Exhibit 99
Investor Presentation
Third Quarter 2008
1
$721 million consolidated
revenues(1)
revenues(1)
Hospital Rehabilitation Services Division
$161 million revenue - 22% of revenue (1)
• 156 hospital-based programs
• 31 states
• 44,500 inpatient and skilled nursing unit discharges/year (1)
• 950,000 annual outpatient visits (1)
$106 million revenue - 15% of revenue (1)
Hospital Division
• 5 LTACHs, 5 rehabilitation hospitals (6th rehabilitation hospital opened in November 2008)
• 1 rehabilitation hospital minority owned (2)
• 7 states (3)
• 483 beds (3)
• 6,500 annual patient discharges (1) (3)
Other Healthcare Services Division
$38 million revenue - 5% of revenue (1)
• Phase 2 Consulting - - consulting and care management for hospitals and health systems
• Polaris Group - consulting for long-term care facilities
• VTA Management Services - therapy and nurse staffing for New York
(1) For twelve months ended 9/30/08
(2) Not included in consolidated revenues
(3) These statistics include the minority-
owned rehab hospital
owned rehab hospital
$416 million revenue - 58% of revenue (1)
Contract Therapy Division
• 1,075 skilled nursing facility programs
• 40 states
• 7.5 million annual patient visits (1)
Service Lines
2
The Contract Therapy division manages skilled nursing facility (SNF) rehab programs that are designed to
provide therapy intervention to both short-stay patients and long-term residents with a wide range of
conditions, including neurological, orthopedic and other conditions common to the geriatric patient.
provide therapy intervention to both short-stay patients and long-term residents with a wide range of
conditions, including neurological, orthopedic and other conditions common to the geriatric patient.
Competitive Landscape (2)
Company
• Self-Operation
• RehabCare
• Aegis Therapies
• Genesis
• Kindred - Peoplefirst
• Sundance
• Select Medical
• EnduraCare
• Skilled Healthcare
Owned
>12,000
0
N/A
~200
228
108
0
0
75
(1) Source: MedPAC and Congressional Budget Office
(2) Source: Information available from public filings or from company websites
Managed
0
1,075
N/A
~500
345
317
~400
~300
114
Total
>11,000
1,075
>1,000
~700
573
425
~400
~300
189
Contract Therapy (CT)
Market Overview
Market Overview
Market Size (1)
15,800 Medicare certified skilled nursing facilities
3
Contract Therapy
Performance
Performance
Dollars in millions | Q3 08 | Q2 08 | Q1 08 | Q4 07 |
Operating Revenues | $105.6 | $106.3 | $104.3 | $99.4 |
Operating Earnings | $6.6 | $5.6 | $3.8 | $4.0 |
Number of Locations End of Period | 1,075 | 1,053 | 1,038 | 1,064 |
Outlook
• Raising operating earnings margin target to a range of 5.5% to 6.5% for the fourth
quarter
quarter
• Number of locations remained stable in the fourth quarter
• Overall strong operating performance
● Operating earnings margin improved from 3.2% in Q3 07 to 6.2% in Q3 08, which
exceeded guidance range of 4.5% to 5.5%
exceeded guidance range of 4.5% to 5.5%
● Same store revenue increased $10.0 million or 11.8% in Q3 08 compared to year
ago period
ago period
● Net gain in operating units for two consecutive quarters
4
Acute care hospital-based inpatient rehabilitation facilities (IRFs) in RehabCare’s Hospital Rehabilitation
Services (HRS) division are for patients who require early, intensive therapies (at least 3 hours/day 5
days/week) for recovery from stroke, brain injury, neurological disorders, amputation and other disabling injuries
and illnesses. Outpatient therapy programs provide proactive, exercise-oriented therapy with hands-on
treatment for individuals of all ages.
Services (HRS) division are for patients who require early, intensive therapies (at least 3 hours/day 5
days/week) for recovery from stroke, brain injury, neurological disorders, amputation and other disabling injuries
and illnesses. Outpatient therapy programs provide proactive, exercise-oriented therapy with hands-on
treatment for individuals of all ages.
