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Article Excerpt
KEVIN ELLIS, ANALYST, RBC CAPITAL MARKETS: Okay. I think we'll get going with this panel. Thanks for joining us today at the RBC Healthcare Conference. I'm Kevin Ellis, RBC's Healthcare Services Analyst.
This is the Taking it to the House Transit Homecare Panel. With us today are representatives from Almost Family -- we have the CEO, Bill Yarmuth -- Larry Graham from Amedisys, and Keith Myers from LHC Group.
I'm going to give each of the panelists a couple of minutes to go over -- give an overview of their company, and then we'll get into discussions.
Bill, if you could start us off.
BILL YARMUTH, CHAIRMAN, CEO AND PRESIDENT, ALMOST FAMILY: Thanks, Kevin.
It's a pleasure to be able to visit with you all today. Almost Family is a regional provider of home healthcare services. We provide services through approximately 100 branches in 11 states, and we do that in what we consider three geographic clusters.
We have two basic guiding principles about the way we go about building and developing our business. The first is that we have what we consider to be a very disciplined development approach. That approach is really based upon a fundamental that we call densification.
We operate in three clusters that you can see on the slide -- Southeast, Midwest., and a Northeast cluster -- and we -- our goal is to stay within that geography and build that territory out. We've based that on our experience in Florida, where we have grown from 2003 to 2008 from 8 branches and about $12 million of revenue to right now we have close to 45 branches, and we're doing north of $100 million in revenue in the state of Florida.
We cover about 80% of the population, and we've found that the benefits of that kind of densification is that we have a very efficient span of control for our operators and our operators are closer to the market and we feel like we get pretty valuable organic growth from that strategy.
We do that through a combination of making an acquisition in a market and then building out some extender branches. We now have turned our sights to our other two geographic clusters, the Northeast and the Midwest, and have recently done our largest acquisition about $45 million -- $48 million acquisition of a company called Patient Care. So we try to stay focused on that development approach, and we think we have plenty of territory to build a meaningful operation. We're doing about $250 million in revenue now.
The other guiding principle that we have is a -- what we call -- is sort of a decentralized operating model. We believe it's very important that local -- local branding to us is very important. We operate about ten brands across our three geographic clusters. When we make an acquisition, we think part of the value that we get in making that acquisition is the brand recognition that they have in the marketplace and that inures to the benefit of the customer as well as to the loyalty of the employees. So we feel like that our best path for development is to make an acquisition, maintain local brand recognition and presence, and then bring the resources that we can as a company to grow that business from where we bought it.
We do that through our senior advocacy mission, and the senior advocacy mission is sort of coined as looking beyond the obvious needs of our patients, and it sounds simple, but it's really relatively complex because it includes the enhanced assessment protocols that we've introduced into our company, combined with the development of clinical specialties or clinical protocols, and then followed up by the prudentialing and training and education of our caregivers as geriatric specialists. So we believe that we can look beyond the obvious needs of our patients by this training and education, additional assessment, and we think we're getting meaningful organic growth from the introduction of that and spreading that through all of our operation.
We have a pretty experienced management team. We've been together for a long time. I've been in the business way too long -- 26 years -- 27 years -- and our senior management team's been together for about -- north of 15, but as we've grown, we've brought seasoned managers on, and we also are getting the benefit of management of the -- some of the entrepreneurs and operators who have managed the companies felt it was in their best interest long term to join up with a company like ours and join our team as a management -- as part of our management team continued to grow.
We've been pretty successful in our growth over the past five years. We had some meaningful compound annual growth rate in both revenue and in EPS, and we think we're pretty well positioned to be a consolidator in this industry as it continues to grow, and obviously it has an important part in the healthcare continuum.
Thank you.
KEVIN ELLIS: Thanks, Bill.
Larry, could you give us an overview on Amedisys.
LARRY GRAHAM, PRESIDENT AND COO, AMEDISYS, INC.: Sure.
Thank you for allowing us to be here today. It's nice to be here with Bill and Keith. And I like this format. It's just a little bit different.
I'll be real brief on Amedisys. We have 465 homecare locations, about 45 hospice locations. We operate in 37 different states, and we're about a $1.1 billion company. The basics of what we do is we take care of old people in the home. The average patient age that we take care of is 82 years old. They're on 12 different medications.
We do that through chronic disease management. To give an example, we'll go into a patient's home that -- be a diabetic patient and we'll educate them on diabetes and how to regulate their blood sugar, and we do that over a series of visits through nurses, social workers, therapists, and home health aides -- multidisciplinary approach.
About half of our business comes directly from physicians offices, and the other half comes from hospital discharge planners, which is pretty similar to what you'll see in the industry.
This is right now about a $14 billion industry -- and when I talk about that, I'm talking about homecare. In the next 11 years it's expected to double. Hospice is about a $10 billion industry -- similar growth in that industry.
In our industry we're primarily paid by Medicare. A lot of questions about that, but in the United States, if you're over 65 years old and you're receiving healthcare, 85% of the time you're going to get your healthcare reimbursed by Medicare.
But it's a great opportunity, a great growth story. I think all companies are doing startups and doing acquisitions and doing quite well on the growth rate. Our earnings per share has grown double digits each of the last five years, and I'll look forward to answering your questions.
KEVIN ELLIS: And last, Keith, could you give us n overview on LHC Group.
KEITH MYERS, CHAIRMAN, CEO, LHC GROUP: Sure. Sure.
I also want to thank you for having us, and it's a great opportunity. I'll try not to go over some of the same things that you all know about homecare because some of the things are the same in what we do. I'll try to focus on distinctions a little bit.
One of the things that sets us apart a little is that we focus more in rural markets than maybe some of the others do. We're about 50% rural and 50% MSA. That presents opportunities with regard to less competition. It certainly presents challenges also -- staffing and the distance you have to travel between patients -- but those are the markets we're comfortable -- very comfortable in, and that's where we come from. We manage very well there.
We also focus quite heavily in CON states. There are 18 certificate-of-need states. Ninety percent of our locations are in certificate-of-need states, and we operate in states that do not have certificate-of-need requirements, but that means a little different model when it comes to managing top line and volume.
One of the other things that is just a little bit unique, I think, is we -- as Bill said, we also have a decentralized operating model. We try to keep as much control as we can in the hands of clinicians on the ground so that they can model care plans to the needs of each individual patient and leave them a lot of that latitude but at the same time being able to feed metrics corporately to predict our financial outcomes and manage the business. That's always challenging and even more so as you grow.
KEVIN ELLIS: Excellent.
Thanks, guys.
I guess the first topic that I'd like to address is, under the new administration with President-Elect Obama, how do you think that will affect the business and -- the industry and specifically your businesses?
Maybe we could start off with Keith since you guys have that distinguished board of director.
KEITH MYERS: Okay. That sounded like a trap (inaudible).
We're very upbeat on this change in Washington. Certainly the health plan -- Senator Obama's --...
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