-----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, JlQUIJ9jHudrKQH4sSazwwuyj2LLvTk8beNVlL9K7IY4xxQ4R4VaJxBO5OFPASQZ ld5OAKiSzdWRK5fabIy/hQ== 0000890925-97-000011.txt : 19970815 0000890925-97-000011.hdr.sgml : 19970815 ACCESSION NUMBER: 0000890925-97-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MULTICARE COMPANIES INC CENTRAL INDEX KEY: 0000890925 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 223152527 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22090 FILM NUMBER: 97661920 BUSINESS ADDRESS: STREET 1: 411 HACKENSACK AVE CITY: HACKENSACK STATE: NJ ZIP: 07601 BUSINESS PHONE: 2014888818 MAIL ADDRESS: STREET 1: 411 HACKENSACK AVENUE CITY: HACKENSACK STATE: NJ ZIP: 07601 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ________X__________ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1997 ___________________ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____________ to _____________ Commission File No. 34-22090 THE MULTICARE COMPANIES, INC. (Exact name of registrant as specified in its charter) Delaware 22-3152527 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification #) 411 Hackensack Avenue Hackensack, New Jersey 07601 Address of principal executive offices Zip Code Registrant's telephone number, including area code (201) 488-8818 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ___X___ No ______ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at August 13, 1997 Common Stock ($.01 Par Value) 30,913,962 THE MULTICARE COMPANIES, INC. Index Page Special note regarding forward-looking statements 1 Part I. Financial Information Consolidated Balance Sheets December 31, 1996 and June 30, 1997 2 Consolidated Statements of Operations Three and six months ended June 30, 1996 and 1997 3 Consolidated Statements of Cash Flows Six months ended June 30, 1996 and 1997 4 Notes to Consolidated Financial Statements 5-7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 Part II. Other Information 11 Signatures 12 THE MULTICARE COMPANIES, INC. AND SUBSIDIARIES Special Note Regarding Forward-Looking Statements Certain statements in this Form 10-Q, including information set forth under "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations", constitute "Forward-Looking Statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). The Multicare Companies, Inc. ("Multicare" or the "Company") desires to take advantage of certain "safe harbor" provisions of the Reform Act and is including this special note to enable the Company to do so. Although the Company believes the assumptions accompanying such forward-looking statements are reasonable, there can be no assurance that expected results will occur. A significant variation between actual results and any of such assumptions may cause actual results to differ materially from expectations. Reference should be made to Multicare's Annual Report on Form 10-K for the year ended December 31, 1996 for more specific information concerning such risks and assumptions. THE MULTICARE COMPANIES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share data)
December 31, June 30, 1996 1997 (Unaudited) Assets Current assets: Cash and cash equivalents $ 1,150 3,293 Accounts receivable, net 102,234 121,267 Prepaid expenses and other current assets 18,419 21,292 Total current assets 121,803 145,852 Property, plant and equipment, net 443,019 447,817 Goodwill, net 157,298 170,804 Other assets 39,547 43,412 $ 761,667 807,885 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 26,948 34,490 Accrued liabilities 54,707 59,369 Current portion of long-term debt 821 643 Total current liabilities 82,476 94,502 Long-term debt 428,347 432,689 Deferred taxes 42,909 42,371 Contingent stock purchase commitment --- 765 Stockholders' equity: Preferred stock, par value $.01, 7,000,000 shares authorized, none issued --- --- Common stock, par value $.01, 70,000,000 shares authorized; 30,133,535 and 30,831,459 issued and outstanding in 1996 and 1997, respectively 301 308 Additional paid-in-capital 143,513 155,061 Retained earnings 64,121 82,189 Total stockholders' equity 207,935 237,558 $ 761,667 807,885
See accompanying notes to consolidated financial statements. THE MULTICARE COMPANIES, INC. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) (In thousands, except per share data)
