Quorum Health Corporation (NYSE: QHC) (the “Company”) today
announced financial and operating results for the third quarter
ended September 30, 2018.
Third Quarter 2018 Financial and Operating
Results
- Same-facility net operating revenues
increased $25.2 million to $463.8 million, compared to $438.6
million for the same period in 2017, representing a 5.8% increase
for the quarter.
- The $25.2 million increase in
same-facility net operating revenues for the quarter was the result
of three factors; improved payor mix and higher acuity, an $8.7
million increase related to revenues from the California Hospital
Quality Assurance Fee (“HQAF”) program, and a $7.3 million increase
in revenues from the monetization of Illinois property tax
credits.
- When normalized for the impact of the
HQAF program and the monetization of Illinois property tax credits,
same-facility net operating revenues increased 2.1% or $9.2 million
relative to the same period in 2017.
- On a same-facility basis, admissions
decreased 4.5%, adjusted admissions decreased 2.1% and net patient
revenues per adjusted admission increased 9.2% compared to the same
period in 2017.
- Net loss attributable to Quorum Health
Corporation was $(53.9) million, or $(1.85) per share, compared to
$(29.2) million, or $(1.03) per share, for the same period in 2017.
The net loss for the third quarter was impacted by $32.4 million of
impairment of long-lived assets and $1.1 million of costs related
to the closure of one hospital.
- Adjusted EBITDA was $34.1 million
compared to $32.3 million for the same period in 2017.
- Adjusted EBITDA, Adjusted for
Divestitures, which is further adjusted to exclude the EBITDA of
hospitals either sold or closed as of September 30, 2018, was $42.8
million compared to $38.3 million for the same period in 2017.
Divestiture Update
- As of November 5, 2018, the Company has
signed letters of intent (“LOIs”) to divest 5 facilities. These
LOIs are not definitive, and no assurance can be provided as to the
likelihood or timing of these turning into completed transactions.
These signed LOIs represent potential net cash proceeds to the
Company in excess of $105 million.
- Subsequent to the end of the third
quarter 2018, the Company paid down $9.9 million of term loan debt
using proceeds from divestitures, including the portion previously
held in escrow.
Update on Transition Service Agreement
(“TSA”) Transition and Arbitration with CHS
- On October 1, 2018 the Company
transitioned off of the Physician Practice Support Agreement
(“PPSI”) and the Professional Account Services Receivables
Collection Agreement (“PASI”).
- Additional arbitration proceedings
occurred in early October. The matters addressed in the proceedings
primarily related to $12.1 million in claims against the Company
from CHS and certain counterclaims made by the Company against CHS.
The Company expects a ruling on these matters by mid-January
2019.
Financial Outlook
The Company’s financial outlook for the year ending December 31,
2018 remains unchanged from the Company’s second quarter press
release.
2018 Guidance
Net operating revenues $1.875 billion to $1.925
billion Adjusted EBITDA, Adjusted for Divestitures
$145 million to $165 million
These projections are based on the Company’s historical
operating performance, current economic, demographic and regulatory
trends and other assumptions that the Company believes are
reasonable at this time. See “Forward-Looking Statements” below for
a list of factors that could affect the future financial and
operating results of the Company or the healthcare industry
generally.
A reconciliation of the Company’s projected 2018 Adjusted
EBITDA, Adjusted for Divestitures, a forward-looking non-GAAP
financial measure, to net income (loss), the most directly
comparable U.S. GAAP financial measure, is omitted from this press
release because the Company is unable to provide such
reconciliation without unreasonable effort. This inability results
from the inherent difficulty in forecasting generally and in
quantifying certain projected amounts that are necessary for such
reconciliation. In particular, sufficient information is not
available to calculate certain items required for such
reconciliation without unreasonable effort, including interest
expense, provision for (benefit from) income taxes and other
adjustments that would be necessary to prepare a forward-looking
statement of net income (loss) in accordance with U.S. GAAP. For
the same reasons, the Company is unable to address the probable
significance of the unavailable information.
