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SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933
Delaware | 8062 | 20-2767829 | ||
(State or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer | ||
incorporation or organization) | Classification Code Number) | Identification No.) |
Franklin, Tennessee 37067
(615) 764-3000
(Address, including zip code, and telephone number, including area code, of registrants’ principal executive offices)
Chief Executive Officer
Capella Healthcare, Inc.
501 Corporate Centre Drive, Suite 200
Franklin, Tennessee 37067
(615) 764-3000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
J. Chase Cole, Esq.
David C. Head, Esq.
Waller Lansden Dortch & Davis, LLP
511 Union Street, Suite 2700
Nashville, Tennessee 37219
(615) 244-6380
Large accelerated filero | Accelerated filero | Non-accelerated filerþ | Smaller reporting companyo | |||
(Do not check if a smaller reporting company) |
Proposed maximum | Proposed maximum | |||||||||||||
Title of each class of | Amount to be | offering price | aggregate offering price | Amount of | ||||||||||
securities to be registered | registered | per note | (1) | registration fee | ||||||||||
91/4% Senior Notes due 2017 | $500,000,000 | 100% | $500,000,000 | $58,050 | ||||||||||
Guarantees of 91/4% Senior Notes due 2017(2) | N/A | — | — | N/A(3) | ||||||||||
(1) | Estimated solely for the purpose of calculating the registration fee under Rule 457(f) of the Securities Act of 1933, as amended (the “Securities Act”). | |
(2) | See inside facing page for table of registrant guarantors. | |
(3) | Pursuant to Rule 457(n) under the Securities Act, no separate filing fee is required for the guarantees. |
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Primary | ||||||
State or Other | Standard | I.R.S. | ||||
Jurisdiction of | Industrial | Employer | ||||
Incorporation | Classification | Identification | ||||
Name, Address and Telephone Number (1) | or Organization | Code Number | Number | |||
Capella Holdings of Oklahoma, LLC | Delaware | 8062 | 20-8308250 | |||
Capital Medical Center Holdings, LLC | Delaware | 8062 | 14-1936331 | |||
Capital Medical Center Partner, LLC | Delaware | 8062 | 62-1805349 | |||
CMCH Holdings LLC | Delaware | 8062 | 26-4088312 | |||
Columbia Medical Group — South Pittsburg, Inc. | Tennessee | 8062 | 62-1639105 | |||
Columbia Olympia Management, Inc. | Delaware | 8062 | 62-1690140 | |||
Cullman County Medical Clinic, Inc. | Alabama | 8062 | 63-1138503 | |||
Cullman Hospital Corporation | Alabama | 8062 | 63-1157234 | |||
Cullman Surgery Venture Corp. | Delaware | 8062 | 74-3042199 | |||
Farmington Clinic Company, LLC | Missouri | 8062 | 20-4795191 | |||
Farmington Heart & Vascular Center, LLC | Delaware | 8062 | 27-0888641 | |||
Farmington Hospital Corporation | Missouri | 8062 | 20-4795037 | |||
Farmington Missouri Hospital Company, LLC | Missouri | 8062 | 20-4795132 | |||
Grandview Physician Group, LLC | Tennessee | 8062 | 32-0142836 | |||
Hartselle Physicians, Inc. | Alabama | 8062 | 63-1173620 | |||
Jacksonville Medical Professional Services, LLC | Delaware | 8062 | 20-5957808 | |||
Jacksonville Surgical and Medical Affiliates, LLC | Delaware | 8062 | 26-3311350 | |||
Lawton Holdings, LLC | Delaware | 8062 | 26-4088357 | |||
Mineral Area Pharmacy and Durable Medical Equipment, LLC | Missouri | 8062 | 20-4890756 | |||
Muskogee Holdings, LLC | Delaware | 8062 | 20-4088158 | |||
Muskogee Medical and Surgical Associates, LLC | Delaware | 8062 | 26-4445694 | |||
Muskogee Physician Group, LLC | Delaware | 8062 | 20-8493666 | |||
Muskogee Regional Medical Center, LLC | Delaware | 8062 | 20-8308340 | |||
National Healthcare of Decatur Inc. | Delaware | 8062 | 63-0928790 | |||
National Healthcare of Hartselle, Inc. | Delaware | 8062 | 63-0928787 | |||
National Park Cardiology Services, LLC | Delaware | 8062 | 26-4446655 | |||
National Park Family Care, LLC | Delaware | 8062 | 27-4035448 | |||
National Park Physician Services, LLC | Delaware | 8062 | 62-1762445 | |||
NPMC Holdings, LLC | Delaware | 8062 | 26-4088237 | |||
NPMC, Home Health, LLC | Delaware | 8062 | 20-8449844 | |||
NPMC, LLC | Delaware | 8062 | 20-4599508 |
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Primary | ||||||
State or Other | Standard | I.R.S. | ||||
Jurisdiction of | Industrial | Employer | ||||
Incorporation | Classification | Identification | ||||
Name, Address and Telephone Number (1) | or Organization | Code Number | Number | |||
Oregon Healthcorp, LLC | Delaware | 8062 | 62-1769632 | |||
Parkway Medical Clinic, Inc. | Alabama | 8062 | 63-1138502 | |||
QHG of Jacksonville, Inc. | Alabama | 8062 | 62-1637909 | |||
River Park Hospital, Inc. | Tennessee | 8062 | 62-0811451 | |||
River Park Hospitalists, LLC | Tennessee | 8062 | 03-0557520 | |||
River Park Physician Group, LLC | Delaware | 8062 | 26-3798779 | |||
Russellville Holdings, LLC | Delaware | 8062 | 62-1771866 | |||
Sequatchie Valley Urology, LLC | Tennessee | 8062 | 32-0142834 | |||
Southwestern Emergency Department Physician Services, LLC | Oklahoma | 8062 | 13-4229397 | |||
Southwestern Medical Center, LLC | Delaware | 8062 | 62-1757662 | |||
Southwestern Neurosurgery Physicians, LLC | Oklahoma | 8062 | 20-1084297 | |||
Southwestern Physician Services, LLC | Oklahoma | 8062 | 57-1141094 | |||
Southwestern Radiology Affiliates, LLC | Delaware | 8062 | 27-3256164 | |||
Southwestern Surgical Affiliates LLC | Delaware | 8062 | 26-3311227 | |||
SP Acquisition Corp. | Tennessee | 8062 | 62-1321262 | |||
Sparta Hospital Corporation | Tennessee | 8062 | 62-1587742 | |||
St. Mary’s Holdings, LLC | Delaware | 8062 | 26-4088270 | |||
St. Mary’s Physician Services, LLC | Delaware | 8062 | 62-1769626 | |||
St. Mary’s Real Property, LLC | Delaware | 8062 | 62-1762460 | |||
Western Washington Healthcare, LLC | Washington | 8062 | 20-1275656 | |||
Willamette Valley Clinics, LLC | Delaware | 8062 | 62-1766695 | |||
Willamette Valley Medical Center, LLC | Delaware | 8062 | 62-1762552 | |||
WPC Holdco, LLC | Delaware | 8062 | 62-1839545 |
(1) | The address of each additional registrant’s principal executive office is c/o Capella Healthcare, Inc., 501 Corporate Centre Drive, Suite 200, Franklin, Tennessee 37067. The telephone number of each additional registrant is (615) 764-3000. |
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
up to $500,000,000 91/4% Senior Notes due 2017
for up to $500,000,000 91/4% Senior Notes due 2017
that have been registered under the Securities Act of 1933
• | The terms of the exchange notes are substantially identical to the terms of the outstanding notes, except that the exchange notes have been registered under the Securities Act and will not contain restrictions on transfer or any registration rights. | ||
• | The exchange notes will represent the same debt as the outstanding notes, and we will issue the exchange notes under the same indenture. |
• | All outstanding notes that you validly tender and do not validly withdraw before the exchange offer expires will be exchanged for an equal principal amount of the exchange notes. | ||
• | The exchange offer expires at 5:00 p.m., New York City time, on , 2011, unless extended. | ||
• | You may withdraw tenders of outstanding notes at any time prior to the expiration date of the exchange offer. | ||
• | The exchange of exchange notes for outstanding notes will not be a taxable event for U.S. federal income tax purposes. Please read the discussion under the caption “Certain Material U.S. Federal Income Tax Considerations” for more information. | ||
• | We will not receive any proceeds from the exchange offer. | ||
• | We issued the outstanding notes in a transaction not requiring registration under the Securities Act, and as a result, their transfer is restricted. We are making the exchange offer to satisfy the registration rights of holders of the outstanding notes. |
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• | Commitment to Delivery of Patient Care Excellence. We believe providing patient care excellence is critical to attracting patients, physicians, medical staff and employees to our facilities. In addition, providing high quality patient care is increasingly vital to achieving our operating and financial success, including receiving full reimbursement from governmental and commercial insurance payors. As a result, we have implemented several management and operating initiatives aimed at continuously monitoring and improving our quality of care. We believe several factors contribute to providing patient care excellence, including leadership and accountability at all levels of our organization, aligning ourselves with quality physicians and clinical staff, as well as providing a clinical environment that is satisfactory to our patients, physicians and employees. To support these initiatives, each of our hospitals has a Chief Quality Officer (“CQO”) who is responsible for implementing and monitoring our quality training and operating programs. In addition, we have Boards of Trustees and Local Physician Leadership Groups (“LPLGs”) at each of our facilities, a Physician Advisory Group (“PAG”), a National Physician Leadership Group (“NPLG”) and several on-line training tools, which are focused on delivering patient care excellence, clinical best practices and results in our hospitals. In January 2011, we added a Chief Medical Officer (“CMO”) to our senior management team to assume leadership responsibility for facilitating the work of our NPLG, ensuring that physician leaders across the Company are continuously involved in shaping our vision and future strategies. The CMO is also responsible for providing leadership for our affiliated hospitals’ quality and service excellence initiatives as well as for on-going communication with medical staff members. Furthermore, we strive continually to improve physician and employee satisfaction, which we believe is critical to delivering quality patient care. Our satisfaction review program is instrumental in identifying ways to improve quality of care in each of our facilities. Some of the results of our efforts include: |
• | accreditation of all of our hospitals, including 12 by The Joint Commission and one by the American Osteopathic Association; | ||
• | in spring of 2011, The Joint Commission recognized eight of our hospitals for significant improvement and/or consistent high performance in various elements of the core measures and invited them to participate in the pilot-testing of Solutions Exchange, a program to help other hospitals throughout the nation; | ||
• | Parkway Medical Center was ranked in the top 1% of all U.S. hospitals by Data Advantage Hospital Value Index (“HVI”) and was recognized as a center of excellence in bariatric surgery in 2010; | ||
• | Capital Medical Center received a #1 ranking in the state of Washington by HealthGrades for its orthopedic program in 2010 and a Best in Country, Top 10 in the state of Washington by HealthGrades for general surgery in 2011; | ||
• | Southwestern Medical Center was the first hospital in southwest Oklahoma to receive certification from The Joint Commission for its stroke program and, in 2011, earned its fifth consecutive accreditation from the Commission on Accreditation of Rehabilitation Facilities; | ||
• | Muskogee Regional Medical Center earned accreditation from the Oklahoma State Medical Association as a sponsor of Continuing Medical Education in 2010 and earned Quality Respiratory Care Recognition from the American Association for Respiratory Care in 2010 and 2011; | ||
• | Willamette Valley Medical Center was named a “Best Value in the State of Oregon” for 2009 and 2010 by the Press Ganey Hospital Value Index; |
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• | River Park Hospital earned its third consecutive national Chest Pain Center accreditation in 2010 from the Society of Chest Pain Centers; | ||
• | Mineral Area Regional Medical Center was named a 2011 “Excellence through Insight” award recipient in the category of “Overall Physician Satisfaction” by HealthStream Research; | ||
• | National Park Medical Center was named to HomeCare Elite in 2010, which is the top 5% of high performance home health agencies in the U.S.; and | ||
• | improved physician and employee satisfaction scores in 2010, as measured by an independent, third-party, nationally-recognized survey administrator. |
• | Diversified Portfolio of Assets with Strong Market Positions in Attractive Communities.We maintain the top market position in six, the second position in six and the third position in one of our markets based on inpatient admissions in our PSAs. We diversified our asset base by entering new geographic markets through successful acquisitions. Our top three states, Arkansas, Oklahoma and Oregon, which contain five of our hospitals, accounted for 25.6%, 21.7% and 12.7% of our 2010 net revenue, respectively, and 25.6%, 20.9% and 12.8% of our net revenue, respectively, for the three month period ended March 31, 2011. | ||
• | Strategic Physician Recruitment and Retention.We have been successful in implementing our strategic physician recruitment and retention plan. In the summer of 2008, we commissioned an independent consulting group to perform a market needs analysis with a focus on the unserved medical needs of the community. From that analysis, we developed a strategic recruitment plan to meet each of our market’s healthcare needs. Executing that plan, we recruited 61 physicians in 2008; 72 in 2009; and 68 in 2010. During 2010, 42.6% were specialists in areas such as general surgery, cardiology, women’s services and, orthopedics. The remainder were primary care physicians, including hospitalists and physicians practicing in areas such as family medicine, internal medicine and pediatrics. | ||
• | Proven Ability to Instill Operational Excellence in Acquired Facilities.We have acquired and integrated 14 hospitals successfully since our inception in 2005. Once we acquire a facility, we implement a customized strategic plan focused on leadership, quality, physician engagement and recruitment, capital investment, cost initiatives and enhancing key services. We believe our ability to increase revenue, operating margins and cash flow at acquired facilities is the direct result of our disciplined approach to expanding and improving key services, recruiting physicians to provide these services, streamlining costs, enhancing relationships with our physicians and employees and implementing a targeted capital investment program. In addition, our senior management team has an average of more than 28 years of experience in hospital operations, with three members of our senior management team having been either a hospital CEO or Chief Financial Officer (“CFO”). | ||
• | Strategic Capital Investments Resulting in Well Capitalized Facilities.We have not been required to make significant capital investments renovating or repairing our facilities because the hospitals we acquired typically have been capitalized and maintained well by their previous owners. For example, Willamette Valley Medical Center completed an approximately $37 million renovation and expansion project in November 2007 (we acquired it in March 2008) and Muskogee Regional Medical Center was in the process of completing an approximately $31 million renovation and expansion project in April 2007 when we entered into a long-term lease for that facility. Although we monitored the project’s completion, the lessor bore the cost of renovation and expansion. We have invested in targeted growth initiatives, primarily focused on new and enhanced services. We have invested a total of approximately $68.0 million in our facilities over the three-year period ended December 31, 2010. Major projects funded by us include (i) approximately $9 million in renovations and expansions to operating rooms, the intensive care unit and the cancer center at Southwestern Medical Center that were completed in 2008; (ii) aggregate of approximately $5.2 million for the purchase of a linear accelerator and medical oncology and radiation therapy renovations at Capital Medical Center that were also completed in 2008; and (iii) approximately $3.4 |
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million for Novalis Tx radiation oncology equipment at Muskogee Regional Medical Center in 2010. We believe that our continued commitment to invest in our communities and facilities will further strengthen our quality of care and our ability to recruit and retain leading physicians and healthcare professionals. | |||
• | Experienced Senior Management and Leadership Teams. Our senior management team has an average of more than 28 years of experience in the healthcare industry with a proven record of achieving strong operating results while operating with significant leverage. The senior management team is highly respected in the hospital industry, has significant experience in acquiring, improving and managing hospitals and has demonstrated its ability to integrate hospitals effectively without reducing its focus on existing operations. In addition, the average experience of our current hospital CEOs is approximately 25 years. |
• | Enhancing Quality of Care and Service Excellence.We place significant emphasis on consistently providing high quality patient care and service excellence. We seek to achieve this by continuously enhancing our programs and protocols through targeted investments in our employees, physicians, systems and strategic growth initiatives. We believe value based purchasing initiatives of both governmental and private payors, such as linking payment for healthcare services to performance on objective quality measures, will increasingly become key drivers of financial performance. Examples of these initiatives include denying payment for avoidable hospital re-admissions and bundling payments for acute care services with physician or post-acute services. We believe our continued strategic investments to improve patient care excellence will prepare us to face the challenges and capitalize on the opportunities relating to the ever-changing, pay-for-performance environment. Some of our strategic initiatives in quality and service excellence include: |
• | Emergency Rooms. Recently, we embarked on a multi-year strategy to enhance quality and improve operating efficiencies in our emergency rooms. This strategy involves implementing process improvement initiatives such as Lean for Healthcare techniques, which are designed to improve patient experiences through more efficient utilization of resources. As a result of this initiative, several members of our corporate and hospital staff have received Lean for Healthcare certifications. We also are making a significant investment in a leading emergency department information system, which is comprised of several modules that offer comprehensive patient management tools. The program provides appropriate and consistent guidelines for patient care excellence helping to ensure that proper screening, evaluation and treatment is performed. | ||
• | Local Physician Leadership Groups, or LPLGs. Our LPLGs are comprised of four to five physician leaders and our hospital CEO in each of our markets. The groups (i) provide ongoing dialogue with hospital administration; (ii) help develop key strategic initiatives for the hospital; and (iii) promote patient care excellence. | ||
• | Physician Advisory Group, or PAG. Our PAG is comprised of physician leaders across the Company. The group (i) provides clinical review and guidance related to information system design, build-out and workflow; (ii) advises us on physician communication and education; and (iii) identify opportunities where technology can be used to improve clinical processes and outcomes. | ||
• | National Physician Leadership Group, or NPLG. Our NPLG is comprised of one member of each LPLG and Capella senior management. The group (i) receives updates on Capella corporate strategy and vision; (ii) discusses quality of care issues and goals; (iii) promotes networking among Capella-affiliated physicians; (iv) offers advice on special projects where front line physician input is critical; and (v) allows members of the medical staff to have direct communication with members of Capella senior management. | ||
• | Chief Medical Officer. Our CMO is responsible for facilitating the work of our NPLG, ensuring that physician leaders from across the Company are continuously involved in shaping our vision and future strategies. The CMO is also responsible for providing leadership for our affiliated hospitals’ quality and service excellence initiatives as well as for on-going communication with medical staff members. |
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• | Training and Education. We provide the Capella Learning Center, a customized on-line learning center comprised of approximately 3,000 clinically based courses to all our staff. Our corporate CQO develops and implements a work plan for each of the hospitals based upon their specific needs. The hospital CQO and Chief Nursing Officer (“CNO”), in turn, develop individual educational work plans for each staff member at their facility. Usage of the Capella Learning Center is monitored by the corporate CQO and is reported to Capella senior management. We work with an independent consulting group to provide training in the areas of improving patient care processes as well as employee, physician and patient satisfaction. We believe this is a critical element in emphasizing our philosophy that, if our employees and physicians enjoy where they work and are intellectually stimulated, they will improve the quality care our patients receive. We will continue to survey our physicians and our employees on an annual basis to identify objectives for quality and satisfaction improvement. | ||
• | Compensation. We base the incentive compensation for our hospital administrative teams in significant part on achieving key individual and facility quality and service metrics such as performance on patient satisfaction surveys and other core measurements. |
• | Continued Physician Engagement and Alignment Initiatives. Our ability to meet the medical care needs of our communities and enhance and expand our services is highly dependent on our physician engagement strategies. We have a comprehensive recruiting program that is directed at the local level by our hospital CEOs and Boards of Trustees. We supplement our local teams with several third-party recruiting firms to assist us in identifying candidates that match the profile of our physician needs. We maintain a flexible approach to aligning our goals with our physician partners, including our willingness to recruit physicians through multi-year employment and/or income guarantee arrangements and to enter into joint venture and other collaborative arrangements. We added a CMO to our senior management team to assume leadership responsibility for facilitating the work of our NPLG, ensuring that physician leaders across the Company are continuously involved in shaping the Company’s vision and future strategies. In addition, we believe physicians are attracted to our hospitals because of several factors, including: |
• | our commitment to patient care excellence; | ||
• | our willingness to deploy strategic capital to improve the delivery of care; | ||
• | our focus on employing and developing high quality nursing and support staff; and | ||
• | our integration into, and support of, the communities we serve. |
• | Identifying and Establishing Strong Local Market Leadership.We empower our individual hospital management teams to develop comprehensive strategic plans and position their hospitals to meet the healthcare needs of the communities they serve. In addition to strong corporate oversight and resources, each of our local leadership teams is supported by a local Board of Trustees and a LPLG. The Board of Trustees is comprised of physicians and community leaders as well as the hospital CEO. We believe local community leaders are an important resource for our hospital CEOs to insure that we are being responsive to the needs of the communities we serve. Our LPLGs are typically comprised of local physician leaders as well as members of our hospital’s administration. These groups insure that we are providing patient care excellence, offering the appropriate medical services, maintaining high quality employees and recruiting the best physicians to our medical staff. Capella corporate provides continuous operational, financial and human resources support to our local teams and has designed programs that allow us to share best practices across our entire portfolio of facilities. | ||
• | Expanding the Services We Provide.Each year, we conduct in-depth strategic reviews of the major service lines offered at each of our facilities as well as market demand for additional services. We leverage our local market knowledge and information together with input and guidance from our local physician and community leaders to prioritize the healthcare services our communities are seeking. We then initiate a financial assessment and develop an investment plan that supports the expansion of the appropriate services. Focus areas include: |
• | expanding specialty medical services such as medical and radiation oncology, orthopedic, cardiovascular, neurology, behavioral health and women’s services; |
• | initiating and expanding outpatient services; |
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• | investing in medical equipment and technology to support our service lines; |
• | improving our efficiency to deliver better quality care in our emergency rooms; and |
• | enhancing patient, physician and employee satisfaction. |
We have engaged consultants and are working with our hospital CEOs to identify trends in service lines and areas for future expansion of services. We remain motivated to invest in our facilities in order to increase the quality and scope of services we provide, meet the needs of our communities and establish a strong reputation so that we may continue to recruit leading physicians, become the healthcare provider of choice in our communities and increase the revenue and profitability of our facilities. For example, we re-introduced medical and radiation oncology to Capital Medical Center to meet the needs of that community. In coordination with this effort, we were able to recruit several medical and radiation oncologists to that facility. More recently, we were able to develop a total joint replacement program at Willamette Valley Medical Center. As part of this program, we were able to recruit three orthopedic surgeons to the market. The hospital’s reputation for quality and our local physicians’ participation helped this program come to fruition. | |||
• | Pursuing Acquisitions and Strategic Relationships.We believe we will continue to have opportunities to pursue acquisitions of hospitals and other healthcare facilities both in existing and new markets. We will pursue a disciplined acquisition strategy in markets where we believe we can have the greatest impact on the financial and operational performance of the acquired facility. We will continue to target acute care hospitals and ancillary facilities in attractive, primarily non-urban markets with populations generally greater than 35,000. We have a focused criteria that cover multiple aspects of a new facility and include demographics, operational improvement, financial improvement and cultural alignment. We perform a significant amount of due diligence on each facility we intend to acquire to ensure that our criteria are met. | ||
As a result of the recent economic downturn, we believe many public and not-for-profit hospitals are facing significant financial challenges and could seek to partner with strong operators who are well capitalized and who demonstrate a willingness to invest in the communities they serve. We believe we meet these criteria. From time to time, we also may consider entering into joint ventures or strategic alliances with other hospitals and healthcare providers. | |||
• | Investing in Technology to Improve Patient Care.The Health Information Technology for Economic and Clinical Health Act (“HITECH Act”) was enacted into law on February 17, 2009 as part of the American Recovery and Reinvestment Act of 2009 (“ARRA”). The HITECH Act includes provisions designed to increase the use of computerized physician order entry at hospitals and the use of electronic health records (“EHR”) by both physicians and hospitals. We believe that these systems improve quality, safety, efficiency and clinical outcomes. We intend to comply with the EHR meaningful use requirements of the HITECH Act to qualify for the maximum available Medicare and Medicaid incentive payments. We continue to refine our budgeted costs and the expected reimbursement improvements associated with our EHR initiatives. Consequently, we believe we may qualify for Medicare reimbursement at three of our hospitals in the fourth quarter of 2011 and already qualify for Medicaid reimbursement in three states. Implementing a standard emergency room management system across all hospitals is another example of our investing in information technology to improve patient care. This system, in conjunction with our other process improvement initiatives, helps to ensure that appropriate and consistent quality patient care is administered quickly and reliably to our emergency room patients. Additionally, the creation of our PAG is designed to foster collaboration with our physicians to assist us in providing patient care excellence through technological improvements. | ||
• | Delivering Strong Financial Performance.We pride ourselves on maintaining disciplined financial policies aimed at growing revenue, improving margins and generating free cash flow. We will continue to focus on ways in which we can increase revenue from our existing facilities, including continued investments to expand services, physician recruitment to meet our communities’ needs and favorable managed care contracts. We are also focused on capitalizing on several operational efficiencies to improve our margins and free cash flow, including: |