Three months Six months ended ended June 30, June 30, 1996 1997 1996 1997 Net revenues $ 131,889 179,164 251,946 347,956 Expenses: Operating expense 99,432 135,598 190,469 263,300 Corporate, general and administrative expense 6,258 8,901 12,413 17,091 Lease expense 3,036 4,207 5,769 8,358 Depreciation and amortization expense 5,553 7,213 10,207 14,083 Interest expense, net 6,621 6,984 12,084 14,168 Debenture conversion expense --- --- --- 785 Total expenses 120,900 162,903 230,942 317,785 Income before income taxes and extraordinary item 10,989 16,261 21,004 30,171 Income tax expense 4,209 6,080 8,027 11,230 Income before extraordinary item 6,780 10,181 12,977 18,941 Extraordinary item - loss on extinguishment of debt, net of tax benefit --- -- 1,481 873 Net income $ 6,780 10,181 11,496 18,068 Income per common and common equivalent share data: Income before extraordinary item $ .25 .32 .47 .59 Net income $ .25 .32 .42 .57 Weighing average number of common and common equivalent shares outstanding 27,589 32,031 27,446 31,845 Income per common share assuming full dilution: Income before extraordinary item $ .24 .30 .46 .56 Net income $ .24 .30 .41 .54 Weighted average number of common shares outstanding assuming full dilution 32,565 36,656 32,511 36,652
See accompanying notes to consolidated financial statements. THE MULTICARE COMPANIES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (In thousands)
Six months ended June 30, 1996 1997 Cash flows from operating activities: Net cash provided by operating activities $ 6,217 21,762 Cash flows from investing activities: Net marketable securities sold 202 --- Assets and operations acquired (122,940) (14,932) Capital expenditures (28,787) (28,077) Proceeds from repayment of construction advances --- 13,100 Other assets (2,201) (5,632) Net cash used in investing activities (153,726) (35,541) Cash flows from financing activities: Proceeds from exercise of stock options and stock purchase plan 128 913 Proceeds from long-term debt 193,700 101,900 Payments of long-term debt (45,871) (86,837) Debt issuance costs (2,406) (188) Other 71 134 Net cash provided by financing activities 145,622 15,922 (Decrease) increase in cash and cash equivalents (1,887) 2,143 Cash and cash equivalents at beginning of period 3,921 1,150 Cash and cash equivalents at end of period $ 2,034 3,293
See accompanying notes to consolidated financial statements. THE MULTICARE COMPANIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements June 30, 1997 (Unaudited) (In thousands, except share and per share data) (1) Organization and Basis of Presentation The Multicare Companies, Inc. and Subsidiaries (Multicare or the Company) own, operate and manage skilled nursing facilities which provide long-term care and specialty medical services in selected geographic regions within the eastern and midwestern United States. In addition, the Company operates assisted-living facilities, institutional pharmacies, medical supply companies, outpatient rehabilitation centers and other ancillary healthcare businesses. The financial information as of June 30, 1997 and for the three and six months ended June 30, 1996 and 1997, is unaudited and has been prepared in conformity with the accounting principles and practices as reflected in the Company's audited annual financial statements. The unaudited financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position as of June 30, 1997 and the operating results and cash flows for the three and six months ended June 30, 1996 and 1997. Results for interim periods are not necessarily indicative of those to be expected for the year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto incorporated in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. (2) Pending Merger On June 16, 1997 the Company entered into a definitive merger agreement under which Genesis ElderCare Acquisition Corp. (GEC), a company formed by Genesis Health Ventures, Inc. (Genesis), The Cypress Group LLC (Cypress) and The Texas Pacific Group (TPG), will acquire the Company for $28.00 per share in cash. In accordance with the terms of the agreement, GEC has commenced a tender offer to acquire all of the Company's outstanding shares of common stock at a price of $28.00 per share. The transaction is subject to a number of conditions including required regulatory approvals and other conditions. The merger agreement provides that it will terminate on September 15, 1997 (subject to extension by GEC to October 15, 1997, under certain circumstances), unless extended by the Company and GEC. For more information regarding the merger agreement, reference is made to the Company's Schedule 14D-9 dated June 20, 1997. (3) Commitments and Contingencies There are numerous legislative and executive initiatives at the federal and state levels for comprehensive reforms affecting the payment for and availability of healthcare services, including without limitation discussions at the federal level concerning budget reductions and the implementation of prospective payment systems for the