Amedisys, Inc.
NASDAQ: AMED
Follow-On Offering of Common Stock
September 2004
Forward Looking Statements
Statements contained in this presentation which are not historical facts are forward-looking statements. These forward-looking statements and all other statements that may be contained in this presentation that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially than those forecasted. Such forward-looking statements are estimates reflecting the best judgment of Amedisys, Inc. management based upon currently available information. Certain factors which could affect the accuracy of such forward-looking statements are identified in the public filings made by Amedisys, Inc. with the Securities and Exchange Commission, and forward-looking statements contained herein, or other public statements of Amedisys, Inc. or its management should be considered in light of those factors.
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Offering Summary
Issuer Amedisys, Inc.
Offering size:
Shares 2.0 million
Over-allotment 7.5% primary
7.5% secondary
Use of proceeds General corporate purposes,
including working capital and
possible acquisitions
Expected pricing September 15, 2004
Underwriters Raymond James & Associates, Inc.
Jefferies & Company, Inc.
Legg Mason Wood Walker, Inc.
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Investment Highlights
Large, growing, and fragmented industry Focus on Medicare home nursing Strong internal growth
Demonstrated ability to identify and integrate acquisitions Proven operating model Experienced management team
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Management Team
William F. Borne, Chairman and Chief Executive Officer
- CEO since founding the Company in 1982
- Registered nurse, extensive hospital administrative and clinical experience
Larry R. Graham, President and Chief Operating Officer
- Joined Amedisys in 1996; COO since 1999; President in 2004
- General Health Systems; Arthur Andersen
Gregory H. Browne, Chief Financial Officer
- Joined Amedisys as CFO in 2002
- CEO for PeopleWorks, Ramsay Health Care, Ramsay-HMO
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Corporate Overview
Leading provider of home nursing to Medicare beneficiaries Medicare accounts for > 90.0% of revenue 96 locations in the southern United States
Services include:
- Skilled nursing
- Physical, occupational, and speech therapy
- Specialized disease management programs
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Our Locations
Largest home nursing provider in the southern United States
- 94 home nursing locations
- 2 hospice locations
As of July 31, 2004
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Our Strategy
Focus on Medicare-eligible patients Prioritize internal growth Grow through strategic acquisitions Leverage cost-efficient operating structure Develop and deploy specialized nursing programs
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Home Health Care Spending
Home health care is a $45 billion industry
Home nursing is the largest segment in the home health industry
Medicare spending for home nursing totaled $11.4 billion in 2002
Home Health Industry Expenditures ($ billions)
Infusion Therapy $4.7
Respiratory Therapy $4.5
Durable Medical Equipment $2.9
Home Nursing $33.2
Medicare Home Nursing $11.4
Home Nursing
(Commercial, Medicaid & Other)
$17.3
Hospice $4.5
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Home Nursing Market
Industry is highly fragmented
7,000 Medicare-certified nursing agencies
Most are single site or small regional providers:
- Independently owned agencies
- Visiting nurse associations
- Facility- and hospital-based agencies
Publicly-owned providers account for less than 5.0% of the home nursing market
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Trend from inpatient to home-based care:
- Patient preference
- Payor incentives
- Technology advancements Demographics – aging population
Increased prevalence of chronic and co-morbid conditions
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Medicare Reimbursement Status
Medicare home nursing is an $11.4 billion market
Prospective Payment System (PPS):
- Implemented in October 2000
- Base payment for 60-day episode of care
Currently $2,213 per episode
Adjusted for patient acuity and market factors
Reviewed and updated annually
- Encourages efficient delivery of care
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Medicare Reimbursement Outlook
Expect 2.15% average price increase in CY2005
5.0% rural add-on expires March 31, 2005 Other considerations:
- Annual changes to base episode rate
- Case mix weighting
- MSA-based wage index
- Therapy threshold
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Internal Growth
Strong recent internal growth in Medicare admissions
Internal growth being driven by:
- Overall industry growth
- Comprehensive range of clinical programs
- Enhanced referral source education efforts
- Expanded and more effective sales force
- Increased focus on start-ups
Internal Admissions Growth
40% 30% 20% 10% 0%
Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004
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Acquisition Strategy
Disciplined approach
Acquisition criteria:
- Defined pricing objectives
- Targeted geographic profile
- Compatible payor mix
- Consistent clinical metrics
- Expandable referral base
- Opportunities for internal growth
Target hospital-based and multi-site agencies Five acquisitions over the past twelve months
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Recent Acquisitions
Date Prior Ownership Locations Location
June 2004 River Region (Triad) 1 Mississippi
March/May 2004 Tenet Healthcare 12* Southern States
