MELVILLE, N.Y., Feb. 14 /PRNewswire-FirstCall/ -- Gentiva Health Services, Inc. (Nasdaq: GTIV), the nation's leading provider of comprehensive home health and related services, today reported the following financial results for the fourth quarter ended December 30, 2007:
-- Net revenues increased 7% to $313.4 million versus the fourth quarter
ended December 31, 2006.
-- Net income rose 60% to $8.8 million, or $0.31 per diluted share, versus
$5.5 million, or $0.20 per diluted share, for the prior year period.
Average diluted shares were 28.8 million versus 28.2 million in the
2006 fourth quarter.
-- Earnings before interest, taxes, depreciation and amortization (EBITDA)
increased 33% to $25.3 million.
-- EBITDA and net income per diluted share, excluding Healthfield-related
restructuring and integration costs in both periods, were $25.6 million
and $0.31 for the fourth quarter of 2007 as compared to $22.3 million
and $0.27 for the 2006 fourth quarter.
-- EBITDA as a percentage of net revenues, excluding Healthfield-related
restructuring and integration costs, was 8.2% in the 2007 fourth
quarter versus 7.6% in the prior year period.
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'Gentiva's performance in the fourth quarter completes another solid year
of progress for the Company,' said Gentiva Chairman and CEO
Malone noted these performance highlights for the 2007 fourth quarter:
-- In the Home Health segment, Medicare revenues were up 12% versus the
prior year period, driven by solid performances in both the expanding
specialty programs and in traditional home health services. Overall
segment revenues increased 5%, with the Medicare revenue gain offset
somewhat by a decline in non-Medicare business as Gentiva pursued its
ongoing strategy of exiting or renegotiating relationships that do not
meet certain profitability standards. Operating contribution for the
segment rose 18%. Operating contribution margin was 14.5% versus 12.9%
reported in the fourth quarter of 2006.
-- CareCentrix revenues and operating contribution each rose about 12%
versus the prior year period. Operating contribution margin was 9.4%,
nearly even with that of the fourth quarter of 2006. CareCentrix
continued to benefit from its servicing of increased managed care
membership enrollments among its customers, as well as implementation
of an exclusive contract in Georgia.
-- Gentiva made voluntary loan repayments of $6 million in the fourth
quarter that reduced long-term debt to $310 million at December 30,
2007. Together with the strong operating earnings, this has resulted
in a lower leverage ratio and has triggered a 25 basis point decrease
in the Company's term loan interest rate, effective today.
Malone added that fourth quarter revenues in the Other Related Services segment were about even with the prior year period, while operating contribution declined as Gentiva continued to focus on the segment's future growth prospects.
Gentiva reported the following results for the fiscal years ended December 30, 2007 and December 31, 2006 , including the results of The Healthfield Group, Inc. since its acquisition on February 28, 2006:
-- Net revenues increased 11% to $1.23 billion in fiscal 2007 versus the
prior year period.
-- Net income rose 58% to $32.8 million, or $1.15 per diluted share, in
fiscal 2007 versus $20.8 million, or $0.76 per diluted share, for the
prior year period.
-- EBITDA for 2007 increased 44% to $99.7 million versus $69.3 million in
2006. EBITDA for each period included net charges for special items
and restructuring and integration costs of $2.4 million and $5.8
million, respectively.
-- EBITDA and net income per diluted share for 2007, excluding special
items and restructuring and integration costs, were $102.1 million and
$1.20 versus $75.1 million and $0.89 for 2006.
-- Operating cash flow increased 22% to $62.7 million for fiscal 2007 as
compared to $51.4 million for the prior year.
2008 Outlook
Gentiva also announced that it has raised its 2008 financial outlook, which was previewed in the Company's third quarter earnings news release last November. The new outlook reflects the following key metrics:
-- Net revenues in a range between $1.28 billion and $1.32 billion (as
compared to the preview of $1.25 billion to $1.29 billion).
-- EBITDA in a range between $112 million and $117 million.
-- Diluted earnings per share in a range between $1.32 and $1.40 (as
compared to the preview of $1.25 to $1.35).
The 2008 outlook incorporates the following assumptions:
-- No changes during calendar 2008 to either Medicare home health
Prospective Payment System refinements or the Medicare home health
market basket increase of 3%, both of which became effective on January
1, 2008.
-- Inclusion of partial-year results of Home Health Care Affiliates, Inc.,
a recently-announced acquisition in Mississippi, which is expected to
close later in the first quarter.
