- Reaffirms 2009 Performance Outlook -
MELVILLE, N.Y., April 30 /PRNewswire-FirstCall/ --
Gentiva Health Services, Inc. (NASDAQ:GTIV), a leading provider of comprehensive home health services, today reported the following 2009 first quarter results:
-- Net revenues of $288.9 million for the quarter ended March 29, 2009
compared to $321.6 million, which included net revenues of $77.8
million from its CareCentrix business unit, for the quarter ended
March 30, 2008. Excluding prior year's first quarter net revenues from
CareCentrix, Gentiva's net revenues grew about $45 million, or 18% in
the 2009 first quarter. The Company sold a majority interest in
CareCentrix to Water Street Healthcare Partners on September 25, 2008.
-- Net income of $18.0 million, or $0.60 per diluted share, which
included a non-recurring pre-tax net gain of $5.8 million or $0.19 per
diluted share resulting from the 2009 first quarter sale of certain
branch offices that specialized primarily in pediatric home health
care services. These results compared to net income of $7.7 million or
$0.27 per diluted share in the 2008 first quarter.
-- Excluding the net gain from the sale of the home health branch offices
referred to above and special charges related to restructuring and
integration activities, adjusted net income for the 2009 first quarter
was $12.7 million, up 61% compared with the prior year period. On a
diluted earnings per share basis, adjusted net income in the 2009
first quarter was $0.43, excluding special charges of $0.02 per
diluted share, compared with $0.27 in the corresponding period of
2008.
-- A 19% increase in earnings before interest, taxes, depreciation and
amortization (EBITDA) to $28.2 million in the first quarter of 2009;
EBITDA as a percentage of net revenues improved to 9.8% in the first
quarter of 2009 versus 7.4% in the prior-year period. EBITDA included
restructuring and integration costs of $0.9 million in the first
quarter of 2009 as compared to $0.3 million for the prior year period.
"Gentiva is off to a good start to 2009, both financially and operationally," said Gentiva CEO Tony Strange. "Our results for the quarter were again led by our Home Health segment as we focus on meeting the needs of the nation's growing senior population, for which home healthcare is a cost-effective and patient-preferred solution. The aggregate results of our other businesses also showed improved performance in the quarter, primarily driven by growth in hospice. Based on these solid first quarter results and our confidence that the Company will continue to execute on its strategy during the remainder of the year, we are today reaffirming our revenue and earnings outlook for 2009."
Gentiva reported these segment highlights for the quarter:
-- Home Health's 19% revenue growth to $257.7 million and operating
contribution growth of 39% to $43.2 million.
-- Revenues in Gentiva's All Other segment - which includes hospice,
respiratory therapy and home medical equipment, infusion therapy and
consulting - increased 14% to $31.6 million, while operating
contribution increased 14% to $3.2 million compared to the prior-year
period.
During the 2009 first quarter, Gentiva generated $25 million in operating cash flow, repaid $14 million of its term loan and spent $4.8 million to repurchase 327,828 shares of its common stock. At March 29, 2009, the Company reported cash and cash equivalents of $79.6 million and long-term debt of $237 million.
Full-Year 2009 Outlook
Gentiva also reaffirmed its outlook for fiscal 2009 of full-year net revenues in a range of $1.14 billion to $1.18 billion. On a diluted earnings per share basis, adjusted net income is expected to be in a range between $1.72 and $1.80, excluding restructuring and integration costs which are estimated to range from $3 million to $5 million for the year. Gentiva's 2009 outlook represents an increase in net revenues of 8% to 11% and an increase in diluted earnings per share of 20% to 30% when compared with 2008 pro forma financial results, which reflect the Company's performance as if the CareCentrix divestiture had occurred at the beginning of fiscal 2008. The 2009 outlook excludes the $0.19 per diluted share net gain resulting from the sale of branches specializing primarily in pediatric home health services in the first quarter.
Non-GAAP Financial Measures
The information provided in this press release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission (SEC) rules. In accordance with SEC rules, the Company has provided, in the supplemental information and the footnotes to the tables, a reconciliation of those measures to the most directly comparable GAAP measures.
