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Vanguard Health Systems Reports Fourth Quarter And Year End Fiscal 2013 Results

Stocks in this article: VHS

As previously announced, we have signed a definitive agreement and plan of merger to be acquired by Tenet Healthcare Corporation (NYSE: THC) (“Tenet”). Completion of the transaction remains subject to the satisfaction or waiver of certain customary closing conditions. The transaction is expected to close early in our second quarter of fiscal 2014. As a result of the proposed merger, we will not have a conference call to discuss our financial results for the fourth quarter and fiscal year ended June 30, 2013.

Fourth Quarter Analysis

Consolidated total revenues increased $62.7 million, or 4.3 percent, during the fourth quarter of fiscal 2013 compared to the prior year period. Health plan premium revenues increased $18.5 million, or 11.1 percent, during the fourth quarter of fiscal 2013 compared to the prior year period as a result of a capitation rate increase at Phoenix Health Plan ("PHP"), increased enrollment at Abrazo Advantage Health Plan in Arizona and the addition of ProCare Health Plan in Michigan. Health plan claims expense increased significantly during the fourth quarter of fiscal 2013 compared to the prior year period due to provider rate increases mandated by the Arizona Health Care Cost Containment System ("AHCCCS") for certain services, most of which were effective April 1, 2013, and changes in actuarial assumptions related to the acuity of certain member groups. Uncompensated care as a percentage of net patient revenues (prior to uncompensated care deductions) was 21.6 percent during the fourth quarter of fiscal 2013 compared to 19.5 percent during the prior year period.

Substantially all of the acquisition related expenses of $7.9 million during the fourth quarter of fiscal 2013 related to legal, advisory and other costs associated with the Tenet transaction. During the fourth quarter of fiscal 2013, we also incurred $5.2 million in severance costs related to our restructuring of the Detroit market operations and recognized a $14.6 million gain on disposal of assets, substantially all of which related to our sale of a portion of our laboratory business in Illinois in June 2013.

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