S ummary of Final Bids For a Potential Partner Presented to the - PowerPoint PPT Presentation

S ummary of Final Bids For a Potential Partner Presented to the Citrus County Hospital Board and Citrus Memorial Health Foundation Presented By: Trey Crabb Il Y ou Robert Jaeger Managing Director S enior Vice President Assistant Vice President tcrabb@ ziegler.com ilyou@ ziegler.com rj aeger@ ziegler.com S eptember 26, 2013

Table of Contents I. Overview of Potential Partners 3 II. S election Criteria 11 III. Transaction Criteria in RFP 14 IV. Preliminary Net Proceeds 18 V. Transaction Value 20 VI. Non-Financial Considerations 23 VII. Next S teps 27 2

3 Overview of Potential Partners

Overview of Potential Partners Proposal Process – S eptember Timeline eptember 5 th – CCHB votes to allow each of the four finalists  S (HCA, HMA, RCHP and TGH) to submit Best and Final responses to eptember 18 th its Request for Proposal by S eptember 18 th – Joint Meeting of the CCHB and CMHF to listen to  S presentations from finalists followed by Q&A (RCHP did not present) eptember 20 th – RegionalCare formally withdraws proposal  S eptember 26 th / 30 th – Joint Meeting of the CCHB and CMHF to  S review and discuss final proposals from Potential Partners  October 1 st – Joint Resolution of Cooperation deadline set by CCHB and CMHF to select final bidder and transaction structure 4

Overview of Potential Partners Health Management Associates – Public For-Profit Business Description Management Founded: 1977 Interim CEO and Interim President: John S tarcher   Headquarters: Naples, FL  Interim CFO: Gary Bryant   Owns and operates 71 hospitals  EVP of Development: Peter Lawson  23 hospitals in Florida  Located in 15 states 42,000 employees  11,000 licensed beds  Financial Summary ($ in Millions) Comments For Fiscal Year Ending Dec. 31, S uburban/ Rural Focus  2011A 2012A 2013E 2014E  Recent M&A Activity: Total Revenue 5,087.6 5,878.2 6,884.1 6,929.1 8/ 20/ 2013 –HMA executed a letter of intent to ฀ Growth Over Prior Year 15.5% 17.1% 0.7% lease Bert Fish Medical Center in New S myrna Beach, FL EBITDA 835.9 972.2 844.8 932.1 Margin % 16.4% 16.5% 12.3% 13.5% ฀ 7/ 29/ 2013 –CHS entered into a definitive merger agreement to acquire HMA for $7.6 billion Operating Income 563.0 614.3 444.1 538.3 6/ 11/ 2013–HMA executed a letter of intent to lease ฀ Margin % 11.1% 10.5% 6.5% 7.8% Munroe Regional Medical Center located in Ocala, FL Net Income 178.7 164.3 154.8 203.2 Margin % 3.5% 2.8% 2.2% 2.9% 5

Overview of Potential Partners Health Management Associates – Public For-Profit 6

Overview of Potential Partners Hospital Corporation of America – Public For-Profit Business Description Management Founded: 1968 Chairman and CEO: Richard Bracken   Headquarters: Nashville, TN   President and CFO: R. Milton Johnson  Largest public for-profit hospital management co.  S VP and Chief Development Officer: Joseph S owell  Owns and operates 162 hospitals and 113  President, National Group – Charles Hall freestanding surgery centers President, HCA West Florida: Peter A. Marmerstein  40 hospitals in Florida  Located in 20 states and London, England CFO, HCA West Florida: Timothy Burroughs    204,000 employees  41,800 licensed beds Financial Summary ($ in Millions) Comments For Fiscal Year Ending Dec. 31,  Urban/ S uburban Focus 2011A 2012A 2013E 2014E Recent M&A Activity:  Total Revenue 29,682.0 33,013.0 36,956.1 38,428.3 Growth Over Prior Year 11.2% 11.9% 4.0% 7/ 18/ 2013 –S igned definitive agreement to acquire ฀ Memorial Hospital of Tampa, Palms of Pasadena EBITDA 5,803.0 6,492.0 6,378.9 6,829.4 Hospital and Town & Country Hospital from IAS IS Margin % 19.6% 19.7% 17.3% 17.8% Healthcare LLC Operating Income 4,338.0 4,813.0 4,679.4 5,089.9 Margin % 14.6% 14.6% 12.7% 13.2% Net Income 2,465.0 1,605.0 1,497.3 1,754.5 Margin % 8.3% 4.9% 4.1% 4.6% 7

Overview of Potential Partners Hospital Corporation of America – Public For-Profit 8 Note: HCA also has hospitals in Alaska and United Kingdom, not shown in the map

