In addition to the hospitals listed in the table above, as of December 31, 2000, Triad operated 13 ambulatory surgery centers, including three surgery centers that are operated by an unaffiliated third party pursuant to a long-term lease. Medical office buildings also are operated in conjunction with its hospitals. These office buildings are primarily occupied by physicians who practice at Triad's hospitals.
The following consolidated selected financial data as of and for the years ended December 31, 2000, 1999, 1998 and 1997 and for the year ended December 31, 1996 has been derived from Triad's audited consolidated financial statements and as of December 31, 1996 has been derived from Triad's unaudited consolidated financial statements. This information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Triad's consolidated financial statements and related notes to the consolidated financial statements, which are included herein.
. possible changes in the Medicare and Medicaid programs that may further limit reimbursements to health care providers and insurers,
. the impact of reductions in Medicare payments mandated by the Balanced Budget Act; and
In the healthcare industry, operations are subject to certain seasonal fluctuations, including decreases in patient utilization during holiday periods and increases in patient utilization during the cold weather months.
Triad's revenues continue to be affected by an increasing proportion of revenue being derived from fixed payment, higher discount sources, including Medicare, Medicaid and managed care plans. In addition, insurance companies, government programs, other than Medicare, and employers purchasing health care services for their employees are also negotiating discounted amounts that they will pay health care providers rather than paying standard prices. Triad expects patient volumes from Medicare and Medicaid to continue to increase due to the general aging of the population and expansion of state Medicaid programs. However, under the Balanced Budget
thus susceptible to varying calculations, EBITDA as presented may not be comparable to other similarly titled measures of other companies. (b) This table does not include any operating statistics for facilities leased to others and, except for admissions, the joint ventures. (c) Ongoing operations exclude facilities that were sold or closed. (d) Licensed beds are those beds for which a facility has been granted approval to operate from the applicable state licensing agency. (e) Available beds are those beds a facility actually has in use. (f) Represents the total number of patients admitted (in the facility for a period in excess of 23 hours) to Triad's facilities and is used by management and certain investors as a general measure of inpatient volume. (g) Adjusted admissions are used by management and certain investors as a general measure of combined inpatient and outpatient volume. Adjusted admissions are computed by multiplying admissions (inpatient volume) by the sum of gross inpatient revenue and gross outpatient revenue and then dividing the resulting amount by gross inpatient revenue. The adjusted admissions computation "adjusts" outpatient revenue to the volume measure (admissions) used to measure inpatient volume resulting in a general measure of combined inpatient and outpatient volume. (h) Represents the average number of days an admitted patient stays in Triad's hospitals. Average length of stay has declined due to the continuing pressures from managed care and other payers to restrict admissions and reduce the number of days that are covered by the payers for certain procedures, and by technological and pharmaceutical improvements.
Depreciation and amortization decreased as a percentage of revenues to 6.8% in the year ended December 31, 2000 from 7.4% in the year ended December 31, 1999, primarily due to $19.9 million in 1999 depreciation for the facilities sold or closed.
Minority interests, which are primarily related to one joint venture in Arizona that includes 9 ambulatory surgery centers, as a percentage of revenues remained relatively unchanged in the year ended December 31, 2000 compared to the year ended December 31, 1999.
Interest expense, which is net of $2.5 million of interest income in 1999, increased to $42.7 million in the year ended December 31, 1999 from $2.7 million in the year ended December 31, 1998 due to the assumption of debt from HCA in the distribution.
Gain on sale of assets were $8.6 million during the year ended December 31, 1999 from the sale of ten facilities during 1999.
Cash provided by operating activities was $71.6 million in the year ended December 31, 2000 compared to $155.2 million in the year ended December 31, 1999. The decrease was due to a decrease in accounts payable and other current liabilities, increase in inventories and other assets and a larger increase in accounts receivable in 2000 than in 1999.
