-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RE9Mg7X8da5b2ZWvRHgAVpTdeVm5UgK5iD0PCtn7putwCnhs4hXAPdAC573LkrtE vxOHVcSEVj3NQg8MPnWXzA== 0000891092-04-005149.txt : 20041028 0000891092-04-005149.hdr.sgml : 20041028 20041027200753 ACCESSION NUMBER: 0000891092-04-005149 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041027 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041028 DATE AS OF CHANGE: 20041027 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENTIVA HEALTH SERVICES INC CENTRAL INDEX KEY: 0001096142 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOME HEALTH CARE SERVICES [8082] IRS NUMBER: 364335801 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15669 FILM NUMBER: 041100704 BUSINESS ADDRESS: STREET 1: 3 HUNTINGTON QUADRANGLE 2S CITY: MELVILLE STATE: NY ZIP: 11747-8943 BUSINESS PHONE: 6315017000 MAIL ADDRESS: STREET 1: 3 HUNTINGTON QUADRANGLE 2S CITY: MELVILLE STATE: NY ZIP: 11747-8943 FORMER COMPANY: FORMER CONFORMED NAME: OLSTEN HEALTH SERVICES HOLDING CORP DATE OF NAME CHANGE: 19991001 8-K 1 e19489_8k.txt FORM 8-K United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 27, 2004 GENTIVA HEALTH SERVICES, INC. (Exact name of registrant as specified in its charter) Delaware 1-15669 36-4335801 (State or other jurisdiction (Commission File No.) (IRS Employer of incorporation) Identification No.) 3 Huntington Quadrangle, Suite 200S, Melville, New York 11747-4627 (Address of principal executive offices) (Zip Code) (631) 501-7000 (Registrant's telephone number, including area code) Not applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Section 2 - Financial Information Item 2.02. Results of Operations and Financial Condition. On October 27, 2004, Gentiva Health Services, Inc. (the "Company") issued a press release on the subject of 2004 third quarter consolidated earnings for the Company. A copy of such release is attached hereto as Exhibit 99.1. In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 and Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such a filing. Section 9 - Financial Statements and Exhibits Item 9.01. Financial Statements and Exhibits. (c) Exhibits. The following exhibit is furnished herewith pursuant to Item 2.02 Exhibit No. Description - ----------- ----------- 99.1 Press Release SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GENTIVA HEALTH SERVICES, INC. (Registrant) /s/ John R. Potapchuk ----------------------------- John R. Potapchuk Senior Vice President and Chief Financial Officer Date: October 27, 2004 EX-99.1 2 e19489ex99_1.txt PRESS RELEASE Exhibit 99.1 [LOGO] Gentiva HEALTH SERVICES - -------------------------------------------------------------------------------- Press Release Financial and Investor Contact: John R. Potapchuk 631-501-7035 john.potapchuk@gentiva.com Media Contact: David Fluhrer 631-501-7102 516-857-7231 david.fluhrer@gentiva.com FOR IMMEDIATE RELEASE Gentiva(R) Reports Third Quarter 2004 EPS of $0.17 and Double-Digit Medicare Revenue Increase Company Repurchases Over One Million Shares during Quarter Melville, N.Y., October 27, 2004 -- Gentiva Health Services, Inc. (NASDAQ: GTIV), the nation's largest provider of comprehensive home health services, today reported net income of $4.4 million, or $0.17 per diluted share, for the third quarter ended September 26, 2004 compared to $4.5 million, or $0.17 per diluted share, for the corresponding period of fiscal 2003. Net Income-As Adjusted for the third quarter of 2004 was $3.7 million, or $0.14 per diluted share, compared with $3.0 million, or $0.11 per diluted share, for the third quarter of 2003. See the Supplemental Information for a reconciliation between "Net Income - As Reported" and "Net Income - As Adjusted." During the third quarter of 2004, Gentiva repurchased 1.01 million shares of its common stock at an aggregate cost of $15.5 million and generated cash flow from operating activities of $11.2 million. The Company reported cash items and short-term investments of $106.5 million as of September 26, 2004 versus $111.1 million as of June 27, 2004, the end of the second quarter. Third quarter 2004 net revenues were $198.1 million versus $199.7 million in the comparable period of 2003. Revenue increases associated with Medicare and non-CIGNA commercial insurance business were offset by anticipated lower revenues from CIGNA business and Medicaid and local government programs, as well as the impact of storms in the southeastern United States. The 2004 net revenues include approximately $1.1 million received from a $1.4 million settlement of the Company's appeal filed with the U.S. Provider Reimbursement Review Board related to the reopening of all of its 1998 Medicare cost reports. 