Overview of Potential Partners Tampa General Hospital – Not-For-Profit Business Description Management Founded: 1927 President and CEO: James Burkhart, DS c   Headquarters: Tampa, FL Executive Vice President and COO: Deana Nelson    Owns and operates 1 hospital  Executive Vice President and CFO: S teve S hort  S erves 12-county region of West Central Florida  Executive Vice President and CMO: S ally Houston  6,600 employees 1,018 licensed beds  Financial Summary ($ in Millions) Comments For Fiscal Year Ending Sep. 30, S ingle site facility  2009A 2010A 2011A 2012A  Recent M&A/ Affiliation Activity: Total Revenue 945.9 1,033.6 1,083.9 1,036.8 ฀ 09/ 24/ 2013 – TGH and Florida Hospital’ s Tampa Bay Growth Over Prior Year 9.3% 4.9% (4.4%) Network announce partnership to j ointly develop new clinical programs and services. EBITDA 72.7 99.6 62.6 74.1  Operates 1 of only 3 burn centers in Florida Margin % 7.7% 9.6% 5.8% 7.1% Among nation’ s leading organ transplant centers  Operating Income 18.7 44.6 7.2 11.4  Primary teaching hospital for US F - Trains over 300 Margin % 2.0% 4.3% 0.7% 1.1% medical residents from the US F Morsani College of Medicine Net Income 39.3 66.5 22.9 48.2 Margin % 4.2% 6.4% 2.1% 4.6% 9

Overview of Potential Partners Tampa General Hospital – Not-For-Profit 10

11 election Criteria S

S election Criteria Proposed Considerations For S electing a Bidder  “ What is best for the people of Citrus County”  Elimination or guaranty of outstanding debt - $55 million  Funding or guaranty of pension liability - $14.6 million  Loss of control of the Hospital  Experience  Quality of care  Charity care 12

S election Criteria Proposed Considerations For S electing a Bidder  Financial resources and credit strength  Antitrust concerns  Fulfill RFP criteria  Transaction Value  Net proceeds at closing 13

14 Transaction Criteria in RFP

Transaction Criteria in RFP S ummary of responses to transaction criteria HCA HMA TGH Purchase/ Purchase/ Merger # RFP Criteria Lease Lease/ JV 1 Will Of f er Employment t o All Current Employees Yes Yes Yes 2 Will Keep Hospit al Name Yes Yes Yes 3 Agree t o No Changes in Medical S t af f Bylaws and Privileges Yes Yes Yes (1) 4 Will Pay All Transact ion Cost s Yes Yes Yes Will Assume All Hospit al Cont ract s (2) 5 Yes Yes Yes (3) 6 If Cont rolled by a S ubsidiary, Guarant y of all Obligat ions Yes Yes Yes Agree t hat S uccessor are Obligat ed t o Lease or Purchase 7 Yes Yes Yes Agreement 8 Will Give Full Credit f or Prior S ervice of Employees Yes Yes Yes 10 Will Maint ain/ Expand S cope of S ervices Yes Yes Yes 11 Will Complet e Due Diligence on Time Yes Yes Yes 12 Will Complet e Def init ive Agreement on Time Yes Yes Yes (1) HMA requires advance estimate and will pay for those that are normal, customary and commercially reasonable for comparable transactions (2) Buyers have said they will assume the contracts, subject to buyers due diligence review. 15 (3) TGH has provided a conditional guaranty of the lease. Will have to be repaid if Florida Supreme Court were to rule that Chapter 2011-256, Laws of Florida, is constitutional or any court were to enter an order invalidating the Lease between the CCHB and the CMHF.

Transaction Criteria in RFP S ummary of responses to transaction criteria HCA HMA TGH Purchase/ Purchase/ Merger # RFP Criteria Lease Lease/ JV If not purchased, willing t o Pay Annual Payment in Lieu of (1) 13 Yes Yes Yes Taxes Equal t o Propert y Taxes 14 Will Not S eek Any Tax Abat ement s Yes Yes N/ A Will File Pre-Merger Forms wit hin 7 days of LOI and Pay All 15 Yes Yes Yes Relat ed Fees (If required) 16 Knowledgeable of Laws of Florida including 155. 40 Yes Yes Yes 17 Will Out line Capit al Appropriat ion Process and Commit ment Yes Yes Yes Will Report Compliance of Transact ion Requirement s Annually 18 Yes Yes Yes t o Board Will Outline S t eps to Prot ect f rom Compet it ion and Reduce 19 Yes Yes Yes Out migrat ion Will Provide Inf ormat ion on Qualit y of Care, S t eps t o Improve 20 Yes Yes Yes at Hospit al 16 (1) TGH has indicated payments as follows: $0 year1, $250k year 2, $500k year 3, $750k year 4 and $1mm in years 5-20.