Diversicare Healthcare Services, Inc. (OTCQX: DVCR), a premier
provider of long-term care services, today announced its results
for the fourth quarter ended December 31, 2019.
Fourth Quarter 2019
Highlights
- Net loss from continuing operations was $1.4 million in the
fourth quarter of 2019, compared to a net loss from continuing
operations of $2.7 million in the fourth quarter of 2018.
- EBITDA for the quarter was $2.7 million, which was $2.2 million
higher than the fourth quarter of 2018 and $1.5 million higher than
the preceding quarter.
- EBITDAR for the quarter was $16.2 million.
See below for a reconciliation of all GAAP and
non-GAAP financial results.
CEO Remarks
Commenting on the quarter and year, Jay
McKnight, President and Chief Executive Officer, said, "The 2019
year, and particularly the fourth quarter, saw significant
transformation at Diversicare that comes from a diligent, focused
company. The team embraced challenges this year and performed
admirably. With our portfolio changes behind us after the Kentucky
exit and the implementation of the new Medicare payment system, we
had the best quarter of the year and achieved an EBITDAR of $16.2
million. Our industry continues to experience challenges, but our
team is focused on providing high quality care using new,
innovative approaches while performing as efficiently as possible.
We are a very different company than we were a year ago and are
ready to move forward in 2020."
Mr. McKnight concluded, "Our team of dedicated
caregivers continues to inspire me. Their commitment to our
patients and residents, as well as one another, is exemplary. By
daily living our mission they improve every life we touch by
providing exceptional healthcare and exceeding expectations. It is
a privilege to lead at Diversicare.”
Fourth Quarter 2019 Results
The following table summarizes key revenue and
census statistics for continuing operations for each period:
| |
Three Months Ended December 31, |
| |
2019 |
|
|
|
2018 |
| Skilled nursing occupancy |
77.2 |
% |
|
|
|
77.5 |
% |
| As a percent of total
census: |
|
|
|
|
|
|
Medicare census |
8.8 |
% |
|
|
|
9.7 |
% |
|
Managed Care census |
4.4 |
% |
|
|
|
4.5 |
% |
| As a percent of total
revenues: |
|
|
|
|
|
|
Medicare revenues |
17.9 |
% |
|
|
|
17.1 |
% |
|
Medicaid revenues |
47.8 |
% |
|
|
|
47.4 |
% |
|
Managed Care revenues |
10.3 |
% |
|
|
|
10.2 |
% |
| Average rate per day: |
|
|
|
|
|
|
Medicare |
$ |
488.69 |
|
|
|
|
$ |
451.30 |
|
|
Medicaid |
$ |
180.25 |
|
|
|
|
$ |
178.01 |
|
|
Managed Care |
$ |
399.72 |
|
|
|
|
$ |
393.65 |
|
Patient Revenues
Patient revenues were $120.9 million and $118.7
million for the three months ended December 31, 2019 and 2018,
respectively, an increase of $2.2 million.
Our Medicare and Medicaid rates increased in the
fourth quarter of 2019 compared to the fourth quarter of 2018,
resulting in an increase in revenues of $1.7 million, or 7.5%, and
$0.8 million, or 1.3%, respectively. In addition, the Hospice
average daily census increased in 2019 compared to 2018 resulting
in increased revenue of $1.6 million, or 21.7%. The increases were
partially offset by decreases in the Medicare and Medicaid average
daily census for 2019 compared to 2018, resulting in decreases in
revenue of $2.2 million, or 9.5%, and $0.4 million, or 0.5%,
respectively. Due to our continued focus on quality care, the
proceeds from quality incentive payment and intergovernmental
transfer programs contributed $0.8 million compared to the fourth
quarter of 2018.
Expenses
Operating expenses decreased to $96.2 million,
or 79.6% of revenue, in the fourth quarter of 2019 from $96.4
million, or 81.2% of revenue, in the fourth quarter of 2018. The
decrease in operating expenses was mostly attributable to the
favorable impact of our operational cost savings initiatives, which
resulted in decreased nursing and ancillary costs of $0.7 million
for 2019 compared 2018.
The largest component of operating expenses is
wages, which were $57.9 million in the fourth quarter of 2019
compared to $57.6 million in the fourth quarter of 2018.
