Encompass Health Corporation · NYSE:EHC
Encompass Health — HealthSouth — Lazard Capital Markets 9th Annual Healthcare Conference 2012
17 slides from Encompass Health's conference presentation, Nov 14, 2012
Slide 1: Lazard Capital Markets 9th Annual Healthcare Conference
Lazard Capital Markets 9th Annual Healthcare Conference New York City|November 14, 2012 Jay Grinney, President and Chief Executive Officer
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 our current outlook, views and plans with respect to future events, including legislative and regulatory developments, strategy, capit
Slide 3: Our Company Portfolio – As of September 30, 2012
Our Company Portfolio – As of September 30, 2012 Inpatient Rehabilitation Hospitals (―IRF‖) 99 • 29 operate as JV’s with Acute Care Hospitals Outpatient Rehabilitation Satellite 26 Clinics 25 Hospital-Based Home Health Agencies 27 + Puerto Rico Number of States ~ 22,500 Employees Key Statistics – Tr
Slide 4: 9 Months 2012 Highlights
9 Months 2012 Highlights Discharge Volume (millions) Net Operating Revenues +4.4% $1,800 90,000 +6.6% 92,159 $1,500 $1,609.0 88,288 $1,508.8 60,000 $1,200 $900 30,000 $600 0 $300 9M 2012 9M 2011 9M 2012 9M 2011 (millions) Adjusted EBITDA (1) Earnings Per Share (2) $1.50 $475 +9.9% $1.00 $1.23 $350 $
Slide 5: Q4 2012 Observations & Considerations (as of Nov 13, 2012)
Q4 2012 Observations & Considerations (as of Nov 13, 2012) Volume: • As anticipated, October 2012 discharge growth was positively impacted by an increased length of stay at the end of September which rolled discharges into October. • Discharge growth in November and December (holiday season) is alwa
Slide 6: Q4 2012 Observations & Considerations (cont.)
Q4 2012 Observations & Considerations (as of Nov 13, 2012)(cont.) Growth: • Continued construction on a replacement hospital for HealthSouth Rehabilitation Hospital of Western Massachusetts (53-bed) ― This hospital will be owned and will replace an existing leased facility. • Completed construction
Slide 7: 2012 Guidance (as of November 13, 2012)
2012 Guidance (as of November 13, 2012) Considerations: Revenue growth of 3.6% to 5.2% (October through December 2012) ― Discharge growth between 2.5% and 3.5% (October through 2012 Adjusted EBITDA (1) December 2012) $490 million to $495 million ― Revenue per discharge growth between 2.0% and 2.5%
Slide 8: Strong and Sustainable Business Fundamentals
Strong and Sustainable Business Fundamentals • Favorable demographic trends Attractive Healthcare Sector • Nondiscretionary nature of many conditions treated in IRFs • Highly fragmented industry • #1 market share: above industry same-store growth and margins Industry Leading Position • Consistent ac
Slide 9: Appendix
Appendix HEALTHSOUTH,
Slide 10: Portfolio Growth: De Novo (40 bed) Assumptions and Timing
Portfolio Growth: De Novo (40 bed) Assumptions and Timing All projects have minimum IRR target of 15% (pre-tax). Investment Considerations • Target 4 openings/Year • All private rooms • Cash Payback (1) = 5 to 7 years • A minimum of 30 patients treated for ―zero‖ revenue (Medicare pre-certification)
Slide 11: Historic Discharge Growth vs. Industry
Historic Discharge Growth vs. Industry HealthSouth’s volume growth has outpaced competitors’ Same Store HealthSouth vs. Industry Quarterly Discharge Growth Yearly 6.5% UDS Industry Sites (1) 120,000 5.0% HLS Same Store (2) 2.1% Q4 4.7% 5.9% 90,000 3.3% 4.2% 2.7% 1.9% 5.9% 2.7% 5.1% Q3 1.8% 1.4% 1.0%
Slide 12: Priorities for Reinvesting Free Cash Flows
Priorities for Reinvesting Free Cash Flows (millions) 2012 9 Months Growth in core business Assumptions 2012 2011 Bed expansions (80 - 100 beds) $20 to $25 $14.5 $12.5 De novo hospitals (complete Ocala; start 4 others) $50 to $70 $28.8 $15.6 Growth Priorities Acquisitions (target 2/year) - Free stan
Slide 13: Medicare Spending on Post-Acute Services
Medicare Spending on Post-Acute Services 2.1% 2.2% 2.1% 1.8% 1.9% Inpatient rehabilitation 1.5% 1.4% 1.3% 1.2% 1.2% 1.2% spending (% of total Medicare spending) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Projected 2010 2012 Total Medicare Spending on Post-Acute Services $63.5 billion in
Slide 14: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA (1) 2012 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 $ 56.8 $ 59.9 $ 59.9 $ 176.6 Loss (income) from disc ops, net of tax, attributable to HealthSouth 0.4 (3.5) 0.5 (
Slide 15: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA (1) 2011 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 $ 91.5 $ 32.3 $ 68.3 $ 62.5 $ 254.6 (Income) loss from disc ops, net of tax, attributable to
Slide 16: Reconciliation Notes for Slides 14-15
Reconciliation Notes for Slides 14-15 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 financial measure. Management and some members of the investment community util
Slide 17: Net Cash Provided by Operating Activities Reconciled to Adjusted EBITDA
Net Cash Provided by Operating Activities Reconciled to Adjusted EBITDA Q3 9 Months Full Year (Millions) 2012 2011 2012 2011 2011 2010 2009 2008 2007 Net cash provided by operating activities $ 107.2 $ 55.1 $ 302.2 $ 213.2 $ 342.7 $ 331.0 $ 406.1 $ 227.2 $ 230.6 Prov ision for doubtful accounts (7.0
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