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EX-99.1 - EX-99.1 - VANGUARD HEALTH SYSTEMS INC | g25703exv99w1.htm |
EX-99.2 - EX-99.2 - VANGUARD HEALTH SYSTEMS INC | g25703exv99w2.htm |
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 or 15(d) of The Securities Exchange Act of 1934
Pursuant To Section 13 or 15(d) of The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported) January 19, 2011
(January 19, 2011)
VANGUARD HEALTH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE | 333-71934 | 62-1698183 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) |
20 Burton Hills Boulevard, Suite 100, Nashville, Tennessee | 37215 | |
(Address of principal executive offices) | (Zip Code) |
Registrants Telephone Number, including area code (615) 665-6000
Not applicable
(Former name or former address, if changed since last report.)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 2.02 Results of Operations and Financial Condition.
The information set forth below under
Item 7.01 of this Current Report on Form 8-K is incorporated herein by reference into this Item 2.02.
Item 7.01 Regulation FD Disclosure.
In connection with
the offering of the Notes (as defined in Item 8.01 below) Registrant, Vanguard Health Systems, Inc.
(Vanguard), is disclosing under Item 7.01 of this Current Report on Form 8-K the information included as
Exhibit 99.1. This information, some of which has not been previously reported (including certain
supplemental and revised disclosure regarding Vanguards business, such as recent developments,
risk factors, business, capitalization data, liquidity and capital
resources information, and certain unaudited pro forma
financial information and certain historical financial information of
The Detroit Medical Center (DMC), acquired by Vanguard on
January 1, 2011),
is excerpted from the Confidential Preliminary Offering Memorandum,
dated January 19, 2011 that is being
circulated in connection with the offering of the Notes described in Item 8.01.
This information includes certain unaudited
preliminary financial information related to Vanguard for the quarter
and six months ended December 31, 2010 and preliminary operating
data related to Vanguard and DMC for the
quarter and year to date periods ended December 31, 2010 for
informational purposes for interested investors and certain unaudited preliminary supplementary
financial information related thereto required by Regulation G (collectively, the Preliminary
Financial Information and Operating Data), which is set forth in Exhibit 99.1, attached hereto and
incorporated herein by reference. The Preliminary Financial Information and Operating Data related
to Vanguard is subject to adjustment in Vanguards full second quarter earnings release. Vanguard
intends to issue the full financial earnings release after market close on Monday, February 7, 2011
and to hold a conference call/webcast to discuss the quarterly and year-to-date results on Tuesday,
February 8, 2011, at 11:00 am EST.
The Preliminary Financial Information and
Operating Data contain a non-GAAP financial measure, Adjusted
EBITDA. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of an
entitys historical or future financial performance, financial position or cash flows that excludes
amounts, or is subject to adjustments that have the effect of excluding amounts, that are included
in the most directly comparable measure calculated and presented in accordance with GAAP in the
statement of operations, balance sheet or statement of cash flows of the registrant; or includes
amounts, or is subject to adjustments that have the effect of including amounts, that are excluded
from the most directly comparable measure so calculated and presented. In this regard, GAAP refers
to generally accepted accounting principles in the United States. Pursuant to the requirements of
Regulation G, Vanguard has provided a reconciliation of Adjusted EBITDA to the most directly
comparable GAAP financial measure to Adjusted EBITDA, net income
attributable to Vanguard Health Systems, Inc. stockholders, in
the Preliminary Financial Information and Operating Data, which is
set forth in Exhibit 99.1 attached hereto and incorporated
herein by reference.
Vanguard defines Adjusted EBITDA as income
(loss) attributable to Vanguards stockholders before interest expense (net of interest
income), income taxes, depreciation and amortization, non-controlling interests, equity method
income, stock compensation, gain or loss on disposal of assets, monitoring fees and expenses,
realized and unrealized gains or losses on investments, acquisition related expenses,
debt extinguishment costs, impairment losses, pension expense
and discontinued operations, net of taxes.
Monitoring fees and expenses include fees and reimbursed expenses paid to affiliates of The
Blackstone Group and Metalmark Subadvisor LLC for advisory and oversight services. Adjusted EBITDA
is not intended as a substitute for net income (loss) attributable to Vanguard Health Systems, Inc. stockholders, operating cash
flows or other cash flow data determined in accordance with GAAP. Adjusted EBITDA, as
presented by Vanguard, may not be comparable to similarly titled measures of other companies due to varying methods of
calculation.
