Form 8-K AMEDISYS INC For: Mar 08
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): MARCH 8, 2016
Commission File Number: 0-24260
AMEDISYS, INC.
(Exact Name of Registrant as specified in its Charter)
| Delaware | 11-3131700 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
5959 S. Sherwood Forest Blvd., Baton Rouge, LA 70816
(Address of principal executive offices, including zip code)
(225) 292-2031 or (800) 467-2662
(Registrant’s telephone number, including area code)
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)) |
SECTION 2 — FINANCIAL INFORMATION
| ITEM 2.02. | RESULTS OF OPERATIONS AND FINANCIAL CONDITION |
On March 8, 2016, Amedisys, Inc. (“we,” “us,” “our” or the “Company”) issued a press release announcing our financial results for the fourth quarter and year ended December 31, 2015. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information presented in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless we specifically state that the information is to be considered “filed” under the Exchange Act or specifically incorporate it by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.
SECTION 7 – REGULATION FD
| ITEM 7.01. | REGULATION FD DISCLOSURE |
Item 2.02 of this Current Report on Form 8-K is incorporated herein by reference.
In addition, a copy of the supplemental slides which will be discussed during the Company’s earnings call at 11:00 a.m. ET on Wednesday, March 9, 2016 is attached to this report as Exhibit 99.2 and incorporated herein by reference.
The information presented in Item 7.01 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, unless we specifically state that the information is to be considered “filed” under the Exchange Act or specifically incorporate it by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.
SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS
| ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS |
(d) Exhibits.
| 99.1 | Press release dated March 8, 2016, announcing the Company’s financial results for the fourth quarter and year ended December 31, 2015 (furnished only) | |
| 99.2 | Supplemental slides provided in connection with the fourth quarter 2015 earnings call of Amedisys, Inc. (furnished only) | |
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.
| AMEDISYS, INC. (Registrant) | ||
| By: | /s/ Scott G. Ginn | |
| Scott G. Ginn | ||
| Senior Vice President of Finance and Accounting and Controller | ||
| (Principal Accounting Officer) | ||
| DATE: | March 8, 2016 | |
Exhibit Index
| Exhibit No. |
Description | |
| 99.1 | Press release dated March 8, 2016, announcing the Company’s financial results for the fourth quarter and year ended December 31, 2015 (furnished only) | |
| 99.2 | Supplemental slides provided in connection with the fourth quarter 2015 earnings call of Amedisys, Inc. (furnished only) | |
Exhibit 99.1
| Contact: | Investor Contact: | Media Contact: | ||
| Amedisys, Inc. | Amedisys, Inc. | |||
| David Castille | Kendra Kimmons | |||
| Managing Director, Treasury/Finance | Managing Director, Marketing & Communications | |||
| (225) 299-3391 | (225) 299-3720 | |||
| [email protected] | [email protected] |
AMEDISYS REPORTS FOURTH QUARTER AND YEAR END FINANCIAL RESULTS
AMEDISYS TO HOST CONFERENCE CALL MARCH 9, 2016 AT 11:00 A.M. ET
BATON ROUGE, Louisiana (March 8, 2016) — Amedisys, Inc. (NASDAQ: AMED), a leading home health and hospice company, today reported its financial results for the three-month period and year ended December 31, 2015.
Three-Month Periods Ended December 31, 2015 and 2014
| • | After adjusting for the 2015 period, $0.1 million ($0.5 million, net of income tax ) or $0.02 per diluted share and for the 2014 period $0.2 million ($0.1 million, net of income tax) or $0.01 per diluted share for certain items*, our adjusted results from continuing operations were as follows: |
| • | Net service revenue of $337.3 million compared to $300.5 million in 2014. |
| • | Net income from continuing operations attributable to Amedisys, Inc. of $13.4 million compared to net income from continuing operations of $9.0 million in 2014. (Net income from continuing operations attributable to Amedisys, Inc. of $12.9 million compared to net income from continuing operations attributable to Amedisys, Inc. of $9.1 million in 2014 on a GAAP basis.) |
| • | Net income from continuing operations attributable to Amedisys, Inc. per diluted share of $0.40 compared to net income from continuing operations attributable to Amedisys, Inc. of $0.27 per diluted share in 2014. (Net income from continuing operations attributable to Amedisys, Inc. per diluted share $0.38 compared to net income from continuing operations attributable to Amedisys Inc. per diluted share of $0.28 per diluted share in 2014 on a GAAP basis.) |
| • | Earnings before interest, taxes, depreciation and amortization attributable to continuing operations (“EBITDA”) of $27.6 million compared to $22.9 million in 2014. |
Years Ended December 31, 2015 and 2014
| • | After adjusting for the 2015 period, $85.4 million ($51.9 million, net of income tax ) or $1.57 per diluted share and for the 2014 period $17.7 million ($10.9 million, net of income tax) or $0.33 per diluted share for certain items*, our adjusted results from continuing operations were as follows: |
| • | Net service revenue of $1,279.5 million compared to $1,204.5 million in 2014. |
| • | Net income from continuing operations attributable to Amedisys, Inc. of $48.9 million compared to net income from continuing operations of $23.9 million in 2014. (Net loss from continuing operations attributable to Amedisys, Inc. of $3.0 million compared to net income from continuing operations attributable to Amedisys, Inc. of $13.0 million in 2014 on a GAAP basis.) |
| • | Net income from continuing operations attributable to Amedisys, Inc. per diluted share of $1.48 compared to net income from continuing operations attributable to Amedisys, Inc. of $0.73 per diluted share in 2014. (Net loss from continuing operations attributable to Amedisys, Inc. per diluted share $0.09 compared to net income from continuing operations attributable to Amedisys Inc. per diluted share of $0.40 per diluted share in 2014 on a GAAP basis.) |
| • | EBITDA of $112.0 million compared to $74.3 million in 2014. |
Paul B. Kusserow, President and Chief Executive Officer stated, “We are extremely pleased with our results in the fourth quarter and 2015 overall, as we continued to demonstrate strong organic revenue and earnings growth. In 2015, we generated $112 million in EBITDA, $108 million in cash flow from operations, strengthened our balance sheet and closed the acquisition of Infinity HomeCare in Florida. Since the end of the year, we also announced our acquisition of Associated Home Care, our first acquisition in the personal care space.”
