EX-99.1 2 qhc-ex991_6.htm EX-99.1 qhc-ex991_6.htm

Exhibit 99.1

 

Investor Contact:  

  

Asher Dewhurst

Westwicke Partners

QuorumHealth@Westwicke.com

(443) 213-0500

 

QUORUM HEALTH CORPORATION ANNOUNCES FOURTH QUARTER 2018 RESULTS AND PROVIDES 2019 GUIDANCE

Full year net loss attributable to Quorum Health Corporation was ($200.2) million, or ($6.91) per share

Full year Adjusted EBITDA was $126.4 million and Adjusted EBITDA, Adjusted for Divestitures was $150.6 million

2019 same-facility net operating revenues guidance of $1.825 to $1.875 billion and Adjusted EBITDA, Adjusted for Divestitures guidance of $160 to $180 million

 

BRENTWOOD, Tenn. (March 12, 2019) – Quorum Health Corporation (NYSE: QHC) (the “Company”) today announced financial and operating results for the fourth quarter and year ended December 31, 2018.

 

QUORUM HEALTH CORPORATION

Unaudited Financial Highlights

(In Millions)

 

Three Months Ended December 31,

 

Year Ended
December 31,

 

2018

 

2017

 

2018

 

2017

Net operating revenues

$458.6

 

$515.1(1)

 

$1,878.6

 

$2,072.2

Net loss attributable to Quorum Health Corporation

($20.7)

 

($26.8)

 

($200.2)

 

($114.2)

Cash flows from operating activities

($3.4)

 

$66.2

 

$39.5

 

$67.0

Same-facility net operating revenues

$460.7

 

$482.8(1)

 

$1,857.5

 

$1,819.4

Adjusted EBITDA(2)

$37.5

 

$49.0(1)

 

$126.4

 

$141.8

Adjusted EBITDA, Adjusted for Divestitures(2)

$40.5

 

$63.9(1)

 

$150.6

 

$177.2

 

 

(1)

Includes $22.5 million of revenues and $16.5 million of EBITDA from the California Hospital Quality Assurance Fee (“HQAF”)

program for the first three quarters of 2017.

 

(2)

A table providing supplemental information on Adjusted EBITDA; Adjusted EBITDA, Adjusted for Divestitures and reconciling

net loss to Adjusted EBITDA and Adjusted EBITDA, Adjusted for Divestitures is included in this release.

 

Robert Fish, Quorum Health’s President and Chief Executive Officer, commented, “Our fourth quarter results represent a strong finish to 2018, and I am proud of the progress our team has made on the strategic initiatives that we established earlier in the year. Over the course of 2018, we significantly improved our EBITDA margins through targeted efficiency initiatives, and divested three hospitals, which brought us closer to our refinancing goal. In addition, we have strengthened our management team by adding experienced leadership in many key areas of our business. In early January, we also received a final ruling in our arbitration with CHS, which is a major step toward a collaborative exit of the remaining Transition Services Agreements. I look forward to building on the success we had in 2018 and carrying that momentum forward through 2019.”

Financial results for the fourth quarter and full year ended December 31, 2018 reflect the following:

 

•

Compared to the fourth quarter of 2017, same-facility net patient revenues decreased 1.6% and same-facility net patient revenue per adjusted admission increased 0.9%, when normalized for $22.5 million in out-of-period California HQAF program revenues recognized in the fourth quarter of 2017 and a $14.7 million change in estimate to the net realizable value of patient accounts receivable during the fourth quarter of 2017. The decrease in same-facility net patient revenues relative to the fourth quarter of 2017 was primarily driven by lower volumes, which reflects the Company’s initiatives to eliminate certain unprofitable service lines, underperforming physicians and unfavorable managed care contracts. The impact of lower volumes on net patient revenue was partially offset by increased patient acuity and improved payor mix.


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QHC Announces Fourth Quarter 2018 Results

Page 2

March 12, 2019

 

•

Fourth quarter Adjusted EBITDA was 8.2% of net operating revenues and Adjusted EBITDA, Adjusted for Divestitures was 8.8% of same-facility net operating revenues, which reflect the benefit of the Company’s margin improvement initiatives that were implemented in the second quarter of 2018.

 

•

Full year cash flows from operating activities included $12.3 million in cash costs from the closure of one hospital, $12.5 million of cash costs related to headcount reductions and $5.2 million of cash costs related to the arbitration with CHS.

