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Voluntary Disclosure
Disclaimer for Investor Conference Presentation
This presentation is provided as of January 13, 2020 in connection with Hospital for Special Surgery’s
(“HSS”) participation at the JP Morgan Healthcare Conference. It has been prepared for informational
purposes only. The information contained herein is subject to amendment. If you are viewing this
presentation after the date stated above, events may have occurred that have a material adverse effect
on the financial information presented. This presentation does not constitute nor does it form part of
an offer to sell or purchase, or the solicitation of an offer to sell or purchase, any securities.
This presentation contains “forward-looking” statements that involve risks, uncertainties and
assumptions. If any of the risks or uncertainties were to materialize or the assumptions prove incorrect,
the results may differ materially from those expressed or implied by such forward-looking statements.
Accordingly, we caution you not to place undue reliance on these statements. All statements in this
presentation other than the statements of historical fact could be deemed forward-looking. All
opinions, estimates, projections, forecasts and valuations are preliminary, indicative and are subject to
change without notice. Financial information provided in this presentation for fiscal year 2019 is based
on unaudited actual year to date financial information as of November 30, 2019, combined with
estimated projected financial results for the month of December 2019. Financial information presented
is of HSS and The Hospital for Special Surgery Fund, Inc. combined, with all of their respective
consolidated affiliates.
By viewing this presentation you acknowledge that you understand and agree to the provisions of this
page.
Hospital for Special Surgery
January 2020
Growing Musculoskeletal Market
Musculoskeletal conditions
More than 1 in 2 adults report a
represent 1/3 of all reasons
musculoskeletal condition every
requiring time away from work2
year1
and affect 20% of the workforce3
Source:
1. The Hidden Impact of Musculoskeletal Disorders on Americans; Bone and Joint Initiative, 2018.
https://www.thebalance.com/us-gdp-by-year-3305543
2. National Health Interview Survey (NHIS), Adult Sample, CDC, 2013;
2 3.
4.
Bureau of Labor Statistics
Huse DM, Marder WD: “What are the leading drivers of employer healthcare spending
growth?,” Truven Health Analytics, April 2013; Ill
HSS Leading in the Musculoskeletal Market
HSS is uniquely
Movement is critical Our knowledge is our
equipped to meet the
to overall well-being greatest asset
needs of populations
3
Ill
Earning Top Recognition
rrdoximity e
#3 in Rheumatology Residency Program
surgery
• ' • •• •• ••
' ' 'l
t 5 5 3
20 19 11 8 7 7 T
~
del1Vi!'r1ng the best patient care-
of ths organlZallon Expa nd Geographic .and value rrsasures
Knowledge
Footprint
Broaden caredelll/ery neMOrk I -i i owrepso:Eofc:;are
~~t~~:=t~::=·
cur grtH,"lng enterprise
•
IJ:seaurkncr,,ledgealldexperttseta •
~..&--
' ~
Talent
Aaracnrf!, cultlWlln,g,
e,wngand mtalnlng the
besttalentand prcMdlng
the resoorcss necessary
-
through new facllmss. markets.
programs and partnsrsh lps
Growth
I
I
()
forsUCC85.'S 1nnm0aon ofn£W products and
sol.Jllons In l~e sclera,s, clovlcss •
J4._
G~th across markPt:s
I
1-------------
Scale il'ld th10U!lf1
Achieve 'focused scale' in
andcamdelll/ery • knowli!dgP-bas,d
lnltlat!We-s
Financial
Musculoskeletal Health Momentum Health
Build Musculoskeletal
ro
Ext"'1do11 !llobal lnlluenco 1hrough l,'O<ll!raphlc Building scalable lnfrastrucni"' and a Rob.Jst finanel.al
ttt
e:panslOn cou~edwlth entrance Into nNI areas ot
rrusculoskeletal heahh ta reach broader pcpulatlcns
propensity for spood, to accelerate glOl'l'!h Ecosystem
lnteQratl! "'Isling competl!ncles,
~ healthfarorl!llllnJ!
suc::cass of the
and remaln~ls amidst Industry changes
orsanlZatlOn
a,
naw slrate!lles. and pertnershl~
to snabls broader acooss for r
lndMduals across th0entlm
spoctnum of musculo:sloalsl>II health
oiiiiii4ii-
Fewer Complications 2
32°/o - HSS1.1%
Non Surgical Higher Discharge
2nd Opinion National Leaders 1.9% - 4.4%
to Home 5
Patients come to HSS Fewer lnfections 3
HSS
NYC Leaders
so%
70%-86%
3
looking for a second Days Gained
opinion after being HSS 0.5%
indicated for surgery.
