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FRANKLIN, Tenn. — IASIS Healthcare® LLC (“IASIS” or the “Company”) today announced financial and operating results for the fiscal first quarter ended December 31, 2016.

Key Financial and Operating Results

Consolidated Financial and Operating Results – First Quarter Ended December 31, 2016 and 2015

Consolidated revenue for the first quarter ended December 31, 2016, totaled $839.9 million, an increase of 4.6% compared to $802.8 million in the prior year quarter. The consolidated revenue increase for the first quarter ended December 31, 2016, is comprised of 8.8% growth in premium, service and other revenue in the Company’s managed care operations and 2.0% growth in acute care revenue.

Net earnings from continuing operations for the first quarter ended December 31, 2016, totaled $2.2 million, compared to a net loss from continuing operations of $3.3 million in the prior year quarter. Adjusted EBITDA for the first quarter ended December 31, 2016, totaled $61.8 million, compared to $57.4 million in the prior year quarter.

“We are pleased with our first quarter results, which reflect solid improvement in EBITDA and continued growth across our acute and managed care business lines,” said IASIS Healthcare President and Chief Executive Officer W. Carl Whitmer. “In particular, our first quarter results reflect significant improvements at our managed care operations, resulting from our recent efforts to enhance clinical and cost efficiencies.”

Acute Care Operations – First Quarter Ended December 31, 2016 and 2015

For the first quarter ended December 31, 2016, acute care revenue totaled $499.2 million, an increase of 2.0% compared to the prior year quarter. Admissions increased 0.3% and adjusted admissions decreased 0.5%, each compared to the prior year quarter. Net patient revenue per adjusted admission for the first quarter ended December 31, 2016, increased 2.6% compared to the prior year quarter.

Managed Care Operations – First Quarter Ended December 31, 2016 and 2015

For the first quarter ended December 31, 2016, premium, service and other revenue in the Company’s managed care operations totaled $340.7 million, an increase of 8.8% compared to the prior year quarter. Total lives served across all managed care division product lines increased 8.5% compared to the prior year, with 681,300 lives served as of December 31, 2016. Excluding lives associated with the Arizona exchange plan, which the Company exited on January 1, 2017, total lives served increased 7.6%.

For the first quarter ended December 31, 2016, excluding the impact of the Arizona exchange plan, the medical loss ratio (“MLR”) was 85.3%, compared to 89.5% in the prior year quarter. On a sequential basis, excluding the impact of the Arizona exchange plan, the MLR was 91.7% for the fourth quarter ended September 30, 2016.

Effective October 1, 2016, the Company’s Arizona Medicaid plan received a 3.1% increase in capitation premium rates primarily as a result of recent medical cost trends, including the on-going increases in pharmacy costs. The state contract amendment, which provided for the increase in premium rates, also included certain program changes to the benefit structure for its members.

Cash Flow Analysis

Cash flows used in operating activities for the first quarter ended December 31, 2016, totaled $38.2 million, compared to $7.0 million in the prior year quarter. Operating cash flows for the first quarter ended December 31, 2016, were negatively impacted by the timing of expected funds associated with the Company’s participation in Medicaid supplemental reimbursement programs. Additionally, the prior year quarter ended December 31, 2015, was positively impacted by the timing of cash associated with the annual health insurer fee and the receipt of income tax refunds.

Information Systems Conversion

The Company is currently in the process of converting to new integrated clinical and revenue cycle systems, a project in which the Company expects to make significant investments through the 2019 fiscal year. During the first quarter ended December 31, 2016, the Company spent $18.0 million in cash associated with its conversion efforts, $4.2 million of which is included in cash flows used in operating activities, $8.3 million is included in cash flows used in investing activities and $5.5 million is included in cash flows used in financing activities. During the prior year quarter ended December 31, 2015, the Company spent $7.7 million in cash associated with its conversion efforts, $2.2 million of which is included in cash flows used in operating activities, $3.4 million of which is included in cash flows used in investing activities and $2.1 million of which is included in cash flows used in financing activities.

Conference Call

A listen-only simulcast and 30-day replay of IASIS’ first quarter 2017 conference call will be available by clicking the “Investors” link on the Company’s Web site at www.iasishealthcare.com beginning at 11:00 a.m. Eastern Time on February 10, 2017.

ADDITIONAL INFORMATION AVAILABLE HERE.

 

IASIS Healthcare is a healthcare services company that seeks to deliver high-quality, cost-effective healthcare through a broad and differentiated set of capabilities and assets that include acute care hospitals with related patient access points and a diversified managed care risk platform. With total annual revenue of approximately $3.3 billion, IASIS, headquartered in Franklin, Tennessee, owns and operates 17 acute care hospitals, one behavioral hospital and multiple other access points, including 139 physician clinics, multiple outpatient surgical units, imaging centers, and investments in urgent care centers and on-site employer-based clinics. Health Choice, the Company’s managed care risk platform, delivers services to more than 681,300 covered lives through its multiple health plans, accountable care networks and agreements to serve as a management services organization (“MSO”) with third party insurers. For more information on IASIS, please visit the Company’s Web site at www.iasishealthcare.com.

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