<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: August 16, 1999
------------------------------
PROVINCE HEALTHCARE COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 0-23639 62-1710772
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification
Number)
105 WESTWOOD PLACE
SUITE 400
BRENTWOOD, TENNESSEE 37027
(Address of principal executive offices) (Zip Code)
(615) 370-1377
(Registrant's telephone number, including area code)
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<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Province Healthcare Company (the "Company"), a Delaware corporation,
hereby amends its Report on Form 8-K, dated June 17, 1999, relating to the
acquisition of Doctors' Hospital of Opelousas on June 1, 1999 (the
"Acquisition"). The Company is filing this amendment for the purpose of
including the required financial statements and pro forma financial information
with respect to the Acquisition in accordance with the requirements of Form 8-K.
(a) Financial Statements of Business Acquired
The required audited combined financial statements of Doctors'
Hospital of Opelousas as of and for the fiscal year ended
December 31, 1998, are filed herewith.
(b) Pro Forma Financial Information.
The required pro forma financial statements of the Company and
its subsidiaries, giving effect to the Acquisition as if it
had occurred on March 31, 1999, as to the balance sheet, and
on January 1, 1998, as to the income statements, are filed
herewith.
(c) Exhibits:
2.1 Asset Purchase Agreement, dated June 1, 1999 among
Doctors' Hospital of Opelousas Limited Partnership,
Columbia/HCA Healthcare Corporation, PHC-Opelousas,
L.P. and Province Healthcare Company is incorporated
herein by reference to the Company's Current Report on
Form 8-K, filed June 17, 1999, Commission File No.
0-23639.
23.1 Consent of Ernst & Young LLP.
99.1 Copy of the press release, dated June 2, 1999, relating
to the completion of the acquisition of Doctors'
Hospital of Opelousas, is incorporated herein by
reference to the Company's Current Report on Form 8-K,
filed June 17, 1999, Commission File No. 0-23639.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PROVINCE HEALTHCARE COMPANY
By: /s/ BRENDA B. RECTOR
-------------------------------
Brenda B. Rector
Vice President and Controller
Date: August 16, 1999
2
<PAGE> 4
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DOCTORS' HOSPITAL OF OPELOUSAS AND CERTAIN AFFILIATED ENTITIES
Report of Independent Auditors------------------------------------------------ 1
Combined Balance Sheet at December 31, 1998----------------------------------- 2
Combined Statement of Operations and Changes in Owners' Equity for the
Year Ended December 31,1998---------------------------------------------- 4
Combined Statement of Cash Flows for the Year Ended December 31, 1998--------- 5
Notes to Combined Financial Statements---------------------------------------- 6
Condensed Combined Balance Sheet at March 31, 1999 (Unaudited)----------------18
Condensed Combined Statement of Operations and Changes in Owners' Equity for
the Three Months Ended March 31, 1999 (Unaudited)------------------------19
Condensed Combined Statements of Cash Flows for the Three Months Ended
March 31, 1999 (Unaudited)-----------------------------------------------20
Notes to Condensed Combined Financial Statements------------------------------21
PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
Pro Forma Condensed Consolidated Financial Statements (Unaudited)-------------24
Pro Forma Condensed Consolidated Balance Sheet at March 31, 1999 (Unaudited)--25
Pro Forma Condensed Consolidated Statement of Income for the Year
Ended December 31, 1998 (Unaudited)--------------------------------------26
Pro Forma Condensed Consolidated Statement of Income for the Three Months
Ended March 31, 1999 (Unaudited)-----------------------------------------27
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)----28
</TABLE>
<PAGE> 5
Report of Independent Auditors
Board of Directors
Doctors' Hospital of Opelousas
We have audited the accompanying combined balance sheet as of December 31, 1998
of Doctors' Hospital of Opelousas and certain affiliated entities, as listed in
Note 1 (collectively, the "Affiliated Group"), and the related combined
statements of operations and changes in owners' equity, and cash flows for the
year ended December 31, 1998. These financial statements are the responsibility
of the Affiliated Group's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position at December 31, 1998 of
Doctors' Hospital of Opelousas and certain affiliated entities, as listed in
Note 1, and the combined results of their operations and their cash flows for
the year ended December 31, 1998 in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
New Orleans, Louisiana
July 23, 1999
1
<PAGE> 6
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
COMBINED BALANCE SHEET
(IN THOUSANDS)
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash $ 167
Accounts receivable, less allowance for doubtful accounts of $3,588 4,663
Assets whose use is limited under bond indenture 373
Inventories 719
Prepaid expenses and other current assets 112
--------
Total current assets 6,034
Property and equipment:
Land 471
Buildings and improvements 9,848
Equipment 8,429
--------
18,748
Less accumulated depreciation (3,976)
--------
14,772
Construction in progress 79
--------
Net property and equipment 14,851
Other assets 32
========
Total assets $ 20,917
========
</TABLE>
See accompanying notes.
2
<PAGE> 7
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
COMBINED BALANCE SHEET
(IN THOUSANDS)
DECEMBER 31, 1998
<TABLE>
<S> <C>
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Accounts payable $ 641
Employee compensation and benefits 836
Other accrued liabilities 406
Estimated payable to third-party payors 3,680
Current portion of long-term debt 620
-------
Total current liabilities 6,183
Due to affiliates, net 9,674
Long-term debt, less current portion 4,590
Owners' equity 470
=======
Total liabilities and owners' equity $20,917
=======
</TABLE>
See accompanying notes.
