Amedisys Third Quarter 2020 Earnings Call Supplemental Slides 1 - - PowerPoint PPT Presentation

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Amedisys Third Quarter 2020 Earnings Call Supplemental Slides

October 29, 2020

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2 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

• r 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.am edisys.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.

Forward-looking statements

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3

Q3 2020 Results

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Our Key Areas of Focus

Strategic areas of focus and progress made during Q3’20

• Hom e Health*:

Total same store admissions +5%, Total same store volume +6%

• Hospice:

Admissions +9%,

• Personal Care:

Billable hours / quarter -18% driven by impact of COVID-19 - turnover dropping into Q3 which will result in better ability to grow moving forward

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Organic Growth

• Quality: Amedisys

Oct’20 preview STARS score of 4.33 (SHP: 4.5 STARS)

• 95% of care centers

at 4+ Stars in the Oct’20 Preview

• 45 Amedisys care

centers rated at 5- Stars in the Oct’20 Preview

• Hospice quality –
• utperforming

industry average in all hospice item set (HIS) categories

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Clinical Initiatives

• Focusing on
• ptimizing RN /

LPN & PT / PTA staffing ratios.

• Current LPN

Ratio: 46.7% (vs. 40.6% in 3Q’19)

• Current PTA

Ratio: 49.6% (vs. 43.7% in 3Q’19)

• 100% of care centers
• n Medalogix Care

as of Aug. 2020

• Adjusted staffing

levels in June to reflect clinician mix shift and utilization

4

Capacity and Productivity

• Aseracare

acquisition closed 6/ 1

• $235M

purchase price ($203M net of tax asset)

• 44 care centers
• 14 states
• $117M annual

revenue

• Technical

integration near complete

• $659 million

invested in Hospice segment since Feb. 2019

• 4 acquisitions
• ~6,000 ADC
• 106 care centers
• ~5,000

employees

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M&A

2

Recruiting / Retention

• Targeting industry

leading employee retention amongst all employee categories

• Current total

voluntary turnover ~19%

• Focus on reduction
• f clinical turnover

with emphasis on “early exits”

*Note: Hom e Health sam e store volum e is defined as adm issions plus recertifications

• 2021 proposed

Home Health industry rule net +2.6% increase – final rule expected soon

• 2021 Final Hospice

industry rule net +2.4% increase (effective 10/ 1/ 20)

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Regulatory

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Highlights and Summary Financial Results (Adjusted): 3Q 2020(1)

Home Health total same store volume +6%, total same store admissions +5%; Hospice same store admissions +9%

Am edisys Consolidated

• Revenue Growth: +10%
• EBITDA: $76M (+33%)
• EBITDA Margin: 14% (+240 bps)
• EPS: $2.24 (+95%) - non-ca sh

com p ensa tion ta x b enefit = $0 .72

3Q’20

• Net debt: $261.3M
• Net Leverage ratio: 1.1x
• CFFO: $83.1M
• Free cash flow (4): $79.2M
• DSO: 40.0 (vs. Q4’19 of 40.9 and

down 2.0 days since Q2)

Balance Sheet & Cash Flow

3Q’20

Sam e Store (2)(3) :

• Total Volume: +6%
• Total Admissions: +5%

Other Statistics:

• Revenue per Episode(6): $2,886

(+1.8%)

• Total Cost per Visit: $96.85 (+5.5%)
• Medicare Recert Rate: 36.9%

Hom e Health

Grow th Metrics (5):

• Billable hours/ quarter: -18%
• Clients served: -20%

Personal Care

Sam e Store Volum e (3):

• Admissions: +9%
• ADC: flat (ADC lags admits)

Other Statistics:

• Revenue per Day: $155.57

(+1.9%)

• Cost per day: $79.96 (+0.6%)

Hospice

3Q’20 3Q’20 3Q’20

Adjusted Financial Results (1)