• | continued focus on revenue cycle management and collections; |
• | disciplined deployment of capital across our portfolio; |
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• | encouragement and motivation of our physicians and medical staff to adhere to our established protocols related to medical supplies utilization; |
• | infrastructure build-out to support our growing physician clinic operations; |
• | implementation of appropriate staffing tools and continued reduction of contract labor; and |
• | leveraged technical expertise through use of our corporate resources. |
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(1) | As of March 31, 2011. Comprised of shares of common stock. | |
(2) | Captive insurance company. | |
(3) | Joint ventures currently own and operate (i) Capital Medical Center, White County Community Hospital and National Park Medical Center in which physicians hold interests representing approximately 9.75%, 16.20% and 4.96%, respectively, of the equity ownership of these facilities; and (ii) outpatient centers in which Capella holds a minority interest. Following the closing of the CCH Transaction, physicians will hold interests representing approximately 12.275% of the equity ownership in White County Community Hospital, and a joint venture will own and operate DeKalb Community Hospital and Stones River Hospital, each of which are owned by Cannon County Hospital, LLC, in which physicians will hold interests representing approximately 40% of the equity ownership of Cannon County Hospital, LLC. |
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Outstanding Notes | $500,000,000 aggregate principal amount of 91/4% Senior Notes due 2017. | |
Exchange Notes | Up to $500,000,000 aggregate principal amount of 91/4% Senior Notes due 2017, which have been registered under the Securities Act. The form and terms of the exchange notes are identical in all material respects to those of the outstanding notes, except that the transfer restrictions and registration rights relating to the outstanding notes do not apply to the exchange notes. | |
Exchange Offer | We are offering to issue up to $500,000,000 aggregate principal amount of the exchange notes in exchange for a like principal amount of the outstanding notes to satisfy our obligations under the registration rights agreement that was executed when the outstanding notes were issued in a transaction in reliance upon the safe harbors from registration provided by Rule 144A and Regulation S of the Securities Act. Outstanding notes may be tendered in minimum denominations of $2,000 and integral multiples of $1,000. We will issue the exchange notes promptly after expiration of the exchange offer. See “The Exchange Offer — Terms of the Exchange Offer.” | |
Resale | Based on an interpretation by the staff of the Securities and Exchange Commission (the “SEC”) set forth in no-action letters issued to third parties, we believe that the exchange notes issued under the exchange offer for the outstanding notes may be offered for resale, resold and otherwise transferred by you (unless you are our “affiliate” within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, if: |
• | you are not our affiliate; | ||
• | you have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of the exchange notes; | ||
• | you are acquiring the exchange notes in the ordinary course of your business; and | ||
• | you are not acting on behalf of any person who could not truthfully make the foregoing representations. |
If you are a broker-dealer and receive exchange notes for your own account in exchange for outstanding notes that you acquired as a result of market-making activities or other trading activities (other than outstanding notes acquired directly from us), you must acknowledge that you will deliver this prospectus in connection with any resale of the exchange notes. See “Plan of Distribution.” | ||
Any holder of outstanding notes who: |
• | is our affiliate; |
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• | does not acquire exchange notes in the ordinary course of its business; or | ||
• | tenders its outstanding notes in the exchange offer with the intention to participate, or the purpose of participating, or has any arrangement or understanding with any person to participate, in a distribution of exchange notes |
cannot rely on the position of the staff of the SEC enunciated inMorgan Stanley & Co. Incorporated (available June 5, 1991) andExxon Capital Holdings Corporation(available May 13, 1988), as interpreted inShearman & Sterling(available July 2, 1993), and similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes. | ||
Expiration Date | The exchange offer will expire at 5:00 p.m., New York City time, on , 2011, unless we decide to extend it. | |
Conditions to the Exchange Offer | The exchange offer is subject to customary conditions, which we may waive. See the discussion below under the caption “The Exchange Offer — Certain Conditions to the Exchange Offer” for more information regarding the conditions to the exchange offer. | |
Procedures for Tendering Outstanding Notes | To participate in the exchange offer, you must complete, sign and date the letter of transmittal and send it, together with all other documents required by the letter of transmittal, including the outstanding notes that you wish to exchange, to U.S. Bank National Association, as exchange agent, at the address indicated on the cover page of the letter of transmittal. In the alternative, you can tender your outstanding notes by following the procedures for book-entry transfer described in this prospectus. | |
If your outstanding notes are held through The Depository Trust Company (“DTC”) and you wish to participate in the exchange offer, you may do so through the Automated Tender Offer Program of DTC. If you tender under this program, you will agree to be bound by the letter of transmittal that we are providing with this prospectus as though you had signed the letter of transmittal. By signing the letter of transmittal or authorizing the transmission of the agent’s message, you will represent to us that, among other things: |
• | you are not an affiliate of Capella; | ||
• | you are not engaged in, and do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of the exchange notes; | ||
• | you are acquiring the exchange notes in the ordinary course of business; and | ||
• | you are not acting on behalf of any person who could not truthfully make the foregoing representations. |
If you are a broker-dealer who holds outstanding notes that were acquired for your own account as a result of market marking activities or other trading activities (other than outstanding notes acquired directly from us), that you will deliver a prospectus in connection with any resale of such exchange notes. |
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Special Procedures for Beneficial Owners | If you are a beneficial owner of outstanding notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender those outstanding notes in the exchange offer, you should contact the registered holder promptly and instruct the registered holder to tender those outstanding notes on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your outstanding notes, either make appropriate arrangements to register ownership of the outstanding notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date. | |
Guaranteed Delivery Procedures | If you wish to tender your outstanding notes and your outstanding notes are not immediately available, or you cannot deliver your outstanding notes, the letter of transmittal or any other required documents to the exchange agent, or you cannot comply with the procedures under DTC’s Automated Tender Offer Program prior to the expiration date, you must tender your outstanding notes according to the guaranteed delivery procedures set forth in this prospectus under “The Exchange Offer — Guaranteed Delivery Procedures.” | |
Withdrawal | You may withdraw your tender of outstanding notes at any time prior to the expiration date of the exchange offer. To withdraw, the exchange agent must receive notice of withdrawal, which may be by facsimile, at its address indicated on the cover page of the letter of transmittal before 5:00 p.m., New York City time, on the expiration date of the exchange offer, or you must comply with the appropriate procedures of DTC’s Automated Tender Offer Program system. | |
Acceptance of Outstanding Notes | If you fulfill all conditions required for proper acceptance of outstanding notes, we will accept any and all outstanding notes that you properly tender in the exchange offer on or before 5:00 p.m., New York City time, on the expiration date. We will return any outstanding notes that we do not accept for exchange to you as promptly as practicable after the expiration date and acceptance of the outstanding notes for exchange. See “The Exchange Offer — Terms of the Exchange Offer.” | |
Effect on Holders of Outstanding Notes | Upon acceptance for exchange of all validly tendered outstanding notes pursuant to the terms of the exchange offer, we will have fulfilled a covenant under the registration rights agreement. Accordingly, there will be no increase in the applicable interest rate on the outstanding notes under the circumstances described in the registration rights agreement. If you do not tender your outstanding notes in the exchange offer, you will continue to be entitled to all the rights and limitations applicable to the outstanding notes as set forth in the indenture, except we will not have any further obligation to you to provide for the exchange and registration of untendered outstanding notes under the registration rights agreement. To the extent that outstanding notes are tendered and accepted in the exchange offer, any trading market that may develop for outstanding notes that are not so tendered and accepted could be adversely affected. |
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Certain U.S. Federal Income Tax Consequences | The exchange of outstanding notes for exchange notes in the exchange offer will not be a taxable event for U.S. federal income tax purposes. See “Certain Material U.S. Federal Income Tax Considerations.” | |
Regulatory Approvals | Other than compliance with the Securities Act and qualification of the indentures governing the notes under the Trust Indenture Act of 1939 (the “Trust Indenture Act”), there are no federal or state regulatory requirements that must be complied with or approvals that must be obtained in connection with the exchange offer. | |
Use of Proceeds | We will not receive any cash proceeds from the issuance of the exchange notes in the exchange offer. See “Use of Proceeds.” | |
Fees and Expenses | We will bear all expenses related to soliciting tenders. See “The Exchange Offer — Fees and Expenses.” | |
Consequences of Failure to Exchange | All untendered outstanding notes will continue to be subject to the restrictions on transfer set forth in the outstanding notes and in the indenture. In general, the outstanding notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, we do not currently anticipate that we will register the outstanding notes under the Securities Act. | |
Exchange Agent | We have appointed U.S. Bank National Association as exchange agent for the exchange offer. You should direct questions and requests for assistance, requests for additional copies of this prospectus or the letter of transmittal and requests for the notice of guaranteed delivery to the exchange agent addressed as follows: U.S. Bank National Association, 60 Livingston Avenue, St. Paul, MN 55107, Attn: Specialized Finance Dept. Eligible institutions may make requests by facsimile at (651) 495-8158. |
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Issuer | Capella Healthcare, Inc. | |
Notes Offered | $500,000,000 aggregate principal amount of 91/4% Senior Notes due 2017. | |
Maturity | The exchange notes will mature on July 1, 2017. | |
Interest Payments | January 1 and July 1 of each year after the date of issuance of the exchange notes, beginning on January 1, 2011. | |
Guarantees | The exchange notes will be guaranteed, jointly and severally, on a senior unsecured basis by all of our current and future Restricted Subsidiaries (as defined herein) that guarantee indebtedness, or are named borrowers, under our credit facility. See “Description of Exchange Notes — Subsidiary Guarantees.” The guarantee of each guarantor is a general unsecured obligations of the respective guarantors and will be: |
• | pari passuin right of payment to all existing and future senior unsecured debt of the respective guarantors; and | ||
• | senior in right of payment to all existing and future subordinated obligations of the respective guarantors. |
Ranking | The exchange notes will be our general senior unsecured obligations and will be: |
• | effectively subordinated to all our existing and future secured debt to the extent of the value of the assets securing that debt; | ||
• | pari passuin right of payment with all existing and future senior unsecured debt of Capella; | ||
• | senior in right of payment to all existing and future subordinated obligations of Capella; and | ||
• | fully and unconditionally guaranteed on a senior, unsecured basis by the guarantors. |
Optional Redemption | At any time, we may redeem all or any portion of the exchange notes at our option on the redemption dates and at the redemption prices specified under “Description of Exchange Notes — Optional Redemption.” | |
On or prior to July 1, 2013, we may on one or more occasions, at our option, apply funds equal to the proceeds from one or more equity offerings to redeem up to 35% of the notes at a redemption price of 109.250% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date. |
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Offer to Repurchase | If we experience a change of control, we must offer to repurchase all of the exchange notes (unless otherwise redeemed) at a price equal to 101% of the aggregate principal amount of the notes, plus accrued and unpaid interest to the repurchase date. See “Description of Exchange Notes — Repurchase at the Option of Holders — Change of Control.” | |
If we sell assets under certain circumstances, we must use the proceeds to make an offer to purchase exchange notes at a price equal to 100% of their principal amount, plus accrued and unpaid interest to the date of purchase. See “Description of Exchange Notes — Repurchase at the Option of Holders — Asset Sales.” | ||
Covenants | The indenture contains covenants that, among other things, will limit our ability and the ability of our Restricted Subsidiaries to: |
• | incur more indebtedness and issue preferred stock; | ||
• | pay dividends, redeem stock or make other distributions; | ||
• | make investments; | ||
• | create liens; | ||
• | transfer or sell assets; | ||
• | merge or consolidate; | ||
• | enter into certain transactions with our affiliates; and | ||
• | enter into sale and lease back transactions. |
No Prior Market | The exchange notes will be freely transferable but will be new securities for which there will not initially be a market. We do not intend to list the exchange notes on any securities exchange. Accordingly, we cannot assure you whether a market for the exchange notes will develop or as to the liquidity of any such market that may develop. |
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Three Months | ||||||||||||||||||||
Year Ended December 31, | Ended March 31, | |||||||||||||||||||
2008(12) | 2009 | 2010 | 2010(13) | 2011(13) | ||||||||||||||||
(Dollars in millions, except for operating data) | ||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||
Net revenue | $ | 702.4 | $ | 813.9 | $ | 869.5 | $ | 210.3 | $ | 208.5 | ||||||||||
Costs and expenses: | ||||||||||||||||||||
Salaries and benefits (includes stock compensation of $—, $0.1, $0.3, $0.1 and $0.1, respectively) | 304.7 | 346.9 | 359.7 | 89.4 | 93.9 | |||||||||||||||
Supplies | 96.8 | 109.7 | 119.6 | 29.2 | 30.5 | |||||||||||||||
Provision for bad debts | 81.1 | 111.3 | 136.2 | 30.2 | 18.0 | |||||||||||||||
Other operating expenses | 137.8 | 150.3 | 158.3 | 37.6 | 42.0 | |||||||||||||||
Depreciation and amortization | 33.7 | 37.8 | 37.1 | 8.9 | 9.6 | |||||||||||||||
Interest, net | 50.4 | 48.5 | 48.4 | 11.6 | 12.7 | |||||||||||||||
Management fee to related party | 0.2 | 0.2 | 0.2 | — | — | |||||||||||||||
Loss on refinancing | 22.4 | — | 20.8 | — | — | |||||||||||||||
Total costs and expense | 727.1 | 804.7 | 880.3 | 206.9 | 206.7 | |||||||||||||||
Income (loss) from continuing operations before income taxes | (24.7 | ) | 9.2 | (10.8 | ) | 3.4 | 1.8 | |||||||||||||
Income taxes | 5.5 | 2.2 | 3.2 | 0.8 | 0.9 | |||||||||||||||
Income (loss) from continuing operations | (30.2 | ) | 7.0 | (14.0 | ) | 2.6 | 0.9 | |||||||||||||
Income (loss) from discontinued operations, net of taxes | (1.9 | ) | (4.5 | ) | (0.2 | ) | (0.1 | ) | 0.1 | |||||||||||
Net income (loss) | $ | (32.1 | ) | $ | 2.5 | $ | (14.2 | ) | $ | 2.5 | $ | 1.0 | ||||||||
Less: Net income attributable to noncontrolling interests | 0.5 | 0.9 | 1.5 | 0.4 | 0.6 | |||||||||||||||
Net income (loss) attributable to Capella Healthcare, Inc. | $ | (32.6 | ) | $ | 1.6 | $ | (15.7 | ) | $ | 2.1 | $ | 0.4 | ||||||||
Other Financial Data: | ||||||||||||||||||||
Purchases of property and equipment, net | $ | (19.9 | ) | $ | (22.1 | ) | $ | (26.1 | ) | $ | (3.9 | ) | $ | (4.0 | ) | |||||
Net cash provided by operating activities | 35.8 | 35.5 | 65.9 | 9.2 | 0.6 | |||||||||||||||
Net cash used in investing activities | (337.1 | ) | (16.3 | ) | (23.8 | ) | (3.8 | ) | (2.5 | ) | ||||||||||
Net cash provided by (used in) financing activities | 307.8 | (6.1 | ) | (13.4 | ) | (0.2 | ) | (0.7 | ) | |||||||||||
Adjusted EBITDA(1) | 82.0 | 95.7 | 95.7 | 23.9 | 24.1 | |||||||||||||||
Operating Data(2): | ||||||||||||||||||||
Number of hospitals at end of each period(3) | 13 | 13 | 13 | 13 | 13 | |||||||||||||||
Licensed beds(4) | 1,799 | 1,745 | 1,745 | 1,745 | 1,745 | |||||||||||||||
Admissions(5) | 47,815 | 50,728 | 50,682 | 12,951 | 12,898 |
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Adjusted admissions(6) | 93,468 | 101,405 | 104,023 | 25,388 | 26,020 | |||||||||||||||
Net revenue per adjusted admission | $ | 7,515 | $ | 8,026 | $ | 8,359 | $ | 8,283 | $ | 8,014 | ||||||||||
Patient days(7) | 219,281 | 232,359 | 231,568 | 58,945 | 60,111 | |||||||||||||||
Average length of stay (days)(8) | 4.6 | 4.6 | 4.6 | 4.6 | 4.7 | |||||||||||||||
Occupancy rate (licensed beds)(9) | 33.3 | % | 36.5 | % | 36.4 | % | 37.5 | % | 38.6 | % |
As of | ||||||||||||||||
As of December 31, | March 31, | |||||||||||||||
2008(12) | 2009 | 2010 | 2011 | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Balance Sheet Data: | ||||||||||||||||
Cash and cash equivalents | $ | 6.4 | $ | 19.6 | $ | 48.3 | $ | 45.7 | ||||||||
Property, plant and equipment, net | 475.9 | 461.7 | 450.7 | 445.1 | ||||||||||||
Total assets | 745.5 | 756.3 | 767.8 | 765.5 | ||||||||||||
Long-term debt, including current portion | 487.7 | 484.5 | 494.1 | 494.4 | ||||||||||||
Working capital(10) | 90.1 | 106.6 | 119.2 | 127.3 |
Three Months | ||||||||||||||||||||||||||||
Year Ended December 31, | Ended March 31, | |||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||||||||
Ratio of earnings to fixed charges(11) | 1.1x | 1.1x | N/A | 1.2x | N/A | 1.3x | 1.1x |
(1) | “EBITDA,” a measure used by management to evaluate operating performance, is defined as net income plus (i) provision for income taxes, (ii) interest expense and (iii) depreciation and amortization. EBITDA is not a recognized term under generally accepted accounting principles in the United States and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and other debt service requirements. Management believes EBITDA is helpful in highlighting trends because EBITDA excludes the results of decisions that are outside the control of operating management and that can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. Management compensates for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures of other companies. | |
“Adjusted EBITDA” is defined as EBITDA plus (i) net income attributable to noncontrolling interests, (ii) loss on refinancing, (iii) loss from discontinued operations and (iv) management fee to related party, if any, for the applicable period. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting adjusted EBITDA are appropriate to provide additional information to investors about the impact of certain noncash items, unusual items that we do not expect to continue at the same level in the future and other items. | ||
The following table presents a reconciliation to provide a more detailed analysis of these non-GAAP performance measures: |
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Three Months | ||||||||||||||||||||
Year Ended December 31, | Ended March 31, | |||||||||||||||||||
2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Net income (loss) | $ | (32.6 | ) | $ | 1.6 | $ | (15.7 | ) | $ | 2.1 | $ | 0.4 | ||||||||
Plus income taxes | 5.5 | 2.2 | 3.2 | 0.8 | 0.9 | |||||||||||||||
Plus net interest expense and amortization of deferred financing costs | 50.4 | 48.5 | 48.4 | 11.6 | 12.7 | |||||||||||||||
Plus depreciation and amortization | 33.7 | 37.8 | 37.1 | 8.9 | 9.6 | |||||||||||||||
EBITDA | $ | 57.0 | $ | 90.1 | $ | 73.0 | $ | 23.4 | $ | 23.6 | ||||||||||
Plus net income attributable to noncontrolling interests | $ | 0.5 | $ | 0.9 | $ | 1.5 | $ | 0.4 | $ | 0.6 | ||||||||||
Plus loss from refinancing | 22.4 | — | 20.8 | — | — | |||||||||||||||
Plus (income) loss from discontinued operations | 1.9 | 4.5 | 0.2 | 0.1 | (0.1 | ) | ||||||||||||||
Plus management fee to related party | 0.2 | 0.2 | 0.2 | — | — | |||||||||||||||
Adjusted EBITDA | $ | 82.0 | $ | 95.7 | $ | 95.7 | $ | 23.9 | $ | 24.1 | ||||||||||
(2) | The operating data set forth in this table includes all facilities that are consolidated for financial reporting purposes as of the end of each period presented. | |
(3) | For the year ended December 31, 2008, Woodland Medical Center is included through June 30, 2008, when it was moved to discontinued operations. | |
(4) | Licensed beds are those beds for which a facility has been granted approval to operate from the applicable state licensing agency regardless of actual use. | |
(5) | Represents the number of patients admitted for inpatient treatment. | |
(6) | General measure of combined inpatient and outpatient volume. We computed adjusted admissions by multiplying admissions by gross patient revenue and then dividing that number by gross inpatient revenue. | |
(7) | Represents the total number of days of care provided to inpatients. | |
(8) | Represents the average number of days admitted patients stay in our hospitals. | |
(9) | Represents the percentage of hospital licensed beds occupied by patients. We calculated occupancy rate percentages by dividing the average daily number of inpatients by the weighted average licensed beds. | |
(10) | We define working capital as current assets minus current liabilities. | |
(11) | See “Ratio of Earnings to Fixed Charges” for an explanation of the calculation of these ratios. | |
(12) | Effective March 1, 2008, we acquired nine hospitals and their affiliated businesses from Community Health Systems, Inc. (“CHS”). | |
(13) | The comparability of our results of operations for the three months ended March 31, 2011 compared to the three months ended March 31, 2010 is impacted by the change in our uninsured discount policy, effective January 1, 2011, as more thoroughly explained under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies.” The change in the uninsured discount policy effectively shifts a portion of our expenses previously classified as provision for bad debts to revenue deductions, thereby resulting in lower net revenue and lower bad debt expense for the three months ended March 31, 2011 as compared to the three months ended March 31, 2010. Had our new uninsured discount policy been in place effective January 1, 2010, our net revenue for the three months ended March 31, 2010 would have been approximately $196.5 million and the provision for bad debts would have been approximately $16.4 million, as follows: |
Provision for | ||||||||
Net Revenue | Bad Debts | |||||||
(In millions) | ||||||||
Historical results of operations for the three months ended March 31, 2010 as presented | $ | 210.3 | $ | 30.2 | ||||
Uninsured discount impact of pro forma change in policy for the three months ended March 31, 2010 | (13.8 | ) | (13.8 | ) | ||||
Pro forma results of operations for the three months ended March 2010 | $ | 196.5 | $ | 16.4 | ||||
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The following table reflects the results of operations for the three months ended March 31, 2010 on a pro forma basis for the change in our uninsured discounts policy: |
Three Months Ended | ||||||||
March 31, 2010 | ||||||||
(Dollars in millions) | ||||||||
Amount | % | |||||||
Net revenue | $ | 196.5 | 100.0 | % | ||||
Costs and expenses: | ||||||||
Salaries and benefits | 89.4 | 45.5 | ||||||
Supplies | 29.2 | 14.9 | ||||||
Provision for bad debts | 16.4 | 8.4 | ||||||
Other operating expenses | 37.6 | 19.1 | ||||||
Depreciation and amortization | 8.9 | 4.5 | ||||||
Interest, net | 11.6 | 5.9 | ||||||
Total costs and expenses | 193.1 | 98.3 | ||||||
Income from continuing operations before income taxes | 3.4 | 1.7 | ||||||
Income taxes | 0.8 | 0.4 | ||||||
Income from continuing operations | 2.6 | 1.3 | ||||||
Loss from discontinued operations, net of taxes | (0.1 | ) | — | |||||
Net income | $ | 2.5 | 1.3 | % | ||||
Less: Net income attributable to noncontrolling interests | 0.4 | 0.2 | ||||||
Net income attributable to Capella Healthcare, Inc. | $ | 2.1 | 1.1 | % | ||||
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• | holders who are not “affiliates” of the Company within the meaning of Rule 405 of the Securities Act; | ||
• | holders who acquire their exchange notes in the ordinary course of business; and | ||
• | holders who do not engage in, intend to engage in, or have an arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of the exchange notes; and holders that are not acting on behalf of any person who could not truthfully make the foregoing representations, |
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• | the number and quality of the physicians on the medical staffs of our hospitals; | ||
• | the admitting practices of those physicians; and | ||
• | the development and maintenance of constructive relationships with those physicians, including physicians with whom we have joint ventures. |
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• | difficulty and expense of integrating acquired operations into our business; | ||
• | diversion of management’s time from existing operations; | ||
• | potential loss of key employees or physicians of acquired facilities; and | ||
• | assumption of the liabilities and exposure to unforeseen liabilities of acquired companies, including liabilities for failure to comply with healthcare regulations. |
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• | our ability to control construction costs; | ||
• | adverse weather conditions; | ||
• | shortages of labor or materials; | ||
• | our ability to obtain necessary licensing and other required governmental authorizations; and | ||
• | other unforeseen problems and delays. |
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• | our direction and policies; | ||
• | the acquisition and disposition of assets; | ||
• | future issuances of common stock, preferred stock or other securities; | ||
• | our future incurrence of debt; and | ||
• | any dividends on our common stock or preferred stock. |
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• | making it more difficult for us to satisfy our obligations with respect to the notes; | ||
• | increasing our vulnerability to general adverse economic and industry conditions; | ||
• | requiring that a portion of our cash flow from operations be used for the payment of interest on our debt, thereby reducing our ability to use our cash flow to fund working capital, capital expenditures, acquisitions and general corporate requirements; | ||
• | limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions and general corporate requirements; | ||
• | limiting our flexibility in planning for, or reacting to, changes in our business and the healthcare industry; and | ||
• | placing us at a competitive disadvantage to our competitors that have less indebtedness. |
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• | pay interest at a higher rate; | ||
• | be subject to additional or more restrictive covenants than currently provided in our debt agreements; and | ||
• | grant additional security interests in our assets. |
• | incur additional indebtedness or issue preferred stock; | ||
• | pay dividends on or make other distributions or repurchase our capital stock or make other restricted payments; | ||
• | make investments; | ||
• | enter into certain transactions with affiliates; | ||
• | issue dividends or other payments from restricted subsidiaries to Holdings or other restricted subsidiaries; | ||
• | create liens; | ||
• | designate our subsidiaries as unrestricted subsidiaries; and | ||
• | sell certain assets or merge with or into other companies or otherwise dispose of all or substantially all of our assets. |
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• | incurred the guarantee with the intent of hindering, delaying or defrauding current or future creditors; or | ||
• | received less than reasonably equivalent value or fair consideration for the incurrence of the subsidiary guarantee and: | ||
• | was insolvent or rendered insolvent by reason of such incurrence; | ||
• | was engaged in a business or transaction for which the subsidiary guarantor’s remaining assets constituted unreasonably small capital; or | ||