About Quorum Health Corporation
The principal business of Quorum Health Corporation is to
provide hospital and outpatient healthcare services in its markets
across the United States. As of September 30, 2018, the Company
owned or leased 27 hospitals in rural and mid-sized markets located
across 14 states and licensed for 2,604 beds. Through Quorum Health
Resources LLC, a wholly-owned subsidiary, the Company provides
hospital management advisory and healthcare consulting services to
non-affiliated hospitals across the country. Over 95% of the
Company’s net operating revenues are attributable to its hospital
operations business.
The Company’s headquarters are located in Brentwood, Tennessee,
a suburb south of Nashville. Shares in Quorum Health Corporation
are traded on the NYSE under the symbol “QHC.” More information
about the Company can be found on its website at www.quorumhealth.com.
Quorum Health Corporation will hold a conference call on
Wednesday, November 7, 2018, at 11:00 a.m. Eastern, to review its
financial and operating results for the third quarter. To
participate, please dial 1-844-761-3024 approximately 10 minutes
prior to the scheduled start of the call. If calling from outside
of the United States, please dial 1-661-378-9914. Please reference
Conference ID number 6966617 when prompted by the conference call
operator. The conference call will also be webcast live from the
Investor Relations portion of the Company’s website. A presentation
will be made available during the call and will be found in the
Investor Relations portion of the Company’s website at www.quorumhealth.com. For those who cannot listen
to the live broadcast, a replay will be available shortly after the
call and will continue to be available for approximately 30 days.
Copies of this press release and the Company’s Current Report on
Form 8-K (including this press release) will be available on the
Company’s website at www.quorumhealth.com.
QUORUM HEALTH CORPORATION
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (LOSS)
(In Thousands, Except Earnings per
Share and Shares)
Three Months Ended September 30, 2018
2017 % of %
of $ Amount Revenues $ Amount
Revenues Operating revenues (a) $ 557,847
Provision for bad debts (b) 58,545 Net
operating revenues $ 460,507 100.0 % 499,302 100.0 %
Operating costs and expenses: Salaries and benefits 226,237 49.1 %
251,780 50.4 % Supplies 48,949 10.6 % 58,657 11.7 % Other operating
expenses (a) 143,716 31.4 % 145,357 29.2 % Depreciation and
amortization 16,612 3.6 % 20,735 4.2 % Rent 11,661 2.5 % 12,377 2.5
% Electronic health records incentives earned (31 ) — % (287 ) (0.1
)% Legal, professional and settlement costs 1,519 0.3 % 2,050 0.4 %
Impairment of long-lived assets and goodwill 32,438 7.0 % 5,261 1.1
% Loss (gain) on sale of hospitals, net 805 0.2 % 79 — % Loss on
closure of hospitals, net 1,111 0.2 % — — % Transaction costs
related to the Spin-off — — % 173 — %
Total operating costs and expenses 483,017 104.9 %
496,182 99.4 % Income (loss) from operations (22,510
) (4.9 )% 3,120 0.6 % Interest expense, net 32,450
7.0 % 32,216 6.4 % Income (loss) before income taxes
(54,960 ) (11.9 )% (29,096 ) (5.8 )% Provision for (benefit from)
income taxes (1,074 ) (0.2 )% (542 )
(0.1 )% Net income (loss) (c) (53,886 ) (11.7 )% (28,554 ) (5.7 )%