“In 2016, we will continue to invest in quality and complete our transition to HomeCare HomeBase. We believe both will be key differentiators for Amedisys as our industry continues to evolve toward outcomes-based reimbursement and away from a fee-for-service model. Finally, we will continue with a disciplined capital allocation strategy, pursuing accretive acquisitions, such as our recently announced Associated Homecare Deal, and executing under our share repurchase program where appropriate. Congratulations to our employees for delivering these outstanding results and welcome to our new team members from Infinity and Associated.”
We urge caution in considering the current trends disclosed in this press release. The home health and hospice industry is highly competitive and subject to intensive regulations, and trends are subject to numerous factors, risks, and uncertainties, some of which are referenced in the cautionary language below and others that are described more fully in our reports filed with the Securities and Exchange Commission (“SEC”) including our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and subsequent Quarterly Reports on Form 10-Q, and current reports on Form 8-K which can be found on the SEC’s internet website, http://www.sec.gov, and our internet website, http://www.amedisys.com. We disclaim any obligations to update disclosed information on trends.
| * | See pages 10 & 11 for explanation of these certain items and the reconciliations of non-GAAP financial measures. |
1
Earnings Call and Webcast Information
To participate on the conference call, please call a few minutes before 11:00 a.m. ET, Wednesday, March 9, 2016 to either (877) 524-8416 (Toll-Free) or (412) 902-1028 (Toll). A replay of the conference call will be available through April 5, 2016 by dialing (877) 660-6853 (Toll-Free) or (201) 612-7415 (Toll) and entering conference ID #13629864.
A live webcast of the call will be accessible through our website on our Investor Relations section at the following web address: http://investors.amedisys.com.
Amedisys, Inc. (the “Company”) is headquartered in Baton Rouge, Louisiana and our common stock trades on the NASDAQ Global Select Market under the symbol “AMED”.
Additional information
Our company website address is www.amedisys.com. We use our website as a channel of distribution for important company information. Important information, including press releases, analyst presentations and financial information regarding our company, is routinely posted on and accessible on the Investor Relations subpage of our website, which is accessible by clicking on the tab labeled “Investors” on our website home page. We also use our website to expedite public access to time-critical information regarding our company in advance of or in lieu of distributing a press release or a filing with the SEC disclosing the same information. Therefore, investors should look to the Investor Relations subpage of our website for important and time-critical information. Visitors to our website can also register to receive automatic e-mail and other notifications alerting them when new information is made available on the Investor Relations subpage of our website.
Forward-Looking Statements
When included in this press release, words like “believes,” “belief,” “expects,” “plans,” “anticipates,” “intends,” “projects,” “estimates,” “may,” “might,” “would,” “should” and similar expressions are intended to identify forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a variety of risks and uncertainties that could cause actual results to differ materially from those described therein. These risks and uncertainties include, but are not limited to the following: changes in Medicare and other medical payment levels, our ability to open care centers, acquire additional care centers and integrate and operate these care centers effectively, changes in or our failure to comply with existing Federal and State laws or regulations or the inability to comply with new government regulations on a timely basis, competition in the home health industry, changes in the case mix of patients and payment methodologies, changes in estimates and judgments associated with critical accounting policies, our ability to maintain or establish new patient referral sources, our ability to attract and retain qualified personnel, changes in payments and covered services due to the economic downturn and deficit spending by Federal and State governments, future cost containment initiatives undertaken by third-party payors, our access to financing due to the volatility and disruption of the capital and credit markets, our ability to meet debt service requirements and comply with covenants in debt agreements, business disruptions due to natural disasters or acts of terrorism, our ability to integrate and manage our information systems, our ability to comply with requirements stipulated in our corporate integrity agreement and changes in law or developments with respect to any litigation relating to the Company, including various other matters, many of which are beyond our control.
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on any forward-looking statement as a prediction of future events. We expressly disclaim any obligation or undertaking and we do not intend to release publicly any updates or changes in our expectations concerning the forward-looking statements or any changes in events, conditions or circumstances upon which any forward-looking statement may be based, except as required by law.
Non-GAAP Financial Measures
This press release includes the following non-GAAP financial measures as defined under SEC rules: EBITDA, defined as net income (loss) from continuing operations attributable to Amedisys, Inc. before provision for income taxes, net interest expense and depreciation and amortization, adjusted EBITDA, defined as EBITDA excluding certain other items, adjusted net income from continuing operations attributable to Amedisys, Inc., defined as net income (loss) from continuing operations attributable to Amedisys, Inc. excluding certain other items, and adjusted net income from continuing operations attributable to Amedisys, Inc. per diluted share, defined as net income (loss) from continuing operations attributable to Amedisys, Inc. common stockholders per diluted share excluding certain other items. In accordance with SEC rules, we have provided herein a reconciliation of these non-GAAP financial measures to the most directly comparable measures under GAAP. Management believes that these are useful gauges of our performance and are common measures used in our industry to assess relative financial performance among companies.