On June 23, 2000, Triad signed a definitive purchase agreement to acquire hospitals in Denton, Texas and Lewisburg, West Virginia from NetCare Health Systems, Inc. for a cash price of approximately $107.0 million plus approximately $10.0 million in working capital. The definitive agreement included the acquisition of a hospital in Statesville, North Carolina, but Triad assigned the rights to acquire this hospital to a third party in a simultaneous closing. On September 29, 2000, Triad completed the closing of the Denton, Texas hospital. The effective date of the Denton, Texas acquisition was October 1, 2000. Triad paid $69.0 million at the closing as a partial payment on the acquisition of the Denton, Texas and Lewisburg, West Virginia hospitals. On October 31, 2000, Triad paid $48.0 million as the final payment on the acquisition and closed on the Lewisburg, West Virginia hospital. The final closing was funded by operating cash and a $24.0 million draw on its new term loan described below. For the periods prior to the acquisition, these facilities had net revenues of $72.7 million and pretax income of $10.3 million. For the year ended December 31, 1999, these facilities had net revenues of $88.1 million and pretax income of $14.0 million.
On September 28, 2000, Triad's bank credit facility was amended to add a $200 million delayed draw term loan, which can be drawn upon in up to ten advances from the date of the amendment until one year after the amendment. Principal payments on amounts outstanding at the end of the delay draw term period are due quarterly beginning February 2002 until May 2005. The delay draw term loan bears interest at LIBOR plus 3.0%. Advances of $51.0 million were made as of December 31, 2000. The amendment also modifies the requirements under certain financial ratios and tests and the restrictions on assets sales and capital expenditures. In conjunction with the amendment, Triad paid $1.5 million in debt issue costs, which will be amortized over the life of the loan.
In March 2000, the Financial Accounting Standards Board issued Financial Accounting Standards Board Interpretation No. 44 "Accounting for Certain Transactions Involving Stock Compensation - an interpretation of APB Opinion No. 25" ("FIN 44"), which became effective on July 1, 2000 covering transactions occurring after December 15, 1998. FIN 44 clarifies the application of APB Opinion No. 25 relating to the definition of an employee, criteria for determining whether a plan qualifies as a noncompensatory plan, accounting consequences of various modifications to the terms of a previously fixed stock option or award and the accounting for an exchange of stock compensation awards in a business combination. The application of FIN 44 did not have a significant effect on the results of operations or the financial position of Triad.
On October 20, 2000, a class action lawsuit was filed against Triad and the Board of Directors of Quorum in the Circuit Court of Davidson County, Tennessee, on behalf of all public stockholders of Quorum. The complaint
HCA is currently the subject of several Federal investigations into certain of its business practices, as well as governmental investigations by various states. 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, HCA expects additional subpoenas and other investigative and prosecutorial activity to occur in these and other jurisdictions in the future. HCA is the subject of a formal order of investigation by the SEC. HCA understands that the SEC's investigation includes the anti-fraud, insider trading, periodic reporting and internal accounting control provisions of the Federal securities laws.
The investigations, actions and claims affecting HCA relate to HCA and its subsidiaries, including subsidiaries that, prior to the distribution, owned facilities now owned by Triad. On May 5, 2000, Triad was advised that one of the qui tam cases which had recently been unsealed listed three of Triad's hospitals as defendants. This qui tam action alleges various violations arising out of the relationship between Curative Health Services and the other defendants, including allegations of false claims relating to contracts with Curative Health Services for the management of certain wound care centers and excessive and unreasonable management fees paid to Curative Health Services and submitted for reimbursement. Two of the three Triad hospitals named as defendants terminated their relationship with Curative Health Services prior to the distribution and the third hospital continues to maintain an ongoing relationship with Curative Health Services. Additionally, in early 2001 approximately thirteen of Triad's current and former hospitals received Notices of Reopening for cost reporting periods between 1993 and 1998, which are prior to the distribution. These notices indicate that reviews of the applicable cost reports will be conducted at HCFA's direction.