VERITY HEALTH SYSTEM (FORMERLY DAUGHTERS OF CHARITY HEALTH SYSYTEM) ANNUAL REPORT

Transcription

1 VERITY HEALTH SYSTEM (FORMERLY DAUGHTERS OF CHARITY HEALTH SYSYTEM) ANNUAL REPORT FISCAL YEAR ENDED JUNE 30,

2 Contents 1) List of Obligated Group Members 3 2) Sources of Gross Patient Revenue.3 3) Unrestricted Revenues, Other Support, Investment Income, Excess of Revenues over Expenses, and Unrestricted Liquidity ) Unrestricted Net Assets of Non-Obligated Group Member Entities...4 5) Capitalization Table...4 6) Debt Service Coverage Table..4 7) Utilization Data for Acute Care Facilities 5 8) Employee Information 5 9) UNAUDITED Financial Statements 6-9 2

3 1) List of Obligated Group Members: Verity Health System of California, Inc. O Connor Hospital Saint Louise Regional Hospital Seton Medical Center Seton Medical Center Coastside (a division of Seton Medical Center) St. Francis Medical Center St. Vincent Medical Center 2) Sources of Gross Patient Revenue for most recent Fiscal Year: Verity All Entities Medicare 40.8% 39.3% Medicare Capitated 2.6% 2.8% Medi-Cal 28.7% 30.2% Medi-Cal Capitated 1.2% 1.3% Contracted Rate Payors 20.8% 20.7% Commercial Capitated 0.2% 0.1% Commercial Insurance and Other Payors 5.7% 5.6% Total 100.0% 100.0% 3) Unrestricted Revenues, Other Support, Investment Income, Excess of Revenues over Expenses, and Unrestricted Liquidity: Verity All Entities Unrestricted Revenues and Other Support $1,464,190 $1,298,095 Investment Income (Loss) - Net $3,876 $1,355 Excess (Deficit) of Revenues over Expenses ($69,948) ($195,429) Unrestricted Liquidity $103,057 $111,357 3

4 4) Combined Unrestricted Net Assets of Non-Obligated Group Member Entities: Unrestricted Net Assets of Non-Obligated Group Member Entities ($4,970) $25,270 5) Capitalization Table for the Obligated Group: Obligated Group Outstanding - Series 2005 Bonds $278,680 $272,590 - Series 2015A and B Bonds $0 $105,000 - Notes Payable $5,506 $0 - Other $0 $0 Subtotal $284,186 $377,590 Less: Current Portion of the Long-Term Debt $6,268 $6,405 Long-Term Debt (excluding bond premium) $277,918 $371,185 Plus: Bond Premium $4,391 $4,031 Total Long-Term Debt $282,309 $375,216 Unrestricted Net Assets ($81,440) ($359,267) Total Capitalization $200,869 $15,949 Percent Total Debt to Capitalization % 2,352.60% 6) Debt Service Coverage Table for the Obligated Group: Obligated Group Excess (Deficit) of Revenues over Expenses ($33,711) ($183,704) Plus: Depreciation and Amortization $57,120 $44,938 Plus: Interest $20,783 $20,300 Plus: Unrealized (Gains) Losses $48 $0 Plus: Management Fee Deferral $0 $16,108 Plus: Asset Impairment $10,000 $0 Income Available for Debt Service $54,240 ($102,358) Maximum Annual Debt Service Requirement $25,767 $36,641 Coverage of Maximum Annual Debt Service Requirement (times) 2.10 (2.79) Annual Debt Service Requirement net of Irrevocable Prepayments $26,747 $26,568 Coverage of Annual Debt Service Requirement (times) 2.03 (3.85) 4

