ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 62-1559667 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
1621 Galleria Boulevard, Brentwood, TN | 37027 |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Name of each Exchange on which registered |
Common Stock, $0.01 par value per share | The NASDAQ Capital Market |
Table of Contents | |||
Page | |||
Part I | |||
Item 1. | Business | ||
Item 1A. | Risk Factors | ||
Item 1B. | Unresolved Staff Comments | ||
Item 2. | Properties | ||
Item 3. | Legal Proceedings | ||
Item 4. | Mine Safety Disclosures | ||
Part II | |||
Item 5. | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | ||
Item 6. | Selected Consolidated Financial Data | ||
Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | ||
Item 7A. | Quantitative and Qualitative Disclosures about Market Risk | ||
Item 8. | Financial Statements and Supplementary Data | ||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | ||
Item 9A. | Controls and Procedures | ||
Item 9B. | Other Information | ||
Part III | |||
Item 10. | Directors, Executive Officers and Corporate Governance | ||
Item 11. | Executive Compensation | ||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | ||
Item 13. | Certain Relationships and Related Transactions, and Director Independence | ||
Item 14. | Principal Accountant Fees and Services | ||
Part IV | |||
Item 15. | Exhibits and Financial Statement Schedules | ||
Item 16. | Form 10-K Summary |
Number of Centers | Licensed Nursing Beds (1) | Available Nursing Beds (1) | ||||||
Operating Locations: | ||||||||
Alabama | 19 | 2,282 | 2,203 | |||||
Florida | 1 | 79 | 79 | |||||
Indiana | 1 | 158 | 158 | |||||
Kansas | 6 | 464 | 464 | |||||
Kentucky | 13 | 1,127 | 1,123 | |||||
Mississippi | 10 | 1,138 | 1,103 | |||||
Missouri | 3 | 339 | 289 | |||||
Ohio | 5 | 404 | 393 | |||||
Tennessee | 5 | 617 | 537 | |||||
Texas | 13 | 1,845 | 1,571 | |||||
76 | 8,453 | 7,920 | ||||||
Classification: | ||||||||
Owned | 17 | 1,504 | 1,266 | |||||
Leased | 59 | 6,949 | 6,654 | |||||
Total | 76 | 8,453 | 7,920 |
(1) | The number of Licensed Nursing Beds is based on the regulatory licenses for the nursing center. The Company reports its occupancy based on licensed nursing beds. The number of Available Nursing Beds represents Licensed Nursing Beds reduced by beds removed from service. Available Nursing Beds is subject to change based upon the needs of the centers, including configuration of patient rooms, common usage areas and offices, status of beds (private, semi-private, ward, etc.) and renovations. The number of Licensed and Available Nursing Beds does not include 496 Licensed Assisted Living/Residential Beds, all of which are also available, and the number of centers excludes one stand-alone Assisted Living Facility in Ohio. These beds are excluded from the bed counts as our operating statistics such as occupancy are calculated using Nursing Beds only. |
• | Tracking Activities of Daily Living (“ADLs”). ADLs are the functions that each person must perform on a daily basis including, but not limited to, getting dressed, bathing, and eating. ADL tracking allows us to capture the provision of care provided by our nursing, dietary and housekeeping staff in assisting with ADLs quickly, efficiently and electronically. |
• | Progress Notes. Progress notes are an important component of our medical records. Licensed nursing professionals provide documentation reflecting assessment of each patient's condition and intervention of skilled care provided. The EMR system provides means for a comprehensive chronological record resulting in improved capture, monitoring and review of documentation of condition and care provided. |
• | Medications. Our patients receive a number of daily medications. This module assists with electronic tracking and documenting of required medications and treatments. This provides a more accurate and efficient care system for our nurses and patients. |
• | Wound Module. This allows for an evidence-based risk assessment to drive patient specific interventions to prevent skin breakdown. When skin abnormalities are present, it provides for accurate depiction of anatomical location and description which drives individualized care treatments. |
• | Incident Module. Allows for capturing any event, such as a fall, and provides quality assurance steps for root cause and patient-specific care plans. |
Center | Location | Effective Date | Licensed Bed Count | |
Diversicare of Hutchinson* | Hutchinson, Kansas | February 1, 2015 | 73 | |
Diversicare of Amory | Amory, Mississippi | October 1, 2016 | 152 | |
Diversicare of Batesville | Batesville, Mississippi | October 1, 2016 | 130 | |
Diversicare of Brookhaven | Brookhaven, Mississippi | October 1, 2016 | 58 | |
Diversicare of Carthage | Carthage, Mississippi | October 1, 2016 | 99 | |
Diversicare of Eupora | Eupora, Mississippi | October 1, 2016 | 119 | |
Diversicare of Meridian | Meridian, Mississippi | October 1, 2016 | 120 | |
Diversicare of Ripley | Ripley, Mississippi | October 1, 2016 | 140 | |
Diversicare of Southaven | Southaven, Mississippi | October 1, 2016 | 140 | |
Diversicare of Tupelo | Tupelo, Mississippi | October 1, 2016 | 120 | |
Diversicare of Tylertown | Tylertown, Mississippi | October 1, 2016 | 60 | |
Diversicare of Arab | Arab, Alabama | November 1, 2016 | 87 | |
Diversicare of Bessemer | Bessemer, Alabama | November 1, 2016 | 180 | |
Diversicare of Riverchase | Birmingham, Alabama | November 1, 2016 | 132 | |
Diversicare of Boaz | Boaz, Alabama | November 1, 2016 | 100 | |
Diversicare of Foley | Foley, Alabama | November 1, 2016 | 154 | |
Baron House of Hueytown | Hueytown, Alabama | November 1, 2016 | 50 | |
Diversicare of Lanett | Lanett, Alabama | November 1, 2016 | 85 | |
Diversicare of Montgomery | Montgomery, Alabama | November 1, 2016 | 138 | |
Diversicare of Oneonta | Oneonta, Alabama | November 1, 2016 | 120 | |
Diversicare of Oxford | Oxford, Alabama | November 1, 2016 | 173 | |
Diversicare of Pell City | Pell City, Alabama | November 1, 2016 | 94 | |
Diversicare of Winfield | Winfield, Alabama | November 1, 2016 | 123 |
Year Ended December 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | ||||||||||||||||||
Medicaid | $ | 215,381 | 50.6 | % | $ | 188,323 | 48.6 | % | $ | 166,497 | 48.4 | % | ||||||||
Medicare | 117,143 | 27.5 | % | 112,305 | 29.0 | % | 101,806 | 29.6 | % | |||||||||||
Managed Care | 29,066 | 6.8 | % | 27,856 | 7.2 | % | 23,178 | 6.7 | % | |||||||||||
Private Pay and other | 64,473 | 15.1 | % | 59,111 | 15.2 | % | 52,711 | 15.3 | % | |||||||||||
Total | $ | 426,063 | 100.0 | % | $ | 387,595 | 100.0 | % | $ | 344,192 | 100.0 | % |
Year Ended December 31, | |||||||||||||||||
2016 | 2015 | 2014 | |||||||||||||||
Medicaid | 3,448 | 68.1 | % | 3,104 | 67.1 | % | 2,844 | 67.0 | % | ||||||||
Medicare | 591 | 11.7 | % | 577 | 12.5 | % | 540 | 12.7 | % | ||||||||
Managed Care | 178 | 3.5 | % | 173 | 3.7 | % | 151 | 3.6 | % | ||||||||
Private Pay and other | 844 | 16.7 | % | 772 | 16.7 | % | 709 | 16.7 | % | ||||||||
Total | 5,061 | 100.0 | % | 4,626 | 100.0 | % | 4,244 | 100.0 | % |
• | difficulties integrating acquired operations, personnel and accounting and information systems, or in realizing projected efficiencies and cost savings; |
• | diversion of management's attention from other business concerns; |
• | potential loss of key team members or customers of acquired companies; |
• | entry into markets in which we may have limited or no experience; |
• | increased indebtedness and reduced ability to access additional capital when needed; |
• | assumption of unknown liabilities or regulatory issues of acquired companies, including failure to comply with healthcare regulations or to establish internal financial controls; and |
• | straining of our resources, including internal controls relating to information and accounting systems, regulatory compliance, logistics and others. |
State | Centers | Leased Beds | Owned Beds | Total Operational Beds | ||||||||
Alabama | 19 | 2,079 | 203 | 2,282 | ||||||||
Florida | 1 | 79 | — | 79 | ||||||||
Indiana | 1 | 172 | — | 172 | ||||||||
Kansas | 6 | — | 490 | 490 | ||||||||
Kentucky | 13 | 917 | 252 | 1,169 | ||||||||
Mississippi | 10 | 1,138 | — | 1,138 | ||||||||
Missouri | 3 | 455 | — | 455 | ||||||||
Ohio | 5 | 702 | — | 702 | ||||||||
Tennessee | 5 | 497 | 120 | 617 | ||||||||
Texas | 13 | 1,370 | 475 | 1,845 | ||||||||
Total | 76 | 7,409 | 1,540 | 8,949 |
Period | High | Low | Dividends | |||||||||
2015 | — | 1st | Quarter | $ | 13.95 | $ | 8.46 | $ | 0.055 | |||
2015 | — | 2nd | Quarter | $ | 17.15 | $ | 11.89 | $ | 0.055 | |||
2015 | — | 3rd | Quarter | $ | 13.00 | $ | 8.14 | $ | 0.055 | |||
2015 | — | 4th | Quarter | $ | 10.59 | $ | 6.45 | $ | 0.055 | |||
2016 | — | 1st | Quarter | $ | 9.95 | $ | 6.75 | $ | 0.055 | |||
2016 | — | 2nd | Quarter | $ | 8.90 | $ | 7.00 | $ | 0.055 | |||
2016 | — | 3rd | Quarter | $ | 10.07 | $ | 6.41 | $ | 0.055 | |||
2016 | — | 4th | Quarter | $ | 12.82 | $ | 9.98 | $ | 0.055 |
Year Ended December 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
Statement of Operations Data | (in thousands, except per share amounts) | |||||||||||||||||||
REVENUES: | ||||||||||||||||||||
Patient revenues, net | $ | 426,063 | $ | 387,595 | $ | 344,192 | $ | 260,221 | $ | 231,047 | ||||||||||
EXPENSES: | ||||||||||||||||||||
Operating | 342,932 | 311,035 | 275,605 | 213,064 | 186,958 | |||||||||||||||
Lease | 33,364 | 28,690 | 26,151 | 20,396 | 18,018 | |||||||||||||||
Professional liability | 8,456 | 8,122 | 7,216 | 5,666 | 4,304 | |||||||||||||||
General and administrative | 30,271 | 24,793 | 22,133 | 20,940 | 19,515 | |||||||||||||||
Depreciation and amortization | 8,292 | 7,524 | 7,078 | 6,363 | 5,758 | |||||||||||||||
Lease termination costs | 2,008 | — | — | — | — | |||||||||||||||
Restructuring | — | — | — | 1,446 | — | |||||||||||||||
425,323 | 380,164 | 338,183 | 267,875 | 234,553 | ||||||||||||||||
OPERATING INCOME (LOSS) | 740 | 7,431 | 6,009 | (7,654 | ) | (3,506 | ) | |||||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||||||
Equity in net income (losses) of investment in unconsolidated affiliate | 273 | 339 | (5 | ) | (183 | ) | (280 | ) | ||||||||||||
Gain on sale of investment in unconsolidated affiliate | 1,366 | — | — | — | — | |||||||||||||||
Interest expense, net | (4,802 | ) | (4,102 | ) | (3,697 | ) | (3,032 | ) | (2,232 | ) | ||||||||||
Debt retirement costs | (351 | ) | — | — | (320 | ) | — | |||||||||||||
(3,514 | ) | (3,763 | ) | (3,702 | ) | (3,535 | ) | (2,512 | ) | |||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (2,774 | ) | 3,668 | 2,307 | (11,189 | ) | (6,018 | ) | ||||||||||||
BENEFIT (PROVISION) FOR INCOME TAXES | 1,030 | (916 | ) | (857 | ) | 4,196 | 2,147 | |||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS | (1,744 | ) | 2,752 | 1,450 | (6,993 | ) | (3,871 | ) | ||||||||||||
DISCONTINUED OPERATIONS, net of taxes | (67 | ) | (1,128 | ) | 3,258 | (1,469 | ) | 951 | ||||||||||||
NET INCOME (LOSS) | $ | (1,811 | ) | $ | 1,624 | $ | 4,708 | $ | (8,462 | ) | $ | (2,920 | ) | |||||||
INCOME (LOSS) PER COMMON SHARE: | ||||||||||||||||||||
Basic | ||||||||||||||||||||
Continuing operations | $ | (0.28 | ) | $ | 0.45 | $ | 0.21 | $ | (1.26 | ) | $ | (0.74 | ) | |||||||
Discontinued operations | (0.01 | ) | (0.18 | ) | 0.54 | (0.25 | ) | 0.16 | ||||||||||||
Net income (loss) per common share | $ | (0.29 | ) | $ | 0.27 | $ | 0.75 | $ | (1.51 | ) | $ | (0.58 | ) | |||||||
Diluted | ||||||||||||||||||||
Continuing operations | $ | (0.28 | ) | $ | 0.44 | $ | 0.20 | (1.26 | ) | (0.74 | ) | |||||||||
Discontinued operations | (0.01 | ) | (0.18 | ) | 0.52 | (0.25 | ) | 0.16 | ||||||||||||
Net income (loss) per common share | $ | (0.29 | ) | $ | 0.26 | $ | 0.72 | $ | (1.51 | ) | $ | (0.58 | ) | |||||||
CASH DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.22 | $ | 0.22 | $ | 0.22 | $ | 0.22 | $ | 0.22 | ||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||||||
Basic | 6,199 | 6,100 | 6,011 | 5,899 | 5,821 | |||||||||||||||
Diluted | 6,199 | 6,315 | 6,197 | 5,899 | 5,821 |
December 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
Balance Sheet Data | (in thousands) | |||||||||||||||||||
Working capital | $ | 21,165 | $ | 13,052 | $ | 8,797 | $ | 8,044 | $ | 15,663 | ||||||||||
Total assets | $ | 163,051 | $ | 137,084 | $ | 129,089 | $ | 137,744 | $ | 114,963 | ||||||||||
Long-term debt and capitalized lease obligations, including current portion | $ | 82,133 | $ | 60,867 | $ | 48,265 | $ | 53,577 | $ | 29,462 | ||||||||||
Preferred Stock - Series C | $ | — | $ | — | $ | — | $ | 4,918 | $ | 4,918 | ||||||||||
Total Shareholders' Equity of Diversicare Healthcare Services, Inc. | $ | 11,420 | $ | 13,267 | $ | 11,754 | $ | 8,129 | $ | 17,178 | ||||||||||
Total Shareholders' Equity | $ | 11,420 | $ | 13,267 | $ | 11,754 | $ | 9,566 | $ | 18,751 |
Year Ended December 31, | |||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
2016 | 2015 | 2014 | |||||||||||||||||||
Revenues: | |||||||||||||||||||||
Patient revenues, net | $ | 426,063 | 100.0 | % | $ | 387,595 | 100.0 | % | $ | 344,192 | 100.0 | % | |||||||||
Expenses: | |||||||||||||||||||||
Operating | 342,932 | 80.5 | % | 311,035 | 80.2 | % | 275,605 | 80.1 | % | ||||||||||||
Lease | 33,364 | 7.8 | % | 28,690 | 7.4 | % | 26,151 | 7.6 | % | ||||||||||||
Professional liability | 8,456 | 2.0 | % | 8,122 | 2.1 | % | 7,216 | 2.1 | % | ||||||||||||
General & administrative | 30,271 | 7.1 | % | 24,793 | 6.4 | % | 22,133 | 6.4 | % | ||||||||||||
Depreciation and amortization | 8,292 | 1.9 | % | 7,524 | 1.9 | % | 7,078 | 2.1 | % | ||||||||||||
Lease termination costs | 2,008 | 0.5 | % | — | — | % | — | — | % | ||||||||||||
425,323 | 99.8 | % | 380,164 | 98.0 | % | 338,183 | 98.3 | % | |||||||||||||
Operating income (loss) | 740 | 0.2 | % | 7,431 | 2.0 | % | 6,009 | 1.7 | % | ||||||||||||
Other income (expense): | |||||||||||||||||||||
Equity in net losses of unconsolidated affiliate | 273 | 0.1 | % | 339 | 0.1 | % | (5 | ) | — | % | |||||||||||
Gain on sale of unconsolidated affiliate | 1,366 | 0.3 | % | — | — | % | — | — | % | ||||||||||||
Interest expense, net | (4,802 | ) | (1.1 | )% | (4,102 | ) | (1.1 | )% | (3,697 | ) | (1.1 | )% | |||||||||
Debt retirement costs | (351 | ) | (0.1 | )% | — | — | % | — | — | % | |||||||||||
(3,514 | ) | (0.8 | )% | (3,763 | ) | (1.0 | )% | (3,702 | ) | (1.1 | )% | ||||||||||
Income (loss) from continuing operations before income taxes | (2,774 | ) | (0.6 | )% | 3,668 | 1.0 | % | 2,307 | 0.6 | % | |||||||||||
Benefit (provision) for income taxes | 1,030 | 0.2 | % | (916 | ) | (0.2 | )% | (857 | ) | (0.2 | )% | ||||||||||
Income (loss) from continuing operations | $ | (1,744 | ) | (0.4 | )% | $ | 2,752 | 0.8 | % | $ | 1,450 | 0.4 | % |
December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Licensed Nursing Center Beds: | |||||||||
Owned | 1,504 | 1,370 | 1,220 | ||||||
Leased | 6,949 | 4,690 | 4,605 | ||||||
Total | 8,453 | 6,060 | 5,825 | ||||||
Facilities: | |||||||||
Owned | 17 | 15 | 13 | ||||||
Leased | 59 | 40 | 39 | ||||||
Total | 76 | 55 | 52 |
Contractual Obligations | Total | Less than 1 year | 1 to 3 Years | 3 to 5 Years | After 5 Years | |||||||||||||||
Long-term debt obligations (1) | $ | 95,263 | $ | 10,786 | $ | 20,889 | $ | 63,588 | $ | — | ||||||||||
Settlement obligations (2) | 1,398 | 1,398 | — | — | — | |||||||||||||||
Elimination of Preferred Stock Conversion feature (3) | 1,202 | 687 | 515 | — | — | |||||||||||||||
Operating leases (4) | 1,131,816 | 57,051 | 117,240 | 121,423 | 836,102 | |||||||||||||||
Required capital expenditures under operating leases (5) | 13,260 | 1,379 | 2,736 | 2,720 | 6,425 | |||||||||||||||
Total | $ | 1,242,939 | $ | 71,301 | $ | 141,380 | $ | 187,731 | $ | 842,527 |
(1) | Long-term debt obligations include scheduled future payments of principal and interest of long-term debt and amounts outstanding on our capital lease obligations. Our long-term debt obligations increased $20.6 million between December 31, 2015 and December 31, 2016, which is related to assumption of operations for the Golden Living centers and our Amended and Restated Credit agreements. See Note 6, "Long-Term Debt and Interest Rate Swap," to the consolidated financial statements included in this report for additional information. |
(2) | Settlement obligations relate to professional liability cases that are expected to be paid within the next twelve months. The professional liabilities are included in our current portion of self-insurance reserves. |
(3) | Payments to Omega Health Investors ("Omega"), from whom we lease 35 nursing centers, for the elimination of the preferred stock conversion feature in connection with restructuring the preferred stock and master lease agreements. Monthly payments of approximately $57,000 will be made through the end of the initial lease period that ends in September 2018. |
(4) | Represents lease payments under our operating lease agreements. Assumes all renewals periods are enacted. Our operating lease obligations increased $558.9 million between December 31, 2015 and December 31, 2016, which is related to our assumption of the Golden Living centers. |
(5) | Includes annual expenditure requirements under operating leases. Our required capital expenditures increased $10.1 million between December 31, 2015 and December 31, 2016, which is related to our assumption of the Golden Living centers. |
(in thousands) | Year Ended December 31, | ||||||||||||||
2016 | 2015 | Change | % | ||||||||||||
PATIENT REVENUES, net | $ | 426,063 | $ | 387,595 | $ | 38,468 | 9.9 | % | |||||||
EXPENSES: | |||||||||||||||
Operating | 342,932 | 311,035 | 31,897 | 10.3 | % | ||||||||||
Lease | 33,364 | 28,690 | 4,674 | 16.3 | % | ||||||||||
Professional liability | 8,456 | 8,122 | 334 | 4.1 | % | ||||||||||
General and administrative | 30,271 | 24,793 | 5,478 | 22.1 | % | ||||||||||
Depreciation and amortization | 8,292 | 7,524 | 768 | 10.2 | % | ||||||||||
Lease termination costs | 2,008 | — | 2,008 | 100.0 | % | ||||||||||
Total expenses | 425,323 | 380,164 | 45,159 | 11.9 | % | ||||||||||
OPERATING INCOME | 740 | 7,431 | (6,691 | ) | (90.0 | )% | |||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||
Equity in net income (losses) of investment in unconsolidated affiliate | 273 | 339 | (66 | ) | (19.5 | )% | |||||||||
Gain on sale of investment in unconsolidated affiliate | 1,366 | — | 1,366 | 100.0 | % | ||||||||||
Interest expense, net | (4,802 | ) | (4,102 | ) | (700 | ) | (17.1 | )% | |||||||
Debt retirement costs | (351 | ) | — | (351 | ) | (100.0 | )% | ||||||||
(3,514 | ) | (3,763 | ) | 249 | 6.6 | % | |||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (2,774 | ) | 3,668 | (6,442 | ) | (175.6 | )% | ||||||||
BENEFIT (PROVISION) FOR INCOME TAXES | 1,030 | (916 | ) | 1,946 | 212.4 | % | |||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS | $ | (1,744 | ) | $ | 2,752 | $ | (4,496 | ) | (163.4 | )% |
(in thousands) | Year Ended December 31, | ||||||||||||||
2015 | 2014 | Change | % | ||||||||||||
PATIENT REVENUES, net | $ | 387,595 | $ | 344,192 | $ | 43,403 | 12.6 | % | |||||||
EXPENSES: | |||||||||||||||
Operating | 311,035 | 275,605 | 35,430 | 12.9 | % | ||||||||||
Lease | 28,690 | 26,151 | 2,539 | 9.7 | % | ||||||||||
Professional liability | 8,122 | 7,216 | 906 | 12.6 | % | ||||||||||
General and administrative | 24,793 | 22,133 | 2,660 | 12.0 | % | ||||||||||
Depreciation and amortization | 7,524 | 7,078 | 446 | 6.3 | % | ||||||||||
Total expenses | 380,164 | 338,183 | 41,981 | 12.4 | % | ||||||||||
OPERATING INCOME (LOSS) | 7,431 | 6,009 | 1,422 | 23.7 | % | ||||||||||
OTHER EXPENSE: | |||||||||||||||
Equity in net losses of investee | 339 | (5 | ) | 344 | 6,880.0 | % | |||||||||
Interest expense, net | (4,102 | ) | (3,697 | ) | (405 | ) | (11.0 | )% | |||||||
(3,763 | ) | (3,702 | ) | (61 | ) | (1.6 | )% | ||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 3,668 | 2,307 | 1,361 | 59.0 | % | ||||||||||
PROVISION FOR INCOME TAXES | (916 | ) | (857 | ) | (59 | ) | (6.9 | )% | |||||||
INCOME FROM CONTINUING OPERATIONS | $ | 2,752 | $ | 1,450 | $ | 1,302 | 89.8 | % |
Year Ended December 31, | |||||||||||
2016 | 2015 | Change | |||||||||
Same-store revenue | $ | 372,452 | $ | 376,497 | $ | (4,045 | ) | ||||
2015 acquisition revenue | 16,438 | 11,098 | 5,340 | ||||||||
2016 acquisition revenue | 37,173 | — | 37,173 | ||||||||
Total revenue | $ | 426,063 | $ | 387,595 | 38,468 |
Year Ended December 31, | |||||||||
2016 | 2015 | ||||||||
Skilled nursing occupancy | 78.1 | % | 77.1 | % | |||||
As a percent of total census: | |||||||||
Medicaid census | 68.1 | % | 67.1 | % | |||||
Medicare census | 11.7 | % | 12.5 | % | |||||
Managed Care census | 3.5 | % | 3.7 | % | |||||
As a percent of total revenues: | |||||||||
Medicaid revenues | 50.6 | % | 48.6 | % | |||||
Medicare revenues | 27.5 | % | 29.0 | % | |||||
Managed Care revenues | 6.8 | % | 7.2 | % | |||||
Average rate per day: | |||||||||
Medicare | $ | 456.30 | $ | 455.24 | |||||
Medicaid | $ | 169.91 | $ | 166.16 | |||||
Managed Care | $ | 385.71 | $ | 389.73 |
Year Ended December 31, | |||||||||||
2016 | 2015 | Change | |||||||||
Same-store operating expenses | $ | 301,991 | $ | 301,720 | $ | 271 | |||||
2015 acquisition operating expenses | 12,953 | 9,315 | 3,638 | ||||||||
2016 acquisition operating expenses | 27,988 | — | 27,988 | ||||||||
Total operating expenses | $ | 342,932 | $ | 311,035 | 31,897 |
Year Ended December 31, | |||||||||||
2015 | 2014 | Change | |||||||||
Same-store revenue | $ | 329,463 | $ | 318,096 | $ | 11,367 | |||||
2014 acquisition revenue | 47,034 | 26,096 | 20,938 | ||||||||
2015 acquisition revenue | 11,098 | — | 11,098 | ||||||||
Total revenue | $ | 387,595 | $ | 344,192 | $ | 43,403 |
Year Ended December 31, | |||||||||
2015 | 2014 | ||||||||
Skilled nursing occupancy | 77.1 | % | 77.5 | % | |||||
As a percent of total census: | |||||||||
Medicaid census | 67.1 | % | 67.0 | % | |||||
Medicare census | 12.5 | % | 12.7 | % | |||||
Managed Care census | 3.7 | % | 3.6 | % | |||||
As a percent of total revenues: | |||||||||
Medicaid revenues | 48.6 | % | 48.4 | % | |||||
Medicare revenues | 29.0 | % | 29.6 | % | |||||
Managed Care revenues | 7.2 | % | 6.7 | % | |||||
Average rate per day: | |||||||||
Medicare | $ | 455.24 | $ | 444.63 | |||||
Medicaid | $ | 166.16 | $ | 160.43 | |||||
Managed Care | $ | 389.73 | $ | 383.44 |
Year Ended December 31, | |||||||||||
2015 | 2014 | Change | |||||||||
Same-store operating expenses | $ | 262,378 | $ | 254,769 | $ | 7,609 | |||||
2014 acquisition operating expenses | 39,342 | 20,836 | 18,506 | ||||||||
2015 acquisition operating expenses | 9,315 | — | 9,315 | ||||||||
Total revenue | $ | 311,035 | $ | 275,605 | $ | 35,430 |
Requirement | Level at December 31, 2016 | ||
Minimum fixed charge coverage ratio | 1.00:1.00 | 1.16:1.00 | |
Minimum adjusted EBITDA | $9.5 million | $13.3 million | |
EBITDAR (mortgaged centers) | $10.0 million | $14.4 million | |
Current ratio (as defined in agreement) | 1.00:1.00 | 1.49:1.00 |
Form 10-K Pages | |
Financial Statements | |
Report of Independent Registered Public Accounting Firm | F-1 |
Consolidated Balance Sheets as of December 31, 2016 and 2015 | F-2 |
Consolidated Statements of Operations for the Years Ended December 31, 2016, 2015 and 2014 | F-3 |
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2016, 2015 and 2014 | F-4 |
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2016, 2015 and 2014 | F-5 |
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2015 and 2014 | F-6 |
Notes to Consolidated Financial Statements as of December 31, 2016, 2015 and 2014 | F-8 to F-33 |
Financial Statement Schedule | |
Schedule II - Valuation and Qualifying Accounts | S-1 to S-2 |
/s/ Chad A. McCurdy | /s/ Robert Z. Hensley |
Chad A. McCurdy | Robert Z. Hensley |
Chairman of the Board and Director | Director |
March 2, 2017 | March 2, 2017 |
/s/ Wallace E. Olson | /s/ William C. O'Neil, Jr. |
Wallace E. Olson | William C. O'Neil, Jr. |
Director | Director |
March 2, 2017 | March 2, 2017 |
/s/ Kelly J. Gill | /s/ Richard M. Brame |
Kelly J. Gill | Richard M. Brame |
President and Chief Executive Officer | Director |
Director | March 2, 2017 |
March 2, 2017 | |
/s/ Robert A. McCabe, Jr. | |
Robert A. McCabe, Jr. | |
Director | |
March 2, 2017 |
F-8 to F-33 | |
Schedule II - Valuation and Qualifying Accounts | S-1 to S-2 |
ASSETS | 2016 | 2015 | LIABILITIES AND SHAREHOLDERS' EQUITY | 2016 | 2015 | |||||||||||||
CURRENT ASSETS: | CURRENT LIABILITIES: | |||||||||||||||||
Cash and cash equivalents | $ | 4,263,000 | $ | 4,585,000 | Current portion of long-term debt and capitalized lease obligations, net | $ | 7,715,000 | $ | 6,603,000 | |||||||||
Receivables, less allowance for doubtful accounts of $10,326,000 and $8,180,000, respectively | 62,152,000 | 43,819,000 | Trade accounts payable | 12,972,000 | 10,136,000 | |||||||||||||
Other receivables | 1,193,000 | 1,407,000 | Current liabilities of discontinued operations | 427,000 | 345,000 | |||||||||||||
Prepaid expenses and other current assets | 3,623,000 | 2,223,000 | Accrued expenses: | |||||||||||||||
Income tax refundable | 431,000 | 347,000 | Payroll and employee benefits | 20,108,000 | 14,404,000 | |||||||||||||
Current assets of discontinued operations | 28,000 | 36,000 | Self-insurance reserves, current portion | 9,401,000 | 10,224,000 | |||||||||||||
Deferred income taxes | 7,644,000 | 7,999,000 | Provider taxes | 3,114,000 | 1,603,000 | |||||||||||||
Total current assets | 79,334,000 | 60,416,000 | Other current liabilities | 4,432,000 | 4,049,000 | |||||||||||||
Total current liabilities | 58,169,000 | 47,364,000 | ||||||||||||||||
NONCURRENT LIABILITIES: | ||||||||||||||||||
PROPERTY AND EQUIPMENT, at cost | 128,822,000 | 114,383,000 | Long-term debt and capitalized lease obligations, less current portion, net | 72,145,000 | 53,297,000 | |||||||||||||
Less accumulated depreciation and amortization | (69,022,000 | ) | (62,110,000 | ) | Self-insurance reserves, noncurrent portion | 11,766,000 | 12,344,000 | |||||||||||
59,800,000 | 52,273,000 | Other noncurrent liabilities | 9,551,000 | 10,812,000 | ||||||||||||||
Total noncurrent liabilities | 93,462,000 | 76,453,000 | ||||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||
OTHER ASSETS: | SHAREHOLDERS’ EQUITY: | |||||||||||||||||
Deferred income taxes | 13,541,000 | 11,762,000 | Common stock, authorized 20,000,000 shares, $.01 par value, 6,592,000 and 6,513,000 shares issued, and 6,361,000 and 6,281,000 shares outstanding, respectively | 66,000 | 65,000 | |||||||||||||
Deferred financing and other costs, net | 193,000 | 382,000 | Treasury stock at cost, 232,000 shares of common stock | (2,500,000 | ) | (2,500,000 | ) | |||||||||||
Investment in unconsolidated affiliate | — | 798,000 | Paid-in capital | 21,935,000 | 21,142,000 | |||||||||||||
Other noncurrent assets | 3,108,000 | 3,994,000 | Accumulated deficit | (8,276,000 | ) | (5,053,000 | ) | |||||||||||
Acquired leasehold interest, net | 7,075,000 | 7,459,000 | Accumulated other comprehensive income (loss) | 195,000 | (387,000 | ) | ||||||||||||
Total other assets | 23,917,000 | 24,395,000 | Total shareholders’ equity | 11,420,000 | 13,267,000 | |||||||||||||
$ | 163,051,000 | $ | 137,084,000 | $ | 163,051,000 | $ | 137,084,000 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
PATIENT REVENUES, net | $ | 426,063,000 | $ | 387,595,000 | $ | 344,192,000 | |||||
EXPENSES: | |||||||||||
Operating | 342,932,000 | 311,035,000 | 275,605,000 | ||||||||
Lease and rent expense | 33,364,000 | 28,690,000 | 26,151,000 | ||||||||
Professional liability | 8,456,000 | 8,122,000 | 7,216,000 | ||||||||
General and administrative | 30,271,000 | 24,793,000 | 22,133,000 | ||||||||
Depreciation and amortization | 8,292,000 | 7,524,000 | 7,078,000 | ||||||||
Lease termination costs | 2,008,000 | — | — | ||||||||
Total expenses | 425,323,000 | 380,164,000 | 338,183,000 | ||||||||
OPERATING INCOME | 740,000 | 7,431,000 | 6,009,000 | ||||||||
OTHER INCOME (EXPENSE): | |||||||||||
Equity in net income (losses) of investment in unconsolidated affiliate | 273,000 | 339,000 | (5,000 | ) | |||||||
Gain on sale of investment in unconsolidated affiliate | 1,366,000 | — | — | ||||||||
Interest expense, net | (4,802,000 | ) | (4,102,000 | ) | (3,697,000 | ) | |||||
Debt retirement costs | (351,000 | ) | — | — | |||||||
(3,514,000 | ) | (3,763,000 | ) | (3,702,000 | ) | ||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (2,774,000 | ) | 3,668,000 | 2,307,000 | |||||||
