Franklin, Tenn.-based Capella Healthcare lost $5.1 million in the third quarter, although revenue and adjusted EBITDA both increased year-over-year.
The third-quarter loss was less than the $5.5 million loss Capella recorded in the third quarter of 2012. Revenue for the three months ended Sept. 30 went up by 5.1 percent, from $175.9 million last year to $184.9 million. Adjusted EBITDA for the quarter was $27.2 million, up 23.6 percent from $22 million in the third quarter of 2012.
Capella CFO Denise Warren says the company is happy with its third-quarter performance.
"Our facilities performed very well, and our quality metrics are outstanding," she says. "We're very pleased with the way our hospitals, our doctors, our employees and our staff are really focused on taking care of the patients. And we experienced strong growth in revenues from same store operations, with adjusted pro forma EBITDA increasing over prior quarter and prior year."
Revenue in the first nine months was $545 million, a 0.5 percent increase from $542.2 million last year. Capella's adjusted EBITDA stood at $71.2 million, compared with $79.5 million in 2012. Excluding the industry-wide rural floor settlement and Oklahoma’s Supplemental Hospital Offset Payment Program dollars, both of which were a one-time adjustment last year, the company saw adjusted pro forma EBITDA of $75.1 million compared to $70.6 million in 2012.
Admissions across Capella's hospitals fell 3.7 percent in the third quarter compared to last year, although revenue per adjusted admission went up by 7.2 percent.
For the nine months ended Sept. 30, Capella reported a loss of $17.2 million. Ms. Warren attributed the losses to discontinued operations, higher operating expenses, lagging admissions and $2.4 million in Medicare cuts from sequestration.
The discontinuation of Medicare's "low quartile" program also played a part. In fiscal years 2011 and 2012, the healthcare reform law required CMS to make $400 million in additional payments to hospitals that were located in counties in the lowest quartile of per enrollee Medicare spending. Those payments didn't continue in 2013.
Capella has not recorded positive earnings since the first quarter of 2012, when it tallied a profit of $4.7 million. Reports have surfaced that GTCR, a Chicago-based private equity firm that currently manages $8 billion in assets, is looking to sell Capella, which owns or operates 14 acute-care and specialty hospital facilities in six states.
In an emailed statement in September, Capella Co-Founder, Chairman and CEO Dan Slipkovich neither confirmed nor denied that Capella was up for sale.
Ms. Warren also declined to comment on the speculation but says Capella is pleased with its equity partners. Additionally, she says the company is always looking for ways to better position itself in the increasingly challenging healthcare environment.
"We constantly look for ways to strengthen Capella going forward," she says.
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