Less: Net income (loss) attributable to noncontrolling interests
54 — % 637 0.1 % Net income (loss)
attributable to Quorum Health Corporation $ (53,940 ) (11.7
)% $ (29,191 ) (5.8 )% Earnings (loss) per share
attributable to Quorum Health Corporation stockholders: Basic and
diluted (d) $ (1.85 ) $ (1.03 ) Weighted-average shares
outstanding: Basic and diluted 29,215,823 28,245,833
QUORUM HEALTH CORPORATION
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (LOSS)
(In Thousands, Except Earnings per
Share and Shares)
Nine Months Ended September 30, 2018
2017 % of % of $
Amount Revenues $ Amount Revenues
Operating revenues (a) $ 1,731,007 Provision for bad debts
(b) 173,919 Net operating revenues $ 1,419,959
100.0 % 1,557,088 100.0 % Operating costs and
expenses: Salaries and benefits 705,868 49.7 % 781,691 50.2 %
Supplies 160,732 11.3 % 186,591 12.0 % Other operating expenses (a)
440,910 31.0 % 466,394 29.9 % Depreciation and amortization 52,015
3.7 % 63,441 4.1 % Rent 35,551 2.5 % 36,631 2.4 % Electronic health
records incentives earned (617 ) — % (4,516 ) (0.3 )% Legal,
professional and settlement costs 10,349 0.7 % 6,519 0.4 %
Impairment of long-lived assets and goodwill 72,198 5.1 % 21,461
1.4 % Loss (gain) on sale of hospitals, net 8,927 0.6 % (5,112 )
(0.3 )% Loss on closure of hospitals, net 18,195 1.3 % — — %
Transaction costs related to the Spin-off — — %
204 — % Total operating costs and expenses
1,504,128 105.9 % 1,553,304 99.8 % Income
(loss) from operations (84,169 ) (5.9 )% 3,784 0.2 % Interest
expense, net 95,307 6.7 % 90,204 5.8 %
Income (loss) before income taxes (179,476 ) (12.6 )% (86,420 )
(5.6 )% Provision for (benefit from) income taxes (1,162 )
— % (86 ) (0.1 )% Net income (loss) (c)
(178,314 ) (12.6 )% (86,334 ) (5.5 )% Less: Net income (loss)
attributable to noncontrolling interests 1,200 — %
1,048 0.1 % Net income (loss) attributable to Quorum
Health Corporation $ (179,514 ) (12.6 )% $ (87,382 )
(5.6 )% Earnings (loss) per share attributable to Quorum
Health Corporation stockholders: Basic and diluted (d) $ (6.21 ) $
(3.11 ) Weighted-average shares outstanding: Basic and diluted
28,891,363 28,068,085
QUORUM HEALTH CORPORATION
UNAUDITED CONSOLIDATED SELECTED
OPERATING DATA
Three Months Ended September 30, 2018
2017 Variance % Variance
Consolidated: Number of licensed beds
at end of period (e) 2,604 3,051 (447 ) (14.7 )% Admissions (f)
17,797 21,646 (3,849 ) (17.8 )% Adjusted admissions (g) 45,536
54,350 (8,814 ) (16.2 )% Total surgeries (h) 17,927 24,168 (6,241 )
(25.8 )% Emergency room visits (i) 135,231 163,986 (28,755 ) (17.5
)% Medicare case mix index (j) 1.42 1.43 (0.01 ) (0.7 )%
Same-facility: (k) Number of licensed beds at end of period (e)
2,604 2,630 (26 ) (1.0 )% Admissions (f) 17,666 18,499 (833 ) (4.5
)% Adjusted admissions (g) 45,001 45,984 (983 ) (2.1 )% Total
surgeries (h) 17,727 18,706 (979 ) (5.2 )% Emergency room visits
(i) 134,153 135,628 (1,475 ) (1.1 )% Medicare case mix index (j)
1.43 1.42 0.01 0.7 %
Nine Months Ended September 30,
2018 2017 Variance % Variance
Consolidated: Number of licensed beds at end of period (e) 2,604
3,051 (447 ) (14.7 )% Admissions (f) 56,546 67,572 (11,026 ) (16.3
)% Adjusted admissions (g) 140,282 166,841 (26,559 ) (15.9 )% Total
surgeries (h) 57,628 77,070 (19,442 ) (25.2 )% Emergency room
