JP Morgan Healthcare Conference January 13, 2016

Transcription

1 JP Morgan Healthcare Conference January 13, 2016

2 FORWARD-LOOKING STATEMENTS Certain statements and information in this presentation may be deemed to be forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of Forward-looking statements may include, but are not limited to, statements relating to our 2016 Adjusted EBITDA and Adjusted EPS guidance, objectives, plans and strategies, and all statements (other than statements of historical facts) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in our filings with the Securities and Exchange Commission from time to time, including in the section entitled Risk Factors in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Factors that could cause future results to differ materially from those provided in this presentation include, but are not limited to: failure to implement our business strategies, the loss of existing contracts; failure to accurately assess costs under new contracts; our ability to integrate acquisitions; competition in markets we serve; the cost of required capital expenditures; retention of our senior management; our ability to maintain or implement information systems; the impact of labor union representation; failure to comply with extensive and complex government regulation of our industry; the impact of changes in the healthcare sector; our ability to service our debt obligations; and other factors discussed in our filings with the Securities and Exchange Commission. Any forward-looking statements herein are made as of the date of this presentation, and we undertake no duty to update or revise any such statements. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. 2

3 3 NON-GAAP FINANCIAL MEASURES In this presentation, we refer to Adjusted EBITDA (1), Adjusted EBITDA Margin (2) and Adjusted EPS (3). These are financial measures commonly used by management and investors as performance measures and liquidity indicators that are not calculated and presented in accordance with generally accepted accounting principles (GAAP) in the United States of America. The items excluded from these non-gaap measures are important in understanding the Company s financial performance, and should not be considered in isolation of, or as an alternative to, GAAP financial measures. These non-gaap measures may not be comparable to similarly titled measures of other companies. Reconciliations of Adjusted EBITDA to net income for the periods presented are included in Supplemental Materials presented herein. Reconciliations for the forward-looking full-year 2016 Adjusted EBITDA and Adjusted EPS projections presented in this presentation are not being provided due to the number of variables in the projected full-year 2016 Adjusted EBITDA and Adjusted EPS ranges and thus EVHC does not have sufficient data to accurately estimate the individual adjustments for such reconciliations. All comparisons included in this presentation are for the 2015 periods relative to the comparable 2014 periods, unless otherwise noted. (1) Adjusted EBITDA is defined as net income (loss) before equity in earnings of unconsolidated subsidiary, income tax benefit (expense), loss on early debt extinguishment, other income (expense), net, realized gains (losses) on investments, interest expense, net, equity-based compensation expense, transaction costs related to acquisition activities, related party management fees, restructuring and other charges, severance and related costs, adjustment to net loss (income) attributable to non-controlling interest due to deferred taxes, and depreciation and amortization expense. Adjusted EBITDA for periods prior to Q have been presented to conform to the current-period presentation by including transaction costs related to acquisition activity in the definition of Adjusted EBITDA. (2) Adjusted EBITDA Margin represents Adjusted EBITDA divided by net revenue. (3) Adjusted EPS is defined as diluted earnings per share adjusted for expenses related to EVHC s secondary offerings, amortization expense, equity-based compensation expense, restructuring and other charges and loss on early debt extinguishment, net of an estimated tax benefit.

4 INVESTMENT HIGHLIGHTS Leading Provider Organization in Large, Growing Healthcare Services Markets Market Leader Positioned For Evolving Care & Reimbursement Models Differentiated, Integrated Service Model Across the Patient Continuum History of Strong Revenue and EBITDA Growth with Stable Cash Flows Consistent Revenue and EBITDA Growth From Diversified Sources Experienced Management Team with History of Success 4

