Gentiva® Health Services Reports First Quarter 2014 Results PR Newswire ATLANTA, May 7, 2014 ATLANTA, May 7, 2014 /PRNewswire/ --Gentiva Health Services, Inc. (NASDAQ: GTIV), one of the largest providers of home health, hospice and community care services in the United States, today reported first quarter 2014 results. Gentiva acquired Harden Healthcare Holdings, Inc. ("Harden") on October 18, 2013. The Company's results for the three months ended March 31, 2014 included Harden's financial results. First quarter 2014 financial highlights include: oTotal net revenues of $487.5 million, an increase of 17% compared to $415.6 million for the quarter ended March 31, 2013. Net revenues included home health episodic revenues of $224.4 million, an increase of 8% compared to $207.4 million in the 2013 first quarter. Hospice revenues were $174.4 million, a decrease of 3% compared to $179.5 million in the 2013 first quarter. Community care revenues were $57.1 million in the first quarter of 2014. oNet income attributable to Gentiva shareholders of $0.3 million, or $0.01 per diluted share, compared to net loss attributable to Gentiva shareholders of $207.2 million, or $6.73 per diluted share, for the first quarter of 2013. During the first quarter of 2013, the Company recorded non-cash impairment charges of $224.3 million based on an interim impairment test of the Company's goodwill and other long-lived assets that was performed during the quarter. oAdjusted income attributable to Gentiva shareholders of $4.8 million, compared with $7.1 million in the comparable 2013 period. On a diluted per share basis, adjusted income attributable to Gentiva shareholders was $0.13 for the first quarter of 2014 as compared to $0.23 for the first quarter of 2013. First quarter 2014 adjusted income attributable to Gentiva shareholders was negatively impacted by approximately $0.05 due to widespread, severe weather conditions across the country. oAdjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) was $39.0 million in the first quarter of 2014 as compared to $39.1 million in the first quarter of 2013. Adjusted EBITDA as a percentage of net revenues was 8.0% in the first quarter of 2014 versus 9.4% in the prior year period. First quarter 2014 Adjusted EBITDA was negatively impacted by approximately $2.7 million due to the aforementioned severe weather conditions. Adjusted income attributable to Gentiva shareholders and Adjusted EBITDA exclude charges related to restructuring, legal settlements, acquisition and integration activities, losses on closed locations and other special items. Cash Flow and Balance Sheet Highlights At March 31, 2014, the Company reported cash and cash equivalents of $62.9 million, compared to $87.0 million at December 31, 2013. Total outstanding debt was $1.17 billion as of March 31, 2014, compared to $1.18 billion at December 31, 2013. Total Company days sales outstanding, or DSO's, was 50 days at March 31, 2014 compared to 49 days at December 31, 2013. For the first quarter of 2014, net cash provided by operating activities was a negative $17.7 million, compared to a negative $20.6 million in the prior year period. Free cash flow was a negative $20.9 million for the first quarter of 2014, compared to a negative $23.3 million in the prior year period. As expected, cash flow for the first quarter of 2014 was impacted by the timing of interest payments on the Company's senior notes and compensation related expenses. Free cash flow is calculated as net cash provided by operating activities less capital expenditures. Full-Year 2014 Outlook Gentiva reaffirmed its full-year 2014 outlook. Net revenues are expected to be in the range of $1.9 billion to $2.1 billion and adjusted income attributable to Gentiva shareholders is expected to be in the range of $0.85 to $1.15 on a diluted per share basis. Gentiva's 2014 outlook includes the full-year impact of its Harden acquisition and the final 2014 Medicare home health and hospice reimbursement rates issued by the Centers for Medicare and Medicaid Services (CMS). The 2014 outlook excludes any ongoing losses from closed locations as the operations are wound down. 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 historical measures to the most directly comparable GAAP measures. A reconciliation of adjusted income attributable to Gentiva shareholders to net income, the most directly comparable GAAP measure, is not accessible on a forward-looking basis without unreasonable effort due to the inherent difficulties in predicting the costs of restructuring, legal settlements and merger and acquisition activities and the impact of any future acquisitions or divestitures, which can fluctuate significantly and may have a significant impact on net income. Conference Call and Webcast Details The Company will comment further on its first quarter 2014 results during its conference call and live webcast to be held today, Wednesday, May 7, 2014 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 #31122421. The webcast is an audio-only, one-way event. Webcast listeners who wish to ask questions must participate in the conference call. Log onto http://investors.gentiva.com/events.cfm to hear the