This presentation provides an overview of Nobilis Health Corp., including its business model, growth strategy, financial performance, and industry outlook. Nobilis utilizes a unique direct-to-patient marketing model to acquire patients and drive organic growth. It has a growing portfolio of surgical facilities across several states. Nobilis is pursuing growth through marketing initiatives, optimizing its case mix, acquisitions, and leveraging operational efficiencies. The ambulatory surgical center industry is large and growing due to favorable trends of cost efficiencies, increased access to care, and an aging population.
3. UNIQUE PATIENT ACQUISITION MODEL
• Acquires patients from physician partners who are not
obligated to bring cases to their facility
• Physicians often form partnerships with inequitable
percentages:
• Productive doctors resent less productive doctors
• Management Co. only manages and does not drive patients
to centers
• No growth drivers – must rely on physician partners to grow
their practices to then bring more patients
• No vertical integration
Traditional Model The Nobilis Model
• Acquire patients through:
• Marketing programs
• Network of primary care
physician partners
• Physician employees
• Physicians typically don’t own equity in
Nobilis facilities
• Nobilis owns and manages its facilities
Nobilis Network
of Primary Care
Physicians
Physician
Partners
Direct to
Consumer
Marketing
Joint Marketing
with Physicians
Nobilis Employed
Primary Care
Physicians
• Drive patient flow to our facilities
• Control the patient experience through the
continuum of care
• Patient acquisition
• Primary care
• Ancillaries
• Surgeries
Physician
Partners
(Minority Ownership)
3
4. LOCATIONS
• 10 markets across 5 states
• 4 surgical hospitals
• 10 ASCs
• 13 multi-specialty clinics
• 36 partner facilities
STRATEGY
• Optimized case mix across the portfolio
• Higher acuity procedures, higher levels of
reimbursements
• Focus on minimally invasive procedures
• Compelling value proposition for physicians,
patients, and payors
• Low capex requirements
• Strong scalable platform to expand to nationwide player
COMPANY OVERVIEW
DIRECT-TO-PATIENT MARKETING MODEL
• Brand procedures and drive additional surgical volume to
portfolio of facilities
• Capitalizes on growing trend of ‘consumerism’ in healthcare
• Drives organic growth
$315 million in revenue and $40 million in Adjusted EBITDA, LTM September 2017
Markets with Nobilis owned facilities
Markets with Nobilis partner facilities
4
5. FAVORABLE CASE MIX
STRONG CASE VOLUME GROWTH
FAVORABLE PAYOR MIX
Note: Unless otherwise dated, figures are based on the LTM period ended 9/30/2017, pro forma for the full year impact of the AZ Vein acquisition.
Note 2: Case mix based on number of cases; payor mix based on revenue.
8,740
17,814
20,459
25,190
-
5,000
10,000
15,000
20,000
25,000
30,000
2014 2015 2016 2017 E
ENT
4%
General Surgery
4%
Ortho
7%
Pain
26%
Spine
18%
Bariatrics
19%
Vein/Vascular
4%
Podiatrist
2%
GI
1%
Plastic
Surgery
10%
GYN
3%
Migraine
2%
AETNA
22%
BCBS
16%
CIGNA
9%
UHC
33%
Other
Commercial
10%
Self Pay
6%
WC
3%
Medicare
1%
NOBILIS BUSINESS OVERVIEW
5
7. AMBULATORY SURGICAL CENTERS (ASCs)
• Outpatient only
• > 5,500 ASCs
• 70%+ owned by independents
• Full-service hospital
• Inpatient and outpatient
• > 5,700 hospitals
• 60%+ not-for-profit
SPECIALTY SURGICAL HOSPITALS (SSHs)
• Typically specialize in service
area of focus
• Inpatient and outpatient
• ~300 SSHs
SURGICAL SETTING BACKGROUND
TRADITIONAL HOSPITALS
NOBILIS HEALTH
7
8. INDUSTRY GROWTH
• Efficient cost structures
• Increased government focus on healthcare
• Aging population
• Newly insured access care
• Economies of scale drive partnership decision
for physician-owned facilities
• 50% of outpatient surgeries performed in an
ASC vs. 32% in 2005
GROWTH OF THE ASC INDUSTRY
PROJECTED ASC INDUSTRY REVENUE
78% of ASCs in the U.S. are comprised of independent operators, hospitals, and small chains
($ in billions)
$16 $17
$19 $20 $21 $22 $23
$25
$27
$30
$32
$34 $36
$38
$40
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015E
2016E
2017E
2018E
2019E
2020E
Source: CSM, Equity Research, IBIS healthcare expenditures estimates, Becker’s.
