-----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, VaFEbHdxx+RKvaoqcoj1ffURJnEKoCjW50Vhx9TpHJMo82822vQ4abwriDfFGcXD b/mh0Q9CAmHDEoZbaJAdCA== 0000812191-04-000006.txt : 20040113 0000812191-04-000006.hdr.sgml : 20040113 20040113154417 ACCESSION NUMBER: 0000812191-04-000006 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20040113 ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REHABCARE GROUP INC CENTRAL INDEX KEY: 0000812191 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOSPITALS [8060] IRS NUMBER: 510265872 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14655 FILM NUMBER: 04522776 BUSINESS ADDRESS: STREET 1: 7733 FORSYTH BLVD 17TH FLR STREET 2: SUITE 1700 CITY: ST LOUIS STATE: MO ZIP: 63105 BUSINESS PHONE: 3148637422 FORMER COMPANY: FORMER CONFORMED NAME: REHABCARE CORP DATE OF NAME CHANGE: 19940218 8-K 1 eightk104presentation.txt UNITED STATES 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 (Date of earliest event reported): January 13, 2004 REHABCARE GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 0-19294 51-0265872 (State or other (Commission File (I.R.S. Employer jurisdiction of Number) Identification incorporation) Number) 7733 Forsyth Boulevard 17th Floor St. Louis, Missouri 63105 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (314) 863-7422 Item 7. Financial Statements and Exhibits. (c) Exhibits. See Exhibit Index. Item 9. Regulation FD Disclosure. Beginning on January 13, 2004, RehabCare executives will make presentations at investor conferences to analysts and in other forums using the slides as included in this Form 8-K as Exhibit 99. Presentations will be made using these slides, or modifications thereof, in connection with other presentations in the foreseeable future. The current slides incorporated into the investor relations presentation are included in this Form 8-K as Exhibit 99. The full slide presentation is available in the Investor Info section on our website at www. rehabcare.com. Information contained in this presentation is an overview and intended to be considered in the context of RehabCare's SEC filings and all other publicly disclosed information. We undertake no duty or obligation to update or revise this information. However, we may update the presentation periodically in a Form 8-K filing. The presentation included in this report does not include images included in the actual slides. In order that all investors be provided with substantially the same information, RehabCare is making these slides available on its website. The presentation in its entirety will be made available in the Investor Info section of the RehabCare website, www.rehabcare.com, although this availability may be discontinued at any time. Forward-looking statements have been provided pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. They involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties may include, but are not limited to, the ability of RehabCare and the Foundation to implement the planned programs within the expected timeframes and the ability of RehabCare to otherwise achieve the revenue and earnings levels from the relationship at or above the levels projected; the timing and financial effect of the Company's continuing restructuring efforts with respect to the Company's current businesses; changes in and compliance with governmental reimbursement rates and other regulations or policies affecting RehabCare's hospital rehabilitation and contract therapy lines of business; RehabCare's ability to attract new client relationships or to retain and grow existing client relationships through expansion of RehabCare's hospital rehabilitation and contract therapy service offerings and the development of alternative product offerings that build stronger partnering relationships between RehabCare and its clients; RehabCare's ability to identify and consummate, within the expected timeframes, strategic acquisitions to accelerate growth in RehabCare's hospital rehabilitation and contract therapy divisions; the consummation of the pending transaction pursuant to which RehabCare's existing staffing business will be acquired by InteliStaf Holdings, Inc. and the operating performance of InteliStaf, and the rate of return that RehabCare will be able to achieve from its equity interest in InteliStaf after the consummation of the transaction; 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 of 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. 