3Q’20

1. The financial results for the three-m onth periods ended Septem ber 30, 2019 and Septem ber 30, 2020 are adjusted for certain item s and should be considered a non-GAAP financial m easure. A reconciliation of these non-GAAP financial m easures is included in the corresponding 8-K detailing quarterly results for each respective reporting period. 2. Sam e Store volum e – Includes adm issions and recertifications. 3. Effective July 1, 2019, sam e store is defined as care centers that w e have operated for at least the last 12 m onths and startups that are an expansion of a sam e store care center. 4. Free cash flow defined as cash flow from operations less routine capital expenditures and required debt repaym ents. 5. Includes acquisitions. 6. Medicare sequestration suspended 5/ 1/ 20

$ in Millions, except EPS 3Q19 3Q20 % Change Hom e Health 311.5 326.0 4.7% Hospice 162.4 199.7 23.0% Personal Care 20.7 18.4

• 11.1%

Total Revenue 49 4.6 $ 544.1 $ 10 .0 %

Gross Margin % 41.6% 45.0 %

Adjusted EBI TDA 56 .8 75.7 33.3%

• 11. 5 %

13 . 9 %

Adjusted EPS $ 1.15 $ 2.24 9 4.8 % Free cash flow (4) $ 44.8 $ 79 .2 76 .8 %

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OUR REVENUE SOURCES: 3Q’20

68.2% 11.2% 20.6% Hom e Health Revenue

Medicare FFS Private Episodic Per Visit

59.9% 36.7% 3.4% Am edisys Consolidated Revenue

Home Health Hospice Personal Care

• Medicare FFS: Reimbursed over a 30-day

period of care

• Private Episodic: MA and Commercial plans

who reimburse us over a 30-day period of care. Generally at rates ~90% – 100% of Medicare

• Per Visit: Managed care, Medicaid and private

payors reimbursing us per visit performed

94.7% 5.3% Hospice Revenue

Medicare FFS Private

Hospice Per Day Reim bursem ent:

• Routine Care: Patient at home with

symptoms controlled ~9 7% of the Hospice care AMED provides, in line with overall hospice industry provision of care

• Continuous Care: Patient at home with

uncontrolled symptoms

• Inpatient Care: Patient in facility with

uncontrolled symptoms

• Respite Care: Patient at facility with

symptoms controlled

• Hom e Health: 320 care centers; 33 states & DC
• Hospice: 182 care centers; 35 states
• Personal Care: 14 care centers; 3 states
• Total AMED: 516 care centers; 39 states

and D.C.

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Home Health and Hospice Segment (Adjusted) – 3Q 2020(1)

• Revenue per Episode up 1.8% (sequestration suspension benefit

$5M)

• Y/ Y CPV up +$5.08 (+5.5%, raises effective 8/ 1, health insurance,

increase in use of contractors, change in visit mix and lower visit volumes)

• Visits per Episode decreased 2.5

Hom e Health Highlights

• Same store admit growth +9%
• Net revenue per day +1.9% (sequestration suspension benefit

$3M, excluding acquisitions)

• ~$1.1M cap expense for 3Q
• Q3’20 Acquisition Contribution:
• Revenue: $33M
• Segment EBITDA: $4.2M ($2.1M net of corporate)

Hospice Highlights

1. The financial results for the three-m onth periods ended Septem ber 30, 2019 and Septem ber 30, 2020 are adjusted for certain item s and should be considered a non-GAAP financial m easure. A reconciliation of these non-GAAP financial m easures is included in the corresponding 8-K detailing quarterly results for each respective reporting period. 2. Pre-Corporate EBITDA does not include any corporate G&A expenses. 3. Sam e store inform ation represents the percent change in volum e or adm issions for the period as a percent of the volum e or adm issions of the prior period. 4. Effective July 1, 2019, sam e store is defined as care centers that w e have operated for at least the last 12 m onths and startups that are an expansion of a sam e store care center. 5. Average Medicare revenue per com pleted episode for the three-m onth period ended Septem ber 30, 2020 reflects the suspension of sequestration effective May 1, 2020.