5 KEY HIGHLIGHTS Net Revenue ($ in billions) $5.1 $4.4 $3.3 $ LTM 9/30/15 Adjusted EBITDA ($ in millions) Highlights Envision Physician-led healthcare-related services to consumers, hospitals, healthcare systems, health plans and local, state and national government entities Serve a broad patient continuum from medical transportation, primary care, facilitybased physician services, post-acute offerings across a number of healthcare settings AMR Expand new relationships with health systems and health plans that recognize the value of community-based medical transportation providers to impact outcomes Continue deployment of technologies, process improvements, to improve efficiencies 2016 Focus: Integration of recently acquired Rural/Metro acquisition EmCare 5 $404.5 $455.4 $445.7 (a) $9.7 $556.2 $ LTM 9/30/15 Note: Adjusted EBITDA as defined in Non-GAAP Financial Measures. Prior periods have been adjusted accordingly for comparability purposes. See reconciliation in supplemental materials. (a) $9.7M of insurance reserve adjustments for two significantly higher than expected malpractice cases from 2009 and 2011 Expand service-line offerings to improve care and outcomes, reduce cost 2016 Focus: Operating improvement, contract rationalization, margin expansion Evolution Health Innovative relationships with health systems, health plans, to manage discrete patient populations across a variety of settings 2016 Focus: Expansion of existing relationships, including health system and health plan opportunities

6 PROVEN TRACK RECORD OF EVOLVING THE BUSINESS TO MEET CUSTOMER AND MARKET NEEDS Future 2005 Adj. EBITDA: $46M 2014 Adj. EBITDA: $363M 30% 70% 65% 35% 2005 Adj. EBITDA: $106M 2014 Adj. EBITDA: $193M 2005 EBITDA: $152M 2014 EBITDA: $556M Leading player focused on episodic care Track record of strong organic growth Accelerated EmCare growth from service line expansion and integration of services Investments in technology, process improvements at AMR to drive revenue growth, margin expansion Expanded service solutions to improve quality and lower overall cost of care Extended clinical capabilities with Evolution Health post-acute offering Positioned for population health management in the evolving healthcare landscape History of Successfully Evolving the Business Model Within a Dynamic Healthcare Environment 6 Note: Adjusted EBITDA as defined in Non-GAAP Financial Measures. Prior periods have been adjusted accordingly for comparability purposes. See reconciliation in supplemental materials.

7 MARKET LEADER POSITIONED FOR EVOLVING CARE MODELS Envision Customers Changing Market Dynamics Communities Healthcare Facilities Payors Value-based integrated care models improve outcomes, reduce cost Key Customer Challenges Addressed by Envision Service, quality and patient outcomes Operational expertise / innovation Recruitment and retention Care coordination improves outcomes, lower costs Accountability and value-based care Population health driving changes in managing care across the patient continuum Movement toward market centricity Service-level scope, geographic scale, enhances care delivery in communities Envision is Well-Positioned to Meet the Changing Market Environment and Deliver a Differentiated Solution for Improving Quality and Lowering the Cost of Care 7

8 POPULATION HEALTH CARE MODEL PRE-ACUTE ACUTE POST-ACUTE Clinic DASH Logis CARMA RCC Logis Logis CARMA Primary Care Patient Transport Urgent Care Emergency Department RAP & GO Logis Hospitalist Anesthesia Surgery Radiology Intensive Care Long-term Acute Care Skilled Nursing Logis Home Health Assisted Living/ Independent Living 24/7 Unplanned Care CERNER Logis RN Primary Home CareHealth ASC MCC 8

9 MULTIPLE LEVERS TO DRIVE STRONG AND CONSISTENT GROWTH Organic Growth Acquisitions and New Services Same Store Net New Contracts Existing Services New Services Consistent underlying market volume trends Stable pricing and reimbursement dynamics Long-term customer relationships Integrated services / crossselling Proven track record improving quality and operating efficiency Approximately two-thirds of EmCare new contracts were with new facilities, one third new services with existing facilities AMR: demand for new services continues Highly fragmented markets with only a few large providers Geographic platform extensions to enhance organic growth Expansion of existing markets with synergy opportunities Continued development of additional services to more effectively manage care across a patient continuum Majority of Historical Revenue Growth Driven by Organic Activity Acquisition Activity Has Significantly Expanded Service Offerings Proven Track Record of Delivering Strong Growth Through a Combination of New Contracts, Same-Contract Revenue Growth and Disciplined Value-Enhancing Acquisitions 9

10 LEADING OUTSOURCED PROVIDER WITH NATIONAL SCALE AND STRONG LOCAL PRESENCE $5.1 billion in LTM 9/30/15 net revenue 20.6 million weighted patient encounters and transports (LTM 9/30/15) Benefits of Scale and Scope Revenue Diversification Service Integration and Cross-Selling Recruitment and Retention National Contracting AMR Operations (38 States) Evolution Health (8 States) EmCare Operations (41 States) Top Market Centricity Opportunities Market Centricity Driving Care Coordination Leading Market Position Provides Significant Competitive Advantages 10 Note: Envision coverage map and state count as of 12/31/14.

