Genesis Health Ventures Reports Third Quarter Fiscal 1999 Results.KENNETT Kennet or Kennett may refer to: Places
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 third quarter of fiscal 1999. Revenues for the quarter ended June June: see month. 30, 1999 were $465.1 million, up from $352.5 million in the third quarter of fiscal 1998. Earnings before interest, taxes, depreciation and rent (EBITDAR Earnings Before Interest, Taxes, Depreciation, Amortization, and Restructuring Costs - EBITDAR An indicator of a company's financial performance calculated as: = Revenue - Expenses (excluding tax, interest, depreciation, amortization, and restructuring costs) ) were $60.4 million for the quarter ended June 30, 1999 compared to $66.8 million for the comparable period in the prior year. Net loss was $5.4 million ($0.15 per share) for the quarter ended June 30, 1999 compared to net income of $16.0 million ($0.45 per share) for the quarter ended June 30, 1998. Included in the results for the quarter ended June 30, 1999 is a net loss of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3.7 million ($0.10 loss per share) on Genesis' 43.6% equity investment in its Multicare affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. compared to earnings of $0.7 million ($0.02 earnings per share) for the comparable period in the prior year. Net loss for the nine months ended June 30, 1999 before extraordinary and unusual items was $1.5 million ($0.04 per share) compared to net income before an extraordinary item of $43.4 million ($1.22 per share) for the nine months ended June 30, 1998. Included in the results for the nine months ended June 30, 1999 is a net loss of approximately $9.3 million ($0.26 loss per share) on Genesis' 43.6% equity investment in its Multicare affiliate compared to earnings of $1.8 million ($0.05 earnings per share) for the comparable period in the prior year. The results for the nine months ended June 30, 1999 included the following unusual and extraordinary items (i) severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs of approximately $0.9 million, net of tax, related to a reduction in work force in the Company's rehabilitation rehabilitation: see physical therapy. services business; (ii) a $6.2 million, net of tax, 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. and $0.6 million, net of tax, of operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. related to the closure of an eldercare eld·er·care n. Social and medical programs and facilities intended for the care and maintenance of the aged. center in Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and ; and (iii) an extraordinary charge of $2.1 million, net of tax, related to the defeasance defeasance n. an antiquated word for a document which terminates the effect of an existing writing such as a deed, bond, or contract if some event occurs. DEFEASANCE, contracts, conveyancing. of certain municipal bonds and the early retirement of debt. Genesis had positive 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 during the quarter and generated cash flow per share (defined as earnings per share before extraordinary items, amortization of goodwill, equity in net loss of unconsolidated affiliates and 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. but unpaid preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. dividends) of $0.22. Revenue growth in the third quarter of Fiscal 1999 compared to the same period in the prior year reflects the acquisition of Vitalink 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. Services, Inc. on August 28, 1998. Pharmacy revenue represented 49.5% of total revenue during the quarter ended June 30, 1999 compared to 29.0% for the comparable period in the prior year. "The operating results reflect weakness in the Company's pharmacy business from the second quarter of fiscal 1999 primarily due to the increasing reluctance by other skilled nursing facilities skilled nursing facility n. Abbr. SNF An establishment that houses chronically ill, usually elderly patients, and provides long-term nursing care, rehabilitation, and other services. to admit 