SOURCE: Vanguard Health Systems
NASHVILLE, TN–(Marketwire – August 25, 2010) – Vanguard Health Systems, Inc. (Vanguard)
today announced results for the fourth quarter and fiscal year ended June
30, 2010.
Total revenues for the quarter ended June 30, 2010 were $858.4 million, an
increase of $31.9 million or 3.9% from the prior year quarter. Patient
service revenues increased $17.4 million from the prior year quarter.
Health plan premium revenues increased $14.5 million from the prior year
quarter. The increase in patient service revenues was attributable to a
3.3% increase in adjusted discharges offset by a 0.2% decrease in patient
revenue per adjusted discharge during the current year quarter compared to
the prior year quarter. Absent the implementation of an insured discount
policy in our Phoenix and San Antonio hospitals effective July 1, 2009,
similar to the program implemented in our two Illinois hospitals on April
1, 2009, and a change to the Medicaid pending policy at all of our
hospitals, patient revenue per adjusted discharge would have increased 3.2%
during the current year quarter compared to the prior year quarter. The
increase in health plan premium revenues was primarily attributable to a
17.1% increase in average membership in Phoenix Health Plan (PHP) during
the current year quarter compared to the prior year quarter. Economic
conditions in Arizona continue to increase the number of individuals
eligible for coverage under the Arizona Health Care Cost Containment System
(AHCCCS) and thus expand PHP’s membership.
Vanguard reported income from continuing operations of $3.4 million for the
current year quarter compared to $2.1 million during the prior year
quarter. During the current year quarter, Vanguard’s net income
attributable to Vanguard Health Systems, Inc. stockholders was $2.8 million
compared to $1.8 million during the prior year quarter. Many quarter over
quarter comparisons of individual cost and expense items, particularly for
health plan claims expense and the provision for doubtful accounts, as a
percentage of total revenues during the current year quarter were impacted
by the significant growth in health plan premium revenues and the uninsured
discount and Medicaid pending policy changes. A table describing the impact
of adjustments to certain expenses and revenues and related ratios for our
acute care services segment and to certain statistical measures is included
in this release in the attached Supplemental Operating Measures Adjusted
for Comparative Analysis.
Adjusted EBITDA for the current year quarter was $82.9 million, an 11.3%
increase compared to the prior year quarter. A reconciliation of Adjusted
EBITDA to net income (loss) attributable to Vanguard Health Systems, Inc.
stockholders as determined in accordance with generally accepted accounting
principles for the quarters ended June 30, 2009 and 2010 is included in the
attached supplemental financial information.
The consolidated operating results for the current year quarter reflect a
1.8% increase in discharges and a 3.3% increase in adjusted discharges
compared to the prior year quarter. Emergency room visits increased 1.0%,
while inpatient surgeries and outpatient surgeries decreased 3.0% and 2.2%,
respectively, during the current year quarter compared to the prior year
quarter. General economic weakness in the United States economy continues
to impact demand for elective surgical procedures.
Total revenues for the year ended June 30, 2010 were $3,376.9 million, an
increase of $191.5 million or 6.0% from the prior year. Patient service
revenues and health plan premium revenues increased $29.8 million and
$161.7 million, respectively, from the prior year. Total revenues during
the current year were positively impacted by a 2.4% increase in adjusted
discharges but were negatively impacted by a 1.1% decrease in patient
revenue per adjusted discharge compared to the prior year. Absent the
previously discussed uninsured discount and Medicaid pending policy
changes, patient revenue per adjusted discharge would have increased 2.8%
during the current year compared to the prior year. Health plan premium
revenues increased 23.8% during the current year primarily due to the
significant enrollment increase associated with PHP’s new contract with
AHCCCS that went into effect on October 1, 2008.
Vanguard reported a loss from continuing operations of $44.6 million during
the current year compared to income from continuing operations of $32.1
million during the prior year. Net loss attributable to Vanguard Health
Systems, Inc. stockholders for the current year was $49.2 million compared
to net income attributable to Vanguard Health Systems, Inc. stockholders of
$28.6 million during the prior year. Each of these current year measures
was negatively impacted by the goodwill impairment loss related to our
Illinois hospitals recognized in December 2009 and by debt extinguishment
costs incurred to complete a refinancing of our indebtedness in January
2010. Many year over year comparisons of individual cost and expense items
as a percentage of total revenues, particularly for health plan claims
expense and the provision for doubtful accounts, were impacted by the
significant growth in health plan premium revenues and the uninsured
discount and Medicaid pending policy changes previously discussed. The
Supplemental Operating Measures Adjusted for Comparative Analysis table
included elsewhere in this release sets forth the impact of the uninsured
discount and Medicaid pending policy changes to certain expenses and
revenues and related ratios for our acute care services segment and to
certain statistical measures. Health plan claims expense as a percentage of
health plan premium revenues increased to 79.3% during the current year
compared to 77.5% during the prior year primarily as a result of changes to
capitation and supplemental payment rates, enrollee medical costs and
enrollee demographic mix under PHP’s new contract with AHCCCS that went
into effect on October 1, 2008.
Adjusted EBITDA was $326.6 million for the current year, an increase of
$23.9 million or 7.9% from the prior year. A reconciliation of Adjusted
EBITDA to net income (loss) attributable to Vanguard Health Systems, Inc.
stockholders as determined in accordance with generally accepted accounting
principles for the years ended June 30, 2009 and 2010 is included in the
attached supplemental financial information.
Cash flows from operating activities were $315.2 million for the current
year, an increase of $2.1 million from the prior year. Current year
operating cash flows were negatively impacted by AHCCCS’ deferral of the
June 2010 capitation and supplemental payments to PHP of approximately
$62.0 million until July 2010. Current year operating cash flows were
positively impacted by an improvement in net days revenue in accounts
receivable from 45 days at June 30, 2009 to 41 days at June 30, 2010. Cash
flows from operating activities were also positively impacted by the timing
of payments of accounts payable during the current year compared to the
prior year. Vanguard’s cash and cash equivalents balance was $257.6 million
at June 30, 2010 compared to $308.2 million at June 30, 2009.