11 EMCARE: ROBUST GROWTH PLATFORM EmCare Revenue Growth Breakdown 1 EmCare Key Growth Drivers Acquisitions Net New Contracts Same Store Contracts Organic 29.1 % Integrated Services and Cross-Selling 23.2 % Expansion of Multiple Service Lines 7.7 % 20.5 % 3.2 % 16.4 % Creative Healthcare System Partnership Models 14.9 % 1.9 % 12.9 % Share Gains from Local and Regional Groups 8.0 % 13.7 % 9.1 % Continued Healthcare Facility Outsourcing 5.0 % 4.4 % 3.6 % 1.8 % YTD Q Organic Growth 13.0% 15.5% 17.3% 12.7% Robust Contract Pipeline with Strong Visibility Long-Term History of Highly Visible, Recurring Revenue with Recent Acceleration in Growth 1. EmCare net new contract growth in 2012 of 9.9% includes acquisition growth contribution of 1.9%. Same store contracts growth shown above is calculated using total contracts as the denominator. When calculating net revenue growth contribution from same-store contracts using only contracts in existence for the entirety of both year-over-year periods in the denominator, 2012 same store contract growth was 6.3%, 2013 was 2.4%, 2014 was 5.5% and YTD Q was 4.2%. 11

12 AMR POSITIONED FOR GROWTH THROUGH INTEGRATED SERVICE OFFERINGS, EFFICIENCIES Differentiated Services Offering Drives Growth Proven Superior Clinical Outcomes Productivity Initiatives Ongoing Platform for Sustainable Growth ( PSG ) program led to: Care Team Integrated with EmCare, Evolution Health Rationalization of underperforming contracts Organizational and infrastructure realignment Support function efficiencies Service Offering Improves Key Health System Metrics AMR Adjusted EBITDA Margin Improvement Since 2010 Expanding Complementary Service Offerings 9.4% 350bps 12.9% Strong Financial Position vs. Competitors Increasing New Contract Wins 2010 YTD Q Achieved LTM 9/30/2015 Adjusted EBITDA Growth of 21% over comparable prior period Future AMR Margin Improvements Primarily Driven by Technology Investments Well-Positioned for Consistent Revenue Growth and Continued Operating Efficiencies 12 Note: Adjusted EBITDA as defined in Non-GAAP Financial Measures. See reconciliation in supplemental materials.

13 ENVISION ACQUIRED RURAL/METRO Q Creates a leading outsourced healthcare transportation services company in the U.S. Strategic Rationale Combined company will offer superior services in: Emergency 911, inter-facility, managed transportation and non-government subscription fire services Enhances substantial organic growth and business development capabilities Supports Envision s Market Centricity strategy in key geographies Expanded clinical provider network supports Evolution Health growth Operational Rationale Enhances geographic and economic scale Ability to leverage Envision s operating infrastructure Further leverages recent AMR technology investments 13

14 EVOLUTION HEALTH: INNOVATIVE SOLUTIONS PROVIDER FOR HEALTHCARE S MOST CHALLENGING PATIENT POPULATIONS Physician-Led Care Management - Solutions for High Risk Populations Specializes in physician-led, population management services in the post-acute, home, mobile environment Focus on high risk, high cost and vulnerable populations with advanced illness and multiple chronic conditions Over 2,200 dedicated caregivers, and rapidly growing Leverages EmCare and AMR competencies and workforce Novel and clinically sophisticated Medical Command Center model provides healthcare logistics, care coordination, telemedicine, telemonitoring and remote care Strong value proposition: improving clinical outcomes and member/patient experience while reducing the cost to riskbearing entities Key customer segments: health plans, health systems and atrisk providers High ROI Service Offerings Comprehensive Population Assessment HRA, Mobile Diagnostics Transitional Care In-Home Care, Facility Care, Virtual Support Longitudinal High Risk Management Home Based Primary Care, Co-Management Advanced Illness Management Palliative Care, Hospice, Comfort Care 24/7 Unplanned Care In-Home, Virtual and Mobile Clinic 14