Medicare and Medicaid programs. The Company is unable to predict the impact of healthcare reform proposals on the Company; however, it is possible that such proposals could have a material adverse effect on the Company. Any changes in reimbursement levels under Medicaid and Medicare and any changes in applicable government regulations could significantly affect the profitability of the Company. Various cost containment measures adopted by governmental pay sources have begun to limit the scope and amount of reimbursable healthcare expenses. Additional measures, including measures that have already been proposed in states in which the Company operates, may be adopted in the future as federal and state governments attempt to control escalating healthcare costs. There can be no assurance that currently proposed or future healthcare legislation or other changes in the administration or interpretation of governmental healthcare programs will not have a material adverse effect on the Company. In particular, changes to the Medicare reimbursement program that have been proposed could materially adversely affect the Company. The Company is from time to time subject to claims and suits arising in the ordinary course of business. In the opinion of management, the ultimate resolution of pending legal proceedings will not have a material effect on the Company's consolidated financial statements. (4) Capital Stock and Net Income Per Share In May 1996, the Company effected a three-for- two stock split in the form of a 50% stock dividend. All references to average number of shares outstanding and per share amounts have been restated to reflect the stock split. The computation of primary earnings per share is based on the weighted average number of outstanding shares during the period and includes when their effect is dilutive, common stock equivalents consisting of certain shares subject to stock options. Fully diluted earning per share additionally assumes the conversion of the Company's Convertible Subordinated Debentures. Net income used in the computation of fully diluted earnings per share was determined on the assumption that the convertible debentures were converted and net income was adjusted for the amounts representing interest and amortization of debt issuance costs, net of tax effect. In February 1997 the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share," ("FASB 128") which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. The impact of FASB 128 on the calculation of earnings per share amounts is not expected to be material. In March 1997 the Company issued put options on 43,700 shares of its common stock which expire September 30, 1997. As of June 30, 1997 the balance in the contingent stock purchase commitment is the amount the Company would have been obligated to pay if the put options were exercised. (5) Acquisitions In February 1996, the Company completed the acquisition of Concord Health Group, Inc. (Concord). The Company acquired the outstanding capital stock and warrants of Concord for approximately $75,000 including transaction costs, repaid approximately $41,000 of debt, and assumed historical debt of approximately $4,000. Total goodwill approximated $61,000. In December 1996, the Company completed the acquisition of The A.D.S. Group (A.D.S.). The Company paid approximately $10,000, repaid or assumed approximately $29,800 in debt, financed $51,000 through a lease facility, and issued 554,973 shares of its common stock for A.D.S.. Total goodwill approximated $29,900. The following unaudited pro forma financial information gives effect to the acquisitions of Concord and A.D.S. as if such transactions occurred on January 1, 1996:
Pro forma Six months ended June 30, 1996 Net revenues $ 288,512 Income before extraordinary item 14,280 Net income 12,799 Income before extraordinary item per common and common equivalent share assuming full dilution .49 Net income per common and common equivalent share assuming full dilution .45