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. residents in light of concerns relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the adequacy of reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. under PPS (Packets Per Second) The measurement of activity in a local area network (LAN). In LANs such as Ethernet, Token Ring and FDDI, as well as the Internet, data is broken up and transmitted in packets (frames), each with a source and destination address. . These reimbursement concerns have resulted in an industry-wide decline in 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 levels and have caused many providers to admit customers funded by other payor payor (payer) n. The one who must make payment on a promissory note. sources," stated Mr. Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. R. Walker, Chairman and Chief Executive Officer. "During the quarter, Genesis owned and leased eldercare centers experienced a 5% increase in average daily Medicare 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. as compared to the March 1999 quarter. Genesis' occupancy levels remained above 90%, however increases in staffing costs negatively impacted the operating results." "Certain of the Company's initiatives to reduce operating costs operating costs npl → gastos mpl operacionales , which include the evaluation and renegotiation of significant vendor relationships and a streamlining of the current management infrastructure, will be reflected in the operating results prospectively," Mr. Walker continued. The results reflect improvement in the Company's rehabilitation services business and in the Multicare eldercare centers from the prior quarter. The initiatives put in place during the fiscal year in the rehabilitation services business resulted in EBITDAR improvement to $3.9 million in the third quarter of fiscal 1999 from $0.7 million in the preceding quarter. Operating results also improved in the Multicare eldercare centers due primarily to more efficient 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 of rehabilitation therapy and reduction in non-salary costs. The Company is in discussions with its senior bank group regarding amendments to its senior bank credit facility which, in part, would make certain financial covenants as of June 30, 1999 and prospectively less restrictive. The Company is also seeking modifications to its senior bank credit facility as a result of the agreement in principle between the Company and 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 and Texas Pacific Group, its co-investor partners in Genesis ElderCare Corp., to simplify the joint-venture structure. Upon entering into the amendments, the Company believes it will be in compliance with the provisions of its senior bank credit facility upon the filing of Form 10-Q Form 10-Q See 10-Q. which is expected to be delayed to the end of August. "We will continue to aggressively manage through the transition to a prospective payment system. Earlier this week, we announced our agreement in principle with The Cypress Group and Texas Pacific Group to revise the Multicare joint venture structure and inject in·ject v. 1. To introduce a substance, such as a drug or vaccine, into a body part. 2. To treat by means of injection. $50 million of equity into Genesis. The amendments to the Company's senior bank credit facility, currently being discussed, would provide for less restrictive financial covenants while the Company continues to pursue its previously announced deleveraging transactions to improve the Company's 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. position," Mr. Walker concluded. Genesis Health Ventures, Inc., a recognized innovator in the healthcare industry, was founded in 1985 to redefine Verb 1. redefine - give a new or different definition to; "She redefined his duties" define, delimit, delimitate, delineate, specify - determine the essential quality of 2. how America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. cares for the elderly and is dedicated to helping older adults live a full life as independently as possible in their later years. The Company, which 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: its businesses under the brand name Genesis ElderCare in 1996, has established Genesis ElderCare Networks in five 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. and currently serves more than 175,000 customers daily. Statements in this press release which are not historical facts, including statements regarding the Company's expected earnings, anticipated charges, the expected impact of the Medicare prospective pay system and expected capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. 