Files Form 10-K for the Fiscal Year Ended
December 31, 2018 and Form 10-Q for the Fiscal Quarters Ended March
31, 2019 and June 30, 2019
Provides 2019 Outlook and Preliminary 2020
Outlook
American Renal Associates Holdings, Inc. (“ARA” or the
“Company”), a leading kidney care and dialysis provider focused on
partnering with local nephrologists, today announced that it has
filed with the Securities and Exchange Commission (“SEC”) its
Annual Report on Form 10-K for the fiscal year ended December 31,
2018 (the “2018 Annual Report”). In addition, the Company has filed
its Quarterly Reports on Form 10-Q for the first and second fiscal
quarters ended March 31, 2019 and June 30, 2019, respectively. The
Company has now completed its required periodic filings with the
SEC and is back in compliance with its listing requirements under
New York Stock Exchange rules.
Restated Financial Statements and Other Financial
Information
The 2018 Annual Report includes audited amended and restated
financial statements and other financial information for the fiscal
years ended December 31, 2017 and 2016, unaudited restated
financial information for the fiscal quarters and year-to-date
periods ended March 31, June 30 and September 30, 2018; March 31,
June 30 and September 30, 2017; and March 31, June 30 and September
30, 2016, and selected financial data for the years ended December
31, 2015 and 2014 derived from unaudited amended and restated
financial statements (collectively, the “Restated Periods”). The
2018 Annual Report also includes adjustments affecting fiscal years
prior to 2014 as a cumulative adjustment as of December 31,
2013.
On a cumulative basis, including fiscal year 2013 and periods
prior to 2013, the restatement adjustments resulted in a net
increase to income before income taxes of $5.4 million, while the
restatement adjustments related to the Restated Periods resulted in
a net decrease to income before income taxes of $15.2 million.
Consistent with the disclosure in the Company’s Current Report on
Form 8-K filed March 27, 2019 (the “March 27 Form 8-K”), the
restatement adjustments primarily relate to revenue recognition and
accounts receivable. The impact of the restatement adjustments to
Income before income taxes for the Restated Periods, as well as
prior fiscal years, is summarized in the table below. Consistent
with the Company’s historical reporting convention, these income
before income tax amounts are presented before net income
attributable to noncontrolling interests. For reference, the table
below also includes the ranges of the impact of the revenue
recognition and accounts receivable adjustments previously
estimated in the Company’s March 27 Form 8-K.
Restated Periods
($ in millions)
Cumulative
Impact
Year Ended
Dec. 31, 2014 -
Nine months ended
Sept. 30, 2018
Nine Months Ended
Sept. 30, 2018
Year Ended
Dec. 31, 2017
Year Ended
Dec. 31, 2016
Year Ended
Dec. 31, 2015
Year Ended
Dec. 31, 2014
Year Ended
Dec. 31, 2013
and Prior
As previously reported - Income before
income taxes
$
32.3
$
83.9
$
87.5
$
105.5
$
95.3
Revenue recognition and accounts
receivable adjustments
$
6.2
$
(13.8
)
(26.8
)
(16.1
)
17.0
13.7
(1.7
)
$
20.0
Other adjustments
(0.8
)
(1.4
)
0.3
(0.2
)
(0.3
)
(0.6
)
(0.6
)
0.6
Total restatement adjustments excluding
income taxes
$
5.4
$
(15.2
)
$
(26.5
)
$
(16.3
)
$
16.7
$
13.1
$
(2.3
)
$
20.6
As restated - Income before income
taxes
$
5.8
$
67.6
$
104.1
$
118.6
$
93.0
Estimated impact range for restatement
adjustments previewed in the March 27 Form 8-K
N/A
$(5) to $5
$(15) to $(25)
$(10) to $(20)
$16 to $26
$8 to $18
"Relatively Neutral"
$14 to $24
More details, including the impact of the restatement
adjustments to each of the annual and interim financial statements
for the Restated Periods and a description of the primary
categories of adjustments, are described in the 2018 Annual
Report.
The review by the Audit Committee of the Board of Directors (the
“Audit Committee”) of the Company’s financial statements for the
Restated Periods described in the March 27 Form 8-K is now
complete. As a result of the Audit Committee’s review, the Company
has identified certain material weaknesses in its internal controls
over financial reporting. The Company has taken and will continue
to take actions to remediate these material weaknesses and to
strengthen its internal controls over financial reporting,
including putting in place new processes for revenue recognition
and revenue accounting. The 2018 Annual Report contains additional
details regarding the actions we have taken and continue to take to
remediate the identified material weaknesses. The previously
disclosed SEC investigation into related matters (the “SEC
Investigation”) remains ongoing, and the Company continues to
cooperate fully with this investigation.
