Consolidated Financial Statements March 31, 2018 and 2017 (Unaudited) Prepared by: Duke University Health System Finance Print Date: April 24, 2018
Consolidated Balance Sheets (Unaudited) March 31, 2018 and 2017 Assets 3/31/2018 3/31/2017 Current Assets: Cash and cash equivalents $ 226,398 241,926 Patient accounts receivable, net 407,085 367,390 Estimated third-party payor settlements, net 47,062 33,423 Other receivables 41,167 42,794 Due from the University, net 3,578 6,103 Inventories of drugs and supplies 92,159 87,239 Other assets 28,694 25,237 Short-term investments 394,713 182,564 Assets limited as to use 19,215 26,668 Total current assets 1,260,071 1,013,344 Assets limited as to use 84,772 80,537 Investments 3,160,569 2,333,261 Property and equipment, net 1,508,295 1,481,115 Due from the University 465 604 Other noncurrent assets 44,584 39,118 Total assets $ 6,058,756 4,947,979 Liabilities and Net Assets Current Liabilities: Accounts payable $ 124,648 116,329 Other current liabilities 76,255 69,143 Accrued salaries, wages and vacation payable 177,944 165,367 Current portion of postretirement and postemployment benefit obligations 6,145 6,087 Current portion of indebtedness 23,340 22,275 Current portion of capital lease obligations 1,679 2,077 Current portion of estimated professional liability costs 16,276 15,612 Total current liabilities 426,287 396,890 Other noncurrent liabilities 39,980 39,225 Postretirement and postemployment benefit obligations, net of current portion 403,363 372,593 Indebtedness, net of current portion 1,629,030 1,071,129 Capital lease obligations, net of current portion 125,138 125,813 Derivative instruments 63,405 82,257 Estimated professional liability costs, net of current portion 32,273 29,290 Total liabilities 2,719,476 2,117,197 Net Assets: Unrestricted 3,281,006 2,772,910 Temporarily restricted 43,484 43,342 Permanently restricted 14,790 14,530 Total net assets 3,339,280 2,830,782 Total liabilities and net assets $ 6,058,756 4,947,979 2
Consolidated Statements of Operations (Unaudited) 3/31/2018 3/31/2017 Unrestricted revenues, gains and other support: Net patient service revenue (net of contractual allowances and discounts) $ 2,588,090 2,405,075 Provision for bad debts (56,746) (34,114) Net patient service revenue less provision for bad debts 2,531,344 2,370,961 Other revenue 148,999 145,849 Total unrestricted revenues, gains and other support 2,680,343 2,516,810 Expenses: Salaries, wages and benefits 1,172,859 1,119,843 Medical supplies 629,915 575,798 Interest 44,169 26,624 Depreciation 120,118 116,226 Other operating expenses 501,255 470,335 Total expenses 2,468,316 2,308,826 Operating income 212,027 207,984 Non-operating income: Investment gain 244,554 202,523 Loss on extinguishment of debt - (18,328) Other 1,026 55 Total non-operating income 245,580 184,250 Excess of revenues over expenses 457,607 392,234 Change in funded status of defined benefit plans 22,303 119,576 Net assets released from restrictions for purchase of property and equipment 623 519 Transfers to the University, net (72,566) (76,495) Increase in unrestricted net assets $ 407,967 435,834 3
Consolidated Statements of Changes in Net Assets (Unaudited) 3/31/2018 3/31/2017 Unrestricted net assets: Excess of revenues over expenses $ 457,607 392,234 Change in funded status of defined benefit plans 22,303 119,576 Net assets released from restrictions for purchase of property and equipment 623 519 Transfers to the University, net (72,566) (76,495) Increase in unrestricted net assets 407,967 435,834 Temporarily restricted net assets: Contributions for restricted purposes 2,239 1,580 Transfers to the University, net (248) (48) Net assets released from restrictions used for operations (2,764) (3,099) Net assets released from restrictions for purchase of property and equipment (623) (519) Net realized and unrealized gains 1,408 1,312 Increase (decrease) in temporarily restricted net assets 12 (774) Permanently restricted net assets: Contributions for endowment funds 106 59 Transfers from the University, net 200 - Net realized and unrealized gains 779 771 Increase in permanently restricted net assets 1,085 830 Increase in net assets 409,064 435,890 Net assets, beginning of year 2,930,216 2,394,892 Net assets, end of period $ 3,339,280 2,830,782 4
Consolidated Statements of Cash Flows (Unaudited) 3/31/2018 3/31/2017 Cash flows from operating activities: Increase in net assets $ 409,064 435,890 Adjustments to reconcile increase in net assets to net cash provided by operating activities: Depreciation 120,118 116,226 Investment income (245,962) (203,835) Loss on the extinguishment of debt - 18,328 Net (gain) loss on other investments and disposals of property and equipment (3,192) 216 Transfers to the University, net 72,614 76,543 Provision for bad debts 56,746 34,114 Restricted contributions received for long-term capital projects (21) (572) Permanently restricted contributions and associated realized and unrealized gains (885) (830) (Increase) decrease in: Patient accounts receivable (98,646) (34,045) Estimated third-party payor