Select Medical Holdings Corporation · NYSE:SEM
Select Medical — Investor Presentation (January 2019)
35 slides from Select Medical's investor presentation, Jan 7, 2019
Slide 1: Forward-Looking Statements
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
Slide 2: Select Medical Overview
Headquartered in Mechanicsburg, Pennsylvania, Select Medical employs approximately 47,200 staff in the United States as of 09/30/2018. SCALE AND EXPERTISE Leading provider of post-acute services with operations in 47 states and D.C. Note: (1) See Slide 33 for non-GAAP reconciliation Founded in 1996
Slide 3: Leading Post Acute Care Provider
Leading Post Acute Care Provider 4 5 Largest operator of Critical Illness Recovery Hospitals (formerly referred to as LTACH) 97 Critical Illness Recovery Hospitals operating in 27 states. Second largest operator of Rehabilitation Hospitals (IRF) 26 IRF’s operating in 11 states. Largest operator of O
Slide 4: 2018 Events
2018 Events Repricing October: Select and Concentra entered into amendments to their respective credit facilities, reducing borrowing spreads. UC San Diego Joint Venture October: Select announced the formation of two new joint ventures with UC San Diego Health and Vibra Healthcare to operate an 86 b
Slide 5: Revenue Mix
2014 2017 LTM Q3 2018 Proforma Revenue Mix Note: LTM Q3 2018 Proforma includes US HealthWorks LTACH 40% IRF 14% Outpatient 23% Occ Med 23% LTACH 60% IRF 13% Outpatient 20% Contract Therapy 7% LTACH 34% IRF 14% Outpatient 21% OCC Med 31%
Slide 6: Payor Mix LTM Q3 2018 Proforma
2014 2017 Payor Mix LTM Q3 2018 Proforma Note: LTM Q3 2018 Proforma includes US HealthWorks Medicare 45% Non Medicare 55% Medicare 30% Non Medicare 70% Medicare 27% Non Medicare 73%
Slide 7: Payor Mix 2017 Proforma
2014 2017 Payor Mix 2017 Proforma Note: 2017 Proforma includes US HealthWorks Medicare 45% Non Medicare 55% Medicare 30% Non Medicare 70% Medicare 27% Non Medicare 73%
Slide 8: LTCH Legislation
LTCH Patient Criteria passed in late December 2013 as part of Budget bill and SGR - effective beginning Q4 2015 All LTCH’s under criteria as of September 2016. LTCH Rates for patients with; 3 day prior short term acute hospital ICU/CCU stay or Ventilation patients for > 96 hours in the LTCH Other pa
Slide 9: LTCH Medicare Annual Spending
LTCH Medicare Annual Spending Source: MedPAC Data (2017 Figures estimated by MedPac) ($ in billions) 5.0 5.3 5.5 5.5 5.4 5.3 5.1 4.6 4.4 4.6 4.8 5.0 5.2 5.4 5.6 2010 2011 2012 2013 2014 2015 2016 2017
Slide 10: LTCH Criteria Impact
LTCH Criteria Impact (ADC1) (Rate) 99.5% Compliance 1 ADC is for hospitals owned and operated as of December 31, 2017. Revenue PPD has been adjusted for revenue recognition change. 2,677 2,665 2,811 2,634 2,712 2,000 2,200 2,400 2,600 2,800 3,000 3,200 Average Daily Census 1.19 1.19 1.20 1.26 1.27 $
Slide 11: Inpatient Rehabilitation Hospitals
INPATIENT REHABILITATION HOSPITALS
Slide 12: Our Rehabilitation Model
Our Rehabilitation “Model” Partner with leading health systems through joint venture relationships Inpatient rehab is the basis of “model” but can include other post acute network of services. Outpatient Rehab Critical Illness Recovery Hospitals (LTCH) Day Rehab Occupational Medicine
Slide 13: Current Rehabilitation Operations
Current Rehabilitation Operations Wholly Owned Consolidated Joint Venture Non-Consolidated Joint Venture
Slide 14: Rehabilitation Network Growth
Rehabilitation Network Growth New JV Partnerships: UF Health – Gainesville, FL Relocation of Shands 40 bed IRF Projected opening in Q1 2019 Dignity Las Vegas, NV – New 60 bed IRF Projected opening in Q2 2019 Riverside Health – Newport News, VA New 50 bed IRF to replace existing hospital Projected op
Slide 15: Our Post Acute Partners
Our Post Acute Partners 2011 Multi-billion dollar health system with 52 acute care hospitals and over 4,800 staffed acute beds. Net patient revenues of approximately $7 billion Four IRFs with 214 beds and two managed rehab units, 68 outpatient clinics and home health services Multi-billion dollar he
Slide 16: Physical Therapy Outpatient Clinics
PHYSICAL THERAPY OUTPATIENT CLINICS
Slide 17: Outpatient Rehabilitation
Outpatient Rehabilitation Largest operator of outpatient rehab clinics in U.S. March 2016 acquired Physiotherapy Associates (second largest at time of acquisition) Growth through denovo clinics and tuck-in acquisitions Bipartisan Budget Act of 2018 repealed annual limits on outpatient therapy servic
