Le Lézard
Classified in: Business
Subjects: EARNINGS, Conference Call, Webcast

Quorum Health Corporation Announces Second Quarter 2019 Results


Quorum Health Corporation (NYSE: QHC) (the "Company") today announced financial and operating results for the second quarter ended June 30, 2019.

 

QUORUM HEALTH CORPORATION
Unaudited Financial Highlights
(In Millions)

 

 

Three Months Ended June 30,

 

2019

 

2018

Net operating revenues

$442.2

 

$472.6

 

Net loss attributable to Quorum Health Corporation

($16.9 )

 

($26.6

)

Same-facility net operating revenues

$442.4

 

$458.5

 

Cash flows from operating activities

($10.4 )

 

$17.2

 

Adjusted EBITDA(1)

$33.4

 

$36.3

 

Same-facility Adjusted EBITDA(1 & 2)

$36.9

 

$40.2

 

 

 

 

 

(1) A table providing supplemental information on Adjusted EBITDA, Same-facility Adjusted EBITDA and reconciling net loss to Adjusted EBITDA and Same-facility Adjusted EBITDA is included in this release, see footnote (a).
(2) Same-facility Adjusted EBITDA was previously reported by the Company as Adjusted EBITDA, Adjusted for Divestitures. There has been no change in how the financial measure is being calculated.

Financial results for the second quarter ended June 30, 2019 reflect the following:

TSA Transition and R1 RCM Partnership Update

Divestiture Update

Financial Outlook

The Company is revising its 2019 Same-facility net operating revenues guidance as a result of the Pending Divestitures. The Company is reiterating its previously established guidance for Same-facility Adjusted EBITDA.

 

 

(In Millions)

2018 Actual

 

2019 Guidance Range

Same-facility net operating revenues

$1,804.4

 

$1,550 - $1,600

Same-facility Adjusted EBITDA

$150.7

 

$160 - $180

 

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 Same-facility 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 June 30, 2019, the Company owned or leased 26 hospitals in rural and mid-sized markets located across 14 states and licensed for 2,458 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 Thursday, August 8, 2019, at 11:00 a.m. Eastern time, to review its financial and operating results for the second quarter ended June 30, 2019. 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 9964019 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.

 
 
 

QUORUM HEALTH CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In Thousands, Except Earnings per Share and Shares)

 

 

 

Three Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

% of

 

 

 

 

 

 

% of

 

 

 

$ Amount

 

 

Revenues

 

 

$ Amount

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating revenues

 

$

442,170

 

 

 

100.0

%

 

$

472,632

 

 

 

100.0

%

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

213,411

 

 

 

48.3

%

 

 

232,631

 

 

 

49.2

%

Supplies

 

 

50,202

 

 

 

11.4

%

 

 

52,897

 

 

 

11.2

%

Other operating expenses

 

 

106,954

 

 

 

24.1

%

 

 

144,456

 

 

 

30.6

%

Depreciation and amortization

 

 

14,500

 

 

 

3.3

%

 

 

17,142

 

 

 

3.6

%

Lease costs and rent

 

 

11,627

 

 

 

2.6

%

 

 

11,358

 

 

 

2.4

%

Electronic health records incentives

 

 

583

 

 

 

0.1

%

 

 

(445

)

 

 

(0.1

)%

Legal, professional and settlement costs

 

 

604

 

 

 

0.1

%

 

 

5,417

 

 

 

1.1

%

Impairment of long-lived assets and goodwill

 

 

25,950

 

 

 

5.9

%

 

 

?

 

 

 

?

%

Loss (gain) on sale of hospitals, net

 

 

1,140

 

 

 

0.3

%

 

 

307

 

 

 

0.1

%

Loss on closure of hospitals, net

 

 

?

 

 

 

?

%

 

 

3,338

 

 

 

0.7

%

Total operating costs and expenses

 

 

424,971

 

 

 

96.1

%

 

 

467,101

 

 

 

98.8

%

Income (loss) from operations

 

 

17,199

 

 

 

3.9

%

 

 

5,531

 

 

 

1.2

%

Interest expense, net

 

 

33,582

 

 

 

7.6

%

 

 

31,926

 

 

 

6.8

%

Income (loss) before income taxes

 

 

(16,383

)

 

 

(3.7

)%

 

 

(26,395

)

 

 

(5.6

)%

Provision for (benefit from) income taxes

 

 

94

 

 

 

?

