Gentiva Health Services — Q3 2014 Earnings Presentation
38 slides from Gentiva Health Services's earnings presentation, Nov 6, 2014
Slide 1: Kindred Healthcare Third Quarter Investor Update
Exhibit 99.3 Kindred Healthcare Third Quarter Investor Update November 6, 2014
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 include, but are not limited to, statemen
Slide 3: Kindred Healthcare's Third Quarter – Achievements and Opportunities
Kindred Healthcare’s Third Quarter – Achievements and Opportunities Continued Progress on Employee Engagement, Quality Assurance, Clinical Outcomes and Patient Satisfaction Measures Across the Enterprise Strong Third Quarter Results and Reaffirming Confidence in 2014 EPS Guidance Continued Progress
Slide 4: Third Quarter – Continuing Operations
ThirdQuarter– Continuing Operations (1) ($ millions, except statistics) Actual Prior Year % change Revenues $1,243 $1,175 +6% Operating expenses 1,085 1,027 Core operating income (EBITDAR) 158 148 +7 Margin 12.7% 12.6% Net income -core 7 7 +7 Diluted EPScore - $0.11 $0.10 (2) +10 Diluted EPSreported
Slide 5: Core Operating Margins
Core Operating Margins (1) Margin Expansion Across Enterprise Reflects Full Recovery from Reimbursement Cuts 25.0% 20.0% 20.1% 20.0% 15.0% 13.1% 11.9% 11.0% 11.7% 10.0% 8.2% 4.0% 5.0% 0.0% 3Q13 3Q14 3Q13 3Q14 3Q13 3Q14 3Q13 3Q14 Hospitals Nursing Centers RehabCare Kindred at Home (1) Before certain
Slide 6: Hospital Division
Hospital Division $2.5 billion Revenues (1) • Continued clinical success with low rates of rehospitalizations, reduced employee $527 million Operating Income (2) turnover and a strong online reputation Transitional Care Hospitals (certified as LTAC hospitals) • Strong results with same-store admissi
Slide 7: RehabCare: $1.3 billion Revenues, $146 million Operating Income
$1.3 billion Revenues (1) • RehabCare continues to deliver outstanding clinical results and improved patient functional $146 million Operating Income (2) improvement across sites of service • 2,264 sites of service served through • Year-over-year core operating income and margin 20,338 therapists(3)
Slide 8: Nursing Center Division
Nursing Center Division $1.1 billion Revenues (1) $147 million Operating Income (2) • Strong operations with low nursing turnover and improved performance on CMS 5-Star • 48 Transitional Care Centers Program (Sub-AcutefacilitieslicensedasSNFs)(3) • 13 Nursing and Rehabilitation Centers • Nursing cen
Slide 9: Kindred at Home: $345 million Revenues, $27 million Operating Income
• High rates of patient satisfaction for Home Health and Hospice with nearly 50% of all home health locations $345 million Revenues (1) named to HomeCare Elite as top 25% of the nation’s $27 million Operating Income (1) home health agencies • Kindred at Home division delivered 60% revenue growth • 2
Slide 10: Kindred and Gentiva
Kindred and Gentiva A Compelling Opportunity for American Healthcare and Shareholders 10
Slide 11: Combination Creates One of the Nation's Premier Healthcare Services Providers
Combination Creates One of the Nation’s Premier Healthcare Services Providers The acquisition of Gentiva further strengthens Kindred’s ability to serve patients across the full continuum of care ($ in millions) Kindred Gentiva Pro Forma States(1) 47 40 47 Locations (1) 2,376 493 2,869 Employees (1)
Slide 12: Combination creates largest home health and hospice system in the United States
Combination creates largest home health and hospice system in the United States Kindred at Home Gentiva Kindred at Home Gentiva Pro Forma Company Revenues(1) $345 MM Revenues(2) $2.0 B Revenues(1) (2) $2.3 B Total States(3) 13 Total States(3) 40 Total States 41 Average Daily Census (4) 17,300 Averag
Slide 13: Gentiva Integration Management Office
Gentiva Integration Management Office Integration Operating Principles INPUTS Integration Operating Principles Future state objectives Prevent disruption to patient care IMO steering committee feedback Prevent harm to target revenue streams Retain key talent Integration red flags / anticipatedcomple