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. Dated: January 13, 2004 REHABCARE GROUP, INC. By: /s/ Vincent L. Germanese ----------------------------------------- Vincent L. Germanese Senior Vice President, Chief Financial Officer and Secretary EXHIBIT INDEX Exhibit No. Description 99 Text of Investor Relations Presentation in Use Beginning January 13, 2004 Exhibit 99 Safe Harbor Forward-looking statements have been provided pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. They involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties may include, but are not limited to, the ability of RehabCare and the Foundation to implement the planned programs within the expected timeframes and the ability of RehabCare to otherwise achieve the revenue and earnings levels from the relationship at or above the levels projected; the timing and financial effect of the Company's continuing restructuring efforts with respect to the Company's current businesses; changes in and compliance with governmental reimbursement rates and other regulations or policies affecting RehabCare's hospital rehabilitation and contract therapy lines of business; RehabCare's ability to attract new client relationships or to retain and grow existing client relationships through expansion of RehabCare's hospital rehabilitation and contract therapy service offerings and the development of alternative product offerings that build stronger partnering relationships between RehabCare and its clients; RehabCare's ability to identify and consummate, within the expected timeframes, strategic acquisitions to accelerate growth in RehabCare's hospital rehabilitation and contract therapy divisions; the consummation of the pending transaction pursuant to which RehabCare's existing staffing business will be acquired by InteliStaf Holdings, Inc. and the operating performance of InteliStaf, and the rate of return that RehabCare will be able to achieve from its equity interest in InteliStaf after the consummation of the transaction; 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 of 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-
RHB Financial Performance (Graphic omitted) Q2/03 Q3/03 % Change Revenue $136.0 million $135.0 million (0.7%) EBITDA* $9.8 million $7.8 million** (20.4%) Net Earnings $4.5 million $3.3 million** (26.7%) EPS $0.27 $0.20** (26.0%)
* Earnings before interest, taxes, depreciation and amortization **Includes restructuring charge of $0.8 million, or $0.05 per diluted share, after tax. -2- RHB Financial Position Strong Balance Sheet o Current cash and marketable securities - $27 million o Cash generated per month - $2 million o No Debt o Unused $110 million/5 year revolver - 2 years remaining o Current Ratio - 3.1:1 o DSO - 62 days -3- RHB Financial Performance - Trend Adjusted EPS Growth (Graphic Omitted)
GAAP Pro Forma Fiscal Year Ended February 28 Fiscal Year Ended February 28 1992 - $0.20 1992 - $0.20 1993 - $0.24 1993 - $0.24 1994 - $0.29 1994 - $0.29 1995 - $0.35 1995 - $0.35 1996 - $0.42 1996 - $0.42 Fiscal Year Ended December 31 Fiscal Year Ended December 31 1996 - $0.47** 1996 - $0.47** 1997 - $0.73* 1997 - $0.68* 1998 - $0.86* 1998 - $0.85* 1999 - $1.03* 1999 - $1.08* 2000 - $1.45 2000 - $1.45 2001 - $1.16* 2001 - $1.48* 2002 - $1.38 2002 - $1.38 2003 - $0.99* 2003 - $0.95-$1.10 Guidance
*Consensus estimate of EPS including $0.05 restructuring charge is $0.99: excluding restructuring charge is $1.04. Pro forma results for 2001 do not include a one-time charge related to a DOL settlement of $0.30. Pro forma results for 2001 and 1999 do not reflect non-operating losses associated with write-down of investments of $0.02 per share and $0.05 per share, respectively. Pro forma results for 1998 do not include a $0.06 per share gain on sale of securities or a $0.05 per share charge for the cumulative effect of change in accounting for start-up costs. The pro forma results for 1997 do not reflect a $0.06 per share gain on sale of securities. **Annualized -4- RHB Revenues Q3/03 Total Revenue $135 million (Graphic Omitted)
Program Management $80.1 million Hospital Rehabilitation Services $46.5 million 34% Contract Therapy $33.6 million 25% Healthcare Staffing $54.9 million Supplemental $29.3 million 22% Travel $25.6 million 19%