8
10. MARKETING EXPERTISE DRIVES ORGANIC GROWTH
• Multiple marketing channels drive volume growth
at hospitals, ASCs, and ancillary service lines
• Bundled payment capabilities
• Strategically adding new marketing brands to portfolio
• Branded referral program, 360 Concierge
SERVICE LINES AND SPECIALTIES
• Continue optimizing case mix to maximize revenue
potential
• Increase the volume of high acuity procedures that
benefit from higher levels of reimbursement
• Identify and develop additional service lines
appropriate for outpatient environment
GROWTH STRATEGY
ACQUISITION OPPORTUNITIES
• Highly fragmented market with many ideal acquisition targets
• Focus on targets that allow Nobilis Health to cross-sell
service lines and leverage marketing capabilities
• Pursuing INN targets that are amenable to Nobilis Health
marketing platform and allow the Company to leverage
existing infrastructure
• Acquisition strategy includes facilities and clinical practices
1
3
2
4 OPERATIONAL LEVERAGE
• Focus on driving cost reductions throughout system
• Identify and achieve greater economies of scale as Nobilis
continues acquiring new businesses and expanding
its platform
• Experienced leadership team with decades of health system
experience
10
15. DIRECT-TO-CONSUMER MARKETING
• Marketing and technology platform that targets
perspective patients
• Unique value proposition to physicians; superior patient
experience
• Scalable revenue driver
• Portfolio effect – direct cases to specific facilities on a
procedure-by-procedure basis for best clinical outcome
and return on investment
UNIQUE PATIENT ACQUISITION STRATEGY
PHYSICIAN SALES
• In-house marketing team works one-on-one with physicians to
develop and distribute customized marketing plans
• Build and execute marketing plans on behalf of physicians
• Expands physicians’ practices and drives additional volume to
facilities
• High average return-on-investment (ROI)
15
16. HIGH TOUCH MARKETING MODEL
Lead Generation
Direct-to-Patient Engagement Points
• Digital
• Traditional (TV, Radio)
• Email & Content
• Real-Time Fulfillment
Concierge Service
Insides Sales Team + IT Platform
• Dedicated Patient Coordinators
• Multi-touch, full service process
• Proprietary Software Solutions
• CRM
Conversion to Surgical Patient
Patient Process Management
• Patient Education
• Imaging Review by Medical Team
• Insurance Verification & Explanation
• Surgery Clearance Management
• Surgery Scheduling/Coordination
Patient Tracking
Patient Experience Follow Up/Facilitate Research
• Post Operative Follow-up Contact
• Patient Experience Surveys & Testimonial
• Referral Request
• 360 Concierge tracking through continuum of care
• Promotes succinct treatment algorithm which
results in higher patient outcomes and lower
healthcare costs
16
17. • Concertis is Nobilis’ Clinically Integrated Network (CIN) of
healthcare providers, ancillary providers, and facilities that
improve the patient experience across the continuum of care
• CIN captures referrals from primary care physicians to
coordinate patient care with Nobilis ancillary providers, surgeons
and facilities
• 360 Concierge and the physician portal, divisions of Concertis,
allows providers the ability to monitor patient care as they move
through the Nobilis continuum of care
• As of September, there are over 100 providers in the 360 Concierge
system across three major markets that resulted in over 1,000
referrals within the Nobilis system
• Align with physicians through employment, bundled payment
