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Gentiva Health Services (GTIV) Reports Fourth Quarter and Full-Year 2010 Results



2/17/2011 7:20:14 AM

ATLANTA, Feb. 17, 2011 /PRNewswire/ -- Gentiva Health Services, Inc. (Nasdaq: GTIV), the largest provider of home health and hospice services in the United States based on revenue, today reported fourth quarter and full-year 2010 results.

Full-year 2010 financial highlights include:

  • Total net revenues increased by 26% to $1.45 billion.
  • Adjusted income from continuing operations on a diluted share basis increased 29% to $2.82.
  • Adjusted EBITDA increased 57% to $200 million.
  • Free cash flow increased 58% to $126 million.

Gentiva acquired Odyssey HealthCare, Inc., one of the largest providers of hospice care in the United States, on August 17, 2010. The Company's continuing operations for the three and twelve months ended December 31, 2010 included Odyssey's financial results since the acquisition date.

During the fourth quarter of 2010, the Company changed to a calendar year reporting basis, resulting in the quarter and year-end closing on December 31st rather than January 2nd under the previous fifty two week calendar. As a result of this change and the extra week in 2009, the fourth quarter of 2010 had nine less days than the comparable period in 2009.

Fourth quarter 2010 highlights include:

  • Total net revenues of $465.0 million, an increase of 50% compared to $310.0 million for the quarter ended January 3, 2010. Net revenues for the 2010 fourth quarter included home health episodic revenues of $224.6 million, down 5% from $235.6 million in the comparable 2009 period. Excluding the fourth quarter revenue reductions associated with the 2011 Medicare rate change and the year-over-year effect of having nine less days in the fourth quarter of 2010, home health episodic revenues would have grown by 6%. Hospice revenues were $195.2 million in the fourth quarter of 2010, compared to $19.8 million in the 2009 fourth quarter. Hospice revenues in the 2010 fourth quarter reflected 6% revenue growth from Gentiva's existing hospice business as well as $174.3 million in revenues from the Odyssey acquisition. Hospice represented 42% of total net revenues in the fourth quarter of 2010, compared to 6% in the comparable quarter of 2009.

  • Income from continuing operations attributable to Gentiva's shareholders of $18.5 million, or $0.60 per diluted share, which included pre-tax restructuring, acquisition and integration costs of $5.3 million or $0.10 per diluted share. In the fourth quarter of 2009, income from continuing operations attributable to Gentiva's shareholders was $19.0 million or $0.63 per diluted share.

  • Adjusted income from continuing operations attributable to Gentiva's shareholders of $21.5 million, up 15% compared with the prior year period. On a diluted per share basis, adjusted income from continuing operations attributable to Gentiva's shareholders was $0.70 in the 2010 fourth quarter compared with $0.63 in the corresponding period of 2009. Adjusted income from continuing operations excluded the pre-tax restructuring, acquisition and integration costs described above.

  • Adjusted earnings before interest, taxes, depreciation and amortization attributable to continuing operations (Adjusted EBITDA) increased 91% to $64.9 million in the fourth quarter of 2010 as compared to $34.0 million in the fourth quarter of 2009. Adjusted EBITDA as a percentage of net revenues improved to 14% in the fourth quarter of 2010 versus 11% in the prior-year period. Adjusted EBITDA excluded charges relating to restructuring, acquisition and integration activities.

"2010 was a milestone year for us as we significantly expanded our hospice business mix through the Odyssey acquisition, while delivering strong operating results and continuing to deliver a high level of patient care," said Gentiva CEO Tony Strange. "With our increased scale and capabilities, we are well positioned for another strong year in 2011."

Highlights for the twelve months ended December 31, 2010 include:

  • Total net revenues of $1.45 billion, an increase of approximately 26% compared to $1.15 billion for the prior year period. Net revenues included home health episodic revenues of $909.2 million, up 6% from $861.8 million in the comparable 2009 period, and hospice revenues of $351.5 million, up approximately 373% from $74.3 million in the prior year period. Hospice revenues in the 2010 twelve month period reflected 12% revenue growth from Gentiva's existing hospice business as well as $268.5 million in revenues from the Odyssey acquisition.

  • Income from continuing operations attributable to Gentiva's shareholders of $57.8 million, or $1.89 per diluted share, which included net pre-tax charges of $46.0 million or $0.93 per diluted share relating to the impact of settlements of two legal matters and charges associated with restructuring, acquisition and integration activities. Income from continuing operations attributable to Gentiva's shareholders in the comparable 2009 period was $69.8 million or $2.34 per diluted share which included (i) a net gain of $6.0 million or $0.20 per diluted share resulting from various asset sales and (ii) pre-tax restructuring and merger and acquisition costs of $2.4 million or $0.05 per diluted share.