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations General The Company has experienced significant growth, primarily through acquisitions of long-term care facilities and ancillary businesses and increased utilization of specialty medical services. It is the Company's strategy to expand through construction and development of new facilities and selective acquisitions with geographically concentrated operations. Summarized below are the recent significant acquisitions completed in 1996: - In February 1996, the Company acquired the outstanding capital stock of Concord Health Group, Inc., a long-term care provider through 15 long-term care facilities with approximately 2,600 beds and ancillary businesses in Pennsylvania. - In December 1996, the Company acquired The A.D.S Group, which owns, operates or manages over 50 long-term care and assisted-living facilities with over 4,200 licensed beds, principally in Massachusetts. Results of Operations Net Revenues. Net revenues for the six months ended June 30, 1997 increased 38% or $96.0 million from the same period last year to $348.0 million. Net revenues for the quarter ended June 30, 1997 increased 36% or $47.3 million from the same period last year to $179.2 million. Of the net revenues increase for the six months ended June 30, 1997, 24% is attributable to the inclusion of results for the Company's recent acquisitions. The internal growth rate of revenues amounted to 14% in the six months ended June 30, 1997, resulting mainly from increases in payor rates and changes in census mix, development and opening of additional beds, and growth in specialty medical service revenues. The revenues increase for the quarter ended June 30, 1997 was due to results from recent acquisitions of 21% and internal growth of 15%. The Company's quality mix of private, Medicare and insurance revenues was 67% of revenues for the six months and quarter ended June 30, 1997 compared to 64% in the similar periods of 1996. Occupancy rates were 91% for the six months ended June 30, 1997 compared to 92% in the similar period of 1996. Occupancy rates were 92% for the three months ended June 30, 1997 and 1996. Operating Expense and Margins. Operating expenses for the six months ended June 30, 1997 increased 38% or $72.8 million from the comparable period in 1996 to $263.3 million. Operating expenses for the three months ended June 30, 1997 increased 36% or $36.2 million from the comparable period in 1996 to $135.6 million. The increases in operating expenses for the six and three month periods ended June 30, 1997 reflect the inclusion of results for the recent acquisitions of $46.2 million and $20.2 million, respectively. The remainder of the increase resulted primarily from higher salaries, wages and benefits for cost of living increases and the expanded utilization of salaried therapists and nursing staffing levels to support higher patient acuities and more complex product lines. Operating margins before interest and debenture conversion expense remained consistent at 13% of net revenues for the three and six months ended June 30, 1997 and 1996. Income before interest, taxes, depreciation, amortization and lease expense (EBITDAR) remained consistent at 19% of net revenues for the six months ended June 30, 1997 and 1996. Income before interest, taxes, depreciation, amortization and lease expense (EBITDAR) is 19% of net revenues for the three months ended June 30, 1997 and 20% of net revenues for the three months ended June 30, 1996. Corporate, General and Administrative Expense. Corporate, general and administrative expense remained consistent at approximately 5% of net revenues for the three and six month periods ended June 30, 1996 and 1997. The expenses include resources devoted to operations, finance, legal, risk management, and information systems in order to support the Company's operations. Lease Expense. Lease expense for the six months ended June 30, 1997 increased 45% or $2.6 million from the same period last year to $8.4 million. In the second quarter of 1997 lease expense increased 39% or $1.2 million from the same period last year to $4.2 million. The increases were primarily due to the inclusion of lease expense relating to a recent acquisition. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued. Depreciation and Amortization Expense. Depreciation and amortization expense for the six months ended June 30, 1997 increased 38% to $14.1 million and 30% to $7.2 million from the comparable periods in 1996. The increases were primarily due to the inclusion of depreciation and amortization relating to recent acquisitions. Interest Expense, net. Net interest expense for the six months ended June 30, 1997 increased 17% from the same period in 1996 to $14.2 million, while net interest expense for the second quarter of 1997 increased 5% to $7.0 million from the same period a year ago. This is primarily a result of increased borrowings under the Company's credit facility in connection with the financing of recent acquisitions. These increases have been offset by decreases relating to the conversion of the Company's convertible debt and the purchase of the Company's senior notes. Debenture Conversion Expense. Debenture conversion expense for the six months ended June 30, 1997 relates to the premium paid in January 1997 to convert $11 million of