%

 

 

(454

)

 

 

(0.1

)%

Net income (loss) (a)

 

 

(16,477

)

 

 

(3.7

)%

 

 

(25,941

)

 

 

(5.5

)%

Less: Net income (loss) attributable to noncontrolling interests

 

 

396

 

 

 

0.1

%

 

 

665

 

 

 

0.1

%

Net income (loss) attributable to Quorum Health Corporation

 

$

(16,873

)

 

 

(3.8

)%

 

$

(26,606

)

 

 

(5.6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted (b)

 

$

(0.56

)

 

 

 

 

 

$

(0.92

)

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

30,001,208

 

 

 

 

 

 

 

28,995,564

 

 

 

 

 

 
 
 
 

QUORUM HEALTH CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In Thousands, Except Earnings per Share and Shares)

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

% of

 

 

 

 

 

 

% of

 

 

 

$ Amount

 

 

Revenues

 

 

$ Amount

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating revenues

 

$

884,975

 

 

 

100.0

%

 

$

959,452

 

 

 

100.0

%

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

438,486

 

 

 

49.5

%

 

 

479,631

 

 

 

50.0

%

Supplies

 

 

101,587

 

 

 

11.5

%

 

 

111,783

 

 

 

11.7

%

Other operating expenses

 

 

243,743

 

 

 

27.7

%

 

 

297,194

 

 

 

31.0

%

Depreciation and amortization

 

 

29,139

 

 

 

3.3

%

 

 

35,403

 

 

 

3.7

%

Lease costs and rent

 

 

23,158

 

 

 

2.6

%

 

 

23,890

 

 

 

2.5

%

Electronic health records incentives earned

 

 

609

 

 

 

0.1

%

 

 

(586

)

 

 

(0.1

)%

Legal, professional and settlement costs

 

 

1,289

 

 

 

0.1

%

 

 

8,830

 

 

 

0.9

%

Impairment of long-lived assets and goodwill

 

 

34,810

 

 

 

3.9

%

 

 

39,760

 

 

 

4.1

%

Loss (gain) on sale of hospitals, net

 

 

1,140

 

 

 

0.1

%

 

 

8,122

 

 

 

0.8

%

Loss on closure of hospitals, net

 

 

?

 

 

 

?

%

 

 

17,084

 

 

 

1.8

%

Total operating costs and expenses

 

 

873,961

 

 

 

98.8

%

 

 

1,021,111

 

 

 

106.4

%

Income (loss) from operations

 

 

11,014

 

 

 

1.2

%

 

 

(61,659

)

 

 

(6.4

)%

Interest expense, net

 

 

65,848

 

 

 

7.4

%

 

 

62,857

 

 

 

6.6

%

Income (loss) before income taxes

 

 

(54,834

)

 

 

(6.2

)%

 

 

(124,516

)

 

 

(13.0

)%

Provision for (benefit from) income taxes

 

 

249

 

 

 

?

%

 

 

(88

)

 

 

?

%

Net income (loss) (a)

 

 

(55,083

)

 

 

(6.2

)%

 

 

(124,428

)

 

 

(13.0

)%

Less: Net income (loss) attributable to noncontrolling interests

 

 

796

 

 

 

0.1

%

 

 

1,146

 

 

 

0.1

%

Net income (loss) attributable to Quorum Health Corporation

 

$

(55,879

)

 

 

(6.3

)%

 

$

(125,574

)

 

 

(13.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted (b)

 

$

(1.88

)

 

 

 

 

 

$

(4.37

)

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

29,721,167

 

 

 

 

 

 

 

28,726,445

 

 

 

 

 

 
 
 
 

QUORUM HEALTH CORPORATION
UNAUDITED CONSOLIDATED SELECTED OPERATING DATA

 

 

 

Three Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

Variance

 

 

% Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of licensed beds at end of period (c)

 

 

2,458

 

 

 

2,649

 

 

 

(191

)

 

 

(7.2

)%

Admissions (d)

 

 

16,354

 

 

 

18,200

 

 

 

(1,846

)

 

 

(10.1

)%

Adjusted admissions (e)

 

 

41,700

 

 

 

45,551

 

 

 

(3,851

)

 

 

(8.5

)%

Surgeries (f)

 

 

17,909

 

 

 

19,114

 

 

 

(1,205

)

 

 

(6.3

)%

Emergency room visits (g)

 

 

128,431

 

 

 

135,389

 

 

 

(6,958

)

 

 

(5.1

)%

Medicare case mix index (h)

 

 

1.46

 

 

 

1.44

 

 

 

0.02

 

 

 

1.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-facility: (i)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of licensed beds at end of period (c)

 

 

2,458

 

 

 

2,458

 

 

 

?

