1 1 Amedisys First Quarter 2018 Earnings Call Supplemental Slides May 8 2018 Exhibit 99.2 th |
2 This presentation may include forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon current expectations and assumptions about our business that are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those described in this presentation. You should not rely on forward-looking statements as a prediction of future events. Additional information regarding factors that could cause actual results to differ materially from those discussed in any forward-looking statements are described in reports and registration statements we file with the SEC, including our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, copies of which are available on the Amedisys internet website http://www.amedisys.com or by contacting the Amedisys Investor Relations department at (225) 292-2031. We disclaim any obligation to update any forward-looking statements or any changes in events, conditions or circumstances upon which any forward-looking statement may be based except as required by law. www.amedisys.com NASDAQ: AMED We encourage everyone to visit the Investors Section of our website at www.amedisys.com, where we have posted additional important information such as press releases, profiles concerning our business and clinical operations and control processes, and SEC filings. Forward-looking statements |
3 Our Key Areas of Focus Strategic areas of focus for 2018 and beyond 1 Organic Growth 3 Clinical Initiatives 4 Impact Capacity and Productivity 5 M&A 2 Recruiting / Retention *Note: Home Health same store volume is admissions plus recertifications • Hospice: Continued impressive growth rate (Admissions +5%, ADC +12%) for 1Q’18 • Home Health*: Total same store admission +4%, same store episodic admission +3%, total same store volume +7%, same store episodic volume +6% for 1Q’18 • Personal Care: Double digit growth in billable hours / quarter +27% • Fifth straight quarter of increased BD FTE’s ending 1Q’18 with 753 • Targeting industry leading employee retention amongst all employee categories • Focus on reduction of clinical turnover • Quality: Amedisys improves STARS scores to 4.38 (July’18 preview) with 93% of providers at 4+ STAR rating • 72 Amedisys providers rated at 5-Stars in the July’18 Preview • Continued focus on reduction of 30-Day and 60-Day ACH rate reduction • Since April 2017, skilled nursing productivity up 8%, PT productivity up 11% and OT productivity up ~1% - helping to drive down CPV • Director of Operations (DOO) leadership training underway • Focusing on optimizing RN / LPN & PT / PTA staffing ratio • Preference to acquire assets in Hospice, Personal Care tuck- in’s, and opportunistic regional acquisitions in Home Health • Unlevered balance sheet (0.2x) gives us access to capital • Pipeline strong but price expectations challenging – will continue to remain disciplined on pricing |
