Segment and Geographic Information

6 Months Ended

Mar. 31, 2012

Segment and Geographic Information [Abstract]

SEGMENT AND GEOGRAPHIC INFORMATION

10. SEGMENT AND GEOGRAPHIC INFORMATION

The Company’s acute care hospitals and related healthcare businesses are similar in their activities and the economic environments in which they operate (i.e. urban and suburban markets). Accordingly, the Company’s reportable operating segments consist of (1) acute care hospitals and related healthcare businesses, collectively “Acute Care”, and (2) Health Choice. The following is a financial summary by business segment for the periods indicated (in thousands):

	For the Quarter Ended March 31, 2012
	Acute Care			Health Choice		Eliminations			Consolidated
Acute care revenue	$	588,641		$	—	$	—		$	588,641
Less: Provision for bad debts		(78,173	)		—		—			(78,173	)
Acute care revenue, net		510,468			—		—			510,468
Premium revenue		—			137,168		—			137,168
Revenue between segments		1,820			—		(1,820	)		—
Net revenue		512,288			137,168		(1,820	)		647,636
Salaries and benefits (excludes stock-based compensation)		226,693			5,957		—			232,650
Supplies		86,907			62		—			86,969
Medical claims		—			110,499		(1,820	)		108,679
Rentals and leases		11,875			401		—			12,276
Other operating expenses		114,115			6,161		—			120,276
Medicaid EHR incentive payments		(2,009	)		—		—			(2,009	)
Adjusted EBITDA (1)		74,707			14,088		—			88,795
Interest expense, net		35,556			—		—			35,556
Depreciation and amortization		28,054			922		—			28,976
Stock-based compensation		1,442			—		—			1,442
Management fees		1,250			—		—			1,250
Earnings from continuing operations before gain on disposal of assets and income taxes		8,405			13,166		—			21,571
Gain on disposal of assets, net		438			—		—			438
Earnings from continuing operations before income taxes	$	8,843		$	13,166	$	—		$	22,009

	For the Quarter Ended March 31, 2011
	Acute Care			Health Choice		Eliminations			Consolidated
Acute care revenue	$	489,027		$	—	$	—		$	489,027
Less: Provision for bad debts		(54,801	)		—		—			(54,801	)
Acute care revenue, net		434,226			—		—			434,226
Premium revenue		—			189,960		—			189,960
Revenue between segments		2,807			—		(2,807	)		—
Net revenue		437,033			189,960		(2,807	)		624,186
Salaries and benefits (excludes stock-based compensation)		190,325			5,173		—			195,498
Supplies		77,872			52		—			77,924
Medical claims		—			160,223		(2,807	)		157,416
Rentals and leases		10,891			398		—			11,289
Other operating expenses		96,425			6,925		—			103,350
Adjusted EBITDA (1)		61,520			17,189		—			78,709
Interest expense, net		16,510			—		—			16,510
Depreciation and amortization		23,697			887		—			24,584
Stock-based compensation		538			—		—			538
Management fees		1,250			—		—			1,250
Earnings from continuing operations before gain on disposal of assets and income taxes		19,525			16,302		—			35,827
Gain on disposal of assets, net		540			—		—			540
Earnings from continuing operations before income taxes	$	20,065		$	16,302	$	—		$	36,367

	For the Six Months Ended March 31, 2012
	Acute Care			Health Choice		Eliminations			Consolidated
Acute care revenue	$	1,131,855		$	—	$	—		$	1,131,855
Less: Provision for bad debts		(148,452	)		—		—			(148,452	)
Acute care revenue, net		983,403			—		—			983,403
Premium revenue		—			287,906		—			287,906
Revenue between segments		3,449			—		(3,449	)		—
Net revenue		986,852			287,906		(3,449	)		1,271,309
Salaries and benefits (excludes stock-based compensation)		445,030			11,084		—			456,114
Supplies		171,026			113		—			171,139
Medical claims		—			236,373		(3,449	)		232,924
Rentals and leases		23,761			781		—			24,542
Other operating expenses		222,412			11,847		—			234,259
Medicaid EHR incentive payments		(8,686	)		—		—			(8,686	)
Adjusted EBITDA (1)		133,309			27,708		—			161,017
Interest expense, net		70,496			—		—			70,496
Depreciation and amortization		55,710			1,800		—			57,510
Stock-based compensation		1,942			—		—			1,942
Management fees		2,500			—		—			2,500
Earnings from continuing operations before gain on disposal of assets and income taxes		2,661			25,908		—			28,569
Gain on disposal of assets, net		678			—		—			678
Earnings from continuing operations before income taxes	$	3,339		$	25,908	$	—		$	29,247
Segment assets	$	2,361,690		$	326,224				$	2,687,914
Capital expenditures	$	51,753		$	1,495				$	53,248
Goodwill	$	802,434		$	5,757				$	808,191

	For the Six Months Ended March 31, 2011
	Acute Care			Health Choice		Eliminations			Consolidated
Acute care revenue	$	960,715		$	—	$	—		$	960,715
Less: Provision for bad debts		(114,415	)		—		—			(114,415	)
Acute care revenue, net		846,300			—		—			846,300
Premium revenue		—			392,152		—			392,152
Revenue between segments		5,467			—		(5,467	)		—
Net revenue		851,767			392,152		(5,467	)		1,238,452
Salaries and benefits (excludes stock-based compensation)		374,719			10,196		—			384,915
Supplies		154,264			96		—			154,360
Medical claims		—			334,217		(5,467	)		328,750
Rentals and leases		21,613			842		—			22,455
Other operating expenses		187,255			13,221		—			200,476
Adjusted EBITDA (1)		113,916			33,580		—			147,496
Interest expense, net		33,387			—		—			33,387
Depreciation and amortization		46,848			1,782		—			48,630
Stock-based compensation		1,034			—		—			1,034
Management fees		2,500			—		—			2,500
Earnings from continuing operations before gain on disposal of assets and income taxes		30,147			31,798		—			61,945
Gain on disposal of assets, net		885			—		—			885
Earnings from continuing operations before income taxes	$	31,032		$	31,798	$	—		$	62,830
Segment assets	$	2,114,294		$	342,970				$	2,457,264
Capital expenditures	$	42,187		$	47				$	42,234
Goodwill	$	795,518		$	5,757				$	801,275

(1) Adjusted EBITDA represents net earnings from continuing operations before interest expense, income tax expense, depreciation and amortization, stock-based compensation, gain (loss) 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, majority shareholder of IAS. 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 GAAP, 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 condensed 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.