Exhibit 99
[pic]
RehabCare(SM)
delivering the post-acute continuum
3RD QUARTER 2004
RehabCare(SM)
delivering the post-acute continuum
SAFE HARBOR
FORWARD-LOOKING STATEMENTS HAVE BEEN PROVIDED PURSUANT TO THE SAFE HARBOR
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES
THAT MAY CAUSE REHABCARE'S ACTUAL RESULTS IN FUTURE PERIODS TO DIFFER
MATERIALLY FROM FORECASTED RESULTS. THESE RISKS AND UNCERTAINTIES MAY
INCLUDE, BUT ARE NOT LIMITED TO, REHABCARE'S ABILITY TO INTEGRATE
ACQUISITIONS AND TO IMPLEMENT CLIENT PARTNERING RELATIONSHIPS WITHIN THE
EXPECTED TIMEFRAMES AND TO ACHIEVE THE REVENUE AND EARNINGS LEVELS FROM SUCH
ACQUISITIONS AND RELATIONSHIPS AT OR ABOVE THE LEVELS PROJECTED; THE TIMING
AND FINANCIAL EFFECT OF RESTRUCTURING EFFORTS WITH RESPECT TO REHABCARE'S
CONTINUING BUSINESSES; CHANGES IN AND COMPLIANCE WITH GOVERNMENTAL
REIMBURSEMENT RATES AND OTHER REGULATIONS OR POLICIES AFFECTING REHABCARE'S
CONTINUING BUSINESSES; REHABCARE'S ABILITY TO ATTRACT NEW CLIENT
RELATIONSHIPS OR TO RETAIN AND GROW EXISTING CLIENT RELATIONSHIPS THROUGH
EXPANSION OF OUR HOSPITAL REHABILITATION AND CONTRACT THERAPY SERVICE
OFFERINGS AND THE DEVELOPMENT OF ALTERNATIVE PRODUCT OFFERINGS; THE FUTURE
OPERATING PERFORMANCE OF INTELISTAF HOLDINGS, INC., AND THE RATE OF RETURN
THAT REHABCARE WILL BE ABLE TO ACHIEVE FROM ITS EQUITY INTEREST IN
INTELISTAF; THE ADEQUACY AND EFFECTIVENESS OF REHABCARE'S OPERATING AND
ADMINISTRATIVE SYSTEMS; REHABCARE'S ABILITY AND THE ADDITIONAL COSTS OF
ATTRACTING ADMINISTRATIVE, OPERATIONAL AND PROFESSIONAL EMPLOYEES;
SIGNIFICANT INCREASES IN HEALTH, WORKERS' COMPENSATION AND PROFESSIONAL AND
GENERAL LIABILITY COSTS; LITIGATION RISKS OF REHABCARE'S PAST AND FUTURE
BUSINESS, INCLUDING REHABCARE'S ABILITY TO PREDICT THE ULTIMATE COSTS AND
LIABILITIES OR THE DISRUPTION TO ITS OPERATIONS; COMPETITIVE AND REGULATORY
EFFECTS ON PRICING AND MARGINS; AND GENERAL ECONOMIC CONDITIONS, INCLUDING
EFFORTS BY GOVERNMENTAL REIMBURSEMENT PROGRAMS, INSURERS, HEALTHCARE
PROVIDERS AND OTHERS TO CONTAIN HEALTHCARE COSTS.