webcast. A replay of the call will be available on May 7 and will remain available continuously through May 14. To listen to a replay of the call from the United States, Canada or international locations dial (800) 585-8367 or (404) 537-3406 and enter the following PIN at the prompt: 31122421. Visit http://investors.gentiva.com/events.cfm to access the webcast archive. This press release is accessible at http://investors.gentiva.com/releases.cfm and a transcript of the conference call will be posted on the Company's website. About Gentiva Health Services, Inc. Gentiva Health Services, Inc. is one of the nation's largest providers of home health, hospice and community care 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; and other therapies and services. GTIV-G (unaudited tables and notes follow) Gentiva Health Services, Inc. and Subsidiaries Condensed Consolidated Financial Statements and Supplemental Information (Unaudited) (in 000's, except per share data) 1st Quarter 2014 2013 Condensed Statements of Comprehensive Loss Net revenues $ 487,505 $ 415,591 Cost of services sold 273,068 221,573 Gross profit 214,437 194,018 Selling, general and administrative expenses (189,020) (159,877) Goodwill and other long-lived asset impairment — (224,320) Interest income 633 785 Interest expense and other (25,131) (23,078) Income (loss) before income taxes 919 (212,472) Income tax (expense) benefit (421) 5,416 Net income (loss) 498 (207,056) Less: Net income attributable to noncontrolling (184) (121) interests Net income (loss) attributable to Gentiva $ 314 $ (207,177) shareholders Total comprehensive income (loss) $ 498 $ (207,056) Earnings per Share Net income (loss) attributable to Gentiva shareholders: Basic $ 0.01 $ (6.73) Diluted $ 0.01 $ (6.73) Weighted average shares outstanding: Basic 36,189 30,785 Diluted 36,677 30,785 (in 000's) Condensed Balance Sheets ASSETS Mar 31, 2014 Dec 31, 2013 Cash and cash equivalents $ 62,884 $ 86,957 Accounts receivable, net (A) 291,338 289,905 Deferred tax assets 26,090 28,153 Prepaid expenses and other current 66,668 64,746 assets Total current assets 446,980 469,761 Notes receivable from CareCentrix 28,471 28,471 Fixed assets, net 47,188 49,375 Intangible assets, net 254,732 256,282 Goodwill 390,081 390,081 Other assets 67,482 68,647 Total assets $ 1,234,934 $ 1,262,617 LIABILITIES AND SHAREHOLDERS' DEFICIT Current portion of long-term debt $ 47,263 $ 45,325 Accounts payable 12,596 15,659 Payroll and related taxes 50,221 64,857 Deferred revenue 48,902 43,864 Medicare liabilities 22,132 23,894 Obligations under insurance programs 79,076 82,634 Accrued nursing home costs 20,969 22,219 Other accrued expenses 66,608 77,018 Total current liabilities 347,767 375,470 Long-term debt 1,118,197 1,124,432 Deferred tax liabilities, net 14,711 9,825 Other liabilities 51,843 53,084 Total deficit (297,584) (300,194) Total liabilities and shareholders' $ 1,234,934 $ 1,262,617 deficit Common shares outstanding 36,763 36,375 (A) Accounts receivable, net included an allowance for doubtful accounts of $11.9 million and $10.7 million at March 31, 2014 and December 31, 2013, respectively. (in 000's) 1st Quarter Condensed Statements of Cash Flows 2014 2013 OPERATING ACTIVITIES: Net income (loss) $ 498 $ (207,056) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 6,447 4,781 Amortization of debt issuance costs 1,576 3,331 Provision for doubtful accounts 1,999 1,007 Equity-based compensation expense 2,221 1,813 Windfall tax benefits associated with (6) (72) equity-based compensation Goodwill and other long-lived asset — 224,320 impairment Deferred income tax expense (benefit) 4,301 (9,360) Changes in assets and liabilities, net of effects from acquisitions and dispositions: Accounts receivable (3,432) (4,855) Prepaid expenses and other current assets (1,922) (162) Current liabilities (28,352) (35,258) Other, net (1,073) 951 Net cash used in operating activities (17,743) (20,560) INVESTING ACTIVITIES: Purchase of fixed assets (3,158) (2,698) Proceeds from the sale of assets 191 — Net cash used in investing activities (2,967) (2,698) FINANCING ACTIVITIES: Proceeds from issuance of common stock 597 992 Windfall tax benefits associated with 6 72 equity-based compensation Repayment of long-term debt (4,581) (25,000) Minority interest capital contribution 1,160 — Distribution to minority interests (115) (240) Other (430) (23) Net cash used in financing activities (3,363) (24,199) Net change in cash and cash equivalents (24,073) (47,457) Cash and cash equivalents at beginning of period 86,957 207,052 Cash and cash equivalents at end of period $ 62,884 $ 159,595 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 33,047 $ 28,728 Income taxes paid $ 108 $ 194 1st Quarter A reconciliation of Free cash flow to Net cash used 2014 2013 in operating activities follows: Net cash used in operating activities $ (17,743) $ (20,560) Less: Purchase of fixed assets (3,158) (2,698) Free cash flow $ (20,901) $ (23,258) (in 000's) Supplemental Information 1st Quarter 2014 2013 Segment Information (2) Net revenues Home Health $ 255,976 $ 236,061 Hospice 174,402 179,530 Community Care 57,127 — Total net revenues $ 487,505 $ 415,591 Operating