3
<PAGE> 8
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
COMBINED STATEMENT OF OPERATIONS AND CHANGES IN OWNERS' EQUITY
(IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
Net patient revenue $ 24,887
Salaries and benefits 11,242
Supplies 3,690
Provision for bad debts 1,920
Purchased services 4,640
Management fees 1,607
Repairs and maintenance 732
Rent and lease expense 237
Depreciation and amortization 1,555
Interest expense 915
Other operating expenses 2,230
--------
28,768
--------
Net loss (3,881)
Owners' equity at January 1, 1998 4,351
========
Owners' equity at December 31, 1998 $ 470
========
</TABLE>
See accompanying notes.
4
<PAGE> 9
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
COMBINED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(3,881)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 1,555
Provision for bad debts 1,920
Changes in operating assets and liabilities:
Increase in accounts receivable (3,412)
Decrease in prepaid expenses and other current assets 319
Decrease in accounts payable and accrued expenses (467)
Decrease in estimated payable to third-party payors 1,847
-------
Net cash used in operating activities (2,119)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment, net (6,220)
Proceeds on notes receivable 129
Increase in assets whose use is limited (127)
-------
Net cash used in investing activities (6,218)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (570)
Net transfers from affiliates 9,132
-------
Net cash provided by financing activities 8,562
-------
Increase in cash 225
Cash (overdraft) at beginning of year (58)
=======
Cash at end of year $ 167
=======
</TABLE>
See accompanying notes.
5
<PAGE> 10
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
1. ORGANIZATION AND PRINCIPLES OF COMBINATION
Doctors' Hospital of Opelousas is an acute care hospital located in Opelousas,
Louisiana, which provides services to patients residing locally. The
accompanying combined financial statements of Doctors' Hospital of Opelousas and
certain affiliated entities (collectively, the "Affiliated Group") include the
accounts of the following entities which are indirect majority-owned
subsidiaries of Columbia/HCA Healthcare Corporation ("Columbia/ HCA"), one of
the largest health care services companies in the United States:
Doctors' Hospital of Opelousas
Notami (Opelousas), Inc.
McCarthy Professional Office Building
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PATIENT ACCOUNTS RECEIVABLE
The Affiliated Group's primary concentration of credit risk is patient accounts
receivable. The Affiliated Group receives payment for patient services from the
federal government primarily under the Medicare program, the Louisiana state
government under its Medicaid program, health maintenance organizations,
preferred provider organizations and other private insurers, and directly from
patients. The Affiliated Group manages the receivables by regularly reviewing
its accounts and contracts and by providing appropriate allowances for
uncollectible amounts.
The Affiliated Group grants credit without collateral to its patients, most of
whom are local residents and are insured under third-party payor agreements. The
following table summarizes the percent of gross accounts receivable from all
payors at December 31, 1998.
<TABLE>
<S> <C>
Medicare 25.3%
Medicaid 8.7
Managed care 26.2
Commercial 10.7
Private pay 21.3
Other 7.8
------
100.0%
======
</TABLE>
6
<PAGE> 11
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Affiliated Group recognizes that revenue and receivables from government
agencies are significant to its operations, but management does not believe that
there are significant credit risks associated with the governmental agencies.
Private and other amounts due consist of receivables from various payors,
including individuals involved in diverse activities subject to differing
economic conditions and do not represent any concentrated credit risk to the
Affiliated Group. Management continually monitors and adjusts its allowances
associated with these receivables.
ESTIMATED PAYABLE TO THIRD-PARTY PAYORS
Final determination of amounts earned under prospective payment and
cost-reimbursement activities is subject to review by appropriate governmental
authorities or their agents. In the opinion of management, adequate provision
has been made for any adjustments that may result from such reviews.
NET PATIENT REVENUE
Net patient revenue includes amounts estimated by management to be reimbursable
by Medicare and Medicaid and other third-party payors based upon established
charges, the cost of providing services, predetermined rates per diagnosis,
fixed per diem rates or discounts from established charges. Amounts received are
generally less than the established billing rates of the facilities and the
differences (contractual adjustments) are reported as deductions from patient
service revenue. The effects of other arrangements for providing services at
less than established rates are also reported as deductions from patient service
revenue. Net patient revenue is net of contractual adjustments and policy
discounts of approximately $22,947,000 for the year ended December 31, 1998.
Settlements under reimbursement agreements with third-party payors are estimated
and recorded in the period the related services are rendered and are adjusted in
future periods as final settlements are determined. Adjustments to estimated
settlements for 1998 resulted in increases to revenue of approximately $80,000.
The Affiliated Group receives payments for services rendered from federal and
state agencies (under Medicare, Medicaid and Champus programs), managed care
health plans, commercial insurance companies, employers and patients. During
1998, approximately
7
<PAGE> 12
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
48.5% of the Affiliated Group's revenues related to patients participating in
the Medicare program, and 19.8% of the Affiliated Group's revenues related to
patients participating in the Medicaid program.
INVENTORIES
Inventories consist principally of pharmaceuticals and supplies and are stated
at the lower of cost (first-in, first-out) or market.
PROPERTY AND EQUIPMENT
Property and equipment acquired after May 1994 is stated at cost. Property and
equipment acquired prior to May 1994 is stated at amounts which management
believes materially approximate cost at December 31, 1998.
Routine maintenance and repairs are charged to expense as incurred. Expenditures
that increase values, change capacities or extend useful lives are capitalized.
Depreciation is computed by the straight-line method over the estimated useful
lives of the assets, which approximate 3 to 40 years.
INCOME TAXES
The Affiliated Group uses the liability method of accounting for income taxes.
As a result, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.
Significant temporary differences between tax and financial reporting relate to
depreciation, doubtful accounts, and the effects of net operating losses.
