Odyssey Healthcare — Investor Presentation (November 2008)
36 slides from Odyssey Healthcare's investor presentation, Nov 4, 2008
Slide 1: Odyssey HealthCare – To Serve All People During the End of Life's Journey
Odyssey HealthCare “To Serve All People During the End of Life’s Journey”
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Certain statements contained in this presentation are forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements are based on management’s current expectations and are subject to known and unknown risks, uncertainties and
Slide 3: Odyssey… A Leader in Hospice Care
ODYSSEY… A LEADER IN HOSPICE CARE 94 Medicare Certified Programs in 29 states 32,294 admissions in 2007 CAGR revenue = 12.3%
Slide 4: Appreciation of end of life services Aging population should lead to increased demand VistaCare
Appreciation of end of life services Aging population should lead to increased demand VistaCare transition on schedule – adds scale and expands leadership position Strong balance sheet Market forces creating barriers to entry Experienced management team in healthcare services
Slide 5: Combined Locations
COMBINED LOCATIONS Odyssey Locations Hospice Office Inpatient Facility Corporate Office – Dallas VistaCare Locations Hospice Office Inpatient Facility
Slide 6: What Is Hospice?
WHAT IS HOSPICE? More cost effective Services provided primarily in home Provides quality of life for terminal patients and families Focus on physical, emotional and spiritual
Slide 7: Covered by Medicare
COVERED BY MEDICARE Benefit enacted in 1983 Estimated Aggregate per beneficiary cap of $22,833 Largest payer at > 90% is Medicare Six months life expectancy Paid on per diem basis based on level of care
Slide 8: Patients by Diagnosis in the Industry
PATIENTS BY DIAGNOSIS IN THE INDUSTRY Heart Disease 12.2% 20% 8.9% 46% 8.2% Other Dementia Cancer Lung Disease Kidney Disease 3.1% Liver Disease 1.6%
Slide 9: Rapidly Growing Market
RAPIDLY GROWING MARKET Hospice Medicare Expenditures ($ in billions) $2.9 $3.6 $4.5 $5.7 $8.5 FY 2000 FY 2001 FY 2002 FY 2003 FY 2006 $6.8 FY 2004 $8.0 FY 2005 $10.5 FY 2007 Proj
Slide 10: Market Opportunity
MARKET OPPORTUNITY Sudden Death/Other Hospice Patients Served 41% 2.5 million deaths annually in U.S. 42% Estimated Under-Served Market 17%
Slide 11: Growth in Hospice Programs
GROWTH IN HOSPICE PROGRAMS (Number of hospices) (Gp:) 2005 (Gp:) 2,809 (Gp:) 2004 (Gp:) 2,580 (Gp:) 2002 (Gp:) 2,286 (Gp:) 2003 (Gp:) 2,401 (Gp:) 2006 (Gp:) 3,071 (Gp:) 2007 (Gp:) 3,238
Slide 12: Number of New Medicare-Participating Hospices Exceeds Voluntary Closures
NUMBER OF NEW MEDICARE-PARTICIPATING HOSPICES EXCEEDS VOLUNTARY CLOSURES 2000 300 250 200 150 100 50 0 New entrants Voluntary closures 2001 2002 2003 2004 2005 2006
Slide 13: Management of Medicare Cap – Strategic Focus
Management of Medicare capstrategic focus
Slide 14: Management of Medicare Cap
MANAGEMENT OF MEDICARE CAP Body: Consolidation of Odyssey and VistaCare overlapping markets Inpatient unit development Market for a more balanced patient mix
Slide 15: Odyssey's Medicare Cap Expense Trend
ODYSSEY’S MEDICARE CAP EXPENSE TREND Note: 2003 - 2006 not adjusted for discontinued operations Q308 Q307 2003 0.5% 2004 0.6% 2005 3.0% 2006 3.8% 2007 1.2% 0.7% 0.9%
Slide 16: Strategic Focus: VistaCare Transaction
strategic focus management of medicare cap vistacare transaction
Slide 17: VistaCare Transaction
VISTACARE TRANSACTION Expands leadership position Compatible organizations Strengthens existing markets Management experience with acquisitions and integration Reducing corporate overhead and closing corporate offices drives profitability Operational and Medicare cap improvements not required for su
Slide 18: Combined Company
COMBINED COMPANY $650 million in revenues 94 Medicare Certified Programs in 29 States ADC of more than 12,000 29 States
Slide 19: VistaCare Transition on Schedule
