ATLANTA, Aug. 9 /PRNewswire-FirstCall/ -- Mariner Health Care, Inc. (“Mariner”) (BULLETIN BOARD: MHCA) today announced net income for the 2004 second quarter of $3.4 million as compared to a net loss of ($1.7) million for the comparable 2003 period. Revenues decreased $14.8 million, or 3.5% to $411.8 million from $426.6 million for the same period last year, primarily due to facilities divested during the three months ended December 31, 2003. For facilities operated at June 30, 2004, revenues increased 9.4% to $411.6 million from $376.2 million for the three months ended June 30, 2003. Mariner achieved a significant improvement in Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and certain divestiture and merger related items) to $27.1 million for the second quarter ended June 30, 2004 as compared to $14.7 million for the same period in 2003. For a detailed derivation of Adjusted EBITDA, please refer to the Adjusted EBITDA Reconciliation Schedule attached hereto.
Six Month Results
Consolidated revenues for the six months ended June 30, 2004 decreased 3.5% to $817.9 million from $847.1 million for the comparable 2003 period. The decrease in revenues is primarily related to the divestiture of facilities during the fourth quarter of 2003. Mariner recorded net income of $9.6 million for the six months ended June 30, 2004 as compared to net income of $1.1 million for the comparable 2003 period. Adjusted EBITDA was $52.8 million for the six months ended June 30, 2004, as compared to $32.5 million for the comparable 2003 six-month period. Our average per diem rate for Medicare Part A for same facility operations increased 8.9%, from $298.13 in the six months ended June 30, 2003 to $324.77 for the six months ended June 30, 2004. This resulted in increased revenues of $17.6 million.
Operating Commentary
As a percentage of total revenues, same facility Medicare revenues grew slightly, increasing to 32.3% for the second quarter of 2004 from 32.1% for the same period in 2003. Same facility Medicare revenues associated with Mariner’s skilled nursing and long-term acute care hospital segments accounted for 25.7% and 6.5% of total revenues, respectively, for the second quarter of 2004 compared to 25.6% and 6.4% of total revenues, respectively for the second quarter of 2003.
“Our operational focus continued to yield results during the quarter,” said C. Christian Winkle, Chief Executive Officer. “For the second quarter of 2004, our Adjusted EBITDA margin improved to 6.6% from 3.4% from the same period last year. Furthermore, profitability of both our skilled nursing facility and long-term acute care hospital groups continued to show improvement during the quarter. These improvements reflect the continued success of our operational strategies.”
Merger Agreement
On June 29, 2004, the Company entered into a merger agreement (the “Merger Agreement”) with National Senior Care, Inc. (“NSC”) and NCARE Acquisition Corp. (“NCARE”), a wholly-owned subsidiary of NSC established for the purpose of acquiring the Company. Pursuant to the Merger Agreement, NCARE will acquire the issued and outstanding shares of common stock of the Company for $30.00 per share in cash. The merger is expected to close in the fourth quarter of 2004 and is subject to various conditions contained in the Merger Agreement, including but not limited to the approval of the stockholders of the Company, receipt of financing by NSC and other regulatory, governmental and licensing approvals. Once the Company receives a commitment letter from NSC and NCARE containing customary terms in connection with the financing necessary to consummate the merger, the Company expects to seek stockholder approval of the merger.
About Mariner Health Care
Mariner, headquartered in Atlanta, Georgia, is one of the largest long- term care operators in the United States. Mariner, through its subsidiaries and affiliates, operates 256 skilled nursing and assisted living facilities as well as eleven long-term acute care hospitals representing 31,399 beds across the country. Additional Company information is available at http://www.marinerhealthcare.com/ .
