|
|
Advocat Announces 2009 Year End Results
GlobeNewswire
2010-03-09
BRENTWOOD, Tenn., March 9, 2010 (GLOBE NEWSWIRE) -- Advocat Inc.
(Nasdaq:AVCA) today announced its results for the fourth quarter and
year ended December 31, 2009.
For the fourth quarter of 2009 compared to the fourth quarter of 2008,
key highlights include the following:
-- Revenue increased 2.9% to $76.1 million in 2009, compared to $74.0
million in 2008.
-- Occupancy increased to 77.4% in 2009, compared to 76.0% in 2008.
-- Net income from continuing operations was $174,000 or $0.02 per diluted
common share in 2009, compared to $1.2 million in 2008, or $0.19 per
diluted common shares.
-- The provision for professional liability was $2.0 million in 2009
compared to $1.0 million in 2008, an increase in expense of $1.0
million.
-- Funds provided by operations were $3.5 million in 2009 compared to $3.0
million in 2008.
Highlights for the Year Ended December 31, 2009
Key Highlights for 2009 compared to 2008 include the following:
-- Revenue increased 5.0% to $302.0 million from $287.6 million in 2008.
-- Occupancy increased to 76.7% in 2009, compared to 75.3% in 2008.
-- Medicare rates increased 3.3%.
-- Operating income was $4.9 million compared to $11.6 million in 2008.
-- Professional liability was an expense of $9.1 million compared to $1.7
million in 2008, an increase in expense of $7.4 million.
-- There was a foreign currency translation gain of $191,000 in 2009
compared to a loss of $1.0 million in 2008. These gains and losses are
related to a note taken on the 2004 sale of the Canadian operations.
-- Net income from continuing operations was $2.4 million compared to $5.4
million in 2008, or $0.36 per diluted common share compared to $0.86 in
2008.
-- Stockholders' equity increased to $19.7 million from $17.6 million a
year ago, while total debt was reduced $7.6 million to $24.8 million.
-- As a result of these balance sheet improvements, the Company's debt to
equity ratio improved to 1.3 to 1, compared to 1.8 to 1 a year ago.
-- Funds provided by operations increased to $14.9 million in 2009 compared
to $12.0 million in 2008.
Funds provided by operations is a non-GAAP performance measurement. A
reconciliation of funds provided by operations to net income is
included in the financial tables accompanying this press release
CEO Remarks
William R. Council, III, noted, "Last week we announced the completion
of the COO search. I am very pleased that in a few weeks Kelly Gill
will assume the responsibilities for the operations of our nursing
centers. He is an executive with exceptional experience and established
credentials in our profession. Kelly joins us at a very critical time
when all providers are challenged by rising costs and lower
reimbursement rates. I am confident that with Kelly's contribution,
Advocat will continue to create the flexibility, innovation and team
leadership to meet these challenges successfully.
"The revenue drivers in our business are increased occupancy, rate
increases, and favorable patient mix. We achieved good results in two
of these metrics this year. Our census initiatives generated growth in
total census and our focus on higher acuity patients increased rates.
While our Medicare percent to total declined because of the increase in
non-Medicare census, we had only a marginal drop in average daily
Medicare census.
"Funds from operations in 2009 totaled $14.9 million or $2.58 per
diluted common share, up from $12.0 million or $2.03 per diluted common
share. This represents the second highest yearly performance in
Advocat's last five years, accomplished during a period of recession.
We utilized the funds generated from operations to the shareholders
benefit by investing in our nursing centers ($6.6 million), paying off
debt ($7.6 million) and providing dividends to our common and preferred
shareholders ($1.2 million)."
Mr. Council continued, "The key elements of our growth strategy are
four fold:
-- Improve physical plants
-- Expand special services
-- Acquire, lease or build additional facilities
-- Concentrate marketing to favorable patient mix
One of the most successful initiatives is our facility renovation
program."
Facility Renovation Update
As of December 31, 2009, we have completed renovations at twelve
facilities and have two additional projects in progress that we expect
to complete in the first half of 2010. In January 2010, the Company
celebrated the grand opening of the Company's thirteenth renovation
project, which included a 15 bed expansion to the nursing center. This
facility has experienced an increase in daily census as of the end of
February 2010 to 67 compared to 59 as of December 2009. The Company is
developing plans for additional renovation projects.
