Kindred Healthcare — Merger or Acquisition (February 2018)
24 slides from Kindred Healthcare's merger presentation, Feb 5, 2018
Slide 1: Investor Presentation February 2018
Investor Presentation February 2018
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are often identified by words such as “
Slide 3: Table of Contents
Table of Contents 1 Overview of Transaction 2 Robust 18-Month Strategic Review and Exploration of Interest 3 Operating, Regulatory and Reimbursement Headwinds and Risks
Slide 4: Overview of Transaction
Overview of Transaction Kindred
Slide 5: Transaction Delivers Superior Risk-Adjusted Value to Kindred Stockholders
Transaction Delivers Superior Risk-Adjusted Value to Kindred Stockholders TPG Capital (“TPG”), Welsh, Carson, Anderson & Stowe (“WCAS”) and Humana Inc. (“Humana”) (collectively the “Consortium”), to acquire Kindred for $9.00 per share in cash All cash offer at a significant 27% premium to Kindred
Slide 6: Offer Premium in Precedent Transactions
Offer Premium in Precedent Transactions $9.00 per share all cash offer represents a 27% premium to Kindred’s 90-day VWAP(1) Precedent healthcare services transactions between $3B and $10B with all cash consideration(2) 50.3% 43.8% 29.9% (4) 27.0% 27.6% Median: 21.9% 20.0%(3) 21.9% 19.2% 17.4% 9.1% 1
Slide 7: Now Is the Right Time to Enter into a Transaction to Maximize Stockholder Value
Now Is the Right Time to Enter into a Transaction to Maximize Stockholder Value Transaction removes risk and volatility from stockholders related to: • Reimbursement uncertainty — Further headwinds from potential Medicare rate reductions as “pay-for” for tax cuts • Financial leverage • Challenging o
Slide 8: Now Is the Right Time to Enter into a Transaction (continued)
Now Is the Right Time to Enter into a Transaction to Maximize Stockholder Value (continued) Restructuring essentially complete, benefits included in Company’s 2018 guidance, and impact already reflected in Kindred’s pre-transaction valuation • Skilled nursing divestiture, cost reductions, as well as
Slide 9: Wall Street Research Commentary Following Q3 2017 Earnings Release
Wall Street Research Commentary Following Q3 2017 Earnings Release After reporting Q3 2017 results, the median 12-month price target for Kindred was $8.00 per share from 6 Wall Street analysts —November 7, 2017 —November 7, 2017 “Home health needs to grow, …As this segment is the single biggest cont
Slide 10: Wall Street Research Commentary Following Transaction Rumors and Announcement
Wall Street Research Commentary Following Transaction Rumors and Announcement After WSJ Rumors on 12/17/2017, 5 Wall Street analysts provided reports on the Transaction —December 18, 2017 —December 18, 2017 “…Updating our SOTP for our current segment estimates and better multiples in HH and rehab (H
Slide 11: Robust 18-Month Strategic Review and Exploration of Interest
Robust 18-Month Strategic Review and Exploration of Interest
Slide 12: Robust Strategic Review to Maximize Value
Robust Strategic Review to Maximize Value Rigorous ï,— Board of Directors / Transaction Committee met 20+ times between December 2016 and December 2017 Governance to evaluate strategic alternatives Processï,— Process was led by a Transaction Committee comprised of 4 non-executive directors, Phyllis
Slide 13: Key Structural Considerations in Evaluation of Alternatives
Key Structural Considerations in Evaluation of Alternatives Kindred’s Board reviewed the following factors extensively in order to assess their impact on value proposition and feasibility: ï,— Capital constraints limit opportunity to pursue more aggressive growth strategies Capital Structureï,— Purs
Slide 14: Broad Range of Alternatives Considered by the Board
Broad Range of Alternatives Considered by the Board ï,— Delivers premium and certainty of value to stockholders Sale of Entire Companyï,— Removes exposure to near-term regulatory uncertainty and financial volatility Sale or Spin of ï,— Significant dis-synergies likely from separation, which coupled
Slide 15: Transaction is the Culmination of a Thorough Process
Transaction is the Culmination of a Thorough Process Kindred undertook an 18-month review of alternatives Kindred Stock Price Performance Significant Kindred / Industry Event Quarterly Earnings Announcement Board of Directors / Transaction Committee Meeting (21 meetings in total) N F G $9.00 Offer A
Slide 16: Operating, Regulatory and Reimbursement Headwinds and Risks
Operating, Regulatory and Reimbursement Headwinds and Risks
Slide 17: Provides Certain Cash Value in Challenging Operating Environment
Provides Certain Cash Value in Challenging Operating Environment Board taking proactive steps to maximize value in light of risks and uncertainty ï,— Uncertainty and wide range of potential outcomes Reimbursement Headwindsï,— High stock price volatility while transitioning businesses to new reimburs
Slide 18: Regulatory Environment Remains Pressured
Regulatory Environment Remains Pressured ï,— Persistent reimbursement headwinds for all post-acute care providers as policymakers seek to lower Post-Acute growth in post-acute care spending and reduce variation in post-acute care costs Reimbursement ï,— Continued pressure to reduce post-acute care u
Slide 19: Reimbursement & Operational Overhang Impact Financial Performance
Reimbursement & Operational Overhang Impact Financial Performance ï,— Significant challenges to forecasting: Difficult operating environment to persist over the foreseeable future with reimbursement challenges expected across all segments ï,— Reimbursement changes in the form of rate cuts are challe
Slide 20: High Leverage Drives Meaningful Volatility to Stockholders
High Leverage Drives Meaningful Volatility to Stockholders Kindred remains levered in excess of 6x, despite the infusion of near-term liquidity from its insurance restructuring Kindred Net Leverage Ratios Leverage ratios have increased 6.3x following acquisition of Gentiva primarily due to reimburse
Slide 21: Roadmap to Completion
Roadmap to Completion Secured fully underwritten financing on signing Submitted Hart–Scott–Rodino (“HSR”) filingsFiledpreliminary proxy statement ï±Obtain stockholder approval at special meeting in April / Mayï±Obtain state regulatory approvalsï±Expected to close transaction in Summer 2018
Slide 22: Transaction Delivers Superior Risk-Adjusted Value to Kindred Stockholders
Transaction Delivers Superior Risk-Adjusted Value to Kindred Stockholders All cash offer at a significant 27% premium to Kindred’s 90-day VWAP(1) Concludes robust strategic review process to maximize value, involving 15 financial sponsors and 3 strategic parties Results in superior risk-adj
Slide 23: Appendix
Appendix Kindred
Slide 24: Kindred's Board of Directors
Kindred’s Board of Directors Kindred has an experienced and diversified board of directors Phyllis Yale* Joel Ackerman* Paul Diaz Richard Goodman* ï,— 8 years on Kindred’s Board, 3ï,— 9 years on Kindred’s Boardï,— 16 years on Kindred’s Boardï,— 4 years on Kindred’s Board years as Chairï,— CFO, DaVit
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