Select Medical Holdings Corporation · NYSE:SEM
Select Medical — 31st Annual J.P. Morgan Healthcare Conference (January 2013)
37 slides from Select Medical's conference presentation, Jan 7, 2013
Slide 1: 31st Annual J.P. Morgan Healthcare Conference
31st Annual J.P. Morgan Healthcare Conference January 7, 2013
Slide 2: Forward-Looking Statements
This presentation may contain forward-looking statements based on current management expectations. Numerous factors, including those related to market conditions and those detailed from time-to-time in the Company’s filings with the Securities and Exchange Commission, may cause results to differ mat
Slide 3: Select Medical Today
111 LTAC Hospitals 110 owned - 4,629 beds 1 managed Hospitals in 28 states 965 Outpatient Rehab Clinics in 32 states and the District of Columbia $2.9 Billion Net Revenue LTM Q3 ‘12 $401 Million Adjusted EBITDA LTM Q3 ‘121 29,750 Employees in the United States 12 Inpatient Rehab Facilities (IRF) 7 C
Slide 4: 2012 Accomplishments
2012 Accomplishments Strong results YTD September Revenue growth of 5.8% Adjusted EPS growth of 33.9% (excludes loss on debt and tax effect in 2011 and 2012) Acquired two rehab hospitals in the Baylor joint venture Completed $275M debt refinancing in Q3 Special Cash Dividend of $1.50/share paid Dec.
Slide 5: IRFs and LTACHs in Post Acute Setting
IRFs and LTACHs in Post Acute Setting Readmission Rates1 2010 Medicare Margin2 2012 Projected Medicare Margin2 % 2010 Total Medicare Spending2 Skilled Nursing Facilities 22.0% 18.5% >14.0% 5.1% Home Health Agencies 18.1% 19.4% 13.7% 3.8% Hospice 4.5% 7.1% 5.1% 3.0% Inpatient Rehabilitation 9.4% 8.8%
Slide 6: IRFs and LTACHs in Post Acute Setting
IRFs and LTACHs in Post Acute Setting Source: Medicare Payment Advisory Commission, A Data Book: Health Care Spending and the Medicare Program (June 2011) (in billions)
Slide 7: Balanced Payor Mix
Balanced Payor Mix Specialty Payor Mix Outpatient Payor Mix Overall Payor Mix 90% Commercial Payors and Other 10% Medicare/ Medicaid 64% Medicare/ Medicaid 36% Commercial Payors and Other Note: LTM September 30, 2012 58.5% 55.0% 50.3% 48.3% 49.0% 49.7% 51.5% 50.3% 41.5% 45.0% 49.7% 51.7% 51.0% 50.3%
Slide 8: Significant Scale and Breadth
DC 3 1 2 1 1 5 77 2 3 9 5 1 5 5 15 2 11 5 3 1 4 3 1 1 10 3 2 1 1 3 3 22 10 66 41 4 2 74 14 3 1 1 17 10 3 6 2 23 2 167 4 41 23 4 2 62 13 142 41 1 5 13 14 2 100 36 20 4 9 58 1 22 25 4 6 7 17 10 34 25 21 14 1 9 1 11 15 2 1 2 2 1 1 4 1 8 1 112 Significant Scale and Breadth LTACH 110 Owned Hospitals 1 Ma
Slide 9: Specialty Hospitals Long Term Acute Care
Specialty Hospitals Long Term Acute Care
Slide 10: LTACH Overview
LTACH Overview Major provider of LTACH services in U.S. 111 hospitals 79 are hospital-in-hospital (2,759 beds) 31 are freestanding (1,870 beds) 1 managed freestanding hospital Ownership of freestanding LTACHs 18 owned 13 leased
Slide 11: Regency Acquisition (23 LTACHs)
Closed September 1, 2010 – Purchase Price $210.0M Regency 2009 Audit 2011 LTM Q3 ‘12 Net Revenue $ 375M $ 340M $ 345M Adjusted EBITDA $ 28M $ 46M $ 58M Adjusted EBITDA Margin 7.5% 13.5% 16.9% Purchase multiple EBITDA 7.5x 4.6x 3.6x Regency Acquisition (23 LTACHs)
Slide 12: LTACH Regulatory Environment
MMSEA 2007 – expired December 2012 CMS Final Rule FY 2013 Net Market Basket update of 1.7% Three Year Phase-In of BNA (1.266% per year) One year extension of 25% Rule at current levels Expiration of moratorium on new LTACHs at 12/29/12 Budget Sequestration cuts? LTACH Regulatory Environment
Slide 13: Specialty Hospitals Inpatient Rehabilitation
Specialty Hospitals Inpatient Rehabilitation
Slide 14: Rehabilitation Hospitals
Wholly Owned Hospitals Kessler Institute (3 hospitals) – New Jersey West Gables Rehabilitation – Miami, FL Consolidated Joint Ventures Penn State Hershey Rehabilitation – Hershey, PA SSM Rehabilitation (2 hospitals and 1 managed unit) – St. Louis, MO Non-Consolidating Joint Ventures Baylor Institute
Slide 15: Kessler Overview and U.S. News Rankings
Rehabilitation Overview Founded in 1948 Largest licensed rehab hospital in U.S. (three campuses) 20 consecutive years U.S. News & World Report best hospital One of eight rehabilitation centers in U.S. to have Model System designation for both traumatic brain injury and spinal cord injury #1 Rehabili
Slide 16: Rehab JV Overview
Rehab JV Overview 2 inpatient hospitals 1 managed inpatient rehab unit 33 outpatient locations 15 contract therapy locations 3 occupational health clinics 3 day institute clinics 4 inpatient hospitals 3 managed inpatient rehab units 37 outpatient locations 1 contract therapy location 54 bed rehab ho
Slide 17: Inpatient Rehab Regulatory Environment
Inpatient Rehab Regulatory Environment CMS Final Rule FY 2013 Net Market basket increase of 1.9% Budget Sequestration cuts?