• | intended to incur, or believed that it would incur, debts beyond its ability to pay its debts as they mature. |
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• | the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets; | ||
• | the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or | ||
• | it could not pay its debts as they become due. |
• | our operating performance and financial condition; |
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• | our ability to complete the exchange offer to exchange the outstanding notes for the exchange notes; | ||
• | the interest of securities dealers in making a market in the exchange notes; and | ||
• | the market for similar securities. |
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• | the original issue price for the notes; and | ||
• | that portion of the original discount that does not constitute “unmatured interest” for purposes of the U.S. Bankruptcy Code. |
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• | the effects of the Affordable Care Act on our financial position and results of operations; | ||
• | our substantial indebtedness and adverse changes in credit markets impacting our ability to receive timely additional financing on terms acceptable to us to fund our acquisition strategy and capital expenditure needs; | ||
• | risks inherent to the healthcare industry, including the impact of unforeseen changes in regulation and the potential adverse impact of government investigations, liabilities and other claims asserted against us; | ||
• | economic downturn resulting in efforts by federal and state healthcare programs and managed care companies to reduce reimbursement rates for our services; | ||
• | potential competition that alters or impedes our acquisition strategy by decreasing our ability to acquire additional inpatient facilities on favorable terms; | ||
• | our ability to comply with applicable licensure and accreditation requirements; | ||
• | our ability to comply with extensive laws and government regulations related to billing, physician relationships, adequacy of medical care and licensure; | ||
• | our ability to retain key employees who are instrumental to our successful operations; | ||
• | our ability to integrate and improve successfully the operations of acquired inpatient facilities; | ||
• | our ability to maintain favorable and continuing relationships with physicians and other healthcare professionals who use our inpatient facilities; | ||
• | our ability to ensure confidential information is not inappropriately disclosed and that we are in compliance with federal and state health information privacy standards; | ||
• | our ability to comply with federal and state governmental regulation covering healthcare-related products and services on-line, including the regulation of medical devices and the practice of medicine and pharmacology; | ||
• | our ability to obtain adequate levels of general and professional liability insurance; | ||
• | future trends for pricing, margins, revenue and profitability remain difficult to predict in the industries that we serve; and | ||
• | negative press coverage of us or our industry that may affect public opinion. |
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Year Ended December 31, | Three Months Ended March 31, | |||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2010 | 2011 | ||||||||
Ratio of earnings to fixed charges | 1.1x | 1.1x | N/A | 1.2x | N/A | 1.3x | 1.1x |
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As of March 31, 2011 | ||||
(Unaudited) | ||||
(In millions) | ||||
Cash and cash equivalents | $ | 45.7 | ||
Debt: | ||||
Revolving Loans | $ | — | ||
ABL | — | |||
91/4% Senior Notes due 2017(1) | 500.0 | |||
Total debt | $ | 500.0 | ||
Stockholder’s deficit | $ | (47.6 | ) | |
Total capitalization | $ | 452.4 | ||
(1) | Excludes effect of $6.3 million discount upon original issuance. |
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Three Months | ||||||||||||||||||||||||||||
Year Ended December 31, | Ended March 31, | |||||||||||||||||||||||||||
2006 | 2007 | 2008(11) | 2009 | 2010 | 2010(12) | 2011(12) | ||||||||||||||||||||||
(Dollars in millions, except for operating data) | ||||||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||||||
Net revenue | $ | 211.8 | $ | 305.6 | $ | 702.4 | $ | 813.9 | $ | 869.5 | $ | 210.3 | $ | 208.5 | ||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||||
Salaries and benefits (includes stock compensation of $—, $0.1, $0.3, $0.1 and $0.1, respectively) | 92.7 | 134.8 | 304.7 | 346.9 | 359.7 | 89.4 | 93.9 | |||||||||||||||||||||
Supplies | 30.2 | 42.7 | 96.8 | 109.7 | 119.6 | 29.2 | 30.5 | |||||||||||||||||||||
Provision for bad debts | 16.1 | 28.4 | 81.1 | 111.3 | 136.2 | 30.2 | 18.0 | |||||||||||||||||||||
Other operating expenses | 44.5 | 55.3 | 137.8 | 150.3 | 158.3 | 37.6 | 42.0 | |||||||||||||||||||||
Depreciation and amortization | 13.2 | 17.8 | 33.7 | 37.8 | 37.1 | 8.9 | 9.6 | |||||||||||||||||||||
Interest, net | 14.2 | 23.9 | 50.4 | 48.5 | 48.4 | 11.6 | 12.7 | |||||||||||||||||||||
Management fee to related party | 0.1 | 0.2 | 0.2 | 0.2 | 0.2 | — | — | |||||||||||||||||||||
Loss on refinancing | — | — | 22.4 | — | 20.8 | — | — | |||||||||||||||||||||
Total costs and expense | 211.0 | 303.1 | 727.1 | 804.7 | 880.3 | 206.9 | 206.7 | |||||||||||||||||||||
Income (loss) from continuing operations before income taxes | 0.8 | 2.5 | (24.7 | ) | 9.2 | (10.8 | ) | 3.4 | 1.8 | |||||||||||||||||||
Income taxes | — | 0.9 | 5.5 | 2.2 | 3.2 | 0.8 | 0.9 | |||||||||||||||||||||
Income (loss) from continuing operations | 0.8 | 1.6 | (30.2 | ) | 7.0 | (14.0 | ) | 2.6 | 0.9 | |||||||||||||||||||
Income (loss) from discontinued operations, net of income taxes | — | — | (1.9 | ) | (4.5 | ) | (0.2 | ) | (0.1 | ) | 0.1 | |||||||||||||||||
Net income (loss) | $ | 0.8 | $ | 1.6 | $ | (32.1 | ) | $ | 2.5 | $ | (14.2 | ) | $ | 2.5 | $ | 1.0 | ||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 0.5 | 0.9 | 1.5 | 0.4 | 0.6 | |||||||||||||||||||||
Net income (loss) attributable to Capella Healthcare, Inc. | $ | 0.8 | $ | 1.6 | $ | (32.6 | ) | $ | 1.6 | $ | (15.7 | ) | $ | 2.1 | $ | 0.4 | ||||||||||||
Other Financial Data: | ||||||||||||||||||||||||||||
Purchases of property and equipment, net | $ | (8.7 | ) | $ | (9.6 | ) | $ | (19.9 | ) | $ | (22.1 | ) | $ | (26.1 | ) | $ | (3.9 | ) | $ | (4.0 | ) | |||||||
Net cash provided by operating activities | 13.7 | 21.9 | 35.8 | 35.5 | 65.9 | 9.2 | 0.6 | |||||||||||||||||||||
Net cash used in investing activities | (19.7 | ) | (147.7 | ) | (337.1 | ) | (16.3 | ) | (23.8 | ) | (3.8 | ) | (2.5 | ) | ||||||||||||||
Net cash provided by (used in) financing activities | (0.3 | ) | 125.2 | 307.8 | (6.1 | ) | (13.4 | ) | (0.2 | ) | (0.7 | ) | ||||||||||||||||
Adjusted EBITDA(1) | 28.4 | 44.4 | 82.0 | 95.7 | 95.7 | 23.9 | 24.1 |
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Operating Data(2): | ||||||||||||||||||||||||||||
Number of hospitals at end of each period(3) | 4 | 5 | 13 | 13 | 13 | 13 | 13 | |||||||||||||||||||||
Licensed beds(4) | 513 | 842 | 1,799 | 1,745 | 1,745 | 1,745 | 1,745 | |||||||||||||||||||||
Admissions(5) | 15,064 | 22,508 | 47,815 | 50,728 | 50,682 | 12,951 | 12,898 | |||||||||||||||||||||
Adjusted admissions(6) | 26,999 | 40,816 | 93,468 | 101,405 | 104,023 | 25,388 | 26,020 | |||||||||||||||||||||
Net revenue per adjusted admission | $ | 7,847 | $ | 7,488 | $ | 7,515 | $ | 8,026 | $ | 8,354 | $ | 8,283 | $ | 8,014 | ||||||||||||||
Patient days(7) | 76,398 | 110,431 | 219,281 | 232,359 | 231,568 | 58,945 | 60,111 | |||||||||||||||||||||
Average length of stay (days)(8) | 5.1 | 4.9 | 4.6 | 4.6 | 4.6 | 4.6 | 4.7 | |||||||||||||||||||||
Occupancy rate (licensed beds)(9) | 40.8 | % | 35.9 | % | 33.3 | % | 36.5 | % | 36.4 | % | 37.5 | % | 38.6 | % |
As of December 31, | As of March 31, | |||||||||||||||||||||||
2006 | 2007 | 2008(11) | 2009 | 2010 | 2011 | |||||||||||||||||||
(Dollars in millions, except for operating data) | ||||||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 0.6 | $ | — | $ | 6.4 | $ | 19.6 | $ | 48.3 | $ | 45.7 | ||||||||||||
Property, plant and equipment | 163.6 | 245.0 | 475.9 | 461.7 | 450.7 | 445.1 | ||||||||||||||||||
Total assets | 247.0 | 395.8 | 745.5 | 756.3 | 767.8 | 765.5 | ||||||||||||||||||
Long-term debt, including current portion | 154.9 | 242.3 | 487.7 | 484.5 | 494.1 | 494.4 | ||||||||||||||||||
Working capital(10) | 22.0 | 32.2 | 90.1 | 106.6 | 119.2 | 127.3 |
(1) | “EBITDA,” a measure used by management to evaluate operating performance, is defined as net income plus (i) provision for income taxes, (ii) interest expense and (iii) depreciation and amortization. EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and other debt service requirements. Management believes EBITDA is helpful in highlighting trends because EBITDA excludes the results of decisions that are outside the control of operating management and that can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. Management compensates for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures of other companies. | |
“Adjusted EBITDA” is defined as EBITDA plus (i) net income attributable to noncontrolling interests, (ii) loss on refinancing, (iii) loss from discontinued operations and (iv) management fee to related party, if any, for the applicable period. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting adjusted EBITDA are appropriate to provide additional information to investors about the impact of certain noncash items, unusual items that we do not expect to continue at the same level in the future and other items. | ||
The following table presents a reconciliation to provide a more detailed analysis of these non-GAAP performance measures: |
Three Months Ended | ||||||||||||||||||||||||||||
Year Ended December 31, | March 31, | |||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
Net income (loss) | $ | 0.8 | $ | 1.6 | $ | (32.6 | ) | $ | 1.6 | $ | (15.7 | ) | $ | 2.1 | $ | 0.4 | ||||||||||||
Plus taxes | — | 0.9 | 5.5 | 2.2 | 3.2 | 0.8 | 0.9 | |||||||||||||||||||||
Plus net interest expense and deferred financing costs | 14.2 | 23.9 | 50.4 | 48.5 | 48.4 | 11.6 | 12.7 |
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Plus depreciation and amortization | 13.2 | 17.8 | 33.7 | 37.8 | 37.1 | 8.9 | 9.6 | |||||||||||||||||||||
EBITDA | $ | 28.2 | $ | 44.2 | $ | 57.0 | $ | 90.1 | $ | 73.0 | $ | 23.4 | $ | 23.6 | ||||||||||||||
Plus net income attributable to noncontrolling interests | $ | — | $ | — | $ | 0.5 | $ | 0.9 | $ | 1.5 | $ | 0.4 | $ | 0.6 | ||||||||||||||
Plus loss on refinancing | — | — | 22.4 | — | 20.8 | — | — | |||||||||||||||||||||
Plus (income) loss from discontinued operations | — | — | 1.9 | 4.5 | 0.2 | 0.1 | (0.1 | ) | ||||||||||||||||||||
Plus management fee to related party | 0.1 | 0.2 | 0.2 | 0.2 | 0.2 | — | — | |||||||||||||||||||||
Adjusted EBITDA | $ | 28.3 | $ | 44.4 | $ | 82.0 | $ | 95.7 | $ | 95.7 | $ | 23.9 | $ | 24.1 | ||||||||||||||
(2) | The operating data set forth in this table includes all facilities that are consolidated for financial reporting purposes as of the end of each period presented. | |
(3) | For the year ended December 31, 2008, Woodland Medical Center is included through June 30, 2008, when it was moved to discontinued operations. | |
(4) | Licensed beds are those beds for which a facility has been granted approval to operate from the applicable state licensing agency regardless of actual use. | |
(5) | Represents the number of patients admitted for inpatient treatment. | |
(6) | General measure of combined inpatient and outpatient volume. We computed adjusted admissions by multiplying admissions by gross patient revenue and then dividing that number by gross inpatient revenue. | |
(7) | Represents the total number of days of care provided to inpatients. | |
(8) | Represents the average number of days admitted patients stay in our hospitals. | |
(9) | Represents the percentage of hospital licensed beds occupied by patients. We calculated occupancy rate percentages by dividing the average daily number of inpatients by the weighted average licensed beds. | |
(10) | We define working capital as current assets minus current liabilities. | |
(11) | Effective March 1, 2008, we acquired nine hospitals and their affiliated businesses from CHS. | |
(12) | The comparability of our results of operations for the three months ended March 31, 2011 compared to the three months ended March 31, 2010 is impacted by the change in our uninsured discount policy, effective January 1, 2011, as more thoroughly explained under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies.” The change in the uninsured discount policy effectively shifts a portion of our expenses previously classified as provision for bad debts to revenue deductions, thereby resulting in lower net revenue and lower bad debt expense for the three months ended March 31, 2011 as compared to the three months ended March 31, 2010. Had our new uninsured discount policy been in place effective January 1, 2010, our net revenue for the three months ended March 31, 2010 would have been approximately $196.5 million and the provision for bad debts would have been approximately $16.4 million, as follows: |
Provision for | ||||||||
Net Revenue | Bad Debts | |||||||
(In millions) | ||||||||
Historical results of operations for the three months ended March 31, 2010 as presented | $ | 210.3 | $ | 30.2 | ||||
Uninsured discount impact of pro forma change in policy for the three months ended March 31, 2010 | (13.8 | ) | (13.8 | ) | ||||
Pro forma results of operations for the three months ended March 31, 2010 | $ | 196.5 | $ | 16.4 | ||||
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The following table reflects the results of operations for the three months ended March 31, 2010 on a pro forma basis for the change in our uninsured discounts policy: |
Three Months Ended | ||||||||
March 31, 2010 | ||||||||
(Dollars in millions) | ||||||||
Amount | % | |||||||
Net revenue | $ | 196.5 | 100.0 | % | ||||
Costs and expenses: | ||||||||
Salaries and benefits | 89.4 | 45.5 | ||||||
Supplies | 29.2 | 14.9 | ||||||
Provision for bad debts | 16.4 | 8.4 | ||||||
Other operating expenses | 37.6 | 19.1 | ||||||
Depreciation and amortization | 8.9 | 4.5 | ||||||
Interest, net | 11.6 | 5.9 | ||||||
Total costs and expenses | 193.1 | 98.3 | ||||||
Income from continuing operations before income taxes | 3.4 | 1.7 | ||||||
Income taxes | 0.8 | 0.4 | ||||||
Income from continuing operations | 2.6 | 1.3 | ||||||
Loss from discontinued operations, net of taxes | (0.1 | ) | — | |||||
Net income | $ | 2.5 | 1.3 | % | ||||
Less: Net income attributable to noncontrolling interests | 0.4 | 0.2 | ||||||
Net income attributable to Capella Healthcare, Inc. | $ | 2.1 | 1.1 | % | ||||
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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• | review of the current CMS quality indicators; | ||
• | mock Joint Commission surveys conducted by a third-party; | ||
• | implementation of hourly nursing rounds; | ||
• | alignment of hospital management incentive compensation with quality and satisfaction indicators; | ||
• | feedback from our LPLGs, NPLG and PAG; | ||
• | hospital board and medical staff oversight of patient safety and quality of care; and | ||
• | investment in clinical technology. |
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Three Months | ||||||||||||||||||||
Year Ended December 31, | Ended March 31, | |||||||||||||||||||
2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||
Medicare(1) | 36.1 | % | 39.1 | % | 36.0 | % | 37.7 | % | 39.9 | % | ||||||||||
Medicaid(1) | 8.3 | 9.6 | 12.0 | 11.6 | 12.7 | |||||||||||||||
Managed Care and Other | 43.4 | 38.3 | 36.1 | 39.0 | 37.1 | |||||||||||||||
Self-pay | 12.2 | 13.0 | 15.9 | 11.7 | 10.3 | |||||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
(1) | Includes net patient revenue received under managed Medicare or managed Medicaid programs. |
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December 31, 2008 | 0-90 Days | 91-180 Days | Over 180 Days | Total | ||||||||||||
Medicare(1) | 21.3 | % | 0.7 | % | 0.6 | % | 22.6 | % | ||||||||
Medicaid(1) | 6.8 | 0.6 | 0.7 | 8.1 | ||||||||||||
Managed Care and Other | 21.3 | 2.3 | 1.4 | 25.0 | ||||||||||||
Self-Pay(2) | 12.4 | 11.5 | 20.4 | 44.3 | ||||||||||||
Total | 61.8 | % | 15.1 | % | 23.1 | % | 100.0 | % | ||||||||
December 31, 2009 | 0-90 Days | 91-180 Days | Over 180 Days | Total | ||||||||||||
Medicare(1) | 21.5 | % | 0.5 | % | 0.3 | % | 22.3 | % | ||||||||
Medicaid(1) | 5.8 | 0.4 | 0.4 | 6.6 | ||||||||||||
Managed Care and Other | 20.3 | 1.6 | 1.1 | 23.0 | ||||||||||||
Self-Pay(2) | 14.2 | 11.7 | 22.2 | 48.1 | ||||||||||||
Total | 61.8 | % | �� | 14.2 | % | 24.0 | % | 100.0 | % | |||||||
December 31, 2010 | 0-90 Days | 91-180 Days | Over 180 Days | Total | ||||||||||||
Medicare(1) | 22.0 | % | 0.4 | % | 0.3 | % | 22.7 | % | ||||||||
Medicaid(1) | 6.2 | 0.7 | 0.5 | 7.4 | ||||||||||||
Managed Care and Other | 18.7 | 1.6 | 1.0 | 21.3 | ||||||||||||
Self-Pay(2) | 13.6 | 12.4 | 22.6 | 48.6 | ||||||||||||
Total | 60.5 | % | 15.1 | % | 24.4 | % | 100.0 | % | ||||||||
March 31, 2011 | 0-90 Days | 91-180 Days | Over 180 Days | Total | ||||||||||||
Medicare(1) | 25.6 | % | 0.5 | % | 0.4 | % | 26.5 | % | ||||||||
Medicaid(1) | 6.1 | 0.7 | 0.4 | 7.2 | ||||||||||||
Managed Care and Other | 17.1 | 1.7 | 0.9 | 19.7 | ||||||||||||
Self-Pay(2) | 10.2 | 11.8 | 24.6 | 46.6 | ||||||||||||
Total | 59.0 | % | 14.7 | % | 26.3 | % | 100.0 | % | ||||||||
(1) | Includes net patient revenue received under managed Medicare or managed Medicaid programs. | |
(2) | Includes both uninsured as well as estimated co-payment and deductible amounts from insured patients. |
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• | It requires assumptions to be made that were uncertain at the time the estimate was made; and | ||
• | Changes in the estimate or different estimates that could have been made could have a material impact on our consolidated results of operations or financial condition. |
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Year Ended | ||||||||||||
December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
(In millions) | ||||||||||||
Accrual for general and professional liability claims at January 1 | $ | 2.1 | $ | 5.4 | $ | 9.7 | ||||||
Expense (income) related to(1): | ||||||||||||
Current accident year | 3.7 | 4.4 | 4.9 | |||||||||
Prior accident years | — | 0.9 | (0.4 | ) | ||||||||
Total incurred loss and loss expense | 3.7 | 5.3 | 4.5 | |||||||||
Paid claims and expenses related to: | ||||||||||||
Current accident year | 0.1 | 0.1 | 0.2 | |||||||||
Prior accident years | 0.3 | 0.9 | 1.6 | |||||||||
Total paid claims and expense | 0.4 | 1.0 | 1.8 | |||||||||
Accrual for general and professional liability claims at December 31 | $ | 5.4 | $ | 9.7 | $ | 12.4 | ||||||
(1) | Total expense, including premiums for insured coverage, was $10.7 million, $10.9 million and $11.8 million for the years ended December 31, 2008, 2009 and 2010, respectively. |
Professional and | Workers | |||||||
General Liability | Compensation | |||||||
(In millions) | ||||||||
December 31, 2008 reserve: | ||||||||
As Reported | $ | 5.4 | $ | 2.4 | ||||
With 75% Confidence Level | 6.5 | 2.6 | ||||||
With 90% Confidence Level | 8.2 | 3.0 | ||||||
December 31, 2009 reserve: | ||||||||
As Reported | $ | 9.7 | $ | 2.0 | ||||
With 75% Confidence Level | 11.4 | 2.4 | ||||||
With 90% Confidence Level | 14.1 | 2.8 | ||||||
December 31, 2010 reserve: | ||||||||
As Reported | $ | 12.4 | $ | 2.7 | ||||
With 75% Confidence Level | 13.8 | 2.8 | ||||||
With 90% Confidence Level | 17.1 | 3.3 |
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• | cumulative losses in recent years; | ||
• | income/losses expected in future years; | ||
• | unsettled circumstances that, if favorably resolved, would adversely affect future operations; | ||
• | availability, or lack thereof, of taxable income in prior carryback periods that would limit realization of tax benefits; | ||
• | carryforward period associated with the deferred tax assets and liabilities; and | ||
• | prudent and feasible tax planning strategies. |
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Three Months | ||||||||||||||||||||
Year Ended December 31, | Ended March 31, | |||||||||||||||||||
2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Net revenue | $ | 702.4 | $ | 813.9 | $ | 869.5 | $ | 210.3 | $ | 208.5 | ||||||||||
Costs and expenses: | ||||||||||||||||||||
Salaries and benefits (includes stock compensation of $ —, $0.1, $0.3, $0.1 and $0.1, respectively) | 304.7 | 346.9 | 359.7 | 89.4 | 93.9 | |||||||||||||||
Supplies | 96.8 | 109.7 | 119.6 | 29.2 | 30.5 | |||||||||||||||
Provision for bad debts | 81.1 | 111.3 | 136.2 | 30.2 | 18.0 | |||||||||||||||
Other operating expenses | 137.8 | 150.3 | 158.3 | 37.6 | 42.0 | |||||||||||||||
Depreciation and amortization | 33.7 | 37.8 | 37.1 | 8.9 | 9.6 | |||||||||||||||
Interest, net | 50.4 | 48.5 | 48.4 | 11.6 | 12.7 | |||||||||||||||
Management fee to related party | 0.2 | 0.2 | 0.2 | — | — | |||||||||||||||
Loss on refinancing | 22.4 | — | 20.8 | — | — | |||||||||||||||
Total costs and expense | 727.1 | 804.7 | 880.3 | 206.9 | 206.7 | |||||||||||||||
Income (loss) from continuing operations before income taxes | (24.7 | ) | 9.2 | (10.8 | ) | 3.4 | 1.8 | |||||||||||||
Income taxes | 5.5 | 2.2 | 3.2 | 0.8 | 0.9 | |||||||||||||||
Income (loss) from continuing operations | (30.2 | ) | 7.0 | (14.0 | ) | 2.6 | 0.9 | |||||||||||||
Loss from discontinued operations, net of taxes | (1.9 | ) | (4.5 | ) | (0.2 | ) | (0.1 | ) | 0.1 | |||||||||||
Net income (loss) | $ | (32.1 | ) | $ | 2.5 | $ | (14.2 | ) | $ | 2.5 | $ | 1.0 | ||||||||
Less: Net income attributable to noncontrolling interests | 0.5 | 0.9 | 1.5 | 0.4 | 0.6 | |||||||||||||||
Net income (loss) attributable to Capella Healthcare, Inc. | $ | (32.6 | ) | $ | 1.6 | $ | (15.7 | ) | $ | 2.1 | $ | 0.4 | ||||||||
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Net | Provision for | |||||||
Revenue | Bad Debts | |||||||
(In millions) | ||||||||
Historical results of operations for the three months ended March 31, 2010 as presented | $ | 210.3 | $ | 30.2 | ||||
Uninsured discount impact of pro forma change in policy for the three months ended March 31, 2010 | (13.8 | ) | (13.8 | ) | ||||
Pro forma results of operations for the three months ended March 2010 | $ | 196.5 | $ | 16.4 | ||||
Three Months Ended | ||||||||
March 31, 2010 | ||||||||
(Dollars in millions) | ||||||||
Amount | % | |||||||
Net revenue | $ | 196.5 | 100.0 | % | ||||
Costs and expenses: | ||||||||
Salaries and benefits | 89.4 | 45.5 | ||||||
Supplies | 29.2 | 14.9 | ||||||
Provision for bad debts | 16.4 | 8.4 | ||||||
Other operating expenses | 37.6 | 19.1 | ||||||
Depreciation and amortization | 8.9 | 4.5 | ||||||
Interest, net | 11.6 | 5.9 | ||||||
Total costs and expenses | 193.1 | 98.3 | ||||||
Income from continuing operations before income taxes | 3.4 | 1.7 | ||||||
Income taxes | 0.8 | 0.4 | ||||||
Income from continuing operations | 2.6 | 1.3 | ||||||
Loss from discontinued operations, net of taxes | (0.1 | ) | — | |||||
Net income | $ | 2.5 | 1.3 | % | ||||
Less: Net income attributable to noncontrolling interests | 0.4 | 0.2 | ||||||
Net income attributable to Capella Healthcare, Inc. | $ | 2.1 | 1.1 | % | ||||
Three Months Ended March 31, | ||||||||||||
2010 | 2011 | % Change | ||||||||||
(Unaudited) | ||||||||||||
(Dollars in millions) | ||||||||||||
Statement of Operations Data: | ||||||||||||
Net revenue | $ | 210.3 | $ | 208.5 | (0.8 | )% | ||||||
Salaries and benefits | 89.4 | 93.9 | 5.0 | |||||||||
Supplies | 29.2 | 30.5 | 4.5 | |||||||||
Provisions for bad debts | 30.2 | 18.0 | (40.4 | ) | ||||||||
Other operating expenses | 37.6 | 42.0 | 11.7 | |||||||||
Depreciation and amortization | 8.9 | 9.6 | 7.9 | |||||||||
Operating Data: | ||||||||||||
Number of hospitals at end of each period | 13 | 13 | — | |||||||||
Admissions | 12,951 | 12,898 | (0.4 | ) | ||||||||
Adjusted admissions | 25,388 | 26,020 | 2.5 | |||||||||
Net revenue per adjusted admission | $ | 8,283 | $ | 8,014 | (3.3 | ) | ||||||
Average length of stay | 4.6 | 4.7 | 2.2 |
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Year Ended December 31, | ||||||||||||
2009 | 2010 | % Change | ||||||||||
(Dollars in millions) | ||||||||||||
Statement of Operations Data: | ||||||||||||
Net revenue | $ | 813.9 | $ | 869.5 | 6.8 | % | ||||||
Salaries and benefits | 346.9 | 359.7 | 3.7 | |||||||||
Supplies | 109.7 | 119.6 | 9.0 | |||||||||
Provisions for bad debts | 111.3 | 136.2 | 22.3 | |||||||||
Other operating expenses | 150.3 | 158.3 | 5.3 | |||||||||
Loss on refinancing | — | 20.8 | 100.0 | |||||||||
Depreciation and amortization | 37.8 | 37.1 | (1.9 | ) | ||||||||
Operating Data: | ||||||||||||
Number of hospitals at end of each period | 13 | 13 | — | |||||||||
Admissions | 50,728 | 50,862 | 0.3 | |||||||||
Adjusted admissions | 101,405 | 104,023 | 2.6 | |||||||||
Net revenue per adjusted admission | $ | 8,026 | $ | 8,359 | 4.1 | |||||||
Average length of stay (days) | 4.6 | 4.6 | — |
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Year Ended December 31, | ||||||||||||
2008 | 2009 | % Change | ||||||||||
(Dollars in millions) | ||||||||||||
Statement of Operations Data: | ||||||||||||
Net revenue | $ | 702.4 | $ | 813.9 | 15.9 | % | ||||||
Salaries and benefits | 304.7 | 346.9 | 13.8 | |||||||||
Supplies | 96.8 | 109.7 | 13.4 | |||||||||
Provisions for bad debts | 81.1 | 111.3 | 37.2 | |||||||||
Other operating expenses | 137.8 | 150.3 | 9.1 | |||||||||
Depreciation and amortization | 33.7 | 37.8 | 12.2 | |||||||||
Operating Data: | ||||||||||||
Number of hospitals at end of each period | 13 | 13 | — | |||||||||
Admissions | 47,815 | 50,728 | 6.1 | |||||||||
Adjusted admissions | 93,468 | 101,405 | 8.5 | |||||||||
Net revenue per adjusted admission | $ | 7,515 | $ | 8,026 | 6.8 | |||||||
Average length of stay | 4.6 | 4.6 | — | |||||||||
Same hospital results(1) | ||||||||||||
Statement of Operations Data: | ||||||||||||
Net revenue | $ | 341.2 | $ | 349.5 | 2.4 | % | ||||||
Salaries and benefits | 149.8 | 155.9 | 4.1 | |||||||||
Supplies | 48.3 | 50.4 | 4.3 | |||||||||
Provision for bad debts | 32.5 | 37.7 | 16.0 | |||||||||
Other operating expenses | 71.7 | 73.6 | 2.6 | |||||||||
Depreciation and amortization | 19.3 | 20.1 | 4.1 |
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Operating Data: | ||||||||||||
Number of hospitals at end of each period | 5 | 5 | — | |||||||||
Admissions | 23,795 | 22,533 | (5.3 | ) | ||||||||
Adjusted admissions | 43,759 | 42,137 | (3.7 | ) | ||||||||
Net revenue per adjusted admission | $ | 7,797 | $ | 8,294 | 6.4 | |||||||
Average length of stay | 5.1 | 5.1 | — |
(1) | Same hospital information includes the results of our operations and statistical data for those hospitals owned for the entire 12-month period for both periods presented. |
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Payments Due by Period | ||||||||||||||||||||
Within | During | During | After | |||||||||||||||||
1 Year | Years 2-3 | Years 4- 5 | 5 Years | Total | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Contractual Cash Obligations: | ||||||||||||||||||||
Long-term debt (1) | $ | 46.9 | $ | 93.8 | $ | 93.8 | $ | 593.8 | $ | 828.3 | ||||||||||
Operating leases (2) | 7.9 | 12.4 | 7.4 | 4.2 | 31.9 | |||||||||||||||
Estimated self-insurance liabilities (3) | 6.8 | 6.7 | 2.9 | 2.3 | 18.7 | |||||||||||||||
Subtotal | $ | 61.6 | $ | 112.9 | $ | 104.1 | $ | 600.3 | $ | 878.9 | ||||||||||
Other Commitments: | ||||||||||||||||||||
Construction and capital improvements (4) | $ | 4.2 | $ | — | $ | — | $ | — | $ | 4.2 | ||||||||||
Letters of credit (5) | 4.9 | — | — | — | 4.9 | |||||||||||||||
Physician commitments (6) | 0.9 | — | — | — | 0.9 | |||||||||||||||
Information technology commitments (7) | 5.6 | 12.9 | 14.7 | 16.6 | 49.8 | |||||||||||||||
Subtotal | $ | 15.6 | $ | 12.9 | $ | 14.7 | $ | 16.6 | $ | 59.8 | ||||||||||
Total obligations and commitments | $ | 77.2 | $ | 125.8 | $ | 118.8 | $ | 616.9 | $ | 938.7 | ||||||||||
(1) | Includes both principal and interest portions of outstanding debt. | |
(2) | These obligations are not reflected in our consolidated balance sheets. | |
(3) | Includes the current and long-term portions of our professional and general liability, workers’ compensation and employee health reserves. | |
(4) | Represents our estimate of amounts we are committed to fund in future periods through executed agreements to complete projects included as construction in progress on our consolidated balance sheets. | |
(5) | Amounts relate to instances in which we have letters of credit outstanding with the third party administrators of our self-insured workers’ compensation program. | |
(6) | Includes physician guarantee liabilities recognized on our consolidated balance sheets under FASB provisions regarding minimum revenue guarantees and liabilities for other fixed expenses under physician relocation agreements not yet paid. | |
(7) | An affiliate of HCA and another third-party vendor provide various information systems services, including but not limited to, financial, clinical, revenue cycle management, patient accounting and network information services, under contracts that expire beginning 2018. The amounts are based on estimated fees that will be charged to our hospitals with an annual fee increase to our hospitals that is capped by the consumer price index increase. |
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• | accreditation of all of our hospitals, including 12 by The Joint Commission and one by the American Osteopathic Association; | ||
• | in the spring of 2011, The Joint Commission recognized eight of our hospitals for significant improvement and/or consistent high performance in various elements of the core measures and invited them to participate in the pilot-testing of Solutions Exchange, a program to help other hospitals throughout the nation; | ||
• | Parkway Medical Center was ranked in the top 1% of all U.S. hospitals by Data Advantage Hospital Value Index (“HVI”) and was recognized as a center of excellence in bariatric surgery in 2010; | ||
• | Capital Medical Center received a #1 ranking in the state of Washington by HealthGrades for its orthopedic program in 2010 and a Best in Country, Top 10 in the state of Washington by HealthGrades for general surgery in 2011; | ||
• | Southwestern Medical Center was the first hospital in southwest Oklahoma to receive certification from The Joint Commission for its stroke program and, in 2011, earned its fifth consecutive accreditation from the Commission on Accreditation of Rehabilitation Facilities; | ||
• | Muskogee Regional Medical Center earned accreditation from the Oklahoma State Medical Association as a sponsor of Continuing Medical Education in 2010 and Quality Respiratory Care Recognition from the American Association for Respiratory Care in 2010 and 2011; | ||
• | Willamette Valley Medical Center was named a “Best Value in the State of Oregon” for 2009 and 2010 by the Press Ganey Hospital Value Index; | ||
• | River Park Hospital earned its third consecutive national Chest Pain Center accreditation in 2010 from the Society of Chest Pain Centers; | ||
• | Mineral Area Regional Medical Center was named a 2011 “Excellence through Insight” award recipient in the category of “Overall Physician Satisfaction” by HealthStream Research; | ||
• | National Park Medical Center was named to HomeCare Elite 2010, which is the top 5% of high performance home health agencies in the U.S.; and | ||
• | improved physician and employee satisfaction scores in 2010, as measured by an independent, third-party, nationally-recognized survey administrator. |
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• | Emergency Rooms.Recently, we embarked on a multi-year strategy to enhance quality and improve operating efficiencies in our emergency rooms. This strategy involves implementing process improvement initiatives such as Lean for Healthcare techniques, which are designed to improve patient experiences through more efficient utilization of resources. As a result of this initiative, several members of our corporate and hospital staff have received Lean for Healthcare certifications. We also are making a significant investment in a leading emergency department information system, which is comprised of several modules that offer comprehensive patient management system tools. The program provides appropriate and consistent guidelines for patient care excellence helping to ensure that proper screening, evaluation and treatment is performed. | ||
• | Local Physician Leadership Groups, or LPLGs.Our LPLGs are comprised of four to five physician leaders and our hospital CEO in each of our markets. The groups (i) provide ongoing dialogue with hospital administration; (ii) help develop key strategic initiatives for the hospital; and (iii) promote patient care excellence. | ||
• | Physician Advisory Group, or PAG. Our PAG is comprised of physician leaders across the Company. The group (i) provides clinical review and guidance related to information system design, build-out and workflow; (ii) advises us on physician communication and education; and (iii) identifies opportunities where technology can be used to improve clinical processes and outcomes. |
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• | National Physician Leadership Group, or NPLG.Our NPLG is comprised of one member of each LPLG and Capella senior management. The group (i) receives updates on Capella corporate strategy and vision; (ii) discusses quality of care issues and goals; (iii) promotes networking among Capella-affiliated physicians; (iv) offers advice on special projects where front line physician input is critical; and (v) allows members of the medical staff to have direct communication with members of Capella senior management. | ||
• | Chief Medical Officer. Our CMO is responsible for facilitating the work of our NPLG, ensuring that physician leaders from across the Company are continuously involved in shaping our vision and future strategies. The CMO is also responsible for providing leadership for our affiliated hospitals’ quality and service excellence initiatives as well as for on-going communication with medical staff members. | ||
• | Training and Education.We provide a customized on-line learning center comprised of approximately 3,000 clinically based courses to all our staff. Our corporate CQO develops and implements a work plan for each of the hospitals based upon their specific needs. The hospital CQO and CNO, in turn, develop individual educational work plans for each staff member at their facility. Usage of the Capella Learning Center is monitored by the corporate CQO and is reported to Capella senior management. We work with an independent consulting group to provide training in the areas of improving patient care processes as well as employee, physician and patient satisfaction. We believe this is a critical element in emphasizing our philosophy that, if our employees and physicians enjoy where they work and if they are intellectually stimulated, they will improve the quality care our patients receive. We survey our physicians and our employees on an annual basis to identify objectives for quality and satisfaction improvement. | ||
• | Compensation.We base the incentive compensation for our hospital administrative teams in significant part on achieving key individual and facility quality and service metrics such as performance on patient satisfaction surveys and other core measurements. |
• | our commitment to patient care excellence; | ||
• | our willingness to deploy strategic capital to improve the delivery of care; | ||
• | our focus on employing and developing high quality nursing and support staff; and | ||
• | our integration into, and support of, the communities we serve. |
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• | expanding specialty medical services such as medical and radiation oncology, cardiovascular, orthopedic, neurology, behavioral health and women’s services; | ||
• | initiating and expanding outpatient services; | ||
• | investing in medical equipment and technology to support our service lines; | ||
• | improving our efficiency to deliver better quality care in our emergency rooms; and | ||
• | enhancing patient, physician and employee satisfaction. |
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• | continued focus on revenue cycle management and collections; | ||
• | disciplined deployment of capital across our portfolio; | ||
• | encouragement and motivation our physicians and medical staff to adhere to our established protocols related to medical supplies utilization; | ||
• | infrastructure build-out to support our growing physician clinic operations; | ||
• | implementation of appropriate staffing tools and continued reduction of contract labor; and | ||
• | leveraged technical expertise through use of our corporate resources. |
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Hospital | Location | Licensed Beds | Date Acquired | |||||
Capital Medical Center(1) | Olympia, WA | 110 | December 1, 2005 | |||||
Grandview Medical Center | Jasper, TN | 70 | December 1, 2005 | |||||
Hartselle Medical Center | Hartselle, AL | 150 | March 1, 2008 | |||||
Jacksonville Medical Center | Jacksonville, AL | 89 | March 1, 2008 | |||||
Mineral Area Regional Medical Center | Farmington, MO | 135 | March 1, 2008 | |||||
Muskogee Regional Medical Center | Muskogee, OK | 275 | April 3, 2007 | |||||
National Park Medical Center(2) | Hot Springs, AR | 166 | March 1, 2008 | |||||
Parkway Medical Center | Decatur, AL | 108 | March 1, 2008 | |||||
River Park Hospital | McMinnville, TN | 125 | December 1, 2005 | |||||
Southwestern Medical Center | Lawton, OK | 199 | December 1, 2005 | |||||
St. Mary’s Regional Medical Center | Russellville, AR | 170 | March 1, 2008 | |||||
White County Community Hospital(3) | Sparta, TN | 60 | March 1, 2008 | |||||
Willamette Valley Medical Center | McMinnville, OR | 88 | March 1, 2008 | |||||
Total Licensed Beds | 1,745 |
(1) | This hospital is operated by us in a joint venture with physicians in which we own 90.25% and physicians or physician entities own the remaining 9.75%. | |
(2) | This hospital is operated by us in a joint venture with physicians in which we own 95.04% and physicians or physician entities own the remaining 4.96%. | |
(3) | This hospital is operated by us in a joint venture with physicians in which we own 83.8% and physicians or physician entities own the remaining 16.2%. |
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• | patient accounting, including billing and collection of revenue; | ||
• | accounting, financial reporting and payroll; | ||
• | coding and compliance; | ||
• | laboratory, radiology and pharmacy systems; | ||
• | medical records and document storage; | ||
• | physician access to patient data; | ||
• | quality indicators; | ||
• | materials and asset management; and | ||
• | negotiating, pricing and administering our managed care contracts |
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Three months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
Year Ended December 31, | March 31, | |||||||||||||||||||
2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||
Medicare | 36.1 | % | 39.1 | % | 36.0 | % | 37.7 | % | 39.9 | % | ||||||||||
Medicaid | 8.3 | 9.6 | 12.0 | 11.6 | 12.7 | |||||||||||||||
Managed Care and other | 43.4 | 38.3 | 36.1 | 39.0 | 37.1 | |||||||||||||||
Self-Pay | 12.2 | 13.0 | 15.9 | 11.7 | 10.3 | |||||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
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• | how many previously uninsured individuals will obtain coverage as a result of the Affordable Care Act (while the CBO estimates 32 million, CMS estimates almost 34 million; both agencies made a number of assumptions to derive that figure, including how many individuals will ignore substantial subsidies and decide to pay the penalty rather than obtain health insurance and what percentage of people in the future will meet the new Medicaid income eligibility requirements); | ||
• | what percentage of the newly insured patients will be covered under the Medicaid program and what percentage will be covered by private health insurers; | ||
• | the extent to which states will enroll new Medicaid participants in managed care programs; | ||
• | the pace at which insurance coverage expands, including the pace of different types of coverage expansion; | ||
• | the change, if any, in the volume of inpatient and outpatient hospital services that are sought by and provided to previously uninsured individuals; |
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• | the rate paid to hospitals by private payers for newly covered individuals, including those covered through the newly created Exchanges and those who might be covered under the Medicaid program under contracts with the state; | ||
• | the rate paid by state governments under the Medicaid program for newly covered individuals; | ||
• | how the value-based purchasing and other quality programs will be implemented; | ||
• | the percentage of individuals in the Exchanges who select the high deductible plans, since health insurers offering those kinds of products have traditionally sought to pay lower rates to hospitals; | ||
• | whether the net effect of the Affordable Care Act, including the prohibition on excluding individuals based on pre-existing conditions, the requirement to keep medical costs lower than a specified percentage of premium revenue, other health insurance reforms and the annual fee applied to all health insurers, will be to put pressure on the bottom line of health insurers, which in turn might cause them to seek to reduce payments to hospitals with respect to both newly insured individuals and their existing business; and | ||
• | the possibility that implementation of provisions expanding health insurance coverage will be delayed or even blocked because of court challenges or revised or eliminated as a result of court challenges and efforts to repeal or amend the new law. |
• | the amount of overall revenues we will generate from Medicare and Medicaid business when the reductions are implemented; | ||
• | whether reductions required by the Affordable Care Act will be changed by statute prior to becoming effective; | ||
• | the size of the Affordable Care Act’s annual productivity adjustment to the market basket beginning in 2012 payment years; | ||
• | the amount of the Medicare DSH reductions that will be made, commencing in FFY 2014; | ||
• | the allocation to our hospitals of the Medicaid DSH reductions, commencing in FFY 2014; | ||
• | what the losses in revenues will be, if any, from the Affordable Care Act’s quality initiatives; | ||
• | how successful ACOs, in which we participate, will be at coordinating care and reducing costs; | ||
• | the scope and nature of potential changes to Medicare reimbursement methods, such as an emphasis on bundling payments or coordination of care programs; and | ||
• | reductions to Medicare payments CMS may impose for “excessive readmissions.” |
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• | the proper handling and disposal of hazardous and low level medical radioactive waste; | ||
• | ownership or historical use of underground and above-ground storage tanks; | ||
• | management of impacts from leaks of hydraulic fluid or oil associated with elevators, chiller units or incinerators; | ||
• | appropriate management of asbestos-containing materials present or likely to be present at some locations; and | ||
• | the potential acquisition of, or maintenance of air emission permits for, boilers or other equipment. |
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Name | Age | Position | ||||
Daniel S. Slipkovich | 53 | Chief Executive Officer and Director | ||||
D. Andrew Slusser | 51 | Senior Vice President of Acquisitions and Development | ||||
Denise W. Warren | 49 | Senior Vice President, Chief Financial Officer and Treasurer | ||||
Michael A. Wiechart | 45 | Senior Vice President and Chief Operating Officer | ||||
Erik Swensson, MD | 57 | Senior Vice President and Chief Medical Officer | ||||
Steven R. Brumfield | 47 | Vice President and Controller | ||||
J. Thomas Anderson | 57 | Vice-Chair and Co-Founder and Director | ||||
Joseph P. Nolan | 46 | Director | ||||
David S. Katz | 45 | Director | ||||
Robert Z. Hensley | 53 | Director |
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Audit | Compensation | |||||||
Name of Director | Committee | Committee | ||||||
J. Thomas Anderson | — | — | ||||||
Robert Z. Hensley | X | X | ||||||
David S. Katz | X | X | ||||||
Joseph P. Nolan | X | X | ||||||
Daniel S. Slipkovich(1) | — | — |
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(1) | Indicates management director. |
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• | attract, retain, motivate and reward individuals of the highest quality in the industry with the experience, skills and integrity necessary to promote our success; | ||
• | be competitive within our industry and community and responsive to the needs of our NEOs; | ||
• | provide incentive opportunities that will motivate NEOs to achieve our long-term objectives; | ||
• | link compensation paid to NEOs to corporate and individual performance; and | ||
• | comply with all applicable laws, and be appropriate in light of reasonable and sensible standards of good corporate governance. |
• | Base salaries; | ||
• | Non-equity incentive compensation; and | ||
• | Benefits and perquisites. |
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• | evaluations of each of the NEOs, as well as feedback from the Board of Directors, regarding each NEO’s performance; | ||
• | the Chief Executive Officer’s review and evaluation of each of the other NEOs, addressing individual performance and the results of operations of the business areas and departments for which such executive had responsibility; | ||
• | the financial performance of the Company, including achieving EBITDA goals established by the Chief Executive Officer and presented to and approved by the Board of Directors; and | ||
• | total proposed compensation, as well as each element of proposed compensation, taking into account the recommendations of the Chief Executive Officer. |
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Non-Equity | ||||||||||||||||||||||||
Incentive Plan | All Other | |||||||||||||||||||||||
Name and Principal | Compensation | Compensation | ||||||||||||||||||||||
Position | Year | Salary | Bonus (4) | (5) | (6) | Total | ||||||||||||||||||
Daniel S. Slipkovich | 2010 | $ | 450,000 | $ | — | $ | — | $ | 3,333 | $ | 453,333 | |||||||||||||
Chief Executive Officer | 2009 | 450,000 | — | 450,000 | 3,822 | 903,822 | ||||||||||||||||||
2008 | 433,335 | — | — | 1,622 | 434,957 | |||||||||||||||||||
Denise W. Warren | 2010 | $ | 358,750 | $ | — | $ | — | $ | 2,901 | $ | 361,651 | |||||||||||||
Senior Vice President, | 2009 | 350,000 | — | 262,500 | 3,390 | 615,890 | ||||||||||||||||||
Chief Financial Officer and Treasurer | 2008 | 344,167 | — | — | 1,622 | 345,789 | ||||||||||||||||||
D. Andrew Slusser | 2010 | $ | 292,125 | $ | — | $ | — | $ | 3,333 | $ | 295,458 | |||||||||||||
Senior Vice President of | 2009 | 285,000 | — | 285,000 | 3,822 | 573,822 | ||||||||||||||||||
Acquisitions and Development | 2008 | 281,250 | — | — | 1,622 | 282,872 | ||||||||||||||||||
Howard T. Wall (1) | 2010 | $ | 312,625 | $ | — | $ | — | $ | 3,333 | $ | 315,958 | |||||||||||||
Former Senior Vice | 2009 | 285,000 | — | 228,750 | 3,822 | 517,572 | ||||||||||||||||||
President, General Counsel and Secretary | 2008 | 281,250 | — | — | 1,622 | 282,872 | ||||||||||||||||||
Michael A. Wiechart (2) | 2010 | $ | 384,375 | $ | — | $ | — | $ | 2,901 | $ | 387,276 | |||||||||||||
Senior Vice President | 2009 | 226,190 | — | 169,643 | 1,560 | 397,393 | ||||||||||||||||||
and Chief Operating Officer | 2008 | — | — | — | — | — | ||||||||||||||||||
J. Thomas Anderson (3) | 2010 | $ | 399,996 | $ | — | $ | — | $ | 4,413 | $ | 404,409 | |||||||||||||
Vice Chairman | 2009 | 399,996 | — | 399,996 | 4,902 | 804,894 | ||||||||||||||||||
2008 | 391,665 | — | — | 1,622 | 393,287 |
(1) | Mr. Wall resigned as our Senior Vice President, General Counsel and Secretary effective June 10, 2011. | |
(2) | Mr. Wiechart joined the Company in 2009 as our Senior Vice President and Chief Operating Officer. | |
(3) | Reflects compensation paid to Mr. Anderson in his capacity as our President. In September 2010, Mr. Anderson resigned as President and currently serves as Vice Chairman of the Board of Directors. | |
(4) | Reflects discretionary bonuses awarded by the Compensation Committee and the Board of Directors. No such bonuses were awarded for 2008, 2009 or 2010. | |
(5) | Reflects cash awards earned under our non-equity incentive compensation plan. | |
(6) | Details of the amounts included in “All Other Compensation” for 2010 are as follows: |
Long-Term | ||||||||||||
Group Term Life | Disability | Total | ||||||||||
Daniel S. Slipkovich | $ | 1,242 | $ | 2,091 | $ | 3,333 | ||||||
Denise W. Warren | 810 | 2,091 | 2,901 | |||||||||
D. Andrew Slusser | 1,242 | 2,091 | 3,333 | |||||||||
Howard T. Wall | 1,242 | 2,091 | 3,333 | |||||||||
Michael A. Wiechart | 810 | 2,091 | 2,901 | |||||||||
J. Thomas Anderson | 2,322 | 2,091 | 4,413 |
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Estimated Future Payouts Under Non-Equity Incentive | ||||||||||||
Plan Awards (1) | ||||||||||||
Name | Threshold | Target | Maximum | |||||||||
Daniel S. Slipkovich | — | $ | 450,000 | $ | 450,000 | |||||||
Denise W. Warren | — | 269,063 | 269,063 | |||||||||
D. Andrew Slusser | — | 292,125 | 292,125 | |||||||||
Howard T. Wall | — | 234,469 | 234,469 | |||||||||
Michael A. Wiechart | — | 288,281 | 288,281 | |||||||||
J. Thomas Anderson | — | 399,996 | 399,996 |
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(1) | Reflects cash bonus awards granted under our non-equity incentive compensation plan where receipt is contingent upon the achievement of a performance goal. The applicable performance goal was not achieved for 2010; therefore, no payments were made to the NEOs under the non-equity incentive compensation plan. For more information about our non-equity incentive compensation plan, please refer to the section above entitled “Compensation Discussion and Analysis — Components of Executive Compensation — Non-Equity Incentive Compensation.” |
• | Messrs. Slipkovich, Slusser or Anderson are terminated without Cause or as a result of a Disability or death or they resign for Good Reason, then they are entitled to receive their annual base salary for one year, and, with respect to Messrs. Slipkovich and Slusser, are entitled to cause Holdings to purchase of portion of their shares of Holdings common stock at fair market value as of the date such right is exercised; | ||
• | Ms. Warren is terminated without Cause or as a result of Disability or death, she is entitled to receive her annual base salary for one year; and | ||
• | Mr. Wiechart is terminated without Cause or as a result of Disability or death or he resigns for Good Reason, he is entitled to receive his annual base salary for two years. |
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Involuntary | ||||||||||||||||
Executive Benefits and | Termination | Resignation for | Change in | Death or | ||||||||||||
Payments upon Termination | without Cause | Good Reason | Control | Disability | ||||||||||||
Cash Payments | $ | 450,000 | $ | 450,000 | — | $ | 450,000 | |||||||||
Accelerated Vesting of Unvested Restricted Stock | — | — | $ | 3,051,574 | (2) | — | ||||||||||
Put Right | 2,703,784 | (1) | 2,703,784 | (1) | — | — |
(1) | Reflects the right to require Holdings to purchase (i) 299,171 shares of Holdings common stock based on a per share price of $3.80 per share, which was determined to be the fair market value of Holdings common stock as of December 31, 2011 by an third-party appraiser, and (ii) 1,566.934 shares of Holdings preferred stock at $1,000 per share. In May 2005, Mr. Slipkovich originally purchased the shares of common stock for fair market value and 1,172.749 share of preferred stock for $1,000 per share. | |
(2) | Reflects the accelerated vesting of 789,888 shares of Holdings common stock that remain unvested until certain terms are met upon a Sale of the Company or an initial Public Offering. The amount of compensation reflected in this column is based on a per share price of $3.80, which was determined to be the fair market value of Holdings common stock as of December 31, 2011 by an third-party appraiser. Mr. Slipkovich originally purchased these shares for fair market value in May 2005. |
Involuntary | ||||||||||||||||
Executive Benefits and | Termination | Resignation for | Change in | Death or | ||||||||||||
Payments upon Termination | without Cause | Good Reason | Control | Disability | ||||||||||||
Cash Payments | $ | 358,750 | — | — | $ | 358,750 | ||||||||||
Accelerated Vesting of Unvested Restricted Stock | — | — | — | — |
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Involuntary | ||||||||||||||||
Executive Benefits and | Termination | Resignation for | Change in | Death or | ||||||||||||
Payments upon Termination | without Cause | Good Reason | Control | Disability | ||||||||||||
Cash Payments | $ | 292,125 | $ | 292,125 | — | $ | 292,125 | |||||||||
Accelerated Vesting of Unvested Restricted Stock | — | — | — | — | ||||||||||||
Put Right | 26,058 | (1) | 26,058 | (1) | — | — |
(1) | Reflects the right to require Holdings to purchase (i) 2,883 shares of Holdings common stock based on a per share price of $3.80, which was determined to be the fair market value of Holdings common stock as of December 31, 2010 by an third-party appraiser, and (ii) 15.102 shares of Holdings preferred stock at $1,000 per share. In May 2005, Mr. Slusser originally purchased the shares of common stock for fair market value and 11.302 shares of preferred stock for $1,000 per share. |
Involuntary | ||||||||||||||||
Executive Benefits and | Termination | Resignation for | Change in | Death or | ||||||||||||
Payments upon Termination | without Cause | Good Reason | Control | Disability | ||||||||||||
Cash Payments | $ | 768,750 | $ | 768,750 | — | $ | 768,750 | |||||||||
Accelerated Vesting of Unvested Restricted Stock | — | — | $ | 1,824,000 | (1) | — |
(1) | Reflects the accelerated vesting of 480,000 shares of Holdings common stock that remain unvested until certain terms are met upon a Sale of the Company, except in the case of an initial Public Offering. The amount of compensation reflected in this column is based on a per share price of $3.80, which was determined to be the fair market value of Holdings common stock as of December 31, 2010 by an third-party appraiser. Mr. Wiechart originally purchased these shares for fair market value in May 2009. |
Involuntary | ||||||||||||||||
Executive Benefits and | Termination | Resignation for | Change in | Death or | ||||||||||||
Payments upon Termination | without Cause | Good Reason | Control | Disability | ||||||||||||
Cash Payments | $ | 399,996 | $ | 399,996 | — | $ | 399,996 | |||||||||
Accelerated Vesting of Unvested Restricted Stock | — | — | $ | 1,800,964 | (1) | — |
(1) | Reflects the accelerated vesting of 473,938 shares of Holdings common stock that remain unvested until certain terms are met upon a Sale of the Company or an initial Public Offering. The amount of compensation reflected in this column is based on a per share price of $3.80, which was determined to be the fair market value of Holdings common stock as of December 31, 2010 by an third-party appraiser. Mr. Anderson originally purchased these shares for fair market value in May 2005. |
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Percentage of | Percentage of | |||||||||||||||
Shares of Common | Common Stock | Shares of Preferred | Preferred Stock | |||||||||||||
Stock Beneficially | Beneficially | Stock Beneficially | Beneficially | |||||||||||||
Name of Beneficial Holder(1) | Owned(5) | Owned | Owned(5) | Owned | ||||||||||||
GTCR(2) | 50,000,000 | (6) | 80.1 | % | 278,616.794 | (11) | 99.4 | % | ||||||||
Daniel S. Slipkovich | 4,880,522 | (7) | 7.8 | 1,596.059 | * | |||||||||||
Denise W. Warren | 947,846 | (8) | 1.5 | — | — | |||||||||||
D. Andrew Slusser | 1,108,721 | 1.8 | 15.382 | * | ||||||||||||
Howard T. Wall(3) | 631,880 | (9) | 1.0 | — | — | |||||||||||
Michael A. Wiechart | 600,000 | * | — | — | ||||||||||||
J. Thomas Anderson | 3,820,297 | (10) | 6.1 | — | — | |||||||||||
Joseph P. Nolan | — | — | — | — | ||||||||||||
David S. Katz | — | — | — | — | ||||||||||||
Robert Z. Hensley | 12,500 | * | — | — | ||||||||||||
All directors and executive officers as a group (11 persons)(4) | 12,310,216 | 19.7 | 1,611.441 | * |
* | Less than one percent. | |
(1) | Each owner has agreed to vote their shares in accordance with the Stockholders Agreement. See “Certain Relationships and Related Transactions — Stockholders Agreement.” | |
(2) | The address of GTCR and Messrs. Nolan and Katz is 300 N. LaSalle Street, Suite 5600, Chicago, Illinois 60654. | |
(3) | Mr. Wall resigned as Capella’s Senior Vice President, General Counsel and Secretary effective June 10, 2011. | |
(4) | Includes 64,737 shares that were subsequently redeemed by Holdings effective May 31, 2011. See “Certain Relationships and Related Transactions — Repayment of Indebtedness to Holdings — Mr. Brumfield.” | |
(5) | Beneficial ownership includes voting or investment power with respect to securities and includes shares that an individual has a right to acquire within 60 days after March 31, 2011. | |
(6) | Includes 42,342,800, 7,431,200 and 226,000 shares owned by GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P. and GTCR Co-Invest II, L.P., respectively. Messrs. Katz and Nolan are principals of GTCR and as such may be deemed to be a beneficial owner of these three funds. Messrs. Katz and Nolan disclaim beneficial ownership of such funds. | |
(7) | Includes 789,888 shares owned by Mr. Slipkovich with financial rights that do not vest until a sale of the Company or an initial public offering but for which Mr. Slipkovich currently has voting power. | |
(8) | Includes 148,599 shares that were subsequently redeemed by Holdings effective May 31, 2011. See “Certain Relationships and Related Transactions — Repayment of Indebtedness to Holdings — Ms. Warren.” | |
(9) | Includes 77,897 shares that were subsequently redeemed by Holdings effective May 31, 2011. See “Certain Relationships and Related Transactions — Repayment of Indebtedness to Holdings — Mr. Wall.” | |
(10) | Includes 48,786 shares that were subsequently redeemed by Holdings effective May 31, 2011. See “Certain Relationships and Related Transactions — Repayment of Indebtedness to Holdings — Mr. Anderson.” | |
(11) | Includes 235,948.304, 41,409.142 and 1,259.348 shares owned by GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P. and GTCR Co-Invest II, L.P., respectively. |
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• | incur additional indebtedness; |
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• | issue certain capital stock; | ||
• | repay certain indebtedness; | ||
• | amend organizational documents; | ||
• | create liens; | ||
• | enter into sale and leaseback transactions; | ||
• | engage in mergers or consolidations; | ||
• | sell or transfer assets; | ||
• | pay dividends and distributions or repurchase our capital stock; | ||
• | make investments, loans, guarantees or advances; | ||
• | prepay certain subordinated indebtedness, subject to exceptions for repayments of certain intercompany indebtedness; | ||
• | make certain acquisitions; | ||
• | engage in certain transactions with affiliates; | ||
• | amend material agreements governing certain subordinated indebtedness; and | ||
• | change the nature of our business. |
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• | it is not an affiliate of Capella; | ||
• | it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the exchange notes; | ||
