Stanton Nelson, CEO May 17, 2016 FOUNDATION HEALTHCARE Investor Presentation Exhibit 99.3 |
Forward Looking Statements This presentation includes forward looking statements. All statements other than statements of historical fact, including, without limitation, statements regarding future plans and objectives of Foundation Healthcare or the Corporation, are forward-looking statements that involve various risks, assumptions, estimates, and uncertainties. These statements reflect the current projections, expectations or beliefs of Foundation Healthcare and are based on information currently available to the Corporation. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. All forward looking statements made in this presentation are qualified by these cautionary statements and the risk factors described above. All such statements are made as of the date this presentation is given and Foundation Healthcare assumes no obligation to update or revise these statements. An investment in Foundation Healthcare is speculative due to the nature of the Corporation's business. Investors must rely upon the ability, expertise, judgment, discretion, integrity, and good faith of the Management of the Corporation. Recipient acknowledges that Foundation Healthcare is subject to the reporting requirements of the Securities and Exchange Commission. Recipient further acknowledges that the financial information included in this presentation related to Foundation Healthcare is confidential until such time as the financial information has been filed with the SEC on Form 8-K. Recipient agrees not to use any confidential information to purchase, sell, or otherwise transfer or dispose of Foundation Healthcare’s common stock. 2 |
Foundation Healthcare: Company Snapshot Foundation Healthcare, Inc. (OTCQB: FDNH) Application filed to up- list to NASDAQ Business Description Own and operate Surgical Hospitals Corporate Headquarters Oklahoma City, OK Shares O/S; FDNH share price 1 18.1 million @ $2.70/share Market Capitalization 1 $48.9 million Cash 2 $2.9 million Total Debt $60.0 million Enterprise Value 1, 2 $106.0 million Reported Q1 3/31/16 Revenue Adjusted EBITDA $39.0 million $1.3 million Fiscal Year 2015 Revenue Adjusted EBITDA $127.5 million $14.8 million 1 Share price as of 5/13/16 2 Financial data as of 3/31/16 (Debt includes capitalized lease obligations) 2 |
FDNH operates majority-owned Surgical Hospitals in partnership with physicians Currently own four surgical hospitals (three majority-owned) and seven ambulatory surgical centers (ASCs) Physician partners : 350+ owners and 165 non-owners Completed the acquisition of University General Hospital (UGH) in Houston on 12/31/15 (rebranded as Foundation Surgical Hospital of Houston) FSH-Houston EBITDA accretive in Q1-2016 History of strong revenue and profit growth post acquisition Robust pipeline of potential hospital acquisitions in addition to UGH Management – experienced operators with strong bench strength Highly-scalable – many markets with opportunities to drive revenue growth with related services Foundation Healthcare: Company Overview 4 |
Foundation Healthcare: Management Objectives 5 Accelerate Growth. FDNH completed its most recent acquisition of UGH on 12/31/2015 UGH generated $54.0 million of revenue in 2015 2015 Annual revenue growth expected to exceed 20% Expect solid organic growth and robust acquisition pipeline Improve Stock Liquidity. 90%+ of shares are owned by insiders and other investors who have been owners for many years Application is pending for up-list to NASDAQ Improve Awareness. Management is actively seeking growth oriented investors and sell-side research firms Increase Shareholder Value. Management is focused on improving returns for shareholders Management owns >31% of the company |