15 24/7 ACCESS & COORDINATION Virtual Clinical Practice 24/7 deployment for planned and unplanned care management Clinical Triage, Medical Consultation, Care Coordination Telehealth, Telemedicine & Virtual Care Telephonic Support Mobile MD/DO/APN/PA In-Home Services Mobile Nurses Community Paramedics Remote Monitoring 15

16 POPULATION-DRIVEN VIEW OF ENVISION TOUCHPOINTS Primary Prevention Secondary Intervention Tertiary Intervention Quaternary Intervention ROI: Long-term investment for future savings ( or more years) ROI: 11 to 13 month engagement to stabilize and control diseases ROI: 30 to 90 day engagement to improve transitional and post-acute care, reduce utilization Wellness & Prevention Bending the Cost Curve (ROI) Primary, Specialty or Acute Care Transitional, Post-Acute, or Longitudinal Care 16

17 Financial Review

18 $46 $84 $119 $115 $106 $ 159 $192 $219 $98 $261 $96 $294 $132 $363 $371 $127 $130 $126 $144 $152 $193 $220 STRONG HISTORICAL REVENUE AND EBITDA GROWTH Net Revenue Adjusted EBITDA CAGR: 3.4% $5,124 $ 600 $ CAGR: 6.9% $556 $591 $ CAGR: 17.9% $1,799 $1,934$2,107 $1,154 $645 $1,189 $745 $1,219 $888 $2,410 $2,570 $1,402 $1,008 $1,344 $1,226 $2,859 $1,381 $1,478 $3,300 $3,108 $1,441 $1,667 $1,385 $1,915 $3,728 $1,369 $2,359 $4,398 $1,555 $2,843 $1,676 $3,448 $ 525 $ 500 $ 475 $ 450 $ 425 $ 400 $ 375 $ 350 $ 325 $ 300 $ 275 $ 250 $ 225 $ 200 $ 175 $ 150 $ 125 $ 100 $ 75 $ 50 $ CAGR: 25.8% $152 $183 $215 $247 $287 $322 $345 $405 $ LTM 9/30/15 EmCare AMR $ LTM 9/30/15 EmCare AMR Long History of Consistent, Strong Revenue and Adjusted EBITDA Growth 18 Note: $ in millions. Adjusted EBITDA as defined in Non-GAAP Financial Measures. Prior periods have been adjusted accordingly for comparability purposes. See reconciliation in supplemental materials net revenue CAGR is 10.6% and Adjusted EBITDA CAGR is 14.5%.

19 EMCARE REVENUE AND EBITDA GROWTH Net Revenue ($ in millions) $3,448 $2,843 $2,359 $1,915 $1, LTM 9/30/15 Adjusted EBITDA ($ in millions) $363 $371 $294 $261 $ LTM 9/30/15 EmCare Demand driven by integrated services offering Same-store rate and volume reverts to historical mean, low single digit growth Acquisitions advance geographic scope 2016 Focus: Sustained Operating Improvement Margin expansion through contract rationalization, improved efficiencies Evolution Health New care delivery model appeals to health systems, payors Integrated care delivery leverages Envision s provider and technology resources 2016 Focus: Platform growth Integrate Florida MA contract Expand Ascension Health partnership New payor contract opportunities 19 % Margin 13.1% 13.6% 12.5% 12.8% 10.8%

20 AMR REVENUE AND EBITDA GROWTH Net Revenue ($ in millions) $1,676 $1,555 $1,441 $1,385 $1, LTM 9/30/15 Adjusted EBITDA ($ in millions) $220 $193 $152 $144 $126 Strategic restructuring project in 2011 (PSG) propelled growth, margin improvement Growth from contracting with communities, health systems Market-centricity strategy improves efficiencies 2016 focus: Rural/Metro Integration Adds AMR ~ $590 million revenue ~10% EBITDA margins before synergies Anticipated synergies of $25M-$28M Accretive to AMR margins when synergies fully realized by 2017 Opportunity to apply PSG initiatives to improve Rural/Metro core margins LTM 9/30/15 20 % Margin 8.7% 10.4% 11.1% 12.4% 13.1%