A total of $19.6 million has been spent on the twelve completed
renovations, with $12.5 million financed through Omega, $6.0 million
financed with internally generated cash, and $1.1 million financed with
long-term debt.
A table is included with this press release summarizing operating
results at renovated nursing centers.
Other Highlights for the Year Ended 2009
The following table summarizes key revenue and census statistics for
the year:
Year Ended
December 31,
-----------------
2009 2008
-------- -------
Skilled nursing occupancy 76.7% 75.3%
Medicare census as percent of total 12.7% 13.3%
Managed care census as percent of total 1.3% 1.2%
Medicare revenues as percent of total 30.0% 31.3%
Medicaid revenues as percent of total 54.8% 53.6%
Managed care revenues as percent of total 2.70 2.4%
Average daily skilled nursing census 4,432 4,346
Average daily Medicare census 564 578
Average daily Managed care census 56 51
Medicare average rate per day $398.88 $386.3
Medicaid average rate per day $146.05 $139.45
Managed care average rate per day $372.76 $343.73
The Company's average rate per day for Medicare Part A patients
increased 3.3% in 2009 compared to 2008 as a result of the annual
inflation adjustment that was effective October 1, 2008 and the acuity
levels of Medicare patients in our nursing centers, as indicated by RUG
level scores, which were higher in 2009 than in 2008. However,
effective October 1, 2009, CMS reduced Medicare rates approximately
1.1%, The Company's average rate per day for Medicaid patients
increased 4.7% in 2009 compared to 2008 as a result of rate increases
in certain states, partially funded by increased provider taxes, and
increasing patient acuity levels. Taking higher provider taxes into
consideration, the net increase in the average Medicaid rate per day
was 3.6%.
-- Operating expense increased to $240.1 million in 2009 from $227.6
million in 2008, an increase of $12.5 million, or 5.5%. Operating
expense increased to 79.5% of revenue in 2009, compared to 79.1% of
revenue in 2008. The increase in operating expense as a percent of
revenue was primarily due to reductions in the fourth quarter of 2009 in
Medicare rates and increased provider taxes imposed by state Medicaid
programs.
-- The largest component of operating expenses is wages, which increased to
$147.2 million in 2009 from $138.9 million in 2008, an increase of $8.3
million, or 6.0%. Average merit increases for operating personnel were
approximately 2.4% for the year, compared to 4.2% in 2008.
-- Cash expenditures for professional liability costs were $4.9 million in
2009 compared to $6.8 million for 2008.
-- Employee health insurance costs are approximately $1.6 million higher in
2009 compared to 2008, an increase of 23.7%.
-- Provider taxes increased approximately $1.8 million in 2009, primarily
due to new rate legislation in Florida.
General and administrative expense was $18.5 million in 2009 unchanged
from 2008. As a percentage of revenue, general and administrative
expense decreased to 6.1% in 2009 from 6.4% in 2008.
Revolving Credit Facility
The Company expects to enter into an agreement with a bank for a new
$15 million revolving credit facility in March 2010, replacing its
current bank revolving credit facility which was to expire in August
2010. In addition to replacing the existing revolving credit facility,
the Company expects to use $3.2 million in proceeds from the new
facility to retire an existing bank term loan. The new revolver is
expected to be secured by accounts receivable, to have a term of three
years and bear interest at the Company's option of LIBOR (subject to a
floor of 3.0%) plus 3.5% or the bank's prime lending rate.
Conference Call Information
A conference call has been scheduled for Wednesday, March 10, 2010 at
9:00 A.M. Central time (10:00 A.M. Eastern time) to discuss 2009 year
end results.
The conference call information is as follows:
Date: Wednesday, March 10, 2010
Time: 9:00 A.M. Central, 10:00 A.M. Eastern
Webcast Links: www.streetevents.comwww.earnings.comwww.irinfo.com/avc
Dial in numbers: 888-713-4205 (domestic) or 617-213-4862
(international)
Passcode: 61228802
The call will consist of remarks from management as well as a question
and answer session. In addition to the questions posed during the live
call, management will also be addressing questions submitted by email.
If you would like to submit a question please email it to
InvestorRelations@advocat-inc.com before the start of the call.
A replay of the conference call will be accessible two hours after its
completion through March 17, 2010 by dialing (888) 286-8010 (domestic)
or (617) 801-6888 (international)and entering passcode 93216164.