BENEFIT (PROVISION) FOR INCOME TAXES | 1,030,000 | (916,000 | ) | (857,000 | ) | ||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS | (1,744,000 | ) | 2,752,000 | 1,450,000 | |||||||
INCOME (LOSS) FROM DISCONTINUED OPERATIONS: | |||||||||||
Operating loss, net of income tax benefit of $41,000, $375,000 and $878,000, respectively | (67,000 | ) | (1,128,000 | ) | (1,486,000 | ) | |||||
Gain on disposal, net of income tax provision of $0, $0 and $2,802,000, respectively | — | — | 4,744,000 | ||||||||
INCOME (LOSS) FROM DISCONTINUED OPERATIONS | (67,000 | ) | (1,128,000 | ) | 3,258,000 | ||||||
NET INCOME (LOSS) | (1,811,000 | ) | 1,624,000 | 4,708,000 | |||||||
Less: net (income) loss attributable to noncontrolling interests | — | — | 25,000 | ||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO DIVERSICARE HEALTHCARE SERVICES, INC. | (1,811,000 | ) | 1,624,000 | 4,733,000 | |||||||
PREFERRED STOCK DIVIDENDS | — | — | (220,000 | ) | |||||||
NET INCOME (LOSS) FOR DIVERSICARE HEALTHCARE SERVICES, INC. COMMON SHAREHOLDERS | $ | (1,811,000 | ) | $ | 1,624,000 | $ | 4,513,000 | ||||
NET INCOME (LOSS) PER COMMON SHARE FOR DIVERSICARE HEALTHCARE SERVICES, INC. COMMON SHAREHOLDERS: | |||||||||||
Per common share – basic | |||||||||||
Continuing operations | $ | (0.28 | ) | $ | 0.45 | $ | 0.21 | ||||
Discontinued operations | (0.01 | ) | (0.18 | ) | 0.54 | ||||||
$ | (0.29 | ) | $ | 0.27 | $ | 0.75 | |||||
Per common share – diluted | |||||||||||
Continuing operations | $ | (0.28 | ) | $ | 0.44 | $ | 0.20 | ||||
Discontinued operations | (0.01 | ) | (0.18 | ) | 0.52 | ||||||
$ | (0.29 | ) | $ | 0.26 | $ | 0.72 | |||||
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK | $ | 0.22 | $ | 0.22 | $ | 0.22 | |||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||||||
Basic | 6,199,000 | 6,100,000 | 6,011,000 | ||||||||
Diluted | 6,199,000 | 6,315,000 | 6,197,000 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
NET INCOME (LOSS) | $ | (1,811,000 | ) | $ | 1,624,000 | $ | 4,708,000 | ||||
OTHER COMPREHENSIVE INCOME (LOSS): | |||||||||||
Change in fair value of cash flow hedge, net of tax | 1,082,000 | 556,000 | 368,000 | ||||||||
Less: reclassification adjustment for amounts recognized in net income | (500,000 | ) | (448,000 | ) | (294,000 | ) | |||||
Total other comprehensive income | 582,000 | 108,000 | 74,000 | ||||||||
COMPREHENSIVE INCOME (LOSS) | (1,229,000 | ) | 1,732,000 | 4,782,000 | |||||||
Less: comprehensive loss attributable to noncontrolling interest | — | — | 25,000 | ||||||||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO DIVERSICARE HEALTHCARE SERVICES, INC. | $ | (1,229,000 | ) | $ | 1,732,000 | $ | 4,807,000 |
Common Stock | Treasury Stock | Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Shareholders' Equity of Diversicare Healthcare Services, Inc. | Non- Controlling Interests | Total Shareholders' Equity | ||||||||||||||||||||||||||||||
Shares Issued | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||
BALANCE, DECEMBER 31, 2013 | 6,307,000 | $ | 63,000 | 232,000 | $ | (2,500,000 | ) | $ | 19,570,000 | $ | (8,435,000 | ) | $ | (569,000 | ) | $ | 8,129,000 | $ | 1,437,000 | $ | 9,566,000 | ||||||||||||||||
Net income (loss) | — | — | — | — | — | 4,733,000 | — | 4,733,000 | (25,000 | ) | 4,708,000 | ||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | (220,000 | ) | — | (220,000 | ) | — | (220,000 | ) | ||||||||||||||||||||||||
Common stock dividends declared | — | — | — | — | 41,000 | (1,363,000 | ) | — | (1,322,000 | ) | — | (1,322,000 | ) | ||||||||||||||||||||||||
Issuance/redemption of equity grants, net | 81,000 | 1,000 | — | — | (49,000 | ) | — | — | (48,000 | ) | — | (48,000 | ) | ||||||||||||||||||||||||
Interest rate cash flow hedge | — | — | — | — | — | — | 74,000 | 74,000 | — | 74,000 | |||||||||||||||||||||||||||
Tax impact of equity grant exercises | — | — | — | — | (10,000 | ) | — | — | (10,000 | ) | — | (10,000 | ) | ||||||||||||||||||||||||
Deconsolidation of noncontrolling interest | — | — | — | — | — | — | — | — | (1,412,000 | ) | (1,412,000 | ) | |||||||||||||||||||||||||
Stock based compensation | — | — | — | — | 418,000 | — | — | 418,000 | — | 418,000 | |||||||||||||||||||||||||||
BALANCE, DECEMBER 31, 2014 | 6,388,000 | 64,000 | 232,000 | (2,500,000 | ) | 19,970,000 | (5,285,000 | ) | (495,000 | ) | 11,754,000 | — | 11,754,000 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | 1,624,000 | — | 1,624,000 | — | 1,624,000 | |||||||||||||||||||||||||||
Common stock dividends declared | — | — | — | — | 45,000 | (1,392,000 | ) | — | (1,347,000 | ) | — | (1,347,000 | ) | ||||||||||||||||||||||||
Issuance/redemption of equity grants, net | 125,000 | 1,000 | — | — | 78,000 | — | — | 79,000 | — | 79,000 | |||||||||||||||||||||||||||
Interest rate cash flow hedge | — | — | — | — | — | — | 108,000 | 108,000 | — | 108,000 | |||||||||||||||||||||||||||
Tax impact of equity grant exercises | — | — | — | — | 62,000 | — | — | 62,000 | — | 62,000 | |||||||||||||||||||||||||||
Stock based compensation | — | — | — | — | 987,000 | — | — | 987,000 | — | 987,000 | |||||||||||||||||||||||||||
BALANCE, DECEMBER 31, 2015 | 6,513,000 | 65,000 | 232,000 | (2,500,000 | ) | 21,142,000 | (5,053,000 | ) | (387,000 | ) | 13,267,000 | — | 13,267,000 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | (1,811,000 | ) | — | (1,811,000 | ) | — | (1,811,000 | ) | ||||||||||||||||||||||||
Common stock dividends declared | — | — | — | — | 46,000 | (1,412,000 | ) | — | (1,366,000 | ) | — | (1,366,000 | ) | ||||||||||||||||||||||||
Issuance/redemption of equity grants, net | 79,000 | 1,000 | — | — | (106,000 | ) | — | — | (105,000 | ) | — | (105,000 | ) | ||||||||||||||||||||||||
Interest rate cash flow hedge | — | — | — | — | — | — | 582,000 | 582,000 | — | 582,000 | |||||||||||||||||||||||||||
Tax impact of equity grant exercises | — | — | — | — | 65,000 | — | — | 65,000 | — | 65,000 | |||||||||||||||||||||||||||
Stock based compensation | — | — | — | — | 788,000 | — | — | 788,000 | — | 788,000 | |||||||||||||||||||||||||||
BALANCE, DECEMBER 31, 2016 | 6,592,000 | $ | 66,000 | 232,000 | $ | (2,500,000 | ) | $ | 21,935,000 | $ | (8,276,000 | ) | $ | 195,000 | $ | 11,420,000 | $ | — | $ | 11,420,000 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income (loss) | $ | (1,811,000 | ) | $ | 1,624,000 | $ | 4,708,000 | ||||
Discontinued operations | (67,000 | ) | (1,128,000 | ) | 3,258,000 | ||||||
Income (loss) from continuing operations | (1,744,000 | ) | 2,752,000 | 1,450,000 | |||||||
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 8,292,000 | 7,524,000 | 7,078,000 | ||||||||
Provision for doubtful accounts | 7,163,000 | 7,507,000 | 5,710,000 | ||||||||
Deferred income tax provision (benefit) | (1,569,000 | ) | (1,222,000 | ) | 837,000 | ||||||
Provision for self-insured professional liability, net of cash payments | 1,968,000 | 3,200,000 | 1,173,000 | ||||||||
Stock based compensation | 1,012,000 | 1,152,000 | 580,000 | ||||||||
Debt retirement costs | 351,000 | — | — | ||||||||
Provision for leases net of cash payments | (1,773,000 | ) | (1,749,000 | ) | (1,180,000 | ) | |||||
Lease termination costs, net of cash payments | 1,863,000 | — | — | ||||||||
Equity in net income of investment in unconsolidated affiliate | (271,000 | ) | (335,000 | ) | — | ||||||
Gain on sale of investment in unconsolidated affiliate | (1,366,000 | ) | — | — | |||||||
Deferred bonus | 350,000 | — | — | ||||||||
Other | 576,000 | 396,000 | 316,000 | ||||||||
Changes in other assets and liabilities affecting operating activities: | |||||||||||
Receivables, net | (25,551,000 | ) | (9,883,000 | ) | (14,592,000 | ) | |||||
Prepaid expenses and other assets | (1,620,000 | ) | (60,000 | ) | (184,000 | ) | |||||
Trade accounts payable and accrued expenses | 10,224,000 | 1,009,000 | 4,771,000 | ||||||||
Net cash provided by (used in) continuing operations | (2,095,000 | ) | 10,291,000 | 5,959,000 | |||||||
Net cash used in discontinued operations | (3,523,000 | ) | (7,014,000 | ) | (2,978,000 | ) | |||||
Net cash provided by (used in) operating activities | (5,618,000 | ) | 3,277,000 | 2,981,000 | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Purchases of property and equipment | (6,022,000 | ) | (4,646,000 | ) | (5,494,000 | ) | |||||
Property acquisitions | (7,550,000 | ) | — | — | |||||||
Acquisition of property and equipment through business combination | — | (10,900,000 | ) | — | |||||||
Proceeds from sale of discontinued operations | — | — | 17,124,000 | ||||||||
Proceeds from sale of unconsolidated affiliate | 2,068,000 | — | — | ||||||||
Change in restricted cash | 1,658,000 | 2,489,000 | 31,000 | ||||||||
Deposits and other deferred balances | — | (9,000 | ) | (64,000 | ) | ||||||
Net cash provided by (used in) continuing operations | (9,846,000 | ) | (13,066,000 | ) | 11,597,000 | ||||||
Net cash used in discontinued operations | — | — | (61,000 | ) | |||||||
Net cash provided by (used in) investing activities | (9,846,000 | ) | (13,066,000 | ) | 11,536,000 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Repayment of debt obligations | (73,374,000 | ) | (15,342,000 | ) | (21,645,000 | ) | |||||
Proceeds from issuance of debt | 92,789,000 | 27,945,000 | 21,808,000 | ||||||||
Financing costs | (2,162,000 | ) | (160,000 | ) | (195,000 | ) | |||||
Issuance and redemption of employee equity awards | (105,000 | ) | 79,000 | (47,000 | ) | ||||||
Redemption of preferred stock | — | — | (4,918,000 | ) | |||||||
Payment of common stock dividends | (1,366,000 | ) | (1,347,000 | ) | (1,322,000 | ) | |||||
Payment of preferred stock dividends | — | — | (220,000 | ) | |||||||
Deconsolidation of noncontrolling interests, net of income taxes | — | — | (1,385,000 | ) | |||||||
Payment for preferred stock restructuring | (640,000 | ) | (619,000 | ) | (600,000 | ) | |||||
Net cash provided by (used in) continuing operations | 15,142,000 | 10,556,000 | (8,524,000 | ) | |||||||
Net cash used in discontinued operations | — | — | (5,956,000 | ) | |||||||
Net cash provided by (used in) financing activities | 15,142,000 | 10,556,000 | (14,480,000 | ) |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | $ | (322,000 | ) | $ | 767,000 | $ | 37,000 | ||||
CASH AND CASH EQUIVALENTS, beginning of period | 4,585,000 | 3,818,000 | 3,781,000 | ||||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 4,263,000 | $ | 4,585,000 | $ | 3,818,000 | |||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||||
Cash payments of interest, net of amounts capitalized | $ | 3,965,000 | $ | 3,629,000 | $ | 3,324,000 | |||||
Cash payments of income taxes | $ | 549,000 | $ | 205,000 | $ | 84,000 | |||||
SUPPLEMENTAL INFORMATION ON NON-CASH INVESTING AND FINANCING TRANSACTIONS: | |||||||||||
Acquisition of equipment through capital lease | $ | 1,851,000 | $ | — | $ | — |
Buildings and improvements | - | 5 to 40 years |
Leasehold improvements | - | 2 to 10 years |
Furniture, fixtures and equipment | - | 2 to 15 years |
December 31, | |||||||
2016 | 2015 | ||||||
Intangible assets | $ | 10,652,000 | $ | 10,652,000 | |||
Accumulated amortization | (3,577,000 | ) | (3,193,000 | ) | |||
Net intangible assets | $ | 7,075,000 | $ | 7,459,000 |
2017 | $ | 384,000 | ||
2018 | 384,000 | |||
2019 | 384,000 | |||
2020 | 384,000 | |||
2021 | 384,000 | |||
Thereafter | 5,155,000 | |||
$ | 7,075,000 |
December 31, 2016 | Fair Value Measurements - Assets (Liabilities) | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Interest rate swap | $ | (129,000 | ) | $ | — | $ | (129,000 | ) | $ | — | ||||||
December 31, 2015 | Fair Value Measurements - Assets (Liabilities) | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Interest rate swap | $ | (625,000 | ) | $ | — | $ | (625,000 | ) | $ | — |
Hutchinson | Clinton Place | |||||
Purchase Price | 4,250,000 | 3,300,000 | ||||
Acquisition Costs | 43,000 | 34,000 | ||||
4,293,000 | 3,334,000 | |||||
Allocation: | ||||||
Buildings | 3,443,000 | 2,898,000 | ||||
Land | 365,000 | 267,000 | ||||
Furniture, Fixtures and Equipment | 485,000 | 169,000 | ||||
4,293,000 | 3,334,000 |
February 1, 2015 | |||
Purchase Price | $ | 7,000,000 | |
Land | 672,000 | ||
Buildings | 5,778,000 | ||
Furniture, Fixtures, and Equipment | 550,000 | ||
$ | 7,000,000 |
November 1, 2015 | |||
Purchase Price | $ | 3,900,000 | |
Land | 300,000 | ||
Buildings | 3,338,000 | ||
Furniture, Fixtures, and Equipment | 262,000 | ||
$ | 3,900,000 |
December 31, | |||||||
2016 | 2015 | ||||||
Medicare | $ | 20,402,000 | $ | 14,415,000 | |||
Medicaid and other non-federal government programs | 31,208,000 | 20,133,000 | |||||
Other patient and resident receivables | 20,868,000 | 17,451,000 | |||||
$ | 72,478,000 | $ | 51,999,000 | ||||
Other receivables and advances | $ | 1,193,000 | $ | 1,407,000 |
December 31, | |||||||
2016 | 2015 | ||||||
Land | $ | 5,761,000 | $ | 4,859,000 | |||
Buildings and leasehold improvements | 85,660,000 | 76,025,000 | |||||
Furniture, fixtures and equipment | 37,401,000 | 33,499,000 | |||||
128,822,000 | 114,383,000 | ||||||
Less: accumulated depreciation | (69,022,000 | ) | (62,110,000 | ) | |||
Net property and equipment | $ | 59,800,000 | $ | 52,273,000 |
December 31, | |||||||
2016 | 2015 | ||||||
Mortgage loan with a syndicate of banks; issued in March 2011, amended May 2013; and further amended February 2016; payable monthly, interest at 4.0% above LIBOR, a portion of which is fixed at 5.79% based on the interest rate swap described below. | $ | 58,792,000 | $ | 47,401,000 | |||
Acquisition loan with The PrivateBank, issued in February 2016, interest at 4.75% above LIBOR. | 6,289,000 | — | |||||
Revolving credit facility borrowings payable to a bank; entered into in March 2010; amended in March 2011 and further amended May 2013, March 2014, February 2016 and October 2016; secured by receivables of the Company; interest at 4.0% above LIBOR. | 15,000,000 | 12,900,000 | |||||
80,081,000 | 60,301,000 | ||||||
Less current portion | (6,663,000 | ) | (6,276,000 | ) | |||
$ | 73,418,000 | $ | 54,025,000 |
2016 | 2015 | ||||||
Write-off of deferred financing costs | $ | 351,000 | $ | — | |||
Deferred financing costs capitalized | $ | 2,162,000 | $ | 160,000 |
2017 | $ | 6,663,000 | |
2018 | 6,740,000 | ||
2019 | 6,820,000 | ||
2020 | 8,196,000 | ||
2021 | $ | 51,662,000 | |
Total | $ | 80,081,000 |
2017 | $ | 1,133,000 | |
2018 | 955,000 | ||
2019 | 75,000 | ||
Total | 2,163,000 | ||
Amounts related to interest | (111,000 | ) | |
Principal payments on capitalized lease obligation | $ | 2,052,000 |
Year Ended December 31, | |||||
2016 | 2015 | 2014 | |||
Expected volatility (range) | N/A(1) | 44%-49% | N/A(1) | ||
Risk free interest rate (range) | N/A(1) | 1.52%-1.87% | N/A(1) | ||
Expected dividends | N/A(1) | 2.15% | N/A(1) | ||
Weighted average expected term (years) | N/A(1) | 6 | N/A(1) |
(1) | The Company did not issue any options or other equity grants that would require application of the Black-Scholes-Merton equity grant valuation model during the years ended December 31, 2016 and 2014. All equity grants during these periods were restricted common shares which are valued using an intrinsic valuation method based on market price. |
Year Ended December 31, | ||||||||||||
2016(1) | 2015 | 2014(1) | ||||||||||
Weighted average grant date fair value | — | $ | 3.78 | $ | — | |||||||
Total intrinsic value of exercises | $ | 3,000 | $ | 249,000 | $ | 126,000 |
(1) | The Company did not issue any options or other equity grants that would require application of the Black-Scholes-Merton equity grant valuation model during the years ended December 31, 2016 and 2014. All equity grants during this period were restricted common shares which are valued using an intrinsic valuation method based on market price. |
Weighted | ||||||||||||||||||
Average | Intrinsic | Intrinsic | ||||||||||||||||
Range of | Exercise | Grants | Value-Grants | Grants | Value-Grants | |||||||||||||
Exercise Prices | Prices | Outstanding | Outstanding | Exercisable | Exercisable | |||||||||||||
$10.21 to $11.59 | $ | 10.88 | 62,000 | $ | 3,000 | 57,000 | $ | — | ||||||||||
$2.37 to $6.21 | $ | 5.54 | 169,000 | 822,000 | 169,000 | 822,000 | ||||||||||||
231,000 | 226,000 |
Weighted | ||||||
SOSARs/ | Average | |||||
Options | Exercise Price | |||||
Outstanding, December 31, 2015 | 232,000 | $ | 6.97 | |||
Granted | — | — | ||||
Exercised | (1,000 | ) | 7.24 | |||
Expired or cancelled | — | — | ||||
Outstanding, December 31, 2016 | 231,000 | $ | 6.97 | |||
Exercisable, December 31, 2016 | 226,000 | $ | 6.90 |
Weighted | ||||||
Average | ||||||
Restricted | Grant Date | |||||
Shares | Fair Value | |||||
Outstanding, December 31, 2015 | 141,000 | $ | 9.07 | |||
Granted | 83,000 | 8.87 | ||||
Dividend Equivalents | 4,000 | 9.21 | ||||
Vested | (68,000 | ) | 7.85 | |||
Cancelled | (7,000 | ) | 9.80 | |||
Outstanding December 31, 2016 | 153,000 | $ | 9.47 |
Weighted | ||||||
Average | ||||||
Restricted | Grant Date | |||||
Share Units | Fair Value | |||||
Outstanding, December 31, 2015 | 62,000 | $ | 9.58 | |||
Granted | 17,000 | 8.87 | ||||
Dividend Equivalents | 2,000 | 9.19 | ||||
Vested | (27,000 | ) | 6.13 | |||
Cancelled | — | — | ||||
Outstanding December 31, 2016 | 54,000 | $ | 11.10 |
Series C Preferred Stock | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Balance at the beginning of the period | $ | — | $ | — | $ | 4,918,000 | ||||||
Redemption of preferred stock | — | — | (4,918,000 | ) | ||||||||
Balance at the end of the period | $ | — | $ | — | $ | — |
9. | NET INCOME (LOSS) PER COMMON SHARE |
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Numerator: Income (loss) attributable to Diversicare Healthcare Services, Inc. common shareholders: | ||||||||||||
Income (loss) from continuing operations | $ | (1,744,000 | ) | $ | 2,752,000 | $ | 1,450,000 | |||||
Less: net loss attributable to noncontrolling interests | — | — | 25,000 | |||||||||
Income (loss) from continuing operations attributable to Diversicare Healthcare Services, Inc. | (1,744,000 | ) | 2,752,000 | 1,475,000 | ||||||||
Preferred stock dividends | — | — | (220,000 | ) | ||||||||
Income (loss) from continuing operations attributable to Diversicare Healthcare Services, Inc. common shareholders | (1,744,000 | ) | 2,752,000 | 1,255,000 | ||||||||
Income (loss) from discontinued operations, net of income taxes | (67,000 | ) | (1,128,000 | ) | 3,258,000 | |||||||
Net income (loss) attributable to Diversicare Healthcare Services, Inc. common shareholders | $ | (1,811,000 | ) | $ | 1,624,000 | $ | 4,513,000 | |||||
Denominator: Basic Weighted Average Common Shares Outstanding: | 6,199,000 | 6,100,000 | 6,011,000 | |||||||||
Basic net income per common share | ||||||||||||
Income (loss) from continuing operations | $ | (0.28 | ) | $ | 0.45 | $ | 0.21 | |||||
Income (loss) from discontinued operations | ||||||||||||
Operating loss, net of taxes | (0.01 | ) | (0.18 | ) | (0.25 | ) | ||||||
Gain on disposal, net of taxes | — | — | 0.79 | |||||||||
Discontinued operations, net of taxes | (0.01 | ) | (0.18 | ) | 0.54 | |||||||
Basic net income (loss) per common share | $ | (0.29 | ) | $ | 0.27 | $ | 0.75 |
2016 | 2015 | 2014 | ||||||||||
Numerator: Income (loss) from continuing operations attributable to Diversicare Healthcare Services, Inc. common shareholders | (1,744,000 | ) | 2,752,000 | 1,255,000 | ||||||||
Income (loss) from discontinued operations, net of income taxes | (67,000 | ) | (1,128,000 | ) | 3,258,000 | |||||||
Net income (loss) attributable to Diversicare Healthcare Services, Inc. common shareholders | $ | (1,811,000 | ) | $ | 1,624,000 | $ | 4,513,000 | |||||
Basic weighted average common shares outstanding | 6,199,000 | 6,100,000 | 6,011,000 | |||||||||
Incremental shares from assumed exercise of options, SOSARS and Restricted Stock Units | — | 215,000 | 186,000 | |||||||||
Denominator: Diluted Weighted Average Common Shares Outstanding: | 6,199,000 | 6,315,000 | 6,197,000 | |||||||||
Diluted net income per common share | ||||||||||||
Income (loss) from continuing operations | $ | (0.28 | ) | $ | 0.44 | $ | 0.20 | |||||
Income (loss) from discontinued operations | ||||||||||||
Operating loss, net of taxes | (0.01 | ) | (0.18 | ) | (0.25 | ) | ||||||
Gain on disposal, net of taxes | — | — | 0.77 | |||||||||
Discontinued operations, net of taxes | (0.01 | ) | (0.18 | ) | 0.52 | |||||||
Diluted net income (loss) per common share | $ | (0.29 | ) | $ | 0.26 | $ | 0.72 |
2016 | 2015 | 2014 | |||
SOSARs/Options Excluded | 31,000 | 62,000 | 57,000 |
Year Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Current provision (benefit) : | ||||||||||||
Federal | $ | 17,000 | $ | 1,191,000 | $ | 10,000 | ||||||
State | 522,000 | 947,000 | 10,000 | |||||||||
539,000 | 2,138,000 | 20,000 | ||||||||||
Deferred provision (benefit): | ||||||||||||
Federal | (1,284,000 | ) | (783,000 | ) | 798,000 | |||||||
State | (285,000 | ) | (439,000 | ) | 39,000 | |||||||
(1,569,000 | ) | (1,222,000 | ) | 837,000 | ||||||||
Provision (benefit) for income taxes of continuing operations | $ | (1,030,000 | ) | $ | 916,000 | $ | 857,000 |
Year Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Provision (benefit) for federal income taxes at statutory rates | $ | (889,000 | ) | $ | 1,247,000 | $ | 784,000 | |||||
Provision for state income taxes, net of federal benefit | 120,000 | 688,000 | 76,000 | |||||||||
Valuation allowance changes affecting the provision for income taxes | (45,000 | ) | (534,000 | ) | (66,000 | ) | ||||||
Employment tax credits | (529,000 | ) | (1,249,000 | ) | (169,000 | ) | ||||||
Nondeductible expenses | 453,000 | 862,000 | 123,000 | |||||||||
Stock based compensation expense | (62,000 | ) | (105,000 | ) | 3,000 | |||||||
Other | (78,000 | ) | 7,000 | 106,000 | ||||||||
Provision (benefit) for income taxes of continuing operations | $ | (1,030,000 | ) | $ | 916,000 | $ | 857,000 |
December 31, | ||||||||
2016 | 2015 | |||||||
Current deferred tax assets: | ||||||||
Allowance for doubtful accounts | 3,772,000 | 3,049,000 | ||||||
Accrued liabilities | 5,011,000 | 5,895,000 | ||||||
8,783,000 | 8,944,000 | |||||||
Less valuation allowance | (272,000 | ) | (319,000 | ) | ||||
8,511,000 | 8,625,000 | |||||||
Current deferred tax liabilities: | ||||||||
Prepaid expenses | (867,000 | ) | (626,000 | ) | ||||
$ | 7,644,000 | $ | 7,999,000 |
December 31, | ||||||||
2016 | 2015 | |||||||
Noncurrent deferred tax assets: | ||||||||
Net operating loss and other carryforwards | $ | 1,260,000 | $ | 1,040,000 | ||||
Credit carryforwards | 3,162,000 | 2,612,000 | ||||||
Deferred lease costs | 107,000 | 167,000 | ||||||
Depreciation | 2,122,000 | 1,184,000 | ||||||
Tax goodwill and intangibles | (1,296,000 | ) | (1,172,000 | ) | ||||
Stock-based compensation | 629,000 | 534,000 | ||||||
Accrued rent | 3,118,000 | 3,055,000 | ||||||
Kentucky and Kansas acquisition costs | 6,000 | 113,000 | ||||||
Impairment of long-lived assets | 269,000 | 267,000 | ||||||
Interest rate swap | 49,000 | 237,000 | ||||||
Hedge Ineffectiveness | (69,000 | ) | — | |||||
Noncurrent self-insurance liabilities | 4,633,000 | 4,185,000 | ||||||
Other | 11,000 | — | ||||||
14,001,000 | 12,222,000 | |||||||
Less valuation allowance | (460,000 | ) | (460,000 | ) | ||||
$ | 13,541,000 | $ | 11,762,000 |
2017 | $ | 57,051,000 | |
2018 | 58,076,000 | ||
2019 | 59,165,000 | ||
2020 | 60,231,000 | ||
2021 | 61,191,000 | ||
Thereafter | 836,102,000 | ||
$ | 1,131,816,000 |
December 31 | |||||||
2016 | 2015 | ||||||
Leasehold improvement | $ | 921,000 | $ | 921,000 | |||
Accumulated Amortization | (737,000 | ) | (631,000 | ) | |||
Net | $ | 184,000 | $ | 290,000 |
Quarter | ||||||||||||||||
2016 | First | Second | Third | Fourth | ||||||||||||
Patient revenues, net | $ | 97,945,000 | $ | 95,805,000 | $ | 97,313,000 | $ | 135,000,000 | ||||||||
Professional liability expense (1) | 2,066,000 | 1,934,000 | 1,977,000 | 2,479,000 | ||||||||||||
Income (loss) from continuing operations | (74,000 | ) | (2,150,000 | ) | (958,000 | ) | 1,438,000 | |||||||||
Loss from discontinued operations | (37,000 | ) | — | (17,000 | ) | (13,000 | ) | |||||||||
Net income (loss) attributable to Diversicare Healthcare Services, Inc. common shareholders | $ | (111,000 | ) | $ | (2,150,000 | ) | $ | (975,000 | ) | $ | 1,425,000 | |||||
Basic net income (loss) per common share for Diversicare Healthcare Services, Inc. common shareholders: | ||||||||||||||||
Income (loss) from continuing operations | $ | (0.01 | ) | $ | (0.35 | ) | $ | (0.16 | ) | $ | 0.24 | |||||
Loss from discontinued operations | (0.01 | ) | — | — | — | |||||||||||
Net income (loss) per common share for Diversicare Healthcare Services, Inc. common shareholders | $ | (0.02 | ) | $ | (0.35 | ) | $ | (0.16 | ) | $ | 0.24 |
Diluted net income (loss) per common share for Diversicare Healthcare Services, Inc. common shareholders: | ||||||||||||||||
Income (loss) from continuing operations | $ | (0.01 | ) | $ | (0.35 | ) | $ | (0.16 | ) | $ | 0.24 | |||||
Loss from discontinued operations | (0.01 | ) | — | — | — | |||||||||||
Net income (loss) per common share for Diversicare Healthcare Services, Inc. common shareholders | $ | (0.02 | ) | $ | (0.35 | ) | $ | (0.16 | ) | $ | 0.24 |
(1) | The Company's quarterly results are significantly affected by the amounts recorded for professional liability expense, as discussed further in Note 11, "Commitments and Contingencies". The amount of expense recorded for professional liability in each quarter of 2016 is set forth in the table above. |
Quarter | ||||||||||||||||
2015 | First | Second | Third | Fourth | ||||||||||||
Patient revenues, net | $ | 95,225,000 | $ | 96,288,000 | $ | 98,105,000 | $ | 97,977,000 | ||||||||
Professional liability expense (1) | 2,155,000 | 1,926,000 | 2,069,000 | 1,972,000 | ||||||||||||
Income (loss) from continuing operations | 5,000 | 807,000 | 669,000 | 1,271,000 | ||||||||||||
Loss from discontinued operations | (263,000 | ) | (299,000 | ) | (238,000 | ) | (328,000 | ) | ||||||||
Net income (loss) attributable to Diversicare Healthcare Services, Inc. common shareholders | $ | (258,000 | ) | $ | 508,000 | $ | 431,000 | $ | 943,000 | |||||||
Basic net income (loss) per common share for Diversicare Healthcare Services, Inc. common shareholders: | ||||||||||||||||
Income from continuing operations | $ | — | $ | 0.13 | $ | 0.11 | $ | 0.21 | ||||||||
Loss from discontinued operations | (0.04 | ) | (0.05 | ) | (0.04 | ) | (0.05 | ) | ||||||||
Net income (loss) per common share for Diversicare Healthcare Services, Inc. common shareholders | $ | (0.04 | ) | $ | 0.08 | $ | 0.07 | $ | 0.16 |
Diluted net income (loss) per common share for Diversicare Healthcare Services, Inc. common shareholders: | ||||||||||||||||
Income from continuing operations | $ | — | $ | 0.13 | $ | 0.11 | $ | 0.20 | ||||||||
Loss from discontinued operations | (0.04 | ) | (0.05 | ) | (0.04 | ) | (0.05 | ) | ||||||||
Net income (loss) per common share for Diversicare Healthcare Services, Inc. common shareholders | $ | (0.04 | ) | $ | 0.08 | $ | 0.07 | $ | 0.15 |
(1) | The Company's quarterly results are significantly affected by the amounts recorded for professional liability expense, as discussed further in Note 11, "Commitments and Contingencies". The amount of expense recorded for professional liability in each quarter of 2015 is set forth in the table above. |
Column A | Column B | Column C | Column D | Column E | ||||||||
Additions | Deductions | |||||||||||
Description | Balance at Beginning of Period | Charged to Costs and Expenses | Charged to Other Accounts | Other | (Write-offs) net of Recoveries | Balance at End of Period | ||||||
Year ended December 31, 2016: Allowance for doubtful accounts | $8,180 | $7,163 | $— | $— | $(5,017) | $10,326 | ||||||
Year ended December 31, 2015: Allowance for doubtful accounts | $6,044 | $7,507 | $— | $— | $(5,371) | $8,180 | ||||||
Year ended December 31, 2014: Allowance for doubtful accounts | $3,879 | $5,710 | $— | $— | $(3,545) | $6,044 |
Column A | Column B | Column C | Column D | Column E | ||||||||
Additions | Deductions | |||||||||||
Description | Balance at Beginning of Period | Charged to Costs and Expenses | Charged to Other Accounts (2) | Other | Payments (1) | Balance at End of Period | ||||||
Year ended December 31, 2016: | ||||||||||||
Professional Liability Reserve | $21,618 | $6,423 | $— | $114 | $(8,178) | $19,977 | ||||||
Workers Compensation Reserve | $227 | $372 | $— | $— | $(428) | $171 | ||||||
Health Insurance Reserve | $686 | $8,896 | $— | $(137) | $(8,426) | $1,019 | ||||||
Year ended December 31, 2015: | ||||||||||||
