Advocat Announces Refinancing and 2006 Second Quarter Results.BRENTWOOD Brentwood, city and district, England Brentwood, city (1991 pop. 51,212) and district, Essex, SE England. Brentwood is mainly residential but produces some agricultural equipment, film, and prefabricated concrete. , Tenn. -- Advocat (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). BB: AVCA AVCA American Volleyball Coaches Association AVCA American Veterinary Chiropractic Association AVCA African Venture Capital Association AVCA Almaden Valley Community Association AVCA Automobil Veteranen Club Austria AVCA Apoyo Vital Cardiopulmonar Avanzado ) today announced results for its second quarter and six months ended June June: see month. 30, 2006. In addition, the Company announced the completion of its comprehensive refinancing Refinancing An extension and/or increase in amount of existing debt. transaction. Advocat provides 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. services to nursing home patients in eight states, primarily in the southeast Southeast or south east is the ordinal direction halfway between south and east. It the opposite of northwest. Southeast or South East can refer to: DEBT REFINANCING On August 7, 2006, the Company entered into a $30.6 million comprehensive refinancing with Capmark Finance, Inc. which retired existing mortgage and bank term debt and provided funds for a $1.1 million renovation of a nursing center. The new debt includes $22.5 million in mortgages with 25 year principal amortization and a five year term, and an $8.1 million term note with a four year term. In addition, the Company made a payment of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2.5 million to reduce outstanding debt. The refinancing allows Advocat to classify clas·si·fy tr.v. clas·si·fied, clas·si·fy·ing, clas·si·fies 1. To arrange or organize according to class or category. 2. To designate (a document, for example) as confidential, secret, or top secret. $24.5 million in debt that was refinanced in the transaction as long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. at June 30, 2006. Advocat is now in compliance with all its debt covenants. INCOME STATEMENT HIGHLIGHTS FOR THE SECOND QUARTER Net income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the quarter was $3.5 million compared to $1.8 million for the same quarter last year. The 2006 results included a net benefit for professional liability expense of $3.9 million compared to a net expense of $1.5 million in 2005, a decrease in expense of $5.4 million. The Company recorded a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. for stock-based compensation of $5.0 million, related to stock options approved by the Company's shareholders in June 2006. The options were granted in December December: see month. 2005 subject to shareholder approval, which occurred at the Company's annual meeting of shareholders. For the three month period, net income per common share from continuing operations on a 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. basis was $0.53 compared to $0.27 for 2005. There were 6.6 million diluted weighted average shares outstanding in the second quarter of 2006. REVENUE HIGHLIGHTS AND OCCUPANCY RATES Noun 1. occupancy rate - the percentage of all rental units (as in hotels) are occupied or rented at a given time pct, per centum, percent, percentage - a proportion in relation to a whole (which is usually the amount per hundred) For the second quarter, revenue increased to $53.9 million from $49.6 million in 2005, an increase of $4.3 million or 8.6%. The increase was due to increased 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. utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be , increased Medicaid Medicaid, national health insurance program in the United States for low-income persons; established in 1965 with passage of the Social Security Amendments and now run by the Centers for Medicare and Medicaid Services. rates in certain states, Medicare rate increases, and an increase in census census, periodic official count of the number of persons and their condition and of the resources of a country. In ancient times, among the Jews and Romans, such enumeration was mainly for taxation and conscription purposes. in 2006 compared to 2005. The rate of occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy at the Company's nursing centers increased to 77.7% in 2006 from 75.4% in 2005. As a percentage of total census, Medicare days increased to 14.2% in 2006 from 13.2% in 2005. Medicare was 31.1% of revenue in 2006 and 30.7% in 2005 while Medicaid and similar programs were 55.5% in 2006 compared to 57.7%. The Company's average rate per day for Medicare Part A patients increased to $322.79 from $308.31 in 2005, an increase of 4.7%. FUNDS PROVIDED BY OPERATIONS Management believes that reviewing funds provided by operations is an important measurement of the Company's performance. The net cash provided by operating activities before changes in other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. and liabilities (or funds provided