1
RehabCare(SM)
delivering the post-acute continuum
BUSINESS PROFILE
o RehabCare, in partnership with hospitals and nursing homes, provides
program management, medical direction, physical rehabilitation, quality
assurance, specialty programs and marketing for the following programs:
o Acute Rehabilitation Units (ARUs)
o PT, OT and SLP Therapies in Acute Care Hospitals
o Transitional Care Units (TCUs)
o Outpatient Rehabilitation Programs (OP)
o Home Health Programs (HH)
o Therapy Programs at Skilled Nursing Facilities (SNFs)
CORE BRAIN Starting LifeSpine(SM)
Centers for INJURY NOW Spine Care for
Orthopedic PROGRAM A Lifetime
Rehabilitation Empowering Lives,
Excellence Independence for
the Future
(c)2002
2
RehabCare(SM)
delivering the post-acute continuum
BUSINESS PROFILE
o The physical rehabilitation industry provides large opportunities
for new RehabCare clients
o 5,000 Hospitals
o 2,000 meet our screens
o Currently 174 are clients (8.7% of potential clients)
o 15,000 Skilled Nursing Facilities
o 5,000 meet our screens
o Currently 600 are clients (12% of potential clients)
o Competitors include:
- HealthSouth - Select Medical Corp
- RehabWorks - Aegis
3
RehabCare(SM)
delivering the post-acute continuum
BUSINESS PROFILE
REHABCARE SERVICES
RehabCare's 8,400 full and part-time clinicians provide physical,
occupational and speech therapy at programs across the country
[map]
More than 770 locations nationwide
4
RehabCare(SM)
delivering the post-acute continuum
BUSINESS PROFILE
REHABCARE PATIENTS
o RehabCare treats approximately 14,000 patients each day
o Typical diagnoses include:
o Stroke
o Neurological disorders
o Orthopedic conditions
o Musculoskeletal conditions
o Payer sources for our patients are 76% Medicare,
6% Medicaid, 18% managed care and other
o 99% of RehabCare billings are to hospitals and skilled
nursing facilities [pic]
5
RehabCare(SM)
delivering the post-acute continuum
BUSINESS PROFILE
PHYSICAL REHABILITATION DELIVERY CONCEPT
Patients currently move to sites
in an uncoordinated and inefficient
manner, based on their medical
acuity and ability to withstand
therapy intensity
[graph omitted]
6
RehabCare(SM)
delivering the post-acute continuum
BUSINESS PROFILE
REHABCARE'S PATIENT-FOCUSED APPROACH
RehabCare's patient-focused approach builds integrated continuums of care in
markets that offer sufficient demand and appropriate therapy resources for
these services
[graph omitted]
Long Term Acute Transitional Care
Care Hospitals* Units Outpatient
Hospital Rehabilitation
Medical/Surgical Programs
CARE MANAGEMENT
Acute
Therapies
Acute
Rehabilitation Skilled Nursing
Units Facilities Home Health
Programs
<FN>
*RehabCare partners with providers of LTACH care
7
RehabCare(SM)
delivering the post-acute continuum
OUR VISION
REHABCARE WILL PROVIDE A
CLINICALLY INTEGRATED CONTINUUM
OF POST-ACUTE CARE RESULTING IN
PATIENTS REGAINING THEIR LIVES [pic]
8
RehabCare(SM)
delivering the post-acute continuum
HOW DO WE ACHIEVE OUR VISION?
o Target Market Strategy
o Acquisitions
o Joint Ownership Arrangements
o HRS Growth Strategy
o Contract Therapy Profitability/Growth
o Clinical Research and Development
o Information Technology and Management
o Access to Capital
9
RehabCare(SM)
delivering the post-acute continuum
HOW DO WE ACHIEVE OUR VISION?
TARGET MARKET STRATEGY
A continuum can be built most efficiently in markets where different
rehabilitation sites of services can all be managed together
[pic] [pic]
Kokomo, IN Brownsville, TX
Population 301,000 Population 363,000
[pic] [pic] [pic]
Norfolk, VA Philadelphia, PA St. Louis, MO
Population 1.4 million Population 5.1 million Population 2.6 million
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RehabCare(SM)
delivering the post-acute continuum
HOW DO WE ACHIEVE OUR VISION?
ACQUISITIONS
RehabCare's acquisition strategy supports our target market strategy
o Revenue size approximately $10-$25 million
o EBITDA multiple 4-6 times, for example
o Continuing management
o 2004 acquisitions have added $30 million in annualized operating
revenues, with more in the pipeline
o Strong balance sheet enables aggressive acquisition strategy
CPR PHASE 2 CONSULTING VitalCare
REHAB THERAPY A Division of RehabCare AMERICA
A Part of RehabCare A RehabCare Company
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RehabCare(SM)
delivering the post-acute continuum
HOW DO WE ACHIEVE OUR VISION?
JOINT OWNERSHIP ARRANGEMENTS
RehabCare has developed joint venture and other relationships with
market-leading health delivery partners
o Provides access to referral networks and market share
o Develops long-term relationships: deploys capital,
provides joint ownership and program management
o Adds key components to continuums of care
JV relationships signed this year
o Valley Baptist Health System
o Howard Regional Health System
o Signature Healthcare Foundation [pic]
Valley Baptist Howard Signature
Health System Regional Health System HEALTHCARE FOUNDATION
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RehabCare(SM)
delivering the post-acute continuum
HOW DO WE ACHIEVE OUR VISION?
