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| 8-K - IASIS HEALTHCARE LLC 8-K - IASIS Healthcare LLC | a50159451.htm |
Exhibit 99.1
IASIS Healthcare Announces First Quarter 2012 Results
FRANKLIN, Tenn.--(BUSINESS WIRE)--February 7, 2012--IASIS Healthcare® LLC (“IASIS”) today announced financial and operating results for the fiscal first quarter ended December 31, 2011. In the first quarter, IASIS adopted accounting guidance that results in the classification of the provision for bad debts as a revenue deduction rather than an operating expense, and such guidance has been applied to the financial statements of both the current and prior year quarters.
Net revenue for the first quarter totaled $623.7 million, an increase of 1.5%, compared to $614.3 million in the prior year quarter. Net revenue for the quarter ended December 31, 2011, which includes an increase in acute care revenue of $60.9 million or 14.8% compared to the prior year quarter, has been affected by a decline in premium revenue at Health Choice, the Company’s Medicaid and Medicare managed health plan in Arizona, as a result of capitation rate reductions implemented by the Arizona Health Care Cost Containment System (“AHCCCS”) and a state mandated reduction in certain Medicaid enrollees. Adjusted EBITDA for the first quarter totaled $72.2 million, compared to $68.8 million in the prior year quarter. Net earnings from continuing operations for the first quarter, which includes additional interest costs resulting from the Company’s fiscal 2011 refinancing transaction, totaled $3.6 million, compared to $17.3 million in the prior year quarter.
In the first quarter, admissions and adjusted admissions increased 20.7% and 17.9%, respectively, compared to the prior year quarter. On a same-facility basis, admissions and adjusted admissions increased 4.7% and 3.4%, respectively, compared to the prior year quarter, while net patient revenue per adjusted admission decreased 1.2% compared to the prior year quarter. The decline in net patient revenue per adjusted admission is attributable to Medicaid rate reductions implemented by certain states, as well as an increase in the provision for bad debts resulting from growth in the volume of uninsured patients in certain markets, particularly Arizona where AHCCCS implemented program changes in Medicaid eligibility in July 2011.
Commenting on the first quarter results, IASIS Healthcare President and Chief Executive Officer Carl Whitmer said, “We continue to be pleased with our ability to demonstrate solid operating results, despite the current economic headwinds and reimbursement challenges facing our industry. We believe the quarter’s strong volume growth further affirms our commitments to expanding the reach of our services and achieving operational excellence through clinical integration and providing high-quality, efficient care to the communities we serve.”
A listen-only simulcast and 30-day replay of IASIS’ first quarter conference call will be available by clicking the “For Investors” link on the Company’s Web site at www.iasishealthcare.com beginning at 11:00 a.m. Eastern Time on February 7, 2012. A copy of this press release will also be available on the Company’s Web site.
IASIS, located in Franklin, Tennessee, is a leading owner and operator of medium-sized acute care hospitals in high-growth urban and suburban markets. The Company operates its hospitals with a strong community focus by offering and developing healthcare services targeted to the needs of the markets it serves, promoting strong relationships with physicians and working with local managed care plans. IASIS owns or leases 18 acute care hospital facilities and one behavioral health hospital facility with a total of 4,365 licensed beds and has total annual net revenue of approximately $2.8 billion. These hospital facilities are located in seven regions: Salt Lake City, Utah; Phoenix, Arizona; Tampa-St. Petersburg, Florida; five cities in Texas, including Houston and San Antonio; Las Vegas, Nevada; West Monroe, Louisiana; and Woodland Park, Colorado. IASIS also owns and operates a Medicaid and Medicare managed health plan in Phoenix that serves more than 186,000 members. For more information on IASIS, please visit the Company’s Web site at www.iasishealthcare.com.