Lease expense increased to $13.5 million in 2019
from $13.1 million in 2018, an increase of $0.4 million, or 2.9%.
The increase in lease expense was due to rent increases resulting
from the amendment to the New Master Lease Agreement with Omega
Healthcare Investors in conjunction with the Kentucky exit.
Professional liability expense was $1.8 million
in 2019 compared to $1.6 million in 2018, an increase of $0.2
million, or 13.4%. Our cash expenditures for professional liability
costs, including the matters in the state of Kentucky, were $1.4
million and $2.1 million for the fourth quarter of 2019 and 2018,
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, the
premium costs of purchased insurance, and the costs incurred in
defending and settling existing claims.
General and administrative expenses were
approximately $6.7 million in 2019 compared to $7.2 million in
2018, a decrease of $0.5 million, or 6.2%. The overall decrease in
general and administrative expenses was primarily attributable to a
decrease in salaries and related taxes.
Depreciation and amortization expense remained
consistent at $2.3 million for both the fourth quarter of 2019 and
the fourth quarter of 2018.
Interest expense increased to $1.6 million in
2019 from $1.4 million in 2018. The increase was primarily
attributable to outstanding borrowings on our debt facility.
As a result of the above, continuing operations
reported a loss before taxes of $1.2 million in 2019, as compared
to a loss of $3.5 million in 2018. The provision for income taxes
was $0.2 million in 2019 compared to a benefit for income taxes of
$0.8 million in 2018. The basic and diluted loss per common share
from continuing operations were $0.22 and $0.22 in 2019,
respectively, compared to a basic and diluted loss per common share
from continuing operations of $0.42 and $0.42 in 2018,
respectively.
Receivables
Our net receivables balance decreased $5.8
million to $60.5 million as of December 31, 2019, from $66.3
million as of December 31, 2018.
Conference Call Information
A conference call has been scheduled for
Thursday, March 5, 2020 at 4:00 P.M. Central time (5:00 P.M.
Eastern time) to discuss fourth quarter 2019 results. The
conference call information is as follows:
| Date: |
|
Thursday, March 5, 2020 |
| 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: 4861428The Operator
will connect you to Diversicare’s Conference Call |
A replay of the conference call will be
accessible two hours after its completion through March 12, 2019,
by dialing 855-859-2056 (domestic) or 404-537-3406 (international)
and entering Conference ID 4861428.
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, as well as
successfully operate all of our centers, our ability to increase
census and occupancy rates at our 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 comply with the terms of our
master lease 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,
our ability to attract and retain qualified healthcare
professionals, changes to our valuation of deferred tax assets,
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, 2019, 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 62 skilled nursing and centers containing 7,329 skilled
licensed nursing 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)
