SCOTTSDALE, Ariz., Dec. 13 /PRNewswire-FirstCall/ -- VistaCare, Inc. , a leading provider of hospice services in the United States, today reported results for the fiscal fourth quarter and full year ended September 30, 2005. Net patient revenue for the year was reduced by $11.9 million due to Medicare Cap accruals. The results include several accruals totaling $5.3 million related to the Company's potential Medicare Cap exposure for previous periods created after the Centers for Medicare and Medicaid Services ("CMS") notified providers in late August (Transmittal 663) that it had "incorrectly computed" the 2004 hospice Cap amount, and used a different approach to calculate the FY2005 Cap amount. In the same transmittal, CMS also notified providers that additional instructions regarding fiscal 2004 Cap calculation would be published in a separate transmittal. Although the Company has not received any additional CMS transmittals or instructions, the Company has elected to take the additional accruals for fiscal 2003 and fiscal 2004.
The $11.9 million reduction to net patient revenue for Medicare Cap for the year ended September 30, 2005 includes the following estimated accruals or adjustments:
-- $6.6 million for patient service dates during the 2005 Medicare regulatory year, including pro-ration for estimated services that these 2005 patients may receive from other hospice programs; -- $1.6 million for an adjustment in the current year resulting from the CMS's lower inflation adjustment on the per beneficiary Cap amount for the 2005 Medicare Cap year as a result of CMS incorrectly computing the per beneficiary Cap amount for the 2004 Medicare Cap year; -- $2.7 million for 2004 to reflect CMS's August 26, 2005 transmittal indicating that "the hospice Cap amount for the Cap year ending October 31, 2004, was incorrectly computed"; -- $1.1 million for 2003 based on our assumption the hospice Cap amount for the Cap year ending October 31, 2003, was incorrectly computed in the same manner as the Cap year ending October 31, 2004; -- $1.1 million for re-assessment received from our Fiscal Intermediary ("FI") in April 2005 for the 2002 Medicare Cap year. The FI had previously issued a zero assessment for 2002; and -- ($1.2) million for an adjustment to net patient revenue to reverse estimated Medicare Cap accruals that were greater than actual assessment letters received from our FI in 2005 (for the 2004 Medicare regulatory year).
As a result of these accruals, net patient revenue for the quarter ended September 30, 2005 was $53.9 million; up 11 percent from the year ago period ended September 30, 2004. Net patient revenue for the full fiscal year ended September 30, 2005 was $225.4 million versus $150.4 million for the nine month fiscal year September 30, 2004.
Net loss for the fiscal fourth quarter was $5.1 million, or a loss of $0.31 per diluted share compared with a net loss for the quarter ended September 30, 2004 of $6.2 million or a loss of $0.38 per diluted share. The net loss for fiscal year 2005 was $2.3 million, or $0.14 per diluted share compared with the net loss for the nine month fiscal year September 30, 2004 of $4.2 million, or $0.26 per share.
VistaCare's patient admissions for the fiscal fourth quarter of 2005 were 4,231 up 7% compared with 3,949 for the comparable period of 2004. VistaCare's average daily census (ADC) for the fiscal fourth quarter of 2005 was 5,440, a 2% increase from 5,316 for the three-month period ended September 30, 2004. The ending census on September 30, 2005 was 5,510. Patient discharges for the fiscal fourth quarter were up 11 % to 4,339 compared with 3,919 for the quarter ended September 30, 2004.
"Throughout fiscal 2005 we made significant investments aimed at reducing our exposure to Medicare Cap by increasing our overall patient admissions and our short length of stay patient census and broadening our strategic partnerships to provide opportunities for future growth," commented Richard R. Slager, Chairman and Chief Executive Officer. "As a result of the success of these initiatives, during fiscal 2005 we significantly reduced our operational Medicare Cap exposure. These investments also position the Company for long term growth and included investment in 14 new sites, the start up expenses of five inpatient units and marketing initiatives focused on shorter length of stay patients and hospital referral sources. In addition, we now have four strategic partnerships with leading healthcare service providers, which we believe provide strong potential for future admissions and average daily census growth.
"While these strategies should positively impact our long-term growth, they have increased our expenses, resulting in an 11% year-over-year increase in SG&A," added Mr. Slager. "This increase in investment for our long-term growth has impacted our profitability, but we believe we are on the right course. For example, year over year our admissions have grown and our average length of stay has dropped 18% while our median length of stay has dropped 11%. The 14 programs added during the fiscal year have meant a large increase in those programs with fewer than 60 patients. However, as these programs mature, their census should grow and our margins should improve," Mr. Slager added.
