Select Medical Holdings Corporation · NYSE:SEM
Select Medical — Investor Presentation (January 2018)
34 slides from Select Medical's investor presentation, Jan 8, 2018
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 42,300 staff in the United States. SCALE AND EXPERTISE Leading provider of post-acute services with operations in 46 states and D.C. Note: (1) See Slide 32 for non-GAAP reconciliation Founded in 1996 $4.4 Billion Net
Slide 3: Leading Post Acute Care Provider
Leading Post Acute Care Provider 4 5 Largest operator of Long-Term Acute Care Hospitals (LTACH) 101 LTACH’s operating in 27 states. Second largest operator of Inpatient Rehabilitation Hospitals (IRF) 22 IRF’s operating in 10 states. Largest operator of Outpatient Rehabilitation Clinics 1,604 clinics
Slide 4: Recent Events
Recent Events Concentra / U.S. HealthWorks On December 27, 2017 the Company announced it received clearance from the Federal Trade Commission to proceed with the planned merger between Concentra and U.S. HealthWorks. The transaction remains subject to certain closing conditions and is expected to cl
Slide 5: Revenue Mix
2014 2016 LTM Q3 ‘17 Revenue Mix LTACH 40% IRF 14% Outpatient 23% Occ Med 23% LTACH 42% IRF 12% Outpatient 22% Occ Med 23% Contract Therapy 1% LTACH 60% IRF 13% Outpatient 20% Contract Therapy 7%
Slide 6: Payor Mix
2014 LTM Q3 ‘17 Payor Mix Medicare 45% Non Medicare 55% Medicare 30% Non Medicare 70%
Slide 7: Revenue Payor Proforma Mix (USHW)
Revenue Payor Proforma Mix (USHW) LTM 9/30/2017 LTACH 35% IRF 12% Outpatient 21% OCC Med 32% Medicare 27% Non Medicare 73%
Slide 8: Long-Term Acute Care Hospitals
LONG-TERM ACUTE CARE HOSPITALS
Slide 9: LTACH Legislation
LTACH Patient Criteria passed in late December 2013 as part of Budget bill and SGR - effective beginning Q4 2015 All LTACH’s under criteria as of September 2016. LTACH Rates for patients with; 3 day prior short term acute hospital ICU/CCU stay or Ventilation patients for > 96 hours in the LTACH Othe
Slide 10: LTACH Criteria Impact
LTACH Criteria Impact (ADC1) (Rate) 99.6% Compliance (1.7) patients per hospital per day pre vs post criteria 1 ADC is for hospitals owned and operated as of September 30, 2017. 1.19 1.19 1.20 1.26 1.28 $1,537 $1,580 $1,596 $1,690 $1,739 $1,500 $1,550 $1,600 $1,650 $1,700 $1,750 $1,800 1.1 1.12 1.14
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 full post acute network of services. Outpatient Rehab LTACH 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: Ochsner New Orleans – New 60 bed IRF Projected opening in Early 2018 Dignity Las Vegas, NV – New 60 bed IRF Projected opening in 2019 Riverside Health – Newport News, VA New 50 bed IRF to replace existing hospital Construction to begin in 2018 UF He
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. Three IRFs with 178 beds and two managed rehab units, 63 outpatient clinics and home health services. 2011 2016 2015 Multi-bill
Slide 16: 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, 61 outpatient clinics and other contract therapy and staffing services. 2009
Slide 17: Physical Therapy Outpatient Centers
PHYSICAL THERAPY OUTPATIENT CENTERS
Slide 18: 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
Slide 19: Outpatient Rehabilitation - Industry
As of 09/30/2017 Outpatient Rehabilitation - Industry ATHLETICO (400) 1,604 Outpatient Rehabilitation Centers (37 States and D.C.) Source: Company public filings and websites as of September 30, 2017 Select (1,604) USPH (579) ATI (500)
Slide 20: Outpatient Rehab Clinics: Visits and Revenue per Visit
