WellSpan Health Financial Analysis Report: Performance and Viability

This report presents a detailed financial analysis of WellSpan Health, a large integrated healthcare system in South-Central Pennsylvania. The analysis focuses on the consolidated financial statements, including the balance sheets, statements of operations, and cash flow statements for the years 2016 and 2017. The report examines key financial metrics, such as changes in assets, liabilities, revenue, and expenses, to assess the company's financial performance and viability. It highlights significant trends, such as changes in cash and cash equivalents, patient account receivables, and investments, providing insights into the company's operational efficiency and financial stability. The analysis also includes comparisons of the company's performance to previous years. Furthermore, the report discusses the financial implications of changes in various accounts and provides an overview of the company's financial position.

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Accounting financial analysis Report

2
Table of Contents
Introduction.................................................................................................................................................3
ANALYSIS OF THE FINANCIAL STATEMENTS................................................................................................3
Consolidated financial statements-.........................................................................................................3
Statement of operations..........................................................................................................................9
CASH FLOW STATEMENT.......................................................................................................................13
Financial viability and competition of WellSpan Health with UPMC Pinnacle memorial and pen state....15
Recommendation and conclusion.............................................................................................................16

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Introduction
In this paper, the financial analysis of WellSpan Health is to be reviewed. The company
performance is also evaluated by reviewing the consolidated financial statement, income
statement and cash flow statement. WellSpan Health is a Health care system which is integrated
and is also a large health care system which is located at South-Central Pennsylvania, and its
headquarters is in York. It was founded in the year, 1880. It is a non-profit health organization
which is integrated. Almost 19000 employees are working under WellSpan Health as per the
latest statistics, 2019. Almost 1200 specialized physicians, primary care and clinicians who are
under practice are working in WellSpan Health.
ANALYSIS OF THE FINANCIAL STATEMENTS
Consolidated financial statements-
it is a group of the liabilities, assets, expenses, income, cash inflows, and outflows of the holding
company, its subsidiaries, and it is presented as per the international accounting standards 27.
Analysis Of Consolidated Financial Statement Of
WellSpan Health(000)
PARTICULARS
30/06/
2016
30/06/
2017
Decre
ase
Incre
ase
Percentage
decrease
%incre
ase
Assets
Current Assets:
Cash and cash equivalents 110419 67546 42873 38.82755685
Inventories 21928 21885 43 0.196096315
Other Accounts receivables 20824 23261 2437
11.702
8429
Prepaid Expenses 27787 31143 3356
12.077
5902
Balance of Account
Receivables of Patent, net 272643 294285
2164
2
7.9378
528

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of uncollectible accounts
i.e. $ 65250 in 2016 and $
79163 in 2017
Assets according to their
limited use 5795 6114 319
5.5047
4547
Total of Current assets 459396 444234 15162 3.300420552
Investment according to
their limited use:
investment-temporarily
restricted 8942 11814 2872
32.118
0944
investment-permanently
restricted 5936 5334 602 10.14150943
investment-Board
designated 945493
108110
4
1356
11
14.342
8878
Investment-Self insurance 13032 14161 1129
8.6632
9036
Beneficially interested-
perpetual trusts 17837 18983 1146
6.4248
4723
Total investment 991240
113139
6
1401
56
14.139
4617
Property and equipment-
Net 735718 771540
3582
2
4.8689
8513
Pledges Receivables- Net 5853 4967 886 15.13753631
Notes receivables 2522 1461 1061 42.06978588
investment in joint ventures 10157 10464 307
3.0225
4603
other assets 67349 111230
4388
1
65.154
6422
TOTAL ASSETS
227223
5
247529
2
2030
57
8.9364
4363
NET ASSETS AND
LIABILITIES
NET assets:
unrestricted net assets
100522
6
118388
8
1786
62
17.773
3166
permanently restricted net
assets 23093 24317 1224
5.3003
0745
temporarily restricted net
assets 23195 25585 2390
10.303
9448
les Non-Controlling 5000 48405 4340 868.1

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s: interest/Minority interest 5
Total NET ASSETS
105651
4
123863
0
1821
16
17.237
4431
LIABILITIES
Current liabilities:
long term debt- current 8131 9806 1675
20.600
1722
Accrued expenses and
account payable 67706 94773
2706
7
39.977
2546
capital lease obligation-
current 2171 337 1834 84.47719945
Accrued wages and salaries 127341 102594 24747 19.43364667
interest payable- accrued 1936 1937 1
0.0516
5289
payer settlements- third
party 16177 9039 7138 44.12437411
Advances-third party 4877 5986 1109
22.739
389
Accrued retirement benefits
and self-insurance reserves-
current 28965 43823
1485
8
51.296
3922
Total liabilities
121572
1
123666
2
Assets
While analyzing the cash and cash equivalents in the consolidated financial statements of
WellSpan Health, it was found that there has been a net decrease in the cash and cash equivalents
of $ 42873000, in the year 30/06/2017 as compared to 30/06/2016. According to Manes-Rossi
et.al. (2018), this decrease in cash and cash equivalents is because the company has invested in
debt instruments which are highly liquid and its maturity period was less than three months. The
company might have invested it in the year 2016-2017, and because of this investment, there has
been decrease in cash. The percentage decrease in cash and cash equivalents is 38.82755685
percent.

