-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TPqirH/hSc3uITvy2pFfELmjXe58HhGZf7iBU2WtS7ktzXk8kUJ3GAQQEISNo685 3h41/nzmWoou70YDwf+yIw== 0001005150-03-000121.txt : 20030114 0001005150-03-000121.hdr.sgml : 20030114 20030108142517 ACCESSION NUMBER: 0001005150-03-000121 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030108 ITEM INFORMATION: FILED AS OF DATE: 20030108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTHSOUTH CORP CENTRAL INDEX KEY: 0000785161 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 630860407 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14940 FILM NUMBER: 03507652 BUSINESS ADDRESS: STREET 1: ONE HEALTHSOUTH PKWY STREET 2: STE 224W CITY: BIRMINGHAM STATE: AL ZIP: 35243 BUSINESS PHONE: 2059677116 MAIL ADDRESS: STREET 1: ONE HEALTHSOUTH PARKWAY CITY: BIRMINGHAM STATE: AL ZIP: 35243 FORMER COMPANY: FORMER CONFORMED NAME: HEALTHSOUTH REHABILITATION CORP DATE OF NAME CHANGE: 19920703 8-K 1 form8k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: January 8, 2003 HEALTHSOUTH Corporation ----------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 1-10315 63-0860407 ------------- ----------- ------------- State or Other (Commission (I.R.S. Employer Jurisdiction of Incorporation File Number) Identification No.) or Organization) One HEALTHSOUTH Parkway Birmingham, Alabama 35243 --------------------------- --------- (Address of Principal (Zip Code) Executive Offices) Registrant's Telephone Number, Including Area Code: (205) 967-7116 Item 9. REGULATION FD DISCLOSURE On January 8, 2003, representatives of HEALTHSOUTH Corporation will begin making presentations at investor conferences and other investor meetings using slides containing the information attached to this Form 8-K as Exhibit 99. We expect to use these slides, in whole or in part and possibly with modifications, in connection with presentations to investors, analysts and others during the first quarter of 2003. We are furnishing the text of these slides pursuant to the Securities and Exchange Commission's Regulation FD. This information is furnished pursuant to Item 9 of Form 8-K and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, unless we specifically incorporate it by reference in a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. By filing this report on Form 8-K and furnishing this information, we make no admission as to the materiality of any information in this report that is required to be disclosed solely by reason of Regulation FD. The information contained in the slides is summary information that is intended to be considered in the context of our SEC filings and other public announcements that we may make, by press release or otherwise, from time to time. We undertake no duty or obligation to publicly update or revise the information contained in this report, although we may do so from time to time as our management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure. The text of the slides included with this report omits various graphic images included in the actual slides. We expect to make copies of the actual slides, including such graphic images, available for viewing at the "Investor Relations" section of our website located at www.healthsouth.com, although we reserve the right to discontinue that availability at any time. Some of the matters discussed in this report (including its exhibit) may constitute forward-looking statements. Some of these forward-looking statements can be identified by the use of forward-looking terminology such as "believes", "expects", "may", "will", "should", "seeks", "approximately", "intends", "plans", "estimates" or "anticipates" or the negative thereof or other comparable terminology, or by discussions of strategy, plans or intentions. Without limiting the generality of the preceding statement, all statements in this report concerning or relating to estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. These forward-looking statements are necessarily estimates that we believe are reasonable based on current information and involve a number of risks and uncertainties. There can be no assurance that our actual results will not differ materially from the results anticipated in such forward-looking statements. While it is impossible to identify all such factors, factors which could cause actual results to differ materially from those estimated by us include, but are not limited to, changes in the regulation of the healthcare industry at either or both of the federal and state levels, changes or delays in reimbursement for our services by governmental or private payors, changes to or delays in the implementation of the prospective payment system for inpatient rehabilitation services, competitive pressures in the healthcare industry and our response thereto, our ability to obtain and retain favorable arrangements with third-party payors, unanticipated delays in the implementation of our strategic plans, general conditions in the economy and capital markets and other factors which may be identified from time to time in our SEC filings and other public announcements. Item 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 99. Text of Investor Relations Slideshow In Use Beginning January 8, 2003. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. Date: January 8, 2002 HEALTHSOUTH CORPORATION By /s/ WILLIAM W. HORTON ----------------------------------------- William W. Horton Executive Vice President and Corporate Counsel EX-99 3 ex99.txt EXHIBIT 99 EXHIBIT 99 TEXT OF INVESTOR RELATIONS SLIDESHOW IN USE BEGINNING JANUARY 8, 2003 FORWARD-LOOKING STATEMENTS Except for historical information discussed, the statements made today are forward-looking statements that involve risks and uncertainties. Investors are cautioned that such statements are only predictions and that actual events or results may differ materially. These forward-looking statements speak only as of this date. HEALTHSOUTH undertakes no obligation to publicly release the results of any revisions to the forward-looking statements made today to reflect events or circumstances after today or to reflect the occurrence of unanticipated events. Please refer to the company's SEC filings for a description of some of the factors that may affect the accuracy of such forward-looking statements. - -------------------------------------------------------------------------------- LEADING HEALTHCARE PROVIDER o Approximately 1,800 Facilities in All 50 States and Every Major Metropolitan Market o Largest Operator of: - Inpatient and Outpatient Rehabilitation Facilities - Freestanding Outpatient Surgery Centers - Freestanding Diagnostic Centers o Over $4.2 Billion in Revenue with $1.1 Billion in EBITDA Projected for 2003 - -------------------------------------------------------------------------------- INPATIENT REHABILITATION #1 MARKET SHARE - 118 LOCATIONS 22% OF 35,000 BED MARKET (7,643 BEDS) (Graphic Omitted) - -------------------------------------------------------------------------------- OUTPATIENT SURGERY #1 MARKET SHARE - 206 LOCATIONS 16% OF $6 BILLION MARKET (Graphic Omitted) - -------------------------------------------------------------------------------- OUTPATIENT REHAB #1 MARKET SHARE - 1,331 LOCATIONS 10% OF $10 BILLION MARKET (Graphic Omitted) - -------------------------------------------------------------------------------- DIAGNOSTIC IMAGING #1 MARKET SHARE - 136 LOCATIONS 4% OF $8 BILLION MARKET (Graphic Omitted) - -------------------------------------------------------------------------------- RECOGNIZED CLINICAL EXCELLENCE 2001 JCAHO Survey Results: HEALTHSOUTH Facility Scores vs. National Average Scores HEALTHSOUTH Rehabilitation 94 National Hospital Organizations 91 HEALTHSOUTH Surgery Centers 95 HEALTHSOUTH Diagnostic 96 National Ambulatory Organizations 93 Source: 2001 JCAHO Survey Results - -------------------------------------------------------------------------------- PRISTINE AUDIT o Unannounced Audit of Every HEALTHSOUTH Facility o 50 Point Checklist o Conducted by Ernst & Young o Overall Score of 98 - -------------------------------------------------------------------------------- MEDICARE EXPENDITURES Total Medicare Expenditures, 1966-2000 (in Billions of Dollars) (Graphic Omitted) - -------------------------------------------------------------------------------- MEDICARE EXPENDITURES o During This Time, HEALTHSOUTH has Saved The Medicare Program Hundreds of Millions of Dollars - -------------------------------------------------------------------------------- INPATIENT REHAB HOSPITAL COST SAVINGS
