ATLANTA, Nov. 5 /PRNewswire-FirstCall/ -- Mariner Health Care, Inc. (“Mariner”) (BULLETIN BOARD: MHCA) today announced a net loss for the 2004 third quarter of ($5.7) million as compared to net income of $6.1 million for the comparable 2003 period. This loss is primarily attributable to an increase in taxes, merger related charges and discontinued operations. Revenues decreased $26.7 million, or 6.1% to $413.1 million from $439.8 million for the same period last year, primarily due to facilities divested during the three months ended December 31, 2003. For facilities operated at September 30, 2004, revenues increased 5.8% to $413.1 million from $390.5 million for the three months ended September 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 $22.5 million for the third quarter ended September 30, 2004 as compared to $16.8 million for the same period in 2003. For a detailed derivation of Adjusted EBITDA, please refer to the Adjusted EBITDA Reconciliation Schedule attached hereto.
Nine Month Results
Consolidated revenues for the nine months ended September 30, 2004 decreased 4.4% to $1,229.7 million from $1,285.7 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 $3.9 million for the nine months ended September 30, 2004 as compared to net income of $7.2 million for the comparable 2003 period. Adjusted EBITDA was $74.6 million for the nine months ended September 30, 2004, as compared to $49.1 million for the comparable 2003 nine-month period. Our average per diem rate for Medicare Part A for same facility operations increased 8.8%, from $299.42 for the nine months ended September 30, 2003 to $325.76 for the nine months ended September 30, 2004. This resulted in increased revenues of $25.6 million.
Operating Commentary
As a percentage of total revenues, same facility Medicare revenues grew slightly, increasing to 31.3% for the third quarter of 2004 from 30.7% 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 24.6% and 6.7% of total revenues, respectively, for the third quarter of 2004 compared to 24.5% and 6.2% of total revenues, respectively for the same period in 2003.
“In addition to making significant progress with the proposed merger we maintained our operational focus during the quarter,” said C. Christian Winkle, Chief Executive Officer. “For the third quarter of 2004, our Adjusted EBITDA margin improved to 5.4% from 4.3% 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 December of 2004 and is subject to various conditions described in the Merger Agreement and the definitive proxy statement, including but not limited to the approval of the stockholders of the Company. The Company has previously announced that it will hold an annual meeting of its stockholders on Tuesday, November 30, 2004 to vote on the proposed 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 252 skilled nursing facilities and two stand-alone assisted living facilities in 23 states with approximately 31,000 licensed beds, and 12 long-term acute care hospitals with approximately 640 beds. Additional company information is available at http://www.marinerhealthcare.com/ .
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 +1-678-443-6872 MARINER HEALTH CARE, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA AND SUPPLEMENTAL FINANCIAL INFORMATION (in thousands, except percentages and per share amounts) (unaudited) Three Months Ended Nine Months Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2004 2003 2004 2003 Net revenue $413,103 $439,789 $1,229,712 $1,285,656 Costs and expenses Operating expenses Wage and related costs 237,442 263,511 701,098 767,897 Supplies 23,179 25,929 69,205 75,733 Insurance 16,768 22,579 49,263 65,253 Provision for bad debt 4,507 4,315 11,341 13,572 Rent expense 8,419 9,014 24,770 26,518 Other 73,808 74,149 218,708 219,567 Total operating expenses 364,123 399,497 1,074,385 1,168,540 General and administrative 27,001 24,473 80,717 70,280 Merger related costs 4,880 - 7,023 - Depreciation and amortization 10,239 9,473 30,430 27,239 Total costs and expenses 406,243 433,443 1,192,555 1,266,059 Operating income 6,860 6,346 37,157 19,597 Other (expenses) income Interest expense (8,220) (8,924) (25,926) (26,713) Interest income 756 710 2,246 2,229 Other 13 (48) (23) (99) (Loss) income from continuing operations before taxes (591) (1,916) 13,454 (4,986) Income tax provision (benefit) 3,415 (747) 5,041 (2,431) (Loss) income from continuing operations (4,006) (1,169) 8,413 (2,555) Discontinued operations Gain (loss) on sale of discontinued operations, net of tax 93 7,200 (758) 10,800 (Loss) income from discontinued operations, net of tax (1,803) 48 (3,791) (1,092) Net (loss) income $(5,716) $6,079 $3,864 $7,153 (Loss) earnings per share - basic (Loss) income from continuing operations $(0.20) $(0.06) $0.42 $(0.13) Gain (loss) on sale of discontinued operations - 0.36 (0.04) 0.54 Loss from discontinued operations (0.09) - (0.19) (0.05) Net (loss) income per share $(0.29) $0.30 $0.19 $0.36 Weighted average shares outstanding 20,013 20,000 20,011 20,000 (Loss) earnings per share - diluted (Loss) income from continuing operations $(0.20) $(0.06) $0.42 $(0.13) Gain (loss) on sale of discontinued operations - 0.36 (0.04) 0.54 Loss from discontinued