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 Health, Inc.
- Prospect Medical Holdings Inc.
- HCA Holdings Inc.
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Research Type: Commentary
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