2
AMEDISYS, INC. AND SUBSIDIARIES
SELECT CONSOLIDATED FINANCIAL STATEMENT DATA AND SUPPLEMENTAL INFORMATION
(Amounts in thousands, except share, per share data and statistical information)
(Unaudited)
Balance Sheet Information
| December 31, 2015 | December 31, 2014 | |||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 27,502 | $ | 8,032 | ||||
| Patient accounts receivable, net of allowance for doubtful accounts of $16,526 and $14,317 |
125,010 | 99,325 | ||||||
| Prepaid expenses |
8,110 | 8,493 | ||||||
| Other current assets |
14,641 | 19,708 | ||||||
|
|
|
|
|
|||||
| Total current assets |
175,263 | 135,558 | ||||||
| Property and equipment, net of accumulated depreciation of $141,793 and $146,438 |
42,695 | 137,455 | ||||||
| Goodwill |
261,663 | 205,587 | ||||||
| Intangible assets, net of accumulated amortization of $25,386 and $25,374 |
44,047 | 33,193 | ||||||
| Deferred income taxes |
125,245 | 124,788 | ||||||
| Other assets, net |
36,172 | 33,161 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 685,085 | $ | 669,742 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 25,682 | $ | 16,056 | ||||
| Payroll and employee benefits |
72,546 | 75,553 | ||||||
| Accrued expenses |
71,965 | 56,329 | ||||||
| Current portion of long-term obligations |
5,000 | 12,000 | ||||||
| Current portion of deferred income taxes |
— | 2,385 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
175,193 | 162,323 | ||||||
| Long-term obligations, less current portion |
95,000 | 104,372 | ||||||
| Other long-term obligations |
4,456 | 5,285 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
274,649 | 271,980 | ||||||
|
|
|
|
|
|||||
| Equity: |
||||||||
| Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued or outstanding |
— | — | ||||||
| Common stock, $0.001 par value, 60,000,000 shares authorized; 34,786,966 and 34,569,526 shares issued; and 33,607,282 and 33,594,572 shares outstanding |
35 | 35 | ||||||
| Additional paid-in capital |
504,290 | 481,762 | ||||||
| Treasury stock at cost, 1,179,684 and 974,954 shares of common stock |
(26,966 | ) | (19,860 | ) | ||||
| Accumulated other comprehensive income |
15 | 15 | ||||||
| Retained earnings |
(67,806 | ) | (64,785 | ) | ||||
|
|
|
|
|
|||||
| Total Amedisys, Inc. stockholders’ equity |
409,568 | 397,167 | ||||||
| Noncontrolling interests |
868 | 595 | ||||||
|
|
|
|
|
|||||
| Total equity |
410,436 | 397,762 | ||||||
|
|
|
|
|
|||||
| Total liabilities and equity |
$ | 685,085 | $ | 669,742 | ||||
|
|
|
|
|
|||||
3
Statement of Operations Information
| For the Three-Month Periods Ended December 31, |
For the Years Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net service revenue |
$ | 338,367 | $ | 300,528 | $ | 1,280,541 | $ | 1,204,554 | ||||||||
| Cost of service, excluding depreciation and amortization |
192,483 | 171,375 | 725,915 | 691,061 | ||||||||||||
| General and administrative expenses: |
||||||||||||||||
| Salaries and benefits |
69,628 | 68,465 | 279,425 | 292,497 | ||||||||||||
| Non-cash compensation |
4,187 | 2,400 | 11,824 | 5,597 | ||||||||||||
| Other |
46,452 | 33,404 | 161,186 | 143,644 | ||||||||||||
| Provision for doubtful accounts |
4,683 | 2,976 | 14,053 | 16,294 | ||||||||||||
| Depreciation and amortization |
4,238 | 6,198 | 20,036 | 28,307 | ||||||||||||
| Asset impairment charge |
— | 899 | 77,268 | 3,107 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating expenses |
321,671 | 285,717 | 1,289,707 | 1,180,507 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income (loss) |
16,696 | 14,811 | (9,166 | ) | 24,047 | |||||||||||
| Other income (expense): |
||||||||||||||||
| Interest income |
38 | 48 | 71 | 94 | ||||||||||||
| Interest expense |
(1,005 | ) | (2,614 | ) | (10,783 | ) | (8,217 | ) | ||||||||
| Equity in earnings from equity method investments |
1,122 | 757 | 9,823 | 2,991 | ||||||||||||
| Miscellaneous, net |
5,785 | 1,517 | 9,747 | 2,061 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other income (expense), net |
5,940 | (292 | ) | 8,858 | (3,071 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) before income taxes |
22,636 | 14,519 | (308 | ) | 20,976 | |||||||||||
| Income tax expense |
(9,564 | ) | (5,188 | ) | (2,004 | ) | (7,671 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) from continuing operations |
13,072 | 9,331 | (2,312 | ) | 13,305 | |||||||||||
| Discontinued operations, net of tax |
— | — | — | (216 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
13,072 | 9,331 | (2,312 | ) | 13,089 | |||||||||||
| Net income attributable to noncontrolling interests |
(161 | ) | (196 | ) | (709 | ) | (313 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) attributable to Amedisys, Inc. |
$ | 12,911 | $ | 9,135 | $ | (3,021 | ) | $ | 12,776 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Basic earnings per common share: |
||||||||||||||||
| Income (loss) from continuing operations attributable to Amedisys, Inc. common stockholders |
$ | 0.39 | $ | 0.28 | $ | (0.09 | ) | $ | 0.40 | |||||||
| Discontinued operations, net of tax |
— | — | — | (0.01 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) attributable to Amedisys, Inc. common stockholders |
$ | 0.39 | $ | 0.28 | $ | (0.09 | ) | $ | 0.39 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average shares outstanding |
33,202 | 32,621 | 33,018 | 32,301 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted earnings per common share: |
||||||||||||||||
| Income (loss) from continuing operations attributable to Amedisys, Inc. common stockholders |
$ | 0.38 | $ | 0.28 | $ | (0.09 | ) | $ | 0.40 | |||||||
| Discontinued operations, net of tax |
— | — | — | (0.01 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) attributable to Amedisys, Inc. common stockholders |
$ | 0.38 | $ | 0.28 | $ | (0.09 | ) | $ | 0.39 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average shares outstanding |
33,743 | 33,188 | 33,018 | 32,823 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Amounts attributable to Amedisys, Inc. common stockholders: |
||||||||||||||||
| Income (loss) from continuing operations |
$ | 12,911 | $ | 9,135 | $ | (3,021 | ) | $ | 12,992 | |||||||
| Discontinued operations, net of tax |
— | — | — | (216 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
$ | 12,911 | $ | 9,135 | $ | (3,021 | ) | $ | 12,776 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
4
Cash Flow and Days Revenue Outstanding, Net Information
| For the Three-Month Periods Ended December 31, |
For the Years Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net cash provided by (used in) operating activities |