 

 

 

?

%

Admissions (d)

 

 

16,286

 

 

 

17,267

 

 

 

(981

)

 

 

(5.7

)%

Adjusted admissions (e)

 

 

41,477

 

 

 

42,949

 

 

 

(1,472

)

 

 

(3.4

)%

Surgeries (f)

 

 

17,843

 

 

 

18,241

 

 

 

(398

)

 

 

(2.2

)%

Emergency room visits (g)

 

 

127,828

 

 

 

129,167

 

 

 

(1,339

)

 

 

(1.0

)%

Medicare case mix index (h)

 

 

1.46

 

 

 

1.45

 

 

 

0.01

 

 

 

0.7

%

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

Variance

 

 

% Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of licensed beds at end of period (c)

 

 

2,458

 

 

 

2,649

 

 

 

(191

)

 

 

(7.2

)%

Admissions (d)

 

 

34,109

 

 

 

38,749

 

 

 

(4,640

)

 

 

(12.0

)%

Adjusted admissions (e)

 

 

85,016

 

 

 

94,779

 

 

 

(9,763

)

 

 

(10.3

)%

Surgeries (f)

 

 

34,632

 

 

 

39,701

 

 

 

(5,069

)

 

 

(12.8

)%

Emergency room visits (g)

 

 

260,556

 

 

 

289,186

 

 

 

(28,630

)

 

 

(9.9

)%

Medicare case mix index (h)

 

 

1.47

 

 

 

1.44

 

 

 

0.03

 

 

 

2.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-facility: (i)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of licensed beds at end of period (c)

 

 

2,458

 

 

 

2,458

 

 

 

?

 

 

 

?

%

Admissions (d)

 

 

33,485

 

 

 

35,778

 

 

 

(2,293

)

 

 

(6.4

)%

Adjusted admissions (e)

 

 

83,254

 

 

 

86,821

 

 

 

(3,567

)

 

 

(4.1

)%

Surgeries (f)

 

 

34,234

 

 

 

36,133

 

 

 

(1,899

)

 

 

(5.3

)%

Emergency room visits (g)

 

 

255,262

 

 

 

263,638

 

 

 

(8,376

)

 

 

(3.2

)%

Medicare case mix index (h)

 

 

1.47

 

 

 

1.44

 

 

 

0.03

 

 

 

2.1

%

 
 
 
 

QUORUM HEALTH CORPORATION
UNAUDITED CONSOLIDATED SELECTED OPERATING DATA

 

 

 

Three Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

$ Variance

 

 

% Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net patient revenues

 

$

423,871

 

 

$

449,261

 

 

$

(25,390

)

 

 

(5.7

)%

Non-patient revenues

 

 

18,299

 

 

 

23,371

 

 

 

(5,072

)

 

 

(21.7

)%

Total net operating revenues

 

$

442,170

 

 

$

472,632

 

 

$

(30,462

)

 

 

(6.4

)%

Net patient revenues per adjusted admission

 

$

10,165

 

 

$

9,863

 

 

$

302

 

 

 

3.1

%

Net operating revenues per adjusted admission

 

$

10,604

 

 

$

10,376

 

 

$

228

 

 

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-facility:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net patient revenues

 

$

424,150

 

 

$

435,307

 

 

$

(11,157

)

 

 

(2.6

)%

Non-patient revenues

 

 

18,255

 

 

 

23,206

 

 

 

(4,951

)

 

 

(21.3

)%

Total net operating revenues

 

$

442,405

 

 

$

458,513

 

 

$

(16,108

)

 

 

(3.5

)%

Net patient revenues per adjusted admission

 

$

10,226

 

 

$

10,135

 

 

$

91

 

 

 

0.9

%

Net operating revenues per adjusted admission

 

$

10,666

 

 

$

10,676

 

 

$

(10

)

 

 

(0.1

)%

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

$ Variance

 

 

% Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net patient revenues

 

$

846,053

 

 

$

913,857

 

 

$

(67,804

)

 

 

(7.4

)%

Non-patient revenues

 

 

38,922

 

 

 

45,595

 

 

 

(6,673

)

 

 