Fourth Quarter and Full Year 2018 Operating Highlights

QUORUM HEALTH CORPORATION

Unaudited Operating Highlights

(Percent Change compared to the prior period in 2017)

 

Three Months Ended December 31, 2018

 

Year Ended
December 31, 2018

 


Consolidated

 

Same-Facility

 


Consolidated

 

Same-Facility

Admissions(1)

(15.6)%

 

(4.4)%

 

(16.1)%

 

(2.9)%

Adjusted Admissions(1)

(14.1)%

 

(2.5)%

 

(15.5)%

 

(1.4)%

Surgeries(1)

(24.8)%

 

(8.0)%

 

(25.1)%

 

(4.1)%

Emergency Room Visits(1)

(17.4)%

 

(4.9)%

 

(16.2)%

 

(1.1)%

Net patient revenue per adjusted admission

4.8%

 

(0.8)%

 

7.6%

 

4.4%

 

        (1) Definitions of Admissions, Adjusted Admissions, Surgeries and Emergency Room Visits are included in this release.

 

 

•

Operating results for the fourth quarter and full year 2018 reflect the impact of the Company’s initiatives to eliminate certain unprofitable service lines, underperforming physicians and unfavorable managed care contracts. These initiatives were implemented in the second quarter of 2018.

 

•

Same-facility admissions for the fourth quarter reflect a decline in flu related volumes, which reduced same-facility admissions by 1.1% compared to the fourth quarter of 2017.

Balance Sheet and Liquidity

 

•

As of December 31, 2018 the Company had cash and cash equivalents of $3.2 million and total debt of $1.2 billion, including $790.8 million outstanding under its Term Loan Facility and $14 million outstanding under its ABL Credit Facility. Under its current credit agreement, the Company’s Net Secured Leverage Ratio was 4.38x, implying a cushion of 12% of EBITDA.

Divestiture Update

 

•

The Company has a stated strategy of reducing its debt and is currently in the process of divesting certain hospital assets. Since the spin-off, the Company has sold 10 hospitals and paid down $84.8 million in debt on its Term Loan Facility. The Company currently has a signed definitive purchase agreement to sell Scenic Mountain Medical Center in Big Spring, Texas, which is expected to close by the end of April 2019. The Company has also targeted certain other hospitals and groups of hospitals for sale by the end of 2019.

Financial Outlook

The Company has established the following financial guidance for 2019:

 

 

(In Millions)

2018 Actual

 

2019 Guidance Range

Same-facility net operating revenues

$1,857.5

 

$1,825 - $1,875

Adjusted EBITDA, Adjusted for Divestitures

$150.6

 

$160 - $180

 


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QHC Announces Fourth Quarter 2018 Results

Page 3

March 12, 2019

 

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 2019 Adjusted EBITDA, 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 December 31, 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, March 13, 2019, at 11:00 a.m. Eastern, to review its financial and operating results for the fourth quarter and year ended December 31, 2018. 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 5227969 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.

 

 


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QHC Announces Fourth Quarter 2018 Results

Page 4

March 12, 2019

 

QUORUM HEALTH CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In Thousands, Except Earnings per Share and Shares)

 

 

 

Three Months Ended December 31,

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

% of

 

 

 

 

 

 

% of

 

 

 

Amount

 

 

Revenues

 

 

Amount

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues (a)

 

 

 

 

 

 

 

 

 

$

596,648

 

 

 

 

 

Provision for bad debts (b)

 

 

 

 

 

 

 

 

 

 

81,566

 

 

 

 

 

Net operating revenues

 

$

458,630

 

 

 

100.0

%

 

 

515,082

 

 

 

100.0

%

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

224,069

 

 

 

48.9

%

 

 

253,106

 

 

 

49.1

%

Supplies

 

 

53,014

 

 

 

11.6

%

 

 

63,932

 

 

 

12.4

%

Other operating expenses (a)

 

 

134,123

 

 

 

29.1

%

 

 

156,669

 

 

 

30.5

%

Depreciation and amortization

 

 

15,979

 

 

 

3.5

%

 

 

18,714

 

 

 

3.6

%

Rent

 

 

11,478

 

 

 

2.5

%

 

 

13,599

 

 

 

2.6

%

Electronic health records incentives earned

 

 

(372

)

 

 

(0.1

)%

 

 

(229

)

 

 

—

%

Legal, professional and settlement costs

 

 

1,625

 

 

 

0.4

%

 

 

(518

)

 

 

(0.1

)%

Impairment of long-lived assets and goodwill

 

 

4,940

 

