Select Medical Holdings Corporation · NYSE:SEM
Select Medical — 33rd Annual J.P. Morgan Healthcare Conference (January 2015)
32 slides from Select Medical's conference presentation, Jan 12, 2015
Slide 1: Select Medical Investor Presentation, 33rd Annual J.P. Morgan Healthcare Conference
Select medical Investor presentation 33RD ANNUAL J.P. MORGAN HEALTHCARE CONFERENCE
Slide 2: 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 3: Select Medical Overview
Headquartered in Mechanicsburg, Pennsylvania, Select Medical employs approximately 31,600 staff in the United States. SCALE AND EXPERTISE Leading provider of post-acute services with operations in 44 states and D.C. Select Medical Overview $3.0 Billion Net Revenue LTM Q3 2014 $371 Million Adjusted E
Slide 4: Select Medical's National Footprint
as of 09/30/2014 Select Medical’s National Footprint
Slide 5: Strategy
Strategy Be the “preferred” provider of post acute care services in our markets Structured relationships to align with patients Partner with academic/major medical institutions Hospital in hospital model in LTACH Experts in our fields – LTACH, Inpatient Rehab and Outpatient Rehab Best in class High
Slide 6: 2014 Financial Highlights
2014 Financial Highlights a... PRICING/AMENDMENT TERM LOANS MARCH 2014 SHARE 10M shares @ $10.95/share on March 13, 2014 HEU MORASS ~1.3M shares @ $14.00/share on May 21, 2014 DIVIDEND PAYMENTS HIGHLIGHTS a < oO z = < Tm <7 So x] $.10/share on March 10, 2014 $.10/share on May 28, 2014 $.10/share on
Slide 7: 2014 Development Highlights
2014 Development Highlights Rehab Joint Ventures LTACH 6 Start Ups 1 New Joint Venture Cleveland, OH Two 60 bed IRFs (opening late 2015 and 2016) Atlanta, GA 56 bed IRF 23 outpatient clinics Harrisburg, PA 55 bed IRF 22 outpatient clinics Cincinnati, OH 60 bed IRF (opening 2016)
Slide 8: Long Term Acute Care Specialty Hospitals
Long Term Acute Care Specialty Hospitals
Slide 9: Select Medical LTAC Hospitals
Select Medical LTAC Hospitals As of 9/30/14
Slide 10: LTACH Overview
LTACH Overview Major provider of LTACH services in U.S. 113 hospitals 83 hospital-in-hospital (3,101 beds); average size 37 beds 29 freestanding (1,601 beds); average size 55 beds 1 managed hospital Ownership of freestanding LTACHs 17 owned 12 leased
Slide 11: LTACH Legislation
LTACH Legislation LTACH Patient Criteria passed in late December 2013 as part of Budget bill and SGR - effective beginning Q4 2015 LTACH Rates for patients with; 3 day prior short term acute hospital ICU/CCU stay or Ventilation patients for > 96 hours in the LTACH Other patients receive “site neutra
Slide 12: Patient Criteria Phase-In
Patient Criteria Phase-In ak ™Sclect MEDICAL Q415 756 BEDS HOSPITALS HOSPITALS Select Medical: Imp: Q1‘16 MOVING 20 ality of Life Q2‘16 848 nospiTats | BEDS TO CRITERIA >>> Q3 16 1.660 | BEDS
Slide 13: Select Impact
Select Impact Positives: Degree of segment certainty with phase-in 25% Rule extension – through cost reporting periods on or after October 1, 2016 Select high CMI HiH Strategy Neutral: Moratorium – on new hospitals and beds (with exceptions) through September 30, 2017 Negatives: Potential loss of vo
Slide 14: Inpatient Rehabilitation Specialty Hospitals
Inpatient Rehabilitation Specialty Hospitals
Slide 15: Inpatient Rehabilitation Hospitals
Inpatient Rehabilitation Hospitals Acquired Kessler Institute in September 2003 The Kessler Rehabilitation network: Three freestanding inpatient rehab hospitals (336 total beds) 89 outpatient rehab clinics Largest licensed rehab hospital in U.S. U.S. News & World Report has recognized Kessler Instit