Slide 14: Defining Day One Readiness
Defining Day 1 Readiness Gentiva Integration Management Office Defining Day One Readiness Day one readiness focuses on the details necessary to bring business functions and processes into alignment at closing. Focus Areas for Day 1 Readiness / Controls: - Payroll Continuity To be completed - Stabili
Slide 15: Integration Team Structure
Gentiva Integration team Integration Management Office structure Integration Team Structure We HaveAssembled FunctionalTeams,asWellasTeamsThatWill HelpUsWorkOnKeyCross-Functional IntegrationPriorities Executive Sponsorship Steve Cunanan, Scott Blanchette IMO IMO Lead:Mark Douglas Gentiva’s functiona
Slide 16: Transaction Summary
Transaction Summary Kindred to acquire Gentiva for $1.8 billion in a combination of cash and stock • $19.50 / share comprising $14.50 in cash and 0.257 shares of Kindred common stock Purchase Price • $1.8 billion total consideration, including assumption of net debt • Pro Forma combined company reve
Slide 17: Continued Confidence in 2014 Gentiva Performance
Continued Confidence in 2014 Gentiva Performance Sustained Improvement in Financial and Operating Performance Further Validates Our Acquisition Thesis Confirmed 2014 Consensus Estimates Q3 Reported(1) Guidance(1) (mean)(2) Revenue $498.0 million $1.96 -2.00 billion $1.99 billion Adjusted EBITDA $48.
Slide 18: Combined Company Overview
Combined Company Overview Confirmed Confidence in Gentiva Performance Mid Point of 2014 Guidance/Consensus ($ in millions) Expected Kindred(1) Gentiva(2) Pro Forma Synergies (3) Revenue $5,100 $1,986 $7,086 Gentiva’s EBITDAR 697 232 $70 999 announcement of Q3 results and EBITDAR Margin 13.7% 11.7% 1
Slide 19: Significant and Immediate Accretion to Earnings and Cash Flows
Significant and Immediate Accretion to Earnings and Cash Flows Acquisition is significantly accretive at the contemplated transaction value and financing structure on both an EPS and cash flow basis (exclusive of transaction and integration costs) Fully Integrated Run Rate Drivers for Potential Upsi
Slide 20: Financing Plan
Financing Plan Sources ($ millions) Key Highlights New debt financing $1,300 –$1,400 • Expected to issue in aggregate ~$620 – $720 million of equity to maintain New equity and mandatory reasonable leverage $200 –$300 convertible securities issued – Proactively raised $220 million in net Equity issue
Slide 21: Wrap-Up
Wrap-Up 21
Slide 22: Kindred has Significantly Diversified its Service Offerings & Transformed its Business Mix
Kindred has Significantly Diversified its Service Offerings & Transformed its Business Mix • Combination with Gentiva uniquely positions Kindred as one of the leading healthcare providers in the U.S. across a broad spectrum of critical services – Fundamentally different company today that is at the
Slide 23: Kindred has Successfully Shifted its Business to Faster Growing Businesses
Kindred has Successfully Shifted its Business to Faster Growing Businesses, Improving Margins, Profitability and Operating Cash Flows Enhances Growth Profile Improves Margin and Profitability 2014 –2015 Revenue Growth (1) EBITDA Margin 6.0% 10.0% 9.0% 4.5% 8.0% 3.9% 7.4% 4.0% 6.1% 6.0% 4.0% 2.0% 2.0
Slide 24: Kindred has Developed a Balanced and Flexible Capital Structure
Kindred has Developed a Balanced and Flexible Capital Structure • Increasing traditional debt while deleveraging lease exposure will continue to drive long-term strategic flexibility and create shareholder value – Rent as a percent of revenue declines from 6.3%(1) for Kindred today to 5.2% (1)(2) Ye
Slide 25: Kindred Has Delivered Attractive Financial Performances
Kindred Has Delivered Attractive Financial Performances Revenue (1) Operating Income ($ billions) Kindred and ($ millions) Kindred and Gentiva Gentiva $7.1 $999 $4.9 $4.8 $5.1 $679 $697 $4.2 $658 $529 (2) (3) (4) 2011 2012 2013 2014 (3) 2014 PF(4) 2011 2012 2013 2014 2014 PF (1) Operating Margin : 1