visits (i) 424,417 504,500 (80,083 ) (15.9 )% Medicare case mix
index (j) 1.43 1.42 0.01 0.7 % Same-facility: (k) Number of
licensed beds at end of period (e) 2,604 2,630 (26 ) (1.0 )%
Admissions (f) 54,781 56,142 (1,361 ) (2.4 )% Adjusted admissions
(g) 135,218 136,597 (1,379 ) (1.0 )% Total surgeries (h) 54,750
56,318 (1,568 ) (2.8 )% Emergency room visits (i) 407,090 406,188
902 0.2 % Medicare case mix index (j) 1.43 1.40 0.03 2.1 %
Three Months Ended September 30, 2018 2017
$ Variance % Variance Consolidated: Net
patient revenues $ 440,731 $ 475,885 $ (35,154 ) (7.4 )%
Non-patient revenues 19,776 23,417 (3,641 )
(15.5 )% Total net operating revenues $ 460,507 $ 499,302 $ (38,795
) (7.8 )% Net patient revenues per adjusted admission $ 9,679 $
8,756 $ 923 10.5 % Net operating revenues per adjusted admission $
10,113 $ 9,187 $ 926 10.1 % Same-facility: Net patient
revenues $ 444,034 $ 415,546 $ 28,488 6.9 % Non-patient revenues
19,810 23,051 (3,241 ) (14.1 )% Total net
operating revenues $ 463,844 $ 438,597 $ 25,247 5.8 % Net patient
revenues per adjusted admission $ 9,866 $ 9,037 $ 829 9.2 % Net
operating revenues per adjusted admission $ 10,306 $ 9,538 $ 768
8.1 %
Nine Months Ended September 30, 2018
2017 $ Variance % Variance
Consolidated: Net patient revenues $ 1,354,588 $ 1,484,375 $
(129,787 ) (8.7 )% Non-patient revenues 65,371 72,713
(7,342 ) (10.1 )% Total net operating revenues $ 1,419,959 $
1,557,088 $ (137,129 ) (8.8 )% Net patient revenues per adjusted
admission $ 9,656 $ 8,897 $ 759 8.5 % Net operating revenues per
adjusted admission $ 10,122 $ 9,333 $ 789 8.5 %
Same-facility: Net patient revenues $ 1,331,907 $ 1,265,465 $
66,442 5.3 % Non-patient revenues 64,884 71,116
(6,232 ) (8.8 )% Total net operating revenues $ 1,396,791 $
1,336,581 $ 60,210 4.5 % Net patient revenues per adjusted
admission $ 9,850 $ 9,264 $ 586 6.3 % Net operating revenues per
adjusted admission $ 10,330 $ 9,785 $ 545 5.6 %
QUORUM HEALTH CORPORATION
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
(In Thousands, Except Par Value per
Share and Shares)
September 30, December 31, 2018
2017 ASSETS Current assets: Cash and cash equivalents
$ 6,066 $ 5,617 Patient accounts receivable, net of allowance for
doubtful accounts of $352,509 at December 31, 2017 318,284 343,145
Inventories 46,964 53,459 Prepaid expenses 21,225 21,167 Due from
third-party payors 64,109 97,202 Current assets of hospitals held
for sale — 8,112 Other current assets 58,162 47,440
Total current assets 514,810 576,142 Property and
equipment, at cost 1,284,695 1,405,184 Less: Accumulated
depreciation and amortization (718,309 ) (729,905 )
Total property and equipment, net 566,386 675,279
Goodwill 401,073 409,229 Intangible assets, net 49,866 64,850
Long-term assets of hospitals held for sale — 7,734 Other long-term
assets 80,994 95,607 Total assets $ 1,613,129 $
1,828,841
LIABILITIES AND EQUITY Current liabilities:
Current maturities of long-term debt $ 1,544 $ 1,855 Accounts
payable 146,403 171,250 Accrued liabilities: Accrued salaries and
benefits 87,287 77,803 Accrued interest 22,046 10,466 Due to
third-party payors 43,934 47,705 Current liabilities of hospitals
held for sale — 2,577 Other current liabilities 47,750
43,687 Total current liabilities 348,964 355,343 Long-term