Home Health total volume growth +6%; Hospice Admit Growth +9%

$ in Millions 3Q19 3Q20 Medicare 211.5 222.2 Non-Medicare 100.0 103.8 H om e H ealth Revenue $ 311.5 $ 326 .0

Gross Margin % 39.4% 45.4%

Pre-Corporate EBI TDA (2) $ 47.1 $ 6 9 .5

15.1% 21.3%

Operating Statistics Sam e Store Growth (3 )(4 ) Total Volum e 6% 6% Total Adm issions 9% 5% Medicare Revenue per Episode (5 ) $2,836 $2,886 Medicare Recert Rate 36.5% 36.9% Total Cost per visit $91.77 $96.85 H OME H EALTH $ in Millions 3Q19 3Q20 Medicare 153.5 189.0 Non-Medicare 8.9 10.7 H ospice Revenue $ 16 2.4 $ 19 9 .7

Gross Margin % 47.9% 48.6%

Pre-Corporate EBI TDA (2) $ 42.2 $ 49 .3

26.0% 24.7%

Operating Statistics Adm it growth - sam e store (4 ) 4% 9% ADC growth - sam e store (4 ) 5% 0% ADC 11,565 13,953

• Avg. discharge length of stay

98 101 Revenue per day (net) $152.67 $155.57 Cost per day $79.49 $79.96 H OSPI CE

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8 $ in Millions 3Q19 4Q19 1Q20 2Q20 3Q20 Hom e Health Segm ent - Total 75.6 76 .3 75.8 71.3 78 .6 % of HH Revenue 24.3% 24.1% 25.0% 24.6% 24.1% Hospice Segm ent - Total 35.6 37.8 38 .7 40 .4 47.8 % of HSP Revenue 21.9% 23.0% 22.9% 22.8% 23.9% Personal Care Segm ent - Total 3.0 3.0 3.3 3.1 3.0 % of PC Revenue 14.6% 14.9% 17.5% 17.5% 16.4% Total Corporate Expenses 35.9 36 .6 36 .6 36 .6 46 .2 % of Total Revenue 7.3% 7.3% 7.5% 7.5% 8.5% Total 150 .1 153.7 154.4 151.4 175.7 % of Total Revenue 30.3% 30.7% 31.4% 31.2% 32.3%

General & Administrative Expenses – Adjusted (1,2)

Notes:

• Year over year total G&A as a percentage of revenue increased 20 0 basis points ($26 m illion)
• Year over year G&A increase due to our acquisitions (~$11M), raises, incentive accruals, higher health insurance costs,

and investments related to PDGM, partially offset by lower travel and training spend

• G&A for our Hospice and Corporate segments include $9.3M and $2.1M, respectively, from acquisitions
• Total G&A as a percentage of revenue increased 110 bps sequentially

1. The financial results for the three-month periods ended September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020 and September 30, 2020 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. 2. Adjusted G&A expenses do not include depreciation and amortization.

Impacted by COVID-19, acquisitions, incentive compensation costs, and investments to drive volume growth

30.3% 30.7% 31.4% 31.2% 32.3%

28.0% 30.0% 32.0% 34.0% 3Q19 4Q19 1Q20 2Q20 3Q20

Total G&A as a Percent of Revenue

G&A as a Percent of Revenue

3Q19 4Q19 1Q20 2Q20 3Q20 Salary and Benefits 20.8 20.9 20.0 21.0 26.2 Other 10.9 11.4 12.4 11.0 15.2

• Corp. G&A Subtotal

31.7 32.3 32.4 32.0 41.5 Non-cash com p 4.2 4.3 4.2 4.6 4.7 Adjusted Corporate G&A 35.9 36 .6 36 .6 36 .6 46 .2

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Com ponents 3Q19 2Q’20 3Q’20 YoY Variance Detail Initiatives Salaries $63.24 $63.03 $64.81 $1.57 YoY increase due to planned wage increases, shift in visit mix and fixed costs (training, PTO, etc.) on lower visits, partially offset by optimization

• f discipline mix.

