EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

 

Financial and Investor Contact:
   John R. Potapchuk
   631-501-7035
   john.potapchuk@gentiva.com
or    Brandon Ballew
   770-221-6700
   brandon.ballew@gentiva.com
Media Contact:
   Jennifer Gery-Egan
   Brainerd Communicators
   212-986-6667
   gery@braincomm.com

Gentiva Reports Second Quarter 2009 Results

— Company Raises 2009 Financial Outlook —

ATLANTA, GA, July 30, 2009 — Gentiva Health Services, Inc. (NASDAQ: GTIV), a leading provider of comprehensive home health services, today reported the following 2009 second quarter results:

 

   

Net revenues of $298.1 million for the quarter ended June 28, 2009 compared to $344.2 million, which included net revenues of $79.3 million from its CareCentrix business unit, for the quarter ended June 29, 2008. Excluding prior year’s second quarter net revenues from CareCentrix, Gentiva’s net revenues grew about $33 million, or 12% in the 2009 second quarter. The Company sold a majority interest in CareCentrix to Water Street Healthcare Partners on September 25, 2008.

 

   

Net income of $17.1 million, or $0.58 per diluted share compared to net income of $12.0 million or $0.41 per diluted share in the 2008 second quarter.

 

   

Adjusted net income for the 2009 second quarter was $17.5 million, up 43% compared with the prior year period. On a diluted earnings per share basis, adjusted net income in the 2009 second quarter was $0.59 compared with $0.42 in the corresponding period of 2008. Adjusted net income for both second quarter periods excludes special charges of $0.01 per diluted share relating to restructuring and integration activities.

 

   

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 12% to $35.4 million in the second quarter of 2009. EBITDA as a percentage of net revenues improved to 11.9% in the second quarter of 2009 versus 9.2% in the prior-year period. EBITDA included restructuring and integration costs of $0.6 million in the second quarter of 2009 as compared to $0.4 million for the prior year period.

“Gentiva had a very good second quarter driven by continued success in executing our core strategies: rolling out our specialty programs, serving the needs of higher acuity seniors and increasing both the capacity and productivity of our growing clinician base,” said Gentiva CEO Tony Strange. “Our performance demonstrates the commitment of our employees as well as the growing belief of the healthcare community in the power of home care as a key part of the solution to the nation’s healthcare challenges.”


Gentiva reported these segment highlights for the quarter:

 

   

Home Health revenue growth of 12% to $265.6 million and operating contribution growth of 23% to $48.6 million.

 

   

Revenues in the All Other segment – which includes hospice, respiratory therapy and home medical equipment, infusion therapy and consulting – increased 14% to $33.0 million, while operating contribution increased 19% to $3.9 million compared to the prior-year period.

Gentiva reported these highlights for the six months ended June 28, 2009:

 

   

Net revenues of $587.0 million versus $665.8 million in the prior year period. Net revenues in the 2008 period included approximately $157 million relating to CareCentrix. Excluding the revenue contribution from CareCentrix, Gentiva’s net revenues grew about $77 million, or 15%, in the six-month period ended June 28, 2009.

 

   

Net income of $35.1 million, or $1.19 per diluted share which included (i) a non-recurring pre-tax net gain of $5.7 million or $0.20 per diluted share resulting from the 2009 first quarter sale of certain branch offices that specialized primarily in pediatric home health care services and (ii) special pre-tax charges of $1.5 million or $0.03 per diluted share relating to restructuring and integration costs. These results compared to net income of $19.7 million or $0.68 per diluted share in the 2008 period which included special pre-tax charges of $0.7 million or $0.01 per diluted share relating to restructuring and integration costs.

 

   

Adjusted net income was $30.2 million, up 50% compared with the prior year period. On a diluted earnings per share basis, adjusted net income in the 2009 period was $1.02 compared with $0.69 in the corresponding period of 2008.

 

   

EBITDA increased 15% to $63.6 million versus $55.3 million in the prior-year period.

 

   

Operating cash flow was $49.5 million in the 2009 period compared to $20.8 million in the comparable 2008 period.

At June 28, 2009, the Company reported cash and cash equivalents of $99.5 million and long-term debt of $237 million.

Full-Year 2009 Outlook

Gentiva announced that it is raising its revenue and earnings outlook for fiscal 2009 based on its year-to-date performance and prospects for the remainder of this year. Gentiva now anticipates full-year 2009 net revenues will range between $1.19 billion to $1.21 billion, as compared to prior guidance of $1.14 billion to $1.18 billion. On a diluted earnings per share basis, adjusted net income is expected to be in a range between $2.04 and $2.10, up from the $1.72 and $1.80 range provided earlier this year. Gentiva’s 2009 outlook represents an increase in net revenues of 12% to 14% and an increase in diluted earnings per share of 45% to 50% when compared with 2008 pro forma financial results, which reflect the Company’s performance as if the CareCentrix divestiture had occurred at the beginning of fiscal 2008. The 2009 outlook excludes special charges relating to restructuring and integration costs which are expected to range between $3 million and $4 million for the year and non-recurring charges and credits. The outlook includes the impact of recently announced acquisitions and also reflects 53 weeks of activity in fiscal 2009.