by operations) is presented at the end of this press release. Funds provided by operations eliminate the effect of actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin assumptions, reflects the cash effect of professional liability, and excludes the non-cash charge for stock-based compensation. Funds provided by operations for the current quarter were $4.7 million compared to $3.1 million in the second quarter last year. REVENUE AND INCOME HIGHLIGHTS FOR 6 MONTHS Revenue increased to $107.1 million in 2006 from $98.5 million, an increase of 8.7%. Income from continuing operations for the six month period was $9.0 million compared to $10.8 million for 2005. The Company recorded a non-cash charge for stock-based compensation of $5.0 million. There was no stock-based compensation expense in 2005. Professional liability expense was a net benefit of $6.0 million versus a net benefit of $5.8 million in the prior year. For the six month periods, net income from continuing operations per diluted common share was $1.53 compared to $1.64 in 2005. CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. REMARKS William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack R. Council stated, "The Company's results for the second quarter, excluding the impact of professional liability actuarial adjustments and the non cash stock-based compensation expense, continue to reflect the positive trends of the last several quarters. These favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. results are the culmination of many of the Company's initiatives coming together, including increasing occupancy and Medicare census. "The completion of the comprehensive refinancing transactions with Capmark Finance Inc. is a significant, and in some ways, final step in accomplishing the Company's restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). following a period of difficult operations. The refinancing allows the Company to extend maturities of its debt to 4 and 5 years, revises covenants such that the Company is in compliance and provides financing for the $1.1 million renovation of one of the buildings owned by the Company. "We have now completed renovations at two nursing centers, and have two projects underway that are scheduled to be completed during the third quarter. For facilities with three months of operations after completing a renovation, occupancy increased to approximately 75% from 58% last year, and Medicare utilization increased to approximately 21% from 13% last year." CONFERENCE CALL INFORMATION A conference call has been scheduled to discuss the results for the period ended June 30, 2006, on Thursday Thursday: see week. , August 10 at 9:00 A.M. Central time (10:00 A.M. Eastern time).
The conference call information is as follows:
Date: Thursday, August 10, 2006
Time: 9:00 A.M. Central, 10:00 A.M. Eastern
Webcast Links:
http://phx.corporate-ir.net/playerlink.zhtml?c=77083&s=wm&e=1362527
www.streetevents.com
www.earnings.com
www.irinfo.com/avc
Dial in numbers: (866) 578-5771 (domestic) or
(617) 213-8055 (international)
Passcode: 22517246
A replay of the conference call will be accessible two hours after its completion through August 17, 2006 by dialing (888) 286-8010 (domestic) or (617) 801-6888 (international) and entering passcode 44014105. Additionally, the conference call may contain certain additional non-GAAP financial measures. Pursuant to the requirements of Regulation G, the Company will provide a reconciliation of all non-GAAP financial measures not previously reconciled rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. to the most directly comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measure on its website. Details and links to the reconciliations of any non-GAAP financial measures discussed during the conference call will be posted to the Company's website prior to the conference call at www.irinfo.com/avc. 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. Forward-looking statements made in this release involve a number of risks and uncertainties, including but not limited to, changes in governmental reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. , government regulation and health care reforms, the increased cost of borrowing under our credit agreements, 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. proceedings alleging violations of laws and regulations governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. quality of care or violations of other laws and regulations applicable to our business, changing economic conditions 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 31, 2005, as well as in other filings with the Securities and Exchange Commission, which readers are encouraged to review for further disclosure of other factors that could cause actual results to differ materially from those indicated in the forward-looking statements. 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 Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the services. For additional information about the Company, visit Advocat's web site: http://www.irinfo.com/avc. -Financial Tables to Follow-
