Select Medical Holdings Corporation · NYSE:SEM
Select Medical — Investor Presentation (December 2018)
34 slides from Select Medical's investor presentation, Dec 4, 2018
Slide 1: Forward-Looking Statements
Forward-Looking Statements This presentation may contain forward-looking statements based managementexpectations.Numerousfactors,includingthose market conditions and those detailed from time-to-time in the on current relatedto Company’s filings with the Securities and Exchange Commission, may cause
Slide 2: Select Medical Overview
Select Medical Overview Founded in 1996 $4.9 Billion Net Revenue LTM Q3 2018 2018 (1) $623 Million Adjusted EBITDA LTM 12.7% Adjusted EBITDA Margins SCALE AND EXPERTISE Leading provider of post-acute services with operations in 47 states and D.C. Headquartered in Mechanicsburg, Pennsylvania, Select
Slide 3: Leading Post Acute Care Provider
Leading Post Acute Care Provider Largest operator of Critical Illness Recovery Hospitals (formerly referred to as LTACH) • 97 Critical Illness Recovery Hospitals operating in 27 states. Second largest operator of Rehabilitation Hospitals (IRF) • 26 IRF’s operating in 11 states. Largest operator of O
Slide 4: Recent Events
Recent Events Repricing On October 26, 2018 Select entered into an amendment to its senior credit facilities, reducing borrowing spreads on its term and revolving loans by 25 basis points. Concentra entered into an amendment to its first lien credit facilities, reducing borrowing spread revolving lo
Slide 5: Revenue Mix
Revenue Mix 2017 Proforma 2017 2014 Contract Therapy 7% Outpatient 20% Occ Med 23% LTACH 40% OCC Med 32% LTACH 35% LTACH 60% IRF 13% Outpatient 23% Outpatient 20% IRF 13% IRF 14% Note: 2017 Proforma includes US HealthWorks 6
Slide 6: Payor Mix
Payor Mix 2017 Proforma 2017 2014 Medicare 27% Medicare 30% Medicare 45% Non Medicare 55% Non Medicare 70% Non Medicare 73% Note: 2017 Proforma includes US HealthWorks 7
Slide 7: Payor Mix
Payor Mix 2017 Proforma 2017 2014 Medicare 27% Medicare 30% Medicare 45% Non Medicare 55% Non Medicare 70% Non Medicare 73% Note: 2017 Proforma includes US HealthWorks 8
Slide 8: LTCH Legislation
LTCH Legislation LTCH Patient Criteria passed in late December 2013 as part of Budget bill and SGR - effective beginning Q4 2015 –All LTCH’s under criteria as of September 2016. LTCH Rates for patients with; –3 day prior short term acute hospital ICU/CCU stay or –Ventilation patients for > 96 hours
Slide 9: LTCH Medicare Annual Spending
LTCH Medicare Annual Spending 5.6 5.5 5.5 5.4 5.2 5.0 4.8 4.6 4.4 2010 2011 2012 2013 2014 2015 2016 2017 ($ in billions) Source: MedPAC Data (2017 Figures estimated by MedPac) 10 5.4 5.3 5.3 5.0 5.1 4.6
Slide 10: LTCH Criteria Impact
LTCH 3,200 Criteria Impact Average Daily Census $1,800 Case Mix Index LTACH Revenue PPD 1.26 1.27 3,000 $1,750 $1,704 2,811 $1,700 2,800 2,677 2,665 $1,663 2,712 1.20 $1,650 2,600 2,634 1.19 1.19 $1,600 2,400 $1,570 $1,550 2,200 $1,558 $1,520 $1,500 (Rate) 2,000 (ADC1) 2013 2014 2015 2016 2017 1 ADC
Slide 11: LTCH Criteria Impact
LTCH Criteria Impact 99.5% Compliance a... MEDICAL —>Average Daily Census 3,200 Case Mixindex -®=LTACHRevenue PPD 4.97 $1,800 1.26 3,000 $1,750 2,800 $1,700 2,600 $1,650 2,400 $1,600 2,200 $1,550 Perl $1,520 $1,500 (apc) 2013 2014 2015 2016 2017 (Rate) ADC is for hospitals owned and operated as of D
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 other post acute network of services. include – – – – Outpatient Rehab Critical Illness Recovery Day Rehab Hospitals (LTCH) Occupational Medicine 13
Slide 13: Current Rehabilitation Operations
Current Rehabilitation Operations [JCleveland Clinic Rehabliitation Hospital ..ilfiiiltictl WCfl Sef!ld Uedcll _uJI' O·luh-ioHealth Rehabil itation Hospital In partners-hlp with Select Mtdiul STATE HERSHEY 1 1-'tNRI' ehabilitation · Hospital SSM Rehabilitation Network INSTITUTE FOR REHABIUTATION Se-
Slide 14: Rehabilitation Network Growth
Rehabilitation Network Growth New JV Partnerships: Under Construction • 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 rep
Slide 15: Our Post Acute Partners
Our Post Acute Partners 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 2011 facility and staffing s
Slide 16: Our Post Acute Partners
Our Post Acute Partners Loe BaylorScotcsWhite 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 2
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 therap
Slide 18: Outpatient Rehabilitation - Industry
Outpatient Rehabilitation - Industry Source: Company public filings and websites as of September 30, 2018 1,649 Outpatient Rehabilitation Clinics (37 States and D.C.) As of 09/30/2018 19 ATHLETICO (≈450) ATI (≈550) USPH (≈560) Select (1,649)
Slide 19: Outpatient Rehab Clinics
Outpatient Rehab Clinics 20 VISITS (000'S) 8,315 8,233 7,799 5,219 4,971 4,781 YEAR LTM Q3 2013 2014 2015 2016 2017 2018 REVENUE PER VISIT $101 $101 $101 $100 $101 $103
Slide 20: Outpatient Rehab Clinics
. . ah Outpatient Rehab Clinics Select CAGRI24% VISITS 8,233 Belo (000's) LTM Q3 YEAR 2013 2014 2015 2016 2017 2018 REVENUE PER VISIT.