On June 10, 2010, Vanguard entered into a definitive agreement to purchase
Detroit Medical Center (DMC), which owns and operates eight hospitals in
and around Detroit, Michigan with 1,734 licensed beds. Under the purchase
agreement, Vanguard will acquire all of DMC’s assets (other than donor
restricted and certain other assets) and assume all of its liabilities
(other than its outstanding bonds and other certain liabilities) for $417.0
million in cash, substantially all of which will be used to repay all such
non-assumed debt. The acquisition is pending review and approval by the
Michigan Attorney General. Detailed information regarding the purchase
price, assets acquired, liabilities assumed and future commitments related
to the DMC purchase are set forth in Vanguard’s Form 8-K filed with the
Securities and Exchange Commission on June 15, 2010. If approval is
obtained, Vanguard expects the DMC transaction to close during its second
quarter of fiscal 2011.
On July 14, 2010, certain of Vanguard’s subsidiaries issued $225.0 million
aggregate principal amount of 8% Senior Notes due 2018 (the Add-On Notes)
utilizing the same indenture governing the $950.0 million 8% Senior Notes
previously issued in January 2010. The Add-On Notes were issued at an
offering price of 96.250% plus accrued interest from January 29, 2010. The
proceeds from the issuance of the Add-On Notes will be used to fund a
portion of the DMC purchase price if such acquisition is approved by the
Michigan Attorney General or else used for general corporate purposes
including other potential acquisitions. Additional information regarding
the Add-On Notes is set forth in Vanguard’s Form 8-K filed with the
Securities and Exchange Commission on July 19, 2010.
On August 1, 2010, Vanguard completed the purchase of Westlake Hospital and
West Suburban Medical Center in the western suburbs of Chicago, Illinois
from Resurrection Health Care. As part of the purchase, Vanguard acquired
certain assets and assumed certain liabilities of these hospitals for a
total cash purchase price of approximately $45.0 million. These hospitals
have a combined 459 licensed beds and are each located within 10 miles of
Vanguard’s MacNeal Hospital. Additional information related to this
acquisition is set forth in Vanguard’s Form 8-K filed with the Securities
and Exchange Commission on August 4, 2010.
Vanguard will host a conference call for investors at 11:00 am EDT on
August 26, 2010. All interested investors are invited to access a live
audio broadcast of the call, via webcast. The live webcast can be accessed
on the home page of Vanguard’s Web site at www.vanguardhealth.com by
clicking on “Fourth Quarter Webcast” or at
http://visualwebcaster.com/event.asp?id=71303. If you are unable to
participate during the live webcast, the call will be available on a replay
basis on Vanguard’s Web site www.vanguardhealth.com. To access the replay,
click on the Investor Relations of www.vanguardhealth.com. The replay will
be available via this link for one year.
Vanguard owns and operates 17 acute care hospitals and complementary
facilities and services in Chicago, Illinois; Phoenix, Arizona; San
Antonio, Texas; and Massachusetts. Vanguard’s strategy is to develop
locally branded, comprehensive healthcare delivery networks in urban
markets. Vanguard will pursue acquisitions where there are opportunities to
partner with leading delivery systems in new urban markets or to increase
its presence in existing markets. Upon acquiring a facility or network of
facilities, Vanguard implements strategic and operational improvement
initiatives including expanding services, strengthening relationships with
physicians and managed care organizations, recruiting new physicians and
upgrading information systems and other capital equipment. These strategies
improve quality and network coverage in a cost effective and accessible
manner for the communities Vanguard serves.
This press release contains forward-looking statements within the meaning
of the federal securities laws, which are intended to be covered by the
safe harbors created thereby. These forward-looking statements include all
statements that are not historical statements of fact and those statements
regarding Vanguard’s intent, belief or expectations. Do not rely on any
forward-looking statements as such statements are subject to numerous
factors, risks and uncertainties that could cause Vanguard’s actual
outcomes, results, performance or achievements to be materially different
from those projected. These factors, risks and uncertainties include, among
others, Vanguard’s high degree of leverage and interest rate risk;
Vanguard’s ability to incur substantially more debt; operating and
financial restrictions in Vanguard’s debt agreements; Vanguard’s ability to
successfully implement its business strategies; Vanguard’s ability to
successfully integrate any future acquisitions; conflicts of interest that
may arise as a result of Vanguard’s control by a small number of
stockholders; the highly competitive nature of the healthcare business;
governmental regulation of the industry including Medicare and Medicaid
reimbursement levels; changes in Federal, state or local regulation
affecting the healthcare industry; the currently unknown effect on us of
the major federal healthcare reforms enacted by Congress in March 2010 or
other potential additional federal or state healthcare reforms; pressures
to contain costs by managed care organizations and other insurers and
Vanguard’s ability to negotiate acceptable terms with these third party
payers; the ability to attract and retain qualified management and
personnel, including physicians and nurses; claims and legal actions
relating to professional liabilities or other matters; the impacts of a
prolonged economic recession and tightened credit and capital markets on
Vanguard’s results of operations, financial position and cash flows
including its ability to successfully service its debt and remain in
compliance with debt covenants under its senior secured credit agreement;
Vanguard’s exposure to the increased amounts of and collection risks
associated with uninsured accounts and the co-pay and deductible portions
of insured accounts; Vanguard’s ability to maintain or increase patient
membership and control costs of its managed healthcare plans; the
availability and terms of capital to fund the expansion of Vanguard’s
business; the geographic concentration of Vanguard’s operations; the
technological and pharmaceutical improvements that increase the cost of
providing healthcare services or reduce the demand for such services; the
timeliness of reimbursement payments received under government programs;
the potential adverse impact of known and unknown government
investigations; and those factors, risks and uncertainties detailed in
Vanguard’s filings from time to time with the Securities and Exchange
Commission, including, among others, Vanguard’s Annual Reports on Form 10-K
and its Quarterly Reports on Form 10-Q.
Although Vanguard believes that the assumptions underlying the
forward-looking statements contained in this press release are reasonable,
any of these assumptions could prove to be inaccurate, and, therefore,
there can be no assurance that the forward-looking statements included in
this press release will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein,
you should not regard the inclusion of such information as a representation
by Vanguard that its objectives and plans anticipated by the
forward-looking statements will occur or be achieved, or if any of them do,
what impact they will have on Vanguard’s results of operations and
financial condition. Vanguard undertakes no obligation to publicly release
any revisions to any forward-looking statements contained herein to reflect
events and circumstances occurring after the date hereof or to reflect the
occurrence of unanticipated events.