$ | 20,044 | $ | 4,595 | $ | 107,785 | $ | (65,534 | ) | |||||||
| Net cash used in investing activities |
(47,562 | ) | (5,138 | ) | (67,421 | ) | (14,300 | ) | ||||||||
| Net cash (used in) provided by financing activities |
(2,031 | ) | 3,033 | (20,894 | ) | 70,563 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net (decrease) increase in cash and cash equivalents |
(29,549 | ) | 2,490 | 19,470 | (9,271 | ) | ||||||||||
| Cash and cash equivalents at beginning of period |
57,051 | 5,542 | 8,032 | 17,303 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Cash and cash equivalents at end of period |
$ | 27,502 | $ | 8,032 | $ | 27,502 | $ | 8,032 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Days revenue outstanding, net (1) |
31.9 | 29.4 | 31.9 | 29.4 | ||||||||||||
| (1) | Our calculation of days revenue outstanding, net at December 31, 2015 and 2014 is derived by dividing our ending patient accounts receivable (i.e., net of estimated revenue adjustments and allowance for doubtful accounts) by our average daily net patient revenue for the three-month period ended December 31, 2015 and 2014, respectively. Days revenue outstanding, net at December 31, 2015 does not include Infinity HomeCare. |
5
Supplemental Information - Home Health
| For the Three-Month Periods Ended December 31, | ||||||||
| 2015 | 2014 | |||||||
| Financial Information (in millions): |
||||||||
| Medicare |
$ | 195.7 | $ | 186.0 | ||||
| Non-Medicare |
66.9 | 53.5 | ||||||
|
|
|
|
|
|||||
| Net service revenue |
262.6 | 239.5 | ||||||
| Cost of service |
153.2 | 138.7 | ||||||
|
|
|
|
|
|||||
| Gross margin |
109.4 | 100.8 | ||||||
| Other operating expenses |
76.6 | 68.0 | ||||||
|
|
|
|
|
|||||
| Operating income |
$ | 32.8 | $ | 32.8 | ||||
|
|
|
|
|
|||||
| Key Statistical Data: |
||||||||
| Medicare: |
||||||||
| Same Store Volume (1): |
||||||||
| Revenue |
5 | % | 4 | % | ||||
| Admissions |
3 | % | 1 | % | ||||
| Recertifications |
3 | % | 2 | % | ||||
| Total (2): |
||||||||
| Admissions |
44,253 | 42,926 | ||||||
| Recertifications |
25,376 | 24,795 | ||||||
| Completed episodes |
68,926 | 66,925 | ||||||
| Visits |
1,216,983 | 1,173,830 | ||||||
| Average revenue per completed episode (3) |
$ | 2,855 | $ | 2,791 | ||||
| Visits per completed episode (4) |
17.7 | 17.5 | ||||||
| Non-Medicare: |
||||||||
| Same Store Volume (1): |
||||||||
| Revenue |
25 | % | 26 | % | ||||
| Admissions |
15 | % | 22 | % | ||||
| Recertifications |
16 | % | 22 | % | ||||
| Total (2): |
||||||||
| Admissions |
25,201 | 21,344 | ||||||
| Recertifications |
9,798 | 8,328 | ||||||
| Visits |
529,948 | 433,086 | ||||||
| Total (2): |
||||||||
| Cost per Visit |
$ | 87.71 | $ | 86.29 | ||||
| Visits |
1,746,931 | 1,606,916 | ||||||
6
| For the Years Ended December 31, | ||||||||
| 2015 | 2014 | |||||||
| Financial Information (in millions): |
||||||||
| Medicare |
$ | 761.4 | $ | 751.5 | ||||
| Non-Medicare |
243.7 | 205.4 | ||||||
|
|
|
|
|
|||||
| Net service revenue |
1,005.1 | 956.9 | ||||||
| Cost of service |
584.2 | 559.4 | ||||||
|
|
|
|
|
|||||
| Gross margin |
420.9 | 397.5 | ||||||
| Other operating expenses |
280.6 | 294.4 | ||||||
|
|
|
|
|
|||||
| Operating income |
$ | 140.3 | $ | 103.1 | ||||
|
|
|
|
|
|||||
| Key Statistical Data: |
||||||||
| Medicare: |
||||||||
| Same Store Volume (1): |
||||||||
| Revenue |
3 | % | 1 | % | ||||
| Admissions |
3 | % | 0 | % | ||||
| Recertifications |
(1 | %) | 1 | % | ||||
| Total (2): |
||||||||
| Admissions |
178,226 | 177,243 | ||||||
| Recertifications |
99,762 | 102,263 | ||||||
| Completed episodes |
269,227 | 272,864 | ||||||
| Visits |
4,797,734 | 4,794,609 | ||||||
| Average revenue per completed episode (3) |
$ | 2,825 | $ | 2,768 | ||||
| Visits per completed episode (4) |
17.5 | 17.3 | ||||||
| Non-Medicare: |
||||||||
| Same Store Volume (1): |
||||||||
| Revenue |
21 | % | 19 | % | ||||
| Admissions |
18 | % | 17 | % | ||||
| Recertifications |
14 | % | 13 | % | ||||
| Total (2): |
||||||||
| Admissions |
96,934 | 83,940 | ||||||
| Recertifications |
35,870 | 32,074 | ||||||
| Visits |
1,954,543 | 1,651,745 | ||||||
| Total (2): |
||||||||
| Cost per Visit |
$ | 86.52 | $ | 86.77 | ||||
| Visits |
6,752,277 | 6,446,354 | ||||||
| (1) | Same store Medicare and Non-Medicare revenue, admissions or recertifications volume is the percent increase (decrease) in our Medicare and Non-Medicare revenue, admissions or recertifications for the period as a percent of the Medicare and Non-Medicare revenue, admissions or recertifications of the prior period. |
| (2) | Based on continuing operations for all periods presented. |
| (3) | Average Medicare revenue per completed episode is the average Medicare revenue earned for each Medicare completed episode of care which includes the impact of sequestration. |
| (4) | Medicare visits per completed episode are the home health Medicare visits on completed episodes divided by the home health Medicare episodes completed during the period. |
7
Supplemental Information - Hospice
| For the Three-Month Periods Ended December 31, | ||||||||
| 2015 | 2014 | |||||||
| Financial Information (in millions): |
||||||||
| Medicare |
$ | 70.9 | $ | 57.5 | ||||
| Non-Medicare |
4.9 | 3.5 | ||||||
|
|
|
|
|
|||||
| Net service revenue |
75.8 | 61.0 | ||||||
| Cost of service |
39.3 | 32.7 | ||||||
|
|
|
|
|
|||||
| Gross margin |
36.5 | 28.3 | ||||||
| Other operating expenses |
17.8 | 15.0 | ||||||
|
|
|
|
|
|||||
| Operating income |
$ | 18.7 | $ | 13.3 | ||||
|
|
|
|
|
|||||
| Key Statistical Data: |
||||||||
| Same Store Volume (1): |
||||||||
| Medicare revenue |
24 | % | (1 | %) | ||||
| Non-Medicare revenue |
40 | % | 7 | % | ||||
| Hospice admits |
21 | % | 2 | % | ||||
| Average daily census |
24 | % | (3 | %) | ||||
| Total (2): |
||||||||
| Hospice admits |
4,966 | 4,134 | ||||||
| Average daily census |
5,576 | 4,522 | ||||||
| Revenue per day |
$ | 147.75 | $ | 146.77 | ||||
| Cost of service per day |
$ | 76.54 | $ | 78.62 | ||||
| Discharge average length of stay |
98 | 102 | ||||||
| For the Years Ended December 31, | ||||||||
| 2015 | 2014 | |||||||
| Financial Information (in millions): |
||||||||
| Medicare |
$ | 258.5 | $ | 232.6 | ||||
| Non-Medicare |
16.9 | 15.0 | ||||||
|
|
|
|
|
|||||
| Net service revenue |
275.4 | 247.6 | ||||||
| Cost of service |
141.7 | 131.7 | ||||||
|
|
|
|
|
|||||
| Gross margin |
133.7 | 115.9 | ||||||
| Other operating expenses |
66.0 | 63.4 | ||||||
|
|
|
|
|
|||||
| Operating income |
$ | 67.7 | $ | 52.5 | ||||
|
|
|
|
|
|||||
| Key Statistical Data: |
||||||||
| Same Store Volume (1): |
||||||||
| Medicare revenue |
