Advocat Announces Results for Third Quarter.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 Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). : 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 its results for the third quarter ended September September: see month. 30, 2005. Advocat reported 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 of $1.8 million, or $0.27 per 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. common share, for the third quarter of 2005 compared with a net income from continuing operations of $182,000, or $0.02 per diluted common share, in 2004. Net income for common stock for the third quarter was $1.7 million, or $0.27 per diluted share, compared with a net loss for common stock of $289,000, or $0.05 per diluted share, in the third quarter of 2004. "Advocat reported higher revenues, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. and net income in the third quarter, and continued to generate strong cash flows from operations," stated 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, III, president and 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. of Advocat. "We continue to focus on strengthening our operations and are pleased with our improved results." "During the third quarter, we acquired the Briarcliff Briarcliff may refer to: Places
n. Abbr. SNF An establishment that houses chronically ill, usually elderly patients, and provides long-term nursing care, rehabilitation, and other services. in Oak Ridge, Tennessee Oak Ridge is an incorporated city in Anderson and Roane Counties in East Tennessee, about 25 miles northwest of Knoxville. Oak Ridge's population was 27,387 people at the 2000 census. . We have operated the Briarcliff facility under a lease agreement since 1990. We purchased the nursing home for approximately $6.7 million and financed the transaction with a commercial finance company. We believe our ability to secure this credit underscores the solid progress we have made in improving our financial condition." Third Quarter Results Advocat's net revenues from continuing operations increased 5.3% to $54.5 million compared with $51.7 million in the third quarter of 2004. The increase in third quarter net revenues was primarily due to patient revenues that increased 5.4% to $51.3 million compared with $48.6 million in the third quarter of 2004. Patient revenues benefited from 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. rate increases that were effective October October: see month. 1, 2004, increased Medicare 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 and a 0.7% increase in census in 2005 compared with 2004. Medicare revenues increased to 29.5% of patient revenues in 2005, up from 28.5% in 2004. Resident revenues increased to $3.2 million in 2005 from $3.1 million in the third quarter of 2004. Ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. service revenues, prior to contractual allowances, increased 22.3% to $10.9 million in 2005 from $8.9 million in the third quarter of 2004. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased to $42.8 million and represented 78.5% of patient and resident revenues for the third quarter of 2005 compared with $40.3 million, or 77.9% of such revenues, in the third quarter of 2004. The increase in operating expenses was primarily due to higher wage and benefit costs. The Company's results of continuing operations for the third quarter of 2005 included professional liability costs that declined to $1.0 million compared with $2.5 million in 2004. The provision for current liability claims recorded during the three months ended September 30, 2005, was partially offset by downward adjustments in the liability primarily resulting from the quarterly actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin valuations, resulting in a net expense of $1.0 million in the period. These reductions from the quarterly actuarial valuation were primarily the result of the effects of settlements of certain claims for amounts less than had been reserved in prior periods and the resulting effect of these settlements on the assumptions inherent to the actuarial estimate. The 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 are assessed on a quarterly basis, with changes in estimated losses being recorded in the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of operations in the period identified. Professional liability costs include cash and non-cash charges 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. recorded based on current actuarial reviews. The actuarial reviews include estimates of known claims and an estimate of claims that may have occurred, but have not yet been reported to the Company. As of September 30, 2005, the Company has recorded total liabilities for reported professional liability claims and estimates for incurred but unreported claims of $34.4 million, and has current debt obligations of $48.3 million. The Company does not have cash or available resources to pay in full this current debt, the accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. professional liability claims or any significant portion of either and has limited resources available to meet its anticipated operating, capital expenditure and debt service requirements during 2005. Nine Months Results Net revenues increased to $159.0 million in the first nine months of 2005 compared with $149.2 million in 2004. Patient revenues increased to $149.4 million in 2005 compared with $140.1 million in the first nine months of 2004. Resident revenues were $9.5 million compared with $9.2 million. Ancillary service revenues, prior to contractual allowances, increased to $31.1 million in 2005 from $27.4 million in 2004. Operating expenses were $123.6 million in 2005 and represented 77.8% of patient and resident revenues compared with $116.9 million, or 78.4% of such revenues, in 2004. The increase in operating expenses was primarily due to higher wage and benefit costs. Professional liability expense for the first nine months of 2005 resulted in a net benefit of $4.8 million compared with a net benefit of $2.2 million in the same period of 2004. During the nine months ended September 30, 2005, the Company reduced its total recorded liabilities for self-insured self-insured Self fund Health insurance adjective Referring to the practice of carrying an individual health insurance policy for oneself; self insurance is usually more expensive than group insurance professional liability risks to $34.4 million, down from $42.9 million at December December: see month. 