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| 8-K - 8-K - Capella Healthcare, Inc. | d767504d8k.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
| INVESTOR CONTACT: | MEDIA CONTACT: | |||
| Denise Warren | Beth Wright | |||
| EVP/CFO | VP – Communications | |||
| 615-764-3013 | 615-764-3010 | |||
Capella Healthcare, Inc. Reports Second Quarter 2014 Results
Adjusted EBITDA For the Second Quarter Increases by 21% Over Prior Year
Franklin, Tennessee. – August 6, 2014 – Capella Healthcare, Inc. (“Capella”) today announced results for the three months and six months ended June 30, 2014.
Three Months Ended June 30, 2014
For the three months ended June 30, 2014, revenues from continuing operations were $192.1 million, up 6.9% from $179.7 million for the same period a year ago. Adjusted EBITDA for the three months ended June 30, 2014, increased 20.6% to $26.9 million compared with $22.3 million for the same period a year ago.
For the three months ended June 30, 2014, admissions decreased 0.5% while adjusted admissions increased 0.5% for the same prior year period. Revenue per adjusted admission increased 6.3%.
Six Months Ended June 30, 2014
For the first half of 2014, revenues from continuing operations were $374.7 million, up 4.0% from $360.2 million for the same period a year ago. Adjusted EBITDA for the six months ended June 30, 2014, increased 4.8% to $46.2 million compared with $44.1 million for the same period a year ago.
For the six months ended June 30, 2014, admissions decreased 3.4% while adjusted admissions decreased 1.6% for the same prior year period. Revenue per adjusted admission increased 5.8%.
“Our second quarter results reflect significant progress on all of our operational and strategic initiatives.” said Michael A. Wiechart, president and chief executive officer of Capella. “Our results reflect sustained improvement to patient safety and quality of care, improving margins, and we are beginning to realize the early benefits of expanded coverage under healthcare reform. Our hospital leaders continue to do an exceptional job in preparing for this new era of value-based care – with an intense focus on quality, collaboration and cost-effectiveness – and our second quarter results reflect the results of their efforts.”
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About Capella Healthcare
Based in Franklin, Tennessee, Capella owns and/or operates general acute-care hospitals in six states. With the philosophy that all health care is local, Capella collaborates with each hospital’s medical staff, board and community leadership to take care to the next level. The company has access to significant leadership and financial resources, reinvesting in its family of hospitals to strengthen and expand services and facilities. For more information visit the website at www.CapellaHealthcare.com.
Conference Call
Capella will host a conference call for investors at 9:00 a.m. Central time today. All interested investors are invited to access the call by dialing: 877-806-6964, conference ID#: 8217 3742. A replay of the call will be available for a period of 30 days, beginning approximately one hour after the call has concluded. Instructions to access the audio recording can be found on the Investor Relations section of the Company’s website at www.CapellaHealthcare.com. A copy of the Company’s Form 10-Q for the quarterly period ended June 30, 2014 may be obtained via the Company’s website when filed with the Securities and Exchange Commission.