Important Legal Information
Mariner intends to file a proxy statement regarding the proposed acquisition of Mariner by National Senior Care with the Securities and Exchange Commission (the “SEC”). Before making any voting or investment decisions, investors and shareholders of Mariner are urged to read the proxy statement regarding the acquisition carefully in its entirety when it becomes available, because it will contain important information about the proposed transaction. Once a financing commitment letter has been issued containing customary terms, a definitive proxy statement will be sent to the shareholders of Mariner seeking their approval of the transaction. Investors and security holders may obtain a free copy of the definitive proxy statement, if it becomes available, and other documents filed with, or furnished to, the SEC by Mariner at the SEC’s web site at http://www.sec.gov/ . The definitive proxy statement and other documents may also be obtained for free from Mariner by directing an email request to proxy@marinerhealthcare.com, or a written request to Mariner Health Care, Inc., One Ravinia Drive, Suite 1500, Atlanta, Georgia 30346; Attn: Boyd P. Gentry, SVP-Treasurer.
Certain Information Concerning Participants: Mariner, its directors, executive officers and certain members of management and employees may be soliciting proxies from Mariner’s shareholders in favor of the approval of the transaction. Information regarding such officers and directors is included in Mariner’s Annual Report of Form 10-K for the year ended December 31, 2003 filed with the SEC on March 15, 2004.
Forward Looking Statements
Certain statements in this press release may constitute “forward-looking” statements as defined in Section 27A of the Securities Act of 1933 (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), or in releases made by the Securities and Exchange Commission, all as may be amended from time to time. Statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of the PSLRA. Any such forward-looking statements reflect our beliefs and assumptions and are based on information currently available to us. Forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. Mariner cautions investors that any forward-looking statements we make are not guarantees or indicative of future performance. For additional information regarding factors that may cause our results of operations to differ materially from those presented herein, please see “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2003.
You can identify forward-looking statements as those that are not historical in nature, particularly those that use terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “contemplate,” “estimate,” “believe,” “plan,” “project,” “predict,” “potential” or “continue,” or the negative of these, or similar terms.
Any subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth or referred to above, as well as the risk factors contained in our Annual Report for the year ended December 31, 2003 on Form 10-K. Except as required by law, we disclaim any obligation to update such statements or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
Contact: Mariner Health Care, Inc. Boyd Gentry Senior Vice President and Treasurer 678-443-6872 MARINER HEALTH CARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA AND SUPPLEMENTAL FINANCIAL INFORMATION (in thousands, except percentages and per share amounts) (unaudited) Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2004 2003 2004 2003 Statements of Operations Data: Net revenue $411,772 $426,607 $817,863 $847,114 Costs and expenses Operating expenses Wage and related costs 231,162 252,960 464,251 505,912 Supplies 23,012 25,274 46,134 49,908 Insurance 16,772 22,350 32,609 42,801 Provision for bad debt 3,822 4,890 6,833 9,257 Rent expense 8,092 8,765 16,351 17,504 Other 74,462 74,574 145,153 145,659 Total operating expenses 357,322 388,813 711,331 771,041 General and administrative 27,344 22,074 53,717 44,807 Merger related costs 2,142 - 2,142 - Depreciation and amortization 10,618 9,296 20,275 17,846 Total costs and expenses 