Advocat Announces Fourth Quarter and Year-End Results.BRENTWOOD, Tenn.--(BUSINESS WIRE)--March 30, 1999--Advocat Inc. (NYSE NYSE See: New York Stock Exchange :AVC (1) (Advanced Video Coding) The video compression techniques used in the H.264 standard, jointly developed by ISO and the ITU-T. See H.264. (2) (Audio Visual C ) today announced revenues and operating results for the fourth quarter and year ended December 31, 1998. Net revenues for the fourth quarter totaled $49.7 million compared with revenue of $50.9 million for the fourth quarter of 1997. Fourth quarter net income before non-recurring items and other charges was $63,000 ($0.01 per share) compared with net income of $97,000 ($0.02 per share diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) for the same period in 1997. After giving effect to $6.2 million in pre-tax fourth quarter non-recurring items and other charges, the Company reported a net loss in the quarter ended December 31, 1998, of $3.9 million. The non-recurring fourth quarter pre-tax charges of $4.4 million include costs resulting from (a) impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of assets primarily related to the Company's investment in a limited partnership; (b) legal and contractual settlements, the most significant of which related to the settlement of claims submitted in the fourth quarter by the Company's largest lessor One who rents real property or Personal Property to another. A lessor of land is a landlord. Cross-references Landlord and Tenant. lessor n. the owner of real property who rents it to a lessee pursuant to a written lease. ; (c) the termination of proposed financing and acquisition transactions; and (d) additional restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. associated with the Company's management information systems conversion. In addition to these non-recurring charges, the Company recorded pre-tax fourth quarter charges of $1.8 million to increase the allowance for doubtful accounts Allowance for Doubtful Accounts An estimation made by a company and documented on its balance sheet for receivables that might go uncollected. Notes: It is standard practice for a company to have funds set aside for money that cannot be collected. for potentially uncollectible accounts Uncollectible account An account which cannot be collected by a company because the customer is not able to pay or is unwilling to pay. receivable identified during the fourth quarter as part of the information systems conversion process and to increase self-insurance self-insurance, n the setting aside of funds by an individual or organization to meet anticipated dental care expenses or dental care claims, and accumulation of a fund to absorb fluctuations in the amount of expenses and claims. reserves related to additional liability exposure under the large deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). program for professional liability insurance. For the full year 1998, net revenues were $205.2 million compared with $182.2 million in the previous year. Net income for 1998, before $7.7 million in pre-tax non-recurring items and other charges, was $1.8 million ($0.34 per share) compared with net income of $3.0 million ($0.56 per share diluted) for 1997. After giving effect to the non-recurring items and other charges, the Company reported a net loss of $3.1 million for the 12 months ended December 31, 1998. "Advocat's operational focus in 1998 has been the implementation of an information system that will allow us to move from a cost-based reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. method for Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. to the new Prospective Payment System (PPS (Packets Per Second) The measurement of activity in a local area network (LAN). In LANs such as Ethernet, Token Ring and FDDI, as well as the Internet, data is broken up and transmitted in packets (frames), each with a source and destination address. )," stated Dr. Charles W. Birkett, chairman and chief executive officer. "The change to PPS combined with the more stringent regulatory environment for long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. providers consumed con·sume v. con·sumed, con·sum·ing, con·sumes v.tr. 1. To take in as food; eat or drink up. See Synonyms at eat. 2. a. significant management time and resources during the year. "We significantly enhanced our information systems during 1998 to prepare for the change to PPS. The new system is resulting in improved cost controls and operational efficiency at our facilities. As of January 1, 1999, all but 16 of our U.S. nursing homes had converted to PPS. The remaining facilities will be converted to PPS by mid- mid- pref. Middle: midbrain. 1999. Our experience so far under PPS has been a reduction in facility revenue and a neutral effect on the bottom line because of our improved cost control measures. As we continue the transition to PPS and other changes related to Medicare reimbursement, we believe there are still other issues that may affect our results, including changes to Medicare Part B payment schedules, certain indirect costs Indirect costs are costs that are not directly accountable to a particular function or product; these are fixed costs. Indirect costs include taxes, administration, personnel and security costs. See also
