Quorum Health Corporation Announces Third Quarter 2017 Operating Results
Net operating revenues for the three months ended
Adjusted EBITDA for the three months ended
Net operating revenues for the nine months ended
Adjusted EBITDA for the nine months ended
The Company had combined proceeds from these six divestitures of
On
Commenting on the results,
Financial Outlook
The Company’s updated financial outlook for the year ending
The Company expects net operating revenues for the year ending
A reconciliation of the Company’s projected 2017 Adjusted EBITDA, and Adjusted EBITDA, Adjusted for Divestitures, each a forward-looking non-GAAP financial measure, to net income (loss), the most directly comparable
About
The principal business of
The Company’s headquarters are located in
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME (LOSS) (In Thousands, Except Earnings per Share and Shares) |
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Three Months Ended |
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2017 | 2016 | |||||||||||||||||
% of | % of | |||||||||||||||||
$ Amount | Revenues | $ Amount | Revenues | |||||||||||||||
Operating revenues, net of contractual allowances and discounts (a) | $ | 557,847 | $ | 612,551 | ||||||||||||||
Provision for bad debts | 58,545 | 68,612 | ||||||||||||||||
Net operating revenues | 499,302 | 100.0 | % | 543,939 | 100.0 | % | ||||||||||||
Operating costs and expenses: | ||||||||||||||||||
Salaries and benefits(b) | 251,780 | 50.4 | % | 266,812 | 49.1 | % | ||||||||||||
Supplies | 58,657 | 11.7 | % | 64,013 | 11.8 | % | ||||||||||||
Other operating expenses (a) | 145,357 | 29.2 | % | 154,878 | 28.3 | % | ||||||||||||
Depreciation and amortization | 20,735 | 4.2 | % | 28,234 | 5.2 | % | ||||||||||||
Rent | 12,377 | 2.5 | % | 12,823 | 2.4 | % | ||||||||||||
Electronic health records incentives earned | (287 | ) | (0.1 | )% | (1,336 | ) | (0.2 | )% | ||||||||||
Legal, professional and settlement costs | 2,050 | 0.4 | % | 488 | 0.1 | % | ||||||||||||
Impairment of long-lived assets and goodwill | 5,261 | 1.1 | % | — | — | % | ||||||||||||
Loss (gain) on sale of hospitals, net | 79 | — | % | — | — | % | ||||||||||||
Transaction costs related to the Spin-off | 173 | — | % | 532 | 0.1 | % | ||||||||||||
Total operating costs and expenses | 496,182 | 99.4 | % | 526,444 | 96.8 | % | ||||||||||||
Income (loss) from operations | 3,120 | 0.6 | % | 17,495 | 3.2 | % | ||||||||||||
Interest expense, net | 32,216 | 6.4 | % | 28,028 | 5.1 | % | ||||||||||||
Income (loss) before income taxes | (29,096 | ) | (5.8 | )% | (10,533 | ) | (1.9 | )% | ||||||||||
Provision for (benefit from) income taxes | (542 | ) | (0.1 | )% | (4,081 | ) | (0.7 | )% | ||||||||||
Net income (loss) (c) | (28,554 | ) | (5.7 | )% | (6,452 | ) | (1.2 | )% | ||||||||||
Less: Net income (loss) attributable to noncontrolling interests | 637 | 0.1 | % | 507 | 0.1 | % | ||||||||||||
Net income (loss) attributable to |
$ | (29,191 | ) | (5.8 | )% | $ | (6,959 | ) | (1.3 | )% | ||||||||
Earnings (loss) per share attributable to |
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Basic and diluted (d) | $ | (1.03 | ) | $ | (0.24 | ) | ||||||||||||
Weighted-average shares outstanding: | ||||||||||||||||||
Basic and diluted (e) | 28,245,833 | 28,413,532 | ||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME (LOSS) (In Thousands, Except Earnings per Share and Shares) |
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Nine Months Ended |
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2017 | 2016 | |||||||||||||||||
