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ATLANTA, July 30, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Gentiva Health Services, Inc. (Nasdaq: GTIV), a leading provider of comprehensive home health services, today reported the following 2009 second quarter results:
-- Net revenues of $298.1 million for the quarter ended June 28, 2009
compared to $344.2 million, which included net revenues of $79.3 million
from its CareCentrix business unit, for the quarter ended June 29, 2008.
Excluding prior year's second quarter net revenues from
CareCentrix, Gentiva's net revenues grew about $33 million, or 12%
in the 2009 second quarter. The Company sold a majority interest in
CareCentrix to Water Street Healthcare Partners on September 25, 2008.
-- Net income of $17.1 million, or $0.58 per diluted share compared to net
income of $12.0 million or $0.41 per diluted share in the 2008 second
quarter.
-- Adjusted net income for the 2009 second quarter was $17.5 million, up
43% compared with the prior year period. On a diluted earnings per share
basis, adjusted net income in the 2009 second quarter was $0.59 compared
with $0.42 in the corresponding period of 2008. Adjusted net income for
both second quarter periods excludes special charges of $0.01 per
diluted share relating to restructuring and integration activities.
-- Earnings before interest, taxes, depreciation and amortization (EBITDA)
increased 12% to $35.4 million in the second quarter of 2009. EBITDA as
a percentage of net revenues improved to 11.9% in the second quarter of
2009 versus 9.2% in the prior-year period. EBITDA included restructuring
and integration costs of $0.6 million in the second quarter of 2009 as
compared to $0.4 million for the prior year period.
"Gentiva had a very good second quarter driven by continued success in executing our core strategies: rolling out our specialty programs, serving the needs of higher acuity seniors and increasing both the capacity and productivity of our growing clinician base," said Gentiva CEO Tony Strange. "Our performance demonstrates the commitment of our employees as well as the growing belief of the healthcare community in the power of home care as a key part of the solution to the nation's healthcare challenges."
Gentiva reported these segment highlights for the quarter:
-- Home Health revenue growth of 12% to $265.6 million and operating
contribution growth of 23% to $48.6 million.
-- Revenues in the All Other segment - which includes hospice, respiratory
therapy and home medical equipment, infusion therapy and consulting -
increased 14% to $33.0 million, while operating contribution increased
19% to $3.9 million compared to the prior-year period.
Gentiva reported these highlights for the six months ended June 28, 2009:
-- Net revenues of $587.0 million versus $665.8 million in the prior year
period. Net revenues in the 2008 period included approximately $157
million relating to CareCentrix. Excluding the revenue contribution
from CareCentrix, Gentiva's net revenues grew about $77 million, or
15%, in the six-month period ended June 28, 2009.
-- Net income of $35.1 million, or $1.19 per diluted share which included
(i) a non-recurring pre-tax net gain of $5.7 million or $0.20 per
diluted share resulting from the 2009 first quarter sale of certain
branch offices that specialized primarily in pediatric home health care
services and (ii) special pre-tax charges of $1.5 million or $0.03 per
diluted share relating to restructuring and integration costs. These
results compared to net income of $19.7 million or $0.68 per diluted
share in the 2008 period which included special pre-tax charges of $0.7
million or $0.01 per diluted share relating to restructuring and
integration costs.
-- Adjusted net income was $30.2 million, up 50% compared with the prior
year period. On a diluted earnings per share basis, adjusted net income
in the 2009 period was $1.02 compared with $0.69 in the corresponding
period of 2008.
-- EBITDA increased 15% to $63.6 million versus $55.3 million in the
prior-year period.
-- Operating cash flow was $49.5 million in the 2009 period compared to
$20.8 million in the comparable 2008 period.
At June 28, 2009, the Company reported cash and cash equivalents of $99.5 million and long-term debt of $237 million.
Full-Year 2009 Outlook
Gentiva announced that it is raising its revenue and earnings outlook for fiscal 2009 based on its year-to- date performance and prospects for the remainder of this year. Gentiva now anticipates full-year 2009 net revenues will range between $1.19 billion to $1.21 billion, as compared to prior guidance 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 $2.04 and $2.10, up from the $1.72 and $1.80 range provided earlier this year. Gentiva's 2009 outlook represents an increase in net revenues of 12% to 14% and an increase in diluted earnings per share of 45% to 50% 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 special charges relating to restructuring and integration costs which are expected to range between $3 million and $4 million for the year and non-recurring charges and credits. The outlook includes the impact of recently announced acquisitions and also reflects 53 weeks of activity in fiscal 2009.