  • Adjusted income from continuing operations attributable to Gentiva's shareholders of $86.1 million, up 32% compared with the prior year period. On a diluted per share basis, adjusted income from continuing operations attributable to Gentiva's shareholders was $2.82 compared with $2.19 in the corresponding period of 2009. Adjusted income from continuing operations excluded the net gain on sales and charges relating to restructuring, acquisition and integration activities.

  • Adjusted earnings before interest, taxes, depreciation and amortization attributable to continuing operations (Adjusted EBITDA) increased approximately 57% to $200.2 million as compared to $127.3 million in the 2009 period. Adjusted EBITDA excluded the aforementioned charges and net gain on sale of assets.

Discontinued operations represent results of Gentiva's respiratory therapy and home medical equipment and infusion therapy businesses which were sold on February 1, 2010. Results of discontinued operations in the fourth quarter of 2010 included a net loss of $2.7 million or $0.09 per diluted share as compared to a net loss of $10.4 million or $0.34 per diluted share in the fourth quarter of 2009. For the full-year 2010, discontinued operations reflected a net loss of $5.6 million or $0.18 per diluted share as compared to a net loss of $10.6 million or $0.36 per diluted share in the corresponding period of 2009.

For the fourth quarter of 2010, the Company reported net income attributable to Gentiva shareholders of $15.8 million or $0.51 per diluted share compared to $8.7 million or $0.29 per diluted share in the fourth quarter of 2009. For the full-year 2010, net income attributable to Gentiva shareholders was $52.2 million or $1.71 per diluted share versus net income of $59.2 million or $1.98 per diluted share for the full year 2009. These results included charges for restructuring, legal settlements and acquisition and integration activities and gains on sales of assets as discussed above as well as the results from discontinued operations.

Cash Flow and Balance Sheet Highlights

For the full-year 2010, net cash provided by operating activities was $142.6 million, compared to $105.1 million in the prior year period for 2009. Free cash flow was $126.4 million for the full-year 2010, up 58% from $80.3 million in 2009. Free cash flow is calculated as net cash provided by operating activities less capital expenditures.

At December 31, 2010, the Company reported cash and cash equivalents of $104.8 million and outstanding debt of $1.052 billion. Gentiva borrowed $1.105 billion in connection with the financing of the Odyssey acquisition. Since closing the Odyssey transaction, the Company has repaid $53.4 million on its revolving credit facility and term loans. Total Company DSO, or days sales outstanding, was 48 days at December 31, 2010 compared to 54 days at January 3, 2010.

Full-Year 2011 Outlook

For 2011, Gentiva expects full-year net revenues to be in the range of $1.90 billion to $1.95 billion and adjusted income from continuing operations attributable to Gentiva shareholders to be in the range of $2.70 to $2.80 on a diluted per share basis. Gentiva's 2011 outlook includes the full-year impact of its Odyssey HealthCare, Inc. acquisition and the final rules regarding Medicare home health reimbursement rates for 2011, which were issued by the Centers for Medicare & Medicaid Services (CMS) on November 2, 2010.

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 from continuing operations 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, the results of discontinued operations 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 fourth quarter and full-year 2010 results during its conference call and live webcast to be held Thursday, February 17, 2011 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 # 40196118. 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 February 17th and will remain available continuously through February 24th. 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: 40196118. 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 is expected to be available on the site within 48 hours after the call.

About Gentiva Health Services, Inc.

Gentiva Health Services, Inc. is the nation's largest provider of home health and hospice services based on revenue, 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. In August 2010, Gentiva acquired Odyssey HealthCare, Inc., one of the leading providers of hospice care in the United States. GTIV-E

Financial and Investor Contact:


Eric Slusser


770-951-6101


eric.slusser@gentiva.com

or

John Mongelli


770-221-6700


john.mongelli@gentiva.com



Media Contact:


Scott Cianciulli


Brainerd Communicators


212-986-6667


cianciulli@braincomm.com



(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)

4th Quarter


Fiscal Year




2010

2009


2010

2009

Statements of Income


(14 weeks)



(53 weeks)



Net revenues

$ 464,966

$ 310,024


$ 1,447,029

$ 1,152,460



Cost of services sold

233,117

149,173


698,936

553,530



Gross profit

231,849

160,851


748,093

598,930



Selling, general and administrative expenses

(179,993)

(131,165)


(616,474)

(490,866)



Gain on sale of assets, net

-

251


103

5,998



Interest income

679

732


2,656

3,037



Interest expense and other

(24,729)

(1,346)


(41,686)

(9,211)



Income from continuing operations before income taxes and equity in net earnings from CareCentrix

27,806

29,323


92,692

107,888



Income tax expense

(8,951)

(10,603)


(35,704)

(39,164)



Equity in net earnings of CareCentrix

17

293


1,298

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