products, 360 Concierge, and other financial and clinical products
CONCERTIS STRATEGY
PRIMARY CARE PRACTICE
• Less expensive to acquire than specialists
• Allows Nobilis Health to control patient experience across the
continuum of care
• Feeds volume into bundled payment and 360 Concierge
• Achieves clinical integration
• Bring physicians into our narrow network
• Our care navigators are trained health care professionals who
serve as patient concierges, guiding patients through the
entire episode of care from diagnosis to post-surgical care
17
19. BENEFITS
• Continuity of care for patients
• Helps recruit top physicians
• Increased patient and physician satisfaction
• Improve patient outcomes
• Accretive earnings
ANCILLARY SERVICES
DEVELOPMENT
• Nobilis Health actively seeks potential M&A targets in the
ancillary services space
• Typically focus on acquisitions with revenue potential system
wide
• Increased capabilities position Nobilis Health to execute
alternative payment methodologies for payors
PATIENT CENTRIC STRATEGY
• Achieve economies of scale
• Make efficient use of capital and operating resources
• Treat same level of demand with less capacity then
stand alone facilities
• Results in increased productivity, lower staffing
requirements and reduced operating and unit costs
FINANCIAL CONTRIBUTION
• 2016 revenue of $20.4 million compared to $2.3
million in 2015
• Maximizes revenue by capturing additional revenue
streams per patient
19
21. Goal: Self-source business and maximize ROI
Sales & Marketing
1
Direct to Consumer
(DTC)
Lead Generation
ConciergeService
Conversion to Surgical
Patient
Patient Experience
Follow Up
Successful Patient Outcomes
Sales Outreach to
Referral Community
Physician Referral to
Nobilis Brand
Leverage concierge
service for enhanced
patient experience
3
360 Concierge
Sales Outreach
to Physicians
Physician & Patient
Conversion
Nobilis Facility
CaseAcquisition
2
Physician
Recruitment
Patient and Physician
Satisfaction
SALES AND MARKETING STRATEGY
Our Unique
Approach
We provide patients personalized treatment plans and access to multi-disciplinary medical staff and physicians 21
22. UNIQUE MARKETING MODEL
• Multiple Marketing channels drive volume growth
• Proprietary technology platform targets prospective clients
• Strong value proposition: Superior patient experience that expands physicians’ practices
ATTRACTIVE FINANCIAL PROFILE
PATIENT-CENTRIC VALUE PROPOSITION
FAVORABLE PAYOR AND PROCEDURE MIX
ATTRACTIVE INDUSTRY FUNDAMENTALS
EXPERIENCED MANAGEMENT TEAM
• Low leverage
• Low capital expenditure requirements
• Stable cash balance
• Unique marketing model increases case volumes and provides superior patient experience
• Offer optimal surgical environments that result in better overall quality of care
• Offer ancillary and complementary services that lead to better efficiency and better outcomes
• Marketing segment targets higher acuity cases resulting in a highly attractive case mix
• Procedure diversification increases the stability of the revenue base
• Minimal government payor reduces risk of Medicare/Medicaid rate changes
• 66% of all surgeries are outpatient with >50% performed in ASCs vs. 32% in 2005
• Lower cost, high quality outpatient setting; trend toward increased consumerism in healthcare
• Abundance of desirable acquisition opportunities due to fragmented market
• Strong management team with M&A and healthcare experience
• Seasoned Ops team leads to financial and operation efficiencies