Conference Call and Web Cast Details
The Company will comment further on its first quarter 2009 results during its conference call and live web cast to be held Thursday, April 30, 2009 at 10:00 a.m. Eastern Time. To participate in the call from the United States, Canada or an international location, dial (973) 935-2408 and reference call #94103101. The web cast is an audio-only, one-way event. Web cast listeners who wish to ask questions must participate in the conference call. Log onto http://investors.gentiva.com/events.cfm to hear the web cast. A replay of the call will be available on April 30, beginning at approximately 1 p.m. ET, and will remain available continuously through May 7. To listen to a replay of the call from the United States, Canada or international locations, dial (800) 642-1687 or (706) 645-9291 and enter the following PIN at the prompt: 94103101. Visit http://investors.gentiva.com/events.cfm to access the web cast archive. This press release is accessible at http://investors.gentiva.com/releases.cfm and a transcript of the conference call is expected to be available on the site within 48 hours after the call.
About Gentiva Health Services, Inc.
Gentiva Health Services, Inc. is a leading provider of comprehensive home health services, delivering innovative, high quality care to patients across the United States. Gentiva is a single source for skilled nursing; physical, occupational, speech and neurorehabilitation services; hospice services; social work; nutrition; disease management education; help with daily living activities; respiratory therapy and home medical equipment; infusion therapy services; and other therapies and services. For more information, visit Gentiva's web site, http://www.gentiva.com/, and its investor relations section at http://investors.gentiva.com/. GTIV-E
(tables and notes follow)
(in 000's, except per share data) 1st Quarter
-----------
2009 2008
---- ----
Statements of Income
--------------------
Net revenues $288,917 $321,633
Cost of services and goods sold 140,809 185,110
------- -------
Gross profit 148,108 136,523
Selling, general and administrative
expenses (125,355) (117,880)
Gain on sale of business, net 5,832 -
Interest expense (3,192) (6,093)
Interest income 801 667
--- ---
Income before income taxes 26,194 13,217
Income tax expense 8,450 5,494
----- -----
Income before equity in net earnings of
affiliate 17,744 7,723
Equity in net earnings of affiliate 278 -
--- ---
Net income $18,022 $7,723
======= ======
Earnings per Share
------------------
Net income:
Basic $0.62 $0.27
===== =====
Diluted $0.60 $0.27
===== =====
Average shares outstanding:
Basic 28,944 28,282
====== ======
Diluted 29,829 29,043
====== ======
Condensed Balance Sheets
------------------------
ASSETS Mar 29, 2009 Dec 28, 2008
------ ------------ ------------
Cash and cash equivalents $79,559 $69,201
Short-term investments (A) 2,550 -
Accounts receivable, net (B) 181,591 177,201
Deferred tax assets 13,363 11,933
Prepaid expenses and other current
assets 15,766 13,141
------- -------
Total current assets 292,829 271,476
Long-term investments (A) 8,500 11,050
Note receivable 25,000 25,000
Investment in affiliate 23,542 23,264
Fixed assets, net 65,159 63,815
Intangible assets, net 249,228 250,432
Goodwill 308,155 308,213
Other assets 20,290 20,247
-------- --------
Total assets $992,703 $973,497
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Accounts payable $6,433 $8,027
Payroll and related taxes 26,738 17,869
Deferred revenue 38,407 32,976
Medicare liabilities 7,154 6,680
Obligations under insurance programs 39,102 39,628
Other accrued expenses 39,533 40,895
------- -------
Total current liabilities 157,367 146,075
Long-term debt 237,000 251,000
Deferred tax liabilities, net 66,299 64,262
Other liabilities 17,071 17,189
Shareholders' equity 514,966 494,971
-------- --------
Total liabilities and shareholders'
equity $992,703 $973,497
======== ========
Common shares outstanding 28,803 28,864
====== ======
(A) Short-term and long-term investments consisted of AAA-rated auction
rate securities. Short-term investments were presented net of a valuation
allowance of $0.4 million, the charge for which was recorded in
interest expense in the 2009 first quarter. At March 29, 2009 and
December 28, 2008, long-term investments were presented net of a valuation
allowance of $1.5 million and $1.9 million, respectively.
(B) Accounts receivable, net, included an allowance for doubtful accounts
of $7.5 million and $8.2 million at March 29, 2009 and December 28, 2008,
respectively.