-5- RHB Business Profile Hospital Rehabilitation Services (Graphic Omitted) Management of inpatient and outpatient rehabilitation programs, skilled nursing units and the delivery of therapy to medical/surgical patients. Inpatient $34.2 million Outpatient $12.3 million 158 Hospital Clients as of September 30, 2003 4 ARU, SNU & OP 12 ARU & SNU 23 ARU & OP 87 ARU only 29 OP only Acute Rehabilitation Units / Skilled Nursing Units Elderly - orthopedic, stroke, circulatory, respiratory Outpatient Middle-aged - most musculoskeletal Competitors - self operation, 3 small competitors (combined market share less than RHB) -6-
RHB Business Profile Hospital Rehabilitation Services (Graphic Omitted) Annual Revenue (in millions) ARU OP SNU 1992 $ 44.5 1993 48.4 1994 61.7 1995 75.5 $ 7.2 $ 0.5 1996 76.7 10.5 4.4 1997 86.6 9.4 10.8 1998 96.5 16.5 15.2 1999 106.2 30.7 10.3 2000 109.3 42.3 10.7 2001 112.5 50.0 10.8 2002 120.7 49.0 10.0 2003* 129.3 48.4 7.1
* 2003 Estimate
Admissions and Visits ARU OP Visits SNU Admissions Admissions 1992 11,696 1993 13,147 1994 17,027 1995 21,329 135,064 628 1996 23,135 223,904 3,732 1997 27,019 231,256 8,381 1998 32,537 378,108 12,856 1999 37,320 785,943 11,375 2000 39,313 1,173,324 11,345 2001 42,278 1,439,169 11,804 2002 44,986 1,366,439 10,302 2003* 48,678 1,247,229 7,070
* 2003 Estimate "RehabCare manages the complete continuum of rehabilitation care, from acute therapy through outpatient services. It's a large commitment." Eileen Malo Executive VP, Continuing Care Services Bon Secours Hampton Roads Health System Norfolk, VA -7- RHB Business Profile Hospital Rehabilitation Services Locations (Graphic Omitted) Map omitted showing HRS Acute Rehab Unit locations, HRS Outpatient locations, HRS Skilled Nursing Unit locations, Corporate Headquarters location and three examples where RehabCare has all three HRS product lines (Southeast Pennsylvania and New Jersey, Norfolk and Oklahoma City). -8- RHB Business Profile Contract Therapy (Graphic Omitted) Management of post-acute rehabilitation services for patients in skilled nursing and continuing care facilities 200 Clients 473 Locations Elderly; stroke, orthopedic, neurological, complex medical Competitors: RehabWorks, Aegis (Beverly), Sundance Rehabilitation, Kindred, Rehab Advantage Contract therapy revenues Q3/03 $33.6M "We were looking for a partner that could not only provide high-quality services, but also help us grow our business." Mr. Dean Eliason Vice President Fountains Retirement Communities, Inc. Tucson, AZ -9-
RHB Business Profile Contract Therapy (Graphic Omitted) Annual Revenue (in millions) Average Revenue Per Location 1997 $ 8.4 $234,921 1998 13.9 281,547 1999 14.1 154,899 2000 30.0 192,130 2001 64.7 258,902 2002 105.3 278,427 2003* 129.5 280,557
*2003 Estimate -10- RHB Business Profile Contract Therapy Locations (Graphic Omitted) Map omitted showing Contract Therapy locations and Corporate Office location Two examples where RehabCare has a large number of locations (Missouri and Minnesota) -11- RHB Business Profile StarMed RehabCare has agreed to sell StarMed to InteliStaf o Combining StarMed and InteliStaf offers a unique opportunity - Similar size - Commitment to Travel and Per Diem - Complementary geography - Similar core business philosophy o Creates a stronger healthcare staffing competitor o Continues commitment to staffing, while fulfilling objective to return the staffing business to profitability -12- RHB Business Profile StarMed The combined company o Will operate under the InteliStaf name o Largest integrated privately held healthcare staffing company o 2nd largest per diem staffing company - more than 85 markets - more than 23,000 professionals at local offices o 3rd largest travel staffing company - more than 1,700 on assignment o Will be led by InteliStaf CEO Ralph Friedmann -13- RHB Business Profile StarMed Transaction Summary o Stock for stock transaction o RehabCare becomes a key investor with - The Carlyle Group - Members of InteliStaf management team o RehabCare will hold two seats on board of directors - Chair audit committee - Member of compensation committee -14- RHB Business Profile Combined Branch Locations (Graphic Omitted) Map omitted showing StarMed locations and InteliStaf locations -15- RHB Business Description Market Drivers (Graphics Omitted)
Aging of Baby Boomers U. S. Population Over 65 (in millions) 2000 34.4 2005 36.3 2010 39.7 2015 45.9 2020 53.7 2025 62.6
Source: U.S. Census Bureau, Population Projections Bureau, January 13, 2000
Shortage of Healthcare Professionals RN Demand Vs. Supply (in millions) Demand Supply 2000 1.999 1.889 2005 2.161 2.012 2010 2.344 2.069 2015 2.562 2.055 2020 2.810 2.001
