IASIS Healthcare Announces Third Quarter 2015 Results
Revenue Growth of 8.5%; Adjusted EBITDA Growth of 25.2%
Key Financial & Operating Results
Third Quarter Fiscal 2015
Revenue for the third quarter totaled
Acute care revenue for the third quarter totaled
Premium, service and other revenue in the Company’s managed care risk platform for the third quarter totaled
For the third quarter, the medical loss ratio (“MLR”) associated with premium revenue across all health plans in the Company’s managed care risk platform was 87.4%, compared to 97.4% in the prior year quarter. The MLR for the third quarter of fiscal 2014 included increased medical costs associated with newly enrolled childless adult members resulting from the expansion of Arizona’s
Year-to-Date Fiscal 2015
Revenue for the first nine months of fiscal 2015 totaled
Acute care revenue for the first nine months of fiscal 2015 totaled
Premium, service and other revenue in the Company’s managed care risk platform for the first nine months of fiscal 2015 totaled
For the first nine months of fiscal 2015, the MLR associated with premium revenue across all health plans in the Company’s managed care risk platform was 87.4%, compared to 89.4% in the prior year period. The MLR for the first nine months of fiscal 2015, benefited from reduced medical costs resulting from the care management of childless adult members, who were newly enrolled as a result of the expansion of Arizona’s
Cash Flow Analysis
Cash flows provided by operating activities for the first nine months of fiscal 2015 totaled
Cash flows used in investing activities for the first nine months of fiscal 2015 totaled
Conference Call
A listen-only simulcast of IASIS’ third quarter 2015 conference call will be available by clicking the “Investors” link on the Company’s Web site at www.iasishealthcare.com beginning at 11:00 a.m. Eastern Time on
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 the Company’s 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 Part I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K/A for the fiscal year ended
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 the Company’s 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 (loss) from continuing operations before net interest expense, income tax expense, depreciation and amortization, stock-based compensation, net gain (loss) on disposal of assets, and management fees. Management fees represent monitoring and advisory fees paid to management companies affiliated with TPG and JLL. 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 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 “adjusted EBITDA” as 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 (loss) 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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Consolidated Statements of Operations (Unaudited) | |||||||||||||||||||||
(in thousands) |
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Quarter Ended |
Nine Months Ended |
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2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
Revenues | |||||||||||||||||||||
Acute care revenue before provision for bad debts |
$ | 563,030 | $ | 531,380 | $ | 1,668,536 | $ | 1,613,457 | |||||||||||||
Less: Provision for bad debts | (88,097 | ) | (77,130 | ) | (258,175 | ) | (260,249 | ) | |||||||||||||
Acute care revenue | 474,933 | 454,250 | 1,410,361 | 1,353,208 | |||||||||||||||||
Premium, service and other revenue | 211,361 | 178,498 | 642,298 | 503,212 | |||||||||||||||||
Total revenue | 686,294 | 632,748 | 2,052,659 | 1,856,420 | |||||||||||||||||
Costs and expenses | |||||||||||||||||||||
Salaries and benefits (includes stock-based compensation of |
228,899 | 221,446 | 697,098 | 664,453 | |||||||||||||||||
Supplies | 81,505 | 75,104 | 241,696 | 227,415 | |||||||||||||||||
Medical claims | 172,475 | 165,943 | 524,506 | 436,754 | |||||||||||||||||
Rentals and leases | 19,258 | 18,198 | 57,055 | 54,444 | |||||||||||||||||
Other operating expenses | 124,395 | 110,337 | 351,362 | 311,586 | |||||||||||||||||
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(2,035 | ) | (2,940 | ) | (7,685 | ) | (9,294 | ) | |||||||||||||
Interest expense, net | 31,905 | 32,267 | 96,122 | 98,300 | |||||||||||||||||
Depreciation and amortization | 26,276 | 23,422 | 70,462 | 70,648 | |||||||||||||||||
Management fees | 1,250 | 1,250 | 3,750 | 3,750 | |||||||||||||||||
Total costs and expenses | 683,928 | 645,027 | 2,034,366 | 1,858,056 | |||||||||||||||||
Earnings (loss) from continuing operations before gain (loss) on disposal of assets and income taxes |
2,366 | (12,279 | ) | 18,293 | (1,636 | ) | |||||||||||||||