2019 Outlook for Adjusted EBITDA-NCI and Preliminary 2020
Outlook for Adjusted EBITDA-NCI
The Company also introduced today its outlook for 2019 and 2020
Adjusted EBITDA less non-controlling interests (“Adjusted
EBITDA-NCI”), reflecting trends in the operating environment and
action plans related to its near-term priorities of improving
margins and reducing leverage. The Company expects 2019 Adjusted
EBITDA-NCI to be in a range of $85 million and $88 million as
compared to 2018 Adjusted EBITDA-NCI of $90.0 million. The
Company’s 2019 EBITDA-NCI outlook is based on the following
full-year assumptions:
- Total normalized treatment growth to be in a range of 7.0% to
7.5%, as compared to 6.1% in 2018;
- Revenue per treatment to decline by 2% to 3%, as compared to
$349 in 2018;
- Commercial treatment mix to be flat to slightly down, as
compared to 12% in 2018, and approximately 80% of commercial
treatments are expected to be in-network, as compared to
approximately 60% in 2018; and
- Capital expenditures to be in a range of 2.5% to 3% of net
patient service operating revenues, as compared to 5.6% in
2018.
The Company is establishing a preliminary outlook for 2020
Adjusted EBITDA-NCI to be in a range of $90 million and $95
million. The Company’s preliminary 2020 outlook incorporates
incremental savings from operating expense reduction initiatives
commenced during 2019. The Company expects its leverage ratio
(defined below) to improve by between 0.3x and 0.6x by year-end
2020 as compared to 5.9x at June 30, 2019 based on several factors,
including the aforementioned operating expense initiatives, more
limited capital expenditures during 2019 and 2020 and anticipated
divestitures of certain assets.
Joseph (Joe) Carlucci, Chairman and Chief Executive Officer,
said, “For the past several years, we have focused on growing our
footprint through building relationships with nephrologists and
opening new clinics. These efforts have established ARA as a
leading dialysis services provider in the United States, all while
staying true to our commitment of being a differentiated partner to
physicians and providing excellent patient care. We now believe it
is important in our next phase of development that we increase our
focus on improving operating efficiency and strengthening the
balance sheet, while thoughtfully balancing the growth and
development opportunities that remain ahead of us. By prioritizing
these goals now, we believe we will be better positioned for growth
beyond 2020.”
The Company’s 2019 and preliminary 2020 Adjusted EBITDA-NCI
outlooks exclude certain legal and other matters costs, including
costs relating to the SEC Investigation and related Audit Committee
review and financial statement restatement process, to the extent
they continue to impact those periods. The Company defines its
leverage ratio as Adjusted owned net debt divided by Adjusted
EBITDA-NCI, last twelve months, which differs from the leverage
ratio calculated in accordance with the Company’s credit agreement.
See “Use of Non-GAAP Financial Measures” and the reconciliation
tables further below.
Please see the “Forward-Looking Statements” section of this
release for a discussion of certain risks to our outlook.
Conference Call
American Renal Associates Holdings, Inc. will hold a conference
call to discuss this release on Thursday, September 5, 2019 at 9:00
a.m. Eastern time. Investors will have the opportunity to listen to
the conference call by dialing (877) 407-8029, or for international
callers (201) 689-8029, or may listen over the Internet by going to
the Investor Relations section of ARA’s website at
www.ir.americanrenal.com. For those who cannot listen to the live
broadcast, a replay will be available and can be accessed by
dialing (877) 660-6853, or for international callers (201)
612-7415. The conference ID for the live call and the replay is
13694265.
About American Renal Associates
American Renal Associates Holdings, Inc. (“ARA”) is a leading
provider of outpatient dialysis services in the United States. As
of June 30, 2019, ARA operated 245 dialysis clinic locations in 27
states and the District of Columbia serving approximately 17,100
patients with end stage renal disease. ARA operates principally
through a physician partnership model, in which it partners with
approximately 400 local nephrologists to develop, own and operate
dialysis clinics. ARA’s Core Values emphasize taking good care of
patients, providing physicians with clinical autonomy and
operational support, hiring and retaining quality staff and
providing comprehensive clinic management services. For more
information about ARA, visit www.americanrenal.com.
