Encompass Health Corporation · NYSE:EHC
Encompass Health — Credit Suisse Healthcare Conference 2021
20 slides from Encompass Health's conference presentation, Nov 8, 2021
Slide 1: Credit Suisse Healthcare Conference
Credit Suisse Healthcare Conference Mark Tarr President and Chief Executive Officer November 8, 2021
Slide 2: Forward-looking statements
Forward-looking statements The information contained in this presentation includes certain estimates, projections and other forward-looking information that reflect Encompass Health’s current outlook, views and plans with respect to future events, including the ongoing strategic review and the timin
Slide 3: Company overview
Company overview A leading provider of inpatient rehabilitation hospitals and States and home-based care Puerto Rico 145 249 95 42 IRFs Home Health Hospice locations locations Committed to delivering high-quality, cost- effective, integrated care across the healthcare continuum Encompass Health 3
Slide 4: Company overview: Inpatient Rehabilitation
Company overview Inpatient Rehabilitation Largest owner and operator of IRFs 145 Inpatient Rehabilitation Hospitals 24% 31% 53 Operate as joint ventures of licensed beds† of Medicare with acute care hospitals patients served† 35 125 States & Puerto Rico Hospitals hold one or more disease-specific ce
Slide 5: Company overview: Home Health and Hospice
Company overview Home Health and Hospice - 4th largest provider of Medicare-certified skilled home health services - Top 8 provider of hospice services 98% Home health agencies ≥3 stars for quality of care 249 95 34 98% Home Health Hospice States locations locations Home health agencies ≥3 stars in
Slide 6: All business lines benefit from a demographic tailwind: growth in the Medicare beneficiary population
All business lines benefit from a demographic tailwind: growth in the Medicare beneficiary population Projected Population of Age 65+ • The growth rate of Medicare beneficiaries Millions increased in 2011 to an approx. 3% CAGR Baby Boomer wave reaches as “Baby Boomers” started turning age 65. averag
Slide 7: Strategic alternatives review for home health and hospice business
Strategic alternatives review for home health and hospice business • On December 9, 2020, the Company announced it is exploring strategic alternatives for its home health and hospice business. • On October 27, 2021, the Company announced that it expects to effect the partial or full separation of it
Slide 8: Q3 Results and Current Trends
Q3 Results and Current Trends Encompass Health 8
Slide 9: Q3 2021 summary
Q3 2021 summary Encompass Health Inpatient Rehabilitation Home Health and Hospice Consolidated Segment Segment NET OPERATING REVENUES ($ millions) (0.2%) 9.4% 9.4% (0.2%) 12.4% 12.4% ADJUSTED EBITDA ($ millions) (10.4%) 6.7% 6.7% 10.7% 10.7% Encompass Health Reconciliations to GAAP can be found on p
Slide 10: Q3 Key takeaways
Q3 Key takeaways Inpatient Rehabilitation Segment Home Health and Hospice Segment Strong revenue growth of 12.4% and Adjusted EBITDA Home health and hospice volumes and labor costs growth of 10.7% in inpatient rehabilitation business negatively impacted by COVID-19 surge over Q3 2020 Discharge gro
Slide 11: Actions taken and October trends
Actions taken and October trends u Actions taken Staffing constraint mitigation strategies include offering more flexible work schedules, increasing our hiring incentives, and implementing market rate adjustments ✓ 435 HH&H nurses were hired in the third quarter of 2021, a 42% increase from the th
Slide 12: 2021 Full-Year Guidance - Updated as of October 27, 2021
2021 Full-Year Guidance - Updated as of October 27, 2021 Updated Updated Revised Initial Guidance Guidance Guidance Guidance ($ in millions, except per share data) January 26, 2021 April 27, 2021 July 27, 2021 $5,000 $5,060 $5,100 $5,080 Net Operating Revenue to to to to $5,170 $5,230 $5,250 $5,130
Slide 13: Q4 2021 guidance considerations
Q4 2021 guidance considerations Inpatient Rehabilitation Home Health and Hospice u Estimated Medicare pricing increase of 1.9% u Estimated 1.9% increase in Medicare pricing for home health; estimated 2.0% pricing increase for u Revenue reserve related to bad debt of 1.8% to hospice 2.0% of net opera
Slide 14: Encompass Health
Encompass CS Health ~—
Slide 15: Appendix: Adjusted EBITDA Reconciliations
Appendix Adjusted EBITDA Reconciliations Encompass Health 15
Slide 16: Reconciliation of net income to Adjusted EBITDA
Reconciliation of net income to Adjusted EBITDA(1) 2021 Q1 Q2 Q3 9 Months (in millions, except per share data) Total Per Share Total Per Share Total Per Share Total Per Share Net Income $ 132.8 $ 142.0 $ 126.7 $ 401.5 Loss from disc ops, net of tax, attributable to Encompass Health — 0.3 0.1 0.4 Net
Slide 17: Reconciliation of net income to Adjusted EBITDA
Reconciliation of net income to Adjusted EBITDA(1) 2020 Q1 Q2 Q3 Q4 Full Year (in millions, except per share data) Total Per Share Total Per Share Total Per Share Total Per Share Total Per Share Net Income $ 108.7 $ 48.3 $ 100.1 $ 111.7 $ 368.8 Loss (income) from disc ops, net of tax, attributable t
Slide 18: Net cash provided by operating activities reconciled to Adjusted EBITDA
Net cash provided by operating activities reconciled to Adjusted EBITDA(1) Q3 9 Months Full Year (In Millions) 2021 2020 2021 2020 2020 Net cash provided by operating activities $ 177.6 $ 173.4 $ 592.0 $ 425.0 $ 704.7 Interest expense and amortization of debt discounts and fees 39.9 49.0 124.5 138.0
Slide 19: Reconciliation of segment Adjusted EBITDA to income from continuing operations before income tax expense
Reconciliation of segment Adjusted EBITDA to income from continuing operations before income tax expense Three Months Ended Nine Months Ended Year Ended September 30, September 30, December 31, 2021 2020 2021 2020 2020 (In Millions) Total segment Adjusted EBITDA $ 278.0 $ 261.0 $ 879.4 $ 712.8 $ 986
Slide 20: End notes
End notes (1) Adjusted EBITDA is a non-GAAP financial measure. The Company’s leverage ratio (total consolidated debt to Adjusted EBITDA for the trailing four quarters) is, likewise, a non-GAAP measure. Management and some members of the investment community utilize Adjusted EBITDA as a financial mea
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