Alliance HealthCare Services Inc
Alliance HealthCare Services — Investor Presentation (January 2017)
46 slides from Alliance HealthCare Services's investor presentation, Jan 9, 2017
Slide 1: Alliance HealthCare Services Investor Presentation January 2017
Alliance HealthCare Services Investor Presentation January 2017
Slide 2: Disclaimer
Disclaimer This presentation includes certain supplemental measures of our performance and liquidity that are not required by, or presented in accordance with, U.S. generally accepted accounting principles (“GAAP“), including Adjusted EBITDA. We present Adjusted EBITDA because we believe that, in ad
Slide 3: Disclaimer
Disclaimer During the course of this presentation, the Company may make projections or other forward-looking statements regarding, among other things, our business outlook, operations and strategy; service areas; competition; changes in laws and regulations and the impact of such changes on us; our
Slide 4: Alliance HealthCare Services
Alliance HealthCare Services 1,000 The leading provider of radiology, oncology and interventional healthcare solutions to hospitals and healthcare providers Complementary business segments align with our vision to provide multiple service lines to a single hospital customer Hospitals and healthcare
Slide 5: The leading hospital-focused national provider of radiology, oncology and interventional services
We are the leading hospital-focused national provider of radiology, oncology and interventional services Who We Are Powerful value proposition in outsourced Radiology, Oncology and Interventional services Consistent free cash flow generation with a track record of deleveraging $501mm of revenue and
Slide 6: Investment Highlights
Investment Highlights Key Historical Financials Leading provider of radiology, oncology and interventional healthcare solutions to hospitals and healthcare providers 30+ year track record of successful partnering with over 1,000 hospitals and healthcare providers across 45 states Providing complemen
Slide 7: Return to Growth Strategy
Return to Growth Strategy Comprehensive outsourced solution for radiology services Fixed-site, multi-modality radiology clinic operations Growth through acquisitions, JV radiology centers and Management Services Agreements Drives improved same store growth, customer retention and pricing Strong onco
Slide 8: Business Overview
9060 Business Overview 9 MCTaeer ee icee Essential Solutions. Exceptional Care.
Slide 9: Company Timeline and Evolution
Interventional Services formed as new segment New CEO Tom Tomlinson Alliance HealthCare Services founded Footprint expanded to include fixed-site radiology centers Company Timeline and Evolution 1983 2001 2003 2005 2007 2008 2010 2011 2013 2014 2015 2016 Building a Leading Platform 2001 – 2012 Layin
Slide 10: Strategic Business Diversification
Expanding revenue and earnings in complementary high growth segments Strategic Business Diversification Revenue By Segment Segment Contribution to EBITDA 2013 LTM 9/30/20161 2013 LTM 9/30/20161 Radiology Oncology Interventional 1 Interventional services not reported as operating segment prior to Q1
Slide 11: Hospital Centric Revenue Mix and Services by Segment
Majority of revenue retail based Minimally invasive interventional healthcare services and pain management procedures performed either in a procedure room or ASC environment Services include clinical consultation, laboratory, diagnostics and interventional procedures to treat pain Deliver radiation
Slide 12: Operating Segments
Alliance achieved 9% year-over-year growth LTM and 8% for 2015. Seeing continued growth in 2016, both organically and through strategic investments Operating Segments Alliance is a market leader in large and highly fragmented sectors of the healthcare industry, with significant opportunity for organ
Slide 13: Alliance Radiology
Alliance Radiology 112 fixed-site (81 hospital based) 23 joint ventures (11 hospital based) Market leader for hospitals looking for strategic partnership in the Radiology Service Line 537 diagnostic radiology systems Outstanding reputation for clinical quality and patient care Existing footprint gen
Slide 14: Radiology Operating Trends
Radiology Operating Trends Radiology Same Store Volume Growth Continued expansion in quarterly SS volume growth for both MRI (10 quarters) and PET/CT (7 quarters) Note that PET/CT pricing reset began in late 2014 PET/CT Scan Volume MRI Scan Volume Quarterly Same Store Volume Growth
Slide 15: Delivering Value Across the Service Line
Delivering Value Across the Service Line End-to-End Radiology Services Market Expertise Clinical Expertise Operational Expertise Downstream Revenue Dr. Dr. Dr. Dr. Dr. Practice Hospital Competitor Hospital Partner Referring Physician Marketing Physician Practice Building Competitive Marketing Engage
Slide 16: Case Study: Los Alamitos Medical Center