Competitive Landscape (Acute care hospital-based IRFs)
• Self-Operation
• RehabCare (110)
• Horizon Health (Physical Rehab Services) (>20)
• HealthSouth (11)
• Milestone(1)
• TherEx (formerly National Rehab Partners)(1)
(1) Private company or a subsidiary of a public company; number of locations is not available
Source: Information available from public filings or from company websites
Hospital Rehabilitation Services (HRS)
Market Overview
Market Overview
Market Size
5,000 acute care hospitals (approximately 1,000 hospital-based IRFs)
5
Hospital Rehab Services
Performance
Performance
Dollars in millions | Q3 08 | Q2 08 | Q1 08 | Q4 07 |
Operating Revenues | $41.6 | $40.2 | $40.2 | $38.8 |
Operating Earnings | $6.2 | $5.3 | $4.6 | $6.0 |
Number of Locations End of Period | 156 | 154 | 153 | 154 |
IRF Discharges | 10,569 | 10,309 | 10,276 | 10,190 |
Outlook
• Raised operating earnings margin target to range of 13% to 16% for the fourth quarter
• IRF locations increased from 110 in Q3 to 113 in Q4
• 3% - 5% growth in same store discharges YOY in the fourth quarter
• Operating earnings margin reached 15.0% in Q3 08, which was the upper end of guidance
range of 12% - 15%
range of 12% - 15%
• Unit and revenue growth are returning to HRS following legislatively enacted freeze of CMS 13
Rule at 60% in December 2007
Rule at 60% in December 2007
● Same store IRF discharges increase by 3.7% in Q3 08 compared to year ago same period
● Unit count in Q3 08 increased for the second consecutive quarter
● Five signed but unopened IRF contracts with three scheduled to open in Q4 08
6
Inpatient rehabilitation facilities (IRFs) are equipped to treat patients with a wide range of debilitating
injuries and illnesses, offering inpatient and outpatient services in a home-like environment. Long-term acute
care hospitals (LTACHs) are specialty care hospitals designed for extended stay patients with complex and
chronic conditions.
injuries and illnesses, offering inpatient and outpatient services in a home-like environment. Long-term acute
care hospitals (LTACHs) are specialty care hospitals designed for extended stay patients with complex and
chronic conditions.
Hospital Division Description
and Locations
and Locations
Arlington, TX
St. Louis, MO (opened
November 2008)
November 2008)
N. Kansas City, MO
Tulsa, OK
Miami, FL
Houston, TX
New Orleans, LA
Amarillo, TX
Austin, TX
Rome, GA
Lafayette, LA
Peoria, IL
Current locations
Future locations
Providence, RI
LTACH CON
LTACH CON
7
Hospital Division
Development Timeline
Development Timeline
• 11 existing hospitals (St. Luke’s Rehabilitation Hospital opened
November 2008), 2 in development, 2 expansions
November 2008), 2 in development, 2 expansions
• Two development projects (Kokomo, IN and Reading, PA LTACHs)
exited in third quarter and one planned acquisition (Providence, RI
IRF) canceled in the fourth quarter
exited in third quarter and one planned acquisition (Providence, RI
IRF) canceled in the fourth quarter
• Continuing to evaluate opportunities to accelerate growth of this
division, including acquisitions
division, including acquisitions
8
Market Size:
240+ IRFs
Competitive Landscape
• Select Medical (88)
• Kindred (83)
• Regency Hospital (23)
• Triumph Healthcare (20)
• LifeCare (20)
• Vibra Healthcare (12)
• Cornerstone Healthcare (9)
• Ernest Health (8)
• HealthSouth (6)
• RehabCare (5)
Market Size:
460+ LTACHs
Freestanding IRFs
LTACHs
(1) Includes St. Luke’s Rehabilitation Hospital (opened in November 2008) and minority-
owned hospital
owned hospital
Source: Information available from public filings or from company websites
Hospital Division
Market Overview
Market Overview
Competitive Landscape
• HealthSouth (93)
• RehabCare (7)(1)
• Ernest Health (6)
• Select Medical (4)
• Vibra Healthcare (4)
• Centerre (4)
9
Hospital Division
Performance
Dollars in millions | Q3 08 | Q2 08 | Q1 08 | Q4 07 |
Operating Revenues | $27.5 | $27.2 | $27.5 | $23.8 |
Operating Earnings (loss) | $(5.5) | $(3.5) | $(0.1) | $(0.7) |
Number of IRFs End of Period | 5 | 5 | 5 | 5 |
IRF Patient Discharges | 994 | 1,045 | 1,076 | 962 |
60% Compliance Level (Avg) | 59.4% | 58.5% | 59.7% | 63.6% |
Number of LTACHs End of Period | 5 | 5 | 3 | 3 |
LTACH Patient Discharges | 498 | 422 | 416 | 407 |
Outlook
• Expect operating loss of $3.7 to $4.7 million, which includes start-up and ramp-up losses
associated with Northland LTAC and St. Luke’s Rehabilitation Hospitals, in the fourth
quarter
associated with Northland LTAC and St. Luke’s Rehabilitation Hospitals, in the fourth
quarter
• Operating losses have been the result of:
● Uneven operating performance among mature hospitals
● Start-up/ramp-up losses from new hospitals (aggregate $5.0 million over the past 4 quarters)
● Higher SG&A related to infrastructure investments to support growing portfolio of hospitals
10
(dollars in millions except per share) | 3Q 08 | 2Q 08 | 1Q 08 | 4Q 07 |
Operating Revenues | $182.6 | $183.9 | $182.4 | $171.8 |
Operating Earnings | $7.0 | $7.7(1) | $8.6 | $9.1 |
Net Earnings | $4.0 | $4.5(1) | $4.5 | $5.1 |
Diluted Earnings Per Share | $0.22 | $0.25(1) | $0.25 | $0.29 |
(1) Includes a favorable pretax net settlement on a non-compete agreement of $0.6 million, or $0.4 million after
tax and $0.02 per diluted share.
tax and $0.02 per diluted share.
