0000919956-13-000023.txt : 20131105 0000919956-13-000023.hdr.sgml : 20131105 20131105164415 ACCESSION NUMBER: 0000919956-13-000023 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20131105 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20131105 DATE AS OF CHANGE: 20131105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Diversicare Healthcare Services, Inc. CENTRAL INDEX KEY: 0000919956 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 621559667 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12996 FILM NUMBER: 131193176 BUSINESS ADDRESS: STREET 1: 1621 GALLERIA BLVD. CITY: BRENTWOOD STATE: TN ZIP: 37027 BUSINESS PHONE: 6157717575 MAIL ADDRESS: STREET 1: 1621 GALLERIA BLVD. CITY: BRENTWOOD STATE: TN ZIP: 37027 FORMER COMPANY: FORMER CONFORMED NAME: ADVOCAT INC DATE OF NAME CHANGE: 19940309 8-K/A 1 a8ka-2ndamendmenttoarkansa.htm 8-K/A 8KA - 2nd Amendment to Arkansas 8K



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549


FORM 8-K/A
Amendment No. 2

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported)
November 5, 2013 (September 1, 2013)

DIVERSICARE HEALTHCARE SERVICES, INC.
(Exact Name of Registrant as Specified in Charter)


Delaware
001-12996
62-1559667
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
 
1621 Galleria Boulevard, Brentwood, TN 37027
(Address of Principal Executive Offices) (Zip Code)

(615) 771-7575
(Registrant's telephone number, including area code)


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))






Explanatory Note
On October 24, 2013, Diversicare filed an amendment to its Form 8-K originally filed on September 4, 2013. The Amendment presented pro forma financial information in connection with the disposition of the Arkansas operations which was omitted from the original filing as permitted under Item 9.01(b)(2) of Form 8-K. This Amendment No. 2 to the original Form 8-K is to correct intercompany revenues and operating expenses allocated to Arkansas that were not eliminated in the pro forma financial information contained in the first amendment. The elimination only affects revenues and operating expenses, and the amounts offset one another.
 
Item 9.01.    Financial Statements and Exhibits.

(b) Unaudited Pro Forma Financial Information

The unaudited pro forma financial information of Diversicare required pursuant to Item 9.01(b) of Form 8-K.is attached hereto as Exhibit 99.2 and incorporated herein by reference.

(d) Exhibits
            
The Exhibits listed under Section (d) of Item 9.01 to the Original Report are hereby incorporated herein by reference thereto.

Number    Exhibit
    
99.2
Unaudited Pro Forma Statements of Operations of Diversicare Healthcare Services, Inc. as of June 30, 2013, and as of December 31, 2012, December 31, 2011, and December 31, 2010.




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.


DIVERSICARE HEALTHCARE SERVICES, INC.

By:    /s/ James R. McKnight, Jr.    
James R. McKnight, Jr.
Chief Financial Officer

Date:    November 5, 2013




EXHIBIT INDEX


No.
 
Exhibit
Exhibit 99.2
 
Unaudited Pro Forma Statements of Operations of Diversicare Healthcare Services, Inc. as of June 30, 2013, and as of December 31, 2012, December 31, 2011, and December 31, 2010.





 EX-99.2 2 ex992amendedproforma-arkdi.htm EXHIBIT EX 99.2 Amended Pro Forma - Ark Disposition


Exhibit 99.2

DIVERSICARE HEALTHCARE SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Effective September 1, 2013, Diversicare Healthcare Services, Inc. ("Diversicare") entered into an agreement with Omega Healthcare Investors, Inc. (NYSE: OHI) ("Omega") to terminate its lease with respect to eleven nursing facilities located in Arkansas and concurrently entered into operation transfer agreements to transfer the operations of each of those eleven facilities to an operator selected by Omega. Upon the completion of the transaction, Diversicare no longer operates any skilled nursing centers in the State of Arkansas.

In connection with the closing of this transaction, effective September 1, 2013, Diversicare and Omega entered into the Thirteenth Amendment to Consolidated Amended and Restated Master Lease ("Amendment No. 13") to amend the Consolidated Amended and Restated Master Lease ("Master Lease") most recently amended on January 22, 2013. Amendment No. 13 effectively modifies the terms of the Master Lease to terminate the terms surrounding the eleven nursing facilities in Arkansas (and only as to those eleven facilities) and effectively reduces the annual rent payable under the Master Lease by $5,000,000.