4 Highlights and Summary Financial Results (Adjusted): 1Q 2018 (1) Same store Home Health total admissions up (+4%). Hospice (+5% same store admissions) and Personal Care (+27% billable hours) continue their strong growth Amedisys Consolidated • Revenue Growth: +9% • EBITDA: $42M (+30%) • EBITDA Margin: 10.4% • EPS: $0.79 (+68%) 1Q’18 • Net debt: ($32.1M) • Leverage ratio: (0.2)x (net) • CFFO: $40.3M • Free cash flow (4) : $36.2M • DSO: 41.4 (vs. Q4’17 of 44.0) Balance Sheet & Cash Flow 1Q’18 Same Store Admissions: • Total: +4% • Episodic (2) : +3% Same Store Volume (3) : • Total: +7% • Episodic (2) : +6% Other Statistics: • Revenue per Episode: $2,792 (+$10) • Total Cost per Visit: (1.4%) • Medicare Recert Rate: +260 bps Home Health Growth Metrics (5) : • Billable hours/quarter: +27% • Clients served: +47% Personal Care Same Store Volume: • Admissions: +5% • ADC: +12% Other Statistics: • Revenue per Day: $149.80 (+2.6%) • Cost per day: +2.9% Hospice 1Q’18 1Q’18 1Q’18 Adjusted Financial Results(1) 1Q’18 1. The financial results for the three-month periods ended March 31, 2017 and March 31, 2018 are adjusted for certain items and should be considered a non-GAAP financial measure. A reconciliation of these non-GAAP financial measures is included in the corresponding 8-K detailing quarterly results for each respective reporting period. 2. Episodic admissions and volume – Includes Medicare and non-Medicare payors that bill on a 60-day episode of care basis. 3. Same Store volume – Includes admissions and recertifications. 4. Free cash flow defined as cash flow from operations less routine capital expenditures and required debt repayments. 5. Includes acquisitions. $ in Millions, except EPS 1Q17 1Q18 % Change Home Health 267.5 284.1 6.2% Hospice 83.6 97.3 16.4% Personal Care 13.5 17.9 32.6% Total Revenue 364.7 $ 399.3 $ 9.5% Gross Margin % 40.7% 40.3% Adjusted EBITDA 32.0 41.7 30.3% 8.8% 10.4% Adjusted EPS $0.47 $0.79 68.1% Free cash flow (5) $23.4 $36.2 54.7% |
5 5 OUR REVENUE SOURCES • Medicare FFS: Paid episodically over a 60 day episode • Private Episodic: MA and Commercial plans who pay us over a 60 day episode. Generally at rates ~90% – 100% of Medicare • Per Visit: Managed care, Medicaid and private payors reimbursing us per visit provided Per Day Reimbursement: • Routine Care: Patient at home with symptoms controlled – 99% of the Hospice care AMED provides • Continuous Care: Patient at home with uncontrolled symptoms • Inpatient Care: Patient in facility with uncontrolled symptoms • Respite Care: Patient at facility with symptoms controlled 71.1% 24.4% 4.5% Amedisys Consolidated Revenue Home Health Hospice Personal Care 72.1% 11.0% 16.9% Home Health Revenue Medicare FFS Private Episodic Per Visit 94.4% 5.6% Hospice Revenue Medicare FFS Private |
6 Home Health and Hospice Segment (Adjusted) – 1Q 2018 ( 1) • Revenue per Episode up +$10 y/y • Recert rate up +260 bps y/y • Y/Y CPV decrease of (1.4%) in Q1’18 despite planned wage increases Home Health Highlights • Same store average daily census (ADC) up 12% in Q1’18 • Net revenue per day up 3% y/y • Two providers over cap as of Q1’18: ~ $200k liability Hospice Highlights 1. The financial results for the three-month periods ended March 31, 2017 and March 31, 2018 are adjusted for certain items and should be considered a non-GAAP financial measure. A reconciliation of these non-GAAP financial measures is included in the corresponding 8-K detailing quarterly results for each respective reporting period. 2. Segment EBITDA does not include any corporate G&A expenses. 