Transaction Highlights LAMC Overview Case Study: Los Alamitos Medical Center (LAMC) Opened in 1968, LAMC is a member of the TENET group and the largest employer in Los Alamitos 167-bed medical center offering a wide range of services to the community with an unparalleled commitment to quality LAMC i
Slide 17: Alliance Oncology
Alliance Oncology $99.4 Fully integrated cancer care partner to hospitals 32 radiation therapy centers 19 hospital joint venture / economic partnerships 6 free standing sites 7 Management Services Agreement sites Long-term, economically aligned contracts $8 billion addressable market growing at 7% a
Slide 18: Oncology Operating Statistics
Oncology Operating Statistics Strong continued growth in SRS SRS and Linac have seen both organic and via acquisition growth Linac SS volume metrics were challenged in 2015 due to inclement weather in the northeast as well as the shutdown of Joplin, MO Radiology Oncology Same Store Case and Treatmen
Slide 19: Case Study: Medical University of South Carolina
Transaction Highlights MUSC Overview Case Study: Medical University of South Carolina One of the nation’s top academic health science centers serving the Charleston, SC area 700-bed medical center with 2,600 healthcare professionals, including 800 physicians South Carolina’s only National Cancer Ins
Slide 20: Alliance Interventional
Alliance Interventional Synergistic business segment in a high growth, fragmented market space $11 Billion addressable market growing at 8% annually JV partnerships to expand geographic footprint Acquired The Pain Center of Arizona (February 2015) and PRC Associates (October 2015) Incremental revenu
Slide 21: Capitalizing on Strong Market Forces
Capitalizing on Strong Market Forces Trends Causing Interventional Procedures to Migrate from Hospitals to Outpatient Facilities 1 2 3 4 5 Source: Axia analysis; CMS; Expert interviews 6 CPTs Migrating To Outpatient Settings Cost Pressure from Payers Payers shunting patients to outpatient clinics fo
Slide 22: Industry Overview
9060 Industry Overview 9 MCTaeer ee icee Essential Solutions. Exceptional Care.
Slide 23: Diagnostic Imaging Industry Overview
Diagnostic Imaging Industry Overview Fixed-site, free standing outpatient diagnostic facilities Single- to multi-modality facilities generally not owned by hospitals or clinics; depend on physician referrals for their patients Hospitals Many hospitals provide both inpatient and outpatient diagnostic
Slide 24: Oncology Industry Overview
Oncology Industry Overview Radiation Oncology ~60% of global cancer patients will need radiotherapy at some point in the treatment cycle Experts predict an acceleration in global market growth of radiation oncology systems of the 3-5% y/y range in 2016 Worldwide radiotherapy market should grow in th
Slide 25: Interventional Services Overview
Interventional Services Overview In 2015, Alliance Interventional completed $48mm in acquisitions for the following: AHIP-Florida, LLC (PRC Associates) The Pain Center of Arizona Growing Chronic Disease Projections ($mm) Industry Characteristics Interventional services Includes interventional radiol
Slide 26: Participation in large, fragmented healthcare sectors
Alliance participates in some of the largest and most fragmented sectors of the healthcare industry with significant growth opportunities Radiology Radiation Oncology Interventional Services1 Market Size ~$15 billion ~$8 billion ~$11 billion Market Growth Rate ~2% annually ~7% annually ~8% annually
Slide 27: Favorable Macro Healthcare Trends
Favorable Macro Healthcare Trends Hospital expenditures projected to increase at a CAGR of 6.1% through 2020 Elderly population expected to grow at a 3.1% CAGR through 2020 Cancer incidence estimated to grow at a 2.7% CAGR through 2030 Hospital Outsourcing Trends 98% of hospitals outsource one or mo
Slide 28: Exclusive, Long-Term Partnerships
A member of Ascension Exclusive, Long-Term Partnerships Coupled with Outsourced Service Contracts Long-Term Contracts Selected existing customers Limited risk due to lower customer concentration No single customer accounts for more than 10% of consolidated revenues Deliver services through exclusive
Slide 29: Business model comparison
Business model comparison Retail Revenue Hospital Based Outsourced & JV Revenue ~77% of revenue1 ~23% of revenue Responsibility of billing placed on service providers Patient Insurance provider Hospital patients Insurance provider Reimbursements Payments Referral Hospital Hospital referral Exclusive
Slide 30: Transaction Background: Tahoe Agreement
Transaction Background: Agreement Completed March 29, 2016 Tahoe through its subsidiary, Thai Hot Investment Company, signed an agreement to purchase approximately 51.5% of shares outstanding for ~$102.5mm Shares purchased from Oaktree Capital Management, MTS Health Investors and former Chairman of
Slide 31: New AIQ Board Members
