-----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, EWZcx7LaYbtuYFu0ZAhMExIY3sJDQNfRRDKvkAOQFArtpgiKKi1N6Ci4YFxvzL/d Ulgr8ggr98eOL9qUIK34sA== 0000812191-04-000018.txt : 20040217 0000812191-04-000018.hdr.sgml : 20040216 20040217165457 ACCESSION NUMBER: 0000812191-04-000018 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20040217 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040217 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: 04609696 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 eightk21704presentation.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): February 17, 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 February 17, 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 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. 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, the ability of RehabCare 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 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; 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 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: February 17, 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 February 17, 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. 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, the ability of RehabCare 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 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; 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 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) Q3/03 Q4/03 Revenue $135.0 million $129.5 million Operating Earnings $ 5.7 million* ($34.5 million)** Net Earnings $ 3.3 million* ($25.5 million)** EPS $ 0.20* ($ 1.58)**
* Includes restructuring charge of $0.8 million, or $0.05 per diluted share, after tax. **Includes a loss on net assets held for sale of $43.6 million pretax, or $30.6 million or $1.90 per diluted share, after tax. -2- RHB Financial Position Strong Balance Sheet o Current cash and marketable securities - $38 million o Operatine Cash generated per month - $2.5 million o No Debt o Unused $110 million/5 year revolver - 1.5 years remaining o Current Ratio - 3.3:1 o DSO - 64 days -3- RHB Financial Performance - Trend (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 - ($0.86) 2003 - $1.07 2004 - $1.22-$1.32 Guidance 2004 Analyst mean $1.32
-4- RHB Financial Performance - Trend (continued) Footnote Explanations for Chart on Page 4
Year Explanation - ---- ----------- 1996 Annualized 1997 Pro forma results do not reflect a $0.06 per share gain on sale of securities. 1998 Pro forma results 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. 1999 Pro forma results do not reflect a non-operating loss associated with write-down of investment of $0.05. 2001 Pro forma results do not include a one-time charge related to a DOL settlement of $0.30. Pro forma results do not reflect a non-operating loss associated with a write-down of investment of $0.02 per share. 2003 GAAP results include a loss on net assets held for sale of $30.6 million, or $1.90 per diluted share, after tax and a restructuring charge of $0.8 million, or $0.05 per diluted share after tax. 2004 GAAP estimates include a $1.2 million charge, net of tax ($0.07 per share) in Q1/04. Pro forma estimates do not include the charge. Analyst mean estimate $1.32.
-5- RHB Revenues Q4/03 Total Revenue $129.5 million (Graphic Omitted)
Program Management $80.3 million Hospital Rehabilitation Services $46.9 million 36% Contract Therapy $33.4 million 26% Healthcare Staffing $49.2 million Supplemental $28.2 million 22% Travel $21.0 million 16%
-6- 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 $34.8 million Outpatient $12.1 million 146 Hospital Clients as of December 31, 2003 4 ARU, SNU & OP 11 ARU & SNU 19 ARU & OP 87 ARU only 24 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) -7-
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 129.7 49.0 7.2
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 49,107 1,247,534 7,047
"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 -8- 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). -9- RHB Business Profile Contract Therapy (Graphic Omitted) Management of post-acute rehabilitation services for patients in skilled nursing and continuing care facilities 200+ Clients 508 Locations Elderly; stroke, orthopedic, neurological, complex medical Competitors: RehabWorks, Aegis (Beverly), Sundance Rehabilitation, Kindred, Rehab Advantage Contract therapy revenues Q4/03 $33.4M "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 -10-
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 130.9 284,544