3 Huntington Quadrangle, 200S, Melville, NY 11747-4627 2 Gentiva's Medicare revenues for the third quarter of 2004 increased $7.2 million, or 16.5%, over the third quarter of 2003, excluding the impact of the special item related to the 1998 cost report. This was the Company's fifth consecutive quarter of double-digit Medicare growth. The increase was driven by growth in admissions, including admissions to Gentiva's specialty programs, higher reimbursement rates compared with the prior year period, and various operational and clinical process enhancements. Revenues from Medicaid and local government sources declined by $2.7 million, or 6.6%, in the third quarter versus the prior year period due to the Company's ongoing plan to reduce participation in certain low-margin, hourly Medicaid and state and county programs. This was offset somewhat by an increase in skilled visits within Medicaid programs. Revenues from the Company's third major payer category - Commercial Insurance and Other - declined by $7.3 million, or 6.3%, due to the reduction in revenues from Gentiva's contract with CIGNA Healthcare. Net revenues for the nine months ended September 26, 2004 were $620.2 million versus $610.2 million reported in the prior year period. Excluding special items and revenues from CIGNA, net revenues for the first nine months of 2004 increased $31.9 million, or 8.2%. Revenues from CIGNA, which declined 13.9% in the first nine months of 2004, represented approximately 31% of Gentiva's total net revenues in the first nine months of 2004 versus approximately 36% in the comparable period of 2003. Net income for the first nine months of 2004 was $19.6 million, or $0.74 per diluted share, compared with $15.0 million, or $0.55 per diluted share, for the same period of 2003. Results for the first nine months of 2004 included a pre-tax gain of $946,000 from the sale of a Canadian investment as well as special items related to the favorable settlement of the Company's Medicare cost report appeals for 1997 and 1998, net of a revenue adjustment to reflect an industrywide repayment of certain Medicare reimbursements. The Medicare special items contributed $9.1 million to nine-month 2004 net revenues and income before income taxes. Net Income - As Adjusted for the first nine months of 2004 as compared to the same period of 2003 was $0.50 and $0.36 per diluted share, respectively. The 2004 adjusted results exclude the gain from the sale of the Canadian investment and the Medicare special items, and the 2003 adjusted results assume a normalized tax rate, exclusive of adjustments to the valuation allowance, which were recorded in the 2003 period. "During the quarter, we achieved solid Medicare growth and an increase in our non-CIGNA commercial insurance revenues," said Gentiva Chairman and CEO Ron Malone. "We also continued to report increases in gross margins and operating income, and generated strong positive cash flow, some of which was used to repurchase a significant number of shares. "The hurricanes have had an impact on our business in Florida, which caused us to temper our revenue outlook for 2004," Malone added. "However, we were able to limit the impact due to our disaster recovery plans and the commitment of our people. Because we activated our plans well in advance of the storms, we responded quickly and were open for business when patients and referral sources needed us most." Due primarily to the third quarter impact of the storms and their anticipated residual effect on fourth quarter performance, Gentiva's revenue outlook for the 2004 fiscal year - excluding special items -- has been 3 adjusted to approximately $828 million to $835 million (versus the previously announced range of $840 million to $850 million). However, the outlook for 2004 earnings - excluding special items - continues within the previously announced range of $0.64 to $0.67 per diluted share, and remains unchanged due to the improvement of operating margins, a lower effective tax rate, and the effect of the share repurchase program. Gentiva also announced a preliminary outlook for the 2005 fiscal year that anticipates full-year net