HRS GROWTH STRATEGY
RehabCare has successfully stabilized the loss of ARU, TCU and OP programs
experienced in 2003
o Expect minimal loss of programs in 2004 compared to a net loss
of 21 (excluding acquisitions) in 2003
o Nine-month YOY same-store growth
o Inpatient 7.2%
o Outpatient 1.0%
o Combined 5.5%
o How to accomplish growth strategy
o New senior business development executive
o Investment in sales processes, strategies and training
o Add-on products
o Deployment of capital
-----------------------------------------
ARU TCU OP Total
-----------------------------------------
2003 -5 -9 -7 -21
-----------------------------------------
2004* 2 -2 -3 -3
-----------------------------------------
<FN>
*Projected
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RehabCare(SM)
delivering the post-acute continuum
HOW DO WE ACHIEVE OUR VISION?
CONTRACT THERAPY PROFITABILITY/GROWTH
Contract therapy operating margins are returning to pre-3Q/03 levels;
but more can be accomplished
o Target market approach is paying off
o Technology platform conversion is complete
o Improving SG&A leverage
o Solid same store revenue growth of 8.5%, nine-month YOY
o Increase of more than 130 programs, YTD
OPERATING MARGIN
[graph]
Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04
5.5% 2.7% 4.1% 6.0% 4.8% 5.4%
NUMBER OF PROGRAMS
[graph]
0 44 67 112 195 305 412 468 600
'96 '97 '98 '99 '00 '01 '02 '03 '04*
REVENUE (MILLIONS)
[graph]
0 8.4 13.9 14.1 30 64.7 105.3 130.9
'96 '97 '98 '99 '00 '01 '02 '03
<FN>
*Projected
14
RehabCare(SM)
delivering the post-acute continuum
HOW DO WE ACHIEVE OUR VISION?
CLINICAL RESEARCH & DEVELOPMENT
RehabCare must ensure its 8,400 full and part-time clinicians provide the
highest quality therapy to 14,000 patients daily
o Develop clinical research programs in
partnership with academic medical centers
o Utilize our clinical database (408,000
patient records) to improve the quality
of rehabilitation outcomes
o Create systems to integrate the continuum
[pic] of care
15
RehabCare(SM)
delivering the post-acute continuum
HOW DO WE ACHIEVE OUR VISION?
INFORMATION TECHNOLOGY & MANAGEMENT
To support the continuum of care, RehabCare has developed a
single-technology platform
o RehabCare's PDA-based clinical system
o Enhanced forecasting tools for management
o Billing turnaround of 3 to 4 days
o Allows billing in any format for client
o Wireless connectivity will allow 2-way real time
communication at point of service
o Clinical pathways
o Patient protocols
o Clinical expertise immediately available [pic]
16
RehabCare(SM)
delivering the post-acute continuum
HOW DO WE ACHIEVE OUR VISION?
ACCESS TO CAPITAL
o $47 million in cash, 9/30/04
o $35 million cash flow from operations (nine-months ended 9/30/04)
o Limited subordinated debt related to acquisitions
o New credit facility of $90 million; expandable to $125 million
17
RehabCare(SM)
delivering the post-acute continuum
CHALLENGES
o Shortage of Therapists
o Regulatory Impact
o Outpatient Business
o InteliStaf Holdings
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RehabCare(SM)
delivering the post-acute continuum
CHALLENGES
SHORTAGE OF THERAPISTS
Recruiting and retaining therapists are key to our success
o Increased web presence
o Utilize large database of therapists
o Increase integration with schools through clinical
R&D function
o Utilize staffing coordinators in select markets
o Introduced Professional Choice Account (PCA)
o No wait period 401(k)
o Competitive benefits package [pic]
19
RehabCare(SM)
delivering the post-acute continuum
CHALLENGES
REGULATORY IMPACT
o 75 PERCENT RULE (ARU)
o Rule was effective July 1, 2004
o 3 year transition (50%, 60%, 65%, 75%)
o Estimated impact included in 2004 guidance
o Consolidated Appropriations Act (CAA) for FY 2005 prohibits
implementation of Rule until 60 days after GAO study
o CAA still needs to be signed by President
o Assuming signature, best guess is GAO report issued end of
January 2005, making moratorium at least until April of 2005
O INPATIENT REHAB RATE INCREASE 3.1% EFFECTIVE OCTOBER 1, 2004 (ARU)
O PART B THERAPY CAPS (CONTRACT THERAPY)
o Medicare Prescription Drug Bill contains moratorium through
12/31/05