8
<PAGE> 13
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
3. RETIREMENT PLANS
The Affiliated Group participates in Columbia/HCA's defined contribution
retirement plans, which cover substantially all employees. Benefits are
determined primarily as a percentage of a participant's earned income. In
addition, Columbia/HCA may make profit sharing contributions on behalf of
certain employees. Retirement expense for the year ended December 31, 1998 was
approximately $280,000.
4. ASSETS WHOSE USE IS LIMITED
Assets whose use is limited consists of funds held by trustees under a bond
indenture agreement. As of December 31, 1998, these funds consisted of cash and
U.S. treasury bills. The U.S. treasury bills are recorded at cost, which
approximates fair value.
5. LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1998 (in thousands):
<TABLE>
<S> <C>
Hospital Revenue Bonds, Series 1980, 10%, term
bonds due June 1, 2005, subject to mandatory
redemption prior to maturity beginning June 1, 1994,
with remaining annual redemption amounts ranging
from $530 to $970 ($530 due in 1999) $ 5,120
Note payable, 8%, final installment due December 15,
1999, collateralized by equipment 90
-------
5,210
Less current portion 620
-------
$ 4,590
=======
</TABLE>
9
<PAGE> 14
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
5. LONG-TERM DEBT (CONTINUED)
The revenue bonds were repaid subsequent to year end from the proceeds of the
sale of the Affiliated Group (see Note 11).
6. RELATED PARTY TRANSACTIONS
Related party balances consisted of the following at December 31, 1998 (in
thousands):
<TABLE>
<S> <C>
Due to Columbia/HCA $ (7,141)
Due to other affiliates, net (2,533)
-----------
Due to affiliates, net $ (9,674)
===========
</TABLE>
Amounts due to Columbia/HCA represent the net excess of funds transferred to or
paid on behalf of the Affiliated Group over funds transferred to the centralized
cash management account of Columbia/HCA. Generally, this balance is increased by
automatic cash transfers from the account to reimburse the Affiliated Group's
bank accounts for operating expenses and to pay the Affiliated Group's debt,
completed construction project additions, fees and services provided by
Columbia/HCA, including information systems services, and other operating
expenses, such as payroll, interest, insurance, and income taxes. Generally, the
balance is decreased through daily cash deposits by the Affiliated Group to the
account. Management fees represent an allocation of home office and regional
expenses of Columbia/HCA.
The Affiliated Group is charged interest on the amounts due to Columbia/HCA at a
rate approximating 10% based on the outstanding balance at month end. Interest
expense charged to the Affiliated Group by Columbia/HCA totaled approximately
$393,000 in 1998.
Amounts due to other affiliates, net, represent the net excess of amounts paid
by certain affiliates on behalf of the Affiliated Group over amounts paid by the
Affiliated Group on behalf of the other affiliates. No interest is charged on
these balances.
10
<PAGE> 15
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
7. LEASES
Rental expense relating primarily to the rental of buildings and equipment was
approximately $237,000 for the year ended December 31, 1998.
Future minimum rental commitments under noncancelable operating leases (with an
initial or remaining term in excess of one year) at December 31, 1998, are as
follows (in thousands):
<TABLE>
<S> <C>
1999 $ 11
2000 11
2001 11
============
Total minimum rental commitments $ 33
============
</TABLE>
8. INCOME TAXES
The Affiliated Group's consolidated effective tax rate for the year ended
December 31, 1998 differed from the federal statutory rate as set forth below:
<TABLE>
<CAPTION>
AMOUNT PERCENT
-------------------------------
<S> <C> <C>
Tax benefit at U.S. statutory rates $ (1,320) (34)%
State taxes (net of federal benefit) (233) (6)
Other, primarily increase in valuation
allowance related to net deferred tax
assets 1,553 40
===============================
Income tax provision (benefit) $ - -- %
===============================
</TABLE>
At December 31, 1998, the Affiliated Group had a net deferred tax asset for
which a 100% valuation allowance has been recorded due to management's belief
that it is more likely than not that the Affiliated Group will not realize a
future benefit from the net deferred tax asset.
11
<PAGE> 16
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
9. COMMITMENTS AND CONTINGENCIES
INVESTIGATIONS
Columbia/HCA is currently the subject of several federal investigations into its
business practices, as well as governmental investigations by various states.
Columbia/HCA is cooperating in these investigations and understands, through
written notice and other means, that it is a target in these investigations.
Given the breadth of the ongoing investigations, Columbia/HCA expects additional
subpoenas and other investigative and prosecutorial activity to occur in these
and other jurisdictions in the future. Columbia/HCA is a defendant in several
qui tam actions brought by private parties on behalf of the United States of
America, which have been unsealed and served on Columbia/HCA. The actions
allege, in general, that Columbia/HCA and certain subsidiaries and/or affiliated
partnerships violated the False Claims Act for improper claims submitted to the
government for reimbursement. The lawsuits seek damages of three times the
amount of all Medicare or Medicaid claims (involving false claims) presented by
the defendants to the federal government, civil penalties of not less than
$5,000 nor more than $10,000 for each such Medicare or Medicaid claim,
attorney's fees and costs. The government has intervened in two qui tam actions.
Columbia/HCA is aware of additional qui tam actions that remain under seal and
believes that there are other sealed qui tam cases of which it is unaware.
Columbia/HCA is the subject of a formal order of investigation by the Securities
and Exchange Commission. Columbia/HCA understands that the investigation
includes the anti-fraud, periodic reporting and internal accounting control
provisions of the federal securities laws.
