Encompass Health Corporation · NYSE:EHC
Encompass Health — HealthSouth — Corporate Update (June 2004)
36 slides from Encompass Health's corporate update, Jun 30, 2004
Slide 1: Business Update June 30, 2004
Business June 30, 2004 Update
Slide 2: Cautionary Statements Regarding Projections
Cautionary the There HealthSouth Certified Projections You -available 2 -projections are can cautioned Public beStatements contained are were herein undertakes noand based Accountants assurance not not have actual prepared on herein toRegarding been no assumptions place results that duty consist pre
Slide 3: Considerations Involving Financial Statements
Considerations SEC Centers Ernst No -Our 3 -financial previously financials and & for Young United Medicare statements will LLP Involving filed States bewas financial and restated; Department are dismissed Our Medicaid available statements Current estimated as of Services for our Justice Situation a
Slide 4: Forward-looking Statements Regarding Projections
Forward-looking of Projections Completion Resolution Our Changes, Regulatory Competitive -General 41934 - ability conditions delays of to changes and are of pressures successfully continue outstanding the based other inStatements investigations investigation or in on matters the suspension tonumerou
Slide 5: Notes Regarding Financial Presentation
Notes The planned Classification connection Financial with “EBITDA” capacity EBITDA Because -calculated 5 - financial prior Regarding business and HealthSouth may should Statements years. inwith isdebt accordance data defined of bethe Actual not certain Presentation useful activities service contain
Slide 6: Agenda
I.6Operational Agenda II. A. III. IV. -V. Questions “Rocks Capital -Summary The Future in Structure & the and Answers Road” Financial B. Legal Update Update
Slide 7: Healthcare Continuum
I.7Operational Preventive O/P Imaging Wellness/Fitness Complimentary/Holistic Cardiac LTCH G.I. Rehab Other SNF Home -Speciality –Surgery Procedures Health Cath. Hospitals Ambulatory and Financial Inpatient Update Acute – Healthcare Post-AcuteContinuum
Slide 8: 2004 Budget by Division
I.8See 2004 Net EBITDA** Facility Inpatient Active 184 Top State/# FL TN AL (Hospitals PA * ** -*** Operational EBITDA -––Revenue –Markets Excludes 95Budget 6Disclaimers IP FL Facilities*** Facilities PA NC Numbers based Surgery –Only) ––(Dollars 15 is 8TX as (Dollars 8managed and MO after OP NY NJ
Slide 9: Inpatient Division EBITDA and Discharges
I.9EBITDA Inpatient Discharges (Dollars Jan Actual Budget Prior Variance Higher Operations High HCFA Issues Growth LTCH Joint Bed * -**Operational Prior -04 Expansion Ventures Year** Quality Development 13 Feb 10,009 Acuity 10,439 Opportunities Year in % Division and Millions) 04 is Q1 (4%) 0%10,036
Slide 10: Surgery Division Ambulatory Procedures
I.10 Ambulatory Procedures (Dollars Jan Actual Budget Prior Variance Case Operations Delayed Issues Continued Growth Several * -**EBITDA Operational Prior 04 -Volumes Year** Feb 64,610 66,988 Start-Ups Opportunities Year in Re-Syndication; %Opportunity Millions) 04 is Q1 (4%) (8%) Surgery 70,025 aft
Slide 11: Diagnostic Division Scans
I.11 Diagnostic Scans (Dollars Jan Actual Budget Prior Variance Low Operations Trade-Off Issues Overly Growth Market * -**EBITDA Operational Prior 04 -Utilization Year** Q1 Feb 64,288 Aggressive Concentration 73,773 Opportunities Year in %04 between Millions) Division 04 is(21%) (13%) 80,869 after i
Slide 12: Outpatient Division Visits
