(Immediate) September 1, 2006

Mike Noble
Fletcher Allen Public Relations
(802) 847-2886

Fletcher Allen Releases Year-to-Date and Third Quarter Financial Results

BURLINGTON VT - Fletcher Allen reported an operating income of $8.7 million for the first three quarters of the 2006 fiscal year. This includes an operating income of $7.4 million for the third quarter.  The third quarter covers the period beginning April 1 and ending June 30, 2006.

Third Quarter Results

Operating income for the third quarter was almost $2.8 million above budget and only $586,000 below the corresponding quarter in FY 2005.  Total operating revenues for the quarter were $176.7 million, $7.8 million above budgeted revenues.  The organization's operating expenses for the quarter were $169.3 million, $5.0 million above budget, resulting in an operating income of $7.4 million and an operating margin of 4.2% for the third quarter.  By comparison, the organization produced an income from operations of $8.0 million in the third quarter of FY 2005. 

Year-to-Date Results

On a year-to-date basis, $8.7 million net income from operations was below the budgeted $10.7 million for the period, and produced an operating margin of 1.7%. A year ago, the organization generated a three-quarter operating gain of almost $18.0 million.  Operating expenses year for the fiscal year-to-date were below budget by almost $8.9 million.

A key financial indicator, earnings before interest, depreciation and amortization (EBIDA) stood at $47.3 million after three quarters. While this was below the FY 2006 budget forecast of almost $50 million, the figure was almost $4.6 million above the first three quarters of FY 2005.  EBDIA provides a good measure of the organization's actual earnings and shows that after a soft first quarter, the two-quarter results indicate that the organization is back on track financially.

Key volume measures for the quarter were mixed. Total inpatient discharges were below budget by 6.8%.  Combined Inpatient and Outpatient Days, a measure of the number of patients in the hospital each day, were 19.1% above budget, and physician office visits were 8% below budget.  At the end of the quarter, days cash-on-hand stood at 87.0 days using a 12-month rolling average.

While one of the bond covenants specifies that days cash-on-hand not drop below 75 days during FY 2006, the covenant is only measured on June 30 and September 30.  Fletcher Allen exceeded that requirement on June 30, remains compliant with its bond covenants, and expects to meet the same requirement on September 30.

The institution began making its quarterly financials public with the release of the first quarter results for FY 2003 in February 2003.  The audited financial statements for the years ended September 30, 2002, 2003, 2004, and 2005, as well as the quarterly results for FY 2003, 2004, 2005, and the first three quarters of FY 2006, are available on the Fletcher Allen Web site at www.fletcherallen.org.

FY 2006 Third Quarter Y-T-D Financial Results

FY 2006 Third Quarter Financial Results