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MANAGEMENT'S DISCUSSION AND ANALYSISRESULTS OF OPERATIONSNet revenues increased 28% to $1.2 billion in 1996 as compared to 1995 and 19% to $931 million in 1995 as compared to 1994. The $259 million increase in net revenues during 1996 as compared to 1995 was due primarily to: (i) the acquisitions of a 357-bed medical complex located in Amarillo, Texas during the second quarter of 1996 and five behavioral health centers located in Pennsylvania and Texas during the second and third quarters of 1996 ($136 million); (ii) a 225-bed acute care facility and a 512-bed acute care facility, both of which were acquired during the third quarter of 1995, net of the revenue effects of the three acute care facilities divested during the year (net increase of $86 million), and; (iii) revenue growth at acute care facilities owned during both years ($23 million). The $149 million increase in net revenues during 1995 as compared to 1994 was primarily attributable to revenues generated at two acute care facilities acquired by the Company during 1995 net of the revenue effects of the three acute care facilities divested during the year (net increase of $58 million), revenue growth at acute care facilities owned during both years ($44 million) and a full year of revenue generated at an acute care facility acquired by the Company in November, 1994 ($29 million). Earnings before interest, income taxes, depreciation, amortization, lease and rental expense and nonrecurring transactions (EBITDAR) increased to $215 million in 1996 from $163 million in 1995 and $139 million in 1994. Overall operating margins were 18.0% in 1996, 17.5% in 1995 and 17.8% in 1994. The improvement in the Company's overall operating margin in 1996 as compared to 1995 was due to improvement in operating margins at the acute care hospitals and behavioral health centers owned during both years and due to the 1995 results including losses sustained at the three acute care facilities divested during 1995. While operating margins at the Company's acute care and behavioral health services facilities owned during both 1995 and 1994 increased, overall margins were lower in 1995 as compared to 1994 due to losses sustained at the three acute care facilities divested during 1995. |
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