UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549


FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported)
November 2, 2017 (November 2, 2017)

Diversicare Healthcare Services, Inc.
(Exact Name of Registrant as Specified in Charter)


Delaware

001-12996

62-1559667
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)


1621 Galleria Boulevard, Brentwood, TN 37027
(Address of Principal Executive Offices) (Zip Code)

(615) 771-7575
(Registrant's telephone number, including area code)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
 
Emerging growth company
 
¨

 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 
¨







Item 2.02 Results of Operation and Financial Condition.

On November 2, 2017, the Registrant announced its results of operation for the three-month and nine-month periods ended September 30, 2017. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference in its entirety. The information furnished pursuant to Item 2.02 herein, including Exhibit 99.1, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e)    As initially adopted in February 2014 and previously disclosed in each of the Registrant’s past four proxy statements, the Compensation Committee approved an  incentive plan that provided a one-time bonus for each Named Executive Officer equal to his or her respective then current annual base salary upon the achievement of $20 million in EBITDA for a trailing four quarter period. For the trailing four-quarter period ended September 30, 2017, the Registrant achieved $20 million in EBITDA. The Board of Directors approved the payment of this bonus upon the finalization of the EBITDA numbers as reported in the Registrant’s earnings press release. As a result, the following bonuses were approved:

Kelly J. Gill               $ 515,100
James R. McKnight, Jr.          $ 330,525
Leslie D. Campbell         $ 339,966


Item 7.01. Regulation FD Disclosure.

The Registrant is furnishing its Investor presentation update for the period ended September 30, 2017, which is also contained on its website, DVCR.com. See Exhibit 99.2 to this Current Report of Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Number    Exhibit

99.1Press release dated November 2, 2017

99.2Investor presentation


    
    







SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Diversicare Healthcare Services, Inc.


By: /s/ James R. McKnight, Jr.
James R. McKnight, Jr.
Chief Financial Officer


Date:    November 2, 2017








dvcrlogoa02a10.jpg
 

   Company Contact:
      Kelly J. Gill
      Chief Executive Officer
      615-771-7575
 
         Investor Relations:
            James R. McKnight, Jr.
            Chief Financial Officer
            615-771-7575
Diversicare Announces 2017 Third Quarter Results

BRENTWOOD, TN, (November 2, 2017) – Diversicare Healthcare Services, Inc. (NASDAQ: DVCR), a premier provider of long-term care services, today announced its results for the third quarter ended September 30, 2017.
On October 26, 2017, the Board of Directors declared a quarterly dividend of $0.055 per common share payable to shareholders of record as of December 31, 2017, to be paid on January 15, 2017.
Third Quarter 2017 Highlights
Net revenue increased to $146.4 million in the third quarter of 2017 from $97.3 million in the third quarter of 2016, an increase of 50.4%, primarily attributable to the 22 Alabama and Mississippi nursing centers acquired in the fourth quarter of 2016 and Park Place in Selma, Alabama in July 2017.
Facility-level operating income was $28.3 million, or 19.3% of net revenue, an increase of $10.4 million from the prior year.
Net loss from continuing operations was $(0.6) million, or $(0.09) per share, in the third quarter of 2017, compared to a net loss from continuing operations of $(1.0) million, or $(0.16) per share, in the third quarter of 2016.
Adjusted EBITDA was $3.9 million in the third quarter of 2017 compared to $2.2 million in the third quarter of 2016.
See below for a reconciliation of all GAAP and non-GAAP financial results.
CEO Remarks
Commenting on the results, Kelly Gill, Diversicare’s CEO, stated, “The third quarter 2017 presented several challenges to our company. We continue to face industry headwinds with skilled patient mix, and five of our centers were affected by Hurricanes Harvey and Irma. Despite these challenges, the financial and operational impacts were contained due to our hardworking and ambitious team members. I am proud of and thankful for our dedicated team of caregivers. Their heroic and selfless actions led to no evacuations during the storms and the opportunity to provide continuous care for our patients and residents.
Mr. Gill concluded, "As previously mentioned, we completed an acquisition of a center located in Selma, Alabama effective July 1, 2017. I am pleased to announce our rapid integration of this center onto our operating platform, and we are already seeing positive operational and financial results."