VANGUARD HEALTH SYSTEMS
Condensed Consolidated Statements of Operations (Unaudited)
(In millions)
Quarter ended June 30,
----------------------------------
2009
(as adjusted) 2010
---------------- ----------------
Patient service revenues $ 629.3 76.1% $ 646.7 75.3%
Premium revenues 197.2 23.9 211.7 24.7
------- ------- ------- -------
Total revenues 826.5 100.0 858.4 100.0
Costs and expenses:
Salaries and benefits (includes
stock compensation of $1.0 and $0.7,
respectively) 314.9 38.1 333.6 38.9
Health plan claims expense 154.9 18.7 165.9 19.3
Supplies 116.1 14.0 116.7 13.6
Provision for doubtful accounts 55.3 6.7 39.5 4.6
Purchased services 41.5 5.0 44.5 5.2
Non-income taxes 12.6 1.5 14.1 1.6
Rents and leases 10.8 1.3 11.0 1.3
Other operating expenses 46.9 5.7 50.9 5.9
Depreciation and amortization 34.2 4.1 37.7 4.4
Interest, net 27.0 3.3 30.8 3.6
Debt extinguishment costs - - 0.3 -
Impairment loss 6.2 0.8 - -
Other 0.7 0.1 5.6 0.7
------- ------- ------- -------
Total costs and expenses 821.1 99.3 850.6 99.1
------- ------- ------- -------
Income from continuing operations
before income taxes 5.4 0.7 7.8 0.9
Income tax expense (3.3) (0.4) (4.4) (0.5)
------- ------- ------- -------
Income from continuing operations 2.1 0.3 3.4 0.4
Income from discontinued operations,
net of taxes 0.6 0.1 0.2 -
------- ------- ------- -------
Net income 2.7 0.3 3.6 0.4
Less: Net income attributable to
non-controlling interests (0.9) (0.1) (0.8) (0.1)
------- ------- ------- -------
Net income attributable to Vanguard
Health Systems, Inc. stockholders $ 1.8 0.2% $ 2.8 0.3%
======= ======= ======= =======
VANGUARD HEALTH SYSTEMS, INC.
Condensed Consolidated Statements of Operations (Unaudited)
(In millions)
Year ended June 30,
------------------------------------------
2009 2010
-------------------- --------------------
Patient service revenues $ 2,507.4 78.7% $ 2,537.2 75.1%
Premium revenues 678.0 21.3 839.7 24.9
--------- --------- --------- --------
Total revenues 3,185.4 100.0 3,376.9 100.0
Costs and expenses:
Salaries and benefits
(includes stock
compensation
of $4.4 and $4.2,
respectively) 1,233.8 38.7 1,296.2 38.4
Health plan claims expense 525.6 16.5 665.8 19.7
Supplies 455.5 14.3 456.1 13.5
Provision for doubtful
accounts 210.3 6.6 152.5 4.5
Purchased services 163.8 5.1 179.5 5.3
Non-income taxes 52.2 1.6 52.9 1.6
Rents and leases 42.6 1.3 43.8 1.3
Other operating expenses 203.3 6.4 207.7 6.2
Depreciation and
amortization 128.9 4.0 139.6 4.1
Interest, net 111.6 3.5 115.5 3.4
Debt extinguishment costs - - 73.5 2.2
Impairment loss 6.2 0.2 43.1 1.3
Other 2.7 0.1 9.1 0.3
--------- --------- --------- --------
Total costs and expenses 3,136.5 98.5 3,435.3 101.7
--------- --------- --------- --------
Income (loss) from continuing
operations before income taxes 48.9 1.5 (58.4) (1.7)
Income tax benefit (expense) (16.8) (0.5) 13.8 0.4
--------- --------- --------- --------
Income (loss) from continuing
operations 32.1 1.0 (44.6) (1.3)
Loss from discontinued
operations, net of taxes (0.3) (0.0) (1.7) (0.1)
--------- --------- --------- --------
Net income (loss) 31.8 1.0 (46.3) (1.4)
Less: Net income attributable
to non-controlling interests (3.2) (0.1) (2.9) (0.1)
--------- --------- --------- --------
Net income (loss) attributable
to Vanguard Health Systems, Inc.
stockholders $ 28.6 0.9% $ (49.2) (1.5)%
========= ========= ========= ========
VANGUARD HEALTH SYSTEMS, INC.
Supplemental Financial Information (Unaudited)
Reconciliation of Adjusted EBITDA to Net Income (Loss) Attributable to
Vanguard Health Systems, Inc. Stockholders
(In millions)
Quarter Ended Year Ended
June 30, June 30,
---------------- ----------------
2009 2010 2009 2010
------- ------- ------- -------
Net income (loss) attributable to
Vanguard Health Systems, Inc.
stockholders $ 1.8 $ 2.8 $ 28.6 $ (49.2)
Interest, net 27.0 30.8 111.6 115.5
Income tax expense (benefit) 3.3 4.4 16.8 (13.8)
Depreciation and amortization 34.2 37.7 128.9 139.6
Non-controlling interests 0.9 0.8 3.2 2.9
Loss (gain) on disposal of assets (0.2) 1.4 (2.3) 1.8
Equity method income (0.4) (0.1) (0.8) (0.9)
Stock compensation 1.0 0.7 4.4 4.2
Monitoring fees and expenses 1.3 1.2 5.2 5.1
Realized loss on investments - - 0.6 -
Impairment loss 6.2 - 6.2 43.1
Acquisition related expenses - 3.1 - 3.1
Debt extinguishment costs - 0.3 - 73.5
Discontinued operations, net of taxes (0.6) (0.2) 0.3 1.7
------- ------- ------- -------
Adjusted EBITDA (1) $ 74.5 $ 82.9 $ 302.7 $ 326.6
======= ======= ======= =======
(1) Adjusted EBITDA is defined as income before interest expense (net of
interest income), income taxes, depreciation and amortization,
non-controlling interests, gain or loss on disposal of assets, equity
method income, stock compensation, monitoring fees and expenses,
realized holding loss on investments, acquisition related expenses,
debt extinguishment costs, impairment loss and discontinued operations,
net of taxes. Adjusted EBITDA is not intended as a substitute for net
income (loss) attributable to Vanguard Health Systems, Inc.
stockholders, operating cash flows or other cash flow data determined
in accordance with accounting principles generally accepted in the
United States. Due to varying methods of calculation, Adjusted EBITDA
as presented may not be comparable to similarly titled measures of
other companies.
VANGUARD HEALTH SYSTEMS, INC.
