ATLANTA, Feb. 18 /PRNewswire-FirstCall/ -- Gentiva Health Services, Inc. , a leading provider of home health and hospice services, today reported fourth quarter and full year fiscal 2009 results.
Highlights for the three and twelve months ended January 3, 2010 are presented as results from continuing operations. This presentation reflects the sale of Gentiva's respiratory therapy and home medical equipment and infusion therapy businesses in February 2010, which are reported as discontinued operations for all periods presented in this press release.
Fourth quarter 2009 highlights, which reflect 14 weeks of activity compared to 13 weeks in 2008, include:
"Gentiva finished 2009 with strong fourth quarter results, and we have set the stage for solid growth in 2010 as well," said Gentiva CEO Tony Strange. "We have done that by executing on core strategic initiatives and narrowing our focus to our home health and hospice operations. We enter 2010 with a business that is performing well and a strong balance sheet that gives us the financial flexibility to invest both internally and externally in initiatives that will further solidify our industry leadership."
Gentiva reported these highlights from continuing operations for the twelve months ended January 3, 2010, reflecting 53-weeks of activity in 2009 compared to 52-weeks in 2008:
For the fourth quarter of 2009, the Company reported net income of $8.7 million or $0.29 per diluted share compared to $12.8 million or $0.43 per diluted share in the fourth quarter of 2008. For the full year, net income was $59.2 million or $1.98 per diluted share in 2009 compared to $153.5 million or $5.21 per diluted share in 2008. These results included non-recurring transaction gains and special charges as discussed above as well as the results from discontinued operations.
At January 3, 2010, the Company reported cash and cash equivalents of $152.4 million and outstanding debt under its credit agreement of $237.0 million.
Results from Discontinued Operations
Results of discontinued operations in 2009 included net revenues of $55.3 million, adjusted EBITDA, excluding asset impairment charges, of $4.4 million and a net loss of $10.6 million or $0.36 per diluted share. The net loss from discontinued operations consisted of an operating loss of $1.0 million or $0.04 per diluted share and a fourth quarter asset impairment charge of $9.6 million or $0.32 per diluted share. For the full year 2008, results of discontinued operations included net revenues of $52.3 million, EBITDA of $8.9 million and net income of $2.0 million or $0.06 per diluted share.
Full-Year 2010 Outlook
Gentiva announced its financial outlook for fiscal 2010. The Company expects net revenues will range between $1.23 billion to $1.26 billion and adjusted net income on a diluted earnings per share basis will range between $2.57 and $2.67. The 2010 estimates exclude the results from the divested businesses and corresponding charges, any future acquisitions and special items.
Gentiva's outlook is consistent with the past several years of strong episodic revenue growth in the Home Health business. Revenue growth in 2010 is expected to be driven primarily by organic volume growth and expansion of the Company's innovative specialty programs. Gentiva's 2010 revenue guidance incorporates the policy and payment updates for Medicare Home Health announced by the Centers for Medicare & Medicaid Services (CMS) on October 30, 2009. These updates to 2010 reimbursement rates include, among other items, a 2.0% market basket update, a 2.5% increase in the Medicare home health base rate resulting from the lowering of total outlier payment targets and a "case mix creep" reduction of 2.75%. Any changes to these published rates resulting from a healthcare reform bill currently being discussed in Washington would likely impact Gentiva's 2010 outlook.
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 measures to the most directly comparable GAAP measures.
Conference Call and Web Cast Details
The Company will comment further on its fourth quarter and fiscal 2009 results during its conference call and live web cast to be held Thursday, February 18, 2010 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 # 53810847. The web cast is an audio-only, one-way event. Web cast listeners who wish to ask questions must participate in the conference call. Log onto http://investors.gentiva.com/events.cfm to hear the web cast. A replay of the call will be available on February 18, beginning at approximately 1 p.m. ET, and will remain available continuously through February 25. 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: 53810847. Visit http://investors.gentiva.com/events.cfm to access the web cast 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 a leading provider of home health and hospice services, 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. For more information, visit Gentiva's web site, http://www.gentiva.com, and its investor relations section at http://investors.gentiva.com. GTIV-E
Notes:
1) Basis of Presentation and Comparability between Reporting Periods - The presentation format in the accompanying financial statements and supplemental information has changed as compared to prior earnings releases. The principal changes involve (A) the classification of the results of the respiratory therapy and home medical equipment ("HME") and infusion therapy ("IV") businesses as discontinued operations as more fully described in Note 4 and (B) the composition of segment information and the classification of corporate administrative expenses as more fully described in Note 5. Previously reported quarterly and full year results have been restated to conform to the current period's presentation format.
In addition, there are various items that affect the comparability of reported results between the 2008 and 2009 periods. These items include the following:
Furthermore, the 2008 fourth quarter and fiscal year reporting periods include the impact of the reclassifications to reduce Hospice (i) net revenues and (ii) cost of services sold by approximately $2.2 million and $8.6 million, respectively, relating to the reimbursement of nursing home room and board charges for hospice patients. This reclassification conforms to the current year presentation.
2) The Company's senior management evaluates performance and allocates resources based on operating contributions of the operating segments, which exclude corporate administrative expenses, depreciation, amortization, and interest expense (net), but include revenues and all other costs directly attributable to the specific segment.