• | it is acquiring the exchange notes in its ordinary course of business; and | ||
• | it is not acting on behalf of any person who could not truthfully make the foregoing representations. |
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• | it is not an affiliate of Capella; | ||
• | it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the exchange notes; | ||
• | it is acquiring the exchange notes in its ordinary course of business; and | ||
• | it is not acting on behalf of any person who could not truthfully make the foregoing representations. |
• | cannot rely on the position of the staff of the SEC set forth inMorgan Stanley & Co. Incorporated(available June 5, 1991) andExxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter toShearman & Sterling, dated July 2, 1993, or similar no-action letters; and | ||
• | in the absence of an exception from the position stated immediately above, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes. |
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• | to delay accepting for exchange any outstanding notes; | ||
• | to extend the exchange offer or to terminate the exchange offer if any of the conditions set forth below under “— Certain Conditions to the Exchange Offer” have not been satisfied, by giving oral or written notice of the delay, extension or termination to the exchange agent; or |
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• | subject to the terms of the registration rights agreements, to amend the terms of any of the exchange offer in any manner. |
• | the exchange notes to be received will not be tradable by the holder without restriction under the Securities Act or the Exchange Act, and without material restrictions under the blue sky or securities laws of substantially all of the states of the United States; | ||
• | the exchange offer, or the making of any exchange by a holder of outstanding notes, violates applicable law or any applicable interpretation of the staff of the SEC; or | ||
• | any action or proceeding has been instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer. |
• | the representations described under “— Purpose and Effect of the Exchange Offer,” “— Procedures for Tendering” and “Plan of Distribution”; or | ||
• | such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to make available to it an appropriate form for registration of the exchange notes under the Securities Act. |
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• | complete, sign and date the accompanying letter of transmittal or a facsimile of the letter of transmittal; have the signature on the letter of transmittal guaranteed if the letter of transmittal so requires; and mail or deliver the letter of transmittal or facsimile thereof to the exchange agent prior to the expiration date; or | ||
• | comply with DTC’s Automated Tender Offer Program procedures described below. |
• | the exchange agent must receive certificates for the outstanding notes along with the accompanying letter of transmittal prior to the expiration date; or | ||
• | the exchange agent must receive, prior to the expiration date, a timely confirmation of book-entry transfer of the outstanding notes into the exchange agent’s account at DTC according to the procedures for book-entry transfer described below or a properly transmitted agent’s message; or | ||
• | the holder must comply with the guaranteed delivery procedures described below. |
• | make appropriate arrangements to register ownership of the outstanding notes in such owner’s name; or |
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• | obtain a properly completed bond power from the registered holder of outstanding notes. |
• | by a registered holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the accompanying letter of transmittal; or | ||
• | for the account of an eligible institution. |
• | DTC has received an express acknowledgment from a participant in its Automated Tender Offer Program that is tendering outstanding notes that are the subject of the book-entry confirmation; | ||
• | the participant has received and agrees to be bound by the terms of the accompanying letter of transmittal, or, in the case of an agent’s message relating to guaranteed delivery, that the participant has received and agrees to be bound by the applicable notice of guaranteed delivery; and |
• | the agreement may be enforced against that participant. |
• | outstanding notes or a timely book-entry confirmation of the outstanding notes into the exchange agent’s account at DTC; and |
• | a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent’s message. |
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• | it is acquiring the exchange notes that the holder receives in its ordinary course of business; | ||
• | it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the exchange notes; and | ||
• | it is not an “affiliate” of Capella, as defined in Rule 405 of the Securities Act. |
• | the tender is made through an eligible institution; |
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• | prior to the expiration date, the exchange agent receives from the eligible institution either a properly completed and duly executed notice of guaranteed delivery, by facsimile transmission, mail or hand delivery, or a properly transmitted agent’s message and notice of guaranteed delivery: |
§ | setting forth the name and address of the holder, the registered number(s) of the outstanding notes and the principal amount of outstanding notes tendered; | ||
§ | stating that the tender is being made thereby; and | ||
§ | guaranteeing that, within three NYSE trading days after the expiration date, the accompanying letter of transmittal, or facsimile thereof, together with the outstanding notes or a book-entry confirmation, and any other documents required by the accompanying letter of transmittal will be deposited by the eligible institution with the exchange agent; and |
• | the exchange agent receives the properly completed and executed letter of transmittal, or facsimile thereof, as well as all tendered outstanding notes in proper form for transfer or a book-entry confirmation and all other documents required by the accompanying letter of transmittal, within three NYSE trading days after the expiration date. |
• | the exchange agent must receive notice of withdrawal, which may be by facsimile, at the address set forth below under “— Exchange Agent”; or | ||
• | holders must comply with the appropriate procedures of DTC’s Automated Tender Offer Program system. |
• | specify the name of the person who tendered the outstanding notes to be withdrawn; | ||
• | identify the outstanding notes to be withdrawn, including the principal amount of the outstanding notes; | ||
• | be signed by the holder in the same manner as the original signature on the letter of transmittal by which such outstanding notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the trustee under the indenture pursuant to which the outstanding notes were issued register the transfer of such outstanding notes into the name of the person withdrawing the tender; and | ||
• | specify the name in which the outstanding notes were registered, if different from that of the withdrawing holder. |
• | the serial numbers of the particular certificates to be withdrawn; and |
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• | a signed notice of withdrawal with signatures guaranteed by an eligible institution unless the holder is an eligible institution. |
By Mail, Hand Delivery or Overnight Delivery: | By Facsimile: | |
U.S. Bank National Association | (651) 495-8158 | |
60 Livingston Avenue | ||
St. Paul, MN 55107 | Confirm receipt of | |
Attn: Specialized Finance Dept. | facsimile by telephone | |
(800) 934-6802 |
• | SEC registration fees; | ||
• | fees and expenses of the exchange agent and trustee; | ||
• | accounting and legal fees and printing costs; and | ||
• | related fees and expenses. |
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• | certificates representing outstanding notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of outstanding notes tendered; | ||
• | tendered outstanding notes are registered in the name of any person other than the person signing the letter of transmittal; or | ||
• | a transfer tax is imposed for any reason other than the exchange of outstanding notes under the exchange offer. |
• | as set forth in the legend printed on the notes as a consequence of the issuance of the outstanding notes under the exemption from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws; and | ||
• | otherwise as set forth in the offering memorandum distributed in connection with the private offering of the outstanding notes. |
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• | are general, senior, unsecured obligations of Capella; | ||
• | are effectively subordinated to all existing and future secured debt of Capella to the extent of the value of the assets securing that debt; | ||
• | arepari passuin right of payment with all existing and future senior unsecured debt of Capella; | ||
• | are senior in right of payment to all existing and future Subordinated Obligations of Capella; and | ||
• | are fully and unconditionally guaranteed on a senior, unsecured basis by the Guarantors. |
• | is a general unsecured obligation of the respective Guarantor; | ||
• | ispari passuin right of payment to all existing and future senior unsecured debt of the respective Guarantor; and | ||
• | is senior in right of payment to all existing and future Subordinated Obligations of the respective Guarantor. |
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Optional | ||||
Redemption | ||||
Year | Price | |||
2013 | 106.938 | % | ||
2014 | 104.625 | % | ||
2015 | 102.313 | % | ||
2016 and thereafter | 100.000 | % |
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(a) | in the ordinary course of its business; and |
(b) | pursuant to a written agreement. |
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CAPELLA HEALTHCARE, INC. | ||||
Unaudited Interim Condensed Consolidated Financial Statements for the Three-Month Periods Ended March 31, 2011 and 2010 | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
Audited Consolidated Financial Statements for the Years Ended December 31, 2010, 2009 and 2008 | ||||
F-17 | ||||
F-18 | ||||
F-20 | ||||
F-21 | ||||
F-22 | ||||
F-23 |
F-1
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March 31, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
(In millions) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 45.7 | $ | 48.3 | ||||
Accounts receivable, net of allowance for doubtful accounts of $115.5 and $123.1 at March 31, 2011 and December 31, 2010, respectively | 121.7 | 115.6 | ||||||
Inventories | 25.2 | 25.2 | ||||||
Prepaid expenses and other current assets | 6.2 | 4.8 | ||||||
Other receivables | 3.1 | 2.3 | ||||||
Deferred tax assets | 2.3 | 3.5 | ||||||
Income tax receivable | 0.1 | 0.6 | ||||||
Total current assets | 204.3 | 200.3 | ||||||
Property and equipment: | ||||||||
Land | 40.4 | 40.7 | ||||||
Buildings and improvements | 374.2 | 373.7 | ||||||
Equipment | 174.0 | 170.0 | ||||||
Construction in progress | 4.2 | 4.7 | ||||||
592.8 | 589.1 | |||||||
Accumulated depreciation | (147.7 | ) | (138.4 | ) | ||||
445.1 | 450.7 | |||||||
Goodwill | 89.9 | 89.9 | ||||||
Intangible assets, net | 8.5 | 9.1 | ||||||
Other assets, net | 17.7 | 17.8 | ||||||
Total assets | $ | 765.5 | $ | 767.8 | ||||
Liabilities and stockholder’s deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 23.4 | $ | 22.4 | ||||
Salaries and benefits payable | 27.3 | 22.3 | ||||||
Accrued interest | 11.7 | 23.7 | ||||||
Other accrued liabilities | 14.6 | 12.7 | ||||||
Current portion of long-term debt | — | — | ||||||
Total current liabilities | 77.0 | 81.1 | ||||||
Long-term debt | 494.4 | 494.1 | ||||||
Deferred income taxes | 12.2 | 12.8 | ||||||
Other liabilities | 14.0 | 12.1 | ||||||
Redeemable non-controlling interests | 5.5 | 5.5 | ||||||
Due to parent | 210.0 | 210.2 | ||||||
Stockholder’s deficit: | ||||||||
Common stock, $0.01 par value; 1,000 shares authorized; 100 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively | — | — | ||||||
Retained deficit | (47.6 | ) | (48.0 | ) | ||||
Total stockholder’s deficit | (47.6 | ) | (48.0 | ) | ||||
Total liabilities and stockholder’s deficit | $ | 765.5 | $ | 767.8 | ||||
F-2
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Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
(In millions) | ||||||||
Net revenue | $ | 208.5 | $ | 210.3 | ||||
Costs and expenses: | ||||||||
Salaries and benefits | 93.9 | 89.4 | ||||||
Supplies | 30.5 | 29.2 | ||||||
Purchased services | 13.6 | 13.1 | ||||||
Other operating expenses | 28.4 | 24.5 | ||||||
Provision for bad debts | 18.0 | 30.2 | ||||||
Interest, net | 12.7 | 11.6 | ||||||
Depreciation and amortization | 9.6 | 8.9 | ||||||
Total costs and expenses | $ | 206.7 | $ | 206.9 | ||||
Income from continuing operations before income taxes | 1.8 | 3.4 | ||||||
Income tax provision | 0.9 | 0.8 | ||||||
Income from continuing operations | 0.9 | 2.6 | ||||||
Income (loss) from discontinued operations, net of tax benefit of $0 | 0.1 | (0.1 | ) | |||||
Net income | 1.0 | 2.5 | ||||||
Less: Net income attributable to non-controlling interests | 0.6 | 0.4 | ||||||
Net income attributable to Capella Healthcare, Inc. | $ | 0.4 | $ | 2.1 | ||||
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Total | ||||||||||||||||
Common Stock | Retained | Stockholder’s | ||||||||||||||
Shares | Amount | Deficit | Deficit | |||||||||||||
(In millions, except share amounts) | ||||||||||||||||
Balance at December 31, 2010 | 100 | $ | — | $ | (48.0 | ) | $ | (48.0 | ) | |||||||
Net income (unaudited) | — | — | 0.4 | 0.4 | ||||||||||||
Balance at March 31, 2011 (unaudited) | 100 | $ | — | $ | (47.6 | ) | $ | (47.6 | ) | |||||||
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Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
(In millions) | ||||||||
Operating activities | ||||||||
Net income | $ | 1.0 | $ | 2.5 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 9.6 | 8.9 | ||||||
Deferred income taxes | 0.6 | 0.7 | ||||||
Losses from mark to market swap valuation | — | 0.2 | ||||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||
Accounts receivable, net | (6.1 | ) | (7.0 | ) | ||||
Inventories | — | 0.1 | ||||||
Prepaid expenses and other current assets | (1.8 | ) | 0.2 | |||||
Accounts payable and other current liabilities | 3.0 | 3.8 | ||||||
Accrued salaries | 5.0 | (1.6 | ) | |||||
Accrued interest | (12.0 | ) | 0.1 | |||||
Other | 1.3 | 1.3 | ||||||
Net cash provided by operating activities | 0.6 | 9.2 | ||||||
Investing activities | ||||||||
Purchases of property and equipment, net | (4.0 | ) | (3.9 | ) | ||||
Change in other assets | 1.5 | 0.1 | ||||||
Net cash used in investing activities | (2.5 | ) | (3.8 | ) | ||||
Financing activities | ||||||||
Payment of debt and capital leases | — | (0.8 | ) | |||||
Advances (to) from Parent | (0.2 | ) | 1.0 | |||||
Distributions to limited partners | (0.5 | ) | (0.4 | ) | ||||
Net cash used in financing activities | (0.7 | ) | (0.2 | ) | ||||
Change in cash and cash equivalents | (2.6 | ) | 5.2 | |||||
Cash and cash equivalents at beginning of year | 48.3 | 19.6 | ||||||
Cash and cash equivalents at end of year | $ | 45.7 | $ | 24.8 | ||||
Supplemental disclosure of cash flow information | ||||||||
Cash paid for interest | $ | 23.7 | $ | 10.3 | ||||
Cash paid (received) for taxes | $ | 0.1 | $ | (2.3 | ) | |||
F-5
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Financial Statements (Unaudited)
F-6
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Gross | ||||||||||||
Carrying | Accumulated | Net | ||||||||||
Class of Intangible Assets | Amount | Amortization | Total | |||||||||
Amortized intangible assets: | ||||||||||||
Contract-based physician minimum revenue guarantees: | ||||||||||||
March 31, 2011 | $ | 15.6 | $ | (7.7 | ) | $ | 7.9 | |||||
December 31, 2010 | $ | 15.9 | $ | (7.4 | ) | $ | 8.5 | |||||
Indefinite-lived intangible assets: | ||||||||||||
Certificates of need: | ||||||||||||
March 31, 2011 | $ | 0.6 | $ | — | $ | 0.6 | ||||||
December 31, 2010 | $ | 0.6 | $ | — | $ | 0.6 | ||||||
Total intangible assets: | ||||||||||||
March 31, 2011 | $ | 16.2 | $ | (7.7 | ) | $ | 8.5 | |||||
December 31, 2010 | $ | 16.5 | $ | (7.4 | ) | $ | 9.1 | |||||
F-7
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March 31, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
9.25% Senior Unsecured Notes | $ | 500.0 | $ | 500.0 | ||||
Unamortized discount on 9.25% Senior Unsecured Notes | (5.6 | ) | (5.9 | ) | ||||
Senior Secured Asset Based Loan | — | — | ||||||
Total | 494.4 | 494.1 | ||||||
Less: current maturities | — | — | ||||||
Total long-term debt | $ | 494.4 | $ | 494.1 | ||||
July 1, 2013 to June 30, 2014 | 106.938 | % | ||
July 1, 2014 to June 30, 2015 | 104.625 | % | ||
July 1, 2015 to June 30, 2016 | 102.313 | % | ||
July 1, 2016 and thereafter | 100.000 | % |
F-9
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Condensed Consolidating Statements of Operations
For Three Months Ended March 31, 2011
(In Millions)
Parent | Non- | |||||||||||||||||||
Issuer | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net revenue | $ | — | $ | 150.1 | $ | 58.4 | $ | — | $ | 208.5 | ||||||||||
Salaries and benefits | 3.1 | 68.4 | 22.4 | — | 93.9 | |||||||||||||||
Supplies | — | 19.8 | 10.7 | — | 30.5 | |||||||||||||||
Purchased services | 0.4 | 9.5 | 3.7 | — | 13.6 | |||||||||||||||
Other operating expenses | 0.6 | 21.9 | 5.9 | — | 28.4 | |||||||||||||||
Provision for bad debts | 0.8 | 12.8 | 4.4 | — | 18.0 | |||||||||||||||
Equity in (earnings) losses of affiliates | (3.6 | ) | — | — | 3.6 | — | ||||||||||||||
Loss on refinancing | — | — | — | — | — | |||||||||||||||
Management fees | (3.9 | ) | 2.9 | 1.0 | — | — | ||||||||||||||
Interest, net | 1.3 | 9.7 | 1.7 | — | 12.7 | |||||||||||||||
Depreciation and amortization | 0.1 | 7.4 | 2.1 | — | 9.6 | |||||||||||||||
(1.2 | ) | 152.4 | 51.9 | 3.6 | 206.7 | |||||||||||||||
Income (loss) from continuing operations before income taxes | 1.2 | (2.3 | ) | 6.5 | (3.6 | ) | 1.8 | |||||||||||||
Income taxes | 0.8 | 0.1 | — | — | 0.9 | |||||||||||||||
Income (loss) from continuing operations | 0.4 | (2.4 | ) | 6.5 | (3.6 | ) | 0.9 | |||||||||||||
Income (loss) from discontinued operations | — | — | 0.1 | — | 0.1 | |||||||||||||||
Net income (loss) | 0.4 | (2.4 | ) | 6.6 | (3.6 | ) | 1.0 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 0.6 | — | 0.6 | |||||||||||||||
Net income (loss) attributable to Capella Healthcare, Inc. | $ | 0.4 | $ | (2.4 | ) | $ | 6.0 | $ | (3.6 | ) | $ | $0.4 | ||||||||
F-11
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Condensed Consolidating Statements of Operations
For Three Months Ended March 31, 2010
(In Millions)
Parent | Non- | |||||||||||||||||||
Issuer | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net revenue | $ | — | $ | 153.7 | $ | 56.6 | $ | — | $ | 210.3 | ||||||||||
Salaries and benefits | 2.3 | 67.0 | 20.1 | — | 89.4 | |||||||||||||||
Supplies | — | 19.4 | 9.8 | — | 29.2 | |||||||||||||||
Purchased services | 0.3 | 9.4 | 3.4 | — | 13.1 | |||||||||||||||
Other operating expenses | 0.4 | 18.8 | 5.3 | — | 24.5 | |||||||||||||||
Provision for bad debts | — | 21.5 | 8.7 | — | 30.2 | |||||||||||||||
Equity in (earnings) losses of affiliates | (3.2 | ) | — | — | 3.2 | — | ||||||||||||||
Management fees | (3.4 | ) | 2.6 | 0.8 | — | — | ||||||||||||||
Interest, net | 1.1 | 8.5 | 2.0 | — | 11.6 | |||||||||||||||
Depreciation and amortization | — | 6.9 | 2.0 | — | 8.9 | |||||||||||||||
(2.5 | ) | 154.1 | 52.1 | 3.2 | 206.9 | |||||||||||||||
Income (loss) from continuing operations before income taxes | 2.5 | (0.4 | ) | 4.5 | (3.2 | ) | 3.4 | |||||||||||||
Income taxes | 0.4 | 0.2 | 0.2 | — | 0.8 | |||||||||||||||
Income (loss) from continuing operations | 2.1 | (0.6 | ) | 4.3 | (3.2 | ) | 2.6 | |||||||||||||
Income (loss) from discontinued operations | — | — | (0.1 | ) | — | (0.1 | ) | |||||||||||||
Net income (loss) | 2.1 | (0.6 | ) | 4.2 | (3.2 | ) | 2.5 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 0.4 | — | 0.4 | |||||||||||||||
Net income (loss) attributable to Capella Healthcare, Inc. | $ | 2.1 | $ | (0.6 | ) | $ | 3.8 | $ | (3.2 | ) | $ | 2.1 | ||||||||
F-12
Table of Contents
Condensed Consolidating Balance Sheets
March 31, 2011
(In Millions)
Non- | ||||||||||||||||||||
Parent Issuer | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 49.7 | $ | (1.9 | ) | $ | (2.1 | ) | $ | — | $ | 45.7 | ||||||||
Accounts receivable, net | (2.0 | ) | 86.7 | 37.0 | — | 121.7 | ||||||||||||||
Inventories | — | 16.6 | 8.6 | — | 25.2 | |||||||||||||||
Prepaid expenses and other current assets | 2.4 | 3.0 | 0.8 | — | 6.2 | |||||||||||||||
Other receivables | 1.2 | 2.2 | (0.3 | ) | — | 3.1 | ||||||||||||||
Deferred tax assets | 2.3 | — | — | — | 2.3 | |||||||||||||||
Income tax receivable | 0.1 | — | — | — | 0.1 | |||||||||||||||
53.7 | 106.6 | 44.0 | — | 204.3 | ||||||||||||||||
Property and equipment: | ||||||||||||||||||||
Land | — | 32.5 | 7.9 | — | 40.4 | |||||||||||||||
Buildings and improvements | 0.1 | 282.3 | 91.8 | — | 374.2 | |||||||||||||||
Equipment | 0.9 | 138.8 | 34.3 | — | 174.0 | |||||||||||||||
Construction in progress | 0.6 | 2.6 | 1.0 | — | 4.2 | |||||||||||||||
1.6 | 456.2 | 135.0 | — | 592.8 | ||||||||||||||||
Accumulated depreciation | (0.5 | ) | (115.6 | ) | (31.6 | ) | — | (147.7 | ) | |||||||||||
1.1 | 340.6 | 103.4 | — | 445.1 | ||||||||||||||||
Goodwill | 89.9 | — | — | — | 89.9 | |||||||||||||||
Intangible assets, net | — | 6.7 | 1.8 | — | 8.5 | |||||||||||||||
Investments in subsidiaries | 27.8 | — | — | (27.8 | ) | — | ||||||||||||||
Other assets, net | 16.3 | 0.9 | 0.5 | — | 17.7 | |||||||||||||||
$ | 326.7 | $ | 454.8 | $ | 149.7 | $ | (27.8 | ) | $ | 765.5 | ||||||||||
Liabilities and stockholder’s deficit | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | 0.4 | $ | 15.8 | $ | 7.2 | $ | — | $ | 23.4 | ||||||||||
Salaries and benefits payable | 1.0 | 18.6 | 7.7 | — | 27.3 | |||||||||||||||
Accrued interest | 11.7 | — | — | — | 11.7 | |||||||||||||||
Other accrued liabilities | 5.4 | 6.8 | 2.4 | — | 14.6 | |||||||||||||||
Current portion of long-term debt | — | — | — | — | — | |||||||||||||||
18.5 | 41.2 | 17.3 | — | 77.0 | ||||||||||||||||
Long-term debt | — | 389.1 | 105.3 | — | 494.4 | |||||||||||||||
Deferred income taxes | 12.2 | — | — | — | 12.2 | |||||||||||||||
Other liabilities | 13.6 | 0.4 | — | — | 14.0 | |||||||||||||||
Redeemable controlling interests | — | — | 5.5 | — | 5.5 | |||||||||||||||
Due to parent | 192.1 | 11.0 | 6.9 | — | 210.0 | |||||||||||||||
Total stockholder’s deficit | (47.6 | ) | 13.1 | 14.7 | (27.8 | ) | (47.6 | ) | ||||||||||||
$ | 326.7 | $ | 454.8 | $ | 149.7 | $ | (27.8 | ) | $ | 765.5 | ||||||||||
F-13
Table of Contents
Condensed Consolidating Balance Sheets
December 31, 2010
Non- | ||||||||||||||||||||
Parent Issuer | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 55.0 | $ | (4.6 | ) | $ | (2.1 | ) | $ | — | $ | 48.3 | ||||||||
Accounts receivable, net | (0.9 | ) | 84.1 | 32.4 | — | 115.6 | ||||||||||||||
Inventories | — | 16.6 | 8.6 | — | 25.2 | |||||||||||||||
Prepaid expenses and other current assets | 1.4 | 2.6 | 0.8 | — | 4.8 | |||||||||||||||
Other receivables | 0.4 | 1.8 | 0.1 | — | 2.3 | |||||||||||||||
Deferred tax assets | 3.5 | — | — | — | 3.5 | |||||||||||||||
Income tax receivable | 0.6 | — | — | — | 0.6 | |||||||||||||||
60.0 | 100.5 | 39.8 | — | 200.3 | ||||||||||||||||
Property and equipment: | ||||||||||||||||||||
Land | — | 32.5 | 8.2 | — | 40.7 | |||||||||||||||
Buildings and improvements | 0.1 | 281.9 | 91.7 | — | 373.7 | |||||||||||||||
Equipment | 0.8 | 136.0 | 33.2 | — | 170.0 | |||||||||||||||
Construction in progress | 0.6 | 3.3 | 0.8 | — | 4.7 | |||||||||||||||
1.5 | 453.7 | 133.9 | — | 589.1 | ||||||||||||||||
Accumulated depreciation | (0.4 | ) | (108.5 | ) | (29.5 | ) | — | (138.4 | ) | |||||||||||
1.1 | 345.2 | 104.4 | — | 450.7 | ||||||||||||||||
Goodwill | 89.9 | — | — | — | 89.9 | |||||||||||||||
Intangible assets, net | — | 7.2 | 1.9 | — | 9.1 | |||||||||||||||
Investments in subsidiaries | 24.3 | — | — | (24.3 | ) | — | ||||||||||||||
Other assets, net | 16.3 | 1.0 | 0.5 | — | 17.8 | |||||||||||||||
$ | 333.0 | $ | 453.9 | $ | 146.6 | $ | (24.3 | ) | $ | 767.8 | ||||||||||
Liabilities and stockholder’s deficit | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | 0.8 | $ | 14.6 | $ | 7.0 | $ | — | $ | 22.4 | ||||||||||
Salaries and benefits payable | 0.6 | 14.9 | 6.8 | — | 22.3 | |||||||||||||||
Accrued interest | 23.7 | — | — | — | 23.7 | |||||||||||||||
Other accrued liabilities | 4.4 | 6.3 | 2.0 | — | 12.7 | |||||||||||||||
Current portion of long-term debt | — | — | — | — | — | |||||||||||||||
29.5 | 35.8 | 15.8 | — | 81.1 | ||||||||||||||||
Long-term debt | — | 388.9 | 105.2 | — | 494.1 | |||||||||||||||
Deferred income taxes | 12.8 | — | — | — | 12.8 | |||||||||||||||
Other liabilities | 11.8 | 0.3 | — | — | 12.1 | |||||||||||||||
Redeemable controlling interests | — | — | 5.5 | — | 5.5 | |||||||||||||||
Due to parent | 185.5 | 13.5 | 11.2 | — | 210.2 | |||||||||||||||
Total stockholder’s deficit | (48.0 | ) | 15.4 | 8.9 | (24.3 | ) | (48.0 | ) | ||||||||||||
$ | 333.0 | $ | 453.9 | $ | 146.6 | $ | (24.3 | ) | $ | 767.8 | ||||||||||
F-14
Table of Contents
Condensed Consolidating Statements of Cash Flows
For Three Months Ended March 31, 2011
(In Millions)
Non- | ||||||||||||||||||||
Parent Issuer | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Operating activities: | ||||||||||||||||||||
Net income (loss) | $ | 0.4 | $ | (2.4 | ) | $ | 6.6 | $ | (3.6 | ) | $ | 1.0 | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Equity in earnings of affiliates | (3.6 | ) | — | — | 3.6 | — | ||||||||||||||
Depreciation and amortization | 0.1 | 7.4 | 2.1 | — | 9.6 | |||||||||||||||
Deferred income taxes | 0.6 | — | — | — | 0.6 | |||||||||||||||
Losses from mark to market swap valuation | — | — | — | — | — | |||||||||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | — | |||||||||||||||||||
Accounts receivable, net | 1.2 | (2.7 | ) | (4.6 | ) | — | (6.1 | ) | ||||||||||||
Inventories | — | — | — | — | — | |||||||||||||||
Prepaid expenses and other current assets | (1.3 | ) | (0.9 | ) | 0.4 | — | (1.8 | ) | ||||||||||||
Accounts payable and other current liabilities | 0.7 | 1.6 | 0.7 | — | 3.0 | |||||||||||||||
Accrued salaries | 0.4 | 3.7 | 0.9 | — | 5.0 | |||||||||||||||
Accrued interest | (12.0 | ) | — | — | — | (12.0 | ) | |||||||||||||
Other | 1.3 | — | — | — | 1.3 | |||||||||||||||
Net cash provided by (used in) operating activities | (12.2 | ) | 6.7 | 6.1 | — | 0.6 | ||||||||||||||
Investing activities: | ||||||||||||||||||||
Purchase of property and equipment, net | — | (2.9 | ) | (1.1 | ) | — | (4.0 | ) | ||||||||||||
Change in other assets | 0.6 | 0.8 | 0.1 | — | 1.5 | |||||||||||||||
Net cash provided by (used in) investing activities | 0.6 | (2.1 | ) | (1.0 | ) | — | (2.5 | ) | ||||||||||||
Financing activities: | ||||||||||||||||||||
Advances to (from) Parent | 6.3 | (1.9 | ) | (4.6 | ) | — | (0.2 | ) | ||||||||||||
Distributions to noncontrolling interests | — | — | (0.5 | ) | — | (0.5 | ) | |||||||||||||
Net cash provided by (used in) financing activities | 6.3 | (1.9 | ) | (5.1 | ) | — | (0.7 | ) | ||||||||||||
Change in cash and cash equivalents | (5.3 | ) | 2.7 | — | — | (2.6 | ) | |||||||||||||
Cash and cash equivalents at beginning of year | 55.0 | (4.6 | ) | (2.1 | ) | — | 48.3 | |||||||||||||
Cash and cash equivalents at end of year | $ | 49.7 | $ | (1.9 | ) | $ | (2.1 | ) | $ | — | $ | 45.7 | ||||||||
F-15
Table of Contents
Condensed Consolidating Statements of Cash Flows
For Three Months Ended March 31, 2010
(In Millions)
Non- | ||||||||||||||||||||
Parent Issuer | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Operating activities: | ||||||||||||||||||||
Net income (loss) | $ | 2.1 | $ | (0.6 | ) | $ | 4.2 | $ | (3.2 | ) | $ | 2.5 | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Equity in earnings of affiliates | (3.2 | ) | — | — | 3.2 | — | ||||||||||||||
Depreciation and amortization | — | 6.9 | 2.0 | — | 8.9 | |||||||||||||||
Deferred income taxes | 0.7 | — | — | — | 0.7 | |||||||||||||||
Losses from mark to market swap valuation | 0.2 | — | — | — | 0.2 | |||||||||||||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||||||||||||||
Accounts receivable, net | (0.1 | ) | (0.6 | ) | (6.3 | ) | — | (7.0 | ) | |||||||||||
Inventories | — | — | 0.1 | — | 0.1 | |||||||||||||||
Prepaid expenses and other current assets | 1.3 | (1.1 | ) | — | — | 0.2 | ||||||||||||||
Accounts payable and other current liabilities | 2.1 | 0.3 | 1.4 | — | 3.8 | |||||||||||||||
Accrued salaries | (0.1 | ) | (1.6 | ) | 0.1 | — | (1.6 | ) | ||||||||||||
Accrued interest | 0.1 | — | — | — | 0.1 | |||||||||||||||
Other | 1.5 | (0.2 | ) | — | — | 1.3 | ||||||||||||||
Net cash provided by operating activities | 4.6 | 3.1 | 1.5 | — | 9.2 | |||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchase of property and equipment, net | (0.2 | ) | (2.7 | ) | (1.0 | ) | — | (3.9 | ) | |||||||||||
Change in other assets | 1.2 | (0.9 | ) | (0.2 | ) | — | 0.1 | |||||||||||||
Net cash used in investing activities | 1.0 | (3.6 | ) | (1.2 | ) | — | (3.8 | ) | ||||||||||||
Net cash provided by financing activities: | ||||||||||||||||||||
Payment of debt and capital leases | — | (0.6 | ) | (0.2 | ) | — | (0.8 | ) | ||||||||||||
Advances to (from) Parent | (0.1 | ) | 1.8 | (0.7 | ) | — | 1.0 | |||||||||||||
Distributions to noncontrolling interests | — | — | (0.4 | ) | — | (0.4 | ) | |||||||||||||
Net cash provided by financing activities | (0.1 | ) | 1.2 | (1.3 | ) | — | (0.2 | ) | ||||||||||||
Change in cash and cash equivalents | 5.5 | 0.7 | (1.0 | ) | — | 5.2 | ||||||||||||||
Cash and cash equivalents at beginning of year | 25.6 | (4.3 | ) | (1.7 | ) | — | 19.6 | |||||||||||||
Cash and cash equivalents at end of year | $ | 31.1 | $ | (3.6 | ) | $ | (2.7 | ) | $ | — | $ | 24.8 | ||||||||
F-16
Table of Contents
Capella Healthcare, Inc.