debt 1,185,684 1,212,035 Deferred income tax liabilities, net 6,670
7,774 Other long-term liabilities 129,825 137,954
Total liabilities 1,671,143 1,713,106 Redeemable
noncontrolling interests 2,279 2,325 Equity: Quorum
Health Corporation stockholders' equity (deficit): Preferred stock,
$0.0001 par value per share, 100,000,000 shares authorized, none
issued — — Common stock, $0.0001 par value per share, 300,000,000
shares authorized; 31,527,885 shares issued and outstanding at
September 30, 2018, and 30,294,895 shares issued and outstanding at
December 31, 2017 3 3 Additional paid-in capital 554,847 549,610
Accumulated other comprehensive income (loss) (1,917 ) (1,956 )
Accumulated deficit (627,730 ) (448,216 ) Total
Quorum Health Corporation stockholders' equity (deficit) (74,797 )
99,441 Nonredeemable noncontrolling interests 14,504
13,969 Total equity (deficit) (60,293 ) 113,410 Total
liabilities and equity $ 1,613,129 $ 1,828,841
QUORUM HEALTH CORPORATION
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In Thousands)
Three Months Ended September 30, Nine Months Ended
September 30, 2018 2017 2018
2017 Cash flows from operating activities: Net income
(loss) $ (53,886 ) $ (28,554 ) $ (178,314 ) $ (86,334 ) Adjustments
to reconcile net income (loss) to net cash provided by (used in)
operating activities: Depreciation and amortization 16,612 20,735
52,015 63,441 Non-cash interest expense, net 1,860 1,793 6,394
3,223 Provision for (benefit from) deferred income taxes (1,129 )
(642 ) (1,104 ) (387 ) Stock-based compensation expense 2,766 2,374
7,986 7,702 Impairment of long-lived assets and goodwill 32,438
5,261 72,198 21,461 Loss (gain) on sale of hospitals, net 805 79
8,927 (5,112 ) Non-cash portion of loss on hospital closures — —
6,394 — Changes in reserves for self-insurance claims, net of
payments 4,623 4,999 15,003 16,253 Changes in reserves for legal,
professional and settlement costs, net of payments — — — (3,651 )
Other non-cash expense (income), net 380 233 387 238 Changes in
operating assets and liabilities, net of acquisitions and
divestitures: Patient accounts receivable, net 9,206 9,156 30,280
(21,193 ) Due from and due to third-party payors, net 8,344 (3,176
) 29,322 12,231 Inventories, prepaid expenses and other current
assets (7,353 ) 9,756 (7,582 ) 2,024 Accounts payable and accrued
liabilities 12,108 (12,002 ) 2,394 (10,710 ) Long-term assets and
liabilities, net 1,560 (268 ) (1,365 )
1,603 Net cash provided by (used in) operating activities
28,334 9,744 42,935 789 Cash flows from
investing activities: Capital expenditures for property and
equipment (9,576 ) (11,525 ) (34,895 ) (50,667 ) Capital
expenditures for software (483 ) (3,005 ) (1,527 ) (6,174 )
Acquisitions, net of cash acquired (63 ) (33 ) (121 ) (1,920 )
Proceeds from the sale of hospitals — 9,084 39,170 29,240 Other
investing activities, net 10 — 259 —
Net cash provided by (used in) investing activities (10,112
) (5,479 ) 2,886 (29,521 ) Cash flows
from financing activities: Borrowings under revolving credit
facilities 121,000 131,000 368,000 433,000 Repayments under
revolving credit facilities (135,000 ) (136,000 ) (368,000 )
(388,000 ) Borrowings of long-term debt 90 175 157 247 Repayments
of long-term debt (354 ) (4,670 ) (31,801 ) (16,517 ) Payments of