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Cautionary Statement about Preliminary Results and other Forward-Looking Information
This press release contains forward-looking statements based on current management expectations. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those expressed in any forward-looking statements. These factors include, but are not limited to, (1) the impact of healthcare reform and other changes in government programs; (2) spending cuts resulting from the Budget Control Act of 2011; (3) the impact of the economy; (4) growth of uninsured and “patient due” accounts and a deterioration in the collectability of these accounts; (5) federal or state programs that reduce our Medicare or Medicaid payments; (6) the reduction or elimination of payments from third-party payors or the inability to negotiate contracts or maintain satisfactory relationships with third-party payors; (7) controls designed to reduce inpatient services may reduce our revenue; (8) any shortage of qualified professional and staff personnel; (9) our ability to recruit and retain quality physicians; (10) the loss of the services of one or more of our executive management team; (11) our ability to comply with extensive laws and government regulations, including fraud and abuse laws; (12) competition from other hospitals or healthcare providers, including physicians; (13) concentration of revenue in a small number of states, which makes us particularly sensitive to regulatory and economic changes in those states; (14) our access to licensed information systems and the ability to integrate changes to our existing information systems or information systems of acquired hospitals; (15) liabilities for professional liability and other claims brought against our facilities; (16) potential legal and reputational risk as a result of our access to personal information of our patients; (17) state efforts to regulate the construction or expansion of healthcare facilities; (18) the industry trend toward value-based purchasing; (19) our substantial indebtedness and ability to generate cash flow to service or refinance our indebtedness; and (20) other risk factors described in our annual report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission. Many of the factors that will determine our future results are beyond our ability to control or predict. In light of the significant uncertainties inherent in the forward-looking statements contained herein, readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. We undertake 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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Capella Healthcare, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in millions)
| Three Months Ended June 30, | ||||||||||||||||
| 2013 | 2014 | |||||||||||||||
| Amount | % of Revenue |
Amount | % of Revenue |
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| Revenue before provision for bad debts |
$ | 204.4 | $ | 208.3 | ||||||||||||
| Provision for bad debts |
(24.7 | ) | (16.2 | ) | ||||||||||||
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| Revenues |
179.7 | 192.1 | ||||||||||||||
| Salaries & benefits |
83.5 | 46.5 | % | 92.4 | 48.1 | % | ||||||||||
| Supplies |
29.5 | 16.4 | 31.6 | 16.4 | ||||||||||||
| Other operating expenses |
46.6 | 25.9 | 50.0 | 26.0 | ||||||||||||
| Other income |
(0.3 | ) | -0.2 | (3.0 | ) | -1.6 | ||||||||||
| Management fees |
0.1 | — | 0.1 | — | ||||||||||||
| Interest, net |
13.4 | 7.5 | 13.8 | 7.2 | ||||||||||||
| Depreciation and amortization |
11.1 | 6.2 | 11.3 | 5.9 | ||||||||||||
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| Loss from continuing operations before income taxes |
(4.2 | ) | -2.3 | (4.1 | ) | -2.1 | ||||||||||
| Income taxes |
1.3 | 0.7 | 0.8 | 0.4 | ||||||||||||
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| Loss from continuing operations |
(5.5 | ) | -3.1 | (4.9 | ) | -2.6 | ||||||||||
| Loss from discontinued operations, net of tax |
(1.2 | ) | -0.7 | (0.3 | ) | -0.1 | ||||||||||
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| Net loss |
(6.7 | ) | -3.7 | (5.2 | ) | -2.7 | ||||||||||
| Less: Net income (loss) attributable to non-controlling interests |
(0.2 | ) | -0.1 | 0.2 | 0.1 | |||||||||||
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| Net loss attributable to Capella Healthcare, Inc. |
$ | (6.5 | ) | -3.6 | % | $ | (5.4 | ) | -2.8 | % | ||||||
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Capella Healthcare, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in millions)
| Six Months Ended June 30, | ||||||||||||||||
| 2013 | 2014 | |||||||||||||||
| Amount | % of Revenue |
Amount | % of Revenue |
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| Revenue before provision for bad debts |
$ | 408.5 | $ | 414.1 | ||||||||||||
| Provision for bad debts |
(48.3 | ) | (39.4 | ) | ||||||||||||
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| Revenues |
360.2 | 374.7 | ||||||||||||||
| Salaries & benefits |
168.2 | 46.7 | % | 180.3 | 48.1 | % | ||||||||||
| Supplies |
59.6 | 16.5 | 62.0 | 16.5 | ||||||||||||
| Other operating expenses |
91.2 | 25.3 | 96.6 | 25.8 | ||||||||||||
| Other income |
(0.3 | ) | — | (4.3 | ) | -1.1 | ||||||||||
| Management fees |
0.1 | — | 0.1 | — | ||||||||||||
| Interest, net |
27.3 | 7.6 | 27.6 | 7.4 | ||||||||||||
| Depreciation and amortization |
21.3 | 5.9 | 22.5 | 6.0 | ||||||||||||
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| Loss from continuing operations before income taxes |
(7.2 | ) | -2.0 | (10.1 | ) | -2.7 | ||||||||||
| Income taxes |
2.4 | 0.7 | 1.7 | 0.5 | ||||||||||||
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| Loss from continuing operations |
(9.6 | ) | -2.7 | (11.8 | ) | -3.1 | ||||||||||
| Loss from discontinued operations, net of tax |
(2.8 | ) | -0.8 | (2.7 | ) | -0.7 | ||||||||||
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| Net loss |
(12.4 | ) | -3.4 | (14.5 | ) | -3.9 | ||||||||||
| Less: Net loss attributable to non-controlling interests |
(0.3 | ) | -0.1 | (0.1 | ) | — | ||||||||||
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| Net loss attributable to Capella Healthcare, Inc. |
$ | (12.1 | ) | -3.4 | % | $ | (14.4 | ) | -3.8 | % | ||||||
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Capella Healthcare, Inc.
