Investor Presentation. August 2007

Transcription

1 Investor Presentation August 2007

2 Forward-Looking Statement This presentation should be considered forward-looking and is subject to various risk factors and uncertainties. For more information on those risk factors, please refer to Gentiva's various filings with the Securities and Exchange Commission (SEC), including the Company s annual report on Form 10-K. This presentation also is produced in compliance with the SEC's Regulation FD, which provides guidelines on all disclosures by publicly-traded companies. The viewer or listener should not place undue reliance on forward-looking statements, which speak only as of the date indicated in this presentation. The Company is not obligated to publicly release any revisions to forward-looking statements to reflect unforeseen or other events after such date

3 Table of Contents Section Investing in Gentiva Gentiva at a Glance: Reportable Business Segments National Network Referral Flow Homecare Industry: Profile Growth Drivers Gentiva Growth Priorities Financial Results and Highlights 2007 Outlook Investing in Homecare s Future Page

4 Investing in Gentiva Leader and largest provider in a growth industry Most comprehensive offerings Broadest geographic reach Diverse payer and business mix Business platforms for future growth and expansion Strategies aligned with demographic and healthcare trends Sound financial base 4

5 Reportable Business Segments Revenues (millions)* 1 st half 2007 Home Health Direct provider of skilled nursing and therapies, chronic disease management Specialty programs for orthopedics, balance issues, cardiopulmonary, neurorehabilitation Other Related Services Top 10 national hospice provider Respiratory therapies and home medical equipment, acute infusion and healthcare consulting CareCentrix $409 $61 $139 Administrative and other outsourcing services, including central access, care coordination, utilization management and claims processing Home health nursing and therapies, respiratory therapy and HME, and acute and chronic infusion services -- all delivered through an extensive national network of third-party providers Total Company Net Revenues $607 *Source: Gentiva second quarter 2007 earnings news release. Total Company net revenues are different than total of individual segment revenues due to rounding and the exclusion of intersegment revenues. 5

6 National Network More than 300 offices covering markets (in blue) in 36 states, from which Gentiva delivers home health, specialty, hospice and/or related services directly to patients, typically within a 60- to 80-mile radius 4,000+ credentialed, third-party provider locations in the CareCentrix network, giving Gentiva the ability to bring comprehensive services to patients across all 50 states 6

7 Referral Flow Home Health Hospice, Respiratory, HME and Infusion CareCentrix Ancillary Care Management Services 7

8 Homecare Industry Profile Gentiva Position National provider with comprehensive range of services Room for additional growth in homecare and related industries Payers Medicare FY 2007 home health market basket increase of 3.3% reduced by elimination of rural add-on provision 1 ; reimbursement changes proposed for 2008 and beyond 2 ; patient shift to Medicare Advantage; 3.4% hospice increase implemented October 2006 and 3.3% increase proposed for October Commercial Insurance/Managed Care competitive pricing environment, increased interest in home health solutions, new business opportunities Medicaid variability in state-administered programs, some states shifting more resources to homecare, skilled care visit opportunities, not an area of growth for Gentiva Competition Highly fragmented and primarily local Limited number of public companies in $90+ billion homecare-related industries 3 1 Source: U.S. Centers for Medicare & Medicaid Services (CMS) news releases 2 Sources: Various government announcements and news releases, including Rule No. CMS-1541-P, Home Health Prospective Payment System Refinement and Rate Update for Calendar Year 2008, issued May 4, Source: CMS projections of total 2007 U.S. spending for home healthcare and durable medical equipment, as well as estimated Medicare spending for hospice 8

9 Homecare Industry Growth Drivers U.S. homecare spending = CAGR of 6.5% through 2016* Aging population and patient preference Clinical specialization Physician acceptance preference Medical and technological advances Cost advantage *Source: CMS projections for combined home health and durable medical equipment expenditures between 2007 and

10 Gentiva Growth Priorities Strengthen Capacity and Productivity Continued focus on practices driving clinician recruiting and retention Becoming an employer of choice Enhance Clinical and Customer Service Excellence Updating of new patient care protocols Implementation of new clinical management system with point-of-care component Maintain Double-Digit Medicare Growth Continued double-digit growth; focus on driving admissions Ongoing growth and development of Medicare-reimbursed specialty programs and hospice Expand Specialty Programs Well over 200 locations by first half 2007; openings in more Gentiva and legacy Healthfield locations Neurorehabilitation pilot and other programs in development Grow Hospice Top 10 provider with solid platform and substantial expertise Strengthening organization for accelerated growth Openings in Gentiva markets and new locations; acquisitions in CON states 10

11 Gentiva Growth Priorities Improve Commercial Pricing Ongoing process to renegotiate contracts with commercial payers Shifting capacity to more profitable business Pursue CareCentrix Business Completed restructuring Focus on renewing and expanding existing relationships Developing new relationships, including managed Medicare and managed Medicaid Continued interest in specialized product offerings with potentially higher margins 11