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 second quarter 2009 results during its conference call and live web cast to be held Thursday, July 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 #19324792. 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 July 30, beginning at approximately 1 p.m. ET, and will remain available continuously through August 6. 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: 19324792. 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
(unaudited tables and notes follow)
(in 000's, except per share data) 2nd Quarter Six Months
-------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
Statements of Income
--------------------
Net revenues $298,103 $344,213 $587,020 $665,846
Cost of services and
goods sold 141,175 192,733 281,984 377,843
------- ------- ------- -------
Gross profit 156,928 151,480 305,036 288,003
Selling, general and
administrative expenses (127,186) (125,569) (252,541) (243,449)
(Loss) gain on sale of
assets, net (85) - 5,747 -
Interest income 817 273 1,618 940
Interest expense and other (2,688) (5,592) (5,880) (11,685)
------- ------- ------- -------
Income before income taxes 27,786 20,592 53,980 33,809
Income tax expense 10,954 8,568 19,404 14,062
------- ------- ------- -------
Income before equity
in net earnings of affiliate 16,832 12,024 34,576 19,747
Equity in net earnings of
affiliate 263 - 541 -
------- ------- ------- -------
Net income $17,095 $12,024 $35,117 $19,747
======= ======= ======= =======
Earnings per Share
------------------
Net income:
Basic $0.59 $0.42 $1.21 $0.70
======= ======= ======= =======
Diluted $0.58 $0.41 $1.19 $0.68
======= ======= ======= =======
Average shares outstanding:
Basic 28,959 28,497 28,952 28,389
======= ======= ======= =======
Diluted 29,396 29,240 29,606 29,147
======= ======= ======= =======
Condensed Balance Sheets
------------------------
Jun 28, Dec 28,
ASSETS 2009 2008
------ -------- --------
Cash and cash equivalents $99,470 $69,201
Short-term
investments (A) 4,450 -
Accounts receivable,
net (B) 174,631 177,201
Deferred tax assets 13,840 11,933
Prepaid expenses and
other current assets 14,458 13,141
-------- --------
Total current assets 306,849 271,476
Long-term investments (A) 4,250 11,050
Note receivable 25,000 25,000
Investment in affiliate 23,805 23,264
Fixed assets, net 67,529 63,815
Intangible assets, net 249,274 250,432
Goodwill 308,868 308,213
Other assets 21,989 20,247
-------- --------
Total assets $1,007,564 $973,497
========== ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
---------------------
Accounts payable $8,593 $8,027
Payroll and related taxes 17,959 17,869
Deferred revenue 38,108 32,976
Medicare liabilities 6,309 6,680
Obligations under
insurance programs 38,059 39,628
Other accrued expenses 38,428 40,895
-------- --------
Total current
liabilities 147,456 146,075
Long-term debt 237,000 251,000
Deferred tax
liabilities, net 68,408 64,262
Other liabilities 18,777 17,189
Shareholders' equity 535,923 494,971
-------- --------
Total liabilities and
shareholders'
equity $1,007,564 $973,497
========== ========
Common shares outstanding 29,011 28,864
========== ========
(A) Short-term and long-term investments consisted of auction rate
securities with underlying guarantees carrying a AAA rating.
Short-term investments were presented net of a valuation allowance of
$0.6 million, the charge for which was recorded in interest expense
and other in the 2009 second quarter. At June 28, 2009 and December
28, 2008, long-term investments were presented net of a valuation
allowance of $0.8 million and $1.9 million, respectively.
(B) Accounts receivable, net, included an allowance for doubtful accounts
of $8.0 million and $8.2 million at June 28, 2009 and December 28,
2008, respectively.
(in 000's) Six Months
-------------
Condensed Statements of Cash Flows 2009 2008
---------------------------------- ---- ----
OPERATING ACTIVITIES:
Net income $35,117 $19,747
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 11,145 10,753
Amortization of debt issuance costs 681 593
Provision for doubtful accounts 4,045 6,124
Equity-based compensation expense 3,466 3,220
Windfall tax benefits associated
with equity-based compensation (585) (1,306)
Impairment loss on auction rate securities 1,000 -
Gain on sale of assets, net (5,747) -
Equity in net earnings of affiliate (541) -
Deferred income taxes 1,458 10,829
Changes in assets and liabilities, net of
effects from acquisitions and dispositions:
Accounts receivable (1,082) (24,960)
Prepaid expenses and other current assets (1,602) (1,508)
Current liabilities 1,836 (3,240)
Other, net 271 529
------- ------
Net cash provided by operating activities 49,462 20,781
------- ------
INVESTING ACTIVITIES:
Purchase of fixed assets (12,403) (13,831)
Proceeds from sale of assets, net of cash
transferred 5,619 -
Acquisition of businesses, net of cash
acquired (2,200) (59,217)
Purchases of short-term investments
available-for-sale - (28,000)
Maturities of short-term investments
available-for-sale 2,550 46,250
------- ------
Net cash used in investing activities (6,434) (54,798)
------- ------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 5,910 6,211
Windfall tax benefits associated with equity-
based compensation 585 1,306
Borrowings under revolving credit facility - 24,000
Home Health Care Affiliates debt repayments - (7,420)
Debt issuance costs - (557)
Repayments under the Company's term loan (14,000) (3,000)
