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Accounting Changes For For-Profit Hospitals Will Result In Artificial Increases In EBITDA Margins Jan 12 Product Image

Accounting Changes For For-Profit Hospitals Will Result In Artificial Increases In EBITDA Margins Jan 12

  • ID: 2043803
  • January 2012
  • Standard & Poors

FEATURED COMPANIES

  • HCA Holdings Inc.
  • LifePoint Hospitals Inc.
  • Tenet Healthcare Corp.
  • MORE

Abstract
As we near the season for earnings reports for the quarter ended Dec. 31, 2011, Standard & Poor's Ratings Services expects many of the for-profit hospital companies to adopt the Financial Accounting Standards Board's (FASB) recent standard regarding the presentation and disclosure of bad debt. All else equal, we expect this change to result in an artificial increase in reported EBITDA margins, simply due to the new required presentation. As a result, we would not view such an increase in EBITDA margins as an improvement in the financial risk profiles of these companies. Last year, the FASB finalized changes in the accounting rules around the presentation of the "provision for doubtful accounts" in the income statement. This line item, which...

Companies mentioned in this report are:
- Tenet Healthcare Corp.
- Universal Health Services Inc.
- Health Management Associates Inc.
- Community Health Systems Inc.
- LifePoint Hospitals Inc.
- Prospect Medical Holdings Inc.
- HCA Holdings Inc.

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Note: Product cover images may vary from those shown

- Tenet Healthcare Corp.
- Universal Health Services Inc.
- Health Management Associates Inc.
- Community Health Systems Inc.
- LifePoint Hospitals Inc.
- Prospect Medical Holdings Inc.
- HCA Holdings Inc.

Note: Product cover images may vary from those shown
Note: Product cover images may vary from those shown

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