Slide 21: Concentra/US HealthWorks
Concentra/US HealthWorks The largest provider of occupational the U.S. – 678 locations across 44 states health services in • Service Lines: – – – 525 occupational health centers 123 onsite clinics at employer locations 30 Community Based Outpatient Clinics Veterans Health Administration patients (CB
Slide 22: Concentra/US HealthWorks Centers
Concentra/US HealthWorks Centers 525 Centers As of 09/30/2018 23
Slide 23: Concentra Stand Alone Post-Acquisition from Humana
Concentra Stand Alone Post-Acquisition from Humana • 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 Marg
Slide 24: US HealthWorks Acquisition
US HealthWorks Acquisition US HealthWorks was the second largest occupational health with 220 centers in States. provider of the United • Transaction closed February 1, 2018. Select retains its 50.1% voting ownership in combined company. US HealthWorks Financial Performance 2017 • – – – Revenue = $5
Slide 25: US HealthWorks Acquisition
sacs ah US HealthWorks Acquisition Select 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 — Reven
Slide 26: Financial Metric Trends
Financial Metric Trends Adjusted EBITDA(1) Net Revenue $623 $4,911 $4,217 2014 2015 2016 Outpatient 2017 LTM Q3 18 2014 2015 2016 Outpatient 2017 Concentra LTM Q3 18 LTCH IRF Concentra LTCH IRF ($ in millions) ($ in millions) Note: (1) See Slide 32 for non-GAAP reconciliation 27 $4,365 $3,684 $3,023
Slide 27: Capital Expenditures
Capital Expenditures $225 $200 $175 $150 $125 $100 $75 $50 $25 $0 2014 2015 Maintenance 2016 Development 2017 LTM Q3 2018 Concentra Systems (1) 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, wh
Slide 28: Debt Maturities
Debt Maturities SEM Revolver (L + 2.50%) $1,400 $1,233 $1,200 $1,000 $800 $600 $400 $200 $0 2018 2019 2020 2021 2022 2023 2024 2025 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. 29 SEM Senior Notes
Slide 29: Financial Guidance
Financial Guidance 2018 Net Revenue $5,050M - $5,100M Adjusted EPS Adjusted EBITDA $640M - $655M $1.08 $1.07 $1.02 $1.01 - - EPS Note: See Slide 33 for non-GAAP reconciliation 30
Slide 30: Appendix: Additional Materials
Appendix: Additional Materials
Slide 31: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2014 $128 2015 $136 2016 $125 2017 $220 LTM Q3 18 Net Income $268 Income tax expense (benefit) 76 72 56 (18) (30) Equity in losses/(earnings) of unconsolidated subsidiaries (7) (17) (20) (21) (20) Interest expense, net 86 113 170 155 187 Loss on debt retirement 2 - 12 20 10 O
Slide 32: Financial Guidance Non-GAAP Reconciliation
Financial Guidance Non-GAAP Reconciliation ($ in millions, except per share amounts) 33 Range Low High Net income attributable to Select Medical $ 137 $ 145 Net income attributable to non-controlling interests 43 45 Net income 180 190 Income tax expense 59 64 Interest expense 195 195 Equity in earni
Slide 33: selectmedical.com/investor-relations/for-investors
selectmedical.com/investor-relations/for-investors
Slide 34: Improving Quality of Life
z . MEDICAL = Improving Quality of Life selectmedical.com/investor-relations/for-investors
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