Some of the statements we make in this press release are forward-looking within the meaning of the federal securities laws, which are intended to be covered by the safe harbors created thereby. Those forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations including, but not limited to, future financial and operating results, the Company’s plans, objectives, expectations and other statements that are not historical facts. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual results in future periods to differ materially from those anticipated in the forward-looking statements. These risk factors and uncertainties are more fully described in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2011, and other filings with the Securities and Exchange Commission.
Although we believe that the assumptions underlying the forward-looking statements contained in this press release are reasonable, any of these assumptions could prove to be inaccurate, and, therefore, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, you should not regard the inclusion of such information as a representation by the Company or any other person that our objectives and plans will be achieved. We undertake no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.
Adjusted EBITDA represents net earnings from continuing operations before interest expense, income tax expense, depreciation and amortization, stock-based compensation, gain (loss) on disposal of assets and management fees. Management fees represent monitoring and advisory fees paid to TPG, the Company’s majority financial sponsor, and certain other members of IASIS Investment LLC. Management routinely calculates and communicates adjusted EBITDA and believes that it is useful to investors because it is commonly used as an analytical indicator within the healthcare industry to evaluate hospital performance, allocate resources and measure leverage capacity and debt service ability. In addition, the Company uses adjusted EBITDA as a measure of performance for its business segments and for incentive compensation purposes. Adjusted EBITDA should not be considered as a measure of financial performance under generally accepted accounting principles, and the items excluded from adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to net earnings, cash flows generated by operating, investing, or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. Adjusted EBITDA, as presented, differs from what is defined under the Company’s senior secured credit facilities and may not be comparable to similarly titled measures of other companies. A table describing adjusted EBITDA and reconciling net earnings from continuing operations to adjusted EBITDA is included in this press release in the attached Supplemental Consolidated Statements of Operations Information.
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IASIS HEALTHCARE LLC |
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Consolidated Statements of Operations (Unaudited) |
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(in thousands) |
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Quarter Ended
December 31, |
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| 2011 | 2010 | |||||||
| Net revenue: | ||||||||
| Acute care revenue | $ | 543,214 | $ | 471,688 | ||||
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Less: Provision for bad debts |
(70,279 | ) | (59,614 | ) | ||||
| Acute care revenue, net | 472,935 | 412,074 | ||||||
| Premium revenue | 150,738 | 202,192 | ||||||
| Net revenue | 623,673 | 614,266 | ||||||
| Costs and expenses: | ||||||||
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Salaries and benefits (includes stock-based compensation of $500 and $496, respectively) |
223,964 | 189,913 | ||||||
| Supplies | 84,170 | 76,436 | ||||||
| Medical claims | 124,245 | 171,334 | ||||||
| Rentals and leases | 12,266 | 11,166 | ||||||
| Other operating expenses | 113,983 | 97,126 | ||||||
| Medicaid EHR incentive payments | (6,677 | ) | – | |||||
| Interest expense, net | 34,940 | 16,877 | ||||||
| Depreciation and amortization | 28,534 | 24,046 | ||||||
| Management fees | 1,250 | 1,250 | ||||||
| Total costs and expenses | 616,675 | 588,148 | ||||||