1997 1998 1999 2000 2001 ---- ---- ---- ---- ---- Cost Per Discharge $ 11,504 $ 10,772 $ 9,935 $ 9,799 $ 9,669 Cost Variance (732) (1,569) (1,705) (1,835) Medicare Discharges* 60,516 66,854 70,187 76,249 Cost Savings $ 44,297,712 $ 104,893,926 $ 119,668,835 $ 139,916,915 - ------------------------------------------------------------------------------------------------------------------- TOTAL MEDICARE SAVINGS $ 408,777,388 - -------------------------------------------------------------------------------------------------------------------
* HOSPITAL DISCHARGES ONLY Through Internal Cost Reduction Initiatives, HEALTHSOUTH Has Saved the Medicare Program over $400MM in the last 4 Years - -------------------------------------------------------------------------------- INPATIENT REHAB HOSPITAL COST SAVINGS - HRC VS. INDUSTRY AVERAGE
1997 1998 1999 2000 2001 ---- ---- ---- ---- ---- Industry Cost Per Discharge $ 13,500 $ 13,500 $ 13,500 $ 13,500 $ 13,500 HRC Cost Per Discharge $ 11,504 $ 10,772 $ 9,935 $ 9,799 $ 9,669 Cost Variance $ (1,996) $ (2,728) $ (3,565) $ (3,701) $ (3,831) HRC Medicare Discharges* 55,999 60,516 66,854 70,187 76,249 Cost Savings $ 111,774,004 $ 165,087,648 $ 238,334,510 $ 259,762,087 $ 292,109,919 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL MEDICARE SAVINGS $ 1,067,068,168 - ------------------------------------------------------------------------------------------------------------------------------------
* HOSPITAL DISCHARGES ONLY By Consistently Keeping Costs Below the Industry Average, HEALTHSOUTH Has Spared the Medicare Program over $1B in Excessive Costs in the last 5 Years - -------------------------------------------------------------------------------- SURGERY CENTERS HRC AVERAGE CHARGE VS. ACUTE HOSPITAL CHARGE HRC Hospital % Procedure Description Avg. Charge Avg. Charge Savings --------------------- ----------- ----------- ------- Endo Polpectomy Lrge Int $1,439 $5,559 74% Colonoscopy $1,155 $5,122 77% Rotator Cuff Repair $7,587 $11,257 33% Cruciate Lig Repair $11,348 $19,882 43% Tonsillectomy $2,575 $8,000 68% Laparoscopy $4,150 $9,159 55% - -------------------------------------------------------------------------------- OUTPATIENT REHAB COST SAVINGS 1995 2001 ---- ---- Total Visits Reported 2,512,864 9,083,251 Medicare % 8% 8% Estimated Medicare Visits 201,029 726,660 Visits/Referral 12.7 7.8 Medicare Visits Saved 456,478 - -------------------------------------------------------------------------------- OUTPATIENT REHAB FUNCTIONAL LEVELS AT ADMISSION COMPARED TO FUNCTIONAL LEVELS AT DISCHARGE (Graphic Omitted) - -------------------------------------------------------------------------------- HEALTHSOUTH REVENUE BY PRODUCT LINE (2000 VS. 2003 BUDGET) (Graphic Omitted) - -------------------------------------------------------------------------------- 2003 GAME PLAN o Continue to Lead Industry with Superior Clinical Services (as Evidenced by JCAHO Surveys) o Improve Cost Efficiency While Increasing Patient Volumes Across all Product Lines o Manage Capital Expenditures Within Guidance, Pay Down Debt, and Strengthen Balance Sheet Success Will Build Investor Confidence by Meeting or Exceeding Financial Expectations and Increase Our Return on Capital - -------------------------------------------------------------------------------- INPATIENT DIVISION 2003 GROWTH STRATEGIES o Tightly Manage Patient Mix To Drive Case Mix Index Higher o Educate Patient Referral Sources on Benefits of Inpatient Rehab vs. Other Post Acute Settings: - Commercial Payors - Physicians - Home Health Agencies - Nursing Homes and Assisted Living Facilities o Expand Specialized Clinical Programs for: - Stroke (Centers of Excellence) - Multiple Sclerosis - Parkinson's - Gamma Knife Centers - -------------------------------------------------------------------------------- INPATIENT DIVISION TARGETED POPULATIONS Population Profit Margin Per Case ---------------------------------------------- Stroke 33% Joint Replacement 31% Hip Fracture 30% Pulmonary 28% Cardiac 28% - -------------------------------------------------------------------------------- INPATIENT DIVISION 2003 GROWTH STRATEGIES o Partner with Acute Care Hospitals To Develop Long Term Acute Care Hospital Units (Hospital within Hospital Model) Associated with Highly Recognized and Respected Medical Centers o Increase Volume of Admits from Home via Free Clinical Assessments and Community Clinical Programs o Promote Benefits of