Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Encompass Health Corp | reliantupdateform8-k.htm |
| EX-23.1 - EXHIBIT 23.1 - Encompass Health Corp | reliantconsentv2ex231.htm |
| EX-99.1 - EXHIBIT 99.1 - Encompass Health Corp | reliantupdatedfinancialsta.htm |
Exhibit 99.2
Reliant Hospital Partners, LLC
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2015
Reliant Hospital Partners, LLC
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2015
Contents
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | ||
Balance Sheet | 1 | |
Statement of Operations | 3 | |
Statement of Members’ Deficit | 4 | |
Statement of Cash Flows | 5 | |
Notes to Consolidated Financial Statements | 6 | |
Reliant Hospital Partners, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, 2015 | December 31, 2014 | ||||||
ASSETS | |||||||
Currents assets | |||||||
Cash | $ | 45,006,669 | $ | 29,314,883 | |||
Patient accounts receivable, net of allowance; 2015 - $3,628,029 and 2014 - $3,755,046 | 27,574,945 | 29,985,411 | |||||
Estimated amounts due from third-party payers | 23,318 | 972,145 | |||||
Prepaid expenses | 8,935,451 | 3,715,579 | |||||
Supply inventory and other | 1,044,263 | 1,036,469 | |||||
Total current assets | 82,584,646 | 65,024,487 | |||||
Property and Equipment, At cost | |||||||
Buildings and land recorded under capital leases | 194,142,528 | 194,142,528 | |||||
Facility equipment and furniture | 25,232,837 | 22,609,351 | |||||
Construction in progress | 135,645 | 39,994 | |||||
219,511,010 | 216,791,873 | ||||||
Less accumulated depreciation and amortization | 47,582,990 | 38,639,126 | |||||
171,928,020 | 178,152,747 | ||||||
Other Assets | |||||||
Deferred financing costs, net | 2,826,658 | 3,356,709 | |||||
Goodwill | 60,223,270 | 60,223,270 | |||||
Intangible assets, net | 6,703,569 | 7,067,000 | |||||
Due from affiliates | 868,003 | 868,003 | |||||
Other long-term assets | 995,075 | 1,078,096 | |||||
71,616,575 | 72,593,078 | ||||||
Total assets | $ | 326,129,241 | $ | 315,770,312 | |||
(Continued)
1.
Reliant Hospital Partners, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(UNAUDITED)
September 30, 2015 | December 31, 2014 | ||||||
Liabilities And Members’ Deficit | |||||||
Current liabilities | |||||||
Current maturities of long-term debt | $ | 3,862,500 | $ | 3,862,500 | |||
Current maturities of capital lease obligations | 2,532,378 | 2,363,175 | |||||
Accounts payable | 1,885,697 | 2,401,627 | |||||
Accrued bonuses | 26,680 | 1,298,316 | |||||
Accrued benefits | 3,458,540 | 2,985,431 | |||||
Accrued property taxes | 2,438,170 | 3,213,956 | |||||
Other accrued expenses | 6,218,799 | 4,962,167 | |||||
Estimated amounts due to third-party payors | 1,369,718 | 979,017 | |||||
Total current liabilities | 21,792,482 | 22,066,189 | |||||
Long-term Debt, Less Current Maturities | 147,740,625 | 150,637,500 | |||||
Capital Lease Obligations, Less Current Maturities | 184,143,306 | 186,238,796 | |||||
Other Long-term Liabilities | 7,413,710 | 6,981,679 | |||||
361,090,123 | 365,924,164 | ||||||
Commitments and Contingencies | |||||||
Members’ Deficit | |||||||
Reliant Hospital Partners, LLC’s deficit | (38,931,093 | ) | (53,416,858 | ) | |||
Noncontrolling interests | 3,970,211 | 3,263,006 | |||||
Total members’ deficit | (34,960,882 | ) | (50,153,852 | ) | |||
Total liabilities and members’ deficit | $ | 326,129,241 | $ | 315,770,312 | |||
See accompanying notes to condensed consolidated financial statements.
2.
Reliant Hospital Partners, LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(UNAUDITED)
2015 | 2014 | ||||||
Revenue | |||||||
Net patient service revenue | $ | 193,257,183 | $ | 182,498,952 | |||
Other | 1,176,148 | 1,294,670 | |||||
Total revenue | 194,433,331 | 183,793,622 | |||||
Expenses | |||||||
Salaries, wages, and benefits | 75,380,870 | 83,078,351 | |||||
Purchased services and professional fees | 15,594,872 | 11,781,746 | |||||
Other operating expenses | 19,916,774 | 20,932,357 | |||||
Rent expense | 8,860,538 | 8,933,623 | |||||
Depreciation and amortization | 9,318,562 | 9,774,290 | |||||
Fees to affiliates | 750,000 | 750,000 | |||||
Provision for doubtful accounts | 1,854,744 | 2,426,105 | |||||
Total expenses | 131,676,360 | 137,676,472 | |||||
Operating income | 62,756,971 | 46,117,150 | |||||
Interest expense | (19,229,338 | ) | (16,094,804 | ) | |||
Net income | $ | 43,527,633 | $ | 30,022,346 | |||
Amounts Attributable to Noncontrolling Interests | |||||||
Net income | $ | 43,527,633 | $ | 30,022,346 | |||
Less net income attributable to noncontrolling interests | 4,420,409 | 2,970,239 | |||||
Net income attributable to Reliant Hospital Partners, LLC | $ | 39,107,224 | $ | 27,052,107 | |||
See accompanying notes to condensed consolidated financial statements.
3.