Management believes the ongoing investigations and related media coverage are
having a negative effect on the Affiliated Group's results of operations. It is
too early to predict the outcome or effect of the ongoing investigations or qui
tam and other actions or whether any additional investigations or litigation
will be commenced. If Columbia/HCA is found to have violated federal or state
laws relating to Medicare, Medicaid or similar programs, Columbia/HCA could be
subject to substantial monetary fines, civil and criminal penalties and
exclusion from participation in the Medicare and Medicaid programs. Similarly,
the
12
<PAGE> 17
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
9. COMMITMENTS AND CONTINGENCIES (CONTINUED)
amounts claimed in the qui tam and other actions may be substantial, and
Columbia/HCA could be subject to substantial costs resulting from an adverse
outcome of one or more such actions. Any such sanctions or losses could have a
material adverse effect on Columbia/HCA's and the Affiliated Group's financial
position and results of operations.
GENERAL AND PROFESSIONAL LIABILITY RISKS
Columbia/HCA assumes the liability and maintains the related reserve for all
general liability claims and for professional liability claims incurred up to
$100,000. For professional liability claims in excess of $100,000, the
Affiliated Group participates in the State of Louisiana Patients' Compensation
Fund (LPCF). As a participant, the Affiliated Group receives malpractice
coverage for claims over $100,000 up to $500,000, the maximum statutory exposure
which currently exists under Louisiana law, plus interest and future medical
costs. Accordingly, no reserve for liability risks is recorded on the
accompanying combined balance sheet. The cost of general and professional
liability coverage is allocated by Columbia/HCA's captive insurance company to
the Affiliated Group based on actuarially determined estimates and on actual
premiums paid to the LPCF. The cost for the year ended December 31, 1998 was
approximately $280,000.
OTHER
The Affiliated Group is subject to claims and suits arising in the ordinary
course of business. In the opinion of management, the ultimate resolution of
such pending legal proceedings, other than those potential claims described
under Investigations above, will not have a material effect on Affiliated
Group's results of operations or financial position.
10. IMPACT OF YEAR 2000 COMPUTER ISSUES (UNAUDITED)
The Affiliated Group is relying on the management services and systems provided
by Columbia/HCA to address the impact of Year 2000 computer issues on the
Affiliated Group.
13
<PAGE> 18
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
10. IMPACT OF YEAR 2000 COMPUTER ISSUES (UNAUDITED) (CONTINUED)
Columbia/HCA has dedicated substantial resources to address the impact of the
Year 2000 problem. Columbia/HCA has engaged all relevant aspects of the
organization in a coordinated effort to address the Year 2000 problem and to
minimize the chance of an interruption to its operations or impact to patient
safety and health. The Year 2000 problem is the result of two potential
malfunctions that could have an impact on Columbia/HCA's systems and equipment.
The first problem arises due to computers being programmed to use two rather
than four digits to define the applicable year. The second problem arises in
embedded chips, where microchips and microcontrollers have been designed using
two rather than four digits to define the applicable year. Certain of
Columbia/HCA's computer programs, building infrastructure components (e.g.,
alarm systems and HVAC systems) and medical devices that are date sensitive, may
recognize a date using "00" as the year 1900 rather than the year 2000. If
uncorrected, the problem could result in computer system and program failures
that could result in disruption of business operations or equipment and medical
device malfunctions that could affect patient diagnosis and treatment.
With respect to the information technology ("IT") systems portions of
Columbia/HCA's Year 2000 project, which address the inventory, assessment,
remediation, testing and implementation of internally developed software,
Columbia/HCA has identified various software applications that were addressed on
separate time lines. Columbia/HCA has completed testing and remediation of these
software applications. Columbia/HCA has completed the assessment of mission
critical third-party software (i.e., that software which is essential for
day-to-day operations) and has developed testing and implementation plans with
separate time lines. Columbia/HCA has completed and placed into production 99%
of software applications for internally developed and mission critical
third-party software. Testing and remediation and implementation of various
software applications for certain of Columbia/HCA's related subsidiaries are
scheduled to be completed in the fourth quarter of 1999 and should not have a
material effect on Columbia/HCA's readiness. The IT systems portions of
Columbia/HCA's Year 2000 project are currently on schedule.
With respect to the IT infrastructure portion of Columbia/HCA's Year 2000
project, Columbia/HCA has undertaken a program to inventory, assess and correct,
replace or otherwise address impacted, vendor-supplied products (hardware,
systems software,
14
<PAGE> 19
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
10. IMPACT OF YEAR 2000 COMPUTER ISSUES (UNAUDITED) (CONTINUED)
business software, and telecommunication equipment). Columbia/HCA has
implemented a program to contact vendors, analyze information provided, and to
remediate, replace or otherwise address IT products that pose a material Year
2000 impact. Columbia/HCA anticipates completion, in all material respects, of
the IT infrastructure portion of its program by September 30, 1999. The IT
infrastructure portion of Columbia/HCA's Year 2000 project is currently on
schedule in all material respects.
Columbia/HCA presently believes that with modifications to existing software or
the installation of upgraded software under the IT infrastructure portion, the
Year 2000 will not pose material operational problems for Columbia/HCA's
computer systems. However, if such modifications or upgrades are not
accomplished in a timely manner, Year 2000 related failures may present a
material adverse impact on the operations of Columbia/HCA and the Affiliated
Group.
