-----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, PE9lxYHvQI9hfnhuoFBgBA6Gewr6afYHZZ9j+Y6fzDkHd49taRpqi0NC6QVZM6uE DVWuLSRDiZzNrvnCxXMY2Q== 0000812191-05-000007.txt : 20050216 0000812191-05-000007.hdr.sgml : 20050216 20050215175030 ACCESSION NUMBER: 0000812191-05-000007 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20050215 ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050216 DATE AS OF CHANGE: 20050215 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: 05618494 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 eightk21505presentation.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 15, 2005 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 23rd Floor St. Louis, Missouri 63105 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (314) 863-7422 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions. [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 7.01 Regulation FD Disclosure. Beginning on February 15, 2005, 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 For Our Investors 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 For Our Investors 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, 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 financial results of InteliStaf Holdings, Inc., RehabCare's unconsolidated affiliate, and the effect of those results on the financial condition and results of operations of RehabCare; 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. Item 9.01 Financial Statements and Exhibits. (c) Exhibits. See Exhibit Index. 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 15, 2005 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 15, 2005 Exhibit 99 [pic] RehabCare(SM) delivering the post-acute continuum February 15, 2005 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 FINANCIAL RESULTS OF INTELISTAF HOLDINGS, INC., REHABCARE'S UNCONSOLIDATED AFFILIATE, AND THE EFFECT OF THOSE RESULTS ON THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF REHABCARE; 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 For Immediate Release St. Louis, MO., February 9, 2005 o Expects to report full year 2004 operating revenues of $383.8 million and operating earnings of $41.8 million o All other numbers in this presentation are 3Q/04 o InteliStaf's independent auditors determined that they were not independent o KPMG will perform audit procedures on InteliStaf's 2004 financial statements o We will release full earnings & 2005 guidance no later than March 10th 2 RehabCare(SM) delivering the post-acute continuum ANNUAL TREND
REVENUE (Millions) [graph] '01 '02 '03 '04 CT $64.7 $105.3 $130.8 OP $50.0 $49.0 $49.0 IP $123.3 $130.7 $136.9 Combined 383.8
OPERATING EARNINGS (Millions) [graph] '01 '02 '03 '04 CT $3.0 $9.1 $5.8 HRS $32.5 $32.3 $33.6 Combined 41.8 SOURCE - COMPANY ANNUAL 10-K FOR RESPECTIVE YEARS, EXCEPT 2004 WHICH IS PER THE COMPANY'S PRESS RELEASE DATED FEBRUARY 9, 2005 Note 1: 2004 also included operating revenues of Phase 2 Consulting, acquired May, 2004
3 RehabCare(SM) delivering the post-acute continuum BUSINESS PROFILE o RehabCare, in partnership with hospitals and nursing homes, provides post acute program management, medical direction, physical rehabilitation, quality assurance, specialty programs and marketing for the following programs: o Hospital-Based Rehabilitation Programs o 113 Acute Rehabilitation Units (ARUs) o 32 Subacute/Transitional Care Units (TCUs) o 41 Outpatient Rehabilitation Programs (OP) o Skilled Nursing Facility-Based Rehabilitation Programs o 600 Programs 4 RehabCare(SM) delivering the post-acute continuum (Graphic omitted) RHB REVENUES 3Q/04 Total Revenue $93.3 million Skilled Nursing Facility-Based Rehabilitation Programs (Contract Therapy Division) $42.9M 46% Hospital-Based Rehabilitation Programs (HRS Division) $48.4M 52% Healthcare Consulting $ 2.0M 2% 5 RehabCare(SM) delivering the post-acute continuum BUSINESS PROFILE o The post-acute 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: - Self-operation - RehabWorks - HealthSouth - Aegis - Select Medical Corp 6 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 780 locations nationwide 7 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] 8 RehabCare(SM) delivering the post-acute continuum BUSINESS PROFILE TRADITIONAL SILO DELIVERY CONCEPT Providers tend to focus on sites of service rather than continuum of care. Patients are treated at the sites in an uncoordinated manner. [graph omitted] 9 RehabCare(SM) delivering the post-acute continuum BUSINESS PROFILE REHABCARE'S PATIENT-FOCUSED APPROACH RehabCare's patient-focused approach builds integrated continuums of care, rather than service silos, in markets that offer sufficient demand and appropriate therapy resources for these services [graph omitted] Acute Skilled Outpatient Rehabilitation Nursing Rehabilitation Units Facilities Programs Hospital Medical/Surgical CARE MANAGEMENT Acute Therapies Transitional Long Term Home Care Acute Care Health Units Hospitals* Programs *RehabCare partners with providers of LTACH care 10 RehabCare(SM) delivering the post-acute continuum HOW DO WE ACHIEVE OUR VISION? TARGET MARKET STRATEGY 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 o Deliver RehabCare resources more efficiently [pic] [pic] Kokomo, IN Brownsville, TX Population 301,000 Population 1.0 million [pic] [pic] [pic] Norfolk, VA Philadelphia, PA St. Louis, MO Population 1.4 million Population 5.1 million Population 2.6 million 11 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 