March 30, 2011, except for Note 12, as to
which the date is June 27, 2011
F-17
Table of Contents
December 31, | ||||||||
2010 | 2009 | |||||||
(In Millions) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 48.3 | $ | 19.6 | ||||
Accounts receivable, net of allowance for doubtful accounts of $123.1 and $109.6 at December 31, 2010 and 2009, respectively | 115.6 | 121.9 | ||||||
Inventories | 25.2 | 23.7 | ||||||
Prepaid expenses and other current assets | 4.8 | 4.2 | ||||||
Other receivables | 2.3 | 3.1 | ||||||
Deferred tax assets | 3.5 | 4.3 | ||||||
Income tax receivable | 0.6 | 1.0 | ||||||
Total current assets | 200.3 | 177.8 | ||||||
Property and equipment: | ||||||||
Land | 40.7 | 39.1 | ||||||
Buildings and improvements | 373.7 | 373.0 | ||||||
Equipment | 170.0 | 139.7 | ||||||
Construction in progress (estimated cost to complete and equip after December 31, 2010 is $3.9) | 4.7 | 11.1 | ||||||
589.1 | 562.9 | |||||||
Accumulated depreciation | (138.4 | ) | (101.2 | ) | ||||
450.7 | 461.7 | |||||||
Goodwill | 89.9 | 89.0 | ||||||
Intangible assets, net | 9.1 | 8.6 | ||||||
Other assets, net | 17.8 | 19.2 | ||||||
Total assets | $ | 767.8 | $ | 756.3 | ||||
F-18
Table of Contents
December 31, | ||||||||
2010 | 2009 | |||||||
(In Millions) | ||||||||
Liabilities and stockholder’s deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 22.4 | $ | 25.9 | ||||
Salaries and benefits payable | 22.3 | 25.8 | ||||||
Accrued interest | 23.7 | — | ||||||
Other accrued liabilities | 12.7 | 16.5 | ||||||
Current portion of long-term debt | — | 12.3 | ||||||
Total current liabilities | 81.1 | 80.5 | ||||||
Long-term debt | 494.1 | 472.2 | ||||||
Deferred income taxes | 12.8 | 11.4 | ||||||
Other liabilities | 12.1 | 9.8 | ||||||
Redeemable noncontrolling interests | 5.5 | 5.1 | ||||||
Due to parent | 210.2 | 209.3 | ||||||
Stockholder’s deficit: | ||||||||
Common stock, $0.01 par value; 1,000 shares authorized; 100 shares issued and outstanding at December 31, 2010 and 2009, respectively | — | — | ||||||
Retained deficit | (48.0 | ) | (32.0 | ) | ||||
Total stockholder’s deficit | (48.0 | ) | (32.0 | ) | ||||
Total liabilities and stockholder’s deficit | $ | 767.8 | $ | 756.3 | ||||
F-19
Table of Contents
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In Millions) | ||||||||||||
Net revenue | $ | 869.5 | $ | 813.9 | $ | 702.4 | ||||||
Costs and expenses: | ||||||||||||
Salaries and benefits | 359.7 | 346.9 | 304.7 | |||||||||
Supplies | 119.6 | 109.7 | 96.8 | |||||||||
Purchased services | 52.6 | 50.4 | 45.3 | |||||||||
Other operating expenses | 105.7 | 99.9 | 92.5 | |||||||||
Provision for bad debts | 136.2 | 111.3 | 81.1 | |||||||||
Loss on refinancing | 20.8 | — | 22.4 | |||||||||
Management fee to related party | 0.2 | 0.2 | 0.2 | |||||||||
Interest, net | 48.4 | 48.5 | 50.4 | |||||||||
Depreciation and amortization | 37.1 | 37.8 | 33.7 | |||||||||
Total costs and expenses | 880.3 | 804.7 | 727.1 | |||||||||
Income (loss) from continuing operations before income taxes | (10.8 | ) | 9.2 | (24.7 | ) | |||||||
Income taxes | 3.2 | 2.2 | 5.5 | |||||||||
Income (loss) from continuing operations | (14.0 | ) | 7.0 | (30.2 | ) | |||||||
Loss from discontinued operations, net of tax benefit of $0 | (0.2 | ) | (4.5 | ) | (1.9 | ) | ||||||
Net income (loss) | (14.2 | ) | 2.5 | (32.1 | ) | |||||||
Less: Net income attributable to noncontrolling interests | 1.5 | 0.9 | 0.5 | |||||||||
Net income (loss) attributable to Capella Healthcare, Inc. | $ | (15.7 | ) | $ | 1.6 | $ | (32.6 | ) | ||||
F-20
Table of Contents
Total | ||||||||||||||||
Common Stock | Retained | Stockholder’s | ||||||||||||||
Shares | Amount | Deficit | Retained | |||||||||||||
(In Millions, Except Share Amounts) | ||||||||||||||||
Balance at January 1, 2008 | 100 | $ | — | $ | (0.7 | ) | $ | (0.7 | ) | |||||||
Adjustment to noncontrolling invests from adoption of updates to US GAAP | — | — | (0.5 | ) | (0.5 | ) | ||||||||||
Net loss | — | — | (32.6 | ) | (32.6 | ) | ||||||||||
Balance at December 31, 2008 | 100 | — | (33.8 | ) | (33.8 | ) | ||||||||||
Adjustment to redemption value of redeemable noncontrolling interests | — | — | 0.2 | 0.2 | ||||||||||||
Net income | — | — | 1.6 | 1.6 | ||||||||||||
Balance at December 31, 2009 | 100 | — | (32.0 | ) | (32.0 | ) | ||||||||||
Adjustment to redemption value of redeemable noncontrolling interests | — | — | (0.3 | ) | (0.3 | ) | ||||||||||
Net loss | — | — | (15.7 | ) | (15.7 | ) | ||||||||||
Balance at December 31, 2010 | 100 | $ | — | $ | (48.0 | ) | $ | (48.0 | ) | |||||||
F-21
Table of Contents
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In Millions) | ||||||||||||
Operating activities | ||||||||||||
Net income (loss) | $ | (14.2 | ) | $ | 2.5 | $ | (32.0 | ) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 37.1 | 37.8 | 33.7 | |||||||||
Loss on refinancing | 20.8 | — | 22.4 | |||||||||
Deferred income taxes | 2.3 | 2.5 | 4.5 | |||||||||
Stock-based compensation | 0.3 | 0.3 | 0.1 | |||||||||
(Gains) losses from mark to market swap valuation | (0.2 | ) | (1.7 | ) | 4.7 | |||||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||||||
Accounts receivable, net | 6.5 | (11.0 | ) | (1.8 | ) | |||||||
Inventories | (1.5 | ) | (0.5 | ) | 0.1 | |||||||
Prepaid expenses and other current assets | (0.4 | ) | (3.4 | ) | 0.4 | |||||||
Accounts payable and other current liabilities | (7.6 | ) | 7.8 | (0.8 | ) | |||||||
Accrued salaries | (3.4 | ) | 4.9 | 1.0 | ||||||||
Accrued interest | 23.7 | (0.3 | ) | 0.2 | ||||||||
Other | 2.5 | (3.3 | ) | 3.2 | ||||||||
Net cash provided by operating activities | 65.9 | 35.6 | 35.7 | |||||||||
Investing activities | ||||||||||||
Acquisition of healthcare businesses | — | — | (323.0 | ) | ||||||||
Escrow deposit payments for pending acquisitions | — | — | 5.0 | |||||||||
Purchases of property and equipment, net | (26.1 | ) | (22.1 | ) | (19.8 | ) | ||||||
Proceeds from disposition of hospital | — | 3.5 | — | |||||||||
Change in other assets | 2.3 | 2.3 | 0.7 | |||||||||
Net cash used in investing activities | (23.8 | ) | (16.3 | ) | (337.1 | ) | ||||||
Financing activities | ||||||||||||
Proceeds from long-term debt | 493.7 | — | 501.5 | |||||||||
Payment of debt and capital leases | (484.5 | ) | (3.2 | ) | (256.2 | ) | ||||||
Advances (to) from Parent | 0.5 | (3.1 | ) | 102.9 | ||||||||
Payment of debt issue costs | (21.7 | ) | — | (40.5 | ) | |||||||
Payments on subscription notes receivable | — | — | 0.3 | |||||||||
Distributions to noncontrolling interests | (1.4 | ) | (0.3 | ) | (0.2 | ) | ||||||
Proceeds from noncontrolling interests | — | 0.5 | — | |||||||||
Net cash provided by (used in) financing activities | (13.4 | ) | (6.1 | ) | 307.8 | |||||||
Change in cash and cash equivalents | 28.7 | 13.2 | 6.4 | |||||||||
Cash and cash equivalents at beginning of year | 19.6 | 6.4 | — | |||||||||
Cash and cash equivalents at end of year | $ | 48.3 | $ | 19.6 | $ | 6.4 | ||||||
Supplemental disclosure of cash flow information | ||||||||||||
Cash paid for interest | $ | 21.2 | $ | 46.7 | $ | 43.1 | ||||||
Cash paid (received) for taxes | $ | (1.1 | ) | $ | 0.6 | $ | 1.2 | |||||
F-22
Table of Contents
F-23
Table of Contents
F-24
Table of Contents
Additions | Accounts | |||||||||||||||||||
Balances at | Charged to | Written Off, | Allowances | |||||||||||||||||
Beginning of | Costs and | Net of | Acquired in | Balances at | ||||||||||||||||
Year | Expenses | Recoveries | Acquisition | End of Year | ||||||||||||||||
Year ended December 31, 2010 | $ | 109.6 | $ | 136.2 | $ | (122.7 | ) | $ | — | $ | 123.1 | |||||||||
Year ended December 31, 2009 | $ | 98.8 | $ | 111.3 | $ | (100.5 | ) | $ | — | $ | 109.6 | |||||||||
Year ended December 31, 2008 | $ | 35.6 | $ | 81.1 | $ | (56.9 | ) | $ | 39.0 | $ | 98.8 |
F-25
Table of Contents
F-26
Table of Contents
F-27
Table of Contents
F-28
Table of Contents
Facility Name | Location | Licensed Beds | ||||
Hartselle Medical Center | Hartselle, AL | 150 | ||||
Jacksonville Medical Center | Jacksonville, AL | 89 | ||||
Parkway Medical Center | Decatur, AL | 120 | ||||
Woodland Medical Center | Cullman, AL | 100 | ||||
National Park Medical Center | Hot Springs, AR | 166 | ||||
St. Mary’s Regional Medical Center | Russellville, AR | 170 | ||||
Mineral Area Regional Medical Center | Farmington, MO | 135 | ||||
White County Community Hospital | Sparta, TN | 60 | ||||
Willamette Valley Medical Center | McMinnville, OR | 88 |
F-29
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Fair value of assets acquired: | ||||
Accounts receivable, net | $ | 54.9 | ||
Inventories | 12.1 | |||
Prepaid expenses and other current assets | 3.4 | |||
Property and equipment | 249.8 | |||
Goodwill | 23.4 | |||
Other assets | 1.4 | |||
Liabilities assumed: | ||||
Accounts payable | 10.3 | |||
Accrued salaries | 10.2 | |||
Accrued expenses and other current liabilities | 0.4 | |||
Capital lease obligations | 0.2 | |||
Other liabilities | 1.7 | |||
Net cash paid | $ | 322.2 | ||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Net revenues | $ | — | $ | 11.6 | $ | 11.1 | ||||||
Loss from operations before income taxes | $ | 0.2 | $ | 4.5 | $ | 1.9 | ||||||
Loss from discontinued operations, net of tax | $ | 0.2 | $ | 4.5 | $ | 1.9 | ||||||
F-30
Table of Contents
Gross | ||||||||||||||||
Carrying | Accumulated | Net | ||||||||||||||
Class of Intangible Assets | Amount | Amortization | Total | |||||||||||||
Amortized intangible assets: | ||||||||||||||||
Contract-based physician minimum revenue guarantees: | ||||||||||||||||
2010 | $ | 15.9 | $ | (7.4 | ) | $ | 8.5 | |||||||||
2009 | $ | 13.7 | $ | (5.5 | ) | $ | 8.2 | |||||||||
Indefinite-lived intangible assets: | ||||||||||||||||
Certificates of need | ||||||||||||||||
2010 | $ | 0.6 | $ | — | $ | 0.6 | ||||||||||
2009 | $ | 0.4 | $ | — | $ | 0.4 | ||||||||||
Total intangible assets: | ||||||||||||||||
2010 | $ | 16.5 | $ | (7.4 | ) | $ | 9.1 | |||||||||
2009 | $ | 14.1 | $ | (5.5 | ) | $ | 8.6 |
F-31
Table of Contents
2011 | $ | 4.1 | ||
2012 | 2.8 | |||
2013 | 1.3 | |||
2014 | 0.3 | |||
2015 | — | |||
Thereafter | — | |||
$ | 8.5 | |||
2010 | 2009 | |||||||||||
9.25% Senior Unsecured Notes | $ | 500.0 | $ | — | ||||||||
Unamortized discount on 9.25% Senior Unsecured Notes | (5.9 | ) | — | |||||||||
Senior Secured Asset Based Loan | — | — | ||||||||||
Term loans payable under credit facility due 2016 | — | 484.5 | ||||||||||
Revolving Loans | — | — | ||||||||||
Total | $ | 494.1 | $ | 484.5 | ||||||||
Less current maturities | — | (12.3 | ) | |||||||||
Total long-term debt | $ | 494.1 | $ | 472.2 | ||||||||
2011 | $ | — | ||
2012 | — | |||
2013 | — | |||
2014 | — | |||
2015 | — | |||
Thereafter | 500.0 | |||
$ | 500.0 | |||
F-32
Table of Contents
July 1, 2013 to June 30, 2014 | 106.938 | % | ||
July 1, 2014 to June 30, 2015 | 104.625 | % | ||
July 1, 2015 to June 30, 2016 | 102.313 | % | ||
July 1, 2016 and thereafter | 100.000 | % |
F-33
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F-34
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Current: | ||||||||||||
Federal | $ | — | $ | (0.3 | ) | $ | 0.4 | |||||
State | 0.9 | 0.1 | 0.6 | |||||||||
Total current | 0.9 | (0.2 | ) | 1.0 | ||||||||
Deferred: | ||||||||||||
Federal | (3.4 | ) | 3.9 | (8.6 | ) | |||||||
State | (1.5 | ) | (1.0 | ) | (2.1 | ) | ||||||
Total deferred | (4.9 | ) | 2.9 | (10.7 | ) | |||||||
Increase (decrease) in valuation allowance | 7.2 | (0.5 | ) | 15.2 | ||||||||
Total | $ | 3.2 | $ | 2.2 | $ | 5.5 | ||||||
F-35
Table of Contents
2010 | 2009 | 2008 | ||||||||||||||||||||||
Federal statutory rate | $ | (3.6 | ) | 34 | % | $ | 3.1 | 34 | % | $ | (8.4 | ) | 34 | % | ||||||||||
State income taxes, net of federal income tax benefits | (0.4 | ) | 4 | (0.6 | ) | (6 | ) | (1.0 | ) | 4 | ||||||||||||||
Non-deductible expense | — | — | — | — | 0.3 | (1 | ) | |||||||||||||||||
Employment tax credits | 0.4 | (4 | ) | 0.3 | 3 | — | — | |||||||||||||||||
AMT tax credit | — | — | — | — | (0.4 | ) | 1 | |||||||||||||||||
Effect of actualization of prior year tax return to prior year tax provision | 0.1 | (1 | ) | 0.1 | 1 | — | — | |||||||||||||||||
Noncontrolling interests | (0.5 | ) | 5 | (0.3 | ) | (3 | ) | (0.2 | ) | 1 | ||||||||||||||
Valuation allowance | 7.2 | (67 | ) | (0.4 | ) | (5 | ) | 15.2 | (61 | ) | ||||||||||||||
Effective income tax rate | $ | 3.2 | (29 | )% | $ | 2.2 | 24 | % | $ | 5.5 | (22 | )% | ||||||||||||
2010 | 2009 | |||||||
Deferred income tax liabilities: | ||||||||
Depreciation and amortization | $ | 25.2 | $ | 19.4 | ||||
Joint ventures | 2.8 | 0.9 | ||||||
Physician income guarantees | 0.4 | 0.6 | ||||||
Other | 0.7 | 0.3 | ||||||
Total deferred tax liabilities | 29.1 | 21.2 | ||||||
Deferred income tax assets: | ||||||||
Deferred loan costs | — | 4.5 | ||||||
Organization costs | 0.5 | 0.5 | ||||||
Professional liability claims | 3.8 | 3.1 | ||||||
Accrued paid time off | 3.0 | 2.8 | ||||||
Employee medical claims | 1.1 | 1.1 | ||||||
Net operating losses | 32.4 | 11.4 | ||||||
AMT credit | 0.1 | 0.1 | ||||||
Employment credit | 2.5 | — | ||||||
Accrued expenses | 1.8 | 3.3 | ||||||
Charitable contributions | 0.6 | 0.5 | ||||||
Provision for doubtful accounts | 4.5 | 4.0 | ||||||
Other | — | 0.4 | ||||||
Total deferred income tax assets | 50.3 | 31.7 | ||||||
Valuation allowance | (30.5 | ) | (17.6 | ) | ||||
Net deferred income tax assets | 19.8 | 14.1 | ||||||
Net deferred income tax liabilities | $ | (9.3 | ) | $ | (7.1 | ) | ||
F-36
Table of Contents
Fiscal year: | ||||
2011 | $ | 7.9 | ||
2012 | 6.8 | |||
2013 | 5.5 | |||
2014 | 4.2 | |||
2015 | 3.3 | |||
Thereafter | 4.2 | |||
Total minimum lease commitments | $ | 31.9 | ||
F-37
Table of Contents
Condensed Consolidating Statements of Operations
For the Year Ended December 31, 2010
(In Millions)
Parent | Non- | |||||||||||||||||||
Issuer | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net revenue | $ | — | $ | 643.2 | $ | 226.3 | $ | — | $ | 869.5 | ||||||||||
Salaries and benefits | 4.7 | 271.9 | 83.1 | — | 359.7 | |||||||||||||||
Supplies | 0.1 | 78.5 | 41.0 | — | 119.6 | |||||||||||||||
Purchased services | 1.4 | 37.2 | 14.0 | — | 52.6 | |||||||||||||||
Other operating expenses | 2.0 | 82.7 | 21.0 | — | 105.7 | |||||||||||||||
Provision for bad debts | 1.5 | 102.1 | 32.6 | — | 136.2 | |||||||||||||||
Equity in (earnings) losses of affiliates | (11.3 | ) | — | — | 11.3 | — | ||||||||||||||
Loss on refinancing | 20.8 | — | — | — | 20.8 | |||||||||||||||
Management fees | (9.3 | ) | 7.1 | 2.4 | — | 0.2 | ||||||||||||||
Interest, net | 3.8 | 36.8 | 7.8 | — | 48.4 | |||||||||||||||
Depreciation and amortization | 0.1 | 28.7 | 8.3 | — | 37.1 | |||||||||||||||
Total costs and expenses | 13.8 | 645.0 | 210.2 | 11.3 | 880.3 | |||||||||||||||
Income (loss) from continuing operations before income taxes | (13.8 | ) | (1.8 | ) | 16.1 | (11.3 | ) | (10.8 | ) | |||||||||||
Income taxes | 1.9 | 0.9 | 0.4 | — | 3.2 | |||||||||||||||
Income (loss) from continuing operations | (15.7 | ) | (2.7 | ) | 15.7 | (11.3 | ) | (14.0 | ) | |||||||||||
Loss from discontinued operations | — | — | (0.2 | ) | — | (0.2 | ) | |||||||||||||
Net income (loss) | (15.7 | ) | (2.7 | ) | 15.5 | (11.3 | ) | (14.2 | ) | |||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 1.5 | — | 1.5 | |||||||||||||||
Net income (loss) attributable to Capella Healthcare, Inc. | $ | (15.7 | ) | $ | (2.7 | ) | $ | 14.0 | $ | (11.3 | ) | $ | (15.7 | ) | ||||||
F-38
Table of Contents
Condensed Consolidating Statements of Operations
For the Year Ended December 31, 2009
(In Millions)
Parent | Non- | |||||||||||||||||||
Issuer | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net revenue | $ | — | $ | 616.0 | $ | 197.9 | $ | — | $ | 813.9 | ||||||||||
Salaries and benefits | 12.0 | 257.1 | 77.8 | — | 346.9 | |||||||||||||||
Supplies | — | 74.4 | 35.3 | — | 109.7 | |||||||||||||||
Purchased services | 1.0 | 37.2 | 12.2 | — | 50.4 | |||||||||||||||
Other operating expenses | 2.2 | 76.9 | 20.8 | — | 99.9 | |||||||||||||||
Provision for bad debts | — | 86.4 | 24.9 | — | 111.3 | |||||||||||||||
Equity in (earnings) losses of affiliates | (8.7 | ) | — | — | 8.7 | — | ||||||||||||||
Management fees | (11.6 | ) | 8.6 | 3.2 | — | 0.2 | ||||||||||||||
Interest, net | 2.1 | 37.0 | 9.4 | — | 48.5 | |||||||||||||||
Depreciation and amortization | 0.1 | 28.7 | 9.0 | — | 37.8 | |||||||||||||||
Total costs and expenses | (2.9 | ) | 606.3 | 192.6 | 8.7 | 804.7 | ||||||||||||||
Income (loss) from continuing operations before income taxes | 2.9 | 9.7 | 5.3 | (8.7 | ) | 9.2 | ||||||||||||||
Income taxes | 1.3 | 0.7 | 0.2 | — | 2.2 | |||||||||||||||
Income (loss) from continuing operations | 1.6 | 9.0 | 5.1 | (8.7 | ) | 7.0 | ||||||||||||||
Loss from discontinued operations | — | — | (4.5 | ) | — | (4.5 | ) | |||||||||||||
Net income (loss) | 1.6 | 9.0 | 0.6 | (8.7 | ) | 2.5 | ||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 0.9 | — | 0.9 | |||||||||||||||
Net income (loss) attributable to Capella Healthcare, Inc. | $ | 1.6 | $ | 9.0 | $ | (0.3 | ) | $ | (8.7 | ) | $ | 1.6 | ||||||||
F-39
Table of Contents
Condensed Consolidating Statements of Operations
For the Year Ended December 31, 2008
(In Millions)
Parent | Non- | |||||||||||||||||||
Issuer | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net revenue | $ | — | $ | 539.6 | $ | 162.8 | $ | — | $ | 702.4 | ||||||||||
Salaries and benefits | 5.8 | 231.7 | 67.2 | — | 304.7 | |||||||||||||||
Supplies | 0.1 | 67.7 | 29.0 | — | 96.8 | |||||||||||||||
Other operating expenses | 2.4 | 105.9 | 29.5 | — | 137.8 | |||||||||||||||
Provision for bad debts | — | 62.4 | 18.7 | — | 81.1 | |||||||||||||||
Equity in (earnings) losses of affiliates | (1.8 | ) | — | — | 1.8 | — | ||||||||||||||
Loss on refinancing | 22.4 | — | — | — | 22.4 | |||||||||||||||
Management fees | (8.8 | ) | 6.8 | 2.2 | — | 0.2 | ||||||||||||||
Interest, net | 7.0 | 33.9 | 9.5 | — | 50.4 | |||||||||||||||
Depreciation and amortization | 0.1 | 26.0 | 7.6 | — | 33.7 | |||||||||||||||
Total costs and expenses | 27.2 | 534.4 | 163.7 | 1.8 | 727.1 | |||||||||||||||
Income (loss) from continuing operations before income taxes | (27.2 | ) | 5.2 | (0.9 | ) | (1.8 | ) | (24.7 | ) | |||||||||||
Income taxes | 5.4 | 0.1 | — | — | 5.5 | |||||||||||||||
Income (loss) from continuing operations | (32.6 | ) | 5.1 | (0.9 | ) | (1.8 | ) | (30.2 | ) | |||||||||||
Loss from discontinued operations | — | — | (1.9 | ) | — | (1.9 | ) | |||||||||||||
Net income (loss) | (32.6 | ) | 5.1 | (2.8 | ) | (1.8 | ) | (32.1 | ) | |||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 0.5 | — | 0.5 | |||||||||||||||
Net income (loss) attributable to Capella Healthcare, Inc. | $ | (32.6 | ) | $ | 5.1 | $ | (3.3 | ) | $ | (1.8 | ) | $ | (32.6 | ) | ||||||
F-40
Table of Contents
Condensed Consolidating Balance Sheets
December 31, 2010
(In Millions)
Non- | ||||||||||||||||||||
Parent Issuer | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 55.0 | $ | (4.6 | ) | $ | (2.1 | ) | $ | — | $ | 48.3 | ||||||||
Accounts receivable, net | (0.9 | ) | 84.1 | 32.4 | — | 115.6 | ||||||||||||||
Inventories | — | 16.6 | 8.6 | — | 25.2 | |||||||||||||||
Prepaid expenses and other current assets | 1.4 | 2.6 | 0.8 | — | 4.8 | |||||||||||||||
Other receivables | 0.4 | 1.8 | 0.1 | — | 2.3 | |||||||||||||||
Deferred tax assets | 3.5 | — | — | — | 3.5 | |||||||||||||||
Income tax receivable | 0.6 | — | — | — | 0.6 | |||||||||||||||
60.0 | 100.5 | 39.8 | — | 200.3 | ||||||||||||||||
Property and equipment: | ||||||||||||||||||||
Land | — | 32.5 | 8.2 | — | 40.7 | |||||||||||||||
Buildings and improvements | 0.1 | 281.9 | 91.7 | — | 373.7 | |||||||||||||||
Equipment | 0.8 | 136.0 | 33.2 | — | 170.0 | |||||||||||||||
Construction in progress | 0.6 | 3.3 | 0.8 | — | 4.7 | |||||||||||||||
1.5 | 453.7 | 133.9 | — | 589.1 | ||||||||||||||||
Accumulated depreciation | (0.4 | ) | (108.5 | ) | (29.5 | ) | — | (138.4 | ) | |||||||||||
1.1 | 345.2 | 104.4 | — | 450.7 | ||||||||||||||||
Goodwill | 89.9 | — | — | — | 89.9 | |||||||||||||||
Intangible assets, net | — | 7.2 | 1.9 | — | 9.1 | |||||||||||||||
Investments in subsidiaries | 24.3 | — | — | (24.3 | ) | — | ||||||||||||||
Other assets, net | 16.3 | 1.0 | 0.5 | — | 17.8 | |||||||||||||||
$ | 333.0 | $ | 453.9 | $ | 146.6 | $ | (24.3 | ) | $ | 767.8 | ||||||||||
Liabilities and stockholder’s deficit | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | 0.8 | $ | 14.6 | $ | 7.0 | $ | — | $ | 22.4 | ||||||||||
Salaries and benefits payable | 0.6 | 14.9 | 6.8 | — | 22.3 | |||||||||||||||
Accrued interest | 23.7 | — | — | — | 23.7 | |||||||||||||||
Other accrued liabilities | 4.4 | 6.3 | 2.0 | — | 12.7 | |||||||||||||||
Current portion of long-term debt | — | — | — | — | — | |||||||||||||||
29.5 | 35.8 | 15.8 | — | 81.1 | ||||||||||||||||
Long-term debt | — | 388.9 | 105.2 | — | 494.1 | |||||||||||||||
Deferred income taxes | 12.8 | — | — | — | 12.8 | |||||||||||||||
Other liabilities | 11.8 | 0.3 | — | — | 12.1 | |||||||||||||||
Redeemable controlling interests | — | — | 5.5 | — | 5.5 | |||||||||||||||
Due to parent | 185.5 | 13.5 | 11.2 | — | 210.2 | |||||||||||||||
Total stockholder’s deficit | (48.0 | ) | 15.4 | 8.9 | (24.3 | ) | (48.0 | ) | ||||||||||||
$ | 333.0 | $ | 453.9 | $ | 146.6 | $ | (24.3 | ) | $ | 767.8 | ||||||||||
F-41
Table of Contents
Condensed Consolidating Balance Sheets
December 31, 2009
(In Millions)
Parent Issuer | Guarantors | Non- Guarantors | Eliminations | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 25.6 | $ | (4.3 | ) | $ | (1.7 | ) | $ | — | $ | 19.6 | ||||||||
Accounts receivable, net | 0.1 | 91.3 | 30.5 | — | 121.9 | |||||||||||||||
Inventories | — | 16.3 | 7.4 | — | 23.7 | |||||||||||||||
Prepaid expenses and other current assets | 1.0 | 2.7 | 0.5 | — | 4.2 | |||||||||||||||
Other receivables | 0.3 | 2.5 | 0.3 | — | 3.1 | |||||||||||||||
Deferred tax assets | 4.3 | — | — | — | 4.3 | |||||||||||||||
Income tax receivable | 1.0 | — | — | — | 1.0 | |||||||||||||||
32.3 | 108.5 | 37.0 | — | 177.8 | ||||||||||||||||
Property and equipment: | ||||||||||||||||||||
Land | — | 29.9 | 9.2 | — | 39.1 | |||||||||||||||
Buildings and improvements | — | 281.7 | 91.3 | — | 373.0 | |||||||||||||||
Equipment | 0.7 | 111.6 | 27.4 | — | 139.7 | |||||||||||||||
Construction in progress | 0.3 | 8.8 | 2.0 | — | 11.1 | |||||||||||||||