convertible debentures into common stock. Liquidity and Capital Resources The Company believes that working capital from operating cash flows and lines of credit are adequate for continuing operations, debt service, and anticipated capital expenditures. At June 30, 1997, the Company had working capital of $51.4 million, compared to $39.3 million at December 31, 1996. In January 1997 the Company purchased $6.5 million of its 12.5% Senior Subordinated Notes resulting in annual interest savings of more than $.4 million based on the Company's incremental borrowing rate under existing credit lines. In addition, in January 1997 $11 million of the Company's Convertible Debentures were converted into common stock. Cash flow from operations was $21.8 million for the six months ended June 30, 1997 compared to cash from operations of $6.2 million in the comparable period of 1996. Net accounts receivable were $121.3 million at June 30, 1997 compared to $102.2 million at December 31, 1996. The increase in net accounts receivable is attributable to the recent acquisitions, the utilization of specialty medical services for higher acuity level patients, and the timing of third-party interim and settlement payments. The allowance for doubtful accounts represents approximately 8% and 10% of gross accounts receivable at June 30, 1997 and December 31, 1996, respectively. Legislative and regulatory action and government budgetary constraints could change the timing of payments and reimbursement rates of the Medicare and Medicaid programs in the future. These changes could have a material adverse effect on the Company's future operating results and cash flows. There are numerous legislative and executive initiatives at the federal and state levels for comprehensive reforms affecting the payment for and availability of healthcare services, including without limitation discussions at the federal level concerning budget reductions and the implementation of prospective payment systems for the Medicare and Medicaid programs. The Company is unable to predict the impact of healthcare reform proposals on the Company; however, it is possible that such proposals could have a material adverse effect on the Company. Any changes in reimbursement levels under Medicaid and Medicare and any changes in applicable government regulations could significantly affect the profitability of the Company. Various cost containment measures adopted by governmental pay sources have begun to limit the scope and amount of reimbursable healthcare expenses. Additional measures, including measures that have already been proposed in states in which the Company operates, may be adopted in the future as federal and state governments attempt to control escalating healthcare costs. There can be no assurance that currently proposed or future healthcare legislation or other changes in the administration or interpretation of governmental healthcare programs will not have a material adverse effect on the Company. In particular, changes to the Medicare reimbursement program that have been proposed could materially adversely affect the Company. The Company anticipates its capital requirements for the construction of new facilities and the expansion and renovation of existing facilities to approximate $60 million over the next twelve months based on existing construction commitments and plans. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued. On June 16, 1997 the Company entered into a definitive merger agreement under which Genesis ElderCare Acquisition Corp. (GEC), a company formed by Genesis Health Ventures, Inc. (Genesis), The Cypress Group LLC (Cypress) and The Texas Pacific Group (TPG), will acquire the Company for $28.00 per share in cash. In accordance with the terms of the agreement, GEC has commenced a tender offer to acquire all of the Company's outstanding shares of common stock. Upon consummation of the tender offer a change of control will occur under the Company's credit agreement and the indenture governing its 12.5% Senior Subordinated Notes, as well as certain leases and financings to which the Company or its subsidiaries is a party, and the Company will be obligated to repay outstanding amounts thereunder. The transaction is subject to required regulatory approvals and other conditions. Part II-Other Information Item 4. Submission of Matters to a Vote of Security Holders. (a) The Annual Meeting of Stockholders was held on May 14, 1997. (b) The following matters were voted upon and approved at the Annual Meeting of Stockholders: (i) the election of three directors with 28,496,756 votes cast in favor and 71,027 negative votes; (ii ) a proposal to amend