 

 

1.1

%

 

 

25,820

 

 

 

5.0

%

Loss (gain) on sale of hospitals, net

 

 

78

 

 

 

—

%

 

 

(131

)

 

 

—

%

Loss on closure of hospitals, net

 

 

478

 

 

 

0.1

%

 

 

—

 

 

 

—

%

Transaction costs related to the Spin-off

 

 

—

 

 

 

—

%

 

 

49

 

 

 

—

%

Total operating costs and expenses

 

 

445,412

 

 

 

97.1

%

 

 

531,011

 

 

 

103.1

%

Income (loss) from operations

 

 

13,218

 

 

 

2.9

%

 

 

(15,929

)

 

 

(3.1

)%

Interest expense, net

 

 

32,823

 

 

 

7.2

%

 

 

31,873

 

 

 

6.2

%

Income (loss) before income taxes

 

 

(19,605

)

 

 

(4.3

)%

 

 

(47,802

)

 

 

(9.3

)%

Provision for (benefit from) income taxes

 

 

315

 

 

 

—

%

 

 

(21,779

)

 

 

(4.2

)%

Net income (loss) (c)

 

 

(19,920

)

 

 

(4.3

)%

 

 

(26,023

)

 

 

(5.1

)%

Less: Net income (loss) attributable to noncontrolling interests

 

 

814

 

 

 

0.2

%

 

 

785

 

 

 

0.1

%

Net income (loss) attributable to Quorum Health Corporation

 

$

(20,734

)

 

 

(4.5

)%

 

$

(26,808

)

 

 

(5.2

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share attributable to Quorum Health Corporation stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted (d)

 

$

(0.71

)

 

 

 

 

 

$

(0.95

)

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

29,227,634

 

 

 

 

 

 

 

28,248,527

 

 

 

 

 

For footnotes, see pages 10-12.


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QHC Announces Fourth Quarter 2018 Results

Page 5

March 12, 2019

 

QUORUM HEALTH CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In Thousands, Except Earnings per Share and Shares)

 

 

 

Year Ended December 31,

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

% of

 

 

 

 

 

 

% of

 

 

 

Amount

 

 

Revenues

 

 

Amount

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues (a)

 

 

 

 

 

 

 

 

 

$

2,327,655

 

 

 

 

 

Provision for bad debts (b)

 

 

 

 

 

 

 

 

 

 

255,485

 

 

 

 

 

Net operating revenues

 

$

1,878,589

 

 

 

100.0

%

 

 

2,072,170

 

 

 

100.0

%

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

929,937

 

 

 

49.5

%

 

 

1,034,797

 

 

 

49.9

%

Supplies

 

 

213,746

 

 

 

11.4

%

 

 

250,523

 

 

 

12.1

%

Other operating expenses (a)

 

 

575,033

 

 

 

30.7

%

 

 

623,063

 

 

 

30.1

%

Depreciation and amortization

 

 

67,994

 

 

 

3.6

%

 

 

82,155

 

 

 

4.0

%

Rent

 

 

47,029

 

 

 

2.5

%

 

 

50,230

 

 

 

2.4

%

Electronic health records incentives earned

 

 

(989

)

 

 

(0.1

)%

 

 

(4,745

)

 

 

(0.2

)%

Legal, professional and settlement costs

 

 

11,974

 

 

 

0.6

%

 

 

6,001

 

 

 

0.3

%

Impairment of long-lived assets and goodwill

 

 

77,138

 

 

 

4.1

%

 

 

47,281

 

 

 

2.3

%

Loss (gain) on sale of hospitals, net

 

 

9,005

 

 

 

0.5

%

 

 

(5,243

)

 

 

(0.3

)%

Loss on closure of hospitals, net

 

 

18,673

 

 

 

1.0

%

 

 

—

 

 

 

—

%

Transaction costs related to the Spin-off

 

 

—

 

 

 

—

%

 

 

253

 

 

 

—

%

Total operating costs and expenses

 

 

1,949,540

 

 

 

103.8

%

 

 

2,084,315

 

 

 

100.6

%

Income (loss) from operations

 

 

(70,951

)

 

 

(3.8

)%

 

 

(12,145

)

 

 

(0.6

)%

Interest expense, net

 

 

128,130

 

 

 

6.8

%

 

 

122,077

 

 

 

5.9

%

Income (loss) before income taxes

 

 

(199,081

)

 

 

(10.6

)%

 

 

(134,222

)

 

 