1.0 | 432.0 | 129.9 | — | 562.9 | ||||||||||||||||
Accumulated depreciation | (0.3 | ) | (79.7 | ) | (21.2 | ) | — | (101.2 | ) | |||||||||||
0.7 | 352.3 | 108.7 | — | 461.7 | ||||||||||||||||
Goodwill | 89.0 | — | — | — | 89.0 | |||||||||||||||
Intangible assets, net | — | 7.0 | 1.6 | — | 8.6 | |||||||||||||||
Investments in subsidiaries | 13.0 | — | (13.0 | ) | — | |||||||||||||||
Other assets, net | 18.3 | 0.3 | 0.6 | — | 19.2 | |||||||||||||||
$ | 304.9 | $ | 468.1 | $ | 147.9 | $ | (13.0 | ) | $ | 756.3 | ||||||||||
Liabilities and stockholder’s deficit | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | 1.2 | $ | 18.1 | $ | 6.6 | $ | — | $ | 25.9 | ||||||||||
Salaries and benefits payable | 4.3 | 16.3 | 5.2 | — | 25.8 | |||||||||||||||
Accrued interest | — | — | — | — | — | |||||||||||||||
Other accrued liabilities | 6.3 | 8.3 | 1.9 | — | 16.5 | |||||||||||||||
Current portion of long-term debt | — | 9.5 | 2.8 | — | 12.3 | |||||||||||||||
11.8 | 52.2 | 16.5 | — | 80.5 | ||||||||||||||||
Long-term debt | — | 361.4 | 110.8 | — | 472.2 | |||||||||||||||
Deferred income taxes | 11.4 | — | — | — | 11.4 | |||||||||||||||
Other liabilities | 9.2 | 0.5 | 0.1 | — | 9.8 | |||||||||||||||
Redeemable noncontrolling interests | — | — | 5.1 | — | 5.1 | |||||||||||||||
Due to parent | 152.9 | 35.9 | 20.5 | — | 209.3 | |||||||||||||||
Total stockholder’s deficit | (32.0 | ) | 18.1 | (5.1 | ) | (13.0 | ) | (32.0 | ) | |||||||||||
$ | 304.9 | $ | 468.1 | $ | 147.9 | $ | (13.0 | ) | $ | 756.3 | ||||||||||
F-42
Table of Contents
For the Year Ended December 31, 2010
(In Millions)
Non- | ||||||||||||||||||||
Parent Issuer | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Operating activities: | ||||||||||||||||||||
Net income (loss) | $ | (15.7 | ) | $ | (2.7 | ) | $ | 15.5 | $ | (11.3 | ) | $ | (14.2 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Equity in earnings of affiliates | (11.3 | ) | — | — | 11.3 | — | ||||||||||||||
Depreciation and amortization | 0.1 | 28.7 | 8.3 | — | 37.1 | |||||||||||||||
Loss on refinancing | 20.8 | — | — | — | 20.8 | |||||||||||||||
Deferred income taxes | 2.3 | — | — | — | 2.3 | |||||||||||||||
Stock-based compensation | 0.3 | — | — | — | 0.3 | |||||||||||||||
Gains from mark to market swap valuation | (0.2 | ) | — | — | — | (0.2 | ) | |||||||||||||
Changes in operating assets and liabilities, net of effect of acquisitions: | — | |||||||||||||||||||
Accounts receivable, net | 1.2 | 7.3 | (2.0 | ) | — | 6.5 | ||||||||||||||
Inventories | — | (0.3 | ) | (1.2 | ) | — | (1.5 | ) | ||||||||||||
Prepaid expenses and other current assets | (1.2 | ) | 0.9 | (0.1 | ) | — | (0.4 | ) | ||||||||||||
Accounts payable and other current liabilities | (2.7 | ) | (5.5 | ) | 0.6 | — | (7.6 | ) | ||||||||||||
Accrued salaries | (3.7 | ) | (1.3 | ) | 1.6 | — | (3.4 | ) | ||||||||||||
Accrued interest | 23.7 | — | — | — | 23.7 | |||||||||||||||
Other | 2.8 | (0.3 | ) | — | — | 2.5 | ||||||||||||||
Net cash provided by operating activities | 16.4 | 26.8 | 22.7 | — | 65.9 | |||||||||||||||
Investing activities: | ||||||||||||||||||||
Purchase of property and equipment, net | (0.5 | ) | (21.6 | ) | (4.0 | ) | — | (26.1 | ) | |||||||||||
Change in other assets | 3.1 | (0.6 | ) | (0.2 | ) | — | 2.3 | |||||||||||||
Net cash provided by (used in) investing activities | 2.6 | (22.2 | ) | (4.2 | ) | — | (23.8 | ) | ||||||||||||
Financing activities: | ||||||||||||||||||||
Proceeds from long-term debt | — | 388.6 | 105.1 | — | 493.7 | |||||||||||||||
Payment of debt and capital leases | — | (370.9 | ) | (113.6 | ) | — | (484.5 | ) | ||||||||||||
Advances to (from) Parent | 32.1 | (22.6 | ) | (9.0 | ) | — | 0.5 | |||||||||||||
Payment of debt issue costs | (21.7 | ) | — | — | — | (21.7 | ) | |||||||||||||
Distributions to noncontrolling interests | — | — | (1.4 | ) | — | (1.4 | ) | |||||||||||||
Net cash provided by (used in) financing activities | 10.4 | (4.9 | ) | (18.9 | ) | — | (13.4 | ) | ||||||||||||
Change in cash and cash equivalents | 29.4 | (0.3 | ) | (0.4 | ) | — | 28.7 | |||||||||||||
Cash and cash equivalents at beginning of year | 25.6 | (4.3 | ) | (1.7 | ) | — | 19.6 | |||||||||||||
Cash and cash equivalents at end of year | $ | 55.0 | $ | (4.6 | ) | $ | (2.1 | ) | $ | — | $ | 48.3 | ||||||||
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Condensed Consolidating Statements of Cash Flows
For the Year Ended December 31, 2009
(In Millions)
Non- | ||||||||||||||||||||
Parent Issuer | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Operating activities: | ||||||||||||||||||||
Net income (loss) | $ | 1.5 | $ | 9.1 | $ | 0.6 | $ | (8.7 | ) | $ | 2.5 | |||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Equity in earnings of affiliates | (8.7 | ) | — | — | 8.7 | — | ||||||||||||||
Depreciation and amortization | 0.1 | 28.7 | 9.0 | — | 37.8 | |||||||||||||||
Deferred income taxes | 2.5 | — | — | — | 2.5 | |||||||||||||||
Stock-based compensation | 0.3 | — | — | — | 0.3 | |||||||||||||||
Gains from mark to market swap valuation | (1.7 | ) | — | — | — | (1.7 | ) | |||||||||||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||||||||||||||
Accounts receivable, net | (0.1 | ) | (7.7 | ) | (3.2 | ) | — | (11.0 | ) | |||||||||||
Inventories | — | (0.9 | ) | 0.4 | — | (0.5 | ) | |||||||||||||
Prepaid expenses and other current assets | (1.6 | ) | (1.8 | ) | — | — | (3.4 | ) | ||||||||||||
Accounts payable and other current liabilities | 2.7 | 3.8 | 1.3 | — | 7.8 | |||||||||||||||
Accrued salaries | 3.7 | 1.6 | (0.4 | ) | — | 4.9 | ||||||||||||||
Accrued interest | (0.3 | ) | — | — | — | (0.3 | ) | |||||||||||||
Other | (3.5 | ) | 0.2 | — | — | (3.3 | ) | |||||||||||||
Net cash provided by (used in) operating activities | (5.0 | ) | 33.0 | 7.6 | — | 35.6 | ||||||||||||||
Investing activities: | ||||||||||||||||||||
Purchase of property and equipment, net | (0.6 | ) | (15.8 | ) | (5.7 | ) | — | (22.1 | ) | |||||||||||
Proceeds from disposition of hospital | — | — | 3.5 | — | 3.5 | |||||||||||||||
Change in other assets | 3.4 | (1.0 | ) | (0.1 | ) | — | 2.3 | |||||||||||||
Net cash provided by (used in) investing activities | 2.8 | (16.8 | ) | (2.3 | ) | — | (16.3 | ) | ||||||||||||
Financing activities: | ||||||||||||||||||||
Payment of debt and capital leases | — | (2.4 | ) | (0.8 | ) | — | (3.2 | ) | ||||||||||||
Advances to (from) Parent | 14.1 | (12.3 | ) | (4.9 | ) | — | (3.1 | ) | ||||||||||||
Distributions to noncontrolling interests | — | — | (0.3 | ) | — | (0.3 | ) | |||||||||||||
Proceeds from noncontrolling interests | — | — | 0.5 | — | 0.5 | |||||||||||||||
Net cash provided by (used in) financing activities | 14.1 | (14.7 | ) | (5.5 | ) | — | (6.1 | ) | ||||||||||||
Change in cash and cash equivalents | 11.9 | 1.5 | (0.2 | ) | — | 13.2 | ||||||||||||||
Cash and cash equivalents at beginning of year | 14.0 | (5.8 | ) | (1.8 | ) | — | 6.4 | |||||||||||||
Cash and cash equivalents at end of year | $ | 25.9 | $ | (4.3 | ) | $ | (2.0 | ) | $ | — | $ | 19.6 | ||||||||
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Condensed Consolidating Statements of Cash Flows
For the Year Ended December 31, 2008
(In Millions)
Non- | ||||||||||||||||||||
Parent Issuer | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Operating activities: | ||||||||||||||||||||
Net income (loss) | $ | (32.6 | ) | $ | 5.1 | $ | (2.8 | ) | $ | (1.8 | ) | $ | (32.1 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Equity in earnings of affiliates | (1.8 | ) | — | — | 1.8 | — | ||||||||||||||
Depreciation and amortization | — | 26.1 | 7.6 | — | 33.7 | |||||||||||||||
Loss on refinancing | 22.4 | — | — | — | 22.4 | |||||||||||||||
Deferred income taxes | 4.5 | — | 4.5 | |||||||||||||||||
Stock-based compensation | 0.1 | — | — | — | 0.1 | |||||||||||||||
Losses from mark to market swap valuation | 4.7 | — | — | — | 4.7 | |||||||||||||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||||||||||||||
Accounts receivable, net | (0.3 | ) | 0.3 | (1.8 | ) | — | (1.8 | ) | ||||||||||||
Inventories | — | 0.1 | — | — | 0.1 | |||||||||||||||
Prepaid expenses and other current assets | (0.2 | ) | 0.5 | 0.1 | — | 0.4 | ||||||||||||||
Accounts payable and other current liabilities | (1.0 | ) | (1.0 | ) | 1.2 | — | (0.8 | ) | ||||||||||||
Accrued salaries | — | 0.2 | 0.8 | — | 1.0 | |||||||||||||||
Accrued interest | 0.2 | — | — | — | 0.2 | |||||||||||||||
Other | 3.1 | 0.1 | — | — | 3.2 | |||||||||||||||
Net cash provided by (used in) operating activities | (0.9 | ) | 31.4 | 5.2 | — | 35.7 | ||||||||||||||
Investing activities: | ||||||||||||||||||||
Acquisition of healthcare businesses | (22.0 | ) | (224.4 | ) | (76.6 | ) | — | (323.0 | ) | |||||||||||
Escrow deposit payments for pending acquisitions | 5.0 | — | — | — | 5.0 | |||||||||||||||
Purchase of property and equipment, net | (0.1 | ) | (14.5 | ) | (5.2 | ) | — | (19.8 | ) | |||||||||||
Change in other assets | 3.2 | (2.4 | ) | (0.1 | ) | — | 0.7 | |||||||||||||
Net cash used in investing activities | (13.9 | ) | (241.3 | ) | (81.9 | ) | — | (337.1 | ) | |||||||||||
Financing activities: | ||||||||||||||||||||
Proceeds from long-term debt | — | 384.6 | 116.9 | — | 501.5 | |||||||||||||||
Payments of debt and capital leases | — | (209.9 | ) | (46.3 | ) | — | (256.2 | ) | ||||||||||||
Advances to (from) Parent | 68.0 | 30.2 | 4.7 | — | 102.9 | |||||||||||||||
Payment of debt issue costs | (40.5 | ) | — | — | — | (40.5 | ) | |||||||||||||
Other | 0.3 | — | — | — | 0.3 | |||||||||||||||
Distributions to noncontrolling interests | — | — | (0.2 | ) | — | (0.2 | ) | |||||||||||||
Net cash provided by financing activities | 27.8 | 204.9 | 75.1 | — | 307.8 | |||||||||||||||
Change in cash and cash equivalents | 13.0 | (5.0 | ) | (1.6 | ) | — | 6.4 | |||||||||||||
Cash and cash equivalents at beginning of year | 1.0 | (0.8 | ) | (0.2 | ) | — | — | |||||||||||||
Cash and cash equivalents at end of year | $ | 14.0 | $ | (5.8 | ) | $ | (1.8 | ) | $ | — | $ | 6.4 | ||||||||
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No. | Description | |
3.1 | Certificate of Incorporation of Capella Healthcare, Inc. | |
3.2 | By-Laws of Capella Healthcare, Inc. | |
3.3 | Certificate of Formation of Capella Holdings of Oklahoma, LLC | |
3.4 | Limited Liability Company Agreement of Capella Holdings of Oklahoma, LLC | |
3.5 | Certificate of Formation of Capital Medical Center Holdings, LLC | |
3.6 | Operating Agreement of Capital Medical Center Holdings, LLC | |
3.7 | Certificate of Formation of Capital Medical Center Partner, LLC, as amended | |
3.8 | Limited Liability Company Agreement of Capital Medical Center Partner, LLC |
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No. | Description | |
3.9 | Certificate of Formation of CMCH Holdings LLC | |
3.10 | Limited Liability Company Agreement of CMCH Holdings LLC | |
3.11 | Charter of Columbia Medical Group — South Pittsburg, Inc. | |
3.12 | By-Laws of Columbia Medical Group — South Pittsburg, Inc. | |
3.13 | Certificate of Incorporation of Columbia Olympia Management, Inc. | |
3.14 | By-Laws of Columbia Olympia Management, Inc. | |
3.15 | Articles of Incorporation of Cullman County Medical Clinic, Inc., as amended | |
3.16 | By-Laws of Cullman County Medical Clinic, Inc., as amended | |
3.17 | Articles of Incorporation of Cullman Hospital Corporation, as amended | |
3.18 | By-Laws of Cullman Hospital Corporation, as amended | |
3.19 | Articles of Incorporation of Cullman Surgery Venture Corp. | |
3.20 | By-Laws of Cullman Surgery Venture Corp., as amended | |
3.21 | Certificate of Formation of Farmington Clinic Company, LLC | |
3.22 | Operating Agreement of Farmington Clinic Company, LLC, as amended | |
3.23 | Certificate of Formation of Farmington Heart & Vascular Center, LLC | |
3.24 | Operating Agreement of Farmington Heart & Vascular Center, LLC | |
3.25 | Certificate of Incorporation of Farmington Hospital Corporation | |
3.26 | By-Laws of Farmington Hospital Corporation, as amended | |
3.27 | Certificate of Incorporation of Farmington Missouri Hospital Company, LLC | |
3.28 | Operating Agreement of Farmington Missouri Hospital Company, LLC, as amended | |
3.29 | Articles of Organization of Grandview Physician Group, LLC, as amended | |
3.30 | Operating Agreement of Grandview Physician Group, LLC | |
3.31 | Articles of Incorporation of Hartselle Physicians, Inc. | |
3.32 | By-Laws of Hartselle Physicians, Inc., as amended | |
3.33 | Certificate of Formation of Jacksonville Medical Professional Services, LLC, as amended | |
3.34 | Limited Liability Company Agreement of Jacksonville Medical Professional Services, LLC, as amended | |
3.35 | Certificate of Formation of Jacksonville Surgical and Medical Affiliates, LLC |
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No. | Description | |
3.36 | Limited Liability Company Agreement of Jacksonville Surgical and Medical Affiliates, LLC | |
3.37 | Certificate of Formation of Lawton Holdings, LLC | |
3.38 | Limited Liability Company Agreement of Lawton Holdings, LLC | |
3.39 | Articles of Organization of Mineral Area Pharmacy and Durable Medical Equipment, LLC | |
3.40 | Operating Agreement of Mineral Area Pharmacy and Durable Medical Equipment, LLC, as amended | |
3.41 | Certificate of Formation of Muskogee Holdings, LLC | |
3.42 | Limited Liability Company Agreement of Muskogee Holdings, LLC | |
3.43 | Certificate of Formation of Muskogee Medical and Surgical Associates, LLC | |
3.44 | Limited Liability Company Agreement of Muskogee Medical and Surgical Associates, LLC | |
3.45 | Certificate of Formation of Muskogee Physician Group, LLC | |
3.46 | Limited Liability Company Agreement of Muskogee Physician Group, LLC | |
3.47 | Certificate of Formation of Muskogee Regional Medical Center, LLC | |
3.48 | Limited Liability Company Agreement of Muskogee Regional Medical Center, LLC | |
3.49 | Certificate of Incorporation of National Healthcare of Decatur Inc. | |
3.50 | By-Laws of National Healthcare of Decatur Inc., as amended | |
3.51 | Certificate of Incorporation of National Healthcare of Hartselle, Inc. | |
3.52 | By-Laws of National Healthcare of Hartselle, Inc., as amended | |
3.53 | Certificate of Incorporation of National Park Cardiology Services, LLC | |
3.54 | Limited Liability Company Agreement of National Park Cardiology Services, LLC | |
3.55 | Limited Liability Company Agreement of National Park Family Care, LLC | |
3.56 | Limited Liability Company Agreement of National Park Family Care, LLC, as amended | |
3.57 | Certificate of Formation of National Park Physician Services, LLC, as amended | |
3.58 | Limited Liability Company Agreement of National Park Physician Services, LLC, as amended | |
3.59 | Certificate of Formation of NPMC Holdings, LLC | |
3.60 | Limited Liability Company Agreement of NPMC Holdings, LLC | |
3.61 | Certificate of Formation of NPMC, Home Health, LLC, as amended | |
3.62 | Limited Liability Company Agreement of NPMC, Home Health, LLC, as amended |
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No. | Description | |
3.63 | Certificate of Formation of NPMC, LLC, as amended | |
3.64 | Limited Liability Company Agreement of NPMC, LLC, as amended | |
3.65 | Certificate of Formation of Oregon Healthcorp, LLC | |
3.66 | Limited Liability Company Agreement of Oregon Healthcorp, LLC, as amended | |
3.67 | Articles of Incorporation of Parkway Medical Clinic, Inc. | |
3.68 | By-Laws of Parkway Medical Clinic, Inc., as amended | |
3.69 | Articles of Incorporation of QHG of Jacksonville, Inc. | |
3.70 | By-Laws of QHG of Jacksonville, Inc., as amended | |
3.71 | Charter of River Park Hospital, Inc., as amended | |
3.72 | By-Laws of River Park Hospital, Inc., as amended | |
3.73 | Articles of Organization of River Park Hospitalists, LLC | |
3.74 | Operating Agreement of River Park Hospitalists, LLC | |
3.75 | Certificate of Formation of River Park Physician Group, LLC | |
3.76 | Limited Liability Company Agreement of River Park Physician Group, LLC | |
3.77 | Certificate of Formation of Russellville Holdings, LLC, as amended | |
3.78 | Limited Liability Company Agreement of Russellville Holdings, LLC, as amended | |
3.79 | Articles of Organization of Sequatchie Valley Urology, LLC | |
3.80 | Operating Agreement of Sequatchie Valley Urology, LLC | |
3.81 | Articles of Organization of Southwestern Emergency Department Physician Services, LLC | |
3.82 | Limited Liability Company Agreement of Southwestern Emergency Department Physician Services, LLC, as amended | |
3.83 | Certificate of Formation of Southwestern Medical Center, LLC | |
3.84 | Limited Liability Company Agreement of Southwestern Medical Center, LLC, as amended | |
3.85 | Articles of Organization of Southwestern Neurosurgery Physicians, LLC | |
3.86 | Limited Liability Company Agreement of Southwestern Neurosurgery Physicians, LLC | |
3.87 | Articles of Organization of Southwestern Physician Services, LLC | |
3.88 | Limited Liability Company Agreement of Southwestern Physician Services, LLC, as amended | |
3.89 | Certificate of Formation of Southwestern Radiology Affiliates, LLC |
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No. | Description | |
3.90 | Limited Liability Company Agreement of Southwestern Radiology Affiliates, LLC | |
3.91 | Certificate of Incorporation of Southwestern Surgical Affiliates LLC | |
3.92 | Limited Liability Company Agreement of Southwestern Surgical Affiliates LLC | |
3.93 | Charter of SP Acquisition Corp., as amended | |
3.94 | By-Laws of SP Acquisition Corp. | |
3.95 | Charter of Sparta Hospital Corporation, as amended | |
3.96 | By-Laws of Sparta Hospital Corporation, as amended | |
3.97 | Certificate of Formation of St. Mary’s Holdings, LLC | |
3.98 | Limited Liability Company Agreement of St. Mary’s Holdings, LLC, as amended | |
3.99 | Certificate of Formation of St. Mary’s Physician Services, LLC, as amended | |
3.100 | Limited Liability Company Agreement of St. Mary’s Physician Services, LLC, as amended | |
3.101 | Certificate of Formation of St. Mary’s Real Property, LLC, as amended | |
3.102 | Limited Liability Company Agreement of St. Mary’s Real Property, LLC, as amended | |
3.103 | Certificate of Formation of Western Washington Healthcare, LLC | |
3.104 | Limited Liability Company Agreement of Western Washington Healthcare, LLC | |
3.105 | Certificate of Formation of Willamette Valley Clinics, LLC, as amended | |
3.106 | Limited Liability Company Agreement of Willamette Valley Clinics, LLC, as amended | |
3.107 | Certificate of Formation of Willamette Valley Medical Center, LLC, as amended | |
3.108 | Limited Liability Company Agreement of Willamette Valley Medical Center, LLC, as amended | |
3.109 | Certificate of Formation of WPC Holdco, LLC, as amended | |
3.110 | Limited liability Company Agreement of WPC Holdco, LLC | |
4.1 | Indenture, dated as of June 28, 2010, among Capella Healthcare, Inc., the Guarantors named therein and U.S. Bank National Association, as Trustee | |
4.2 | Form of 91/4% Senior Notes due 2017 (included in Exhibit 4.1) | |
4.3 | First Supplemental Indenture, dated October 8, 2010, among Southwestern Radiology Affiliates, LLC, Capella Healthcare, Inc. and U.S. Bank National Association, as Trustee | |
4.4 | Second Supplemental Indenture, dated January 14, 2011, among National Park Family Care, LLC, Capella Healthcare, Inc. and U.S. Bank National Association, as Trustee |
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No. | Description | |
4.5 | Registration Rights Agreement, dated as of June 28, 2010, among Capella Healthcare, Inc., the Guarantors party thereto, and Banc of America Securities LLC, as representatives of the initial purchasers named therein | |
5 | Opinion of Waller Lansden Dortch & Davis, LLP(1) | |
10.1 | Stock Purchase Agreement, dated as of May 4, 2005, by and among Capella Holdings, Inc., GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P. and the other investors named therein | |
10.2 | Supplement No. 1 to the Stock Purchase Agreement, dated as of April , 2007, by and among Capella Holdings, Inc., GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P. and the other investors named therein | |
10.3 | Amendment and Supplement No. 2 to the Stock Purchase Agreement, dated as of February 29, 2008, by and among Capella Holdings, Inc., GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P. and the other investors named therein | |
10.4 | Stockholders Agreement, dated as of May 4, 2005, by and among Capella Holdings, Inc., GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P. and the other investors named therein | |
10.5 | Amendment No. 1 to the Stockholders Agreement, dated as of February 29, 2008, by and among Capella Holdings, Inc., GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P. and the other investors named therein | |
10.6 | Registration Rights Agreement, dated as of May 4, 2005, by and among Capella Holdings, Inc., GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P. and the other investors named therein | |
10.7 | Professional Services Agreement, dated as of May 4, 2005, between GTCR Golder Rauner II, LLC and Capella Healthcare, Inc. | |
10.8 | Amendment No. 1 to Professional Services Agreement between GTCR Golder Rauner II, LLC and Capella Healthcare, Inc., dated as of November 30, 2005 | |
10.9 | Loan and Security Agreement, dated June 28, 2010, by and among Capella Healthcare, Inc. and certain borrowing subsidiaries as Borrowers, certain guarantying subsidiaries as Guarantors, certain financial institutions as Lenders, Bank of America, N.A. as Agent and Collateral Agent, Citibank, N.A. as Syndication Agent, Barclays Bank PLC and General Electric Capital Corporation as Co-Documentation Agents and Bank of America Securities LLC and Citigroup Global Markets Inc. as Co-Lead Arrangers and Co-Book Managers(2) | |
10.10 | Form of Joinder to Loan and Security Agreement | |
10.11 | Senior Management Agreement, dated as of May 4, 2005, by and among Capella Holdings, Inc., Capella Healthcare, Inc. and Daniel S. Slipkovich | |
10.12 | Amendment No. 1 to Senior Management Agreement, dated as of May 12, 2006, by and among Capella Holdings, Inc., Capella Healthcare, Inc., Daniel S. Slipkovich and GTCR Fund VIII, L.P. | |
10.13 | Senior Management Agreement, dated as of May 4, 2005, by and among Capella Holdings, Inc., Capella Healthcare, Inc. and James Thomas Anderson | |