Professional Liability Reserve | $25,163 | $5,213 | $1,010 | $— | $(9,768) | $21,618 | ||||||
Workers Compensation Reserve | $250 | $364 | $— | $— | $(387) | $227 | ||||||
Health Insurance Reserve | $687 | $6,294 | $— | $— | $(6,295) | $686 | ||||||
Year ended December 31, 2014: | ||||||||||||
Professional Liability Reserve | $27,067 | $5,930 | $2,440 | $— | $(10,274) | $25,163 | ||||||
Workers Compensation Reserve | $176 | $372 | $— | $18 | $(316) | $250 | ||||||
Health Insurance Reserve | $843 | $6,748 | $237 | $— | $(7,141) | $687 |
(1) | Payments for the Professional Liability Reserve include amounts paid for claims settled during the period as well as payments made under structured arrangements for claims settled in earlier periods. |
(2) | As discussed in Note 3, "Discontinued Operations" of the Consolidated Financial Statements, the Company has presented the results of certain divestiture and lease termination transactions as discontinued operations. The amounts charged to Other Accounts represent the amounts charged to discontinued operations. |
Exhibit | ||
Number | Description of Exhibits |
3.1 | Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement No. 33-76150 on Form S-1). | ||
3.2 | Certificate of Designation of Registrant (incorporated by reference to Exhibit 3.5 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2006). | ||
3.3 | Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement No. 33-76150 on Form S-1). | ||
3.4 | Bylaw Amendment adopted November 5, 2007 (incorporated by reference to Exhibit 3.4 to the Company's annual report on Form 10-K for the year ended December 31, 2007). | ||
3.5 | Amendment to Certificate of Incorporation dated March 23, 1995 (incorporated by reference to Exhibit A of Exhibit 1 to the Company's Form 8-A filed March 30, 1995). | ||
3.6 | Certificate of Designation of Registrant (incorporated by reference to Exhibit 3.4 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2001). | ||
3.7 | Certificate of Ownership and Merger of Diversicare Healthcare Services, Inc. with and into Advocat Inc. (incorporated by reference to Exhibit 3.1 to the Company's current report on Form 8-K filed March 14, 2013). | ||
3.8 | Amendment to Certificate of Incorporation dated June 9, 2016 (incorporated by reference to Exhibit 3.8 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2016). | ||
4.1 | Form of Common Stock Certificate (incorporated by reference to Exhibit 4 to the Company's Registration Statement No. 33-76150 on Form S-1). | ||
*10.1 | Master Agreement and Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.6 to the Company's Registration Statement No. 33-76150 on Form S-1). | ||
10.2 | Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.8 to the Company's Registration Statement No. 33-76150 on Form S-1). | ||
10.3 | Advocat Inc. Guaranty in favor of Omega Healthcare Investors, Inc. dated May 10, 1994 (incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994). | ||
10.4 | Settlement and Restructuring Agreement dated as of October 1, 2000 among Registrant, Diversicare Leasing Corp., Sterling Health Care Management, Inc., Diversicare Management Services Co., Advocat Finance, Inc., Omega Healthcare Investors, Inc. and Sterling Acquisition Corp. (incorporated by reference to Exhibit 10.83 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000). | ||
10.5 | Consolidated Amended and Restated Master Lease dated November 8, 2000, effective October 1, 2000, between Sterling Acquisition Corp. (as Lessor) and Diversicare Leasing Corp. (as Lessee) (incorporated by reference to Exhibit 10.84 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000). | ||
10.6 | Management Agreement effective October 1, 2000, between Diversicare Leasing Corp. and Diversicare Management Services Co. (incorporated by reference to Exhibit 10.85 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000). | ||
10.7 | Amended and Restated Security Agreement dated as of November 8, 2000 between Diversicare Leasing Corp. and Sterling Acquisition Corp. (incorporated by reference to Exhibit 10.86 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000). | ||
10.8 | Security Agreement dated as of November 8, 2000 between Sterling Health Care Management, Inc. and Sterling Acquisition Corp. (incorporated by reference to Exhibit 10.87 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000). | ||
10.9 | Guaranty given as of November 8, 2000 by Registrant, Advocat Finance, Inc., and Diversicare Management Services Co., in favor of Sterling Acquisition Corp. (incorporated by reference to Exhibit 10.88 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000). | ||
10.10 | First Amendment to Consolidated Amended and Restated Master Lease dated September 30, 2001 by and between Sterling Acquisition Corp. and Diversicare Leasing Corporation (incorporated by reference to Exhibit 10.126 to the Company's Annual Report on Form 10-K for the year ended December 31, 2001). | ||
10.11 | Second Amendment to Consolidated Amended and Restated Master Lease dated as of June 15, 2005 by and between Sterling Acquisition Corp. and Diversicare Leasing Corporation (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005). | ||
10.12 | Restructuring Stock Issuance and Subscription Agreement dated as of October 20, 2006 between Advocat Inc. and Omega Healthcare Investors, Inc. (incorporated by reference to Exhibit 10.1 to the Company's current report on Form 8-K filed October 24, 2006). | ||
10.13 | Third Amendment to Consolidated Amended and Restated Master Lease executed as of October 20, 2006, to be effective as of October 1, 2006 by and between Sterling Acquisition Corp. and Diversicare Leasing Corporation (incorporated by reference to Exhibit 10.2 to the Company's current report on Form 8-K filed October 24, 2006). | ||
10.14 | Subordinated Promissory Note in the amount of $2,533,614.53 issued to Omega HealthCare Investors Inc. dated as of October 1, 2006 (incorporated by reference to Exhibit 10.3 to the Company's current report on Form 8-K filed October 24, 2006). | ||
10.15 | Fourth Amendment to Consolidated Amended and Restated Master Lease executed and delivered as of April 1, 2007 by and between Sterling Acquisition Corp., a Kentucky corporation, and Diversicare Leasing Corp., a Tennessee corporation (incorporated by reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2007). | ||
10.16 | Fifth Amendment to Consolidated Amended and Restated Master Lease dated as of August 10, 2007 by and between Sterling Acquisition Corp., a Kentucky corporation, and Diversicare Leasing Corp., a Tennessee corporation (incorporated by reference to Exhibit 10.7 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2007). | ||
10.17 | Sixth Amendment to Consolidated Amended and Restated Master Lease dated as of March 14, 2008 by and between Sterling Acquisition Corp., a Kentucky corporation, and Diversicare Leasing Corp., a Tennessee corporation (incorporated by reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2008). | ||
10.18 | Seventh Amendment to Consolidated Amended and Restated Master Lease dated as of October 24, 2008 by and between Sterling Acquisition Corp., a Kentucky corporation, and Diversicare Leasing Corp., a Tennessee corporation (incorporated by reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2008). | ||
*10.19 | Advocat Inc. 2005 Long-Term Incentive Plan (incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A filed on April 20, 2006). | ||
*10.20 | First Amendment to the Advocat Inc. 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.63 to the Company's annual report on Form 10-K for the year ended December 31, 2008). | ||
*10.21 | Advocat Inc. 2010 Long-Term Incentive Plan (incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A filed on April 28, 2010). | ||
*10.22 | Advocat Inc. 2008 Stock Purchase Plan for Key Personnel (incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A filed May 2, 2008). | ||
10.23 | Ninth Amendment to Consolidated Amended and Restated Master Lease dated as of May 5, 2009 by and between Sterling Acquisition Corp., a Kentucky corporation, and Diversicare Leasing Corp., a Tennessee corporation (incorporated by reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2009). | ||
10.24 | Tenth Amendment to Consolidated Amended and Restated Master Lease dated as of September 8, 2009 by and between Sterling Acquisition Corp., a Kentucky corporation, and Diversicare Leasing Corp., a Tennessee corporation (incorporated by reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2009). | ||
10.25 | Lease Agreement dated as of July 14, 2010 by and between Diversicare Rose Terrace, LLC, a subsidiary of the registrant, and A.B.E., LLC (incorporated by reference to Exhibit 10.4 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2010). | ||
10.26 | Eleventh Amendment to the Amended and Restated Master Lease between the Company and Sterling Acquisition Corp., an affiliate of Omega Healthcare Investors, Inc. (incorporated by reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2011). | ||
10.27 | Swap Agreement between the Company and The PrivateBank and Trust Company dated as of March 1, 2011 (incorporated by reference to Exhibit 10.6 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2011). | ||
*10.28 | Amended and Restated Employment Agreement effective as of April 1, 2012, by and between Advocat Inc., a Delaware corporation, and Kelly Gill (incorporated by reference to Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2012). | ||
*10.29 | Employment Agreement effective August 20, 2012, between James R. McKnight, Jr. and Advocat Inc. (incorporated by reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2012). | ||
*10.30 | Employment Agreement effective January 1, 2013, between Leslie Campbell and Advocat Inc. (incorporated by reference to Exhibit 10.49 to the Company’s annual report on Form 10-K for the year ended December 31, 2012). | ||
*10.31 | Amendment No. 1 to Amended and Restated Employment Agreement effective as of March 1, 2013 by and between Advocat Inc., a Delaware corporation, and Kelly Gill (incorporated by reference to Exhibit 10.50 to the Company's annual report on Form 10-K for the year ended December 31, 2012). | ||
10.32 | Asset Purchase Agreement effective March 6, 2013 between the Company and Cumberland & Ohio Co. of Texas, as receiver of the assets of SeniorTrust of Florida, Inc. (incorporated by reference to Exhibit 10.3 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2013). | ||
10.33 | Operations Transfer Agreement effective March 6, 2013 by and between certain subsidiaries of the Company and the Cumberland & Ohio Co. of Texas, as receiver of the assets of SeniorTrust of Florida, Inc. (incorporated by reference to Exhibit 10.4 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2013). | ||
10.34 | Amended and Restated Revolving Loan and Security Agreement dated April 30, 2013 among the Company and a syndicate of financial institutions and banks, including The PrivateBank as the Administering Agent (incorporated by reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2013). | ||
10.35 | Amended and Restated Term Loan and Security Agreement dated April 30, 2013 among the Company and a syndicate of financial institutions and banks, including The PrivateBank as the Administering Agent (incorporated by reference to Exhibit 10.6 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2013). | ||
10.36 | Amended and Restated Guaranty (Revolver) dated as of April 30, 2013, by the Company to and for the benefit of The PrivateBank in its capacity as administrative agent (incorporated by reference to Exhibit 10.7 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2013). | ||
10.37 | Amended and Restated Guaranty (Term Loan) dated as of April 30, 2013, by the Company to and for the benefit of The PrivateBank in its capacity as administrative agent (incorporated by reference to Exhibit 10.8 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2013). | ||
10.38 | Thirteenth Amendment to Consolidated Amended and Restated Master Lease effective September 1, 2013 by and between Sterling Acquisition Corp. and Diversicare Leasing Corp. (incorporated by reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2013). |
**10.39 | First Amendment and Consent to Amended and Restated Revolving Loan and Security Agreement dated as of November 1, 2013 among the Company and a syndicate of financial institutions and banks, including The PrivateBank as the Administering Agent (incorporated by reference to Exhibit 10.1 to the Company's annual report on Form 10-K for the year ended Decemeber 31, 2014). | ||
10.40 | Asset Purchase Agreement dated April 3, 2014, by and between Diversicare Rose Terrace, LLC, and Rose Terrace Acq., LLC (incorporated by reference to exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2014). | ||
10.41 | Second Amendment and Consent to Amended and Restated Revolving Loan and Security Agreement dated as of March 31, 2014, among the Company and a syndicate of financial institutions and banks, including The PrivateBank as the Administering Agent (incorporated by reference to exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2014). | ||
10.42 | Term Loan and Security Agreement effective as of March 27, 2014, by and between Diversicare Rose Terrace, LLC and The PrivateBank And Trust Company (incorporated by reference to exhibit 10.3 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2014). | ||
10.43 | Third Amendment and Consent to Amended And Restated Revolving Loan and Security Agreement dated as of July 1, 2014 by and among the Company and a syndicate of financial institutions and banks, including The PrivateBank as the Administering Agent (incorporated by reference to exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2014). | ||
10.44 | Third Amendment to Amended and Restated Term Loan And Security Agreement dated as of July 1, 2014, by and among the Company and a syndicate of financial institutions and banks, including The PrivateBank as the Administering Agent (incorporated by reference to exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2014). | ||
10.45 | Fifteenth Amendment to Consolidated Amended and Restated Master Lease dated as of June 30, 2014 by and between the Company and Sterling Acquisition Corp. (incorporated by reference to exhibit 10.3 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2014). | ||
10.46 | Asset Purchase Agreement dated February 1, 2015 by and between Diversicare Healthcare Services, Inc. and Barren County Health Care Center, Inc. (incorporated by reference to exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2015). | ||
10.47 | Term Loan and Security Agreement dated as of February 2, 2015 by and between Diversicare Glasgow Property, LLC and The PrivateBank And Trust Company (incorporated by reference to exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2015). | ||
10.48 | Asset Purchase Agreement dated November 1, 2015 by and between Diversicare Healthcare Services, Inc. and Haws Fulton Investors, LLC. | ||
10.49 | Second Amended and Restated Term Loan and Security Agreement dated February 26, 2016 (incorporated by reference to exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2016). | ||
10.50 | Third Amended and Restated Revolving Loan and Security Agreement dated February 26, 2016 (incorporated by reference to exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2016). | ||
10.51 | Amendment to Diversicare Healthcare Services, Inc. 2008 Employee Stock Purchase Plan for Key Personnel (incorporated by reference to exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2016). | ||
10.52 | First Amendment to Third Amended and Restated Revolving Loan and Security Agreement dated August 3, 2016 (incorporated by reference to exhibit 10.12 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2016). | ||
10.53 | First Amendment to Second Amended and Restated Term Loan and Security Agreement dated August 3, 2016 (incorporated by reference to exhibit 10.3 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2016). | ||
10.54 | Second Amendment to Third Amended and Restated Revolving Loan and Security Agreement dated October 3, 2016 (incorporated by reference to exhibit 10.3 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2016). | ||
10.55 | Third Amendment to the Third Amended and Restated Revolving Loan and Security Agreement dated December 29, 2016. | ||
10.56 | Golden Living Master Lease Agreement dated October 1, 2016. | ||
**10.57 | Amended and Restated Golden Living Master Lease Agreement dated November 1, 2016. | ||
21 | Subsidiaries of the Registrant. | ||
23.1 | Consent of BDO USA, LLP. | ||
31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a). | ||
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a). | ||
32 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b). | ||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema Document | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||
* | Indicates management contract or compensatory plan or arrangement. | ||
** | Confidential treatment has been requested for portions of this exhibit |
BORROWER: ADVOCAT FINANCE, INC. DIVERSICARE MANAGEMENT SERVICES CO. DIVERSICARE LEASING CORP. STERLING HEALTH CARE MANAGEMENT, INC. DIVERSICARE TEXAS I, LLC DIVERSICARE HOLDING COMPANY, LLC DIVERSICARE KANSAS, LLC DIVERSICARE LEASING COMPANY II, LLC DIVERSICARE PROPERTY CO., LLC | ||
By: | /s/ James R. McKnight, Jr. | |
Name: | James R. McKnight, Jr. | |
Its: | Executive Vice President & Chief Financial Officer |
SENIOR CARE CEDAR HILLS, LLC SENIOR CARE GOLFCREST, LLC SENIOR CARE GOLFVIEW, LLC SENIOR CARE SOUTHERN PINES, LLC | |||
BY: | SENIOR CARE FLORIDA LEASING, LLC, its sole member | ||
BY: | DIVERSICARE LEASING CORP., its sole member | ||
By: | /s/ James R. McKnight, Jr. | ||
Name: | James R. McKnight, Jr. | ||
Its: | Executive Vice President & Chief Financial Officer |
SENIOR CARE FLORIDA LEASING, LLC DIVERSICARE AFTON OAKS, LLC DIVERSICARE BRIARCLIFF, LLC DIVERSICARE CHISOLM, LLC DIVERSICARE HARTFORD, LLC DIVERSICARE HILLCREST, LLC DIVERSICARE LAMPASAS, LLC DIVERSICARE PINEDALE, LLC DIVERSICARE WINDSOR HOUSE, LLC DIVERSICARE YORKTOWN, LLC DIVERSICARE ROSE TERRACE, LLC DIVERSICARE THERAPY SERVICES, LLC DIVERSICARE CLINTON, LLC DIVERSICARE HIGHLANDS, LLC | |||
BY: | DIVERSICARE LEASING CORP., its sole member | ||
By: | /s/ James R. McKnight, Jr. | ||
Name: | James R. McKnight, Jr. | ||
Its: | Executive Vice President & Chief Financial Officer | ||
DIVERSICARE BALLINGER, LLC DIVERSICARE DOCTORS, LLC DIVERSICARE ESTATES, LLC DIVERSICARE HUMBLE, LLC DIVERSICARE KATY, LLC DIVERSICARE NORMANDY TERRACE, LLC DIVERSICARE TREEMONT, LLC DIVERSICARE PARIS, LLC | |||
BY: | DIVERSICARE TEXAS I, LLC, its sole member | ||
By: | /s/ James R. McKnight, Jr. | ||
Name: | James R. McKnight, Jr. | ||
Its: | Executive Vice President & Chief Financial Officer |
DIVERSICARE OF CHANUTE, LLC DIVERSICARE OF COUNCIL GROVE, LLC DIVERSICARE OF HAYSVILLE, LLC DIVERSICARE OF SEDGWICK, LLC DIVERSICARE OF HUTCHINSON, LLC DIVERSICARE OF LARNED, LLC | |||
BY: | DIVERSICARE KANSAS, LLC its sole member | ||
By: | /s/ James R. McKnight, Jr. | ||
Name: | James R. McKnight, Jr. | ||
Its: | Executive Vice President & Chief Financial Officer |
By: | DIVERSICARE LEASING COMPANY II, LLC, its sole member |
Name: | James R. McKnight, Jr. |
Its: | Executive Vice President & Chief Financial Officer |
By: | DIVERSICARE PROPERTY CO., LLC, its sole member |
Its: | Executive Vice President & Chief |
By: | DIVERSICARE HOLDING COMPANY, LLC, its sole member |
Its: | Executive Vice President & Chief |
Name: | James R. McKnight, Jr. |
Its: | Executive Vice President & Chief Financial Officer |
By: | DIVERSICARE LEASING COMPANY III, LLC, its sole member |
Name: | James R. McKnight, Jr. |
Its: | Executive Vice President & Chief Financial Officer |
Acknowledged and Agreed: DIVERSICARE HEALTHCARE SERVICES, INC. | ||
/s/ Kelly J. Gill | ||
Name: | Kelly J. Gill | |
Its: | President and Chief Executive Officer |
LENDER: BANKERS TRUST COMPANY | ||
By: /s/ Jon M. Doll | ||
Name: | Jon M. Doll | |
Its: | Vice President |
LENDER: BOKF, NA D/B/A BANK OF OKLAHOMA | ||
By: /s/ Ryan Kirk | ||
Name: | Ryan Kirk | |
Its: | Vice President |
LENDER: CIT BANK N.A. | ||
By: /s/ Edward Shuster | ||
Name: | Edward Shuster | |
Its: | Director |
LENDER: OPUS BANK, a California commercial bank | ||
By: /s/ Bryan Nance | ||
Name: | Bryan Nance | |
Its: | VP, Portfolio Manager Healthcare Banking |
LENDER: FRANKLIN SYNERGY BANK | ||
By: /s/ Lisa Fletcher | ||
Name: | Lisa Fletcher | |
Its: | Senior Vice President |
If to Tenant: | If to Landlord: |
c/o Diversicare Leasing Company II, LLC 1621 Galleria Blvd. Brentwood, TN 37027 Facsimile No.: 615-620-7875 Attn: Chief Financial Officer | c/o Golden Living 1000 Fianna Way Fort Smith, Arkansas 72919 Facsimile: 479-201-4801 Attn: Holly Rasmussen-Jones |
With a copy to: | With a copy to: |
Bass, Berry & Sims PLC 150 Third Avenue South Suite 2800 Nashville, TN 37201 Facsimile No.: 615-742-0466 Attn: Mark Manner | Nicholas R. Finn Four Embarcadero Center, Suite 710 San Francisco, California 94111 |
By: | DIVERSICARE LEASING COMPANY III, LLC, a Delaware limited liability company, its sole member |
REPORT | DUE DATE |
Monthly financial reports concerning the operations of each Facility and the combined Facilities or such other combination of this and related leases as reasonably requested by Landlord reported using a template provided by Landlord (which template may change from time to time as reasonably required by Landlord). Landlord may require Tenant to provide similar financial reports, utilizing the same or a similar template, for periods prior to the Commencement Date. (Via e-mail to farallonreporting@goldenliving.com, or such other e-mail address as Landlord may designate from time to time) | Thirty (30) days after the end of each calendar month, or, with respect to reports for periods prior to the Commencement Date, within (30) days after Landlord’s demand therefor |
Quarterly consolidated or combined financial statements of Tenant and any Guarantor (Via e-mail to farallonreporting@goldenliving.com, or such other e-mail address as Landlord may designate from time to time) | Forty-Five (45) days after the end of each of the first three quarters of the fiscal year of Tenant and such Guarantor |
Annual consolidated or combined financial statements of Tenant and any Guarantor audited by a reputable certified public accounting firm (Via e-mail to farallonreporting@goldenliving.com, or such other e-mail address as Landlord may designate from time to time) | Ninety (90) days after the fiscal year end of Tenant and such Guarantor |
Quarterly Certified Compliance Certificates, in form reasonably acceptable to Landlord, certified by appropriate officers of Tenant and Guarantor, as applicable, demonstrating (with supporting calculations) compliance with all financial covenants contained in Section 6.12 of this Lease and in the Guaranty | Together and concurrently with each Quarterly and Annual financial statement described above |
Regulatory reports with respect to each Facility, as follows: (1) all federal, state and local licensing and reimbursement certification surveys, inspection and other reports received by Tenant as to any Facility and its operations, including state department of health licensing surveys and reports relating to complaint surveys; (2) Medicare and Medicaid certification surveys; and (3) life safety code survey reports and/or fire marshal survey reports. (Via e-mail to farallonreporting@goldenliving.com, or such other e-mail address as Landlord may designate from time to time) | Five (5) Business Days after receipt |
Reports of regulatory violations, by written notice of the following: (1) any violation of any federal, state or local licensing or reimbursement certification statute or regulation, including Medicare or Medicaid Level G or above; (2) any suspension, termination or restriction (including immediate jeopardy) placed upon Tenant or any Facility, the operation of any Facility or the ability to admit residents or patients; (3) the inclusion of any Facility on the “Special Focus List” maintained by CMS; or (4) any violation of any other permit, approval or certification in connection with any Facility or the operations thereof, by any federal, state or local authority, including Medicare or Medicaid. | Three (3) Business Days after receipt |
Written evidence of payment of all Impositions to be paid by Tenant under the Lease as and when required under the Lease. | Not later than thirty (30) days after the applicable due date under this Lease for each Imposition. |
Annual operating and capital budget covering the operations and reasonable estimate of capital repairs, replacements and improvements for each Facility for the forthcoming calendar year (which annual budget shall include month-to-month projections), reported using a template provided by Landlord (which template may change from time to time as reasonably required by Landlord). (Via e-mail to farallonreporting@goldenliving.com or such other e-mail address as Landlord may designate from time to time) | Thirty (30) days prior to beginning of each calendar year for the annual capital budget and prior to the commencement of each calendar year for the annual operating budget. |
Updated Schedule 6.10 / Affiliate Agreements as provided in Section 6.10 | Not later than ten (10) Business Days after each anniversary of the Commencement Date |
Facility Name | Facility Address | Primary Intended Use | No. of Beds/Units |
Golden LivingCenter - Amory | 1215 Earl Frye Drive Amory, MS 38821 | SNF | 152 |
Golden LivingCenter - Batesville | 154 Woodland Road Batesville, MS 38606-7300 | SNF | 130 |
Golden LivingCenter - Brook Manor | 519 Brookman Drive Brookhaven, MS 39601-2326 | SNF | 58 |
Golden LivingCenter - Eupora | 156 E Walnut Avenue Eupora, MS 39744-2027 | SNF | 119 |
Golden LivingCenter - Ripley | 101 Cunningham Drive Ripley, MS 38663-1302 | SNF | 140 |
Golden LivingCenter - Southaven | 1730 Dorchester Drive Southaven, MS 38671-5723 | SNF | 140 |
Golden LivingCenter - Eason Blvd | 2273 South Eason Boulevard Tupelo, MS 38804-5900 | SNF | 120 |
Golden LivingCenter - Tylertown | 200 Medical Circle Tylertown, MS 39667-2069 | SNF | 60 |
“SNF” | Skilled Nursing Facility |
If to Tenant: | If to Landlord: |
c/o Diversicare Leasing Company II, LLC 1621 Galleria Blvd. Brentwood, TN 37027 Facsimile No.: 615-620-7875 Attn: Chief Financial Officer | c/o Golden Living 1000 Fianna Way Fort Smith, Arkansas 72919 Facsimile: 479-201-4801 Attn: Holly Rasmussen-Jones |
With a copy to: | With a copy to: |
Bass, Berry & Sims PLC 150 Third Avenue South Suite 2800 Nashville, TN 37201 Facsimile No.: 615-742-0466 Attn: Mark Manner | Nicholas R. Finn Four Embarcadero Center, Suite 710 San Francisco, California 94111 |
By: | DIVERSICARE LEASING COMPANY III, LLC, a Delaware limited liability company, its sole member |
REPORT | DUE DATE |
Monthly financial reports concerning the operations of each Facility and the combined Facilities or such other combination of this and related leases as reasonably requested by Landlord reported using a template provided by Landlord (which template may change from time to time as reasonably required by Landlord). Landlord may require Tenant to provide similar financial reports, utilizing the same or a similar template, for periods prior to the Commencement Date. (Via e-mail to farallonreporting@goldenliving.com, or such other e-mail address as Landlord may designate from time to time) | Thirty (30) days after the end of each calendar month, or, with respect to reports for periods prior to the Commencement Date, within (30) days after Landlord’s demand therefor |
Quarterly consolidated or combined financial statements of Tenant and any Guarantor (Via e-mail to farallonreporting@goldenliving.com, or such other e-mail address as Landlord may designate from time to time) | Forty-Five (45) days after the end of each of the first three quarters of the fiscal year of Tenant and such Guarantor |
Annual consolidated or combined financial statements of Tenant and any Guarantor audited by a reputable certified public accounting firm (Via e-mail to farallonreporting@goldenliving.com, or such other e-mail address as Landlord may designate from time to time) | Ninety (90) days after the fiscal year end of Tenant and such Guarantor |
