Two privately held companies that reported earnings last week-Iasis Healthcare and Ardent Health Services-had vastly different results for the quarter.
Iasis said its earnings for the quarter ended June 30 were wiped out by costs associated with bringing in a new lead investor. The direct costs of Texas Pacific Group's $1.4 billion purchase of a majority stake in the Franklin, Tenn.-based company were $19.8 million, covering legal and advisory expenses and executive bonuses, Iasis said. The privately held company also incurred costs of $51.9 million for retiring its debt early, also part of the deal, which closed June 23.
As a result of those costs, Iasis lost $56 million for its third fiscal quarter, compared with profits of $82,000 in the year-ago quarter. Fiscal 2003's third quarter included an $11.7 million asset impairment charge. If the charges for both fiscal third quarters are removed, Iasis would have reported third-quarter profits of $15.7 million in 2004 and $11.8 million in 2003. Revenue for the third quarter was up 27.4%, to $355.3 million. For the nine months ended June 30, Iasis lost $36 million, compared with profits of $18.5 million in the year-ago period. Revenue was up 27.8%, to $1.03 billion.
Iasis reported much higher levels of bad-debt expense for both the third quarter and nine months. As a percentage of net patient revenue, Iasis reported bad-debt expense of 11.5% for the quarter and 11% for the nine months in fiscal 2004, compared with 9.3% and 9%, respectively, for the quarterly and nine-month periods in fiscal 2003.
On a same-hospital basis, which covers 14 of the company's 15 hospitals, Iasis said adjusted admissions were up 0.2% for the quarter and 0.8% for the nine months. Inpatient admissions were up 1.7% for the quarter and 3.5% for the nine months.
Nashville-based Ardent, meanwhile, said lagging performance of ancillary businesses in its biggest market and problems with a recently acquired behavioral health hospital hurt profits in its second quarter ended June 30. The company said its loss on continuing operations widened to $3 million in the second quarter, compared with a $486,000 loss in the year-ago quarter.
Ardent's laboratory and pharmacy business in the Albuquerque market dipped compared with the first quarter, and the company lost $1.6 million on its Brooke Glen Behavioral Hospital, Fort Washington, Pa., Chief Financial Officer R. Dirk Allison said. Ardent acquired Brooke Glen last year and had to make improvements while applying for Medicare provider status, which was granted in May, Allison said.
A $2 million after-tax gain on the sale of a behavioral health hospital in Indiana, however, kept Ardent's bottom-line loss substantially the same for both quarters-$964,000 on revenue of $357.2 million compared with a loss of $760,000 on revenue of $317.9 million in the 2003 quarter. For the six months, Ardent earned $5.2 million on $723.7 million in revenue, up from profits of $1.9 million on $628.8 million in revenue in the first half of 2003.
The company said admissions rose at both its acute-care and behavioral health hospitals. At the seven acute-care hospitals Ardent operated in all periods, adjusted admissions grew 8% for the quarter and 8.4% for the first six months of 2004 compared with admissions in the 2003 periods. At the 19 behavioral health hospitals Ardent operated in all periods, adjusted admissions were up 8.8% for the quarter and 10.1% for the six-month period.
Ardent's bad-debt expense as a percentage of net patient revenue was up for the second quarter and first half of 2004, compared with the year-ago periods. For the quarter, bad-debt expense was up to 8.9%, from 8.1% a year ago, and for the six months, it was 9%, up from 7.7% a year ago.
"Like the rest of our industry, we continue to see our bad-debt expense as a challenge," David Vandewater, Ardent's chief executive officer, said in a news release.