10.14 | Amendment No. 1 to Senior Management Agreement, dated as of May 12, 2006, by and among Capella Holdings, Inc., Capella Healthcare, Inc., James Thomas Anderson and GTCR Fund VIII, L.P. |
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No. | Description | |
10.15 | Amendment No. 2 to Senior Management Agreement, dated as of September 1, 2010, by and among Capella Holdings, Inc., Capella Healthcare, Inc., James Thomas Anderson and GTCR Fund VIII, L.P. | |
10.16 | Senior Management Agreement, dated May 4, 2005, by and among Capella Holdings, Inc., Capella Healthcare, Inc. and David Andrew Slusser | |
10.17 | Amendment No. 1 to Senior Management Agreement, dated as of May 12, 2006, by and among Capella Holdings, Inc., Capella Healthcare, Inc., David Andrew Slusser and GTCR Fund VIII, L.P. | |
10.18 | Senior Management Agreement, dated as of October 17, 2005, by and among Capella Holdings, Inc., Capella Healthcare, Inc. and Denise Wilder Warren | |
10.19 | Amendment No. 1 to Senior Management Agreement, dated as of May 12, 2006, by and among Capella Holdings, Inc., Capella Healthcare, Inc., Denise Wilder Warren and GTCR Fund VIII, L.P. | |
10.20 | Senior Management Agreement, dated as of May 26, 2009, by and among Capella Holdings, Inc., Capella Healthcare, Inc. and Michael Wiechart | |
10.21 | Form of Amendment No. 1 to Senior Management Agreement, dated as of , 2011, by and among Capella Holdings, Inc., Capella Healthcare, Inc., Michael Wiechart and GTCR Fund VIII, L.P.(1) | |
10.22 | Senior Management Agreement, dated November 7, 2005, by and among Capella Holdings, Inc., Capella Healthcare, Inc. and Howard T. Wall, III | |
10.23 | Amendment No. 1 to Senior Management Agreement, dated May 12, 2006, by and among Capella Holdings, Inc., Capella Healthcare, Inc. and Howard T. Wall, III | |
10.24 | Confirmation of Departure Terms, effective June 10, 2011, by and among Capella Holdings, Inc., Capella Healthcare, Inc., Howard T. Wall, III and RegionalCare Hospital Partners | |
10.25 | Capella Holdings, Inc. 2006 Stock Option Plan | |
10.26 | Capella Holdings, Inc. Deferred Compensation Plan | |
10.27 | Computer and Data Processing Services Agreement, effective February 21, 2011, by and among HCA-Information Technology & Services, Inc. and Capella Healthcare, Inc.(2) | |
10.28 | Amendment No. 001 to Computer and Data Processing Services Agreement, effective , 2011, by and among HCA-Information Technology & Services, Inc. and Capella Healthcare, Inc. | |
10.29 | Lease Agreement, dated April 3, 2007, by and among Muskogee Medical Center Authority, d/b/a Muskogee Regional Medical Center, Muskogee Regional Medical Center, LLC and Capella Healthcare, Inc. | |
10.30 | Form of Redemption Agreement | |
12 | Statement of Computation of Ratio of Earnings to Fixed Charges | |
21 | Subsidiaries of Registrant | |
23.1 | Consent of Waller Lansden Dortch & Davis, LLP (included in Exhibit 5) | |
23.2 | Consent of Ernst & Young LLP | |
24 | Powers of Attorney (included on signature page) |
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No. | Description | |
25 | Statement on Form T-1 as to the eligibility of the Trustee | |
99.1 | Form of Letter of Transmittal | |
99.2 | Form of Notice of Guaranteed Delivery |
(1) | To be filed by amendment. | |
(2) | Certain information has been omitted pursuant to a confidential treatment request filed with the SEC. |
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CAPELLA HEALTHCARE, INC. | ||||
By: | /s/ Daniel S. Slipkovich | |||
Chief Executive Officer |
Signature | Title | Date | ||
/s/ Daniel S. Slipkovich | Chief Executive Officer and Director (Principal Executive Officer) | June 28, 2011 | ||
/s/ Denise W. Warren | Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | June 28, 2011 | ||
/s/ Steven R. Brumfield | Vice President and Controller (Principal Accounting Officer) | June 28, 2011 | ||
/s/ J. Thomas Anderson | Director | June 28, 2011 | ||
/s/ Robert Z. Hensley | Director | June 28, 2011 | ||
/s/ David S. Katz | Director | June 28, 2011 | ||
/s/ Joseph P. Nolan | Director | June 28, 2011 |
Table of Contents
Capella Holdings of Oklahoma, LLC | ||
Capital Medical Center Holdings, LLC | ||
Capital Medical Center Partner, LLC | ||
CMCH Holdings LLC | ||
Columbia Medical Group — South Pittsburg, Inc. | ||
Columbia Olympia Management, Inc. | ||
Cullman County Medical Clinic, Inc. | ||
Cullman Hospital Corporation | ||
Cullman Surgery Venture Corp. | ||
Farmington Clinic Company, LLC | ||
Farmington Heart & Vascular Center, LLC | ||
Farmington Hospital Corporation | ||
Farmington Missouri Hospital Company, LLC | ||
Grandview Physician Group, LLC | ||
Hartselle Physicians, Inc. | ||
Jacksonville Medical Professional Services, LLC | ||
Jacksonville Surgical and Medical Affiliates, LLC | ||
Lawton Holdings, LLC | ||
Mineral Area Pharmacy and Durable Medical Equipment, LLC | ||
Muskogee Holdings, LLC | ||
Muskogee Medical and Surgical Associates, LLC | ||
Muskogee Physician Group, LLC | ||
Muskogee Regional Medical Center, LLC | ||
National Healthcare of Decatur Inc. | ||
National Healthcare of Hartselle, Inc. | ||
National Park Cardiology Services, LLC | ||
National Park Family Care, LLC | ||
National Park Physician Services, LLC | ||
NPMC Holdings, LLC | ||
NPMC, Home Health, LLC | ||
NPMC, LLC | ||
Oregon Healthcorp, LLC | ||
Parkway Medical Clinic, Inc. | ||
QHG of Jacksonville, Inc. | ||
River Park Hospital, Inc. | ||
River Park Hospitalists, LLC | ||
River Park Physician Group, LLC | ||
Russellville Holdings, LLC | ||
Sequatchie Valley Urology, LLC | ||
Southwestern Emergency Department Physician Services, LLC | ||
Southwestern Medical Center, LLC | ||
Southwestern Neurosurgery Physicians, LLC | ||
Southwestern Physician Services, LLC | ||
Southwestern Radiology Affiliates, LLC | ||
Southwestern Surgical Affiliates LLC | ||
SP Acquisition Corp. | ||
Sparta Hospital Corporation |
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St. Mary’s Holdings, LLC | ||
St. Mary’s Physician Services, LLC | ||
St. Mary’s Real Property, LLC | ||
Western Washington Healthcare, LLC | ||
Willamette Valley Clinics, LLC | ||
Willamette Valley Medical Center, LLC | ||
WPC Holdco, LLC |
By: | /s/ Daniel S. Slipkovich | |||
Chief Executive Officer |
Signature | Title | Date | ||
/s/ Daniel S. Slipkovich | Chief Executive Officer and Director or Manager of Each Additional Registrant (Principal Executive Officer) | June 28, 2011 | ||
/s/ Denise W. Warren | Vice President and Treasurer of Each Additional Registrant (Principal Financial Officer) | June 28, 2011 | ||
/s/ Steven R. Brumfield | Vice President and Controller of Each Additional Registrant (Principal Accounting Officer) | June 28, 2011 |
Table of Contents
Exhibit | ||
Number | Description | |
3.1 | Certificate of Incorporation of Capella Healthcare, Inc. | |
3.2 | By-Laws of Capella Healthcare, Inc. | |
3.3 | Certificate of Formation of Capella Holdings of Oklahoma, LLC | |
3.4 | Limited Liability Company Agreement of Capella Holdings of Oklahoma, LLC | |
3.5 | Certificate of Formation of Capital Medical Center Holdings, LLC | |
3.6 | Operating Agreement of Capital Medical Center Holdings, LLC | |
3.7 | Certificate of Formation of Capital Medical Center Partner, LLC, as amended | |
3.8 | Limited Liability Company Agreement of Capital Medical Center Partner, LLC | |
3.9 | Certificate of Formation of CMCH Holdings LLC | |
3.10 | Limited Liability Company Agreement of CMCH Holdings LLC | |
3.11 | Charter of Columbia Medical Group — South Pittsburg, Inc. | |
3.12 | By-Laws of Columbia Medical Group — South Pittsburg, Inc. | |
3.13 | Certificate of Incorporation of Columbia Olympia Management, Inc. | |
3.14 | By-Laws of Columbia Olympia Management, Inc. | |
3.15 | Articles of Incorporation of Cullman County Medical Clinic, Inc., as amended | |
3.16 | By-Laws of Cullman County Medical Clinic, Inc., as amended | |
3.17 | Articles of Incorporation of Cullman Hospital Corporation, as amended | |
3.18 | By-Laws of Cullman Hospital Corporation, as amended | |
3.19 | Articles of Incorporation of Cullman Surgery Venture Corp. | |
3.20 | By-Laws of Cullman Surgery Venture Corp., as amended | |
3.21 | Certificate of Formation of Farmington Clinic Company, LLC | |
3.22 | Operating Agreement of Farmington Clinic Company, LLC, as amended | |
3.23 | Certificate of Formation of Farmington Heart & Vascular Center, LLC | |
3.24 | Operating Agreement of Farmington Heart & Vascular Center, LLC | |
3.25 | Certificate of Incorporation of Farmington Hospital Corporation |
Table of Contents
Exhibit | ||
Number | Description | |
3.26 | By-Laws of Farmington Hospital Corporation, as amended | |
3.27 | Certificate of Incorporation of Farmington Missouri Hospital Company, LLC | |
3.28 | Operating Agreement of Farmington Missouri Hospital Company, LLC, as amended | |
3.29 | Articles of Organization of Grandview Physician Group, LLC, as amended | |
3.30 | Operating Agreement of Grandview Physician Group, LLC | |
3.31 | Articles of Incorporation of Hartselle Physicians, Inc. | |
3.32 | By-Laws of Hartselle Physicians, Inc., as amended | |
3.33 | Certificate of Formation of Jacksonville Medical Professional Services, LLC, as amended | |
3.34 | Limited Liability Company Agreement of Jacksonville Medical Professional Services, LLC, as amended | |
3.35 | Certificate of Formation of Jacksonville Surgical and Medical Affiliates, LLC | |
3.36 | Limited Liability Company Agreement of Jacksonville Surgical and Medical Affiliates, LLC | |
3.37 | Certificate of Formation of Lawton Holdings, LLC | |
3.38 | Limited Liability Company Agreement of Lawton Holdings, LLC | |
3.39 | Articles of Organization of Mineral Area Pharmacy and Durable Medical Equipment, LLC | |
3.40 | Operating Agreement of Mineral Area Pharmacy and Durable Medical Equipment, LLC, as amended | |
3.41 | Certificate of Formation of Muskogee Holdings, LLC | |
3.42 | Limited Liability Company Agreement of Muskogee Holdings, LLC | |
3.43 | Certificate of Formation of Muskogee Medical and Surgical Associates, LLC | |
3.44 | Limited Liability Company Agreement of Muskogee Medical and Surgical Associates, LLC | |
3.45 | Certificate of Formation of Muskogee Physician Group, LLC | |
3.46 | Limited Liability Company Agreement of Muskogee Physician Group, LLC | |
3.47 | Certificate of Formation of Muskogee Regional Medical Center, LLC | |
3.48 | Limited Liability Company Agreement of Muskogee Regional Medical Center, LLC | |
3.49 | Certificate of Incorporation of National Healthcare of Decatur Inc. | |
3.50 | By-Laws of National Healthcare of Decatur Inc., as amended | |
3.51 | Certificate of Incorporation of National Healthcare of Hartselle, Inc. | |
3.52 | By-Laws of National Healthcare of Hartselle, Inc., as amended |
Table of Contents
Exhibit | ||
Number | Description | |
3.53 | Certificate of Incorporation of National Park Cardiology Services, LLC | |
3.54 | Limited Liability Company Agreement of National Park Cardiology Services, LLC | |
3.55 | Limited Liability Company Agreement of National Park Family Care, LLC | |
3.56 | Limited Liability Company Agreement of National Park Family Care, LLC, as amended | |
3.57 | Certificate of Formation of National Park Physician Services, LLC, as amended | |
3.58 | Limited Liability Company Agreement of National Park Physician Services, LLC, as amended | |
3.59 | Certificate of Formation of NPMC Holdings, LLC | |
3.60 | Limited Liability Company Agreement of NPMC Holdings, LLC | |
3.61 | Certificate of Formation of NPMC, Home Health, LLC, as amended | |
3.62 | Limited Liability Company Agreement of NPMC, Home Health, LLC, as amended | |
3.63 | Certificate of Formation of NPMC, LLC, as amended | |
3.64 | Limited Liability Company Agreement of NPMC, LLC, as amended | |
3.65 | Certificate of Formation of Oregon Healthcorp, LLC | |
3.66 | Limited Liability Company Agreement of Oregon Healthcorp, LLC, as amended | |
3.67 | Articles of Incorporation of Parkway Medical Clinic, Inc. | |
3.68 | By-Laws of Parkway Medical Clinic, Inc., as amended | |
3.69 | Articles of Incorporation of QHG of Jacksonville, Inc. | |
3.70 | By-Laws of QHG of Jacksonville, Inc., as amended | |
3.71 | Charter of River Park Hospital, Inc., as amended | |
3.72 | By-Laws of River Park Hospital, Inc., as amended | |
3.73 | Articles of Organization of River Park Hospitalists, LLC | |
3.74 | Operating Agreement of River Park Hospitalists, LLC | |
3.75 | Certificate of Formation of River Park Physician Group, LLC | |
3.76 | Limited Liability Company Agreement of River Park Physician Group, LLC | |
3.77 | Certificate of Formation of Russellville Holdings, LLC, as amended | |
3.78 | Limited Liability Company Agreement of Russellville Holdings, LLC, as amended | |
3.79 | Articles of Organization of Sequatchie Valley Urology, LLC |
Table of Contents
Exhibit | ||
Number | Description | |
3.80 | Operating Agreement of Sequatchie Valley Urology, LLC | |
3.81 | Articles of Organization of Southwestern Emergency Department Physician Services, LLC | |
3.82 | Limited Liability Company Agreement of Southwestern Emergency Department Physician Services, LLC, as amended | |
3.83 | Certificate of Formation of Southwestern Medical Center, LLC | |
3.84 | Limited Liability Company Agreement of Southwestern Medical Center, LLC, as amended | |
3.85 | Articles of Organization of Southwestern Neurosurgery Physicians, LLC | |
3.86 | Limited Liability Company Agreement of Southwestern Neurosurgery Physicians, LLC | |
3.87 | Articles of Organization of Southwestern Physician Services, LLC | |
3.88 | Limited Liability Company Agreement of Southwestern Physician Services, LLC, as amended | |
3.89 | Certificate of Formation of Southwestern Radiology Affiliates, LLC | |
3.90 | Limited Liability Company Agreement of Southwestern Radiology Affiliates, LLC | |
3.91 | Certificate of Incorporation of Southwestern Surgical Affiliates LLC | |
3.92 | Limited Liability Company Agreement of Southwestern Surgical Affiliates LLC | |
3.93 | Charter of SP Acquisition Corp., as amended | |
3.94 | By-Laws of SP Acquisition Corp. | |
3.95 | Charter of Sparta Hospital Corporation, as amended | |
3.96 | By-Laws of Sparta Hospital Corporation, as amended | |
3.97 | Certificate of Formation of St. Mary’s Holdings, LLC | |
3.98 | Limited Liability Company Agreement of St. Mary’s Holdings, LLC, as amended | |
3.99 | Certificate of Formation of St. Mary’s Physician Services, LLC, as amended | |
3.100 | Limited Liability Company Agreement of St. Mary’s Physician Services, LLC, as amended | |
3.101 | Certificate of Formation of St. Mary’s Real Property, LLC, as amended | |
3.102 | Limited Liability Company Agreement of St. Mary’s Real Property, LLC, as amended | |
3.103 | Certificate of Formation of Western Washington Healthcare, LLC | |
3.104 | Limited Liability Company Agreement of Western Washington Healthcare, LLC | |
3.105 | Certificate of Formation of Willamette Valley Clinics, LLC, as amended | |
3.106 | Limited Liability Company Agreement of Willamette Valley Clinics, LLC, as amended |
Table of Contents
Exhibit | ||
Number | Description | |
3.107 | Certificate of Formation of Willamette Valley Medical Center, LLC, as amended | |
3.108 | Limited Liability Company Agreement of Willamette Valley Medical Center, LLC, as amended | |
3.109 | Certificate of Formation of WPC Holdco, LLC, as amended | |
3.110 | Limited liability Company Agreement of WPC Holdco, LLC | |
4.1 | Indenture, dated as of June 28, 2010, among Capella Healthcare, Inc., the Guarantors named therein and U.S. Bank National Association, as Trustee | |
4.2 | Form of 91/4% Senior Notes due 2017 (included in Exhibit 4.1) | |
4.3 | First Supplemental Indenture, dated October 8, 2010, among Southwestern Radiology Affiliates, LLC, Capella Healthcare, Inc. and U.S. Bank National Association, as Trustee | |
4.4 | Second Supplemental Indenture, dated January 14, 2011, among National Park Family Care, LLC, Capella Healthcare, Inc. and U.S. Bank National Association, as Trustee | |
4.5 | Registration Rights Agreement, dated as of June 28, 2010, among Capella Healthcare, Inc., the Guarantors party thereto, and Banc of America Securities LLC, as representatives of the initial purchasers named therein | |
5 | Opinion of Waller Lansden Dortch & Davis, LLP(1) | |
10.1 | Stock Purchase Agreement, dated as of May 4, 2005, by and among Capella Holdings, Inc., GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P. and the other investors named therein | |
10.2 | Supplement No. 1 to the Stock Purchase Agreement, dated as of April , 2007, by and among Capella Holdings, Inc., GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P. and the other investors named therein | |
10.3 | Amendment and Supplement No. 2 to the Stock Purchase Agreement, dated as of February 29, 2008, by and among Capella Holdings, Inc., GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P. and the other investors named therein | |
10.4 | Stockholders Agreement, dated as of May 4, 2005, by and among Capella Holdings, Inc., GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P. and the other investors named therein | |
10.5 | Amendment No. 1 to the Stockholders Agreement, dated as of February 29, 2008, by and among Capella Holdings, Inc., GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P. and the other investors named therein | |
10.6 | Registration Rights Agreement, dated as of May 4, 2005, by and among Capella Holdings, Inc., GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P. and the other investors named therein | |
10.7 | Professional Services Agreement, dated as of May 4, 2005, between GTCR Golder Rauner II, LLC and Capella Healthcare, Inc. | |
10.8 | Amendment No. 1 to Professional Services Agreement between GTCR Golder Rauner II, LLC and Capella Healthcare, Inc., dated as of November 30, 2005 |
Table of Contents
Exhibit | ||
Number | Description | |
10.9 | Loan and Security Agreement, dated June 28, 2010, by and among Capella Healthcare, Inc. and certain borrowing subsidiaries as Borrowers, certain guarantying subsidiaries as Guarantors, certain financial institutions as Lenders, Bank of America, N.A. as Agent and Collateral Agent, Citibank, N.A. as Syndication Agent, Barclays Bank PLC and General Electric Capital Corporation as Co-Documentation Agents and Bank of America Securities LLC and Citigroup Global Markets Inc. as Co-Lead Arrangers and Co-Book Managers(2) | |
10.10 | Form of Joinder to Loan and Security Agreement | |
10.11 | Senior Management Agreement, dated as of May 4, 2005, by and among Capella Holdings, Inc., Capella Healthcare, Inc. and Daniel S. Slipkovich | |
10.12 | Amendment No. 1 to Senior Management Agreement, dated as of May 12, 2006, by and among Capella Holdings, Inc., Capella Healthcare, Inc., Daniel S. Slipkovich and GTCR Fund VIII, L.P. | |
10.13 | Senior Management Agreement, dated as of May 4, 2005, by and among Capella Holdings, Inc., Capella Healthcare, Inc. and James Thomas Anderson | |
10.14 | Amendment No. 1 to Senior Management Agreement, dated as of May 12, 2006, by and among Capella Holdings, Inc., Capella Healthcare, Inc., James Thomas Anderson and GTCR Fund VIII, L.P. | |
10.15 | Amendment No. 2 to Senior Management Agreement, dated as of September 1, 2010, by and among Capella Holdings, Inc., Capella Healthcare, Inc., James Thomas Anderson and GTCR Fund VIII, L.P. | |
10.16 | Senior Management Agreement, dated May 4, 2005, by and among Capella Holdings, Inc., Capella Healthcare, Inc. and David Andrew Slusser | |
10.17 | Amendment No. 1 to Senior Management Agreement, dated as of May 12, 2006, by and among Capella Holdings, Inc., Capella Healthcare, Inc., David Andrew Slusser and GTCR Fund VIII, L.P. | |
10.18 | Senior Management Agreement, dated as of October 17, 2005, by and among Capella Holdings, Inc., Capella Healthcare, Inc. and Denise Wilder Warren | |
10.19 | Amendment No. 1 to Senior Management Agreement, dated as of May 12, 2006, by and among Capella Holdings, Inc., Capella Healthcare, Inc., Denise Wilder Warren and GTCR Fund VIII, L.P. | |
10.20 | Senior Management Agreement, dated as of May 26, 2009, by and among Capella Holdings, Inc., Capella Healthcare, Inc. and Michael Wiechart | |
10.21 | Form of Amendment No. 1 to Senior Management Agreement, dated as of , 2011, by and among Capella Holdings, Inc., Capella Healthcare, Inc., Michael Wiechart and GTCR Fund VIII, L.P.(1) | |
10.22 | Senior Management Agreement, dated November 7, 2005, by and among Capella Holdings, Inc., Capella Healthcare, Inc. and Howard T. Wall, III | |
10.23 | Amendment No. 1 to Senior Management Agreement, dated May 12, 2006, by and among Capella Holdings, Inc., Capella Healthcare, Inc. and Howard T. Wall, III | |
10.24 | Confirmation of Departure Terms, effective June 10, 2011, by and among Capella Holdings, Inc., Capella Healthcare, Inc., Howard T. Wall, III and RegionalCare Hospital Partners | |
10.25 | Capella Holdings, Inc. 2006 Stock Option Plan | |
10.26 | Capella Holdings, Inc. Deferred Compensation Plan |
Table of Contents
Exhibit | ||
Number | Description | |
10.27 | Computer and Data Processing Services Agreement, effective February 21, 2011, by and among HCA-Information Technology & Services, Inc. and Capella Healthcare, Inc.(2) | |
10.28 | Amendment No. 001 to Computer and Data Processing Services Agreement, effective , 2011, by and among HCA-Information Technology & Services, Inc. and Capella Healthcare, Inc. | |
10.29 | Lease Agreement, dated April 3, 2007, by and among Muskogee Medical Center Authority, d/b/a Muskogee Regional Medical Center , Muskogee Regional Medical Center, LLC, and Capella Healthcare, Inc. | |
10.30 | Form of Redemption Agreement | |
12 | Statement of Computation of Ratio of Earnings to Fixed Charges | |
21 | Subsidiaries of Registrant | |
23.1 | Consent of Waller Lansden Dortch & Davis, LLP (included in Exhibit 5) | |
23.2 | Consent of Ernst & Young LLP | |
24 | Powers of Attorney (included on signature page) | |
25 | Statement on Form T-1 as to the eligibility of the Trustee | |
99.1 | Form of Letter of Transmittal | |
99.2 | Form of Notice of Guaranteed Delivery |
(1) | To be filed by amendment. | |
(2) | Certain information has been omitted pursuant to a confidential treatment request filed with the SEC. |