Memorial Sloan-Kettering Cancer Center Financial and Statistical Information For the Six Months Ended September 30, 2012

Transcription

1 Memorial Sloan-Kettering Cancer Center Financial and Statistical Information For the Six Months Ended September 30, 2012 Page No. Certificate of Compliance Management's Discussion of Financial Performance Combined Statements of Activities Combined Balance Sheets Combined Statements of Changes in Net Assets Combined Statements of Cash Flow Debt Ratio Analysis and Adjusted Operating Loss Combined Philanthropic History Combined Investments in Securities Key Patient Statistics and Other Data Patient Revenue Distribution and CMI

2 CERTIFICATE OF COMPLIANCE For The Period Ended 9/30/2012 Re: Memorial Sloan-Kettering Cancer Center Bond Series 1998, Series Series 1-2, 2008 A1 & A2, 2010 Series 1, 2011 A, and 2012 Series 1 The undersigned hereby certifies as follows: 1. I am the Controller of Memorial Sloan-Kettering Cancer Center, herein after referred to as the Institution, and I am authorized on behalf of the Senior Vice President Finance, an Officer of the Institution, to sign this certificate. 2. I have read the Loan Agreements, and Tax Certificates executed on behalf of the Institution in connection with the referenced Bond issues. 3. By virtue of my position at the Institution I would expect to become aware in the ordinary course of business of any breach of the terms, conditions and covenants contained in the Loan Agreements or Tax Certificates. 4. To the best of knowledge, there has not been and is not now existing any breach of any of the terms, conditions or covenants contained in the Loan Agreements or Tax Certificates. 5. The Institution has not received an insurance payment, eminent domain award or property damage award for any part of the Project or Mortgaged Property. 6. Except as permitted by the Loan Agreements or Tax Certificates executed in connection with the issuances of the Bonds or as subsequently consented to by the Authority and any other parties required to consent thereto, (1) the Institution owns, occupies and uses for its tax exempt purposes all of the Project(s) financed with the proceeds of the referenced Bond issue(s); (2) no other party has the right to use or occupy any portion of such Project(s); (3) the Institution receives no payment from any party or parties for occupying all or any part of such Project(s); (4) the Institution has not entered into any contract for the management of any part of the Project(s) by another party or person. (Payment does not include fees from students for occupying dormitory rooms and fees from staff members for occupying staff housing). Melllorial Sloan-Kettering Cancer Center 633 Third A11enue, New York. New York I OOT7 NCT-tlesignaitd Comprebemit;e Cancer Center

3 7. The Institution has not received any correspondence from the Internal Revenue Service questioning its tax-exempt status and hereby reaffirms its status as a not-for-profit corporation that is exempt from federal income tax pursuant to Section 501 (c)(3) ofthe Internal Revenue Code or as a tax exempt governmental entity. 8. The Institution has implemented adequate policies and procedures to enable the Institution to comply with any reporting requirements of the Internal Revenue Service applicable to the Bonds, including but not limited to Schedule K (Form 990). 9. To the best of my knowledge, the Institution has not granted or permitted any liens against the Mortgaged Property or leases of any part thereof except those which were filed prior to, or in connection, with the issuance of the Bonds or those which were subsequently consented to by the Authority and any other parties required to consent thereto. /);,. 0~-~--- Signatu~ Date Mark Svenningson Print Name Controller Title