% of | % of | |||||||||||||||||
$ Amount | Revenues | $ Amount | Revenues | |||||||||||||||
Operating revenues, net of contractual allowances and discounts (a) | $ | 1,731,007 | $ | 1,825,198 | ||||||||||||||
Provision for bad debts | 173,919 | 201,971 | ||||||||||||||||
Net operating revenues | 1,557,088 | 100.0 | % | 1,623,227 | 100.0 | % | ||||||||||||
Operating costs and expenses: | ||||||||||||||||||
Salaries and benefits(b) | 781,691 | 50.2 | % | 788,560 | 48.6 | % | ||||||||||||
Supplies | 186,591 | 12.0 | % | 191,810 | 11.8 | % | ||||||||||||
Other operating expenses (a) | 466,394 | 29.9 | % | 482,526 | 29.8 | % | ||||||||||||
Depreciation and amortization | 63,441 | 4.1 | % | 90,854 | 5.6 | % | ||||||||||||
Rent | 36,631 | 2.4 | % | 37,917 | 2.3 | % | ||||||||||||
Electronic health records incentives earned | (4,516 | ) | (0.3 | )% | (9,791 | ) | (0.6 | )% | ||||||||||
Legal, professional and settlement costs | 6,519 | 0.4 | % | 6,176 | 0.4 | % | ||||||||||||
Impairment of long-lived assets and goodwill | 21,461 | 1.4 | % | 250,400 | 15.4 | % | ||||||||||||
Loss (gain) on sale of hospitals, net | (5,112 | ) | (0.3 | )% | — | — | % | |||||||||||
Transaction costs related to the Spin-off | 204 | — | % | 5,444 | 0.3 | % | ||||||||||||
Total operating costs and expenses | 1,553,304 | 99.8 | % | 1,843,896 | 113.6 | % | ||||||||||||
Income (loss) from operations | 3,784 | 0.2 | % | (220,669 | ) | (13.6 | )% | |||||||||||
Interest expense, net | 90,204 | 5.8 | % | 84,756 | 5.2 | % | ||||||||||||
Income (loss) before income taxes | (86,420 | ) | (5.6 | )% | (305,425 | ) | (18.8 | )% | ||||||||||
Provision for (benefit from) income taxes | (86 | ) | (0.1 | )% | (50,320 | ) | (3.1 | )% | ||||||||||
Net income (loss) (c) | (86,334 | ) | (5.5 | )% | (255,105 | ) | (15.7 | )% | ||||||||||
Less: Net income (loss) attributable to noncontrolling interests | 1,048 | 0.1 | % | 1,917 | 0.1 | % | ||||||||||||
Net income (loss) attributable to |
$ | (87,382 | ) | (5.6 | )% | $ | (257,022 | ) | (15.8 | )% | ||||||||
Earnings (loss) per share attributable to |
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Basic and diluted (d) | $ | (3.11 | ) | $ | (9.05 | ) | ||||||||||||
Weighted-average shares outstanding: | ||||||||||||||||||
Basic and diluted (e) | 28,068,085 | 28,412,552 | ||||||||||||||||
UNAUDITED CONSOLIDATED AND COMBINED SELECTED OPERATING DATA |
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Three Months Ended |
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2017 | 2016 | Variance | % Variance | |||||||||||
Consolidated and combined: | ||||||||||||||
Number of licensed beds at end of period (f) | 3,051 | 3,578 | (527 | ) | (14.7 | )% | ||||||||
Admissions (g) | 21,646 | 23,503 | (1,857 | ) | (7.9 | )% | ||||||||
Adjusted admissions (h) | 54,350 | 59,333 | (4,983 | ) | (8.4 | )% | ||||||||
Emergency room visits (i) | 163,986 | 184,166 | (20,180 | ) | (11.0 | )% | ||||||||
Medicare case mix index (j) | 1.43 | 1.37 | 0.06 | 4.4 | % | |||||||||
Same-facility: (k) | ||||||||||||||
Number of licensed beds at end of period (f) | 3,051 | 3,051 | — | — | % | |||||||||
Admissions (g) | 21,155 | 21,195 | (40 | ) | (0.2 | )% | ||||||||
Adjusted admissions (h) | 52,755 | 52,471 | 284 | 0.5 | % | |||||||||
Emergency room visits (i) | 158,337 | 162,608 | (4,271 | ) | (2.6 | )% | ||||||||
Medicare case mix index (j) | 1.43 | 1.38 | 0.05 | 3.6 | % | |||||||||
Nine Months Ended |
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2017 | 2016 | Variance | % Variance | |||||||||||
Consolidated and combined: | ||||||||||||||