Slide 18: Outpatient Rehabilitation Outpatient Rehab Clinics
Outpatient Rehabilitation Outpatient Rehab Clinics
Slide 19: Outpatient Rehab Clinics
Outpatient Rehab Clinics Outpatient Rehab Facilities (Number of Facilities) ≃ 965 Source: Company public filings and websites as of September 30, 2012. 26 183 423 700
Slide 20: Outpatient Rehab—Philadelphia/South Jersey locations
Outpatient Rehab—Philadelphia/South Jersey 123 locations
Slide 21: Outpatient Rehab—North Jersey locations
Outpatient Rehab—North Jersey 84 locations
Slide 22: Outpatient Rehab—St. Louis, MO locations
Outpatient Rehab—St. Louis, MO 39 locations
Slide 23: Outpatient Rehab—Dallas/Ft. Worth locations
Outpatient Rehab—Dallas/Ft. Worth 37 locations
Slide 24: Outpatient Rehabilitation Contract Therapy
Outpatient Rehabilitation Contract Therapy
Slide 25: Outpatient Rehab Regulatory Environment
Outpatient Rehab Regulatory Environment Commercial - Stable Medicare MPPR changes to therapy payments (effective April 2013) 25% reductions increased to 50% reductions to practice expense component for 2nd and subsequent codes Contract Therapy rates
Slide 26: Minority Investments
Minority Investments Haven Health Inpatient Psychiatric hospital company Allevant Rural Hospital Management Services (Mayo Clinic JV) Amplion Alarm alert technology company naviHealth Post acute managed care company U.S. Physiatry Physician practice management company
Slide 27: Financial Overview
ali by he Financial Overview Select Medical: Imp
Slide 28: Net Revenue and Adjusted EBITDA Trends
$2,390 $2,240 $2,153 Note: In Millions CAGR 8.5% CAGR 11.1% $307 $330 $270 Net Revenue Adjusted EBITDA $2,805 $386 Net Revenue and Adjusted EBITDA Trends $2,926 $401 2008 2009 2010 2011 LTM Q3 '12 Specialty Outpatient Other 2008 2009 2010 2011 LTM Q3 '12 Specialty Outpatient
Slide 29: Key Financial Metrics
Key Financial Metrics Pricing and Volume Trends Specialty Hospital Revenue per Patient Day1 / Admissions Outpatient Rehab Revenue per Visit2 / Visits (Admissions in Thousands) (Visits in Thousands) 1 Net revenue per patient day is calculated by dividing specialty hospital direct patient service reve
Slide 30: Annual Capital Expenditures
Annual Capital Expenditures ($ in millions) 2008 2009 2010 2011 LTM Q3 '12 Maintenance Development $52 $46 $57 $58 $59
Slide 31: Free Cash Flow
Free Cash Flow Free Cash Flow1 ($ in millions) Note: Free Cash Flow calculated as Net Cash Provided by Operating Activities less Purchases of Property and Equipment Intense Focus on Free Cash Flow Generation 1 See slide 37 for non-GAAP reconciliation $51 $108 $93 $171 $208 2008 2009 2010 2011 LTM Q3
Slide 32: Capitalization Details
As of 12/31/08 As of 12/31/09 As of 12/31/10 As of 12/31/11 As of 9/30/12 Cash and Equivalents $ 64 $ 84 $ 4 $ 12 $ 50 Revolving Credit Facility ($300mm) 150 0 25 40 0 Term Loan B 657 483 482 838 1,099 Other Debt 5 6 6 5 6 Total Senior Debt 811 489 513 883 1,105 Sr. Sub. Notes due 2015 658 612 612 3
Slide 33: 2013 Financial Guidance
2013 Financial Guidance Net Revenue $ 2,950M - $ 3,050M Adjusted EBITDA $ 400M - $ 415M EPS, Adjusted $ 0.98 - $ 1.04
Slide 34: Questions
F | Y Select JMEDICAL Questions
Slide 35: Appendix: Additional Materials
Appendix: Additional Materials
Slide 36: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2008 2009 2010 2011 YTD ’11 YTD ’12 LTM Q3 ‘12 Net Income $ 25 $ 79 $ 82 $ 113 $ 75 $ 112 $ 150 (+) Income tax 26 37 42 71 57 72 86 (+/-) Equity in losses/(earnings) of unconsolidated subsidiaries - - 1 (3) (1) (6) (8) (+/-) Other expense / (income) - 1 (1) - - - - (+) Intere
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