13 | % | (2 | %) | ||||
| Non-Medicare revenue |
18 | % | 6 | % | ||||
| Hospice admits |
16 | % | (3 | %) | ||||
| Average daily census |
12 | % | (4 | %) | ||||
| Total (2): |
||||||||
| Hospice admits |
19,205 | 17,081 | ||||||
| Average daily census |
5,105 | 4,632 | ||||||
| Revenue per day |
$ | 147.78 | $ | 146.51 | ||||
| Cost of service per day |
$ | 76.06 | $ | 77.93 | ||||
| Discharge average length of stay |
92 | 100 | ||||||
| (1) | Same store Medicare and Non-Medicare revenue, Hospice admits or average daily census volume is the percent increase (decrease) in our Medicare and Non-Medicare revenue, Hospice admits or average daily census for the period as a percent of the Medicare and Non-Medicare revenue, Hospice admits or average daily census of the prior period. |
| (2) | Based on continuing operations for all periods presented. |
8
Supplemental Information - Corporate
| For the Three-Month Periods Ended December 31, | ||||||||
| 2015 | 2014 | |||||||
| Financial Information (in millions): |
||||||||
| Other operating expenses |
$ | 32.2 | $ | 27.6 | ||||
| Depreciation and amortization |
2.6 | 3.7 | ||||||
|
|
|
|
|
|||||
| Total |
$ | 34.8 | $ | 31.3 | ||||
|
|
|
|
|
|||||
| For the Years Ended December 31, | ||||||||
| 2015 | 2014 | |||||||
| Financial Information (in millions): |
||||||||
| Other operating expenses |
$ | 126.5 | $ | 114.4 | ||||
| Depreciation and amortization |
13.4 | 17.2 | ||||||
|
|
|
|
|
|||||
| Total before impairment (1) |
$ | 139.9 | $ | 131.6 | ||||
|
|
|
|
|
|||||
| (1) | Total of $217.2 million on a GAAP basis for the year ended December 31, 2015 (including $77.3 million asset impairment charge). |
9
AMEDISYS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAPP FINANCIAL MEASURES TO GAAP FINANCIAL STATEMENTS
(Amounts in thousands)
(Unaudited)
Earnings From Continuing Operations Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA
| For the Three-Month Periods Ended December 31, |
For the Years Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net income (loss) attributable to Amedisys, Inc. |
$ | 12,911 | $ | 9,135 | $ | (3,021 | ) | $ | 12,776 | |||||||
| Less: |
||||||||||||||||
| Discontinued operations, net of tax |
— | — | — | (216 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) from continuing operations attributable to Amedisys, Inc. |
12,911 | 9,135 | (3,021 | ) | 12,992 | |||||||||||
| Add: |
||||||||||||||||
| Income tax expense |
9,564 | 5,188 | 2,004 | 7,671 | ||||||||||||
| Interest expense, net |
967 | 2,566 | 10,712 | 8,123 | ||||||||||||
| Depreciation and amortization |
4,238 | 6,198 | 20,036 | 28,307 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA (1) |
27,680 | 23,087 | 29,731 | 57,093 | ||||||||||||
| Add: |
||||||||||||||||
| Certain items (2) |
(120 | ) | (214 | ) | 85,447 | 17,673 | ||||||||||
| Debt refinance costs (2) |
— | — | (3,212 | ) | (488 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA (3) |
$ | 27,560 | $ | 22,873 | $ | 111,966 | $ | 74,278 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Net Service Revenue Reconciliation | ||||||||||||||||
| For the Three-Month Periods Ended December 31, |
For the Years Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net service revenue |
$ | 338,367 | $ | 300,528 | $ | 1,280,541 | $ | 1,204,554 | ||||||||
| Add: |
||||||||||||||||
| Certain items (2) |
(1,059 | ) | — | (1,059 | ) | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted net service revenue (4) |
$ | 337,308 | $ | 300,528 | $ | 1,279,482 | $ | 1,204,554 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Net Income From Continuing Operations Attributable to Amedisys, Inc. Reconciliation: | ||||||||||||||||
| For the Three-Month Periods Ended December 31, |
For the Years Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net income (loss) attributable to Amedisys, Inc. |
$ | 12,911 | $ | 9,135 | $ | (3,021 | ) | $ | 12,776 | |||||||
| Less: |
||||||||||||||||
| Discontinued operations, net of tax |
— | — | — | (216 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) from continuing operations attributable to Amedisys, Inc. |
12,911 | 9,135 | (3,021 | ) | 12,992 | |||||||||||
| Add: |
||||||||||||||||
| Certain items (2) |
543 | (138 | ) | 51,898 | 10,880 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted net income from continuing operations attributable to Amedisys, Inc. (5) |
$ | 13,454 | $ | 8,997 | $ | 48,877 | $ | 23,872 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
10
Adjusted Net Income From Continuing Operations Attributable to Amedisys, Inc. per Diluted Share:
| For the Three-Month Periods Ended December 31, |
For the Years Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net income (loss) attributable to Amedisys, Inc. common stockholders per diluted share |
$ | 0.38 | $ | 0.28 | $ | (0.09 | ) | $ | 0.39 | |||||||
| Less: |
||||||||||||||||
| Discontinued operations, net of tax |
— | — | — | (0.01 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) from continuing operations attributable to Amedisys, Inc. common stockholders per diluted share |
0.38 | 0.28 | (0.09 | ) | 0.40 | |||||||||||
| Add: |
||||||||||||||||
| Certain items (2) |
0.02 | (0.01 | ) | 1.57 | 0.33 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted net income from continuing operations attributable to Amedisys, Inc. common stockholders per diluted share (6) |
$ | 0.40 | $ | 0.27 | $ | 1.48 | $ | 0.73 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (1) | EBITDA is defined as net income (loss) from continuing operations attributable to Amedisys, Inc. before provision for income taxes, net interest expense, and depreciation and amortization. EBITDA should not be considered as an alternative to, or more meaningful than, income before income taxes, cash flow from operating activities, or other traditional indicators of operating performance. This calculation of EBITDA may not be comparable to a similarly titled measure reported by other companies, since not all companies calculate this non-GAAP financial measure in the same manner. |
| (2) | The following details the certain other items for the three-month periods and years ended December 31, 2015 and 2014: |
| For the Three-Month Period Ended December 31, 2015 | For the Year Ended December 31, 2015 | |||||||||||||||||||||||
| (Income) Expense |
Net | Diluted EPS | (Income) Expense |
Net | Diluted EPS | |||||||||||||||||||
| HCHB implementation |
$ | 2,383 | $ | 1,442 | $ | 0.04 | $ | 4,431 | $ | 2,681 | $ | 0.08 | ||||||||||||
| Acquisition costs |
1,046 | 633 | 0.02 | 1,046 | 633 | 0.02 | ||||||||||||||||||
| Exit and restructuring activity |