O PART B FEE SCHEDULE 1.5% INCREASE IN 2005 (CONTRACT THERAPY & OP)
o PART A INCREASE OF 2.8% TO SNF'S (CONTRACT THERAPY)
O LTACH HOSPITAL WITHIN HOSPITAL AND LTACH SATELLITES
o Effective October 1, 2004
o Admissions of more than 25% from host hospital subject to
payment restrictions
o Separate control of co-located hospitals
o MEDPAC STUDY DUE JANUARY 2005 ALLOWING FEE-FOR-SERVICE PATIENTS
ACCESS TO OUTPATIENT THERAPY AND REHAB FACILITY SERVICES WITHOUT
PHYSICIAN'S ORDER (OP)
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RehabCare(SM)
delivering the post-acute continuum
CHALLENGES
OUTPATIENT BUSINESS
Outpatient business is experiencing:
o Reduced number of locations and lower same-store volumes
o Increased labor costs at the unit level
o Increased competition from physician practices
RehabCare is:
o Conducting unit by unit reviews to evaluate growth
opportunities
o Implementing a new weekly revenue and cost matching
tool to improve productivity
o Re-designing ProMOS to provide real-time outpatient
clinical information collection [pic]
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RehabCare(SM)
delivering the post-acute continuum
CHALLENGES
INTELISTAF HOLDINGS
StarMed, our former staffing division, sold to InteliStaf on 2/3/04 in
exchange for 25% of combined equity
o Creates the 4th largest staffing company in the United States
o StarMed lost $5.3 million after-tax in 2003 versus estimated
$0.6 million in 2004 for RHB's equity share of InteliStaf's net loss
o Healthcare staffing industry appears to be leveling out from most
recent contraction cycle
o Anticipate healthcare staffing cycle to reverse within 2 to 3 years
o Partner is in a strong position when the industry does
return to growth phase
InteliStaf
HEALTHCARE
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RehabCare(SM)
delivering the post-acute continuum
QUARTERLY UPDATE
---------------------------------------------------------------------------
GAAP Q3/03 Q4/03 Q1/04 Q2/04 Q3/04
---------------------------------------------------------------------------
REVENUE
(MILLIONS) $135.0 $129.5 $104.5 $90.9 $93.3
---------------------------------------------------------------------------
OPERATING EARNINGS
(MILLIONS) $5.7 $(34.5) $9.5 $10.2 $10.7
---------------------------------------------------------------------------
EPS $0.20 $(1.58) $0.31 $0.34 $0.36
---------------------------------------------------------------------------
---------------------------------------------------------------------------
PROFORMA Q3/03 Q4/03 Q1/04 Q2/04 Q3/04
---------------------------------------------------------------------------
REVENUE(1)
(MILLIONS) $79.8 $80.0 $87.7 $90.9 $93.3
---------------------------------------------------------------------------
OPERATING EARNINGS
(MILLIONS) $5.7 $9.0(2) $9.5 $10.2 $10.7
---------------------------------------------------------------------------
EPS $0.20 $0.31(2) $0.31 $0.34 $0.36
---------------------------------------------------------------------------
<FN>
(1) EXCLUDES STARMED OPERATING REVENUES
(2) EXCLUDES THE EFFECT OF LOSS ON SALE OF STARMED
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RehabCare(SM)
delivering the post-acute continuum
ANNUAL TREND (HRS & CT)
REVENUE (Millions)
[graph]
'97 '98 '99 '00 '01 '02 '03 '04
CT $8.4 $13.9 $14.1 $30.0 $64.7 $105.3 $130.8
OP $9.4 $16.5 $30.7 $42.3 $50.0 $49.0 $49.0
IP $97.4 $111.6 $116.5 $120.0 $123.3 $130.7 $136.9
Combined* 354-374(1)
<FN>
(1) Adjusted Analyst Mean Estimate - $368*
OPERATING EARNINGS** (Millions)
[graph]
'01 '02 '03 '04
CT $3.0 $9.1 $5.8
HRS $32.5 $32.3 $33.6
Combined 39-41
<FN>
SOURCE - COMPANY ANNUAL 10-K FOR RESPECTIVE YEARS, EXCEPT 2004 WHICH IS
ESTIMATED
* ANALYSTS' MEAN ESTIMATE EXCLUDES 2004 STAFFING DIVISION REVENUES
**DATA PRIOR TO '01 NOT AVAILABLE ON A COMPARABLE BASIS FOR CORPORATE
OVERHEAD ALLOCATIONS
24
RehabCare(SM)
delivering the post-acute continuum
REHABCARE - PRIMED FOR GROWTH
o Increasing demand -
rehabilitation is a large and
growing market
o Significant growth strategies
o Coordinated and efficient
delivery strategy
o Strong financial position
o Solid results - both top line
and bottom line [pic]
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