-- Exclusion of special items, restructuring or non-recurring charges and
other future acquisitions.
'We believe 2008 will be a year of growth and the extension of our industry leadership,' Malone said. 'We saw examples last week with the announcement of our planned home health acquisition in Mississippi and CareCentrix' signing of a contract with CIGNA HealthCare, which extends their relationship through January 2011 .
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 2007 results during its conference call and live web cast to be held Thursday, February 14, 2008 , 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 #31906724. 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 ontohttp://investors.gentiva.com/events.cfm to hear the web cast. 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 36 hours after the call.
About Gentiva Health Services, Inc.
Gentiva Health Services, Inc. is the nation's leading provider of comprehensive home health and related services. The Company serves patients across the United States , through its direct service delivery units or through CareCentrix(R), which manages home health services for major managed care organizations. 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; respiratory therapy and home medical equipment; infusion therapy services; and other therapies and services. Gentiva's revenues are generated from federal and state government programs, commercial insurance and individual consumers. For more information, visit Gentiva's web site, http://www.gentiva.com, and its investor relations section at http://investors.gentiva.com. GTIV-E
(tables and notes follow)
(in 000's, except per share data)
4th Quarter Fiscal Year
2007 2006 2007 2006
Statements of Income
Net revenues $313,396 $293,118 $1,229,297 $1,106,588
Cost of services and goods
sold 180,154 169,510 705,592 644,274
Gross profit 133,242 123,608 523,705 462,314
Selling, general and
administrative expenses 113,247 108,471 444,042 408,271
Operating income 19,995 15,137 79,663 54,043
Interest expense (6,636) (7,303) (27,285) (24,685)
Interest income 768 765 3,204 3,284
Income before income taxes 14,127 8,599 55,582 32,642
Income tax expense 5,281 3,087 22,754 11,866
Net income $8,846 $5,512 $32,828 $20,776
Earnings per Share
Net income:
Basic $0.32 $0.20 $1.18 $0.78
Diluted $0.31 $0.20 $1.15 $0.76
Average shares outstanding:
Basic 28,006 27,301 27,798 26,480
Diluted 28,781 28,167 28,599 27,317
Condensed Balance Sheets
ASSETS
Dec 30, 2007 Dec 31, 2006
Cash, cash equivalents and
restricted cash (A) $36,181 $32,910
Short-term investments (B) 31,250 24,325
Accounts receivable, net (C) 207,801 181,549
Deferred tax assets 18,859 30,443
Prepaid expenses and other
current assets 14,415 11,933
Total current assets 308,506 281,160
Fixed assets, net 59,562 49,684
Intangible assets, net 211,602 213,280
Goodwill 276,100 274,959
Other assets 26,463 24,799
Total assets $882,233 $843,882
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term
debt $2,304 $-
Accounts payable 20,093 19,580
Payroll and related taxes 17,163 16,085
Deferred revenue 29,015 20,122
Medicare liabilities 7,985 9,232
Cost of claims incurred but
not reported 24,321 19,462
Obligations under insurance
programs 36,816 35,910
Other accrued expenses 42,282 45,020
Total current
liabilities 179,979 165,411
Long-term debt 307,696 342,000
Deferred tax liabilities,
net 48,572 41,065
Other liabilities 22,557 21,081
Shareholders' equity 323,429 274,325
Total liabilities and
shareholders' equity $882,233 $843,882
Common shares outstanding 28,046 27,436
(A) Cash, cash equivalents and restricted cash included restricted cash of
$22.0 million at December 30, 2007 and December 31, 2006.
(B) Short-term investments at December 30, 2007 and December 31, 2006
consisted of AAA-rated auction rate securities.
(C) Accounts receivable, net, included an allowance for doubtful accounts
of $9.4 million and $9.8 million at December 30, 2007 and December 31,
2006, respectively.