I.12 Outpatient Visits** (Dollars Jan Actual Budget Variance Prior Variance% Performance Operations Five Volume Issues Growth Targeted/Enhanced Focus * ** -*** EBITDA Operational Excludes 04 Prior –States Year*** on Feb 389,152 453,600 Opportunities and Q1 in % Poor Year Division Millions) (23%) 04
Slide 13: First Quarter 2004 Highlights
I.13 First (Dollars Net EBITDA Restructuring Capital 1. 2. 3. Sarbanes-Oxley restructuring. allocated 4. Company’s -* See Operational Budget Includes Restructuring Capital Revenues -Quarter disclaimers Expenditures inevenly before after Expenditures EBITDA Millions) $26.0 Information 2004 This Charg
Slide 14: FY 2004 Results Considerations
I.14 Cautionary Prepared No Proforma Restructuring First Q4 Seasonality HCFA Timing Continued -Continue Operational Adjustments 2004 -Quarter - 13 ofCost on to Results Considerations Growth Distraction Statements Target Basis Results Costs and of Made Living to Consistent Financial Projects EBITDA a
Slide 15: Liquidity
I.15 (Dollars Liquidity January Available Restricted Consolidated Highlights $130.2 $80.2 $22.0 $34.2 -(1) Operational Restricted - Million Million 20 inCash Cash(1) Since Millions) 2004 Cash cash Paid of and Paid $348.0 Proceeds March January Financial $185.8 includes $533.8 for forContinued Noteho
Slide 16: Forensic Accounting Review
I.16 Forensic Delivered Informative Performed Thorough $2.7 Conclusion Significant $632 -Other Recommendations Operational -Billion Million Areas Report by Review with Other and Impact for Special Identified and the Full Complete Accounting Financial Company toCooperation Audit Income Review Matters
Slide 17: Impact of Accounting Misstatements
I.17 Impact Reduction Acquisition Bonus Investment Third $2,741 Other Operating Capitalization Inventory/Supplies Borrowed Assets Leased Audit Facility Reported Recalculated Employee $632 $3,373 -Previously Operational - $266 Party Adjustments Potential Accounting at $2,203 $2,469 to Assets Contract
Slide 18: Target Dates for Restated Financials and 10-K
I.18 Target Project Complete Comprehensive10-K -10-K Operational - for Plan Target 2004 2005 First forand Date Filed Filing Close Financial Q3 Q1 for of of 2006 2005 Reconstructed Audited 2000-2003 Matters Financial Filed (cont’d) 2000-2003 Q1 Statements 2005Accounting Records Q3 2004
Slide 19: Agenda
I.19 Agenda II. A. B. III. IV. -V.Operational Questions “Rocks Legal Capital Summary The - Future in Structure & the and Answers Road” Financial Update Update
Slide 20: Rocks in the Road
II.20“Rocks Financial Forensic Bondholder Bank Restated Legal CMS/DOJ DOJ SEC -Class-Criminal Ongoing Facility Actions Target Accounting Financials Target in Civil Consents Date the Resolution and Ongoing Q4 Date Road” Other for 2004 Report Complete Periods Update Litigation Q3 Complete 2004 Ending
Slide 21: Capital Structure
A.21 Capital (Dollars Annual Bank 6 7% 8 7 $2,275 10 Greenery $337 Senior Total Net (1) -(2) 7/8% 1/2% 3/8% 5/8% Capital 3/4% Holders due Debt - 10.602% Debt Cash Facility Notes Sub 7.702% due Structure 2008 in due $2,740 2011 2015 Structure $3,341 $601 Millions) Term Notes 2005 2006 2008 2011 2012
Slide 22: Debt Maturity Schedule
A.22 Maturity (Dollars $0.0 2004 -* Bank Capital -$245.0 2005 facility in Schedule Structure 2006 Millions) $180.3 of2007 $374 (Assuming $374.0 $624.0* Update 2008 MM*2009 (cont’d) $662.3 matures $912.0 All2010 Noteholders $1,256.4 $0.0 June 2011 $0.0 2007 2012 $0.0 $703.0 Exercise $355.0 $908.7 Opt
Slide 23: Capital Structure Summary