Forward-Looking Statements
Statements in this press release that are “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, including statements regarding our 2019 outlook
for Adjusted EBITDA-NCI and preliminary 2020 outlook for Adjusted
EBITDA-NCI, are based upon currently available information,
operating plans and projections about future events and trends.
Terminology such as “anticipate,” “believe,” “contemplate,”
“estimate,” “expect,” “forecast,” “intend,” “may,” “objective,”
“outlook,” “plan,” “potential,” “project,” “seek,” “should,”
“strategy,” “target” or “will” or variations of such words or
similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
such terms.
Forward-looking statements inherently involve risks and
uncertainties that could cause actual results to differ materially
from those predicted in such forward-looking statements. Such risks
and uncertainties include, among others, the effect of the
restatement of our previously issued financial results and any
claims, investigations or proceedings arising as a result; our
ability to remediate material weaknesses in our internal controls
over financial reporting; continuing decline in the number of
patients with commercial insurance, including as a result of
changes to the healthcare exchanges or changes in regulations or
enforcement of regulations regarding the healthcare exchanges and
challenges from commercial payors or any regulatory or other
changes leading to changes in the ability of patients with
commercial insurance coverage to receive charitable premium
support; decline in commercial payor reimbursement rates; the
ultimate resolution of the Centers for Medicare and Medicaid
Services Interim Final Rule published December 14, 2016 related to
dialysis facilities Conditions for Coverage (CMS 3337-IFC),
including an issuance of a different but related Final Rule;
reduction of government-based payor reimbursement rates or
insufficient rate increases or adjustments that do not cover all of
our operating costs; our ability to successfully develop de novo
clinics, acquire existing clinics and attract new nephrologist
partners; our ability to compete effectively in the dialysis
services industry; the performance of our joint venture
subsidiaries and their ability to make distributions to us; changes
to the Medicare end-stage renal disease (“ESRD”) program that could
affect reimbursement rates and evaluation criteria, as well as
changes in Medicaid or other non-Medicare government programs or
payment rates, including the ESRD prospective payment rate system
proposed rule for 2020 issued July 29, 2019; federal or state
healthcare laws that could adversely affect us; our ability to
comply with all of the complex federal, state and local government
regulations that apply to our business, including those in
connection with federal and state anti-kickback laws and state laws
prohibiting the corporate practice of medicine or fee-splitting;
heightened federal and state investigations and enforcement
efforts; the impact of the SEC Investigation, the restatement, the
related securities and derivative litigation and related matters;
changes in the availability and cost of erythropoietin-stimulating
agents and other pharmaceuticals used in our business; changes in
the reimbursement rates of the calcimimetics pharmaceutical class
reimbursed under the Medicare Transitional Drug Add-on Payment
Adjustment; development of new technologies or government
regulation that could decrease the need for dialysis services or
decrease our in-center patient population; our ability to timely
and accurately bill for our services and meet payor billing
requirements; claims and losses relating to malpractice,
professional liability and other matters; the sufficiency of our
insurance coverage for those claims and rising insurances costs;
and any negative publicity or reputational damage arising from such
matters; loss of any members of our senior management; damage to
our reputation or our brand and our ability to maintain brand
recognition; our ability to maintain relationships with our medical
directors and renew our medical director agreements; shortages of
qualified skilled clinical personnel, or higher than normal
turnover rates; competition and consolidation in the dialysis
services industry; deteriorations in economic conditions,
particularly in states where we operate a large number of clinics,
or disruptions in the financial markets; the participation of our
physician partners in material strategic and operating decisions
and our ability to favorably resolve any disputes; our ability to
honor obligations under the joint venture operating agreements with
our physician partners were they to exercise certain put rights and
other rights; unauthorized disclosure of personally identifiable,
protected health or other sensitive or confidential information;
our ability to meet our obligations and comply with restrictions
under our substantial level of indebtedness; and the ability of our
principal stockholder, whose interests may conflict with yours, to
strongly influence or effectively control our corporate
decisions.
For additional information and other factors that could cause
ARA’s actual results to materially differ from those set forth
herein, please see ARA’s filings with the SEC, including the 2018
Annual Report and subsequent reports on Forms 10-Q and 8-K.