5 7) Utilization Data for Acute Care Facilities: Historical Utilization Date for Acute Care Facilities For the Fiscal Years Ended June 30 Acute Staffed Year Acute Acute Average Length Beds Est. Licensed Beds Discharges Patient Days of Stay June 30 Acute O Connor Hospital 1889 Acute 334 SNF Acute 334 SNF 24 Acute 334 SNF 24 10,947 10,816 9,565 41,717 39,807 36, Saint Louise Regional Hospital 1989 Acute 72 SNF 21 Acute 72 SNF 21 Acute 72 SNF 21 3,044 2,903 2,607 10,550 9,838 9, Seton Medical Center 1893 Acute 274 SNF & Subacute 83 Acute 274 SNF & Subacute 83 Acute 274 SNF & Subacute 83 6,717 6,408 5,320 33,038 31,775 28, Seton Medical Center Coastside 1978 Acute 5 SNF 116 Acute 5 SNF 116 Acute 5 SNF St. Francis Medical Center 1945 Acute 314 SNF 30 Psych 40 Acute 314 SNF 30 Psych 40 Acute 314 SNF 30 Psych 40 16,329 16,775 17,727 69,665 71,415 72, St. Vincent Medical Center 1856 Acute 320 SNF & Acute Rehab 46 Acute 320 SNF & Acute Rehab 46 Acute 320 SNF & Acute Rehab 46 7,223 7,977 9,097 34,634 36,995 43, ) Employee Information: Verity All Entities Verity All Entities Number of Employees 6,937 6,018 Percentage of Employees Subject to Collective Bargaining Agreements 71.13% 77.67% 5

6 UNAUDITED FINANCIAL STATEMENTS 6

7 VERITY HEALTH SYSTEM BALANCE SHEET - UNAUDITED FOR THE TWELVE MONTHS ENDED JUNE 30, 2016 (In thousands) NON- ELIMINATIONS Verity Total ASSETS CURRENT ASSETS: Cash and cash equivalents $ 43,946 $ 22,411 $ - $ 66,357 Subtotal 43,946 22,411-66,357 Net patient accounts receivable 155,234 5, ,324 Due from government agencies 20, ,137 Due from related organizations 40,121 15,816 (55,937) (0) Discontinued operations Pending Trades Receivable - 1,187-1,187 Other current assets 98,029 11,486 (4,428) 105,087 Other restricted assets - 12,074-12,074 Total current assets 357,466 68,064 (60,365) 365,166 ASSETS LIMITED AS TO USE: Other investments 2, , ,243 Under bond indenture agreements 25, ,154 Total assets limited as to use 28, , ,396 PROPERTY AND EQUIPMENT, Net 215,852 29, ,912 OTHER LONG-TERM ASSETS 7,560 2,801-10,361 TOTAL ASSETS 608, ,201 (60,365) 757,835 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Accounts payable 32,137 4,224-36,362 Current portion of long-term debt 6, ,647 Short-term debt Due to government agencies 1, ,155 Accrued liabilities/other 194,565 22,744 (1,027) 216,283 Discontinued operations Pending Trades Payable - 1,121-1,121 Due to related organizations 15,816 40,121 (55,937) 0 Total current liabilities 250,079 68,452 (56,963) 261,568 OTHER LIABILITIES Pension and other long-term liabilities 339,626 32,216 (3,401) 368,441 Other long-term liabilities OTHER LIABILITIES 339,626 32,216 (3,401) 368,441 LONG-TERM DEBT, Net of current portion 375,216 5, ,356 Total liabilities 964, ,808 (60,365) 1,010,365 NET ASSETS: Unrestricted (359,267) 25,270 - (333,997) Temporarily restricted ,656-73,330 Permanently restricted 2,671 5,467-8,137 Total net assets (355,923) 103,393 - (252,530) TOTAL LIABILITIES AND NET ASSETS 608, ,201 (60,365) 757,835 7