3) EBITDA, a non-GAAP financial measure, is defined as income before interest expense (net of interest income), income taxes, depreciation and amortization. Management uses EBITDA to evaluate overall performance and compare current operating results with other companies in the healthcare industry. EBITDA should not be considered in isolation or as a substitute for net income, operating income or cash flow statement data determined in accordance with accounting principles generally accepted in the United States. Because EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States and is susceptible to varying calculations, it may not be comparable to similarly titled measures in other companies. EBITDA presented in the Supplemental Information relates to the Company's continuing operations.
4) In February 2010, the Company consummated the sale of its HME and IV businesses to a subsidiary of Lincare Holdings, Inc. . The financial results of these two operating segments are reported as discontinued operations in the accompanying condensed consolidated financial statements. HME and IV net revenues and operating results for the periods presented were as follows (dollars in thousands):
Capital expenditures related to discontinued operations amounted to $5.8 million and $5.1 million for fiscal years 2009 and 2008, respectively. Depreciation and amortization expense relating to discontinued operations amounted to $1.8 million and $5.9 million for the fourth quarter and fiscal year 2009, respectively, and $1.4 million and $5.7 million for the fourth quarter and fiscal year 2008, respectively.
For the fourth quarter and fiscal year of 2009, loss before income taxes included an asset impairment charge of $9.6 million relating to the write-down of goodwill associated with these businesses. There was no income tax benefit recorded in connection with the goodwill write-down.
The condensed balance sheet as of January 3, 2010 reflects the classification of certain assets of these businesses as held for sale and presents the debt repayment required for lenders approval of the transaction as a current liability.
The Company expects to record additional losses of between $2 million and $3 million as discontinued operations in 2010 in connection with various lease costs and severance payments resulting from the sale of the HME and IV businesses.
5) The Company adopted changes to its presentation of segment information in the fourth quarter of 2009. The changes involve (i) the classification of HME and IV operating segment results as discontinued operations, (ii) the reclassification of results of the Company's consulting business from All Other to the Home Health segment and (iii) the classification of certain administrative support functions that had previously been allocated among the Company's operating segments to corporate administrative expenses. As a result, the Company's segment information now reflects two reportable segments: Home Health and Hospice. Prior quarterly and full year information has been restated to conform to the new presentation. Trend information for the reportable segments and corporate administrative expenses is presented below (dollars in thousands):
6) Operating contribution and EBITDA for the fiscal year of 2009 included special charges of $2.4 million. For the fourth quarter and fiscal year of 2008, operating contribution and EBITDA included special charges of $0.6 million and $2.7 million, respectively. The special charges, which included restructuring and integration costs and costs and professional fees associated with merger and acquisition activities, were reflected as follows for segment reporting (dollars in millions):
7) Fiscal 2008 operating contribution for CareCentrix, in which the Company sold a majority ownership interest on September 25, 2008, was comprised of the following (dollars in thousands):
In addition, corporate administrative expenses for the year 2008 included $5.7 million associated with support services for the CareCentrix business.
8) Interest expense, net for fiscal year 2009 included realized losses on auction rate securities of approximately $1.0 million.
9) The Company's effective tax rate relating to its continuing operations was 36.2% and 36.3% for the fourth quarter and fiscal year 2009, respectively, and 42.0% and 15.7% for the fourth quarter and fiscal year 2008, respectively.
During fiscal year 2008, the Company recorded a pre-tax gain, net of transaction costs, of $107.9 million and an income tax benefit of approximately $1.6 million relating to the sale of a majority interest in its CareCentrix unit. The CareCentrix transaction generated a capital loss carryforward for federal tax purposes. During fiscal year 2009, the Company recorded a pre-tax gain, net of transaction costs, of $6.0 million relating primarily to the sale of several branch offices that specialized in pediatric home health care services. There was no income tax expense relating to the gain on sale of assets in 2009 due to the utilization of a capital loss carryforward. Excluding the impact of the non-recurring gains, the Company's effective tax rate relating to its continuing operations would have been 38.4% for fiscal year 2009 and 41.6% for fiscal year 2008.
Forward-Looking Statement
Certain statements contained in this news release, including, without limitation, statements containing the words "believes," "anticipates," "intends," "expects," "assumes," "trends" and similar expressions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon the Company's current plans, expectations and projections about future events. However, such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, among others, the following: economic and business conditions, including the ability to access capital markets; demographic changes; changes in, or failure to comply with, existing governmental regulations; legislative proposals for healthcare reform; changes in Medicare and Medicaid reimbursement levels; effects of competition in the markets in which the Company operates; liability and other claims asserted against the Company; ability to attract and retain qualified personnel; availability and terms of capital; loss of significant contracts or reduction in revenues associated with major payer sources; ability of customers to pay for services; business disruption due to natural disasters or terrorist acts; ability to successfully integrate the operations of acquisitions the Company may make and achieve expected synergies and operational efficiencies within expected time-frames; effect on liquidity of the Company's debt service requirements; and changes in estimates and judgments associated with critical accounting policies and estimates. For a detailed discussion of certain of these and other factors that could cause actual results to differ from those contained in this news release, please refer to the Company's various filings with the Securities and Exchange Commission (SEC), including the "Risk Factors" section contained in the Company's annual report on Form 10-K for the year ended December 28, 2008.
CONTACT: Financial and Investor Contact: John R. Potapchuk,
+1-631-501-7035, john.potapchuk@gentiva.com, or Brandon Ballew,
+1-770-221-6700, brandon.ballew@gentiva.com, Media Contact: Scott
Cianciulli, Brainerd Communicators, +1-212-986-6667,
cianciulli@braincomm.com