-11- RHB Business Profile Contract Therapy Locations (Graphic Omitted) Map omitted showing Contract Therapy locations and Corporate Office location and Two examples where RehabCare has a large number of locations (Missouri and Minnesota) -12- RHB Business Profile StarMed RehabCare has finalized the sale of StarMed to InteliStaf, effective February 2, 2004 o Stock for stock transaction o RehabCare is a key investor with - The Carlyle Group - Members of InteliStaf management team o RehabCare holds two seats on board of directors - Chair audit committee - Member of compensation committee o Immediately accretive to earnings -13- RHB Business Profile StarMed The combined company o Operates under the InteliStaf brand 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 InteliStaf expects 2004 revenue between $425 and $465 million -14- RHB Business Profile Combined Branch Locations (Graphic Omitted) Map omitted showing StarMed locations and InteliStaf locations -15- RHB Business Description Market Drivers (Graphic Omitted) o Shortages of healthcare professionals o Aging of baby boomers o Cost effective solutions for patients o Quest for better clinical outcomes -16- RHB Regulatory Drivers o 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 - Estimated impact included in Q3 and Q4/04 guidance o Part B Therapy Caps (Contract Therapy) - Medicare Prescription Drug Bill contains moratorium through 12/31/05 o Part B Fee Schedule 1.5% increase in 2004 and 2005 (Contract Therapy) o MEDPAC study due January 2005 allowing fee-for-service patients access to outpatient therapy and rehab facility services without physician's order (Outpatient) -17- RHB Strategic Initiatives Core Strategic Principles (Graphic omitted) New initiatives for RehabCare follow 4 core strategic principles - - Organizational Re-design - - Service Offerings - - Stronger Relationships - - Acquisitions -18- RHB Strategic Initiatives Division Specific Strategies (Graphic omitted) Hospital Rehabilitation Services - - Stabilize erosion of programs - - Improve margins - - Hire senior business development executive - - Invest additional $600,000 improving sales process - - Focus on add-on products - - Provide capital opportunities to existing relationships Contract Therapy - - Concentrate resources on selected markets - - Implement more disciplined pricing policies - - Improve margins through productivity - - Increase targeted marketing and advertising campaign - - Create awareness of continuum product; reinforce industry-wide reputation - - Improve profit margins with monitoring tool PROMOS -19- RHB Strategic Initiatives Support Services Redesign (Graphic omitted) StarMed transaction leaves RHB with $11.6 million of stranded corporate costs o $4.0 M to support growth or cost will be eliminated o $6.0 M transitional service costs eliminated by May 31, 2004 o $1.6 M eliminated in 2H/04 -20- RHB Strategic Initiatives Service Offering (Graphic omitted) Post-Acute Continuum -21- 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 -22- RHB Strategic Initiatives Service Offering (Graphic omitted) Signature agreement 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 -23- RHB Strategic Initiatives Building Stronger Relationships Build partnerships instead of transactional relationships - - Develop joint venture and capital infusion models - - Create a la carte service offerings - - Develop partnership models for long-term care chains - - Prove employee competencies with Simulis - - Target markets and clients -24- RHB Strategic Initiatives Building Stronger Relationships RehabCare will develop a freestanding rehabilitation hospital in Los Angeles - - 56 beds, leased and operated by joint venture of RehabCare - - Develop clinical research network with UCLA and RHB inpatient and outpatient programs - - Expect $19 million in revenues, 22% EBITDA, total capital requirement of $12 million, when fully developed - - Expect implementation in 2005 -25- RHB Strategic Initiatives Building Stronger Relationships 3 year IT plan to enhance partnerships - - Enables continuum strategy - - Simplifies integration of acquisitions - - Use internet internally for process improvement o Recruiting o Training o Employee portal - - Develop web-based external tools to enhance relationships with o Clients o Referral Sources o Patients -26- RHB Strategic Initiatives Acquisitions (Graphic omitted) 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 CPR Therapies, LLC o Pipeline o Capital - negotiating new credit facility to fund acquisitions and strategic partnership transactions o Key executive focus o Acquisition experience -27- RHB Strategic Initiatives Acquisition of CPR Therapies (Graphic omitted) o Leading provider of contract rehabilitation services to SNFs and ALFs in Colorado and California o Entry into Colorado o Critical mass added in California o Foundation to build continuum in Colorado o 60 contracts -28- 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 $38 Million Cash and Marketable Securities, Solid Cash Flow -29- -----END PRIVACY-ENHANCED MESSAGE-----