| |
|
December 31, 2019 |
|
December 31, 2018 |
| ASSETS: |
|
|
|
|
| Current
Assets |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,710 |
|
|
$ |
2,685 |
|
|
Receivables |
|
60,521 |
|
|
66,257 |
|
|
Self-insurance receivables |
|
1,011 |
|
|
4,475 |
|
|
Current assets of discontinued operations |
|
— |
|
|
155 |
|
|
Other current assets |
|
8,074 |
|
|
6,965 |
|
|
Total current assets |
|
72,316 |
|
|
80,537 |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
47,755 |
|
|
50,843 |
|
|
Deferred income taxes |
|
— |
|
|
15,851 |
|
|
Acquired leasehold interest, net |
|
5,736 |
|
|
6,307 |
|
|
Operating lease assets |
|
310,238 |
|
|
— |
|
|
Other assets, net |
|
4,323 |
|
|
3,450 |
|
|
Noncurrent assets of discontinued operations |
|
$ |
— |
|
|
2,256 |
|
| TOTAL
ASSETS |
|
$ |
440,368 |
|
|
$ |
159,244 |
|
| |
|
|
|
|
| LIABILITIES AND
SHAREHOLDERS’ DEFICIT: |
|
|
|
|
| Current
Liabilities |
|
|
|
|
|
Current portion of long-term debt and finance lease
obligations |
|
$ |
3,498 |
|
|
$ |
12,449 |
|
|
Trade accounts payable |
|
14,641 |
|
|
15,659 |
|
|
Current liabilities of discontinued operations |
|
— |
|
|
86 |
|
|
Current portion of operating lease liabilities |
|
23,736 |
|
|
— |
|
|
Accrued expenses: |
|
|
|
|
|
Payroll and employee benefits |
|
16,780 |
|
|
19,471 |
|
|
Current portion of self-insurance reserves |
|
13,829 |
|
|
13,158 |
|
|
Other current liabilities |
|
11,545 |
|
|
9,522 |
|
|
Total current liabilities |
|
84,029 |
|
|
70,345 |
|
| Noncurrent
Liabilities |
|
|
|
|
|
Long-term debt and finance lease obligations, less current
portion |
|
70,637 |
|
|
60,984 |
|
|
Operating lease liabilities, less current portion |
|
295,636 |
|
|
— |
|
|
Self-insurance reserves, less current portion |
|
16,291 |
|
|
16,057 |
|
|
Accrued litigation contingency |
|
9,000 |
|
|
6,400 |
|
|
Other noncurrent liabilities |
|
1,691 |
|
|
6,656 |
|
|
Total noncurrent liabilities |
|
393,255 |
|
|
90,097 |
|
| |
|
|
|
|
| SHAREHOLDERS’
DEFICIT |
|
(36,916 |
) |
|
(1,198 |
) |
| |
|
|
|
|
| TOTAL LIABILITIES AND
SHAREHOLDERS’ DEFICIT |
|
$ |
440,368 |
|
|
$ |
159,244 |
|
| |
|
|
|
|
DIVERSICARE HEALTHCARE SERVICES,
INC. CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share data)
| |
Three Months Ended December 31, |
| |
2019 |
|
2018 |
| PATIENT REVENUES, net |
$ |
120,873 |
|
|
$ |
118,716 |
|
| Operating expense |
96,227 |
|
|
96,350 |
|
|
Facility-level operating income |
24,646 |
|
|
22,366 |
|
| |
|
|
|
| EXPENSES: |
|
|
|
|
Lease and rent expense |
13,510 |
|
|
13,126 |
|
|
Professional liability |
1,814 |
|
|
1,600 |
|
|
General and administrative |
6,742 |
|
|
7,190 |
|
|
Depreciation and amortization |
2,310 |
|
|
2,304 |
|
|
Total expenses less operating |
24,376 |
|
|
24,220 |
|
| OPERATING INCOME (LOSS) |
270 |
|
|
(1,854 |
) |
| OTHER INCOME (EXPENSE): |
|
|
|
|
Other income |
82 |
|
|
46 |
|
|
Debt retirement costs |
— |
|
|
(267 |
) |
|
Interest expense, net |
(1,570 |
) |
|
(1,386 |
) |
| |
(1,488 |
) |
|
(1,607 |
) |
| LOSS FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES |
(1,218 |
) |
|
(3,461 |
) |
| BENEFIT (PROVISION) FOR INCOME
TAXES |
(150 |
) |
|
774 |
|
| NET LOSS FROM CONTINUING
OPERATIONS |
(1,368 |
) |
|
(2,687 |
) |
| NET INCOME (LOSS) FROM
DISCONTINUED OPERATIONS: |
|
|
|
|
Operating income (loss), net of taxes |
