Select Medical Holdings Corporation · NYSE:SEM
Select Medical — J.P. Morgan Global High Yield & Leveraged Finance Conference (February 2015)
32 slides from Select Medical's conference presentation, Feb 23, 2015
Slide 1: J.P. Morgan Global High Yield & Leveraged Finance Conference
J.P. MORGAN GLOBAL HIGH YIELD & LEVERAGED FINANCE CONFERENCE
Slide 2: Forward-Looking Statements
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
Slide 3: Select Medical Overview
Headquartered in Mechanicsburg, Pennsylvania, Select Medical employs approximately 31,400 staff in the United States. SCALE AND EXPERTISE Leading provider of post-acute services with operations in 41 states and D.C. Select Medical Overview Note: (1) See Slide 32 for non-GAAP reconciliation Founded i
Slide 4: Select Medical's National Footprint
10 2 7 1 3 6 1 14 3 2 3 17 2 1 1 4 25 2 3 3 15 2 20 10 10 91 6 1 2 2 3 19 66 4 3 13 1 11 5 44 31 18 3 16 11 1 58 9 51 1 125 146 1 9 2 44 4 1 3 153 25 1 1 21 2 2 1 21 33 1 43 3 2 4 2 5 5 12 15 2 6 1 24 17 1 1 2 5 3 1 98 53 9 1 Select Medical’s National Footprint 113 Long-Term Acute Care Hospitals (LT
Slide 5: Strategy
Strategy Be the “preferred” provider of post acute care services in our markets Structured relationships to align with patients Partner with academic/major medical institutions Hospital in hospital model in LTACH Experts in our fields – LTACH, Inpatient Rehab and Outpatient Rehab Best in class High
Slide 6: 2014 Financial Highlights
2014 Financial Highlights 2014 FINANCIAL HIGHLIGHTS PRICING/ADMENDMENT TERM LOANS MARCH 2014 $110.0M SR. NOTE ADD-ON @ 101.5 MARCH 2014 SHARE PURCHASES DIVIDEND PAYMENTS 10M shares @ $10.95/share on March 13, 2014 ~1.3M shares @$14.00/share on May 21, 2014 $.10/share on March 10, 2014 $.10/share on
Slide 7: 2014 Development Highlights
2014 Development Highlights Rehabilitation Joint Ventures: LTACHs: 6 Start Ups 1 New Joint Venture Atlanta, GA 56 bed IRF 23 outpatient clinics Harrisburg, PA 55 bed IRF 21 outpatient clinics Cleveland, OH Two 60 bed IRFs (opening late 2015 & 2016) Cincinnati, OH 60 bed IRF (opening 2016) Atlanta, G
Slide 8: Long Term Acute Care Specialty Hospitals
Long Term Acute Care Specialty Hospitals
Slide 9: Select Medical LTAC Hospitals
Select Medical LTAC Hospitals 113 Long-Term Acute Care Hospitals (LTACH) (28 States) As of 12/31/14 3 3 2 1 1 2 3 2 10 2 3 3 11 5 16 9 1 1 1 3 2 5 2 6 1 5 1 9
Slide 10: LTACH Overview
LTACH Overview Major provider of LTACH services in U.S. 113 hospitals 83 hospital-in-hospital (3,116 beds); average size 38 beds 29 freestanding (1,601 beds); average size 55 beds 1 managed hospital Ownership of freestanding LTACHs 17 owned 12 leased
Slide 11: LTACH Legislation
LTACH Legislation LTACH Patient Criteria passed in late December 2013 as part of Budget bill and SGR - effective beginning Q4 2015 LTACH Rates for patients with; 3 day prior short term acute hospital ICU/CCU stay or Ventilation patients for > 96 hours in the LTACH Other patients receive “site neutra
Slide 12: Patient Criteria Phase-In
Patient Criteria Phase-In HOSPITALS MOVING TO CRITERIA >>> 2015 2016 17 HOSPITALS 756 BEDS 40 HOSPITALS 1,438 BEDS 19 HOSPITALS 823 BEDS 36 HOSPITALS 1,700 BEDS Q4 ‘15 Q1 ‘16 Q2 ‘16 Q3 ‘16
Slide 13: Select Impact
Select Impact Positives: Degree of segment certainty with phase-in 25% Rule extension – through cost reporting periods on or after October 1, 2016 Select high CMI HiH Strategy Neutral: Moratorium – on new hospitals and beds (with exceptions) through September 30, 2017 Negatives: Potential loss of vo
Slide 14: Inpatient Rehabilitation Hospitals
Inpatient Rehabilitation Hospitals Inpatient Rehabilitation Specialty Hospitals
Slide 15: Inpatient Rehabilitation Hospitals