Repurchases of common stock (4,813) -
Repayment of capital lease obligations (441) (625)
------- ------
Net cash (used in) provided by financing
activities (12,759) 19,915
------- ------
Net change in cash and cash equivalents 30,269 (14,102)
Cash and cash equivalents at beginning of
period 69,201 36,181
------- ------
Cash and cash equivalents at end of period $99,470 $22,079
======= =======
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW INFORMATION:
Interest paid $5,172 $11,355
Income taxes paid $15,831 $7,197
(in 000's)
Supplemental Information 2nd Quarter Six Months
------------------------ -------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
Segment Information (1)
Net revenues
Home Health $265,581 $236,876 $523,326 $453,876
CareCentrix - 79,323 - 157,171
All Other (3) 32,987 28,827 64,558 56,556
Intersegment revenues (465) (813) (864) (1,757)
-------- -------- -------- --------
Total net revenues (3) $298,103 $344,213 $587,020 $665,846
======== ======== ======== ========
Operating contribution (4)
Home Health $48,633 $39,423 $91,858 $70,625
CareCentrix (5) - 6,523 - 12,849
All Other 3,891 3,278 7,121 6,123
-------- -------- -------- --------
Total operating contribution 52,524 49,224 98,979 89,597
Corporate expenses (17,124) (17,711) (35,339) (34,290)
(Loss) gain on sale of
assets, net (85) - 5,747 -
Depreciation and amortization (5,658) (5,602) (11,145) (10,753)
Interest expense, net (6) (1,871) (5,319) (4,262) (10,745)
-------- -------- -------- --------
Income before income taxes $27,786 $20,592 $53,980 $33,809
======= ======= ======= =======
2nd Quarter Six Months
-------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
Net Revenues by Major
Payer Source:
Medicare
Home Health $194,140 $161,257 $380,210 $306,362
Other 20,891 17,292 40,948 33,492
-------- -------- -------- --------
Total Medicare 215,031 178,549 421,158 339,854
Medicaid and local
government 24,830 32,953 52,972 64,520
Commercial Insurance
and Other:
Paid at episodic rates 19,164 13,402 35,294 24,548
Other 39,078 119,309 77,596 236,924
-------- -------- -------- --------
Total Commercial
Insurance and Other 58,242 132,711 112,890 261,472
-------- -------- -------- --------
Total net revenues $298,103 $344,213 $587,020 $665,846
======== ======== ======== ========
A reconciliation of EBITDA to
Net income - As Reported
amounts follows: (2) 2nd Quarter Six Months
-------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
EBITDA (4) $35,400 $31,513 $63,640 $55,307
(Loss) gain on sale of
assets, net (85) - 5,747 -
Depreciation and
amortization (5,658) (5,602) (11,145) (10,753)
Interest expense, net (6) (1,871) (5,319) (4,262) (10,745)
-------- -------- -------- --------
Income before income taxes 27,786 20,592 53,980 33,809
Income tax expense (7) (10,954) (8,568) (19,404) (14,062)
-------- -------- -------- --------
Income before equity in net
earnings of affiliate 16,832 12,024 34,576 19,747
Equity in net earnings
of affiliate 263 - 541 -
-------- -------- -------- --------
Net income - As Reported $17,095 $12,024 $35,117 $19,747
======== ======== ======== ========
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) Certain reclassifications have been made to the 2008 second quarter and first half statements 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 $2.0 million and $4.1 million, in the second quarter and first half of 2008, respectively, relating to the reimbursement of nursing home room and board charges for hospice patients.
(4) Operating contribution and EBITDA for the second quarter and first half of 2009 included special charges of $0.6 million and $1.5 million, respectively. For the second quarter and first half of 2008, operating contribution and EBITDA included special charges of $0.4 million and $0.7 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):
2nd Quarter Six Months
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Home Health $0.4 $0.1 $0.5 $0.2
Corporate expenses 0.2 0.3 1.0 0.5
---- ---- ---- ----
Total $0.6 $0.4 $1.5 $0.7
==== ==== ==== ====
(5) 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):
2nd Quarter Six Months
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Gross profit $- $14,580 $- $28,870
Selling, general and
administrative expenses - (8,184) - (16,261)
Add: depreciation - 127 - 240
--- --- --- ---
Operating contribution $- $6,523 $- $12,849
=== ====== === =======
(6) Interest expense, net for the second quarter and first half of 2009 included impairment losses on auction rate securities of $0.6 million and $1.0 million, respectively.
(7) The Company's effective tax rate was 39.4% and 35.9% for the second quarter and first half of 2009, respectively, and 41.6% for the second quarter and first half of 2008. During the first half of 2009, the Company recorded a pre-tax gain, net of transaction costs, of $5.7 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 assets due to the utilization of a capital loss carryforward. Excluding the impact of the non-recurring gain, the Company's effective tax rate would have been 40.2% for the first half 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
john.potapchuk@gentiva.com
or Brandon Ballew
770-221-6700
brandon.ballew@gentiva.com
Media Contact: Jennifer Gery-Egan
Brainerd Communicators
212-986-6667
gery@braincomm.com
SOURCE Gentiva Health Services, Inc.
http://www.gentiva.com
Copyright (C) 2009 PR Newswire. All rights reserved