Reliant Hospital Partners, LLC
CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS' (DEFICIT) EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(UNAUDITED)
Reliant Hospital Partners, LLC | Noncontrolling Interests | Total Members’ Deficit | |||||||||
Balance, January 1, 2015 | $ | (53,416,858 | ) | $ | 3,263,006 | $ | (50,153,852 | ) | |||
Unit-based compensation | 237,109 | — | 237,109 | ||||||||
Member distributions | (24,858,568 | ) | (2,608,920 | ) | (27,467,488 | ) | |||||
Reliant Hospital Partners, LLC purchase of noncontrolling interests and other redemption of interests | — | (1,104,284 | ) | (1,104,284 | ) | ||||||
Net income | 39,107,224 | 4,420,409 | 43,527,633 | ||||||||
Balance, September 30, 2015 | $ | (38,931,093 | ) | $ | 3,970,211 | $ | (34,960,882 | ) | |||
Reliant Hospital Partners, LLC | Noncontrolling Interests | Total Members’ Equity | |||||||||
Balance, January 1, 2014 | $ | 33,807,301 | $ | 6,976,493 | $ | 40,783,794 | |||||
Unit-based compensation | 263,195 | — | 263,195 | ||||||||
Member distributions | (33,917,906 | ) | (3,269,218 | ) | (37,187,124 | ) | |||||
Reliant Hospital Partners, LLC purchase of noncontrolling interests and other redemption of interests | (729,317 | ) | (474,605 | ) | (1,203,922 | ) | |||||
Net income | 27,052,107 | 2,970,239 | 30,022,346 | ||||||||
Balance, September 30, 2014 | $ | 26,475,380 | $ | 6,202,909 | $ | 32,678,289 | |||||
See accompanying notes to condensed consolidated financial statements.
4.
Reliant Hospital Partners, LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(UNAUDITED)
2015 | 2014 | ||||||
Operating activities | |||||||
Net income | $ | 43,527,633 | $ | 30,022,346 | |||
Items not requiring cash | |||||||
Depreciation and amortization of property and equipment | 8,955,131 | 9,410,859 | |||||
Amortization of intangible assets | 363,431 | 363,431 | |||||
Amortization of deferred financing costs | 530,051 | 1,571,058 | |||||
Provision for doubtful accounts | 1,854,744 | 2,426,105 | |||||
Unit-based compensation | 237,109 | 263,195 | |||||
Changes in | |||||||
Patient accounts receivable | 555,722 | (16,234,203 | ) | ||||
Estimated amounts due from third-party payers | 1,339,528 | 1,748,220 | |||||
Inventory, prepaid expenses and other | (5,144,644 | ) | (256,683 | ) | |||
Accounts payable | (515,930 | ) | (1,954,203 | ) | |||
Accrued expenses and other | 120,146 | 2,113,985 | |||||
Net cash provided by operating activities | 51,822,921 | 29,474,110 | |||||
Investing activities | |||||||
Purchase of property and equipment | (2,736,201 | ) | (913,916 | ) | |||
Net cash used in investing activities | (2,736,201 | ) | (913,916 | ) | |||
Financing activities | |||||||
Distributions to members | (27,467,488 | ) | (37,187,124 | ) | |||
Reliant Hospital Partners, LLC purchase of noncontrolling interests and other redemption of interests | (1,104,284 | ) | (1,203,922 | ) | |||
Proceeds from issuance of long-term debt | — | 124,667,621 | |||||
Payment of deferred financing costs | — | (3,449,024 | ) | ||||
Payments on line of credit | — | (11,000,000 | ) | ||||
Payments on long-term debt | (2,896,875 | ) | (15,167,621 | ) | |||
Payments on capital lease obligations | (1,926,287 | ) | (1,828,422 | ) | |||
Net cash (used in) provided by financing activities | (33,394,934 | ) | 54,831,508 | ||||
Increase in Cash | 15,691,786 | 83,391,702 | |||||
Cash, Beginning of Period | 29,314,883 | 33,368,293 | |||||
Cash, End of Period | $ | 45,006,669 | $ | 116,759,995 | |||
Supplemental Cash Flows Information | |||||||
Interest paid | $ | 18,731,007 | $ | 14,711,319 | |||
Supplemental Disclosures of Noncash Investing Activities | |||||||
Payables incurred for property and equipment | $ | 34,826 | $ | 219,192 | |||
See accompanying notes to condensed consolidated financial statements.
5.
Reliant Hospital Partners, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: | Nature of Operations and Summary of Significant Accounting Policies |
Nature of Operations and Principles of Consolidation
Reliant Hospital Partners, LLC (RHP) is a Texas limited liability company. RHP and its subsidiaries (Company) operate inpatient rehabilitation hospitals providing physical, occupational and speech therapy services on an inpatient and outpatient basis at eight hospitals in Texas, two hospitals in Massachusetts and one hospital in Ohio. The condensed consolidated financial statements include the accounts of RHP and its subsidiaries. All significant intercompany transactions and balances have been eliminated.
The Company operates seven of its hospitals through multiple tier partnership arrangements in which the hospital operating entity is in a separate partnership and whose owners consist of physician limited partners with RHP controlling the general partnership of each entity and varying amounts of limited partner interests. The term of each partnership is 50 years, commencing on various dates. The partnership agreements contain provisions, which limit the sale, assignment or transfer of a partner’s interest in the partnerships.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of RHP should be read in conjunction with the consolidated financial statements and accompanying notes of RHP’s consolidated financial statements as of and for the year ended December 31, 2014. The unaudited condensed consolidated financial statements have been prepared consistent with the rules and regulations of the United States Securities and Exchange Commission applicable to interim financial information. Certain information and note disclosures included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted in these interim statements, as allowed by such SEC rules and regulations. The condensed consolidated balance sheet as of December 31, 2014 has been derived from audited financial statements. However, we believe the disclosures are adequate to make the information presented not misleading.
