Skilled Healthcare Presentation

Published on November 2016 | Categories: Documents | Downloads: 25 | Comments: 0 | Views: 124
of 27
Download PDF   Embed   Report

Comments

Content

Credit Suisse November, 2011

Safe Harbor Statement
The following information contains, or may be deemed to contain, “forward-looking statements,” including but not limited to 2011 revenue, EDITDAR, EBITDA and EPS guidance. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The future results of the company may vary from the results expressed in, or implied by, the following forward-looking statements, possibly to a material degree. For a discussion of some of the important factors that could cause the company’s results to differ from those expressed in, or implied by, the following forward-looking statements, please refer to the company’s latest annual report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission (including sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein) and in our subsequent reports on Form 10-Q and Form 8-K. Any forward-looking statements are made only as of the date of this presentation. Skilled Healthcare disclaims any obligation to update or revise any forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements. Note: References made in these materials and related presentations to “Skilled Healthcare”, “the Company”, “we”, “us” and “our” refer to Skilled Healthcare Group, Inc. and each of its wholly-owned companies.

1

Industry Landscape
Healthcare Providers

Favorable Demographic Trends

65+ Population Growth

85+ Population Growth

(Population, in millions)
81.2

(Population, in millions)
14.2 72.1 77.5

11.5

63.9 54.8 46.8 40.2 6.3 6.6 7.2 8.7 3.5%

13.0%

14.5%

16.3%

18.3%

19.8%

19.9%

20.0%

5.8

2.9%
2.0% 2.3%

1.8%

1.9%

1.9%

2010E

2015E

2020E 65+ Population

2025E

2030E

2035E

2040E

2010E

2015E

2020E 85+ Population

2025E

2030E

2035E

2040E

% of Total Population

% of Total Population

Source: AHCA.

3

SNFs Provide a More Affordable Option
 SNFs offer skilled medical care and custodial care in a cost efficient setting
High
IRF LTAC Acute Care Hospital

Cost of patient service

Outpatient Rehab

SNF
Assisted Living

Inpatient Rehab

Home Health
Adult Day Care

Hospice

Low

Low

Severity of patient illness

Yellow – sections in which we are involved

High

Note: Bubbles are an approximation of relative industry size.

4

Shift of Patient Care to Lower Cost Alternatives
 SNFs deliver effective clinical outcomes at reduced costs  Increased Medicare funding for treatment of high-acuity patients  Lower staffing requirements and associated costs  60% rule driving high-acuity patients from in-patient rehab facilities to SNFs  Short stay outlier policy shifting patients from LTACs to SNFs  Shorter length of stays for SNFs

SNFs Are Lower Cost Setting
Comparison of per Case Rates Tracheotomy with Vent Respiratory with Vent Joint Replacement Hip Fracture Stroke Average
Source: Medpac

SNF $10,051 7,897 6,165 10,618 8,905 $8,727

IRF $26,051 26,051 17,135 18,487 34,196 $24,384

LTAC $115,463 74,689 67,104 44,633 31,496 $66,677

5

Skilled Healthcare Group, Inc. (NYSE: SKH)

Company Overview

Diversified Health Care Portfolio
Long-Term Care • Long-Term assisted living affiliate facilities 97 skilled nursing & Care
• • • • •

Rehabilitation Therapy
• • Providing physical, speech, and occupational therapy 177 contracts – 36% affiliated – 64% unaffiliated Partner vs. vendor approach

• operated Skilled nursing & assisted 101 living facilities 5 skilled nursing facilities leased to a third party operator • Award-winning quality care 74% ownership • 76.5% property ownership High-acuity focus driving industryleading quality mix & & EBITDA High-acuity focus driving quality mixEBITDA margins margins Providing care in 8 states • Care operations in 7 states



Hospice
• • Providing palliative and supportive care to people and their families who are facing an incurable disease Providing care in 6 states – AZ, CA, ID, MT, NM, NV

Home Health Care
• • • Providing professional in-home skilled medical care Medicare-certified Providing care in 6 states – AZ, CA, ID, MT, NM, NV

7

Expanding Geographic Footprint
• Concentrated network of SNF/ALF affiliates
– Urban/suburban cluster market focus – 8,814 SNF beds – 1,308 ALF units
Nevada 3 facilities, 8% of revenue
Boise

Montana & Idaho 3% of revenue
Kansas & Missouri 33 facilities, 17% of revenue Nebraska* 1 facility 0% of revenue
Omaha Las Vegas Des Moines

Billings

Iowa 2 facilities, 1% of revenue



Growth opportunity for home health care in existing SNF markets

Eureka (leased)

Davenport

Los Angeles
21

Albuquerque Phoenix Kansas City

SNF/ALF Locations SNF/Hospice/Home Care Locations Hospice/Home Care Locations
Note: States represent approximate % of revenue as of September 30, 2011. The Company has a hospice joint venture with Gentiva in the Kansas/Missouri market. * The Omaha, Nebraska facility began operating on April 1, 2011 as such there is no revenue for period ended 03/31/11.

California 31 facilities (26 operated & 5 leased), 36% of revenue

Dallas

Arizona 1% of revenue
New Mexico 10 facilities, 12% of revenue

San Antonio

Houston

Texas 22 facilities, 22% of revenue

8

Outstanding Recognition for High Quality Focus
• 71 facilities were awarded Bronze National Quality Awards from the AHCA/NCAL within last 3 years.
- 13 facilities were awarded the Bronze National Quality Award in 2011.



3 facilities were awarded Silver National Quality Awards from the AHCA/NCAL within the last 2 years.
- 2 facilities were awarded the Silver National Quality Award in 2011.

• Fort Worth Center of Rehabilitation - Opened in July 2010 - 2nd new state-of-the-art skilled nursing development

9

Industry-Leading Real Estate Ownership
• • Skilled Healthcare owns an INDUSTRY-LEADING 76.5% of its facilities Ownership provides greater operating and financial flexibility
 Ownership eliminates exposure to rising rents  Ability to accelerate build-out of Express RecoveryTM units  Consistent reinvestment in facilities  Access to capital / high leveragability of real estate  Ability to easily manage and sell facilities
8% 3%
SUNH

Owned Facilities
76.5%

67%

SKH

ENSG

KND

Note: KND ownership represents SNF facility ownership, JPMorgan report 12/15/09. SUNH ownership reflects recent spin-off.

10

New Developments Raise Bar For Industry Standard
Skilled Nursing Facilities


Baylor Healthcare System alliance offers the right to build on Baylor acute campuses



2 state-of-the-art facilities with high-acuity capabilities
• Dallas, TX – 128-bed SNF • Fort Worth, TX – 128-bed SNF



Selectively targeting other markets to accommodate SNF high-acuity patients

Assisted Living Facilities • Completed 2 developments of 41 units each in Ottawa and Tonganoxie, Kansas

11

Innovative Express Recovery™ Units
Dedicated unit in a skilled nursing facility - 61 units with 2,197 beds at Q3 2011 Focus on high-acuity, short-term stay Lower cost than LTAC’s & IRF’s, high quality care





• •

Specialty Variations in Select Markets


Renew tm



Pulmonary Advantage tm
A Respiratory Specialty Unit

A Rehabilitation Unit Designed for Women

12

Financial & Operating Performance

Expanding Revenue Mix

Revenue by Segment – Q3 2011

11%

7% 2%

80%
Skilled Nursing & Assisted Living
Hallmark Rehabilitation Hospice Home Care

14

High-Acuity Focus Drives Quality & Skilled Mix
Skilled Healthcare is an industry leader in skilled and quality mix percentages

Express Recovery tm Units
Drive Skilled Mix
Skilled Mix

Skilled Mix
22.6% 22.5%
19.9%

24.5%
21.9%

23.5%
21.5%

22.7%
20.9%

20.1%

25.1%
Q3'10 Q4'10 Q1'11 Q2'11 Q3'11

Skilled Healthcare Quality Mix
68.5% 69.1% 72.1%

Peer Avg.*

71.5%

70.8%

12.9%

62.3% 58.6% 58.3%

61.8%

61.4%

ERU

Non-ERU

Q3'10

Q4'10

Q1'11

Q2'11

Q3'11

Source: Based on public filings, available data for each of the reported periods as of 09/30/2011. * Peer average includes the weighted average for SUNH, KND, and ENSG for each for the reported periods.

Skilled Healthcare

Peer Avg.*

15

Stable Occupancy Trends
• Occupancy in the skilled nursing affiliate facilities has remained steady in a difficult economic environment

SNF Occupancy(1)

83.4%

82.9%

83.8%

82.5%

83.0%

Q3'10*

Q4'10*

Q1'11

Q2'11

Q3'11

(1) Occupancy based on available beds. Note: Occupancy excludes ALFs. * Occupancy excludes Fort Worth Center of Rehabilitation which opened in July 2010.

16

Solid Operating Performance
Revenue
($ in millions) ($ in millions)

Adjusted EBITDA(1)
2011 vs. 2010 growth: 6.6%

2011 vs. 2010 growth: 5.8%

$868

$820.2
$733.3 $634.6 $759.8

$98.9

$109.8

$110.9

$121.5

$129.5

2007

2008

2009

2010

2011E

2

2007

2008

2009

2010

2011E

2

(1) Adjusted for special charges and non-recurring/non- operating items. See reconciliation of Adjusted EBITDA for the respective periods referenced in our regulatory filings listed on our Web site. (2) 2011 represents the mid-point of the updated numbers per the 2011 guidance issued on September 8, 2011.

17

Sustained Margin Advantage Over Peers
Adjusted EBITDA Margins - YTD 2011
14.5% 14.6% 15.5% 16.5% 15.8% 15.6%

9.1%

9.5% 8.2%

8.9%

9.6%

8.9%

Q2'10

Q3'10

Q4'10

Q1'11

Q2'11

Q3'11

Skilled Healthcare

Peer Avg.*

Note:

EBITDA adjusted for non-recurring and non-operating charges for SKH. See reconciliation of EBITDA for the respective periods referenced in our regulatory filings listed on our Web site. Source: Based on public filings and Q3 2011 company press releases. * Peer average includes the weighted average for SUNH, KND, and ENSG for each for the reported periods.