Investors are cautioned not to place undue reliance on any such
forward-looking statements, which speak only as of the date they
are made. ARA undertakes no obligation to update any
forward-looking statement, whether as a result of new information,
future events or otherwise.
Supplemental Information
Summary Financial
Data:
$ in millions, except per
treatment data
Nine months ended
Sept. 30, 2018
Year ended
Dec, 31, 2017
Year ended
Dec, 31, 2016
Year ended
Dec, 31, 2015
Year ended
Dec, 31, 2014
Net patient service operating
revenues:
As previously reported
$
622.9
$
745.1
$
749.8
$
653.0
$
560.7
As restated
$
598.0
$
729.0
$
766.8
$
666.7
$
559.1
Restatement impact
$
(24.9
)
$
(16.1
)
$
17.0
$
13.7
$
(1.7
)
Net income (loss)
As previously reported
$
34.3
$
75.7
$
88.2
$
93.1
$
82.4
As restated
$
11.3
$
58.1
$
101.7
$
99.9
$
82.7
Restatement impact
$
(23.0
)
$
(17.6
)
$
13.5
$
6.8
$
0.3
Adjusted EBITDA including
noncontrolling interests(1):
As previously reported
$
131.6
$
176.4
$
212.2
$
188.1
$
170.5
As restated
$
104.8
$
160.9
$
229.2
$
201.4
$
168.5
Restatement impact
$
(26.8
)
$
(15.5
)
$
17.0
$
13.3
$
(2.0
)
Adjusted EBITDA-NCI(1):
As previously reported
$
80.9
$
105.5
$
123.6
$
113.8
$
104.3
As restated
$
65.3
$
98.1
$
130.7
$
120.9
$
102.7
Restatement impact
$
(15.6
)
$
(7.4
)
$
7.1
$
7.1
$
(1.6
)
Summary Operating Data:
Nine months ended
Sept 30, 2018
Year ended
December 31, 2017
Year ended
December 31, 2016
Year ended
December 31, 2015
Year ended
December 31, 2014
Treatments
1,710,847
2,191,172
2,027,423
1,804,910
1,563,802
Normalized total treatment growth
6.2%
8.8%
12.0%
15.4%
13.1%
Net patient service operating revenues per
treatment:
As previously reported
$
364.07
$
340.05
$
369.81
$
361.78
$
358.57
As restated
$
349.52
$
332.70
$
378.20
$
369.38
$
357.51
Restatement impact
$
(14.55
)
$
(7.35
)
$
8.39
$
7.60
$
(1.06
)
Adjusted patient care costs per
treatment(2):
As previously reported
$
245.25
$
219.35
$
220.56
$
216.60
$
210.93
As restated
$
246.36
$
219.39
$
220.57
$
216.60
$
210.93
Restatement impact
$
1.11
$
0.04
$
0.01
$
—
$
—
Adjusted general and administrative
expenses per treatment(3):
As previously reported
$
44.65
$
42.44
$
45.60
$
42.80
$
40.30
As restated
$
44.65
$
42.13
$
45.74
$
43.12
$
40.63
Restatement impact
$
—
$
(0.31
)
$
0.14
$
0.32
$
0.33
Total adjusted costs per treatment
As previously reported
$
289.90
$
261.79
$
266.16
$
259.40
$
251.23
As restated
$
291.01
$
261.52
$
266.31
$
259.72
$
251.56
Restatement impact
$
1.11
$
(0.27
)
$
0.15
$
0.32
$
0.33
Summary Quarterly Financial
Data:
Three months ended
$ in millions, except per
treatment data
June 30,
2019
Mar. 31,
2019
Dec. 31,
2018
Sept. 30,
2018
June 30,
2018
Mar. 31,
2018
Dec. 31,
2017
Sept. 30,
2017
June 30,
2017
Mar. 31,
2017
Net patient service operating
revenues:
$
213.3
$
191.8
$
207.8
$
205.7
$
206.0
$
186.3
$
187.3
$
187.9
$
177.5
$
176.3
Net income (loss)
$
5.1
$
(5.1
)