 

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Non-GAAP Financial Measures

The information provided in this press release 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 second quarter 2009 results during its conference call and live web cast to be held Thursday, July 30, 2009 at 10:00 a.m. Eastern Time. To participate in the call from the United States, Canada or an international location, dial (973) 935-2408 and reference call #19324792. The web cast is an audio-only, one-way event. Web cast listeners who wish to ask questions must participate in the conference call. Log onto http://investors.gentiva.com/events.cfm to hear the web cast. A replay of the call will be available on July 30, beginning at approximately 1 p.m. ET, and will remain available continuously through August 6. To listen to a replay of the call from the United States, Canada or international locations, dial (800) 642-1687 or (706) 645-9291 and enter the following PIN at the prompt: 19324792. Visit http://investors.gentiva.com/events.cfm to access the web cast archive. This press release is accessible at http://investors.gentiva.com/releases.cfm and a transcript of the conference call is expected to be available on the site within 48 hours after the call.

About Gentiva Health Services, Inc.

Gentiva Health Services, Inc. is a leading provider of comprehensive home health services, delivering innovative, high quality care to patients across the United States. Gentiva is a single source for skilled nursing; physical, occupational, speech and neurorehabilitation services; hospice services; social work; nutrition; disease management education; help with daily living activities; respiratory therapy and home medical equipment; infusion therapy services; and other therapies and services. For more information, visit Gentiva’s web site, http://www.gentiva.com, and its investor relations section at http://investors.gentiva.com. GTIV-E

(unaudited tables and notes follow)

 

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      2nd Quarter     Six Months  
(in 000’s, except per share data)    2009     2008     2009     2008  

Statements of Income

        

Net revenues

   $ 298,103      $ 344,213      $ 587,020      $ 665,846   

Cost of services and goods sold

     141,175        192,733        281,984        377,843   
                                

Gross profit

     156,928        151,480        305,036        288,003   

Selling, general and administrative expenses

     (127,186     (125,569     (252,541     (243,449

(Loss) gain on sale of assets, net

     (85     —          5,747        —     

Interest income

     817        273        1,618        940   

Interest expense and other

     (2,688     (5,592     (5,880     (11,685
                                

Income before income taxes

     27,786        20,592        53,980        33,809   

Income tax expense

     10,954        8,568        19,404        14,062   
                                

Income before equity in net earnings of affiliate

     16,832        12,024        34,576        19,747   

Equity in net earnings of affiliate

     263        —          541        —     
                                

Net income

   $ 17,095      $ 12,024      $ 35,117      $ 19,747   
                                

Earnings per Share

        

Net income:

        

Basic

   $ 0.59      $ 0.42      $ 1.21      $ 0.70   
                                

Diluted

   $ 0.58      $ 0.41      $ 1.19      $ 0.68   
                                

Average shares outstanding:

        

Basic

     28,959        28,497        28,952        28,389   
                                

Diluted

     29,396        29,240        29,606        29,147   
                                

 

     Jun 28, 2009    Dec 28, 2008

Condensed Balance Sheets

     

ASSETS

     

Cash and cash equivalents

   $ 99,470    $ 69,201

Short-term investments (A)

     4,450      —  

Accounts receivable, net (B)

     174,631      177,201

Deferred tax assets

     13,840      11,933

Prepaid expenses and other current assets

     14,458      13,141
             

Total current assets

     306,849      271,476

Long-term investments (A)

     4,250      11,050

Note receivable

     25,000      25,000

Investment in affiliate

     23,805      23,264

Fixed assets, net

     67,529      63,815

Intangible assets, net

     249,274      250,432

Goodwill

     308,868      308,213

Other assets

     21,989      20,247
             

Total assets

   $ 1,007,564    $ 973,497
             

LIABILITIES AND SHAREHOLDERS’ EQUITY

     

Accounts payable

   $ 8,593    $ 8,027

Payroll and related taxes

     17,959      17,869

Deferred revenue

     38,108      32,976

Medicare liabilities

     6,309      6,680

Obligations under insurance programs

     38,059      39,628

Other accrued expenses

     38,428      40,895
             

Total current liabilities

     147,456      146,075

Long-term debt

     237,000      251,000

Deferred tax liabilities, net

     68,408      64,262

Other liabilities

     18,777      17,189

Shareholders’ equity

     535,923      494,971
             

Total liabilities and shareholders’ equity

   $ 1,007,564    $ 973,497
             

Common shares outstanding

     29,011      28,864
             

 

(A) Short-term and long-term investments consisted of auction rate securities with underlying guarantees carrying a AAA rating. Short-term investments were presented net of a valuation allowance of $0.6 million, the charge for which was recorded in interest expense and other in the 2009 second quarter. At June 28, 2009 and December 28, 2008, long-term investments were presented net of a valuation allowance of $0.8 million and $1.9 million, respectively.
(B) Accounts receivable, net, included an allowance for doubtful accounts of $8.0 million and $8.2 million at June 28, 2009 and December 28, 2008, respectively.