Condensed Consolidated Balance Sheets
(Dollars in millions)
| (Unaudited) | ||||||||
| December 31, | June 30, | |||||||
| 2013 | 2014 | |||||||
| ASSETS | ||||||||
| Current Assets: |
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| Cash and cash equivalents |
$ | 26.4 | $ | 25.7 | ||||
| Accounts receivable, net |
126.3 | 122.6 | ||||||
| Inventories |
24.3 | 24.8 | ||||||
| Prepaid expenses and other current assets |
11.6 | 12.7 | ||||||
| Deferred tax assets |
2.5 | 0.5 | ||||||
| Assets held for sale |
13.1 | — | ||||||
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| Total current assets |
204.2 | 186.3 | ||||||
| Property and equipment, net |
456.1 | 444.0 | ||||||
| Goodwill |
133.6 | 133.6 | ||||||
| Intangible assets, net |
13.2 | 12.1 | ||||||
| Other assets, net |
23.7 | 23.9 | ||||||
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| Total assets |
$ | 830.8 | $ | 799.9 | ||||
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| LIABILITIES AND STOCKHOLDER’S DEFICIT | ||||||||
| Current liabilities: |
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| Accounts payable |
$ | 28.5 | $ | 28.2 | ||||
| Salaries and benefits payable |
23.8 | 23.7 | ||||||
| Accrued interest |
23.3 | 23.3 | ||||||
| Other accrued liabilities |
32.7 | 22.0 | ||||||
| Current portion of long-term debt |
49.6 | 44.1 | ||||||
| Liabilities held for sale |
1.9 | — | ||||||
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| Total current liabilities |
159.8 | 141.3 | ||||||
| Long-term debt |
507.8 | 507.2 | ||||||
| Deferred income taxes |
17.3 | 17.0 | ||||||
| Other liabilities |
28.4 | 29.0 | ||||||
| Redeemable non-controlling interests |
21.4 | 20.8 | ||||||
| Due to parent |
210.9 | 213.8 | ||||||
| Stockholder’s deficit: |
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| Common stock |
— | — | ||||||
| Retained deficit |
(114.8 | ) | (129.2 | ) | ||||
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| Total stockholder’s deficit |
(114.8 | ) | (129.2 | ) | ||||
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| Total liabilities and stockholder’s deficit |
$ | 830.8 | $ | 799.9 | ||||
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Capella Healthcare, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in millions)
| ` | For the Six Months Ended June 30, | |||||||
| 2013 | 2014 | |||||||
| Operating activities: |
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| Net loss |
$ | (12.4 | ) | $ | (14.5 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
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| Loss from discontinued operations |
2.8 | 2.7 | ||||||
| Depreciation and amortization |
21.3 | 22.5 | ||||||
| Amortization of loan costs and debt discount |
2.0 | 2.0 | ||||||
| Provision for bad debts |
48.3 | 39.4 | ||||||
| Deferred income taxes |
1.6 | 1.6 | ||||||
| Stock-based compensation |
0.5 | 3.3 | ||||||
| Changes in working capital, net of acquisitions |
(55.3 | ) | (45.4 | ) | ||||
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| Net cash provided by operating activities - continuing operations |
8.8 | 11.6 | ||||||
| Net cash used in operating activities - discontinued operations |
(2.8 | ) | (2.8 | ) | ||||
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| Net cash provided by operating activities |
6.0 | 8.8 | ||||||
| Investing activities: |
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| Purchases of property and equipment, net |
(15.4 | ) | (10.2 | ) | ||||
| Proceeds from disposition of healthcare businesses |
— | 11.2 | ||||||
| Other investing activities |
— | (0.2 | ) | |||||
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| Net cash (used in) provided by investing activities |
(15.4 | ) | 0.8 | |||||
| Financing activities: |
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| Payments on capital leases and other obligations |
(2.5 | ) | (7.5 | ) | ||||
| Payments of financing costs and fees |
— | (2.0 | ) | |||||
| Advances (to) from Parent |
0.1 | (0.4 | ) | |||||
| Distributions to non-controlling interests |
(0.7 | ) | (0.5 | ) | ||||
| Sale (repurchase) of non-controlling interests |
(0.2 | ) | 0.1 | |||||
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| Net cash used in financing activities - continuing operations |
(3.3 | ) | (10.3 | ) | ||||
| Net decrease in cash and cash equivalents |
(12.7 | ) | (0.7 | ) | ||||
| Cash and cash equivalents, beginning of period |
33.3 | 26.4 | ||||||
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| Cash and cash equivalents, end of period |
$ | 20.6 | $ | 25.7 | ||||
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Capella Healthcare, Inc.