With respect to the non-IT infrastructure portion of Columbia/HCA's Year 2000
project, Columbia/HCA has undertaken a program to inventory, assess and correct,
replace or otherwise address impacted vendor products, medical equipment and
other related equipment with embedded chips. Columbia/HCA has implemented a
program to contact vendors, analyze information provided, and to remediate,
replace or otherwise address devices or equipment that pose a material Year 2000
impact. Columbia/HCA anticipates completion, in all material respects, of the
non-IT infrastructure portion of its program by September 30, 1999. The non-IT
infrastructure portion of Columbia/HCA's Year 2000 project is currently on
schedule in all material respects.
Columbia/HCA is prioritizing its non-IT infrastructure efforts by focusing on
equipment and medical devices that will have a direct impact on patient care.
Columbia/HCA is directing substantial efforts to repair, replace, upgrade or
otherwise address this equipment and these medical devices in order to minimize
risk to patient safety and health. Columbia/HCA is relying on information that
is being provided to it by equipment and medical device manufacturers regarding
the Year 2000 status of their products. While Columbia/HCA is attempting to
evaluate information provided by its previous and current vendors, there can be
no assurance that in all instances accurate information is being provided.
Columbia/HCA also cannot in all instances guarantee that the repair, replacement
or upgrade of all non-IT infrastructure systems will occur on a timely basis or
that such repairs, replacements or upgrades will avoid all Year 2000 problems.
15
<PAGE> 20
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
10. IMPACT OF YEAR 2000 COMPUTER ISSUES (UNAUDITED) (CONTINUED)
Columbia/HCA has initiated communications with its major third-party payers,
including government payers and intermediaries. Columbia/HCA relies on these
entities for accurate and timely reimbursement of claims, often through the use
of electronic data interfaces. Columbia/HCA has not received assurances that
these interfaces will be timely converted. Because certain payers have refused
or are not ready to test with Columbia/HCA's systems, testing with payers and
intermediaries will continue through the end of 1999. Failure of these
third-party systems could have a material adverse effect on Columbia/HCA's and
the Affiliated Group's cash flow and results of operations.
Columbia/HCA also has initiated communications with its mission critical
suppliers and vendors (i.e., those suppliers and vendors whose products and
services are essential for day-to-day operations) to verify their ability to
continue to deliver goods and services through the Year 2000. Columbia/HCA has
not received assurances from all mission critical suppliers and vendors that
they will be able to continue to deliver goods and services through the Year
2000, but Columbia/HCA is continuing its efforts to obtain such assurances.
Failure of these third parties could have a material impact on operations and/or
the ability to provide health care services.
With the assistance of external resources, Columbia/HCA has undertaken the
development of contingency plans in the event that its Year 2000 efforts, or the
efforts of third parties upon which Columbia/HCA relies, are not accurately or
timely completed. Columbia/HCA has developed a contingency planning methodology
and will implement contingency plans throughout 1999.
While Columbia/HCA is developing contingency plans to address possible failure
scenarios, Columbia/HCA recognizes that there are "worst case" scenarios which
may develop and are largely outside Columbia/HCA's control. Columbia/HCA
recognizes the risks associated with extended infrastructure (power, water,
telecommunications) failure, the interruption of insurance and other payments to
Columbia/HCA and the failure of equipment or software that could impact patient
safety or health despite the assurances of third parties. Columbia/HCA is
addressing these and other failure scenarios in its contingency planning effort
and is engaging third parties in discussions regarding how to manage common
failure scenarios, but Columbia/HCA cannot currently estimate the likelihood or
the potential cost of such failures. Currently, Columbia/HCA
16
<PAGE> 21
DOCTORS' HOSPITAL OF OPELOUSAS
AND CERTAIN AFFILIATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
10. IMPACT OF YEAR 2000 COMPUTER ISSUES (UNAUDITED) (CONTINUED)
does not believe that any reasonably likely worst case scenario will have a
material impact on Columbia/HCA's revenues or operations. Those reasonably
likely worst case scenarios include continued expenditures for remediation,
continued expenditures for replacement or upgrade of equipment, continued
efforts regarding contingency planning, increased staffing for the periods
immediately preceding and after January 1, 2000, and possible payment delays
from Columbia/HCA's payers.
11. SUBSEQUENT EVENT
Effective June 1, 1999, the Affiliated Group was sold to Province Healthcare
Company. A portion of the sale proceeds was used to repay the revenue bonds
discussed in Note 5.