The unaudited results of operations for the interim periods shown in these financial statements are not necessarily indicative of operating results for the entire year. In our opinion, the accompanying condensed consolidated financial statements recognize all adjustments of a normal recurring nature considered necessary to fairly state the financial position, results of operations, and cash flows for each interim period presented.
Net Patient Service Revenue
The Company has agreements with third-party payers that provide for payments to the Company at amounts different from its established rates. Net patient service revenue is reported at the estimated net realizable amounts from patients, third-party payers and others for services rendered and includes estimated retroactive revenue adjustments. Retroactive adjustments are considered in the recognition of revenue on an estimated basis in the period the related services are rendered and such estimated amounts are revised in future periods as adjustments become known.
6.
Reliant Hospital Partners, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Income Taxes
The Company is not directly subject to income taxes under the provisions of the Internal Revenue Code and applicable state laws. Therefore, taxable income or loss is reported to the individual members for inclusion in their respective tax returns and no provision for federal income taxes are included in the accompanying condensed consolidated statements of operations.
The Company is subject to state income taxes, including the Texas margin tax. These taxes are not significant for the nine months ended September 30, 2015 and 2014.
Note 2: | Net Patient Service Revenue |
Revenues consist primarily of net patient service revenue that is recorded based on established billing rates less contractual adjustments.
Inpatient and outpatient rehabilitation services rendered to Medicare and Medicaid program beneficiaries are paid at prospectively determined rates. These rates vary according to a patient classification system that is based on clinical and diagnostic factors. The Company is reimbursed for certain services at tentative rates with final settlement determined after submission of annual cost reports and audits thereof by the Medicare and Medicaid administrative contractors.
Approximately 75% of net patient service revenue is from participation in the Medicare program during the nine months ended September 30, 2015 and 2014. Net patient service revenue from participation in the Medicaid program has not been a significant source of revenue for the Company.
Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation and change. As a result, it is reasonably possible that recorded estimates will change materially in the near term.
The Company has also entered into payment agreements with certain commercial insurance carriers, health maintenance organizations and preferred provider organizations. The basis for payment to the Company under these agreements includes prospectively determined rates per discharge, discounts from established charges and prospectively determined daily rates.
Note 3: | Concentration of Credit Risk |
The Company grants credit without collateral to its patients, most of who reside in areas near the Company’s hospitals and are insured under third-party payer agreements. Substantially all of the Company’s net receivables are due from third-party payers. The mix of net receivables from third-party payers at September 30, 2015 is:
Medicare | 76 | % |
Medicaid | 5 | % |
Blue Cross Blue Shield | 6 | % |
Other third-party payers | 13 | % |
100 | % | |
7.
Reliant Hospital Partners, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 4: | Related Party Transactions |
RHP has an agreement with Nautic Partners VI, L.P. (Nautic), which is a member of RHP’s ultimate parent, Reliant Holding Company, LLC (Holding), to pay management fees of $500,000 annually, until actual annualized or budgeted EBITDA equals or exceeds $20,000,000, when the management fee increases to $900,000 annually. The Company’s EBITDA exceeded $20,000,000 during the nine months ended September 30, 2015 and 2014. Nautic received $675,000 of the management fee during the nine months ended September 30, 2015 and 2014 and $75,000 was paid to board consultants during the nine months ended September 30, 2015 and 2014. Additionally, the Company reimburses certain travel costs of Nautic. RHP paid travel costs totaling $21,363 and $25,111 to Nautic during the nine months ended September 30, 2015 and 2014, respectively, under this agreement.
Nautic is also named in the lawsuit discussed in Note 5. The Company and Nautic have agreed to share in certain legal costs related to the lawsuit. Based on the allocation proposed by Nautic’s insurer, the Company has paid and accrued obligations to various firms that include amounts to be reimbursed by Nautic. At September 30, 2015 and December 31, 2014, approximately $868,000 is recorded as a receivable from Nautic included in due from affiliates in the accompanying consolidated balance sheet and as an offset to legal expense.
Note 5: | Litigation |
A lawsuit has been brought against RHP and other parties in Dallas County, Texas, District Court. The plaintiff alleges a number of causes of actions and seeks, among other things, monetary damages and an injunction prohibiting RHP from pursuing any expansion of services in certain markets. RHP has denied any wrongdoing and is defending the case vigorously. On November 18, 2011, the court awarded monetary sanctions against certain former executives of RHP. The Court has not awarded any sanctions against RHP. No potential range of loss, if any, can be estimated. Accordingly, an estimated liability has not been recorded in the accompanying condensed consolidated financial statements. A portion of the Company’s legal expenses were recoverable based on the Company’s insurance policies in effect. As of September 30, 2015, any additional legal expenses or settlements will not be recovered as the maximum insurance payment was fully recovered.
In the normal course of business, the Company is, from time to time, subject to allegations that may or do result in litigation. Some of these allegations are in areas not covered by commercial insurance; for example, allegations regarding employment practices or performance of contracts. The Company evaluates such allegations by conducting investigations to determine the validity of each potential claim. Based upon the advice of counsel, management records an estimate of the amount of ultimate expected loss, if any, for each of these matters. No provisions for potential losses were accrued at September 30, 2015. Events could occur that would cause the estimate of ultimate loss to differ materially in the near term.
8.