debt issuance costs — (181 ) (2,268 ) (3,119 ) Cancellation of
restricted stock awards for payroll tax withholdings on vested
shares (36 ) (14 ) (1,979 ) (1,503 ) Cash distributions to
noncontrolling investors (678 ) — (1,481 ) (3,851 ) Purchases of
shares from noncontrolling investors — (1,244 )
— (1,244 ) Net cash provided by (used in) financing
activities (14,978 ) (10,934 ) (37,372 )
19,013 Net change in cash, cash equivalents and
restricted cash 3,244 (6,669 ) 8,449 (9,719 ) Cash, cash
equivalents and restricted cash at beginning of period
10,822 22,405 5,617 25,455 Cash, cash
equivalents and restricted cash at end of period $ 14,066 $ 15,736
$ 14,066 $ 15,736
FOOTNOTES TO UNAUDITED FINANCIAL
STATEMENTS AND SELECTED OPERATING DATA
(a) The California Department of Health Care Services
administers the HQAF program, imposing a fee on certain general and
acute care California hospitals. Revenues generated from these fees
provide funding for the non-federal supplemental payments to
California hospitals that serve California’s Medicaid (“Medi-Cal”)
and uninsured patients. Under the HQAF program, the Company
recognized $8.7 million of net operating revenues less $0.1 million
of provider taxes for the three months ended September 30, 2018
with no corresponding amounts in the three months ended September
30, 2017. For the nine months ended September 30, 2018, the Company
recognized $24.4 million of net operating revenues less $4.4
million of provider taxes with no corresponding amounts in the nine
months ended September 30, 2017. The revenues and provider taxes
paid for the full year 2017 were recognized in the fourth quarter
of 2017 when CMS approved Phase V of the program. (b) On
January 1, 2018, the Company adopted ASC Topic 606 “Revenue from
Contracts with Customers” using the modified retrospective method
to all contracts existing on January 1, 2018. Results for reporting
periods beginning after January 1, 2018 are presented under Topic
606, while prior period amounts are not adjusted and continue to be
reported in accordance with the Company’s historic accounting under
Topic 605. Prior to the adoption of ASC Topic 606, a significant
portion of the Company’s allowance for doubtful accounts related to
amounts due from self-pay patients, as well as co-pays and
deductibles owed to the Company by patients with insurance. Under
ASC 606, the estimated allowance for these patients are generally
considered a direct reduction to net operating revenues rather than
as a provision for bad debts. (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, net loss on closure of hospitals,
transition of transition services agreements (“TSAs”), transaction
costs related to the Spin-off, and post-spin headcount reductions
and executive severance. 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 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 adjusted to exclude the
effect of EBITDA of hospitals either sold or closed as of September
30, 2018. The Company has presented Adjusted EBITDA and Adjusted
EBITDA, Adjusted for Divestitures in this press release because it
believes these measures provide investors and other users of the
Company’s financial statements with additional information about
how the Company’s management assesses its results of operations.