Sequential increase due to the same drivers, partially offset by a lesser impact of planned wage increases and an additional holiday in Q3. Staffing mix optimization, productivity and scheduling improvement initiatives in place to help overcome salary increases Contractors $2.83 $3.05 $3.69 $0.86 YOY and Sequential increase driven by additional staffing needs due to COVID-19 Focused efforts on filling positions with full-time clinicians Benefits $11.14 $10.20 $12.59 $1.45 YoY and Sequential increase primarily due to health insurance with COVID related cost shift to Q3 Focus on cost containment and spend optimization with specific focus on high cost claims Transportation & Supplies $6.47 $6.89 $6.85 $0.38 *Visiting Clinician CPV $8 3.68 $8 3.17 $8 7.94 $4 .26 Clinical Managers $8.09 $9.27 $8.91 $0.82 Fixed cost associated with non-visiting clinicians and planned wage increases: YOY increase driven by lower visit volumes Unit cost reduced as volume increases Total CPV $91.77 $92.44 $96.85 $5.08

Operational Excellence: Home Health Cost Per Visit (CPV)-Adjusted

YOY Total CPV impacted by planned wage increases and lower volumes resulting from COVID-19

*Note: Direct com parison w ith industry com petitors CPV calculation

$25.00 $50.00 $75.00 $100.00 3Q19 2Q20 3Q20

Cost Per Visit (CPV)

Salaries Contractors Benefits Transportation

$83.68 $83.17 $87.94

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Driving Top Line Growth

Growth in all three lines of business impacted by COVID-19 but recovering

6 % 4 % 1%

• 2%

6 %

• 3.0%
• 1.0%

1.0% 3.0% 5.0% 7.0% 9.0% 50,000 100,000 150,000 3Q19 4Q19 1Q20 2Q20 3Q20 Volume YoY Same Store Growth

Home Health Total Volume Hospice ADC

5% 8 % 4 % 0 % 0 % 4 % 1% 1%

• 1%

9 %

• 1.0%

1.0% 3.0% 5.0% 7.0% 9.0% 4,000 6,000 8,000 10,000 12,000 14,000 3Q19 4Q19 1Q20 2Q20 3Q20

YoY SS ADC Growth YoY SS Admit Growth

Personal Care Total Hours / Quarter

200,000 400,000 600,000 800,000 1,000,000 3Q19 4Q19 1Q20 2Q20 3Q20 Billable Hours

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Industry Leading Quality Scores

Note: Top Com petitor Avg w eighted by CCN count and includes LHC, Kindred, AFAM, EHC and BKD

Metric OCT 19 Release JAN 20 Release APR 20 Release Oct 20 PREVIEW Quality of Patient Care 4.28 4.27 4.26

4.33

Entities at 4 + Stars 8 8 % 8 6 % 8 6 % 9 2% Metric JUL 19 Release OCT 19 Release JAN 20 Release APR 20 Release Patient Satisfaction Star 3.87 3.97 3.71

3.8 0

Perform ance Over Industry +6% +6% +6% +6%

Quality of Patient Care (QPC) Patient Satisfaction (PS)

• Amedisys maintains a 4-Star average in the Oct 2020 HHC preview with 92% of our providers (representing 95% of

care centers) at 4 + Stars and 6 1% of our providers (representing 65% of care centers) at 4.5+ Stars

• 26 Am edisys providers (representing 45 care centers) rated at 5-Stars in the Oct 20 20 HHC preview.

CMS will provide an Oct 20 20 HHC release. After this, CMS will hold the data constant (i.e., freeze the data) until the Jan 20 22 HHC release.

4.33

QPC Industry Performance

Amedisys Other QPC Industry Avg QPC Top Competitor 3.00 3.50 4.00 4.50

PS Industry Performance

Amedisys PS Score PS Industry Avg PS Top Competitor

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Hospice Quality: Amedisys Hospice Continues to Move Towards Best-in-Class

Hospice Quality

Hospice Com pare HIS and CAHPS reporting currently “frozen” and will resum e reporting in Feb 20 22