Third Quarter 2017 Results
The following table summarizes key revenue and census statistics for continuing operations for each period:
 
Three Months Ended September 30,
 
 
 
2017
 
 
 
2016
 
 
Skilled nursing occupancy
80.1
%
 
 
 
78.1
%
 
 
As a percent of total census:
 
 
 
 
 
 
 
Medicare census
10.6
%
 
 
 
11.4
%
 
 
Medicaid census
69.1
%
 
 
 
68.1
%
 
 
Managed Care census
3.9
%
 
 
 
3.5
%
 
 
As a percent of total revenues:
 
 
 
 
 
 
 
Medicare revenues
24.9
%
 
 
 
27.2
%
 
 
Medicaid revenues
52.6
%
 
 
 
50.4
%
 
 
Managed Care revenues
7.5
%
 
 
 
6.9
%
 
 
Average rate per day:
 
 
 
 
 
 
 
Medicare
$
455.95

 
  
 
$
455.69

 
 
Medicaid
$
176.26

 
  
 
$
169.51

 
 
Managed Care
$
379.68

 
  
 
$
388.25

 
 

Patient Revenues
Patient revenues were $146.4 million and $97.3 million for the three months ended September 30, 2017 and 2016, respectively, an increase of $49.1 million. The following table summarizes the revenue fluctuations attributable to our portfolio growth (in thousands):
 
Three Months Ended September 30,
 
2017
 
2016
 
Change
Same-store revenue
$
96,889

 
$
97,313

 
$
(424
)
2016 acquisition revenue
47,244

 

 
47,244

2017 acquisition revenue
2,244

 

 
2,244

Total revenue
$
146,377

 
$
97,313

 
$
49,064

The overall increase in revenues of $49.1 million is primarily attributable to revenue contributions from the acquisition of the Golden Living operations in Alabama and Mississippi during the fourth quarter of 2016 and Park Place during the third quarter of 2017 of $49.5 million combined.
On a same-store center basis, the average Medicare and Medicaid rate per patient day for the third quarter of 2017 increased compared to the third quarter of 2016, resulting in increases in revenue of $0.6 million and $0.6 million, respectively, or 2.6% and 1.2%, respectively. Our same-store Medicare and Medicaid average daily census for the third quarter of 2017 decreased $1.8 million and $0.6 million, or 8.0% and 1.2%, respectively. Conversely our Managed Care average daily census for the third quarter of 2017 increased $0.8 million or 14.2%.
Expenses
Operating expense increased in the third quarter of 2017 to $118.1 million as compared to $79.4 million in the third quarter of 2016. Operating expense decreased as a percentage of revenue at 80.7% for the third quarter of 2017 as compared to 81.6% for the third quarter of 2016. The following table summarizes the expense increases attributable to our portfolio growth (in thousands):
 
Three Months Ended September 30,
 
2017
 
2016
 
Change
Same-store operating expense
$
78,886

 
$
79,441

 
$
(555
)
2016 acquisition expense
37,355

 

 
37,355

2017 acquisition expense
1,863

 