the Company's Amended and Restated 1993 Stock Option Plan with 18,298,447 votes cast in favor, 8,244,585 negative votes and, 10,800 abstentions and 2,013,951 non-votes; (iii) a proposal to ratify the appointment of KPMG Peat Marwick LLP as the Company's independent auditors for the year ending December 31, 1997 with 28,258,135 votes cast in favor, 6,120 negative votes and 303,528 abstentions. Item 5. Other Information. On June 16, 1997 the Company entered into a definitive merger agreement under which a company formed by Genesis Health Ventures, Inc. (Genesis), The Cypress Group LLC (Cypress) and The Texas Pacific Group (TPG) will acquire the Company for $28.00 per share in cash. In accordance with the terms of the agreement, GEC has commenced a tender offer to acquire all of the Company's outstanding shares of common stock. The transaction is subject to required regulatory approvals and other conditions. The merger agreement provides that it will terminate on September 15, 1997 (subject to extension by GEC to October 15, 1997, under certain circumstances), unless extended by the Company and GEC. Item 6. (a) Exhibits. Exhibit No. 2.1 Agreement and Plan of Merger, dated as of June 16, 1997, among The Multicare Companies, Inc. and Genesis ElderCare Corp. (f.k.a. Waltz Corp.) and Genesis ElderCare Acquisition Corp. (f.k.a. Waltz Acquisition Corp.) * 2.2 Tender Agreement and Irrevocable Proxy, dated as of June 16, 1997, among Genesis ElderCare Corp. (f.k.a. Waltz Corp.), Genesis ElderCare Acquisition Corp. (f.k.a. Waltz Acquisition Corp.) and Moshael J. Straus.* 2.3 Tender Agreement and Irrevocable Proxy, dated as of June 16, 1997, among Genesis ElderCare Corp. (f.k.a. Waltz Corp.), Genesis ElderCare Acquisition Corp. (f.k.a. Waltz Acquisition Corp.) and Daniel E. Straus.* 11 Statement re computation of per share earnings 27 Financial Data Schedule 99 Press Release dated June 16, 1997 * Incorporated by reference from the Company's Schedule 14D-9, dated June 20, 1997. 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, thereunto duly authorized. The Multicare Companies, Inc. STEPHEN R. BAKER By: ______________________________ Stephen R. Baker Executive Vice President and Chief Financial Officer August 13, 1997 EX-11 2 EXHIBIT 11 The Multicare Companies, Inc. Computation of earnings per share June 30, 1997 (Unaudited) (in thousands, except per share data)
Three months ended Six months ended June 30, June 30, 1996 1997 1996 1997 Income per common and common equivalent share: Income before extraordinary item $ 6,780 10,181 12,977 18,941 Net Income $ 6,780 10,181 11,496 18,068 Weighted average number of common and common equivalent shares outstanding 27,589 32,031 27,446 31,845 Income before extraordinary item per common and common equivalent share $ .25 .32 .47 .59 Net income per common and common equivalent share $ .25 .32 .42 .57 Income per common and common equivalent share assuming full dilution: Income before extraordinary item $ 6,780 10,181 12,977 18,941 Net income 6,780 10,181 11,496 18,068 Adjustments to income: Interest expense and amortization of debt issuance costs relating to convertible debt, net of tax 985 864 1,982 1,740 Adjusted net income $ 7,765 11,045 13,478 19,808 Weighted average number of common and common equivalent shares outstanding 27,589 32,315 27,535 32,257 Convertible debt shares 4,976 4,341 4,976 4,395 Adjusted shares 32,565 36,656 32,511 36,652 Income before extraordinary item per common share assuming full dilution $ .24 .30 .46 .56 Net income per common share assuming full dilution $ .24 .30 .41 .54
EX-27 3
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MULTICARE COMPANIES, INC. FORM 10-Q QUARTERLY REPORT FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JUN-30-1997 3,293 0 121,267 0 0 145,852 447,817 0 807,885 94,502 432,689 0 0 308 237,250 807,885 0 347,956 0 263,300 8,358 0 14,168 30,171 11,230 18,941 0 873 0 18,068 .57 .54
EX-99 4 Exhibit 99 FOR IMMEDIATE RELEASE Contact: Robert P. Borchert Director, Corporate Communications (201) 525-5932 MULTICARE REPORTS RECORD SECOND QUARTER RESULTS -- Revenues Increase 36%; Net Income Up 50% -- HACKENSACK, NJ, August 6, 1997 -- The Multicare Companies, Inc. (NYSE:MUL) today announced record financial results for the second quarter and six month period ended June 30, 1997. In comparing the second quarter of 1997 with the same period in 1996: - Revenues increased 35.8% to $179.2 million from $131.9 million. - Income before income taxes and extraordinary item rose 48.0% to $16.3 million compared with $11.0 million. - Net income increased 50.2% to $10.2 million, or $0.30 per share versus $6.8 million, or $0.24 per share. - Quality