Quorum Health — Investor Presentation (April 2016)
44 slides from Quorum Health's investor presentation, Apr 14, 2016
Slide 1: Investor Presentation April 14, 2016
Exhibit 99.1 Investor14, 0APRIL Presentation 2016
Slide 2: Disclaimers
Except Disclaimers combined Forward-Looking the completion market uncertainties as results and or markets relationships; complete More “Cautionary Relations The whether Non-GAAP This used 1accordance CHS anticipated, proposed future similar completion combined forward-looking presentation by informa
Slide 3: Proposed Spin-Off Transaction Overview
Spin-Off Community hospitals management _Quorum Proposed NYSE Transaction Spin-off When 1Record distribution Distribution Process [Graphic Number 2result QHCofIssued ticker: common Date: both of this expected Appears Overview and stockholders Health_ CHS to intended Health Following distribution CHS
Slide 4: Spin-Off Rationale and Benefits
Rationale into 194 Focused and Larger Leveraging systems Benefits 14 revenue Invest healthcare Divest 3Improve ofconsulting hospitals diversified 28 in underperforming hospitals Streamline across Enhance states on EBITDA and for Evolved systems networks standardized QHR further Spin-Off ingenerate s
Slide 5: Prior Hospital Spin-Offs Opportunity
Prior Market Focus Opportunity Overview Renewed capital Spin-off ($ Revenue EBITDA % Hospitals Financial Divested Acquired Closed 1LifePoint Stock Source: 4Note: year in millions) margin Hospital Spin-offs Price 21 post spending 2Rural Company Spin-off $503 hospitals 5$59 of 2focus Profile Triad Hos
Slide 6: Company Overview
Company Overview QUORUM | HEALTH CORPORATION
Slide 7: Quorum Health Overview
Quorum Hospital Revenues: 38 consulting 84% Leading 76% Key Hospitals 73% Medicaid Nationally 6Own hospitals Quality of real hospitals acute revenues hospital Health Operations estate coverage located $2.1bn services recognized in Measures care 16 of Overview management generated are in states Reven
Slide 8: Non-Urban Growth Industry
Non-Urban Growth Industry Aging Critical Strength Limited 84% 73% that 76% Performers Essential Hospital Significant 7positive expanded ofofacute hospitals revenues shortage in local of Operations population for health opportunity by QHCs Focus managed care competition Medicaid Theof generated are a
Slide 9: Quorum Health Resources
Quorum Hospital On-site 93 Similar provider Educational Education Consulting Over Group Discounts membership Negotiates products 8Vantage Modeler hospitals 125 Purchasing management markets CAH Health hospitals Management /hospitals services on discounts and guidance programs in with supplies Reimbu
Slide 10: Our Competitive Strengths
Our Competitive Diversified Leading Track Excellence 9Experienced Record Market Leadership Portfolio of Share Clinical Strengths ofWell-Positioned Team Dedicated andAssets
Slide 11: Leading Market Share
Leading Cities of Medically Essential hospitals networks Demographics outpatient 10 50,000 and Market for providers or services counties underserved less managed drive Share with demand care communities populations areforsole 84% of
Slide 12: Diversified Portfolio of Hospitals
Diversified Operates Waukegan Springfield Tooele Evanston Galesburg Watsonville Mt. Mesquite Lexington McKenzie Barstow Las Centre Helena Augusta Deming Big Greenville Georgia Alpine California Oregon Kentucky QHC QHR Hospitals (1) 11 Patient Vernon Vegas Spring Hospital Managed Monroe% Blue 9% 10%
Slide 13: Track Record of Clinical Excellence
Track 28 on 29 Numerous 23 26 27 20 and 17 2011 14 (1) The as 12 Top Hospitals Key 28 19 16 8Psychiatric Joint facilities 2012 (1) 18 Record Performers Quality Cardiovascular, Commission awards 2013of are Care Measures 2014 Clinical 5-time across on Key 2015 Top recognized Excellence Honorees. speci
Slide 14: Experienced Leadership Team
Experienced Tom Chief President, President LifePoint 34 39 Proven 13 years Miller Executive track of& Hospitals Division experience Michael CEO, Leadership record Officer Lutheran V (NYSE: successfully Culotta Operations, 24Chief Team years Health LPNT) Martin Financial ofbuilding CHS experience Net
Slide 15: Our Business Strategy
Our Business Build related Improve quality 14 a facilities hospitals of portfolio patient careStrategy financial safety and of high- services and performance Expand Improve breadth operating of and
Slide 16: Build Local Physician and Provider Relationships