Number of licensed beds at end of period (f) | 3,051 | 3,578 | (527 | ) | (14.7 | )% | ||||||||
Admissions (g) | 67,572 | 72,113 | (4,541 | ) | (6.3 | )% | ||||||||
Adjusted admissions (h) | 166,841 | 178,062 | (11,221 | ) | (6.3 | )% | ||||||||
Emergency room visits (i) | 504,500 | 551,401 | (46,901 | ) | (8.5 | )% | ||||||||
Medicare case mix index (j) | 1.42 | 1.37 | 0.05 | 3.6 | % | |||||||||
Same-facility: (k) | ||||||||||||||
Number of licensed beds at end of period (f) | 3,051 | 3,051 | — | — | % | |||||||||
Admissions (g) | 64,347 | 64,906 | (559 | ) | (0.9 | )% | ||||||||
Adjusted admissions (h) | 157,440 | 157,171 | 269 | 0.2 | % | |||||||||
Emergency room visits (i) | 475,062 | 487,286 | (12,224 | ) | (2.5 | )% | ||||||||
Medicare case mix index (j) | 1.42 | 1.38 | 0.04 | 2.9 | % | |||||||||
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS (In Thousands, Except Par Value per Share and Shares) |
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2017 | 2016 | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 15,736 | $ | 25,455 | ||||||
Patient accounts receivable, net of allowance for doubtful accounts of |
393,559 | 380,685 | ||||||||
Inventories | 55,125 | 58,124 | ||||||||
Prepaid expenses | 24,393 | 23,028 | ||||||||
Due from third-party payors | 98,778 | 116,235 | ||||||||
Current assets of hospitals held for sale | 9,202 | 1,502 | ||||||||
Other current assets | 40,920 | 57,942 | ||||||||
Total current assets | 637,713 | 662,971 | ||||||||
Property and equipment, at cost | 1,419,827 | 1,519,975 | ||||||||
Less: Accumulated depreciation and amortization | (717,754 | ) | (786,075 | ) | ||||||
Total property and equipment, net | 702,073 | 733,900 | ||||||||
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409,229 | 416,833 | ||||||||
Intangible assets, net | 70,993 | 84,982 | ||||||||
Long-term assets of hospitals held for sale | 12,782 | 6,851 | ||||||||
Other long-term assets | 105,405 | 88,833 | ||||||||
Total assets | $ | 1,938,195 | $ | 1,994,370 | ||||||
LIABILITIES AND EQUITY | ||||||||||
Current liabilities: | ||||||||||
Current maturities of long-term debt | $ | 1,887 | $ | 5,683 | ||||||
Accounts payable | 157,102 | 169,684 | ||||||||
Accrued liabilities: | ||||||||||
Accrued salaries and benefits | 81,300 | 98,803 | ||||||||
Accrued interest | 27,350 | 19,915 | ||||||||
Due to third-party payors | 37,311 | 42,537 | ||||||||
Current liabilities of hospitals held for sale | 2,767 | 492 | ||||||||
Other current liabilities | 39,447 | 53,268 | ||||||||
Total current liabilities | 347,164 | 390,382 | ||||||||
Long-term debt | 1,276,874 | 1,241,142 | ||||||||
Deferred income tax liabilities, net | 31,087 | 31,474 | ||||||||
Other long-term liabilities | 145,559 | 108,996 | ||||||||
Total liabilities | 1,800,684 | 1,771,994 | ||||||||
Redeemable noncontrolling interests | 1,578 | 6,807 | ||||||||
Equity: | ||||||||||
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Preferred stock, |
— | — | ||||||||
Common stock, |
3 | 3 | ||||||||
Additional paid-in capital | 546,609 | 537,911 | ||||||||
Accumulated other comprehensive income (loss) | (2,395 | ) | (2,760 | ) | ||||||
Accumulated deficit | (421,408 | ) | (334,026 | ) | ||||||
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122,809 | 201,128 | ||||||||
Nonredeemable noncontrolling interests | 13,124 | 14,441 | ||||||||
Total equity | 135,933 | 215,569 | ||||||||
Total liabilities and equity | $ | 1,938,195 | $ | 1,994,370 | ||||||
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS (In Thousands) |
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Three Months Ended |