Consolidated Balance Sheets
(In millions)
June 30, June 30,
ASSETS 2009 2010
--------- ---------
Current assets:
Cash and cash equivalents $ 308.2 $ 257.6
Restricted cash 1.9 2.3
Accounts receivable, net of allowance for doubtful
accounts of approximately $121.5 and $75.6 at
June 30, 2009 and June 30, 2010, respectively 275.3 270.4
Inventories 48.3 49.6
Deferred tax assets 29.6 21.9
Prepaid expenses and other current assets 68.4 119.2
--------- ---------
Total current assets 731.7 721.0
Property, plant and equipment, net of accumulated
depreciation 1,174.1 1,203.8
Goodwill 692.1 649.1
Intangible assets, net of accumulated amortization 54.6 66.0
Deferred tax assets, noncurrent 38.0 50.0
Investments in auction rate securities 21.6 19.8
Other assets 19.0 19.9
--------- ---------
Total assets $ 2,731.1 $ 2,729.6
========= =========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 127.9 $ 194.8
Accrued salaries and benefits 133.9 144.9
Accrued health plan claims and settlements 117.6 149.8
Accrued interest 13.2 41.4
Other accrued expenses and current liabilities 79.5 76.9
Current maturities of long-term debt 8.0 8.2
--------- ---------
Total current liabilities 480.1 616.0
Professional and general liability and workers
compensation reserves 76.7 83.6
Other liabilities 34.9 31.6
Long-term debt, less current maturities 1,543.6 1,743.8
Commitments and contingencies
Equity:
Vanguard Health Systems, Inc. stockholders' equity:
Common stock - -
Additional paid-in capital 651.3 354.9
Accumulated other comprehensive loss (6.8) (2.5)
Retained deficit (56.7) (105.9)
--------- ---------
Total Vanguard Health Systems, Inc. stockholders'
equity 587.8 246.5
Non-controlling interests 8.0 8.1
--------- ---------
Total equity 595.8 254.6
--------- ---------
Total liabilities and equity $ 2,731.1 $ 2,729.6
========= =========
VANGUARD HEALTH SYSTEMS, INC.
Consolidated Statements of Cash Flows
(In millions)
Year Ended
June 30,
------------------
2009 2010
-------- --------
Operating activities:
Net income (loss) $ 31.8 $ (46.3)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Loss from discontinued operations 0.3 1.7
Depreciation and amortization 128.9 139.6
Provision for doubtful accounts 210.3 152.5
Amortization of loan costs and accretion of principal
on notes 27.2 11.7
Loss (gain) on disposal of assets (2.3) 1.8
Stock compensation 4.4 4.2
Deferred income taxes 6.4 (8.5)
Impairment loss 6.2 43.1
Realized holding loss on investments 0.6 -
Acquisition related expenses - 3.1
Debt extinguishment costs - 73.5
Changes in operating assets and liabilities:
Accounts receivable (185.6) (148.3)
Inventories 1.0 (1.3)
Prepaid expenses and other current assets (12.7) (80.5)
Accounts payable (27.5) 67.1
Accrued expenses and other liabilities 122.7 102.8
-------- --------
Net cash provided by operating activities - continuing
operations 311.7 316.2
Net cash provided by (used in) operating activities -
discontinued operations 1.4 (1.0)
-------- --------
Net cash provided by operating activities 313.1 315.2
Investing activities:
Acquisitions and related expenses (4.4) (4.6)
Capital expenditures (132.0) (155.9)
Proceeds from asset dispositions 4.9 2.0
Sales of auction rate securities - 1.8
Other (2.0) 0.3
-------- --------
Net cash used in investing activities - continuing
operations (133.5) (156.4)
Net cash used in investing activities - discontinued
operations (0.1) (0.1)
-------- --------
Net cash used in investing activities (133.6) (156.5)
Financing activities:
Payments of long-term debt (7.8) (1,557.4)
Proceeds from debt borrowings - 1,751.3
Payments of refinancing costs and fees - (93.6)
Repurchases of stock and stock options (0.2) (300.6)
Payments related to derivative instrument with
financing element - (6.2)
Distributions paid to non-controlling interests and
other (4.9) (2.8)
-------- --------
Net cash used in financing activities (12.9) (209.3)
-------- --------
Net increase (decrease) in cash and cash equivalents 166.6 (50.6)
Cash and cash equivalents, beginning of year 141.6 308.2
-------- --------
Cash and cash equivalents, end of year $ 308.2 $ 257.6
======== ========
VANGUARD HEALTH SYSTEMS, INC.
Segment Information (Unaudited)
(In millions)
Three months ended June 30, 2009
----------------------------------------------------
Acute
Care % of Health % of Elimin- Consol-
Services Revenues Plans Revenues ations idated
------- ------ -------- ------- ------- -------
Patient service
revenues(1) $ 638.3 100.0% $ - -% $ (9.0) $ 629.3
Premium revenues - - 197.2 100.0 - 197.2
------- ------ -------- ------- ------- -------
Total revenues 638.3 100.0 197.2 100.0 (9.0) 826.5
Salaries and benefits
(excludes stock
compensation) 306.0 47.9 7.9 4.0 - 313.9
Health plan claims
expense - - 163.9 83.1 (9.0) 154.9
Supplies 116.0 18.2 0.1 0.1 - 116.1
Provision for
doubtful
accounts 55.3 8.7 - - - 55.3
Other operating
expenses 102.2 16.0 9.6 4.9 - 111.8
------- ------ -------- ------- ------- -------
Total operating
expenses 579.5 90.8 181.5 92.0 (9.0) 752.0
------- ------ -------- ------- ------- -------
Segment EBITDA(2) 58.8 9.2 15.7 8.0 - 74.5
Less:
Interest, net 26.8 4.2 0.2 0.1 - 27.0
Depreciation and
amortization 33.1 5.2 1.1 0.6 - 34.2
Equity method income (0.4) (0.1) - - - (0.4)
Stock compensation 1.0 0.2 - - - 1.0
Gain on disposal of
assets (0.2) (0.0) - - - (0.2)
Monitoring fees and
expenses 1.3 0.2 - - - 1.3
Impairment loss 6.2 1.0 - - - 6.2
------- ------ -------- ------- ------- -------
Income (loss) from
continuing operations
before income taxes $ (9.0) (1.4)% $ 14.4 7.3% $ - $ 5.4
======= ====== ======== ======= ======= =======
(1) Vanguard eliminates in consolidation those patient service revenues
earned by its healthcare facilities attributable to services provided
to enrollees in its owned health plans and eliminates the corresponding
medical claims expenses incurred by the health plans for those
services.
