Quorum Health is planning more divestitures as it tries to stabilize its financial situation on the heels of third quarter financial reporting that shows a year-over-year 8 percent drop in operating revenues and a doubling in their year-over year net losses.
Quorum ended the first nine months of 2018 with a net loss of $179.5 million, compared to an $87.4 million net loss in the same period last year.
Operating revenues fell 8.8 percent year-over-year to $1.4 billion in the first nine months of 2018 compared to a little more than $1.5 billion for the nine months ended September 30, 2017. The $137.1 million decrease is primarily attributable to a $197.3 million decrease in net operating revenues resulting from the sale or closing of hospitals subsequent to the prior period, Quorum said in an SEC filing.
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Offsetting the losses was a $24.4 million increase in revenues from the California Hospital Quality Assurance Fee program and $7.3 million from the sale of the Illinois property tax credits in the nine months ended September 30.
Net loss attributable to Quorum Health Corporation was $53.9 million for the third quarter, or $1.85 per share, compared to $29.2 million, or $1.03 per share, for the same period in 2017. The net loss for the third quarter was impacted by $32.4 million of impairment of long-lived assets and $1.1 million of costs related to the closure of one hospital, Quorum said in the filing and a release.
WHY IT MATTERS
As of September 30, Quorum owned or leased 27 hospitals in rural and mid-sized markets located across 14 states with 2,604 beds. More than 95 percent of the company's net operating revenues are attributable to its hospital operations business, it said.
The company has been steadily selling off hospitals in an attempt to stabilize its finances.
In late September, Quorum sold 45-bed McKenzie Regional Hospital and its affiliated facilities located in McKenzie, Tennessee, for $1.7 million, which was received in October.
In March 2018, the system sold 77-bed Clearview Regional Medical Center and its affiliated facilities in Monroe, Georgia, for $37.4 million. Also in March, the system sold 70-bed Vista Medical Center West and its affiliated facilities located in Waukegan, Illinois, for $1.2 million.
ON THE RECORD
"We perform an ongoing strategic review of our hospitals based upon an analysis of financial performance, current competitive conditions, market demographic and economic trends and capital allocation requirements. As part of this strategy, we engage in initiatives to divest or close nonstrategic or underperforming hospitals and outpatient service facilities which, in turn, will allow us to reduce our corporate indebtedness and refine our hospital portfolio to become a strategic and sustainable group of hospitals and outpatient service facilities with higher operating margins. To date, we have received combined proceeds of $86.5 million, including $8.0 million of cash in escrow, from the sale of three hospitals in 2018, five hospitals in 2017 and two hospitals in 2016, which have been used to pay down $84.8 million on our term loan facility. We have targeted additional hospitals that we intend to sell or close by the end of 2019," Quorum said in its SEC filing.
WHAT ELSE YOU NEED TO KNOW
As of November 5, the company had signed letters of intent to divest five more facilities. The signed LOIs represent potential proceeds in excess of $105 million.
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