 
1,863

Total expense
$
118,104

 
$
79,441

 
$
38,663







The overall increase in operating expense of $38.7 million is primarily attributable to the acquisition of the Golden Living operations in Alabama and Mississippi during the fourth quarter of 2016 of $37.4 million and Park Place during the third quarter of 2017 of $1.9 million.
On a same-store center basis, operating expenses slightly decreased by $0.6 million, which is attributable to favorable variances in bad debt expense, health insurance costs, and provider taxes of $0.6 million, $0.2 million and $0.2 million, respectively, in third quarter of 2017 compared to the third quarter of 2016. Conversely our same-store salaries and related taxes increased by $0.6 million in third quarter of 2017 compared to the third quarter of 2016.
One of the largest components of operating expenses is wages, which increased to $69.4 million during the third quarter of 2017 as compared to $46.2 million in the third quarter of 2016, which, consistent with above, is due primarily to acquisition activity.
Lease expense increased in the third quarter of 2017 to $13.8 million as compared to $6.9 million in the third quarter of 2016. The increase in lease expense was primarily attributable to the 22 newly leased centers in Alabama and Mississippi, which occurred during the fourth quarter of 2016.
Professional liability expense was $2.6 million and $2.0 million in the third quarters of 2017 and 2016, respectively. Our cash expenditures for professional liability costs of continuing operations were $1.7 million and $1.2 million for the third quarters of 2017 and 2016, respectively. Professional liability expense and cash expenditures fluctuate from year to year based respectively on the results of our third-party professional liability actuarial studies and on the costs incurred in defending and settling existing claims. See “Liquidity and Capital Resources” for further discussion of the accrual for professional liability.
General and administrative expense was $8.1 million in the third quarter of 2017 as compared to $7.4 million in the third quarter of 2016, an increase of $0.7 million, but conversely decreased as a percentage of revenue from 7.6% in 2016 to 5.5% in 2017. The increase in general and administrative expense is attributable to an increase in corporate wages and payroll taxes, travel and health insurance costs by $0.9 million, $0.1 million and $0.1 million, respectively, which is due to the acquisition of 22 new centers during the fourth quarter of 2016. The increase was partially offset by a $0.7 million decrease in legal costs during third quarter of 2017 compared to the third quarter of 2016, which is also related to the 2016 acquisitions.
Depreciation and amortization expense was approximately $3.0 million in the third quarter of 2017 as compared to $2.0 million in 2016. The increase in depreciation expense relates to fixed assets at the newly leased centers.
The Company ceased operations at our Carthage, Mississippi center in September 2017, which resulted in a $0.2 million cash termination payment, net of legal costs, in the third quarter of 2017. This was recorded as lease termination receipts during third quarter of 2017.
Interest expense was $1.7 million in the third quarter of 2017 and $1.2 million in the third quarter of 2016, an increase of $0.5 million. The increase was primarily attributable to higher debt balances in 2017 as a result of the change in ownership processes for the newly leased Alabama and Mississippi centers.
Hurricane costs of $0.2 million were included during the third quarter 2017, which related to Hurricanes Harvey and Irma.
As a result of the above, continuing operations reported a loss of $0.9 million before income taxes for the third quarter of 2017 as compared to a loss of $1.5 million for the third quarter of 2016. The provision for income taxes was less than $0.1 million for the third quarter of 2017, and the benefit for income taxes was $0.5 million for the third quarter of 2016. Both basic and diluted loss per common share from continuing operations were $0.09 for the third quarter of 2017 as compared to both basic and diluted loss per common share from continuing operations of $0.16 in the third quarter of 2016.
Receivables
Our net receivables balance increased $1.7 million to $63.9 million as of September 30, 2017, from $62.2 million as of December 31, 2016. The increase in accounts receivable is attributable to the 22 newly leased centers in Alabama and Mississippi.






Conference Call Information
A conference call has been scheduled for Thursday, November 2, 2017 at 4:00 P.M. Central time (5:00 P.M. Eastern time) to discuss third quarter 2017 results. The conference call information is as follows:
 
 
 
Date:
 
Thursday, November 2, 2017
Time:
 
4:00 P.M. Central, 5:00 P.M. Eastern
Webcast Links:
 
www.DVCR.com
Dial in numbers:
 
877.340.2552 (domestic) or 253.237.1159 (International)
Conference ID: 8697409
The Operator will connect you to Diversicare’s Conference Call

A replay of the conference call will be accessible two hours after its completion through November 9, 2017, by dialing 855-859-2056 (domestic) or 404-537-3406 (international) and entering Conference ID 8697409.
FORWARD-LOOKING STATEMENTS
The “forward-looking statements” contained in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictive in nature and are frequently identified by the use of terms such as “may,” “will,” “should,” “expect,” “believe,” “estimate,” “intend,” and similar words indicating possible future expectations, events or actions. These forward-looking statements reflect our current views with respect to future events and present our estimates and assumptions only as of the date of this release. Actual results could differ materially from those contemplated by the forward-looking statements made in this release. In addition to any assumptions and other factors referred to specifically in connection with such statements, other factors, many of which are beyond our ability to control or predict, could cause our actual results to differ materially from the results expressed or implied in any forward-looking statements including, but not limited to, our ability to successfully integrate the operations of our new nursing centers in Alabama, Mississippi, Kansas and Kentucky, as well as successfully operate all of our centers, our ability to increase census at our renovated centers, changes in governmental reimbursement, government regulation, the impact of the recently adopted federal health care reform or any future health care reform, any increases in the cost of borrowing under our credit agreements, our ability to comply with covenants contained in those credit agreements, our ability to renew or extend our leases at or prior to the end of the existing lease terms, the outcome of professional liability lawsuits and claims, our ability to control ultimate professional liability costs, the accuracy of our estimate of our anticipated professional liability expense, the impact of future licensing surveys, the outcome of proceedings alleging violations of state or Federal False Claims Acts, laws and regulations governing quality of care or other laws and regulations applicable to our business including HIPAA and laws governing reimbursement from government payors, the costs of investing in our business initiatives and development, our ability to control costs, changes to our valuation of deferred tax assets, changes in occupancy rates in our centers, changing economic and competitive conditions, changes in anticipated revenue and cost growth, changes in the anticipated results of operations, the effect of changes in accounting policies as well as others. The Company has provided additional information in its Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as well as in its other filings with the Securities and Exchange Commission, which readers are encouraged to review for further disclosure of other factors. These assumptions may not materialize to the extent assumed, and risks and uncertainties may cause actual results to be different from anticipated results. These risks and uncertainties also may result in changes to the Company’s business plans and prospects. Diversicare Healthcare Services, Inc. is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet services.
Diversicare provides long-term care services to patients in 76 nursing centers and 8,457 skilled nursings beds. For additional information about the Company, visit Diversicare's web site: www.DVCR.com.
-Financial Tables to Follow-







