Genesis Health Ventures Reports First Quarter Fiscal 2000 Results.Health/Medical Writers/Business Editors KENNETT SQUARE, Pa.--(BW HealthWire)--Feb. 3, 2000 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 results for the first quarter of fiscal 2000 which include the consolidation of The Multicare Companies, Inc. Revenues for the quarter ended December 31, 1999 were $585.1 million, up from $581.5 million for the quarter ended September 30, 1999 presented on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis to give effect to the consolidation of Genesis and Multicare and to exclude the results of businesses exited. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
The decline in adjusted EBITDA from the preceding quarter primarily represented an increase in labor costs in the eldercare eld·er·care n. Social and medical programs and facilities intended for the care and maintenance of the aged. centers primarily due to increased premium time in the holiday season. The decline in adjusted EBITDA was attributable to the Multicare operations ($1.6 million decline) partially offset by the Genesis operations ($0.5 million increase). Net loss before the Multicare joint venture restructuring and 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 and other charges was $14.9 million ($0.35 per share) for the quarter ended December 31, 1999 compared to net loss of $14.6 million ($0.40 per share) for the quarter ended September 30, 1999. Net loss attributed to common shareholders before the cumulative effect of an accounting change was $439.8 million ($10.37 per share) for the quarter ended December 31, 1999 compared to net loss attributed to common shareholders of $277.3 million ($7.67 per share) for the quarter ended September 30, 1999. Multicare Joint Venture Restructuring and Other Charges As a result of the restructuring of the Multicare joint venture agreement, Genesis consolidated, with minority interest, the results of Multicare beginning the first quarter of fiscal 2000. For comparative purposes, operating results for the quarter ended September 30, 1999 were prepared on a pro forma consolidated basis with minority interest. In connection with the Multicare restructuring, The Cypress Cypress, city, United States Cypress (sī`prəs), city (1990 pop. 42,655), Orange co., S Calif. near Long Beach; inc. 1956. Forest Lawn–Cypress, a branch of the famous cemetery in Glendale, Calif. Group (Cypress) and Texas Pacific Group (TPG TPG Texas Pacific Group TPG Tapping TPG Transports Publics Genevois (Geneva, Switzerland public transportation) TPG Test Pattern Generator TPG TNT Post Group TPG Trésorier Payeur Général ) invested $50 million in Genesis in exchange for 12.5 million newly issued common shares and warrants to purchase two million shares of common stock with a $5.00 exercise price. In addition, Cypress and TPG terminated their right to put their 56% equity interest in Genesis ElderCare Corp. to Genesis in exchange for convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". in Genesis with a $420 million face amount, a 5% dividend rate (payable in kind for the first five years) and a conversion price of $8.75. In the quarter ended December 31, 1999, Genesis recorded a charge of $420 million for the termination of the Multicare put arrangement. The Company also recorded a pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern charge of approximately $7.7 million for a stock option redemption program under which current Genesis employees and directors have elected to surrender certain Genesis stock options for unrestricted shares of Genesis Common Stock. Businesses Exited During the quarter ended December 31, 1999, Genesis did not renew operating leases Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. which came to term on five eldercare centers with 480 beds. Also, Genesis sold a 50% interest in a 370 bed eldercare center and entered into an agreement to manage the operations of the center effective October 1, 1999. The operating results for the quarter ended December 31, 1999 exclude this center's results. Change in Accounting Principle Effective October 1, 1999, Genesis adopted the provisions of the American Institute of Certified See certification. Public Accountant's Statement of Position 98-5 &uot;Reporting on the Costs of Start-Up Activities&uot; (SOP 98-5) which requires start-up costs to be expensed as incurred. The cumulative effect of expensing all unamortized capitalized start-up costs was $16.3 million pretax and $10.4 million after tax. The initial adoption of SOP 98-5 resulted in a reduction of EBITDA of approximately $1.3 million in the quarter ended December 31, 1999, as compared to the quarter ended September 30, 1999. &uot;Although our operating results reflect a slight decline in eldercare centers driven primarily by increased labor costs due to the holiday season and some deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in census mix in the Multicare centers, the preliminary figures for January 2000 indicate improvement in both occupancy and census mix. The operating results of the Company's healthcare service business, which includes NeighborCare Pharmacies This article is a list of major pharmacies (also known as chemists and drugstores) by country. Australia Pharmacies in Australia are mostly independently-owned by pharmacists, often operated as franchises of retail brands offered by the three major and rehabilitation rehabilitation: see physical therapy. services were consistent with the prior quarter,&uot; stated Michael R. Walker, Chairman and Chief Executive Officer. &uot;We analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. the provisions 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. Refinement Act and have transitioned 24 eldercare centers to the full federal rate effective January 1, 2000. This will result in incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. revenue of approximately $2.4 million, which will in part be offset by the continued phase in of PPS&uot;, added Walker. &uot;In addition to securing an incremental $40.0 million of availability under our senior credit facility, we continue to make progress on our remaining deleveraging transactions that should provide in excess of $125.0 million in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). . Our liquidity position at the end of the quarter was approximately $65.0 million comprised of availability under our revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility and unrestricted cash balances. Our capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. for the quarter was $15.7 million of which $4.9 million was for development projects. This represents a reduction of $8.6 million in capital spending as compared to the September 30, 1999 quarter primarily attributable to the completion of development projects. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was negatively impacted by the timing of vendor and interest payments during the quarter. In addition, approximately $16.3 million of senior debt amortized during the quarter,&uot; Walker concluded. Genesis Health Ventures provides eldercare 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. through a network of Genesis ElderCare skilled nursing and 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. centers plus long term care support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services nationwide including pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. , medical equipment and supplies, rehabilitation, group purchasing, consulting and facility management. Statements in this press release which are not historical facts, including statements regarding the Company's expected revenue, census 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) , and the expected impact of the changes to Medicare prospective payment system are 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 involve risks and uncertainties and 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, including the Company's substantial 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. and significant debt service obligations, the Company's ability to obtain capital to fund future growth, the Company's ability to complete divestitures and other transactions to delever its balance sheet, changes in the healthcare system, government regulation, dependence on reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. by third party payors, competition, the implementation and interpretation of healthcare reform legislation and other factors as detailed from time to time in the Company's filings with the Securities and Exchange Commission.