397,426 420,183 787,465 833,694 Operating income 14,346 6,424 30,398 13,420 Other income (expenses) Interest expense (8,489) (9,576) (17,706) (17,789) Interest income 739 692 1,489 1,520 Other (31) (1) (36) (51) Income (loss) from continuing operations before taxes 6,565 (2,461) 14,145 (2,900) Income tax provision (benefit) 732 (1,127) 1,627 (1,684) Income (loss) from continuing operations 5,833 (1,334) 12,518 (1,216) Discontinued operations (Loss) gain on sale of discontinued operations, net of tax (709) - (851) 3,600 Loss from discontinued operations, net of tax (1,772) (360) (2,088) (1,310) Net income (loss) $3,352 $(1,694) $9,579 $1,074 Earnings (loss) per share - basic Income (loss) from continuing operations $0.29 $(0.07) $0.63 $(0.06) (Loss) gain on sale of discontinued operations (0.03) - (0.04) 0.18 Loss from discontinued operations (0.09) (0.01) (0.11) (0.07) Net income (loss) per share $0.17 $(0.08) $0.48 $0.05 Weighted average shares outstanding 20,012 20,000 20,010 20,000 Earnings (loss) per share - diluted Income (loss) from continuing operations $0.29 $(0.07) $0.62 $(0.06) (Loss) gain on sale of discontinued operations (0.03) - (0.04) 0.18 Loss from discontinued operations (0.09) (0.01) (0.11) (0.07) Net income (loss) per share $0.17 $(0.08) $0.47 $0.05 Weighted average shares outstanding 20,247 20,000 20,328 20,000 Operating statistics: Sources of revenue: Medicaid 47.4% 47.4% 46.6% 47.4% Medicare 34.7% 34.3% 35.2% 34.2% Private and other 17.9% 18.3% 18.2% 18.4% EBITDA $22,452 $15,359 $47,698 $33,505 Adjusted EBITDA $27,075 $14,669 $52,779 $32,511 MARINER HEALTH CARE, INC. CONDENSED CONSOLIDATED BALANCE SHEET AND OTHER DATA (in thousands, except other data) June 30, December 31, 2004 2003 (unaudited) ASSETS Current assets Cash and cash equivalents $26,815 $41,934 Receivables, net of allowance for doubtful accounts of $102,213 and $97,448, respectively 239,912 234,098 Prepaid expenses and other current assets 21,887 25,396 Total current assets 288,614 301,428 Property and equipment, net of accumulated depreciation of $79,194 and $59,255, respectively 535,946 544,356 Reorganization value in excess of amounts allocable to identifiable assets 192,771 192,771 Goodwill, net of accumulated amortization of $970 6,797 6,797 Restricted investments 17,397 19,300 Other assets 35,804 43,082 Total assets $1,077,329 $1,107,734 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $17,381 $9,663 Accounts payable 45,961 69,914 Accrued compensation and benefits 66,945 69,330 Accrued insurance obligations 72,312 54,315 Other current liabilities 53,147 42,202 Total current liabilities 255,746 245,424 Long-term debt, net of current maturities 367,107 379,973 Long-term insurance reserves 160,218 191,124 Other liabilities 25,253 31,741 Minority interest 3,355 3,319 Total liabilities 811,679 851,581 Total stockholders’ equity 265,650 256,153 Total liabilities and stockholders’ equity $1,077,329 $1,107,734 Other data (skilled nursing facilities and assisted living facilities): Number of facilities (end of period): Owned 180 184 Leased 75 76 Managed 1 4 256 264 Number of beds (end of period): Owned 22,078 22,262 Leased 8,592 8,686 Managed 116 541 30,786 31,489 MARINER HEALTH CARE, INC. SUPPLEMENTAL FINANCIAL INFORMATION (unaudited, in thousands) ADJUSTED EBITDA RECONCILIATION SCHEDULE Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2004 2003 2004 2003 Net income $3,352 $(1,694) $9,579 $1,074 Add back: Provision (benefit) for income taxes 732 (1,127) 1,627 (1,684) Interest expense 8,489 9,576 17,706 17,789 Interest income (739) (692) (1,489) (1,520) Depreciation and amortization 10,618 9,296 20,275 17,846 EBITDA 22,452 15,359 47,698 33,505 Adjustments: Loss (gain) on sale of discontinued operations, net of tax 709 - 851 (3,600) Loss from discontinued operations, net of tax 1,772 360 2,088 1,310 (Income) loss from operations of divested facilities(1) - (1,050) - 1,296 Merger related costs 2,142 - 2,142 - Adjusted EBITDA $27,075 $14,669 $52,779 $32,511 (1) This amount relates to loss from operations on facilities that did not qualify for discontinued operations.