Slide 16: Operational Joint Ventures
Dallas, TX 4 IRFs (220 beds) 2 managed units (33 beds) 47 outpatient clinics Operational JVs Consolidated Joint Ventures Hershey, PA 76 bed IRF 22 bed TCU Non-Consolidating Joint Ventures St. Louis, MO 2 IRFs (95 beds) 1 managed unit 47 outpatient clinics Additional services San Antonio, TX 42 bed I
Slide 17: JVs Under Construction
JVs Under Construction Cleveland, OH Two 60 bed IRFs (opening late 2015 and 2016) Los Angeles, CA 138 bed IRF (opening late 2015) Cincinnati, OH 60 bed IRF (opening 2016)
Slide 18: Growing Rehabilitation Network
Growing Rehabilitation Network Partner in joint ventures with premier acute care hospitals and systems to build post acute networks
Slide 19: Poised for Growth
Poised for Growth LTACH REHAB
Slide 20: Outpatient Rehabilitation Clinics
Outpatient Rehab Clinics Outpatient Rehabilitation
Slide 21: Outpatient Rehabilitation – Industry Overview
Source: Company public filings and websites as of September 30, 2014 Select (1,023) PhysioTherapy Associates (575) USPH (489) ATI (310) Outpatient Rehabilitation – Industry Overview
Slide 22: Payor Mix Outpatient Rehab Clinics
Payor Mix Outpatient Rehab Clinics 45% 13% 23% 19% Medicare / Medicaid Commercial / Managed Care Workers’ Comp Managed/ Other
Slide 23: 2014 Outpatient Initiatives
Continued growth in workers’ comp business by illustrating historical ROI benefits of working with Select Payors/Employers Expand hand therapy services to more clinics Expand concussion management program Continued development of start-up clinics 2014 Outpatient Initiatives
Slide 24: Financial Overview
Financial Overview
Slide 25: Financial Metric Trends
Financial Metric Trends Net Revenue Adjusted EBITDA CAGR 6.6% CAGR 5.2% Adjusted EPS CAGR 19.3% $2,390 $2,805 $2,949 $2,976 $3,040 2010 2011 2012 2013 LTM Q3 2014 $307 $386 $406 $373 $371 2010 2011 2012 2013 LTM Q3 2014 $0.48 $0.84 $1.07 $0.82 $0.93 2010 2011 2012 2013 LTM Q3 2014 ($ in millions) ($
Slide 26: Annual Capital Expenditures
($ in millions) Annual Capital Expenditures Accelerated development spending expected 2014-2015 $52 $46 $68 $74 $102 2010 2011 2012 2013 LTM Q3 2014 $ 0 $ 2 5 $ 5 0 $ 7 5 $ 1 0 0 D e v e l o p m e n t M a i n t e n a n c e
Slide 27: Focus on Free Cash Flow Generation
($ in millions) Note: Free Cash Flow calculated as Net Cash Provided by Operating Activities less Purchases of Property and Equipment See Slide 31 for non-GAAP reconciliation Focus on Free Cash Flow Generation Free Cash Flow $ 9 3 $ 1 7 1 $ 1 1 9 $ 2 3 1 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 L T M Q 3 2 0
Slide 28: Use of Capital - Opportunistic
Use of Capital - Opportunistic
Slide 29: 2015 Financial Guidance
Net Revenue $3,100M - $3,200M Adjusted EBITDA $370M - $385M Adjusted EPS $0.84 - $0.90 2015 Financial Guidance
Slide 30: Appendix: Additional Materials
Appendix: Additional Materials
Slide 31: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) 2010 2011 2012 2013 YTD Q3 ’13 YTD Q3 ’14 LTM Q3 ’14 Net Income $82 $113 $154 $123 $92 $101 $132 (+) Income tax 42 71 90 75 57 64 81 (+/-) Equity in losses/(earnings) of unconsolidated subsidiaries 1 (3) (8) (2) (1) (4) (5) (+/-) Other expense / (income) (1) -
Slide 32: <<selectmedical.com/investor-relations/for-investors/
<<selectmedical.com/investor-relations/for-investors/
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