4 Memorial Sloan-Kettering Cancer Center Management's Discussion and Analysis of Financial Performance For the Nine Months Ended September 30, 2012 For the nine months ended September 30, 2012, Memorial Sloan-Kettering Cancer Center and affiliates had income from operations of$103.2 million, as compared to $138.3 million for the same period last year. Operating revenues increased by 21.5% or $433.2 million from the same period in Management attributes a portion of the operating revenue improvement to continuing increases in patient care revenue, primarily improved outpatient volumes provided by an expanding network. Inpatient days were slightly higher than last year by 5.2%. Outpatient visits are 2% or 8,112 greater than last year. Part of this growth is due to higher volumes at our Basking Ridge, New Jersey and Commack, Long Island sites. Investment return allocated to operations is $20 million less than in 2011 due to a reduction in the Institution's internal spending rate from 5% to 4%. Overall investment return net of allocation to operations is $339.7 million higher than in Operating expenses net offundraising costs increased by 6.8% or $127.4 million from Compensation and fringe benefit expense increased by 6.6% or $72 million from the same period in 2011, primarily due to the addition of309 full time equivalents needed to staff higher patient volumes and new facilities in addition to normal year to year salary and fringe benefit cost increases. Purchased supplies increased $48.1 million or 7.9% which includes growth in pharmaceutical costs of $23.9 million or 11%. During the first quarter the Institution issued $150 million of taxable bonds maturing in July 2042 with a 5% fixed interest rate. The Institution also issued $89.5 million of tax exempt debt through the Dotmitory Authority ofthe State ofnew York. These bonds mature through 2041 at fixed interest rates ranging from 3.00% to 5.00%. The Institution's investable assets of $2.7 billion have a year-to-date return of 8.8%, which is exclusive of short-term investments and cash equivalents. Our rate of return is reflective of a portfolio that includes 21% domestic and 13% global equity, 11% fixed income, 26% marketable alternative investments, 19% private equity and venture capital markets, and 1 0% inflation hedging. Footnotes: For the first nine months of2012 there has not been any change in operations, application of accounting principles or any other activity that would require an updating to the audited year-end footnote disclosures. The audited financial statements for 2011 with 2010 are available on the DacBond website, November 12,

5 Memorial Sloan-Kettering Cancer Center Combined Statements of Activities (Dollars In Thousands) Year Ended December 31, Se[!tember YTD Operating Revenues Patient Care Revenue $ 1,531,639 $ 1,606,989 $ 1,723,313 $ 1,854,776 $ 2,141,421 1,586,622 1,672,329 Grants and Contracts 149, , , , , , ,143 Contributions Allocated to Operations 95, , , , ,791 95, ,793 Royalty Income 38,302 94,131 62,232 68,663 77,510 39,032 58,398 Other Income 39,902 41,963 43,144 44,874 48,351 35,341 36,775 Unrestricted Investment Return Allocated to Operations 113, , , , ,699 77,898 57,837 Transfer of Board-Designated Annual Royalty Annuitization 29,440 33, ,578 46,417 34,813 38,782 Total Operating Revenues 1,997,170 2,164,947 2,263,590 2,413,930 2,740,137 2,017,769 2,110,057 Operating Expenses Compensation & Fringe Benefits 1,061,946 1,164,155 1,286,536 1,361,032 1,466,667 1,097,461 1,169,466 Purchased Supplies & Services 659, , , , , , ,350 Provision for Bad Debts & Assessments 13,387 6,823 10,881 11,046 18,285 14,993 12,719 Depreciation & Amortization 157, , , , , , ,450 Interest Expense 54,872 59,023 64,997 47,931 57,098 42,156 41,324 Less Fund Raising Expenses Transferred to Non-Operating Income (Expenses) (33,523) (36,048) (40,320) (43,926) (44,665) (31,51 7) (32,429) Total Operating Expenses 1,913,664 2,054,695 2,251,763 2,324,545 2,528,467 1,879,423 2,006,880 Income from Operations 83, ,252 11,827 89, , , ,177 Non-Operating Income (Expense) Contributions Net of Fundraising Expenses and Amount Allocated to Operations (35,096) 19,096 (22,537) (30,052) (47,102) (52,441) (62,192) Net Assets Released from Restrictions- Pledge Payments 78,333 82,347 73,819 65,442 65,378 49,893 64,725 Investment Return Net of Allocation to Operations 166,834 (772,328) 327, ,324 (126,179) (154,981) 181,502 Other nonoperating costs (6,731) (3,000) 2,916 2,916 (35,120) Total Non-Operating Income (Expense) 210,071 (677,616) 378, ,714 (104,987) (154,613) 148,915 Board-Designated Investment Income and Other Additions 6,410 {11,085) 5,749 2,951 (590) (1,200) 2,046 Transfer of Annual Royalty A nnuitization (29,440) (33,122) (37,158) (41,578) (46,417) (34,813) (38,782) Gain on Sale of Royalty Rights Total Board-Designated Income (Expense) (23,030) (44,207) (31,409) (38,627) (47,007) (36,01 3) (36,736) Provision for Asset Retirement Obligation Effect of Adoption of Recogniton and Measurement Date Provisions of FASB Statement No. 158 Postretirement benefit obligation changes to be recognized in future periods 45,720 (207,217) 52,728 (72,162) (11 0,250) (1 87,667) Increase (Decrease) in Total Unrestricted Net Assets $ 316,267 $ (818,788) $ 411,929 $ 202,310 $ (50,574) (239,947) 215,356 2

