Capella Health

Franklin, TN.  March 7, 2014 – Capella Healthcare has announced financial and operating results for the year ended December 31, 2013.  Highlights included the following national awards and recognition:

• Capella Healthcare was named to Modern Healthcare’s “Healthcare’s Hottest” for the second consecutive year (based on five years of financial data) and was the  highest ranked acute-care hospital company on the list.
• Willamette Valley Medical Center (McMinnville, OR) was named one of the iVantage Health Analytics® 2013 HealthStrong™ Top 100 Hospitals in the country (based on quality, service and financial metrics).
• Southwestern Medical Center (Lawton, OK) was named to Becker’s Hospital Review’s top 100 “Greatest Places to Work in Healthcare” list and as one of Oklahoma’s “Top Workplaces.”
• DeKalb Community Hospital (Smithville, TN) was awarded HealthStream’s ‘Excellence Through Insight’ Award for its Emergency Department’s most improved patient satisfaction scores

Financial highlights included:

• Solid growth of 3.6% in outpatient surgeries as well as a 2.3% increase in revenues per adjusted admission.
• Adjusted revenue for continuing operations for the year totaled $726.8 million, an increase of 3.2% for the same period a year ago.
• Total revenues were up at $209.9 compared to $200.7 in the prior year. The company had several unusual events that impacted revenues, including electing to increase its bad debt expenses by an additional $4.5 million resulting from aged self-pay accounts and another $2.9 million in charges related to a reorganization of the corporate support center.
• Pro forma adjusted EBITDA for 2013 was $95.0 million, a slight decrease (2.0%) from a record $96.8 million for the same period a year ago.  Adjusted revenue and pro forma adjusted EBITDA exclude the impact of the Company’s additional bad debt expense, the impact of the Company’s reorganization charges, transaction and stock compensation expenses, and the impact of the out-of-period portion of the state of Oklahoma’s Supplemental Hospital Offset Payment Program (SHOPP) and the Medicare rural floor settlement in 2012.
• The “net loss” of $31.8 million appearing on the condensed consolidated statement is reflective of the sale of several assets, the bad debt adjustment and reorganization costs cited above, and staff training costs relative to the achievement of Meaningful Use criteria as well as the impact of CMS’s Two-Midnight rule (which impacted admissions) and the government sequestration (which impacted reimbursement).

“Throughout a challenging 2013, our hospitals continued to show significant and sustained quality improvement as well as revenue and service line growth,” said Michael Wiechart, President and Chief Executive Officer of Capella Healthcare. “I commend our hospital leaders for doing an excellent job focusing on providing high quality care and outstanding constituency satisfaction, our most important priorities, while managing expenses effectively. We were also pleased last year with our second consecutive ranking on Modern Healthcare’s list of fastest growing healthcare companies, for which we give full credit to those who serve our patients.”

Commenting about the future, he added:  “We are on the leading edge of a massive transformation of the health care system. This new era of value-based care – with an intense focus on quality, collaboration and cost-effectiveness – provides both tremendous opportunities and significant challenges. Our recent corporate reorganization puts us in an even better position to leverage the growth opportunities ahead as well as to more effectively support our hospitals’ quality, safety and patient satisfaction initiatives.”

“Over the past year, we invested significantly in the communities we serve, spending more than $26.3 million at our hospitals.  And, we experienced progress in all of our key initiatives, most importantly in improving quality of care and patient satisfaction. In fact, our HCAHPS results are some of the highest in our peer group and are reflective of our priorities and our leadership investments.  We are extremely proud of our leaders in the field and employees who serve our patients and their communities.”

Wiechart also discussed Capella’s investments in technology:  “We continue to make significant progress on our technology initiatives to support our commitment to patient care excellence and value-based purchasing.  We are confident that our industry-best tools, along with the dedication of our hospital leaders, will allow us to outperform our peers in quality and value-based purchasing. As we embrace the challenges of the future, we will continue investing in our facilities, our leadership and our communities, as well as to continue to focus on collaborative approaches, as we pursue new ways to improve access and quality while lowering the costs of care.”

Denise Warren, Executive Vice President and Chief Financial Officer, commented on the company’s financial performance. “2013 was a challenging, but overall good year for us.  We were pleased with the performance of our hospitals.  It’s important when looking at the financial reports to remember that we use EBITDA to service our debt and to make capital investments in our facilities. In fact, all of our operating cash flow is reinvested into our facilities every year.  Preparing for the future requires investments – in technology, new services, infrastructure, leadership and staff development, as well as in new partnerships to continue broadening access and improving quality for the communities we serve.”

About Capella Healthcare

Capella Healthcare partners with communities to build strong local healthcare systems that are known for quality patient care. Based in Franklin, Tenn., Capella owns and/or operates 13 acute care and specialty hospital facilities in six states. With the philosophy that all healthcare is local, Capella collaborates with each hospital’s medical staff, board and community leadership to take care to the next level. The company has access to significant leadership and financial resources, investing in its family of hospitals to strengthen and expand services and facilities. The company was recognized in 2012 and 2013 by Modern Healthcare as one of the nation’s fastest growing health care companies.  For more information, visit the website, www.CapellaHealthcare.com.

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