Encompass Health Corporation · NYSE:EHC
Encompass Health — HealthSouth — Morgan Stanley Global Healthcare Conference 2012
17 slides from Encompass Health's conference presentation, Sep 11, 2012
Slide 1: Morgan Stanley Global Healthcare Conference
Morgan Stanley Global Healthcare Conference New York City|September 11, 2012 Jay Grinney, President and Chief Executive Officer
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 our current outlook, views and plans with respect to future events, including legislative and regulatory developments, strategy, capit
Slide 3: Our Company Portfolio – As of June 30, 2012
Our Company Portfolio – As of June 30, 2012 Inpatient Rehabilitation Hospitals (―IRF‖) 99 • 29 operate as JV’s with Acute Care Hospitals Outpatient Rehabilitation Satellite 26 Clinics 25 Hospital-Based Home Health Agencies 27 + Puerto Rico Number of States ~ 22,500 Employees Key Statistics – Trailin
Slide 4: 6 Months 2012 Highlights
6 Months 2012 Highlights Discharge Volume (millions) Net Operating Revenues 80,000 $1,200 +6.0% +4.5% 60,000 $1,072.0 61,590 $900 $1,011.1 58,938 40,000 $600 20,000 0 $300 6M 2012 6M 2011 6M 2012 6M 2011 (millions) Adjusted EBITDA (1) Earnings Per Share (2) $0.80 $300 +8.3% $0.79 $0.74 $225 $252.1 $
Slide 5: Q3 2012 Observations & Considerations
Q3 2012 Observations & Considerations (as of Sept 5, 2012) Volume: • Q3 2012 discharge growth is in line with the higher end of the previously disclosed expectations for July through December 2012 of 2.5% to 3.5%. ― Q3 2011 discharge growth was 5.1% Balance Sheet: • HealthSouth amended its credit ag
Slide 6: Q3 2012 Observations & Considerations (cont.)
Q3 2012 Observations & Considerations (as of Sept 5, 2012)(cont.) Growth: • Completing construction on 40-bed inpatient rehabilitation hospital in the Ocala, FL market ― Operational in Q4 2012 • Continued construction on 40-bed inpatient rehabilitation hospital in Littleton, CO (South Denver) ― Oper
Slide 7: De Novo (40 bed) Assumptions and Timing
De Novo (40 bed) Assumptions and Timing All projects have minimum IRR target of 15% (pre-tax). Investment Considerations • Target 4 openings/Year • All private rooms • Cash Payback (1) = 5 to 7 years • First 30 patients treated for ―zero‖ revenue • Assumes sequestration in 2013 (Medicare pre-certifi
Slide 8: 2012 Guidance
2012 Guidance – (as of September 5, 2012) Considerations: Revenue growth of 3.7% to 5.3% (July through December 2012) 2012 Adjusted EBITDA (1) ― Discharge growth between 2.5% and 3.5% (July through December 2012) $487 million to $495 million ― Revenue per discharge growth between 2.0% and 2.5% (Ju
Slide 9: Strong and Sustainable Business Fundamentals
Strong and Sustainable Business Fundamentals • Favorable demographic trends Attractive Healthcare Sector • Non-discretionary nature of many conditions treated in IRFs • Highly fragmented industry • #1 market share: above industry same-store growth and margins Industry Leading Position • Consistent a
Slide 10: Appendix
Appendix HEALTHSOUTH,
Slide 11: Historic Discharge Growth vs. Industry
Historic Discharge Growth vs. Industry HealthSouth’s volume growth has outpaced competitors’ Same Store HealthSouth vs. Industry Quarterly Discharge Growth Yearly 6.5% UDS Industry Sites (1) 120,000 5.0% HLS Same Store (2) 2.1% Q4 4.7% 5.9% 3.4% 90,000 3.3% 1.9% 5.9% 2.7% 5.1% Q3 1.8% 1.4% 1.0% 0.9%
Slide 12: Priorities for Reinvesting Free Cash Flows
Priorities for Reinvesting Free Cash Flows (millions) 2012 6 Months Assumptions 2012 •Growth in core business Bed expansions $20 to $25 $10.7 (80-100 beds) Priorities Growth De novo hospitals $50 to $70 $17.0 (complete Ocala; start 4 others) Acquisitions (target 2/year) (1) TBD $2.1 − Free sta
Slide 13: Medicare Spending on Post-Acute Services
Medicare Spending on Post-Acute Services 2.1% 2.2% 2.1% 1.8% 1.9% Inpatient rehabilitation 1.5% 1.4% 1.3% 1.2% 1.2% 1.2% spending (% of total Medicare spending) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Projected 2010 2012 Total Medicare Spending on Post-Acute Services $63.5 billion in
Slide 14: Reconciliation of Net Income to Adjusted EBITDA
(1) Reconciliation of Net Income to Adjusted EBITDA 2012 Q1 Q2 6 Months (in millions, except per share data) Total Per Share Total Per Share Total Per Share Net income $ 56.8 $ 59.9 $ 116.7 Loss (income) from disc ops, net of tax, attributable to HealthSouth 0.4 (3.5) (3.1) Net income attributable t
Slide 15: Reconciliation of Net Income to Adjusted EBITDA
(1) Reconciliation of Net Income to Adjusted EBITDA 2011 Q1 Q2 Q3 Q4 Full Year (in millions, except per share data) Total Per Share Total Per Share Total Per Share Total Per Share Total Per Share Net income $ 91.5 $ 32.3 $ 68.3 $ 62.5 $ 254.6 (Income) loss from disc ops, net of tax, attributable to
Slide 16: Reconciliation Notes for Slides 14-15
Reconciliation Notes for Slides 14-15 1. Adjusted EBITDA is a non-GAAP financial measure. The Company’s leverage ratio (total consolidated debt to Adjusted EBITDA for the trailing four quarters) is, likewise, a non- GAAP financial measure. Management and some members of the investment community util
Slide 17: Net Cash Provided by Operating Activities Reconciled to Adjusted EBITDA
Net Cash Provided by Operating Activities Reconciled to Adjusted EBITDA Q2 6 Months Full Year (Millions) 2012 2011 2012 2011 2011 2010 2009 2008 2007 Net cash provided by operating activities $ 114.0 $ 68.6 $ 195.0 $ 158.1 $ 342.7 $ 331.0 $ 406.1 $ 227.2 $ 230.6 Prov ision for doubtful accounts (6.5
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