Nine Months Ended |
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2017 | 2016 | 2017 | 2016 | |||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income (loss) | $ | (28,554 | ) | $ | (6,452 | ) | $ | (86,334 | ) | $ | (255,105 | ) | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Depreciation and amortization | 20,735 | 28,234 | 63,441 | 90,854 | ||||||||||||||||
Non-cash interest expense, net | 1,793 | 1,257 | 3,223 | 1,986 | ||||||||||||||||
Provision for (benefit from) deferred income taxes | (642 | ) | (4,081 | ) | (387 | ) | (51,532 | ) | ||||||||||||
Stock-based compensation expense | 2,374 | 2,781 | 7,702 | 4,678 | ||||||||||||||||
Impairment of long-lived assets and goodwill | 5,261 | — | 21,461 | 250,400 | ||||||||||||||||
Loss (gain) on sale of hospitals, net | 79 | — | (5,112 | ) | — | |||||||||||||||
Changes in reserves for self-insurance claims, net of payments | 4,999 | 11,208 | 16,253 | 28,099 | ||||||||||||||||
Changes in reserves for legal, professional and settlement costs, net of payments | — | — | (3,651 | ) | 4,642 | |||||||||||||||
Other non-cash expense (income), net | 233 | 54 | 238 | (533 | ) | |||||||||||||||
Changes in operating assets and liabilities, net of acquisitions and divestitures: | ||||||||||||||||||||
Patient accounts receivable, net | 9,156 | (9,586 | ) | (21,193 | ) | (16,797 | ) | |||||||||||||
Due from and due to third-party payors, net | (3,176 | ) | (7,528 | ) | 12,231 | (2,173 | ) | |||||||||||||
Inventories, prepaid expenses and other current assets | 9,756 | (14,689 | ) | 2,024 | (12,412 | ) | ||||||||||||||
Accounts payable and accrued liabilities | (12,002 | ) | (2,505 | ) | (10,710 | ) | 26,624 | |||||||||||||
Long-term assets and liabilities, net | (268 | ) | 880 | 1,603 | (7,965 | ) | ||||||||||||||
Net cash provided by (used in) operating activities | 9,744 | (427 | ) | 789 | 60,766 | |||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Capital expenditures for property and equipment | (11,525 | ) | (23,241 | ) | (50,667 | ) | (56,448 | ) | ||||||||||||
Capital expenditures for software | (3,005 | ) | (1,454 | ) | (6,174 | ) | (5,258 | ) | ||||||||||||
Acquisitions, net of cash acquired | (33 | ) | (26 | ) | (1,920 | ) | (26 | ) | ||||||||||||
Proceeds from the sale of hospitals | 9,084 | — | 29,240 | — | ||||||||||||||||
Other investing activities | — | (346 | ) | — | 1,056 | |||||||||||||||
Net cash provided by (used in) investing activities | (5,479 | ) | (25,067 | ) | (29,521 | ) | (60,676 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Borrowings (repayments) of revolving credit facilities, net | (5,000 | ) | — | 45,000 | — | |||||||||||||||
Borrowings of long-term debt | 175 | 36 | 247 | 1,255,556 | ||||||||||||||||
Repayments of long-term debt | (4,670 | ) | (3,165 | ) | (16,517 | ) | (7,442 | ) | ||||||||||||
Increase (decrease) in Due to Parent, net | — | — | — | 25,183 | ||||||||||||||||
Payments of debt issuance costs | (181 | ) | (1,136 | ) | (3,119 | ) | (29,139 | ) | ||||||||||||
Cash paid to Parent related to the Spin-off | — | — | — | (1,217,336 | ) | |||||||||||||||
Cancellation of restricted stock awards for payroll tax withholdings on vested shares | (14 | ) | (39 | ) | (1,503 | ) | (12 | ) | ||||||||||||
Cash distributions to noncontrolling investors | — | (181 | ) | (3,851 | ) | (2,828 | ) | |||||||||||||
Purchases of shares from noncontrolling investors | (1,244 | ) | (88 | ) | (1,244 | ) | (100 | ) | ||||||||||||
Net cash provided by (used in) financing activities | (10,934 | ) | (4,573 | ) | 19,013 | 23,882 | ||||||||||||||