Foundation Healthcare: Management Team 6 Thomas Michaud Chairman of the Board • Founded Foundation Surgery Affiliates, LLC (“FSA”) • CEO of FSA and Foundation Surgical Hospital Affiliates, LLC Stanton Nelson CEO • CEO since January 2010 • Vice Chairman of Valliance Bank. Prior CEO of Monroe-Stephens Broadcasting and VP of Oliver Investments Jennifer Duke CDO • 10+ years of health care experience • Formerly with Johnson & Johnson and Cardinal Health Hugh King CFO • 35+ years of hospital financial management experience • Former Vice President and CFO at four multi-hospital systems. Travis Crenshaw CIO • Joined Company in 2014 • Former Vice President & Chief Information Officer, United Surgical Partners International Cindy Braly CNO • Joined company in 2011 with 35+ years of leadership in acute care surgical nursing, quality management, and accreditation |
Case Study: San Antonio – De Novo Development |
Foundation Healthcare: San Antonio Diagnostic Imaging Centers Physical Therapists Wound Care 8 Foundation Surgical Hospital of San Antonio |
Foundation Healthcare: San Antonio 9 The Proof is in the Numbers… * Construction/expansion in operating rooms suite to accommodate new physicians - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 5,000,000 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015* Q1 2016* San Antonio EBITDA by Quarter 2013-2016 |
Case Study: El Paso – Acquisition out of Bankruptcy |
Foundation Healthcare: El Paso Surgical Centers Diagnostic Imaging Centers Physical Therapists Reference Lab Oncology Wound Care 11 |
Foundation Healthcare: El Paso 12 The Proof is in the Numbers…And More Opportunities to Come. *Three new physicians starting in 2016 - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 El Paso Net Revenues by Quarter 2013-2016 |
El Paso – The Proof is in the Numbers… And More Opportunities to Come… Foundation Healthcare: El Paso 2013- 2016 1,000,000 2,000,000 3,000,000 4,000,000 (2,000,000) (1,000,000) - Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 El Paso EBITDA by Quarter 13 |
UGH Opportunity |
Foundation Healthcare: UGH – Houston 15 Established Surgical Hospital located in a desirable location in Houston, Texas Opened in 2006 and grandfathered for physician ownership under ACA Licensed for: 69 inpatient beds Six operating rooms (main campus) HOPD ambulatory surgery facility (three operating rooms) Reported more than $54.0 million of net revenue in 2015 Reported an operating loss of $5.0 million, or (9.4)% Compared to an operating margin of (17.6)% at El Paso surgical hospital when FDNH acquired the facility Significant opportunity for revenue and margin improvement Acquired by FDNH on 12/31/2015 for $33.0 million financed by cash and debt |
Foundation Healthcare: UGH Details and Opportunity 16 Bankruptcy Court approved Section 363 sale to Foundation on November 9, 2015 Purchase price = $33.0 million financed by equipment financing ($5.0 million), note to UGH parent corporation ($7.9 million) and bank financing ($20.1 million) FSH-Houston EBITDA accretive in Q1-2016 Patient satisfaction scores for Q1-2016 improved to 93% from 63% reported in 2015 Operating improvement plan includes: Re-syndicate to 49% physician (predominantly surgeon) ownership Transition could be completed before July 1, 2015 Buy-in will generate $4.9 million of proceeds used to reduce debt Improve physician recruitment (owners and partners) Add additional service lines Eliminate duplicative overhead costs Implement proprietary program to drive staffing improvement Implement proprietary BI system to monitor daily profitability by case, physician and service line _ |
Ninety Nine Health Care Management |
Ninety Nine Health Care Management 18 Physician services company providing management of the following services Revenue Cycle Information Technology Practice Operations Human Resources Competitive Advantage and Strategic Relationships Established “clinically and financially integrated” physician network Enables physicians and Foundation Hospitals to participate in higher paying managed care contracts Physicians can only participate if: They contract for the Ninety Nine Management’s billing services to achieve financial integration. They contract for the Ninety Nine Management’s information technology services to achieve clinical integration by interfacing electronic medical record systems Currently operating in Dallas market but scalable to all markets in which there are Foundation hospitals |