(in 000's) Fiscal Year
Condensed Statements of Cash Flows 2007 2006
OPERATING ACTIVITIES:
Net income $32,828 $20,776
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 20,014 15,241
Amortization of debt issuance costs 1,063 1,028
Provision for doubtful accounts 9,939 9,425
Loss on disposal of assets - 844
Reversal of tax audit reserves (450) (800)
Equity-based compensation expense 6,812 4,281
Windfall tax benefits associated with equity-
based compensation (856) (1,804)
Deferred income taxes 20,923 10,841
Changes in assets and liabilities:
Accounts receivable (36,423) (2,424)
Prepaid expenses and other current assets (3,531) (2,344)
Current liabilities 12,606 (4,695)
Other, net (254) 1,078
Net cash provided by operating activities 62,671 51,447
INVESTING ACTIVITIES:
Purchase of fixed assets (24,064) (24,407)
Acquisition of businesses (3,820) (210,314)
Purchases of short-term
investments available-for-sale (96,850) (176,495)
Maturities of short-term
investments available-for-sale 89,925 201,920
Net cash used in investing activities (34,809) (209,296)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 7,882 12,400
Windfall tax benefits associated with
equity-based compensation 856 1,804
Proceeds from issuance of debt - 370,000
Healthfield debt repayments - (195,305)
Other debt repayments (32,000) (28,000)
Changes in book overdrafts - (1,395)
Debt issuance costs - (6,930)
Repayment of capital lease obligations (1,329) (432)
Net cash (used in) provided
by financing activities (24,591) 152,142
Net change in cash, cash
equivalents and restricted cash 3,271 (5,707)
Cash, cash equivalents and
restricted cash at beginning of year 32,910 38,617
Cash, cash equivalents and
restricted cash at end of year $36,181 $32,910
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Interest paid $27,469 $17,268
Income taxes paid, net of refunds $2,329 $2,839
(in 000's, except per share data)
Supplemental Information 4th Quarter Fiscal Year
2007 2006 2007 2006
Segment Information
Net revenues (1) (6)
Home Health (2) $207,494 $197,102 $821,829 $746,893
CareCentrix 76,275 68,128 290,786 267,539
Other Related Services 30,575 30,589 121,797 104,660
Intersegment revenues (948) (2,701) (5,115) (12,504)
Total net revenues $313,396 $293,118 $1,229,297 $1,106,588
Operating contribution (1) (5) (6)
Home Health (2) $30,069 $25,481 $122,053 $94,477
CareCentrix 7,180 6,394 29,070 24,740
Other Related Services 3,593 4,773 13,821 18,612
Total operating contribution 40,842 36,648 164,944 137,829
Corporate expenses (3) (15,539) (17,661) (65,268) (68,545)
Depreciation and amortization (5,308) (3,850) (20,013) (15,241)
Interest expense, net (5,868) (6,538) (24,081) (21,401)
Income before income taxes $14,127 $8,599 $55,582 $32,642
4th Quarter Fiscal Year
2007 2006 2007 2006
Net Revenues by Major Payer
Source:
Medicare (2)
Home Health $140,111 $125,321 $549,262 $455,270
Other 15,527 15,788 60,285 53,779
Total Medicare 155,638 141,109 609,547 509,049
Medicaid and local government 36,536 41,830 153,078 174,193
Commercial insurance and
other 121,222 110,179 466,672 423,346
Total net revenues $313,396 $293,118 $1,229,297 $1,106,588
A reconciliation of EBITDA to
Net income - As Reported amounts follows: (4)
4th Quarter Fiscal Year
2007 2006 2007 2006
EBITDA (5) (6) $25,303 $18,987 $99,676 $69,284
Depreciation and
amortization (7) (5,308) (3,850) (20,013) (15,241)
Interest expense, net (8) (5,868) (6,538) (24,081) (21,401)
Income before income taxes 14,127 8,599 55,582 32,642
Income tax expense (9) (5,281) (3,087) (22,754) (11,866)
Net income - As Reported $8,846 $5,512 $32,828 $20,776
A reconciliation of Net income per diluted share - As
Adjusted and Net income per diluted
share - As Reported follows: 4th Quarter Fiscal Year
2007 2006 2007 2006
Net income per diluted share:
As Adjusted $0.36 $0.31 $1.38 $1.03
Equity-based compensation (5) (0.05) (0.04) (0.18) (0.14)
Excluding special items and
restructuring and
integration costs 0.31 0.27 1.20 0.89
Restructuring and
integration costs (6A) - (0.07) (0.05) (0.17)
Medicare cost report
settlement (6B) - - - 0.04
As Reported $0.31 $0.20 $1.15 $0.76
Notes:
1) The Company's senior management evaluates performance and allocates
resources based on operating contributions of the reportable segments,
which exclude corporate expenses, depreciation, amortization, and
interest expense (net), but include revenues and all other costs
directly attributable to the specific segment.
2) Fiscal 2006 results included approximately $1.9 million recorded and
received from the total settlement of $5.5 million relating to the
Company's appeal filed with the U.S. Provider Reimbursement Review
Board ('PRRB') on the reopening of all of its 1999 cost reports.