— | — | — | 2,735 | 1,654 | 0.05 | ||||||||||||||||||
| Legal fees - CID |
459 | 278 | 0.01 | 745 | 451 | 0.01 | ||||||||||||||||||
| OIG Self-Disclosure |
4,674 | 3,443 | 0.10 | 4,674 | 3,443 | 0.10 | ||||||||||||||||||
| Legal settlements |
(5,314 | ) | (3,215 | ) | (0.10 | ) | (7,453 | ) | (4,509 | ) | (0.14 | ) | ||||||||||||
| Inventory and Data Security Reporting |
— | — | — | 2,121 | 1,283 | 0.04 | ||||||||||||||||||
| Wage and Hour litigation |
(2,309 | ) | (1,397 | ) | (0.04 | ) | 5,691 | 3,443 | 0.10 | |||||||||||||||
| Asset impairment |
— | — | — | 77,268 | 46,747 | 1.42 | ||||||||||||||||||
| Reduction of cost report reserve |
(1,059 | ) | (641 | ) | (0.02 | ) | (1,059 | ) | (641 | ) | (0.02 | ) | ||||||||||||
| Debt refinance costs |
— | — | — | 3,212 | 1,944 | 0.06 | ||||||||||||||||||
| Miscellaneous, other (income) expense, net |
— | — | — | (7,964 | ) | (5,231 | ) | (0.16 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
$ | (120 | ) | $ | 543 | $ | 0.02 | $ | 85,447 | $ | 51,898 | $ | 1.57 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| For the Three-Month Period Ended December 31, 2014 | For the Year Ended December 31, 2014 | |||||||||||||||||||||||
| (Income) Expense |
Net | Diluted EPS | (Income) Expense |
Net | Diluted EPS | |||||||||||||||||||
| Exit and restructuring activity |
$ | — | $ | — | $ | — | $ | 9,954 | $ | 6,132 | $ | 0.19 | ||||||||||||
| OIG Self-Disclosure |
— | — | — | 1,450 | 893 | 0.03 | ||||||||||||||||||
| Legal settlements |
(1,113 | ) | (716 | ) | (0.02 | ) | (1,113 | ) | (716 | ) | (0.02 | ) | ||||||||||||
| Asset impairment |
899 | 578 | 0.01 | 3,107 | 1,938 | 0.05 | ||||||||||||||||||
| Relator fees |
— | — | — | 3,938 | 2,426 | 0.07 | ||||||||||||||||||
| Loss on disposal of in-patient facility |
— | — | — | 515 | 317 | 0.01 | ||||||||||||||||||
| Debt refinance costs |
— | — | — | 488 | 301 | 0.01 | ||||||||||||||||||
| Miscellaneous, other (income) expense, net |
— | — | — | (666 | ) | (411 | ) | (0.01 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
$ | (214 | ) | $ | (138 | ) | $ | (0.01 | ) | $ | 17,673 | $ | 10,880 | $ | 0.33 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (3) | Adjusted EBITDA is defined as net income (loss) from continuing operations attributable to Amedisys, Inc. before provision for income taxes, net interest expense, depreciation and amortization excluding certain other items as described in footnote 2. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, income before income taxes, cash flow from operating activities, or other traditional indicators of operating performance. This calculation of adjusted EBITDA may not be comparable to a similarly titled measure reported by other companies, since not all companies calculate this non-GAAP financial measure in the same manner. |
| (4) | Adjusted net service revenue is defined as net service revenue plus certain items as described in footnote 2. Adjusted net service revenue should not be considered as an alternative to, or more meaningful than, income before income taxes, cash flow from operating activities, or other traditional indicators of operating performance. This calculation of adjusted net service revenue may not be comparable to a similarly titled measure reported by other companies, since not all companies calculate this non-GAAP measure in the same manner. |
11
| (5) | Adjusted net income from continuing operations attributable to Amedisys, Inc. is defined as net income (loss) from continuing operations attributable to Amedisys, Inc. excluding certain other items as described in footnote 2. Adjusted net income from continuing operations attributable to Amedisys, Inc. should not be considered as an alternative to, or more meaningful than, income before income taxes, cash flow from operating activities, or other traditional indicators of operating performance. This calculation of adjusted net income from continuing operations attributable to Amedisys, Inc. may not be comparable to a similarly titled measure reported by other companies, since not all companies calculate this non-GAAP measure in the same manner. |
| (6) | Adjusted net income from continuing operations attributable to Amedisys, Inc. common stockholders per diluted share is defined as diluted income (loss) from continuing operations per share excluding the earnings per share effect of certain other items as described in footnote 2. Adjusted net income from continuing operations attributable to Amedisys, Inc. common stockholders per diluted share should not be considered as an alternative to, or more meaningful than, income before income taxes, cash flow from operating activities, or other traditional indicators or operating performance. This calculation of adjusted net income from continuing operations attributable to Amedisys, Inc. common stockholders per diluted share may not be comparable to a similarly titled measure reported by other companies, since not all companies calculate this non-GAAP financial measure in the same manner. |
12
Amedisys Earnings Call Supplemental Materials March 9, 2016 Exhibit 99.1
Forward-looking Statements This presentation may include forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon current expectations and assumptions about our business that are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those described in this presentation. You should not rely on forward-looking statements as a prediction of future events. Additional information regarding factors that could cause actual results to differ materially from those discussed in any forward-looking statements are described in reports and registration statements we file with the SEC, including our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, copies of which are available on the Amedisys internet website http://www.amedisys.com or by contacting the Amedisys Investor Relations department at (225) 292-2031. We disclaim any obligation to update any forward-looking statements or any changes in events, conditions or circumstances upon which any forward-looking statement may be based except as required by law. www.amedisys.com NASDAQ: AMED We encourage everyone to visit the Investors Section of our website at www.amedisys.com, where we have posted additional important information such as press releases, profiles concerning our business and clinical operations and control processes, and SEC filings. We intend to use our website to expedite public access to time-critical information regarding the Company in advance of or in lieu of distributing a press release or a filing with the SEC disclosing the same information.