(6.5

)%

Provision for (benefit from) income taxes

 

 

(847

)

 

 

—

%

 

 

(21,865

)

 

 

(1.1

)%

Net income (loss) (c)

 

 

(198,234

)

 

 

(10.6

)%

 

 

(112,357

)

 

 

(5.4

)%

Less: Net income (loss) attributable to noncontrolling interests

 

 

2,014

 

 

 

0.1

%

 

 

1,833

 

 

 

0.1

%

Net income (loss) attributable to Quorum Health Corporation

 

$

(200,248

)

 

 

(10.7

)%

 

$

(114,190

)

 

 

(5.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share attributable to Quorum Health Corporation stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted (d)

 

$

(6.91

)

 

 

 

 

 

$

(4.06

)

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

28,976,122

 

 

 

 

 

 

 

28,113,566

 

 

 

 

 

For footnotes, see pages 10-12.

 


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QHC Announces Fourth Quarter 2018 Results

Page 6

March 12, 2019

 

QUORUM HEALTH CORPORATION

UNAUDITED CONSOLIDATED SELECTED OPERATING DATA

 

 

 

Three Months Ended December 31,

 

 

 

2018

 

 

2017

 

 

$ Variance

 

 

% Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated and combined:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of licensed beds at end of period (e)

 

 

2,604

 

 

 

2,979

 

 

 

(375

)

 

 

(12.6

)%

Admissions (f)

 

 

17,676

 

 

 

20,932

 

 

 

(3,256

)

 

 

(15.6

)%

Adjusted admissions (g)

 

 

43,640

 

 

 

50,788

 

 

 

(7,148

)

 

 

(14.1

)%

Surgeries (h)

 

 

17,881

 

 

 

23,793

 

 

 

(5,912

)

 

 

(24.8

)%

Emergency room visits (i)

 

 

128,628

 

 

 

155,746

 

 

 

(27,118

)

 

 

(17.4

)%

Medicare case mix (j)

 

 

1.47

 

 

 

1.45

 

 

 

0.02

 

 

 

1.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-facility: (k)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of licensed beds at end of period (e)

 

 

2,604

 

 

 

2,630

 

 

 

(26

)

 

 

(1.0

)%

Admissions (f)

 

 

17,676

 

 

 

18,483

 

 

 

(807

)

 

 

(4.4

)%

Adjusted admissions (g)

 

 

43,640

 

 

 

44,742

 

 

 

(1,102

)

 

 

(2.5

)%

Surgeries (h)

 

 

17,881

 

 

 

19,445

 

 

 

(1,564

)

 

 

(8.0

)%

Emergency room visits (i)

 

 

128,628

 

 

 

135,267

 

 

 

(6,639

)

 

 

(4.9

)%

Medicare case mix (j)

 

 

1.47

 

 

 

1.42

 

 

 

0.05

 

 

 

3.5

%

 

 

 

Year Ended December 31,

 

 

 

2018

 

 

2017

 

 

$ Variance

 

 

% Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated and combined:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of licensed beds at end of period (e)

 

 

2,604

 

 

 

2,979

 

 

 

(375

)

 

 

(12.6

)%

Admissions (f)

 

 

74,222

 

 

 

88,504

 

 

 

(14,282

)

 

 

(16.1

)%

Adjusted admissions (g)

 

 

183,919

 

 

 

217,583

 

 

 

(33,664

)

 

 

(15.5

)%

Surgeries (h)

 

 

75,509

 

 

 

100,863

 

 

 

(25,354

)

 

 

(25.1

)%

Emergency room visits (i)

 

 

553,045

 

 

 

660,246

 

 

 

(107,201

)

 

 

(16.2

)%

Medicare case mix (j)

 

 

1.44

 

 

 

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)

 

 

72,457

 

 

 

74,625

 

 

 

(2,168

)

 

 

(2.9

)%

Adjusted admissions (g)

 

 

178,859

 

 

 

181,328

 

 

 

(2,469

)

 

 

(1.4

)%

Surgeries (h)

 

 

72,631

 

 

 

75,763

 

 

 

(3,132

)

 

 

(4.1

)%

Emergency room visits (i)

 

 

535,718

 

 

 

541,455

 

 

 

(5,737

)

 

 

(1.1

)%

Medicare case mix (j)

 

 

1.44

 

 

 

1.41

 

 

 

0.03

 

 

 

2.1

%

For footnotes, see pages 10-12.