Management believes that Adjusted EBITDA
provides useful information about Vanguards financial performance to investors, lenders, financial analysts and rating agencies since
these groups have historically used EBITDA-related measures in the healthcare industry, along with
other measures, to estimate the value of a company, to make informed investment decisions, to
evaluate a companys operating performance compared to that of other companies in the healthcare
industry and to evaluate a companys leverage capacity and its ability to meet its debt requirements. Adjusted EBITDA
eliminates the uneven effects of non-cash depreciation of tangible assets and amortization of
intangible assets, much of which results from acquisitions accounted for under the purchase method
of accounting. Adjusted EBITDA also eliminates the effects of changes in interest rates which
management believes relate to general trends in global capital markets, but are not necessarily
indicative of a companys operating performance. Adjusted EBITDA is also used by Vanguards
management to measure individual performance for incentive compensation purposes and as an
analytical indicator for purposes of allocating resources to its operating businesses and assessing
their performance, both internally and relative to Vanguards peers, as well as to evaluate the
performance of Vanguards operating management teams.
A limitation of Adjusted EBITDA, however, is that it does not reflect the periodic cost of
certain capitalized assets that Vanguard uses to generate its revenues. These costs are
evaluated through other financial measures such as capital expenditures. Adjusted EBITDA also does
not include interest expense, which is a significant expense because of Vanguards substantial indebtedness. Despite
these limitations, management believes that Adjusted EBITDA, as an operating performance measure,
and not as a liquidity measure, provides investors and analysts with a useful measure of operating
results unaffected by differences in capital structures, capital investment cycles and ages of
related assets among otherwise comparable companies. Finally, management believes it is useful to
investors to provide them with disclosure of Vanguards operating results using the same
key financial metric as that used by management.
Item 8.01 Other Events.
On January 19,
2011, Vanguard announced that its wholly-owned
subsidiaries, Vanguard Health Holding Company II, LLC (VHS Holdco II) and Vanguard Holding Company
II, Inc. (together with VHS Holdco II, the Senior Note Issuers), plan to issue an aggregate
principal amount of $375.0 million of senior notes due 2019 (the Senior Notes) and that Vanguard
plans to issue senior discount notes due 2016 generating
approximately $375.0 million in gross
proceeds (the Senior Discount Notes and, together with the Senior Notes, the Notes),
each in a private placement.
The Senior Notes Issuers obligations under the Senior Notes will be fully and
unconditionally guaranteed on a senior basis by Vanguard, Vanguard Health Holding
Company I, LLC and certain subsidiaries of VHS Holdco II. The Senior Discount Notes
will not be guaranteed by any of Vanguards subsidiaries.
The Senior Note Issuers intend
to use the net proceeds from the Senior Notes offering for general corporate purposes, including
acquisitions, and the related transaction fees and expenses of both notes offerings. Vanguard
intends to use the proceeds from the Senior Discount Notes offering to pay a dividend to its
equityholders. A copy of the press release, dated January 19,
2011, announcing the offering of the Notes is
attached as Exhibit 99.2 and is incorporated herein by this reference.
The Notes have
not been registered under the Securities Act of 1933, as amended (the Securities Act). The Notes may not
be offered or sold within the United States or to U.S. persons, except to qualified institutional
buyers in reliance on the exemption from registration provided by Rule 144A and to certain persons
in offshore transactions in reliance on Regulation S. You are hereby notified that sellers of the
Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act,
provided by Rule 144A. This announcement does not constitute an offer to sell or
the solicitation of an offer to buy Notes in any jurisdiction in which such an offer or sale would
be unlawful.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. | The exhibits filed as part of this Current Report on Form 8-K are listed in the Exhibit Index which is located at the end of this Current Report on Form 8-K. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly authorized this report to be signed on its behalf by the undersigned thereunto duly
authorized.
VANGUARD HEALTH SYSTEMS, INC. |
||||
BY: | /s/ Gary D. Willis | |||
Gary D. Willis | ||||
Senior Vice President, Controller and Chief Accounting Officer | ||||
Date:
January 19, 2011
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