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Earnings from continuing operations before gain on disposal of assets and income taxes |
6,998 | 26,118 | ||||||
| Gain on disposal of assets, net | 240 | 345 | ||||||
| Earnings from continuing operations before income taxes | 7,238 | 26,463 | ||||||
| Income tax expense | 3,605 | 9,189 | ||||||
| Net earnings from continuing operations | 3,633 | 17,274 | ||||||
| Loss from discontinued operations, net of income taxes | (48 | ) | (3,208 | ) | ||||
| Net earnings | 3,585 | 14,066 | ||||||
| Net earnings attributable to non-controlling interests | (2,232 | ) | (2,320 | ) | ||||
| Net earnings attributable to IASIS Healthcare LLC | $ | 1,353 | $ | 11,746 | ||||
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IASIS HEALTHCARE LLC |
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Consolidated Balance Sheets (Unaudited) |
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(in thousands) |
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Dec. 31,
2011 |
Sept. 30,
2011 |
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| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 83,996 | $ | 147,327 | ||
| Accounts receivable, net | 303,597 | 277,932 | ||||
| Inventories | 69,185 | 68,330 | ||||
| Deferred income taxes | 39,153 | 40,415 | ||||
| Prepaid expenses and other current assets | 74,103 | 72,914 | ||||
| Total current assets | 570,034 | 606,918 | ||||
| Property and equipment, net | 1,164,487 | 1,167,920 | ||||
| Goodwill | 807,009 | 808,651 | ||||
| Other intangible assets, net | 31,454 | 32,779 | ||||
| Other assets, net | 76,056 | 63,509 | ||||
| Total assets | $ | 2,649,040 | $ | 2,679,777 | ||
| LIABILITIES AND EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 103,737 | $ | 92,805 | ||
| Salaries and benefits payable | 47,076 | 58,379 | ||||
| Accrued interest payable | 9,522 | 30,045 | ||||
| Medical claims payable | 75,357 | 85,723 | ||||
| Other accrued expenses and other current liabilities | 86,786 | 100,830 | ||||
| Current portion of long-term debt and capital lease obligations | 13,855 | 14,020 | ||||
| Total current liabilities | 336,333 | 381,802 | ||||
| Long-term debt and capital lease obligations | 1,861,545 | 1,864,749 | ||||
| Deferred income taxes | 131,465 | 131,018 | ||||
| Other long-term liabilities | 97,726 | 78,441 | ||||
| Non-controlling interests with redemption rights | 97,594 | 95,977 | ||||
| Equity: | ||||||
| Member’s equity | 114,565 | 118,000 | ||||
| Non-controlling interests | 9,812 | 9,790 | ||||
| Total equity | 124,377 | 127,790 | ||||
| Total liabilities and equity | $ | 2,649,040 | $ | 2,679,777 | ||
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IASIS HEALTHCARE LLC |
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Consolidated Statements of Cash Flows (Unaudited) |
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(in thousands) |
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Quarter Ended
December 31, |
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| 2011 | 2010 | |||||||
| Cash flows from operating activities: | ||||||||
| Net earnings | $ | 3,585 | $ | 14,066 | ||||
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Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
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| Depreciation and amortization | 28,534 | 24,046 | ||||||
| Amortization of loan costs | 1,902 | 810 | ||||||
| Stock-based compensation | 500 | 496 | ||||||
| Deferred income taxes | 3,067 | 2,539 | ||||||
| Income tax benefit from stock-based compensation | 6 | – | ||||||
| Income tax benefit from parent company interest | – | 2,240 | ||||||
| Fair value change in interest rate hedges | (845 | ) | – | |||||
| Amortization of other comprehensive loss | 1,234 | – | ||||||
| Gain on disposal of assets, net | (240 | ) | (345 | ) | ||||
| Loss from discontinued operations, net | 48 | 3,208 | ||||||
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Changes in operating assets and liabilities, net of the effect of acquisitions and dispositions: |
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| Accounts receivable, net | (26,860 | ) | (8,334 | ) | ||||