The following Unaudited Pro Forma Condensed Consolidated Financial Statements are presented to comply with Article 11 of Regulation S-X and follow prescribed SEC regulations. The Unaudited Pro Forma Condensed Consolidated Financial Statements do not purport to present what Diversicare's results would have been had the disposition actually occurred on the dates indicated or to project what Diversicare's results of operations will be for any future period. The prescribed regulations limit pro forma adjustments to those that are directly attributable to the disposition on a factually supported basis.

As permitted under Article 11 of Regulation S-X, Diversicare has elected to omit a columnar presentation of the condensed consolidated balance sheet as of June 30, 2013, due to the limited number of pro forma adjustments required as a result of the aforementioned transaction. As part of the agreement reached in the disposition, Diversicare will maintain all existing receivables and liabilities from the facilities that existed prior to the disposition date. The primary impact to the historical balance sheet is related to the write-off of certain leasehold improvements from the Property and Equipment line of the balance sheet. The total net book value of these fixed assets were $2.1 million which were impaired upon disposition of the Arkansas operations.

The Unaudited Pro Forma Condensed Consolidated Statements of Operations have been prepared for informational purposes and to assist in the analysis of Diversicare's disposition of its Arkansas operations. This information should be read together with the historical consolidated financial statements and related notes of Diversicare included in its Annual Report on Form 10-K for the year ended December 31, 2012 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.

The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the six months ended June 30, 2013 and the years ended December 31, 2012, December 31, 2011, and December 31, 2010 give effect to the transaction described above as if it had occurred on January 1, 2010. The Unaudited Pro Forma Condensed Consolidated Financial Statements are derived from the historical consolidated financial statements of Diversicare and are based on assumptions that management believes are reasonable in the circumstances.






EXHIBIT 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)

 
As Reported (a)
 
Arkansas Region (b)
 
Pro Forma
 
Six Months Ended
June 30,
 
Six Months Ended
June 30,
 
Six Months Ended
June 30,
 
2013
 
2013
 
2013
PATIENT REVENUES, net
$
162,028

 
$
31,880

 
$
130,148

EXPENSES:
 
 
 
 
 
Operating
127,279

 
24,204

 
103,075

Lease and rent expense
12,533

 
2,440

 
10,093

Professional liability (c)
8,471

 
4,320

 
4,151

General and administrative
13,342

 
856

 
12,486

Depreciation and amortization
3,578

 
348

 
3,230

Asset impairment
—

 
—

 
—

Total expenses
165,203

 
32,168

 
133,035

OPERATING LOSS
(3,175
)
 
(288
)
 
(2,887
)
OTHER EXPENSE:
 
 
 
 
 
Equity in net losses of unconsolidated affiliate
(215
)
 
—

 
(215
)
Interest expense, net
(1,580
)
 
—

 
(1,580
)
Debt retirement costs
(320
)
 
—

 
(320
)
 
(2,115
)
 
—

 
(2,115
)
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(5,290
)
 
(288
)
 
(5,002
)
BENEFIT FOR INCOME TAXES
2,211

 
60

 
2,151

LOSS FROM CONTINUING OPERATIONS
(3,079
)
 
(228
)
 
(2,851
)
 
 
 
 
 
 
Loss per common share from continuing operations – basic
$
(0.56
)
 
 
 
$
(0.53
)
Loss per common share from continuing operations – diluted
$
(0.56
)
 
 
 
$
(0.53
)
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
 
 
Basic
5,861

 
 
 
5,861

Diluted
5,861

 
 
 
5,861


See accompanying notes to unaudited pro forma condensed consolidated financial statements.