revenues of $870 million to $890 million, and net income in the range of $0.78 to $0.85 per diluted share. The Company plans to offer additional commentary on this outlook on tomorrow's conference call and live web cast. Non-GAAP Financial Measures The information provided in the following tables includes certain non-GAAP financial measures as defined under Securities and Exchange Commission (SEC) rules. In accordance with SEC rules, the Company has provided, in the supplemental information and the footnotes to the tables, a reconciliation of those measures to the most directly comparable GAAP measures. Conference Call and Web Cast Details The Company will comment further on its third quarter results during its conference call and live web cast to be held Thursday, October 28, 2004, at 10:00 a.m. Eastern Time. To participate in the call from the United States or Canada, dial: (612) 326-1003. The web cast is an audio only, one-way event. Web cast listeners who wish to ask questions must participate in the conference call. To hear the web cast, log onto http://www.gentiva.com/investor/events.asp. This press release is also accessible at the same link, and a transcript of the conference call will be available on the site within 24 hours after the call. About Gentiva Health Services, Inc. Gentiva Health Services, Inc. is the nation's largest provider of comprehensive home health services. Gentiva serves patients through more than 350 direct service delivery units within approximately 250 locations in 35 states, and through CareCentrix(R), which manages home healthcare services for many major managed care organizations throughout the United States and delivers them in all 50 states through a network of more than 2,000 third-party provider locations, as well as Gentiva locations. The Company is a single source for skilled nursing; physical, occupational, speech and neuro-rehabilitation services; social work; nutrition; disease management education; and help with daily living activities, as well as other therapies and services. Gentiva's revenues are generated from commercial insurance, federal and state government programs and individual consumers. For more information, visit Gentiva's web site, www.gentiva.com, and its investor relations section at http://www.gentiva.com/investor. (Tables and notes follow) 4
(in 000's, except per share data) 3rd Quarter Nine Months ----------- ----------- 2004 2003 2004 2003 ---- ---- ---- ---- Statements of Income Net revenues $ 198,070 $ 199,698 $ 620,223 $ 610,160 Cost of services sold 122,539 130,457 383,092 402,529 -------------------------- -------------------------- Gross profit 75,531 69,241 237,131 207,631 Selling, general and administrative expenses (67,227) (62,738) (201,405) (186,332) Depreciation and amortization (1,756) (1,689) (5,505) (5,164) -------------------------- -------------------------- Operating income 6,548 4,814 30,221 16,135 Gain on sale of Canadian investment -- -- 946 -- Interest income, net 248 93 538 275 -------------------------- -------------------------- Income before income taxes 6,796 4,907 31,705 16,410 Income tax expense (2,397) (360) (12,111) (1,415) -------------------------- -------------------------- Net income $ 4,399 $ 4,547 $ 19,594 $ 14,995 ========================== ========================== Earnings per Share Net income: Basic $ 0.18 $ 0.18 $ 0.78 $ 0.57 ========================== ========================== Diluted $ 0.17 $ 0.17 $ 0.74 $ 0.55 ========================== ========================== Weighted average shares outstanding: Basic 24,422 25,972 25,011 26,399 ========================== ========================== Diluted 26,034 27,098 26,645 27,452 ========================== ==========================
Condensed Balance Sheets ASSETS Sep 26, 2004 Dec 28, 2003 ------------ ------------ Cash, cash equivalents and restricted cash $ 96,518 $100,013 Short-term investments 10,000 10,000 Net receivables 127,345 132,998 Deferred tax assets 21,667 26,464 Prepaid expenses and other current assets 7,227 6,524 ------------------------ Total current assets 262,757 275,999 Fixed assets 18,457 15,135 Deferred tax assets, net 22,798 28,025 Other assets 15,009 15,929 ------------------------ Total assets $319,021 $335,088 ======================== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 13,236 $ 16,079 Payroll and related taxes 9,976 12,932 Medicare liabilities 12,591 12,736 Cost of claims incurred but not reported 26,297 28,525 Obligations under insurance programs 36,591 37,200 Other accrued expenses 29,772 32,230 ------------------------ Total current liabilities 128,463 139,702 Other liabilities 20,528 18,207 Shareholders' equity 170,030 177,179 ------------------------ Total liabilities and shareholders' equity $319,021 $335,088 ======================== Common shares outstanding 24,080 25,598 ======================== Note: Cash, cash equivalents and restricted cash includes restricted cash of $21.8 million at September 26, 2004 and December 28, 2003. 