Attached files
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| 8-K - FORM 8-K - UNITED SURGICAL PARTNERS INTERNATIONAL INC | d492450d8k.htm |
 February 2013
Exhibit 99.1 |
 2
SAFE HARBOR STATEMENT
This presentation contains forward-looking statements,
including those regarding United Surgical Partners
International, Inc. and the services it provides. Investors
are cautioned not to place an undue reliance on these
forward-looking statements, which will speak only as of
the date of this presentation. United Surgical Partners
International, Inc. undertakes no obligation to publicly
revise these forward-looking statements. |
 3
NON-GAAP MEASUREMENT
We
use
the
non-GAAP
financial
measurement
term
“EBITDA.”
EBITDA
is
calculated as operating income plus net gain (loss) on deconsolidations, disposals,
impairments
and
depreciation
and
amortization.
USPI
uses
EBITDA
and
EBITDA
less noncontrolling interests as analytical indicators for purposes of allocating
resources
and
assessing
performance.
EBITDA
is
commonly
used
as
an
analytical
indicator within the health care industry and also serves as a measure of leverage
capacity and debt service ability. EBITDA should not be considered as a
measure of financial performance under generally accepted accounting
principles, and the items excluded from EBITDA could be significant
components in understanding and assessing financial performance.
Because EBITDA is not a measurement determined in accordance with
generally
accepted
accounting
principles
and
is
thus
susceptible
to
varying
calculation methods, EBITDA as presented by USPI may not be comparable to
similarly titled measures of other companies. |
 4
$2.2+bn of revenues under management from 214 facilities performing 900,000+ cases
by 8,800+ physician utilizers
High quality, low cost provider of surgical services
Leading operator
Leading operator
in an attractive
in an attractive
industry segment
industry segment
Proven management
Proven management
team
team
Attractive business
Attractive business
and payor mix
and payor mix
KEY HIGHLIGHTS
High margin, elective procedures with over half of revenue from orthopedic
specialties 78% private insurance; operating discipline yields bad debt
expense of ~2% of revenues Two-thirds of our facilities are owned in a
partnership with and partially owned by various not-for-profit
healthcare systems (hospital partners) Provides long-term strategic
stability in the market place with strong brand reputation and
stability Working with existing partners (physicians and hospitals) to grow
market share and enhance strategic positioning
Adjusted EBITDA
1
CAGR of 13% from 2006 to 2012
Cumulative Free Cash Flow
of $330 million from 2009 to 2012
Estimated 2012 adjusted EBITDA of $238m
Majority of USPI’s senior management has been with the Company over 10
years Consistent financial
Consistent financial
performance
performance
Focused on key
Focused on key
strategic markets with
strategic markets with
significant share
significant share
Unique JV
Unique JV
partnership
partnership
strategy
strategy
1
Consolidated Adjusted EBITDA less noncontrolling interest
2
Consolidated FCF calculated as adjusted EBITDA less capital expenditures, cash
interest, cash taxes and change in working capital (defined as increases
(decreases) in cash from changes in operating assets and liabilities, net effects from purchases of new businesses)
3
Represents pro forma adjusted EBITDA-MI
3
2 |
 5
KEY MARKETS
Major Market
Facilities
USPI operates 214 facilities in 26 states
Denver
6 facilities
Centura
Health
Partnership
Oklahoma City
1 facility
INTEGRIS Health Partnership
St. Louis
18 facilities
New Jersey
14 facilities
Meridian Health
Partnership
Nashville
21 facilities
St. Thomas Partnership
Atlanta
6 facilities
Houston
19 facilities
Memorial Hermann Partnership
Austin
5 facilities
Seton Partnership
San Antonio/Corpus Christi
5 facilities
CHRISTUS Health Partnership
Dallas/Ft. Worth
32 facilities
Baylor Health Care
System Partnership
Phoenix/Las Vegas
14 facilities
Dignity Health
Partnership
Los Angeles
6 facilities
Dignity Health
Partnership
Kansas City
5 facilities
North Kansas City Hospital
Ascension Partnership
Chicago
5 facilities
NorthShore
University
HealthSystem, Adventist
Partnership |
 6
FAVORABLE REVENUE AND PAYOR
MIX
High margin, elective procedures
56% of revenue mix from orthopedic
and pain management
Diversification of specialties insulates USPI
from negative utilization and specialty pricing
changes
78% private insurance
Insurance companies favor low cost
providers
Modest exposure to government
reimbursement fluctuations
Reliable payors
and operating discipline
yields bad debt expense of ~2% of revenues
and receivable days outstanding is under 35
Low risk cash flows from high margin
specialties and reliable payors:
2012 U.S. Revenue Mix
2012 U.S. Payor
Mix
12%
7%
ENT
5%
General
Gynecology
3%
Pain Mgmt
44%
Orthopedic
9%
Medical/Other
8%
Ophthalmology
3%
Cosmetic
9%
GI
78%
Private Insurance
2%
Self-pay
19%
Government
1%
Other |
 7
STRONG FINANCIAL AND OPERATING
PERFORMANCE POST LBO
86 acquisitions
25 de novo facility developments
16 new health system partners
Facility revenue CAGR of 13% from 2006 to 2012
Positive each of the past 5 years
Same facility revenue + 6.2% for 2011
Same facility revenue +5.7% for 2012
Facility EBITDA CAGR of 13% from 2006 through 2012
Facility EBITDA margins of 30.5% for 2012
25% SWB as a percent of revenue
3% G&A as a percent of systemwide revenue
Installed decision support system
Improved quality management system
EHR Investment
40 facilities divested
75% of revenue from top 10 markets
Expansion
Expansion
Facility revenue growth
Facility revenue growth
Facility EBITDA
Facility EBITDA
Cost management
Cost management
System enhancements
System enhancements
Portfolio management
Portfolio management |
 8
U.S. INDUSTRY OVERVIEW
ASCs have been widely successful and are a significant presence in
the U.S. healthcare delivery system
Advantages in patient safety and physician efficiency are meaningful
Significant savings to patients, government and commercial payors
Typically a savings to commercial insurers
Medicare savings >40%
Medicare beneficiary savings >50%
Able to reduce overall healthcare costs and manage need for surgical
services in an integrated care environment
Industry poised for consolidation
Top ten companies own less than 20%
Growth of new facilities has slowed in recent years |
 9
FRAGMENTED MARKET
Further consolidation likely within the industry and USPI is well-positioned
to capitalize
There are over 375 surgery center chains that own 2 or more ASCs.
