Encompass Health Corporation · NYSE:EHC
Encompass Health — 36th Annual J.P. Morgan Healthcare Conference 2018
17 slides from Encompass Health's conference presentation, Jan 9, 2018
Slide 1: 2018 J.P. Morgan Healthcare Conference
2018 J.P. Morgan Healthcare Conference Mark Tarr, President and Chief Executive Officer January 9, 2018
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 Encompass Health’s current outlook, views and plans with respect to future events, including legislative and regulatory developments, s
Slide 3: Company Overview
Company Overview Encompass Health 3
Slide 4: Company Overview - Inpatient Rehabilitation
Company Overview - Inpatient Rehabilitation Encompass Health 4
Slide 5: Company Overview - Home Health and Hospice
Company Overview - Home Health and Hospice Encompass Health 5
Slide 6: Market Overlap: Inpatient Rehabilitation and Home Health
Market Overlap Inpatient Rehabilitation and Home Health ~60% of the Company’s IRFs have an Encompass Health home health location within a 30-mile radius. Encompass Health 6
Slide 7: Investment Thesis
Investment Thesis Encompass Health is positioned to become the nation’s leading provider of integrated post-acute services. The healthcare industry is evolving toward integrated delivery models and value-based care. Change Agility Strategic Relationships Quality of Patient Outcomes Superior Performa
Slide 8: Both Segments Benefit from a Demographic Tailwind
Both Segments Benefit from a Demographic Tailwind: Growth in the Medicare Beneficiary Population Projected Population of Age 65+ Baby Boomer wave Millions reaches average age of an Encompass Health 80 Medicare patient (~76). 70 60 ~3% CAGR CAGR (Population Growth by Age) 50 2014 2018 2022 46% Age to
Slide 9: Strategy
Strategy The Company’s strategy is to expand its network of inpatient rehabilitation hospitals and home health and hospice agencies, further strengthen its relationships with healthcare systems, provider networks, and payors in order to connect patient care across the healthcare continuum, and to de
Slide 10: 2017 Summary
2017 Summary GROWTH Expanded Existing 4 New Acquired or Opened 15 Hospitals Hospitals Home Health Agencies by 166 Beds OPERATIONAL INITIATIVES Completed Finalized TEAMWORKS Piloted Use of Formed Installation of Enhanced Post-Acute Clinical Clinical Information Predictive Analytics Innovation Center
Slide 11: 2018 Priorities
2018 Priorities GROWTH Home Health Hospice Hospitals Agencies Agencies OPERATIONAL INITIATIVES Post-Acute Rebranding Patient Clinical Predictive Alternative and Data Payment Navigation Collaboration Name Change Analytics Models Tools CAPITAL STRUCTURE Continued Opportunistic Refinancings Shareholder
Slide 12: Guidance
Guidance 2017 Guidance 2018 The Company currently expects to be in the upper half of these ranges. Preliminary Guidance Net Operating Revenues Net Operating Revenues $3,900 million to $3,950 million $4,150 million to $4,250 million Adjusted EBITDA Adjusted EBITDA $810 million to $820 million $830 mi
Slide 13: 2018 Guidance Considerations
2018 Guidance Considerations Inpatient Rehabilitation Home Health and Hospice u Estimated 0.8% increase in Medicare pricing u Estimated 1.0% net Medicare pricing for Q1 through Q3; ~1.25% for Q4 reduction for CY 2018 u Salary increase of ~3.0%; benefits increase u Salary increase of ~3.0%; benefits
Slide 14: Adjusted Free Cash Flow Assumptions
Adjusted Free Cash Flow Assumptions Certain Cash Flow Items 2017 2018 (millions) Estimates Assumptions • Cash interest expense (net of amortization of debt ~$148 $140 to $150 discounts and fees) • Cash payments for taxes, net of refunds ~$100 $125 to $150 • Working Capital and Other $0 to $25 $50 to
Slide 15: Free Cash Flow Priorities
Free Cash Flow Priorities 2018 Assumptions (In Millions) Growth in Core Business IRF bed expansions $30 to $40 New IRFs - De novos 80 to 110 - Acquisitions opportunistic - Replacement IRFs and other 40 to 50 New home health and hospice acquisitions 50 to 100 $200 to $300, excluding IRF acquisitions
Slide 16: Strong and Sustainable Business Fundamentals
Strong and Sustainable Business Fundamentals Attractive Healthcare Sectors Industry Leading Positions Cost-Effectiveness Real Estate Ownership Financial Strength Growth Opportunities Encompass Health 16
Slide 17: Committed to Delivering High-Quality, Cost-Effective Care Across the Post-Acute Continuum
Committed to Delivering High-Quality, Cost-Effective Care Across the Post-Acute Continuum
Encompass Health — 36th Annual J.P. Morgan Healthcare Conference 2018 on 6ix