5 Nine Months ----------- Condensed Statements of Cash Flows 2004 2003 ---- ---- OPERATING ACTIVITIES: Net income $ 19,594 $ 14,995 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 5,505 5,164 Provision for doubtful accounts 4,708 5,544 Gain on sale of Canadian investment (946) -- Deferred income taxes 9,743 -- Changes in assets and liabilities, net of acquisitions/divestitures Accounts receivable 945 (10,773) Prepaid expenses and other current assets (1,144) 3,682 Current liabilities (12,102) (969) Other, net 657 (1,295) ---------------------- Net cash provided by operating activities 26,960 16,348 ---------------------- INVESTING ACTIVITIES: Purchase of fixed assets (7,607) (4,725) Proceeds from sale of assets 4,123 200 Acquisition of businesses -- (1,300) Purchase of short-term investments (10,000) (14,900) Maturities of short-term investments 10,000 14,935 ---------------------- Net cash used in investing activities (3,484) (5,790) ---------------------- FINANCING ACTIVITIES: Proceeds from issuance of common stock 3,420 2,179 Repurchases of common stock (30,163) (9,651) Repayment of capital lease obligations (228) -- ---------------------- Net cash used in financing activities (26,971) (7,472) ---------------------- Net change in cash, cash equivalents and restricted cash (3,495) 3,086 Cash, cash equivalents and restricted cash at beginning of period 100,013 101,241 ---------------------- Cash, cash equivalents and restricted cash at end of period $ 96,518 $ 104,327 ====================== 6
3rd Quarter Nine Months ----------- ----------- 2004 2003 2004 2003 ---- ---- ---- ---- Supplemental Information Net Revenues: Medicare (1) $ 52,308 $ 43,977 $ 168,749 $ 128,502 Medicaid and local government 38,017 40,718 116,162 125,721 Commercial insurance and other 107,745 115,003 335,312 355,937 ----------------------- ----------------------- Total net revenues $ 198,070 $ 199,698 $ 620,223 $ 610,160 ======================= ======================= A reconciliation of net income between as reported and as adjusted, and the related diluted earnings per share amounts follows (2): Net Income - As Reported $ 4,399 $ 4,547 $ 19,594 $ 14,995 Add: income tax expense - as reported (3) 2,397 360 12,111 1,415 ----------------------- ----------------------- Income before income taxes - as reported 6,796 4,907 31,705 16,410 Less: Gain on sale of Canadian investment (4) -- -- (946) -- Less: Medicare cost report settlement (1) (1,084) -- (10,087) -- Add: Revenue adjustment for estimated Medicare repayment (1) -- -- 1,000 -- ----------------------- ----------------------- Income before income taxes - as adjusted 5,712 4,907 21,672 16,410 Less: income tax expense - at normalized tax rate (3) (2,054) (1,914) (8,278) (6,400) ----------------------- ----------------------- Net Income - As Adjusted $ 3,658 $ 2,993 $ 13,394 $ 10,010 ======================= ======================= Diluted Earnings per Share Net Income - As Reported $ 0.17 $ 0.17 $ 0.74 $ 0.55 ======================= ======================= Net Income - As Adjusted $ 0.14 $ 0.11 $ 0.50 $ 0.36 ======================= =======================
Notes: 1) Medicare revenues for the third quarter of fiscal 2004 included approximately $1.1 million received from a $1.4 million settlement of the Company's appeal filed with the U.S. Provider Reimbursement Review Board ("PRRB") related to the reopening of all of its 1998 cost reports. Medicare revenues for the first nine months of fiscal 2004 included approximately $10.1 million received in settlement of the Company's appeals filed with the PRRB related to the reopening of all of its 1997 and 1998 cost reports reduced by a $1 million estimated repayment to Medicare in connection with services rendered to certain patients since the inception of the Prospective Payment Reimbursement System in October 2000. In connection with the estimated repayment, the Centers for Medicare & Medicaid Services has determined that homecare providers should have received lower reimbursements for certain services rendered to beneficiaries discharged from inpatient hospitals within fourteen days immediately preceding admission to home healthcare. 