mix, or percent of revenues from non-Medicaid sources, remained high at 67% compared with 64%. - Occupancy at the Company's facilities was 92% in both periods. - Revenues from specialty medical services, which includes institutional pharmacy, sub-acute care, rehabilitative therapies and medical supplies, grew 37% to $71.8 million from $52.4 million and accounted for 40% of revenues in both years. In comparing the first half 1997 to the first half 1996: - Revenues increased 38.1% to $348.0 million from $251.9 million. - Income before income taxes and extraordinary item increased 43.6% to $30.2 million compared with $21.0 million. - Net income before extraordinary item (loss on extinguishment of debt) increased 46.0% to $18.9 million, or $0.56 per share, compared with $13.0 million, or $0.46 per share. - Net income increased 57.2% to $18.1 million, or $0.54 per share, compared with $11.5 million, or $0.41 per share. - more - Multicare Second Quarter Results Page 2 August 6, 1997 "Multicare's operating performance continues to be driven by the dedication and focus of our managers and employees to provide the highest level of quality patient care services in all of our facilities," said Daniel E. Straus, president and co-chief executive officer of Multicare. "We believe that the quality of our assets and success of our growth strategy will be translated into exceptional returns for all Multicare shareholders through the Genesis transaction." On June 16, 1997, the Company announced that it had signed a definitive agreement through which a company formed by Genesis Health Ventures, Inc. (NYSE: GHV), The Cypress Group LLC and The Texas Pacific Group (TPG), will acquire Multicare for $28.00 per share in cash, resulting in a transaction value of $1.4 billion, including the assumption or repayment of debt. In accordance with the terms of the merger, Genesis, Cypress and TPG have commenced a tender offer to acquire a majority of the outstanding shares. The transaction is subject to required regulatory approvals and other conditions and is expected to close by September 30, 1997. Founded in 1984, The Multicare Companies, Inc. is a leading provider of high quality, cost-effective long-term care and specialty medical services. Multicare owns, leases or manages 156 facilities with more than 16,000 beds in 11 states, and is the market share leader in New Jersey, Massachusetts and West Virginia. Multicare also owns and operates a number of ancillary health care businesses, including a significant institutional pharmacy operation servicing over 30,000 beds through eight locations. The Company's long-term care services include skilled nursing care, sub-acute care, assisted living, home health care and related support activities traditionally provided in long-term care facilities. NOTE: This news release contains forward-looking statements which are subject to certain risks and uncertainties. Although Multicare believes the assumptions accompanying such forward-looking statements are reasonable, there can be no assurance that expected results will occur. A significant variation between actual results and any of such assumptions may cause actual results to differ materially from expectations. For more specific information concerning such risks and uncertainties, refer to Multicare's Form 10-Q to be filed for the period ended June 30, 1997, Form 10-K for the year ended December 31, 1996 and other Securities and Exchange Commission filings. - Tables to Follow - THE MULTICARE COMPANIES, INC. AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share data)
Three months Six months ended ended June 30, June 30, 1996 1997 1996 1997 Net revenues $ 131,889 179,164 251,946 347,956 Expenses: Operating expense 99,432 135,598 190,469 263,300 Corporate, general and administrative expense 6,258 8,901 12,413 17,091 Lease expense 3,036 4,207 5,769 8,358 Depreciation and amortization expense 5,553 7,213 10,207 14,083 Interest expense, net 6,621 6,984 12,084 14,168 Debenture conversion expense --- --- --- 785 Total expenses 120,900 162,903 230,942 317,785 Income before income taxes and extraordinary item 10,989 16,261 21,004 30,171 Income tax expense 4,209 6,080 8,027 11,230 Income before extraordinary item 6,780 10,181 12,977 18,941 Extraordinary item - loss on extinguishment of debt, net of tax benefit --- --- 1,481 873 Net income $ 6,780 10,181 11,496 18,068 Income per common share assuming full dilution: Income before extraordinary item $ .24 .30 .46 .56 Net income $ .24 .30 .41 .54 Weighted average number of common shares outstanding assuming full dilution 32,565 36,656 32,511 36,652
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