Sun Healthcare — Investor Presentation (March 2011)
36 slides from Sun Healthcare's investor presentation, Mar 29, 2011
Slide 1: Investor Presentation
EXHIBIT 99.1 Investor Presentation March 2011
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements made in this Confidential Information Memorandum that are not historical facts are "forward-looking" statements (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change at any time. These
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures References are made in this presentation to Adjusted EBITDA, EBITDA, EBITDA margin, Adjusted EBITDAR, EBITDAR and EBITDAR margin, which are non-GAAP financial measures. These non-GAAP financial measures are reconciled to the corresponding GAAP financial measures in the Ap
Slide 4: Investment Highlights
Investment Highlights Attractive industry fundamentals § Healthcare policy favors SNFs - effective clinical outcomes at lower costs § Favorable demographics - increasing senior population § Improving supply / demand dynamics - number of SNF beds has steadily declined Diversified, growing platform §
Slide 5: Sun Has a Dynamic History...
Sun Has a Dynamic History... Sun has consistently increased revenue and EBITDAR through a mix of organic and external growth, as well as operational improvements The 2005 and 2007 acquisitions of Peak Medical Corporation and Harborside Healthcare along with the recent 2010 spin of Sun’s real estate
Slide 6: ...Under Consistent Operating Management...
…Under Consistent Operating Management… 5 (1) Effective 01/17/11.
Slide 7: ...And With Patient Care As Its Top Priority
…And With Patient Care As Its Top Priority Based on a recent independent survey, 86% of our current residents/patients would recommend our center to others; 87% expressed overall satisfaction Quality Measures Trend in Rehospitalizations § Key quality metrics continue to improve and trend § By respon
Slide 8: Sun Healthcare Today
Sun Healthcare Today Skilled Nursing Services (SunBridge) Net Revenue by Line of Business § 200 skilled nursing centers § 19,400 patients/residents Hospice Services (SolAmor) § Growing business operating in 10 states with 20 offices with 4 startups Rehabilitation Therapy Services (SunDance) § Contra
Slide 9: Sun's Portfolio Diversification
Sun’s Portfolio Diversification IN 2005: Sun Operated 104 Inpatient Centers in 13 States TODAY (1): Sun Operates 200 Inpatient Centers in 25 States Revenue Revenue ($M’s) Normalized EBITDAR ($M’s) $882.1 ($M’s) Normalized EBITDAR ($M’s) $1,906.9 Margin 60.6 6.9% Margin 250.6 13.1% Inpatient Skilled
Slide 10: SunBridge
SunBridge SunBridge Healthcare Corporation OPERATING PROFILE as of December 31, 2010 Centers include skilled nursing centers, assisted living centers and independent Centers 200 living States 25 centers Provides services that: Property Type: § Focus on higher acuity, short-term stay Skilled Nursing
Slide 11: SunDance
SunDance SunDance Rehabilitation Corporation Revenue ($ in millions) Broad array of rehabilitation therapy services for post acute patients provided in skilled nursing centers and assisted living facilities Provides rehabilitation therapy services to 527 centers in 37 states (1) § 346 centers operat
Slide 12: SolAmor
SolAmor SolAmor Hospice Corporation Average Daily Census Provides hospice services in affiliated skilled nursing centers, non-affiliated skilled nursing centers and the patient’s home Operates in 10 states; 9 of which have affiliated skilled nursing centers § Synergistic service as 6% - 10% of patie
Slide 13: CareerStaff
CareerStaff CareerStaff Unlimited, Inc. Revenue ($ in millions) Provides temporary medical staffing to hospitals, skilled nursing facilities, schools and prisons § Approximately 60% of billings are for therapists Operates in 39 states § National network of 32 branches with 25 offices EBITDA and marg
Slide 14: RUG IV: What It Means
RUG IV: What It Means Resource Utilization Group (RUG) payment system Payments to SNFs vary based on the intensity of clinical services provided to Medicare patients Resource Utilization Group IV (RUG IV) system replaced existing RUG III system effective October 1, 2010 The new RUG IV system: § Upda
Slide 15: Financial Outcome of RUG-IV
Financial Outcome of RUG-IV Q4 2010 rate increased 12.6% over Q4 2009 1.7% was related to the Market Basket increase Sun’s concurrent therapy experience is less than CMS estimates § There is an associated cost increase per unit of therapy delivered § Partially mitigated by group therapy MDS 3.0 is c
Slide 16: Further Expansion of Product & Service Offering