Source: National Center for Health Workforce Analysis, U.S.D.H.H.S., July 2002 -16- RHB Regulatory Drivers Part B Therapy Caps (Contract Therapy) - -------------------------------------- - - Limits Part B Therapy $1,590 - Occupational Therapy $1,590 - Physical & Speech Therapy (Combined) - - Effective 9/1/03 through 12/8/03 - - Prescription Drug Bill contains moratorium through 12/31/2005 65 Percent Rule (ARU) - --------------------- - - Rule is not final, effective date not yet known - - Limits access to ARU for certain diagnoses - - Patients denied access to ARU will seek rehab in other venues - - As currently written, 0% to 3% decline in RHB discharges in first year -17- RHB Strategic Initiatives (Graphic omitted) RHB has developed new strategies to respond to changing markets, regulations and customer needs: - - Disciplined growth and only profitable growth - - Focus on target markets and develop local market concentration - Provides better opportunities for product differentiation - Enhances ability to recruit - Enhances and protects margins - - Develop higher quality professionals through training improvements - - Create better outcomes -18- RHB Strategic Initiatives Restructuring (Graphic omitted) Restructure Selling, General & Administrative Expenses - - $3.5 million estimated cost improvement in 4Q/03 compared to 2Q/03 - - $12 million estimated cost improvement in 2004 compared to 2003 * 48% Personnel Related 31% Vendor Relationships 21% Discretionary Expenditures * Will be reduced as a result of the StarMed transaction -19- RHB Strategic Initiatives Service Offering (Graphic omitted) Re-design Service Offering Post-Acute Continuum -20- RHB Strategic Initiatives Service Offering RehabCare signed an agreement with Signature Health Care Foundation, December 31 to provide outpatient and home health rehabilitation in the St. Louis area o Foundation's mission is to improve quality, efficiency and affordability of health care by - Increasing physician leadership - Developing effective business practices o Foundation was formed by Signature Health Systems Inc - 41 physician orthopedic group - 6 offices in greater St. Louis - More than 140,000 office visits -21- RHB Strategic Initiatives Service Offering Signature agreement supports 2 strategies o Partnership relationship with physicians delivering both cost-effective and high quality rehabilitation services o Enables development of market-based continuum of care - 49 bed acute rehab unit - 26 rehabilitation programs in SNFs - New Outpatient and Home Health Offices - 3 hub offices - 11-14 satellites -22- RHB Strategic Initiatives Build Relationships (Graphic Omitted) The St. Louis Area Continuum of Care (map omitted showing St. Louis locations) -23- RHB Strategic Initiatives Build Relationships Build partnerships instead of transactional relationships - - Develop joint venture and capital infusion models - - Create a la carte service offerings - - Develop partnerships models for long-term care chains - - Simulis - proving competencies - - Target markets and clients -24- RHB Strategic Initiatives Build Relationships Create and utilize technology to enhance partnerships - Integrate inpatient, outpatient and CT technology platforms to support the continuum of care - Develop website as strategic business tool Develop cost-saving business practices Recruiting Training Employee portal Enhance ability to recruit Attract employees with proven competencies (through Simulis) -25- RHB Strategic Initiatives (Graphic omitted) Acquisitions - Capital available - Key Executive focus - Acquisition experience - Pipeline in development Hospital Rehabilitation Services -------------------------------- Advanced Rehabilitation Resources, Inc. - IP Physical Therapy Resources, Inc. - OP Rehabilitative Care Systems of America - OP Salt Lake Physical Therapy - OP DiversiCare Rehab Services, Inc. - OP Contract Therapy ---------------- TeamRehab Moore Rehabilitation Services, Inc. Rehab Unlimited, Inc. Therapeutic Systems, Ltd -26- RHB Key Investment Points (Graphic omitted) Long Record of Successful Growth and Profitability Disciplined Strategy Long Standing Diversified for Growth and Relationships Revenue Mix Profitability with Clients Favorable Strong Financial Position Experienced Demographic Factors No Debt Management Team $27 Million Cash, Solid Cash Flow -27- -----END PRIVACY-ENHANCED MESSAGE-----