• Strong in-house and outside legal team to safely navigate complex healthcare space
INVESTMENT HIGHLIGHTS
22
23. HARRY FLEMING
Chief Executive Officer
• Joined Nobilis in 2010
• Previously served as CFO, President and Executive Chairman of Nobilis
• Earned an MBA from Boston College, a J.D. from the University of Houston, and a B.A. from the
University of St. Thomas
• Joined Nobilis in 2010
• Previously served as Chief Operating Officer & Chief Business Development Officer at Nobilis
• Founder & CEO of Diagnostic and Interventional Spine Centers
• Doctorate from Texas Chiropractic College
• Joined Nobilis in 2017
• Previously served as Divisional CFO for St. Jude Medical’s America division
• Licensed CPA
• Earned an MBA from the University of Texas at Austin
• Joined Nobilis in 2014
• 15 years of healthcare sales and business development
• Previously held successful sales leadership positions at Intuitive Surgical, Medtronic, and Pfizer
• Earned a B.A. from Rhodes College
• Joined Nobilis in 2016
• Partner at Baker Donelson, specializing in health law and served as a Director at Houston
Methodist Hospital System
• Earned a J.D. from the University of Houston and B.A. Cum Laude from Rice University
MANAGEMENT TEAM
KENNETH EFIRD
President
DAVID YOUNG
Chief Financial Officer
PATRICK YODER
Chief Revenue Officer
MARISSA ARREOLA
Chief Strategy Officer / President, Concertis
23
24. MARCOS RODRIGUEZ
Chief Accounting Officer
• Joined Nobilis in 2016
• Began his career at Deloitte & Touche LLP and served five years as Director at Opportune LLP
• 19 years of financial & accounting reporting, external and internal audits, and SEC regulations
• Earned a B.S. from Louisiana State University and is a licensed CPA
• Joined Nobilis in 2017
• 20 years of operational and managerial experience in the healthcare industry
• VP of Continuous Improvement for United Surgical Partners International/ Tenet Healthcare
(“USPI”) and CEO of Memorial Hermann Surgical Hospital Kingwood, in Houston, Texas
• M.S. from University of Maryland
• Joined Nobilis in 2015
• Previously served as CFO at Northstar Healthcare LLC and Nobilis Health
• 20 years of financial and accounting reporting in the healthcare industry
• Earned an M.B.A. from Texas Woman’s University and a B.S. from Sacred Heart University
• Joined Nobilis in 2017
• Previously served as Director of Marketing for Travelocity and Director of Online Marketing at
Hotels.com
• Earned a J.D. from University of Tennessee College of Law and a B.S. from Vanderbilt University
• Joined Nobilis in 2014
• 10 years of finance & accounting experience in the healthcare industry, including HCA & Tenet
• Earned an M.B.A. from University of Texas – San Antonio and a B.S. from New York University
MANAGEMENT TEAM
MARC CELIA
EVP of Operations
KENNETH KLEIN
CFO of Operations
PHIL AYRES
VP of Marketing
BRANDON MORENO
VP of Finance
24
25. THE SPINE SHIFT
• Less complex spine procedures shifting from inpatient to outpatient
• Key spine procedures have stronger tailwinds due to demographics and improvements in technology
• ~31 million Americans experience back pain at any given time
• ~600,000 Americans undergo spine surgery every year
INPATIENT SPINE DISCHARGES 2014 - 2019
SHIFT TO OUTPATIENT
OUTPATIENT SPINE DISCHARGES 2014 - 2019
Note: Growth rate data reflects U.S. market.
Source: Wall Street Research.
Advanced Imaging 13%
Arthrocentesis / Injections
5%
Rehab & Chiropractic
14%
Standard Imaging
13%
E&MVisits
17%
Fusion Surgery
Spinal Decom. / Laminec.