Gain (loss) on disposal of assets, net | 20 | 2,102 | (434 | ) | 2,868 | ||||||||||||||||
Earnings (loss) from continuing operations before income taxes |
2,386 | (10,177 | ) | 17,859 | 1,232 | ||||||||||||||||
Income tax expense | 1,018 | 1,138 | 8,111 | 7,387 | |||||||||||||||||
Net earnings (loss) from continuing operations | 1,368 | (11,315 | ) | 9,748 | (6,155 | ) | |||||||||||||||
Earnings (loss) from discontinued operations, net of income taxes |
1,084 | (6,199 | ) | (2,222 | ) | (5,786 | ) | ||||||||||||||
Net earnings (loss) | 2,452 | (17,514 | ) | 7,526 | (11,941 | ) | |||||||||||||||
Net earnings attributable to non-controlling interests |
(4,164 | ) | (2,453 | ) | (9,214 | ) | (8,857 | ) | |||||||||||||
Net loss attributable to |
$ | (1,712 | ) | $ | (19,967 | ) | $ | (1,688 | ) | $ | (20,798 | ) | |||||||||
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Consolidated Balance Sheets (Unaudited) | |||||||||
(in thousands) |
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ASSETS | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 307,630 | $ | 341,180 | |||||
Accounts receivable, net | 322,187 | 305,654 | |||||||
Inventories | 59,688 | 57,632 | |||||||
Deferred income taxes | 1,003 | 1,987 | |||||||
Prepaid expenses and other current assets | 227,341 | 216,563 | |||||||
Assets held for sale | – | 50,151 | |||||||
Total current assets | 917,849 | 973,167 | |||||||
Property and equipment, net | 867,009 | 826,478 | |||||||
Goodwill | 820,501 | 814,498 | |||||||
Other intangible assets, net | 20,804 | 23,331 | |||||||
Other assets, net | 58,816 | 62,362 | |||||||
Total assets | $ | 2,684,979 | $ | 2,699,836 | |||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities | |||||||||
Accounts payable | $ | 120,823 | $ | 128,359 | |||||
Salaries and benefits payable | 60,944 | 71,121 | |||||||
Accrued interest payable | 9,843 | 28,820 | |||||||
Medical claims payable | 95,678 | 79,449 | |||||||
Other accrued expenses and current liabilities | 91,997 | 73,491 | |||||||
Current portion of long-term debt, capital leases and other long-term obligations | 11,985 | 12,690 | |||||||
Liabilities held for sale | – | 9,171 | |||||||
Total current liabilities | 391,270 | 403,101 | |||||||
Long-term debt, capital leases and other long-term obligations | 1,833,215 | 1,841,110 | |||||||
Deferred income taxes | 107,789 | 100,499 | |||||||
Other long-term liabilities | 111,527 | 117,289 | |||||||
Non-controlling interests with redemption rights | 113,233 | 108,156 | |||||||
Equity | |||||||||
Member’s equity | 119,537 | 120,005 | |||||||
Non-controlling interests | 8,408 | 9,676 | |||||||
Total equity | 127,945 | 129,681 | |||||||
Total liabilities and equity | $ | 2,684,979 | $ | 2,699,836 | |||||
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Consolidated Statements of Cash Flows (Unaudited) | |||||||||||
(in thousands) |
|||||||||||
Nine Months Ended |
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2015 | 2014 | ||||||||||
Cash flows from operating activities | |||||||||||
Net earnings (loss) | $ | 7,526 | $ | (11,941 | ) | ||||||
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: |
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Depreciation and amortization | 70,462 | 70,648 | |||||||||
Amortization of loan costs | 5,913 | 5,559 | |||||||||
Amortization of deferred gain from sale-leaseback | (1,872 | ) | (1,872 | ) | |||||||
Change in physician minimum revenue guarantees | 2,852 | 2,177 | |||||||||
Stock-based compensation | 4,937 | 10,033 | |||||||||
Deferred income taxes | 5,929 | (1,015 | ) | ||||||||
Income tax benefit from parent company | 6 | 5 | |||||||||
Loss (gain) on disposal of assets, net | 434 | (2,868 | ) | ||||||||
Loss from discontinued operations, net | 2,222 | 5,786 | |||||||||
Changes in operating assets and liabilities, net of the effect of acquisitions and dispositions: |
|||||||||||
Accounts receivable, net | (18,106 | ) | (6,792 | ) | |||||||
Inventories, prepaid expenses and other current assets | (15,278 | ) | (53,406 | ) | |||||||
Accounts payable, other accrued expenses and other accrued liabilities | (7,936 | ) | 10,552 | ||||||||
Income taxes and other transaction costs payable related to sale-leaseback of real estate |
– | (22,270 | ) | ||||||||
Net cash provided by operating activities – continuing operations | 57,089 | 4,596 | |||||||||
Net cash provided by (used in) operating activities – discontinued operations | 2,919 | (15,140 | ) | ||||||||
Net cash provided by (used in) operating activities | 60,008 | (10,544 | ) | ||||||||
Cash flows from investing activities | |||||||||||