Slide 18: Outpatient Rehabilitation - Industry
As of 09/30/2018 Outpatient Rehabilitation - Industry ATHLETICO (≈450) 1,649 Outpatient Rehabilitation Clinics (37 States and D.C.) Source: Company public filings and websites as of September 30, 2018 Select (1,649) USPH (≈560) ATI (≈550)
Slide 19: Outpatient Rehab Clinics visits and revenue per visit
42% 13% 22% 23% Outpatient Rehab Clinics CAGR 10.7% VISITS (000'S) YEAR LTM Q3 2013 2014 2015 2016 2017 2018 REVENUE PER VISIT 4,781 4,971 8,233 5,219 7,799 $101 $101 $101 $101 $100 CAGR 12.4% 8,315 $103
Slide 20: Outpatient Rehab Clinics
Outpatient Rehab Clinics a... VISITS 8,233 8,315 (000'S) LTM Q3 YEAR 2013 2014 2015 2016 2017 2018 REVENUE PER VISIT. Select Medical: Improving Quality of Life
Slide 21: Concentra/US HealthWorks
The largest provider of occupational health services in the U.S. 678 locations across 44 states Service Lines: 525 occupational health centers 123 onsite clinics at employer locations 30 Community Based Outpatient Clinics (CBOC) serving Veterans Health Administration patients Treat 21% of workplace
Slide 22: Concentra/US HealthWorks Centers
Concentra/US HealthWorks Centers As of 09/30/2018 525 Centers
Slide 23: Concentra Financial Information
Financial Information 2015 (acquired June 2015) Revenue = $997 million Adjusted EBITDA = $90 million Adjusted EBITDA Margin = 9.0% Financial Information 2017 Revenue = $1.0 billion Adjusted EBITDA = $157.6 million Adjusted EBITDA Margin = 15.6% Implemented $44 million of cost saving synergies. Conce
Slide 24: US HealthWorks Acquisition
US HealthWorks Acquisition US HealthWorks was the second largest provider of occupational health with 220 centers in the United States. Transaction closed February 1, 2018. Select retains its 50.1% voting ownership in combined company. US HealthWorks Financial Performance 2017 Revenue = $552 million
Slide 25: US HealthWorks Acquisition
wg: ah US HealthWorks Acquisition MsSelect US HealthWorks was the second largest provider of occupational health with 220 centers in the United States. * Transaction closed February 1, 2018. Select retains its 50.1% voting ownership in combined company. US HealthWorks Financial Performance 2017 — Re
Slide 26: Financial Metric Trends
Net Revenue Adjusted EBITDA CAGR 13.8% CAGR 15.4% ($ in millions) ($ in millions) Financial Metric Trends Note: (1) See Slide 32 for non-GAAP reconciliation (1) $364 $399 $466 $538 $623 2014 2015 2016 2017 LTM Q3 18 LTCH IRF Outpatient Concentra $3,023 $3,684 $4,217 $4,365 $4,911 2014 2015 2016 2017
Slide 27: Capital Expenditures
Capital Expenditures ($ in millions) $197 Excludes development capital related to the recapture of capital expenditures of $7M from 2016 and $36M from 2017 that Select funded on an interim basis, which we were reimbursed in 2017. (1) (1)
Slide 28: Free Cash Flow
Free Cash Flow Note: Free cash flow is operating cash flow less all capital expenditures. See slide 33 for non-GAAP reconciliation.
Slide 29: Debt Maturities
Debt Maturities Note: New SEM Revolver and Term loans have springing maturity feature and become due in early 2021 unless SEM Senior Notes are refinanced prior to. ($ in millions)
Slide 30: Financial Guidance 2019
Financial Guidance 2019 Net Revenue $5,200M - $5,400M Adjusted EBITDA $660M - $700M EPS $0.97 - $1.13 Note: See Slide 34 for non-GAAP reconciliation
Slide 31: Appendix: Additional Materials
Appendix: Additional Materials
Slide 32: Non-GAAP Reconciliation
($ in millions) 2014 2015 2016 2017 LTM Q3 2018 Net Income $128 $136 $125 $220 $268 Income tax expense (benefit) 76 72 56 (18) (30) Equity in losses/(earnings) of unconsolidated subsidiaries (7) (17) (20) (21) (20) Interest expense, net 86 113 170 155 187 Loss on debt retirement 2 - 12 20 10 Other (
Slide 33: Financial Guidance 2019 Non-GAAP Reconciliation
($ in millions) Financial Guidance 2019 Non-GAAP Reconciliation $ 132 $ 153 56 65 188 218 64 74 200 200 (25) (25) 427 467 27 27 206 206 $ 660 $ 700 Income from operations Stock compensation expense Depreciation and amortization Adjusted EBITDA Net income Income tax expense Interest expense Equity in
Slide 34: Investor Relations website
selectmedical.com/investor-relations/for-investors
Slide 35: Select Medical: Improving Quality of Life
SP... MEDICAL Improving Quality of Life selectmedical.com/investor-relations/for-investors
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