$
11.2
$
12.5
$
(8.4
)
$
7.2
$
10.8
$
25.8
$
9.8
$
11.8
Adjusted EBITDA including
noncontrolling interests(1):
$
37.6
$
19.2
$
36.5
$
36.5
$
40.0
$
28.3
$
41.7
$
46.9
$
37.4
$
34.8
Adjusted EBITDA-NCI(2):
$
24.3
$
13.9
$
24.7
$
23.3
$
24.8
$
17.3
$
26.0
$
28.6
$
22.5
$
21.0
Summary Quarterly Operating
Data:
Three months ended
June 30,
2019
Mar. 31,
2019
Dec. 31,
2018
Sept. 30,
2018
June 30,
2018
Mar. 31,
2018
Dec. 31,
2017
Sept. 30,
2017
June 30,
2017
Mar. 31,
2017
Treatments
614,844
591,365
600,190
578,982
572,929
558,936
565,945
551,258
542,749
531,220
Normalized total treatment
growth
7.9%
7.2%
5.6%
6.1%
6.3%
6.3%
7.3%
7.5%
8.9%
11.5%
Net patient service operating
revenues per treatment:
$
346.84
$
324.27
$
346.23
$
355.31
$
359.47
$
333.31
$
331.01
$
340.89
$
326.96
$
331.87
Adjusted patient care costs per
treatment(2):
$
248.87
$
250.57
$
247.46
$
252.06
$
246.92
$
239.88
$
219.97
$
217.21
$
217.24
$
223.23
Adjusted general and
administrative expenses per treatment(3):
$
38.52
$
43.80
$
41.62
$
42.52
$
46.14
$
45.31
$
39.80
$
40.45
$
43.43
$
45.04
Total adjusted costs per
treatment
$
287.39
$
294.37
$
289.08
$
294.58
$
293.06
$
285.19
$
259.77
$
257.66
$
260.67
$
268.27
(1) See “Use of Non-GAAP Financial Measures.” (2) The year ended
December 31, 2017 excludes $2.2 million of expense related to the
modification of options and other transactions at the time of the
IPO (“Modification Expense”), including $1.7 million and $0.5
million for the first and second quarters, respectively. The year
ended December 31, 2016 excludes $5.2 million of Modification
Expense, including $1.4 million, $1.9 million and $1.9 million in
the second, third, and fourth quarters, respectively. (3) The year
ended December 31, 2017 excludes $9.5 million of Modification
Expense, including $7.4 million and $2.1 million in the first and
second quarters, respectively, and $0.8 million of severance
expense. The year ended December 31, 2016 excludes $31.7 million of
Modification Expense, including $8.0 million, $10.3 million, and
$13.4 million in the second, third, and fourth quarters,
respectively, and $3.1 million of severance expense.
Use of Non-GAAP Financial Measures
In addition to the results prepared in accordance with generally
accepted accounting principles in the United States (“GAAP”)
provided in this press release, the Company has presented the
following Non-GAAP financial measures: Adjusted EBITDA, Adjusted
EBITDA-NCI and its leverage ratio, which is calculated using
Adjusted EBITDA-NCI and Adjusted owned net debt, which exclude
various items detailed below. These Non-GAAP financial measures are
not intended to replace financial performance and liquidity
measures determined in accordance with GAAP. Rather, they are
presented as supplemental measures of the Company's performance and
liquidity that management believes may enhance the evaluation of
the Company's ongoing operating results.