(1,879 |
) |
|
3,102 |
|
| DISCONTINUED OPERATIONS |
(1,879 |
) |
|
3,102 |
|
| NET INCOME (LOSS) |
$ |
(3,247 |
) |
|
$ |
415 |
|
| |
|
|
|
| NET INCOME (LOSS) PER COMMON
SHARE FOR DIVERSICARE HEALTHCARE SERVICES, INC. SHAREHOLDERS: |
|
|
|
|
Per common share – basic |
|
|
|
|
Continuing operations |
$ |
(0.22 |
) |
|
$ |
(0.42 |
) |
|
Discontinued operations |
(0.29 |
) |
|
0.48 |
|
| |
$ |
(0.51 |
) |
|
$ |
0.06 |
|
|
Per common share – diluted |
|
|
|
|
Continuing operations |
$ |
(0.22 |
) |
|
$ |
(0.42 |
) |
|
Discontinued operations |
$ |
(0.29 |
) |
|
$ |
0.48 |
|
| |
$ |
(0.51 |
) |
|
$ |
0.06 |
|
| WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING: |
|
|
|
|
Basic |
6,471 |
|
|
6,402 |
|
|
Diluted |
6,471 |
|
|
6,402 |
|
| |
|
|
|
|
|
DIVERSICARE HEALTHCARE SERVICES,
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share data)
| |
Twelve Months EndedDecember
31, |
| |
2019 |
|
2018 |
| PATIENT REVENUES, net |
$ |
475,020 |
|
|
$ |
476,122 |
|
|
Operating expense |
380,870 |
|
|
381,178 |
|
|
Facility-level operating income |
94,150 |
|
|
94,944 |
|
| |
|
|
|
| EXPENSES: |
|
|
|
|
Lease and rent expense |
52,990 |
|
|
49,231 |
|
|
Professional liability |
6,996 |
|
|
6,498 |
|
|
Litigation contingency |
3,100 |
|
|
6,400 |
|
|
General and administrative |
28,009 |
|
|
30,237 |
|
|
Depreciation and amortization |
9,122 |
|
|
9,991 |
|
|
Total expenses less operating |
100,217 |
|
|
102,357 |
|
| OPERATING LOSS |
(6,067 |
) |
|
(7,413 |
) |
| OTHER INCOME (EXPENSE): |
|
|
|
|
Other income |
281 |
|
|
160 |
|
|
Gain on sale of unconsolidated affiliate |
— |
|
|
308 |
|
|
Interest expense, net |
(5,994 |
) |
|
(5,533 |
) |
|
Debt retirement costs |
— |
|
|
(267 |
) |
| |
(5,713 |
) |
|
(5,332 |
) |
| LOSS FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES |
(11,780 |
) |
|
(12,745 |
) |
| BENEFIT (PROVISION) FOR INCOME
TAXES |
(15,694 |
) |
|
1,481 |
|
| NET LOSS FROM CONTINUING
OPERATIONS |
(27,474 |
) |
|
(11,264 |
) |
| NET INCOME (LOSS) FROM
DISCONTINUED OPERATIONS: |
|
|
|
|
Operating loss, net of taxes |
(9,322 |
) |
|
(957 |
) |
|
Gain on lease modification, net of tax |
733 |
|
|
— |
|
|
Gain on sale of assets, net of tax |
— |
|
|
4,825 |
|
| DISCONTINUED OPERATIONS |
(8,589 |
) |
|
3,868 |
|
| NET LOSS |
$ |
(36,063 |
) |
|
$ |
(7,396 |
) |
| |
|
|
|
| NET LOSS PER COMMON SHARE FOR
DIVERSICARE HEALTHCARE SERVICES, INC. SHAREHOLDERS: |
|
|
|
|
Per common share – basic |
|
|
|
|
Continuing operations |
$ |
(4.25 |
) |
|
$ |
(1.77 |
) |
|
Discontinued operations |
(1.33 |
) |
|
0.61 |
|
| |
$ |
(5.58 |
) |
|
$ |
(1.16 |
) |
|
Per common share – diluted |
|
|
|
|
Continuing operations |
$ |
(4.25 |
) |
|
$ |
(1.77 |
) |
|
Discontinued operations |
(1.33 |
) |
|
0.61 |
|
| |
$ |
(5.58 |
) |
|
$ |
(1.16 |
) |
| DIVIDENDS DECLARED PER SHARE
OF COMMON STOCK |
$ |
— |
|
|
$ |
0.17 |
|
| WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING: |
|
|
|
|
Basic |
6,459 |
|
|
6,372 |
|
|
Diluted |
6,459 |
|
|
6,372 |
|
|
|
|
|
|
|
|
DIVERSICARE HEALTHCARE SERVICES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(In thousands)
| |
Twelve Months Ended December 31, |
| |
2019 |
|
2018 |
| NET LOSS |
$ |
(36,063 |
) |
|
$ |
(7,396 |
) |
| Discontinued operations |
(8,589 |
) |
|
3,868 |
|
