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ValueX Vail 2014 – HealthSouth Corp (HLS)
Laughing Water Capital’s presentation on HealthSouth Corp (NYSE:HLS) at ValueX Vail.
Easy To Understand
- Strong Moat
- Strong Balance Sheet
- Competitive Advantages
- Strong FCF Generation
- Opportunity for Reinvestment
- Long Runway for Growth
- Incentivized Management
- Excellent Capital Allocation
- Misunderstood Risks
ValueX Vail: HealthSouth Description
HealthSouth Corp (NYSE:HLS) is the largest operator of Inpatient Rehab Facilities (IRFs) in the United States
The average patient is 72 years old, and is suffering from one or more of 13 government designated qualifying conditions
All patients are referred to IRFs by physicians (typically from acute care hospitals) based on the acuity of their condition. The highest acuity patients go to IRFs, while less severe cases go to SNFs or HHC.
IRF patients receive intensive multi-disciplinary rehabilitation therapy at least 3 hours a day, 5 days a week
The conditions that IRFs treat are generally non-discretionary in nature.
Key Takeaway: HealthSouth Corp (NYSE:HLS) is the dominant player in a niche segment of the healthcare complex
ValueX Vail – HealthSouth’s Market Share
- 103 IRFs (31 as JVs with ACHs)
- ~9% of all US IRF facilities in the US
- ~19% of all IRF licensed beds in the US
- ~43% of all free standing IRF facilities in the US
Most Common Treatments Q1’14
- Neurological 25.0%
- Stroke 16.7%
- Leg Fracture 9.2%
- Other Orthopedic 9.0%
- Brain Injury 8.3%
ValueX Vail – HealthSouth’s Competitive Advantages Unit Level
IRF facilities employ skilled staff such as physical, cognitive, and occupational therapists with the goal of returning patients to home and/or work.
HealthSouth Corp (NYSE:HLS) operates free standing IRF units, which are able to draw patients from multiple area acute care hospitals, resulting in higher utilization rates for their skilled staff.
Non free standing IRF units receive patients from their parent hospital only, resulting in lower utilization levels for skilled staff.
Full presentation: 232016260-HealthSouth-HLS-ValueX-Vail-2014