(14.6

)%

Total net operating revenues

 

$

884,975

 

 

$

959,452

 

 

$

(74,477

)

 

 

(7.8

)%

Net patient revenues per adjusted admission

 

$

9,952

 

 

$

9,642

 

 

$

310

 

 

 

3.2

%

Net operating revenues per adjusted admission

 

$

10,410

 

 

$

10,123

 

 

$

287

 

 

 

2.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-facility:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net patient revenues

 

$

835,915

 

 

$

860,994

 

 

$

(25,079

)

 

 

(2.9

)%

Non-patient revenues

 

 

38,783

 

 

 

44,927

 

 

 

(6,144

)

 

 

(13.7

)%

Total net operating revenues

 

$

874,698

 

 

$

905,921

 

 

$

(31,223

)

 

 

(3.4

)%

Net patient revenues per adjusted admission

 

$

10,041

 

 

$

9,917

 

 

$

124

 

 

 

1.3

%

Net operating revenues per adjusted admission

 

$

10,506

 

 

$

10,434

 

 

$

72

 

 

 

0.7

%

 
 
 
 

QUORUM HEALTH CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Par Value per Share and Shares)

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,265

 

 

$

3,203

 

Patient accounts receivable

 

 

270,923

 

 

 

322,608

 

Inventories

 

 

41,447

 

 

 

45,646

 

Prepaid expenses

 

 

21,653

 

 

 

19,683

 

Due from third-party payors

 

 

57,071

 

 

 

63,443

 

Current assets of hospitals held for sale

 

 

35,380

 

 

 

?

 

Other current assets

 

 

33,604

 

 

 

36,405

 

Total current assets

 

 

462,343

 

 

 

490,988

 

Property and equipment, net

 

 

496,555

 

 

 

559,438

 

Goodwill

 

 

391,658

 

 

 

401,073

 

Intangible assets, net

 

 

41,066

 

 

 

48,289

 

Operating lease right-of-use assets

 

 

84,854

 

 

 

?

 

Long-term assets of hospitals held for sale

 

 

25,796

 

 

 

?

 

Other long-term assets

 

 

65,954

 

 

 

74,306

 

Total assets

 

$

1,568,226

 

 

$

1,574,094

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

1,646

 

 

$

1,697

 

Current portion of operating lease liabilities

 

 

23,797

 

 

 

?

 

Accounts payable

 

 

140,768

 

 

 

143,917

 

Accrued liabilities:

 

 

 

 

 

 

 

 

Accrued salaries and benefits

 

 

61,006

 

 

 

76,908

 

Accrued interest

 

 

10,517

 

 

 

10,024

 

Due to third-party payors

 

 

37,218

 

 

 

45,852

 

Current liabilities of hospitals held for sale

 

 

10,675

 

 

 

?

 

Other current liabilities

 

 

38,573

 

 

 

43,336

 

Total current liabilities

 

 

324,200

 

 

 

321,734

 

Long-term debt

 

 

1,210,523

 

 

 

1,191,777

 

Long-term operating lease liabilities

 

 

61,554

 

 

 

?

 

Deferred income tax liabilities, net

 

 

6,978

 

 

 

6,736

 

Long-term liabilities of hospitals held for sale

 

 

3,248

 

 

 

?

 

Other long-term liabilities

 

 

89,245

 

 

 

126,499

 

Total liabilities

 

 

1,695,748

 

 

 

1,646,746

 

Redeemable noncontrolling interests

 

 

2,278

 

 

 

2,278

 

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; 32,926,689 shares issued and outstanding at June 30, 2019, and 31,521,398 shares issued and outstanding at December 31, 2018

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

559,487

 

 

 

557,309

 

Accumulated other comprehensive income (loss)

 

 

856

 

 

 

759

 

Accumulated deficit

 

 

(705,071

)

 

 

(648,464

)

Total Quorum Health Corporation stockholders' equity (deficit)

 

 

(144,725

)

 

 

(90,393

)

Nonredeemable noncontrolling interests

 

 

14,925

 

 

 

15,463

 

Total equity (deficit)

 

 

(129,800

)

 

 

(74,930

)

Total liabilities and equity

 

$

1,568,226

 

 

$

1,574,094

 

 
 
 
 

QUORUM HEALTH CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(16,477

)

 

$

(25,941

)

 

$

(55,083

)

 

$

(124,428

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

14,500

 

 

 

17,142

 

 

 

29,139

 

 

 

35,403

 

Non-cash interest expense, net

 

 

2,380

 

 

 

2,723

 

 

 

4,319

 

 

 

4,534

 

Provision for (benefit from) deferred income taxes

 

 

31

 

 

 

(511

)

 

 

121

 

 

 

25

 

Stock-based compensation expense

 

 

1,194

 

 

 

2,756

 

 

 

2,964

 

 

 

5,220

 

Impairment of long-lived assets and goodwill

 

 

25,950

 

 

 

?

