Quorum Health Corporation Announces Second Quarter 2019 Results

Second quarter net loss attributable to Quorum Health Corporation was ($16.9) million, or ($0.56) per share

Second quarter Adjusted EBITDA was $33.4 million and Same-facility Adjusted EBITDA was $36.9 million

Announces agreement with MEDHOST Inc. to deploy its Electronic Health Record platform

BRENTWOOD, Tenn.–(BUSINESS WIRE)–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:

  • Compared to the second quarter of 2018, same-facility net patient revenues decreased 2.6%, while same-facility net patient revenues per adjusted admission increased 0.9%. The decrease in same-facility net patient revenues compared to the second quarter of 2018 reflects a 3.4% decline in same-facility adjusted admissions and a 2.2% decline in same-facility surgeries. The decline in volumes compared to the second quarter of 2018 represents approximately $14.9 million of same-facility net patient revenues.
  • Same-facility net operating revenues for the second quarter of 2019 reflect a $5.6 million decrease related to Watsonville Community Hospital and MetroSouth Medical Center (the “Pending Divestitures”). The Pending Divestitures incurred negative Adjusted EBITDA of $2.4 million during the second quarter of 2019. The Company previously announced that it had entered into a definitive agreement to sell Watsonville Community Hospital and discontinue operations at MetroSouth Medical Center by the end of 2019. The Company will continue to reflect the results of the Pending Divestitures in its same-facility results until the facilities have been sold or closed (see “Divestiture Update” below).
  • Second quarter 2019 Adjusted EBITDA was 7.6% of net operating revenues and Same-facility Adjusted EBITDA was 8.3% of same-facility net operating revenues. Excluding the impact of the Pending Divestitures, Same-facility Adjusted EBITDA as a percent of same-facility net operating revenues would have been 10.3% in the second quarter of 2019 compared to 10.0% in the second quarter of 2018.
  • Same-facility operating expenses in the second quarter of 2019 reflect a $28.5 million reduction in professional and general liability reserves due to a change in actuarial estimates, including a $23.5 million reduction that relates to prior years and is excluded from Same-facility Adjusted EBITDA. Factors contributing to the change in estimate include the use of valuation techniques that place more emphasis on the Company’s claims subsequent to the Spin-off compared to historical trends, as well as more reliance on industry trend factors. The reduction in the frequency and severity of the Company’s claims is the result of internal initiatives in the areas of patient safety, risk management, and claims management, as well as external factors such as tort reform in certain key states.
  • Same-facility surgeries during the second quarter of 2019 improved 8.9% compared to the first quarter of 2019, as the Company focused on improving volumes at two facilities impacted by independent physician turnover and re-syndicating two outpatient surgery centers in Illinois. Excluding these four facilities and the Pending Divestitures, same-facility surgeries increased 4.9% during the second quarter of 2019 compared to the second quarter of 2018 as a result of the Company’s efforts to increase volumes in higher acuity service lines.

TSA Transition and R1 RCM Partnership Update

  • The Company announced today that it had signed an agreement with MEDHOST Inc. (“MEDHOST”) to deploy their Electronic Health Record platform in connection with the Company’s planned transition from its Computer and Data Processing Transition Services Agreement (or “IT TSA”) with Community Health Systems, Inc. (“CHS”). The Company currently utilizes MEDHOST’s software through its IT TSA with CHS. The Company will incur additional costs to establish the remainder of its information technology systems. The Company expects the transition to be completed by the end of the first quarter of 2021.
  • As previously announced, the Company has partnered with R1 RCM to provide end-to-end revenue cycle management services. The Company is on-track with the implementation of R1 RCM’s services and believes that the agreement with R1 RCM will result in approximately $5 million in cost savings and $5 million of improved net patient revenues during the second half of 2019. Beyond 2019, the Company expects the annual impact of the R1 RCM partnership to grow to approximately $45 million by 2021, which is revised from its previous estimate of $50 million to account for the Pending Divestitures.

Divestiture Update

  • During the second quarter of 2019, the Company announced that it had entered into a definitive agreement to divest 106-bed Watsonville Community Hospital in Watsonville, California. Cash proceeds from the transaction are expected to be approximately $35 million to $40 million, subject to final net working capital balances.
  • On July 18, 2019 the Company received notice from the Pajaro Valley Community Health Trust (“Trust”) that it had exercised its Right of First Refusal to purchase the stock interests of Watsonville Community Hospital. If the terms of the Right of First Refusal are not met, the definitive agreement entered into on May 31, 2019 will remain in effect. The Company currently anticipates completing the sale of Watsonville by the end of 2019.
  • The Company previously announced that it would either sell or discontinue operations at MetroSouth Medical Center in Blue Island, Illinois by the end of 2019. The Company later announced that operations will be discontinued by the end of the third quarter of 2019. The Company expects to complete its assessment of the closure of MetroSouth by the end of the third quarter, including any potential impacts on the Company’s results of operations, financial position and cash flows.

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

 

 
 
 

Contacts

Investor Contact:

Asher Dewhurst

Westwicke Partners

QuorumHealth@Westwicke.com

(443) 213-0500

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