Buildprovider Local Physician Facility-specific Sole 76% Focused 15 ofacommunity acute Portfolio onand establishing care in clinical over operating ofand hospitals High-Quality 84% management leadership strong and ofnamed our marketing community groups hospitals Hospitals Top teams Performers strate
Slide 17: Expand Breadth of Services
Expand 220 Strategic High Focused Recruiting ED ER Complementary Physician 62% Specialists 38% Care Primary 77 2012 61 71 16 79 renovation initiatives primary satisfaction 2013 Breadth on initiatives Engagement engagement Mix Recruiting 2014 general care at (2015) services of 2015 hospital Services
Slide 18: Expand Facility Services
Expand Facility Building Increasing All Expanding Cardiovascular Increase surgery Construction Completion 17 private Breadth Expansion market new ADC rooms surgical expected costs patient services share of byofin Services ~25% capacity tower ~$88 in Springfield, and 2017 million vascular Oregon (Gre
Slide 19: Disciplined Acquisition and Divestiture Approach
Disciplined Intend Selectively Located Sole Not-for-profit Potential Financial QHC MetroSouth Barrow Clearview QHCs 18 oracquisitions: leadership toprimary Regional infor divest and Regional similar pursue Approach Medical service operating hospitals hospitals provider Medical team markets acquisiti
Slide 20: Improve Safety and Quality
Improve Safety Sharing Infrastructure Standardized Consistent Q1 (80%) (70%) (70%)(72%)(71%) (60%)(65%) (63%) (50%)(58%) (40%)(48%) (30%)(36%) (20%) (10%) 0% Note: Source: 19 2014 Represents and Health of Patient Q2best measurement Reduction quality 2014 compliance and Performance practices Safety r
Slide 21: Improve Financial Performance
Improve strategic Hospital-specific Optimize portfolio Cost Reducing initiatives 20 control initiatives Operating services hospital operatingGrowth and costs Financial and in outpatient improving Performance operations should generate increased cash flow
Slide 22: Executive Team
Executive Years Name Tom Michael PharMerica Ernst Martin Health Shaheed University James Community R. Ridgeview 21 Harold Miller & in Title Matthew Management Smith Young Culotta Koury, (Hal) Management of Institute Past President, Health Kentucky EVP, (Matt) McCard, M.D. Experience EVP,Operations S
Slide 23: Board of Directors
Board Name James of Adam Joseph William Tom Barbara Associate R. 22 Praxair Lawrence Miller Experience T. of Feinstein A.R. M. S. Breedlove Directors Professor, Hastings, Hussey Paul, President, Gracey VanCo-Founder M.D. Horn, Former (Chairman) Former D.M.D. Faculty Chief Senior Ph.D. President, Sen
Slide 24: Financial Summary
Financial Summary QUORUM | HEALTH CORPORATION
Slide 25: Favorable Operating Metrics
Favorable Net 236,228 240,841 2012 212,557 218,447 $8,067 Note: Adjusted Excludes 24 Patient 2013 Percentages $8,597 Admissions(1) Admissions impact Operating 2014 Revenue $8,553 2015 ofrepresent ILPer Metrics is2012 cost (2) aAdjusted general $8,656 report 2013 2012-2015 2014 measure settlement Adm
Slide 26: Strong Net Operating Revenue and Adjusted EBITDA
Strong ($ Net as $2,187 $2,146 $191 12.3% $1,892 $1,948 10.1% 2012 % Notes: .2See 5 margin in adjusted Appendix Operating millions) $197 2013 12.1% 10.1% Percentages Revenue $2652014 $255 $264 for Revenues and 2015 a$266 represent reconciliation Adjusted 2012 Adjusted 2013 2012-2015 EBITDA 2014 of E
Slide 27: Management Adjustments to Adjusted EBITDA
Recent Management about ($ Cost Losses that Adjusted Sale Accounts Costs costs Stock-Based be (1) 26 in non-cash. See was of Report millions) and the offrom Operating Appendix 2014 subsequently Separate, EBITDA(1) EBITDA, Companys expenses Receivable Settlement(11.1) Intended Income Compensation bel
Slide 28: Quarterly Results
Quarterly Management the 2014 ($ Net Income Depreciation Interest Impairment Government Other Transaction CA Stock-Based Adjusted Cost Sale million evenly Accounts Receivables Costs costs (~$5 27 inCompanys Provider Operating of Report millions) million). 2015 and of Settlements across 2014 of (Loss
Slide 29: QHC Fourth Quarter and 2015 Metrics
QHC ($ Net Same—store Emergency Debt 2015 % expansion Adjusted Based This 15, Includes 28 in2016, HMA revenues Operating amount millions) /% 4Q Compares Adjusted onHMA hospitals 415 EBITDA for Adjusted as states hospitals Room from 2015 adjusted IL reflects (year hospitals Revenues Quorum cost EBITD
Slide 30: Healthcare Reform and Payor Mix