Quarterly Certified Compliance Certificates, in form reasonably acceptable to Landlord, certified by appropriate officers of Tenant and Guarantor, as applicable, demonstrating (with supporting calculations) compliance with all financial covenants contained in Section 6.12 of this Lease and in the Guaranty | Together and concurrently with each Quarterly and Annual financial statement described above |
Regulatory reports with respect to each Facility, as follows: (1) all federal, state and local licensing and reimbursement certification surveys, inspection and other reports received by Tenant as to any Facility and its operations, including state department of health licensing surveys and reports relating to complaint surveys; (2) Medicare and Medicaid certification surveys; and (3) life safety code survey reports and/or fire marshal survey reports. (Via e-mail to farallonreporting@goldenliving.com, or such other e-mail address as Landlord may designate from time to time) | Five (5) Business Days after receipt |
Reports of regulatory violations, by written notice of the following: (1) any violation of any federal, state or local licensing or reimbursement certification statute or regulation, including Medicare or Medicaid Level G or above; (2) any suspension, termination or restriction (including immediate jeopardy) placed upon Tenant or any Facility, the operation of any Facility or the ability to admit residents or patients; (3) the inclusion of any Facility on the “Special Focus List” maintained by CMS; or (4) any violation of any other permit, approval or certification in connection with any Facility or the operations thereof, by any federal, state or local authority, including Medicare or Medicaid. | Three (3) Business Days after receipt |
Written evidence of payment of all Impositions to be paid by Tenant under the Lease as and when required under the Lease. | Not later than thirty (30) days after the applicable due date under this Lease for each Imposition. |
Annual operating and capital budget covering the operations and reasonable estimate of capital repairs, replacements and improvements for each Facility for the forthcoming calendar year (which annual budget shall include month-to-month projections), reported using a template provided by Landlord (which template may change from time to time as reasonably required by Landlord). (Via e-mail to farallonreporting@goldenliving.com or such other e-mail address as Landlord may designate from time to time) | Thirty (30) days prior to beginning of each calendar year for the annual capital budget and prior to the commencement of each calendar year for the annual operating budget. |
Updated Schedule 6.10 / Affiliate Agreements as provided in Section 6.10 | Not later than ten (10) Business Days after each anniversary of the Commencement Date |
Facility Name | Facility Address | Primary Intended Use | No. of Beds/Units |
Golden LivingCenter - Arab | 235 3rd Street SE Arab, AL 35016 | SNF | 87 |
Golden LivingCenter - Meadowood | 820 Golf Course Road Bessemer, AL 35022-6024 | SNF | 180 |
Golden LivingCenter - Riverchase | 2500 River Haven Drive Birmingham, AL 35244 | SNF | 132 |
Golden LivingCenter - Boaz | 600 Corley Avenue Boaz, AL 35957-5952 | SNF | 100 |
Golden LivingCenter - Foley | 1701 North Alston Street Foley, AL 36535-2246 | SNF | 154 |
Golden LivingCenter - Hueytown | 190 Brooklane Drive Hueytown, AL 35023 | SNF | 50 |
Golden LivingCenter - Lanett | 702 South 13th Street Lanett, AL 36863 | SNF | 85 |
Golden LivingCenter - Montgomery | 2020 North Country Club Drive Montgomery, AL 36106 | SNF | 138 |
Golden LivingCenter - Oneonta | 215 Valley Road Oneonta, AL 35121 | SNF | 120 |
Golden LivingCenter - Oxford | 1130 South Hale Street Oxford, AL 36203-2444 | SNF | 173 |
Golden LivingCenter - Pell City | 510 Wolf Creek Road North Pell City, AL 35125-2477 | SNF | 94 |
Golden LivingCenter - Winfield | 144 County Highway 14 Winfield, AL 35594 | SNF | 123 |
Golden LivingCenter - Amory | 1215 Earl Frye Drive Amory, MS 38821 | SNF | 152 |
Golden LivingCenter - Batesville | 154 Woodland Road Batesville, MS 38606-7300 | SNF | 130 |
Golden LivingCenter - Brook Manor | 519 Brookman Drive Brookhaven, MS 39601-2326 | SNF | 58 |
Golden LivingCenter - Eupora | 156 E Walnut Avenue Eupora, MS 39744-2027 | SNF | 119 |
Golden LivingCenter - Ripley | 101 Cunningham Drive Ripley, MS 38663-1302 | SNF | 140 |
Golden LivingCenter - Southaven | 1730 Dorchester Drive Southaven, MS 38671-5723 | SNF | 140 |
Golden LivingCenter - Eason Blvd | 2273 South Eason Boulevard Tupelo, MS 38804-5900 | SNF | 120 |
Golden LivingCenter - Tylertown | 200 Medical Circle Tylertown, MS 39667-2069 | SNF | 60 |
“SNF” | Skilled Nursing Facility |
Advocat Finance, Inc. |
Diversicare Afton Oaks, LLC |
Diversicare Afton Oaks Property, LLC |
Diversicare Ballinger, LLC |
Diversicare Briarcliff, LLC |
Diversicare Briarcliff Property, LLC |
Diversicare Chanute Property, LLC |
Diversicare Chisolm, LLC |
Diversicare Chisolm Property, LLC |
Diversicare Clinton, LLC |
Diversicare Clinton Property, LLC |
Diversicare Council Grove Property, LLC |
Diversicare Doctors, LLC |
Diversicare Estates, LLC |
Diversicare Fulton Property, LLC |
Diversicare Glasgow Property, LLC |
Diversicare Hartford, LLC |
Diversicare Hartford Property, LLC |
Diversicare Haysville Property, LLC |
Diversicare Highlands, LLC |
Diversicare Hillcrest, LLC |
Diversicare Hillcrest Property, LLC |
Diversicare Holding Company, LLC |
Diversicare Humble, LLC |
Diversicare Hutchinson Property, LLC |
Diversicare Kansas, LLC |
Diversicare Katy, LLC |
Diversicare Lampasas, LLC |
Diversicare Lampasas Property, LLC |
Diversicare Larned Property, LLC |
Diversicare Leasing Company II, LLC |
Diversicare Leasing Company III, LLC |
Diversicare Leasing Corp. |
Diversicare Management Services Co. |
Diversicare Normandy Terrace, LLC |
Diversicare of Big Springs, LLC |
Diversicare of Bradford Place, LLC |
Diversicare of Chanute, LLC |
Diversicare of Chateau, LLC |
Diversicare of Council Grove, LLC |
Diversicare of Fulton, LLC |
Diversicare of Glasgow, LLC |
Diversicare of Greenville, LLC |
Diversicare of Haysville, LLC |
Diversicare of Hutchinson, LLC |
Diversicare of Larned, LLC |
Diversicare of Mansfield, LLC |
Diversicare of Nicholasville, LLC |
Diversicare of Providence, LLC |
Diversicare of Riverside, LLC |
Diversicare of Sedgwick, LLC |
Diversicare of Seneca Place, LLC |
Diversicare of Siena Woods, LLC |
Diversicare of St. Joseph, LLC |
Diversicare of St. Theresa, LLC |
Diversicare Paris, LLC |
Diversicare Pharmacy Holdings, LLC |
Diversicare Pinedale, LLC |
Diversicare Property Co., LLC |
Diversicare Rose Terrace, LLC |
Diversicare Sedgwick Property, LLC |
Diversicare Texas I, LLC |
Diversicare Therapy Services, LLC |
Diversicare Treemont, LLC |
Diversicare Windsor House, LLC |
Diversicare Windsor House Property, LLC |
Diversicare Yorktown, LLC |
Diversicare Yorktown Property, LLC |
Diversicare of Amory, LLC |
Diversicare of Arab, LLC |
Diversicare of Batesville, LLC |
Diversicare of Bessemer, LLC |
Diversicare of Boaz, LLC |
Diversicare of Brookhaven, LLC |
Diversicare of Eupora, LLC |
Diversicare of Foley, LLC |
Diversicare of Hueytown, LLC |
Diversicare of Lanett, LLC |
Diversicare of Montgomery, LLC |
Diversicare of Oneonta, LLC |
Diversicare of Oxford, LLC |
Diversicare of Pell City, LLC |
Diversicare of Ripley, LLC |
Diversicare of Riverchase, LLC |
Diversicare of Southaven, LLC |
Diversicare of Tupelo, LLC |
Diversicare of Tylertown, LLC |
Diversicare of Winfield, LLC |
Diversicare of Carthage, LLC |
Diversicare of Meridian, LLC |
Senior Care Cedar Hills, LLC |
Senior Care Florida Leasing, LLC |
Senior Care Golfcrest, LLC |
Senior Care Golfview, LLC |
Senior Care Southern Pines, LLC |
SHC Risk Carrier, Inc. |
Sterling Health Care Management, Inc. |
/s/ Kelly J. Gill |
Kelly J. Gill |
President and Chief Executive Officer |
/s/ James R. McKnight, Jr. |
James R. McKnight, Jr. |
Executive Vice President and Chief Financial Officer |
Document and Entity Information - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Feb. 15, 2017 |
Jun. 30, 2016 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Diversicare Healthcare Services, Inc. | ||
Entity Central Index Key | 0000919956 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2016 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 6,360,676 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 34,068 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 10,326 | $ 8,180 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 6,592,000 | 6,513,000 |
Common stock, shares outstanding | 6,361,000 | 6,281,000 |
Treasury stock, shares | 232,000 | 232,000 |
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Income Statement [Abstract] | |||
Tax effect on operating income | $ (41) | $ (375) | $ (878) |
Tax effect on gain on disposal | $ 0 | $ 0 | $ 2,802 |
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Statement of Comprehensive Income [Abstract] | |||
NET INCOME (LOSS) | $ (1,811) | $ 1,624 | $ 4,708 |
OTHER COMPREHENSIVE INCOME (LOSS): | |||
Change in fair value of cash flow hedge, net of tax | 1,082 | 556 | 368 |
Less: reclassification adjustment for amounts recognized in net income | (500) | (448) | (294) |
Total other comprehensive income | 582 | 108 | 74 |
COMPREHENSIVE INCOME (LOSS) | (1,229) | 1,732 | 4,782 |
Less: net (income) loss attributable to noncontrolling interests | 0 | 0 | 25 |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO DIVERSICARE HEALTHCARE SERVICES, INC. | $ (1,229) | $ 1,732 | $ 4,807 |
Business and Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Diversicare Healthcare Services, Inc. ("Diversicare" or the "Company") provides a broad range of post-acute care services to patients and residents including skilled nursing, ancillary health care services and assisted living. In addition to the nursing and social services usually provided in long-term care centers, we offer a variety of rehabilitative, nutritional, respiratory, and other specialized ancillary services. As of December 31, 2016, our continuing operations consist of 76 nursing centers with 8,453 licensed skilled nursing beds. Our nursing centers range in size from 48 to 320 licensed nursing beds. The licensed nursing bed count does not include 496 licensed assisted living beds. Our continuing operations include centers in Alabama, Florida, Indiana, Kansas, Kentucky, Mississippi, Missouri, Ohio, Tennessee, and Texas. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the financial position, operations and accounts of Diversicare and its subsidiaries, all wholly-owned. All significant intercompany accounts and transactions have been eliminated in consolidation. Any variable interest entities (“VIEs”) in which the Company has an interest are consolidated when the Company identifies that it is the primary beneficiary. The Company had one variable interest entity through 2014 and it related to a nursing center in West Virginia described in Note 7, "Variable Interest Entity". Any joint ventures are accounted for using the equity method, which is an investment in an entity over which the Company lacks control, but otherwise has the ability to exercise significant influence over operating and financial policies. The Company had one equity method investee through the fourth quarter of 2016. The investment in unconsolidated affiliate reflected on the 2015 consolidated balance sheet related to a pharmacy joint venture partnership in which the Company owned a 50% interest. The Company’s share of the profits and losses from this investment are reported in equity in earnings of investment in unconsolidated affiliate and the proceeds received from the sale are reported in gain on sale of investment in unconsolidated affiliate in the accompanying consolidated statement of operations. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition The fees charged by the Company to patients in its nursing centers are recorded on an accrual basis. These rates are contractually adjusted with respect to individuals receiving benefits under federal and state-funded programs and other third-party payors. Rates under federal and state-funded programs are determined prospectively for each center and may be based on the acuity of the care and services provided. These rates may be based on a center's actual costs subject to program ceilings and other limitations or on established rates based on acuity and services provided as determined by the federal and state-funded programs. Amounts earned under federal and state programs with respect to nursing home patients are subject to review by the third-party payors which may result in retroactive adjustments. In the opinion of management, adequate provision has been made for any adjustments that may result from such reviews. Retroactive adjustments, if any, are recorded when objectively determinable, generally within three years of the close of a reimbursement year depending upon the timing of appeals and third-party settlement reviews or audits. During the years ended December 31, 2016, 2015 and 2014, the Company recorded $38,000, $141,000 and $298,000 of net unfavorable estimated settlements from federal and state programs for periods prior to the beginning of fiscal 2016, 2015 and 2014, respectively. Allowance for Doubtful Accounts The Company's allowance for doubtful accounts is estimated utilizing current agings of accounts receivable, historical collections data and other factors. Management monitors these factors and determines the estimated provision for doubtful accounts. Historical bad debts have generally resulted from uncollectible private balances, some uncollectible coinsurance and deductibles and other factors. Receivables that are deemed to be uncollectible are written off. The allowance for doubtful accounts balance is assessed on a quarterly basis, with changes in estimated losses being recorded in the Consolidated Statements of Operations in the period identified. The Company includes the provision for doubtful accounts in operating expenses in its Consolidated Statements of Operations. The provisions for doubtful accounts of continuing operations were $7,163,000, $7,507,000, and $5,710,000 for 2016, 2015 and 2014, respectively. The provision for doubtful accounts of continuing operations was 1.7%, 1.9%, and 1.7% of net revenue during 2016, 2015, and 2014, respectively. Lease Expense As of December 31, 2016, the Company operates 59 nursing centers under operating leases, including 35 owned by Omega, 20 owned by Golden Living and four owned by other parties. The Company's operating leases generally require the Company to pay stated rent, subject to increases based on changes in the Consumer Price Index, a minimum percentage increase, or increases in the net revenues of the leased properties. The Company's Omega and Golden Living leases require the Company to pay certain scheduled rent increases. Such scheduled rent increases are recorded as additional lease expense on a straight-line basis recognized over the term of the related leases and the difference between the amounts recorded for rent expense as compared to rent payments as an accrued liability. See Note 2, "Business Development and Other Significant Transactions", Note 3, "Discontinued Operations", and Note 11, "Commitments and Contingencies" for a discussion regarding the Company's Master Leases with Omega and Golden Living, the termination of leases for certain centers, and the addition of certain leased centers. Classification of Expenses The Company classifies all expenses (except lease, interest, depreciation and amortization expenses) that are associated with its corporate and regional management support functions as general and administrative expenses. All other expenses (except lease, professional liability, interest, depreciation and amortization expenses) incurred by the Company at the center level are classified as operating expenses. Property and Equipment Property and equipment are recorded at cost or at fair value determined on the respective dates of acquisition for assets obtained in a business combination, with depreciation and amortization being provided over the shorter of the remaining lease term (where applicable) or the assets' estimated useful lives on the straight-line basis as follows:
Interest incurred during construction periods for qualifying expenditures is capitalized as part of the building cost. Maintenance and repairs are expensed as incurred, and major betterments and improvements are capitalized. The Company routinely evaluates the recoverability of the carrying value of its long-lived assets, including when significant adverse changes in the general economic conditions and significant deteriorations of the underlying undiscounted cash flows or fair values of the property indicate that the carrying amount of the property may not be recoverable. If circumstances suggest that the recorded amounts are not recoverable based upon estimated future undiscounted cash flows, the carrying values of such assets are reduced to fair value. Cash and Cash Equivalents Cash and cash equivalents include cash on deposit with banks and all highly liquid investments with original maturities of three months or less when purchased. Our cash on deposit with banks was subject to the Federal Deposit Insurance Corporation ("FDIC") minimum insurance levels. Effective January 1, 2013, the coverage provided by the FDIC that had been unlimited under the Dodd-Frank Deposit Insurance Provision is limited to the legal maximum, which is generally $250,000 per ownership category. Deferred Financing and Other Costs The Company records deferred financing and lease costs for direct and incremental expenditures related to entering into or amending debt and lease agreements. These expenditures include lenders and attorneys fees. Financing costs are amortized using the effective interest method over the term of the related debt. The amortization is reflected as interest expense in the accompanying consolidated statements of operations. Deferred lease costs are amortized on a straight-line basis over the term of the related leases. See Note 6, "Long-term Debt, Interest Rate Swap and Capitalized Lease Obligations" for further discussion. As a result of our adoption of ASU No. 2015-03, which is further discussed below, the Company nets long-term debt and deferred financing costs in the consolidated balance sheets. Acquired Leasehold Interest The Company has recorded an acquired leasehold interest intangible asset related to an acquisition completed during 2007. The intangible asset is accounted for in accordance with the FASB's guidance on goodwill and other intangible assets, and is amortized on a straight-line basis over the remaining life of the acquired lease, including renewal periods, the original period of which is approximately 28 years from the date of acquisition. The lease terms for the seven centers this intangible relates to provide for an initial term and renewal periods at the Company's option through May 31, 2035. As the renewal periods of the acquired leased centers are solely based on the Company's option, it is expected that costs (if any) to renew the lease through its current amortization period would be nominal and the decision to continue to lease the acquired centers lies solely within the Company's intent to continue to operate the seven centers. Any renewal costs would be included in deferred lease costs and amortized over the renewal period. Amortization expense of approximately $384,000 related to this intangible asset was recorded during each of the years ended December 31, 2016, 2015 and 2014, respectively. The carrying value of the acquired leasehold interest intangible and the accumulated amortization are as follows:
The Company evaluates the recoverability of the carrying value of the acquired leasehold intangible in accordance with the FASB's guidance on accounting for the impairment or disposal of long-lived assets. Included in this evaluation is whether significant adverse changes in general economic conditions, and significant deteriorations of the underlying cash flows or fair values of the intangible asset, indicate that the carrying amount of the intangible asset may not be recoverable. The need to recognize an impairment charge is based on estimated future undiscounted cash flows from the asset compared to the carrying value of that asset. If recognition of an impairment charge is necessary, it is measured as the amount by which the carrying amount of the intangible asset exceeds the fair value of the intangible asset. The expected amortization expense for the acquired leasehold interest intangible asset is as follows:
Self-Insurance Self-insurance liabilities primarily represent the unfunded accrual for self insured risks associated with general and professional liability claims, employee health insurance and workers' compensation. The Company's health insurance liability is based on known claims incurred and an estimate of incurred but unreported claims determined by an analysis of historical claims paid. The Company's workers' compensation liability relates primarily to periods of self insurance prior to May 1997 and consists of an estimate of the future costs to be incurred for the known claims. Final determination of the Company's actual liability for incurred general and professional liability claims is a process that takes years. The Company evaluates the adequacy of this liability on a quarterly basis. Semi-annually, the Company retains a third-party actuarial firm to assist in the evaluation of this unfunded accrual. Since May 2012, Merlinos & Associates, Inc. (“Merlinos”) has assisted management in the preparation of the appropriate accrual for incurred but not reported general and professional liability claims based on data furnished by the Company. Merlinos primarily utilizes historical data regarding the frequency and cost of the Company's past claims over a multi-year period, industry data and information regarding the number of occupied beds to develop its estimates of the Company's ultimate professional liability cost for current periods. On a quarterly basis, the Company obtains reports of asserted claims and lawsuits incurred. These reports, which are provided by the Company's insurers and a third party claims administrator, contain information relevant to the actual expense already incurred with each claim as well as the third-party administrator's estimate of the anticipated total cost of the claim. This information is reviewed by the Company quarterly and provided to the actuary semi-annually. Based on the Company's evaluation of the actual claim information obtained, the semi-annual estimates received from the third-party actuary, the amounts paid and committed for settlements of claims and on estimates regarding the number and cost of additional claims anticipated in the future, the reserve estimate for a particular period may be revised upward or downward on a quarterly basis. Any increase in the accrual has an unfavorable impact on results of operations in the period and any reduction in the accrual increases results of operations during the period. All losses are projected on an undiscounted basis. The self-insurance liabilities include estimates of liability for incurred but not reported claims, estimates of liability for reported but unresolved claims, actual liabilities related to settlements, including settlements to be paid over time, and estimates of related legal costs incurred and expected to be incurred. One of the key assumptions in the actuarial analysis is that historical losses provide an accurate forecast of future losses. Changes in legislation such as tort reform, changes in our financial condition, changes in our risk management practices and other factors may affect the severity and frequency of claims incurred in future periods as compared to historical claims. The facts and circumstances of each claim vary significantly, and the amount of ultimate liability for an individual claim may vary due to many factors, including whether the case can be settled by agreement, the quality of legal representation, the individual jurisdiction in which the claim is pending, and the views of the particular judge or jury deciding the case. Although the Company adjusts its unfunded accrual for professional and general liability claims on a quarterly basis and retains a third-party actuarial firm semi-annually to assist management in estimating the appropriate accrual, professional and general liability claims are inherently uncertain, and the liability associated with anticipated claims is very difficult to estimate. Professional liability cases have a long cycle from the date of an incident to the date a case is resolved, and final determination of the Company's actual liability for claims incurred in any given period is a process that takes years. As a result, the Company's actual liabilities may vary significantly from the unfunded accrual, and the amount of the accrual has and may continue to fluctuate by a material amount in any given period. Each change in the amount of this accrual will directly affect the Company's results of operations and financial position for the period in which the change in accrual is made. Income Taxes The Company follows the FASB's guidance on Accounting for Income Taxes, which requires the asset and liability method of accounting for income taxes whereby deferred income taxes are recorded for the future tax consequences attributable to differences between the financial statement and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are provided against any estimated non-realizable deferred tax assets where necessary. Where the Company believes that a tax position is supportable for income tax purposes, the item is included in its income tax returns. Where treatment of a position is uncertain, liabilities are recorded based upon the Company’s evaluation of the “more likely than not” outcome considering the technical merits of the position. While the judgments and estimates made by the Company are based on management’s evaluation of the technical merits of a matter, historical experience and other assumptions that management believes are appropriate and reasonable under current circumstances, actual resolution of these matters may differ from recorded estimated amounts, resulting in charges or credits that could materially affect future financial statements. See Note 10, "Income Taxes" for additional information related to the provision for income taxes. Disclosure of Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. In calculating fair value, a company must maximize the use of observable market inputs, minimize the use of unobservable market inputs and disclose in the form of an outlined hierarchy the details of such fair value measurements. The carrying amounts of cash and cash equivalents, receivables, trade accounts payable and accrued expenses approximate fair value because of the short-term nature of these accounts. The Company's self-insurance liabilities are reported on an undiscounted basis as the timing of estimated settlements cannot be determined. The Company follows the FASB's guidance on Fair Value Measurements and Disclosures which provides rules for using fair value to measure assets and liabilities as well as a fair value hierarchy that prioritizes the information used to develop the measurements. It applies whenever other guidance requires (or permits) assets or liabilities to be measured at fair value and gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). A summary of the fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels is described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. As further discussed in Note 6, "Long-term Debt, Interest Rate Swap and Capitalized Lease Obligations", in conjunction with the debt agreements entered into in February 2016, the Company entered into an interest rate swap agreement with a member of the bank syndicate as the counterparty. The applicable guidance requires companies to recognize all derivative instruments as either assets or liabilities at fair value in a company's balance sheets. As the Company's interest rate swap, a cash flow hedge, is not traded on a market exchange, the fair value is determined using a valuation model based on a discounted cash flow analysis. This analysis reflects the contractual terms of the interest rate swap agreement and uses observable market-based inputs, including estimated future LIBOR interest rates. The fair value of the Company's interest rate swap is the net difference in the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates and are observable inputs available to a market participant. The interest rate swap valuation is classified in Level 2 of the fair value hierarchy. The debt balances as presented in the consolidated balance sheets approximate the fair value of the respective instruments as the debt is at a variable rate, the estimates of which are considered Level 2 fair value calculations within the fair value hierarchy. The following table presents by level, within the fair value hierarchy, assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and 2015:
