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8-K - FORM 8-K - American Renal Associates Holdings, Inc. | d477056d8k.htm |
Exhibit 99.1
American Renal Associates Holdings, Inc.
Consolidated Statements of Income
(preliminary and unaudited and in thousands)
Three Months Ended December 31, |
Year Ended December 31, |
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2012 | 2011 | 2012 | 2011 | |||||||||||||
Patient service operating revenues |
$ | 116,686 | $ | 93,106 | $ | 424,010 | $ | 360,081 | ||||||||
Provision for uncollectible accounts |
(796 | ) | (686 | ) | (2,543 | ) | (4,178 | ) | ||||||||
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Net patient service operating revenues |
115,890 | 92,420 | 421,467 | 355,903 | ||||||||||||
Operating expenses: |
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Patient care costs |
65,856 | 54,539 | 244,973 | 217,036 | ||||||||||||
General and administrative |
12,281 | 9,908 | 45,904 | 39,326 | ||||||||||||
Merger related costs |
| 154 | | 604 | ||||||||||||
Depreciation and amortization |
5,840 | 4,643 | 20,991 | 17,865 | ||||||||||||
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Total operating expenses |
83,977 | 69,244 | 311,868 | 274,831 | ||||||||||||
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Operating Income |
31,913 | 23,176 | 109,599 | 81,072 | ||||||||||||
Interest expense, net |
(10,459 | ) | (9,860 | ) | (40,884 | ) | (36,236 | ) | ||||||||
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Income before income taxes |
21,454 | 13,316 | 68,715 | 44,836 | ||||||||||||
Income tax expense |
2,628 | 2,588 | 8,266 | 4,400 | ||||||||||||
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Net income |
18,826 | 10,728 | 60,449 | 40,436 | ||||||||||||
Less: Net income attributable to noncontrolling interests |
(14,884 | ) | (10,344 | ) | (50,808 | ) | (37,530 | ) | ||||||||
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Net income attributable to ARAH |
$ | 3,942 | $ | 384 | $ | 9,641 | $ | 2,906 | ||||||||
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(1)
American Renal Associates Holdings, Inc.
Condensed Consolidated Balance Sheets
(preliminary and unaudited and in thousands)
December 31, | December 31, | |||||||
2012 | 2011 | |||||||
Assets |
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Cash |
$ | 31,023 | $ | 36,774 | ||||
Patient accounts receivable, net |
60,019 | 56,027 | ||||||
Income tax receivable |
| 1,322 | ||||||
Inventories, prepaid expenses and other current assets |
16,816 | 15,101 | ||||||
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Total current assets |
107,858 | 109,224 | ||||||
Property and equipment, net |
91,026 | 72,416 | ||||||
Deferred financing costs, net |
4,400 | 4,962 | ||||||
Intangible assets, net |
34,480 | 35,416 | ||||||
Other long-term assets |
3,238 | 1,734 | ||||||
Goodwill |
551,390 | 504,045 | ||||||
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Total assets |
$ | 792,392 | $ | 727,797 | ||||
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Liabilities and Equity |
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Current liabilities: |
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Accounts payable and accrued expenses |
$ | 51,738 | $ | 52,682 | ||||
Amount due to sellers |
675 | 2,192 | ||||||
Current portion of long-term debt |
3,644 | 2,662 | ||||||
Current portion of capital lease obligations |
98 | 51 | ||||||
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Total current liabilities |
56,155 | 57,587 | ||||||
Long-term debt, less current portion |
416,816 | 391,084 | ||||||
Capital lease obligations, less current portion |
129 | 111 | ||||||
Other long-term liabilities |
4,213 | 3,362 | ||||||
Deferred tax liabilities |
17,425 | 16,233 | ||||||
Noncontrolling interests subject to put provisions |
59,538 | 47,492 | ||||||
Total equity |
238,116 | 211,928 | ||||||
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Total liabilities and equity |
$ | 792,392 | $ | 727,797 | ||||
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(2)
American Renal Associates Holdings, Inc.