DIVERSICARE HEALTHCARE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
 
 
September 30,
2017
 
December 31,
2016
 
 
(Unaudited)
 
 
ASSETS:
 
 
 
 
Current Assets
 
 
 
 
Cash and cash equivalents
 
$
3,295

 
$
4,263

Receivables, net
 
63,867

 
62,152

Current assets of discontinued operations
 
45

 
28

Other current assets
 
4,804

 
5,247

Total current assets
 
72,011

 
71,690

 
 
 
 
 
Property and equipment, net
 
69,388

 
59,800

Deferred income taxes
 
21,092

 
21,185

Acquired leasehold interest, net
 
6,789

 
7,075

Other assets, net
 
3,139

 
3,301

TOTAL ASSETS
 
$
172,419

 
$
163,051

 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
 
 
 
 
Current Liabilities
 
 
 
 
Current portion of long-term debt and capitalized lease obligations
 
$
10,582

 
$
7,715

Trade accounts payable
 
13,051

 
12,972

Current liabilities of discontinued operations
 
461

 
427

Accrued expenses:
 
 
 
 
Payroll and employee benefits
 
20,178

 
20,108

Current portion of self-insurance reserves
 
10,099

 
9,401

Provider taxes
 
3,116

 
3,114

Other current liabilities
 
5,960

 
4,432

Total current liabilities
 
63,447

 
58,169

Noncurrent Liabilities
 
 
 
 
Long-term debt and capitalized lease obligations, less current portion and deferred financing costs, net
 
76,708

 
72,145

Self-insurance reserves, less current portion
 
11,657

 
11,766

Other noncurrent liabilities
 
8,337

 
9,551

Total noncurrent liabilities
 
96,702

 
93,462

 
 
 
 
 
SHAREHOLDERS’ EQUITY
 
12,270

 
11,420

 
 
 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
 
$
172,419

 
$
163,051

 
 
 
 
 







DIVERSICARE HEALTHCARE SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
 
Three Months Ended September 30,
 
2017
 
2016
PATIENT REVENUES, net
$
146,377

 
$
97,313

Operating expense
118,104

 
79,441

Facility-level operating income
28,273

 
17,872

 
 
 
 
EXPENSES:
 
 
 
Lease and rent expense
13,791

 
6,865

Professional liability
2,617

 
1,977

General and administrative
8,083

 
7,420

Depreciation and amortization
2,988

 
1,992

Lease termination receipts
(180
)
 

Total expenses less operating
27,299

 
18,254

OPERATING INCOME (LOSS)
974

 
(382
)
OTHER INCOME (EXPENSE):
 
 
 
Equity in net income of unconsolidated affiliate

 
130

Interest expense, net
(1,668
)
 
(1,201
)
Hurricane costs
(232
)
 

Total other expense
(1,900
)
 
(1,071
)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(926
)
 
(1,453
)
BENEFIT (PROVISION) FOR INCOME TAXES
345

 
495

INCOME (LOSS) FROM CONTINUING OPERATIONS
(581
)
 
(958
)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS:
 
 
 
OPERATING LOSS
1

 
(17
)
NET INCOME (LOSS)
$
(580
)
 
$
(975
)
 
 
 
 
NET INCOME (LOSS) PER COMMON SHARE:
 
 
 
Per common share – basic
 
 
 
Continuing operations
$
(0.09
)
 
$
(0.16
)
Discontinued operations

 

