Select Medical Holdings Corporation · NYSE:SEM
Select Medical — Investor Presentation (October 2017)
29 slides from Select Medical's investor presentation, Oct 3, 2017
Slide 1: Forward-Looking Statements
Forward-Looking Statements This presentation may contain forward-looking statements based management expectations. Numerous factors, including those market conditions and those detailed from time-to-time in the on current related to Company’s filings with the Securities and Exchange Commission, may
Slide 2: Select Medical Overview
Select Medical Overview Founded in 1996 $4.3 Billion Net Revenue LTM Q2 2017 2017 (1) $493 Million Adjusted EBITDA LTM 11.4% Adjusted EBITDA Margins SCALE AND EXPERTISE Leading provider of post-acute services with operations in 46 states and D.C. Headquartered in Mechanicsburg, Pennsylvania, Select
Slide 3: Leading Post Acute Care Provider
Leading Post Acute Care Provider Largest operator of Long-Term Acute Care Hospitals (LTACH) • 102 LTACH’s operating in 27 states. Second largest operator of Inpatient Rehabilitation Hospitals (IRF) • 21 IRF’s operating in 10 states. Largest operator of Outpatient Rehabilitation Clinics • 1,608 clini
Slide 4: Revenue Mix
Revenue Mix LTM Q2 ‘17 2016 2014 Contract Therapy 1% Contract Therapy 7% Outpatient 20% Occ Med 23% Occ Med 23% LTACH 40% LTACH 42% LTACH 60% IRF 13% Outpatient 22% Outpatient 24% IRF 12% IRF 13% 5
Slide 5: Payor Mix
Payor Mix 2014 LTM Q2 ‘17 Medicare 30% Medicare 45% Non Medicare 55% Non Medicare 70% 6
Slide 6: Long-Term Acute Care Hospitals
LONG-TERM ACUTE CARE HOSPITALS
Slide 7: LTACH Criteria Impact
LTACH Criteria Impact Average Daily Census 3,200 $1,800 Case Mix Index LTACH Revenue PPD 1.28 $1,750 3,000 1.26 $1,761 2,878 $1,700 $1,690 2,800 2,749 2,792 2,735 2,697 $1,650 2,600 1.20 1.19 1.19 $1,600 2,400 $1,580 $1,596 $1,550 2,200 $1,537 $1,500 (Rate) 2,000 (ADC1) 2013 2014 2015 2016 2017 Q2 Y
Slide 8: Inpatient Rehabilitation Hospitals
INPATIENT REHABILITATION HOSPITALS
Slide 9: 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 full – – – – post acute network of services. Outpatient Rehab LTACH Day Rehab Occupational Medicine 11
Slide 10: Current Rehabilitation Operations
Current Rehabilitation Operations Wholly Owned e Consolidated Joint Venture Non-Consolidated Joint Venture
Slide 11: Rehabilitation Network Growth
Rehabilitation Network Growth New JV Partnerships: Under Construction • Ochsner New Orleans – New 60 bed IRF • Projected opening in Early 2018 • Dignity Las Vegas, NV – New 60 bed IRF • Projected opening in 2019 Signed • Riverside Health – Newport News, VA • • New 50 bed IRF to replace existing hosp
Slide 12: Post Acute Partners
Post Acute Partners Multi-billion dollar health system with 32 acute care hospitals with over 3,900 staffed acute care beds. Net patient revenue of over $4 billion. Three IRFs with 125 beds including recent opening of 30 bed HIH in July 2017, 59 outpatient clinics and other contract therapy and staf
Slide 13: Physical Therapy Outpatient Centers
PHYSICAL THERAPY OUTPATIENT CENTERS
Slide 14: Outpatient Rehabilitation
Outpatient Rehabilitation • Largest operator of outpatient rehab clinics in U.S. • March 2016 acquired Physiotherapy Associates (second largest at time of acquisition) –500+ clinics –Over $20 million of synergies • Growth through denovo clinics and tuck-in acquisitions 17
Slide 15: Outpatient Rehabilitation - Industry
Outpatient Rehabilitation - Industry Source: Company public filings and websites as of June 30, 2017 1,608 Outpatient Rehabilitation Centers (37 States and D.C.) As of 06/30/2017 18 ATHLETICO (≈370) USPH (567) ATI (≈700) Select (1,608)