The change in fair value of the Company's cash flow hedge is detailed in the Company's Consolidated Statements of Comprehensive Income (Loss). Net Income (Loss) per Common Share The Company follows the FASB's guidance on Earnings Per Share for the financial reporting of net income (loss) per common share. Basic earnings per common share excludes dilution and restricted shares and is computed by dividing income available to common shareholders by the weighted-average number of common shares, excluding restricted shares, outstanding for the period. Diluted earnings per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or otherwise resulted in the issuance of common stock that then shared in the earnings of the Company. See Note 9, "Net Income (Loss) per Common Share" for additional disclosures about the Company's Net Income (Loss) per Common Share. Stock Based Compensation The Company follows the FASB's guidance on Stock Compensation to account for share-based payments granted to team members and recorded non-cash stock based compensation expense of $1,012,000, $1,152,000 and $580,000 during the years ended December 31, 2016, 2015 and 2014, respectively. Such amounts are included as components of general and administrative expense or operating expense based upon the classification of cash compensation paid to the related employees. See Note 8, "Shareholders' Equity, Stock Plans and Preferred Stock" for additional disclosures about the Company's stock based compensation plans. Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income consists of other comprehensive income (loss). Comprehensive income (loss) is a more inclusive financial reporting method that includes disclosure of financial information that historically has not been recognized in the calculation of net income (loss). The Company has chosen to present the components of other comprehensive income in a separate statement of comprehensive income (loss). Currently, the Company's other comprehensive income (loss) consists of the change in fair value of the Company's interest rate swap transaction accounted for as a cash flow hedge. Recent Accounting Guidance In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. In March 2016, the FASB issued an update to ASU No. 2014-09 in the form of ASU No. 2016-08, which amended the principal-versus-agent implementation guidance and illustrations in the new revenue guidance. The update clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. In April 2016, the FASB issued another update to the new revenue standard in the form of ASU No. 2016-10, which amends the guidance on identifying performance obligations and the implementation guidance on licensing. In May 2016, ASU No. 2016-12 was issued, which amends the new revenue recognition guidance on transition, collectibility, noncash consideration and the presentation of taxes. The new revenue standard (including updates) will be effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted only as of annual reporting periods beginning after December 15, 2016. The Company will adopt the requirements of this standard effective January 1, 2018. We are in the early stages of evaluating the expected adoption method of ASU No. 2014-09, and we are analyzing whether enhancements are needed to our business and accounting systems. In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (Topic 835), which amends and simplifies the presentation of debt issuance costs. The main provisions of the standard require that debt issuance costs related to a recognized liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, and amortization of the debt issuance costs continues to be reported as interest expense. The Company adopted ASU No. 2015-03 as of January 1, 2016. The new standard was applied on a retroactive basis. The adoption of this guidance resulted in a $967,000 reclass between deferred financing costs and long-term debt. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which changes how deferred taxes are classified on the Company's balance sheets and is effective for financial statements issued for annual periods beginning after December 15, 2016, with early adoption permitted. ASU 2015-17 requires all deferred tax assets and liabilities to be classified as non-current. Upon adoption on January 1, 2017, the Company anticipates reclassifying deferred income taxes of approximately $7,644,000 from current to non-current assets. In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Disclosures will be required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. We anticipate this standard will have a material impact on our consolidated financial statements. While we are continuing to assess all potential impacts of the standard, we currently believe the most significant impact relates to our accounting for building and equipment operating leases and will result in a significant increase in the assets and liabilities on the consolidated balance sheet. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU was issued as part of the FASB Simplification Initiative and involves several aspects of accounting for shared-based payment transactions, including the income tax consequences and classification on the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2016, which will be the Company's fiscal year 2017, and interim periods within those annual periods. Early adoption is permitted. The Company is in the early stages of evaluating the impact this standard will have on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. This update is intended to improve financial reporting by requiring timelier recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other such commitments. This update requires that financial statement assets measured at an amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. This standard is effective for the fiscal year beginning after December 15, 2019 with early adoption permitted. The Company is in the initial stages of evaluating the impact from the adoption of this new standard on the Consolidated Financial Statements and related notes. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230). The ASU provides clarification regarding how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The ASU is effective for annual and interim periods beginning after December 15, 2017, which will require the Company to adopt these provisions in the first quarter of fiscal 2018 using a retrospective approach. Early adoption is permitted. The Company is currently evaluating the impact this standard will have on our consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that the Statement of Cash Flows explain the changes during the period of cash and cash equivalents inclusive of amounts categorized as Restricted Cash. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard is effective for periods beginning after December 15, 2017. Reclassifications As discussed above, the Company adopted ASU No. 2015-03 as of January 1, 2016, and was applied on a retroactive basis. We reclassified $967,000 of debt issuance costs to long-term debt as of December 31, 2015. As discussed in Note 3, "Discontinued Operations" the consolidated financial statements of the Company have been retroactively reclassified for all periods presented to reflect as discontinued operations certain divestitures and lease terminations. |
Business Development and Other Significant Transactions |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS DEVELOPMENT AND OTHER SIGNIFICANT TRANSACTIONS | BUSINESS DEVELOPMENT AND OTHER SIGNIFICANT TRANSACTIONS Golden Living Transaction On August 15, 2016, the Company entered into an Operation Transfer Agreement with Golden Living (the "Lessor") to assume the operations of 22 centers in Alabama and Mississippi. On October 1, 2016, the Company entered into a Master Lease Agreement (the "Lease") with Golden Living to directly lease eight centers located in Mississippi from the Lessor, which include: (i) a 152-bed skilled nursing center known as Golden Living Center - Amory; (ii) a 130-bed skilled nursing center known as Golden Living Center - Batesville; (iii) a 58-bed skilled nursing center known as Golden Living Center - Brook Manor; (iv) a 119-bed skilled nursing center known as Golden Living Center - Eupora; (v) a 140-bed skilled nursing center known as Golden Living Center - Ripley; (vi) a 140-bed skilled nursing center known as Golden Living Center - Southaven; (vii) a 120-bed skilled nursing center known as Golden Living Center - Eason Blvd; (viii) a 60-bed skilled nursing center known as Golden Living Center - Tylertown. The Lease is triple net and has an initial term of ten years with two separate five year options to extend the term. The Company also assumed the individual leases of a 120-bed center known as Broadmoor Nursing Home, with an initial lease term of ten years with first year rent of $540,000, escalating to $780,000 in the second year, and 2% annually thereafter, and a 99-bed skilled nursing center known as Leake County Nursing Home, with a lease term of two years with annual rent of $300,000. On November, 1 2016, the Company amended and restated the Lease ("Amended Lease") with the Lessor to directly lease an additional twelve centers located in Alabama from the Lessor, which include: (i) a 87-bed skilled nursing center known as Golden Living Center - Arab; (ii) a 180-bed skilled nursing center known as Golden Living Center - Meadowood; (iii) a 132-bed skilled nursing center known as Golden Living Center - Riverchase; (iv) a 100-bed skilled nursing center known as Golden Living Center - Boaz; (v) a 154-bed skilled nursing center known as Golden Living Center - Foley; (vi) a 50-bed skilled nursing center known as Golden Living Center - Hueytown; (vii) a 85-bed skilled nursing center known as Golden Living Center - Lanett; (viii) a 138-bed skilled nursing center known as Golden Living Center - Montgomery; (ix) a 120-bed skilled nursing center known as Golden Living Center - Oneonta; (x) a 173-bed skilled nursing center known as Golden Living Center - Oxford; (xi) a 94-bed skilled nursing center known as Golden Living Center - Pell City; (xii) a 123-bed skilled nursing center known as Golden Living Center - Winfield. The Amended Lease is triple net and has an initial term of ten years with two separate five year options to extend the term. Base rent for the amended lease is $24,675,000 for the first year and escalates 2% annually thereafter. 2016 Acquisitions On February 26, 2016, the Company exercised its purchase options to acquire the real estate assets for Diversicare of Hutchinson in Hutchinson, Kansas and Clinton Place in Clinton, Kentucky for $4,250,000 and $3,300,000, respectively. The Company has operated these centers since February 2015 and April 2012, respectively. Hutchinson is an 85-bed skilled nursing center and Clinton is an 88-bed skilled nursing center. As a result of the consummation of the Agreements, the Company allocated the purchase price and acquisition costs between the assets acquired. The relative fair value allocation of the purchase price was determined with the assistance of HealthTrust LLC, a third-party real estate valuation firm. The allocation for the assets acquired is as follows:
2015 Acquisitions On February 1, 2015, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Barren County Health Care Center, Inc. to acquire a 94-bed skilled nursing center in Glasgow, Kentucky, for an aggregate purchase price of $7,000,000, partially financed through a $5,000,000 mortgage loan with The PrivateBank with the balance paid in cash consideration. As a result of this business combination transaction, the Company allocated the purchase price of $7,000,000 based on the fair value of the acquired net assets. The allocation of the purchase price was determined with the assistance of HealthTrust LLC, a third-party real estate valuation firm. The allocation for the net assets acquired is as follows:
On November 1, 2015, the Company entered into an Asset Purchase Agreement with Haws Fulton Investors, LLC to acquire a 60-bed skilled nursing center in Fulton, Kentucky, for an aggregate purchase price of $3,900,000. As a result of this business combination transaction, the Company allocated the purchase price of $3,900,000 based on the fair value of the acquired net assets. The allocation for the net assets acquired is as follows:
2015 Lease Agreement On February 1, 2015, the Company assumed operations of a 85-bed skilled nursing center in Hutchinson, Kansas. This center has an initial lease term of 10 years, and included an option to purchase exercisable after the first year of operations. The center was already operating and treating patients on the transition date. There was no purchase price paid to enter into the lease agreement. As disclosed above, the Company purchased this center on February 26, 2016. 2016 Lease Termination On May 31, 2016, the Company entered into an Agreement with Avon Ohio, LLC to amend the original lease agreement, thus terminating the Company's right of possession of the center. As a result, the Company incurred lease termination costs of $2,008,000 in the second quarter of 2016. Under the amended agreement, the Company is required to pay $300,000 per year through the term of the original lease agreement, July 31, 2024. For accounting purposes, this transaction was not reported as a discontinued operation, which is in accordance with the modified authoritative guidance for reporting discontinued operations, effective January 1, 2015. A disposal is now required to be reported in discontinued operations only if the disposal represents a strategic shift that has (or will have) a major effect on the Company's operations and financial results. 2016 Sale of Investment in Unconsolidated Affiliate On October 28, 2016, the Company and its partners entered into an asset purchase agreement to sell the pharmacy joint venture. The sale resulted in a $1,366,000 recorded gain for the Company for the year ended December 31, 2016. The transaction also resulted in an immaterial gain contingency. The Company accounts for gain contingencies in accordance with the provisions of ASC 450, Contingencies, and, therefore, we do not record gain contingencies and recognize income until realized. |
Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS West Virginia Disposition Effective April 3, 2014, the Company entered into an asset purchase agreement with Rose Terrace Acq., LLC (“Purchaser”) to sell its skilled nursing center in Culloden, West Virginia. The original asset purchase agreement was subject to a number of conditions including an amendment to the Consolidated Amended and Restated Master Lease ("Master Lease") with Omega to terminate the lease only with respect to two other skilled nursing centers in West Virginia, state licensure and regulatory approval. Effective July 1, 2014, the Company completed the transaction with Rose Terrace Acq., LLC to sell Rose Terrace, a 90-bed skilled nursing center in Culloden, West Virginia for a sales price of $16,500,000. The Company also entered into the Fifteenth Amendment to the Master Lease with Omega to terminate the lease only with respect to two other skilled nursing centers in West Virginia, and concurrently entered into an operations transfer agreement with American Health Care Management, LLC, an affiliate of the purchaser with respect to two other skilled nursing centers located in Danville and Ivydale, West Virginia. The amendment effectively reduced the annual rent payments due under the Master Lease by $1,900,000. Upon completion of the transaction, Diversicare no longer operates any skilled nursing centers in the state of West Virginia. In conjunction with the closing of the sale, the Company paid the balance of the $8,000,000 mortgage loan outstanding on the Rose Terrace center. The transaction resulted in a gain on the disposition of Rose Terrace which, along with the results of operations for these nursing centers, is presented within Discontinued Operations on the Consolidated Statements of Operations. The pretax gain on the transaction was $7,522,000. The tax expense associated with the gain was $2,793,000 for which the Company applied net operating loss carryforwards from our deferred tax assets to substantially offset and minimize the cash outlay for this transaction. These centers contributed revenues of $0, $0, and $10,961,000 and net loss of $51,000, $225,000, and $26,000 during the years ended December 31, 2016, 2015, and 2014, respectively. In addition to the West Virginia centers, other discontinued operations that were disposed of prior to 2014 contributed net income (loss) of $(16,000), $(903,000), and $3,284,000 during the years ended December 31, 2016, 2015, and 2014, respectively. The net income or loss for the nursing centers included in discontinued operations does not reflect any allocation of corporate general and administrative expense or any allocation of corporate interest expense. The Company considered these additional costs along with the centers' future prospects based upon operating history when determining the contribution of the skilled nursing centers to its operations. |
Receivables |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RECEIVABLES | RECEIVABLES Receivables, before the allowance for doubtful accounts, consist of the following components:
The other receivables and advances balance include of $474,000 and $938,000 related to renovation projects to be funded by Omega at December 31, 2016 and 2015, respectively. See Note 11, "Commitments and Contingencies" for additional discussion of these receivables and leased center construction projects. Our accounts receivable at December 31, 2016, reflects the change in ownership of the twenty-two newly leased Golden Living centers in Alabama and Mississippi. The Company has entered into an agreement with Golden Living to utilize their billing credentials in order to perform the billing of the Medicare and Medicaid receivables until the change in ownership process has been completed. This agreement allows the Medicare and Medicaid receivables to be billed and collected in the interim. Payer sources could be delayed due to setting up new agreements and credentialing with those payers. The Company provides credit for a substantial portion of its revenues and continually monitors the credit worthiness and collectability from its patients, including proper documentation of third-party coverage. The Company is subject to accounting losses from uncollectible receivables in excess of its reserves. Substantially all receivables are pledged as collateral on the Company's debt obligations. |
Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment, at cost, consists of the following:
As discussed further in Note 6, "Long-term Debt, Interest Rate Swap and Capitalized Lease Obligations", the property and equipment of certain skilled nursing centers are pledged as collateral for mortgage debt obligations. In addition, the Company has assets recorded as capital leased assets purchased through capitalized lease obligations. The Company capitalizes leasehold improvements which will revert back to the lessor of the property at the expiration or termination of the lease, and depreciates these improvements over the shorter of the remaining lease term or the assets' estimated useful lives. |
Long-Term Debt, Interest Rate Swap, and Capitalized Lease Obligations |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM DEBT, INTEREST RATE SWAP AND CAPITALIZED LEASE OBLIGATIONS | LONG-TERM DEBT, INTEREST RATE SWAP AND CAPITALIZED LEASE OBLIGATIONS Long-term debt consists of the following:
As of December 31, 2016, the Company's weighted average interest rate on long-term debt, including the impact of the interest rate swap, was approximately 5.17%. The Company has agreements with a syndicate of banks for a mortgage term loan ("Original Mortgage Loan") and the Company’s revolving credit agreement ("Original Revolver"). On February 26, 2016, the Company executed an Amended and Restated Credit Agreement (the "Credit Agreement") which modified the terms of the Original Mortgage Loan and the Original Revolver Agreements dated April 30, 2013. The Credit Agreement increases the Company's borrowing capacity to $100,000,000 allocated between a $72,500,000 Mortgage Loan ("Amended Mortgage Loan") and a $27,500,000 Revolver ("Amended Revolver"). The Amended Mortgage Loan consists of $60,000,000 term and $12,500,000 acquisition loan facilities. Loan acquisition costs associated with the Amended Mortgage Loan and the Amended Revolver were capitalized in the amount of $2,162,000 and are being amortized over the five-year term of the agreements. Additionally, the Glasgow term loan balance of $5,000,000 was consolidated into the new Credit Agreement. Under the terms of the amended agreements, the syndicate of banks provided the Amended Mortgage Loan with an original balance of $72,500,000 with a five-year maturity through February 26, 2021, and a $27,500,000 Amended Revolver through February 26, 2021. The Amended Mortgage Loan has a term of five years, with principal and interest payable monthly based on a 25-year amortization. Interest on the term and acquisition loan facilities are based on LIBOR plus 4.0% and 4.75%, respectively. A portion of the Amended Mortgage Loan is effectively fixed at 5.79% pursuant to an interest rate swap with an initial notional amount of $30,000,000. As of December 31, 2016, the interest rate related to the Amended Mortgage Loan was 4.75%. The Amended Mortgage Loan is secured by 17 owned nursing centers, related equipment and a lien on the accounts receivable of these centers. The Amended Mortgage Loan and the Amended Revolver are cross-collateralized and cross-defaulted. The Company’s Amended Revolver has an interest rate of LIBOR plus 4.0% and is secured by accounts receivable and is subject to limits on the maximum amount of loans that can be outstanding under the revolver based on borrowing base restrictions. Effective October 3, 2016, the Company entered into the Second Amendment to the Third Amended and Restated Revolver ("Second Amendment"). The Second Amendment increased the Amended Revolver capacity from the $27,500,000 in the original Amended Revolver to $52,250,000; provided that the maximum revolving facility be reduced to $42,250,000 on August 1, 2017. The change to the borrowing capacity is a result of the increase in receivables related to new centers that continue to progress through the change in ownership process. On December 29, 2016, the Company executed a Third Amendment to the Third Amended and Restated Revolver ("Third Amendment"). The Third Amendment modifies the terms of the Loan Agreement by increasing the Company’s letter of credit sublimit from $10,000,000 to $15,000,000. As of December 31, 2016, the Company had $15,000,000 in borrowings outstanding under the Amended Revolver compared to $12,900,000 outstanding as of December 31, 2015. The outstanding borrowings on the Amended Revolver primarily reflect the Company's approach to accumulated Medicaid and Medicare receivables at recently acquired centers as these centers proceed through the change in ownership process with CMS. Annual fees for letters of credit issued under the Amended Revolver are 3.0% of the amount outstanding. The Company has 12 letters of credit with a total value of $10,230,000 outstanding as of December 31, 2016. Considering the balance of eligible accounts receivable, the letter of credit, the amounts outstanding under the Amended Revolver and the maximum loan amount of $42,674,000, the balance available for borrowing under the Amended Revolver is $14,443,000 at December 31, 2016. The Company’s debt agreements contain various financial covenants, the most restrictive of which relates to debt service coverage ratios. The Company is in compliance with all such covenants at December 31, 2016. In connection with the Company's 2016 and 2015 financing agreements, the Company recorded the following deferred loan costs related to the new financing agreements as a reduction of the debt balances discussed above:
The deferred financing costs included in the current and long-term balances were $2,273,000 at December 31, 2016 and $967,000 at December 31, 2015. Scheduled principal payments of long-term debt are as follows:
Interest Rate Swap Cash Flow Hedge As part of the debt agreements entered into in April 2013, the Company entered into an interest rate swap agreement with a member of the bank syndicate as the counterparty. The Company entered into the interest rate swap agreement to mitigate the variable interest rate risk on its outstanding mortgage borrowings. The Company designated its interest rate swap as a cash flow hedge and the effective portion of the hedge, net of taxes, is reflected as a component of other comprehensive income (loss). In conjunction with the aforementioned amendment to the Credit Agreement that occurred in February 2016, the Company retained the previously agreed upon interest rate swap modifying the terms of the swap to reflect the amended Credit Agreement. The Company redesignated the interest rate swap as a cash flow hedge. The interest rate swap agreement has the same effective date and maturity date as the Amended Mortgage Loan, and has an amortizing notional amount that was $29,329,000 as of December 31, 2016. The interest rate swap agreement requires the Company to make fixed rate payments to the bank calculated on the applicable notional amount at an annual fixed rate of 5.79% while the bank is obligated to make payments to the Company based on LIBOR on the same notional amounts. The applicable guidance requires companies to recognize all derivative instruments as either assets or liabilities at fair value in a company's balance sheets. The Company assesses the effectiveness of its interest rate swap on a quarterly basis and at December 31, 2016, the Company determined that the interest rate swap was effective. The interest rate swap valuation model indicated a net liability of $129,000 at December 31, 2016. The fair value of the interest rate swap is included in “other noncurrent liabilities” on the Company's consolidated balance sheets. The liability related to the change in the interest rate swap included in accumulated other comprehensive income at December 31, 2016 is $80,000, net of income tax benefit of $49,000. As the Company's interest rate swap is not traded on a market exchange, the fair value is determined using a valuation model based on a discounted cash flow analysis. This analysis reflects the contractual terms of the interest rate swap agreement and uses observable market-based inputs, including estimated future LIBOR interest rates. The fair value of the Company's interest rate swap is the net difference in the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates and are observable inputs available to a market participant. The interest rate swap valuation is classified in Level 2 of the fair value hierarchy, in accordance with the FASB's guidance on Fair Value Measurements and Disclosures. Capitalized Lease Obligations Upon acquisition of some centers, we assumed certain leases, primarily related to equipment, that constitute capital leases. As a result, we have recorded the underlying lease assets and capitalized lease obligations of $2,052,000 and $566,000 as of December 31, 2016 and 2015, respectively. These lease agreements provide three to five year terms. Scheduled payments of the capitalized lease obligations are as follows:
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Variable Interest Entity Variable Interest Entity |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
