Concentra Operating Corporation Reports Second Quarter Results.ADDISON, Texas Addison is a city in Dallas County, Texas (USA). The population was 14,166 at the 2000 census. Addison is a northern suburb of Dallas. The city calls itself the Town of Addison but it is incorporated as a city. -- Concentra Operating Corporation ("Concentra" or the "Company") today announced results for the second quarter ended June June: see month. 30, 2005. The Company reported 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: Adjusted Earnings Before Interest Taxes Depreciation and Amortization Noun 1. Earnings Before Interest Taxes Depreciation and Amortization - income before interest and taxes and depreciation and amortization have been subtracted; an indicator of a company's profitability that is watched by investors (especially in leveraged buyouts) ("Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ") of $44,825,000 for the quarter, which compared to $44,318,000 in EBITDA reported for the same period in 2004. Concentra computes Adjusted EBITDA in the manner prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). by its bond indentures Bond indenture Contract that sets forth the promises of a bond issuer and the rights of investors. bond indenture See indenture. . A reconciliation of Adjusted EBITDA to net income is provided within this press release. Revenue for the second quarter of 2005 increased to $286,914,000 from $281,450,000 in the year-earlier period. 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. grew 11% to $37,335,000 from $33,616,000 in the second quarter of last year. This increase in operating income primarily related to a gain on the sale of certain assets of $1,426,000 during the quarter and the fact that results for the prior year included $2,502,000 in general and administrative expenses incurred in connection with the Company's refinancing Refinancing An extension and/or increase in amount of existing debt. and dividend transactions. During the quarter, in connection with an audit of prior tax years, Concentra also received a tax benefit of $10,217,000 associated with the resolution with the Internal Revenue Services of an issue relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the deductibility of previously incurred transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). . Including this benefit, net income for the quarter was $23,628,000. This compares with net income of $3,590,000 for the same period in 2004. The Company's prior-year results included a loss on the early retirement of debt of $11,815,000 related to the retirement of the majority of Concentra's 13% Senior Subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. Notes during the second quarter of last year. Concentra's revenue on a year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. basis increased to $561,843,000 from $551,603,000 in the same period of 2004. Including the charges and gains described above, operating income increased 9% to $68,210,000 from $62,431,000 for the first six months of 2004. Net income for the first half of the year was $32,811,000 versus $11,763,000 in the first half of 2004. For the year-to-date period, Adjusted EBITDA was $84,335,000, which compares to $83,322,000 in the comparable period last year. "During the quarter, our Health Services health services Managed care The benefits covered under a health contract segment continued to provide us with strong growth in revenue and earnings," said Daniel Daniel, book of the Bible Daniel, book of the Bible. It combines "court" tales, perhaps originating from the 6th cent. B.C., and a series of apocalyptic visions arising from the time of the Maccabean emergency (167–164 B.C. Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs , Concentra's President and Chief Executive Officer. "Same-center visits increased 4.8% and, after considering increases in our average revenue per visit, we were pleased to achieve a same-center revenue growth rate of 6.6% during the quarter. These organic increases continue to be complemented by exceptional levels of growth in our 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. services and the beneficial effects of our acquisitions. When considering the value that we believe our recently announced acquisition of Occupational Health + Rehabilitation rehabilitation: see physical therapy. Inc ("OH+R") will bring to this segment of our business, we are excited about our growth prospects during coming years. "Due primarily to the effects of the California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). Fee Schedule change put into effect in early 2004, the loss of a significant Network Services customer, which we reported last December December: see month. , and the other factors that we have previously discussed, our positive Health Services results continue to be offset by a year-over-year decrease in the revenue and earnings from our Network Services segment. Despite these current year trends, we are increasingly optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our 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. prospects in this portion of our business. In particular, we feel that our recently announced acquisition of Beech beech, common name for the Fagaceae, a family of trees and shrubs mainly of temperate and subtropical regions in the Northern Hemisphere. The principal genera—Castanea (chestnut and chinquapin), Fagus (beech), and Quercus Street Corporation ("Beech Street") and its preferred provider organization pre·ferred provider organization n. Abbr. PPO A medical insurance plan in which members receive more coverage if they choose health care providers approved by or affiliated with the plan. offers us the opportunity to achieve significant new revenue growth in both the group health and workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. portions of our Network Services segment," said Thomas. Concentra recently announced that it had entered into definitive agreements to acquire Beech Street and OH+R. Beech Street is one of the country's leading preferred provider organizations and has approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 400,000 physicians, 52,000 ancillary healthcare providers and 3,800 acute-care hospitals within its provider network. OH+R is a publicly held corporation that provides occupational health care services through 35 health centers located predominately in the northeastern north·east n. 1. Abbr. NE The direction or point on the mariner's compass halfway between due north and due east, or 45° east of due north. 