(2) Segment EBITDA is defined as income (loss) from continuing operations
before income taxes less interest expense (net of interest income),
depreciation and amortization, equity method income, stock
compensation, gain or loss on disposal of assets, realized holding
losses on investments, monitoring fees and expenses, acquisition
related expenses, debt extinguishment costs and impairment losses.
Management uses Segment EBITDA to measure performance for Vanguard's
segments and to develop strategic objectives and operating plans for
those segments. Segment EBITDA eliminates the uneven effect of non-cash
depreciation of tangible assets and amortization of intangible assets,
much of which results from acquisitions accounted for under the
purchase method of accounting. Segment EBITDA also eliminates the
effects of changes in interest rates which management believes relate
to general trends in global capital markets, but are not necessarily
indicative of the operating performance of Vanguard's segments.
Management believes that Segment EBITDA provides useful information
about the financial performance of Vanguard's segments to investors,
lenders, financial analysts and rating agencies. Additionally,
management believes that investors and lenders view Segment EBITDA as
an important factor in making investment decisions and assessing the
value of Vanguard. Segment EBITDA is not a substitute for net income
(loss), operating cash flows or other cash flow statement data
determined in accordance with accounting principles generally accepted
in the United States. Segment EBITDA, as presented, may not be
comparable to similar measures of other companies.
VANGUARD HEALTH SYSTEMS, INC.
Segment Information (Unaudited)
(In millions)
Three months ended June 30, 2010
--------------------------------------------------------
Acute
Care % of Health % of Elimina- Consoli-
Services Revenues Plans Revenues tions dated
-------- ------- ------- ------- -------- --------
Patient service
revenues(1) $ 657.8 100.0% $ - -% $ (11.1) $ 646.7
Premium revenues - - 211.7 100.0 - 211.7
-------- ------- ------- ------- -------- --------
Total revenues 657.8 100.0 211.7 100.0 (11.1) 858.4
Salaries and
benefits
(excludes stock
compensation) 324.0 49.3 8.9 4.2 - 332.9
Health plan
claims expense - - 177.0 83.6 (11.1) 165.9
Supplies 116.7 17.7 - - - 116.7
Provision for
doubtful
accounts 39.5 6.0 - - - 39.5
Other operating
expenses 110.8 16.8 9.7 4.6 - 120.5
-------- ------- ------- ------- -------- --------
Total operating
expenses 591.0 89.8 195.6 92.4 (11.1) 775.5
-------- ------- ------- ------- -------- --------
Segment EBITDA(2) 66.8 10.2 16.1 7.6 - 82.9
Less:
Interest, net 31.2 4.7 (0.4) (0.2) - 30.8
Depreciation and
amortization 36.6 5.6 1.1 0.5 - 37.7
Equity method
income (0.1) (0.0) - - - (0.1)
Stock compensation 0.7 0.1 - - - 0.7
Loss on disposal
of assets 1.4 0.2 - - - 1.4
Monitoring fees
and expenses 1.2 0.2 - - - 1.2
Acquisition
related expenses 3.1 0.5 - - - 3.1
Debt
extinguishment
costs 0.3 - - - - 0.3
-------- ------- ------- ------- -------- --------
Income (loss)
from continuing
operations
before income
taxes $ (7.6) (1.2)% $ 15.4 7.3% $ - $ 7.8
======== ======= ======= ======= ======== ========
(1) Vanguard eliminates in consolidation those patient service revenues
earned by its healthcare facilities attributable to services provided
to enrollees in its owned health plans and eliminates the
corresponding medical claims expenses incurred by the health plans for
those services.
(2) Segment EBITDA is defined as income (loss) from continuing operations
before income taxes less interest expense (net of interest income),
depreciation and amortization, equity method income, stock
compensation, gain or loss on disposal of assets, realized holding
losses on investments, monitoring fees and expenses, acquisition
related expenses, debt extinguishment costs and impairment losses.
Management uses Segment EBITDA to measure performance for Vanguard's
segments and to develop strategic objectives and operating plans for
those segments. Segment EBITDA eliminates the uneven effect of
non-cash depreciation of tangible assets and amortization of
intangible assets, much of which results from acquisitions accounted
for under the purchase method of accounting. Segment EBITDA also
eliminates the effects of changes in interest rates which management
believes relate to general trends in global capital markets, but are
not necessarily indicative of the operating performance of Vanguard's
segments. Management believes that Segment EBITDA provides useful
information about the financial performance of Vanguard's segments to
investors, lenders, financial analysts and rating agencies.
Additionally, management believes that investors and lenders view
Segment EBITDA as an important factor in making investment decisions
and assessing the value of Vanguard. Segment EBITDA is not a
substitute for net income (loss), operating cash flows or other cash
flow statement data determined in accordance with accounting
principles generally accepted in the United States. Segment EBITDA,
as presented, may not be comparable to similar
measures of other companies.
VANGUARD HEALTH SYSTEMS, INC.
Segment Information (Unaudited)
(In millions)
Year ended June 30, 2009
--------------------------------------------------------
Acute
Care % of Health % of Elimina- Consoli-
Services Revenues Plans Revenues tions dated
-------- -------- ------ -------- -------- --------
Patient service
revenues(1) $2,541.4 100.0% $ - -% $ (34.0) $2,507.4
Premium revenues - - 678.0 100.0 - 678.0
-------- -------- ------ -------- -------- --------
Total revenues 2,541.4 100.0 678.0 100.0 (34.0) 3,185.4
Salaries and
benefits
(excludes stock
compensation) 1,198.8 47.2 30.6 4.5 - 1,229.4
Health plan
claims expense - - 559.6 82.5 (34.0) 525.6
Supplies 455.2 17.9 0.3 - - 455.5
Provision for
doubtful
accounts 210.3 8.3 - - - 210.3
Other operating
expenses 425.5 16.7 36.4 5.4 - 461.9
-------- -------- ------ -------- -------- --------
Total operating
expenses 2,289.8 90.1 626.9 92.5 (34.0) 2,882.7
-------- -------- ------ -------- -------- --------
Segment EBITDA(2) 251.6 9.9 51.1 7.5 - 302.7
Less:
Interest, net 112.2 4.4 (0.6) (0.1) - 111.6
Depreciation and
amortization 124.8 4.9 4.1 0.6 - 128.9
Equity method
income (0.8) (0.0) - - - (0.8)
Stock
compensation 4.4 0.2 - - - 4.4
Gain on disposal
of assets (2.3) (0.1) - - - (2.3)
Monitoring fees
and expenses 5.2 0.2 - - - 5.2
Realized holding
loss on
investments 0.6 - - - - 0.6
Impairment loss 6.2 0.2 - - - 6.2
-------- -------- ------ -------- -------- --------
Income from
continuing
operations
before income
taxes $ 1.3 0.1% $ 47.6 7.0% $ - $ 48.9
======== ======== ====== ======== ======== ========
(1) Vanguard eliminates in consolidation those patient service revenues
earned by its healthcare facilities attributable to services provided
to enrollees in its owned health plans and eliminates the
corresponding medical claims expenses incurred by the health plans for
those services
(2) Segment EBITDA is defined as income (loss) from continuing operations
before income taxes less interest expense (net of interest income),
depreciation and amortization, equity method income, stock
compensation, gain or loss on disposal of assets, realized holding
losses on investments, monitoring fees and expenses, acquisition
related expenses, debt extinguishment costs and impairment losses.