| Inventories, prepaid expenses and other current assets | (2,839 | ) | (5,956 | ) | ||||
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Accounts payable, other accrued expenses and other accrued liabilities |
(40,766 | ) | (26,048 | ) | ||||
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Net cash provided by (used in) operating activities – continuing operations |
(32,674 | ) | 6,722 | |||||
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Net cash used in operating activities – discontinued operations |
(27 | ) | (240 | ) | ||||
| Net cash provided by (used in) operating activities | (32,701 | ) | 6,482 | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment, net | (24,357 | ) | (15,360 | ) | ||||
| Cash paid for acquisitions, net | 602 | (1,880 | ) | |||||
| Change in other assets, net | 1,171 | 515 | ||||||
| Net cash used in investing activities | (22,584 | ) | (16,725 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payment of debt and capital lease obligations | (3,745 | ) | (1,933 | ) | ||||
| Debt financing costs incurred | (998 | ) | – | |||||
| Distributions to non-controlling interests | (3,303 | ) | (3,089 | ) | ||||
| Net cash used in financing activities | (8,046 | ) | (5,022 | ) | ||||
| Change in cash and cash equivalents | (63,331 | ) | (15,265 | ) | ||||
| Cash and cash equivalents at beginning of period | 147,327 | 144,511 | ||||||
| Cash and cash equivalents at end of period | $ | 83,996 | $ | 129,246 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 53,182 | $ | 26,514 | ||||
| Cash paid for income taxes, net | $ | 13 | $ | 5 | ||||
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IASIS HEALTHCARE LLC |
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Segment Information (Unaudited) |
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(in thousands) |
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| For the Quarter Ended December 31, 2011 | |||||||||||||||
| Acute Care | Health Choice | Eliminations | Consolidated | ||||||||||||
| Acute care revenue | $ | 543,214 | $ | – | $ | – | $ | 543,214 | |||||||
| Less: Provision for bad debts | (70,279 | ) | – | – | (70,279 | ) | |||||||||
| Acute care revenue, net | 472,935 | – | – | 472,935 | |||||||||||
| Premium revenue | – | 150,738 | – | 150,738 | |||||||||||
| Revenue between segments | 1,629 | – | (1,629 | ) | – | ||||||||||
| Net revenue | 474,564 | 150,738 | (1,629 | ) | 623,673 | ||||||||||
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Salaries and benefits (excludes stock-based compensation) |
218,337 | 5,127 | – | 223,464 | |||||||||||
| Supplies | 84,119 | 51 | – | 84,170 | |||||||||||
| Medical claims | – | 125,874 | (1,629 | ) | 124,245 | ||||||||||
| Rentals and leases | 11,886 | 380 | – | 12,266 | |||||||||||
| Other operating expenses | 108,297 | 5,686 | – | 113,983 | |||||||||||
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Medicaid EHR incentive payments |
(6,677 | ) | – | – | (6,677 | ) | |||||||||
| Adjusted EBITDA | 58,602 | 13,620 | – | 72,222 | |||||||||||
| Interest expense, net | 34,940 | – | – | 34,940 | |||||||||||
| Depreciation and amortization | 27,656 | 878 | – | 28,534 | |||||||||||
| Stock-based compensation | 500 | – | – | 500 | |||||||||||
| Management fees | 1,250 | – | – | 1,250 | |||||||||||
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Earnings (loss) from continuing operations before gain on disposal of assets and income taxes |
(5,744 | ) | 12,742 | – | 6,998 | ||||||||||
| Gain on disposal of assets, net | 240 | – | – | 240 | |||||||||||
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Earnings (loss) from continuing operations before income taxes |
$ | (5,504 | ) | $ | 12,742 | $ | – | $ | 7,238 | ||||||
| For the Quarter Ended December 31, 2010 | |||||||||||||||
| Acute Care | Health Choice | Eliminations | Consolidated | ||||||||||||
| Acute care revenue | $ | 471,688 | $ | – | $ | – | $ | 471,688 | |||||||
| Less: Provision for bad debts | (59,614 | ) | – | – | (59,614 | ) | |||||||||
| Acute care revenue, net | 412,074 | – | – | 412,074 | |||||||||||
| Premium revenue | – | 202,192 | – | 202,192 | |||||||||||
| Revenue between segments | 2,660 | – | (2,660 | ) | – | ||||||||||