AutoAmbulator(TM) - -------------------------------------------------------------------------------- AUTOAMBULATOR(TM) The AutoAmbulator(TM) Was Conceived To More Effectively Treat Patients with a Variety of Neurological Conditions That Affect Walking and Balance: o Stroke - (Market = 2MM People) o Spinal Cord Injury - (Market = 250,000 People) o Multiple Sclerosis - (Market = 200,000 Cases/Year) o Parkinson's - (Market = 1MM People) o APPROXIMATELY 3MM POTENTIAL CANDIDATES FOR THE AUTOAMBULATOR - -------------------------------------------------------------------------------- AUTOAMBULATOR(TM) o HEALTHSOUTH Received Clearance from the FDA on March 22, 2002 for a Class I Medical Device o Phase 1 Rollout to all Inpatient Hospitals to Begin 1Q03 - 100 Units to be in Place by End of Year 2003 o The AutoAmbulator will Help: - Provide Safe, Consistent Therapy - Decrease Healthcare Costs - Provide Better Patient Outcomes - Improve Patients' Lives - Will Facilitate Clinical Research That Will Provide Better Treatment Modalities - Distinguish HEALTHSOUTH from the Competition - Attract Potential Investors from Pharmaceutical Companies for Clinical Research - -------------------------------------------------------------------------------- AUTOAMBULATOR(TM) CLINICAL RELEVANCE o During Initial Clinical Studies, Patients Using the AutoAmbulator(TM): - Dramatically Improved Gait - Reduced or Eliminated the Need for Constant Use of Crutches or Canes - Significantly Improved Balance, Which Should Reduce Number of Falls - Experienced Pain Relief in Affected Joints and Limbs - Reduced Dependence on Others - Reduced the Incidence of Complications Usually Associated with Spinal Cord Injury - Improved Quality of Their Daily Lives - -------------------------------------------------------------------------------- INPATIENT DIVISION 2003 PRICING STRATEGIES o Medicare - Continue To Improve Clinical Mix of Patients (i.e., Higher Acuity Patients) - Utilize Best Practices for Case Mix Index, Comorbidities, Discharge Destination, and Admission FIM o Commercial - Target Commercial Payors with Cost Benefits of Inpatient vs. Other Long Term Options - -------------------------------------------------------------------------------- INPATIENT DIVISION 2003 GROWTH STRATEGIES o Continue Development of 40 and 60 Bed Freestanding Rehabilitation Facilities - 4 New Hospitals to Open in 2003 o Bed Expansions Under Review for all Facilities with 95% or Greater Occupancy - -------------------------------------------------------------------------------- INPATIENT DIVISION TARGET MARKETS FOR REHAB HOSPITAL AND LTAC DEVELOPMENT (Graphic Omitted) - -------------------------------------------------------------------------------- LONG TERM ACUTE CARE HOSPITALS MEDICARE REIMBURSEMENT CHANGE o PPS Reimbursement Effective January 1, 2003 o Previously, Cost-Based Reimbursement o Payment and Classification Will be Based on Hospital DRG System o New Base Rate = $32,649 - Adjusted for Case Mix Index, Existing Facilities Range from 80% to 90% of this Base Rate o Current Cost per Discharge = $17,821 - -------------------------------------------------------------------------------- AMBULATORY SERVICES Outpatient Visits, U.S. Community Hospitals 1990-2001 (in thousands) (Graphic Omitted) Demand for Outpatient Services is Growing - -------------------------------------------------------------------------------- NUMBER OF ACUTE CARE HOSPITALS ON THE DECLINE Number of U.S. Community Hospitals 1995-2001 (Graphic Omitted) - -------------------------------------------------------------------------------- SURGERY DIVISION 2003 GROWTH STRATEGIES o Management Team Dedicated Exclusively to Surgery o Maximize Existing Partnerships and Drive Capacity Utilization Through the Resyndication Process - Over 250 New Physician Partners Added in 2002 - Have Added Over 800 New Physician Partners Under Initiative of Adding 1,000 - Targeting Approximately 200 New Physician Partners in 2003 - Same Store Volume Up Nine Consecutive Quarters o Strong Opportunity for Opening New Centers with Dedicated Development Team - -------------------------------------------------------------------------------- SURGERY DIVISION 2003 GROWTH STRATEGIES o Expand/Relocate Existing Centers To Increase Volumes and Improve Block Time Capacity o Initiate Pricing Initiatives Focused on Case