3. Same store admissions and volume exclude 7 closed and consolidated care centers in FL during 2017. Home health growth continues to move in the right direction; Hospice continues with double digit ADC growth $ in Millions 1Q17 1Q18 Medicare 80.7 91.8 Non-Medicare Hospice Revenue $83.6 $97.3 Gross Margin % 48.6% 48.5% Segment EBITDA (2) $22.6 $27.2 27.0% 28.0% Operating Statistics Admit growth - same store 20% 5% ADC growth - same store 16% 12% Admits 6,505 6,933 ADC 6,365 7,214 Avg. discharge length of stay 92 97 Revenue per day (net) $145.99 $149.80 Cost per day $75.03 $77.17 HOSPICE HOME HEALTH $ in Millions 1Q17 1Q18 Medicare 198.7 205.0 Non-Medicare 68.8 79.2 Home Health Revenue $267.5 $284.1 Gross Margin % 39.1% 38.6% Segment EBITDA (2) $36.6 $41.6 13.7% 14.6% Operating Statistics Same Store Growth (3) Total Admit 3% 4% Total Volume 2% 7% Episodic Admit 4% 3% Episodic Volume 3% 6% Revenue per Episode 2,782 $ 2,792 $ Recert Rate 34.8% 37.4% Total Cost per visit $89.61 $88.33 2.9 5.5 |
7 $ in Millions 1Q17 2Q17 3Q17 4Q17 1Q18 Corp G&A 1Q17 2Q17 3Q17 4Q17 1Q18 Home Health Segment 68.0 68.2 68.2 69.0 67.1 Salary and Benefits 13.9 14.1 13.6 14.7 14.9 Acquisitions - Tenet - 0.7 1.1 1.0 1.0 Other 11.0 10.5 9.4 9.9 11.5 Home Health Segment - Total 68.0 68.9 69.3 70.0 68.1 Corp. G&A Subtotal 24.9 24.6 23.0 24.6 26.4 % of HH Revenue 25.4% 25.5% 25.6% 24.8% 24.0% Non-cash comp 2.4 3.0 2.7 3.0 2.7 Adjusted corporate G&A 27.3 27.6 25.7 27.6 29.1 Hospice Segment 18.0 18.8 18.6 20.0 19.5 Acquisitions - Tenet - 0.2 0.4 0.5 0.4 Hospice Segment - Total 18.0 19.0 19.0 20.5 19.9 % of HSP Revenue 21.5% 21.0% 19.8% 20.9% 20.5% Personal Care Segment 3.1 2.8 2.8 3.3 2.2 Acquisitions - HomeStaff & Intercity 0.2 0.2 0.2 1.0 1.0 Personal Care Segment - Total 3.3 3.0 3.0 4.3 3.2 % of PC Revenue 24.4% 21.0% 21.9% 23.8% 17.9% Corporate Expenses 27.3 27.6 25.7 27.6 29.1 Acquisition Integration Costs 0.6 0.8 0.1 0.2 0.1 Total Corporate 27.9 28.4 25.8 27.8 29.2 % of Total Revenue 7.7% 7.6% 6.8% 7.0% 7.3% Total 117.2 119.3 117.1 122.6 120.4 % of Total Revenue 32.1% 31.8% 30.8% 30.8% 30.2% General & Administrative Expenses – Adjusted (1,2) Notes: • Year over year total G&A as a percentage of revenue decreased 190 basis points • Home Health segment G&A: 140 bps y/y decrease as % of revenue • Hospice segment G&A: 100 bps decrease y/y as % of revenue • Personal Care segment G&A: 650 bps decrease y/y as % of revenue (Personal Care G&A reflects reclassification of certain support personnel to corporate in 1Q’18) • Corporate G&A: 40 bps decrease y/y as % of total revenue • G&A has increased $3.2M in 1Q18 vs. 1Q17: Mainly driven by planned wage increases 1. The financial results for the three-month periods ended March 31, 2017, June 30, 2017, September 30, 2017, December 31, 2017 and March 31, 2018 are adjusted for certain items and should be considered a non-GAAP financial measure. A reconciliation of these non-GAAP financial measures is included in the corresponding 8-K detailing quarterly results for each respective reporting period. 2. Adjusted G&A expenses do not include depreciation and amortization. Impact of G&A cost control materializing as operational efficiencies are realized 32.1% 31.8% 30.8% 30.8% 30.2% 29.0% 29.5% 30.0% 30.5% 31.0% 31.5% 32.0% 32.5% 1Q17 2Q17 3Q17 4Q17 1Q18 Total G&A as a Percent of Revenue G&A as a Percent of Revenue |