3) Corporate expenses for the fourth quarter and fiscal 2007 included a
credit of $0.8 million relating to an adjustment of remaining lease
obligations associated with a 2002 restructuring plan and a net charge
of $1.1 million relating to miscellaneous adjustments. Corporate
expenses for the fourth quarter and fiscal 2006 included a credit of
approximately $0.9 million relating to legal settlements.
4) 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.
5) EBITDA included equity-based compensation expense for the fourth
quarters of 2007 and 2006 of approximately $1.7 million and $1.3
million, respectively, resulting from the adoption of Statement of
Financial Accounting Standards No. 123 (Revised) 'Share-Based Payment'
(SFAS 123(R)) as of January 2, 2006. Corresponding amounts for fiscal
2007 and 2006 were $6.8 million and $4.3 million, respectively. Such
amounts were reflected in corporate expenses.
6) Components of EBITDA included the following:
A) Restructuring and integration costs for the fourth quarter and
fiscal 2007 were $0.3 million and $2.4 million, respectively, and
for the fourth quarter and fiscal 2006 were $3.3 million and $7.7
million, respectively. These costs included the following items:
(i) $0.3 million and $2.4 million for the fourth quarters of 2007
and 2006, respectively, and $2.3 million and $6.1 million for
fiscal 2007 and 2006, respectively, resulting from restructuring
and integration activities relating to the Healthfield
acquisition; (ii) $0.1 million for fiscal 2007 and $0.9 million
for both the fourth quarter of 2006 and fiscal 2006 in connection
with a restructuring plan associated with the Company's hospice
operations; and (iii) $0.7 million for fiscal 2006 resulting from
a restructuring plan associated with the Company's CareCentrix
operations.
Restructuring and integration costs for the fourth quarters and
fiscal 2007 and 2006 were reflected as follows for segment
reporting purposes (dollars in millions):
4th Quarter Fiscal Year
2007 2006 2007 2006
Home Health $0.1 $0.6 $0.6 $2.3
CareCentrix - - - 0.7
Other Related Services - 0.9 0.1 0.9
Corporate expenses 0.2 1.8 1.7 3.8
Total $0.3 $3.3 $2.4 $7.7
B) A special item -- further described in Note 2 above -- relating to
a Medicare cost report settlement of $1.9 million for fiscal 2006,
was reflected in the Home Health segment.
Excluding the items described in Notes 6A and 6B above, EBITDA for the
fourth quarters of 2007 and 2006 would have been $25.6 million and
$22.3 million, respectively, and for fiscal 2007 and 2006 would have
been $102.1 million and $75.1 million, respectively.
7) Depreciation and amortization reflected amortization of identifiable
intangible assets of $1.0 million and $3.9 million, respectively, for
the fourth quarter and fiscal 2007, and $0.9 million and $3.3 million,
respectively, for the fourth quarter and fiscal 2006.
8) Interest expense, net, included interest expense on a term loan, fees
associated with a $75 million revolving credit facility and
amortization of debt financing costs, net of interest income.
9) The Company's effective tax rate was 37.4% and 40.9% for the fourth
quarter and fiscal 2007, respectively, and 35.9% and 36.4% for the
fourth quarter and fiscal 2006, respectively. The impact of the
adoption of SFAS 123(R) resulted in an increase in the Company's
effective tax rate of 2.0% and 2.3% in the fourth quarter and fiscal
2007, respectively, and 3.8% and 3.5% in the fourth quarter and fiscal
2006, respectively. In addition, the recognition of state net
operating loss carryforwards and the release of certain tax reserves
resulted in decreases in the Company's effective tax rate of 4.3% and
1.6% in the fourth quarter and fiscal 2007, respectively, and 6.4% and
6.2% in the fourth quarter and fiscal 2006, respectively.
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. Such factors include, among others: the Company's ability to successfully execute its growth strategy; the impact of significant indebtedness on the Company's liquidity and its ability to meet the requirements of its creditors; general economic and business conditions; 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 implementation of new business systems, or due to natural disasters or terrorist acts; a material shift in utilization within capitated agreements; 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 31, 2006 .
Financial and Investor Contact: John R. Potapchuk
631-501-7035
john.potapchuk@gentiva.com
Media Contact: David Fluhrer
631-501-7102,
516-589-0778
david.fluhrer@gentiva.com
SOURCE Gentiva Health Services, Inc.