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, changes in the healthcare system, government regulation, dependence on reimbursement 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. -0-
GENESIS HEALTH VENTURES, INC.
Financial Highlights
(in thousands, except per share)
Quarter Ended Nine Months Ended
June 30, June 30,
Statement of
Operations Data 1999 1998 1999 1998
-------------------------------------------------
Revenues, net $ 465,088 $ 352,526 $ 1,408,911 $ 999,390
EBITDAR $ 60,430 $ 66,840 $ 183,794 $ 185,048
EBITDA $ 53,775 $ 58,343 $ 164,153 $ 162,040
Net income (loss)
before
extraordinary items $ (5,372) $ 15,991 $ (9,178) $ 43,381
Net income (loss) $ (5,372) $ 15,991 $ (11,278) $ 41,457
Per Common Share:
Net income (loss)
before
extraordinary
items, Basic $ (0.15) $ 0.46 $ (0.26) $ 1.24
Net income (loss)
before
extraordinary
items, Diluted $ (0.15) $ 0.45 $ (0.26) $ 1.22
Net income (loss)
per share, Diluted $ (0.15) $ 0.45 $ (0.32) $ 1.16
Cash flow per share,
(a) Diluted $ 0.22 $ 0.48 $ 0.64 $ 1.33
Weighted average
shares outstanding,
Diluted 35,372 35,720 35,269 35,701
Statement of Quarter Ended Nine Months Ended
Operations Data June 30, June 30,
before unusual
items 1999 1998 1999 1998
-------------------------------------------------
Revenues, net $ 465,088 $ 352,526 $ 1,408,911 $ 999,390
EBITDAR $ 60,430 $ 66,840 $ 195,554 $ 185,048
EBITDA $ 53,775 $ 58,343 $ 176,208 $ 162,040
Net income (loss)
before
extraordinary items $ (5,372) $ 15,991 $ (1,523) $ 43,381
Net income (loss) $ (5,372) $ 15,991 $ (3,623) $ 41,457
Per Common Share:
Net income (loss)
before
extraordinary
items, Basic $ (0.15) $ 0.46 $ (0.04) $ 1.24
Net income (loss)
before
extraordinary
items, Diluted $ (0.15) $ 0.45 $ (0.04) $ 1.22
Net income (loss)
per share,
Diluted $ (0.15) $ 0.45 $ (0.10) $ 1.16
Cash flow per
share, (a) Diluted $ 0.22 $ 0.48 $ 0.86 $ 1.33
Weighted average
shares outstanding,
Diluted 35,372 35,720 35,269 35,701
Reconciliation of Statement of Operations Data for the nine months
ended June 30, 1999:
Net loss E.P.S.
before before
extraordinary extraordinary
EBITDAR EBITDA items items
---------------------------------------------
Results including
unusual items $183,794 $164,153 $(9,178) $(0.26)
Facility closure
expense 9,701 9,701 9,701 0.27
Operating loss of
closed center 690 985 985 0.03
Rehabilitation services
severance 1,369 1,369 1,369 0.04
Income taxes - - (4,400) (0.12)
---------------------------------------------
Results excluding
unusual items $195,554 $176,208 $(1,523) $(0.04)
---------------------------------------------
(a) - Cash flow per share is defined as earnings before: extraordinary
items, goodwill amortization, equity in net income (loss) of
unconsolidated affiliates and accrued but unpaid preferred stock
dividends.
GENESIS HEALTH VENTURES, INC.
Financial Highlights, Continued
(in whole numbers, except Pharmacy-Community-based revenue)
Quarter Ended Nine Months Ended
June 30, June 30,
Selected Operating
Statistics 1999 1998 1999 1998
--------------------------------------------------
Occupancy 90.3% 91.2% 90.8% 91.4%
Patient Days:
Private and Other 267,702 289,457 819,044 858,857
Medicare 147,626 122,837 408,034 372,912
Medicaid 810,076 835,431 2,471,858 2,507,356
--------------------------------------------------
Total Days 1,225,404 1,247,725 3,698,936 3,739,125
--------------------------------------------------
Per Diems:
Private and Other $ 155 $ 157 $ 154 $ 156
Medicare $ 299 $ 395 $ 305 $ 384
Medicaid $ 109 $ 104 $ 108 $ 104
Pharmacy-Community
-based revenue $ 33,881 $ 27,547 $ 96,277 $ 80,192
Pharmacy Beds