17
<PAGE> 22
DOCTORS' HOSPITAL OF OPELOUSAS AND CERTAIN AFFILIATED ENTITIES
CONDENSED COMBINED BALANCE SHEET (UNAUDITED)
MARCH 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash $ (43)
Accounts receivable, less allowance for doubtful
accounts of $4,002 4,928
Assets whose use is limited under bond indenture 690
Inventories 705
Prepaid expenses and other current assets 429
--------
Total current assets 6,709
Property and equipment:
Land 471
Buildings and improvements 9,952
Equipment 8,505
--------
18,928
Less accumulated depreciation (4,516)
--------
14,412
Construction in progress --
--------
Net property and equipment 14,412
Other assets 124
--------
$ 21,245
========
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Accounts payable $ 903
Employee compensation and benefits 602
Other accrued liabilities 280
Estimated payable to third-party payors 3,495
Current portion of long-term debt 620
--------
5,900
Due to affiliates, net 10,551
Long-term debt, less current portion 4,590
Owners' equity 204
--------
Total liabilities and owner's equity $ 21,245
========
</TABLE>
18
<PAGE> 23
DOCTORS' HOSPITAL OF OPELOUSAS AND CERTAIN AFFILIATED ENTITIES
CONDENSED COMBINED STATEMENTS OF OPERATIONS AND OWNERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
------- -------
(In thousands)
<S> <C> <C>
Net patient revenue $ 6,858 $ 6,671
Salaries and benefits 2,697 2,795
Supplies 1,001 951
Provision for bad debts 248 547
Purchased services 1,110 1,045
Management fees 459 473
Repairs and maintenance 202 184
Rent and lease expense 70 72
Depreciation and amortization 540 388
Interest 230 234
Other operating expenses 567 516
------- -------
7,124 7,205
------- -------
Loss before income taxes (266) (534)
Income tax benefit -- --
------- -------
Net loss (266) (534)
Owners' equity at beginning of period 470 4,351
------- -------
Owners' equity at end of period $ 204 $ 3,817
======= =======
</TABLE>
19
<PAGE> 24
DOCTORS' HOSPITAL OF OPELOUSAS AND CERTAIN AFFILIATED ENTITIES
CONDENSED COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
------- ------
(In thousands)
<S> <C> <C>
NET CASH USED IN OPERATING ACTIVITIES $(669) $ (910)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment, net (101) 2
Proceeds on notes receivable -- --
Increase in assets whose use is limited (317) (481)
----- -------
Net cash used in investing activities (418) (479)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt -- --
Net transfers from affiliates 877 1,488
----- -------
Net cash provided by financing activities 877 1,488
(Decrease) increase in cash (210) 99
Cash (overdraft) at beginning of period 167 (58)
----- -------
Cash (overdraft) at end of period $ (43) $ 41
===== =======
</TABLE>
20
<PAGE> 25
DOCTOR'S HOSPITAL OF OPELOUSAS AND CERTAIN AFFILIATED ENTITIES
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1999
1. ORGANIZATION AND PRINCIPLES OF COMBINATION
Doctors' Hospital of Opelousas is an acute care hospital located in
Opelousas, Louisiana, which provides services to patients residing
locally. The accompanying combined condensed financial statements of
Doctors' Hospital of Opelousas and certain affiliated entities
(collectively, the "Affiliated Group") include the accounts of the
following entities which are indirect majority-owned subsidiaries of
Columbia/HCA Healthcare Corporation ("Columbia/HCA"), one of the
largest healthcare services companies in the United States:
Doctors' Hospital of Opelousas
Notami (Opeolousas), Inc.
McCarthy Professional Office Building
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited condensed combined financial statements of
the Affiliated Group have been prepared in accordance with generally
accepted accounting principles for interim financial information and
with the instructions to Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three months
ended March 31, 1999, are not indicative of the results that may be
expected for the year ended December 31, 1999. For further information,
refer to the 1998 financial statements and footnotes thereto included
herein.
INCOME TAXES
The Affiliated Group uses the liability method of accounting for
income taxes. As a result, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected
to reverse.
Significant temporary differences between tax and financial reporting
relate to depreciation, doubtful accounts, and the effects of net
operating losses.
21
<PAGE> 26
DOCTOR'S HOSPITAL OF OPELOUSAS AND CERTAIN AFFILIATED ENTITIES
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
3. COMMITMENTS AND CONTINGENCIES
INVESTIGATIONS
Columbia/HCA is currently the subject of several federal investigations
into its business practices, as well as governmental investigations by
various states. Columbia/HCA is cooperating in these investigations and
understands, through written notice and other means, that it is a
target in these investigations. Given the breadth of the ongoing
investigations, Columbia/HCA expects additional subpoenas and other
investigative and prosecutorial activity to occur in these and other
jurisdictions in the future. Columbia/HCA is a defendant in several qui
tam actions brought by private parties on behalf of the United States
of America, which have been unsealed and served on Columbia/HCA. The
actions allege, in general, that Columbia/HCA and certain subsidiaries
and/or affiliated partnerships violated the False Claims Act for
improper claims submitted to the government for reimbursement. The
lawsuits seek damages of three times the amount of all Medicare or
Medicaid claims (involving false claims) presented by the defendants to
the Federal government, civil penalties of not less than $5,000 nor
more than $10,000 for each such Medicare or Medicaid claim, attorney's
fees and costs. The government has intervened in two qui tam actions.
Columbia/HCA is aware of additional qui tam actions that remain under
seal and believes that there are other sealed qui tam cases of which it
is unaware.
Columbia/HCA is the subject of a formal order of investigation by the
Securities and Exchange Commission. Columbia/HCA understands that the
investigation includes the anti-fraud, periodic reporting and internal
accounting control provisions of the federal securities laws.
Management believes the ongoing investigations and related media
coverage are having a negative effect on the Affiliated Group's results
of operations. It is too early to predict the outcome or effect of the
ongoing investigations or qui tam and other actions or whether any
additional investigations or litigation will be commenced. If
Columbia/HCA is found to have violated Federal or state laws relating
to Medicare, Medicaid or similar programs, Columbia/HCA could be
subject to substantial monetary fines, civil and criminal penalties and
exclusion from participation in the Medicare and Medicaid programs.
Similarly, the amounts claimed in the qui tam and other actions may be
substantial, and Columbia/HCA could be subject to substantial costs
resulting from an adverse outcome of one or more such actions. Any such
sanctions or losses could have a
22
<PAGE> 27
DOCTOR'S HOSPITAL OF OPELOUSAS AND CERTAIN AFFILIATED ENTITIES
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
material adverse effect on Columbia/HCA's and the Affiliated Group's
financial position and results of operations.