8 Star scores continue to trend upwards: Among industry leaders Note: Top Competitor Avg weighted by CCN count and include LHC, Kindred, AFAM, HLS and BKD Metric JAN 18 Release APR 18 Release JUL 18 PREVIEW Quality of Patient Care 4.22 4.30 4.38 Entities at 4+ Stars 88% 89% 93% Metric OCT 17 Release JAN 18 Release APR 18 Release Patient Satisfaction Star 3.56 3.85 3.94 Performance Over Industry +6% +7% +7% Quality of Patient Care (QPC) Patient Satisfaction (PS) • Amedisys maintains a 4-Star average in the July 2018 HHC preview with 93% of our providers at 4+ Stars and 64% at 4.5+ Stars • STAR score improvement for the twelfth consecutive quarter (from initial Jul 15 release to Jul 18 preview) • 37 Amedisys providers (representing 72 care centers) rated at 5-Stars in the July 2018 preview • AMED received ~$250K in bonus payments related to Value Based Purchasing (VBP) during 1Q’18 QPC Industry Performance 3.00 3.50 4.00 4.50 Jul 15 Oct 15 Jan 16Apr 16 Jul 16 Oct 16 Jan 17Apr 17 Jul 17 Oct 17 Jan 18Apr 18 Jul 18 QPC Top Competitor AMED QPC Score QPC Industry Avg PS Industry Performance *Scoring methodology changed dropped entire industry’s PS STAR scores 3.00 3.50 4.00 4.50 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 PS Top Competitor AMED PS Score PS Industry Avg |
9 Hospice Quality: Amedisys Hospice Continues to Move Towards Best- in-Class Hospice Quality 99.9% 98.3% 98.4% 96.0% 99.4% 96.9% 98.9% 98.3% 98.6% 94.5% 94.8% 81.5% 97.6% 95.2% 93.6% 93.7% 70.0% 80.0% 90.0% 100.0% Treatment Preferences Beliefs & Values Addressed Pain Screening Pain Assessment Dyspnea Screening Dyspnea Treatment Patient Treated with an Opioid Who Are Given a Bowel Regimen HIS Rollup/ Average* Hospice Item Set (HIS) Preview - May 2018 Jul 2016 - Jun 2017 Discharges AMED CMS NAT 80.4% 77.8% 90.1% 89.4% 73.9% 75.0% 79.4% 83.9% 81.2% 80.0% 78.0% 91.0% 89.0% 75.0% 75.0% 81.0% 85.0% 81.0% 65.0% 75.0% 85.0% 95.0% Communication Timely Care Treat with Respect Emo / Rel Support Help for Symptoms Hospice Training Rating of Hospice Care Willingness to Recommend CAHPS Roll-Up/ Average* Hospice CAHPS Preview - May 2018 Jul 2015 - Jun 2017 Discharges AMED CMS NAT |
10 Components 1Q’17 4Q’17 1Q’18 YoY Variance Detail Mitigation Plan Salaries $61.48 $61.80 $60.93 ($0.55) YoY decrease driven by increased productivity Staffing mix optimization, productivity and scheduling improvement initiatives in place helped us overcome planned salary increases Contractors $2.35 $2.93 $2.93 $0.58 YoY increased demand due to increasing volumes Focused efforts on filling positions with full-time clinicians Benefits $10.09 $12.35 $9.84 ($0.25) Sequential decline driven by seasonality of health insurance claims Focus on cost containment and spend optimization with specific focus on high cost claims Transportation & Supplies $7.16 $6.80 $6.64 ($0.52) YoY decrease primarily due to transportation costs More effective medical supply contracting cost initiatives are underway *Visiting Staff CPV $81.08 $83.88 $80.34 ($0.74) Clinical Managers $8.53 $8.49 $7.99 ($0.54) Fixed cost associated with non- visiting clinicians Unit cost reduced as volume increases Total CPV $89.61 $92.37 $88.33 ($1.28) Operational Excellence: Cost Per Visit (CPV) Total CPV decreased due to improvement in clinician productivity *Note: Direct comparison with industry competitors CPV calculation $25.00 $50.00 $75.00 $100.00 1Q17 4Q17 1Q18 Cost Per Visit (CPV) Salaries Contractors Benefits Transportation $81.08 $83.88 $80.34 |
