Kindred Healthcare — Merger or Acquisition (November 2014)
23 slides from Kindred Healthcare's merger presentation, Nov 12, 2014
Slide 1: Kindred, Centerre and RehabCare: Creating the Nation's Premier Inpatient Rehabilitation Provider
Exhibit 99.2 Kindred, Centerre and RehabCare Creating the Nation’s Premier Inpatient Rehabilitation Provider November 2014
Slide 2: Forward Looking Statements
Forward Looking Statements Certainstatementscontainedherein containforward-lookingstatementswithin the meaningof Section27Aof the SecuritiesActof 1933,asamended,andSection21Eof the SecuritiesExchangeActof 1934,asamended(the “ExchangeAct”). Theseforward-lookingstatementsinclude,but are not limited to
Slide 3: Kindred Hospital Rehabilitation Services
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Slide 4: Kindred Hospital Rehabilitation Services: Combining our Strengths
Kindred Hospital Rehabilitation Services: Combining our Strengths • Expertise in the • Combination of • Strong platform management of experience in for Joint Venture Acute both wholly- Inpatient Rehabilitation owned Rehabilitation Units(1) freestanding and partnerships Joint Venture with large • Lar
Slide 5: Combination Creates One of the Nation's Largest Inpatient Rehabilitation Providers
Combination of Kindred & Centerre Creates One of the Nation’s Largest Inpatient Rehabilitation Providers (1) ($ in millions) RehabCare HRS Kindred IRFs Centerre IRFs Pro Forma States 36 2 8 36 ARU/IRF Locations 102 5 11 118 Other Locations (2) 266 - - 266 Total Locations 368 5 11 384 Employees 3,900
Slide 6: Kindred's Inpatient Rehabilitation Presence
Kindred’s Inpatient Rehabilitation Presence Centerre Freestanding Inpatient Rehabilitation Hospitals (“IRFs”) Open– (11) As of September 30, 2014 Centerre Freestanding Inpatient Rehabilitation Hospitals In Development – (2) Kindred/Rehabcare Managed Acute Rehabilitation Units (“ARUs”) (102) Kindred
Slide 7: Our Hospital Rehabilitation Services
Our Hospital Rehabilitation Services Kindred Hospital Rehabilitation Services (“HRS”) • Freestanding InpatientRehabilitation HospitalManagement:BothJVandKindredownedmodels • JointVentureFacilityDesignandDevelopment: Frommarketidentificationto grandopening • InpatientRehabilitationUnitManagement:Dist
Slide 8: Acquisition of Centerre Healthcare Transaction Summary
Acquisition of Centerre Healthcare Transaction Summary Purchase Price • $195 million • 11 operating IRF locations with 9 acute care joint venture partners 3 opened in 2014 and 2 opened in 2013 Locations • 2 locations under development • 6 operating locations in Kindred Integrated Care Markets • Esti
Slide 9: Kindred and Centerre Outperform National Benchmarks on Quality and Clinical Outcomes
Kindred and Centerre Outperform National Benchmarks on Quality and Clinical Outcomes Functional Improvement Measurement (“FIM®”) (1) Gain Discharge to Community 40.0 80.0% 75.9% 76.1% 75.6% 75.4% 74.0% 73.0% 35.2 35.0 68.5% 67.8% 32.2 32.6 30.6 30.0 60.0% 25.6 26.4 26.0 26.3 25.0 Industry Average(2)
Slide 10: Kindred and Centerre Strong Organic Discharge Volume Growth
Kindred and Centerre Strong Organic Discharge Volume Growth Same-Store Discharge Growth Total Discharges 20% 60,000 (1) UDS Industry 53,800 56,276 50,942 Centerre 50,000 5,384 7,222 9,500 15% 3,866 3,337 4,348 Kindred IRFs 40,000 42,221 42,712 42,428 10% RehabCare ARUs 30,000 20,000 5% 10,000 0% 0 2
Slide 11: Our Combined Track Record: Combined Revenue and EBITDAR
Our Combined Track Record: Combined Revenue and EBITDAR Total Net Revenue Total EBITDAR ($ in millions) ($ in millions) $600 $160 $578 $147 $497 $140 $500 $460 $121 $120 $400 $103 $100 $300 $80 $60 $200 $40 $100 $20 $0 $0 2012(1) 2013(1) 2014(2) 2012(1) 2013(1) 2014(2) Kindred -HRS Centerre -IRFs Ki