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Debt and Liquidity Metrics

~Net leverage ~1.1x

1. Net debt defined as total debt outstanding ($314.2M) less cash ($52.9M). 2. Leverage ratio (net) is defined as net debt divided by last twelve months adjusted EBITDA ($247.6M). 3. Liquidity defined as the sum of cash balance and available revolving line of credit. 4. Cash per 9/30/20 10-Q less Provider relief fund advance (~$60M)

Total Debt Outstanding 314.2 Less: Deferred Debt Issuance Costs (2.9) Total Debt - Balance Sheet 311.3 Total Debt Outstanding 314.2 Less Cash (4) (52.9) Net Debt (1) 26 1.3 Leverage Ratio (net) (2) 1.1 Term Loan 175.0 Revolver Size 550.0 Borrowing Capacity 725.0 Revolver Size 550.0 Oustanding Revolver (145.0) Letters of Credit (28.8) Available Revolver 376 .2 Plus Cash (4) 52.9 Total Liquidity (3) 429 .1 As of: 9 / 30 / 20 Credit Facility Outstanding Debt As of: 9 / 30 / 20

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Cash Flow Statement Highlights (1)

Q2 and Q3 include benefit of payroll tax deferral (COVID-19 relief) of approximately $20 and $18M

1. Free cash flow defined as cash flow from operations less routine capital expenditures and required debt repayments.

$ in Million s 3 Q19 4 Q19 1Q2 0 2 Q2 0 3 Q2 0 GAAP Net In com e 3 4 .3 2 8 .0 3 2 .0 3 5.1 7 2 .4 Ch an ges in wor kin g capital (17 .2 ) 3 3 .8 (4 7 .5) 7 1.3 (2 4 .8 ) Depr eciation an d am or tization 4 .4 6 .0 5.3 6 .3 8 .3 Non -cash com pen sation , in clu des 4 0 1(k) m atch expen se 9 .2 9 .6 9 .2 6 .7 7 .1 Defer r ed in com e taxes 11.9 (4 .3 ) 1.2 (5.3 ) 1.3 Oth er 4 .9 2 .1 5.8 19 .8 18 .8 Ca sh flow from opera t ion s 4 7 .5 7 5 .2 6 .0 13 3 .9 8 3 .1 Capital expen ditu r es - r ou tin e (1.2 ) (1.0 ) (1.2 ) (0 .3 ) (1.2 ) Requ ir ed debt r epay m en ts (1.5) (1.8 ) (1.6 ) (3 .1) (2 .7 ) Free ca sh flow 4 4 .8 7 2 .4 3 .2 13 0 .5 7 9 .2 Ca pit a l Deploy m en t Acqu isition s

• (6 9 .3 )

(2 3 0 .4 )

• Tot a l
• (6 9 .3 )

2 3 0 .4

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Income Statement Adjustments (1)

1. The financial results for the three-month periods ended September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020 and September 30, 2020 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. 2. Planned closures consist of in-patient units acquired from Compassionate Care Hospice whose operations ceased in April 2019. $ 0 0 0 s In com e St a t em en t Lin e It em 3 Q19 4 Q19 1Q2 0 2 Q2 0 3 Q2 0 Rev en u e Con tin gen cy accr u al Net Ser v ice Rev en u e

• $
• $
• $
• $
• $

Plan n ed closu r es (2 ) Net Ser v ice Rev en u e

• 6
• Ot h er Opera t in g In com e

CARES Act & State COVID-19 gr an ts Oth er Oper atin g In com e

• (2 2 ,7 8 0 )

(4 ,8 12 ) Cost of Serv ice Plan n ed closu r es (2 ) Cost of Ser v ice, Exclu din g Depr eciation & Am or tization 15 2

• COVID-19 costs

Cost of Ser v ice, Exclu din g Depr eciation & Am or tization

• 1,0 17

2 1,9 9 3 4 ,3 8 9 Sev er an ce - r edu ction in staffin g lev els Cost of Ser v ice, Exclu din g Depr eciation & Am or tization

• 5,18 3

(550 ) G&A Plan n ed closu r es (2 ) G&A, Salar ies an d ben efits

• 2
• Acqu isition an d in tegr ation costs

G&A, Salar ies an d ben efits 1,10 5 2 7 3 6 6 2 2 ,0 9 5 1,2 6 7 Sev er an ce - r edu ction in staffin g lev els G&A, Salar ies an d ben efits