Reliant Hospital Partners, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 6: | Subsequent Event |
On October 1, 2015, HealthSouth Corporation, a Delaware corporation, and it’s newly formed 100%-owned subsidiary, HealthSouth Acquisition Holdings, LLC, a Delaware limited liability company, completed its previously announced acquisition of the operations of the Company and affiliated entities. At closing, one Company entity had a remaining minority limited partner interest of 0.5%. The cash purchase price was reduced by the estimated fair value of this interest. The total consideration delivered at closing was approximately $730 million in cash, which amount includes payment of outstanding borrowings, transaction expenses, and an escrow reserve and is subject to working capital and other adjustments.
Note 7: | Condensed Consolidating Financial Information |
Due to the above acquisition and the requirement under HealthSouth's credit agreement that certain wholly-owned subsidiaries guarantee its debt, the accompanying condensed consolidating financial information for the Company has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.” The following tables present the condensed consolidating financial information for RHP, which was not included in the acquisition and is therefore not a guarantor nor an issuer of the debt that has been issued by HealthSouth Corporation (the “Parent”), the subsidiaries of RHP that are now 100% owned by HealthSouth Corporation and are guarantors (the “Guarantor Subsidiaries”), and the subsidiary of RHP that had a remaining minority limited partner interest after the acquisition and is a nonguarantor (the “Nonguarantor Subsidiary”), together with elimination adjustments, as of and for the periods indicated. All guarantees of the Guarantor Subsidiaries are full and unconditional and joint and several, subject to certain customary conditions for release.
Periodically, certain subsidiaries of RHP make distributions of available cash to RHP. When made, these distributions impact the Investments in consolidated affiliates and Reliant Hospital Partners, LLC's deficit line items in the accompanying condensed consolidating balance sheet but have no impact on the consolidated financial statements of RHP. RHP’s long-term debt was not assumed by HealthSouth Corporation in the acquisition discussed above and was paid off with proceeds from the transaction. In addition, for the Guarantor Subsidiaries presented in the accompanying condensed consolidating financial information, all of the noncontrolling interests were subsequently acquired by HealthSouth Corporation.
9.
Reliant Hospital Partners, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||
As of September 30, 2015 | |||||||||||||||||||
Parent | Guarantor Subsidiaries | Nonguarantor Subsidiary | Eliminating Entries | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Currents assets | |||||||||||||||||||
Cash | $ | 2,150,253 | $ | 36,131,486 | $ | 6,724,930 | $ | — | $ | 45,006,669 | |||||||||
Patient accounts receivable, net | — | 24,554,229 | 3,020,716 | — | 27,574,945 | ||||||||||||||
Estimated amounts due from third-party payers | — | 23,318 | — | — | 23,318 | ||||||||||||||
Prepaid expenses | 5,420,909 | 3,279,761 | 234,781 | — | 8,935,451 | ||||||||||||||
Supply inventory and other | 100,688 | 913,703 | 86,699 | (56,827 | ) | 1,044,263 | |||||||||||||
Total current assets | 7,671,850 | 64,902,497 | 10,067,126 | (56,827 | ) | 82,584,646 | |||||||||||||
Property and Equipment, At cost | |||||||||||||||||||
Buildings and land recorded under capital leases | — | 168,142,528 | 26,000,000 | — | 194,142,528 | ||||||||||||||
Facility equipment and furniture | 349,568 | 23,250,503 | 1,632,766 | — | 25,232,837 | ||||||||||||||
Construction in progress | — | 135,645 | — | — | 135,645 | ||||||||||||||
349,568 | 191,528,676 | 27,632,766 | — | 219,511,010 | |||||||||||||||
Less accumulated depreciation and amortization | 212,205 | 41,258,248 | 6,112,537 | — | 47,582,990 | ||||||||||||||
137,363 | 150,270,428 | 21,520,229 | — | 171,928,020 | |||||||||||||||
Other Assets | |||||||||||||||||||
Deferred financing costs, net | 436,545 | 2,197,123 | 192,990 | — | 2,826,658 | ||||||||||||||
Goodwill | — | 46,336,141 | 13,887,129 | — | 60,223,270 | ||||||||||||||
Intangible assets, net | 3,568,069 | 3,135,500 | — | — | 6,703,569 | ||||||||||||||
Due from affiliates | 868,003 | — | — | — | 868,003 | ||||||||||||||
Other long-term assets | 35,862 | 952,699 | 6,514 | — | 995,075 | ||||||||||||||
Investments in consolidated affiliates | (15,502,572 | ) | — | — | 15,502,572 | — | |||||||||||||
(10,594,093 | ) | 52,621,463 | 14,086,633 | 15,502,572 | 71,616,575 | ||||||||||||||
Total assets | $ | (2,784,880 | ) | $ | 267,794,388 | $ | 45,673,988 | $ | 15,445,745 | $ | 326,129,241 | ||||||||
10.