Highlights – Fourth Quarter and Year End 2015 (1,2,3,5) Amedisys Financial Results (adjusted) (Year-over-year comparisons) 4Q15 FY15 Consolidated Revenue Growth EBITDA EBITDA Margin EPS +12% $27.6M 8.2% $0.40 +6% $112M 8.8% $1.48 Home health SS Medicare admissions SS Non-Medicare admissions Recert rate Cost per visit +3% +15% 37% +1.6% +3% +18% 37% (0.3%) Hospice SS admissions SS average daily census Cost per day +21% +24% (2.6%) +16% +12% (2.4%) Cash flow Cash flow from Operations Free cash flow $20.0M $16.5M $107.8M $80.4M Balance sheet / capital deployment Outstanding debt of $100M and cash balance of $28M ($72M net debt) Leverage ratio (net) of 0.6x Acquired Infinity Homecare with cash on 12/31 ($63M) Closed on AHC acquisition on 3/1 ($28M) Share repurchases 4Q15 1Q16 (through 3/9) Cumulative Shares (in 000s) 116.9 324.1 441.0 $ in Millions $4.6 $12.3 $16.9 Wgtd. Avg. Price $39.20 $37.96 $38.29
Summary Adjusted Financials Fourth Quarter and Year End (1)
Home Health Segment –Fourth Quarter and Year End (1) Highlights Organic growth in Medicare admissions for 4 out of the last 5 quarters Segment EBITDA contribution grew 24% for FY15 Cost per visit increases in 3Q15 driven by growth and ICD-10 prep moderated in 4Q15
Hospice Segment – Fourth Quarter and Year End (1) Highlights Three straight quarters of double digit organic admissions growth (16% for FY 15) Segment EBITDA contribution grew 20% for FY15 Cost per day decrease driven mainly by pharmacy and DME costs
Amedisys Strategy – Four Areas of Focus Clinicians Patient Health Clinicians Patient Health Clinical Distinction Employer of Choice Operational Excellence and Efficiency Driving Growth Outstanding Outcomes for Our Patients In Their Homes Amedisys Care Centers & Clinical Teams Current: 142 centers currently on HomeCare HomeBase – All centers will be live on HCHB Nov 1, 2016 Rationalizing IT infrastructure Future: Realize $40M - $50M in savings from IT and HCHB efficiencies by end of 2017 Current: Reduced voluntary turnover from 32.2% in 2014 to 29.3% in 2015 Future: 10% productivity increase YE16 goal of 25% voluntary turnover Improved employee engagement and retention Current: Patient Survey score: 4.35 and Quality of Patient care score: 3.49 based on January release 30% of centers at 4.0+ STARs Future: Goal: All care centers at 4.0+ STARs at end of 2017 Current: 4Q15 same store Medicare admissions growth of 3% 4Q15 same store hospice admissions growth 21% Closed both Infinity and AHC acquisitions Future: Continued HH Medicare and Hospice Growth Continued strong cash generation Inorganic Growth
Clinical Distinction: STARs and Value Based Purchasing Metric Release Amedisys Average* Industry Average Quality of Patient Care January 2016 3.49 3.25 Patient Survey January 2016 4.35 4.07 Quality of Patient Care and Patient Survey Results Value Based Purchasing Entities at 4+ Stars: 30% Internal goal of all care centers 4+ Stars by YE 2017 *Provider number data Year + / - Quality % $’s at risk or reward (based on 2015 revenue) 2018 3% ~$7M 2019 5% ~$12M 2020 6% ~$14M 2021 7% ~$17M 2022 8% ~$19M Amedisys performance and improvement in QPC outpaces industry average (improvement from Oct – Jan ~0.6% vs. industry improvement of ~0.1%) Amedisys outperforms industry average and most competitors in Patient Survey measures Quality of Patient Care Patient Satisfaction AMED Industry Avg. AMED Industry Avg. VBP State Avg. 3.56 3.43 4.34 3.99 Since VBP uses most measures currently tracked for STAR scores, we use them as a proxy for VBP performance Amedisys QPC and PS scores within VBP states are 3.56 and 4.34 respectively, both higher than industry average and in line with overall Amedisys scores STAR Scores in VBP States Only VBP Opportunity (2015 Revenue in Pilot States: ~$237M)
Operational Excellence: HCHB Implementation Timeline We have accelerated our HCHB implementation timeline with a target Go-Live date of November 1, 2016, seven months ahead of our original plan. We are currently at 142 Installs Care Centers Why Accelerate? AMS2 specifications not designed for ongoing operation; rate of regulatory change increases risk of operating on older system Desire to move to cheaper POC devices sooner (POC device cost ~88% lower) Acceleration of operational efficiencies and impact on business Improved documentation, imbedded clinical pathways and OASIS validations will all have a positive impact on quality Implementation experience thus far has shown very limited operational disruption March 2016: All Hospice Centers on HCHB * *Includes 15 Infinity Care Centers
Home Health Care Center Conversion to HCHB Home Health implementation data shows that once a center is live on HCHB, on average they experience a total disruption of $8,600 split between revenue per episode impact and increases in overtime and admin. Note: We are not seeing disruption within our Hospice care centers Center Performance During month 1 of implementation, care centers see an increase in OT and Admin costs OT & Admin cost increase as care center staff adopts to new system Episodes in progress during HCHB rollout complete at a lower revenue per episode Decrease caused by missed visits as clinicians learn new system OT and admin costs rebound back to pre HCHB levels as care center staff becomes more efficient on the new system One month after revenue per episode decreases impact care centers, they rebound to pre HCHB levels Cases enroll and “recertify” in HCHB All clinical operations on HCHB All back office operations on HCHB Data available to drive performance Centers supporting 2 systems System support HCHB only Reports become meaningful Total average disruption per care center: ~$8,600 Month 1 Month 2 Month 3 Month 4 Components of Disruption Homecare Avg. RPE $2,880 HCHB Rollout RPE Decline (%) ~(4.1%) HCHB Rollout RPE Decline ($) ($117) Homecare Avg. Episodic GM% 45% HCHB Rollout GM ($) Decline ($53) Care Center Avg. Completed Episodes During Disruption 118 Forecasted GM($) Decline per Care Center ($6,270) Avg. Increase in OT ($709) Avg. Increase in Admin ($1,609) Total Avg. Disruption Impact (8,588) Total Cumulative Home Health Disruption: ~$2.5M