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The patient account receivables net of balances for the year 30/06/2017 is $ 294285000 as
compared to 30/06/2016, which was $ 272643000. While analyzing the patient account
receivables of both the year it was found that there has been an increase of $ 21642000 in the
year June 30, 2017. The percentage increase in the patient account receivables is 7.937852797.
As per Nobes & Zeff (2016), this signifies that the company patient receivables is outstanding
and has not been received.
The inventories for the year 30th June 2016 were $ 20198000 and in the year 30th June 2017, the
inventories have been reduced to $ 21885000. The inventories have been reduced by $ 4300. The
percentage reduction of the inventories is 0.196096315. The company has calculated the
inventories as per the first-in-first-out basis. According to Clausing (2016), the company has
stated the inventories at net realizable value or cost whichever is lower. This reduction of
inventories is because there have been less medical supplies in the year 30th June 2017, as
compared to 30th, June 2016. In 2016, the medical supplies were $ 13137000 and in 2017, the
medical supplies were reduced to $ 12455000.
The other account receivables in the year 30th, June 2016 were $ 20824000 and in the year 30th,
June 2017 it has been increased to $ 23261000. The net increase in the other account receivables
is $ 2437000. The percentage increase in other account receivables is 11.7028429. This increase
is due to outstanding in the receivables. The provision for bad debts is assessed by the
management, by assessing the net expected collection and the historical collection. According to
Stiglitz (2016), the indicators for the collections are economic conditions of the business,
historical business, trends followed in health care system. The uncollectible accounts are written
off periodically.

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While analyzing the prepaid expenses it was found that the prepaid has been increased by $
3356000 in the year 30th, June 2017 as compared to the year 30th, June 2016. The percentage
increase in the prepaid expenses is 12.0775902. This increase is because of the advanced
payment for the services or assets to be received next year or future years.
Assets which were limited use as of 30th, June 2017 were $6114000, an increase of $ 3119000,
from the previous year. The percentage increase was 5.5047547. This increase is because it
includes assets which are held by trustees and an agreement has been done as per bond indenture.
These assets include self-insurance trust, designated assets, board-designated. As per Golden et
al. (2016), investments in equity shares, money market funds, mutual funds, debentures are
measured by the management according to the fair value which is based on the market prices.
Total current assets as disclosed in the consolidated financial statement have been decreased by $
1562000. Percentage decrease in total current assets is 3.300420552.
The total investments of the company have been increased by $ 140156000, an almost of 14.13
% has been increased as compared to prior year, 30th, June 2016. According to Reis (2017), when
an investment is converted to equity method from cost method, the difference is recorded by the
company which arises from the differences between the cost and the fair value. Realized losses
and gain, investment income and unrealized losses and gains except temporary losses are added
in excess of income over expenditure. Investments which are not held for trading are reviewed
periodically so as to check whether it is impaired.
Property and equipment increased by $ 35822000 as compared to prior year. The net increase in
percentage in property and equipment is 4.86898513. Company is continuously increasing the
value of its property and equipment by doing expenditures for the improvement and renewals of

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property and equipment. Maintenance and repairs which does not result in the enhancement or
improvement of the life of the assets are written off immediately as when incurred.
Liabilities
The current portion of the long term debt has been increased by $ 1675000. The percentage
increase in the current portion of long term debt is 20.06001722. This signifies there has been an
increase in the current portion of long term debt which is a current liability for the company.
The accrued expenses and account payable of the company in the year 30th, June 2016 was $
67706000 and in the year 30th, June 2017 it has been increased to $ 94773000. It has been
increased by $ 27067000. The percentage increase is 39.9772546. This signifies that the
company current obligations of current liabilities have been increased as compared to previous
year.
Accrued wages and salaries for the year 30th, June 2016 was $ 127341000 and in the year 30th,
June 2017 it has been reduced to $ 102594. It has been decreased by $ 24747000. The decrease
in percentage is 19.43364667. According to Dawson, Perryman & Osborne (2016), this signifies
that the company has paid the salaries and wages to its staff and employees.
Advances to the third party have shown an increase of $ 1109000. The percentage increase is
22.73989. This indicates that the company has paid advances to the third party for any material
or services to be received on a later date.
Accrued retirement benefit and self-insurance reserves have been increased by 51.2963922
percentages. This signifies that in the year 30th, June 2017 the number of employees who will
retire is more than the previous year. The company liabilities have been increased as compared to