11 Driving Top Line Growth All three lines of business continue to grow. Hospice drives another quarter of double digit ADC growth and Home Health total same store volume continue to improve year over year Volume *Total Home Health Same Store Volumes exclude 7 closed and consolidated care centers in Florida in 2017 Hospice ADC Personal Care Total Hours / Quarter 1.6% 3.1% 5.8% 7.4% 6.7% -1.0% 1.0% 3.0% 5.0% 7.0% 9.0% 50,000 100,000 150,000 1Q17 2Q17 3Q17 4Q17 1Q18 YoY Growth 15.6% 16.2% 14.1% 12.2% 11.9% 0.0% 5.0% 10.0% 15.0% 20.0% 0 2,000 4,000 6,000 8,000 10,000 1Q17 2Q17 3Q17 4Q17 1Q18 ADC YoY Growth 0 200,000 400,000 600,000 800,000 1,000,000 1Q17 2Q17 3Q17 4Q17 1Q18 Billable Hours Home Health Total Same Store Volume* |
12 Debt and Liquidity Metrics Our debt levels remain very low at (0.2x) net leverage ratio, providing us ample flexibility and available liquidity for strategic initiatives and inorganic growth opportunities 1. Net debt defined as total debt outstanding ($88M) less cash balance ($120M). 2. Leverage ratio (net) is defined as net debt divided by last twelve months adjusted EBITDA ($152M). 3. Liquidity defined as the sum of cash balance and available revolving line of credit. Credit facility and cash provide significant capital for accretive acquisitions and/or other capital deployment options As of: Outstanding Debt 03/31/18 Term Loan 87.5 Outstanding Revolver / Other Notes Payable 0.4 Total Debt Outstanding 87.9 Less: Deferred Finance Fees (1.7) Total Debt - Balance Sheet 86.2 Total Debt Outstanding 87.9 Less: Cash (120.0) Net Debt (1) (32.1) Leverage Ratio (net) (2) (0.2) As of: Credit Facility 03/31/18 Revolver Size 200.0 Oustanding Revolver - Letters of Credit 37.7 Available Revolver 162.3 Plus: Cash 120.0 Total Liquidity (3) 282.3 |
13 Cash Flow Statement Highlights (1) $36.2M in free cash flow for the quarter, with $2.3M in capital deployed to M&A opportunities 1. Free cash flow defined as cash flow from operations less routine capital expenditures and required debt repayments. $ in Millions 1Q17 2Q17 3Q17 4Q17 1Q18 GAAP Net Income 15.2 4.5 14.7 (3.7) 27.3 Changes in working capital (8.1) (7.3) 15.8 (11.0) (2.0) Depreciation and amortization 4.4 4.5 4.2 4.0 3.6 Non-cash compensation, includes 401(k) match expense 6.1 6.5 5.7 6.7 6.6 Deferred income taxes 9.4 (1.9) 9.6 35.0 2.9 Securities class action lawsuit settlement - 28.7 (28.7) - - Other 0.1 1.1 (11.1) 1.2 1.9 Cash flow from operations 27.1 36.2 10.2 32.2 40.3 Capital expenditures - routine (2.4) (1.4) (0.3) (1.2) (1.3) Required debt repayments (1.3) (1.3) (1.6) (1.3) (2.8) Free cash flow 23.4 33.5 8.3 29.7 36.2 Capital Deployment Acquisitions (4.1) (20.0) - (9.6) (2.3) Share Repurchases - - - - - Total (4.1) (20.0) - (9.6) (2.3) |
14 Income Statement Adjustments (1) Amount of non-GAAP adjustments have substantially decreased 1. The financial results for the three-month periods ended March 31, 2017, June 30, 2017, September 30, 2017, December 31, 2017 and March 31, 2018 are adjusted for certain items and should be considered a non-GAAP financial measure. A reconciliation of these non-GAAP financial measures is included in the corresponding 8-K detailing quarterly results for each respective reporting period. Income Statement $000s Line Item 1Q17 2Q17 3Q17 4Q17 1Q18 Florida ZPIC audit Revenue 6,506 Cost of Service Restructuring activity Cost of service, excluding depreciation and amortization 101 G&A Restructuring activity G&A, Salaries and benefits 2,474 Restructuring activity G&A, Non-cash compensation (905) Restructuring activity G&A, Other 648 Data Center relocation G&A, Other 714 226 Acquisition costs G&A, Other 682 294 48 435 Legal fees - non-routine G&A, Other 123 1,111 176 358 562 Securities Class Action Lawsuit settlement G&A, Other 28,712 Asset impairment Asset impairment 1,323 Legal settlements Other, Miscellaneous, net (674) (693) (647) Miscellaneous, other (income) expense, net Other, Miscellaneous, net 621 (1,692) (115) 613 (809) Deferred tax asset related to tax reform Income tax expense 21,424 Total 1,466 27,958 7,590 24,414 188 EPS Impact $0.03 $0.49 $0.13 $0.67 $0.00 Revenue Other Items |