VARIABLE INTEREST ENTITY | VARIABLE INTEREST ENTITY On December 28, 2011, the Company completed construction of Rose Terrace Health and Rehabilitation Center (“Rose Terrace”), its third health care center in West Virginia. The Company initially entered into a lease agreement with the real estate developer that constructed, furnished, and equipped Rose Terrace. The agreement included the right to purchase the center and all associated assets beginning at the end of the first year of the initial term of the lease and continuing through the fifth year for a purchase price ranging from 110% to 120% of the total project cost. On March 27, 2014, the Company exercised this purchase option and acquired the land, building, and all other assets of the Rose Terrace nursing center from the real estate developer for the contractually agreed upon price of $7,693,000. Prior to the exercise of the purchase option, the Company had determined it was the primary beneficiary of the variable interest entity ("VIE") that developed the Rose Terrace nursing center based on the ownership of the Certificate of Need, the fixed price purchase option described above, the Company’s ability to direct the activities that most significantly impact the economic performance of the VIE, and the right to receive potentially significant benefits from the VIE. Accordingly, as the primary beneficiary, the Company consolidated the balance sheet and results of operations of the VIE for periods prior to the exercise of the purchase option. However, after the exercise of the purchase option, the previous owners paid the outstanding debt related to the entity in full. Subsequently, as further disclosed in Note 3, "Discontinued Operations", the Company sold the Rose Terrace facility and all assets associated with the facility. As a result of these events, the real estate development entity is no longer consolidated. |
Shareholders' Equity, Stock Plans and Preferred Stock |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY, STOCK PLANS AND PREFERRED STOCK | SHAREHOLDERS' EQUITY, STOCK PLANS AND PREFERRED STOCK Shareholders' Rights Plan On May 7, 2014, the Company entered into a fourth amendment (the “Fourth Amendment”) to the Amended and Restated Rights Agreement, dated as of December 7, 1998, as amended March 19, 2005, August 15, 2008, and August 14, 2009 between the Company (formerly Advocat Inc.) and ComputerShare Trust Company, N.A., as successor to SunTrust Bank, as Rights Agent. In the Fourth Amendment, the Company changed the Expiration Date of the preferred share purchase rights (the “Rights”) under the Rights Agreement from August 2, 2018 to May 15, 2014. As a result of the Fourth Amendment, the Rights Agreement terminated by its terms and is of no further force and effect and the Rights expired at the close of business on May 15, 2014. Stock Based Compensation Plans The Company follows the FASB's guidance on Stock Compensation to account for stock-based payments granted to employees and non-employee directors. Overview of Plans In December 2005, the Compensation Committee of the Board of Directors adopted the 2005 Long-Term Incentive Plan (“2005 Plan”). The 2005 Plan allows the Company to issue stock options and other share and cash based awards. Under the 2005 Plan, 700,000 shares of the Company's common stock have been reserved for issuance upon exercise of equity awards granted thereunder. All grants under this plan expire 10 years from the date the grants were authorized by the Board of Directors. In June 2008, the Company adopted the Advocat Inc. 2008 Stock Purchase Plan for Key Personnel (“Stock Purchase Plan”). The Stock Purchase Plan provides for the granting of rights to purchase shares of the Company's common stock to directors and officers and 150,000 shares of the Company's common stock has been reserved for issuance under the Stock Purchase Plan. The Stock Purchase Plan allows participants to elect to utilize a specified portion of base salary, annual cash bonus, or director compensation to purchase restricted shares or restricted share units (“RSU's”) at 85% of the quoted market price of a share of the Company's common stock on the date of purchase. The restriction period under the Stock Purchase Plan is generally two years from the date of purchase and during which the shares will have the rights to receive dividends, however, the restricted share certificates will not be delivered to the shareholder and the shares cannot be sold, assigned or disposed of during the restriction period and are subject to forfeiture. In June 2016, our shareholders approved an amendment to the Stock Purchase Plan to increase the number of shares of our common stock authorized under the Plan from 150,000 shares to 350,000 shares. No grants can be made under the Stock Purchase Plan after April 25, 2028. In April 2010, the Compensation Committee of the Board of Directors adopted the 2010 Long-Term Incentive Plan (“2010 Plan”), followed by approval by the Company's shareholders in June 2010. The 2010 Plan allows the Company to issue stock appreciation rights, stock options and other share and cash based awards. Under the 2010 Plan, 380,000 shares of the Company's common stock have been reserved for issuance upon exercise of equity awards granted. Equity Grants and Valuations During 2016 and 2015, the Compensation Committee of the Board of Directors approved grants totaling approximately 83,000 and 74,000, respectively, shares of restricted common stock to certain employees and members of the Board of Directors. These restricted shares vest one-third on the first, second and third anniversaries of the grant date. Unvested shares may not be sold or transferred. During the vesting period, dividends accrue on the restricted shares, but are paid in additional shares of common stock upon vesting, subject to the vesting provisions of the underlying restricted shares. The restricted shares are entitled to the same voting rights as other common shares. Upon vesting, all restrictions are removed. The Company recorded non-cash stock-based compensation expense from continuing operations for equity grants and RSU's issued under the Plans of $1,012,000, $1,152,000, and $580,000 during the years ended December 31, 2016, 2015, and 2014, respectively. Such amounts are included as components of general and administrative expense or operating expense based upon the classification of cash compensation paid to the related employees. As of December 31, 2016, there was $537,000 in unrecognized compensation costs related to stock-based compensation to be recognized over the applicable remaining vesting periods. The Company estimated the total recognized and unrecognized compensation for all options and SOSARs using the Black-Scholes-Merton equity grant valuation model. Restricted stock awards are valued using the market price on the grant date. The table below shows the weighted average assumptions the Company used to develop the fair value estimates under its option valuation model:
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In computing the fair value estimates using the Black-Scholes-Merton valuation model, the Company took into consideration the exercise price of the equity grants and the market price of the Company's stock on the date of grant. The Company used an expected volatility that equals the historical volatility over the most recent period equal to the expected life of the equity grants. The risk free interest rate is based on the U.S. treasury yield curve in effect at the time of grant. The Company used the expected dividend yield at the date of grant, reflecting the level of annual cash dividends currently being paid on its common stock. In computing the fair value of these equity grants, the Company estimated the equity grants' expected term based on the average of the vesting term and the original contractual terms of the grants, consistent with the Securities and Exchange Commission's interpretive guidance often referred to as the “Simplified Method.” The Company's recent exercise history is primarily from options granted in 2005 that were vested at grant date and were significantly in-the-money due to an increase in stock price during the period between grant date and formal approval by shareholders, and from older options granted several years ago that had fully vested. The table below describes the resulting weighted average grant date fair values calculated as well as the intrinsic value of options exercised under the Company's equity awards during each of the following years:
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The following table summarizes information regarding stock options and SOSAR grants outstanding as of December 31, 2016:
As of December 31, 2016, the outstanding equity grants have a weighted average remaining life of 3.94 and those outstanding equity grants that are exercisable have a weighted average remaining life of 3.84. During the year ended December 31, 2016, approximately 1,000 stock option and SOSAR grants were exercised under these plans. All of the equity grants exercised were net settled. The net proceeds from equity grants exercised in 2016 was $(105,000). Summarized activity of the equity compensation plans is presented below:
Summarized activity of the Restricted Share Units for the Stock Purchase Plan is as follows:
Series A Preferred Stock The Company is authorized to issue up to 200,000 shares of Series A Preferred Stock. The Company's Board of Directors is authorized to establish the terms and rights of each series, including the voting powers, designations, preferences, and other special rights, qualifications, limitations, or restrictions thereof. Series B and Series C Redeemable Preferred Stock As part of the consideration paid to Omega for restructuring the terms of the Omega Master Lease in November 2000, the Company issued to Omega 393,658 shares of the Company's Series B Redeemable Convertible Preferred Stock (“Series B Preferred Stock”) with a stated value of $3,300,000 and an annual dividend rate of 7% of the stated value. In October 2006, the Company and Omega entered into a Restructuring Stock Issuance and Subscription Agreement (“Restructuring Agreement”) to restructure the Series B Preferred Stock, eliminating the option of Omega to convert the Series B Preferred Stock into shares of Diversicare (formerly Advocat) common stock. At the time of the Restructuring Agreement, the Series B Preferred Stock had a recorded value (including accrued dividends) of approximately $4,918,000 and was convertible into approximately 792,000 shares of common stock. The Company issued 5,000 shares of a new Series C Redeemable Preferred Stock (“Series C Preferred Stock”) to Omega in exchange for the 393,658 shares of Series B Preferred Stock held by Omega. The Series C Preferred Stock had a stated value of approximately $4,918,000 and an annual dividend rate of 7% of its stated value payable quarterly in cash. The Series C Preferred Stock was not convertible, but was redeemable at its stated value at Omega's option since September 30, 2010, and since September 30, 2007, was redeemable at its stated value at the Company's option. In connection with the termination of the conversion feature, the Company agreed to pay Omega an additional $687,000 per year under the Lease Amendment. The additional annual payments of $687,000 were discounted over the twelve year term of the renewal to arrive at a net present value of $6,701,000, the preferred stock premium. The Company recorded the fair value of the elimination of the conversion feature as a reduction in Paid In Capital with an offsetting increase to record a premium on the Series C Preferred Stock. As a result, the Series C Preferred Stock was initially recorded at a total value of $11,619,000, equal to the stated value of the Series B Preferred Stock, $4,918,000, plus the value of the conversion feature, $6,701,000 which was fully amortized in 2010. The stated value of the preferred stock was classified as temporary equity and the additional obligation was classified as a noncurrent in the accompanying consolidated balance sheet. As the related cash payments were made, the preferred stock premium was reduced and interest expense was recorded. Effective August 14, 2014, the Company redeemed all of its outstanding shares of Series C Preferred Stock for approximately $4,918,000 from the holder. The redemption was affected as a result of Omega’s exercise of its pre-existing option to require the Company to redeem the Preferred Stock as provided in the Company’s Certificate of Designation. As a result of the redemption, the Company no longer has any Series C Preferred Stock outstanding. The following table reflects activity in the Series C Preferred Stock:
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Net Income (Loss) Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME (LOSS) PER COMMON SHARE | NET INCOME (LOSS) PER COMMON SHARE Information with respect to the calculation of basic and diluted net income (loss) per common share is presented below:
The dilutive effects of the Company's stock options, SOSARs, Restricted Shares and Restricted Share Units are included in the computation of diluted income per common share during the periods they are considered dilutive. The following table reflects the weighted average outstanding SOSARs and Options that were excluded from the computation of diluted earnings per share, as they would have been anti-dilutive:
The weighted average common shares for basic and diluted earnings for common shares was the same due to the losses in 2016. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES Overview For the year ended December 31, 2016, the Company recorded a benefit for income taxes from continuing operations of $1,030,000, and a provision for income taxes from continuing operations of $916,000 and $857,000 for the years ended December 31, 2015 and 2014, respectively . The provision (benefit) for income taxes of continuing operations is composed of the following components:
A reconciliation of taxes computed at statutory income tax rates on income (loss) from continuing operations is as follows:
Deferred Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are reduced by a valuation allowance if, based upon the weight of available evidence, it is more likely than not that we will realize only some portion of the deferred tax assets. The net deferred tax assets and liabilities, at the respective income tax rates, are as follows:
Deferred Tax Valuation Allowance The assessment of the amount of value assigned to our deferred tax assets under the applicable accounting standards is highly judgmental. We are required to consider all available positive and negative evidence in evaluating the likelihood that we will be able to realize the benefit of our deferred tax assets in the future. Such evidence includes scheduled reversals of deferred tax assets and liabilities, projected future taxable income, tax-planning strategies, and the results of recent operations. Since this evaluation requires consideration of historical and future events, there is significant judgment involved, and our conclusion could be materially different should certain of our expectations not transpire. When assessing all available evidence, we consider the weight of the evidence, both positive and negative, based on the objectivity of the underlying evidence and the extent to which it can be verified. For the three-year period ended December 31, 2016, the Company has a cumulative pre-tax income from continuing operations of $3,201,000, which includes $2,774,000 of loss attributable to the year ended December 31, 2016. Additionally, the Company recognized governmental and regulatory changes have put downward revenue pressure on the long-term care industry as a piece of negative evidence in our analysis. As a result of this negative evidence, the Company performed a thorough assessment of the available positive and negative evidence in order to ascertain whether it is more-likely-than-not that in future periods the Company will generate sufficient pre-tax income to utilize all of our federal deferred tax assets and our net operating loss and other carryforwards and credits. State deferred tax assets are considered for valuation separately and on a state-by-state basis. The Company also identified several pieces of objective positive evidence which were considered and weighed in the analysis performed regarding the valuation of deferred tax assets, including, but not limited to the expected accretive strategic acquisitions completed by us during the three-year period, corporate and regional restructuring expected to reduce costs while maintaining revenue levels, the long-term expiration dates of a majority of the net operating losses and credits, our history of not having carryforwards or credits expire unutilized, and the completed divestiture of the centers in Ohio in 2016 and West Virginia in 2014. The operations in the state of West Virginia demonstrated a trend of growing losses in recent years primarily as a result of disproportionate amount of professional liability expense relative to the revenue contributed. Additionally, the net operating loss created in 2013 was fully utilized during 2014 as a result of the income produced from operations and the taxable gain on the sale of Rose Terrace. In performing the analysis, the Company contemplated utilization of the deferred tax assets under multiple scenarios. After consideration of these factors, the Company determined that it was more likely than not that future taxable income would be sufficient to realize substantially all of the recorded value of the Company's deferred tax assets for federal income tax purposes. Realization of the deferred tax assets is not assured and future events could result in a change in judgment. If future events result in a conclusion that realization is no longer more likely than not to occur, the Company would be required to establish a valuation allowance on the deferred tax assets at that time, which would result in a charge to income tax expense and a potentially material decrease in net income in the period in which the factors change our judgment. At December 31, 2016, the Company had $7,385,000 of net operating losses, which expire at various dates beginning in 2019 and continue through 2036. The use of a portion of these loss carryforwards is limited by change in ownership provisions of the Federal tax code to a maximum of approximately $2,519,000. The Company has reduced the deferred tax asset and the corresponding valuation allowances for net operating loss deductions permanently lost as a result of the change in ownership provisions. With respect to state deferred tax assets, the Company reduced the valuation allowance by approximately $47,000 in 2016, primarily related to the expectation that deferred tax assets for which valuation allowances had previously been applied would more-likely-than-not be utilized as a result of the increase in taxable income during the year ended December 31, 2016. In 2015 and 2014, the Company recorded a deferred tax provision to adjust approximately $315,000 and $215,000, respectively, of the valuation allowance on state deferred tax assets. The changes in valuation allowance were based on the Company's assessment of the realization of certain individual tax assets. The Company has recorded a total valuation allowance of approximately $732,000 at December 31, 2016 to reduce the deferred tax assets by the amount management believes is more likely than not to not be realized through the turnaround of existing temporary differences, future earnings, or a combination thereof. Under the Work Opportunity Tax Credit ("WOTC") program, the Company recorded $550,000, $737,000 and $550,000 in Work Opportunity Tax Credits during 2016, 2015 and 2014, respectively. On December 19, 2014, the Tax Increase Prevention Act of 2012 (the "Act") was signed into law. The Act retroactively reinstated the federal Work Opportunity Tax Credit for qualifying costs paid during 2014. Pursuant to ASC 740-10-25-47, the effect of changes in the tax laws including retroactive changes are recognized in the period the law was enacted, and as a result of the retroactive treatment, the credit was recognized in the financial statements during the fourth quarter of 2014. The remaining WOTC credit carryforwards expire at various dates beginning in 2031 and continue through 2036. The Company received a notice of an audit by the Internal Revenue Service related to the 2012 tax year, which was closed in 2015. As of December 31, 2016, the Company’s tax years for 2013 forward are subject to examination by tax authorities. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Lease Commitments The Company is committed under long-term operating leases with various expiration dates and varying renewal options. Minimum annual rentals, including renewal option periods (exclusive of taxes, insurance, and maintenance costs) under these leases beginning January 1, 2017, are as follows:
Under these lease agreements, the Company's lease payments are subject to periodic annual escalations as described below and in Note 1, "Business and Summary of Significant Accounting Policies". Total lease expense for continuing operations was $33,364,000, $28,690,000 and $26,151,000 for 2016, 2015 and 2014, respectively. The accrued liability related to straight line rent was $7,920,000 and $7,830,000 at December 31, 2016 and 2015, respectively, and is included in “Other noncurrent liabilities” on the accompanying consolidated balance sheets. Omega Master Lease The Company leases 35 nursing centers from Omega, 15 of which are subject to a Master Lease. On October 20, 2006, the Company and Omega entered into a Third Amendment to Consolidated Amended and Restated Master Lease (“Lease Amendment”) to extend the term of its centers leased from Omega. The Lease amendment extended the term to September 30, 2018 and provided a renewal option of an additional twelve years, and the Company must notify Omega by September 30, 2017 about exercising the renewal option. Consistent with prior terms, the lease provides for annual increases in lease payments equal to the lesser of two times the increase in the consumer price index or 3%. Under generally accepted accounting principles, the Company is required to report these scheduled rent increases on a straight line basis over the term of the lease including the 12 year term of the renewal period. These scheduled increases had no effect on cash rent payments at the start of the lease term and only result in additional cash outlay as the annual increases take effect each year. The Company amended the Master Lease by entering into the Fifteenth Amendment to Consolidated Amended and Restated Master Lease as a result of the disposition and transfer of operations of the Company's West Virginia nursing centers. This amendment effectively modified the terms of the Master Lease to terminate the lease with regard to the two West Virginia nursing centers, and effectively reduced the annual rent payable under the Master Lease by $1,900,000. The Master Lease requires the Company to fund annual capital expenditures related to the leased centers at an amount currently equal to $440 per licensed bed. These amounts are subject to adjustment for increases in the Consumer Price Index. The Company is in compliance with the capital expenditure requirements. Total required capital expenditures during the remaining lease term and renewal options are $1,700,000. These capital expenditures are being depreciated on a straight-line basis over the shorter of the asset life or the appropriate lease term. Upon expiration of the Master Lease or in the event of a default under the Master Lease, the Company is required to transfer all of the leasehold improvements, equipment, furniture and fixtures of the leased centers to Omega. The assets to be transferred to Omega are being amortized on a straight-line basis over the shorter of the remaining lease term or estimated useful life, and will be fully depreciated upon the expiration of the lease. All of the equipment, inventory and other related assets of the centers leased pursuant to the Master Lease have been pledged as security under the Master Lease. In addition, the Company has a letter of credit of $4,792,000 as a security deposit for the Company's leases with Omega, as described in Note 6, "Long-term Debt, Interest Rate Swap and Capitalized Lease Obligations". Renovation Funding In January 2013, we entered into an amendment to the Master lease with Omega under which Omega agreed to provide an additional $5,000,000 to fund renovations to two nursing centers located in Texas that are leased from Omega. The annual base rent related to these centers will be increased to reflect the amount of capital improvements to the respective centers as the related expenditures are made. The increase is based on a rate of 10.25% per year of the amount financed under this amendment. The Company completed an expansion to one of its centers by making use of fifteen licensed beds it acquired in 2005. This expansion project was funded by Omega with the renovation funding previously described. Accordingly, the costs incurred to expand the center are recorded as a leasehold improvement asset with the amounts reimbursed by Omega for this project included as a long-term liability and amortized to rent expense over the remaining term of the lease. The capitalized leasehold improvements and lessor reimbursed costs are being amortized over the initial lease term ending in September 2018. The leasehold improvement asset and accumulated amortization are as follows:
