For the Period Ended June 30, 2016 Unaudited Quarterly Disclosure
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For the Period Ended December 31, 2015 Unaudited Quarterly Disclosure For the Period Ended June 30, 2016 Unaudited Quarterly Disclosure Quarterly Disclosure Report for June 30, 2016 The following discussion and analysis provides a narrative explanation of the results of operations and financial position of ProMedica Health System Inc. and its subsidiaries (collectively,”ProMedica”) for the six months ended June 30, 2016. The analysis should be read in conjunction with ProMedica Health System and ProMedica Healthcare Obligated group’s financial statements for the six-month period ending June 30, 2016 and 2015. Beginning with the disclosure information presented for the Second Quarter of 2016, the discussion and analysis is made with respect to consolidated ProMedica Health System and does not include a separate discussion or presentation of the results of operations and financial position for the members of the Obligated Group except in those instances where management of ProMedica believes that discussion of the results of the members of the Obligated Group is relevant to understanding the discussion and analysis. The Obligated Group accounted for approximately 51% of total operating revenues for the six months ended June 30, 2016. Bond Cusips Bond Series CUSIP 2008D 52601PBD9 549310VH0 549310TV2 52601PBE7 549310VJ6 549310TW0 549310VK3 2011D 2011A 549310UN8 2011E 549310TZ3 549310UP3 52601PBF4 549310UA6 549310UQ1 52601PBG2 549310UB4 549310UR9 52601PBH0 549310UC2 549310US7 52601PBJ6 549310UD0 549310UT5 52601PBK3 549310UE8 549310UU2 52601PBL1 549310UF5 549310UV0 52601PBM9 549310UG3 549310UW8 52601PBN7 549310UH1 549310UX6 52601PBP2 549310UJ7 549310UY4 52601PBQ0 549310UK4 549310UZ1 52601PBR8 549310UL2 549310VA5 52601PBS6 549310UM0 549310VB3 549310VC1 2015B 2011B 549310VD9 549310VlL1 52601PBA5 549310VE7 52601PBB3 549310VF4 52601PBC1 549310VG2 TABLE OF CONTENTS PROMEDICA OVERVIEW ............................................................................................................................ 1 Who ProMedica is… ............................................................................................................................. 1 Service Area ................................................................................................................................. 3 Awards .......................................................................................................................................... 4 Community Benefit........................................................................................................................ 5 Organizational Overview ....................................................................................................................... 6 Structure ....................................................................................................................................... 6 ProMedica Obligated Group Members ......................................................................................... 7 Clinical Service Lines .................................................................................................................... 8 Non-Obligated Group Members .................................................................................................. 10 Executive Leadership & Governance ......................................................................................... 14 Strategy ............................................................................................................................................... 15 RECENT SIGNIFICANT DEVELOPMENTS .............................................................................................. 16 Expansion Activities ............................................................................................................................ 16 University of Toledo Affiliation ............................................................................................................. 17 Epic Implementation ........................................................................................................................... 17 St. Luke’s Divestiture .......................................................................................................................... 18 Other ................................................................................................................................................... 18 Leadership Changes ........................................................................................................................... 19 MANAGEMENT DISCUSSION AND ANALYSIS ...................................................................................... 20 Operational Performance .................................................................................................................... 20 Income Statement ............................................................................................................................... 20 Net Operating income ................................................................................................................. 21 Sources of Revenue ................................................................................................................... 21 Acute Patient Revenue Payor Mix .............................................................................................. 22 ProMedica Quarterly Disclosure Non-Operating Income ............................................................................................................... 22 Balance Sheet ..................................................................................................................................... 23 Balance Sheet and Cash Flow ................................................................................................... 23 Debt ..................................................................................................................................................... 24 Interest Rate Swaps: .................................................................................................................. 24 Recent Debt Activity ................................................................................................................... 25 Ratings ........................................................................................................................................ 25 Investments ......................................................................................................................................... 26 Valuations ................................................................................................................................... 27 Liquidity ....................................................................................................................................... 27 Pension Plans ..................................................................................................................................... 27 Financial Indicators ............................................................................................................................. 28 Profitability .................................................................................................................................. 28 Liquidity/Leverage ....................................................................................................................... 28 UTILIZATION STATISTICS – SYSTEM ..................................................................................................... 29 FINANCIAL STATEMENTS ....................................................................................................................... 30 DEBT COVENANT CALCULATIONS ........................................................................................................ 40 ProMedica Quarterly Disclosure PROMEDICA OVERVIEW Who ProMedica is… Mission Formed in 1986, ProMedica is a mission-driven, community-based, not- for-profit health system serving northwest Ohio and southeast Michigan. Our Mission is to improve ProMedica operates acute care hospital facilities, integrated continuing your health and well-being. care facilities and services, a health insurance company with several health plans and a physician organization. ProMedica also has numerous joint ventures, co-management and other affiliations, including a long- term academic affiliation. Values ProMedica has maintained a steadfast commitment to operating as a fully Compassion – We treat our patients and integrated health system. ProMedica Toledo Hospital, established in each other with respect, integrity and 1874, is the legacy hospital, and ProMedica’s tertiary facility. The dignity. development of the health system began in 1986, with the inception of ProMedica Health System, followed by the formation of Paramount Innovation – We continually search to (health plan) in 1988 and ProMedica Physicians in 1992. ProMedica find a better way forward. Toledo Children’s Hospital was established in 1993. Thereafter, ProMedica’s expansion began, transforming ProMedica into the largest Teamwork – We partner with others health system in the region, with 14 owned, managed or affiliated because we are better together than hospitals. apart. Excellence – We strive to be the best ProMedica is… in all we do. 2,100+ Acute Care Beds 14(1) Hospitals 338,000+ 330+ lives covered by Paramount insurance Continuum Services Beds 17,000+ Employees 900+ (2015) 2,000+ Inpatient Hospice Credentialed