Healthcare Location 2015 Self-pay Non-patient Medicare 20.8% 100% 46.1% 92% 89% Increased 17.4% 12.4% 14.1% 16.5% 2012 10.2% Self 73% 29 Pay with of Payor 2013 of &revenues 18.2% 11.8% Medicaid 4.7% QHC of Commercial Managed Patient two 1st 2014 Reform Mix QHC or 11.9% or Medicaid hospitals 2nd 2015
Slide 31: Adjusted Cash Flow from Operations
Adjusted ($ 106 316 $43 2$128 Net Note: 2015 (1) 30 57in 18 Represents Income $95 millions) items Costs See 21 Operating Appendix Working Operations D&Atax Other impact Cash for Capital anon-cash Flow more of Operations adjusted detailed Changes interest reconciliation Expense in expense, Cash FeeFl
Slide 32: Historical Capital Expenditures
Historical Facilities IT Several ($ Maintenance Other $82 $107 $203 $59 $69 41 21 61 9237 % revenues: (1) 31 012 in of spending $47 $19 44 Includes 142 $99 millions) net 2013 Investing non-recurring well 5.7% Investing 2014 decreased costs / maintained Growth 4.2% Activities 2015 ofActivity replacem
Slide 33: Pro Forma Capitalization
ProinAppendix Capitalization ($ Cash Asset-Based Revolver Term Capital 11.625% Adjusted Credit Secured Total Net See Bond 32 Forma Debt millions) $18 Secured Debt Loan proceeds statistics Leases Debt Senior EBITDA, /due Adjusted /$1,303 BAdjusted Revolver due 2021 /Debt for as /Adjusted expected Oth
Slide 34: Separation Information and Transition Services
Separation Information Revenue Payroll Eligibility Collections QHC 33 will is processing expected cycle enter screening Costs technology management into to incur five services year administrative an for additional transition hospitals ~$3 services expenses andmillion physician agreements commensurat
Slide 35: Legal Matters and Distribution Agreements
As specified Legal contributed and that Any from QHC 34 Distribution may CHS liabilities third and anticipates arise after party liabilities toinQHC; in that the the claim Agreement, the entering completion are Separation that future; relating expressly relate into and including of to aand toCorpora
Slide 36: Investment Highlights
Investment Leading Experienced proven team Opportunity improve and 35 performance financial well-positioned management market operations Highlights to and clinical share Diversified Track excellence assetsrecord portfolio of of
Slide 37: Appendix
Appendix QUORUM | HEALTH CORPORATION
Slide 38: Non-GAAP Financial Measures
QHC Non-GAAP EBITDA attributable noncontrolling portion Adjusted collecting item, being We analysts measures The calculation nearest 37 have items and Unaudited anGAAP ofand independent, included consists EBITDA, should include accounts excluded EBITDA of to Financial rating (i) noncontrolling measu
Slide 39: Adjusted EBITDA Reconciliation
QHC The ($ Income Depreciation Interest Impairment Legal Transaction Cost Sale Accounts Costs Stock-based Adjusted 38 infollowing of report millions) Unaudited of settlements 2014 (loss) expense, separate, EBITDA EBITDA, receivable settlement(11.1) of costs compensation income and before table 2012
Slide 40: Adjusted EBITDA to Cash Flow Reconciliation
QHC The ($ 2012 Cost Sale Costs Stock-based Adjusted Interest (Provision Deferred Legal Transaction Changes net Patient Supplies, Accounts Other Net 39 inof cash following of report millions) 2013 Unaudited of settlements(2.2)(20.5)(30.4) non-cash non-current effects accounts 2014 expense, separate,
Slide 41: Adjusted Cash Flow from Operations Reconciliation
($Employee Net 2015 2014 2013 2012 Adjusted Accounts Stock-Based Baker DOJ QHR BNA Transaction Employee Adj. A. B. CHS. November C. will D. (1) $69.6 8.1 (0.6)(0.7)(1.0)(1.3) (2.0)(1.3)(4.5)(1.7) 10.3 13.9 15.0 $76.6 21.1 9.6 (8.8) E. F. G. H. I. 40 QHR in DOJ Accounts Adjusted Stock-Based Transacti
Slide 42: Historical Operating Results
Historical ($ Operating Salaries Supplies Other Government Electronic Rent Depreciation Amortization Impairment Total Interest Equity Income Provision Less: Net (1) 41 inBased operating income thousands) 43,092 operating Net operating in(loss) from expense, and 226,561 earnings income for on and rev
Slide 43: Unaudited Quarterly Results
Unaudited 2014 ($ Operating Salaries Supplies Other Government Electronic Rent Depreciation Amortization Impairment Total Interest Equity Income Provision Less: Net Admissions Adjusted 42 inincome operating millions) 11.6 2015 operating Net operating in(loss) expense, and 58.3 Admissions earnings in
Slide 44: Quorum Health Corporation
Quorum Health Corporation