Management uses Segment EBITDA to measure performance for Vanguard's
segments and to develop strategic objectives and operating plans for
those segments. Segment EBITDA eliminates the uneven effect of
non-cash depreciation of tangible assets and amortization of
intangible assets, much of which results from acquisitions accounted
for under the purchase method of accounting. Segment EBITDA also
eliminates the effects of changes in interest rates which management
believes relate to general trends in global capital markets, but are
not necessarily indicative of the operating performance of Vanguard's
segments. Management believes that Segment EBITDA provides useful
information about the financial performance of Vanguard's segments to
investors, lenders, financial analysts and rating agencies.
Additionally, management believes that investors and lenders view
Segment EBITDA as an important factor in making investment decisions
and assessing the value of Vanguard. Segment EBITDA is not a
substitute for net income (loss), operating cash flows or other cash
flow statement data determined in accordance with accounting
principles generally accepted in the United States. Segment EBITDA,
as presented, may not be comparable to similar measures of other
companies.
VANGUARD HEALTH SYSTEMS, INC.
Segment Information (Unaudited)
(In millions)
Year ended June 30, 2010
--------------------------------------------------------
Acute
Care % of Health % of Elimina- Consoli-
Services Revenues Plans Revenues tions dated
-------- ------- ------- ------- -------- --------
Patient service
revenues(1) $2,580.0 100.0 % $ - -% $ (42.8) $2,537.2
Premium revenues - - 839.7 100.0 - 839.7
-------- ------- ------- ------- -------- --------
Total revenues 2,580.0 100.0 839.7 100.0 (42.8) 3,376.9
Salaries and
benefits
(excludes stock
compensation) 1,257.9 48.8 34.1 4.1 - 1,292.0
Health plan
claims expense - - 708.6 84.4 (42.8) 665.8
Supplies 456.0 17.7 0.1 - - 456.1
Provision for
doubtful
accounts 152.5 5.9 - - - 152.5
Other operating
expenses 447.0 17.3 36.9 4.4 - 483.9
-------- ------- ------- ------- -------- --------
Total operating
expenses 2,313.4 89.7 779.7 92.9 (42.8) 3,050.3
-------- ------- ------- ------- -------- --------
Segment EBITDA(2) 266.6 10.3 60.0 7.1 - 326.6
Less:
Interest, net 116.5 4.5 (1.0) (0.1) - 115.5
Depreciation and
amortization 135.2 5.2 4.4 0.5 - 139.6
Equity method
income (0.9) (0.0) - - - (0.9)
Stock
compensation 4.2 0.2 - - - 4.2
Loss on disposal
of assets 1.8 0.1 - - - 1.8
Monitoring fees
and expenses 5.1 0.2 - - - 5.1
Acquisition
related expenses 3.1 0.1 - - - 3.1
Debt
extinguishment
costs 73.5 2.8 - - - 73.5
Impairment loss 43.1 1.7 - - - 43.1
-------- ------- ------- ------- -------- --------
Income (loss)
from
continuing
operations
before income
taxes $ (115.0) (4.5)% $ 56.6 6.7% $ - $ (58.4)
======== ======= ======= ======= ======== ========
(1) Vanguard eliminates in consolidation those patient service revenues
earned by its healthcare facilities attributable to services provided
to enrollees in its owned health plans and eliminates the corresponding
medical claims expenses incurred by the health plans for those
services.
(2) Segment EBITDA is defined as income (loss) from continuing operations
before income taxes less interest expense (net of interest income),
depreciation and amortization, equity method income, stock
compensation, gain or loss on disposal of assets, realized holding
losses on investments, monitoring fees and expenses, acquisition
related expenses, debt extinguishment costs and impairment losses.
Management uses Segment EBITDA to measure performance for Vanguard's
segments and to develop strategic objectives and operating plans for
those segments. Segment EBITDA eliminates the uneven effect of non-cash
depreciation of tangible assets and amortization of intangible assets,
much of which results from acquisitions accounted for under the
purchase method of accounting. Segment EBITDA also eliminates the
effects of changes in interest rates which management believes relate
to general trends in global capital markets, but are not necessarily
indicative of the operating performance of Vanguard's segments.
Management believes that Segment EBITDA provides useful information
about the financial performance of Vanguard's segments to investors,
lenders, financial analysts and rating agencies. Additionally,
management believes that investors and lenders view Segment EBITDA as
an important factor in making investment decisions and assessing the
value of Vanguard. Segment EBITDA is not a substitute for net income
(loss), operating cash flows or other cash flow statement data
determined in accordance with accounting principles generally accepted
in the United States. Segment EBITDA, as presented, may not be
comparable to similar measures of other companies.
VANGUARD HEALTH SYSTEMS, INC.