6 Memorial Sloan-Kettering Cancer Center and Affiliated Corporations Balance Sheets - Combined September 30, 2012 $ In Thousands CURRENT MONTH DECEMBER Prior Year ASSETS CURRENT ASSETS Cash and cash equivalents 155, ,242 Short term investments (Approximates cost) , , ,982 Patient Accounts Receivable 388, ,600 Other Accounts Receivable 115,471 73,491 Pledges, trusts & estates receivable 105, ,002 Other current assets ~ 85,064 NONCURRENT ASSETS ASSETS WHOSE USE IS LIMITED Investments in marketable securities: TOTAL CURRENT ASSETS 1, , Construction, debt service and repair reserve funds 102,977 33,981 Captive insurance reserve funds 42,317 33,006 Employee benefit funds ~ ~ TOTAL ASSETS WHOSE USE IS LIMITED 218, ,796 Investments at fair value 3,303,607 2,945,953 Property & equipment 2,173,026 2,147,383 Mortgages & other loans receivable 28,767 27,440 Pledges, trusts & estates receivable 300, ,247 Other noncurrent assets ~ ~ TOTAL NONCURRENT ASSETS 6, , TOTAL ASSETS 7,216,381 6,790,

7 Memorial Sloan-Kettering Cancer Center and Affiliated Corporations Balance Sheets - Combined September 30, 2012 $ In Thousands LIABILITIES AND FUND BALANCES CURRENT LIABILITIES Accounts payable 173, ,045 Accrued expenses 200, ,652 Current portion of long term debt Z.Q.2 TOTAL CURRENT LIABILITIES 423, ,403 NONCURRENT LIABILITIES Long term debt, less current portion 1,711,909 1,490,007 Other Noncurrent liabilities TOTAL LIABILITIES 3, NET ASSETS Unrestricted 2,887,325 2,681,711 Board Designated 354, ,253 Temporarily Restricted 480, ,992 Permanently Restricted 451, ,213 TOTAL NET ASSETS 4,174, ,169 TOTAL LIABILITIES AND NET ASSETS 7,216,382 6,790,007 4

8 Memorial Sloan-Kettering Cancer Center and Affiliated Corporations Combined Statements of Changes in Net Assets For the Periods Ended September 30, 2012 and the Year Ended December 31, 2011 $ In Thous ands Current Year Prior Year Unrestricted Net Assets Net Assets at the Beginning of the Year (Decrease) Increase in Unrestricted Net Assets 3,033, ,657 3,241,621 3,084,537-50,574 3,033,964 Temporarily Restricted Net Assets Net Assets at the Beginning of the Year Contributions, Pledges and Bequests Investment Return on Endowments Net Assets Released from Restrictions 481,992 42,734 20,898-64, , , ,800-11,089-65, ,992 Permanently Restricted Net Assets Net Assets at the Beginning of the Year Contributions, Pledges and Bequests Realized Gain(Loss) on Investment Transactions Unrealized Gain(Loss) on Investment Transactions 425,213 19,542 1,258 5, , ,337 27,220 4,720-7, ,213 5

9 Memorial SloanMKettering Cancer Center and Affiliated Corporations Combined Statements of Cash Flow For the Periods Ended September 30, 2012 and the Year Ended December 31, 2011 $In Thousands Year to Date Full Prior Year Operating activities Increase (decrease) in net assets 233,029 43,635 Adjustments to reconcile increase in unrestricted net assets to net cash provided by Operating activities Depreciation and amortization 157, ,461 Unrealized (gains) losses -20,708 4,265 Realized (gains) losses -4,562-9,508 Temporarily and permanently restricted contributions, pledges and bequests transferred to -75, ,930 Operating activities Effects of FASB ,250 (Increase) decrease in assets: Accounts receivable -62,266-47,850 Other current assets 3,770-15,849 Pledges, trusts and estates receivable ,630 Mortgages and other loans receivable -1, Other noncurrent assets -1,567-4,073 (Increase) decrease in liabilities: Accounts payable and accrued expenses -50,440-57,804 Other noncurrent liabilities 7,627 32,811 Net cash (used in) provided by operating activities 185,958 20,273 Investing activities Net additions to property and equipment -196, ,408 Increase in investments, net -411, ,347 Temporarily and permanently restricted contributions, pledges and bequests transferred to ,930 Operating activities 6