 
$
(0.09
)
 
$
(0.16
)
 
 
 
 
Per common share – diluted
$
(0.09
)
 
$
(0.16
)
Continuing operations

 

Discontinued operations
$
(0.09
)
 
$
(0.16
)
 
 
 
 
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK
$
0.055

 
$
0.055

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
Basic
6,294

 
6,212

Diluted
6,294

 
6,212







DIVERSICARE HEALTHCARE SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
 
Nine Months Ended September 30,
 
2017
 
2016
PATIENT REVENUES, net
$
430,427

 
$
291,063

Operating expense
341,937

 
236,444

Facility-level operating income
88,490

 
54,619

 
 
 
 
EXPENSES:
 
 
 
Lease and rent expense
41,297

 
20,971

Professional liability
8,011

 
5,977

General and administrative
25,277

 
21,035

Depreciation and amortization
8,095

 
6,055

Lease termination costs (receipts)
(180
)
 
2,008

Total expenses less operating
82,500

 
56,046

OPERATING INCOME (LOSS)
5,990

 
(1,427
)
OTHER INCOME (EXPENSE):
 
 
 
Equity in net income of unconsolidated affiliate

 
191

Gain on sale of investment in unconsolidated affiliate
733

 

Interest expense, net
(4,692
)
 
(3,429
)
Hurricane costs
(232
)
 

Debt retirement costs

 
(351
)
Total other expense
(4,191
)
 
(3,589
)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
1,799

 
(5,016
)
BENEFIT (PROVISION) FOR INCOME TAXES
(651
)
 
1,834

INCOME (LOSS) FROM CONTINUING OPERATIONS
1,148

 
(3,182
)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS:
 
 
 
OPERATING LOSS
(42
)
 
(54
)
NET INCOME (LOSS)
$
1,106

 
$
(3,236
)
 
 
 
 
NET INCOME (LOSS) PER COMMON SHARE:
 
 
 
Per common share – basic
 
 
 
Continuing operations
$
0.18

 
$
(0.51
)
Discontinued operations
(0.01
)
 
(0.01
)
 
$
0.17

 
$
(0.52
)
 
 
 
 
Per common share – diluted
$
0.18

 
$
(0.51
)
Continuing operations
(0.01
)
 
(0.01
)
Discontinued operations
$
0.17

 
$
(0.52
)
 
 
 
 
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK
$
0.17

 
$
0.17

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
Basic
6,274

 
6,195

Diluted
6,465

 
6,195







DIVERSICARE HEALTHCARE SERVICES, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(In thousands)
 
 
 
For Three Months Ended
 
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
December 31, 2016
 
September 30, 2016
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
Net income (loss)
 
$
(580
)
 
$
353

 
$
1,333

 
$
1,425

 
$
(975
)
Loss from discontinued operations, net of tax
 
(1
)
 
28

 
15

 
13

 
17

Income tax provision (benefit)
 
(345
)
 
134

 
862

 
804

 
(495
)
Interest expense
 
1,668

 
1,541

 
1,483

 
1,373

 
1,201

Depreciation and amortization
 
2,988

 
2,620

 
2,487

 
2,237

 
1,992

EBITDA
 
3,730

 
4,676

 
6,180

 
5,852

 
1,740

 
 
 
 
 
 
 
 
 
 
 
EBITDA adjustments:
 
 
 
 
 
 
 
 
 
 
Acquisition & disposition related costs (a)
 
72

 
133

 
85

 
1,492

 
438

Hurricane costs (b)
 
232

 

 

 

 

Lease termination receipts (c)
 
(180
)
 

 

 

 

Gain on sale of unconsolidated
    affiliate (d)
 

 

 
(733
)
 
(1,366
)
 

Adjusted EBITDA
 
$
3,854

 
$
4,809

 
$
5,532

 
$
5,978

 
$
2,178

 

(a)
Represents non-recurring costs associated with acquisition and disposition-related transactions.
(b)
Represents non-recurring hurricane costs related to Hurricanes Harvey and Irma during the third quarter 2017.
(c)
Represents non-recurring lease termination receipts, net of expenses, related to the termination of the Carthage, Mississippi operating lease in September 2017.
(d)
Represents non-recurring gain on the sale of an unconsolidated affiliate in November 2016.

