BIRMINGHAM, Ala., April 26, 2016 /PRNewswire/ -- HealthSouth Corporation (NYSE: HLS), one of the nation’s largest providers of post-acute healthcare services, offering both facility-based and home-based post-acute services, today reported its results of operations for the first quarter ended March 31, 2016.
“The first quarter was an excellent start to the year as both segments generated strong volume, revenue, and Adjusted EBITDA growth,” said Jay Grinney, President and Chief Executive Officer of HealthSouth. “Additionally, we produced $129.5 million of adjusted free cash flow which we were able to invest in a variety of value-creating ways: expanding our portfolio of hospitals and home health agencies; reducing our long-term debt by $55.3 million; repurchasing 314,532 shares of our common stock; and paying a $0.23 per share cash dividend. As a result of these very strong results, we are increasing our guidance for full-year net operating revenues, Adjusted EBITDA, and adjusted earnings per share.”
Consolidated Results | ||||||||||||||
Growth | ||||||||||||||
Q1 2016 | Q1 2015 | Dollars | Percent | |||||||||||
(In Millions, Except per Share Data) | ||||||||||||||
Net operating revenues | $ | 909.8 | $ | 740.6 | $ | 169.2 | 22.8 | % | ||||||
Income from continuing operations attributable to HealthSouth per diluted share | 0.61 | 0.44 | 0.17 | 38.6 | % | |||||||||
Adjusted earnings per share | 0.61 | 0.51 | 0.10 | 19.6 | % | |||||||||
Cash flows provided by operating activities | 159.7 | 102.0 | 57.7 | 56.6 | % | |||||||||
Adjusted EBITDA | 192.1 | 156.1 | 36.0 | 23.1 | % | |||||||||
Adjusted free cash flow | 129.5 | 79.4 | 50.1 | 63.1 | % | |||||||||
Revenue growth primarily resulted from strong volumes in both of the Company’s operating segments and included the effect of the Company’s acquisitions of Reliant Hospital Partners, LLC and affiliated entities (“Reliant”) on October 1, 2015 and CareSouth Health System, Inc. (“CareSouth”) on November 2, 2015.
The increase in adjusted earnings per share primarily resulted from increased Adjusted EBITDA. Adjusted earnings per share also included the impact of higher interest expense related to the financing of the Reliant and CareSouth acquisitions, higher depreciation and amortization related to acquisitions and capital investments, and a lower share count resulting from share repurchases in the fourth quarter of 2015 and first quarter of 2016.
Adjusted free cash flow increased primarily as a result of the Company’s growth in Adjusted EBITDA. Adjusted free cash flow in the first quarter of 2016 included increased cash interest expense related to the acquisitions of Reliant and CareSouth and lower working capital primarily attributable to payroll-related liabilities.
See attached supplemental information for calculations of non-GAAP measures and reconciliations to their most comparable GAAP measure.
Inpatient Rehabilitation Segment Results | ||||||||||||||
Growth | ||||||||||||||
Q1 2016 | Q1 2015 | Dollars | Percent | |||||||||||
Net operating revenues: | (In Millions) | |||||||||||||
Inpatient | $ | 719.4 | $ | 606.6 | $ | 112.8 | 18.6 | % | ||||||
Outpatient and other | 29.8 | 23.7 | 6.1 | 25.7 | % | |||||||||
Total segment revenue | $ | 749.2 | $ | 630.3 | $ | 118.9 | 18.9 | % | ||||||
(Actual Amounts) | ||||||||||||||
Discharges | 41,098 | 35,116 | 5,982 | 17.0 | % | |||||||||
New-store discharge growth | 14.2 | % | ||||||||||||
Same-store discharge growth | 2.8 | % | ||||||||||||
Net patient revenue per discharge | $ | 17,505 | $ | 17,274 | $ | 231 | 1.3 | % | ||||||
(In Millions) | ||||||||||||||
Adjusted EBITDA | $ | 196.9 | $ | 164.4 | $ | 32.5 | 19.8 | % | ||||||
Revenue - Revenue growth resulted primarily from strong same-store and new-store volume growth. Discharge growth from new stores resulted from the Company’s acquisitions of Reliant (October 2015) and Cardinal Hill Rehabilitation Hospital (May 2015), the Company’s joint ventures with Memorial Health in Savannah, Georgia (April 2015) and CHI St. Vincent in Hot Springs, Arkansas (February 2016), and the de novo opened in Franklin, Tennessee (December 2015).
Net patient revenue per discharge was impacted by the ramping up of new hospitals (Franklin, TN and Hot Springs, AR) which are required to treat a minimum of 30 patients for zero revenue as part of the Medicare certification process. In the first quarter of 2016, the Company also recorded a $1.8 million revenue reserve related to post-payment claims reviews.
Outpatient revenues increased by $6.1 million in the first quarter of 2016 compared to the first quarter of 2015 due to the acquisitions of Reliant and Cardinal Hill.
Adjusted EBITDA - Inpatient rehabilitation segment Adjusted EBITDA increased by 19.8% driven primarily by revenue growth. Adjusted EBITDA for the segment was impacted by an increase in salaries and benefits as a percent of revenue.
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