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2003-Q4 |
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About Fletcher Allen > Financial Information > 2003-Q4 |
Immediate (February 3, 2004)
Mike Noble
Communications & Public Affairs
(802) 847-2886
Fletcher Allen Releases Audited 2003 Fiscal Year Summary
Fourth Quarter Positive Results Reduce Loss
BURLINGTON VT -- Fletcher Allen has released its audited 2003 Fiscal Year financial report along with its fourth quarter (July-September) results. The fiscal year ended with a $5.6 million loss following fourth quarter gains of just over $5 million. The organization's financial performance improved throughout 2003. Fletcher Allen recorded losses of $4.9 million, $3.0 million and $2.3 million during the first three quarters of the year respectively, before moving into the black in the final quarter.
Fiscal Year 2003 Results
For the year ended September 30, 2003, Fletcher Allen lost $5.6 million in operations. This fell short of the organization's original budgeted projection of a $24.5 million operational gain because of lower than anticipated patient volumes and operational efficiency issues. These problems were addressed in the second half of the year through the implementation of a multifaceted financial recovery plan, which mitigated the early losses by producing positive results in the last five months of the year.
"The staff made a big effort to implement a budget recovery plan early in the third quarter. They successfully addressed patient backlogs and controlled expenses. I want to thank all of our employees for their hard work," said Melinda Estes, M.D., president and chief executive officer, Fletcher Allen Health Care. "Our challenge going forward will be to continue to keep a close eye on expenses while providing high-quality care. Financial stability is a key to the organization's overall success and our ability to reinvest in the people, equipment and programs that enable us to meet the needs of our patients."
For the fiscal year ended September 30, 2003, the total operating revenues were $524.9 million. Operating expenses for the year were $530.5 million. Losses from non-operating revenues added another $1.2 million for a combined loss of $6.8 million of expenses over revenues for the 2003 Fiscal Year. The operating margin was -1.08%.
Fourth Quarter
Although financial performance fell below budget for the fourth straight quarter, this was the first quarter in FY 03 that Fletcher Allen posted a positive operating result. Net income from operations was more than $5 million and net income from all sources was slightly more than $5.3 million. The operating margin was 3.85% for the fourth quarter.
Fiscal Year 2004 Update
Preliminary results from the first quarter of 2004 show Fletcher Allen is continuing its positive financial trend. Additional details will be available as Fletcher Allen publishes it first quarter results in the next few weeks. During the first quarter of 2004, Fletcher Allen restructured the operating lease associated with the new parking garage as a conventional construction loan. This will increase both long-term assets and long-term liabilities on Fletcher Allen's balance sheet by approximately $55 million. Fletcher Allen worked with its bond insurer, AMBAC to get a waiver on certain bond covenants that allow both the assumption of the debt related to the garage and additional borrowing to complete the Renaissance project.
Fletcher Allen plans to go to the bond market in early 2004 to borrow approximately $160 million, up from projections of $85 million, which was discussed last fall. Approximately $85 million will be used to complete the project; approximately $55 million will be used to pay off the parking garage debt; approximately $15 million will be placed in a required reserve fund, and the remainder will be used to pay the fees associated with the bond issue.
The institution began making its quarterly financials public with the release of the first quarter results for FY 2003 in February 2003. The complete audit for FY 2002 and 2003 is available on the Fletcher Allen Web site at www.fletcherallen.org.