12 Financial Results 2005 vs. 2006* (in millions, except per share and % amounts) Net Revenues Gross Profit % EBITDA Diluted EPS Adjusted Results (A) : EBITDA - $ EBITDA - % of revenue Diluted EPS 2005 $ % $38.1 $0.94 $ % $ $1, % $69.3 $0.76 $ % $0.89 (A) Adjusted results exclude special items and restructuring and integration costs and, for 2006, include equity compensation expense, which had an impact on EBITDA of $4.3 million and on diluted EPS of $0.14. *Sources: Gentiva fourth quarter 2006 earnings news release and financial release conference call transcript Figures for 2006 include results of The Healthfield Group, Inc., which was acquired by Gentiva on February 28,

13 Q2 07 Financial Highlights Summary Continued shift in payer mix -- focus on Medicare and other higher gross margin business 17% organic Medicare growth, with strong demand for specialty program services Significant positive trends in overall operating margins, and margins for Home Health and CareCentrix Improved leverage ratios leading to lower interest rate on long-term debt 13

14 Changing Revenue Mix - Payers* Q2 05 Q2 06 Q2 07 Medicare Total Company 24% 29% 30% 17% 18% 19% 16% 47% 20% 18% 13% 49% Medicaid & Local Government CIGNA Non-CIGNA Commercial Insurance & Other Q2 05 Q2 06 Q2 07 Home Health 52% 48% 39% 61% 33% 67% Medicare All Other *Sources: Gentiva second quarter 2007 and 2006 earnings news releases and financial release conference call transcripts. 14

15 Operating Contribution Margin* Q Q Q Q Home Health 15.2% 14.8% 13.5% 12.6% CareCentrix 10.9% 10.6% 9.4% 8.7% 2006 Year 2005 Year 12.8% 11.7% 9.5% 8.4% *Excludes special items and restructuring and integration costs, as well as corporate expenses, depreciation, amortization and net interest costs. *Sources: Gentiva second quarter and first quarter 2007 earnings news releases and financial release conference call transcripts, and fourth quarter and third quarter 2006 earnings news releases. 15

16 Financial Results Q2 06 vs. Q2 07* (in millions, except per share and % amounts) Net Revenues Gross Profit % EBITDA Diluted EPS Adjusted Results (A) : EBITDA - $ EBITDA - % of revenue Diluted EPS Q $ % $20.0 $0.20 $ % $0.21 Q $ % $26.5 $0.31 $ % $0.32 (A) Adjusted results exclude special items and restructuring and integration costs, and include equity compensation expense. *Sources: Gentiva second quarter 2007 earnings news release and financial release conference call transcript. 16

17 Cash Flow Highlights* (in millions) st half 2007 Operating Cash Flow $22 $52 $22 Capital expenditures (12) (24) (12) Voluntary debt repayment -- (28) (18) Stock repurchases (21) Proceeds from stock issuance Acquisition-related payments (12) (405) -- Debt issuance term loan *Sources: Gentiva second quarter 2007 earnings news release and financial release conference call transcript, and fourth quarter 2006 earnings news release. Figures for 2006 and 2007 include results of The Healthfield Group, Inc., which was acquired by Gentiva on February 28,

18 Financial Position - 12/31/06 vs. 7/1/07* ($ in millions) Selected Balance Sheet Accounts: Cash items/investments Long-term debt Shareholders equity Days Sales Outstanding 12/31/06 $57 $342 $ /1/07 $55 $324 $ (A) Deferred tax assets Leverage ratio $84 3.9x $76 3.3x (A) Contributing to the increase in DSO was a delay in filing Healthfield-related cost reports that triggered a lag in Medicare remittances beginning late in the second quarter of The Company was expected to complete the filing of remaining reports in August 2007 and, thus, recover additional cash of about $7 million. As a result, Gentiva anticipates DSO improvement during the second half of the year. * Sources: Gentiva second quarter 2007 earnings news release and financial release conference call transcript Figures for both years include results of The Healthfield Group, Inc., which was acquired by Gentiva on February 28,

19 2007 Outlook* (in millions, except per share amounts) Net Revenues Adjusted Results (A) : EBITDA - $ EBITDA - % of revenues Diluted EPS 2006 Actual $1,107 $75 6.8% $ Outlook $1,240-$1,270 $101-$ %-8.5% $1.15-$ Outlook Assumptions: Excludes special items and impact of restructuring and integration costs relating to Healthfield acquisition Equity compensation expense between $6M and $7M, with the effect on diluted EPS and its impact of increasing the Company s effective tax rate expected to range from $0.17 to $0.19 Depreciation and amortization between $18M and $19M; capital expenditures between $22M and $24M (A) Adjusted results exclude special items and restructuring/integration costs and, for 2006, include equity compensation expense, which had an impact on EBITDA of $4.3 million and on diluted EPS of $0.14. *Sources: Gentiva second quarter 2007 and fourth quarter 2006 earnings news releases and financial release conference call transcripts; Gentiva outlook news release of January 17, Figures for 2006 include results of The Healthfield Group, Inc., which was acquired by Gentiva on February 28,

20 Gentiva: Investing in Homecare s Future Extending leadership in a growth industry Increasing geographic reach and scope of services Finding opportunities from a diverse payer and business mix Growing home health, hospice and other platforms Driving increased efficiencies and improved outcomes in specialty programs Pursuing strategies aligned with demographics and healthcare trends 20

21 Investor Presentation August 2007