Genesis Announces Acceleration Of Investment In Managed Care Initiatives.KENNETT SQUARE, Pa.--(BW HealthWire)--Nov. 5, 1997--Genesis Health Ventures, Inc. (NYSE NYSE See: New York Stock Exchange :GHV GHV Genesis Health Ventures, Inc. GHV Gross Heating Value (relationship between volume and corresponding amount of energy for gas) ), today announced the acceleration of its strategy designed to take advantage of the opportunities created by the continued movement of the eldercare eld·er·care n. Social and medical programs and facilities intended for the care and maintenance of the aged. industry to a managed care environment. While speculation exists in the marketplace surrounding the impact of the Balanced Budget Balanced budget A budget in which the income equals expenditure. See: budget. balanced budget A budget in which the expenditures incurred during a given period are matched by revenues. Act of 1997 on 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, principally the establishment of a Medicare prospective payment system, the substantive details and timing of implementing any such prospective payment system are not yet known. To date, the Company has not experienced any significant impact to its business as a consequence of the adoption of the Balanced Budget Act of 1997. To implement its strategy, Genesis will accelerate its investments in information technology systems, Genesis ElderCare(sm) toll-free telephone lines, community-based programs and marketing campaigns, and will execute the Company's initial fully-capitated managed care contract. As a result of this decision the Company will recognize a special, after-tax charge of approximately $8 million to $10 million ($13-16 million pretax) against its 1997 fiscal year earnings to recognize the anticipated start-up losses in the capitated managed care contract and to realign re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. the Company's physician services business. In fiscal year 1998, the Company currently anticipates that these initiatives will result in approximately $12 million of additional 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. and $13 million in capital investments. When combined with the Company's current investments, Genesis' total balance sheet investment in its managed care programs will be approximately $45 million at the end of fiscal year 1998. The Company does not expect to realize any significant level of revenue from these investments until fiscal year 1999. The Company is still in the process of closing its routine, September 30 year-end audit prior to announcing its fiscal year 1997 fourth quarter and year-end financial results. As is customary, the Company anticipates having the audit completed and announcing the Company's fiscal 1997 fourth quarter and year-end results around the third week in November. With the exception of the special, after-tax charge, the Company is not aware of any developments that would significantly impact its 1997 fiscal fourth quarter and year-end financial results. In addition, in fiscal 1997, the Company has experienced approximately a 1% reduction in the gross margin of its pharmacy business primarily due to a shift from private pay to insurance payors. "The decision to accelerate the Company's investments in managed care and community-based programs was made to take advantage of two significant developments, one internal - the recent acquisition of The Multicare Companies, Inc. - and one external - the changing health care environment, including recently enacted provisions in the Balanced Budget Act of 1997." commented Michael R. Walker, the Company's Chief Executive Officer. "The Multicare acquisition is progressing as planned and we are prepared to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the opportunities afforded by the combined companies," stated Mr. Walker. Genesis Health Ventures, Inc. is a recognized innovator in the delivery of geriatric healthcare. The Company, founded in 1985, develops and manages healthcare networks designed to provide cost- effective, outcome-oriented services in select regional markets in the eastern 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. . -0- The above statements include 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. . The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance. Numerous factors exist which, in some cases have affected, and in the future could cause results to differ materially from these expectations. These statements involve risks and uncertainties concerning the implementation and interpretation of the healthcare reform legislation and other factors as detailed from time to time in the Company's filings with the Securities and Exchange Commission. CONTACT: George V George V, king of Great Britain and Ireland George V (George Frederick Ernest Albert), 1865–1936, king of Great Britain and Ireland (1910–36), second son and successor of Edward VII. . Hager, Jr. Senior Vice President & Chief Financial Officer 610-444-6350 |
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