Odyssey Healthcare — Investor Presentation (March 2008)
46 slides from Odyssey Healthcare's investor presentation, Mar 18, 2008
Slide 1: Odyssey HealthCare
Pou HealthCare oD “To Serve All People During the End of Life’s Journey” —
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Certain statements contained in this presentation are forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements are based on management’s current expectations and are subject to known and unknown risks, uncertainties and
Slide 3: Odyssey: A Leader in Hospice Care
= ODYSSEY... A LEADER IN HOSPICE CARE 72 32,757 Medicare Certified admissions in Programs in, 29 states 2007 CAGR revenue = 11.9% | Disses | - ,
Slide 4: Value Proposition
VALUE PROPOSITION = Growing recognition of end of life services = Aging population assures increased demand = VistaCare acquisition adds scale and expands leadership position = Strong balance sheet/cash surplus = Compelling operating/growth strategy = Experienced management team with strong integrat
Slide 5: Odyssey Locations
| ODYSSEY LOCATIONS
Slide 6: Combined Locations
COMBINED LOCATIONS Odyssey Locations VistaCare Locations Hospice Office Hospice Office
Slide 7: What Is Hospice?
WHAT IS HOSPICE? More cost effective Services provided primarily in home Provides quality of life for terminal patients and families Bai, Focus on physical, emotional and spiritual — |
Slide 8: Improves Quality of Life
IMPROVES QUALITY OF LIFE . Prior studies have found that hospice improves quality of care . Mor and Kidder 1985 . National Hospice Organization 1995 . Miller et al. 2002, 2004 . Wu et al. 2003
Slide 9: Cost Effective
COST EFFECTIVE . 25% of total US Medicare budget spent on last year of life . Mean expenditure in last year of life $24,600 vs $9,400 for same beneficiaries in next to last year of life . Duke University study (2007) . Hospice use reduced Medicare costs by an average of $2,309 in last year of life .
Slide 10: Covered by Medicare
COVERED BY MEDICARE Paid eaten Aggregate er diem Benefit ie Six y basis per enacted in > 90% is months life based on beneficiary expectancy level of cap of care $22,052 IEEE) Medicare —, Bosse,
Slide 11: Patients by Diagnosis in the Industry
PATIENTS BY DIAGNOSIS IN THE INDUSTRY Heart Disease Liver Disease 1.6% Kidney Disease 3.1% Lung Disease 8.9% | Dementia Cancer ce ee
Slide 12: Rapidly Growing Market
RAPIDLY GROWING MARKET Hospice Medicare Expenditures ($ in billions) $8.2 $8.5 $6.9 $5.7 $4.5 $3.6 $2.9
Slide 13: Market Opportunity
MARKET OPPORTUNITY Sudden Death/ Other Hospice Patients Served Estimated Under-Served Market 2.5 million deaths annually in .S.
Slide 14: Programs Exceeding Cap
PROGRAMS EXCEEDING CAP ™ Number of hospices ~@-+ Percent of hospices 220
Slide 15: Medicare Cap Liability
| MEDICARE CAP LIABILITY ($ in millions) $166
Slide 16: Growth in Hospice Programs
GROWTH IN HOSPICE PROGRAMS (Number of hospices) 3,071 2,809 2,580 2,286 2,401 | q q | | | | | j | | | | j | | | | 2002 2003 2004 = 20052006 —,
Slide 17: New Medicare-Participating Hospices Exceed Voluntary Closures
NUMBER OF NEW MEDICARE-PARTICIPATING HOSPICES EXCEEDS VOLUNTARY CLOSURES New entrants Voluntary closures 300 250 200 150 100 50 0 2000 2001 2002 2003 2004 2005 2006
Slide 18: Management of Medicare Cap
of Medicare cap
Slide 19: Management of Medicare Cap
= MANAGEMENT OF MEDICARE CAP = Consolidation of programs @ Inpatient unit development = Market for a more balanced patient mix = Closed programs Che» ——
Slide 20: Odyssey's Medicare Cap Expense Trend
ODYSSEY’S MEDICARE CAP EXPENSE TREND 3.8% 1.5% 1.6% 1.2% 1.2% 0.7% 2006* Q1 07 Q2 07 Q3 07 Q4 07 2007
Slide 21: Strategic Focus: Strengthen Senior Management Team
= STRATEGIC FOCUS @ Strengthen senior management team
Slide 22: Strengthen Senior Management Team
STRENGTHEN SENIOR MANAGEMENT TEAM Added in the past two years... =President and Chief Executive Officer, Robert Lefton =Senior Vice President and Chief Financial Officer, Dirk Allison Senior Vice President and Chief Operating Officer, Craig Goguen Bh =.