• 2 7 1
• COVID-19 costs

G&A, Salar ies an d ben efits

• 2 2 4

4 4 Plan n ed closu r es (2 ) G&A, Oth er 2 8

• Acqu isition an d in tegr ation costs

G&A, Oth er 3 ,0 3 6 1,4 4 5 1,6 7 4 1,50 4 2 ,3 59 Legal fees - n on -r ou tin e G&A, Oth er 3 9 7 6 0 4

• COVID-19 costs

G&A, Oth er

• 12

8 2 7 2 7 8 Ot h er It em s Asset im pair m en t Asset im pair m en t

• 1,4 7 0
• Legal settlem en ts

Total oth er (expen se) in com e, n et (1,4 3 7 )

• In ter est com pon en t of cer tain item s

In ter est expen se 4 51 4 51 4 4 6 4 4 6 558 Oth er (in com e) expen se, n et Total oth er (expen se) in com e, n et 1,4 9 3 3 6 5 2 2 5 3 ,550 (3 9 ) Tot a l 5 ,0 8 8 $ 4 ,6 18 $ 4 ,0 3 6 $ 13 ,3 13 $ 3 ,4 9 4 $ EPS Im pa ct 0 .11 $ 0 .10 $ 0 .0 9 $ 0 .3 0 $ 0 .0 8 $

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2020 Guidance Update

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Amedisys 2020 Updated Guidance Ranges

Note:

• Ad justed num b ers a re ex-CARES Act fund s
• *EPS: Inclusiv e of $0 .72 incom e ta x b enefit rela ted to executiv e stock op tion

exercise

Increased Revenue, EBITDA and EPS guidance ranges for FY 2020

20 20 Original Guidance 20 20 Reinstated Guidance

Revenue $2,115M – $2,160M $2,040M - $2,070M Adjusted EBITDA $250M – $260M $245M - $255M Adjusted Earnings per Share $4.90 – $5.13 $4.84 - $5.06 20 20 Updated Guidance $2,067M - $2,072M $269M - $272M $6.02 - $6.08*

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Reimbursement Outlook

Reimbursement Impact for Home Health and Hospice

Hom e Health Hospice

20 20

Final Rule (PDGM – Behavioral Assumptions) (4.36%) Estim a ted AMED-Sp ecific Im p a ct (2.8%)

20 20 *

Market Basket Update 3.0% Productivity / Other Adjustment (0.4) Estimated Industry Impact +2.6% Estim a ted AMED-Sp ecific Im p a ct +~0 .5%

Note: AMED im p a ct d iffers from ind ustry d ue to p a tient m ix, referra l m ix a nd footp rint *Hosp ice ra te increa se effectiv e Octob er 1, 20 19 – m a jority of ra te increa se w ill b e p a ssed throug h to g enera l inp a tient & resp ite fa cilities resulting in a ~(0 .5%) red uction in g ross m a rg in p ercenta g e Proposed FY’21 Hom e Health Rule 20 21

Estim ated Industry Im pact +2.6 %

Final FY’21 Hospice Rule 20 21

Estim ated Industry Im pact (Effectiv e 10 / 1/ 20 20 ) +2.4 %

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Our Path Forward: 2021 & Beyond

20 21 & Beyond – The Future Is Very Bright for AMED

• Entering 2021 with all PDGM cost levers in place
• Continued strategic acquisitions of Home Health and Hospice assets – Home Health market share

absorption strategy delayed until early 2021 due to CARES Act funds

• FY 2021 Proposed Home Health rule: +2.6%
• FY 2021 Final Hospice rule: +2.4%
• FY 2021 – EBITDA contribution from CCH and AseraCare
• Integration and optimization of AseraCare asset
• Previously acquired Hospice assets performing near legacy AMED growth and profitability
• Continued industry consolidation
• New referral sources and market share opportunities from SNF@Home
• Continued expansion of Medicare Advantage “gain share” arrangements