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the previous year. Due to the curtailment by the company in pension benefit, there has been a
reduction in the benefit obligations in the year 30th, June 2016.
The total liabilities of the company in the year 30th, June 2017 has been increased by 1.72251693
percent. The company obligation has been increased in the current year as compared to the
previous year.
Statement of operations
Financial Analysis of Consolidated Statements of
operations
Particulars
30/06/2
016
30/06/2
017
Net
increase
Net
decrease
%
increase
%
decreas
e
unrestricted gains,
revenues, and others:
Net revenue from
patient service
196501
7
207516
3 110146
5.605345
908
uncollectible
accounts-provision -77295 -80913 -3618
4.680768
484
Total
188772
2
199425
0 106528
5.643203
819
NET assets gained
from restrictions
which were utilized in
operations 3001 2179 -822 0
-
27.3908
7
other revenue 75260 82312 7052
9.370183
364
Total gain, revenue,
and others
196598
3
207874
1 112758
5.735451
426
Expenses
employees benefits 292070 289603 -2467
-
0.84466
05

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amortization and
depreciation 84573 86357 1784
2.109420
264
professional fees 30365 50848 20483
67.45595
258
salaries and wages 883892 998045 114153
12.91481
312
interest 18795 21866 3071
16.33945
198
debt refinancing-loss 975 - 0
supplies 578782 598666 19884
3.435490
392
Total expenses
188945
2
204538
5 155933
8.252816
16
other income
income from
investment -23082 107334 130416
-
565.0116
974
contributions from
acquisition 58358 - -58358 -100
other contributions 1509 2413 904
59.90722
333
gain on equity-joint
venture 968 582 -386
-
39.8760
33
gain/loss on assets
sold 13837 -5788 -19625
-
141.829
88
other
income/expenses 2925 -982 -3907
-
133.572
65
fair value changes in
swap interest rate -20569 20123 40692
-
197.8316
885
TOTAL of other
income 33946 123682 89736
264.3492
606
operating income 76531 33356 -43175
-
56.4150
47
total income 110477 157038 46561
42.14542
393
NON-controlling/
Minority interest -702 -831 -129
18.3760
684
Total profit 109775 156207 46432
42.29742
655

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changes in net
assets-unrestricted:
changes in unrealized
losses or gains on
assets limited
according to use
except trading
securities 375 -566 -941
166.254
417
changes in retirement
benefit-accrued -10593 22164 32757
-
309.2325
12
net assets gained from
restrictions to acquire
property and
equipment 1586 857 -729
-
45.9646
91
Increase in net assets-
unrestricted 101143 178662 77519
76.64297
084
The company net revenue from the patient in the previous year that is 30th, June 2016 was $
1965017000 and in the current year that is 30th, June 2017 has been increased to $ 2075163000.
An increase of almost 5 percent has been experienced in the current year in the net revenue from
patient. The patient account receivables collections are followed as per the WellSpan Health
policies. The due balances from the patient are collected by the collecting agencies appointed by
WellSpan Health. The uncollectible accounts are written off on a periodic basis.
The provision for uncollectible accounts has also increased by approx. 4 percent in the current
year in comparison to the prior year.
The net asset gained from restriction which was utilized in operations is decreased in the current
year as compared to previous year. A decrease of 27% in the current year compared to the
previous year 30th, June 2016.

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Total revenue of the company in the previous year that is 30th, June 2016 was $ 110477000 and
in the year 30th, June 2017 was $ 157038000. The total income has been increased by $
46561000, an increase of almost 42 percent from the previous year, 30th, June 2016. The income
from interest and dividend is continuously increasing. The income from investment in the
previous year, 30th, June 2016 was negative $ 23082000 and in the current year, it has shown an
upward movement and has been increased to $ 107334000, an increase of almost 223 percent
increase in income from investment, an increase of almost 223 percent. Net gain on the
realization of securities has shown a continuously increased in the year 30th, June 2017.
The total expenses of the company are less than the total income in the current year, 30th, June
2017. The amortizations and depreciation of the company have been increased by $ 1784000. An
approximate of 2% has been increased in amortization and depreciation. This signifies that the
company has purchased some assets or the depreciation rate has been changed for the
depreciation of their fixed assets. The company has incurred expenditure for the purchase of
land, its improvement. As per Lin et al. (2018), the company has also incurred expenditure for
the purchase of fixed equipment, for the purchase of a building and also for the equipment in
which the major part is movable. These are the reasons that the expenses for the depreciation and
amortization have been increased.
The salaries and wages have also been increased in the current year as compared to the prior
year, 30th, June 2016. This indicates that there is a revision in the salaries and wages of the
employees or the new employees joined the company.
The company debt refinancing loss in the previous year that is 30th, June 2016 was$ 975000. In
the current year, the debt refinancing loss has been reduced to zero. This indicates that the