• Improved operating earnings performance in CT and HRS divisions has
been masked by operating losses in the Hospital division
been masked by operating losses in the Hospital division
Consolidated Financial Summary
11
(Dollars in thousands)
Cash and Cash Equivalents
Total Assets
Total Debt
Stockholders’ Equity
Percent of Debt to Total Capital
6/30/08
9/30/08
$ 14,345
426,704
71,000
$255,903
22%
$ 12,405
415,953
52,000
$261,371
17%
• Cash flow from operations totaled $32.0 million for nine months ended
September 30, 2008. Debt was reduced by $19.0 million in the third
quarter.
September 30, 2008. Debt was reduced by $19.0 million in the third
quarter.
Consolidated Balance Sheet
12
Part B Therapy Caps & Fee Schedule: On July 15, 2008, Congress passed the Medicare
Improvements for Patients and Providers Act of 2008. This law reinstated the therapy cap exceptions
process for Part B patients through December 31, 2009. We continue to press our trade groups toward
finalizing an alternative to the therapy cap exception process.
Improvements for Patients and Providers Act of 2008. This law reinstated the therapy cap exceptions
process for Part B patients through December 31, 2009. We continue to press our trade groups toward
finalizing an alternative to the therapy cap exception process.
The July Medicare act also provided for an additional 1.1% rate increase in 2009.
Payments: The final rule for SNFs that went into effect October 1, delays implementation of a
recalibration of RUG (Resource Utilization Group) categories and includes a market basket increase of
3.4% for FY09.
recalibration of RUG (Resource Utilization Group) categories and includes a market basket increase of
3.4% for FY09.
MedPAC is recommending a 0% rate increase for SNFs and IRFs in FY10, but a net 1.6% increase for
LTACHs.
LTACHs.
MMSEA: The Medicare, Medicaid and SCHIP Extension Act (MMSEA) of 2007 contained LTACH-
specific provisions through December 31, 2010, including:
specific provisions through December 31, 2010, including:
•Prohibiting application of the 25% Rule to freestanding and grandfathered LTACHs
•Freezing the referral threshold from co-located hospitals to 50% for HIH (hospital-in-hospital) LTACHs
and 75% for rural and MSA-dominated HIH LTACHs
and 75% for rural and MSA-dominated HIH LTACHs
•Preventing application of a short-stay outlier payment provision
•Instituting a moratorium on development of new LTACHs
Legislative and Regulatory
Environment
Environment
13
• Continue to implement action plan for turning around Hospital
division, which includes strengthening field management, centralizing
business functions, trimming overhead and ramping up market
development efforts
division, which includes strengthening field management, centralizing
business functions, trimming overhead and ramping up market
development efforts
• Maintain targeted margins in operating divisions
• Grow operating revenues and earnings both organically and through
acquisitions
acquisitions
• Continue to address therapist supply issue through academic
partnerships, campus relations/recruiting and innovative initiatives
like the Allied Health Research Institute. (Campus Relations
program has resulted in 1,285 new grad hires since 2005, growing
from 83 in ’05 to 525 in ’08.)
partnerships, campus relations/recruiting and innovative initiatives
like the Allied Health Research Institute. (Campus Relations
program has resulted in 1,285 new grad hires since 2005, growing
from 83 in ’05 to 525 in ’08.)
Primary Objectives
14
Increasing market demand
Unique continuum of care model
Demonstrated ability to grow revenue
organically and through acquisitions
organically and through acquisitions
Proven ability to adapt to market
and regulatory changes
Expenditures for post-acute services:
ü Grew $20.4 billion from 2000-2007
ü Projected increase of 150% by 2016
ü Represents 15% of Medicare fee-for-service
spending
spending
One of the longest tenured post-acute providers (established in 1982)
Revenues1
1 excludes StarMed
15
Forward-looking statements have been provided pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements are based on the Company’s current expectations and could be
affected by numerous factors, risks and uncertainties discussed in the Company’s filings with the Securities and
Exchange Commission, including the Company’s most recent annual report on Form 10-K, subsequent quarterly
reports on Form 10-Q and current reports on Form 8-K. Do not rely on forward looking statements as the
Company cannot predict or control many of the factors that ultimately may affect the Company’s ability to
achieve the results estimated. The Company makes no promise to update any forward looking statements
whether as a result of changes in underlying factors, new information, future events or otherwise.
Litigation Reform Act of 1995. Such statements are based on the Company’s current expectations and could be
affected by numerous factors, risks and uncertainties discussed in the Company’s filings with the Securities and
Exchange Commission, including the Company’s most recent annual report on Form 10-K, subsequent quarterly
reports on Form 10-Q and current reports on Form 8-K. Do not rely on forward looking statements as the
Company cannot predict or control many of the factors that ultimately may affect the Company’s ability to
achieve the results estimated. The Company makes no promise to update any forward looking statements
whether as a result of changes in underlying factors, new information, future events or otherwise.
Safe Harbor