Regulation FD Disclosure
The following tables set forth selected information concerning the Company’s updated projected consolidated operating results for the year ending December 31, 2012. These projections are based on the Company’s historical operating performance, current trends and other assumptions that the Company believes are reasonable at this time. This 2012 guidance reaffirms the Company’s previous guidance for 2012 provided on July 25, 2012, modified to reflect certain changes as detailed in the guidance assumptions below. See page 16 for a list of factors that could affect the future results of the Company or the healthcare industry generally.
The following is provided as guidance to analysts and investors:
|2012 Projection Range||2011 Actual|
|Net operating revenues less provision for bad debts (in millions) *||$||12,800||to||$||13,200||$||11,906||*|
|Adjusted EBITDA (in millions)||$||1,965||to||$||1,990||$||1,837|
|Income from continuing operations per share - diluted||$||3.80||to||$||3.95||$||3.33||**|
|Same-store hospital annual adjusted admissions growth||-0.5||%||to||1.5||%||-0.7||%|
|Weighted-average diluted shares (in millions)||90||to||91||91|
|* Any reference to net operating revenues means net operating revenues less provision for bad debts.|
|** Excludes loss on early extinguishment of debt.|
The following assumptions were used in developing the 2012 guidance provided above:
- Effective January 1, 2012, the Company adopted Accounting Standards Update 2011-07, which requires the provision for bad debts expense associated with patient service revenue to be presented as an offset to the patient service revenue line item in the statement of operations. 2012 projection range and restated 2011 actual net operating revenues are presented net of projected and actual provision for bad debts, respectively.
- The Company’s 2012 projection includes an aggregate $80 million of net operating revenues and $0.38 per share (diluted) of adjustments recognized in our operating results for the three months ended March 31, 2012, related to the Rural Floor Budget Neutrality Adjustment, the Supplemental Security Income payment update and the accrual of certain legal matters not previously included in our guidance.
- The Company’s projection excludes loss on early extinguishment of debt.
- The Company’s previously issued 2012 guidance for Adjusted EBITDA has been reduced by approximately 50 basis points, and its income from continuing operations per share (diluted) has been reduced by approximately $0.07, as a result of California no longer expecting an approved managed care component of its provider tax program during the second half of 2012. Currently, final approval from CMS on this component of California’s program is anticipated to occur in the first half of 2013.
- Expressed as a percent of net operating revenues, Health Information Technology (HITECH) electronic health records incentive reimbursement for 2012 is projected to be approximately 0.8% to 0.9%. Electronic health records-related total costs and expenses for 2012, expressed as a percentage of net operating revenues, are projected to be approximately 0.4% to 0.6%, including depreciation and amortization, expressed as a percentage of net operating revenues, of approximately 0.2% to 0.3%. The projections related to HITECH incentive reimbursement and the related costs are based on the assumption that approximately one-third of our hospitals are Stage 1 compliant by September 30, 2012.
- 2012 projection includes four acquisitions which have closed prior to September 30, 2012.
- Projected 2012 same-store hospital annual adjusted admissions growth does not take into account service closures and other unusual events.
- Expressed as a percentage of net operating revenues, depreciation and amortization is projected to be approximately 5.6% to 5.8% for 2012; however, this is a fixed cost and the percentages may vary as revenue varies. Such amounts exclude the possible impact of any future hospital fixed asset impairments.
- 2012 projection includes an estimate of $0.05 to $0.07 per share (diluted) of acquisition costs that are required to be expensed.
- The Company’s 2012 projection does not take into account resolution of government investigations or other significant legal settlements not resolved at October 30, 2012.
- For the purpose of providing interest expense guidance, the Company has included approximately $10 million of additional interest expense for the remainder of 2012 as a result of the following: the issuance, in August 2012, of $1.6 billion 5.125% Senior Secured Notes, the proceeds of which were used to repay non-extended term loans under our Credit Agreement, which bore interest at a variable rate approximating 2.50% at the time of repayment; and the modification, on August 22, 2012, extending the maturity of $340 million of term loans from July 25, 2014 to January 25, 2017. Including these transactions, interest expense, expressed as a percentage of net operating revenues, is projected to be approximately 4.8% to 4.9% for 2012; however, these percentages will vary as revenue and interest rates vary.
- Total fixed rate debt, including swaps, is expected to average approximately 82% to 86% of total debt during the 4 th quarter of 2012.
- On December 14, 2011, the Company adopted a new open market repurchase program for up to four million shares of the Company’s common stock, not to exceed $100 million in purchases. The new repurchase program will conclude at the earliest of three years, when the maximum number of shares has been repurchased, or when the maximum dollar amount has been expended. Through October 30, 2012, no shares have been repurchased and retired under this repurchase plan.
- Expressed as a percentage of net operating revenues, equity in earnings of unconsolidated affiliates is projected to be approximately 0.3% to 0.4% for 2012.
- Expressed as a percentage of net operating revenues, net income attributable to noncontrolling interests is projected to be approximately 0.5% to 0.6% for 2012.
- Expressed as a percentage of income from continuing operations before income taxes, provision for income tax is projected to be approximately 31.0% to 33.0% for 2012.
- Capital expenditures are projected as follows (in millions):
- Net cash provided by operating activities is projected as follows (in millions):
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