Slide 16: Outpatient Rehab Clinics visits and revenue per visit
Outpatient Rehab Clinics 19 VISITS (000’s) 8,283 7,799 5,219 4,569 4,781 4,971 4,470 LTM YEAR201120122013201420152016Q2 2017 REVENUE PER VISIT $103 $103 $104 $103 $103 $102 $102
Slide 17: Outpatient Rehab Clinics
. . ah Outpatient Rehab Clinics Select er er VISITS um 7 TH | ‘oe YEAR 2011 2012 2013 2014 2015 2016 war REVENUE Ea PER VISIT
Slide 18: Concentra
Concentra Concentra is the largest provider of occupational health services in the U.S. –448 locations across 43 states • Service Lines: – – – 315 occupational health centers (with some consumer health) 101 onsite clinics at employer locations 32 Community Based Outpatient Clinics (CBOC) serving Vet
Slide 19: Post-Acquisition Update
Post-Acquisition Update • • Management transition Earnings 2015 – – – Revenue = $997 million Adjusted EBITDA Adjusted EBITDA = $90 million Margin = 9.0% ‘17 • Earnings LTM Q2 – – – Revenue = $1.0 billion Adjusted EBITDA= $151.5 million Adjusted EBITDA Margin = 15.0% • Implemented $44 million of cost
Slide 20: Post-Acquisition Update
Post-Acquisition Update a... ¢« Management transition ¢ Earnings 2015 — Revenue = $997 million — Adjusted EBITDA = $90 million — Adjusted EBITDA Margin = 9.0% ¢ Earnings LTM Q2 ‘17 — Revenue = $1.0 billion — Adjusted EBITDA = $151.5 million — Adjusted EBITDA Margin = 15.0% ¢ Implemented $44 million
Slide 21: Financial Metric Trends
Financial Metric Trends Net Revenue Adjusted EBITDA $4,332 $4,286 $493 2013 2014 2015 2016 LTM Q2 17 2013 2014 2015 2016 LTM Q2 17 ($ in millions) ($ in millions) Hospitals Outpatient Concentra Hospitals Outpatient Concentra 24 $466 $399 $373$364 $3,743 $3,065 $2,976
Slide 22: Annual Capital Expenditures
Annual Capital Expenditures Accelerated development spending 2014-2017 $200 $175 $150 $125 $100 $75 $50 $25 $0 2013 2014 Maintenance 2015 Development 2016 LTM Q2 '17 Concentra Systems 25 ($ in millions) $183$187 $95 $162 $74
Slide 23: Debt Maturities as of 06/30/2017
Debt Maturities as of 06/30/2017 SEM Revolver (L + 3.25%) $1,200 $1,000 $800 $600 $400 $200 $12 $0 2017 2018 2019 2020 2021 2022 2023 2024 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. 26 SEM Term L
Slide 24: Financial Guidance 2017
Financial Guidance 2017 Net Revenue $4,400M - $4,600M Adjusted EBITDA $540M - $580M EPS $0.69 - $0.87 Adjusted EPS $0.78 - $0.96 Note: See Slide 30 for non-GAAP reconciliation 27
Slide 25: Appendix: Additional Materials
Appendix: Additional Materials
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation LTM Q2 17 2013 $123 2014 $128 2015 $136 2016 $125 Net Income $99 Income tax 75 76 72 56 51 Equity in losses/(earnings) of unconsolidated subsidiaries (2) (7) (17) (20) (22) Interest expense, net (Gain) / Loss on debt retirement Other (Gains) / Losses Concentra/Physio acquisit
Slide 27: Non-GAAP Reconciliation – Financial Guidance
Non-GAAP Reconciliation – Financial Guidance 2017 Low High Net Income $121 $145 Income tax 91 107 Interest expense 159 159 Equity in earnings of unconsolidated subsidiaries (23) (23) Loss on early retirement of debt 20 20 Stock Based Compensation 15 15 Depreciation and Amortization 157 157 Adjusted
Slide 28: selectmedical.com/investor-relations/for-investors
selectmedical.com/investor-relations/for-investors
Slide 29: Improving Quality of Life
z . MEDICAL = Improving Quality of Life selectmedical.com/investor-relations/for-investors
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