10 Memorial Sloan-Kettering Cancer Center and Affiliated Corporations Combined Statements of Cash Flow For the Periods Ended September 30, 2012 and the Year Ended December 31, 2011 $In Thousands Net cash used by investing activities Financing activities Retirement of Tax Exempt Debt New Bond Issue Net cash provided(used) by financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the year Year to Date -533, , , ,962-97, , ,851 Full Prior Year ,113 22, ,242 7

11 MEMOlUAL SLOAN-KETIERING CANCER CENTER DEBT RATIO AND ANALYSIS A.l\'D ADJUSTED OPERATING LOSS September 30, 2012 DEBT RATIO ANALYSIS 9130/ / Current Last year Two Years Ago Debt Ratio Cash & Equivalents 155, , ,681 Short Term Investments 192, , , 177 Assets Whose Use is Limited 635, , ,288 Investments 2,886,039 2,685,167 2,812,469 Total Cash & Investments 3,870,647 3,527,732 3,359,615 Pennanently Restricted Net Assets 451, , ,336 Less Current Restricted Pledges 3,700 4,404 4,779 Less Non-Current Restricted Pledges 9,031 9,03 1 7,210 PRNA Net of Restricted Pledges 438, , ,347 Unrestricted Cash & Investments 3,431,700 3,115,954 2,971,268 LTDebt 1,761,675 1, ,304, Minimum Debt Ratio Required Pass Pass Pass Loss Allowed Income (Loss) From Operations 103, ,670 89,385 Less Invest Income Supp Operations (57,837) (104,699) (100,389) Less Fundraising Costs (32,429) (44,665) (43,926) Add Contributions Net of Support to Operations (29,763) (2,437) 13,874 Add Net Assets Released from Restrictions 64,725 65,378 65,442 8% of Unrestricted Investments (3 yr avg) 222, , ,733 Adjusted Operating Gain (Loss) 270, ,119 Maximum Loss Allowed ~50,000) (50,000) ~50,000) Pass Pass Pass Calculation of 8% of Unrestricted Investments Total Cash and Investments 3,870,647 3,527,732 3,359,615 Less: Perrnanent Net Assets 438, , ,347 Less: Assets Whose Usc is Limited 635, ,288 Unrestricted Investments 2,795,902 2,720,371 2,819,980 3 yr average 2,778,751 2,691,128 2,47 1,665 X8% 222, , , , , ,733 LT Debt to Unrestricted Net Assets Ratio Unrestricted net assets 3,431,700 3,115,954 2,97 1,268 Long-term debt I,761,675 1,51 1,71 3 1,304, LT Debt to Unrestricted NA Ratio not to exceed Pass Pass Pass 8

12 Memorial Sloan-Kettering Cancer Center Combined Philanthropic History (in Thousands of Dollars) 2007 Year Ended December 31, September YTD Cash and Donated Securities Individuals Corporations Foundations Bequests $143,084 12,836 66,940 34,562 $126,122 $117,952 $118,159 14,132 11,819 17,858 51,251 41,450 36, ,774 (a) 59,889 36,233 $110,073 69,605 89,746 12,224 7,752 8,240 42,119 30,800 26,833 55,575 38,711 21,384 Total $257,422 $315,279 $231,110 $208,720 $219,991 $146,868 $146,203 GAAP Basis Philanthropy Unrestricted (b) Temporarily Restricted, net of release Permanently Restricted $172,604 (12,419) (d) 78,835 $246,335 $217,853 $196,639 30,990 (57,136) (d) 30,557 1,778 (c) 5,531 10,470 $193,732 $124,298 $140,755 80,422 18,878 (21,991) (d) 27,220 21,392 19,542 Total $239,020 $279,103 $166,248 $237,666 $301,374 $164,568 $138,306 Fundraising Cost $33,523 $36,048 $40,320 $43,926 $44,665 $31,517 $32,429 % of Cost to Accrual Basis Philanthropy 14.0% 12.9% 24.3% 18.5% 14.8% 19.2% 23.4% (a) Includes a one time bequest of $79.5 million. (b) Includes pledge payments released from Temporarily Restricted Net Assets. (c) Includes a prior period reclassification of $24 million which is offset against Unrestricted Net Assets. (d) Includes payments against exisiting pledges greater than the amount of recording new pledges. 9