21 Net CapEx as a % of Revenue Contract Retention Rate Top 10 Customers Tenure HIGHLY VISIBLE RECURRING REVENUE STREAMS Recurring Revenue 87% of revenue generated under exclusive contracts 1 2 Years 13 Years EmCare 3 5 Years 33 Years AMR Strong Client Retention Proven ability to improve customer metrics 99% 99% 99% 99% 98% 99% 84% 86% 88% 88% 87% 90% 88% 84% 86% EmCare AMR Low Capital Expenditures Low asset intensity Outsourced service provider 2.1% 1.6% 1.7% 1.7% Recurring Revenue, Attractive Operating Margins and Relatively Low Capital Expenditure and Working Capital Requirements Result in Strong and Predictable Cash Flows 21

22 HISTORICAL ABILITY TO REDUCE LEVERAGE Total Net Leverage-to-LTM Adjusted EBITDA Multiples Capitalization 6.9 x 6.4 x As of September 30, 2015 Cash $ x 5.4 x 3.1 x 3.8 x 3.6 x Debt: 2022 Notes 750 ABL Facility 210 Term Loan Facility 1,277 Other 2 Total Debt 2,239 Total Equity 1,944 Total Capitalization $4,183 Key Events: IPO 0.4 x Q Q Q Q CD&R Acquisition Recap Acquisition Funding $1 billion term loan completed Q4 Funded Rural/Metro, Questcare acquisitions, reduced ABL Strong Cash Flow Supports De-Levering 22 Note: $ in millions. Cash balance includes cash and all near cash items.

23 2016 FINANCIAL OUTLOOK Adjusted EBITDA $715 million Range $740 million Adjusted EPS $1.43 $ Outlook Components: Organic growth Same-store rate and volume New contracts, net of contract terminations EmCare contract terminations higher in 2016 due to contract rationalization Contributions from acquisitions completed during 2015 including: Rural/Metro Questcare Outlook excludes contributions from incremental acquisitions 2016 First Quarter Adjusted EBITDA ~ 20 to 21% of annual outlook 23

24 INVESTMENT HIGHLIGHTS Leading Provider Organization in Large, Growing Healthcare Services Markets Market Leader Positioned For Evolving Care & Reimbursement Models Differentiated, Integrated Service Model Across the Patient Continuum History of Strong Revenue and EBITDA Growth with Stable Cash Flows Consistent Revenue and EBITDA Growth From Diversified Sources Experienced Management Team with History of Success 24

25 Supplemental Materials

26 ADJUSTED EBITDA RECONCILIATION ($ in millions) Q Q Q Q Q Q LTM 9/30/15 Net income (+) Depreciation and amortization expense (+) Restructuring and other charges (+) Equity-based compensation expense (+) Transaction costs (+) Severance and related costs $14.0 $39.1 $59.8 $84.8 $115.2 $131.7 $33.7 $41.2 $6.0 $24.8 ($2.0) $52.8 $125.5 $33.4 $52.4 $17.2 $ (+) Related party management fees (+) Adjustment to net income (loss) attributable to noncontrolling interest due to deferred taxes (2.3) (2.3) (+) Interest expense (+) Realized (gain) loss on investments (+) Other expense (income), net (+) Loss on early debt extinguishment (+) Income tax expense (benefit) (+) Equity in earnings of unconsolidated subsidiary Reported Adjusted EBITDA Prior Period Insurance Case Reserve Pro Forma Adjusted EBITDA (0.2) (2.7) (2.1) (2.4) - (0.4) (0.5) (0.6) (0.5) 0.5 (0.4) (1.0) (2.4) (2.0) (2.0) (1.8) (1.0) 32.0 (1.4) (1.0) 16.7 (1.4) (0.1) (0.4) (0.8) (0.3) (0.3) (0.3) (0.4) (0.4) (0.3) (0.0) (0.1) (0.1) (0.3) (0.1) (0.1) (0.1) (0.3) $152.3 $182.5 $215.2 $247.1 $287.0 $322.1 $345.4 $404.5 $445.7 $110.8 $135.1 $153.7 $556.2 $128.9 $162.8 $142.5 $ $152.3 $182.5 $215.2 $247.1 $287.0 $322.1 $345.4 $404.5 $455.4 $110.8 $135.1 $153.7 $556.2 $128.9 $162.8 $142.5 $ related party management fees represent both Laidlaw and Onex management fees and 2013 includes $20M to terminate the CD&R consulting agreement