Adjusted EBITDA and Adjusted EBITDA, Adjusted for
Divestitures are not measurements of financial performance under
U.S. GAAP. These calculations should not be considered in isolation
or as a substitute for net income, operating income or any other
measure calculated in accordance with U.S. GAAP. The items excluded
from Adjusted EBITDA and Adjusted EBITDA, Adjusted for Divestitures
are significant components in understanding and evaluating the
Company’s financial performance. The Company believes such
adjustments are appropriate, as the magnitude and frequency of such
items can vary significantly and are not related to the assessment
of the Company’s normal operating performance. Additionally, the
Company’s calculation of Adjusted EBITDA and Adjusted EBITDA,
Adjusted for Divestitures may not be comparable to similarly titled
measures reported by other companies. The following table
reconciles Adjusted EBITDA and Adjusted EBITDA, Adjusted for
Divestitures, each as defined above, to net income (loss), the most
directly comparable U.S. GAAP financial measure, as derived
directly from the Company’s consolidated statements of income for
the respective periods (in thousands):
Three
Months Ended September 30, Nine Months Ended September
30, 2018 2017 2018
2017 Net income (loss) $ (53,886 ) $ (28,554 ) $
(178,314 ) $ (86,334 ) Interest expense, net 32,450 32,216 95,307
90,204 Provision for (benefit from) income taxes (1,074 ) (542 )
(1,162 ) (86 ) Depreciation and amortization 16,612
20,735 52,015 63,441 EBITDA (5,898 ) 23,855 (32,154 )
67,225 Legal, professional and settlement costs 1,519 2,050 10,349
6,519 Impairment of long-lived assets and goodwill 32,438 5,261
72,198 21,461 Loss (gain) on sale of hospitals, net 805 79 8,927
(5,112 ) Loss on closure of hospitals, net 1,111 — 18,195 —
Transition of transition services agreements 2,445 — 3,682 —
Transaction costs related to the Spin-off — 173 — 204 Post-spin
headcount reductions and executive severance 1,722
850 7,688 2,543 Adjusted EBITDA 34,142 32,268 88,885
92,840 Negative EBITDA of divested hospitals 8,651
6,032 21,290 20,510 Adjusted EBITDA, Adjusted for
Divestitures $ 42,793 $ 38,300 $ 110,175 $ 113,350
(d) The following table reconciles net income (loss) attributable
to Quorum Health Corporation, as reported and on a per share basis,
with the adjustments described herein:
Three
Months Ended September 30, Nine Months Ended September
30, 2018 2017 2018
2017 (per share - basic and diluted) (per share -
basic and diluted) Earnings (loss) per share
attributable to Quorum Health Corporation stockholders, as reported
$ (1.85 ) $ (1.03 ) $ (6.21 ) $ (3.11 ) Adjustments: Legal,
professional and settlement costs 0.05 0.07 0.36 0.23 Impairment of
long-lived assets and goodwill 1.09 0.18 2.48 0.76 Loss (gain) on
sale of hospitals, net 0.03 — 0.31 (0.18 ) Loss on closure of
hospitals, net 0.04 — 0.63 — Transition of transition services
agreements 0.08 — 0.13 — Transaction costs related to the Spin-off
— 0.01 — 0.01 Post-spin headcount reductions and executive
severance 0.06 — 0.26 — Net operating losses of divested hospitals
0.29 0.21 0.73 0.73 Earnings (loss) per
share attributable to Quorum Health Corporation stockholders,
excluding adjustments $ (0.21 ) $ (0.56 ) $ (1.31 ) $ (1.56 )
(e) 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. (f)
Admissions represent the number of patients admitted for inpatient
services. (g) Adjusted admissions are computed by
multiplying admissions by gross patient revenues and then dividing
that number by gross inpatient revenues. (h) Total surgeries
represent the number of inpatient and outpatient surgeries.
(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 patients 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 or closed 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 Sandhills Regional
Medical Center, Barrow Regional Medical Center, Cherokee Medical
Center, Trinity Hospital of Augusta, Lock Haven Hospital, Sunbury
Community Hospital, L.V. Stabler Memorial Hospital, Affinity
Medical Center, Vista Medical Center West, Clearview Regional
Medical Center and McKenzie Regional Hospital which were sold or
closed on December 1, 2016, December 31, 2016, March 31, 2017, June
30, 2017, September 30, 2017, September 30, 2017, October 31, 2017,
February 11, 2018, March 1, 2018, March 31, 2018 and September 30,
2018, respectively.