2. An area or region lying in the northeast. 3. United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The closings of both of these acquisitions, which are expected to occur later this year, are subject to further documentation, the satisfaction of pre-closing conditions, and the receipt of required approvals. Concentra currently anticipates that it will raise approximately $157,500,000 in additional senior indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. during the third quarter, will assume approximately $1,100,000 in capital leases, and will utilize an estimated $59,400,000 of available cash to finance its recently announced acquisitions of OH+R and Beech Street. On a combined basis, and excluding non-recurring items, these companies reported approximately $128,600,000 in revenue and $17,500,000 in EBITDA for the twelve-month period ending June 30, 2005. At June 30, 2005, Concentra had $58,819,000 in unrestricted cash and investments. At the conclusion of the second quarter, the Company had a Days Sales Outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). of 57 days, which represented the lowest level achieved in the Company's history. For the trailing twelve-month period ending June 30, 2005, Concentra had net cash provided by operating activities of $115,122,000. Concentra Operating Corporation, a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Concentra Inc., is the comprehensive outsource solution for containing healthcare and disability costs. Serving the occupational, auto and group healthcare markets, Concentra provides employers, insurers and payors with a series of integrated services In computer networking, IntServ or integrated services is an architecture that specifies the elements to guarantee quality of service (QoS) on networks. IntServ can for example be used to allow video and sound to reach the receiver without interruption. which include employment-related injury and occupational health care, in-network and out-of-network out-of-network Managed care adjective Referring to a provider/service that is not part of an MCO's network of contracted providers/services. See Managed care organization. medical claims review and repricing Repricing To change the price of an asset. In derivatives, it sometimes refers to the exchange of options of with different strike prices. repricing , access to specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. preferred provider organizations, first notice of loss services, case management and other cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. services. Concentra provides its services to approximately 136,000 employer locations and 3,700 insurance companies, group health plans, third-party administrators and other healthcare payors. Through its health centers, Concentra has approximately 680 affiliated af·fil·i·ate v. af·fil·i·at·ed, af·fil·i·at·ing, af·fil·i·ates v.tr. 1. To adopt or accept as a member, subordinate associate, or branch: primary-care physicians. The Company also operates the FOCUS network, a national workers' compensation provider network that includes 544,000 individual providers and over 4,400 acute-care hospitals nationwide. A public, listen-only simulcast Simulcast is a portmanteau of "simultaneous broadcast", and refers to programs or events broadcast across more than one medium, or more than one service on the same medium, at the same time. of Concentra's second quarter conference call will begin at 9:00 a.m. Eastern Daylight For other uses, see Daylight (disambiguation). Daylight or the light of day is the combination of all direct and indirect sunlight outdoors during the daytime (and perhaps twilight). Time tomorrow (August 9, 2005) and may be accessed via the Company's web site, www.concentra.com. Investors are requested to access the call at least 15 minutes before the scheduled start time in order to complete a brief registration. An online replay using the same link will be available shortly after the conclusion of the live broadcast and will continue through September September: see month. 9, 2005. This press release contains certain 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. , which the Company is making in reliance on the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties, and that the Company's actual results may differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the potential adverse impact of governmental regulation on the Company's operations, changes in nationwide employment and injury rate trends, interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. in its data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a capabilities, operational, financing and strategic risks related to the Company's capital structure, acquisitions and growth strategy, possible fluctuations in quarterly and annual operations, possible legal liability for adverse medical consequences, competitive pressures, adverse changes in market conditions for the Company's services, and dependence on key management personnel. Additional factors include those described in the Company's filings with the Securities and Exchange Commission.
CONCENTRA OPERATING CORPORATION
a wholly owned subsidiary of
CONCENTRA INC.