NYC Leaders 0.2%-1.1%
Days gained from shorter
Lower Spending length of stay, less
32% received a
recommendation for non- Fewer Readmissions 4 per Beneficiary6 readmissions, doctors visits,
surgical treatment HSS o.93 and physical therapy
HSS 2.6%
appointments
Natl Average 1.00
National Leaders 3.6%-4.3%
7
Expanding HSS Geographic Footprint
Campuses NYC Tri-State Footprint Extending Network
- MAIN CAMPUS
lliil Upper East Side, Manhattan , NY
TRI-STATE REGION
(NY,NJ, CT} II EMPLOYER CONNECT
• Partnerships with large employers to provide
■ Main hospital includes inpatient and variety of service offerings (30+ relationships)
outpatient facilities, PT and Performance, • Delivering more accessible , high value care to
Imaging and Physician Services 2.5MM+ employees
■ Research, Education and Innovation
Institutes
Ill REHAB NETWORK
• Network of 170+ PT sites to facilitate episode of
- CONNECTICUT CAMPUS care management
lliil Stamford , CT PARAMUS, NJ
• Expanding national footprintthrough corporate on-
sites
■ State-of-the-art facilities including PT and WESTSIDE • Scaling PT nationally through partnership with
Performance, Imaging and Physician MIDTOWN lvyRehab
Services; inpatient surgery • Enabling digital access to network through
• Ambulatory surgery provided at Stamford BetterPT, HSS@Home and other technologies
Hospital
111!1!1 ACADEMIC, ADVISORY +
lliiil MANAGEMENT
- FLORIDA CAMPUS
lliil West Palm Beach, FL . OU PTA TIENT CENTERS • AMBULATORY SURGERY CENTERS • Partnerships with leading global institutions
Brooklyn Queens Manhattan- Upper East Side • Treating patients from 80+ countries
■ State-of-the-art destination center to include Hudson Yards (2020) stamford Manhattan- Upper West Side • Sharing HSS knowledge globally through HSS
ambulatory surgery, PT and Performance, Long Island West Side Stamford
Midtown (2020) Westchester
eAcademy and academic collaborations
Imaging and Physician Services Paramus, NJ Lower Manhattan* • Providing education to 25K+ international
*Under Development professionals
9
Advancing Innovation by Leveraging HSS Knowledge
Commercializing our knowledge with specialized orthopedic faculty, clinicians across related
medical specialties, leading musculoskeletal researchers and operational experts
®
~
DEVICE DRUG DIGITAL
Building the first additive Commercializing Novel Advancing motion
manufacturing and 3D Antibody and Small capture with machine
printing studio for Molecules for the learning to improve
orthopedic precision treatment of musculoskeletal
devices and rheumatologic and wellness, fitness and
instrumentation orthopedic conditions performance
Looking Ahead: Advancing a new approach that can change the device market
10
II
Introducing HSS Health: Building a Musculoskeletal Ecosystem
• Wellness+ Prevention
• Fitness+ Performance
Hea Ith . Conservative Care
?i-• VIRTUAL CARE
• Surgical Care
• Rehab + Recovery
IN-PERSON CARE
Digitally-enabled care management platform along the wellness-illness continuum, including self-, virtual-,
and in-person care
Core platform provides guided navigation to personalized solutions–– using a robust digital platform,
specialized health coaches, AI-driven algorithms and virtual access to HSS + top musculoskeletal providers to
provide best-in-class care anywhere, anytime
Partnerships with like-minded organizations will enable HSS Health to reach broader populations and deliver
11 more comprehensive offerings
Growth and Financial Health
9% 4%+
Growth
Average Annual Consistent Margins
Revenue Growth
(10 YR) (10 YR)
Growth across markets and through
knowledge-based initiatives
12
Growth Across the Enterprise
SURGICAL VOLUME NON- OPERATIVE OUTPATIENT VISITS
10 YR CAGR 4% 10 YR CAGR 6%
35,349 600,000
33,344
35,000 32,592 522,515
502 5,458 470,607
3,591 500,000
413,837
30,000
136,892
97,918
400,000
25,000 66,999
32,090 300,000
20,000 29,753 29,891
372,689 385,623
346,838
15,000 200,000
10,000 100,000
2017 2018 2019 Proj 2017 2018 2019 Proj
$1,678
$1,510 $247
$1,403
$228 6% 7% 6%
$201 18% 17% 18%
$1,431
$1,202 $1,282 76% 76% 76%
14
Strong Track Record of Profitability
OPERATING CASH FLOW MARGIN EXCESS INCOME MARGIN
10 YR AVG. 12.2% 10 YR AVG. 6.6%
11.7%
11.1% 11.0%
8.3%
5.9%
4.9%
15
Ill
Healthy Liquidity and Moderate Leverage
DAYS CASH ON HAND ($MM) CASH TO TOTAL DEBT
198 196
188
245%
207%
184%
Strategic
Philanthropy Projects
Raised to date $50MM*
$76MM Main
Campus
Taxable Bonds Transform
To be Raised Main
ationCampus
$175MM $49MM $175MM
Transformation
$175MM