operations (0.09) - (0.19) (0.05) Net (loss) income per share $(0.29) $0.30 $0.19 $0.36 Weighted average shares outstanding 20,013 20,000 20,432 20,000 Operating statistics: Sources of revenue: Medicaid 48.2% 48.6% 47.1% 47.8% Medicare 34.0% 33.0% 34.9% 33.8% Private and other 17.8% 18.4% 18.0% 18.4% EBITDA $15,402 $23,019 $63,015 $56,445 Adjusted EBITDA $22,496 $16,808 $74,551 $49,063 MARINER HEALTH CARE, INC. CONDENSED CONSOLIDATED BALANCE SHEET AND OTHER DATA (in thousands, except other data) September 30, December 31, 2004 2003 (unaudited) ASSETS Current assets Cash and cash equivalents $46,766 $41,934 Receivables, net of allowance for doubtful accounts of $105,939 and $97,448, respectively 213,631 234,098 Prepaid expenses and other current assets 22,748 25,396 Total current assets 283,145 301,428 Property and equipment, net of accumulated depreciation of $89,188 and $59,255, respectively 530,584 544,356 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 16,962 19,300 Other assets 35,720 43,082 Total assets $1,065,979 $1,107,734 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $17,183 $9,663 Accounts payable 40,699 69,914 Accrued compensation and benefits 69,753 69,330 Accrued insurance obligations 84,544 54,315 Other current liabilities 56,399 42,202 Total current liabilities 268,578 245,424 Long-term debt, net of current maturities 366,508 379,973 Long-term insurance reserves 144,202 191,124 Other liabilities 23,251 31,741 Minority interest 3,342 3,319 Total liabilities 805,881 851,581 Stockholders’ equity 260,098 256,153 Total liabilities and stockholders’ equity $1,065,979 $1,107,734 Other data (skilled nursing facilities and assisted living facilities): Number of facilities (end of period): Owned 178 184 Leased 75 76 Managed 1 4 254 264 Number of beds (end of period): Owned 21,888 22,262 Leased 8,610 8,686 Managed 116 541 30,614 31,489 MARINER HEALTH CARE, INC. SUPPLEMENTAL FINANCIAL INFORMATION (unaudited, in thousands) ADJUSTED EBITDA RECONCILIATION SCHEDULE Three Months Ended Nine Months Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2004 2003 2004 2003 Net (loss) income $(5,716) $6,079 $3,864 $7,153 Add back: Provision (benefit) for income taxes 3,415 (747) 5,041 (2,431) Interest expense 8,220 8,924 25,926 26,713 Interest income (756) (710) (2,246) (2,229) Depreciation and amortization 10,239 9,473 30,430 27,239 EBITDA 15,402 23,019 63,015 56,445 Adjustments: (Gain) loss on sale of discontinued operations, net of tax (93) (7,200) 758 (10,800) Loss (income) from discontinued operations, net of tax 1,803 (48) 3,791 1,092 Loss (income) from operations of divested facilities (1) 504 1,037 (36) 2,326 Merger related costs 4,880 - 7,023 - Adjusted EBITDA $22,496 $16,808 $74,551 $49,063 (1) This amount relates to loss from operations on facilities that did not qualify for discontinued operations. EBITDA (which we calculate as net (loss) income before taxes, interest expense, interest income, and depreciation and amortization) and Adjusted EBITDA (which we calculate as EBITDA excluding (gain) loss on sale of discontinued operations, net of tax, loss (income) from discontinued operations, net of tax, loss (income) 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 Nine Months Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2004 2003 2004 2003 NET REVENUE (in thousands): Skilled Nursing Services Medicaid $197,570 $211,161 $574,272 $608,797 Medicare - Part A 101,590 109,580 316,533 330,919 Private & other 81,005 89,174 240,480 258,546 Subtotal 380,165 409,915 1,131,285 1,198,262 LTAC 32,891 29,538 98,251 87,570 Other 47 336 176 (176) Total $413,103 $439,789 $1,229,712 $1,285,656 PATIENT DAYS (in thousands): Skilled Nursing Services Medicaid 1,620 1,805 4,767 5,299 Medicare - Part A 310 363 972 1,107 Private & other 424 503 1,266 1,481 Total 2,354 2,671 7,005 7,887 PER DIEM RATE (including ancillaries): Skilled Nursing Services Medicaid $121.92 $117.00 $120.46 $114.88 Medicare - Part A 327.89 301.53 325.76 298.99 Private & other 191.26 177.29 189.91 174.59 Total (1) $161.51 $153.46 $161.49 $151.93 Occupancy - Skilled Nursing Services 85.0% 86.2% 85.0% 85.8% (1) Weighted average rates. MARINER HEALTH CARE, INC. SUPPLEMENTAL FINANCIAL INFORMATION (SAME FACILITY OPERATIONS - UNAUDITED) Three Months Ended Nine Months Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2004 2003 2004 2003 NET REVENUE (in thousands): Skilled Nursing Services Medicaid $197,570 $186,671 $573,815 $537,800 Medicare - Part A 101,590 95,870 316,534 286,988 Private & other 81,005 78,105 240,182 226,312 Subtotal 380,165 360,646 1,130,531 1,051,100 LTAC 32,891 29,538 98,251 87,570 Other 47 336 176 (176) Total $413,103 $390,520 $1,228,958 $1,138,494 PATIENT DAYS (in thousands): Skilled Nursing Services Medicaid 1,620 1,631 4,767 4,798 Medicare - Part A 310 317 972 958 Private & other 424 446 1,266 1,320 Total 2,354 2,394 7,005 7,076 PER DIEM RATE (including ancillaries): Skilled Nursing Services Medicaid $121.92 $114.42 $120.36 $112.09 Medicare - Part A 327.89 302.01 325.76 299.42 Private & other 191.26 175.15 189.74 171.42 Total (1) $161.51 $150.59 $161.39 $148.53 Occupancy - Skilled Nursing Services 85.4% 86.1% 85.2% 85.7% (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/