settlements, net (60,584) (52,667) Due from the University, net (6,641) (18,437) Other receivables (10,511) (13,801) Inventories of drugs and supplies (5,697) (4,841) Prepaid pension asset - - Other assets (7,817) (7,783) Increase (decrease) in: Accounts payable 5,429 (2,355) Other current liabilities 32,052 22,984 Accrued salaries, wages and vacation payable 1,517 7,532 Postretirement and postemployment benefit obligation (7,123) (92,427) Other noncurrent liabilities 2,025 (25,913) Estimated professional liability costs 3,251 2,845 Net cash provided by operating activities 255,737 257,172 Cash flows from investing activities: Capital expenditures (139,645) (147,653) Decrease in assets limited as to use 680 10,438 Sales of investments 2,175,872 870,068 Purchases of investments (2,183,010) (947,449) Proceeds from sale of fixed assets 151 618 Decrease in other assets 4,610 472 Net cash used in investing activities (141,342) (213,506) 5
Consolidated Statements of Cash Flows, Continued (Unaudited) 3/31/2018 3/31/2017 Cash flows from financing activities: Payments on indebtedness and bank borrowings $ - (137,859) Proceeds from issuance of indebtedness - 140,200 Bond issuance and rate hedge costs (505) (1,432) Restricted contributions received for long-term capital projects 602 1,174 Proceeds from restricted contributions and associated realized gains 885 830 Payments on capital lease obligations (2,714) (1,914) Transfers to the University, net (68,204) (83,882) Net cash used in financing activities (69,936) (82,883) Net increase (decrease) in cash and cash equivalents 44,459 (39,217) Cash and cash equivalents, beginning of year 181,939 281,143 Cash and cash equivalents, end of period $ 226,398 241,926 Supplemental disclosures of cash flow information: Cash paid for interest, net of amount capitalized $ 38,352 26,672 Supplemental disclosures of noncash investing/financing activities: Transfer of investments to the University - 501,417 Net transfers to the University of property and equipment 2,591 2,649 Net transfers payable between the Health System and the University 4,787 38 6
Hospital Utilization Statistics (Unaudited) Duke University Duke Regional Duke Raleigh Hospital Hospital Hospital Combined 9 months 9 months 9 months 9 months 9 months 9 months 9 months 9 months 3/31/2018 3/31/2017 3/31/2018 3/31/2017 3/31/2018 3/31/2017 3/31/2018 3/31/2017 Adult Patient Days 223,557 215,911 58,931 58,512 32,044 32,276 314,532 306,699 Average Adult Daily Census 816 788 215 214 117 118 1,148 1,119 Licensed Beds 957 957 369 369 186 186 1,512 1,512 Average Number of Available Beds 951 951 353 356 175 170 1,479 1,477 Full Time Equivalents 8,526 8,254 1,738 1,681 1,451 1,373 11,715 11,308 Average Adult Occupancy 86% 83% 61% 60% 67% 69% 78% 76% Adult Discharges 32,128 32,085 12,292 12,258 7,080 7,204 51,500 51,547 Average Adult Length of Stay 7.0 6.7 4.8 4.8 4.5 4.5 6.1 5.9 Medicare Case Mix Index 2.3959 2.4080 1.6846 1.6634 1.9229 2.0077 - - Number of Deliveries 2,550 2,473 1,721 1,824 - - 4,271 4,297 Surgical Procedures 30,462 30,225 11,597 10,692 12,438 11,721 54,497 52,638 Endoscopy Procedures 9,811 9,875 4,411 3,761 2,560 2,176 16,782 15,812 Emergency Department Visits 56,835 57,655 46,505 46,510 36,175 36,510 139,515 140,675 Outpatient Visits ED Outpatient & CEU 45,788 46,859 40,117 40,165 31,573 31,947 117,478 118,971 Observation Visits 7,986 7,206 6,092 5,551 6,562 5,863 20,640 18,620 Hospital Clinics 712,743 737,389 87,876 61,976 135,660 119,600 936,279 918,965 Outpatient Surgeries and Endoscopies 25,065 25,236 12,248 10,756 11,652 10,316 48,965 46,308 DPC Visits 545,914 513,715 - - - - 545,914 513,715 Total Outpatient Visits 1,337,496 1,330,405 146,333 118,448 185,447 167,726 1,669,276 1,616,579 Gross Revenues by Payor Medicare 43% 42% 47% 46% 51% 51% 45% 44% Medicaid 12% 12% 11% 11% 6% 7% 11% 11% Managed Care 36% 38% 32% 33% 36% 35% 36% 37% Indemnity 1% 1% 1% 1% 1% 1% 1% 1% Self-pay 3% 3% 6% 7% 4% 4% 3% 3% Other 5% 4% 3% 2% 2% 2% 4% 4% Total 100% 100% 100% 100% 100% 100% 100% 100% 7
Consolidating Statements of Operations (Unaudited) For the Nine Months Ended March 31, 2018 Duke Duke Duke All University Regional Raleigh Other Hospital Hospital Hospital Affiliates Consolidated Unrestricted revenues, gains and other support: Net patient service revenue (net of contractual allowances and discounts) $ 1,818,255 275,864 351,648 142,323 2,588,090 Provision for bad debts (33,566) (9,744) (9,182) (4,254) (56,746) Net patient service revenue less provision for bad debts 1,784,689 266,120 342,466 138,069 2,531,344 Other revenue 50,024 6,995 9,943 82,037 148,999 Total unrestricted revenues, gains and other support 1,834,713 273,115 352,409 220,106 2,680,343 Expenses: Salaries, wages and benefits 589,690 120,274 102,193 360,702 1,172,859 Medical supplies 430,679 50,369 104,634 44,233 629,915 Interest 33,659 5,083 4,969 458 44,169 Depreciation 60,006 11,555 13,150 35,407 120,118 Other operating expenses 551,499 76,593 92,624 (219,461) 501,255 Total expenses 1,665,533 263,874 317,570 221,339 2,468,316 Operating income $ 169,180 9,241 34,839 (1,233) 212,027 8