-----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, D9BqyQpX+GDVNcMsRHS1n5BELX+EDgk/J2G6Ixp3am/KSXPZrjw7njmVy0sx2ssB OFiN/HoqQRMQMJ3YX39WKg== 0001068800-04-000675.txt : 20041130 0001068800-04-000675.hdr.sgml : 20041130 20041130143920 ACCESSION NUMBER: 0001068800-04-000675 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041130 ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041130 DATE AS OF CHANGE: 20041130 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: 041174345 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 rehab8k.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): November 30, 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 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 November 30, 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 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 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. 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: November 30, 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 November 30, 2004 EX-99 2 ex99.txt 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 *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 10 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 11 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 12 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 ----------------------------------------- *Projected 13 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 *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 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 (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) 20 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] 21 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 22 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 --------------------------------------------------------------------------- (1) EXCLUDES STARMED OPERATING REVENUES (2) EXCLUDES THE EFFECT OF LOSS ON SALE OF STARMED 23 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) (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 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] 25 -----END PRIVACY-ENHANCED MESSAGE-----