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 complete the
contemplated refinancing of our revolving credit facility, our ability
to arrange appropriate financing and successfully construct and operate
the replacement facility for the facility in West Virginia, our ability
to increase census at our renovated facilities, changes in governmental
reimbursement, government regulation and health care reforms, any
increases in the cost of borrowing under our credit agreements, our
ability to comply with covenants contained in those credit agreements,
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 regulatory proceedings
alleging violations of laws and regulations governing quality of care
or violations of other laws and regulations applicable to our business,
our ability to control costs, changes to our valuation of deferred tax
assets, changes in occupancy rates in our facilities, 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 other risk factors detailed
in the Company's Securities and Exchange Commission filings. The
Company has provided additional information in its Annual Report on
Form 10-K for the fiscal year ended December 31, 2009, as well as in
its Quarterly Reports on Form 10-Q and 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. Advocat 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.
Advocat provides long term care services to patients in 50 skilled
nursing centers containing 5,799 licensed nursing beds, primarily in
the Southeast and Southwest. For additional information about the
Company, visit Advocat's web site: http://www.irinfo.com/avc.
ADVOCAT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December December
31, 31,
2009 2008
--------- --------
ASSETS:
Current Assets
Cash and cash equivalents $8,609 $7,598
Receivables, net 25,787 24,627
Deferred income taxes 4,792 3,967
Other current assets 2,546 3,117
--------- --------
Total current assets 41,734 39,309
Property and equipment, net 37,362 37,456
Deferred income taxes 13,804 13,899
Note receivable, net -- 3,486
Acquired leasehold
interest, net 9,764 10,149
Other assets, net 2,602 3,040
--------- --------
TOTAL ASSETS $105,266 $107,339
========= ========
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current Liabilities
Current portion of
long-term debt $2,278 $2,238
Trade accounts payable 4,758 4,828
Accrued expenses:
Payroll and employee
benefits 10,177 9,545
Current portion of
self-insurance reserves 7,860 6,469
Other current liabilities 4,327 5,344
--------- --------
Total current liabilities 29,400 28,424
Noncurrent Liabilities
Long-term debt, less
current portion 22,551 30,172
Self-insurance reserves,
less current portion 12,235 10,212
Other noncurrent
liabilities 15,195 13,089
--------- --------
Total noncurrent
liabilities 49,981 53,473
PREFERRED STOCK 6,192 7,891
SHAREHOLDERS' EQUITY 19,693 17,551
--------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $105,266 $107,339
========= ========
ADVOCAT INC.
CONSOLIDATED INCOME STATEMENTS
(In thousands, except per share
data)
For the Three Months For the Year
Ended December 31, Ended December 31,
------------------------ -------------------
2009 2008 2009 2008
----------- ----------- --------- --------
(Unaudited) (Unaudited)
PATIENT REVENUES, NET $76,127 $73,957 $302,031 $287,607
----------- ----------- --------- --------
EXPENSES:
Operating 61,281 58,250 240,095 227,633
Lease 5,992 5,759 23,422 22,962
Professional liability 2,033 1,022 9,132 1,658
General and administrative 4,504 4,638 18,496 18,486
Depreciation and amortization 1,587 1,392 5,999 5,306
----------- ----------- --------- --------
75,397 71,061 297,144 276,045
----------- ----------- --------- --------
OPERATING INCOME 730 2,896 4,887 11,562
----------- ----------- --------- --------
OTHER INCOME (EXPENSE):
Foreign currency transaction
gain (loss) -- (712) 191 (1,005)
Other income -- -- 549 --
Interest income 2 83 161 454
Interest expense (454) (644) (1,877) (2,870)
----------- ----------- --------- --------
(452) (1,273) (976) (3,421)
----------- ----------- --------- --------
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 278 1,623 3,911 8,141
PROVISION FOR INCOME TAXES (104) (449) (1,497) (2,759)
----------- ----------- --------- --------
NET INCOME FROM CONTINUING
OPERATIONS 174 1,174 2,414 5,382
DISCONTINUED OPERATIONS:
Operating income, net of tax
provision of $1, $52, $117,
and $180,
respectively 2 112 187 353
----------- ----------- --------- --------
NET INCOME FROM DISCONTINUED
OPERATIONS 2 112 187 353
----------- ----------- --------- --------
NET INCOME 176 1,286 2,601 5,735
PREFERRED STOCK DIVIDENDS 86 86 344 344
----------- ----------- --------- --------
NET INCOME FOR COMMON STOCK $90 $1,200 $2,257 $5,391
=========== =========== ========= ========
NET INCOME PER COMMON SHARE:
Per common share -- basic
Income from continuing
operations $0.02 $0.19 $0.37 $0.89
Income from discontinued
operations -- 0.02 0.03 0.06
----------- ----------- --------- --------
$0.02 $0.21 $0.40 $0.95
=========== =========== ========= ========
Per common share -- diluted
Income (loss) from continuing
operations $0.02 $0.19 $0.36 $0.86
Income from discontinued
operations -- 0.02 0.03 0.06
----------- ----------- --------- --------
$0.02 $0.21 $0.39 $0.92
=========== =========== ========= ========
WEIGHTED AVERAGE COMMON SHARES:
Basic 5,687 5,671 5,678 5,693
=========== =========== ========= ========
Diluted 5,917 5,726 5,797 5,887
=========== =========== ========= ========
ADVOCAT INC.