VISTACARE TRANSITION ON SCHEDULE Phoenix corporate office is closed Transition to Odyssey information systems completed Ramping up of Dallas Support Center on track for substantial completion in fourth quarter On time and on budget
Slide 20: Strategic Focus: Focus on Existing Footprint
strategic focus management of medicare cap vistacare transaction focus on existing footprint
Slide 21: Growth Strategy
GROWTH STRATEGY Growth Same store growth – add new programs De Novos as a market extension strategy Fill- in Acquisitions
Slide 22: Implement More Sophisticated Sales and Marketing Strategy
Management of Medicare cap VistaCare transaction Focus on existing footprint Implement more sophisticated sales and marketing strategy
Slide 23: Implement More Sophisticated Sales and Marketing Strategy
IMPLEMENT MORE SOPHISTICATED SALES AND MARKETING STRATEGY Hired Senior Vice President of Sales and Marketing Revamped CER bonus plan based on targeted sales Developed detailed marketing plan for major markets Developed unique Care Beyond Program COPD Dementia Congestive Heart Failure ESRD (2009)
Slide 24: Strategic Focus: Expense Control
Management of Medicare cap VistaCare transaction Focus on existing footprint Implement more sophisticated sales and marketing strategy expense control
Slide 25: Expense Control Initiatives
EXPENSE CONTROL INITIATIVES Improve labor productivity Implemented site level labor tools Implemented bi-weekly labor calls with Senior Management Developed labor outlier tracking and response Improved labor management training Utilize size to leverage operating expenses Pharmacy Telecommunications
Slide 26: Operating Expenses per Patient Day of Care
OPERATING EXPENSES PER PATIENT DAY OF CARE Q407 $139.93 Q207 $129.69 Q307 $131.33 $129.91 Q107 * Excludes VistaCare Ramp Down and One Time Expenses and Amortization and Depreciation Expenses Q208 $130.62* $136.32 Q108 Q308 $131.72*
Slide 27: Investment in Information Systems
INVESTMENT IN INFORMATION SYSTEMS Implementing new sales and marketing system Evaluating increased centralization of billing Considering on-line scheduling and logistics support
Slide 28: Financial Summary
et HealthCare SSEY FINANCIAL SUMMARY —_ —
Slide 29: Net Revenue Growth from Continuing Operations
Q308 Q307 NET REVENUE GROWTH FROM CONTINUING OPERATIONS CAGR = 12.3% 2003 $251.3 2004 $312.9 2005 $348.6 2006 $379.3 2007 $398.2 $165.2 $99.8 ($ in millions)
Slide 30: Average Daily Census from Continuing Operations
AVERAGE DAILY CENSUS ROM CONTINUING OPERATIONS Q308 Q307 2003 5,449 2004 6,691 2005 7,145 2006 7,528 2007 7,649 12,329 7,676
Slide 31: Admissions from Continuing Operations
ADMISSIONS FROM CONTINUING OPERATIONS Q308 Q307 2003 24,900 2004 28,620 2005 30,972 2006 32,001 2007 32,246 11,843 7,725
Slide 32: Average Length of Stay from Continuing Operations
AVERAGE LENGTH OF STAY FROM CONTINUING OPERATIONS (Days) Q308 Q307 2003 72 2004 77 2005 80 2006 83 2007 85 86 88
Slide 33: Income from Continuing Operations
INCOME FROM CONTINUING OPERATIONS * Excludes charge for settlement with Department of Justice of $9.6 million, net of tax. A reconciliation of GAAP to non-GAAP financial measures are available on the Investor Relations page of Odyssey’s website at www.odsyhealth.com. ($ in millions) Q308 Q307 2003 $
Slide 34: Net Cash from Operations
NET CASH FROM OPERATIONS * Exclusive of $13 million for Department of Justice payment ($ in millions) Q308 Q307 2003 $27.6 2004 $47.1 2005 $45.2* 2006 $47.7* 2007 $16.9 $3.7 $3.1
Slide 35: Appreciation of end of life services Aging population should lead to increased demand VistaCare
Appreciation of end of life services Aging population should lead to increased demand VistaCare transition on schedule – adds scale and expands leadership position Strong balance sheet Market forces creating barriers to entry Experienced management team in healthcare services
Slide 36: To Serve All People During the End of Life's Journey
To Serve All People During the End of Life’s Journey”
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