Reliant Hospital Partners, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) | |||||||||||||||||||
As of September 30, 2015 | |||||||||||||||||||
Parent | Guarantor Subsidiaries | Nonguarantor Subsidiary | Eliminating Entries | Consolidated | |||||||||||||||
Liabilities And Members’ Deficit | |||||||||||||||||||
Current liabilities | |||||||||||||||||||
Current maturities of long-term debt | $ | — | $ | 3,575,351 | $ | 287,149 | $ | — | $ | 3,862,500 | |||||||||
Current maturities of capital lease obligations | — | 2,125,027 | 407,351 | — | 2,532,378 | ||||||||||||||
Accounts payable | 224,294 | 1,546,691 | 114,712 | — | 1,885,697 | ||||||||||||||
Accrued bonuses | — | 26,680 | — | — | 26,680 | ||||||||||||||
Accrued benefits | 49,084 | 3,073,601 | 335,855 | — | 3,458,540 | ||||||||||||||
Accrued property taxes | 4,725 | 2,193,367 | 240,078 | — | 2,438,170 | ||||||||||||||
Other accrued expenses | 1,918,376 | 3,938,694 | 418,556 | (56,827 | ) | 6,218,799 | |||||||||||||
Estimated amounts due to third-party payers | — | 1,259,593 | 110,125 | — | 1,369,718 | ||||||||||||||
Total current liabilities | 2,196,479 | 17,739,004 | 1,913,826 | (56,827 | ) | 21,792,482 | |||||||||||||
Long-term Debt, Less Current Maturities | 33,878,900 | 106,564,235 | 7,297,490 | — | 147,740,625 | ||||||||||||||
Capital Lease Obligations, Less Current Maturities | — | 160,494,546 | 23,648,760 | — | 184,143,306 | ||||||||||||||
Other Long-term Liabilities | 70,834 | 7,342,876 | — | — | 7,413,710 | ||||||||||||||
36,146,213 | 292,140,661 | 32,860,076 | (56,827 | ) | 361,090,123 | ||||||||||||||
Commitments and Contingencies | |||||||||||||||||||
Members’ Deficit | |||||||||||||||||||
Reliant Hospital Partners, LLC’s deficit | (38,931,093 | ) | (26,681,107 | ) | 11,178,535 | 15,502,572 | (38,931,093 | ) | |||||||||||
Noncontrolling interests | — | 2,334,834 | 1,635,377 | — | 3,970,211 | ||||||||||||||
Total members’ deficit | (38,931,093 | ) | (24,346,273 | ) | 12,813,912 | 15,502,572 | (34,960,882 | ) | |||||||||||
Total liabilities and members’ deficit | $ | (2,784,880 | ) | $ | 267,794,388 | $ | 45,673,988 | $ | 15,445,745 | $ | 326,129,241 | ||||||||
11.
Reliant Hospital Partners, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||
As of December 31, 2014 | |||||||||||||||||||
Parent | Guarantor Subsidiaries | Nonguarantor Subsidiary | Eliminating Entries | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Currents assets | |||||||||||||||||||
Cash | $ | 3,813,656 | $ | 22,980,397 | $ | 2,520,830 | $ | — | $ | 29,314,883 | |||||||||
Patient accounts receivable, net | — | 27,618,126 | 2,367,285 | — | 29,985,411 | ||||||||||||||
Estimated amounts due from third-party payers | — | 794,022 | 178,123 | — | 972,145 | ||||||||||||||
Prepaid expenses | 270,282 | 3,200,716 | 244,581 | — | 3,715,579 | ||||||||||||||
Supply inventory and other | 1,552,962 | 985,447 | 49,685 | (1,551,625 | ) | 1,036,469 | |||||||||||||
Total current assets | 5,636,900 | 55,578,708 | 5,360,504 | (1,551,625 | ) | 65,024,487 | |||||||||||||
Property and Equipment, At cost | |||||||||||||||||||
Buildings and land recorded under capital leases | — | 168,142,528 | 26,000,000 | — | 194,142,528 | ||||||||||||||
Facility equipment and furniture | 347,284 | 20,634,008 | 1,628,059 | — | 22,609,351 | ||||||||||||||
Construction in progress | 10,269 | 29,725 | — | — | 39,994 | ||||||||||||||
357,553 | 188,806,261 | 27,628,059 | — | 216,791,873 | |||||||||||||||
Less accumulated depreciation and amortization | 171,894 | 33,341,527 | 5,125,705 | — | 38,639,126 | ||||||||||||||
185,659 | 155,464,734 | 22,502,354 | — | 178,152,747 | |||||||||||||||
Other Assets | |||||||||||||||||||
Deferred financing costs, net | 518,450 | 2,609,083 | 229,176 | — | 3,356,709 | ||||||||||||||
Goodwill | — | 46,336,141 | 13,887,129 | — | 60,223,270 | ||||||||||||||
Intangible assets, net | 3,741,000 | 3,326,000 | — | — | 7,067,000 | ||||||||||||||
Due from affiliates | 868,003 | — | — | — | 868,003 | ||||||||||||||
Other long-term assets | 87,290 | 979,492 | 11,314 | — | 1,078,096 | ||||||||||||||
Investments in consolidated affiliates | (28,541,184 | ) | — | — | 28,541,184 | — | |||||||||||||
(23,326,441 | ) | 53,250,716 | 14,127,619 | 28,541,184 | 72,593,078 | ||||||||||||||
Total assets | $ | (17,503,882 | ) | $ | 264,294,158 | $ | 41,990,477 | $ | 26,989,559 | $ | 315,770,312 | ||||||||
12.