Rates, Carve-in Procedures and Implants o Work with Top Payors to Dislodge Cases from More Costly Acute Care Setting to ASC's - -------------------------------------------------------------------------------- SURGERY DIVISION 2003 GROWTH STRATEGIES o Tightly Manage Case Mix To Enhance Efficiencies and Target Higher Margin Cases o Focus on Expense Control: - Productivity - Salary Management - Inventory Efficiencies - Fixed Asset Utilization - -------------------------------------------------------------------------------- SURGERY DIVISION 2003 GROWTH STRATEGIES o Aggressively Market Consumer Programs: - Endometrial Ablation - Trivex - Gerds and GI programs - Ophthalmology - Unispacer - Facility Specific Physician Promotions - Patient Financing Venture with a National Bank - -------------------------------------------------------------------------------- SURGERY DIVISION TARGET MARKETS (Graphic Omitted) - -------------------------------------------------------------------------------- OUTPATIENT DIVISION 2003 GROWTH STRATEGIES - VOLUME o Sales Initiatives - Increase Referrals from "Top 20" Physicians per Market - Utilize Marketing Representatives To Drive Volume and Enhance Referrals o Fitness Club Site Development - Low Cost Model Which Generates Higher Margin and Returns - Target Large 20,000+ Member Health Clubs - -------------------------------------------------------------------------------- OUTPATIENT REHABILITATION STRATEGY FOR TRANSMITTAL 1753 o Improve Scheduling Patterns To Maximize "One on One" Care o Limit Group Sessions To Appropriately Sized Groups To Optimize Productivity and Reimbursement o Sponsor Legislative Change to CMS Transmittal 1753 - -------------------------------------------------------------------------------- FINANCIAL OVERVIEW - -------------------------------------------------------------------------------- BALANCE SHEET RATIOS 1999 2000 2001 1Q02 2Q02 3Q02 ---- ---- ---- ---- ---- ---- Net Debt/Cap 48.2% 46.2% 42.0% 43.6% 46.9% 44.8% EBITDA/Interest 6.9x 5.1x 5.6x 6.0x 6.3x 5.8x Debt/EBITDA 2.6x 2.8x 2.5x 2.4x 2.7x 2.6x Debt $3.11B $3.21B $3.03B $3.02B $3.48B $3.21B Balance Sheet Ratios Remain Strong - -------------------------------------------------------------------------------- 2003 GUIDANCE Ranges ------ Revenues $4,230,000 - $4,320,000 EBITDA $1,045,000 - $1,090,000 EPS $0.55 - $0.57 Capital Expenditures $375,000 - $425,000 Depreciation and Amortization $320,000 - $330,000 Interest Expense $235,000 - $245,000 Minority Interests $130,000 - $140,000 Shares Outstanding 400,000 - 402,000 Tax Rate 38.75% - -------------------------------------------------------------------------------- STRONG LIQUIDITY POSITION o $1B Available Under $1.25B Bank Facility o New Facility Provides Ample Availability to Take Out Last Remaining 2003 Maturity ($344MM Outstanding); No Significant Maturities until 2007 o No Off-Balance Sheet Financing Issues - -------------------------------------------------------------------------------- FOCUSED ON RETURN ON CAPITAL o Goal is to Increase ROC to 12% Over Time by Making Progress Each Quarter o Strategies Include: - Increased Throughput in Existing Facilities - Maintain or Increase Pricing Across All Divisions - Carefully Manage Expenses - Deploy New Capital on Projects with Highest Returns - Reduce DSO's - Use Free Cash Flow to Pay Down Debt - -------------------------------------------------------------------------------- SUMMARY o 2002 Was Difficult Year Due to Transmittal 1753 - Had to Overcome Confusion from Payors, Physicians, and Therapists - Negative Press Added to Difficulties and Damaged Some Referral Sources - Wall Street Overreacted o 2003 is a "Comeback" Year - Rebuilding Relationships - Closing Underperforming Facilities - Adding Incentives for Marketing Team - Cutting Expenses - Adding Programs Aimed Directly at Consumers (i.e. stroke) - Focus on Re-establishing Our Leadership Role in All Business Lines - Focus on Building Shareholder Value - Ongoing Governance Improvements - -------------------------------------------------------------------------------- SUMMARY (CONTINUED) o HEALTHSOUTH Remains a Great Company - Highest Quality Assets - Brightest Management Team - Over $1B in EBITDA - Ample Liquidity - Sound Balance Sheet - Focused on Increasing Our Return on Capital -----END PRIVACY-ENHANCED MESSAGE-----