Golden Living Master Lease The Company leases 20 nursing centers from Golden Living under a Master Lease. On October 1, 2016, the Company and Golden Living entered into a Master Lease agreement to lease eight centers located in Mississippi. On November 1, 2016, the Company and Golden Living entered into an Amended and Restated Master Lease ("Golden Living Lease Amendment") to extend the term of its centers leased from Golden Living and lease an additional twelve centers located in Alabama. The Amended Lease is triple net and has an initial term of ten years with two separate five year options to extend the term. Base rent for the amended lease is $24,675,000 for the first year and escalates 2% annually thereafter. Under generally accepted accounting principles, the Company is required to report these scheduled rent increases on a straight line basis over the term of the lease including the 10 year term of the renewal period. These scheduled increases had no effect on cash rent payments at the start of the lease term and only result in additional cash outlay as the annual increases take effect each year. The Master Lease requires the Company to fund annual capital expenditures related to the leased centers at an amount currently equal to $500 per licensed bed. These amounts are subject to adjustment for increases in the Consumer Price Index. The Company is in compliance with the capital expenditure requirements. Total required capital expenditures during the remaining lease term and renewal options are $11,560,000. These capital expenditures are being depreciated on a straight-line basis over the shorter of the asset life or the appropriate lease term. Upon expiration of the Master Lease or in the event of a default under the Master Lease, the Company is required to transfer all of the leasehold improvements, equipment, furniture and fixtures of the leased centers to Golden Living. The assets to be transferred to Golden Living are being amortized on a straight-line basis over the shorter of the remaining lease term or estimated useful life, and will be fully depreciated upon the expiration of the lease. All of the equipment, inventory and other related assets of the center leased pursuant to the Master Lease have been pledged as security under the Master Lease. In addition, the Company has a letter of credit of $2,056,000 as a security deposit for the Company's leases with Golden Living, as described in Note 6, "Long-term Debt, Interest Rate Swap and Capitalized Lease Obligations". Other Operating Leases In addition to the Omega and Golden Living Master Leases, the Company currently leases 24 other nursing centers which primarily operate under individual leases. The lease terms for these centers range from two years to twenty years including renewal options. While the individual lease terms vary from center to center, the majority of the leases include annual lease increases which are capped and, in most cases, are subject to adjustment for increases in the Consumer Price Index. All operating leases are accounted for using a straight-line rent methodology. Insurance Matters Professional Liability and Other Liability Insurance The Company has professional liability insurance coverage for its nursing centers that, based on historical claims experience, is likely to be substantially less than the claims that are expected to be incurred. Effective July 1, 2013, the Company established a wholly-owned, offshore limited purpose insurance subsidiary, SHC Risk Carriers, Inc. (“SHC”), to replace some of the expiring commercial policies. SHC covers losses up to specified limits per occurrence. All of the Company's nursing centers in Florida, Tennessee, and West Virginia are now covered under the captive insurance policies along with most of the nursing centers in Alabama, Kentucky, and Texas. The insurance coverage provided for these centers under the SHC policy includes coverage limits of at least $500,000 per medical incident with a sublimit per center of $1,000,000 and total annual aggregate policy limits of $5,000,000. All other centers within the Company’s portfolio are covered through various commercial insurance policies which provide similar coverage limits per medical incident, per location, and on an aggregate basis for covered centers. Reserve for Estimated Self-Insured Professional Liability Claims Because the Company’s actual liability for existing and anticipated professional liability and general liability claims will exceed the Company’s limited insurance coverage, the Company has recorded total liabilities for reported and incurred, but not reported claims of $19,977,000 as of December 31, 2016. This accrual includes estimates of liability for incurred but not reported claims, estimates of liability for reported but unresolved claims, actual liabilities related to settlements, including settlements to be paid over time, and estimates of legal costs related to these claims. All losses are projected on an undiscounted basis and are presented without regard to any potential insurance recoveries. Amounts are added to the accrual for estimates of anticipated liability for claims incurred during each period, and amounts are deducted from the accrual for settlements paid on existing claims during each period. The Company evaluates the adequacy of this liability on a quarterly basis. Semi-annually, the Company retains a third-party actuarial firm to assist in the evaluation of this reserve. Since May 2012, Merlinos & Associates, Inc. (“Merlinos”) has assisted management in the preparation of the appropriate accrual for incurred but not reported general and professional liability claims based on data furnished as of May 31 and November 30 of each year. Merlinos primarily utilizes historical data regarding the frequency and cost of the Company’s past claims over a multi-year period, industry data and information regarding the number of occupied beds to develop its estimates of the Company’s ultimate professional liability cost for current periods. On a quarterly basis, the Company obtains reports of asserted claims and lawsuits incurred. These reports, which are provided by the Company’s insurers and a third party claims administrator, contain information relevant to the actual expense already incurred with each claim as well as the third-party administrator’s estimate of the anticipated total cost of the claim. This information is reviewed by the Company quarterly and provided to the actuary semi-annually. Based on the Company’s evaluation of the actual claim information obtained, the semi-annual estimates received from the third-party actuary, the amounts paid and committed for settlements of claims and on estimates regarding the number and cost of additional claims anticipated in the future, the reserve estimate for a particular period may be revised upward or downward on a quarterly basis. Any increase in the accrual decreases results of operations in the period and any reduction in the accrual increases results of operations during the period. The Company’s cash expenditures for self-insured professional liability costs from continuing operations were $4,456,000, $3,328,000, and $4,757,000 for the years ended December 31, 2016, 2015 and 2014, respectively. The Company follows the FASB Accounting Standards Update, “Presentation of Insurance Claims and Related Insurance Recoveries,” that clarifies that a health care entity should not net insurance recoveries against a related professional liability claim and that the amount of the claim liability should be determined without consideration of insurance recoveries. Accordingly, the estimated insurance recovery receivables are included within "Other Current Assets" on the Consolidated Balance Sheet. As of December 31, 2016 and 2015, there are no estimated insurance recovery receivables. Although the Company adjusts its accrual for professional and general liability claims on a quarterly basis and retains a third-party actuarial firm semi-annually to assist management in estimating the appropriate accrual, professional and general liability claims are inherently uncertain, and the liability associated with anticipated claims is very difficult to estimate. Professional liability cases have a long cycle from the date of an incident to the date a case is resolved, and final determination of the Company’s actual liability for claims incurred in any given period is a process that takes years. As a result, the Company’s actual liabilities may vary significantly from the accrual, and the amount of the accrual has and may continue to fluctuate by a material amount in any given period. Each change in the amount of this accrual will directly affect the Company’s reported earnings and financial position for the period in which the change in accrual is made. Other Insurance With respect to workers’ compensation insurance, substantially all of the Company’s employees became covered under either an indemnity insurance plan or state-sponsored programs in May 1997. The Company is completely self-insured for workers’ compensation exposures prior to May 1997. The Company has been and remains a non-subscriber to the Texas workers’ compensation system and is, therefore, completely self-insured for employee injuries with respect to its Texas operations. From June 30, 2003 until June 30, 2007, the Company’s workers’ compensation insurance programs provided coverage for claims incurred with premium adjustments depending on incurred losses. For the period from July 1, 2007 until June 30, 2008, the Company is completely self-insured for workers' compensation exposure. For the period from July 1, 2008 through December 31, 2013, the Company is covered by a prefunded deductible policy. Under this policy, the Company is self-insured for the first $500,000 per claim, subject to an aggregate maximum of $3,000,000. The Company funds a loss fund account with the insurer to pay for claims below the deductible. The Company accounts for premium expense under this policy based on its estimate of the level of claims subject to the policy deductibles expected to be incurred. The liability for workers’ compensation claims is $171,000 at December 31, 2016. The Company has a non-current receivable for workers’ compensation policies covering previous years of $1,310,000 as of December 31, 2016. The non-current receivable is a function of payments paid to the Company’s insurance carrier in excess of the estimated level of claims expected to be incurred. As of December 31, 2016, the Company is self-insured for health insurance benefits for certain employees and dependents for amounts up to $175,000 per individual annually. The Company provides reserves for the settlement of outstanding self-insured health claims at amounts believed to be adequate. The liability for reported claims and estimates for incurred but unreported claims is $1,019,000 at December 31, 2016. The differences between actual settlements and reserves are included in expense in the period finalized. Employment Agreements The Company has employment agreements with certain members of management that provide for the payment to these members of amounts up to 2.0 times their annual salary in the event of a termination without cause, a constructive discharge (as defined in each employee agreement), or upon a change in control of the Company (as defined in each employee agreement). The maximum contingent liability under these agreements is $1,789,000 as of December 31, 2016. The terms of such agreements are from 1 to 3 years and automatically renew for 1 year if not terminated by the employee or the Company. In addition, upon the occurrence of any triggering event, these certain members of management may elect to require the Company to purchase equity awards granted to them for a purchase price equal to the difference in the fair market value of the Company's common stock at the date of termination versus the stated equity award exercise price. Based on the closing price of our common stock on December 31, 2016, there is $461,000 of contingent liabilities for the repurchase of the equity grants. No amounts have been accrued for these contingent liabilities for members of management the Company currently employs. Health Care Industry and Legal Proceedings The provision of health care services entails an inherent risk of liability. Participants in the health care industry are subject to lawsuits alleging malpractice, violations of false claims acts, product liability, or related legal theories, many of which involve large claims and significant defense costs. Like many other companies engaged in the long-term care profession in the United States, we have numerous pending liability claims, disputes and legal actions for professional liability and other related issues. It is expected that we will continue to be subject to such suits as a result of the nature of our business. Further, as with all health care providers, we are periodically subject to regulatory actions seeking fines and penalties for alleged violations of health care laws and are potentially subject to the increased scrutiny of regulators for issues related to compliance with health care fraud and abuse laws and with respect to the quality of care provided to residents of our center. Like other health care providers, in the ordinary course of our business, we are also subject to claims made by employees and other disputes and litigation arising from the conduct of our business. As of December 31, 2016, we are engaged in 67 professional liability lawsuits, which are reserved for as discussed above. Seven lawsuits are currently scheduled for trial or arbitration during the next twelve months, and it is expected that additional cases will be set for trial or hearing. The ultimate results of any of our professional liability claims and disputes cannot be predicted. We have limited, and sometimes no, professional liability insurance with regard to most of these claims. A significant judgment entered against us in one or more of these legal actions could have a material adverse impact on our financial position and cash flows. In July 2013, the Company learned that the United States Attorney for the Middle District of Tennessee (DOJ) had commenced a civil investigation of potential violations of the False Claims Act (FCA). In October 2014, the Company learned that the investigation was started by the filing under seal of a false claims action against the two centers that were the subject of the original CID. In connection with this matter, between July 2013 and early February 2016, the Company has received three civil investigative demands (a form of subpoena) for documents and information relating to our practices and policies for rehabilitation, and other services, our preadmission evaluation forms ("PAEs") required by TennCare and our Pre-Admission Screening and Resident Reviews ("PASRRs"). We have responded to those requests. The DOJ has also issued CID’s for testimony from current and former employees of the Company. The DOJ’s civil investigation of the Company’s practices and policies for rehabilitation now covers all of the Company’s centers, but thus far only documents from six of our centers have been requested. In June 2016, the Company received an authorized investigative demand (a form of subpoena) for documents in connection with a criminal investigation by the DOJ related to our practices with respect to PAEs and PASRRs, and the Company has provided documents responsive to this subpoena and continues to provide additional information as requested. The Company cannot predict the outcome of these investigations or the related lawsuits, and the outcome could have a materially adverse effect on the Company, including the imposition of treble damages, criminal charges, fines, penalties and/or a corporate integrity agreement. The Company is committed to provide caring and professional services to its patients and residents in compliance with applicable laws and regulations. In January 2009, a purported class action complaint was filed in the Circuit Court of Garland County, Arkansas against the Company and certain of its subsidiaries and Garland Nursing & Rehabilitation Center (the “Center”). The complaint alleges that the defendants breached their statutory and contractual obligations to the patients of the Center over the five-year period prior to the filing of the complaints. The lawsuit remains in its early stages and has not yet been certified by the court as a class action. The Company intends to defend the lawsuit vigorously. We cannot currently predict with certainty the ultimate impact of any of the above cases on our financial condition, cash flows or results of operations. Our reserve for professional liability expenses does not include any amounts for the pending DOJ investigation or the purported class action against the Arkansas centers. An unfavorable outcome in any of these lawsuits or any of our professional liability actions, any regulatory action, any investigation or lawsuit alleging violations of fraud and abuse laws or of elderly abuse laws or any state or Federal False Claims Act case could subject us to fines, penalties and damages, including exclusion from the Medicare or Medicaid programs, and could have a material adverse impact on our financial condition, cash flows or results of operations. |
Quarterly Financial Information (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
QUARTERLY FINANCIAL INFORMATION (Unaudited) | QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Selected quarterly financial information for each of the quarters in the years ended December 31, 2016 and 2015 is as follows:
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Schedule II - Valuation of Qualifying Accounts of Continuing Operations |
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SCHEDULE II - VALUATION OF QUALIFYING ACCOUNTS OF CONTINUING OPERATIONS | SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS OF CONTINUING OPERATIONS (in thousands)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (in thousands)
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Business and Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the financial position, operations and accounts of Diversicare and its subsidiaries, all wholly-owned. All significant intercompany accounts and transactions have been eliminated in consolidation. Any variable interest entities (“VIEs”) in which the Company has an interest are consolidated when the Company identifies that it is the primary beneficiary. The Company had one variable interest entity through 2014 and it related to a nursing center in West Virginia described in Note 7, "Variable Interest Entity". Any joint ventures are accounted for using the equity method, which is an investment in an entity over which the Company lacks control, but otherwise has the ability to exercise significant influence over operating and financial policies. The Company had one equity method investee through the fourth quarter of 2016. The investment in unconsolidated affiliate reflected on the 2015 consolidated balance sheet related to a pharmacy joint venture partnership in which the Company owned a 50% interest. The Company’s share of the profits and losses from this investment are reported in equity in earnings of investment in unconsolidated affiliate and the proceeds received from the sale are reported in gain on sale of investment in unconsolidated affiliate in the accompanying consolidated statement of operations. |
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Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
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Revenue Recognition | Revenue Recognition The fees charged by the Company to patients in its nursing centers are recorded on an accrual basis. These rates are contractually adjusted with respect to individuals receiving benefits under federal and state-funded programs and other third-party payors. Rates under federal and state-funded programs are determined prospectively for each center and may be based on the acuity of the care and services provided. These rates may be based on a center's actual costs subject to program ceilings and other limitations or on established rates based on acuity and services provided as determined by the federal and state-funded programs. Amounts earned under federal and state programs with respect to nursing home patients are subject to review by the third-party payors which may result in retroactive adjustments. In the opinion of management, adequate provision has been made for any adjustments that may result from such reviews. Retroactive adjustments, if any, are recorded when objectively determinable, generally within three years of the close of a reimbursement year depending upon the timing of appeals and third-party settlement reviews or audits. |
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Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company's allowance for doubtful accounts is estimated utilizing current agings of accounts receivable, historical collections data and other factors. Management monitors these factors and determines the estimated provision for doubtful accounts. Historical bad debts have generally resulted from uncollectible private balances, some uncollectible coinsurance and deductibles and other factors. Receivables that are deemed to be uncollectible are written off. The allowance for doubtful accounts balance is assessed on a quarterly basis, with changes in estimated losses being recorded in the Consolidated Statements of Operations in the period identified. The Company includes the provision for doubtful accounts in operating expenses in its Consolidated Statements of Operations. |
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Lease Expense | Lease Expense As of December 31, 2016, the Company operates 59 nursing centers under operating leases, including 35 owned by Omega, 20 owned by Golden Living and four owned by other parties. The Company's operating leases generally require the Company to pay stated rent, subject to increases based on changes in the Consumer Price Index, a minimum percentage increase, or increases in the net revenues of the leased properties. The Company's Omega and Golden Living leases require the Company to pay certain scheduled rent increases. Such scheduled rent increases are recorded as additional lease expense on a straight-line basis recognized over the term of the related leases and the difference between the amounts recorded for rent expense as compared to rent payments as an accrued liability. See Note 2, "Business Development and Other Significant Transactions", Note 3, "Discontinued Operations", and Note 11, "Commitments and Contingencies" for a discussion regarding the Company's Master Leases with Omega and Golden Living, the termination of leases for certain centers, and the addition of certain leased centers. |
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Classification of Expenses | Classification of Expenses The Company classifies all expenses (except lease, interest, depreciation and amortization expenses) that are associated with its corporate and regional management support functions as general and administrative expenses. All other expenses (except lease, professional liability, interest, depreciation and amortization expenses) incurred by the Company at the center level are classified as operating expenses. |
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Property and Equipment | Property and Equipment Property and equipment are recorded at cost or at fair value determined on the respective dates of acquisition for assets obtained in a business combination, with depreciation and amortization being provided over the shorter of the remaining lease term (where applicable) or the assets' estimated useful lives on the straight-line basis as follows:
Interest incurred during construction periods for qualifying expenditures is capitalized as part of the building cost. Maintenance and repairs are expensed as incurred, and major betterments and improvements are capitalized. The Company routinely evaluates the recoverability of the carrying value of its long-lived assets, including when significant adverse changes in the general economic conditions and significant deteriorations of the underlying undiscounted cash flows or fair values of the property indicate that the carrying amount of the property may not be recoverable. If circumstances suggest that the recorded amounts are not recoverable based upon estimated future undiscounted cash flows, the carrying values of such assets are reduced to fair value. |
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Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on deposit with banks and all highly liquid investments with original maturities of three months or less when purchased. Our cash on deposit with banks was subject to the Federal Deposit Insurance Corporation ("FDIC") minimum insurance levels. Effective January 1, 2013, the coverage provided by the FDIC that had been unlimited under the Dodd-Frank Deposit Insurance Provision is limited to the legal maximum, which is generally $250,000 per ownership category. |
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Deferred Financing and Other Costs | Deferred Financing and Other Costs The Company records deferred financing and lease costs for direct and incremental expenditures related to entering into or amending debt and lease agreements. These expenditures include lenders and attorneys fees. Financing costs are amortized using the effective interest method over the term of the related debt. The amortization is reflected as interest expense in the accompanying consolidated statements of operations. Deferred lease costs are amortized on a straight-line basis over the term of the related leases. See Note 6, "Long-term Debt, Interest Rate Swap and Capitalized Lease Obligations" for further discussion. As a result of our adoption of ASU No. 2015-03, which is further discussed below, the Company nets long-term debt and deferred financing costs in the consolidated balance sheets. |
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Acquired Leasehold Interest | Acquired Leasehold Interest The Company has recorded an acquired leasehold interest intangible asset related to an acquisition completed during 2007. The intangible asset is accounted for in accordance with the FASB's guidance on goodwill and other intangible assets, and is amortized on a straight-line basis over the remaining life of the acquired lease, including renewal periods, the original period of which is approximately 28 years from the date of acquisition. The lease terms for the seven centers this intangible relates to provide for an initial term and renewal periods at the Company's option through May 31, 2035. As the renewal periods of the acquired leased centers are solely based on the Company's option, it is expected that costs (if any) to renew the lease through its current amortization period would be nominal and the decision to continue to lease the acquired centers lies solely within the Company's intent to continue to operate the seven centers. Any renewal costs would be included in deferred lease costs and amortized over the renewal period. Amortization expense of approximately $384,000 related to this intangible asset was recorded during each of the years ended December 31, 2016, 2015 and 2014, respectively. The carrying value of the acquired leasehold interest intangible and the accumulated amortization are as follows:
The Company evaluates the recoverability of the carrying value of the acquired leasehold intangible in accordance with the FASB's guidance on accounting for the impairment or disposal of long-lived assets. Included in this evaluation is whether significant adverse changes in general economic conditions, and significant deteriorations of the underlying cash flows or fair values of the intangible asset, indicate that the carrying amount of the intangible asset may not be recoverable. The need to recognize an impairment charge is based on estimated future undiscounted cash flows from the asset compared to the carrying value of that asset. If recognition of an impairment charge is necessary, it is measured as the amount by which the carrying amount of the intangible asset exceeds the fair value of the intangible asset. |
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Self Insurance | Self-Insurance Self-insurance liabilities primarily represent the unfunded accrual for self insured risks associated with general and professional liability claims, employee health insurance and workers' compensation. The Company's health insurance liability is based on known claims incurred and an estimate of incurred but unreported claims determined by an analysis of historical claims paid. The Company's workers' compensation liability relates primarily to periods of self insurance prior to May 1997 and consists of an estimate of the future costs to be incurred for the known claims. Final determination of the Company's actual liability for incurred general and professional liability claims is a process that takes years. The Company evaluates the adequacy of this liability on a quarterly basis. Semi-annually, the Company retains a third-party actuarial firm to assist in the evaluation of this unfunded accrual. Since May 2012, Merlinos & Associates, Inc. (“Merlinos”) has assisted management in the preparation of the appropriate accrual for incurred but not reported general and professional liability claims based on data furnished by the Company. Merlinos primarily utilizes historical data regarding the frequency and cost of the Company's past claims over a multi-year period, industry data and information regarding the number of occupied beds to develop its estimates of the Company's ultimate professional liability cost for current periods. On a quarterly basis, the Company obtains reports of asserted claims and lawsuits incurred. These reports, which are provided by the Company's insurers and a third party claims administrator, contain information relevant to the actual expense already incurred with each claim as well as the third-party administrator's estimate of the anticipated total cost of the claim. This information is reviewed by the Company quarterly and provided to the actuary semi-annually. Based on the Company's evaluation of the actual claim information obtained, the semi-annual estimates received from the third-party actuary, the amounts paid and committed for settlements of claims and on estimates regarding the number and cost of additional claims anticipated in the future, the reserve estimate for a particular period may be revised upward or downward on a quarterly basis. Any increase in the accrual has an unfavorable impact on results of operations in the period and any reduction in the accrual increases results of operations during the period. All losses are projected on an undiscounted basis. The self-insurance liabilities include estimates of liability for incurred but not reported claims, estimates of liability for reported but unresolved claims, actual liabilities related to settlements, including settlements to be paid over time, and estimates of related legal costs incurred and expected to be incurred. One of the key assumptions in the actuarial analysis is that historical losses provide an accurate forecast of future losses. Changes in legislation such as tort reform, changes in our financial condition, changes in our risk management practices and other factors may affect the severity and frequency of claims incurred in future periods as compared to historical claims. The facts and circumstances of each claim vary significantly, and the amount of ultimate liability for an individual claim may vary due to many factors, including whether the case can be settled by agreement, the quality of legal representation, the individual jurisdiction in which the claim is pending, and the views of the particular judge or jury deciding the case. Although the Company adjusts its unfunded accrual for professional and general liability claims on a quarterly basis and retains a third-party actuarial firm semi-annually to assist management in estimating the appropriate accrual, professional and general liability claims are inherently uncertain, and the liability associated with anticipated claims is very difficult to estimate. Professional liability cases have a long cycle from the date of an incident to the date a case is resolved, and final determination of the Company's actual liability for claims incurred in any given period is a process that takes years. As a result, the Company's actual liabilities may vary significantly from the unfunded accrual, and the amount of the accrual has and may continue to fluctuate by a material amount in any given period. Each change in the amount of this accrual will directly affect the Company's results of operations and financial position for the period in which the change in accrual is made. |