ADVOCAT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2006 2005
---------- -----------
(Unaudited)
ASSETS:
Current Assets
Cash and cash equivalents $ 10,503 $ 7,070
Restricted cash 350 625
Receivables, net 17,436 18,147
Deferred income taxes 798 1,004
Other current assets 5,647 5,180
-------- --------
Total current assets 34,734 32,026
Property and equipment, net 27,842 39,421
Deferred income taxes 14,285 12,856
Note receivable, net 4,923 5,198
Other assets, net 3,902 4,261
-------- --------
TOTAL ASSETS $ 85,686 $ 93,762
======== ========
LIABILITIES AND SHAREHOLDERS' DEFICIT:
Current Liabilities
Short-term debt and current
portion of long-term debt
and settlement promissory notes $ 9,316 $ 47,419
Trade accounts payable 3,882 4,415
Accrued expenses:
Payroll and employee benefits 7,499 8,495
Current portion of
self-insurance reserves 5,229 5,952
Other current liabilities 4,417 5,715
-------- --------
Total current liabilities 30,343 71,996
Noncurrent Liabilities
Long-term debt and settlement
promissory notes, less current
portion 24,455 128
Self-insurance reserves,
less current portion 22,961 29,041
Other noncurrent liabilities 4,728 4,717
-------- --------
Total noncurrent liabilities 52,144 33,886
REDEEMABLE CONVERTIBLE PREFERRED STOCK 4,918 4,750
SHAREHOLDERS' DEFICIT (1,719) (16,870)
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS'
DEFICIT $ 85,686 $ 93,762
======== ========
ADVOCAT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2006 2005 2006 2005
------------------- -------------------
PATIENT REVENUES, NET $53,895 $49,607 $107,082 $98,491
------- ------- -------- -------
EXPENSES:
Operating 40,668 37,420 81,298 75,752
Lease 3,828 4,079 7,653 7,961
Professional liability (3,853) 1,461 (6,000) (5,781)
General and administrative 3,716 3,316 7,197 6,708
Stock-based compensation 5,012 - 5,012 -
Depreciation 926 825 1,870 1,685
------- ------- -------- -------
50,297 47,101 97,030 86,325
------- ------- -------- -------
OPERATING INCOME 3,598 2,506 10,052 12,166
------- ------- -------- -------
OTHER INCOME (EXPENSE):
Foreign currency
transaction gain (loss) 249 (66) 240 (122)
Other income - - 207 -
Interest income 165 152 348 269
Interest expense (877) (780) (1,876) (1,549)
------- ------- -------- -------
(463) (694) (1,081) (1,402)
------- ------- -------- -------
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 3,135 1,812 8,971 10,764
PROVISION (BENEFIT) FOR
INCOME TAXES (387) 51 (1,116) 62
------- ------- -------- -------
NET INCOME FROM
CONTINUING OPERATIONS 3,522 1,761 10,087 10,702
INCOME (LOSS ) FROM
DISCONTINUED OPERATIONS:
Operating income (loss),
net of tax provision
(benefit) of $0,
$(31), $0 and $(42),
respectively 52 (134) 170 (487)
Gain (loss) on sale,
net of tax provision
of $0, $0, $0 and
$0, respectively (128) 7 (120) 383
------- ------- -------- -------
INCOME (LOSS) FROM
DISCONTINUED OPERATIONS (76) (127) 50 (104)
------- ------- -------- -------
NET INCOME 3,446 1,634 10,137 10,598
PREFERRED STOCK DIVIDENDS,
ACCRUED BUT NOT PAID 85 78 168 156
------- ------- -------- -------
NET INCOME FOR COMMON STOCK $ 3,361 $ 1,556 $ 9,969 $10,442
======= ======= ======== =======
NET INCOME PER COMMON SHARE:
Per common share - basic
Income from continuing
operations $ .60 $ .29 $ 1 .73 $ 1.84
Income (loss)from
discontinued
operations $ (.02) $ (.02) $ .01 $ (.02)
------- ------- -------- -------
$ .58 $ .27 $ 1.74 $ 1.82
======= ======= ======== =======
Per common share - diluted
Income from continuing
operations $ .53 $ .27 $ 1.53 $ 1.64
Income (loss) from
discontinued
operations $ (.01) $ (.02) $ .01 $ (.02)
------- ------- -------- -------
$ .52 $ .25 $ 1.54 $ 1.62
======= ======= ======== =======
WEIGHTED AVERAGE COMMON
SHARES:
Basic 5,746 5,725 5,743 5,725
======= ======= ======== =======
Diluted 6,596 6,498 6,544 6,498
======= ======= ======== =======
ADVOCAT INC.
FUNDS PROVIDED BY OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
------- -------- -------- --------
NET INCOME $ 3,446 $ 1,634 $10,137 $10,598
Income (loss) from
discontinued operations (76) (127) 50 (104)
-------- -------- -------- --------
Net income from
continuing operations 3,522 1,761 10,087 10,702
Adjustments to reconcile
net income from continuing
operations to funds
provided by operations:
Depreciation 926 825 1,870 1,685
Provision for doubtful
accounts 595 258 936 743
Deferred income taxes, net (445) - (1,223) -
Provision for (benefit from)
accrual for self-insured
professional liability,
net (4,004) 1,308 (6,304) (6,080)
Payment of professional
liability costs (637) (1,196) (1,183) (2,231)
Stock-based compensation 5,012 - 5,012 -
Amortization of
deferred balances 36 59 87 198
Provision for leases in
excess of cash payments 3 92 11 109
Gain on sale of bed license - - (207) -
Foreign currency transaction
(gain) loss (249) 66 (240) 122
Non-cash interest expense 43 41 86 81
Non-cash interest income (98) (117) (206) (222)
-------- -------- -------- --------
FUNDS PROVIDED BY OPERATIONS $ 4,704 $ 3,097 $ 8,726 $ 5,107
======== ======== ======== ========
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