FUNDS PROVIDED BY OPERATIONS
(In thousands)
Three Months Ended Year Ended
December 31, December 31,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
NET INCOME $176 $1,286 $2,601 $5,735
Income from discontinued operations 2 112 187 353
----------- ----------- ----------- -----------
Net income from continuing
operations 174 1,174 2,414 5,382
Adjustments to reconcile net
income from continuing operations
to funds provided by operations:
Depreciation and amortization 1,587 1,392 5,999 5,306
Provision for doubtful accounts 395 655 2,181 2,334
Deferred income tax provision (230) 520 (678) 775
1,084 (2,081) 3,543 (5,717)
Provision (benefit) for
self-insured professional
liability, net of cash payments
Stock-based compensation 133 222 689 867
Amortization of deferred balances 99 91 382 426
Provision for leases in excess of
cash payments 209 340 1,187 1,711
Other -- 687 (781) 884
----------- ----------- ----------- -----------
FUNDS PROVIDED BY OPERATIONS $3,451 $3,000 $14,936 $11,968
=========== =========== =========== ===========
FUNDS PROVIDED BY OPERATIONS PER
SHARE:
Basic $0.61 $0.53 $2.63 $2.10
=========== =========== =========== ===========
Diluted $0.58 $0.52 $2.58 $2.03
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES:
Basic 5,687 5,671 5,678 5,693
=========== =========== =========== ===========
Diluted 5,917 5,726 5,797 5,887
=========== =========== =========== ===========
Advocat provides financial measures using accounting principles
generally accepted in the United States (GAAP) and using adjustments to
GAAP (non-GAAP). These non-GAAP measures are not measurements under
GAAP. These measurements should be considered in addition to, but not
as a substitute for, the information contained in our financial
statements prepared in accordance with GAAP. Funds Provided by
Operations is defined as cash flow from operating activities before
changes in other assets and liabilities affecting operating activities.
Management believes that Funds Provided by Operations is an important
performance measurement because it eliminates the effect of actuarial
assumptions on our professional liability reserves, includes the cash
effect of professional liability payments, and does not include the
effects of deferred tax benefit and other non-cash charges. Since the
definition of Funds Provided by Operations may vary among companies and
industries, it should not be used as a measure of performance among
companies.
ADVOCAT INC.
