PLANO, Texas, Oct. 14 /PRNewswire/ -- The evaluation of the condition of the three facilities in which LifeCare operated its New Orleans long term acute care hospitals is still in process. At this time we know that the Chalmette campus, which contained 37 licensed beds, was substantially damaged as a result of Hurricane Katrina and based upon the information currently available to us we do not believe we will be able to resume operations within the existing building. We are exploring various options to relocate this operation to another site. The other two locations are within hospitals operated by Tenet Healthcare Corp. (“Tenet”). Tenet is still in process of evaluating the condition of these two buildings and has not indicated to us the timing of when we will be allowed to return to our space in their two hospitals. As a result, we do not know at this time when we will be able to resume operations at these two locations.
The three New Orleans hospitals contributed approximately 12.5% of consolidated revenue, 15.5% of adjusted earnings before interest, taxes, depreciation and amortization for the six months ended June 30, 2005 and represented 15% of the Company’s licensed beds. We are hopeful that we will be able to provide an update of the timing of the resumption of our New Orleans operations during our earnings call in November. We are presently in compliance with the financial covenants contained in our senior debt and bond agreements. Furthermore, we have not drawn on the $75 million revolver that was put in place on August 11, 2005.
The Company maintains property and business interruption coverage on all of its hospital operations. We are working with our insurance consultants and insurance coverage providers to assess the amount we will ultimately recover. At this time it is not possible to provide an estimate of what ultimately will be recovered pursuant to our insurance coverage.
As announced on Wednesday, September 28th by the Louisiana Attorney General, his office is conducting an investigation of 13 nursing homes and six hospitals in the New Orleans area relating to patient deaths that occurred at these facilities during and in the aftermath of Hurricane Katrina. One of these facilities is Memorial Medical Center within which LifeCare operated an 82-bed licensed hospital. LifeCare has been fully cooperating with this investigation since its inception and will continue to do so until the investigation is complete. Until the Attorney General completes the investigation, it would not be appropriate for us to comment on matters within the scope of that investigation. We have received no indication of how long the Attorney General’s office will take to complete its investigation.
Management will host a conference call in November to discuss our results for the quarter ended September 30, 2005. The date and time of this call will be announced prior to November 1, 2005.
LifeCare Holdings, Inc.
CONTACT: Debt Holders, Jim Shelton of LifeCare Holdings, Inc.,+1-469-241-2113; or Media, Rosemary Plorin, +1-615-297-7766, for LifeCareHoldings, Inc.