-MORE-

QHC Announces Fourth Quarter 2018 Results

Page 7

March 12, 2019

 

QUORUM HEALTH CORPORATION

UNAUDITED CONSOLIDATED SELECTED OPERATING DATA

 

 

 

 

Three Months Ended December 31,

 

 

 

2018

 

 

2017

 

 

$ Variance

 

 

% Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated and combined:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net patient revenues

 

$

441,627

 

 

$

490,471

 

 

$

(48,844

)

 

 

(10.0

)%

Non-patient revenues

 

 

17,003

 

 

 

24,611

 

 

 

(7,608

)

 

 

(30.9

)%

Total net operating revenues

 

$

458,630

 

 

$

515,082

 

 

$

(56,452

)

 

 

(11.0

)%

Net patient revenues per adjusted admission

 

$

10,120

 

 

$

9,657

 

 

$

463

 

 

 

4.8

%

Net operating revenues per adjusted admission

 

$

10,509

 

 

$

10,142

 

 

$

367

 

 

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-facility:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net patient revenues

 

$

443,710

 

 

$

458,503

 

 

$

(14,793

)

 

 

(3.2

)%

Non-patient revenues

 

 

16,999

 

 

 

24,281

 

 

 

(7,282

)

 

 

(30.0

)%

Total net operating revenues

 

$

460,709

 

 

$

482,784

 

 

$

(22,075

)

 

 

(4.6

)%

Net patient revenues per adjusted admission

 

$

10,168

 

 

$

10,248

 

 

$

(80

)

 

 

(0.8

)%

Net operating revenues per adjusted admission

 

$

10,557

 

 

$

10,790

 

 

$

(233

)

 

 

(2.2

)%

 

 

 

Year Ended December 31,

 

 

 

2018

 

 

2017

 

 

$ Variance

 

 

% Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated and combined:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net patient revenues

 

$

1,796,215

 

 

$

1,974,847

 

 

$

(178,632

)

 

 

(9.0

)%

Non-patient revenues

 

 

82,374

 

 

 

97,323

 

 

 

(14,949

)

 

 

(15.4

)%

Total net operating revenues

 

$

1,878,589

 

 

$

2,072,170

 

 

$

(193,581

)

 

 

(9.3

)%

Net patient revenues per adjusted admission

 

$

9,766

 

 

$

9,076

 

 

$

690

 

 

 

7.6

%

Net operating revenues per adjusted admission

 

$

10,214

 

 

$

9,524

 

 

$

690

 

 

 

7.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-facility:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net patient revenues

 

$

1,775,617

 

 

$

1,723,967

 

 

$

51,650

 

 

 

3.0

%

Non-patient revenues

 

 

81,883

 

 

 

95,397

 

 

 

(13,514

)

 

 

(14.2

)%

Total net operating revenues

 

$

1,857,500

 

 

$

1,819,364

 

 

$

38,136

 

 

 

2.1

%

Net patient revenues per adjusted admission

 

$

9,927

 

 

$

9,507

 

 

$

420

 

 

 

4.4

%

Net operating revenues per adjusted admission

 

$

10,385

 

 

$

10,034

 

 

$

351

 

 

 

3.5

%

For footnotes, see pages 10-12.


-MORE-

QHC Announces Fourth Quarter 2018 Results

Page 8

March 12, 2019

 

QUORUM HEALTH CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Par Value per Share and Shares)

 

 

 

December 31,

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,203

 

 

$

5,617

 

Patient accounts receivable, net of allowance for doubtful accounts of $352,509 at December 31, 2017

 

 

322,608

 

 

 

343,145

 

Inventories

 

 

45,646

 

 

 

53,459

 

Prepaid expenses

 

 

19,683

 

 

 

21,167

 

Due from third-party payors

 

 

63,443

 

 

 

97,202

 

Current assets of hospitals held for sale

 

 

—

 

 

 

8,112

 

Other current assets

 

 

36,405

 

 

 

47,440

 

Total current assets

 

 

490,988

 

 

 

576,142

 

Property and equipment, at cost

 

 

1,287,329

 

 

 

1,405,184

 

Less:  Accumulated depreciation and amortization

 

 

(727,891

)

 

 

(729,905

)

Total property and equipment, net

 

 

559,438

 

 

 

675,279

 

Goodwill

 

 

401,073

 

 

 

409,229

 

Intangible assets, net

 

 

48,289

 

 

 

64,850

 

Long-term assets of hospitals held for sale

 

 

—

 

 

 

7,734

 

Other long-term assets

 

 

74,306

 