18

High Acuity Model Driving Higher Revenues
$633

Improving Revenue PPDs
(SNFs only, before eliminations)
$525 $495

$557

$578

$354

$359

$369

$379

$388

$131

$139

$146

$151

$154

$151

$157

$162

$169

$175

Medicaid

Private Other

Managed Care

Medicare

2007
As % of SNF revenue (as of 09/30/2011):

2008

2009

2010
10.0%

YTD 2011 (as of 09/30/2011)
38.4%

28.8%

22.8%

19

Strong Operating Cash Flow
($ millions)

$90.0

$88.8 $74.9

$75.0

$67.5

$66.2

$60.0

$45.0

$30.0

2008

2009

2010*

YTD Q3 2011

*2010 has been adjusted for legal settlement charges which occurred in Q3’10.

20

Continuous Business Reinvestment
$140.00 $120.00 $100.00 $80.00 $60.00 $40.00
43.0

Acquisitions
88.4 23.4

Developments ERU
45.3
18.3 5.0 7.2 8.7 20.3

Routine CapEx

$20.00
$0.00
Total Capital Expenditures: Routine CapEx as

11.8 3.4 7.0

16.1 4.5 8.8

12.8

7.9 5.6 14.3

18.5

13.6 0.1 0.7 10.3

2006
$65.2

2007
$117.8

2008
$73.0

2009
$41.2

2010
$73.1

YTD Q3 2011
$24.7

% of Total Revenues:

1.3%

1.4%

2.5%

2.7%

1.8%

3.8%

21

Improving Debt Covenants
Long-term Debt Structure ($ millions, 9/30/11)



Debt Structure

Term Loan - $360 million, due April 2016 Revolver - $100 million, due April 2015 11% Notes - $130 million, due June 2014

$352

• • •

All-in interest rate of ~ 7.8% (09/30/11) Leverage ratio (09/30/11) – 3.5X
– maximum debt covenant ratio – 5.4X

Fixed charge coverage ratio (09/30/11) – 3.5X
– minimum debt covenant ratio – 1.5X

$130

$10
Term Loan 11% Notes Other

$0
Revolver

22

Reimbursement Update
• Medicare
– – CMS issued a Medicare rate cut of 11.1% effective October 1, 2011 Decrease in therapy business from elimination of group therapy and OMRA.

% of Medicare Patient Days in RUG Categories
100% 80% 60% 40% 20% 0%
• Medicaid
– – Average rate = $154 PPD for Q3 2011 FY 2012 Rate Environment 43.0% 2.5% 51.8% 91.2% 5.2% 6.3%

Non-Rehab Rehab (ex-Upper 9) Upper 9 Rehab Q3 2011

Q3 2010

23

2011 Guidance – Full Year
($ millions, except EPS)

Guidance assumes:

• Decline in skilled nursing Medicare revenue of approximately $7.0 million for the fourth quarter of 2011 due to the CMS rate reduction.

LOW Revenue EBITDAR EDITDA EPS $865.0 $147.0 $128.0 $1.07

HIGH $870.0 $150.0 $131.0 $1.12

• Combined decrease in revenue and increase in expense for rehabilitation therapy of approximately $3.5 million for the fourth quarter of 2011. • Other state Medicaid revenue reductions of approximately $1.0 million for the fourth quarter of 2011 as a result of state rate reductions. • Of an anticipated combined negative annualized impact of approximately $45 million from the aforementioned CMS final rule and from Medicaid reductions, the Company expects to be able to mitigate approximately $15 million on an annualized basis through a combination of enterprise-wide cost savings and productivity improvements in its rehabilitation therapy business. A portion of the cost savings will be effective immediately and the remainder will be phased in through the end of the Company's fiscal year 2012. The Company anticipates that approximately $2.0 million of the projected $15 million mitigation will be realized during the fourth quarter of 2011. • No additional Medicare or Medicaid rate reductions. • 2011 capital expenditures of approximately $15 million to $18 million. • Average interest rate on outstanding debt of approximately 8%. • An effective tax rate of 38.5%. • No material acquisitions, developments or divestitures. • No goodwill or intangible asset impairment charge, excluding the goodwill and long-lived asset impairment charge recognized in Q3 2011. • No material variations in the Company's occupancy and skilled mix from what the Company experienced through the second quarter, adjusted for seasonal trends typically experienced in the second half of the year.

Note: Guidance as of 09/08/11. The Company undertakes no obligation to update this guidance.

24

Summary

• Strong reputation for providing high quality patient care with favorable clinical outcomes • Attractive industry fundamentals • Integrated SNF / Rehab model with emphasis on high-acuity patients • Diversified healthcare portfolio • Superior operating and financial performance • Significant facility ownership with strong underlying value • Strategic focus on referral relationships in local markets and regional payor networks • Proven acquisition and development strategy • Experienced and proven management team • Strong risk management protocol

25

Questions & Answers

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close