o Continuing management o 2004 acquisitions have added $40 million in annualized operating revenues, with more in the pipeline o Strong balance sheet enables aggressive acquisition strategy CPR REHAB PHASE 2 CONSULTING VitalCare Cornerstone THERAPY A Division of AMERICA Rehabilitation A Part of RehabCare RehabCare A RehabCare Company 12 RehabCare(SM) delivering the post-acute continuum HOW DO WE ACHIEVE OUR VISION? JOINT OWNERSHIP ARRANGEMENTS JV relationships signed in 2004 o Valley Baptist Health System o 50% local hospital market share o Howard Regional Health System o 57% local hospital market share o Signature Healthcare Foundation o Sponsored by 43 orthopedic surgeons [pic] Valley Baptist Howard Signature Health System Regional Health System HEALTHCARE FOUNDATION 13 RehabCare(SM) delivering the post-acute continuum HOW DO WE ACHIEVE OUR VISION? HOSPITAL-BASED REHABILITATION PROGRAMS STABILIZATION & GROWTH STRATEGY RehabCare has successfully stabilized the loss of hospital-based programs experienced in 2003 o Expected net loss of 4 programs in 2004 versus a net loss of 21 in 2003 (excluding acquisitions) o Nine-month YOY same-store growth - 5.5% o How to accomplish growth strategy o Retaining business o Convert existing clients to longer-term relationships using capital o Integrate acute rehabilitation units, outpatient programs and skilled nursing facility-based programs electronically o New business o Deploy capital o Investment in sales processes, strategies and training o Add-on products - Center of Orthopedic Rehabilitation Excellence, LifeSpine, Brain Injury Program * Projected Number of Programs 97 98 99 00 01 02 03 04* 135 167 179 201 190 187 166 180 Revenue (Millions) 92 93 94 95 96 97 98 99 00 01 02 03 47 48.4 61.7 83.2 91.6 106.8 128.1 147.2 162.3 173.3 179.7 185.9 Contribution Margin Percentage 92 93 94 95 96 97 98 99 00 01 02 03 25.5 24.4 22.7 24.9 27.6 30.6 32.2 33.8 35.8 35.2 34.4 34.1 14 RehabCare(SM) delivering the post-acute continuum HOW DO WE ACHIEVE OUR VISION? SKILLED NURSING FACILITY-BASED REHABILITATION PROGRAMS PROFITABILITY/GROWTH Contract therapy operating margins are returning to pre-3Q/03 levels; but more can be accomplished o Focused market sales 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, (YOY -3Q) 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 64.7 105.3 130.8 '96 '97 '98 '99 '00 '01 '02 '03 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% *Projected 15 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 post-acute physical rehabilitation outcomes o Create systems to integrate the continuum [pic] of care Brain Injury Program CORE LifeSpine Empowering Lives, Centers for Spine Care Independence for Orthopedic for a Lifetime the Future Rehabilitation Excellence 16 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] 17 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 18 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 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 (Acute Rehabilitation Units) o Rule was effective July 1, 2004 o 3 year transition (50%, 60%, 65%, 75%) o Estimated impact to be included in 2005 guidance o Consolidated Appropriations Act (CAA) for FY 2005 prohibits implementation of Rule until 60 days after GAO study o Best guess is GAO report issued first part of April 2005, effective July 2005 O PART B THERAPY CAPS (SKILLED NURSING FACILITY-BASED REHABILITATION) o Medicare Prescription Drug Bill contains moratorium through 12/31/05 O FEE SCHEDULE INCREASES 20 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 Cumulative equity share of InteliStaf's net loss was $0.6 million for nine-months ended 9/30/04 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 o InteliStaf has strong industry differentiators o One-stop shop o Management system to manage variable labor InteliStaf HEALTHCARE 21
RehabCare(SM) delivering the post-acute continuum QUARTERLY UPDATE - ----------------------------------------------------------------------- GAAP Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 - ----------------------------------------------------------------------- REVENUE (MILLIONS) $129.5 $104.5 $90.9 $93.3 $95.1 - ----------------------------------------------------------------------- OPERATING EARNINGS (MILLIONS) $(34.5) $9.5 $10.2 $10.7 $11.4 - ----------------------------------------------------------------------- EPS $(1.58) $0.31 $ 0.34 $ 0.36 N/R (3) - ----------------------------------------------------------------------- - ----------------------------------------------------------------------- PROFORMA Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 - ----------------------------------------------------------------------- REVENUE(1) (MILLIONS) $80.0 $87.7 $90.9 $93.3 $95.1 - ----------------------------------------------------------------------- OPERATING EARNINGS (MILLIONS) $9.0(2) $9.5 $10.2 $10.7 $11.4 - ----------------------------------------------------------------------- EPS $0.31(2) $0.31 $0.34 $0.36 N/R (3) - ----------------------------------------------------------------------- (1) EXCLUDES STARMED OPERATING REVENUES (2) EXCLUDES THE EFFECT OF LOSS ON SALE OF STARMED (3) N/R - NOT YET REPORTED
22 RehabCare(SM) delivering the post-acute continuum REHABCARE - PRIMED FOR GROWTH o Increasing demand o Significant growth strategies o Coordinated and efficient delivery strategy o Strong financial position o Solid results - both top line and bottom line [pic] 23 -----END PRIVACY-ENHANCED MESSAGE-----