IASIS Healthcare Announces First Quarter 2013 Results

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 revenue

502,445

472,935

Premium revenue

138,854

150,738

Net revenue

641,299

623,673

Costs and expenses

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

246,288

223,964

Supplies

89,899

84,170

Medical claims

113,343

124,245

Rentals and leases

13,965

12,266

Other operating expenses

115,093

113,983

Medicare and Medicaid EHR incentives

(5,536

)

(6,677

)

Interest expense, net

33,845

34,940

Depreciation and amortization

26,852

28,534

Management fees

1,250

1,250

Total costs and expenses

634,999

616,675

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

6,300

6,998

Gain on disposal of assets, net

88

240

Earnings from continuing operations before income taxes

6,388

7,238

Income tax expense

2,735

3,605

Net earnings from continuing operations

3,653

3,633

Earnings (loss) from discontinued operations, net of income taxes

415

(48

)

Net earnings

4,068

3,585

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, net

364,793

339,749

Inventories

63,722

67,650

Deferred income taxes

20,697

19,744

Prepaid expenses and other current assets

94,758

117,851

Total current assets

553,983

593,876

Property and equipment, net

1,176,479

1,171,657

Goodwill

818,475

818,424

Other intangible assets, net

28,341

29,161

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 payable

48,583

65,390

Accrued interest payable

10,087

28,034

Medical claims payable

56,599

61,142

Other accrued expenses and other current liabilities

79,619

83,243

Current portion of long-term debt and capital lease obligations

13,015

13,387

Total current liabilities

320,096

352,902

Long-term debt and capital lease obligations

1,850,208

1,853,107

Deferred income taxes

126,123

120,961

Other long-term liabilities

97,196

104,110

Non-controlling interests with redemption rights

99,667

99,164

Equity

Member's equity

142,837

141,589

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 amortization

26,852

28,534

Amortization of loan costs

1,828

1,902

Stock-based compensation

1,137

500

Deferred income taxes

1,964

3,067

Income tax benefit from stock-based compensation

16

6

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 assets

27,196

(2,839

)

Accounts payable, other accrued expenses and other accrued liabilities

(37,349

)

(40,766

)

Net cash provided by (used in) operating activities - continuing operations

166

(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 assets

12

-

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 interests

700

-

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

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 revenue

502,445

-

-