We use Adjusted EBITDA and Adjusted EBITDA-NCI to track our
performance. “Adjusted EBITDA” is defined as net income before
income taxes and other non-income based tax, interest expense, net,
depreciation and amortization, as adjusted for stock-based
compensation and associated payroll taxes, loss on early
extinguishment of debt, transaction-related costs, certain legal
and other matters costs, executive and management severance costs,
change in fair value of income tax receivable agreement, gain or
loss on sale or closure of clinics and management fees. “Adjusted
EBITDA-NCI” is defined as Adjusted EBITDA less net income
attributable to noncontrolling interests. We believe Adjusted
EBITDA and Adjusted EBITDA-NCI provide information useful for
evaluating our business and a further understanding of our results
of operations from management’s perspective. We believe Adjusted
EBITDA is helpful in highlighting trends because Adjusted EBITDA
excludes certain expenses that can differ significantly from
company to company depending on, among other things, long-term
strategic decisions regarding capital structure, the tax
jurisdictions in which companies operate and capital investments,
or that we believe do not reflect our core business operations. We
believe Adjusted EBITDA-NCI is helpful in highlighting the amount
of Adjusted EBITDA that is available to us after reflecting the
interests of our joint venture partners. Adjusted EBITDA and
Adjusted EBITDA-NCI are not measures of operating performance
computed in accordance with GAAP and should not be considered as a
substitute for operating income, net income, cash flows from
operations, or other statement of operations or cash flow data
prepared in conformity with GAAP, or as measures of profitability
or liquidity. In addition, Adjusted EBITDA and Adjusted EBITDA-NCI
may not be comparable to similarly titled measures of other
companies and differ from the calculation of “Consolidated EBITDA”
under our credit agreement. Adjusted EBITDA and Adjusted EBITDA-NCI
may not be indicative of historical operating results, and we do
not mean for these items to be predictive of future results of
operations or cash flows. Adjusted EBITDA and Adjusted EBITDA-NCI
have limitations as analytical tools, and they should not be
considered in isolation, or as substitutes for an analysis of our
results as reported under GAAP. Some of these limitations are that
Adjusted EBITDA and Adjusted EBITDA-NCI:
- do not include stock-based compensation expense and associated
payroll taxes;
- do not include depreciation and amortization—because
construction and operation of our dialysis clinics requires
significant capital expenditures, depreciation and amortization are
a necessary element of our costs and our ability to generate
profits;
- do not include interest expense—as we have borrowed money for
general corporate and facility purposes, interest expense is a
necessary element of our costs and ability to generate profits and
cash flows;
- do not include income tax expense or benefits and other
non-income based taxes;
- do not include transaction-related costs;
- do not include loss on early extinguishment of debt;
- do not include change in fair value of income tax receivable
agreement;
- do not include costs related to certain legal and other
matters;
- do not include executive and management severance costs;
- do not reflect the gain or loss on sale or closure of clinics;
and
- do not include certain management advisory fees.
In addition, Adjusted EBITDA is not reduced by the portion of
earnings attributable to our joint venture partners as reflected on
our Consolidated Statements of Operations as Net income
attributable to noncontrolling interests.
We use Adjusted owned net debt because we believe it is a useful
metric to evaluate the Company’s share of interests in the cash on
our consolidated balance sheet and the debt of the Company.
“Adjusted owned net debt” is defined as debt (other than
clinic-level debt) plus clinic-level debt guaranteed by our wholly
owned subsidiaries less unamortized debt discounts and fees less
cash (other than clinic-level cash) less the Company’s pro rata
interest in clinic-level cash.
The following table presents the reconciliation from net income
to Adjusted EBITDA and Adjusted EBITDA-NCI for the periods
indicated:
Reconciliation of Net income
(loss) to Adjusted EBITDA - Annual
Year Ended
($ in millions)
Dec. 31,
2018
Dec. 31,
2017
Dec. 31,
2016
Dec. 31,
2015
Dec. 31,
2014
Net income
$
22.5
$
58.1
$
101.7
$
99.9
$
82.7