Unaudited Consolidated Statements of Operations
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2005 2004 2005 2004
--------- --------- --------- ---------
REVENUE:
Health Services $ 167,213 $ 144,750 $ 321,805 $ 279,007
Network Services 68,326 73,764 136,185 146,777
Care Management
Services 51,375 62,936 103,853 125,819
--------- --------- --------- ---------
Total revenue 286,914 281,450 561,843 551,603
COST OF SERVICES:
Health Services 134,575 115,450 262,758 226,943
Network Services 40,525 42,502 80,970 84,054
Care Management
Services 44,598 55,071 88,119 110,476
--------- --------- --------- ---------
Total cost of
services 219,698 213,023 431,847 421,473
--------- --------- --------- ---------
Total gross
profit 67,216 68,427 129,996 130,130
General and
administrative
expenses 30,725 33,938 62,047 65,976
Amortization of
intangibles 582 873 1,165 1,723
Gain on sale of
assets (1,426) -- (1,426) --
--------- --------- --------- ---------
Operating income 37,335 33,616 68,210 62,431
Interest expense,
net 13,170 14,060 27,115 27,979
Loss on fair value
of economic hedges 793 -- 793 --
Loss on early
retirement of debt -- 11,815 -- 11,815
Other, net 615 969 1,497 1,783
--------- --------- --------- ---------
Income before
income taxes 22,757 6,772 38,805 20,854
Provision (benefit)
for income taxes (878) 3,154 5,982 9,069
--------- --------- --------- ---------
Income from
continuing
operations 23,635 3,618 32,823 11,785
Loss from
discontinued
operations 7 28 12 22
--------- --------- --------- ---------
Net income $ 23,628 $ 3,590 $ 32,811 $ 11,763
========= ========= ========= =========
CONCENTRA OPERATING CORPORATION
a wholly owned subsidiary of
CONCENTRA INC.
Consolidated Balance Sheets
(in thousands)
June 30, Dec. 31,
2005 2004
--------- ---------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 58,819 $ 61,319
Restricted cash 2,422 1,250
Restricted short-term investments 702 --
Accounts receivable, net 178,798 175,294
Prepaid expenses and other current assets 36,097 32,011
--------- ---------
Total current assets 276,838 269,874
PROPERTY AND EQUIPMENT, NET 110,143 103,058
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 454,842 449,698
OTHER ASSETS 31,971 30,710
--------- ---------
$ 873,794 $ 853,340
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Revolving credit facility $ -- $ --
Current portion of long-term debt 4,019 34,092
Accounts payable and accrued expenses 131,085 123,387
--------- ---------
Total current liabilities 135,104 157,479
LONG-TERM DEBT, NET 698,560 700,112
DEFERRED INCOME TAXES AND OTHER LIABILITIES 68,179 58,615
FAIR VALUE OF ECONOMIC HEDGES 793 --
STOCKHOLDER'S EQUITY (DEFICIT) (28,842) (62,866)
--------- ---------
$ 873,794 $ 853,340
========= =========
CONCENTRA OPERATING CORPORATION
a wholly owned subsidiary of
CONCENTRA INC.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
Six Months Ended
June 30,
----------------------
2005 2004
--------- ---------
OPERATING ACTIVITIES:
Net income $ 32,811 $ 11,763
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation of property and equipment 17,546 20,754
Amortization of intangibles 1,165 1,723
Restricted stock amortization 729 595
Loss on change in fair value of
economic hedges 793 --
Gain on sale of assets (1,426) --
Write-off of deferred financing costs -- 2,034
Write-off of fixed assets 355 175
Changes in assets and liabilities:
Accounts receivable, net (3,601) (14,422)
Prepaid expenses and other assets (6,259) 8,735
Accounts payable and accrued expenses 16,928 11,435
--------- ---------
Net cash provided by operating
activities 59,041 42,792
INVESTING ACTIVITIES:
Purchases of property, equipment and other
assets (24,168) (12,022)
Acquisitions, net of cash acquired (5,677) (3,067)
Proceeds from sale of assets 800 --
Proceeds from the licensing of internally
developed software 85 --
--------- ---------
Net cash used in investing activities (28,960) (15,089)
FINANCING ACTIVITIES:
Borrowings (payments) under the revolving
credit facility -- --
Repayments of debt (32,232) (118,330)
Distributions to minority interests (342) (1,056)
Payment of deferred financing costs (28) (7,283)
Proceeds from the issuance of debt -- 222,850
Payment of dividend to parent -- (96,028)
Payment of early debt retirement costs -- (9,781)
Contribution from the issuance of common
stock by parent 21 272
--------- ---------
Net cash used in financing activities (32,581) (9,356)
NET (DECREASE) INCREASE IN CASH (2,500) 18,347
CASH, BEGINNING OF PERIOD 61,319 42,621
--------- ---------
CASH, END OF PERIOD $ 58,819 $ 60,968
========= =========
CONCENTRA OPERATING CORPORATION
a wholly owned subsidiary of
CONCENTRA INC.