EXHIBIT 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

 
As Reported (a)
 
Arkansas Region (b)
 
Pro Forma
 
Year Ended December 31,
 
Year Ended December 31,
 
Year Ended December 31,
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
PATIENT REVENUES, net
$
308,072

 
$
309,467

 
$
285,594

 
$
61,782

 
$
63,589

 
$
60,560

 
$
246,290

 
$
245,878

 
$
225,034

EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating
242,591

 
239,674

 
225,469

 
47,884

 
48,320

 
45,906

 
194,707

 
191,354

 
179,563

Lease and rent expense
23,930

 
22,939

 
22,600

 
4,879

 
4,875

 
4,874

 
19,051

 
18,064

 
17,726

Professional liability (c)
11,964

 
10,466

 
5,140

 
5,875

 
7,012

 
3,198

 
6,089

 
3,454

 
1,942

General and administrative
24,419

 
25,589

 
19,680

 
1,651

 
1,766

 
1,515

 
22,768

 
23,823

 
18,165

Depreciation and amortization
7,043

 
6,365

 
5,614

 
767

 
758

 
591

 
6,276

 
5,607

 
5,023

Asset impairment
—

 
344

 
—

 
—

 
—

 
—

 
—

 
344

 
—

Total expenses
309,947

 
305,377

 
278,503

 
61,056

 
62,731

 
56,084

 
248,891

 
242,646

 
222,419

OPERATING INCOME (LOSS)
(1,875
)
 
4,090

 
7,091

 
726

 
858

 
4,476

 
(2,601
)
 
3,232

 
2,615

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in net losses of unconsolidated affiliate
(280
)
 
—

 
—

 
—

 
—

 
—

 
(280
)
 
—

 
—

Interest expense, net
(2,809
)
 
(2,355
)
 
(1,632
)
 
—

 
(1
)
 
1

 
(2,809
)
 
(2,354
)
 
(1,633
)
Debt retirement costs
—

 
(112
)
 
(127
)
 
—

 
—

 
—

 
—

 
(112
)
 
(127
)
 
(3,089
)
 
(2,467
)
 
(1,759
)
 
—

 
(1
)
 
1

 
(3,089
)
 
(2,466
)
 
(1,760
)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(4,964
)
 
1,623

 
5,332

 
726

 
857

 
4,477

 
(5,690
)
 
766

 
855

BENEFIT (PROVISION) FOR INCOME TAXES
1,747

 
(437
)
 
(1,702
)
 
(269
)
 
(317
)
 
(1,656
)
 
2,016

 
(120
)
 
(46
)
INCOME (LOSS) FROM CONTINUING OPERATIONS
(3,217
)
 
1,186

 
3,630

 
457

 
540

 
2,821

 
(3,674
)
 
646

 
809

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (Loss) per common share from continuing operations – basic
$
(0.63
)
 
$
0.15

 
$
0.57

 
 
 
 
 
 
 
$
(0.71
)
 
$
0.05

 
$
0.08

Income (Loss) per common share from continuing operations – diluted
$
(0.63
)
 
$
0.14

 
$
0.56

 
 
 
 
 
 
 
$
(0.71
)
 
$
0.05

 
$
0.08

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
5,821

 
5,744

 
5,732

 
 
 
 
 
 
 
5,821

 
5,744

 
5,732

Diluted
5,821

 
5,906

 
5,854

 
 
 
 
 
 
 
5,821

 
5,906

 
5,854

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to unaudited pro forma condensed consolidated financial statements.




NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following pro forma adjustments are included in the Unaudited Pro Forma Condensed Consolidated Statements of Operations:

a)
Reflects the consolidated historical statements of operations of Diversicare for the six months ended June 30, 2013 and the years ended December 31, 2012, December 31, 2011, and December 31, 2010, as contained in the historical consolidated financial statements and notes thereto presented in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 and the Annual Report on Form 10-K for the year ended December 31, 2012, respectively.

b)
Represents adjustments to reflect the disposition of the Company's Arkansas operations as follows:
    
•
The elimination of revenues and expenses directly attributable to Arkansas operations for the periods presented.

c)
The Company has allocated all professional liability expense to the states where the Company operates based on calculations performed by Diversicare management with assistance from its external actuary’s calculation as completed semi-annually. The actuary designates a percentage allocation of ultimate loss to the states in which the Company operates based upon the result of multiple years of developed loss runs and trends. The actuary aggregates three broadly used actuarial methods in performing the analysis including the Frequency-Severity Method, the Reported Bornhuetter-Ferguson Method, and the Paid Bornhuetter-Ferguson Method. The aggregation of these methods provides the actuary a basis upon which to develop an appropriate statistical range within which the recommended percentage allocations are identified.