Slide 26: Kindred Is Helping to Shape the Future of American Healthcare
Kindred Is Helping to Shape the Future of American Healthcare • As the U.S. population ages, demand for patient-centered healthcare is growing rapidly –and Kindred is pioneering an integrated approach to address this demand –implementing a better model to improve clinical outcomes and patient safety
Slide 27: Most Admired Companies; Q&A
Mc Yne of the : | Most Kindred) ADMIRED Healthcare Companies in the World, Six Years in a Row! 2009-2014 Q&A
Slide 28: Appendix
* * * * * * * * * * * Appendix 28
Slide 29: Explanation of Non-GAAP Measures
Explanation of Non-GAAP Measures In addition to the results provided in accordance with GAAP, Kindred Healthcare, Inc. (the "Company") has provided information in this presentation to compute certain non-GAAP measurements for the three months ended September 30, 2014 and 2013, the twelve months ende
Slide 30: Reconciliation of Earnings Guidance
Reconciliation of Earnings Guidance (a) Continuing Operations ($ Millions, except per chare amounts) As of November 5, 2014 Low High Revenues $ 5,100 $ 5,100 Operating income (EBITDAR) $ 692 $ 702 Rent 322 322 EBITDA 370 380 Depreciation and amortization 157 157 Interest, net 92 92 Income from conti
Slide 31: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Three months ended ($ Thousands) September 30, 2014 2013 Detail of charges: Severance, retirement and other restructuring costs ($1,686) ($1,894) Customer bankruptcy (1,857) - Facility closing costs - (6,043) Litigation costs - (23,850) Debt refinancing charges (o
Slide 32: Reconciliation of Non-GAAP Measures (continued)
Reconciliation of Non-GAAP Measures (continued) ($ Thousands) 2013 Quarters 2014 Quarters Twelve Months ended First Second Third Fourth First Second Third Sept. 30, 2014 Revenues: Hospital division $ 657,814 $ 606,604 $ 594,154 $ 606,988 $ 646,458 $ 632,156 $ 609,452 $ 2,495,054 Nursing center divis
Slide 33: Reconciliation of Non-GAAP Measures (continued)
Reconciliation of Non-GAAP Measures (continued) ($ Thousands) Three months ended September 30, 2014 Charges Severance Before and other Customer Transaction As charges restructuring bankruptcy costs Total reported Income from continuing operations: Operating income (loss): Hospital division $ 122,361
Slide 34: Reconciliation of Non-GAAP Measures (continued)
Reconciliation of Non-GAAP Measures (continued) ($ Thousands) Three months ended September 30, 2013 Charges Severance Before and Facility Debt Transaction As charges retirement closing Litigation refinancing costs Total reported Income (loss) from continuing operations: Operating income (loss): Hosp
Slide 35: Reconciliation of Non-GAAP Measures (continued)
Reconciliation of Non-GAAP Measures (continued) ($ Thousands) 2013 2012 2011 Detail of charges: One-time bonus $ (19,842) $ - $ - Severance, retirement and other restructuring costs (12,558) (8,730) (18,259) Litigation costs (30,850) (5,000) - Impairment charges (76,082) (107,899) (73,554) Transacti
Slide 36: Reconciliation of Non-GAAP Measures (continued)
Reconciliation of Non-GAAP Measures (continued) ($ Thousands) Three months ended September 30, 2014 2013 Reconciliation of net cash flows provided by operating activities to free cash flows: Net cash flows provided by operating activities $90,039 $110,750 Adjustments to remove certain payments (incl
Slide 37: Gentiva Non-GAAP Disclosure
Gentiva Non-GAAP Disclosure (1) ($ Millions) Third quarter 2014 Adjusted EBITDA $48.5 Cost savings initiatives and acquisition and integration activities (0.5) Impact of closed locations (0.3) Impact of merger related expenses (1.6) EBITDA 46.1 Depreciation and Amortization (7.3) Interest Expense an
Slide 38: Kindred Healthcare Third Quarter Investor Update
Kindred Healthcare Third Quarter Investor Update November 6, 2014
Gentiva Health Services — Q3 2014 Earnings Presentation on 6ix