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EXHIBIT 99.3
Index to Unaudited Pro Forma
Condensed Consolidated Financial Statements
IASIS HEALTHCARE CORPORATION
Pro Forma Condensed Consolidated Financial Statements
(unaudited) 2
Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 2003 (unaudited) 3
Pro Forma Condensed Consolidated Statement of Operations
for the three months ended December 31, 2003 (unaudited) 4
Pro Forma Condensed Consolidated Statement of Operations
for the year ended September 30, 2003 (unaudited) 5
Notes to Pro Forma Condensed Consolidated Financial Statements
(unaudited) 6
IASIS HEALTHCARE CORPORATION
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Effective February 1, 2004, IASIS Healthcare Corporation (the "Company"),
through a wholly-owned subsidiary, completed the acquisition of Lake Mead
Hospital Medical Center ("Lake Mead") in Las Vegas, Nevada from Tenet
Healthcare Corporation. The accompanying unaudited pro forma condensed
consolidated balance sheet gives effect to the acquisition of Lake Mead by the
Company as if the transaction had been completed as of December 31, 2003. The
following unaudited condensed consolidated statements of operations for the
three months ended December 31, 2003 and for the twelve months ended September
30, 2003 as if the transaction had been completed October 1, 2003 and 2002,
respectively.
The pro forma adjustments are based upon available information and certain
assumptions that the Company believes are reasonable. The unaudited pro forma
financial statements are provided for informational purposes only and are not
necessarily indicative of the results that would have occurred if the
acquisition had occurred on the dates indicated or the expected financial
position or results of operations in the future. Furthermore, the allocation of
the purchase price is preliminary and subject to further revision.
The unaudited pro forma condensed consolidated financial statements should be
read in conjunction with the Company's separate historic financial statements
and notes thereto, as well as the historical financial statements and notes of
the operations of Lake Mead contained elsewhere herein, and in conjunction with
the related notes to these unaudited pro forma condensed consolidated financial
statements. In management's opinion, all adjustments necessary to reflect the
effect of this transaction have been made.
2
IASIS HEALTHCARE CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET (UNAUDITED)
DECEMBER 31, 2003
(IN THOUSANDS)
<Table>
<Caption>
HISTORICAL ACQUISITION PRO FORMA
-------------------------- PRO FORMA ACQUISITION
IASIS LAKE MEAD ADJUSTMENTS CONSOLIDATED
---------- --------- ----------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 94,970 $ -- $(22,439)(a) $ 72,531
Accounts receivable, net 161,513 28,660 (28,660)(b) 161,513
Inventories 23,961 1,756 -- 25,717
Prepaid expenses and other current assets 15,590 1,415 (1,112)(b) 15,893
Assets held for sale 11,070 -- -- 11,070
---------- ------- -------- ----------
Total current assets 307,104 31,831 (52,211) 286,724
Property and equipment, net 437,091 23,967 3,391 (c) 464,449
Goodwill 252,204 -- -- 252,204
Intangible assets -- 1,033 (1,033)(d) --
Other assets 36,798 59 -- 36,857
---------- ------- -------- ----------
Total assets $1,033,197 $56,890 $(49,853) $1,040,234
========== ======= ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 46,337 $ 8,880 $ (1,835)(e) $
-- -- (4,603)(b) 48,779
Salaries and benefits payable 25,898 -- 1,835 (e)
(745)(b)
186 (f)
143 (f) 27,317
Accrued interest payable 12,617 -- -- 12,617
Medical claims payable 41,290 -- -- 41,290
Accrued expenses and other liabilities 20,651 1,380 (268)(b)
127 (g)
1,937 (h) 23,827
Current portion of long-term debt and capital lease obligations 6,073 -- -- 6,073
---------- ------- -------- ----------
Total current liabilities 152,866 10,260 (3,223) 159,903
Long-term debt and capital lease obligations 656,858 55,000 (55,000)(b) 656,858
Other long-term liabilities 27,149 1,255 (1,255)(b) 27,149
Minority interest 12,007 -- -- 12,007
Stockholders' equity (deficit) 184,317 (9,625) 9,625 (i) 184,317
---------- ------- -------- ----------
Total liabilities and stockholders' equity $1,033,197 $56,890 $(49,853) $1,040,234
========== ======= ======== ==========
</Table>
3
IASIS HEALTHCARE CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED DECEMBER 31, 2003
(IN THOUSANDS)
<Table>
<Caption>
HISTORICAL ACQUISITION PRO FORMA
------------------ PRO FORMA ACQUISITION