| Net loss from continuing operations |
(27,474 |
) |
|
(11,264 |
) |
|
Adjustments to reconcile net loss from continuing operations to
cash provided by (used in) operating activities: |
|
|
|
|
Depreciation and amortization |
9,122 |
|
|
9,991 |
|
|
Deferred income tax provision (benefit) |
15,421 |
|
|
(926 |
) |
|
Provision for self-insured professional liability, net of cash
payments |
4,739 |
|
|
2,325 |
|
|
Stock based and deferred compensation |
573 |
|
|
1,127 |
|
|
Debt retirement costs |
— |
|
|
267 |
|
|
Provision for leases, net of cash payments |
3,897 |
|
|
(106 |
) |
|
Litigation contingency expense |
3,100 |
|
|
6,400 |
|
|
Gain on sale of investment in unconsolidated affiliate |
— |
|
|
(308 |
) |
|
Other |
2,243 |
|
|
415 |
|
|
Changes in other assets and liabilities |
714 |
|
|
(2,205 |
) |
| Cash provided by operating activities from continuing
operations |
12,335 |
|
|
5,716 |
|
| Cash used in operating activities from discontinued
operations |
(7,003 |
) |
|
(65 |
) |
| Cash provided by operating activities |
5,332 |
|
|
5,651 |
|
| |
|
|
|
| Cash used in investing activities from continuing
operations |
(4,980 |
) |
|
(7,223 |
) |
| Cash provided by investing
activities from discontinued operations |
6 |
|
|
17,653 |
|
| Cash provided by (used in)
investing activities |
(4,974 |
) |
|
10,430 |
|
| |
|
|
|
| Cash used in financing
activities |
(333 |
) |
|
(16,920 |
) |
| |
|
|
|
| Net increase (decrease) in
cash |
25 |
|
|
(839 |
) |
| Cash beginning of period |
2,685 |
|
|
3,524 |
|
| Cash end of period |
$ |
2,710 |
|
|
$ |
2,685 |
|
| |
|
|
|
|
|
|
|
DIVERSICARE HEALTHCARE SERVICES,
INC.RECONCILIATION OF NET INCOME (LOSS) TO EBITDA,
EBITDAR AND ADJUSTED EBITDAR(In thousands)
| |
|
December 31, 2019 |
|
September 30,2019 |
|
June 30, 2019 |
|
March 31, 2019 |
|
December 31, 2018 |
| |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
| Net income
(loss) |
|
$ |
(3,247 |
) |
|
$ |
(4,874 |
) |
|
$ |
(24,596 |
) |
|
$ |
(3,346 |
) |
|
$ |
415 |
|
| Loss (income) from discontinued
operations, net of tax |
|
1,879 |
|
|
2,958 |
|
|
1,980 |
|
|
1,772 |
|
|
(3,102 |
) |
| Income tax provision
(benefit) |
|
150 |
|
|
(741 |
) |
|
17,313 |
|
|
(1,028 |
) |
|
(774 |
) |
| Interest expense |
|
1,570 |
|
|
1,554 |
|
|
1,476 |
|
|
1,394 |
|
|
1,386 |
|
| Depreciation and
amortization |
|
2,310 |
|
|
2,279 |
|
|
2,217 |
|
|
2,316 |
|
|
2,304 |
|
| Debt retirement costs (a) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
267 |
|
| EBITDA |
|
2,662 |
|
|
1,176 |
|
|
(1,610 |
) |
|
1,108 |
|
|
496 |
|
| |
|
|
|
|
|
|
|
|
|
|
| EBITDA adjustments: |
|
|
|
|
|
|
|
|
|
|
| Litigation contingency expense
(b) |
|
— |
|
|
— |
|
|
3,100 |
|
|
— |
|
|
— |
|
| Severance expense (c) |
|
— |
|
|
— |
|
|
87 |
|
|
— |
|
|
157 |
|
| Adjusted
EBITDA |
|
$ |
2,662 |
|
|
$ |
1,176 |
|
|
$ |
1,577 |
|
|
$ |
1,108 |
|
|
$ |
653 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Lease expense (d) |
|
$ |
13,510 |
|
|
$ |
13,251 |
|
|
$ |
13,114 |
|
|
$ |
13,115 |
|
|
$ |
13,126 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (a) |
Represents non-recurring debt retirement costs related to the
amendment of our debt agreements in December 2018. |
| (b) |
Represents non-recurring expected costs associated with the DOJ
investigation. |
| (c) |