contribution (4) Home Health $ 29,603 $ 30,188 Hospice 17,544 27,421 Community Care 9,279 — Total operating contribution 56,426 57,609 Corporate administrative expenses (24,562) (18,687) Goodwill and other long-lived asset impairment — (224,320) (5) Depreciation and amortization (6,447) (4,781) Interest expense and other, net (24,498) (22,293) Income (loss) before income taxes $ 919 $ (212,472) Home Health operating contribution margin % 11.6% 12.8% Hospice operating contribution margin % 10.1% 15.3% Community Care operating contribution margin % 16.2% —% 1st Quarter Net Revenues by Major Payer Source: 2014 2013 Medicare Home Health $ 208,766 $ 193,120 Hospice 163,209 167,274 Total Medicare 371,975 360,394 Medicaid and local government 71,127 18,269 Commercial insurance and other: Paid at episodic rates 15,599 14,255 Other 28,804 22,673 Total commercial insurance and other 44,403 36,928 Total net revenues $ 487,505 $ 415,591 1st Quarter A reconciliation of Adjusted EBITDA to Net income (loss) attributable to Gentiva shareholders 2014 2013 follows: (3) Adjusted EBITDA (3) $ 38,976 $ 39,063 Cost savings initiatives and acquisition (5,341) (141) and integration activities (4) Impact of closed locations (1,771) — Goodwill and other long-lived asset — (224,320) impairment (5) EBITDA (4) 31,864 (185,398) Depreciation and amortization (6,447) (4,781) Interest expense and other, net (24,498) (22,293) Income (loss) before income taxes 919 (212,472) Income tax (expense) benefit (6) (421) 5,416 Net income (loss) 498 (207,056) Less: Net income attributable to (184) (121) noncontrolling interests Net income (loss) attributable to Gentiva $ 314 $ (207,177) shareholders A reconciliation of Adjusted income attributable to Gentiva shareholders to Net income (loss) (all items presented are net of tax): (3) 1st Quarter 2014 2013 Adjusted income attributable $ 4,799 $ 7,107 to Gentiva shareholders Cost savings initiatives and acquisition and integration (3,302) (86) activities (4) Impact of closed locations (1,183) — Goodwill and other long-lived — (214,198) asset impairment (5) Income (loss) attributable to 314 (207,177) Gentiva shareholders Add back: Net income attributable to noncontrolling 184 121 interests Net income (loss) $ 498 $ (207,056) Adjusted income attributable to Gentiva shareholders per $ 0.13 $ 0.23 diluted share Cost savings initiatives and acquisition and integration (0.09) — activities (4) Impact of closed locations (0.03) — Goodwill and other long-lived — (6.96) asset impairment (5) Income (loss) attributable to Gentiva shareholders per 0.01 (6.73) diluted share Add back: Net income attributable to noncontrolling — — interests Net income (loss) per diluted $ 0.01 $ (6.73) share Operating Metrics 1st Quarter 2014 2013 Home Health Episodic admissions 54,400 50,400 Total episodes 82,600 72,200 Episodes per admission 1.52 1.43 Revenue per episode $ 2,715 $ 2,875 Hospice Admissions 12,900 13,500 Average daily census 13,000 12,700 Patient days (in thousands) 1,168 1,146 Revenue per patient day ^ (a) $ 149 $ 157 Length of stay at discharge 104 99 (in days) Services by patient type: Routine 99% 98% General Inpatient & Other 1% 2% Community Care Billed hours (in thousands) 4,200 — Revenue per hour $ 14 — Notes: 1.The comparability between reporting periods has been affected by the following items: a. The Company completed the Harden transaction on October 18, 2013, affecting the reporting periods presented. Annualized net revenues of Harden at acquisition date approximated $145 million of Home Health, $109 million of Hospice and $220 million of Community Care. Net revenues specific to Harden for the first quarter of 2014 are not available as, subsequent to the acquisition date, the Company has undertaken significant consolidations and closures of Harden branches in overlapping and smaller markets for which reporting of separate results is no longer available. As a result of this transaction, the Company's net revenues comparisons were positively impacted for the first quarter 2014 as compared to the corresponding period of 2013. b. The Company closed a significant number of branch operations relating to the branch rationalization initiative which began in 2013, affecting the reporting periods presented. As a result of these activities, the Company's net revenues comparisons were negatively impacted for the first quarter 2014 by approximately $8 million as compared to the corresponding period of 2013. 2.The Company's senior management evaluates performance and allocates resources based on operating contributions of the operating segments, which exclude corporate expenses, depreciation, amortization, interest income, and interest expense and other, but include revenue and all other costs directly attributable to the specific segment. 