Select Medical Holdings Corporation · NYSE:SEM
Select Medical — 28th Annual J.P. Morgan Healthcare Conference (January 2010)
22 slides from Select Medical's conference presentation, Jan 11, 2010
Slide 1: 28th Annual J.P. Morgan Healthcare Conference
28th Annual J.P. Morgan Healthcare Conference January 11, 2010
Slide 2: Disclosure
Disclosure 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 cause results to
Slide 3: Select Medical At A Glance
Select Medical At A Glance Leading Provider of Post-Acute Care in the United States 89 LTAC Hospitals with 3,770 beds in 25 States 6 Inpatient Rehab Facilities (IRF) and 1 Rehab Unit with 483 beds in 4 States 968 Outpatient Rehab Clinics in 37 States and the District of Columbia 22,500 Employees in
Slide 4: Complementary Business Segments Well-Positioned in the Post-Acute Continuum of Care
Complementary Business Segments Well-Positioned in the Post-Acute Continuum of Care
Slide 5: Significant Scale and Breadth
Significant Scale and Breadth... Note: As of September 30, 2009, updated to include facilities for SSM Rehab JV. Leading Provider of Post-Acute Care in the United States LTAC 89 hospitals 25 states Inpatient Rehab 7 hospitals/units 4 states Outpatient Rehab 968 clinics 37 states and District of Colu
Slide 6: Balanced Payor Mix
Balanced Payor Mix Specialty Payor Mix Outpatient Payor Mix Overall Payor Mix (2005 - YTD 9/09) Commercial Payors and Other 90% Medicare/ Medicaid 10% Commercial & Other Medicare East 34 66 West Medicare/ Medicaid 66% Commercial Payors and Other 34% 2005 2006 2007 2008 YTD 9/09 Medicare/Medicaid 0.5
Slide 7: Strong Track Record of Growth
(2003) (1999) 1998 2000 2002 2004 2006 2008 LTM-Sep. 2009 149 806 1127 1602 1851 2153 2213 Strong Track Record of Growth Company has Struck the Right Balance of Both Organic and Acquisitive Growth De Novo - 62 specialty hospitals and 272 outpatient clinics opened since inception Acquisitions - 61 sp
Slide 8: Operating Strategy
Operating Strategy Leading Operator through Proven and Effective Strategies Centralization Margin Improvement Growth Through Development Centralize functions Coding Collections HR, Accounting, and Legal Monitor staffing levels Maximize group purchasing discounts Optimize payor contracts Increase com
Slide 9: Growth Strategy
Growth Strategy LTAC - maturing of new hospitals Inpatient Rehab - Joint Venture/Acquisition opportunities Outpatient Rehab - margin improvement
Slide 10: Specialty Hospital Profile
Specialty Hospital Profile Hospital-in-Hospital 66 (2,346 beds) Freestanding 22 (1,424 beds) Managed 1 Long-Term Acute Care Inpatient Rehab Freestanding 4 (371 beds) Hospital-in-Hospital 2 ( 92 beds) Hospital Units 1 ( 20 beds) Note: Hospitals and bed counts as of Sep. 30, 2009, updated to include S
Slide 11: Inpatient Rehab Facility JV Strategy
Inpatient Rehab Facility JV Strategy Potential IRF JV Partner Profile Leading healthcare systems and/or university hospitals Services Provided: Rehab Annual Revenue: > $1 billion Beds: > 400 Patient Volume: High Geography: > 750,000 population
Slide 12: SSM Rehab Joint Venture
SSM Rehab Joint Venture The Partners SSM Health Care St. Louis network with seven acute care hospitals, 12,000 employees, 2,500 staff physicians Select Medical 51% owner of joint venture with management responsibility The Services 80 inpatient rehab beds 33 outpatient locations (18 SSM, 15 Select) 6
Slide 13: Outpatient Strategy
Outpatient Strategy Continue to expand former HealthSouth clinics' EBITDA margins 2008 EBITDA margin differential - greater than 7% YTD 2009 EBITDA margin differential - greater than 5% Former HealthSouth clinics' revenue - greater than $200M Contract renewals Lease renewals
Slide 14: Regulatory Environment
Regulatory Environment Inpatient Rehab - stable Outpatient Rehab - stable Long Term Care Hospitals - stable through 2010
Slide 15: LTAC Hospital Regulatory Environment
LTAC Hospital Regulatory Environment MMSEA 2007 - expiration December 2010 Hospital in Hospital Rules - suspended at 50% Very Short Stay Outlier Rule - suspended Moratorium or new LTAC hospital licenses Extension through 2011/2012 Senate Bill 935 House Bill 2124
Slide 16: Historical Financial Overview: Segment Net Revenue
Historical Financial Overview Revenue Specialty Outpatient 2006 1378.5 470.4 2007 1386.41 603.413 2008 1488.412 664.76 LTM 30-Sep 2009 1540 673 Segment Net Revenue $2,213 $2,153 $1,989 $1,849 ($ in millions) Note: Does not account for general and administrative services and non-healthcare services,
Slide 17: Historical Financial Overview: Segment Adjusted EBITDA
Revenue Specialty Outpatient Total 2006 283.27 64.823 348.09 2007 217.175 75.437 292 2008 236.388 77.279 313 LTM 30-Sep 2009 281 85 366 Historical Financial Overview Segment Adjusted EBITDA Note: Does not account for general and administrative services and non-healthcare services, which accounted fo
Slide 18: Free Cash Flow
Free Cash Flow Revenue Free Cash Flow 2006 72.6 2007 -80.1 2008 50.9 LTM 30-Sep 2009 111 Free Cash Flow1 Note: Free Cash Flow calculated as Net Cash Provided by Operating Activities less Purchases of Property and Equipment 1 See slide 21 for non-GAAP reconciliation Intense Focus on Free Cash Flow Ge
Slide 19: 2010 Financial Guidance
2010 Financial Guidance Revenue - $2,380 - $2,420 million EBITDA - $360 - $370 million Capital spending of $50 - $60 million Free cash flow of $120 million
Slide 20: Key Investment Highlights
Key Investment Highlights Complementary businesses in attractive market segments High quality operator with significant scale and breadth Strong track record of growth through acquisitions, de novos and JVs Balanced payor mix and well-positioned for healthcare reform Experienced management team with
Slide 21: Non-GAAP Reconciliation
9-Months Ended 9-Months Ended LTM 31-Dec-06 31-Dec-07 31-Dec-08 30-Sep-08 30-Sep-09 30-Sep-09 Income from Operations $ 258 $ 194 $ 196 $ 139 $ 166 $ 223 (+) Depreciation and Amortization 47 57 72 53 53 72 EBITDA 305 251 268 192 219 295 (+) Stock Based Compensation 4 4 2 1 23 24 Adjusted EBITDA 308 2
Slide 22: Select Medical Corporation
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Select Medical Holdings — 28th Annual J.P. Morgan Healthcare Conference (January 2010) on 6ix