Represents non-recurring costs associated with severance
expenses. |
| (d) |
As management, we evaluate
Adjusted EBITDA exclusive of lease expense, or Adjusted EBITDAR, as
a financial valuation metric. For the three month period ended
December 31, 2019, Adjusted EBITDAR is calculated below. |
|
Adjusted EBITDA |
|
$ |
2,662 |
|
| Lease expense |
|
13,510 |
|
| Adjusted
EBITDAR |
|
$ |
16,172 |
|
DIVERSICARE HEALTHCARE SERVICES,
INC.RECONCILIATION OF NET INCOME (LOSS) FOR
DIVERSICARE HEALTHCARESERVICES, INC. COMMON
SHAREHOLDERS TO ADJUSTED NET INCOME (LOSS)FOR
DIVERSICARE HEALTHCARE SERVICES, INC. COMMON
SHAREHOLDERS(In thousands, except per share data)
| |
|
For Three Months Ended |
| |
|
December 31, 2019 |
|
September 30,2019 |
|
June 30,2019 |
|
March 31,2019 |
|
December 31, 2018 |
| |
|
|
|
|
|
|
|
|
|
|
| Net income (loss) for
Diversicare Healthcare Services, Inc. Common
shareholders |
|
$ |
(3,247 |
) |
|
$ |
(4,874 |
) |
|
$ |
(24,596 |
) |
|
$ |
(3,346 |
) |
|
$ |
415 |
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Debt retirement costs (a) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
267 |
|
|
Litigation contingency expense (b) |
|
— |
|
|
— |
|
|
3,100 |
|
|
— |
|
|
— |
|
|
Severance expense (c) |
|
— |
|
|
— |
|
|
87 |
|
|
— |
|
|
157 |
|
|
Tax impact of above adjustments (d) |
|
— |
|
|
— |
|
|
(40 |
) |
|
— |
|
|
(486 |
) |
|
Discontinued operations, net of tax |
|
1,879 |
|
|
2,958 |
|
|
1,980 |
|
|
1,772 |
|
|
(3,102 |
) |
| Adjusted net loss for
Diversicare Healthcare Services, Inc. common
shareholders |
|
$ |
(1,368 |
) |
|
$ |
(1,916 |
) |
|
$ |
(19,469 |
) |
|
$ |
(1,574 |
) |
|
$ |
(2,749 |
) |
| |
|
|
|
|
|
|
|
|
|
|
| Adjusted net loss for
Diversicare Healthcare Services, Inc. common
shareholders |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.22 |
) |
|
$ |
(0.30 |
) |
|
$ |
(3.01 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.43 |
) |
|
Diluted |
|
$ |
(0.22 |
) |
|
$ |
(0.30 |
) |
|
$ |
(3.01 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.43 |
) |
| |
|
|
|
|
|
|
|
|
|
|
| WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING : |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
6,471 |
|
|
6,470 |
|
|
6,472 |
|
|
6,424 |
|
|
6,402 |
|
|
Diluted |
|
6,471 |
|
|
6,470 |
|
|
6,472 |
|
|
6,424 |
|
|
6,402 |
|
|
(a) |
Represents non-recurring debt retirement costs related to the
amendment of our debt agreements in December 2018. |
|
(b) |
Represents non-recurring expected costs associated with the DOJ
investigation. |
|
(c) |
Represents non-recurring costs associated with severance
expenses. |
| (d) |
Represents tax provision for the cumulative adjustments for each
period. |
We have included certain financial measures in
this press release, including EBITDA, Adjusted EBITDA, Adjusted
EBITDAR, Adjusted Net income (loss), 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, debt retirement costs, income tax and
depreciation and amortization. We define Adjusted EBITDA as EBITDA
adjusted for litigation contingency expense and severance expense.
We define Adjusted EBITDAR as Adjusted EBITDA adjusted for rent
expense. We define Adjusted Net income (loss) as Net income (loss)
adjusted for debt retirement costs, litigation contingency expense,
severance expense, and income (loss) from discontinued
operations.