Slide 23: Strategic Focus: Focus on Existing Footprint
= STRATEGIC FOCUS @ Focus on existing footprint Eh=
Slide 24: Growth Strategy
= GROWTH STRATEGY Same —_ growth oO dicsmeeuaiaa/ Tice, _— i De Novos
Slide 25: Strategic Focus: Rationalize Existing Portfolio
- STRATEGIC FOCUS @ Rationalize existing portfolio
Slide 26: Rationalize Existing Portfolio
= RATIONALIZE EXISTING PORTFOLIO Reasons for Closed closure: 11 . Competitive programs | f position f = Market size = Medicare cap / Disses _
Slide 27: Strategic Focus: Sales and Marketing Strategy
- STRATEGIC FOCUS = Implement more sophisticated sales and marketing strategy
Slide 28: n iped CER bonus plan
n iped CER bonus plan yped detailed marketing plan najor markets Tis,
Slide 29: Strategic Focus
a STRATEGIC FOCUS
Slide 30: Inpatient Program Development
INPATIENT PROGRAM DEVELOPMENT Two strategies = Medicare cap — acute, short stay patients = Grow market share — create differentiation I sey One to two new projects per year Opening losses approximating $700,000 i
Slide 31: Strategic Focus: Investment in Information Systems
STRATEGIC FOCUS @ Investment in information systems
Slide 32: Investment in Information Systems
INVESTMENT IN INFORMATION SYSTEMS = Implemented new billing system = In process of implementing new sales and marketing system @ Testing advanced clinical systems Bh =.
Slide 33: Transaction Highlights
TRANSACTION HIGHLIGHTS Total value of $147. 1 million | Cash transaction valued at 8.60 per share Funding includes $20 million in cash and GE Capital commitment of $130 million After closing, $30 - $35 million in cash on balance sheet and $30 million undrawn on GE Capital commitment hy —
Slide 34: Combined Company
a COMBINED COMPANY $650 110 __ million locations in revenues / y ADC of 30 \ more than states f 12,000 , i - .
Slide 35: VistaCare Transaction
VISTACARE TRANSACTION Expands leadership position Compatible organizations Strengthens existing markets m= Management experience with acquisitions and integration ™ Reducing corporate overhead and closing corporate offices drives profitability Operational and Medicare cap improvements not required f
Slide 36: Financial Summary
L- . FINANCIAL SUMMARY —
Slide 37: Net Revenue Growth from Continuing Operations
NET REVENUE GROWTH FROM CONTINUING OPERATIONS ($ in millions) 1.9% 4 cases A $404.9 ot ee i "$385.0 alls = 4. $319.8 $258.7 q q | | | ! | | | | | | | | | | | 2003 2004 2005 2006 2007
Slide 38: Admissions from Continuing Operations
ADMISSIONS FROM CONTINUING OPERATIONS 32,757 sia7e 32388 29,096 2 dt ef 1 “2003 2004 2005 2006 2007
Slide 39: Average Length of Stay
AVERAGE LENGTH OF STAY FROM CONTINUING OPERATIONS (Days) 84 85 81 78 ; = = h ] = ; | | | | | | | | : leet 2003 2004 2005 2006 2007 Eh=
Slide 40: Average Daily Census
AVERAGE DAILY CENSUS FROM CONTINUING OPERATIONS 7,312 6,881 5,643 = | ] ; 2003 2004 2005 2006 “2007
Slide 41: Odyssey's Medicare Cap Expense
ODYSSEY’S MEDICARE CAP EXPENSE ($ in thousands) $16,464 $11,968 $7,690 $1,322 2.089 ee OO 2003 2004 2005 2006 2007
Slide 42: Odyssey's Medicare Cap Expense
ODYSSEY’S MEDICARE CAP EXPENSE 3.8% 3.0% 1.2% 0.5% 0.6% 2003 2004 2005 2006 2007*
Slide 43: Income from Continuing Operations
INCOME FROM CONTINUING OPERATIONS ($ in millions) $31.5 $29.5 song? $21.4 i $13.7 2003 2004 2005 2006 2007 ® Encludes charge for settlement with Department of Justice of $9.6 milion, net of tax. A reconciliation of GAAP to non-GAAP. financial measures are avallable on the Investor Relations page of
Slide 44: Net Cash from Continuing Operations
NET CASH FROM CONTINUING OPERATIONS ($ in millions) $47.1 $45.2* $47.7* $27.6 $16.9 2003 2004 2005 2006 2007
Slide 45: Value Proposition
VALUE PROPOSITION = Growing recognition of end of life services = Aging population assures increased demand = VistaCare acquisition adds scale and expands leadership position = Strong balance sheet/cash surplus = Compelling operating/growth strategy = Experienced management team with strong integrat
Slide 46: Odyssey HealthCare
Pou HealthCare oD “To Serve All People During the End of Life’s Journey” —
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