Top ten companies still own less than 20%
Some ASCs and ASC companies choosing to sell in face of current headwinds
From 2000 –
2012, the percentage of ASCs owned by a multi-facility chain
increased from 22% to 40%
Source: SDI’s Outpatient Surgery Center Profiling Solution
Multi-facility
Independent
USPI facilities
2004
3,957
2012
2,717
(40%)
2008
5,876
2,136
(36%)
3,740
(64%)
6,758
4,041
(60%)
984
(25%)
2,973
(75%)
2000
3,172
704
(22%)
2,468
(78%)
49
87
161
214 |
 10
POSITIONED FOR REFORM
OPPORTUNITIES
Post-reform, positioned to play an important role in managing increased need
for surgical services due to coverage of previously uninsured lives
|
 11
HEALTHCARE SYSTEM PARTNERS
Benefits to Healthcare Systems
Leverage USPI’s operational expertise
and singular focus
Provides a strategy to promote
physician alignment and strategic
network capabilities
Provides defensive mechanism to
maintain short-stay surgical business
Provides capital and spreads risk
through USPI and physicians’
investment
Provides an opportunity to expand in
new markets at lower capital outlay
than a hospital
Benefits to USPI
Provides long-term strategic
stability in the marketplace
Provides brand, image,
reputation and credibility
Accelerates growth
Enhances relationships with
managed care payors
148 facilities are in a partnership with a healthcare system
|
 12
USPI’s strategy of partnering with not-for-profit healthcare systems
aligns the Company’s facilities with strong networks of physicians
and hospitals that are prominent in their communities and known
for providing high quality care
BON SECOURS HEALTH SYSTEM, INC.
HEALTHCARE SYSTEM PARTNERS |
 13
GROWTH STRATEGY
Work with existing partners (physicians and hospitals) to grow market
share and enhance strategic positioning
Poised to react to current economic conditions and legislative
changes
Acquisition of troubled facilities
Selective acquisition of strong facilities
Selective de novo development
Selective acquisition of multi-facility companies
Selectively enter new markets with existing or new partners
Attractive demographics and/or payor
characteristics
Prominent health system that embraces physician
alignment
strategy
Prominent physicians who are influential in the market
|
 14
SUSTAINED REVENUE GROWTH
Systemwide revenue growth and same facility revenue growth
Facilities
operated at
year-end
165
185
200
213
12%
13%
7%
9%
6%
6%
5%
8%
0%
2%
4%
6%
8%
10%
12%
14%
2009
2010
2012
2011
Same facility revenue growth
Systemwide revenue growth |
 15
U.S. ADJUSTED EBITDA BRIDGE
($ in thousands)
2010
2011
2012
Operating income
194,611
$
233,659
$
245,234
$
Depreciation and amortization
22,493
21,177
23,955
EBITDA
217,104
254,836
269,189
Net income attributable to noncontrolling interests
(60,240)
(69,929)
(72,693)
EBITDA less noncontrolling interests
156,864
184,907
196,496
Net (gain) loss on deconsolidations, disposals and impairments
6,378
(1,529)
7,588
Impairment of unconsolidated affiliate
3,676
-
-
De novo start-up losses
136
4,009
500
Acquisition / transaction costs
2,857
3,314
2,200
Expense related to prior acquisition
6,000
-
-
Equity compensation
2,168
1,237
1,700
Management fee
2,000
2,000
2,000
Adjusted EBITDA
180,079
$
193,938
$
210,484
$
Years Ended December 31,
Unaudited Adjusted |
 16
2012 ADJUSTED EBITDA BRIDGE
1
Pro forma impact for full year effect of acquisitions completed in 2012
2
USPI is in discussions to sell a portion of its ownership in several facilities to
a health system partner; if completed, this will reduce our EBITDA by
$10-$13mm; final terms have not been determined $1.7
$2.0
$2.2
$0.5
Adjusted
EBITDA-MI as
of 12/31/12
$238.0
Acquisitions
Completed
by 12/31/12
$27.6
Equity
Compensation
Management
Fees WCAS
Transaction
Costs
De novo
Hospital Losses
EBITDA-MI
$204.0
1
2 |
 17
DEBT MATURITIES
Total debt of $1.4 billion
1%
2%
22%
75%
Next 12 Months
Months 13-36
Months 37-60
Beyond 5 years
$329M
$1,114M |
 18
SUMMARY
USPI is well positioned: low cost, high quality, high customer
satisfaction provider
Partner with prominent health systems
Strong partnering capabilities will continue to provide opportunities
for growth, even in difficult times
Focused on key strategic markets with significant market share
Stable revenue growth
Strong equity sponsor in WCAS
Capitalized for growth and flexibility |