"We are also pleased to report today that by closely working with the Indiana State Department of Health (ISDH) and CMS, we collectively have developed a solution to the decertification of our Indianapolis program, which we reported on October 15," said David W. Elliot, President and Chief Operating Officer. "The solution developed by the three parties allows for continual patient care. VistaCare will operate in Indianapolis by the approved movement of our Bloomington, Indiana provider number to Indianapolis, and Bloomington will operate under the same provider number.
"In Terre Haute, in order to minimize the disruption to our patients and their families, we have continued to serve more than 100 patients despite our inability to seek reimbursement. We have requested from both CMS and ISDH a new provider number and survey of the program. The issues leading to the decertification in Indianapolis were not present in Terre Haute. It is our hope that by continuing to serve more than 100 patients during this period, combined with the strong track record of the Terre Haute program, we will be able to work with ISDH and CMS to receive a prompt and successful response to our request. While the decertification process in Indianapolis lead to operational uncertainty and sharply reduced admissions in both the Indianapolis and Terre Haute site late in the fourth quarter, the solution we are announcing today positions VistaCare to provide continuous service in all sites. We appreciate all the time and effort that CMS and ISDH has devoted to developing a solution that best serves both communities," Mr. Elliot added.
"Of course, the biggest impact to our results is the Cap adjustments. The actions we have announced today to increase accruals, combined with the operational progress we've achieved in reduction Cap exposure during fiscal 2005, lead us to believe that we will continue to reduce Cap exposure in fiscal 2006," Mr. Elliott concluded.
The Company ended the quarter with $53.4 million in cash and short-term investments.
Conference Call
VistaCare will host a conference call and webcast on Tuesday, December 13, 2005 at 8:00 a.m. Eastern Time to discuss VistaCare's fiscal fourth quarter and full year results and recent corporate developments. The dial in number for the conference call is 800-218-0530 for domestic participants and +1-303-262-2140 for international participants.
A taped replay of the conference call will also be available beginning approximately one hour after the call's conclusion. The replay will remain available through Midnight Eastern Time on Tuesday, December 20, 2005 and can be accessed by dialing 800-405-2236 for domestic callers and +1-303-590-3000 for international callers, using pass code 11045824#. To access the live webcast of the call, go to VistaCare's website at www.vistacare.com and click on Investor Relations. An archived webcast will also be available on VistaCare's website.
About VistaCare
VistaCare is a leading provider of hospice services in the United States. Through interdisciplinary teams of physicians, nurses, home healthcare aides, social workers, spiritual and other counselors and volunteers, VistaCare provides care primarily designed to reduce pain and enhance the quality of life of terminally ill patients, most commonly in the patient's home or other residence of choice.
Forward-Looking Statements:
Certain statements contained in this press release and the accompanying tables, including statements with respect to VistaCare's anticipated growth in net patient revenue, organic patient census and diluted earnings per share, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "hope," "anticipate," "plan," "expectations," "forecast," "goal," "targeted" and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. VistaCare does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause VistaCare's actual results to differ from those expressed in such forward- looking statements. These risks and uncertainties arise from, among other things, possible changes in regulations governing the hospice care industry, periodic changes in reimbursement levels and procedures under Medicare and Medicaid programs, difficulties predicting patient length of stay and estimating potential Medicare reimbursement obligations, patient discharge rate, challenges inherent in VistaCare's growth strategy, the current shortage of qualified nurses and other healthcare professionals, VistaCare's dependence on patient referral sources, and other factors detailed under the caption "Factors that May Affect Future Results" or "Risk Factors" in VistaCare's most recent report on form 10-Q or 10-K and its other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved.