(in 000's) 1st Quarter
-----------
Condensed Statements of Cash Flows 2009 2008
---------------------------------- ---- ----
OPERATING ACTIVITIES:
Net income $18,022 $7,723
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,487 5,151
Amortization of debt issuance costs 399 287
Provision for doubtful accounts 1,410 2,600
Equity-based compensation expense 1,805 1,736
Windfall tax benefits associated with equity-
based compensation (547) (1,235)
Loss on sale of auction rate securities 450 -
Gain on sale of business, net (5,832) -
Equity in net earnings of affiliate (278) -
Deferred income taxes 427 4,848
Changes in assets and liabilities, net of effects
from acquisitions and dispositions:
Accounts receivable (5,800) (19,598)
Prepaid expenses and other current assets (2,565) (2,151)
Current liabilities 11,976 8,825
Other, net 42 (51)
------ -----
Net cash provided by operating activities 24,996 8,135
------ -----
INVESTING ACTIVITIES:
Purchase of fixed assets (5,671) (6,624)
Proceeds from sale of business, net of cash
transferred 5,619 -
Acquisition of businesses, net of cash acquired - (47,405)
Purchases of short-term investments available-
for-sale - (28,000)
Maturities of short-term investments available-
for-sale - 44,900
--- -------
Net cash used in investing activities (52) (37,129)
--- -------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 3,899 4,119
Windfall tax benefits associated with equity-
based compensation 547 1,235
Borrowings under revolving credit facility - 12,000
Home Health Care Affiliates debt repayments - (7,420)
Debt issuance costs - (432)
Repayments under the Company's term loan (14,000) -
Repurchases of common stock (4,813) -
Repayment of capital lease obligations (219) (307)
------- ------
Net cash (used in) provided by financing
activities (14,586) 9,195
------- -------
Net change in cash and cash equivalents 10,358 (19,799)
Cash and cash equivalents at beginning of period 69,201 36,181
------- -------
Cash and cash equivalents at end of period $79,559 $16,382
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid $3,117 $5,702
Income taxes paid $1,489 $417
(in 000's)
Supplemental Information 1st Quarter
------------------------- -----------
2009 2008
---- ----
Segment Information (1)
Net revenues
Home Health $257,745 $217,000
CareCentrix - 77,848
All Other (5) 31,571 27,729
Intersegment revenues (399) (944)
-------- --------
Total net revenues (5) $288,917 $321,633
======== ========
Operating contribution (3)
Home Health $43,225 $31,202
CareCentrix (4) - 6,326
All Other 3,230 2,845
------- -------
Total operating contribution 46,455 40,373
Corporate expenses (18,215) (16,579)
Gain on sale of business, net 5,832 -
Depreciation and amortization (5,487) (5,151)
Interest expense, net (2,391) (5,426)
------- -------
Income before income taxes $26,194 $13,217
======= =======
1st Quarter
-----------
2009 2008
---- ----
Net Revenues by Major Payer Source:
Medicare
Home Health $186,070 $145,106
Other 20,057 16,200
-------- --------
Total Medicare 206,127 161,306
Medicaid and local government 28,142 31,566
Commercial Insurance and Other:
Paid at episodic rates 16,130 11,146
Other 38,518 117,615
-------- --------
Total Commercial Insurance and Other 54,648 128,761
-------- --------
Total net revenues $288,917 $321,633
======== ========
A reconciliation of EBITDA to Net income - As Reported
amounts follows: (2) 1st Quarter
-----------
2009 2008
---- ----
EBITDA (3) $28,240 $23,794
Gain on sale of business, net 5,832 -
Depreciation and amortization (5,487) (5,151)
Interest expense, net (2,391) (5,426)
------ ------
Income before income taxes 26,194 13,217
Income tax expense (6) (8,450) (5,494)
------ ------
Income before equity in net earnings of
affiliate 17,744 7,723
Equity in net earnings of affiliate 278 -
------- ------
Net income - As Reported $18,022 $7,723
======= ======
Notes:
(1) The Company's senior management evaluates performance and allocates
resources based on operating contributions of the operating segments,
which exclude corporate expenses, depreciation, amortization, and
interest expense (net), but include revenues and all other costs directly
attributable to the specific segment.