Inpatient Rehabilitation Hospitals Acquired Kessler Institute in September 2003 The Kessler Rehabilitation network: Three freestanding inpatient rehab hospitals (336 total beds) 88 outpatient rehab clinics Largest licensed rehab hospital in U.S. U.S. News & World Report has recognized Kessler Instit
Slide 16: Operational Joint Ventures
Operational Joint Ventures Consolidated Joint Ventures: Non-Consolidating Joint Ventures: Dallas, TX 4 IRFs (220 beds) 2 managed units (33 beds) 48 outpatient clinics Scottsdale, AZ 50 bed IRF Columbus, OH 44 bed IRF Atlanta, GA 56 bed IRF 23 outpatient clinics Columbus, OH 44 bed IRF Scottsdale, AZ
Slide 17: JVs Under Construction
JVs Under Construction Cleveland, OH Two 60 bed IRFs (opening late 2015 & 2016) Los Angeles, CA 138 bed IRF (opening late 2015) Cincinnati, OH 60 bed IRF (opening 2016)
Slide 18: Growing Rehabilitation Network
Growing Rehabilitation Network Partner in joint ventures with premier acute care hospitals and systems to build post acute networks 18
Slide 19: Poised for Growth
Poised for Growth LTACH REHAB 2014 2015 2016 2 new LTACHs 1 new LTACH 3 new LTACHs 1 new LTACH 1 new LTACH Begin phase-in of LTACH patient criteria
Slide 20: Outpatient Rehab Clinics
Outpatient Rehab Clinics Outpatient Rehabilitation
Slide 21: Outpatient Rehabilitation - Industry
Outpatient Rehabilitation - Industry 1,023 Outpatient Rehabilitation Clinics (31 States and D.C.) Source: Company public filings and websites as of December 31, 2014 Select (1,023) PhysioTherapy Associates (575) USPH (489) ATI (356) 10 7 6 14 2 17 25 15 20 91 1 66 13 44 18 58 9 44 153 1 21 2 21 33 4
Slide 22: Payor Mix Outpatient Rehab Clinics
Payor Mix Outpatient Rehab Clinics 42% 13% 23% 22% YEAR 2010 2011 2012 2013 2014 VISITS (000’s) REVENUE PER VISIT $101 4,567 $103 4,470 $103 4,569 $104 4,781 $103 4,971
Slide 23: 2014 Outpatient Initiatives
Continued growth in workers’ comp business by illustrating historical ROI benefits of working with Select Payors/Employers Expand hand therapy services to more clinics Expand concussion management program Continued development of start-up clinics 2014 Outpatient Initiatives
Slide 24: Financial Overview
Financial Overview
Slide 25: Financial Metric Trends
Financial Metric Trends Net Revenue Adjusted EBITDA CAGR 6.4% CAGR 4.3% Adjusted EPS CAGR 17.4% $2,390 $2,805 $2,949 $2,976 $3,065 2010 2011 2012 2013 2014 $307 $386 $406 $373 $364 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 ($ in millions) ($ in millions)
Slide 26: Annual Capital Expenditures
($ in millions) Annual Capital Expenditures Accelerated development spending expected 2014-2015 $52 $46 $68 $74 $95
Slide 27: Focus on Free Cash Flow Generation
($ in millions) Note: Free Cash Flow calculated as Net Cash Provided by Operating Activities less Purchases of Property and Equipment See Slide 32 for non-GAAP reconciliation Free Cash Flow Focus on Free Cash Flow Generation
Slide 28: Use of Capital - Opportunistic
Use of Capital - Opportunistic USE OF CAPITAL (OPPORTUNISTIC) STOCK BUYBACK DEBT REPAYMENT Acquisition payments $175M since 2010 $.10/share on December 1, 2014 DIVIDENDS ACQUISITIONS Investments in businesses $70M since 2011 Special dividend $1.50/share @ 12/2012 Dividend payments totaling $.30/shar
Slide 29: 2015 Financial Guidance
Net Revenue $3,100M - $3,200M Adjusted EBITDA $370M - $385M Adjusted EPS $0.84 - $0.90 2015 Financial Guidance
Slide 30: Appendix: Additional Materials
Appendix: Additional Materials
Slide 31: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) 2010 2011 2012 2013 2014 Net Income $82 $113 $154 $123 $128 (+) Income tax 42 71 90 75 76 (+/-) Equity in losses/(earnings) of unconsolidated subsidiaries 1 (3) (8) (2) (7) (+/-) Other expense / (income) (1) - - - - (+) Interest expense, net 112 99 95 87 86 (-
Slide 32: Investor Relations
selectmedical.com/investor-relations/for-investors