Net change in cash and cash equivalents | (6,669 | ) | (30,067 | ) | (9,719 | ) | 23,972 | |||||||||||||
Cash and cash equivalents at beginning of period | 22,405 | 55,145 | 25,455 | 1,106 | ||||||||||||||||
Cash and cash equivalents at end of period | $ | 15,736 | $ | 25,078 | $ | 15,736 | $ | 25,078 | ||||||||||||
FOOTNOTES TO UNAUDITED FINANCIAL STATEMENTS AND SELECTED OPERATING DATA |
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(a) | The |
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In |
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(b) | Salaries and benefits were impacted by a net decrease in discretionary employee benefits as the Company continues to implement cost savings plans. | |
(c) | EBITDA is a non-GAAP financial measure that consists of net income (loss) before interest, income taxes, depreciation and amortization. Adjusted EBITDA, also a non-GAAP financial measure, is EBITDA adjusted to add back the effect of certain legal, professional and settlement costs, impairment of long-lived assets and goodwill, net loss (gain) on sale of hospitals and transaction costs related to the Spin-off. The Company uses Adjusted EBITDA as a measure of financial performance. Adjusted EBITDA is a key measure used by the Company’s management to assess the operating performance of its hospital operations business and to make decisions on the allocation of resources. Additionally, management utilizes Adjusted EBITDA in assessing the Company’s consolidated results of operations and in comparing the Company’s results of operations between periods. Adjusted EBITDA, Adjusted for Divestitures, also a non-GAAP financial measure, is further retrospectively adjusted to exclude the effect of EBITDA of hospitals divested in |
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Adjusted EBITDA and Adjusted EBITDA, Adjusted for Divestitures are not measurements of financial performance under |
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The following table reconciles Adjusted EBITDA and Adjusted EBITDA, Adjusted for Divestitures, each as defined above, to net income (loss), the most directly comparable |
Three Months Ended |
Nine Months Ended |
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2017 | 2016 | 2017 | 2016 | |||||||||||||||||
Net income (loss) | $ | (28,554 | ) | $ | (6,452 | ) | $ | (86,334 | ) | $ | (255,105 | ) | ||||||||
Interest expense, net | 32,216 | 28,028 | 90,204 | 84,756 | ||||||||||||||||
Provision for (benefit from) income taxes | (542 | ) | (4,081 | ) | (86 | ) | (50,320 | ) | ||||||||||||
Depreciation and amortization | 20,735 | 28,234 | 63,441 | 90,854 | ||||||||||||||||
EBITDA | 23,855 | 45,729 | 67,225 | (129,815 | ) | |||||||||||||||
Legal, professional and settlement costs | 2,050 | 488 | 6,519 | 6,176 | ||||||||||||||||
Impairment of long-lived assets and goodwill | 5,261 | — | 21,461 | 250,400 | ||||||||||||||||
Loss (gain) on sale of hospitals, net | 79 | — | (5,112 | ) | — | |||||||||||||||
Transaction costs related to the Spin-off | 173 | 532 | 204 | 5,444 | ||||||||||||||||
Post-spin headcount reductions | 850 | — | 2,543 | — | ||||||||||||||||
Adjusted EBITDA | 32,268 | 46,749 | 92,840 | 132,205 | ||||||||||||||||
Negative EBITDA of divested hospitals | 4,670 | 7,023 | 13,563 | 18,468 | ||||||||||||||||
Adjusted EBITDA, Adjusted for Divestitures | $ | 36,938 | $ | 53,772 | $ | 106,403 | $ | 150,673 | ||||||||||||
(d) | The following table reconciles net income (loss) attributable to |
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Three Months Ended |
