Select Medical Holdings Corporation · NYSE:SEM
Select Medical — Goldman Sachs Leveraged Finance Healthcare Conference 2012
22 slides from Select Medical's conference presentation, May 1, 2012
Slide 1: Goldman Sachs Leveraged Finance Healthcare Conference 2012
Goldman Sachs Leveraged Finance Healthcare Conference 2012 May 1, 2012
Slide 2: 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 cause results to differ mat
Slide 3: Select Medical Today
111 LTAC Hospitals 110 owned with 4,660 beds and 1 managed. Hospitals in 28 states. 950 Outpatient Rehab Clinics in 32 states and the District of Columbia. $2.8 Billion Net Revenue 2011 $386 Million Adjusted EBITDA 20111 29,250 Employees in the United States 12 Inpatient Rehab Facilities (IRF) 7 own
Slide 4: 2011 Accomplishments
2011 Accomplishments Financial Performance Grew YoY Revenue by 17.3% Grew YoY EBITDA by 25.7% Reduced leverage thru Holdco by 1 full turn (4.6x to 3.6x) Added Miami, FL IRF – Jan. 1, 2011 Completed Baylor Health System Rehab JV – April 1, 2011 Continued improvement on Regency integration Completed d
Slide 5: Balanced Payor Mix
Balanced Payor Mix Specialty Payor Mix Outpatient Payor Mix Overall Payor Mix 90% Commercial Payors and Other 10% Medicare/Medicaid 65% Medicare/Medicaid 35% Commercial Payors and Other Note: 2011 58.5% 55.0% 50.3% 48.3% 49.0% 49.7% 51.5% 41.5% 45.0% 49.7% 51.7% 51.0% 50.3% 48.5% 2005 2006 2007 2008
Slide 6: Regency Acquisition
Closed September 1, 2010 – Purchase Price $210.0M 23 long-term acute care hospitals Corporate services and back office functions fully integrated Regency 2009 Audit 2011 Net Revenue $ 375M $ 340M Adjusted EBITDA $ 28M $ 46M Adjusted EBITDA Margin 7.5% 13.5% 2011 specialty hospital margins excluding
Slide 7: LTACH Regulatory Environment
MMSEA 2007 – extended through December 2012 Hospital in Hospital Rules – suspended at 50% Very Short Stay Outlier Rule – suspended Moratorium on new LTAC hospital licenses Future – post-2012 Patient/Facility Criteria (Supported by Industry, AHA, FAH, etc.) Extension of 2012 legislation (status quo)
Slide 8: Proposed Regulatory Updates
10/1/12 Market-Basket Update: Net of 2.1% 12/29/12 Market-Basket Update 1.266% reduction for 3-year phase-in of the Budget Neutrality Adjustment 25% Rule 1 year extension Exception: Cost reporting periods on or after 7/1/2012 and before 10/1/2012 subject to 25% rule for 1 year before receiving exten
Slide 9: Inpatient Rehabilitation Strategy
Joint Ventures Baylor Rehabilitation SSM Rehabilitation Penn State Hershey Rehabilitation Denton, TX CON States Kessler, NJ Miami, FL Inpatient Rehabilitation Strategy
Slide 10: Rehab JV Overview
Rehab JV Overview Two inpatient hospitals One unit 32 outpatient locations 16 contract therapy locations 3 occupational health clinics 3 day institute clinics Four inpatient rehab hospitals Three managed inpatient rehab units 34 outpatient locations 1 contract therapy location 54 bed rehab facility
Slide 11: Outpatient Rehab Clinics
Outpatient Rehab Clinics Outpatient Rehab Facilities (Number of Facilities) 950 Outpatient Margin Opportunity Continue to expand former HealthSouth clinics’ EBITDA margins 2009 EBITDA margin differential – greater than 5% 2010 EBITDA margin differential – greater than 3% 2011 EBITDA margin different
Slide 12: Contract Services
Contract Services 520 contracts in 31 states and the District of Columbia 2011 Revenue $164.3M Organic growth only
Slide 13: Financial Overview
ab “Reet Financial Overview Select Medical: Imp
Slide 14: Net Revenue and Adjusted EBITDA Trends
$2,390 $2,240 $2,153 Note: In Millions CAGR 9.2% CAGR 12.7% $307 $330 $270 Net Revenue Adjusted EBITDA $2,805 $386 Net Revenue and Adjusted EBITDA Trends 2008 2009 2010 2011 Specialty Outpatient Other 2008 2009 2010 2011 Specialty Outpatient
Slide 15: Key Financial Metrics: Pricing and Volume Trends
Key Financial Metrics Pricing and Volume Trends Specialty Hospital Revenue per Patient Day1 / Admissions Outpatient Rehab Revenue per Visit2 / Visits (Admissions in Thousands) (Visits in Thousands) 1 Net revenue per patient day is calculated by dividing specialty hospital direct patient service reve
Slide 16: Annual Capital Expenditures
Annual Capital Expenditures ($ in millions) 2008 2009 2010 2011 Maintenance Development $52 $ 46 $57 $58
Slide 17: Intense Focus on Free Cash Flow Generation
Free Cash Flow Free Cash Flow1 Intense Focus on Free Cash Flow Generation ($ in millions) Note: Free Cash Flow calculated as Net Cash Provided by Operating Activities less Purchases of Property and Equipment 1 See slide 21 for non-GAAP reconciliation $51 $108 $93 $171 2008 2009 2010 2011
Slide 18: Capitalization Details
As of 12/31/08 As of 12/31/09 As of 12/31/10 As of 12/31/11 Cash and Equivalents $ 64 $ 84 $ 4 $ 12 Revolving Credit Facility ($300mm) 150 0 25 40 Term Loan B 657 483 482 838 Other Debt 5 6 6 5 Total Senior Debt 811 489 513 883 Sr. Sub. Notes due 2015 658 612 612 345 Total Op. Co. Debt $ 1,469 $ 1,1
Slide 19: 2012 Financial Guidance
2012 Financial Guidance Net Revenue $ 2,850M - $ 2,950M Adjusted EBITDA $ 390M - $ 410M EPS $ 0.86 - $ 0.94
Slide 20: Questions
ah Select JMEDICAL Questions
Slide 21: Appendix: Additional Materials
Appendix: Additional Materials
Slide 22: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2008 2009 2010 2011 Net Income $ 25 $ 79 $ 82 $ 113 (+) Income tax 26 37 42 71 (+/-) Equity in losses/(earnings) of unconsolidated subsidiaries - - 1 (3) (+/-) Other expense / (income) - 1 (1) - (+) Interest expense, net 146 132 112 99 (-/+) (Gain) / Loss on debt retirement (
Select Medical Holdings — Goldman Sachs Leveraged Finance Healthcare Conference 2012 on 6ix