IASIS Healthcare Announces First Quarter 2013 Results

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IASIS Healthcare Announces First Quarter 2013 Results

FRANKLIN, Tenn.--(BUSINESS WIRE)-- IASIS Healthcare® LLC ("IASIS") today announced financial and operating results for the fiscal first quarter ended December 31, 2012.

Net revenue for the first quarter totaled $641.3 million, an increase of 2.8% compared to $623.7 million in the prior year quarter. Adjusted EBITDA for the first quarter totaled $69.4 million, compared to $72.2 million in the prior year quarter. Included in adjusted EBITDA for the first quarter were EHR incentives of $5.5 million, compared to $6.7 million in the prior year quarter, and $1.5 million of start-up related costs associated with our new campus of St. Joseph Medical Center located in the Heights community of Houston. Net earnings from continuing operations for the first quarter totaled $3.7 million, compared to $3.6 million in the prior year quarter.


In the first quarter, admissions decreased 0.4% and adjusted admissions increased 3.1%, while net patient revenue per adjusted admission increased 2.4%, each compared to the prior year quarter.

A listen-only simulcast and 30-day replay of IASIS' first quarter 2013 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, 2013. A copy of this press release will also be available on the Company's Web site.

IASIS Healthcare, located in Franklin, Tennessee, is a leading provider of high quality, affordable healthcare services in urban and suburban markets. With total annual net revenue of approximately $2.6 billion, IASIS owns and operates 19 acute care hospitals, one behavioral health hospital, several outpatient service facilities, more than 160 physician clinics, and Medicaid and Medicare managed health plans in Arizona and Utah that serve more than 174,000 members. IASIS' healthcare facilities offer a variety of access points for convenient patient care in numerous regions across the U.S., including: Salt Lake City, Utah; Phoenix, Arizona; Tampa-St. Petersburg, Florida; five cities in Texas, including Houston and San Antonio; Las Vegas, Nevada; and West Monroe, Louisiana. 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, 2012, 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 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.

  

IASIS HEALTHCARE LLC

Consolidated Statements of Operations (Unaudited)

(in thousands)

 
Quarter Ended

December 31,

2012  2011
Net revenue
Acute care revenue before provision for bad debts$597,101$543,214
Less: Provision for bad debts (94,656) (70,279)
Acute care revenue502,445472,935
Premium revenue 138,854  150,738 
Net revenue641,299623,673
 
Costs and expenses

Salaries and benefits (includes stock-based compensation of $1,137 and $500, respectively)

246,288223,964
Supplies89,89984,170
Medical claims113,343124,245
Rentals and leases13,96512,266
Other operating expenses115,093113,983
Medicare and Medicaid EHR incentives(5,536)(6,677)
Interest expense, net33,84534,940
Depreciation and amortization26,85228,534
Management fees 1,250  1,250 
Total costs and expenses634,999616,675
 

Earnings from continuing operations before gain on disposal of assets and income taxes

6,3006,998
Gain on disposal of assets, net 88  240 
 
Earnings from continuing operations before income taxes6,3887,238
Income tax expense 2,735  3,605 
 
Net earnings from continuing operations3,6533,633
Earnings (loss) from discontinued operations, net of income taxes 415  (48)
 
Net earnings4,0683,585
Net earnings attributable to non-controlling interests (1,599) (2,232)
 
Net earnings attributable to IASIS Healthcare LLC$2,469 $1,353 

    

IASIS HEALTHCARE LLC

Consolidated Balance Sheets (Unaudited)

(in thousands)

 
Dec. 31,

2012

Sept. 30,

2012

 
ASSETS
 
Current assets
Cash and cash equivalents$10,013$48,882
Accounts receivable, net364,793339,749
Inventories63,72267,650
Deferred income taxes20,69719,744
Prepaid expenses and other current assets 94,758 117,851
Total current assets553,983593,876
 
Property and equipment, net1,176,4791,171,657
Goodwill818,475818,424
Other intangible assets, net28,34129,161
Other assets, net 68,656 68,498
Total assets$2,645,934$2,681,616
 
LIABILITIES AND EQUITY
 
Current liabilities
Accounts payable$112,193$101,706
Salaries and benefits payable48,58365,390
Accrued interest payable10,08728,034
Medical claims payable56,59961,142
Other accrued expenses and other current liabilities79,61983,243
Current portion of long-term debt and capital lease obligations 13,015 13,387
Total current liabilities320,096352,902
 
Long-term debt and capital lease obligations1,850,2081,853,107
Deferred income taxes126,123120,961
Other long-term liabilities97,196104,110
 
Non-controlling interests with redemption rights99,66799,164
 
Equity
Member's equity142,837141,589
Non-controlling interests 9,807 9,783
Total equity 152,644 151,372
Total liabilities and equity$2,645,934$2,681,616

  

IASIS HEALTHCARE LLC

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 
Quarter Ended

December 31,

2012  2011
Cash flows from operating activities
Net earnings$4,068$3,585

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:

Depreciation and amortization26,85228,534
Amortization of loan costs1,8281,902
Stock-based compensation1,137500
Deferred income taxes1,9643,067
Income tax benefit from stock-based compensation166
Fair value change in interest rate hedges-(845)
Amortization of other comprehensive loss-1,234
Gain on disposal of assets, net(88)(240)
Loss (earnings) from discontinued operations, net(415)48

Changes in operating assets and liabilities, net of the effect of acquisitions and dispositions:

Accounts receivable, net(25,043)(26,860)
Inventories, prepaid expenses and other current assets27,196(2,839)
Accounts payable, other accrued expenses and other accrued liabilities (37,349) (40,766)
Net cash provided by (used in) operating activities - continuing operations166(32,674)
Net cash provided by (used in) operating activities - discontinued operations 435  (27)
Net cash provided by (used in) operating activities 601  (32,701)
 
Cash flows from investing activities
Purchases of property and equipment, net(30,974)(24,357)
Cash paid for acquisitions, net(1,088)602
Proceeds from sale of assets12-
Change in other assets, net (1,313) 1,171 
Net cash used in investing activities (33,363) (22,584)
 
Cash flows from financing activities
Payment of debt and capital lease obligations(3,647)(3,745)
Debt financing costs incurred-(998)
Distributions to non-controlling interests(2,963)(3,303)
Cash received for the sale of non-controlling interests700-
Cash paid for the repurchase of non-controlling interests (197) - 
Net cash used in financing activities (6,107) (8,046)
 
Change in cash and cash equivalents(38,869)(63,331)
Cash and cash equivalents at beginning of period 48,882  147,327 
Cash and cash equivalents at end of period$10,013 $83,996 
 
Supplemental disclosure of cash flow information
Cash paid for interest$49,966 $53,182 
Cash paid for income taxes, net$5 $13 

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IASIS HEALTHCARE LLC

Segment Information (Unaudited)

(in thousands)

 
For the Quarter Ended December 31, 2012
Acute Care  Health Choice  Eliminations  Consolidated

Acute care revenue before provision for bad debts

$597,101$-$-$597,101
Less: Provision for bad debts (94,656) - -  (94,656)
Acute care revenue502,445--