A.23Capital Closed Summary As Total No Next Establish -Develop aIncrease -Result, Steps Cost Consent Strategy aStructure to New in Company Company Interest Solicitations Bank forUpdate 2005 Facility has Rates of $80.2 No &(cont’d) after 2006 Defaults and Million Receiving Retire Maturities on orthe
Slide 24: Legal Update
B.24Legal CMS/DOJ DOJ -Class SEC -Criminal Action Update Civil and Other Litigation
Slide 25: Agenda
I.25 Agenda II. A. III. IV. -V.Operational Questions “Rocks Capital Summary The - Future in Structure & the and Answers Road” Financial B. Legal Update Update
Slide 26: The Future: Vision and Goals
III. Anticipated Position Vision Establish Goals Create Serve -MAXIMIZE 26The - as an Efficient, Future HealthSouth aComprehensive Organizational “Consolidator” Timeframe: SHAREHOLDER High-Quality, as 2-4 the Structure Strategic Nation’s Years Cost-Effective VALUE to andPreeminent Facilitate Financi
Slide 27: Near Term: Blocking and Tackling
III. Near Meet (2000-2003 Improve Weekly Faster Revise Establish -Standardize 27The -Term: all Month-End Levels Forecasts Future “Re-Listing” Internal ROI Operational Analysis Reconstruction/Audit/10-K; Reporting of Criteria/Metrics (cont’d) Authority Financial Close and Milestones Format, “Blocking
Slide 28: Near Term: Streamline Operations
III. Near Streamline Enhance Implement Evaluate Develop/Implement Strengthen Centralize Decentralize -Leverage 28The -Term: Future Revenue Materials GPO Economies Market Support Processes Upgraded Managed Operational Decision-Making Relationship (cont’d) Position Cycle Management Functions Contract
Slide 29: Near Term: Productivity and Human Resources
III. Near Productivity Enhance Benchmarking Update Review Management Establish Evaluate Formal -Leverage 29The -Term: Incentive Evaluation Future and Recruitment Needs/Capabilities/Affordability Human IT Operational Revise Plan for Metrics Development (cont’d) Competitive Compensation Resources Proc
Slide 30: Near Term: Realign Business Reporting
III. 100 Realign Assume Conduct Recruit Visit Assess Schedule Business Major Governor, -Federal 30The Day -Key Physician Environmental New Regulators Future Reporting Oversight “Update Plan Community Introductory Markets; State COO CFO (cont’d) and Groups Meeting” Relationships; Responsibility Meet
Slide 31: Agenda
I.31 Agenda II. A. III. IV. -V.Operational Questions “Rocks Capital Summary The - Future in Structure & the and Answers Road” Financial B. Legal Update Update
Slide 32: Summary
IV. HealthSouth Current The Some -Focus 32Summary HCFA - of isoperations on the13/LMRP quality, “Rocks is wellare compliance positioned inpose on thetarget; Road” near-term toand improved are take shareholder challenges. gone advantage –management the remaining value. of the trends infrastructure on
Slide 33: Agenda
I.33 Agenda II. A. III. IV. -V.Operational Questions “Rocks Capital Summary The - Future in Structure & the and Answers Road” Financial B. Legal Update Update
Slide 34: Appendix
APPENDIX
Slide 35: Basis of Presentation
Appendix Basis Top July Based Presentation capitalization partnerships would January Bottom The -*Key 35 down 2004 -–7,assumptions of November on not 2003 up 20, Presentation* actual Budget A1 analysis be analysis 2004 should Presentation: assumes an five-month impact Presentation: 2003 was used wit
Slide 36: Key Divisional Budget Assumptions
Appendix Key (Dollars 2004 Inpatient Patient Discharges Average Contractual Salary, Cost Bad Minority -Divisional 36 -Debt Operating of Budget Wages Days/Visits/Procedures Sales in Net Surgery Interest as A2 OH Millions) 126,153 Allowance % Patient Revenue as& as Metrics of% Benefits as % Outpatient