Slide 12: Platform for Significant Organic and de novo Development Growth
Combination of Kindred and Centerre Creates a Platform for Significant Organic and de novo Development Growth Favorable • Current target demographic is growing Market • Neurorehabilitation population expected to nearly double over next 15 years (1) Dynamics • Highly fragmented IRF industry • #1 (2)
Slide 13: Appendix I - Inpatient Rehabilitation Industry Overview
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Slide 14: Inpatient Rehabilitation Facility (IRF) Industry
Inpatient Rehabilitation Facility (“IRF ”) Industry 1,400 Inpatient Rehabilitation Features (2) : • Average length of stay = 12.9 days 1,200 245 • Discharge to community = 69.9% 1,000 Free- • All patients must be seen by a Standing rehabilitation physician at least three 800 Rehab times weekly. Hosp
Slide 15: Qualifying IRF Conditions: "CMS 13"
Qualifying IRF Conditions: “CMS 13” IRFs must adhere to strict 1 Stroke admission/coverage policies set 2 Brain Injury forth by CMS: 3 Amputation 4 Spinal Cord • Facility must exceed 60% of patients 5 Hip Fracture (Fracture of the femur) classified under the 13 qualifying conditions in a cost report
Slide 16: Inpatient Rehabilitation as Part of Overall Medicare Spending
Inpatient Rehabilitation as Part of Overall Medicare Spending ($ in billions) Medicare spending for Inpatient Rehabilitation Hospitals amounted to $7 billion, or roughly 1% of the $580 billionof total spending in 2013 Medicare Part A Medicare Part B Medicare Parts A&B Medicare Part C Medicare Part D
Slide 17: 60% Rule Overview
60% Rule Overview Established Implementd Updated 1983 2002 2004 2007 1983: Rule established, 2007: 75% Rule reduced to Requires at least 75% of 2002:IRF reimbursement 2004: 75% Rule 60% Rule through patients have one of 10 transitions to the inpatient moratorium ended, Medicare, Medicaid & qualifyin
Slide 18: Post-Acute Lines of Business: Comparison
Post-Acute Lines of Business: Comparison % of Acute Care % of Patients % Rehospitalized to Post Acute Line of Business Discharges Expired Acute Care Inpatient Rehabilitation 3% < 1% 9% Skilled Nursing 17% 5% 22% Home Health 16% 1% 18% Long Term Acute Care 1% 16% 10% Hospice 2% 82% 5% Inpatient Rehab
Slide 19: Appendix Reconciliation
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Slide 20: Explanation of Non-GAAP Measures
Explanation of Non-GAAP Measures In addition to the results provided in accordance with GAAP, Kindred Healthcare, Inc. (the "Company") has provided information in this presentationto compute certain non-GAAPmeasurements for the nine months ended September 30, 2014 and the twelve months ended Decembe
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ in Thousands) Year ended December 31, 2014 Quarters Nine months ended Annualized 2012 2013 First Second Third Sept. 30, 2014 Sept. 30, 2014 Revenues: Transitional care hospitals $ 2,486,625 $ 2,396,382 $ 626,294 $ 611,458 $ 590,132 $ 1,827,884 $ 2,437,179 Inpat
Slide 22: Centerre Non-GAAP Reconciliation
Centerre Non-GAAP Reconciliation ($ In Thousands) Year ended December 31, 2012 2013 2014 Revenues $109,205 $140,974 $198,513 Operating income (EBITDAR) $25,190 $31,922 $48,337 Rent 10,514 15,239 20,199 EBITDA 14,676 16,683 28,138 Depreciation and amortization 1,728 2,711 3,060 Interest, net 398 490
Slide 23: Kindred, Centerre and RehabCare
Kindred, Centerre and RehabCare Creating the Nation’s Premier Inpatient Rehabilitation Provider November 2014
Kindred Healthcare — Merger or Acquisition (November 2014) on 6ix