 

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(in 000’s)    Six Months  
   2009     2008  

Condensed Statements of Cash Flows

    

OPERATING ACTIVITIES:

    

Net income

   $ 35,117      $ 19,747   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     11,145        10,753   

Amortization of debt issuance costs

     681        593   

Provision for doubtful accounts

     4,045        6,124   

Equity-based compensation expense

     3,466        3,220   

Windfall tax benefits associated with equity-based compensation

     (585     (1,306

Impairment loss on auction rate securities

     1,000        —     

Gain on sale of assets, net

     (5,747     —     

Equity in net earnings of affiliate

     (541     —     

Deferred income taxes

     1,458        10,829   

Changes in assets and liabilities, net of effects from acquisitions and dispositions:

    

Accounts receivable

     (1,082     (24,960

Prepaid expenses and other current assets

     (1,602     (1,508

Current liabilities

     1,836        (3,240

Other, net

     271        529   
                

Net cash provided by operating activities

     49,462        20,781   
                

INVESTING ACTIVITIES:

    

Purchase of fixed assets

     (12,403     (13,831

Proceeds from sale of assets, net of cash transferred

     5,619        —     

Acquisition of businesses, net of cash acquired

     (2,200     (59,217

Purchases of short-term investments available-for-sale

     —          (28,000

Maturities of short-term investments available-for-sale

     2,550        46,250   
                

Net cash used in investing activities

     (6,434     (54,798
                

FINANCING ACTIVITIES:

    

Proceeds from issuance of common stock

     5,910        6,211   

Windfall tax benefits associated with equity-based compensation

     585        1,306   

Borrowings under revolving credit facility

     —          24,000   

Home Health Care Affiliates debt repayments

     —          (7,420

Debt issuance costs

     —          (557

Repayments under the Company’s term loan

     (14,000     (3,000

Repurchases of common stock

     (4,813     —     

Repayment of capital lease obligations

     (441     (625
                

Net cash (used in) provided by financing activities

     (12,759     19,915   
                

Net change in cash and cash equivalents

     30,269        (14,102

Cash and cash equivalents at beginning of period

     69,201        36,181   
                

Cash and cash equivalents at end of period

   $ 99,470      $ 22,079   
                

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

    

Interest paid

   $ 5,172      $ 11,355   

Income taxes paid

   $ 15,831      $ 7,197   

 

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     2nd Quarter     Six Months  
(in 000’s)    2009     2008     2009     2008  

Supplemental Information

        

Segment Information (1)

        

Net revenues

        

Home Health

   $ 265,581      $ 236,876      $ 523,326      $ 453,876   

CareCentrix

     —          79,323        —          157,171   

All Other (3)

     32,987        28,827        64,558        56,556   

Intersegment revenues

     (465     (813     (864     (1,757
                                

Total net revenues (3)

   $ 298,103      $ 344,213      $ 587,020      $ 665,846   
                                

Operating contribution (4)

        

Home Health

   $ 48,633      $ 39,423      $ 91,858      $ 70,625   

CareCentrix (5)

     —          6,523        —          12,849   

All Other

     3,891        3,278        7,121        6,123   
                                

Total operating contribution

     52,524        49,224        98,979        89,597   

Corporate expenses

     (17,124     (17,711     (35,339     (34,290

(Loss) gain on sale of assets, net

     (85     —          5,747        —     

Depreciation and amortization

     (5,658     (5,602     (11,145     (10,753

Interest expense, net (6)

     (1,871     (5,319     (4,262     (10,745
                                

Income before income taxes

   $ 27,786      $ 20,592      $ 53,980      $ 33,809   
                                
     2nd Quarter     Six Months  
     2009     2008     2009     2008  

Net Revenues by Major Payer Source:

        

Medicare

        

Home Health

   $ 194,140      $ 161,257      $ 380,210      $ 306,362   

Other

     20,891        17,292        40,948        33,492   
                                

Total Medicare

     215,031        178,549        421,158        339,854   

Medicaid and local government

     24,830        32,953        52,972        64,520   

Commercial Insurance and Other:

        