Purchases of property and equipment | (106,604 | ) | (76,084 | ) | |||||||
Cash paid for acquisitions, net | (11,324 | ) | (1,038 | ) | |||||||
Cash received from divestiture | 42,633 | – | |||||||||
Proceeds from sale of assets | 350 | 1,508 | |||||||||
Change in other assets, net | (1,141 | ) | (219 | ) | |||||||
Other, net | – | (3,025 | ) | ||||||||
Net cash used in investing activities – continuing operations | (76,086 | ) | (78,858 | ) | |||||||
Net cash used in investing activities – discontinued operations | (341 | ) | (5,242 | ) | |||||||
Net cash used in investing activities | (76,427 | ) | (84,100 | ) | |||||||
Cash flows from financing activities | |||||||||||
Payment of long-term debt, capital leases and other long-term obligations | (9,801 | ) | (10,084 | ) | |||||||
Distributions to non-controlling interests | (6,306 | ) | (13,222 | ) | |||||||
Cash paid for the repurchase of non-controlling interests | (1,018 | ) | (600 | ) | |||||||
Other | – | (1,838 | ) | ||||||||
Net cash used in financing activities – continuing operations | (17,125 | ) | (25,744 | ) | |||||||
Net cash used in financing activities – discontinued operations | (6 | ) | (100 | ) | |||||||
Net cash used in financing activities | (17,131 | ) | (25,844 | ) | |||||||
Change in cash and cash equivalents | (33,550 | ) | (120,488 | ) | |||||||
Cash and cash equivalents at beginning of period | 341,180 | 438,131 | |||||||||
Cash and cash equivalents at end of period | $ | 307,630 | $ | 317,643 | |||||||
Supplemental disclosure of cash flow information | |||||||||||
Cash paid for interest | $ | 111,847 | $ | 111,152 | |||||||
Cash paid for income taxes, net | $ | 14,875 | $ | 39,030 | |||||||
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Consolidated Financial and Operating Data (Unaudited) | |||||||||||||||||
Quarter Ended |
Nine Months Ended |
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2015 | 2014 | 2015 | 2014 | ||||||||||||||
Acute care operations (1) | |||||||||||||||||
Number of acute care hospital facilities at end of period |
16 | 15 | 16 | 15 | |||||||||||||
Licensed beds at end of period | 3,644 | 3,601 | 3,644 | 3,601 | |||||||||||||
Average length of stay (days) | 4.9 | 5.0 | 5.0 | 5.0 | |||||||||||||
Occupancy rates (average beds in service) | 47.1 | % | 47.8 | % | 49.3 | % | 48.6 | % | |||||||||
Admissions | 24,961 | 24,930 | 76,643 | 75,576 | |||||||||||||
Percentage change | 0.1 | % | 1.4 | % | |||||||||||||
Adjusted admissions | 48,127 | 47,032 | 143,616 | 138,771 | |||||||||||||
Percentage change | 2.3 | % | 3.5 | % | |||||||||||||
Patient days | 122,793 | 123,985 | 383,983 | 378,095 | |||||||||||||
Adjusted patient days | 236,756 | 233,904 | 719,518 | 694,248 | |||||||||||||
Surgeries | 16,525 | 16,579 | 49,107 | 49,334 | |||||||||||||
Emergency room visits | 108,380 | 104,560 | 324,325 | 305,578 | |||||||||||||
Outpatient revenue as a percentage of gross patient revenue |
48.1 | % | 47.0 | % | 46.6 | % | 45.5 | % | |||||||||
Managed care operations | |||||||||||||||||
Health plan lives | 260,200 | 213,000 | 260,200 | 213,000 | |||||||||||||
MSO lives | 97,700 | – | 97,700 | – | |||||||||||||
Accountable care network lives | 32,000 | – | 32,000 | – | |||||||||||||
Total lives | 389,900 | 213,000 | 389,900 | 213,000 | |||||||||||||
Medical loss ratio (2) |
87.4 | % | 97.4 | % | 87.4 | % | 89.4 | % | |||||||||
(1) Excludes the impact of the Company’s
(2) Represents medical claims expense as a percentage of premium revenue, including claims paid to the Company’s hospitals.
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Supplemental Consolidated Statements of Operations Information (Unaudited) | ||||||||||||||||||||
(in thousands) |
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Quarter Ended |
Nine Months Ended |
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2015 | 2014 | 2015 | 2014 | |||||||||||||||||
Consolidated Results | ||||||||||||||||||||
Net earnings (loss) from continuing operations | $ | 1,368 | $ | (11,315 | ) | $ | 9,748 | $ | (6,155 | ) | ||||||||||
Add: | ||||||||||||||||||||
Interest expense, net | 31,905 | 32,267 | 96,122 | 98,300 | ||||||||||||||||
Income tax expense | 1,018 | 1,138 | 8,111 | 7,387 | ||||||||||||||||
Depreciation and amortization | 26,276 | 23,422 | 70,462 | 70,648 | ||||||||||||||||
Stock-based compensation | 1,231 | 5,679 | 4,937 | 10,033 | ||||||||||||||||
Loss (gain) on disposal of assets, net | (20 | ) | (2,102 | ) | 434 | (2,868 | ) | |||||||||||||
Management fees | 1,250 | 1,250 | 3,750 | 3,750 | ||||||||||||||||
Adjusted EBITDA | $ | 63,028 | $ | 50,339 | $ | 193,564 | $ | 181,095 | ||||||||||||
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