2018 Guidance |
16 Amedisys 2018 Guidance Targeting 7% growth in revenue and 13% growth in EBITDA; EPS includes impact of tax reform 2017 2018 Revenue Adjusted EBITDA Adjusted Earnings per Share *Adjusted for adoption of new revenue recognition accounting standard $142.2M $1.54B $1.52B* $2.21 $158M – $163M $1.60B - $1.64B $2.97 – $3.08 |
17 Amedisys 2018 Guidance Considerations Amedisys Consolidated Home Health Personal Care Hospice • Total same store admission growth ~10% • Continue to leverage industry-leading platform by exploring growth opportunities • Large acquisitions • Small acquisitions • Denovos ~ $1 million • Addition of business development resources to maintain organic growth ~ $3 million • Total billable hours growth ~ 7% • Employer Medical Assistance Contribution (EMAC) ~$1 million • Includes impact of Intercity acquisition (closed Q4’17) Project solid revenue and earnings growth while continuing to invest in people and future organic growth • Tax rate ~26 - 27% (includes impact from Tax Cuts and Jobs Act) • Cash tax rate ~ 5% • Diluted share count ~34.85 million shares • Excludes potential acquisitions and related integration costs • Capital Expenditures ~$7- $9 million • Benefits increase ~5% - 6% • Salary increase ~2% - 3% • Overall ~ $9 million investment in business development resources • Excludes acquisition activity • Total same store admission growth ~5% • Focus on business development staffing strategy ~ $6 million (Y/Y increase) • Continue focus on Quality of Care (Stars and Acute Care Hospitalization rates) • Increase focus on underperforming care centers |
18 Reimbursement Outlook 2018 Reimbursement Impact for Home Health and Hospice Home Health Hospice 2018 Market Basket Update 1.0% Nominal Case Mix Adjustment -0.90 Estimated Industry Impact +0.1% Estimated AMED-Specific Impact -0.7% 2018 Market Basket Update 1.0% Productivity / Other Adjustment __ Estimated Industry Impact +1.0% Estimated AMED-Specific Impact +1.0% |
19 EBITDA Seasonality Q1 Q2 Q3 Q4 *EBITDA further adjusted for health insurance and workers compensation 30.0 35.0 40.0 45.0 50.0 55.0 60.0 65.0 Q1 Q2 Q3 Q4 Historical Adj. EBITDA Trends* 2016 2017 • Weather disruption • Lower RPE (LUPA) • Payroll tax reset • Short Month (Feb.) • Lower Hospice ADC & Higher Salary Cost per Day • Highest Completed Episodes • Stronger RPE • Incremental holiday vs. 1H • High PTO • Lower Volumes • Health Insurance Increases • Raises • Incremental holiday vs. 1H • Health Insurance Increases • Better Volumes • Raises |
20 EBITDA Seasonality (Unadjusted for Health Insurance and Workers Compensation) Q1 Q2 Q3 Q4 20 25 30 35 40 Q1 Q2 Q3 Q4 Historical Adj. EBITDA Trends 2016 2017 • Weather disruption • Lower RPE (LUPA) • Payroll tax reset • Short Month (Feb.) • Lower Hospice ADC & Higher Salary Cost per Day • Highest Completed Episodes • Stronger RPE • Incremental holiday vs. 1H • High PTO • Lower Volumes • Health Insurance Increases • Raises • Incremental holiday vs. 1H • Health Insurance Increases • Better Volumes • Raises |