 




 






DIVERSICARE HEALTHCARE SERVICES, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME (LOSS)
(In thousands, except per share data)
 
 
 
For Three Months Ended
 
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
December 31, 2016
 
September 30, 2016
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
Net income (loss)
 
$
(580
)
 
$
353

 
$
1,333

 
$
1,425

 
$
(975
)
Adjustments:
 
 
 
 
 
 
 
 
 
 
Acquisition and disposition related costs (a)
 
72

 
133

 
85

 
1,492

 
438

Hurricane costs (b)
 
232

 

 

 

 

Gain on sale of unconsolidated affiliate (c)
 

 

 
(733
)
 
(1,366
)
 

Lease termination receipts (d)
 
(180
)
 

 

 

 

Tax impact of above adjustments (e)
 
(43
)
 
(53
)
 
(283
)
 
(1,000
)
 
(153
)
Discontinued operations, net of tax
 
(1
)
 
28

 
15

 
13

 
17

Adjusted net income (loss)
 
$
(500
)
 
$
461

 
$
417

 
$
564

 
$
(673
)
 
 
 
 
 
 
 
 
 
 
 
Adjusted net income (loss) per common share
 
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.08
)
 
$
0.07

 
$
0.07

 
$
0.09

 
$
(0.11
)
Diluted
 
$
(0.08
)
 
$
0.07

 
$
0.06

 
$
0.09

 
$
(0.11
)
 
 
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
 
 
 
 
 
 
 
Basic
 
6,294

 
6,294

 
6,233

 
6,213

 
6,212

Diluted
 
6,294

 
6,472

 
6,440

 
6,421

 
6,212

 
 
 
 
 
 
 
 
 
 
 


(a)
Represents non-recurring costs associated with acquisition and disposition-related transactions.
(b)
Represents non-recurring hurricane costs related to Hurricanes Harvey and Irma during the third quarter 2017.
(c)
Represents non-recurring gain on the sale of an unconsolidated affiliate in November 2016.
(d)
Represents non-recurring lease termination receipts, net of expenses, related to the termination of the Carthage, Mississippi operating lease in September 2017.
(e)
Represents tax provision for the cumulative adjustments for each period.
 





DIVERSICARE HEALTHCARE SERVICES, INC.
FUNDS PROVIDED BY OPERATIONS
(In thousands, except per share data, unaudited)
 
Nine Months Ended September 30,
 
2017
 
2016
NET INCOME (LOSS)
$
1,106

 
$
(3,236
)
Discontinued operations
(42
)
 
(54
)
Net income (loss) from continuing operations
1,148

 
(3,182
)
Adjustments to reconcile net income (loss) from continuing operations to funds provided by operations:
 
 
 
Depreciation and amortization
8,095

 
6,055

Provision for doubtful accounts
6,407

 
5,785

Deferred income tax benefit
52

 
(2,329
)
Provision for self-insured professional liability, net of cash payments
(168
)
 
1,853

Stock based compensation
766

 
721

 Equity in net losses of unconsolidated affiliate

 
(191
)
 Gain on sale of unconsolidated affiliate
(733
)
 

 Debt retirement costs

 
351

 Provision for leases in excess of cash payments
(517
)
 
(1,640
)
 Lease termination costs, net of cash payments

 
1,958

Deferred bonus
700

 

Other
388

 
463

FUNDS PROVIDED BY OPERATIONS
$
16,138

 
$
9,844

 
 
 
 
FUNDS PROVIDED BY OPERATIONS PER COMMON SHARE:
 
 
 
Basic
$
2.57

 
$
1.59

Diluted
$
2.50

 
$
1.59

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING :
 
 
 