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,” “outlook,”
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 Company’s ability to successfully
complete divestitures and the timing thereof, its ability to
complete any such divestitures on desired terms or at all, and its
ability to realize the intended benefits from any such
divestitures;
- changes in reimbursement methodologies
and rates paid by federal or state healthcare programs, including
Medicare and Medicaid, or commercial payors, and the timeliness of
reimbursement payments, including delays in certain states in which
the Company operates;
- 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 impact of changes made to the
Affordable Care Act, the potential for repeal or additional changes
to the Affordable Care Act, its implementation or its
interpretation, as well as changes in other federal, state or local
laws or regulations affecting the healthcare industry;
- 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 and difficulties in collecting payments for which
patients are responsible, including co-pays and deductibles;
- competition;
- changes in medical or other
technology;
- 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 costs associated with the
transition of the transition services agreements with Community
Health Systems, Inc., including the related arbitration proceeding,
as well as the additional costs and risks associated with any
operational problems, delays in collections from payors, and errors
and control issues during the termination and transition process,
and the Company’s ability to realize the intended benefits from
transitioning off of the transition services agreements;
- an unfavorable outcome from the
arbitration with CHS,
- the impact of certain outsourcing
functions, and the ability of CHS, as provider of the Company’s
billing and collection services pursuant to the transition services
agreements, to timely and appropriately bill and collect;
- the Company’s ability to manage
effectively its arrangements with third-party vendors for key
non-clinical business functions and services;
- the Company’s ability to achieve
operating and financial targets and to control the costs of
providing services if patient volumes are lower than expected;
- the Company’s ability to achieve and
realize the operational and financial benefits expected from its
margin improvement program;
- the effects related to outbreaks of
infectious diseases;
- the Company’s ability to attract and
retain, at reasonable employment costs, qualified personnel, key
management, physicians, nurses and other healthcare workers;
- the impact of seasonal or severe
weather conditions or earthquakes;
- 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;
- the Company’s ongoing ability to
demonstrate meaningful use of certified EHR technology, including
meeting interoperability objectives, and avoid related penalties
and recognize income for the related Medicare or Medicaid incentive
payments, to the extent such payments have not expired;
- the efforts of healthcare insurers,
providers, large employer groups 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 failure to comply with governmental
regulations;
- the Company’s ability, where
appropriate, to enter into, maintain and comply with provider
arrangements with payors and the terms of these arrangements, which
may be impacted by the increasing consolidation of health insurers
and managed care companies and vertical integration efforts
involving payors and healthcare providers;
- 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;
- liabilities and other claims asserted
against the Company, including self-insured malpractice
claims;
- the impact of cyber-attacks or security
breaches, including, but not limited to, the compromise of the
Company’s facilities and confidential patient data, potential harm
to patients, remediation and other expenses, potential liability
under the Health Insurance Portability and Accountability Act of
1996, or HIPAA, and consumer protection laws, federal and state
governmental inquiries, and damage to the Company’s
reputation;
- the Company’s ability to utilize its
income tax loss carryforwards and risks associated with the Tax
Cuts and Jobs Act of 2017;
- the Company’s ability to maintain
certain accreditations at its existing facilities and any future
facilities it may acquire;
- the success and long-term viability of
healthcare insurance exchanges and potential changes to the
beneficiary enrollment process;
- 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 timing and amount of cash flows
related to the California HQAF Program, as well as the potential
for retroactive adjustments for prior year payments;
- the effects related to the continued
implementation of the sequestration spending reductions and the
potential for future deficit reduction legislation;
- changes in U.S. generally accepted
accounting principles, including the impacts of adopting newly
issued accounting standards;
- the availability and terms of capital
to fund acquisitions, replacement facilities or other capital
expenditures;
- the Company’s ability to obtain
adequate levels of professional and general liability and workers’
compensation liability insurance; 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20181106005970/en/
Investor Contact:Westwicke PartnersAsher Dewhurst,
443-213-0500QuorumHealth@Westwicke.com
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