| Net revenue | 414,734 | 202,192 | (2,660 | ) | 614,266 | ||||||||||
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Salaries and benefits (excludes stock-based compensation)
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184,394 | 5,023 | – | 189,417 | |||||||||||
| Supplies | 76,392 | 44 | – | 76,436 | |||||||||||
| Rentals and leases | 10,722 | 444 | – | 11,166 | |||||||||||
| Medical claims | – | 173,994 | (2,660 | ) | 171,334 | ||||||||||
| Other operating expenses | 90,830 | 6,296 | – | 97,126 | |||||||||||
| Adjusted EBITDA | 52,396 | 16,391 | – | 68,787 | |||||||||||
| Interest expense, net | 16,877 | – | – | 16,877 | |||||||||||
| Depreciation and amortization | 23,151 | 895 | – | 24,046 | |||||||||||
| Stock-based compensation | 496 | – | – | 496 | |||||||||||
| Management fees | 1,250 | – | – | 1,250 | |||||||||||
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Earnings from continuing operations before gain on disposal of assets and income taxes |
10,622 | 15,496 | – | 26,118 | |||||||||||
| Gain on disposal of assets, net | 345 | – | – | 345 | |||||||||||
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Earnings from continuing operations before income taxes |
$ | 10,967 | $ | 15,496 | $ | – | $ | 26,463 | |||||||
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IASIS HEALTHCARE LLC |
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Consolidated Financial and Operating Data (Unaudited) |
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Quarter Ended
December 31, |
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| 2011 | 2010 | |||||
| Consolidated Hospital Facilities | ||||||
| Number of acute care hospital facilities at end of period | 18 | 17 | ||||
| Licensed beds at end of period | 4,365 | 3,573 | ||||
| Average length of stay (days) | 4.9 | 4.9 | ||||
| Occupancy rates (average beds in service) | 48.9 | % | 45.3 | % | ||
| Admissions | 31,634 | 26,202 | ||||
| Percentage change | 20.7 | % | ||||
| Adjusted admissions | 53,421 | 45,312 | ||||
| Percentage change | 17.9 | % | ||||
| Patient days | 154,810 | 127,807 | ||||
| Adjusted patient days | 252,163 | 211,696 | ||||
| Outpatient revenue as a percentage of gross patient revenue | 40.7 | % | 41.0 | % | ||
| Same-Facility Hospitals (1) | ||||||
| Number of acute care hospital facilities at end of period | 17 | 17 | ||||
| Licensed beds at end of period | 3,573 | 3,573 | ||||
| Average length of stay (days) | 4.9 | 4.9 | ||||
| Occupancy rates (average beds in service) | 47.7 | % | 45.3 | % | ||
| Admissions | 27,422 | 26,202 | ||||
| Percentage change | 4.7 | % | ||||
| Adjusted admissions | 46,854 | 45,312 | ||||
| Percentage change | 3.4 | % | ||||
| Patient days | 133,769 | 127,807 | ||||
| Adjusted patient days | 219,355 | 211,696 | ||||
| Outpatient revenue as a percentage of gross patient revenue | 41.4 | % | 41.0 | % | ||
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(1) Excludes the impact of the St. Joseph Medical Center acquisition, which was effective May 1, 2011. |
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IASIS HEALTHCARE LLC |
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Supplemental Consolidated Statements of Operations Information (Unaudited) |
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(in thousands) |
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Quarter Ended
December 31, |
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| 2011 | 2010 | |||||||
| Consolidated Results | ||||||||
| Net earnings from continuing operations | $ | 3,633 | $ | 17,274 | ||||
| Add: | ||||||||
| Interest expense, net | 34,940 | 16,877 | ||||||
| Income tax expense | 3,605 | 9,189 | ||||||
| Depreciation and amortization | 28,534 | 24,046 | ||||||
| Stock-based compensation | 500 | 496 | ||||||
| Gain on disposal of assets, net | (240 | ) | (345 | ) | ||||
| Management fees | 1,250 | 1,250 | ||||||
| Adjusted EBITDA | $ | 72,222 | $ | 68,787 | ||||
CONTACT:
IASIS Healthcare LLC
Investor Contact:
W. Carl
Whitmer, 615-844-2747
President and Chief Executive Officer
or
John
M. Doyle, 615-844-2747
Chief Financial Officer
or
Media
Contact:
Michele M. Peden, 615-467-1255
VP, Corporate
Communications