GENERAL AND PROFESSIONAL LIABILITY RISKS
Columbia/HCA assumes the liability and maintains the related reserve
for all general liability claims and for professional liability claims
incurred up to $100,000. For professional liability claims in excess of
$100,000, the Affiliated Group participates in the State of Louisiana
Patients' Compensation Fund (LPCF). As a participant, the Affiliated
Group receives malpractice coverage for claims over $100,000 up to
$500,000, the maximum statutory exposure which currently exists under
Louisiana law, plus interest and future medical costs. Accordingly, no
reserve for liability risks is recorded on the accompanying combined
balance sheet. The cost of general and professional liability coverage
is allocated by Columbia/HCA's captive insurance company to the
Affiliated Group based on actuarially determined estimates and on
actual premiums paid to the LPCF.
ESTIMATED PAYABLE TO THIRD-PARTY PAYORS
Final determination of amounts earned under prospective payment and
cost-reimbursement activities is subject to review by appropriate
governmental authorities or their agents. In the opinion of management,
adequate provision has been made for any adjustments that may result
from such reviews.
NET PATIENT REVENUE
Settlements under reimbursement agreements with third-party payors are
estimated and recorded in the period the related services are rendered
and are adjusted in future periods as final settlements are determined.
OTHER
The Affiliated Group is subject to claims and suits arising in the
ordinary course of business. In the opinion of management, the ultimate
resolution of such pending legal proceedings, other than those
potential claims described under Investigations above, will not have a
material effect on Affiliated Group's results of operations or
financial position.
4. SUBSEQUENT EVENT
Effective June 1, 1999, Columbia/HCA sold the Affiliated Group to
Province Healthcare Company.
23
<PAGE> 28
PROVINCE HEATLHCARE COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On June 1, 1999, Province acquired Doctors' Hospital of Opelousas and
certain affiliated entities ("the Affiliated Group").
The following unaudited pro forma condensed consolidated balance sheet as
of March 31, 1999 gives effect to the acquisition of the Affiliated Group by
Province as if the transaction had been completed as of March 31, 1999.
The following unaudited pro forma condensed consolidated statements of
income for the year ended December 31, 1998, and the three months ended March
31, 1999, give effect to the acquisition of the Affiliated Group by Province, as
if such transaction had been completed as of January 1, 1998.
The pro forma condensed consolidated financial information presented herein
does not purport to represent what the Company's results of operations or
financial position would have been had such transaction, in fact, occurred at
the beginning of the periods presented or to project the Company's results of
operations in any future period. The pro forma results of operations, which do
not take into account certain operational changes instituted by the Company upon
acquisition of its hospitals, are not necessarily indicative of the results that
may be expected from such hospitals. The unaudited pro forma condensed
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements of Province, included in its Annual Report on
Form 10-K for the year ended December 31, 1998, the unaudited condensed
consolidated financial statements of Province, included in its Quarterly Report
on Form 10-Q for the period ended March 31, 1999, and the financial statements
of the Affiliated Group, included elsewhere in this Current Report on Form
8-K/A. Certain reclassifications have been made in the Affiliated Group's
historical financial statements, included in the pro forma financial statements,
to conform to the Province presentation.
24
<PAGE> 29
PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
------------------------ ACQUISITION PRO FORMA
AFFILIATED PRO FORMA ACQUISITION
PROVINCE GROUP ADJUSTMENTS CONSOLIDATED
-------- --------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 12,656 ($43) $ 22,000 (a)
44 (b)
(22,667)(c) $ 11,990
Accounts receivable, net 56,930 4,928 (699)(b) 61,159
Inventories 7,501 705 8,206
Assets whose use is limited under bond indentures -- 690 (690)(b) --
Prepaid expenses and other 8,417 429 (337)(b) 8,509
--------- -------- ---------- ----------
Total current assets 85,504 6,709 (2,349) 89,864
Property, plant and equipment, net 111,830 14,412 (14,412)(b) 111,830
Other assets:
Cost in excess of net assets acquired, net 140,846 -- 140,846
Other 16,001 124 18,694 (c)
1 (b) 34,820
--------- -------- ---------- ----------
$ 354,181 $ 21,245 $ 1,934 $ 377,360
========= ======== ========== ==========
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $8,015 $ 903 ($304)(b) $ 8,614
Accrued salaries and benefits 10,232 602 (152)(b) 10,682
Accrued expenses 5,473 280 (240)(b) 5,513
Current maturities of long-term obligations 1,545 620 (530)(b) 1,635
--------- -------- ---------- ----------
Total current liabilities 25,265 2,405 (1,226) 26,444
Long-term obligations, less current maturities 138,357 4,590 22,000 (a)
(4,590)(b) 160,357
Third-party settlements 5,353 3,495 (3,495)(b) 5,353
Other liabilities 10,795 -- 10,795
Minority interest 787 -- 787
Due to affiliates, net -- 10,551 (10,551)(b) --
Common stockholders' equity (deficit):
Net assets 204 3,769 (b)
(3,973)(c) --
Common stock 157 -- 157
Additional paid-in-capital 163,294 -- 163,294
Retained earnings 10,173 -- 10,173
--------- -------- ---------- ----------
Total common stockholders' equity (deficit) 173,624 204 (204) 173,624
--------- -------- ---------- ----------
$ 354,181 $ 21,245 $ 1,934 $ 377,360
========= ======== ========== ==========
</TABLE>
25
<PAGE> 30
PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL ACQUISITION
HISTORICAL AFFILIATED PRO FORMA PRO FORMA
PROVINCE GROUP ADJUSTMENTS CONSOLIDATED
-------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Revenue:
Net patient service revenue $ 217,364 $ 24,887 $ 242,251
Management and professional services 11,885 -- 11,885
Reimbursable expenses 6,520 -- 6,520
Other 3,086 -- 3,086
--------- -------- --------- ---------
Net operating revenue 238,855 24,887 -- 263,742
Expenses:
Salaries, wages and benefits 94,970 11,242 106,212
Reimbursable expenses 6,520 -- 6,520
Purchased services 28,250 4,640 32,890
Supplies 24,252 3,690 27,942
Provision for doubtful accounts 17,839 1,920 19,759
Other operating expenses 19,149 2,962 22,111
Rentals and leases 5,777 237 6,014
Depreciation and amortization 13,409 1,555 ($295)(a) 14,669
Interest expense 10,555 915 763 (b) 12,233
Management fees -- 1,607 1,607
Minority interest 155 -- 155
Loss on sale of assets 45 -- 45
--------- -------- --------- ---------
Total expenses 220,921 28,768 468 250,157
--------- -------- --------- ---------
Income (loss) before income taxes 17,934 (3,881) (468) 13,585
Income taxes (benefit) 7,927 -- (1,734)(c) 6,193
--------- -------- --------- ---------
Net income (loss) 10,007 (3,881) 1,266 7,392
Preferred stock dividends and accretion (696) -- -- (696)
-------- --------- ---------
Net income (loss) to common shareholders $ 9,311 ($ 3,881) $ 1,266 $ 6,696
========= ======== ========= =========
Basic earnings (loss) per common share:
Net income $ 0.75 $ 0.55
Preferred stock dividends and accretion (0.05) (0.05)
--------- ---------
Net income per common share $ 0.70 $ 0.50
========= =========
Diluted earnings (loss) per common share:
Net income $ 0.73 $ 0.54
Preferred stock dividends and accretion (0.05) (0.05)
--------- ---------
Net income per common share $ 0.68 $ 0.49
========= =========
Weighted-average shares:
Basic earnings per common share 13,344 13,344
Diluted earnings per common share 13,672 13,672
</TABLE>
26
<PAGE> 31
PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL ACQUISITION
HISTORICAL AFFILIATED PRO FORMA PRO FORMA
PROVINCE GROUP ADJUSTMENTS CONSOLIDATED
-------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Revenue:
Net patient service revenue $ 67,256 $ 6,858 $ 74,114
Management and professional services 3,450 -- 3,450
Reimbursable expenses 1,777 -- 1,777
Other 764 -- 764
---------- --------- --------- ---------
Net operating revenue 73,247 6,858 80,105
Expenses:
Salaries, wages and benefits 29,508 2,697 32,205
Reimbursable expenses 1,777 -- 1,777
Purchased services 7,236 1,110 8,346
Supplies 8,217 1,001 9,218
Provision for doubtful accounts 4,676 248 4,924
Other operating expenses 6,145 769 6,914
Rentals and leases 1,683 70 1,753
Depreciation and amortization 4,177 540 ($225)(a) 4,492
Interest expense 2,575 230 138 (b) 2,943
Management fees -- 459 459
Minority interest 58 -- 58
Loss on sale of assets -- -- --
---------- --------- --------- ---------
Total expenses 66,052 7,124 (87) 73,089
---------- --------- --------- ---------
Income (loss) before income taxes 7,195 (266) 87 7,016
Income taxes (benefit) 3,130 -- (71)(c) 3,059
---------- --------- --------- ---------
Net income (loss) to common shareholders $ 4,065 $ (266) $ 158 $ 3,957
========== ========= ========= =========
Net income per common share:
Basic $0.26 $ 0.25
========== =========
Diluted $0.25 $ 0.25
========== =========
Weighted-average shares:
Basic earnings per common share 15,709 15,709
Diluted earnings per common share 16,021 16,021
</TABLE>
27
<PAGE> 32
PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(a) Reflects the borrowing by Province of $22.0 million to finance
the acquisition of the Affiliated Group.
(b) Reflects the elimination of the Affiliated Group assets not
purchased and liabilities not assumed by Province as follows:
<TABLE>
<S> <C>
Cash $ 44
Accounts receivable (699)
Assets whose use is limited under bond indentures (690)
Prepaid expenses and other (337)
Property, plant and equipment (14,412)
Other assets 1
Accounts payable 304
Accrued salaries and benefits 152
Accrued expenses 240
Current maturities of long-term obligations 530
Long-term obligations, less current maturities 4,590
Third-party settlements 3,495
Due to affiliates, net 10,551
-------
Net assets $ 3,769
=======
</TABLE>
(c) Reflects the purchase of the Affiliated Group and the
allocation of the purchase price to adjust assets purchased
and liabilities assumed to fair value and to record
intangibles as follows:
<TABLE>
<S> <C>
Unallocated purchase price $18,694
Net assets 3,973
-------
Cash paid $22,667
=======
</TABLE>
28
<PAGE> 33
PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
(a) Reflects the elimination of the historical depreciation expense of the
Affiliated Group, and the inclusion of the Company's depreciation of
property, plant and equipment and amortization of unallocated purchase
price.
(b) Reflects the elimination of the historical interest expense related to
the debt of the Affiliated Group not assumed in the acquisition, and
the inclusion of the Company's interest expense related to the debt
used to finance the acquisition.
(c) Reflects the inclusion of the income tax benefit based on the combined
federal and state statutory rate of 40.0% applied to adjusted pre-tax
income.
29
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-56987) pertaining to the 1997 Long-Term Equity Incentive Plan and
the Employee Stock Purchase Plan of Province Healthcare Company of our report
dated July 23, 1999, with respect to the combined financial statements of
Doctors' Hospital of Opelousas and certain affiliated entities included in this
Current Report (Form 8-K/A Amendment No. 1) of Province Healthcare Company,
dated August 16, 1999.
Ernst & Young LLP
Nashville, Tennessee
August 13, 1999
