Assets and Liabilities in and Results of Discontinued Operations

12 Months Ended

Dec. 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Assets Held for Sale and Results of Discontinued Operations

Assets and Liabilities in and Results of Discontinued Operations:

The operating results of discontinued operations are as follows (in millions): 

	For the Year Ended December 31,
	2013			2012			2011
Net operating revenues	$	0.2		$	1.0		$	95.7
Less: Provision for doubtful accounts	0.3			—			(1.5		)
Net operating revenues less provision for doubtful accounts	0.5			1.0			94.2
Costs and expenses	0.2			0.2			66.3
Impairments	1.1			—			6.8
(Loss) income from discontinued operations	(0.8		)	0.8			21.1
(Loss) gain on disposal of assets/sale of investments of discontinued operations	(0.4		)	5.0			65.6
Income tax benefit (expense)	0.1			(1.3		)	(37.9		)
(Loss) income from discontinued operations, net of tax	$	(1.1	)	$	4.5		$	48.8

Our results of discontinued operations primarily included the operations of six long-term acute care hospitals (“LTCHs”). In August 2011, we completed a transaction to sell five LTCHs to certain subsidiaries of LifeCare Holdings, Inc. for an aggregate purchase price of $117.5 million. We closed the sixth LTCH in August 2011 and sold the associated real estate in December 2013.

As discussed in Note 18,Contingencies and Other Commitments, in April 2011, we entered into a definitive settlement and release agreement with the state of Delaware (the “Delaware Settlement”) relating to a previously disclosed audit of unclaimed property conducted on behalf of Delaware and two other states by Kelmar Associates, LLC. During the year ended December 31, 2011, we recorded a $24.8 million gain in connection with this settlement as part of our results of discontinued operations.

The impairment charges presented in the above table for 2013 and 2011 related to the LTCH that was closed in 2011. We determined the fair value of the impaired long-lived assets at this LTCH based on offers from potential buyers of the closed facility’s real estate. The impairment charges recorded in 2011 also related to the Dallas Medical Center that was closed in 2008. We determined the fair value of the impaired long-lived assets at this hospital based on the assets’ estimated fair value using valuation techniques that included third-party appraisals and offers from potential buyers.

During 2012, we recognized gains associated with the sale of the real estate associated with Dallas Medical Center and an investment we had in a cancer treatment center that was part of our former diagnostic division. As a result of the transaction discussed above to sell five of our LTCHs, we recorded a $65.6 million pre-tax gain as part of our results of discontinued operations in 2011.

Income tax expense recorded as part of our results of discontinued operations in 2011 related primarily to the gain from the sale of five of our LTCHs and the Delaware Settlement.

As discussed in Note 9,Self-Insured Risks, we insure a substantial portion of our professional liability, general liability, and workers’ compensation risks through a self-insured retention program underwritten by HCS. Expenses for retained professional and general liability risks and workers’ compensation risks associated with our divested surgery centers, outpatient, and diagnostic divisions and our former LTCHs have been included in our results of discontinued operations.

Assets and liabilities in discontinued operations consist of the following (in millions): 

	As of December 31,
	2013		2012
Total current assets	$	0.1	$	0.4
Total long-term assets	$	0.3	$	5.0
Total current liabilities	$	4.6	$	5.2
Total long-term liabilities	$	0.6	$	0.6

As of December 31, 2013 and 2012, assets and liabilities in discontinued operations primarily relate to our former LTCHs. Current assets and long-term assets in the above table are included in Prepaid expenses and other current assets and Other long-term assets, respectively, in our consolidated balance sheets. Current liabilities and long-term liabilities in the above table are included in Other current liabilities and Other long-term liabilities, respectively, in our consolidated balance sheets.

In connection with the 2007 sale of our surgery centers division (now known as Surgical Care Affiliates, or “SCA”) to ASC Acquisition LLC, an affiliate of TPG Partners V, L.P. (“TPG”), a private investment partnership, we received an option, subject to terms and conditions set forth below, to purchase up to a 5% equity interest in SCA. The price of the option is equal to the original issuance price of the units subscribed for by TPG and certain other co-investors in connection with the acquisition plus a 15% annual premium, compounded annually. The option has a term of ten years and is exercisable upon certain liquidity events, including a public offering of SCA’s shares of common stock that results in 30% or more of SCA’s common stock being listed or traded on a national securities exchange.