EBITDA (which we calculate as net income before taxes, interest expense, interest income, and depreciation and amortization) and Adjusted EBITDA (which we calculate as EBITDA excluding (loss) gain on sale of discontinued operations, net of tax, loss from discontinued operations, net of tax, (income) loss from operations of divested facilities, and merger related costs) are non-GAAP financial measures. For purposes of Regulation G (“Regulation G”) promulgated by the Securities and Exchange Commission, a non- GAAP financial measure is a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable financial measure calculated and presented in accordance with GAAP in the statement of operations, statement of stockholders’ equity, balance sheet or statement of cash flows (or equivalent statements) of the registrant; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable financial measure so calculated and presented. Pursuant to the requirements of Regulation G, we have provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measure, which we believe is net (loss) income. Management believes that the presentation of EBITDA and Adjusted EBITDA provide useful information to investors regarding our results of operations because (i) they are useful for trending, analyzing and benchmarking the performance and value of our business, and (ii) Adjusted EBITDA is the means used to calculate compliance with certain ratios appearing in our senior credit facility and the indenture governing our outstanding senior subordinated notes. EBITDA and Adjusted EBITDA should be considered in addition to, not as substitutes for, or superior to, GAAP financial measures or as indicators of operating performance.
MARINER HEALTH CARE, INC. SUPPLEMENTAL FINANCIAL INFORMATION (AS REPORTED - UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2004 2003 2004 2003 NET REVENUE (in thousands): Skilled Nursing Services Medicaid $191,739 $200,819 $377,014 $397,969 Medicare - Part A 105,930 111,413 214,943 221,339 Private & other 81,860 86,540 160,275 170,144 Subtotal 379,529 398,772 752,232 789,452 LTAC 32,115 28,709 65,360 58,032 Other 128 (874) 271 (370) Total $411,772 $426,607 $817,863 $847,114 PATIENT DAYS (in thousands): Skilled Nursing Services Medicaid 1,581 1,764 3,152 3,500 Medicare - Part A 327 371 662 743 Private & other 431 497 861 996 Total 2,339 2,632 4,675 5,239 PER DIEM RATE (including ancillaries): Skilled Nursing Services Medicaid $121.29 $113.87 $119.61 $113.71 Medicare - Part A 324.34 300.36 324.77 297.75 Private & other 189.83 173.97 186.18 170.85 Total (1) $162.28 $151.52 $160.91 $150.68 Occupancy - Skilled Nursing Services 85.0% 85.5% 85.0% 85.5% (1) Weighted average rates. MARINER HEALTH CARE, INC. SUPPLEMENTAL FINANCIAL INFORMATION (SAME FACILITY OPERATIONS - UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2004 2003 2004 2003 NET REVENUE (in thousands): Skilled Nursing Services Medicaid $191,673 $177,245 $376,558 $351,461 Medicare - Part A 105,931 96,472 214,944 191,119 Private & other 81,730 74,688 160,119 149,122 Subtotal 379,334 348,405 751,621 691,702 LTAC 32,115 28,709 65,360 58,032 Other 128 (874) 271 (370) Total $411,577 $376,240 $817,252 $749,364 PATIENT DAYS (in thousands): Skilled Nursing Services Medicaid 1,581 1,595 3,152 3,172 Medicare - Part A 327 320 662 641 Private & other 431 446 860 892 Total 2,339 2,361 4,674 4,705 PER DIEM RATE (including ancillaries): Skilled Nursing Services Medicaid $121.24 $111.14 $119.46 $110.81 Medicare - Part A 324.34 301.05 324.77 298.13 Private & other 189.53 167.65 186.09 167.13 Total (1) $162.20 $147.58 $160.80 $147.01 Occupancy - Skilled Nursing Services 85.2% 85.4% 85.1% 85.5% (1) Weighted average rates.
Mariner Health Care, Inc.
CONTACT: Boyd Gentry, Senior Vice President and Treasurer of MarinerHealth Care, Inc., +1-678-443-6872
Web site: http://www.marinerhealthcare.com/