 

 

95,607

 

Total assets

 

$

1,574,094

 

 

$

1,828,841

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

1,697

 

 

$

1,855

 

Accounts payable

 

 

143,917

 

 

 

171,250

 

Accrued liabilities:

 

 

 

 

 

 

 

 

Accrued salaries and benefits

 

 

76,908

 

 

 

77,803

 

Accrued interest

 

 

10,024

 

 

 

10,466

 

Due to third-party payors

 

 

45,852

 

 

 

47,705

 

Current liabilities of hospitals held for sale

 

 

—

 

 

 

2,577

 

Other current liabilities

 

 

43,336

 

 

 

43,687

 

Total current liabilities

 

 

321,734

 

 

 

355,343

 

Long-term debt

 

 

1,191,777

 

 

 

1,212,035

 

Deferred income tax liabilities, net

 

 

6,736

 

 

 

7,774

 

Other long-term liabilities

 

 

126,499

 

 

 

137,954

 

Total liabilities

 

 

1,646,746

 

 

 

1,713,106

 

Redeemable noncontrolling interests

 

 

2,278

 

 

 

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; 31,521,398 shares issued and outstanding at December 31, 2018 and 30,294,895 shares issued and outstanding at December 31, 2017

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

557,309

 

 

 

549,610

 

Accumulated other comprehensive income (loss)

 

 

759

 

 

 

(1,956

)

Accumulated deficit

 

 

(648,464

)

 

 

(448,216

)

Total Quorum Health Corporation stockholders' equity (deficit)

 

 

(90,393

)

 

 

99,441

 

Nonredeemable noncontrolling interests

 

 

15,463

 

 

 

13,969

 

Total equity (deficit)

 

 

(74,930

)

 

 

113,410

 

Total liabilities and equity

 

$

1,574,094

 

 

$

1,828,841

 

 

For footnotes, see pages 10-12.

-MORE-

QHC Announces Fourth Quarter 2018 Results

Page 9

March 12, 2019

 

QUORUM HEALTH CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

 

 

 

Year Ended December 31,

 

 

 

2018

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(198,234

)

 

$

(112,357

)

 

$

(345,197

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

67,994

 

 

 

82,155

 

 

 

117,288

 

Non-cash interest expense

 

 

8,733

 

 

 

5,770

 

 

 

2,496

 

Provision for (benefit from) deferred income taxes

 

 

(1,280

)

 

 

(22,137

)

 

 

(56,339

)

Stock-based compensation expense

 

 

10,663

 

 

 

9,952

 

 

 

7,441

 

Impairment of long-lived assets and goodwill

 

 

77,138

 

 

 

47,281

 

 

 

291,870

 

Loss (gain) on sale of hospitals, net

 

 

9,005

 

 

 

(5,243

)

 

 

2,150

 

Non-cash portion of loss on hospital closures

 

 

6,394

 

 

 

—

 

 

 

—

 

Changes in reserves for self-insurance claims, net of payments

 

 

19,678

 

 

 

22,519

 

 

 

27,994

 

Changes in reserves for legal, professional and settlement costs, net of payments

 

 

—

 

 

 

(3,651

)

 

 

3,651

 

Other non-cash expense (income), net

 

 

959

 

 

 

190

 

 

 

(575

)

Changes in operating assets and liabilities, net of acquisitions and divestitures:

 

 

 

 

 

 

 

 

 

 

 

 

Patient accounts receivable, net

 

 

25,977

 

 

 

29,091

 

 

 

10,205

 

Due from and due to third-party payors, net

 

 

31,906

 

 

 

24,201

 

 

 

7,005

 

Inventories, prepaid expenses and other current assets

 

 

15,156

 

 

 

673

 

 

 

1,457

 

Accounts payable and accrued liabilities

 

 

(33,860

)

 

 

(14,743

)

 

 

20,760

 

Long-term assets and liabilities, net

 

 

(725

)

 

 

3,269

 

 

 

(9,120

)

Net cash provided by (used in) operating activities

 

 

39,504

 

 

 

66,970

 

 

 

81,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures for property and equipment

 

 

(45,882

)

 

 

(61,530

)

 

 

(79,920

)

Capital expenditures for software

 

 

(2,662

)

 

 

(6,898

)

 

 

(7,269

)

Acquisitions, net of cash acquired

 

 

(121

)

 

 

(1,920

)

 

 

(785

)

Proceeds from the sale of hospitals

 

 

40,848

 

 

 

32,081

 

 