Reliant Hospital Partners, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) | |||||||||||||||||||
As of December 31, 2014 | |||||||||||||||||||
Parent | Guarantor Subsidiaries | Nonguarantor Subsidiary | Eliminating Entries | Consolidated | |||||||||||||||
Liabilities And Members’ Deficit | |||||||||||||||||||
Current liabilities | |||||||||||||||||||
Current maturities of long-term debt | $ | — | $ | 3,575,351 | $ | 287,149 | $ | — | $ | 3,862,500 | |||||||||
Current maturities of capital lease obligations | — | 1,982,020 | 381,155 | — | 2,363,175 | ||||||||||||||
Accounts payable | 326,049 | 1,965,935 | 109,643 | — | 2,401,627 | ||||||||||||||
Accrued bonuses | — | 1,203,737 | 94,579 | — | 1,298,316 | ||||||||||||||
Accrued benefits | 425,256 | 2,252,386 | 307,789 | — | 2,985,431 | ||||||||||||||
Accrued property taxes | 5,995 | 2,886,351 | 321,610 | — | 3,213,956 | ||||||||||||||
Other accrued expenses | 987,434 | 5,078,966 | 447,392 | (1,551,625 | ) | 4,962,167 | |||||||||||||
Estimated amounts due to third-party payers | — | 979,017 | — | — | 979,017 | ||||||||||||||
Total current liabilities | 1,744,734 | 19,923,763 | 1,949,317 | (1,551,625 | ) | 22,066,189 | |||||||||||||
Long-term Debt, Less Current Maturities | 34,123,900 | 109,000,749 | 7,512,851 | — | 150,637,500 | ||||||||||||||
Capital Lease Obligations, Less Current Maturities | — | 162,254,308 | 23,984,488 | — | 186,238,796 | ||||||||||||||
Other Long-term Liabilities | 44,342 | 6,937,337 | — | — | 6,981,679 | ||||||||||||||
35,912,976 | 298,116,157 | 33,446,656 | (1,551,625 | ) | 365,924,164 | ||||||||||||||
Commitments and Contingencies | |||||||||||||||||||
Members’ Deficit | |||||||||||||||||||
Reliant Hospital Partners, LLC’s deficit | (53,416,858 | ) | (36,231,703 | ) | 7,690,519 | 28,541,184 | (53,416,858 | ) | |||||||||||
Noncontrolling interests | — | 2,409,704 | 853,302 | — | 3,263,006 | ||||||||||||||
Total members’ deficit | (53,416,858 | ) | (33,821,999 | ) | 8,543,821 | 28,541,184 | (50,153,852 | ) | |||||||||||
Total liabilities and members’ deficit | $ | (17,503,882 | ) | $ | 264,294,158 | $ | 41,990,477 | $ | 26,989,559 | $ | 315,770,312 | ||||||||
13.
Reliant Hospital Partners, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
For the Nine Months Ended September 30, 2015 | |||||||||||||||||||
Parent | Guarantor Subsidiaries | Nonguarantor Subsidiary | Eliminating Entries | Consolidated | |||||||||||||||
Revenue | |||||||||||||||||||
Net patient service revenue | $ | — | $ | 172,314,935 | $ | 20,942,248 | $ | — | $ | 193,257,183 | |||||||||
Management fee revenue | 9,570,463 | — | — | (9,570,463 | ) | — | |||||||||||||
Other | — | 1,156,997 | 19,151 | — | 1,176,148 | ||||||||||||||
Total revenue | 9,570,463 | 173,471,932 | 20,961,399 | (9,570,463 | ) | 194,433,331 | |||||||||||||
Expenses | |||||||||||||||||||
Salaries, wages, and benefits | 3,657,384 | 64,804,805 | 6,918,681 | — | 75,380,870 | ||||||||||||||
Purchased services and professional fees | 4,851,352 | 9,910,068 | 833,452 | — | 15,594,872 | ||||||||||||||
Other operating expenses | 255,813 | 17,975,040 | 1,685,921 | — | 19,916,774 | ||||||||||||||
Rent expense | 77,964 | 8,737,530 | 45,044 | — | 8,860,538 | ||||||||||||||
Depreciation and amortization | 213,242 | 8,118,488 | 986,832 | — | 9,318,562 | ||||||||||||||
Fees to affiliates | 750,000 | — | — | — | 750,000 | ||||||||||||||
Fees | — | 8,532,753 | 1,037,710 | (9,570,463 | ) | — | |||||||||||||
Provision for doubtful accounts | — | 1,666,702 | 188,042 | — | 1,854,744 | ||||||||||||||
Total expenses | 9,805,755 | 119,745,386 | 11,695,682 | (9,570,463 | ) | 131,676,360 | |||||||||||||
Operating income | (235,292 | ) | 53,726,546 | 9,265,717 | — | 62,756,971 | |||||||||||||
Interest expense | (1,595,453 | ) | (15,638,261 | ) | (1,995,624 | ) | — | (19,229,338 | ) | ||||||||||
Equity in net income of consolidated affiliates | 40,937,967 | — | — | (40,937,967 | ) | — | |||||||||||||
Net income | $ | 39,107,222 | $ | 38,088,285 | $ | 7,270,093 | $ | (40,937,967 | ) | $ | 43,527,633 | ||||||||
Amounts Attributable to Noncontrolling Interests | |||||||||||||||||||
Net income | $ | 39,107,222 | $ | 38,088,285 | $ | 7,270,093 | $ | (40,937,967 | ) | $ | 43,527,633 | ||||||||
Less net income attributable to noncontrolling interests | — | 2,802,829 | 1,617,580 | — | 4,420,409 | ||||||||||||||
Net income attributable to Reliant Hospital Partners, LLC | $ | 39,107,222 | $ | 35,285,456 | $ | 5,652,513 | $ | (40,937,967 | ) | $ | 39,107,224 | ||||||||
14.