3.Adjusted EBITDA, a non-GAAP financial measure, is defined as income before interest expense and other (net of interest income), income taxes, depreciation and amortization and excluding charges relating to (i) cost savings initiatives and acquisition and integration activities, (ii) impact of closed locations and (iii) goodwill and other long-lived asset impairment. Management uses Adjusted EBITDA to evaluate overall performance and compare current operating results with other companies in the healthcare industry. Adjusted EBITDA should not be considered in isolation or as a substitute for income from continuing operations, net income, operating income or cash flow statement data determined in accordance with accounting principles generally accepted in the United States. Because Adjusted 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. Adjusted income attributable to Gentiva shareholders is defined as income attributable to Gentiva shareholders, excluding (i) charges relating to cost savings initiatives and acquisition and integration activities, (ii) impact of closed locations and (iii) goodwill and other long-lived asset impairment. 4.Operating contribution and EBITDA included charges relating to cost savings and other restructuring, legal settlements and acquisition and integration activities of $5.3 million for the first quarter 2014 as compared to $0.1 million for the corresponding period of 2013. For the first quarter 2014, the Company recorded charges relating to cost savings initiatives associated with the Company's branch rationalization initiative of $2.7 million and charges of $2.6 million associated with acquisition and integration activities of Harden. For the first quarter 2013, the Company recorded acquisition and integration activities of $0.1 million associated with the Company's acquisitions of North Mississippi Hospice and Family Home Care, Inc. in 2012. These charges were reflected as follows for segment reporting purposes (dollars in millions): 1st Quarter 2014 2013 Home Health $ 0.6 $ — Hospice 2.9 — Corporate expenses 1.9 0.1 Total $ 5.3 $ 0.1 5.During the first quarter of 2013, the Company recorded non-cash charges of $224.3 million related to goodwill and other long-lived assets. At March 31, 2013, the Company performed an interim impairment test of its Hospice reporting unit due to lower than expected average daily census and higher than expected discharge rates during the first quarter. Based on the results of the interim impairment test, the Company recorded a non-cash impairment charge relating to goodwill of approximately $220.8 million. As part of that analysis, the Company reviewed the valuation of its owned real estate utilized in the Hospice business. The analysis indicated that two of the Company's hospice inpatient units had estimated fair values lower than their carrying values and, as such, the Company recorded a non-cash impairment charge of approximately $1.9 million. In addition, the Company conducted an evaluation of the various systems used to support its field operations. In connection with that review, the Company made a strategic decision to replace its business intelligence software platform and, as such, recorded a non-cash impairment charge, related to developed software, of approximately $1.6 million. 6.The Company's effective tax rate was a tax expense of 45.9% for the first quarter 2014 as compared to a benefit of 2.5% for the first quarter 2013. During the first quarter of 2013, the Company recorded non-cash impairment charges of $224.3 million related to goodwill and other long-lived assets (see note 5). Excluding the impact of the impairment charges, the Company's effective tax rate would have been 39.9% for the first quarter of 2013. Forward-Looking Statements 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: general economic and business conditions; demographic changes; changes in, or failure to comply with, existing governmental regulations; the impact on our Company of healthcare reform legislation and its implementation through governmental regulations; legislative proposals for healthcare reform; changes in Medicare, Medicaid and commercial payer reimbursement levels; the outcome of any inquiries into the Company's operations and business practices by governmental authorities; compliance with any corporate integrity agreement affecting the Company's operations; 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; ability to access capital markets; 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 severe weather conditions, natural disasters, pandemic outbreaks, terrorist acts or cyber-attacks; availability, effectiveness, stability and security of the Company's information technology systems; ability to successfully integrate the operations of acquisitions the Company may make and achieve expected synergies and operational efficiencies within expected time-frames; ability to maintain compliance with its financial covenants under the Company's credit agreement; 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, including the "Risk Factors" section contained in the Company's annual report on Form 10-K for the year ended December 31, 2013. Financial and Investor Contact: Eric Slusser 770-951-6101 firstname.lastname@example.org or John Mongelli 770-951-6496 email@example.com Media Contact: Scott Cianciulli Brainerd Communicators 212-986-6667 firstname.lastname@example.org SOURCE Gentiva Health Services, Inc. Website: http://www.gentiva.com
Gentiva® Health Services Reports First Quarter 2014 Results
Press spacebar to pause and continue. Press esc to stop.