Vertebral Augmentation
23%
27%
25%17%
-9%
-5%
-2%
2%
-11%
Nobilis Key
Procedures
Lumbar / Thoracic Fusion
Cervical Fusion
No Procedure and
Diagnostics
Spinal Decompression/
Laminectomy
Vertebral Augmentation
Procedures
Revision Spinal Procedure
25
28. TEXAS (DALLAS AND HOUSTON) EQUITY
First Nobilis Surgical Center (HOPD) ------------------------------------------------------ 51%
Kirby Surgical Center -------------------------------------------------------------------------- 25%
Medical Park Drive Specialty Center (HOPD) -------------------------------------------- 51%
Northstar Healthcare Surgery Center – Houston --------------------------------------- 100%
Dallas Metro ------------------------------------------------------------------------------------- 35%
ARIZONA (PHOENIX, SCOTTSDALE, AND TUCSON)
Northstar Healthcare Surgery Center – Scottsdale -------------------------------------- 100%
Chandler Surgery Center ---------------------------------------------------------------------- 100%
Oracle Surgery Center -------------------------------------------------------------------------- 100%
Phoenix Surgery Center ------------------------------------------------------------------------ 100%
Surprise Surgery Center ------------------------------------------------------------------------ 100%
NOBILIS FACILITIES
ASCs
28
29. TEXAS (DALLAS, HOUSTON, ROUND ROCK, SAN ANTONIO) EQUITY
Hamilton Vein Sugar Land Clinic ------------------------------------------------------------- 100%
Hamilton Vein Woodlands Clinic ------------------------------------------------------------ 100%
Hamilton Vein Clear Lake Clinic -------------------------------------------------------------- 100%
Hamilton Vein Katy Clinic ---------------------------------------------------------------------- 100%
Hamilton Vein Stone Oak Clinic --------------------------------------------------------------- 100%
Hamilton Vein Round Rock Clinic ------------------------------------------------------------- 100%
ARIZONA (CHANDLER, GLENDALE, PHOENIX, SCOTTSDALE, AND TUCSON)
Arizona Vein & Vascular Chandler Clinic ---------------------------------------------------- 100%
Arizona Vein & Vascular Oracle Clinic ------------------------------------------------------- 100%
Arizona Vein & Vascular Phoenix Clinic ----------------------------------------------------- 100%
Arizona Vein & Vascular Surprise Clinic ---------------------------------------------------- 100%
DeRosa Medical Clinic – Glendale ----------------------------------------------------------- 100%
DeRosa Medical Clinic – Chandler ----------------------------------------------------------- 100%
DeRosa Medical Clinic – Scottsdale ---------------------------------------------------------- 100%
NOBILIS FACILITIES
Clinics
29
30. NOBILIS FACILITIES
FACILITY NAME FACILITY DETAILS SPECIALTIES
PLANO SURGICAL HOSPITAL • 26 Inpatient beds • Bariatrics
• 6 ORs • Spine
• 2 Procedure Rooms • Plastics
• Orthopedics
• General Surgery
• Pain Management
KIRBY SURGICAL HOSPITAL • 4 ORs • Orthopedics
• 1 Procedure Room • General surgery
• Pain
• ENT
HERMANN DRIVE SURGICAL HOSPITAL • 22 Beds • Bariatrics
• 18 Private rooms • Spine
• 6 ORs • Plastics
• 2 Procedure Rooms • Orthopedics
• General Surgery
FIRST SURGICAL HOSPITAL • 4 ORs • Bariatrics
• 1 Procedure Room • Spine
HOPDs of First Surgical Hospital: • Plastics
First Street Surgery Center (ASC) • 4 ORs • Orthopedics
Medical Park Specialty Centre (ASC) • 1 OR • General Surgery
• Pain management
NORTHSTAR HEALTHCARE SURGERY CENTER - HOUSTON • 3 ORs • Spine
• 2 Treatment rooms • Bariatrics
• General Surgery
• Pain
• Podiatry
• Plastics
• GI
30
31. NOBILIS FACILITIES
FACILITY NAME FACILITY DETAILS SPECIALTIES
NORTHSTAR HEALTHCARE SURGERY CENTER - SCOTTSDALE • 4 ORs • Plastics/Reconstructive
• 1 Procedure Room • Orthopedics
• General Surgery
• Pain management
• Bariatrics
• Podiatry
SCOTTSDALE LIBERTY HOSPITAL • 12 Inpatient Beds • Spine
• 2 ORs • Orthopedic Surgery
• 1 Procedure Room • General Surgery
• Podiatry
• Bariatrics
• Migraine
• Vascular
ARIZONA VEIN & VASCULAR CENTER • 4 Clinics • Vein
• 4 ASCs
• 15 ORs
HAMILTON VEIN CENTER • 6 Clinics • Vein
• 20 RFAs
DEROSA MEDICAL, P.C. • 3 ORs • Health & Wellness
• 2 Treatment rooms • Weight Loss
• Chronic Health Condition
Management
31