13 Memorial Sloan-Kettering Cancer Center Combined Investments in Securities (at Market Value, includes Cash) (in Thousands of Dollars) Assets Whose Use is Limited Donor Permanently Restricted * Unrestricted Total 2007 $ 282, ,767 2,848,677 $3,518,246 Year Ended December 31, $ 198,894 $ 198, , ,419 2,179,400 2,644,994 $2,724,407 $3,213, $ 151, ,348 2,933,437 $3,473, $ 395, ,778 2,836,864 $3,644,225 September YTD $ 118,936 $ 235, , ,216 2, 730,937 3,321,980 $ 3,258,220 $3,983,994 *Represents permanently restricted funds that have been received under arrangements stipulated by the donor that prohibit spending the original gift. Amount shown is net of pledge receivables. 10

14 Memorial Sloan-Kettering Cancer Center Key Patient Statistics and Other Data Year Ended December 31, Se~tem ber YTD Licensed Beds Beds in Service Admissions 21,868 22,689 23,469 24,356 24,486 18,684 18,713 Discharges 21,866 22,655 23,484 24,391 24,478 18,499 18,606 Average Length of Stay Occupancy Rate (1) 87.4% 88.0% 88.5% 83.7% 82.2% 83.3% 87.3% Patient Days 137, , , , , , ,461 Total Outpatient Visits: 443, , , , , , ,440 Manhattan 368, , , , , , ,951 Regional Network 75,631 81,995 94,293 97, ,098 76,823 79,489 Screening Visits 30,200 28,888 27,369 23,373 20,518 15,432 11,720 Surgical Cases 16,951 18,035 19,233 19,362 19,374 14,707 15,062 Inpatient 10,259 10,718 11,052 11,303 11,318 8,670 8,700 Outpatient 6,692 7,317 8,181 8,059 8,056 6,037 6,362 Radiation Treatments & Implants: 101, , , , ,007 83,845 84,181 Manhattan 57,307 58,494 57,856 59,223 60,393 45,347 45,733 Regional Network 44,615 43,550 47,987 47,926 51,614 38,498 38,448 X-ray Examinations & Special Procedures 329, , , , , , ,230 Laboratory Procedures (2) 3,118,817 3,365,310 3,532,124 3,659,171 3,853,487 2,912,560 3,091,171 Full Time Equivalents 9, , , , , , ,222.5 (1) Based on adjusted bed count (2) Includes surgical pathology, cytology, and molecular diagnostic tests 11

15 Memorial Sloan-Kettering Cancer Center Case Mix Index and Patient Revenue Distribution September 30, September YTD Case Mix Index (1) Medicare Only CMI Revenue Distribution (2) Medicare 26.6% 23.7% 25.9% 22.4% Medicaid 4.2% 3.1% 3.7% 2.8% Commercial, Self Pay & Managed Care 28.1 % 12.4% 10.2% 12.8% non-contracted Managed Care Contracted (4) 41.1% 60.8% 60.1% 62.0% 100% 100% 100% 100% 25.1% 2.0% 11.5% 61.4% 100% 25.0% 24.1% 2.4% 1.0% 7.3% 11.0% 65.3% 63.9% 100% 100% (1) Since 2007, the grouper and weights applicable at the time of discharge were used in the CMI calculation. This CMI is for the total Hospital. (2) Includes net inpatient, outpatient, and medical practice revenue (3) Memorial Hospital is not reimbursed under the PPS system. (4) Beginning with the fourth quarter of 2007 and during 2008, a number of new managed care contracts were signed and implemented with managed care companies previously classified as non-contracted. 12