Ninety Nine Health Care Management 19 Value for the Physician Higher compensation through economy of scale contracting, lean business practices and increased productivity. Value for the Payer Lower cost of care by re-directing patients from high-cost health systems to lower-cost providers. Clinical integration of physician practices offers better oversight of quality metrics and outcomes. Value for Foundation Surgical Hospitals Higher-reimbursement fee schedules from Payers Physicians benefit from steering patients away from high-cost health systems The 99 MGMT Value Proposition |
Investment Highlights 20 New Acquisitions, Well-Positioned for Growth Large, attractive market with powerful secular tail-winds Addition of UGH, 99 MGMT and facility expansions suggest positive outlook for 2016 Strong, experienced Corporate and Hospital Leadership teams Uplist likely to improve visibility and float Active pipeline of potential surgical hospital acquisitions |
FDNH Financial Appendix |
Foundation Healthcare: Income Statement 22 2016 2015 2015 2014 Total Revenue and Equity from Affiliates 39,026 $ 29,981 $ 127,509 $ 104,225 $ Total Operating Expense 40,907 29,274 121,257 101,591 Total Other Income/(Expense) (962) (309) (1,022) (1,226) (Provision) Benefit for Income Taxes 1,200 0 1,120 852 Income (Loss) from Continuing Operations, Net of Taxes (1,643) 398 6,350 2,260 Income (Loss) from Discontinued Operations, Net of Taxes (12) (114) 6,192 255 Net Income (Loss) (1,655) 284 12,542 2,515 Less: Non-controlling Interests 728 1,421 6,645 3,827 Net Income (Loss) to Foundation HealthCare (2,383) $ (1,137) $ 5,897 $ (1,312) $ Adjusted EBITDA from Continuing Operations 1,316 $ 2,301 $ 14,218 $ 9,624 $ Adjusted EBITDA Percentage 3.4% 7.7% 11.2% 9.2% Three Months Ended March 31, December 31, Year Ended Dollars In Thousands |
Foundation Healthcare: Balance Sheet 23 March 31 December 31, 2016 2015 Cash and Cash Equivalents 2,900 $ 5,062 $ Working Capital 6,999 9,004 Total Assets 124,064 119,271 Short-Term Debt 804 309 Long Term Debt 80,024 80,740 Total Liabilities From Discontinued Operations 2,359 2,356 Preferred Non-controlling Interests 6,960 6,960 Accumulated Deficit (34,613) (32,074) Total Stockholder Equity (Deficit) (13,978) $ (11,186) $ Dollars In Thousands |
Foundation Healthcare: Adjusted EBITDA (Cont. Ops) 24 2016 2015 2015 2014 Net Income (Loss) From Continuing Operations (1,643) $ 398 $ 6,351 $ 2,872 $ Interest Expense 1,192 326 1,060 1,611 Provision (Benefit) for Income Taxes (1,200) 0 (1,120) (852) Depreciation and Amortization 2,749 1,381 5,698 5,550 EBITDA From Continuing Operations 1,098 2,105 11,989 9,181 Add: Stock Compensation 218 196 1,637 1,387 Add: S-1 Filing Expenses 319 Add: Acquisiton Expenses 273 Adjusted EBITDA From Continuing Operations 1,316 $ 2,301 $ 14,218 $ 10,568 $ Three Months Ended March 31, December 31, Year Ended Dollars In Thousands |
Foundation Healthcare: EBITDA – San Antonio & El Paso Hospitals 24 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Net Income (Loss) From Continuing Operations (509) $ 1,067 $ 2,470 $ 4,048 $ 1,829 $ 1,794 $ 1,999 $ 1,885 $ 1,407 $ 1,372 $ 3,294 $ 2,017 $ 1,060 $ Interest Expense 116 156 127 (53) 64 49 40 41 36 34 33 35 44 Provision (Benefit) for Income Taxes 0 0 0 0 0 0 0 0 0 0 0 0 0 Depreciation and Amortization 311 309 268 352 342 308 139 137 118 84 82 84 87 EBITDA From Continuing Operations (82) $ 1,532 $ 2,864 $ 4,347 $ 2,236 $ 2,152 $ 2,178 $ 2,063 $ 1,561 $ 1,490 $ 3,409 $ 2,135 $ 1,191 $ Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Net Income (Loss) From Continuing Operations (1,629) $ (679) $ (840) $ (1,660) $ (915) $ (905) $ 575 $ 1,767 $ 1,625 $ 912 $ 2,152 $ 1,166 $ 426 $ Interest Expense 288 324 218 211 146 176 106 112 116 144 144 157 184 Provision (Benefit) for Income Taxes 0 0 0 0 0 0 0 0 0 0 0 0 0 Depreciation and Amortization 588 682 612 586 642 628 682 703 768 769 770 779 770 EBITDA From Continuing Operations (753) $ 327 $ (11) $ (863) $ (127) $ (102) $ 1,363 $ 2,583 $ 2,509 $ 1,825 $ 3,066 $ 2,102 $ 1,380 $ 2016 2016 2014 2015 El Paso EBITDA Reconciliation Dollars In Thousands 2013 2014 2015 San Antonio EBITDA Reconciliation Dollars In Thousands 2013 |
Foundation HealthCare 14000 N. Portland Ave., Suite 200 Oklahoma City, OK 73134 800.783.0404 www.fdnh.com |