 

13,746

 

Other investing activities

 

 

(489

)

 

 

—

 

 

 

1,082

 

Net cash provided by (used in) investing activities

 

 

(8,306

)

 

 

(38,267

)

 

 

(73,146

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings under revolving credit facilities

 

 

490,000

 

 

 

508,000

 

 

 

50,000

 

Repayments under revolving credit facilities

 

 

(476,000

)

 

 

(508,000

)

 

 

(50,000

)

Borrowings of long-term debt

 

 

105

 

 

 

376

 

 

 

1,256,281

 

Repayments of long-term debt

 

 

(41,918

)

 

 

(39,195

)

 

 

(15,222

)

Increase in Due to Parent, net

 

 

—

 

 

 

—

 

 

 

24,796

 

Payments of debt issuance costs

 

 

(2,268

)

 

 

(3,119

)

 

 

(29,146

)

Cash paid to Parent related to the Spin-off

 

 

—

 

 

 

—

 

 

 

(1,217,336

)

Cancellation of restricted stock awards for payroll tax withholdings on vested shares

 

 

(1,996

)

 

 

(1,508

)

 

 

(13

)

Cash distributions to noncontrolling investors

 

 

(1,535

)

 

 

(3,851

)

 

 

(2,850

)

Purchases of shares from noncontrolling investors

 

 

—

 

 

 

(1,244

)

 

 

(101

)

Net cash provided by (used in) financing activities

 

 

(33,612

)

 

 

(48,541

)

 

 

16,409

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(2,414

)

 

 

(19,838

)

 

 

24,349

 

Cash and cash equivalents at beginning of period

 

 

5,617

 

 

 

25,455

 

 

 

1,106

 

Cash and cash equivalents at end of period

 

$

3,203

 

 

$

5,617

 

 

$

25,455

 

For footnotes, see pages 10-12.

-MORE-

QHC Announces Fourth Quarter 2018 Results

Page 10

March 12, 2019

 

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 $7.9 million of net operating revenues less $2.1 million of provider taxes for the three months ended December 31, 2018. The Company recognized the full year 2017 HQAF of $29.9 million of net operating revenues and $7.9 million of provider taxes for the three months ended December 31, 2017, when CMS approved Phase V of the program. For the year ended December 31, 2018, the Company recognized $32.4 million of net operating revenues less $6.5 million of provider taxes compared to $29.9 million of net operating revenues and $7.9 million of provider taxes for the year ended December 31, 2017.

 

(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, post-spin headcount reductions and executive severance, and changes in estimate related to collectability of patient accounts receivable. 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 December 31, 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.


-MORE-

QHC Announces Fourth Quarter 2018 Results

Page 11

March 12, 2019

 

FOOTNOTES TO UNAUDITED FINANCIAL STATEMENTS AND SELECTED OPERATING DATA

(Continued)

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 December 31,

 

 

Year Ended December 31,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(19,920

)

 

$

(26,023

)

 

$

(198,234

)

 

$

(112,357

)

Interest expense, net

 

 

32,823

 

 

 

31,873

 

 

 

128,130

 

 

 

122,077

 

Provision for (benefit from) income taxes

 

 

315

 

 

 

(21,779

)

 

 

(847

)

 

 

(21,865

)

Depreciation and amortization

 

 

15,979

 

 

 

18,714

 

 

 

67,994

 

 

 

82,155

 

EBITDA

 

 

29,197

 

 

 

2,785

 

 

 

(2,957

)

 

 

70,010

 

Legal, professional and settlement costs

 

 

1,625

 

 

 

(518

)

 

 

11,974

 

 

 

6,001

 

Impairment of long-lived assets and goodwill

 

 

4,940

 

 

 

25,820

 

 

 

77,138

 

 

 

47,281

 

Loss (gain) on sale of hospitals, net

 

 

78

 

 

 

(131

)

 

 

9,005

 

 

 

(5,243

)

Loss on closure of hospitals, net

 

 

478

 

 

 

—

 

 

 

18,673

 

 

 

—

 

Transition of transition services agreements

 

 

(475

)

 

 

—

 

 

 

3,207

 

 

 

—

 

Transaction costs related to the Spin-off

 

 

—

 

 

 

49

 

 

 

—

 

 

 

253

 

Post-spin headcount reductions and executive severance

 

 

1,667

 

 

 

—

 

 

 

9,355

 

 

 

2,543

 

Change in estimate related to collectability of patient accounts receivable (l)

 

 

—

 