April 2004 Hillcrest Medical Center 1 Oklahoma
November 2003 St. Lukes Episcopal 1 Texas
August 2003 Metro Home Health 6 Louisiana
July 2003 Crawford Memorial (HMA) 1 Arkansas
October 2002 South Georgia Medical Center 1 Georgia
August 2002 Baylor All Saints Home Care 1 Texas
April 2002 Christus Spohn Home Health 1 Texas
June 2001 Tenet Healthcare 1 South Carolina
April 2001 Seton Home Health Services 7 Alabama
*Includes two hospice locations
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Tenet Acquisition
Acquired ten home health agencies and two hospice operations
Paid approximately $19.1 million in cash
$26.7 million in annualized revenue
Operate in Southern states
- Alabama - Georgia - Mississippi - Texas
- Florida - Louisiana - Tennessee Expect agencies to be accretive to EPS
- CY2004 — $0.05 to $0.07 per share
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Investments in Technology
Realizing strategic advantages from investment in information technology Standardized processes:
- Automatic scheduling
- Scanning, uploading, and automated review of assessment forms
- Web-based HR and payroll system
Centralized management of clinical oversight and utilization:
- Real time episode analysis
- Daily / weekly review of quality indicators
- Executive information system
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Recent Financial Results
CY2004
CY2003 Q1 Q2 YTD
Net revenue $ 142.5 $ 47.3 $ 56.9 $ 104.2
Year-over-year growth (1) 9.2% 52.1% 76.7% 64.6%
Gross margin 83.9 27.8 33.3 61.1
Percentage of revenue 58.9% 58.7% 58.5% 58.6%
Operating income 14.3 6.9 8.1 15.0
Percentage of revenue 10.1% 14.6% 14.2% 14.4%
EBITDA 17.5 7.9 9.0 16.9
Percentage of revenue 12.3% 16.7% 15.8% 16.2%
Fully-diluted EPS $0.83 $ 0.34 $ 0.39 $0.72
Year-over-year growth (1) 40.7% 183.3% 143.8% 157.1%
$ millions, except per share data
(1) CY2003 growth based on adjusted CY2002 results that exclude nonrecurring and one-time charges
EBITDA is net income before provision for income taxes, interest expense, and depreciation and amortization. EBITDA should not be considered as an alternative to, or more meaningful than, income before income taxes, cash flow from operating activities, or other traditional indicators of operating performance. Rather, EBITDA is presented because it is a widely accepted supplemental financial measure that we believe provides relevant and useful information. Our calculation of EBITDA may not be comparable to a similarly titled measure reported by other companies, since all companies do not calculate this non-GAAP measure in the same manner.
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Net Revenue
Revenue of $104.2 million for the six months ended June 30, 2004 64.6% year-over-year increase vs. first six months of CY2003 Internal and external volume growth Expanded sales force and market share gains Deployment of specialty programs Favorable pricing trends
Year-Over-Year Revenue
($ millions)
$150.0 $100.0 $50.0 $0.0
2001 2002 2003 Six Months
Quarterly Revenue
($ millions) $60.0 $45.0 $30.0 $15.0 $0.0
Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004
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EBITDA
EBITDA of $16.9 million for the six months ended June 30, 2004
168.2% year-over-year increase vs. first six months of CY2003
Increased operating leverage
Economies of scale
Year-Over-Year EBITDA
($ millions) $20.0 $15.0 $10.0 $5.0 $0.0
2001* 2002* 2003 Six Months
Quarterly EBITDA
($ millions) $10.0 $8.0 $6.0 $4.0 $2.0 $0.0
Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004
*Results exclude nonrecurring and one-time charges
EBITDA is net income before provision for income taxes, interest expense, and depreciation and amortization. EBITDA should not be considered as an alternative to, or more meaningful than, income before income taxes, cash flow from operating activities, or other traditional indicators of operating performance. Rather, EBITDA is presented because it is a widely accepted supplemental financial measure that we believe provides relevant and useful information. Our calculation of EBITDA may not be comparable to a similarly titled measure reported by other companies, since all companies do not calculate this non-GAAP measure in the same manner.
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Earnings Per Share
Fully-diluted EPS of $0.72 for the six months ended June 30, 2004 157.1% year-over-year increase vs. first six months of CY2003 Significantly improved capital structure Improving cash from operations Reduction of long-term debt
Year-Over-Year EPS
$1.00 $0.75 $0.50 $0.25 $0.00
2001* 2002* 2003 Six Months
Quarterly EPS
$0.40 $0.30 $0.20 $0.10 $0.00
Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004
*Results exclude nonrecurring and one-time charges
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Pro Forma Capitalization
June 30, 2004
Actual Adjusted
Cash and cash equivalents $ 22,279 $ 77,488
Debt and capital lease obligations:
Long-term debt, including current portion $ 4,796 $ 4,796
Capital lease obligations, including current portion 942 942
Total debt and capital lease obligations 5,738 5,738
Stockholders’ equity:
Common stock 12 14
Additional paid-in capital 58,980 114,187
Treasury stock (25) (25)
Retained earnings 5,129 5,129
Total stockholders’ equity 64,096 119,305
Total capitalization $ 69,834 $ 125,043
$ millions
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Investment Highlights
Large, growing, and fragmented industry Focus on Medicare home nursing Strong internal growth
Demonstrated ability to identify and integrate acquisitions Proven operating model Experienced management team
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