Basic
6,274

 
6,195

Diluted
6,465

 
6,195

We have included certain financial measures in this press release, including EBITDA, Adjusted EBITDA, Adjusted Net income (loss) and Funds Provided by Operations which are “non-GAAP financial measures” using accounting principles generally accepted in the United States (GAAP) and using adjustments to GAAP (non-GAAP). These non-GAAP measures are not measurements under GAAP. These measurements should be considered in addition to, but not as a substitute for, the information contained in our financial statements prepared in accordance with GAAP. We define EBITDA as net income (loss) adjusted for loss (income) from discontinued operations, interest expense, income tax and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted for acquisition-related, debt retirement, lease termination and lease deferral costs. We define Adjusted Net income (loss) as Net income (loss) adjusted for acquisition-related costs, lease termination costs, lease deferral costs, debt retirement costs and income (loss) from discontinued operations. Funds Provided by Operations is defined as net income from operating activities adjusted for the cash effect of professional liability and other non-cash charges. Management believes that Funds Provided by Operations is an important performance measurement because it eliminates the effect of actuarial assumptions on our professional liability reserves, includes the cash effect of professional liability payments, and does not include the effects of deferred tax benefit and other non-cash charges.
Our measurements of EBITDA, Adjusted EBITDA, Adjusted Net income (loss) and Funds Provided by Operations may not be comparable to similarly titled measures of other companies. We have included information concerning EBITDA, Adjusted EBITDA, Adjusted Net income (loss) and Funds Provided by Operations in this press release because we believe that such information is used by certain investors as measures of a company’s historical performance. Management believes that Adjusted EBITDA and Adjusted Net income (loss) are important performance measurements because they eliminate certain nonrecurring start-up losses and separation costs. Management believes that Funds Provided by Operations is an important performance measurement because it eliminates the effect of actuarial assumptions on our professional liability reserves, includes the cash effect of professional liability payments, and does not include the effects of deferred taxes and other non-cash items. Our presentation of EBITDA, Adjusted EBITDA, Adjusted Net income (loss) and Funds Provided by Operations should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.





DIVERSICARE HEALTHCARE SERVICES, INC.
SELECTED OPERATING STATISTICS
(Unaudited)
Three Months Ended September 30, 2017
 
 
 




As of September 30, 2017
 
 




Occupancy (Note 2)
 
 
 
 
 
 
 
 
Region
(Note 1)
 
Licensed Nursing Beds
Note (4)
 
Available Nursing Beds
Note (4)
 
Skilled Nursing Weighted Average Daily Census
 
Licensed Nursing Beds
 
Available
 Nursing
 Beds
 
Medicare
 Utilization
2017 Q3
 Revenue
($ in millions)
 
Medicare Room and Board Revenue PPD
 (Note 3)
 
Medicaid Room and Board Revenue PPD
 (Note 3)
 
Alabama
 
2,464

 
2,397

 
2,137

 
86.6
%
 
89.1
%
 
10.5
%
 
$
46.7

 
$
438.00

 
$
188.23

 
Kansas
 
464

 
464

 
405

 
87.2
%
 
87.2
%
 
9.4
%
 
7.9

 
438.64

 
168.18

 
Kentucky
 
1,285

 
1,281

 
1,116

 
86.9
%
 
87.1
%
 
13.1
%
 
26.9

 
470.45

 
192.61

 
Mississippi
 
1,039

 
1,004

 
990

 
87.0
%
 
98.6
%
 
11.7
%
 
20.7

 
433.77

 
180.93

 
Missouri
 
339

 
339

 
236

 
69.7
%
 
69.7
%
 
8.7
%
 
4.2

 
487.85

 
137.17

 
Ohio
 
404

 
393

 
336

 
83.3
%
 
85.6
%
 
11.1
%
 
9.4

 
483.88

 
193.51

 
Tennessee
 
617

 
551

 
439

 
71.2
%
 
79.7
%
 
12.2
%
 
9.3

 
451.60

 
169.93

 
Texas
 
1,845

 
1,662

 
1,195

 
64.8
%
 
71.9
%
 
7.4
%
 
21.3

 
497.76

 
143.43

 
Total
 
8,457

 
8,091

 
6,854

 
80.1
%
 
84.7
%
 
10.6
%
 
$
146.4

 
$
455.95

 
$
176.26

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note 1:
The Alabama region includes nursing centers in Alabama and Florida. The Kentucky region includes one nursing center in Indiana.
 
Note 2:
The number of Licensed Nursing Beds is based on the licensed capacity of the facility. The Company has historically reported its occupancy based on licensed nursing beds, and excludes a limited number of assisted living, independent living, and personal care beds. The number of Available Nursing Beds represents licensed nursing beds less beds removed from service. Available nursing beds is subject to change based upon the needs of the facilities, including configuration of patient rooms, common usage areas and offices, status of beds (private, semi-private, ward, etc.) and renovations. Occupancy is measured on a weighted average basis.
 
Note 3:
These Medicare and Medicaid revenue rates include room and board revenues, but do not include any ancillary revenues related to these patients.
 
Note 4:
The Licensed and Available Nursing Bed counts above include only licensed and available SNF beds.

###
 





This regulatory filing also includes additional resources:
dvcr2017investorslidesfy17q3.pdf
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