 

 

21,000

 

 

 

—

 

 

 

21,000

 

Adjusted EBITDA

 

 

37,510

 

 

 

49,005

 

 

 

126,395

 

 

 

141,845

 

Negative EBITDA of divested hospitals

 

 

2,941

 

 

 

14,858

 

 

 

24,232

 

 

 

35,368

 

Adjusted EBITDA, Adjusted for Divestitures

 

$

40,451

 

 

$

63,863

 

 

$

150,627

 

 

$

177,213

 

 

(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 December 31,

 

 

Year Ended December 31,

 

 

 

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

 

$

(0.71

)

 

$

(0.95

)

 

$

(6.91

)

 

$

(4.06

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal, professional and settlement costs

 

 

0.06

 

 

 

(0.01

)

 

 

0.41

 

 

 

0.18

 

Impairment of long-lived assets and goodwill

 

 

0.17

 

 

 

0.50

 

 

 

2.65

 

 

 

1.41

 

Loss (gain) on sale of hospitals, net

 

 

—

 

 

 

(0.10

)

 

 

0.31

 

 

 

(0.16

)

Loss on closure of hospitals, net

 

 

0.02

 

 

 

—

 

 

 

0.64

 

 

 

—

 

Transition of transition services agreements

 

 

(0.02

)

 

 

—

 

 

 

0.11

 

 

 

—

 

Transaction costs related to the Spin-off

 

 

—

 

 

 

—

 

 

 

—

 

 

 

0.01

 

Post-spin headcount reductions and executive severance

 

 

0.06

 

 

 

—

 

 

 

0.32

 

 

 

0.08

 

Change in estimate related to collectability of patient accounts receivable

 

 

—

 

 

 

0.40

 

 

 

—

 

 

 

0.63

 

Net operating losses of divested hospitals

 

 

0.10

 

 

 

0.29

 

 

 

0.83

 

 

 

1.05

 

Earnings (loss) per share attributable to Quorum Health Corporation stockholders, excluding adjustments

 

$

(0.32

)

 

$

0.13

 

 

$

(1.64

)

 

$

(0.86

)

 


-MORE-

QHC Announces Fourth Quarter 2018 Results

Page 12

March 12, 2019

 

FOOTNOTES TO UNAUDITED FINANCIAL STATEMENTS AND SELECTED OPERATING DATA

(Continued)

 

(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)

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.


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QHC Announces Fourth Quarter 2018 Results

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March 12, 2019

 

Forward-Looking Statements

The terms “QHC,” “Quorum Health,” “the Company,” “we,” “us” or “our” refer to Quorum Health Corporation or one or more of its subsidiaries or affiliates as applicable.

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 we operate;

 

•

risks associated with our substantial indebtedness, leverage and debt service obligations, including our ability to comply with our debt covenants, including our senior credit facility, as amended;

 

•

our ability to successfully complete divestitures and the timing thereof, our ability to complete any such divestitures on desired terms or at all, and our 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 we operate;

 

•

the extent to which regulatory and economic changes occur in Illinois, where a material portion of our 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 (“TSAs”) with CHS, 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 our ability to realize the intended benefits from transitioning the transition services agreements;

 

•

the impact of certain outsourcing functions, and the ability of CHS, as provider of our billing and collection services pursuant to the TSAs, to timely and appropriately bill and collect;

 

•

our ability to manage effectively our arrangements with third-party vendors for key non-clinical business functions and services;

 

•

our ability to achieve operating and financial targets and to control the costs of providing services if patient volumes are lower than expected;

 

•

our ability to achieve and realize the operational and financial benefits expected from our margin improvement program;

 

•

the effects related to outbreaks of infectious diseases;

 

 

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QHC Announces Fourth Quarter 2018 Results

Page 14

March 12, 2019

 

 

•

our 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;

 

•

our ongoing ability to adopt, maintain, and utilize certified EHR technology;

 

•

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;

 

•

our 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 our company and certain of our officers and directors 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 us, including self-insured malpractice claims;

 

•

the impact of cyber-attacks or security breaches, including, but not limited to, the compromise of our 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 our reputation;

 

•

our ability to utilize our income tax loss carryforwards;

 

•

our ability to maintain certain accreditations at our facilities;

 

•

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 Hospital Quality Assurance Fee (“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 capital expenditures;

 

•

our 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 we believe that these forward-looking statements are based upon 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 our control. Accordingly, we cannot give any assurance that our expectations will in fact occur and caution 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. 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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