Paid at episodic rates

     19,164        13,402        35,294        24,548   

Other

     39,078        119,309        77,596        236,924   
                                

Total Commercial Insurance and Other

     58,242        132,711        112,890        261,472   
                                

Total net revenues

   $ 298,103      $ 344,213      $ 587,020      $ 665,846   
                                
A reconciliation of EBITDA to Net income - As Reported amounts follows: (2)   
     2nd Quarter     Six Months  
     2009     2008     2009     2008  

EBITDA (4)

   $ 35,400      $ 31,513      $ 63,640      $ 55,307   

(Loss) gain on sale of assets, net

     (85     —          5,747        —     

Depreciation and amortization

     (5,658     (5,602     (11,145     (10,753

Interest expense, net (6)

     (1,871     (5,319     (4,262     (10,745
                                

Income before income taxes

     27,786        20,592        53,980        33,809   

Income tax expense (7)

     (10,954     (8,568     (19,404     (14,062
                                

Income before equity in net earnings of affiliate

     16,832        12,024        34,576        19,747   

Equity in net earnings of affiliate

     263        —          541        —     
                                

Net income - As Reported

   $ 17,095      $ 12,024      $ 35,117      $ 19,747   
                                

 

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Notes:

1) The Company’s senior management evaluates performance and allocates resources based on operating contributions of the operating segments, which exclude corporate expenses, depreciation, amortization, and interest expense (net), but include revenues and all other costs directly attributable to the specific segment.
2) EBITDA, a non-GAAP financial measure, is defined as income before interest expense (net of interest income), income taxes, depreciation and amortization. Management uses EBITDA to evaluate overall performance and compare current operating results with other companies in the healthcare industry. EBITDA should not be considered in isolation or as a substitute for net income, operating income or cash flow statement data determined in accordance with accounting principles generally accepted in the United States. Because EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States and is susceptible to varying calculations, it may not be comparable to similarly titled measures in other companies.
3) Certain reclassifications have been made to the 2008 second quarter and first half statements of income and supplemental information to conform to the current year presentation. The primary impact of the reclassifications was to reduce (i) net revenues in All Other and (ii) cost of services and goods sold by approximately $2.0 million and $4.1 million, in the second quarter and first half of 2008, respectively, relating to the reimbursement of nursing home room and board charges for hospice patients.
4) Operating contribution and EBITDA for the second quarter and first half of 2009 included special charges of $0.6 million and $1.5 million, respectively. For the second quarter and first half of 2008, operating contribution and EBITDA included special charges of $0.4 million and $0.7 million, respectively. The special charges, which included restructuring and integration costs and costs and professional fees associated with merger and acquisition activities, were reflected as follows for segment reporting (dollars in millions):

 

     2nd Quarter    Six Months
     2009    2008    2009    2008

Home Health

   $ 0.4    $ 0.1    $ 0.5    $ 0.2

Corporate expenses

     0.2      0.3      1.0      0.5
                           

Total

   $ 0.6    $ 0.4    $ 1.5    $ 0.7
                           

 

5) Operating contribution for CareCentrix, in which the Company sold a majority ownership interest on September 25, 2008, was comprised of the following (dollars in thousands):

 

     2nd Quarter     Six Months  
     2009    2008     2009    2008  

Gross profit

   $ —      $ 14,580      $ —      $ 28,870   

Selling, general and administrative expenses

     —        (8,184     —        (16,261

Add: depreciation

     —        127        —        240   
                              

Operating contribution

   $ —      $ 6,523      $ —      $ 12,849   
                              

 

6) Interest expense, net for the second quarter and first half of 2009 included impairment losses on auction rate securities of $0.6 million and $1.0 million, respectively.
7) The Company’s effective tax rate was 39.4% and 35.9% for the second quarter and first half of 2009, respectively, and 41.6% for the second quarter and first half of 2008. During the first half of 2009, the Company recorded a pre-tax gain, net of transaction costs, of $5.7 million relating to the sale of several branch offices that specialized primarily in pediatric home health care services. There was no income tax expense relating to the gain on sale of assets due to the utilization of a capital loss carryforward. Excluding the impact of the non-recurring gain, the Company’s effective tax rate would have been 40.2% for the first half of 2009.

 

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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. These factors include, among others, the following: economic and business conditions, including the ability to access capital markets; demographic changes; changes in, or failure to comply with, existing governmental regulations; legislative proposals for healthcare reform; changes in Medicare and Medicaid reimbursement levels; effects of competition in the markets in which the Company operates; 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; ability to successfully integrate the operations of acquisitions the Company may make and achieve expected synergies and operational efficiencies within expected time-frames; effect on liquidity of the Company’s debt service requirements; and changes in estimates and judgments associated with critical accounting policies and estimates. For a detailed discussion of certain 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, 2008.

# # #

 

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