IASIS LAKE MEAD ADJUSTMENTS CONSOLIDATED
------ --------- ----------- ------------
Net Revenue:
Net acute care revenue $249,390 $ 29,321 $ -- $278,711
Premium revenue 68,714 -- -- 68,714
-------- -------- --------- --------
Total net revenue 318,104 29,321 -- 347,425
Costs and expenses:
Salaries and benefits 99,416 8,745 -- 108,161
Supplies 40,279 4,691 -- 44,970
Medical claims 57,771 -- -- 57,771
Other operating expenses 55,828 5,636 -- 61,464
Provision for bad debts 25,098 10,096 -- 35,194
Interest, net 13,891 1,375 (1,375)(a)
51 (b) 13,942
Depreciation and amortization 16,731 670 (670)(c)
525 (c) 17,256
Impairment of assets held for sale -- 16,850 -- 16,850
-------- -------- --------- --------
Total costs and expenses 309,014 48,063 (1,469) 355,608
-------- -------- --------- --------
Earnings (loss) before gain on
sale of assets, minority
interests, and income taxes 9,090 (18,742) 1,469 (8,183)
-------- -------- --------- --------
Gain on sale of assets, net 151 -- -- 151
Minority interests (991) -- -- (991)
-------- -------- --------- --------
Earnings (loss) before income
taxes 8,250 (18,742) 1,469 (9,023)
Income tax expense (benefit) 32 (7,020) 7,020 (d) 32
-------- -------- --------- --------
Net earnings (loss) $ 8,218 $(11,722) $ (5,551) $ (9,055)
======== ======== ========= ========
</Table>
4
IASIS HEALTHCARE CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED SEPTEMBER 30, 2003
(IN THOUSANDS)
<Table>
<Caption>
HISTORICAL ACQUISITION PRO FORMA
------------------------ PRO FORMA ACQUISITION
IASIS LAKE MEAD ADJUSTMENTS CONSOLIDATED
---------- --------- ----------- ------------
Net Revenue:
Net acute care revenue $ 934,192 $ 95,687 $ -- $1,029,879
Premium revenue 153,964 -- -- 153,964
---------- -------- -------- ----------
Total net revenue 1,088,156 95,687 -- 1,183,843
Costs and expenses:
Salaries and benefits 375,509 35,012 -- 410,521
Supplies 152,199 19,629 -- 171,828
Medical claims 128,595 -- -- 128,595
Other operating expenses 198,027 21,221 -- 219,248
Provision for bad debts 86,231 21,204 -- 107,435
Interest, net 53,881 5,500 (5,500)(a)
1,120 (b) 55,001
Depreciation and amortization 56,280 2,748 (2,748)(C)
2,100 (C) 58,380
Loss on debt extinguishment 3,900 -- -- 3,900
Impairment of assets held for sale 11,741 -- -- 11,741
---------- -------- -------- ----------
Total costs and expenses 1,066,363 105,314 (5,028) 1,166,649
---------- -------- -------- ----------
Earnings (loss) before gain on sale
of assets, minority interests,
and income taxes 21,793 (9,627) 5,028 17,194
Gain on sale of assets, net 588 -- -- 588
Minority interests (1,828) -- -- (1,828)
---------- -------- -------- ----------
Earnings (loss) before income taxes 20,553 (9,627) 5,028 15,954
Income tax (benefit) expense -- (3,595) 3,595(d) --
---------- -------- -------- ----------
Net earnings (loss) $ 20,553 $ (6,032) $ 1,433 $ 15,954
========== ======== ======== ==========
</Table>
5
IASIS HEALTHCARE CORPORATION
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
a) To record cash paid for the Lake Mead acquisition of $22,439,000 at
closing of the transaction.
b) To eliminate the following assets and liabilities of Lake Mead that
were retained by the seller at the date of purchase: 1) $28,660,000 of
accounts receivable; 2) $1,112,000 of prepaid expenses and other
current assets; 3) $4,603,000 of accounts payable, 4) $745,000 of
salaries and benefits payable, 5) $268,000 of accrued expenses and
other liabilities; 6) $55,000,000 of long-term debt instruments not
acquired and 7) $1,255,000 of other long-term liabilities.
c) To increase property and equipment by $3,391,000 to $27,358,000, the
Company's estimate of fair market value.
d) To write-off $1,033,000 of software costs capitalized and recorded as
an intangible asset by Lake Mead.
e) To reclass $1,835,000 of salaries and benefits payable from accounts
payable to salaries and benefits payable.
f) To record $186,000 of estimated sick pay benefits payable as agreed to
by the seller at the closing date and $143,000 of severance liabilities
related to the acquisition of Lake Mead.
g) To record estimated liabilities related to the acquisition of
$127,000 including remaining transaction costs such as legal and
accounting fees.
h) To record the estimated net working capital settlement payable to the
seller of $1,937,000 based upon the initial estimate of working capital
as of January 31, 2004.
i) To eliminate the acquired equity of Lake Mead of $9,625,000 against the
Company's investment.