Supplemental Non-GAAP Disclosures
Adjusted EBITDA – Reported (Unaudited)
(Dollars in millions)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2013 | 2014 | 2013 | 2014 | |||||||||||||
| Net loss attributable to Capella Healthcare, Inc. |
$ | (6.5 | ) | $ | (5.4 | ) | $ | (12.1 | ) | $ | (14.4 | ) | ||||
| Interest, net |
13.4 | 13.8 | 27.3 | 27.6 | ||||||||||||
| Income taxes |
1.3 | 0.8 | 2.4 | 1.7 | ||||||||||||
| Depreciation and amortization |
11.1 | 11.3 | 21.3 | 22.5 | ||||||||||||
| Non-controlling interests |
(0.2 | ) | 0.2 | (0.3 | ) | (0.1 | ) | |||||||||
| Business development and refinancing related costs |
1.7 | 0.8 | 2.1 | 1.0 | ||||||||||||
| Stock-based compensation, non-cash |
0.2 | 3.2 | 0.5 | 3.3 | ||||||||||||
| Stock-based compensation, cash |
— | 1.8 | — | 1.8 | ||||||||||||
| Management fee to related party |
0.1 | 0.1 | 0.1 | 0.1 | ||||||||||||
| Discontinued operations, net of taxes |
1.2 | 0.3 | 2.8 | 2.7 | ||||||||||||
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| Adjusted EBITDA (1) |
$ | 22.3 | $ | 26.9 | $ | 44.1 | $ | 46.2 | ||||||||
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| (1) | Adjusted EBITDA is defined as income (loss) before interest expense, income taxes, depreciation and amortization, non-controlling interests, business development and refinancing related expenses, stock-based compensation, management fee to related party and discontinued operations, net of taxes. Adjusted EBITDA is not intended as a substitute for net income (loss) attributable to Capella Healthcare, Inc. stockholders, operating cash flows or other cash flow data determined in accordance with accounting principles generally accepted in the United States. Due to varying methods of calculation, Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies. |
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Capella Healthcare, Inc.
Operating Statistics (1) (Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||
| 2013 | 2014 | % change | 2013 | 2014 | % change | |||||||||||||||||||
| Total Consolidated: |
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| Admissions |
10,452 | 10,398 | -0.5 | % | 21,453 | 20,727 | -3.4 | % | ||||||||||||||||
| Adjusted Admissions |
22,849 | 22,970 | 0.5 | % | 45,508 | 44,766 | -1.6 | % | ||||||||||||||||
| Revenue per adjusted admission |
$ | 7,865 | $ | 8,363 | 6.3 | % | $ | 7,914 | $ | 8,371 | 5.8 | % | ||||||||||||
| Inpatient Surgery |
2,340 | 2,263 | -3.3 | % | 4,753 | 4,462 | -6.1 | % | ||||||||||||||||
| Outpatient Surgery |
5,814 | 5,801 | -0.2 | % | 11,446 | 11,104 | -3.0 | % | ||||||||||||||||
| Emergency Room Visits |
54,612 | 56,886 | 4.2 | % | 110,550 | 110,226 | -0.3 | % | ||||||||||||||||
| (1) | All hospital statistics are on a continuing operations basis and excludes facilities classified as discontinued operations. |
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