31, 2004. Downward adjustments in the liability primarily resulting from the quarterly actuarial valuations were partially offset by the provision for current liability claims recorded during the nine months ended September 30, 2005, resulting in a net benefit of $4.8 million in the period. Net income from continuing operations for the first nine months of 2005 was $12.2 million, or $1.87 per diluted common share, compared with $8.3 million, or $1.29 per share, in the first nine months of 2004. Net income for common stock for the first nine months of 2005 was $12.1 million, or $1.90 per diluted share, compared with $6.7 million, or $1.08 per diluted share, in the same period of 2004. The 2005 results include income of $141,000 from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. compared with a loss of $1.4 million in the same period of 2004. Third Quarter Conference Call Advocat will conduct a conference call to discuss its third quarter 2005 earnings release on November November: see month. 10, 2005, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). To participate in the Company's call, dial 866-800-8651 or 617-614-2704 and enter passcode 25570245. A live broadcast of the conference call will also be available on the 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 at the Company's web site, www.irinfo.com/avc, as well as www.earnings.com and www.streetevents.com. A replay of the broadcast will be available until November 24, 2005, at the same web sites. 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, uncertainty regarding the Company's ability to restructure or refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. its debt, the impact of under-insured professional liability claims, the accuracy of the Company's estimate of its anticipated professional liability expense, factors affecting the 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. industry in general, governmental reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. , government regulation, 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. 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, 2004, 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 services. Advocat Inc. provides long-term care services to nursing home patients and residents of 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. facilities in nine states, primarily in the Southeast. For additional information about the Company, visit Advocat's web site: http://www.irinfo.com/avc
ADVOCAT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
For the Three For the Nine
Months Months
Ended September 30, Ended September 30,
2005 2004 2005 2004
--------- --------- --------- ---------
REVENUES:
Patient revenues, net $51,261 $48,620 $149,426 $140,058
Resident revenues 3,229 3,115 9,543 9,162
--------- --------- --------- ---------
Net revenues 54,490 51,735 158,969 149,220
--------- --------- --------- ---------
EXPENSES:
Operating 42,799 40,283 123,602 116,940
Lease 3,972 3,827 11,950 11,494
Professional liability 984 2,500 (4,837) (2,185)
General and administrative 3,391 3,396 10,577 9,316
Depreciation and
amortization 1,273 1,171 3,719 3,540
--------- --------- --------- ---------
Total expenses 52,419 51,177 145,011 139,105
--------- --------- --------- ---------
OPERATING INCOME 2,071 558 13,958 10,115
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Foreign currency
transaction gain 258 303 136 496
Interest income 132 111 401 155
Interest expense (868) (758) (2,417) (2,280)
--------- --------- --------- ---------
(478) (344) (1,880) (1,629)
--------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 1,593 214 12,078 8,486
PROVISION (BENEFIT) FOR
INCOME TAXES (170) 32 (150) 186
--------- --------- --------- ---------
NET INCOME FROM CONTINUING
OPERATIONS 1,763 182 12,228 8,300
--------- --------- --------- ---------
INCOME (LOSS) FROM
DISCONTINUED OPERATIONS:
Operating loss, net of tax
provision of $0, $0, $0
and $150, respectively - (473) (250) (1,513)
Gain on sale, net of tax
provision of $0, $30, $0
and $424, respectively 8 77 391 159
--------- --------- --------- ---------
Net income (loss) from
discontinued operations 8 (396) 141 (1,354)
--------- --------- --------- ---------
NET INCOME (LOSS) 1,771 (214) 12,369 6,946
PREFERRED STOCK DIVIDENDS,
ACCRUED BUT NOT PAID 81 75 237 221
--------- --------- --------- ---------
NET INCOME (LOSS) FOR COMMON
STOCK $1,690 $(289) $12,132 $6,725
========= ========= ========= =========
NET INCOME (LOSS) PER COMMON
SHARE:
Per common share - basic
Income from continuing
operations $0.29 $0.02 $2.09 $1.43
Income (loss) from
discontinued operations 0.00 (0.07) 0.03 (0.24)
--------- --------- --------- ---------
$0.29 $(0.05) $2.12 $1.19
========= ========= ========= =========
Per common share - diluted
Income from continuing
operations $0.27 $0.02 $1.87 $1.29
Income (loss) from
discontinued operations 0.00 (0.07) 0.03 (0.21)
--------- --------- --------- ---------
$0.27 $(0.05) $1.90 $1.08
========= ========= ========= =========
WEIGHTED AVERAGE SHARES:
Basic 5,725 5,695 5,725 5,647
========= ========= ========= =========
Diluted 6,498 5,695 6,498 6,407
========= ========= ========= =========
ADVOCAT INC.
CASH FLOWS FROM OPERATING ACTIVITIES
(Unaudited)
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
--------- --------- --------- ---------
NET INCOME $1,771 $(214) $12,369 $6,946
Income (loss) from
discontinued operations 8 (396) 141 (1,354)
--------- --------- --------- ---------
Net income from continuing
operations 1,763 182 12,228 8,300
Adjustments to reconcile net
income from continuing
operations to net cash
provided by operating
activities:
Depreciation and
amortization 1,273 1,171 3,719 3,540
Provision for doubtful
accounts 492 465 1,212 1,170
Provision for (benefit
from) accrual for
self-insured
professional
liability, net 830 2,341 (5,291) (2,760)
Payment of
professional
liability costs (967) (778) (3,198) (2,145)
Amortization of
deferred balances 65 90 265 272
Provision for leases
in excess of cash
payments 59 139 168 417
Foreign currency
transaction gain (258) (303) (136) (496)
Non-cash interest
expense 41 39 122 114
Non-cash interest
income (101) (95) (323) (125)
--------- --------- --------- ---------
NET CASH PROVIDED BY
OPERATING ACTIVITIES BEFORE
CHANGES IN OTHER ASSETS AND
LIABILITIES 3,197 3,251 8,766 8,287
CHANGES IN OTHER ASSETS AND
LIABILITIES AFFECTING
OPERATING ACTIVITIES:
Receivables, net (246) (1,241) (1,848) (167)
Prepaid expenses and
other assets (713) (1,402) (1,928) (1,056)
Trade accounts payable
and occurred expenses 501 126 1,137 (2,539)
--------- --------- --------- ---------
Net cash
provided by
continuing
operations 2,739 734 6,127 4,525
Net cash
provided
(used) by
discontinued
operations -- (57) (59) 738
--------- --------- --------- ---------
NET CASH PROVIDED BY
OPERATING ACTIVITIES $2,739 $677 $6,068 $5,263
========= ========= ========= =========
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