GENESIS HEALTH VENTURES, INC.
FINANCIAL HIGHLIGHTS FOR GENESIS AND MULTICARE CONSOLIDATED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(Unaudited) (Unaudited)
Pro Forma (1)
Three Months Ended Three Months Ended
Reconciliation of December 31, 1999 September 30, 1999
Operating Results
Revenues EBITDA Revenues EBITDA
---------- -------- ---------- --------
As reported $ 586,883 $(363,796) $ 591,051 $(485,755)
Impact of Multicare
joint venture
restructuring - 420,000 - -
Impact of impairment
and other charges - 7,720 - 552,579
Impact of exited
businesses (1,831) (171) (9,509) (649)
Impact of adoption
of SOP 98-5 - 1,322 - -
---------- -------- ---------- --------
As adjusted $ 585,052 $ 65,075 $ 581,542 $ 66,175
---------- -------- ---------- --------
(in whole numbers, except Community-based revenue)
For the Three Months Ended
December 31, September 30,
Selected Operating Statistics 1999 1999 (2)
------------- --------------
Inpatient
Occupancy 90.3% 90.3%
Patient Days:
Private and Other 553,315 554,104
Medicare 246,114 240,652
Medicaid 1,398,447 1,405,425
============= ==============
Total Days 2,197,876 2,200,181
============= ==============
Per Diems:
Private and Other $ 159 $ 156
Medicare $ 289 $ 291
Medicaid $ 116 $ 115
Pharmacy
Community-based
revenue (in thousands) $ 35,122 $ 33,039
Beds Served (restated) 236,620 233,902
Revenue Mix:
Private and Other 56.9% 58.6%
Medicare 4.2% 4.4%
Medicaid 38.9% 37.0%
(1) The unaudited pro forma financial results for the quarter ended
September 30, 1999 represents the pro forma consolidation of
Genesis and Multicare effective July 1, 1999 including the
elimination of intercompany transactions.
(2) The pro forma adjusted selected operating statistics for the
quarter ended September 30, 1999 were prepared on a consolidated
basis with Multicare and were adjusted to reflect the impact of
five leased eldercare centers exited during the quarter ended
December 31, 1999 and the impact of one owned eldercare center
sold to a joint venture effective October 1, 1999.
GENESIS HEALTH VENTURES, INC.
FINANCIAL HIGHLIGHTS
QUARTERS ENDED DECEMBER 31, 1999 AND SEPTEMBER 30, 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Pro Forma (1)
Unaudited Unaudited
Three Months Three Months
Ended Ended
December 31, September 30, Dollar Percent
1999 1999 Change Change
------------ ------------- ------ -------
Net revenues:
Pharmacy and
medical supply
services $ 223,907 $ 221,643 $2,264 1%
Inpatient services 326,327 331,745 (5,418) (2)%
Other revenue 36,650 37,663 (1,013) (3)%
------------ ------------- ------ -------
Total net revenues 586,884 591,051 (4,167) (1)%
------------ ------------- ------ -------
Operating expenses:
Operating
expenses (2) 513,414 669,305 (155,891) (23)%
Impairment and
other charges 7,720 397,269 (389,549) (98)%
Multicare joint
venture
restructuring 420,000 - 420,000 -
Depreciation and
amortization 29,118 31,201 (2,083) (7)%
Lease expense 9,527 10,232 (705) (7)%
Interest expense,
net 52,776 51,630 1,146 2%
------------ ------------- ------ -------
Loss before income
taxes, minority
interest and
cumulative effect
of accounting
change (445,671) (568,586) 122,915 22%
Income tax benefit 7,280 79,711 (72,431) (91)%
------------ ------------- ------ -------
Loss before minority
interest and
cumulative effect
of accounting
change (438,391) (488,875) 50,484 10%
Minority interest 6,927 216,474 (209,547) (97)%
------------ ------------- ------ -------
Net loss before
cumulative effect
of accounting
change (431,464) (272,401) (159,063) (58)%
Cumulative effect
of accounting
change (10,412) - (10,412) -%
------------ ------------- ------ -------
Net loss (441,876) (272,401) (169,475) (62)%
------------ ------------- ------ -------
Preferred stock
dividends 8,306 4,909 3,397 69%
------------ ------------- ------ -------
Net loss attributed
to common
shareholders $ (450,182) $ (277,310) $(172,872) (62)%
------------ ------------ ------ -------
Per common share data:
Basic
Net loss before
cumulative effect
of accounting
change $ (10.37) $ (7.67)
Net loss $ (10.62) $ (7.67)
Weighted average
shares 42,389,715 36,133,578
Diluted
Net loss before
cumulative effect
of accounting
change $ (10.37) $ (7.67)
Net loss $ (10.62) $ (7.67)
Weighted average
shares 42,389,715 36,133,578
(1) The unaudited pro forma financial results for the quarter ended
September 30, 1999 represents the pro forma consolidation of
Genesis and Multicare effective July 1, 1999 including the
elimination of intercompany transactions.
(2) Includes impairment of assets and other charges of $155,310 in
the three months ended September 30, 1999.
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