The pro forma balance sheet adjustments presented above are based upon the
Company's initial purchase price allocation utilizing the best information
available at the time of this filing. The purchase price allocation is
preliminary in nature and could change as a result of adjustments to working
capital acquired, adjustments to estimates of the fair value of assets acquired
resulting from an independent appraisal or other adjustments that may be
required as better information is obtained. Management believes that future
adjustments to the purchase price allocation would not have a material impact on
the pro forma condensed consolidated balance sheet presented herein.
6
IASIS HEALTHCARE CORPORATION
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED DECEMBER 31, 2003
a) To eliminate $1,375,000 of interest expense recorded by Lake Mead
during the period related to debt retained by the seller.
b) To record estimated interest expense (foregone interest income) of
$51,000 incurred by the Company for the three-month period related to
the use of $22.4 million of cash on hand, assuming an average interest
rate of 0.91% on cash invested in money market funds.
Each 1/8% change in the floating interest rate applicable to the $22.4
million credit facility loan debt would result in a pre-tax increase or
decrease to interest expense of approximately $7,000 during the three
month period.
c) To eliminate depreciation and amortization expense recorded by Lake
Mead during the three-month period of $670,000 and to record
depreciation expense of $525,000 for the three-month period based upon
the estimated fair value and remaining useful life of property and
equipment recorded as part of the acquisition purchase price allocation
and initiating Iasis's depreciation policies.
d) To eliminate $(7,020,000) of income tax expense (benefit) recorded by
Lake Mead during the period based on Iasis's income tax assumptions for
the period ended December 31, 2003. Iasis recorded no income tax
expense (benefit) for the period based upon the utilization of a
valuation allowance.
The pro forma adjustments presented above are subject to change given
adjustments to the preliminary purchase price allocation. Management believes
that any such changes would not have a material impact on the pro forma
condensed consolidated statement of operations for the three months ended
December 31, 2003.
7
IASIS HEALTHCARE CORPORATION
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED SEPTEMBER 30, 2003
a) To eliminate $5,500,000 of interest expense recorded by Lake Mead
during the period related to debt retained by the seller.
b) To record estimated interest incurred by the Company for the year ended
September 30, 2003 assuming debt would have been required had the
acquisition occurred at the beginning of the period, including the use
of cash on hand, as follows:
$22.4 million revolving credit facility loan proceeds at 6.79%.
Borrowing is considered outstanding from the beginning of the
period through June 6, 2003 (date on which the Company received
proceeds from $100.0 million senior subordinated notes
offering). $1,044,000
$22.4 million of cash on hand used at 0.91% money market funds rate.
Cash is considered on hand from June 6, 2003 (date on which the
Company received proceeds from $100.0 million senior subordinated
notes offering) through the end of the period. 76,000
----------
Total estimated annual interest incurred by Iasis $1,120,000
==========
Each 1/8% change in the floating interest rate applicable to the $22.4 million
credit facility loan debt would result in a pre-tax increase or decrease to
interest expense of approximately $28,000 during the year ended September 30,
2003.
c) To eliminate year-to-date depreciation and amortization expense
recorded by Lake Mead of $2,748,000 and to record annual depreciation
expense of $2,100,000 based upon the estimated fair value and remaining
useful life of property and equipment recorded as part of the
acquisition purchase price allocation and initiating Iasis's
depreciation policies.
d) To eliminate $(3,595,000) of income tax expense (benefit) recorded by
Lake Mead during the year based on Iasis's income tax assumptions for
the year ended September 30, 2003. Iasis recorded no income tax expense
(benefit) for the year based upon the utilization of a valuation
allowance.
The pro forma adjustments presented above are subject to change given
adjustments to the preliminary purchase price allocation. Management believes
that any such changes would not have a material impact on the pro forma
condensed consolidated statement of operations for the year ended September 30,
2003.
8