42% 13% 22% 23% Outpatient Rehab Clinics REVENUE PER VISIT VISITS (000’s) YEAR 2011 2012 2013 2014 2015 2016 LTM Q3 2017 $103 $103 $104 $103 $103 $102 $102 4,470 4,569 4,781 4,971 5,219 7,799 8,216 CAGR 11.2%
Slide 21: Outpatient Rehab Clinics
Outpatient Rehab Clinics —_ VISITS a ] "TL a YEAR 2011-2012, 2013, 2014-2015 .2016 shat REVENUE PER VISIT # Quality of Life
Slide 22: Concentra
Concentra is the largest provider of occupational health services in the U.S. 445 locations across 43 states Service Lines: 312 occupational health centers (with some consumer health) 102 onsite clinics at employer locations 31 Community Based Outpatient Clinics (CBOC) serving Veterans Health Admini
Slide 23: Concentra Post-Acquisition Update
Management transition Earnings 2015 Revenue = $997 million Adjusted EBITDA = $90 million Adjusted EBITDA Margin = 9.0% Earnings LTM Q3 ‘17 Revenue = $1.0 billion Adjusted EBITDA = $150.6 million Adjusted EBITDA Margin = 14.8% Implemented $44 million of cost saving synergies Concentra Post-Acquisitio
Slide 24: U.S. HealthWorks Transaction
U.S. HealthWorks Transaction Purchase price: At closing, SEM will maintain its 50.1% voting ownership, Dignity Health will own approximately 20% of the pro forma entity, with the existing minority shareholders, including WCAS/Cressey, owning the balance The transaction will result in significant syn
Slide 25: U.S. HealthWorks Transaction
. ah U.S. HealthWorks Transaction Select U.S. HealthWorks is the second largest provider of occupational health with 216 centers in the United States. Purchase price: On October 23, 2017 Select Medical announced that Concentra had entered into an agreement to purchase U.S. HealthWorks for $753 milli
Slide 26: Financial Metric Trends
Net Revenue Adjusted EBITDA CAGR 10.8% CAGR 8.8% ($ in millions) ($ in millions) Financial Metric Trends $373 $364 $399 $466 $511 2013 2014 2015 2016 LTM Q3 17 Hospitals Outpatient Concentra $2,976 $3,065 $3,743 $4,286 $4,375 2013 2014 2015 2016 LTM Q3 17 Hospitals Outpatient Concentra
Slide 27: Annual Capital Expenditures
Annual Capital Expenditures Accelerated development spending 2014-2017 ($ in millions)
Slide 28: Debt Maturities as of 09/30/2017
Debt Maturities as of 09/30/2017 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.
Slide 29: Financial Guidance
Financial Guidance 2017 2018 Net Revenue $4,400M - $4,500M $5,000M - $5,200M Adjusted EBITDA $530M - $550M $630M - $660M EPS $0.72 - $0.82 $0.97 - $1.12 Adjusted EPS $0.81 - $0.91 Note: See Slide 33 for non-GAAP reconciliation 2018 Guidance Includes: Assumed consummation of U.S. HealthWorks acquisit
Slide 30: Appendix: Additional Materials
Appendix: Additional Materials
Slide 31: Non-GAAP Reconciliation
($ in millions) 2013 2014 2015 2016 LTM Q3 17 Net Income $123 $128 $136 $125 $120 Income tax 75 76 72 56 63 Equity in losses/(earnings) of unconsolidated subsidiaries (2) (7) (17) (20) (21) Interest expense, net 87 86 113 170 159 (Gain) / Loss on debt retirement 19 2 - 12 20 Other (Gains) / Losses (
Slide 32: Non-GAAP Reconciliation – Financial Guidance
($ in millions) 2017 2018 Low High Low High Net Income $124 $136 176 197 Income tax 76 84 68 77 Interest expense 155 155 206 206 Equity in earnings of unconsolidated subsidiaries (22) (22) (22) (22) Loss on early retirement of debt 20 20 - - Stock Based Compensation 19 19 21 21 Depreciation and Amor
Slide 33: selectmedical.com/investor-relations/for-investors
selectmedical.com/investor-relations/for-investors
Slide 34: Improving Quality of Life
SP... MEDICAL Improving Quality of Life selectmedical.com/investor-relations/for-investors
Select Medical Holdings — Investor Presentation (January 2018) on 6ix