Dr. Birkett continued, "The harsher regulatory environment in 1998 experienced by all long-term care providers directly impacted Advocat and increased our costs. Advocat's quality of care remains very high, however increased regulatory issues at certain facilities had a significant impact on operating costs operating costs npl → gastos mpl operacionales that did not always translate into improved patient care. "The issues we encountered with the Alabama Alabama, indigenous people of North America Alabama (ăləbăm`ə), indigenous people of North America whose language belongs to the Muskogean branch of the Hokan-Siouan linguistic stock (see Native American languages). regulators in the latter half of 1997 and first half of 1998 were not unique to Advocat or our industry. Our experience in 1998 suggests that the combination of lost revenues and increased expenses related to responding to the regulatory issues cost Advocat approximately $2.9 million pre-tax ($2.0 million in Alabama incurred in the first half of 1998 and an estimated $0.9 million in Florida, Arkansas and Ohio incurred in the second half of 1998)." Dr. Birkett concluded, "While the U.S. nursing home division is operating in a very difficult environment, we remain positive about the valuable services we provide the elderly population. Our U.S. assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. division and the Canadian long-term care division continue to perform well and are meeting our financial expectations. With more than 4,700 beds, the assisted living business will remain a key area of focus for Advocat." Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made in this release involve a number of risks and uncertainties, including but not limited to, changes in governmental reimbursement, government regulation and health care reforms, the impact of future licensing surveys, changing economic and market conditions and other risk factors detailed in the Company's Securities and Exchange Commission filings. As of December 31, 1998, Advocat Inc. operated 115 facilities with 11,937 beds of which 52 were assisted living with 4,755 beds and 63 were skilled nursing facilities skilled nursing facility n. Abbr. SNF An establishment that houses chronically ill, usually elderly patients, and provides long-term nursing care, rehabilitation, and other services. containing 7,182 licensed beds. The Company has facilities in 11 southern states Southern States U.S. Confederacy government of 11 Southern states that left the Union in 1860. [Am. Hist.: EB, III: 73] Dixie popular name for Southern states in U.S. and for song. [Am. Hist. and two provinces in Canada. For additional information about the Company, visit Advocat's web site: http://www.irinfo.com/avc -0-
ADVOCAT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
--------------------- -------------------
1998 1997 1998 1997
---------- --------- --------- --------
REVENUES:
Patient revenues $ 39,867 $ 41,064 $ 166,529 $163,094
Resident revenues 8,821 8,741 34,804 15,105
Management fee
revenues 919 1,060 3,627 3,886
Interest income 49 42 192 158
---------- --------- --------- --------
Net revenues 49,656 50,907 205,152 182,243
---------- --------- --------- --------
EXPENSES:
Operating 41,223 41,483 164,769 146,555
Lease 4,730 4,658 19,109 15,850
General and
administrative 2,810 2,589 10,969 9,636
Depreciation and
amortization 1,020 824 3,838 2,823
Interest 1,577 1,201 5,425 2,672
Non-recurring charges 4,391 -- 5,859 --
---------- --------- --------- --------
Total expenses 55,751 50,755 209,969 177,536
========== ========= ========= ========
Income (loss) before
income taxes (6,095) 152 (4,817) 4,707
Provision (benefit) for
income taxes (2,194) 55 (1,734) 1,694
---------- --------- --------- --------
Net income (loss) $ (3,901) $ 97 $ (3,083) $3,013
========== ========= ========= ========
Earnings (loss) per share
(basic) $(0.72) $ 0.02 $(0.57) $0.56
========== ========= ========= ========
Earnings (loss) per share
(diluted) $(0.72) $ 0.02 $(0.57) $0.56
========== ========= ========= ========
Average Weighted Shares
Outstanding:
Basic 5,399,000 5,376,000 5,388,000 5,339,000
========== ========= ========= ========
Fully Diluted 5,399,000 5,384,000 5,388,000 5,373,000
========== ========= ========= ========
ADVOCAT INC.
SUPPLEMENTARY INFORMATION
ANALYSIS OF 1998 EARNINGS
(In thousands, except per share data)
For the Three Months For the Twelve Months
Ended Dec. 31, Ended Dec. 31,
--------------------- -------------------
1998 1997 1998 1997
---------- --------- --------- --------
Revenues $ 49,656 $ 50,907 $ 205,152 $182,243
Pre-tax earnings before
non-recurring items and
other charges 98 152 2,844 4,707
Net income before
non-recurring
and other charges 63 97 1,820 3,013
Non-recurring items:
Impaired assets 2,858 -- 2,858 --
Legal and contractual
settlements 994 -- 1,276 --
Termination of proposed
financing and acquisition
transactions 341 -- 559 --
Restructuring -- information
systems conversion 198 -- 1,166 --
Other charges:
Allowance for bad debt 875 -- 875 --
Self-insurance reserves 927 -- 927 --
Pre-tax income (loss) (6,095) 152 (4,817) 4,707
Net income (loss) (3,901) 97 (3,083) 3,013
Earnings (loss) per share:
Earnings before
non-recurring
and other charges $ 0.01 $ 0.02 $ 0.34 $0.56
Net earnings (loss) $ (0.72) $ 0.02 $ (0.57) $0.56
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