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:
8697409The 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 EndedSeptember 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 EndedSeptember 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) |
|
LicensedNursingBedsNote (4) |
|
AvailableNursingBedsNote (4) |
|
Skilled NursingWeightedAverage DailyCensus |
|
LicensedNursingBeds |
|
Available Nursing Beds |
|
Medicare Utilization |
2017
Q3 Revenue($ in millions) |
|
MedicareRoom andBoardRevenue
PPD (Note 3) |
|
MedicaidRoom andBoardRevenue
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. |
|
|
|
Investor Relations:Company Contact:Kelly J.
GillChief Executive Officer615-771-7575
James R. McKnight, Jr.Chief Financial
Officer615-771-7575
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