Company Contact: Investor Contacts: Media Contact: Rick Slager Doug Sherk/ Steve DiMattia Chief Executive Officer Jennifer Beugelmans EVC Group (480) 648-4545 EVC Group (415) 896-6820 ir@vistacare.com (415) 896-6820 sdimattia@evcgroup.comdsherk@evcgroup.com VISTACARE, INC. CONSOLIDATED BALANCE SHEETS September 30, September 30, 2005 2004 (in thousands, except share information) ASSETS Current assets: Cash and cash equivalents $25,962 $28,687 Short-term investments 27,413 33,165 Patient accounts receivable (net of allowance for denials of $1,594 and $2,905 at September 30, 2005 and 2004, respectively) 20,202 17,495 Patient accounts receivable -- room & board (net of allowance for denials of $1,527 and $2,980 at September 30, 2005 and 2004, respectively) 9,149 8,789 Prepaid expenses 3,811 3,404 Tax receivable 4,329 3,014 Deferred tax assets 8,826 10,676 Total current assets 99,692 105,230 Fixed assets, net 5,757 5,379 Goodwill 24,002 20,564 Other assets 7,310 6,619 Total assets $136,761 $137,792 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $1,445 $1,367 Accrued expenses 45,709 45,117 Current portion of capital lease obligations -- 5 Total current liabilities 47,154 46,489 Deferred tax liability-non-current 2,745 3,776 Stockholders' equity: Class A Common Stock, $0.01 par value; authorized 33,000,000 shares; 16,376,529 and 16,209,282 shares issued and outstanding at September 30, 2005 and 2004, respectively. 164 162 Additional paid-in capital 108,054 107,084 Deferred compensation (555) (1,175) Accumulated deficit (20,801) (18,544) Total stockholders' equity 86,862 87,527 Total liabilities and stockholders' equity $136,761 $137,792 VISTACARE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Nine Months Year Ended Ended Year Ended September 30, September 30, December 31, 2005 2004 2003 (in thousands, except per share information) Net patient revenue $225,432 $150,436 $191,656 Operating expenses: Patient care expenses 147,211 100,096 114,631 Sales, general and administrative expenses (exclusive of stock-based compensation charges reported below) 76,933 53,877 54,455 Depreciation and amortization 4,604 3,005 1,963 Stock-based compensation 304 239 1,329 Total operating expenses 229,052 157,217 172,378 Operating (loss) income (3,620) (6,781) 19,278 Non-operating income (expense): Interest income 1,212 364 391 Interest expense -- (68) (126) Other expense (661) (48) (82) Total non-operating income, net 551 248 183 Net (loss) income before income taxes (3,069) (6,533) 19,461 Income tax (benefit) expense (812) (2,301) 4,256 Net (loss) income $(2,257) $(4,232) $15,205 Net (loss) income per common share: Basic net (loss) income per common share $(0.14) $(0.26) $0.97 Diluted net (loss) income per common share $(0.14) $(0.26) $0.89 Weighted average shares outstanding: Basic 16,316 16,082 15,707 Diluted 16,316 16,082 17,038 VISTACARE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Year Ended Ended Year Ended September 30, September 30, December 31, 2005 2004 2003 (in thousands) Operating activities Net (loss) income $(2,257) $(4,232) $15,205 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Depreciation and amortization 4,604 3,005 1,963 Amortization of deferred compensation related to stock options and grants 304 239 1,329 Deferred income tax expense (benefit) 819 (4,810) (2,090) Loss on disposal of assets 480 -- 23 Tax benefit of stock option exercises 136 2,074 634 Changes in operating assets and liabilities: Patient accounts receivable, net (16,480) 8,023 (7,620) Prepaid expenses and other (1,722) (2,739) (2,674) Accounts payable and accrued expenses 14,094 15,825 5,647 Net cash (used in) provided by operating activities (22) 17,385 12,417 Investing activities Short-term investments purchased (23,740) (141,282) (219,046) Short-term investments sold 29,492 140,982 186,182 Acquisitions (4,868) -- -- Purchases of equipment (2,769) (2,055) (3,004) Internally developed software expenditures (913) (1,051) (1,768) Increase in other assets (1,057) (907) (879) Net cash used in investing activities (3,855) (4,313) (38,515) Financing activities Net payments on debt -- (83) (339) Proceeds from issuance of common stock from exercise of stock options and employee stock purchases 1,152 1,370 2,171 Secondary costs -- -- (510) Net cash provided by financing activities 1,152 1,287 1,322 Net (decrease) increase in cash (2,725) 14,359 (24,776) Cash and cash equivalents, beginning of period 28,687 14,328 39,104 Cash and cash equivalents, end of period $25,962 $28,687 $14,328 Cash and short-term investments end of period $53,375 $61,852 $47,193
VistaCare, Inc.CONTACT: Rick Slager, Chief Executive Officer of VistaCare,+1-480-648-4545, or ir@vistacare.com; or investors, Doug Sherk,dsherk@evcgroup.com, or Jennifer Beugelmans, or media, Steve DiMattia,sdimattia@evcgroup.com, all of EVC Group, +1-415-896-6820, for VistaCare
Web site: http://www.vistacare.com//