(2) EBITDA, a non-GAAP financial measure, is defined as income before
interest expense (net of interest income), income taxes, depreciation and
amortization. Management uses EBITDA to evaluate overall performance and
compare current operating results with other companies in the healthcare
industry. EBITDA should not be considered in isolation or as a
substitute for net income, operating income or cash flow statement data
determined in accordance with accounting principles generally accepted in
the United States. Because EBITDA is not a measure of financial
performance under accounting principles generally accepted in the United
States and is susceptible to varying calculations, it may not be
comparable to similarly titled measures in other companies.
(3) Operating contribution and EBITDA for the first quarter of 2009 and
2008 included special charges of $0.9 million and $0.3 million,
respectively. The special charges, which included restructuring and
integration costs and costs and professional fees associated with merger
and acquisition activities, were reflected as follows for segment
reporting (dollars in millions):
1st Quarter
-----------
2009 2008
---- ----
Home Health $0.1 $0.1
Corporate expenses 0.8 0.2
---- ----
Total $0.9 $0.3
==== ====
(4) Operating contribution for CareCentrix, in which the Company sold a
majority ownership interest on September 25, 2008, was comprised of the
following (dollars in thousands):
1st Quarter
-----------
2009 2008
---- ----
Gross profit $- $14,290
Selling, general and administrative expenses - (8,077)
Add: depreciation - 113
-- ------
Operating contribution $- $6,326
== ======
(5) Certain reclassifications have been made to the 2008 first quarter
statement of income and supplemental information to conform to the
current year presentation. The primary impact of the reclassifications
was to reduce (i) net revenues in All Other and (ii) cost of services and
goods sold by approximately $2.1 million in the 2008 first quarter
relating to the reimbursement of nursing home room and board charges for
hospice patients. The Company believes that this presentation better
conforms to industry practice.
(6) The Company's effective tax rate was 32.3% for the first quarter of
2009, and 41.6% for the first quarter of 2008. During the first quarter
of 2009, the Company recorded a pre-tax gain, net of transaction costs,
of $5.8 million relating to the sale of several branch offices that
specialized primarily in pediatric home health care services. There was
no income tax expense relating to the gain on sale of business due to the
utilization of a capital loss carryforward. Excluding the impact of the
gain on sale of businesses, the Company's effective tax rate would have
been 41.5% for the first quarter of 2009.
Forward-Looking Statement
Certain statements contained in this news release, including, without limitation, statements containing the words "believes," "anticipates," "intends," "expects," "assumes," "trends" and similar expressions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon the Company's current plans, expectations and projections about future events. However, such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, among others, the following: economic and business conditions, including the ability to access capital markets; demographic changes; changes in, or failure to comply with, existing governmental regulations; legislative proposals for healthcare reform; changes in Medicare and Medicaid reimbursement levels; effects of competition in the markets in which the Company operates; liability and other claims asserted against the Company; ability to attract and retain qualified personnel; availability and terms of capital; loss of significant contracts or reduction in revenues associated with major payer sources; ability of customers to pay for services; business disruption due to natural disasters or terrorist acts; ability to successfully integrate the operations of acquisitions the Company may make and achieve expected synergies and operational efficiencies within expected time-frames; effect on liquidity of the Company's debt service requirements; and changes in estimates and judgments associated with critical accounting policies and estimates. For a detailed discussion of certain of these and other factors that could cause actual results to differ from those contained in this news release, please refer to the Company's various filings with the Securities and Exchange Commission (SEC), including the "Risk Factors" section contained in the Company's annual report on Form 10-K for the year ended December 28, 2008.
Financial and Investor Contact: John R. Potapchuk
631-501-7035
or Brandon Ballew
770-221-6700
Media Contact: Jennifer Gery-Egan
Brainerd Communicators
212-986-6667
DATASOURCE: Gentiva Health Services, Inc.
CONTACT: Financial and Investor Contact: John R. Potapchuk,
+1-631-501-7035, , or Brandon Ballew,
+1-770-221-6700, ; Media Contact: Jennifer
Gery-Egan, Brainerd Communicators, +1-212-986-6667,
Web Site: http://www.gentiva.com/