Stock-based compensation and
associated payroll taxes
5.9
16.4
40.3
1.5
1.0
Depreciation and amortization
39.8
37.6
33.9
31.8
28.5
Interest expense, net
32.6
29.3
36.0
45.4
44.1
Income tax expense (benefit) and
other non-income based tax
3.4
9.8
2.8
19.0
10.5
Transaction-related costs
0.9
0.7
2.2
2.1
—
Loss on early extinguishment of
debt
—
0.5
4.7
—
—
Change in fair value of income
tax receivable
(2.7
)
(7.2
)
(1.3
)
—
—
Certain legal and other
matters(2)
39.1
15.2
6.8
—
—
Executive and management
severance costs
—
0.9
1.7
—
—
(Gain) loss on sale or closure of
clinics
(0.3
)
(0.5
)
—
—
0.1
Management fees
—
—
0.5
1.8
1.6
Adjusted EBITDA (including
noncontrolling interests)
141.3
160.9
229.2
201.4
168.5
Less: Net income attributable to
noncontrolling interests
(51.2
)
(62.7
)
(98.5
)
(80.5
)
(65.8
)
Adjusted EBITDA-NCI
$
90.0
$
98.1
$
130.7
$
120.9
$
102.7
Reconciliation of Net income
(loss) to Adjusted EBITDA - Quarterly
LTM (1)
June 30,
2019
($ in millions)
June 30,
2019
Mar. 31,
2019
Dec. 31,
2018
Sept. 30,
2018
June 30,
2018
Mar. 31,
2018
Dec. 31,
2017
Sept. 30,
2017
June 30,
2017
Mar. 31,
2017
Net income (loss)
$
23.7
$
5.1
$
(5.1
)
$
11.2
$
12.5
$
(8.4
)
$
7.2
$
10.8
$
25.8
$
9.8
$
11.8
Stock-based compensation and
associated payroll taxes
5.2
0.9
1.4
1.6
1.3
1.7
1.4
1.3
1.1
3.9
10.1
Depreciation and amortization
40.7
10.3
10.1
10.3
10.0
9.8
9.6
9.7
9.4
9.4
9.1
Interest expense, net
37.3
11.5
8.8
8.8
8.2
8.1
7.5
7.3
7.3
7.2
7.6
Income tax expense (benefit) and
other non-income based tax
10.2
0.9
0.8
8.6
(0.1
)
(2.0
)
(3.1
)
10.9
3.8
(1.8
)
(3.1
)
Transaction-related costs
—
—
—
—
—
—
0.9
—
—
0.7
—
Loss on early extinguishment of
debt
—
—
—
—
—
—
—
—
—
0.5
—
Change in fair value of income
tax receivable
(3.3
)
0.3
(1.7
)
(5.4
)
3.5
(1.7
)
1.0
(1.8
)
(3.6
)
2.6
(4.5
)
Certain legal and other
matters(2)
16.1
8.4
5.3
1.4
1.0
32.5
4.1
3.5
3.5
4.3
3.9
Executive and management
severance costs
0.5
0.2
0.2
—
—
—
—
—
—
0.9
—
Gain on sale or closure of
clinics
(0.5
)
—
(0.5
)
—
—
—
(0.3
)
—
(0.3
)
(0.3
)
—
Adjusted EBITDA (including
noncontrolling interests)
129.8
37.6
19.2
36.5
36.5
40.0
28.3
41.7
46.9
37.4
34.8
Less: Net income attributable to
noncontrolling interests
(43.6
)
(13.3
)
(5.3
)
(11.7
)
(13.2
)
(15.3
)
(11.0
)
(15.7
)
(18.3
)
(14.8
)
(13.9
)
Adjusted EBITDA-NCI
$
86.1
$
24.3
$
13.9
$
24.7
$
23.3
$
24.8
$
17.3
$
26.0
$
28.6
$
22.5
$
21.0
(1) Last twelve months (“LTM”) is the period beginning July 1,
2018 through June 30, 2019. (2) Certain legal and other matters
include legal fees and other expenses associated with matters that
we believe do not reflect our core business operations, including,
but not limited to, our handling of, and response to the following:
the United litigation and settlement; the SEC Investigation and
related Audit Committee review and restatement process; the
securities and derivative litigation related to the foregoing; our
internal review and analysis of factual and legal issues relating
to the aforementioned matters; and legal fees and other expenses
relating to matters that we believe do not reflect our core
business operations.
American Renal Associates
Holdings, Inc. and Subsidiaries
Unaudited Supplemental
Leverage Statistics
($ in millions)
As of June 30, 2019
Total ARA
ARA "Owned"
Cash (other than clinic-level
cash)
$
28.9
$
28.9
Clinic-level cash
40.1
21.2
Total cash
69.1
50.1
Debt (other than clinic-level
debt)
502.5
502.5
Clinic-level debt
121.3
64.6
Unamortized debt discounts and
fees
(12.0
)
(11.9
)
Total debt
$
611.7
$
555.1
Adjusted owned net debt (total
debt - total cash)
$
505.0
Adjusted EBITDA-NCI,
LTM
$
86.1
Leverage ratio
5.9x
We are not providing a quantitative reconciliation of our
Non-GAAP outlook to the corresponding GAAP information because the
GAAP measures that we exclude from our Non-GAAP outlook are not
available without unreasonable effort on a forward-looking basis
due to their unpredictability, high variability, complexity and low
visibility. These excluded GAAP measures include noncontrolling
interests, interest expense, income taxes, and other charges. We
expect the variability of these charges to have a potentially
unpredictable, and potentially significant, impact on our future
GAAP financial results.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190905005432/en/
Investor Contact Darren Lehrich Telephone: (978)
522-6063; Email: dlehrich@americanrenal.com
Press Contact Anntal Silver, Kekst CNC Telephone: (212)
521-4849; Email: anntal.silver@kekstcnc.com
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