Selected Operating Statistics
(Unaudited)
Three months ended
June 30,
----------------
2009 2010 % Change
------- ------- -------
Number of hospitals at end of period 15 15
Licensed beds at end of period 4,135 4,135
Discharges 41,400 42,159 1.8%
Adjusted discharges 73,210 75,620 3.3
Adjusted discharges - hospitals 69,258 71,657 3.5
Average length of stay 4.18 4.09 (2.2)
Patient days 173,022 172,388 (0.4)
Adjusted patient days 305,966 309,209 1.1
Adjusted patient days - hospitals 289,447 293,003 1.2
Patient revenue per adjusted discharge $ 8,422 $ 8,407 (0.2)
Patient revenue per adjusted discharge -
hospitals $ 8,850 $ 8,560 (3.3)
Inpatient surgeries 9,530 9,244 (3.0)
Outpatient surgeries 19,521 19,084 (2.2)
Emergency room visits 158,936 160,523 1.0%
Charity care and uninsured discounts as a
percent of acute care segment revenues
(prior to these discounts)(1) 4.9% 10.8%
Provision for doubtful accounts as a percent of
acute care services segment revenues (prior to
charity and uninsured discounts)(1) 8.2% 5.4%
Net patient revenue payer mix:
Medicare 24.8% 25.0%
Medicaid 7.7 7.6
Managed Medicare 14.7 14.7
Managed Medicaid 9.1 9.3
Managed care 34.0 35.2
Commercial 0.9 1.0
Self pay 8.8 7.2
------- -------
Total 100.0% 100.0%
======= =======
Discharges by payer:
Medicare 26.7% 27.8%
Medicaid(1) 9.7 9.3
Managed Medicare 16.5 16.3
Managed Medicaid 14.3 15.2
Managed care 28.3 26.4
Commercial 0.4 0.4
Self pay(1) 4.1 4.6
------- -------
Total 100.0% 100.0%
======= =======
(1) See Supplemental Operating Measures Adjusted For Comparative Analysis
for the impact to the ratio of charity and uninsured discounts as a
percent of acute care services segment revenues, the ratio of
provision for doubtful accounts as a percent of acute care services
segment revenues and Medicaid and self pay discharges of the change
in our Medicaid pending policy during the three months ended June
30, 2010.
VANGUARD HEALTH SYSTEMS, INC.
Selected Operating Statistics
(Unaudited) (continued)
Year ended June 30,
--------------------
2009 2010 % Change
--------- --------- ---------
Number of hospitals at end of period 15 15
Licensed beds at end of period 4,135 4,135
Discharges 167,880 168,370 0.3%
Adjusted discharges 288,807 295,702 2.4
Adjusted discharges - hospitals 274,767 280,437 2.1
Average length of stay 4.23 4.17 (1.4)
Patient days 709,952 701,265 (1.2)
Adjusted patient days 1,221,345 1,231,604 0.8
Adjusted patient days - hospitals 1,161,967 1,168,027 0.5
Patient revenue per adjusted discharge $ 8,503 $ 8,408 (1.1)
Patient revenue per adjusted discharge -
hospitals $ 8,623 $ 8,516 (1.2)
Inpatient surgeries 37,970 37,320 (1.7)
Outpatient surgeries 76,378 75,969 (0.5)
Emergency room visits 605,729 626,237 3.4%
Charity care and uninsured discounts as a
percent of acute care services segment
revenues (prior to these discounts) 3.9% 10.5%
Provision for doubtful accounts as a
percent of acute care services segment
revenues (prior to charity and uninsured
discounts)(1) 8.0% 5.3%
Net patient revenue payer mix:
Medicare 25.3% 25.5%
Medicaid 7.9 7.4
Managed Medicare 14.1 14.8
Managed Medicaid 8.8 9.5
Managed care 34.7 34.9
Commercial 0.9 1.1
Self pay 8.3 6.8
--------- ---------
Total 100.0% 100.0%
========= =========
Discharges by payer:
Medicare 27.1% 27.5%
Medicaid (1) 10.2 8.8
Managed Medicare 16.0 16.3
Managed Medicaid 13.8 15.3
Managed care 29.2 26.8
Commercial 0.3 0.4
Self pay (1) 3.4 4.9
--------- ---------
Total 100.0% 100.0%
========= =========
(1) See Supplemental Operating Measures Adjusted For Comparative Analysis
for the impact to the ratio of charity and uninsured discounts as a
percent of acute care services segment revenues, the ratio of provision
for doubtful accounts as a percent of acute care services segment
revenues and Medicaid and self pay discharges of the change in our
Medicaid pending policy during the year ended June 30, 2010.
VANGUARD HEALTH SYSTEMS, INC.
Supplemental Operating Measures Adjusted for Comparative Analysis
For the three months ended June 30, 2010
(dollars in millions, except for statistical measures)
(Unaudited)
Impact of Policy % of Segment Revenues
Changes ----------------------
GAAP- ---------------- Non-GAAP Non-GAAP
basis Uninsured Medicaid adjusted GAAP adjusted(4)
amounts discounts pending amounts basis --------------
(1) (2) (3) (4) 2010 2009 2010
------- -------- ------ ------- ------ ------ ------
Acute care
services
segment:
Total
revenues(5) $ 657.8 $ 33.5 $ (4.7) $ 686.6 100.0% 100.0% 100.0%
Salaries and
benefits(8) $ 324.7 $ - $ - $ 324.7 49.4 47.6 47.3
Supplies $ 116.7 $ - $ - $ 116.7 17.7 18.0 17.0
Provision for
doubtful
accounts $ 39.5 $ 33.5 $ (3.6) $ 69.4 6.0 9.6 10.1
Other operating
expenses $ 110.8 $ - $ - $ 110.8 16.8 15.8 16.1
Total operating
expenses $ 591.7 $ 33.5 $ (3.6) $ 621.6 90.0% 91.0 % 90.5%
% of Segment Revenues
Prior to Charity and
Impact of Policy Uninsured Discounts
Changes ----------------------
GAAP- ---------------- Non-GAAP Non-GAAP
basis Uninsured Medicaid adjusted GAAP adjusted(4)
amounts discounts pending amounts basis --------------
(1) (2) (3) (4) 2010 2009 2010
------- -------- ------ ------- ------ ------ ------
Uncompensated
care(6) $ 117.8 $ (21.2) $ (3.6) $ 93.0 16.0% 12.4% 13.1%
Total revenues,
prior
to charity(7) $ 681.3 $ 33.5 $ (4.7) $ 710.1
2010 2010
Statistical 2010 2010 Statistical 2009 Current
Vanguard Measure Uninsured Medicaid Measure Measure year
consolidated: as discounts pending as as change as
reported (2) (3) adjusted adjusted adjusted
------- -------- ------ ------- ------- ------
Patient revenue
per total
adjusted
discharge $ 8,407 $ 443 $ (62) $ 8,788 $ 8,516 3.2%
Self-pay
discharges 1,942 - (600) 1,342 1,526 (12.1)%
Medicaid
discharges 3,910 - 600 4,510 4,197 7.5%
VANGUARD HEALTH SYSTEMS, INC.