Reliant Hospital Partners, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
For the Nine Months Ended September 30, 2014 | |||||||||||||||||||
Parent | Guarantor Subsidiaries | Nonguarantor Subsidiary | Eliminating Entries | Consolidated | |||||||||||||||
Revenue | |||||||||||||||||||
Net patient service revenue | $ | — | $ | 164,965,569 | $ | 17,533,383 | $ | — | $ | 182,498,952 | |||||||||
Management fee revenue | 9,004,923 | — | — | (9,004,923 | ) | — | |||||||||||||
Other | — | 1,278,382 | 15,928 | — | 1,294,670 | ||||||||||||||
Total revenue | 9,004,923 | 166,243,951 | 17,549,311 | (9,004,923 | ) | 183,793,622 | |||||||||||||
Expenses | |||||||||||||||||||
Salaries, wages, and benefits | 2,748,511 | 73,734,104 | 6,595,736 | — | 83,078,351 | ||||||||||||||
Purchased services and professional fees | 970,642 | 9,914,618 | 896,486 | — | 11,781,746 | ||||||||||||||
Other operating expenses | 192,611 | 18,998,016 | 1,741,370 | — | 20,932,357 | ||||||||||||||
Rent expense | 72,499 | 8,861,120 | 4 | — | 8,933,623 | ||||||||||||||
Depreciation and amortization | 214,651 | 8,525,606 | 1,034,033 | — | 9,774,290 | ||||||||||||||
Fees to affiliates | 750,000 | — | — | — | 750,000 | ||||||||||||||
Fees | — | 8,135,961 | 868,962 | (9,004,923 | ) | — | |||||||||||||
Provision for doubtful accounts | — | 2,271,966 | 154,139 | — | 2,426,105 | ||||||||||||||
Total expenses | 4,948,914 | 130,441,391 | 11,290,730 | (9,004,923 | ) | 137,676,472 | |||||||||||||
Operating income | 4,056,009 | 35,802,560 | 6,258,581 | — | 46,117,150 | ||||||||||||||
Interest expense | (2,155,816 | ) | (12,255,669 | ) | (1,683,319 | ) | — | (16,094,804 | ) | ||||||||||
Equity in net income of consolidated affiliates | 25,151,913 | — | — | (25,151,913 | ) | — | |||||||||||||
Net income | $ | 27,052,106 | $ | 23,546,891 | $ | 4,575,262 | $ | (25,151,913 | ) | $ | 30,022,346 | ||||||||
Amounts Attributable to Noncontrolling Interests | |||||||||||||||||||
Net income | $ | 27,052,106 | $ | 23,546,891 | $ | 4,575,262 | $ | (25,151,913 | ) | $ | 30,022,346 | ||||||||
Less net income attributable to noncontrolling interests | — | 1,947,025 | 1,023,214 | — | 2,970,239 | ||||||||||||||
Net income attributable to Reliant Hospital Partners, LLC | $ | 27,052,106 | $ | 21,599,866 | $ | 3,552,048 | $ | (25,151,913 | ) | $ | 27,052,107 | ||||||||
15.
Reliant Hospital Partners, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||
For the Nine Months Ended September 30, 2015 | |||||||||||||||||||
Parent | Guarantor Subsidiaries | Nonguarantor Subsidiary | Eliminating Entries | Consolidated | |||||||||||||||
Operating activities | |||||||||||||||||||
Net income | $ | 39,107,222 | $ | 38,088,285 | $ | 7,270,093 | $ | (40,937,967 | ) | $ | 43,527,633 | ||||||||
Items not requiring cash | |||||||||||||||||||
Depreciation and amortization of property and equipment | 40,311 | 7,927,988 | 986,832 | — | 8,955,131 | ||||||||||||||
Amortization of intangible assets | 172,931 | 190,500 | — | — | 363,431 | ||||||||||||||
Amortization of deferred financing costs | 81,905 | 411,960 | 36,186 | — | 530,051 | ||||||||||||||
Provision for doubtful accounts | — | 1,666,702 | 188,042 | — | 1,854,744 | ||||||||||||||
Distributions from subsidiaries | 29,003,640 | — | — | (29,003,640 | ) | — | |||||||||||||
Unit-based compensation | 237,109 | — | — | — | 237,109 | ||||||||||||||
Equity in net income of consolidated affiliates | (40,937,967 | ) | — | — | 40,937,967 | — | |||||||||||||
Changes in | |||||||||||||||||||
Patient accounts receivable | — | 1,397,195 | (841,473 | ) | — | 555,722 | |||||||||||||
Estimated amounts due from third-party payers | — | 1,161,405 | 178,123 | — | 1,339,528 | ||||||||||||||
Inventory, prepaid expenses and other | (3,646,925 | ) | 19,493 | (22,414 | ) | (1,494,798 | ) | (5,144,644 | ) | ||||||||||
Accounts payable | (101,755 | ) | (419,244 | ) | 5,069 | — | (515,930 | ) | |||||||||||
Accrued expenses and other | 579,992 | (1,887,888 | ) | (66,756 | ) | 1,494,798 | 120,146 | ||||||||||||
Net cash provided by operating activities | 24,536,463 | 48,556,396 | 7,733,702 | (29,003,640 | ) | 51,822,921 | |||||||||||||
Investing activities | |||||||||||||||||||
Purchase of property and equipment | (2,284 | ) | (2,729,210 | ) | (4,707 | ) | — | (2,736,201 | ) | ||||||||||
Net cash used in investing activities | (2,284 | ) | (2,729,210 | ) | (4,707 | ) | — | (2,736,201 | ) | ||||||||||
Financing activities | |||||||||||||||||||
Distributions to members | (24,858,566 | ) | (1,943,317 | ) | (665,605 | ) | — | (27,467,488 | ) | ||||||||||
Reliant Hospital Partners, LLC purchase of noncontrolling interests and other redemption of interests | (1,104,284 | ) | — | — | — | (1,104,284 | ) | ||||||||||||
Payments on long-term debt | (2,896,875 | ) | — | — | — | (2,896,875 | ) | ||||||||||||
Payments on capital lease obligations | — | (1,616,755 | ) | (309,532 | ) | — | (1,926,287 | ) | |||||||||||
Distributions to Parent | — | (26,669,244 | ) | (2,334,396 | ) | 29,003,640 | — | ||||||||||||
Change in intercompany advances | 2,662,143 | (2,446,781 | ) | (215,362 | ) | — | — | ||||||||||||
Net cash used in financing activities | (26,197,582 | ) | (32,676,097 | ) | (3,524,895 | ) | 29,003,640 | (33,394,934 | ) | ||||||||||
(Decrease) Increase in Cash | (1,663,403 | ) | 13,151,089 | 4,204,100 | — | 15,691,786 | |||||||||||||
Cash, Beginning of Period | 3,813,656 | 22,980,397 | 2,520,830 | — | 29,314,883 | ||||||||||||||
Cash, End of Period | $ | 2,150,253 | $ | 36,131,486 | $ | 6,724,930 | $ | — | $ | 45,006,669 | |||||||||
Supplemental Disclosures of Noncash Investing Activities | |||||||||||||||||||
Payables incurred for property and equipment | $ | — | $ | 34,826 | $ | — | $ | — | $ | 34,826 | |||||||||
16.