New AIQ Board Members Heping Feng Serves as the Supervisor of China Galaxy Securities Company Limited since June 2015. Senior Advisor of PricewaterhouseCoopers since October 2014. Held various executive positions at PricewaterhouseCoopers, Morgan Stanley and Arthur Anderson Independent Non-Executive
Slide 32: Experienced and Committed Management Team
Name Title Prior Experience Alliance Experience In Current Position as of Tom Tomlinson CEO Midwest Dental, Center for Diagnostic Imaging (CDI) 3 32 2013 Rhonda Longmore-Grund CFO Printronix, Ingram Micro, Exult, Velocium , Digital Equipment Corporation (DEC) 1 30 2016 Richard Johns COO & CLO LaVie
Slide 33: Financial Performance
In adjusted EBITDA in Fiscal 2015 Financial Performance
Slide 34: Financial Strategy
$473 $131 In adjusted EBITDA in Fiscal 2015 Financial Strategy Financial Policy Summary Decline in revenue and pricing pressure has been addressed with new growth strategy, resulting in positive revenue year over year growth in last seven quarters and positive adjusted EBITDA growth in the last four
Slide 35: Return to Growth Strategy: Revenue
Return to Growth Strategy Launched in 2014, the multi-faceted growth strategy has begun to gain traction. Annual Revenue Quarterly Revenue 5% 10% 13% 13% Q/Q Growth FY14 revenue closed at $436M which was $18M lower than FY13 due to the sale of 24/7 LLC as well as terminations of unprofitable contrac
Slide 36: EBITDA Momentum Building
EBITDA Momentum Building $131 $136 $147 Adj. EBITDA Trend FY13-FY14 ($9mm) ($5mm) Rad 360 Investments ($2mm) 1x Credit in FY13 FY14-FY15 ($5mm) ($15mm) Mobile Imaging Price Reset +$10mm Acquisition +$2mm Organic ($2mm) Joplin, MO Shutdown $133
Slide 37: Targeted Investments
Targeted Investments 2014-2015 we invested more heavily in both Maintenance and Growth CAPEX to improve performance. Key Investments Net Debt Increased Maintenance CAPEX, but will revert to long-run average Disciplined Growth CAPEX investment to strengthen EBITDA Near-term increase in leverage, with
Slide 38: Strong cash flow allows capital allocation optionality
Strong cash flow allows optionality with regard to capital allocation Despite recent pricing pressure in Radiology, free cash flow generation remains strong in continuing to support strategic investments and growth initiatives Plan to de-lever to target range of 3.5x Significant strategic investment
Slide 39: Historical Financial Performance
Historical Financial Performance ($ in millions) Adj. EBITDA1 Total Debt / PF Adj. EBITDA3 ($ in millions) Revenue ($ in millions) Adj. EBITDA1 less maintenance capex2 Note: 2015 and LTM Sept-16 figures were lower than historical norms as a result of significant capital expenditures during this peri
Slide 40: Third Quarter 2016 Results
Reported on November 4th for quarter ended 9/30/2016 3Q’16 Δ from 3Q’15 Revenues $127.1M +5.2% Radiology Revenue $88.7M +2.8% Oncology Revenue $26.3M +4.2% Interventional Revenue $11.5M +28.5% Adjusted EBITDA $35.1M +3.7% Radiology Adjusted EBITDA $30.3M +6.3% Oncology Adjusted EBITDA $13.3M +5.1% I
Slide 41: Summary Capitalization
($ millions) LTM Sep-16 x LTM EBITDA Cash and cash equivalents $19.6 $50 million revolving credit facility due June 2018 3.5 0.0x $520 million term loan B due June 2019 499.0 3.7x Capital leases 16.9 0.1x Equipment debt 42.6 0.3x Total senior secured debt $562.0 4.1x -- -- 0.0x Total debt $562.0 4.1
Slide 42: Adjusted EBITDA Reconciliation
Year Ended December 31, Nine Months Ended Sept. 30, LTM Sept. 30, 2012 ($) 2013 ($) 2014 ($) 2015 ($) 2015 ($) 2016 ($) 2016 ($) Net (loss) income attributable to AIQ (11,938) (21,483) 10,618 6,742 6,994 2,627 2,375 Income tax expense (6,710) (12,398) 7,327 6,536 5,304 3,137 4,369 Interest expense a
Slide 43: Operating Segments Reconciliation
Operating Segments Reconciliation Revenue LTM as reported in 10-Q/K1 LTM management reporting reclassification LTM adjusted to include interventional segment data for Q4 FY15 Radiology 348,874 348,874 Oncology 103,379 103,379 Interventional 34,572 12,213 46,785 Corporate/Other 13,674 (12,213) 1,461
Slide 44: 2016 Guidance
2016 Guidance Guidance Ranges ($’s in millions) Revenue $505 - $535 Adjusted EBITDA $130 - $150 Capital Expenditures Maintenance $45 - $55 Growth $30 - $35 Net Debt Change in Net Debt – Before Growth CAPEX: Decrease/(Increase) in long-term debt, net of the change in cash and cash equivalent (before
Slide 45: Key Investor Highlights
Key Investor Highlights Industry Leading Provider and Platforms Hospital Centric Model Aligns with Favorable Industry Trends Exclusive, Long-Term Partnerships Coupled with Outsourced Services Model Experienced and Committed Management Team Strong Free Cash Flow with History of Deleveraging Supportiv
Slide 46: Thank You
Thank You O08 www.alliancehealthcareservices-us.com GO ALuianc HEALTHCARE SERVICES
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