Operational Excellence: Roadmap to EBITDA Improvement IT and HCHB Efficiencies and Disruption ~$12M in savings by 4Q 17 Annualized impact ~$46M *HCHB Implementation disruption detailed on slide 9 ($M) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 HCHB Efficiencies - 0.1 2.2 3.5 5.2 6.4 6.4 6.4 IT Reduction - 0.9 1.3 2.0 3.3 3.9 4.7 5.2 Total Efficiencies - 1.0 3.5 5.5 8.5 10.3 11.1 11.6 HCHB Implementation Disruption (0.3) (0.6) (0.8) (0.8) - - - - Net Impact (0.3) $ 0.4 $ 2.7 $ 4.7 $ 8.5 $ 10.3 $ 11.1 $ 11.6 $ HCHB Roll Out Schedule (84 Implementations completed in 2015) HH Care Centers 74 99 82 31 Hospice Care Centers 41 - - - 2016 2017
Driving Growth: Organic and Inorganic Balance Sheet and Cash Flow Metrics Cash $28 Total Debt Outstanding $100 Net Debt (5) $72 Leverage Ratio (net) (5) 0.6x LTM Adjusted Free Cash Flow (2) $80 Infinity Homecare Acquisition Expanding our Ability to Care for Patients in Florida Infinity Home Care adds 15 locations in 8 of 11 Florida districts including 48 counties
Driving Growth: Associated Home Care Transaction Synergy Opportunity Associated Home Care, founded in 1991, is the leading private-duty agency in Mass. Its 1,500 employees deliver care to 5,000 seniors daily, in homes throughout Eastern, Central, and Southern Massachusetts. Associated Home Care has corporate headquarters in North Andover and nine branch offices located in Beverly, Boston, Burlington, Leominster, Marblehead, Middleboro, Springfield, Worcester and Fall River. The Company generates approximately $40 million in annualized revenues New Service Line - High Quality Personal Care: Amedisys home health patients in need of personal care services have access to one of the highest quality providers in Massachusetts. Positions us as valued partner to payers. New Referral Source: AHC home health aides will monitor patients to identify key indicators that suggest skilled home health or hospice services are/will be needed for the patient. Insures a seamless continuity of care and quality patient experience resulting in better patient outcomes. Referrals based on interaction with patient’s care managers, physician confirmation of patient eligibility, and patient choice. Personal Care Technology Platform: AHC becomes a technology platform for continued personal care growth in Massachusetts and throughout the Amedisys footprint. Management Team for Personal Care Service Line: Experienced and talented management team will run Amedisys personal care services line of business. Expanding our Ability to Care for Patients in Mass.
Becoming Employer of Choice: Improving Return on Human Capital We are seeing improvement in turnover rates as efforts to improve engagement and to simplify processes are taking effect Additional improvements are expected as engagement initiatives and process improvements continue through 2016, particularly as HCHB rollout is completed In addition to reduced turnover, we are targeting improved productivity which will enable clinicians to serve more patients and drive additional clinical outcomes Our current productivity of 28.2 visits per week among our full-time visiting clinicians drive 84% of all our patient visits Productivity enhancement is 15% - 20% of the expected HCHB efficiencies We expect to achieve a 10% improvement to FT clinician productivity by YE 2017 Achievement of this target will result in improved staffing forecasting 21% 15% 14% 11% 10% 12% 12% 23% 25% 23% 56% 50% Voluntary Turnover Rate
Adjusted EBITDA to Free Cash Flow Reconciliation (2,6) Highlights Consistent cash flow from operations before working capital impact of ~$30M/quarter LTM capital expenditures of $21M; includes roughly $10M for HCHB licenses in 2Q15 LTM free cash flow of $80M Expect $22M of capex in 2016; $9M routine and $13M non-routine
Income Statement Adjustments (6)
Deferred Tax Asset / Cash Tax Expense (7) Illustrative Cash Tax Calculation based on 2016 Analyst Consensus Estimates Tax-Effected Amounts 2015 ($M) Intangibles $72 NOL (Federal & State) + Tax Credit $53 Total $125 Illustrative Cash Tax Calculation based on 2016 Consensus ($M) 2016 2017 2018 2019 2020 Pre-Tax Book Income $98 $98 $98 $98 $98 Effective Tax Rate 40% 40% 40% 40% 40% Tax Expense - Total $39 $39 $39 $39 $39 Intangibles ($14) ($14) ($14) ($14) ($14) NOL (Federal & State) ($26) ($18) ($5) - - Tax Credit and Other $1 ($5) Deferred Tax Asset Utilization ($39) ($37) ($19) ($14) ($14) Cash Tax Due $0 $2 $20 $25 $25
Endnotes The financial results for the three-month periods and years ended December 31, 2014 and December 31, 2015 are adjusted for certain items and should be considered a non-GAAP financial measure. A reconciliation of these non-GAAP financial measures is included in the 8-K earnings release filed on March 8, 2016. Free cash flow defined as cash flow from operations less capital expenditures and required debt repayments. Free cash flow in 2014 includes impact of Department of Justice settlement. Leverage ratio defined as total debt outstanding divided by last twelve months adjusted EBITDA. Liquidity defined as the sum of cash balance and available revolving line of credit. Net debt defined as total balance sheet debt ($100M) less cash balance ($28M). Leverage ratio (net) is defined as net debt divided by FY15 adjusted EBITDA ($112M). The financial results for the three-month periods ended March 31, 2015, June 30, 2015, September 30, 2015 and December 31, 2015 are adjusted for certain items and should be considered a non-GAAP financial measure. A reconciliation of these non-GAAP financial measures is included in the corresponding 8-K detailing quarterly results for each respective reporting period. For illustrative purposes only. Pre-tax income figures for 2016-2020 are equal to current analyst consensus estimates and held constant through this time period. These figures should not be interpreted as Company estimates for our financial performance.