Supplemental Business Metrics
(preliminary and unaudited)
Three Months | Three Months | Three Months | Year | Year | ||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
2012 | 2012 | 2011 | 2012 | 2011 | ||||||||||||||||
Volume |
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Treatments |
324,810 | 301,901 | 266,313 | 1,187,390 | 1,023,444 | |||||||||||||||
Number of treatment days |
79 | 78 | 79 | 313 | 313 | |||||||||||||||
Treatments per day |
4,112 | 3,871 | 3,371 | 3,794 | 3,270 | |||||||||||||||
Non-acquired growth year over year |
14.5 | % | 8.5 | % | 11.3 | % | 11.7 | % | 17.4 | % | ||||||||||
Revenue |
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Patient service operating revenues (in thousands) |
$ | 116,686 | $ | 108,288 | $ | 93,106 | $ | 424,010 | $ | 360,081 | ||||||||||
Patient service operating revenues per treatment |
$ | 359.24 | $ | 358.69 | $ | 349.61 | $ | 357.09 | $ | 351.83 | ||||||||||
Per treatment increase from previous quarter |
$ | 0.55 | $ | 1.29 | $ | (5.46 | ) | N/A | N/A | |||||||||||
Provision for uncollectible accounts |
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As a % of patient service operating revenues |
0.7 | % | 0.8 | % | 0.7 | % | 0.6 | % | 1.2 | % | ||||||||||
Expenses |
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Patient care costs |
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Amount (in thousands) |
$ | 65,856 | $ | 62,245 | $ | 54,539 | $ | 244,973 | $ | 217,036 | ||||||||||
As a % of patient service operating revenues |
56.4 | % | 57.5 | % | 58.6 | % | 57.8 | % | 60.3 | % | ||||||||||
Per treatment |
$ | 202.75 | $ | 206.18 | $ | 204.79 | $ | 206.31 | $ | 212.06 | ||||||||||
Per treatment decrease from previous quarter |
$ | (3.43 | ) | $ | (0.08 | ) | $ | (5.66 | ) | N/A | N/A | |||||||||
General and administrative expenses |
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Amount (in thousands) |
$ | 12,281 | $ | 11,705 | $ | 9,908 | $ | 45,904 | $ | 39,326 | ||||||||||
As a % of patient service operating revenues |
10.5 | % | 10.8 | % | 10.6 | % | 10.8 | % | 10.9 | % | ||||||||||
Per treatment |
$ | 37.81 | $ | 38.77 | $ | 37.20 | $ | 38.66 | $ | 38.43 | ||||||||||
Per treatment (decrease) increase from previous quarter |
$ | (0.96 | ) | $ | (1.53 | ) | $ | 0.03 | N/A | N/A | ||||||||||
Adjusted EBITDA |
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Adjusted EBITDA including noncontrolling interests (in thousands) |
$ | 38,330 | $ | 34,028 | $ | 28,376 | $ | 132,784 | $ | 103,879 | ||||||||||
Adjusted EBITDA (in thousands) |
$ | 23,446 | $ | 20,859 | $ | 18,032 | $ | 81,976 | $ | 66,349 | ||||||||||
Accounts receivable DSO (days) |
47 | 47 | 54 | N/A | N/A |
(3)
American Renal Associates Holdings, Inc.
Reconciliation of Non-GAAP Financial Measures:
(preliminary and unaudited and in thousands)
To supplement our consolidated financial statements prepared in accordance with GAAP, we use the following measures defined as Non-GAAP measures by the SEC: Adjusted EBITDA (including noncontrolling interests) and Adjusted EBITDA. Adjusted EBITDA is defined as net income attributable to ARAH before income taxes, interest expense, depreciation and amortization, and we further adjust for other non-cash charges and non-recurring charges. We believe this information is useful for evaluating our business and understanding our operating performance in a manner similar to management. We believe Adjusted EBITDA is helpful in highlighting trends because Adjusted EBITDA excludes the results of decisions that are outside the control of operating management and can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. In addition, we present Adjusted EBITDA because it is one of the components used in the calculations under the covenants contained in our revolving credit facility. Adjusted EBITDA is not a measure of operating performance computed in accordance with GAAP and should not be considered as a substitute for operating income, net income, cash flows from operations, or other statement of income or cash flow data prepared in conformity with GAAP, or as measures of profitability or liquidity. In addition, Adjusted EBITDA may not be comparable to similarly titled measures for other companies. Adjusted EBITDA may not be indicative of historical operating results, and we do not mean for it to be predictive of future results of operations or cash flows. Adjusted EBITDA has limitations as an analytical tool, and you should not consider this item in isolation, or as a substitute for an analysis of our results as reported under GAAP. Some of these limitations are that Adjusted EBITDA:
| does not include interest expense as we have borrowed money for general corporate purposes, interest expense is a necessary element of our costs and ability to generate profits and cash flows; |
| does not include depreciation and amortization because construction and operation of our dialysis clinics requires significant capital expenditures, depreciation and amortization are a necessary element of our costs and ability to generate profits; |
| does not include stock-based compensation expense; |
| does not reflect changes in, or cash requirements for, our working capital needs; and |
| does not include certain income tax payments that represent a reduction in cash available to us. |
The following table presents the reconciliation from net income to Adjusted EBITDA for the periods indicated:
Three Months | Three Months | Three Months | Year | Year | ||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
2012 | 2012 | 2011 | 2012 | 2011 | ||||||||||||||||
Reconciliation of Net income to Adjusted EBITDA: |
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Net income |
$ | 18,826 | $ | 14,898 | $ | 10,728 | $ | 60,449 | $ | 40,436 | ||||||||||
Interest expense, net |
10,459 | 10,247 | 9,860 | 40,884 | 36,236 | |||||||||||||||
Income tax expense |
2,628 | 2,991 | 2,588 | 8,266 | 4,400 | |||||||||||||||
Depreciation and amortization |
5,840 | 5,333 | 4,643 | 20,991 | 17,865 | |||||||||||||||
Merger related costs |
| | 154 | | 604 | |||||||||||||||
Stock-based compensation |
233 | 221 | 230 | 897 | 3,649 | |||||||||||||||
Management fee |
344 | 338 | 173 | 1,297 | 689 | |||||||||||||||
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Adjusted EBITDA (including noncontrolling interests) |
$ | 38,330 | $ | 34,028 | $ | 28,376 | $ | 132,784 | $ | 103,879 | ||||||||||
Less: Net income attributable to noncontrolling interests |
(14,884 | ) | (13,169 | ) | (10,344 | ) | (50,808 | ) | (37,530 | ) | ||||||||||
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Adjusted EBITDA |
$ | 23,446 | $ | 20,859 | $ | 18,032 | $ | 81,976 | $ | 66,349 | ||||||||||
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(4)