Nine Months Ended |
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2017 | 2016 | 2017 | 2016 | |||||||||||||||||
(per share - basic and diluted) | ||||||||||||||||||||
Earnings (loss) per share attributable to |
$ | (1.03 | ) | $ | (0.24 | ) | $ | (3.11 | ) | $ | (9.05 | ) | ||||||||
Adjustments: | ||||||||||||||||||||
Legal, professional and settlement costs | 0.07 | 0.01 | 0.23 | 0.18 | ||||||||||||||||
Impairment of long-lived assets and goodwill | 0.18 | — | 0.76 | 7.36 | ||||||||||||||||
Loss (gain) on sale of hospitals, net | — | — | — | — | ||||||||||||||||
Transaction costs related to the Spin-off | 0.01 | 0.01 | 0.01 | 0.16 | ||||||||||||||||
Post-spin headcount reductions | 0.03 | — | 0.09 | — | ||||||||||||||||
Net operating losses of divested hospitals | 0.16 | 0.15 | 0.48 | 0.54 | ||||||||||||||||
Earnings (loss) per share attributable to |
$ | (0.58 | ) | $ | (0.07 | ) | $ | (1.54 | ) | $ | (0.81 | ) | ||||||||
(e) | For comparative purposes, the Company used 28,412,054 shares as the number of weighted-average shares to calculate basic and diluted earnings per share for periods prior to the Spin-off. This number represents the number of shares issued on the Spin-off date. Due to the net loss attributable to |
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(f) | Licensed beds are the number of beds for which the appropriate state agency licenses a hospital, regardless of whether the beds are actually available for patient use. | |
(g) | Admissions represent the number of patients admitted for inpatient services. | |
(h) | Adjusted admissions is computed by multiplying admissions by gross patient revenues and then dividing that number by gross inpatient revenues. | |
(i) | Emergency room visits represent the number of patients registered and treated in the Company’s emergency rooms. | |
(j) | Medicare case mix index is a relative value assigned to a diagnosis-related group of inpatients that is used in determining the allocation of resources necessary to treat the patients in that group. Medicare case mix index is calculated as the average case mix index for all Medicare admissions during the period. | |
(k) | Same-facility financial and operating data excludes hospitals that were sold prior to and as of the end of the current reporting period. Same-facility operating results have been adjusted to exclude the operating results of |
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Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties. All statements in this press release other than statements of historical fact, including statements regarding projections, expected operating results, and other events that depend upon or refer to future events or conditions or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “thinks,” and similar expressions, are forward-looking statements. Although the Company believes that these forward-looking statements are based on reasonable assumptions, these assumptions are inherently subject to significant economic and competitive uncertainties and contingencies, which are difficult or impossible to predict accurately and may be beyond the control of the Company. Accordingly, the Company cannot give any assurance that its expectations will in fact occur and cautions that actual results may differ materially from those in the forward-looking statements. A number of factors could affect the future results of the Company or the healthcare industry generally and could cause the Company’s expected results to differ materially from those expressed in this press release.