Unaudited Reconciliation of Net Income to Adjusted EBITDA
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Net income $ 23,628 $ 3,590 $ 32,811 $ 11,763
Provision (benefit)
for income taxes (878) 3,154 5,982 9,069
Interest expense,
net 13,170 14,060 27,115 27,979
Depreciation
expense 8,790 10,529 17,546 20,754
Amortization
expense 947 1,365 1,894 2,318
--------- --------- --------- ---------
EBITDA 45,657 32,698 85,348 71,883
Loss on fair value
of economic
hedges 793 -- 793 --
Loss on early
retirement of
debt -- 11,815 -- 11,815
Gain on sale of
assets (1,426) -- (1,426) --
Discontinued
operations -
income tax
benefit (4) (15) (7) (11)
Minority share of
depreciation,
amortization and
interest (195) (180) (373) (365)
--------- --------- --------- ---------
Adjusted EBITDA $ 44,825 $ 44,318 $ 84,335 $ 83,322
========= ========= ========= =========
Computations of Adjusted Earnings Before Interest Taxes Depreciation and Amortization ("Adjusted EBITDA") have been provided in this press release due to the use of this measure by the holders of the Company's 9.5% Senior Subordinated Notes and 9.125% Senior Subordinated Notes and other lenders, for purposes of determining the Company's performance in light of its debt covenant covenant (kŭv`ənənt), agreement entered into voluntarily by two or more parties to do or refrain from doing certain acts. In the Bible and in theology the covenant is the agreement or engagement of God with man as revealed in the requirements, which are stated in the Company's debt agreements as measures that relate to Adjusted EBITDA. Adjusted EBITDA is disclosed because compliance with the liquidity covenants included in these agreements is considered material to the Company. The Company's computations of this measure may differ from that provided by other companies due to differences in the inclusion or exclusion of items in its computations as compared to that of others. The Company's measure of Adjusted EBITDA has been made in a manner consistent with the requirements of the indenture An agreement declaring the benefits and obligations of two or more parties, often applicable in the context of Bankruptcy and bond trading. The term indenture primarily describes secured contracts and has several applications in U.S. law. that relates to its 9.5% Senior Subordinated Notes and 9.125% Senior Subordinated Notes. Adjusted EBITDA is a measure that is not prescribed for under Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). Adjusted EBITDA specifically excludes changes in working capital, capital expenditures and other items that are set forth on a cash flow statement presentation of a company's operating, investing and financing activities, and it also excludes the effects of interest expense, depreciation expense, amortization expense, taxes and other items that are included when determining a company's net income. As such, the Company would encourage a reader not to use this measure as a substitute for the determination of net income, operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , or other similar GAAP-related measures, and to use it primarily for the debt covenant compliance purposes above.
CONCENTRA OPERATING CORPORATION
a wholly owned subsidiary of
CONCENTRA INC.
Supplemental Information
We use certain operating metrics to measure aspects of our operations.
Additionally, from time to time, we provide estimates of our possible
future financial performance. Our disclosure to you of this
information is conditioned in its entirety by the provisions, risk
factors and cautionary statements provided for you in the main text of
this press release. It is being provided solely to ensure full and
fair disclosure to investors in the Company's existing debt
instruments and for no other purpose.
Operating Metrics and Information:
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Health centers at
period end 268 252 268 252
Total visits to
health centers 1,671,143 1,500,119 3,207,870 2,871,994
Same-center performance (a):
Injury-related
visits % 45.4% 47.0% 46.2% 47.8%
Visits per business
day growth 4.8% 10.3% 5.0% 9.5%
Revenue per visit
growth 1.7% (0.1%) 1.5% (0.8%)
Revenue per business
day growth 6.6% 10.2% 6.6% 8.7%
Revenue (in
thousands) (b) $ 136,764 $ 125,845 $ 264,627 $ 243,475
Current 2005 performance guidance:
(Subject to immediate change and no public update or notice; does
not include the effects of the pending acquisitions)
Revenue: $1.120 billion to $1.150 billion.
Adjusted EBITDA (c): $163 million to $168 million.
Operating Cash Flow: $100 million to $110 million.
Capital Expenditures: $43 million to $48 million.
Notes:
(a) Our same-center comparisons represent all centers that Health
Services has operated for the previous two full years as of the
date indicated and includes the effects of any centers acquired
and subsequently consolidated into existing centers.
(b) Excludes ancillary services, on-site services and centers
acquired within the previous two full years.
(c) Please refer to the discussion on Page 7 of this press release
concerning the Company's computation and use of Adjusted EBITDA.
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