SELECTED OPERATING
STATISTICS
December 31, 2009
(Unaudited)
As of
December 31, 2009
-------------------
Licensed Available
Region Beds Beds
------------ -------- ---------
Alabama 711 704
Arkansas 1,311 1,183
Florida 502 462
Kentucky
(Note 3) 775 742
Tennessee 617 586
Texas 1,868 1,676
-------- ---------
Total 5,784 5,353
======== =========
For the Three Months Ended December 31, 2009
--------------------------------------------------------------------------
Medicare Medicaid
Skilled Room and Room and
Nursing Occupancy 2009 Board Board
Weighted (Note 1)
-------------------- Q4 Revenue Revenue
Average Licensed Available Medicare Revenue PPD PPD
Daily ($ in
Region Census Beds Beds Utilization millions) (Note 2) (Note 2)
------------ -------- --------- --------- ----------- --------- -------- --------
Alabama 585 82.3% 83.1% 11.5% $10.6 $394.72 $161.16
Arkansas 982 74.9% 83.0% 13.3% 16.2 374 145.4
Florida 411 81.8% 88.9% 8.7% 8 429.92 180.51
Kentucky
(Note 3) 643 82.9% 86.6% 11.8% 12.4 394.08 175.16
Tennessee 491 79.6% 83.8% 16.4% 8.5 381.14 137.59
Texas 1,365 73.1% 81.4% 10.5% 20.4 399.2 122.66
-------- --------- --------- ----------- --------- -------- --------
Total 4,477 77.4% 83.6% 11.9% $76.1 $391.07 $148.09
======== ========= ========= =========== ========= ======== ========
As of
December 31, 2009
-------------------
Licensed Available
Region Beds Beds
------------ -------- ---------
Alabama 711 704
Arkansas 1,311 1,183
Florida 502 462
Kentucky
(Note 3) 775 742
Tennessee 617 586
Texas 1,868 1,676
-------- ---------
Total 5,784 5,353
======== =========
For the Year Ended December 31, 2009
--------------------------------------------------------------------------
Medicare Medicaid
Skilled Room and Room and
Nursing Occupancy 2009 Board Board
Weighted (Note 1)
-------------------- YTD Revenue Revenue
Average Licensed Available Medicare Revenue PPD PPD
Daily ($ in
Region Census Beds Beds Utilization millions) (Note 2) (Note 2)
------------ -------- --------- --------- ----------- --------- -------- --------
Alabama 606 85.20% 86.10% 13.50% $45.50 $406.64 $162.71
Arkansas 954 72.80% 80.70% 14.40% 62.2 374.13 141.78
Florida 402 80.10% 87.00% 9.50% 30.6 419.94 173.06
Kentucky
(Note 3) 654 84.30% 88.10% 11.90% 50.4 411.44 171.78
Tennessee 488 79.20% 83.30% 16.00% 33.8 384.27 137.75
Texas 1,328 71.40% 79.20% 11.30% 79.5 412.98 120.66
-------- --------- --------- ----------- --------- -------- --------
Total 4,432 76.70% 82.80% 12.70% $302.00 $398.88 $146.05
======== ========= ========= =========== ========= ======== ========
Note 1: The number of "Licensed beds" is based on the licensed capacity
of the facility. The Company has historically reported its occupancy
based on licensed beds. The number of "Available Beds" represents
"licensed beds" less beds removed from service. "Available beds" is
subject to change based upon the needs of the facilities, including
configuration of patient rooms and offices, status of beds (private,
semi-private, ward, etc.) and renovations. Occupancy is measured on a
weighted average basis.
Note 2: These Medicare and Medicaid revenue rates include room and
board revenues but do not include any ancillary revenues related to
these patients.
Note 3: The Kentucky region includes nursing centers in Kentucky, West
Virginia and Ohio. Licensed and available beds increased by 15 in
Kentucky in January 2010, following the expansion of a facility.
ADVOCAT INC.
SELECTED OPERATING STATISTICS OF RENOVATED FACILITIES
December 31, 2009
(Unaudited)
Medicare Average
Occupancy(1) Daily Census
Q4 LTM(2) Q4 LTM(2)
Renovation -- Completion Date 2009 Prior 2009 Prior
----------------------------------- ------------ ------ -------- ------
1st renovation -- January 2006 84.00% 64.9% 10.1 8.1
2nd renovation -- July 2006 71.40% 71.2% 11.4 12.3
3rd renovation -- August 2006 71.00% 45.1% 10 5.3
4th renovation -- October 2006 81.90% 71.9% 8 8.6
5th renovation -- February 2007 69.10% 56.2% 10.8 8
6th renovation -- April 2007 50.70% 47.5% 10.2 12.7
7th renovation -- July 2007 81.00% 85.0% 7.1 17.4
8th renovation -- January 2008 76.30% 50.9% 17.6 8.9
9th renovation -- October 2008 83.00% 83.0% 15.2 17.2
10th renovation -- November 2008 83.80% 80.8% 15.5 12.2
11th renovation -- March 2009 68.90% 62.5% 16.5 7
------------ ------ -------- ------
Total 74.40% 66.5% 132.4 117.7
------------ ------ -------- ------
(1) Occupancy based on licensed
beds.
(2) Last Twelve Months prior to
commencement of construction.
CONTACT: Advocat
William R. Council, III, President and CEO
(615) 771-7575
Cameron Associates
Investor Relations:
Rodney O'Connor
(212) 554-5470
|
|
|