2) Although "Net Income - As Adjusted" is a non-GAAP financial measure, management believes that the presentation of net income as calculated using normalized tax rates for each period and excluding the PRRB settlements and the estimated Medicare repayment as described in Note 1, as well as the gain on the sale of Gentiva's investment in a Canadian homecare company, as described in Note 4, is a useful adjunct to "Net Income - As Reported" under GAAP because it measures the Company's performance in a consistent manner between the results for the third quarter and first nine months of fiscal years 2004 and 2003. Furthermore, due to the lower effective tax rate for the third quarter and first nine months of fiscal 2003 as described in Note 3, the presentation of "Net Income - As Adjusted" incorporates an effective tax rate which is more representative of the Company's normalized tax rate for reporting purposes. Management also believes that the PRRB settlements in the third quarter and first nine months of fiscal 2004, reduced by the Medicare estimated repayment recorded in the first nine months of fiscal 2004, should be excluded from "Net Income - As Adjusted" as these items relate to reimbursement activities from prior periods as described in Note 1. In addition, the gain on the sale of the Canadian investment should be excluded from "Net Income - As Adjusted," since this is a nonrecurring item. For these reasons, management believes that "Net Income - As Adjusted" is useful to investors. Investors should not view "Net Income - As Adjusted" as an alternative to the GAAP measure of Net income. 7 3) For the third quarter and first nine months of fiscal 2003, the Company's effective tax rates were 7.3% and 8.6%, respectively. These effective rates were lower than the statutory income tax rate due to the reversal of a portion of the Company's valuation allowance relating to the realization of tax benefits associated with a net operating loss carry forward and other net deferred tax assets. For fiscal 2003, a 39% tax rate was more representative of the Company's normalized tax rate for reporting purposes, exclusive of the adjustment to the valuation allowance. For fiscal 2004, the Company's annual effective tax rate is estimated to be 38.2%. 4) Income before income taxes for the first nine months of 2004 included a gain of $946,000 from the sale of Gentiva's 19.9% interest in a Canadian homecare company to whom Gentiva sold its Canadian operations in November 2000. Forward-Looking Statement Certain statements contained in this news release, including, without limitation, statements containing the words "believes," "anticipates," "intends," "expects," "assumes," "trends" and similar expressions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon the Company's current plans, expectations and projections about future events. However, such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, general economic and business conditions; demographic changes; changes in, or failure to comply with, existing governmental regulations; legislative proposals for health care reform; changes in Medicare and Medicaid reimbursement levels; effects of competition in the markets the Company operates in; liability and other claims asserted against the Company; ability to attract and retain qualified personnel; availability and terms of capital; loss of significant contracts or reduction in revenues associated with major payer sources; ability of customers to pay for services; business disruption due to natural disasters or terrorist acts; a material shift in utilization within capitated agreements; and changes in estimates and judgments associated with critical accounting policies. For a detailed discussion of these and other factors that could cause actual results to differ from those contained in this news release, please refer to the Company's various filings with the Securities and Exchange Commission (SEC), including the "risk factors" section contained in the Company's annual report on Form 10-K for the year ended December 28, 2003. # # # -----END PRIVACY-ENHANCED MESSAGE-----