Quorum Health Corporation, which was spun off from struggling hospital operator Community Health Systems last year, saw a net loss of $90.7 million during the fourth quarter of 2016, the company announced on Wednesday.
Net operating revenues for the three months ending Dec. 31, 2016 totaled $515.2 million, compared to $558.2 million during the same period on 2015, a 7.7 percent decrease. Net operating revenues from two hospitals it divested in December totaled $4.7 million and $12.7 million in the fourth quarter of 2016 and 2015, respectively. While net loss attributable to Quorum in the fourth quarter of 2016 was $90.7 million, losses for the same period in 2015 were only about $600,000.
Adjusted earnings before interest, tax, depreciation and amortization in the fourth quarter of 2016 was $30.7 million, compared to $77.7 million for the same period the year before. When the two divested hospitals are factored in, the gap between those two figures narrows; those hospitals negatively adjusted EBITDA to the tune of about $9.1 million. The numbers, when taking the divestiture into account, are $39.8 million and $78.8 million, respectively.
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Quorum, which primarily operates rural hospitals, saw its values cut in half last summer after it posted a $245 million loss in the second quarter of 2016. It attributed that loss to nearly $220 million in charges tied to the spin-off from CHS.
CHS netted $1.2 billion from its spinoff of nearly 40 small or rural hospitals at that time, but that transaction is now under legal scrutiny, after a class-action lawsuit was filed in U.S. District Court last fall for the Middle District of Tennessee on behalf of those that purchased Quorum's common stock.
The complaint alleges that Quorum and certain of its executive officers made false and misleading statements, and/or failed to disclose to investors that many of Quorum's hospitals were underperforming at the time of the spin-off, as well as other "indicators of impairment" that were present at the time. It also alleges Quorum failed to inform investors about the issues, rendering Quorum's public statements "materially false and misleading." Movement on the lawsuit is still pending.
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Commenting on the results, Thomas D. Miller, Quorum's president and CEO of Quorum, said in a statement that the results "are not what we hoped for; however, we have made significant progress towards restructuring our hospital portfolio, refining our operations, and adding access to care in our communities."
MIller said Quorum was executing a definitive agreement for the sale of at least one hospital that it that is expected to close by the end of the first quarter of this year, It has also signed letters of intent covering four additional hospitals with expected divestiture completions later in the year. Quorum is also contemplating the potential divestitures of additional hospitals with low or negative EBITDA margins.
On the operations side, Quorum has developed an initiative to improve its revenue cycle and add physician practices.
Twitter: @JELagasse