Reliant Hospital Partners, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||
For the Nine Months Ended September 30, 2014 | |||||||||||||||||||
Parent | Guarantor Subsidiaries | Nonguarantor Subsidiary | Eliminating Entries | Consolidated | |||||||||||||||
Operating activities | |||||||||||||||||||
Net income | $ | 27,052,106 | $ | 23,546,891 | $ | 4,575,262 | $ | (25,151,913 | ) | $ | 30,022,346 | ||||||||
Items not requiring cash | |||||||||||||||||||
Depreciation and amortization of property and equipment | 41,720 | 8,335,106 | 1,034,033 | — | 9,410,859 | ||||||||||||||
Amortization of intangible assets | 172,931 | 190,500 | — | — | 363,431 | ||||||||||||||
Amortization of deferred financing costs | 1,346,932 | 213,447 | 10,679 | — | 1,571,058 | ||||||||||||||
Provision for doubtful accounts | — | 2,271,966 | 154,139 | — | 2,426,105 | ||||||||||||||
Distributions from subsidiaries | 28,434,961 | — | — | (28,434,961 | ) | — | |||||||||||||
Unit-based compensation | 263,195 | — | — | — | 263,195 | ||||||||||||||
Equity in net income of consolidated affiliates | (25,151,913 | ) | — | — | 25,151,913 | — | |||||||||||||
Changes in | |||||||||||||||||||
Patient accounts receivable | — | (16,313,359 | ) | 79,156 | — | (16,234,203 | ) | ||||||||||||
Estimated amounts due from third-party payers | — | 1,637,098 | 111,122 | — | 1,748,220 | ||||||||||||||
Inventory, prepaid expenses and other | 770,630 | 281,628 | 16,301 | (1,325,242 | ) | (256,683 | ) | ||||||||||||
Accounts payable | (533,914 | ) | 261,618 | (1,681,907 | ) | — | (1,954,203 | ) | |||||||||||
Accrued expenses and other | (1,028,456 | ) | 2,342,440 | (525,241 | ) | 1,325,242 | 2,113,985 | ||||||||||||
Net cash provided by operating activities | 31,368,192 | 22,767,335 | 3,773,544 | (28,434,961 | ) | 29,474,110 | |||||||||||||
Investing activities | |||||||||||||||||||
Purchase of property and equipment | (31,040 | ) | (856,527 | ) | (26,349 | ) | — | (913,916 | ) | ||||||||||
Net cash used in investing activities | (31,040 | ) | (856,527 | ) | (26,349 | ) | — | (913,916 | ) | ||||||||||
Financing activities | |||||||||||||||||||
Distributions to members | (33,917,906 | ) | (1,719,131 | ) | (1,550,087 | ) | — | (37,187,124 | ) | ||||||||||
Reliant Hospital Partners, LLC purchase of noncontrolling interests and other redemption of interests | (738,863 | ) | (465,059 | ) | — | — | (1,203,922 | ) | |||||||||||
Proceeds from issuance of long-term debt | 124,667,621 | — | — | — | 124,667,621 | ||||||||||||||
Payment of deferred financing costs | (3,449,024 | ) | — | — | — | (3,449,024 | ) | ||||||||||||
Payments on line of credit | (11,000,000 | ) | — | — | — | (11,000,000 | ) | ||||||||||||
Payments on long-term debt | (15,167,621 | ) | — | — | — | (15,167,621 | ) | ||||||||||||
Payments on capital lease obligations | — | (1,581,008 | ) | (247,414 | ) | — | (1,828,422 | ) | |||||||||||
Distributions to Parent | — | (23,021,328 | ) | (5,413,633 | ) | 28,434,961 | — | ||||||||||||
Change in intercompany advances | 16,478,087 | (14,278,087 | ) | (2,200,000 | ) | — | — | ||||||||||||
Net cash provided by (used in) financing activities | 76,872,294 | (41,064,613 | ) | (9,411,134 | ) | 28,434,961 | 54,831,508 | ||||||||||||
Increase (Decrease) in Cash | 108,209,446 | (19,153,805 | ) | (5,663,939 | ) | — | 83,391,702 | ||||||||||||
Cash, Beginning of Period | 2,593,410 | 24,726,109 | 6,048,774 | — | 33,368,293 | ||||||||||||||
Cash, End of Period | $ | 110,802,856 | $ | 5,572,304 | $ | 384,835 | $ | — | $ | 116,759,995 | |||||||||
Supplemental Disclosures of Noncash Investing Activities | |||||||||||||||||||
Payables incurred for property and equipment | $ | — | $ | 219,192 | $ | — | $ | — | $ | 219,192 | |||||||||
17.