These factors include, but are not limited to, the following:
- general economic and business conditions, both nationally and in the regions in which the Company operates;
- risks associated with the Company’s substantial indebtedness, leverage and debt service obligations, including its ability to comply with its debt covenants, including its senior credit facility, as amended;
- the ability to achieve operating and financial targets and to control the costs of providing services if patient volumes are lower than expected;
- the impact of significant changes to the Affordable Care Act, its implementation or its interpretation, efforts to repeal the Affordable Care Act, as well as changes in other federal, state or local laws or regulations affecting the healthcare industry;
- the success and long-term viability of healthcare insurance exchanges, which may be impacted by whether a sufficient number of payors participate, the availability of cost-sharing subsidies and actions taken by the current administration and
Congress affecting the Affordable Care Act; - the extent to which states support or implement changes to Medicaid programs, utilize healthcare insurance exchanges or alter the provision of healthcare to state residents through regulation or otherwise;
- the extent to which regulatory and economic changes occur in
Illinois , where a material portion of the Company’s revenues are concentrated; - demographic changes;
- the failure to comply with governmental regulations;
- the impact of certain outsourcing functions, and the ability of Community Health Systems, Inc., as provider of the Company’s billing and collection services pursuant to the transition services agreements, to timely and appropriately bill and collect;
- the potential adverse impact of known and unknown government investigations, internal investigations, audits, and federal and state false claims act litigation and other legal proceedings, including the shareholder and creditor litigations against the Company and certain of its officers and threats of litigation, as well as the significant costs and attention from management required to address such matters;
- the ability, where appropriate, to enter into, maintain and comply with provider arrangements with payors and the terms of these arrangements, which may be further impacted by the increasing consolidation of health insurers and managed care companies;
- changes in reimbursement rates paid by federal or state healthcare programs, including Medicare and Medicaid, or commercial payors, and the timeliness of reimbursement payments;
- the timing of any approval by CMS of Phase V of the California HQAF Program, the recognition of any revenues from the
California program, and the timing and amount of any related cash flows, as well as the potential for retroactive adjustments for prior year payments; - any potential impairments in the carrying values of long-lived assets and goodwill or the shortening of the useful lives of long-lived assets;
- the effects related to the continued implementation of the sequestration spending reductions and the potential for future deficit reduction legislation;
- increases in the amount and risk of collectability of patient accounts receivable, including lower collectability levels which may result from, among other things, self-pay growth in states that have not expanded Medicaid and difficulties in collecting payments for which patients are responsible, including co-pays and deductibles;
- the efforts of healthcare insurers, providers and others to contain healthcare costs, including the trend toward treatment of patients in less acute or specialty healthcare settings and the increased emphasis on value-based purchasing;
- the Company’s ongoing ability to demonstrate meaningful use of certified electronic health records technology and recognize income for the related Medicare or Medicaid incentive payments, to the extent such payments have not expired;
- increases in wages as a result of inflation or competition for highly technical positions and rising medical supply and drug costs due to market pressure from pharmaceutical companies and new product releases;
- liabilities and other claims asserted against the Company, including self-insured malpractice claims;
- competition;
- the ability to attract and retain, at reasonable employment costs, qualified personnel, key management, physicians, nurses and other healthcare workers;
- changes in medical or other technology;
- changes in
U.S. generally accepted accounting principles, including the impact of adopting newly issued accounting standards; - the availability and terms of capital to fund acquisitions, replacement facilities or other capital expenditures;
- the ability to successfully make acquisitions or complete divestitures and the timing thereof, the ability to complete any such acquisitions or divestitures on desired terms or at all, and the ability to realize the intended benefits from any such acquisitions or divestitures;
- the impact of seasonal or severe weather conditions or earthquakes;
- the ability to obtain adequate levels of professional and general liability and workers’ compensation liability insurance;
- the effects related to outbreaks of infectious diseases;
- the impact of cyber-attacks or security breaches;
- the ability to manage effectively the Company’s arrangements with third-party vendors for key non-clinical business functions and services;
- the ability to maintain certain accreditations at the Company’s existing facilities and any future facilities the Company may acquire; and
- the other risk factors set forth in the Company’s other public filings with the
Securities and Exchange Commission .
Although the Company believes that these forward-looking statements are based on reasonable assumptions, these assumptions are inherently subject to significant regulatory, economic and competitive uncertainties and contingencies, which are difficult or impossible to predict accurately and may be beyond its control. Accordingly, the Company cannot give any assurance that its expectations will in fact occur and cautions that actual results may differ materially from those in the forward-looking statements. Given these uncertainties, prospective investors are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this filing. The Company undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171108006638/en/
Executive Vice President and Chief Financial Officer
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