8 VERITY HEALTH SYSTEM STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS - UNAUDITED FOR THE TWELVE MONTHS ENDED JUNE 30, 2016 (In thousands) NON- ELIMINATIONS Verity Total UNRESTRICTED REVENUES AND OTHER SUPPORT: Net patient service revenue $ 1,121,431 $ 40,249 $ - $ 1,161,679 Provision and write-off for doubtful accounts (26,195) (539) - (26,734) Net patient service revenue less provision and write off for doubtful accounts 1,095,236 39,710-1,134,946 Premium revenue 96,166 26, ,849 Other revenue 13,766 45,740 (35,851) 23,656 Contributions 4,249 12,396-16,645 Total unrestricted revenues and other support 1,209, ,528 (35,850) 1,298,096 EXPENSES: Salaries and benefits 697,996 37,938 (12,612) 723,322 Supplies 158,715 6,789 (127) 165,377 Purchased services and other 471,865 88,421 (23,006) 537,281 Depreciation and amortization 44,938 3,474 (105) 48,308 Interest, net 20, ,593 Total expenses 1,393, ,915 (35,850) 1,494,880 OPERATING LOSS (184,397) (12,387) - (196,784) INVESTMENT INCOME (LOSS) ,355 EXCESS (DEFICIT) OF REVENUES OVER EXPENSES (183,704) (11,726) - (195,430) Net unrealized gains on investments - (3) - (3) Net assets released from restrictions used for purchase of property and equipment 1,903 (21) - 1,882 Net assets released from restrictions used for operations Change in pension obligations (53,981) - - (53,981) Other (42,047) 41,991 - (56) INCREASE (DECREASE) IN UNRESTRICTED NET ASSETS (277,829) 30,241 - (247,588) TEMPORARILY RESTRICTED NET ASSETS Contributions 95 76,057-76,152 Net realized and unrealized gains on investments Net assets released from restrictions: Operations (130) (16,247) - (16,377) Property, plant and equipment - (1,780) - (1,780) Other - (132) - (132) INCREASE (DECREASE) IN TEMPORARILY RESTRICTED NET ASSETS (35) 57,910-57,875 PERMANENTLY RESTRICTED NET ASSETS Contributions Net realized and unrealized gains on investments (63) (10) - (73) Net assets released from restrictions: Operations Property, plant and equipment - (102) - (102) Other INCREASE (DECREASE) IN PERMANENTLY RESTRICTED NET ASSETS (63) (5) - (68) INCREASE (DECREASE) IN NET ASSETS (277,927) 88,146 - (189,781) NET ASSETS AS OF JUNE 30, 2015 (77,996) 15,247 (0) (62,749) NET ASSETS AS OF JUNE 30, 2016 (355,923) 103,393 (0) (252,530) 8

9 VERITY HEALTH SYSTEM STATEMENT OF CASH FLOWS - UNAUDITED FOR THE TWELVE MONTHS ENDED JUNE 30, 2016 (In thousands) NON- ELIMINATIONS Verity Total Operating activities Increase (Decrease) in net assets $ (277,927) $ 88,146 $ 0 $ (189,781) Adjustments to reconcile increase (decrease) in net assets to net cash provided by (used in) operating activities: Depreciation and amortization 45,027 3,474 (105) 48,397 Provision for doubtful accounts 26, ,734 Changes in fair value and unrealized and realized gains on investments, net - (694) - (694) Amortization of bond premium Amortization of deferred debt issuance cost Change in funded status of pension plans 52, ,326 Goodwill impairment Long lived assets impairment Gain on disposal of property and equipment (2,584) - - (2,584) Gains on disposal of other assets Gain on contribution for debt repayment 26,692 (26,692) - - Transfers to (from) affiliates Gain on loan forgiveness Changes in operating assets and liabilities: Patient accounts receivable (30,364) 55 - (30,310) Due to/from government agencies (1,748) - - (1,748) Other current assets 82,137 (25,534) 21,380 77,983 Other long-term assets (1,265) (45,126) (57) (46,447) Accounts payable (9,893) (9,383) Accrued liabilities 52,884 (20,815) (22,072) 9,997 Other short-term liabilities (69,807) (69,618) Workers compensation Change (394) 31,749 4,148 35,503 Change in Pension obligations (2,066) - - (2,066) Other long-term liabilities 17,055 5,351 (3,399) 19,006 Net cash provided by (used in) operating activities (93,732) 11,152 (105) (82,685) Investing activities Purchases of investments - (250,547) - (250,547) Purchase of asset for health-related activity Proceeds from disposal of property and equipment 2,470 1,918-4,388 Proceeds from disposal of assets held for sale Proceeds from sales of investments - 251, ,518 Changes in interest in pooled investment fund - short term Cash and cash equivalents movements in assets limited as to use Changes in assets under bond indenture agreements Additions to property and equipment (10,829) (1,633) 105 (12,357) Net cash provided by (used in) investing activities (7,641) 1, (6,054) CASH FLOWS FROM FINANCING ACTIVITIES Retirement of debt (47,643) - - (47,643) Repayment of debt (6,268) (511) - (6,779) Issuance of debt 103, ,788 Cash contributions received for the purchase of property and equipment Net cash provided by (used in) financing activities 49,877 (511) - 49,365 Net Increase (Decrease) in Cash and Cash Equivalents (51,496) 12,123 (0) (39,373) CASH AND CASH EQUIVALENTS AS OF JUNE 30, ,442 10, ,730 CASH AND CASH EQUIVALENTS AS OF JUNE 30, ,946 22,411 (0) 66,357 9