Our measurements of EBITDA, Adjusted EBITDA,
Adjusted EBITDAR, and Adjusted Net income (loss) may not be
comparable to similarly titled measures of other companies. We have
included information concerning EBITDA, Adjusted EBITDA, and
Adjusted Net income (loss) 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 items and
separation costs. Our presentation of EBITDA, Adjusted EBITDA, and
Adjusted Net income (loss) should not be construed as an inference
that our future results will be unaffected by unusual or
nonrecurring items.
We have included Adjusted EBITDAR in this press
release because we believe that such information is used by certain
investors as a measure of the Company’s valuation. We believe that
Adjusted EBITDAR is an important financial valuation measure that
is commonly used by our management, research analysts, investors,
lenders and financial institutions, to compare the enterprise value
of different companies in the healthcare industry, without regard
to differences in capital structures and leasing arrangements.
Adjusted EBITDAR is a financial valuation measure and is not
displayed as a performance measure as it excludes rent expense,
which is a normal and recurring operating expense. As such,
our presentation of Adjusted EBITDAR, should not be construed as a
financial performance measure.
|
DIVERSICARE HEALTHCARE SERVICES, INC. SELECTED OPERATING
STATISTICS(Unaudited) |
|
Three Months Ended December 31, 2019 |
|
|
|
|
|
As of December 31, 2019 |
|
|
|
Occupancy (Note 2) |
|
|
|
|
|
|
|
|
|
Region(Note 1) |
|
Licensed Nursing Beds (4) |
|
Available Nursing Beds (4) |
|
Skilled Nursing Weighted Average Daily Census |
|
Licensed Nursing Beds |
|
Available Nursing Beds |
|
Medicare Utilization |
2019
Q4 Revenue($ in millions) |
|
Medicare Room
and Board Revenue PPD (Note
3) |
|
Medicaid Room and Board Revenue PPD (Note
3) |
|
|
Alabama |
|
2,464 |
|
|
2,397 |
|
|
2,127 |
|
|
86.3 |
% |
|
88.7 |
% |
|
8.3 |
% |
|
$ |
45.1 |
|
|
$ |
461.41 |
|
|
$ |
187.28 |
|
|
| Kansas |
|
464 |
|
|
464 |
|
|
376 |
|
|
80.9 |
% |
|
81.0 |
% |
|
7.8 |
% |
|
7.7 |
|
|
510.59 |
|
|
182.41 |
|
|
| Mississippi |
|
1,039 |
|
|
1,004 |
|
|
879 |
|
|
84.6 |
% |
|
87.5 |
% |
|
12.1 |
% |
|
19.4 |
|
|
469.72 |
|
|
189.58 |
|
|
| Missouri |
|
339 |
|
|
339 |
|
|
230 |
|
|
67.9 |
% |
|
67.8 |
% |
|
7.0 |
% |
|
4.2 |
|
|
537.26 |
|
|
145.61 |
|
|
| Ohio |
|
403 |
|
|
393 |
|
|
323 |
|
|
80.1 |
% |
|
82.2 |
% |
|
10.3 |
% |
|
12.3 |
|
|
515.76 |
|
|
196.44 |
|
|
| Tennessee |
|
775 |
|
|
709 |
|
|
562 |
|
|
72.5 |
% |
|
79.3 |
% |
|
13.4 |
% |
|
10.0 |
|
|
488.40 |
|
|
201.68 |
|
|
| Texas |
|
1,845 |
|
|
1,662 |
|
|
1,159 |
|
|
62.9 |
% |
|
69.7 |
% |
|
5.5 |
% |
|
22.2 |
|
|
559.24 |
|
|
153.76 |
|
|
| Total |
|
7,329 |
|
|
6,968 |
|
|
5,656 |
|
|
77.2 |
% |
|
81.2 |
% |
|
8.8 |
% |
|
$ |
120.9 |
|
|
$ |
488.69 |
|
|
$ |
180.25 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Note 1: |
The Alabama region includes nursing centers in Alabama and Florida.
The Tennessee 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. |
Company Contact:James R. McKnight, Jr.Chief
Executive Officer615-771-7575
Investor Relations:Kerry D. MasseyChief Financial
Officer615-771-7575
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