 

 

 

34,810

 

 

 

39,760

 

Loss (gain) on sale of hospitals, net

 

 

1,140

 

 

 

307

 

 

 

1,140

 

 

 

8,122

 

Non-cash portion of loss (gain) on hospital closures

 

 

?

 

 

 

1,089

 

 

 

(567

)

 

 

6,394

 

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

 

 

(29,963

)

 

 

4,355

 

 

 

(25,803

)

 

 

10,380

 

Other non-cash expense (income), net

 

 

116

 

 

 

56

 

 

 

(1,256

)

 

 

7

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patient accounts receivable

 

 

22,766

 

 

 

19,645

 

 

 

18,780

 

 

 

21,074

 

Due from and due to third-party payors, net

 

 

2,159

 

 

 

19,761

 

 

 

(2,262

)

 

 

20,978

 

Inventories, prepaid expenses and other current assets

 

 

(5,143

)

 

 

(1,519

)

 

 

(232

)

 

 

(229

)

Accounts payable and accrued liabilities

 

 

(28,930

)

 

 

(19,301

)

 

 

(8,784

)

 

 

(9,714

)

Long-term assets and liabilities, net

 

 

(117

)

 

 

(3,368

)

 

 

398

 

 

 

(2,925

)

Net cash provided by (used in) operating activities

 

 

(10,394

)

 

 

17,194

 

 

 

(2,316

)

 

 

14,601

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures for property and equipment

 

 

(9,819

)

 

 

(10,791

)

 

 

(18,111

)

 

 

(25,319

)

Capital expenditures for software

 

 

(2,326

)

 

 

(531

)

 

 

(3,517

)

 

 

(1,044

)

Acquisitions, net of cash acquired

 

 

?

 

 

 

(26

)

 

 

(455

)

 

 

(58

)

Proceeds from the sale of hospitals

 

 

11,741

 

 

 

507

 

 

 

11,741

 

 

 

39,170

 

Other investing activities, net

 

 

(2,112

)

 

 

52

 

 

 

(383

)

 

 

249

 

Net cash provided by (used in) investing activities

 

 

(2,516

)

 

 

(10,789

)

 

 

(10,725

)

 

 

12,998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings under revolving credit facilities

 

 

175,000

 

 

 

115,000

 

 

 

327,000

 

 

 

247,000

 

Repayments under revolving credit facilities

 

 

(149,000

)

 

 

(119,000

)

 

 

(299,000

)

 

 

(233,000

)

Borrowings of long-term debt

 

 

25

 

 

 

55

 

 

 

186

 

 

 

67

 

Repayments of long-term debt

 

 

(12,130

)

 

 

(30,820

)

 

 

(13,963

)

 

 

(31,447

)

Payments of debt issuance costs

 

 

?

 

 

 

?

 

 

 

?

 

 

 

(2,268

)

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

 

 

(103

)

 

 

(1,309

)

 

 

(564

)

 

 

(1,943

)

Cash distributions to noncontrolling investors

 

 

(333

)

 

 

?

 

 

 

(1,556

)

 

 

(803

)

Net cash provided by (used in) financing activities

 

 

13,459

 

 

 

(36,074

)

 

 

12,103

 

 

 

(22,394

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

 

 

549

 

 

 

(29,669

)

 

 

(938

)

 

 

5,205

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

1,716

 

 

 

40,491

 

 

 

3,203

 

 

 

5,617

 

Cash, cash equivalents and restricted cash at end of period

 

$

2,265

 

 

$

10,822

 

 

$

2,265

 

 

$

10,822

 

 
 
 