Further Expansion of Product & Service Offering Expand clinical products/services to improve ability to capture clinically complex patients § Upgrade complement of clinicians and their skill sets § Focus on clinical competencies • Tracheotomy care, HIV / Isolation, advanced IV capabilities, etc. § E
Slide 17: Rehab Recovery Suites - Product Profile
Rehab Recovery Suites - Product Profile Rehab Recovery Suites (RRS) Skilled Mix (Q4 ’10) % of Days % of Revenue Separate and distinct units within a center Enhanced therapy and clinical product Hospitality services - dedicated concierge RRS Metrics Rehab Utilization and Medicare Rates Number of cent
Slide 18: Long-Term Asset Modernization Initiative
Long-Term Asset Modernization Initiative Long term capital investment strategy designed to upgrade, reconfigure and fully renovate nursing §centers Focus on privacy for patients, enhanced amenities/public spaces, designated units with § Create specificimproved purpose work environment for staff and
Slide 19: External Growth
External Growth Sun utilizes a targeted acquisition Acquisitions strategy of new skilled nursing centers and ancillary- services providers that are attractive from Ample liquidity to pursue acquisitions April 2005 both financial and operational § Cash of $81.2 (1) perspectives § Undrawn revolver wit
Slide 20: Countryside Hospice Care, Inc. Acquisition
Countryside Hospice Care, Inc. Acquisition Acquisition Rationale: Countryside Hospice Care Good geographic overlap to our SunBridge portfolio Countryside § 7 existing offices / 4 startup offices - Sun center Countryside - Startup growing or opening in 2011 § Shares markets with 9 existing Other Sun
Slide 21: Sun's Growth Strategy
Sun’s Growth Strategy Focus on skilled nursing Seek growth in ancillary Utilize Sun’s financial growth businesses flexibility Increase skilled nursing Grow hospice operations Targeted acquisitions of revenue and contribution and leverage new new skilled nursing by acquisition centers and ancillary-
Slide 22: Financial Overview
Financial Overview 0 . Craters (Caring isthe Keyin Life
Slide 23: Sun 4th Quarter 2010 results
Sun 4th Quarter 2010 results 22
Slide 24: Sun 4th Quarter 2010 Segment Results
Sun 4th Quarter 2010 Segment Results Inpatient SolAmor (1) SunDance CareerStaff 23 (1) Included in Inpatient Segment
Slide 25: Sun Full Year 2010 results
Actual Results Year Ended December 31, (in thousands, except per share data) | 2010 ial ‘2009 | Revenue $1,906,861 $1,880,776 Adjusted EBITDAR normalized $250,581 $ 250,655 Margin - Adjusted EBITDAR normalized 13.1% 13.3% Center rent expense 73,128 Adjusted EBITDA normalized $ $177,527 Margin - Adju
Slide 26: 2011 Guidance
2011 Guidance (Dollars in millions, except per share data) 2010 Normalized 2011 Full Year Guidance Results 25
Slide 27: 2011 Guidance Parameters
2011 Guidance Parameters Portfolio Post-Restructuring with Sabra No acquisitions or dispositions beyond the recently Sun currently leases 86 formerly owned centers from announced purchase of Countryside Hospice Care, Inc. Sabra, resulting in an increased rent of $70.4 million Excludes results of ope
Slide 28: Debt Table
Debt Table (Dollars in millions) 27 Note: Leverage based on midpoint EBITDA of 2011 guidance
Slide 29: Cash Flows
Cash Flows (Dollars in millions) 2010 Pro Forma Cash flows from operating activities 1 $ 79.9 Normalizing adjustments 3 42.0 Pro forma rent adjustment 3 (61.4) Pro forma interest adjustment 4 29.7 Pro forma cash flows from operating activities $ 90.2 Capital expenditures (53.5) Pro forma free cash f
Slide 30: Appendix: Industry Fundamentals
Appendix: Industry Fundamentals 29
Slide 31: Leveraging Opportunities in the Care Chain
Leveraging Opportunities in the Care Chain Acute Care LTAC SNF Assisted Living Home Based Care Sweet Spot - Lower Cost Provider to Higher Acuity Patients = Higher Margins and Greater Opportunities 30
Slide 32: Attractive Industry Fundamentals
Attractive Industry Fundamentals 65+ Population Projected to Increase 16% by 2015 Declining Number of Nursing Facilities Source: U.S. Census Bureau. 85+ Population Projected to Increase 8% by 2015 Source: U.S. Census Bureau. Source: AHCA. 31
Slide 33: SNFs Provide Lower Cost Setting
SNFs Provide Lower Cost Setting SNFs deliver effective clinical outcomes at lower 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 out
Slide 34: Reimbursement Evolution Favors SNFs
Reimbursement Evolution Favors SNFs Near Term: RUG IV Medicare System Implementation § RUG IV continues to place emphasis on higher acuity patients § Requires centers to optimize therapy delivery using a combination of individual, group, concurrent and nursing rehabilitation to increase efficiency §
Slide 35: Sun Healthcare - Caring is the Key in Life
\Ad 4 ~ SUNHEALTHCARE Caring is the Key in Life
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