Served 235,444 90,152 239,858 78,281
Pharmacy Revenue
Mix:
Private and Other 60.7% 66.2% 61.2% 68.4%
Medicare 4.4% 8.3% 4.6% 8.2%
Medicaid 34.9% 25.5% 34.2% 23.4%
GENESIS HEALTH VENTURES
FINANCIAL HIGHLIGHTS
QUARTERS ENDED JUNE 30, 1999 AND 1998
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Unaudited Unaudited
Quarter Quarter
Ended Ended Dollar Percent
June 30, 1999 June 30, 1998 Change Change
------------- ------------- ------ -------
Net revenues:
Pharmacy and
medical supply
services $230,387 $102,177 $128,210 125%
Inpatient services 175,887 187,055 (11,168) (6)%
Other revenue 58,814 63,294 (4,480) (7)%
------------- ------------- --------- -------
Total net revenues 465,088 352,526 112,562 32%
------------- ------------- --------- -------
Operating expenses:
Operating expenses 390,973 272,059 118,914 44%
General corporate
expense 13,685 13,627 58 -%
Depreciation and
amortization 18,887 13,632 5,255 39%
Lease expense 6,655 8,497 (1,842) (22)%
Interest expense, net 29,515 20,679 8,836 43%
------------- ------------- --------- -------
Earnings before income
taxes and equity
in net income (loss)
of unconsolidated
affiliates 5,373 24,032 (18,659) (78)%
Income taxes 2,901 8,771 (5,870) (67)%
------------- ------------- --------- -------
Earnings before
equity in net
income (loss) of
unconsolidated
affiliates 2,472 15,261 (12,789) (84)%
Equity in net income
(loss) of
unconsolidated
affiliates (3,475) 730 (4,205) (576)%
------------- ------------- --------- -------
Net income (loss) (1,003) 15,991 (16,994) (106)%
Preferred stock
dividend 4,369 - 4,369 -
------------- ------------- --------- -------
Net income (loss)
attributed to common
shareholders $(5,372) $15,991 $(21,363) (134)%
------------- ------------- --------- -------
Per common share data:
Basic
Net income (loss) $(0.15) $0.46
Weighted average
shares 35,371,494 35,133,022
Diluted
Net income (loss) $(0.15) $0.45
Weighted average
shares 35,371,494 35,719,840
GENESIS HEALTH VENTURES
FINANCIAL HIGHLIGHTS
NINE MONTHS ENDED JUNE 30, 1999 AND 1998
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Unaudited Unaudited
Nine Months Nine Months
Ended Ended Dollar Percent
June 30, June 30, Change Change
1999 1998
---------- ---------- --------- --------
Net revenues:
Pharmacy and medical
supply services $ 698,505 $ 269,417 $ 429,088 159%
Inpatient services 527,720 551,089 (23,369) (4)%
Other revenue 182,686 178,884 3,802 2%
---------- ---------- --------- --------
Total net revenues 1,408,911 999,390 409,521 41%
---------- ---------- --------- --------
Operating expenses:
Operating expenses 1,172,685 774,539 398,146 51%
General corporate
expense 42,731 39,803 2,928 7%
Facility closure
expense 9,701 - 9,701 -
Depreciation and
amortization 55,453 37,985 17,468 46%
Lease expense 19,641 23,008 (3,367) (15)%
Interest expense, net 85,295 59,010 26,285 45%
---------- ---------- --------- --------
Earnings before income
taxes, equity in net
income (loss) of
unconsolidated
affiliates and
extraordinary items 23,405 65,045 (41,640) (64)%
Income taxes 10,851 23,741 (12,890) (54)%
---------- ---------- --------- --------
Earnings before equity
in net income (loss)
of unconsolidated
affiliates and
extraordinary items 12,554 41,304 (28,750) (70)%
Equity in net income
(loss) of
unconsolidated
affiliates (8,626) 2,077 (10,703) (515)%
---------- ---------- --------- --------
Earnings before
extraordinary items 3,928 43,381 (39,453) (91)%
Extraordinary items,
net of tax (2,100) (1,924) (176) 9%
---------- ---------- --------- --------
Net income 1,828 41,457 (39,629) (96)%
Preferred stock
dividend 13,106 - (13,106) -
---------- ---------- --------- --------
Net income (loss)
attributed to common
shareholders $ (11,278) $ 41,457 $ (52,735) (127)%
---------- ---------- --------- --------
Per common share data:
Basic
Earnings (loss)
before extraordinary
items $ (0.26) $ 1.24
Net income (loss) $ (0.32) $ 1.18
Weighted average
shares 35,268,910 35,107,983
Diluted
Earnings (loss)
before extraordinary
items $ (0.26) $ 1.22
Net income (loss) $ (0.32) $ 1.16
Weighted average
shares 35,268,910 35,701,210
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