FOOTNOTES TO UNAUDITED FINANCIAL STATEMENTS AND SELECTED OPERATING DATA

(a) 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"), change in actuarial estimates and headcount reductions and executive severance. Change in actuarial estimates refers to the previously discussed impact of a change in estimate for the Company's professional and general liability reserves for periods prior to the current reporting period. 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. Same-facility Adjusted EBITDA, also a non-GAAP financial measure, is further adjusted to exclude the effect of EBITDA of hospitals either sold or closed as of June 30, 2019. The Company has presented Adjusted EBITDA and Same-facility Adjusted EBITDA 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 Same-facility Adjusted EBITDA 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 Same-facility Adjusted EBITDA 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 Same-facility Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

The following table reconciles Adjusted EBITDA and Same-facility Adjusted EBITDA, 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 June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(16,477

)

 

$

(25,941

)

 

$

(55,083

)

 

$

(124,428

)

Interest expense, net

 

 

33,582

 

 

 

31,926

 

 

 

65,848

 

 

 

62,857

 

Provision for (benefit from) income taxes

 

 

94

 

 

 

(454

)

 

 

249

 

 

 

(88

)

Depreciation and amortization

 

 

14,500

 

 

 

17,142

 

 

 

29,139

 

 

 

35,403

 

EBITDA

 

 

31,699

 

 

 

22,673

 

 

 

40,153

 

 

 

(26,256

)

Legal, professional and settlement costs

 

 

604

 

 

 

5,417

 

 

 

1,289

 

 

 

8,830

 

Impairment of long-lived assets and goodwill

 

 

25,950

 

 

 

?

 

 

 

34,810

 

 

 

39,760

 

Loss (gain) on sale of hospitals, net

 

 

1,140

 

 

 

307

 

 

 

1,140

 

 

 

8,122

 

Loss on closure of hospitals, net

 

 

?

 

 

 

3,338

 

 

 

?

 

 

 

17,084

 

Transition of transition services agreements

 

 

834

 

 

 

520

 

 

 

1,976

 

 

 

1,237

 

Change in actuarial estimates

 

 

(26,880

)

 

 

?

 

 

 

(26,880

)

 

 

?

 

Headcount reductions and executive severance

 

 

82

 

 

 

4,068

 

 

 

1,572

 

 

 

5,966

 

Adjusted EBITDA

 

 

33,429

 

 

 

36,323

 

 

 

54,060

 

 

 

54,743

 

Negative EBITDA of divested hospitals

 

 

3,487

 

 

 

3,858

 

 

 

5,656

 

 

 

11,638

 

Same-facility Adjusted EBITDA

 

$

36,916

 

 

$

40,181

 

 

$

59,716

 

 

$

66,381

 

 
 

(b) 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 June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(per share - basic and diluted)

 

 

(per share - basic and diluted)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share attributable to Quorum Health Corporation stockholders, as reported

 

$

(0.56

)

 

$

(0.92

)

 

$

(1.88

)

 

$

(4.37

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal, professional and settlement costs

 

 

0.02

 

 

 

0.18

 

 

 

0.04

 

 

 

0.31

 

Impairment of long-lived assets and goodwill

 

 

0.87

 

 

 

?

 

 

 

1.18

 

 

 

1.38

 

Loss (gain) on sale of hospitals, net

 

 

0.04

 

 

 

0.01

 

 

 

0.04

 

 

 

0.28

 

Loss on closure of hospitals, net

 

 

?

 

 

 

0.11

 

 

 

?

 

 

 

0.58

 

Transition of transition services agreements

 

 

0.03

 

 

 

0.02

 

 

 

0.07

 

 

 

0.04

 

Change in actuarial estimates

 

 

(0.90

)

 

 

?

 

 

 

(0.91

)

 

 

?

 

Headcount reductions and executive severance

 

 

?

 

 

 

0.14

 

 

 

0.05

 

 

 

0.21

 

Net operating losses of divested hospitals

 

 

0.12

 

 

 

0.13

 

 

 

0.19

 

 

 

0.39

 

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

 

$

(0.38

)

 

$

(0.33

)

 

$

(1.22

)

 

$

(1.18

)

(c) 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.
(d) Admissions represent the number of patients admitted for inpatient services.
(e) Adjusted admissions are computed by multiplying admissions by gross patient revenues and then dividing that number by gross inpatient revenues.
(f) Surgeries represent the number of inpatient and outpatient surgeries.
(g) Emergency room visits represent the number of patients registered and treated in the Company's emergency rooms.
(h) 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.
(i) 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 the following hospitals and their affiliated facilities: 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, McKenzie Regional Hospital and Scenic Mountain Medical Center 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, September 30, 2018 and April 12, 2019, respectively.

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:

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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