Supplemental Operating Measures Adjusted for Comparative Analysis
For the year ended June 30, 2010
(dollars in millions, except for statistical measures)
(Unaudited)
Impact of Policy % of Segment Revenues
Changes -----------------------
GAAP- --------------- Non-GAAP Non-GAAP
basis Uninsured Medicaid adjusted GAAP adjusted(4)
amounts discounts pending amounts basis ---------------
(1) (2) (3) (4) 2010 2009 2010
-------- ------ ------ -------- ------ ----- -------
Acute care
services
segment:
Total
revenues(5) $2,580.0 $128.7 $(22.9) $2,685.8 100.0% 100.0% 100.0%
Salaries and
benefits(8) $1,262.1 $ - $ - $1,262.1 48.9 47.2 47.0
Supplies $ 456.0 $ - $ - $ 456.0 17.7 17.9 17.0
Provision for
doubtful
accounts $ 152.5 $128.7 $(22.3) $ 258.9 5.9 8.5 9.6
Other operating
expenses $ 447.0 $ - $ - $ 447.0 17.3 16.7 16.6
Total operating
expenses $2,317.6 $128.7 $(22.3) $2,424.0 89.8% 90.3% 90.3%
% of Segment Revenues
Prior to Charity and
Impact of Policy Uninsured Discounts
Changes ----------------------
GAAP- ---------------- Non-GAAP Non-GAAP
basis Uninsured Medicaid adjusted GAAP adjusted(4)
amounts dis- pending amounts basis ---------------
(1) counts(2) (3) (4) 2010 2009 2010
-------- ------ ------ -------- ----- ----- ------
Uncompensated
care(6) $ 455.9 $(87.0) $(22.3) $ 346.6 15.8% 11.6% 12.5%
Total revenues,
prior to
charity(7) $2,667.7 $128.7 $(22.9) $2,773.5
2010 2010
Statistical 2010 2010 Statistical 2009 Current
Vanguard Measure Uninsured Medicaid Measure Measure year
consolidated: as discounts pending as as change as
reported (2) (3) adjusted adjusted adjusted
------- -------- ------ ------- ------- ------
Patient revenue
per total
adjusted
discharge $ 8,408 $ 435 $ (79) $ 8,764 $ 8,527 2.8%
Self-pay
discharges 8,168 - (2,717) 5,451 5,483 (0.6)%
Medicaid
discharges 14,867 - 2,717 17,584 17,235 2.0%
(1) Amounts reflected in or components of amounts reflected in the
segment information tables included in this release. These amounts
are based upon revenues or expenses determined in accordance with
accounting principles generally accepted in the United States.
(2) Includes the impact of the uninsured discount policy implemented
for Vanguard's Illinois hospitals effective April 1, 2009 and for
it Phoenix and San Antonio hospitals effective July 1, 2009. Under
this policy, Vanguard applies an uninsured discount (calculated as
a standard percentage of gross revenues) at the time of patient
billing and includes the discount as a reduction of revenues. This
uninsured discount program applies to patients receiving hospital
services who have no insurance coverage and do not otherwise meet
Vanguard's charity care guidelines. Vanguard recorded a total of
$11.7 million and $54.7 million of uninsured discounts relates to
its acute care services segment during the three months ended June
30, 2009 and 2010, respectively. Of these amounts $7.6 million and
$33.5 million for the three months ended June 30, 2009 and 2010,
respectively, related to non-Medicaid pending accounts that reduced
revenues as a result of implementing this policy. Vanguard recorded
a total of $11.7 million and $215.7 million of uninsured discounts
related to its acute care services segment during the years ended
June 30, 2009 and 2010, respectively. Of these amounts, $7.6 million
and $128.7 million for the years ended June 30, 2009 and 2010,
respectively, related to non-Medicaid pending accounts that reduced
revenues as a result of implementing this policy.
(3) Includes the impact of Vanguard's policy change for accounts pending
Medicaid qualification. Prior to the implementation of its new
uninsured discount policy, Vanguard classified accounts pending
Medicaid qualification as Medicaid revenues (and Medicaid discharges)
and recorded a contractual discount for these accounts based upon
the average Medicaid reimbursement rate for each specific state until
qualification was confirmed. Vanguard implemented a new Medicaid
pending policy for all of its hospitals whereby Medicaid pending
accounts are classified as self-pay revenues (and self-pay discharges)
with an uninsured discount applied. The balance of these accounts is
subject to Vanguard's allowance for doubtful accounts policy. For
those accounts that subsequently qualify for Medicaid coverage, the
uninsured discount is reversed and the account is reclassified to
Medicaid revenues (and Medicaid discharges) with the appropriate
contractual discount applied. The difference between the
state-specific Medicaid contractual discounts under the previous
policy and the uninsured discount percentage applied to Medicaid
pending accounts under the new policy increased total revenues by
$0.7 million, $4.7 million, $0.7 million and $22.9 million for the
three months ended June 30, 2009 and 2010 and the years ended June
30, 2009 and 2010, respectively. The provision for doubtful accounts
recorded for Medicaid pending accounts, after the uninsured discounts
were applied, were $1.0 million, $3.6 million, $1.0 million and $22.3
million for the three months ended June 30, 2009 and 2010 and the
years ended June 30, 2009 and 2010, respectively.
(4) Revenues, certain expenses and those expenses as a percentage of
revenues for the acute care services segment for the three months and
year ended June 30, 2010 have been adjusted to allow for comparative
measurement on a basis consistent with the three months and year ended
June 30, 2009 (before implementation of the majority of the uninsured
discount policy or the change to the Medicaid pending policy).
Management believes these non-GAAP measures will provide investors,
analysts and general users of this financial information an effective
means to compare the operating results of Vanguard's acute care
services segment for the current year periods to those of the prior
year periods. However, these non-GAAP operating measures are not
meant to replace GAAP-basis revenues, expenses or expenses as a
percentage of revenues as operating performance indicators for the
acute care services segment.
(5) Total revenues for the acute care services segment represent revenues
prior to the elimination in consolidation of revenues earned by
Vanguard's hospitals for services provided to enrollees in Vanguard's
owned health plans.
(6) Uncompensated care is defined as the sum of uninsured discounts,
charity deductions and the provision for doubtful accounts.
(7) Represents total revenues for the acute care services segment plus
charity deductions.
(8) Includes stock compensation.