GENESIS HEALTHCARE CORPORATION REPORTS SECOND QUARTER FISCAL 2004 RESULTS5/3/2004
Kennett Square, PA -- 05/03/2004 --
- $0.31 Earnings Per Diluted Share from Continuing Operations
- 13.3% Net Revenue Growth Over Prior Year Quarter
- $44.2 Million of Operating Cash Flow Generated
--Genesis HealthCare Corporation ("GHC") (NASDAQ:GHCI) today announced income from continuing operations of $6.1 million ($0.31 per diluted share) and net income of $5.6 million ($0.28 per diluted share) for the quarter ended March 31, 2004.
EBITDA for the quarter ended March 31, 2004 was $28.8 million, compared to EBITDA of $20.4 million for the comparable period in the prior year (see attached reconciliation on page 6). EBITDA was reduced in the quarter ended March 31, 2004 by $0.7 million ($0.02 per diluted share) for non-cash charges related to the early extinguishment of debt.
For the year to date period, on a pro forma basis, assuming the December 1, 2003 spin-off of GHC from NeighborCare, Inc. ("NCI") occurred on October 1, 2003, income from continuing operations was $12.5 million or $0.63 per diluted share (see attached pro forma financial information on page 11).
For the year to date period, both EBITDA and Adjusted EBITDA were $58.3 million, compared to EBITDA and Adjusted EBITDA of $49.2 million and $48.0 million, respectively, for the comparable period in the prior year (see attached reconciliation on page 6). EBITDA and Adjusted EBITDA were reduced in the year to date period by $0.8 million ($0.03 per diluted share) for non-cash charges related to the early extinguishment of debt.
GHC revenues for the quarter ended March 31, 2004 grew 13.3% to $383.3 million from $338.4 million in the comparable period in the prior year. For the year to date period, revenues grew 11.4% to $754.5 million from $677.5 million in the comparable period in the prior year.
"Fundamentally, this was a very strong quarter for GHC and our results exceeded our expectations," said George V. Hager Jr., Chairman and Chief Executive Officer. "The second quarter is typically one of our most challenging due to the January 1 reset of payroll taxes, the cost of inclement weather and seasonal census variability. However, as a result of our continued focus, we enjoyed stable occupancy, attracted higher acuity patients, and more efficiently utilized our nursing resources to reduce reliance on nursing agency services."
Net revenue and EBITDA growth was principally driven by an increase in Medicare and Medicaid rates per patient day. GHC's Medicare rate grew 10.8% to $347 for the quarter ended March 31, 2004 from $313 in the comparable period in the prior year. Medicare revenues increased as a result of the October 1, 2003 Medicare rate increases, as well as higher Medicare patient acuity and census. In addition, revenue and EBITDA growth in the quarter ended March 31, 2004 of $18.2 million and $0.7 million, respectively, were attributed to the consolidation of eight eldercare centers that were not included in the comparable period in the prior year.
The rehabilitation therapy business, which represents approximately 9% of revenues, showed improved results from the first quarter given the postponement of the therapy caps beginning in December 2003 and a 1.5% increase in the Medicare Part B therapy fee schedule beginning January 1, 2004.
GHC continued to make progress in reducing its reliance on temporary staffing. While aggregate nursing labor costs grew 4.9% per patient day in the quarter ended March 31, 2004 versus the comparable period in the prior year, agency labor costs declined by 27.1% on a per patient day basis from the comparable period in the prior year.
From a liquidity and capital resources perspective, GHC ended the quarter with $126.0 million of cash, $192.1 million of working capital, $72.9 million of available borrowings under its revolving credit facility, and $461.8 million of indebtedness. During the quarter, GHC repaid $19.9 million of fixed rate mortgage debt, $12.5 million of which was assumed during the quarter in connection with the acquisition of two skilled nursing facilities previously under joint ownership. Subsequent to quarter end, GHC repaid an additional $4.7 million of fixed rate mortgage debt.
"Our cash balance of $126.0 million and our strong operating cash flow of $44.2 million reflects the quality of our earnings and will allow us to implement our debt repayment and other strategic priorities over the next two years," concluded Hager.
Basis of Presentation
The accompanying financial statements through November 30, 2003 have been prepared on a basis which reflects the historical financial statements of GHC assuming the operations of NCI contributed in the spin-off were organized as a separate legal entity, owning certain net assets of NCI. Beginning December 1, 2003, the accompanying financial statements have been prepared on a basis which reflects the net operations of GHC as a stand alone entity. The allocation methodologies followed in preparing the accompanying financial statements prior to the December 1, 2003 spin-off may not necessarily reflect the results of operations, cash flows, or financial position of GHC in the future, or what the results of operations, cash flows or financial position would have been had GHC been a separate stand-alone entity for all periods presented.
GHC accounts for discontinued operations, including assets held for sale, under the provisions of Statement of Financial Accounting Standards, No. 144 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 144"). Under SFAS 144, discontinued businesses including assets held for sale are removed from the results of continuing operations and presented as a separate line on the statement of operations. The net revenues and loss per diluted share of GHC's discontinued operations for the three months ended March 31, 2004 were $7.1 million and $(0.03), respectively. The net revenues and loss per diluted share for the year to date period ended March 31, 2004 were $16.3 million and $(0.11), respectively.
Genesis HealthCare Corporation will hold a conference call at 10:00 a.m. EDT on May 4, 2004 to discuss results for the quarter. Investors can access the conference call by phone at (888) 428-4480 or live via webcast through the GHC web site at http://www.genesishcc.com, where a replay of the call will also be posted for one year.
About Genesis HealthCare Corporation
Genesis HealthCare (NASDAQ: GHCI) is one of the nation's largest long term care providers with over 200 skilled nursing centers and assisted living residences in 13 eastern states operating under the Genesis ElderCare banner. Genesis also supplies contract rehabilitation therapy to over 730 healthcare providers in 21 states and the District of Columbia. Visit our website at www.genesishcc.com.
Statements made in this release, our website and in our other public filings and releases, which are not historical facts contain "forward-looking" statements (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change at any time. These forward-looking statements may include, but are not limited to, statements containing words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "may", "target", "appears" and similar expressions. Such forward looking statements include, without limitation, the effect of the spin-off on our operations, expected reimbursement rates, including RUGs changes, agency labor utilization, inflationary increases in state Medicaid rates and self-insurance retention limits. Factors that could cause actual results to differ materially include, but are not limited to, the following: costs, changes in the reimbursement rates or methods of payment from Medicare or Medicaid, or the implementation of other measures to reduce reimbursement for our services; the expiration of enactments providing for additional government funding; efforts of third party payors to control costs; the impact of federal and state regulations; changes in payor mix and payment methodologies; further consolidation of managed care organizations and other third party payors; competition in our business; an increase in insurance costs and potential liability for losses not covered by, or in excess of, our insurance; competition for qualified staff in the healthcare industry; our ability to control operating costs, and generate sufficient cash flow to meet operational and financial requirements; changes in interest expense; and an economic downturn or changes in the laws affecting our business in those markets in which we operate.rn
The forward-looking statements involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control. We caution investors that any forward-looking statements made by us are not guarantees of future performance. We disclaim any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments.