Encompass Health Corporation · NYSE:EHC
Encompass Health — 37th Annual J.P. Morgan Healthcare Conference (January 2019)
23 slides from Encompass Health's conference presentation, Jan 8, 2019
Slide 1: 2019 J.P. Morgan Healthcare Conference
2019 J.P. Morgan Healthcare Conference Mark Tarr, President and Chief Executive Officer January 8, 2019
Slide 2: Forward-looking statements
Forward-looking statements The information contained in this presentation includes certain estimates, projections and other forward-looking information that reflect Encompass Health’s current outlook, views and plans with respect to future events, including legislative and regulatory developments, s
Slide 3: Company overview
Company overview Encompass Health 3
Slide 4: Company overview - Inpatient Rehabilitation
Company overview - Inpatient Rehabilitation Encompass Health 4
Slide 5: Company overview - Home Health and Hospice
Company overview - Home Health and Hospice Encompass Health 5
Slide 6: Clinical collaboration in overlap markets
Clinical collaboration in overlap markets Improving the patient experience and reducing total costs through integrated care delivery Encompass Health IRF discharges to: EHC Home Health Non-EHC Home Health 28.7% 34.3% Collaboration rate Collaboration rate 4,395 5,323 560 Basis points year-over-year i
Slide 7: Preliminary Q4 2018 results
Preliminary Q4 2018 results - Preliminary and subject to change - Earnings Release scheduled for February 7, 2019 Q4 2018 u Operating Metrics IRF discharge growth of 3.5%; same store = 1.8% same-store discharge growth negatively impacted by ~50 basis points due to ongoing ü effects of Hurricane Mi
Slide 8: Updated 2018 guidance
Updated 2018 guidance 2018 2018 previous guidance updated guidance Net operating revenues Net operating revenues $4,250 million to $4,300 million $4,260 million to $4,280 million Adjusted EBITDA Adjusted EBITDA $880 million to $890 million $890 million to $895 million Adjusted earnings per share Adj
Slide 9: 2018 Highlights
2018 Highlights FINANCE (2018 Updated Guidance Ranges) Net operating revenues Adjusted EBITDA Adjusted EPS Free cash flow $4.26 to $4.28 $890 to $895 million $3.62 to $3.66 $480 to $505 million billion GROWTH Opened Expanded existing Acquired or opened Acquired 22 hospice 4 new hospitals 23 home hea
Slide 10: Rebranding and name change
Rebranding and name change The Company’s rebranding and name change reinforce its existing strategy and position as an integrated provider of inpatient and home-based care. JULY 2017 APRIL 2018 OCT. 2018 Announced Phase 1 field asset Phase 3 field asset planned conversions conversions name change As
Slide 11: 2019 Priorities
2019 Priorities GROWTH Home health Hospice Hospitals locations locations OPERATIONAL INITIATIVES Further Transition to Increase Build stroke develop CARE Tool Prepare for Implement clinical market post-acute payment PDGM RCD collaboration share solutions system CAPITAL STRUCTURE Consider Continue Ma
Slide 12: Building stroke market share
Building stroke market share Leveraging our: • strategic partnership with the AHA/ASA • clinical collaboration • joint commission certifications ~800,000 Strokes ~130,000 per year in Deaths from stroke 112 EHC IRFs the U.S. hold stroke-specific ~31,000 certifications. Strokes treated in EHC IRFs Con
Slide 13: Post-acute solutions
Post-acute solutions Our post-acute solutions will leverage our clinical expertise, large post-acute datasets, EMR technologies, and strategic partnerships to drive improved patient outcomes and lower cost of care across the entire post-acute episode. 2018 2019 Modified and implemented Cerner’s
Slide 14: Inpatient Rehabilitation: Transition to CARE Tool payment system
Inpatient Rehabilitation: Transition to CARE Tool payment system Background Elimination of FIM™ Functional Assessment items from IRF-PPS Effective October 1, 2019, CMS will replace the FIM™ functional assessment measures with the CARE Tool measures for reporting and payment purposes. This change
Slide 15: Home Health: Patient Driven Groupings Model (PDGM)
Home Health: Patient Driven Groupings Model (PDGM) Background Move to the Patient-Driven Groupings Model • Effective January 1, 2020, PDGM will: - move from 60-day episodes for payment to 30-day payment periods; - rely more heavily on clinical characteristics; and - eliminate therapy service use thr
Slide 16: Home Health: Review Choice Demonstration (RCD)
Home Health: Review Choice Demonstration (RCD) Background Start of the Review Choice Demonstration Scheduled to begin no earlier than December 10, 2018; has not yet started; expected to begin in early 2019 in Illinois with a staggered implementation Gives three choices to providers - 100% pre-cl
Slide 17: Proven Track Record
Proven Track Record Period Adj. EBITDA % Change History Ending R E MMSEA* Q1-09 Final Establishment Q2-09 C Q3-09 E of IRF 60% Rule Q4-09 S Q1-10 S I Medicare Price Rollback Q2-10 and 18-Month Freeze Q3-10 O We posted a Q4-10 Q1-11 N Q2-11 1st Medicare IRF Price year-over-year Q3-11 Q4-11 Increase S
Slide 18: Guidance
Guidance 2018 2019 updated guidance preliminary guidance Net operating revenues Net operating revenues $4,260 million to $4,280 million $4,500 million to $4,600 million Adjusted EBITDA Adjusted EBITDA $890 million to $895 million $925 million to $945 million Adjusted earnings per share Adjusted earn
Slide 19: 2019 Guidance considerations
2019 Guidance considerations Inpatient Rehabilitation Home Health and Hospice u Estimated 1.2% increase in Medicare pricing u Estimated 1.5% net Medicare pricing for Q1 through Q3 and estimated 2.4% increase for CY 2019 increase for Q4 Transition to CARE Tool may negatively u Salary increase of ap
Slide 20: Adjusted free cash flow assumptions
Adjusted free cash flow assumptions Certain cash flow items 2018 2019 (millions) Estimates Assumptions • Cash interest expense (net of amortization of debt ~$144 $145 to $155 discounts and fees) • Cash payments for taxes, net of refunds ~$116 $140 to $150 • Working capital and other ($0 to $20) $30
Slide 21: Free cash flow priorities
Free cash flow priorities (In Millions) 2018 Estimates 2019 Assumptions Growth in core business IRF bed expansions ~$25 $40 to $50 New IRFs - De novos ~80 85 to 115 - Acquisitions - opportunistic - Replacement IRFs and other ~25 90 to 110 New home health and hospice 50 to 100 acquisitions ~143 $265
Slide 22: Strong and sustainable business fundamentals
Strong and sustainable business fundamentals Attractive healthcare sectors Industry leading positions Cost-effectiveness Real estate ownership Financial strength Growth opportunities Encompass Health 22
Slide 23: Committed to delivering high-quality, cost-effective care across the post-acute continuum
Committed to delivering high-quality, cost-effective care across the post-acute continuum
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