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Income Taxes | Income Taxes The Company follows the FASB's guidance on Accounting for Income Taxes, which requires the asset and liability method of accounting for income taxes whereby deferred income taxes are recorded for the future tax consequences attributable to differences between the financial statement and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are provided against any estimated non-realizable deferred tax assets where necessary. Where the Company believes that a tax position is supportable for income tax purposes, the item is included in its income tax returns. Where treatment of a position is uncertain, liabilities are recorded based upon the Company’s evaluation of the “more likely than not” outcome considering the technical merits of the position. While the judgments and estimates made by the Company are based on management’s evaluation of the technical merits of a matter, historical experience and other assumptions that management believes are appropriate and reasonable under current circumstances, actual resolution of these matters may differ from recorded estimated amounts, resulting in charges or credits that could materially affect future financial statements. See Note 10, "Income Taxes" for additional information related to the provision for income taxes. |
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Disclosure of Fair Value of Financial Instruments | Disclosure of Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. In calculating fair value, a company must maximize the use of observable market inputs, minimize the use of unobservable market inputs and disclose in the form of an outlined hierarchy the details of such fair value measurements. The carrying amounts of cash and cash equivalents, receivables, trade accounts payable and accrued expenses approximate fair value because of the short-term nature of these accounts. The Company's self-insurance liabilities are reported on an undiscounted basis as the timing of estimated settlements cannot be determined. The Company follows the FASB's guidance on Fair Value Measurements and Disclosures which provides rules for using fair value to measure assets and liabilities as well as a fair value hierarchy that prioritizes the information used to develop the measurements. It applies whenever other guidance requires (or permits) assets or liabilities to be measured at fair value and gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). A summary of the fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels is described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. As further discussed in Note 6, "Long-term Debt, Interest Rate Swap and Capitalized Lease Obligations", in conjunction with the debt agreements entered into in February 2016, the Company entered into an interest rate swap agreement with a member of the bank syndicate as the counterparty. The applicable guidance requires companies to recognize all derivative instruments as either assets or liabilities at fair value in a company's balance sheets. As the Company's interest rate swap, a cash flow hedge, is not traded on a market exchange, the fair value is determined using a valuation model based on a discounted cash flow analysis. This analysis reflects the contractual terms of the interest rate swap agreement and uses observable market-based inputs, including estimated future LIBOR interest rates. The fair value of the Company's interest rate swap is the net difference in the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates and are observable inputs available to a market participant. The interest rate swap valuation is classified in Level 2 of the fair value hierarchy. The debt balances as presented in the consolidated balance sheets approximate the fair value of the respective instruments as the debt is at a variable rate, the estimates of which are considered Level 2 fair value calculations within the fair value hierarchy. |
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Net Income (Loss) per Common Share | Net Income (Loss) per Common Share The Company follows the FASB's guidance on Earnings Per Share for the financial reporting of net income (loss) per common share. Basic earnings per common share excludes dilution and restricted shares and is computed by dividing income available to common shareholders by the weighted-average number of common shares, excluding restricted shares, outstanding for the period. Diluted earnings per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or otherwise resulted in the issuance of common stock that then shared in the earnings of the Company. See Note 9, "Net Income (Loss) per Common Share" for additional disclosures about the Company's Net Income (Loss) per Common Share. |
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Stock based Compensation | Stock Based Compensation The Company follows the FASB's guidance on Stock Compensation to account for share-based payments granted to team members and recorded non-cash stock based compensation expense of $1,012,000, $1,152,000 and $580,000 during the years ended December 31, 2016, 2015 and 2014, respectively. Such amounts are included as components of general and administrative expense or operating expense based upon the classification of cash compensation paid to the related employees. See Note 8, "Shareholders' Equity, Stock Plans and Preferred Stock" for additional disclosures about the Company's stock based compensation plans. |
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Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income consists of other comprehensive income (loss). Comprehensive income (loss) is a more inclusive financial reporting method that includes disclosure of financial information that historically has not been recognized in the calculation of net income (loss). The Company has chosen to present the components of other comprehensive income in a separate statement of comprehensive income (loss). Currently, the Company's other comprehensive income (loss) consists of the change in fair value of the Company's interest rate swap transaction accounted for as a cash flow hedge. |
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Recent Accounting Guidance | Recent Accounting Guidance In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. In March 2016, the FASB issued an update to ASU No. 2014-09 in the form of ASU No. 2016-08, which amended the principal-versus-agent implementation guidance and illustrations in the new revenue guidance. The update clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. In April 2016, the FASB issued another update to the new revenue standard in the form of ASU No. 2016-10, which amends the guidance on identifying performance obligations and the implementation guidance on licensing. In May 2016, ASU No. 2016-12 was issued, which amends the new revenue recognition guidance on transition, collectibility, noncash consideration and the presentation of taxes. The new revenue standard (including updates) will be effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted only as of annual reporting periods beginning after December 15, 2016. The Company will adopt the requirements of this standard effective January 1, 2018. We are in the early stages of evaluating the expected adoption method of ASU No. 2014-09, and we are analyzing whether enhancements are needed to our business and accounting systems. In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (Topic 835), which amends and simplifies the presentation of debt issuance costs. The main provisions of the standard require that debt issuance costs related to a recognized liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, and amortization of the debt issuance costs continues to be reported as interest expense. The Company adopted ASU No. 2015-03 as of January 1, 2016. The new standard was applied on a retroactive basis. The adoption of this guidance resulted in a $967,000 reclass between deferred financing costs and long-term debt. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which changes how deferred taxes are classified on the Company's balance sheets and is effective for financial statements issued for annual periods beginning after December 15, 2016, with early adoption permitted. ASU 2015-17 requires all deferred tax assets and liabilities to be classified as non-current. Upon adoption on January 1, 2017, the Company anticipates reclassifying deferred income taxes of approximately $7,644,000 from current to non-current assets. In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Disclosures will be required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. We anticipate this standard will have a material impact on our consolidated financial statements. While we are continuing to assess all potential impacts of the standard, we currently believe the most significant impact relates to our accounting for building and equipment operating leases and will result in a significant increase in the assets and liabilities on the consolidated balance sheet. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU was issued as part of the FASB Simplification Initiative and involves several aspects of accounting for shared-based payment transactions, including the income tax consequences and classification on the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2016, which will be the Company's fiscal year 2017, and interim periods within those annual periods. Early adoption is permitted. The Company is in the early stages of evaluating the impact this standard will have on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. This update is intended to improve financial reporting by requiring timelier recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other such commitments. This update requires that financial statement assets measured at an amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. This standard is effective for the fiscal year beginning after December 15, 2019 with early adoption permitted. The Company is in the initial stages of evaluating the impact from the adoption of this new standard on the Consolidated Financial Statements and related notes. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230). The ASU provides clarification regarding how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The ASU is effective for annual and interim periods beginning after December 15, 2017, which will require the Company to adopt these provisions in the first quarter of fiscal 2018 using a retrospective approach. Early adoption is permitted. The Company is currently evaluating the impact this standard will have on our consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that the Statement of Cash Flows explain the changes during the period of cash and cash equivalents inclusive of amounts categorized as Restricted Cash. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard is effective for periods beginning after December 15, 2017. |
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Reclassifications | Reclassifications As discussed above, the Company adopted ASU No. 2015-03 as of January 1, 2016, and was applied on a retroactive basis. We reclassified $967,000 of debt issuance costs to long-term debt as of December 31, 2015. As discussed in Note 3, "Discontinued Operations" the consolidated financial statements of the Company have been retroactively reclassified for all periods presented to reflect as discontinued operations certain divestitures and lease terminations. |
Business and Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Useful Lives | Property and equipment are recorded at cost or at fair value determined on the respective dates of acquisition for assets obtained in a business combination, with depreciation and amortization being provided over the shorter of the remaining lease term (where applicable) or the assets' estimated useful lives on the straight-line basis as follows:
Property and equipment, at cost, consists of the following:
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Schedule of Acquired Finite-Lived Intangible Assets by Major Class | The carrying value of the acquired leasehold interest intangible and the accumulated amortization are as follows:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The expected amortization expense for the acquired leasehold interest intangible asset is as follows:
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Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table presents by level, within the fair value hierarchy, assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and 2015:
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Business Development and Other Significant Transactions (Tables) |
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Diversicare of Hutchinson and Clinton Place | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The allocation for the assets acquired is as follows:
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Skilled nursing center in Glasgow, Kentucky | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The allocation for the net assets acquired is as follows:
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Skilled nursing center in Fulton, Kentucky | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The allocation for the net assets acquired is as follows:
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Receivables (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable | Receivables, before the allowance for doubtful accounts, consist of the following components:
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Property and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, at cost | Property and equipment are recorded at cost or at fair value determined on the respective dates of acquisition for assets obtained in a business combination, with depreciation and amortization being provided over the shorter of the remaining lease term (where applicable) or the assets' estimated useful lives on the straight-line basis as follows:
Property and equipment, at cost, consists of the following:
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Long-Term Debt, Interest Rate Swap and Capitalized Lease Obligations (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long Term Debt | Long-term debt consists of the following:
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Schedule of Deferred Financing Costs | In connection with the Company's 2016 and 2015 financing agreements, the Company recorded the following deferred loan costs related to the new financing agreements as a reduction of the debt balances discussed above:
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Scheduled Principal Payments of Long-term Debt | Scheduled principal payments of long-term debt are as follows:
|
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Scheduled Payments of Capitalized Lease Obligations | Scheduled payments of the capitalized lease obligations are as follows:
|
Shareholders' Equity, Stock Plans and Preferred Stock (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The table below shows the weighted average assumptions the Company used to develop the fair value estimates under its option valuation model:
___________
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Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | The table below describes the resulting weighted average grant date fair values calculated as well as the intrinsic value of options exercised under the Company's equity awards during each of the following years:
___________
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Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range | The following table summarizes information regarding stock options and SOSAR grants outstanding as of December 31, 2016:
|
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Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | Summarized activity of the equity compensation plans is presented below:
|
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Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity |
Summarized activity of the Restricted Share Units for the Stock Purchase Plan is as follows:
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Schedule of Auction Market Preferred Securities by Stock Series | The following table reflects activity in the Series C Preferred Stock:
|
Net Income (Loss) Per Common Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and diluted net income (loss) per common share | Information with respect to the calculation of basic and diluted net income (loss) per common share is presented below:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table reflects the weighted average outstanding SOSARs and Options that were excluded from the computation of diluted earnings per share, as they would have been anti-dilutive:
|
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income before Income Tax, Domestic and Foreign | The provision (benefit) for income taxes of continuing operations is composed of the following components:
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Schedule of Components of Income Tax Expense (Benefit) | A reconciliation of taxes computed at statutory income tax rates on income (loss) from continuing operations is as follows:
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Schedule of Deferred Tax Assets and Liabilities | The net deferred tax assets and liabilities, at the respective income tax rates, are as follows:
|
Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Obligation, Fiscal Year Maturity Schedule | Minimum annual rentals, including renewal option periods (exclusive of taxes, insurance, and maintenance costs) under these leases beginning January 1, 2017, are as follows:
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Schedule of Finite-Lived Intangible Assets | The leasehold improvement asset and accumulated amortization are as follows:
|
Quarterly Financial Information (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information | Selected quarterly financial information for each of the quarters in the years ended December 31, 2016 and 2015 is as follows:
|
Business and Summary of Significant Accounting Policies (Schedule of Estimated Useful Lives) (Details) |
12 Months Ended |
---|---|
Dec. 31, 2016 | |
Buildings and improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Buildings and improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 40 years |
Leasehold improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 2 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 10 years |
Furniture, fixtures and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 2 years |
Furniture, fixtures and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 15 years |
Business and Summary of Significant Accounting Policies (Schedule of Acquired Leasehold Interest Intangible) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Net | $ 7,075 | $ 7,459 |
Leases, acquired-in-place | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets | 10,652 | 10,652 |
Accumulated amortization | (3,577) | (3,193) |
Net | $ 7,075 | $ 7,459 |
Business and Summary of Significant Accounting Policies (Schedule of Expected Amortization Expense for Acquired Leasehold Interest Intangible Asset) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Accounting Policies [Abstract] | ||
2017 | $ 384 | |
2018 | 384 | |
2019 | 384 | |
2020 | 384 | |
2021 | 384 | |
Thereafter | 5,155 | |
Net | $ 7,075 | $ 7,459 |
Business and Summary of Significant Accounting Policies (Schedule of Fair Value Measurements - Assets and Liabilities) (Details) - Interest rate swap - Fair value, measurements, recurring - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets (liabilities) at fair value | $ (129) | $ (625) |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets (liabilities) at fair value | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets (liabilities) at fair value | (129) | (625) |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets (liabilities) at fair value | $ 0 | $ 0 |
Receivables (Schedule of Other Receivables and Advances) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables before the allowance for doubtful accounts | $ 72,478 | $ 51,999 |
Other receivables and advances | 1,193 | 1,407 |
Medicare | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables before the allowance for doubtful accounts | 20,402 | 14,415 |
Medicaid and other non-federal government programs | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables before the allowance for doubtful accounts | 31,208 | 20,133 |
Other patient and resident receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables before the allowance for doubtful accounts | $ 20,868 | $ 17,451 |
Receivables (Narrative) (Details) $ in Thousands |
Dec. 31, 2016
USD ($)
facility
center
|
Dec. 31, 2015
USD ($)
|
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Other receivables | $ 1,193 | $ 1,407 |
Number of nursing centers | center | 76 | |
Kentucky and Kansas | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of nursing centers | facility | 22 | |
Renovation Projects | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Other receivables | $ 474 | $ 938 |
Property and Equipment (Schedule of Property and Equipment, at Cost) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | $ 128,822 | $ 114,383 |
Less: accumulated depreciation | (69,022) | (62,110) |
Net property and equipment | 59,800 | 52,273 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 5,761 | 4,859 |
Buildings and leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 85,660 | 76,025 |
Furniture, fixtures and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | $ 37,401 | $ 33,499 |
Long-Term Debt, Interest Rate Swap and Capitalized Lease Obligations (Schedule of Deferred Loan Costs) (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Feb. 26, 2016 |
|
Debt Instrument [Line Items] | ||||
Debt retirement costs | $ 351,000 | $ 0 | $ 0 | |
Amended and restated credit agreement | ||||
Debt Instrument [Line Items] | ||||
Debt retirement costs | $ 351,000 | 0 | ||
Deferred financing costs capitalized | $ 160,000 | $ 2,162,000 |
Long-Term Debt, Interest Rate Swap and Capitalized Lease Obligations (Schedule of Principal Payments of Long Term Debt Instruments) (Details) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Disclosure [Abstract] | ||
Deferred financing costs | $ (2,273,000) | $ (967,000) |
2017 | 6,663,000 | |
2018 | 6,740,000 | |
2019 | 6,820,000 | |
2020 | 8,196,000 | |
2021 | 51,662,000 | |
Total | $ 80,081,000 | $ 60,301,000 |
Long-Term Debt, Interest Rate Swap and Capitalized Lease Obligations (Interest Rate Swap Cash Flow Hedge) (Narrative) (Details) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Derivative [Line Items] | ||
Accumulated other comprehensive income (loss) | $ 195,000 | $ (387,000) |
Interest rate swap | ||
Derivative [Line Items] | ||
Notional amount of interest rate swap | $ 29,329,000 | |
Long-term debt fixed based on the interest rate swap | 5.79% | |
Net liability of interest rate swap | $ 129,000 | |
Accumulated other comprehensive income (loss) | (80,000) | |
Income tax benefit, interest rate swap | $ 49,000 |
Long-Term Debt, Interest Rate Swap and Capitalized Lease Obligations (Capital Lease Obligations) (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Capital Leased Assets [Line Items] | ||
Capital lease obligations | $ 2,052 | $ 566 |
Minimum | ||
Capital Leased Assets [Line Items] | ||
Lease agreement term | 3 years | |
Maximum | ||
Capital Leased Assets [Line Items] | ||
Lease agreement term | 5 years |
Long-Term Debt, Interest Rate Swap and Capitalized Lease Obligations (Scheduled Payments of Capital Lease Obligations) (Details) $ in Thousands |
Dec. 31, 2016
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2017 | $ 1,133 |
2018 | 955 |
2019 | 75 |
Total | 2,163 |
Amounts related to interest | (111) |
Principal payments on capitalized lease obligation | $ 2,052 |
Variable Interest Entity (Narrative) (Details) - Rose Terrace Nursing Center |
Mar. 27, 2014
USD ($)
|
---|---|
Variable Interest Entity [Line Items] | |
Purchase Price | $ 7,693,000 |
Minimum | |
Variable Interest Entity [Line Items] | |
Purchase price base on percentage of project costs | 110.00% |
Maximum | |
Variable Interest Entity [Line Items] | |
Purchase price base on percentage of project costs | 120.00% |
Shareholders' Equity, Stock Plans and Preferred Stock (Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value) (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected dividends | 2.15% | |
Weighted average expected term (years) | 6 years | |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility (range) | 44.00% | |
Risk free interest rate (range) | 1.52% | |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility (range) | 49.00% | |
Risk free interest rate (range) | 1.87% |
Shareholders' Equity, Stock Plans and Preferred Stock (Schedule of Weighted Average Grant Date Fair Value and Total Intrinsic Value of Exercises) (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
[1] | Dec. 31, 2014 |
[1] | |||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||
Weighted average grant date fair value (in dollars per share) | $ 0.00 | $ 3.78 | $ 0.00 | ||||
Total intrinsic value of exercises | $ 3 | $ 249 | $ 126 | ||||
|
Shareholders' Equity, Stock Plans and Preferred Stock (Schedule of Preferred Stock) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at the beginning of the period | $ 0 | $ 0 | $ 4,918 |
Redemption of preferred stock | 0 | 0 | (4,918) |
Balance at the end of the period | $ 0 | $ 0 | $ 0 |
(Schedule of Antidilutive Securities Excluded from the Computation of Earnings Per Share) (Details) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Earnings Per Share [Abstract] | |||
SOSARs/Options Excluded | 31,000 | 62,000 | 57,000 |
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | 36 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Line Items] | ||||
Provision (benefit) of income taxes | $ (1,030) | $ 916 | $ 857 | |
Cumulative pre-tax income (loss) from continuing operations | (2,774) | 3,668 | 2,307 | $ 3,201 |
Net operating losses | 7,385 | 7,385 | ||
Deferred tax benefit to reverse valuation allowance | (47) | (315) | (215) | |
Valuation allowance | 732 | 732 | ||
Work Opportunity Tax Credit | ||||
Income Tax Disclosure [Line Items] | ||||
Employment tax credit | 550 | $ 737 | $ 550 | |
IRS | ||||
Income Tax Disclosure [Line Items] | ||||
Operating loss carryforwards limited by change in ownership provisions | $ 2,519 | $ 2,519 |
Income Taxes (Schedule of Components of Income Tax Expense (Benefit)) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Current provision (benefit) : | |||
Federal | $ 17 | $ 1,191 | $ 10 |
State | 522 | 947 | 10 |
Total current | 539 | 2,138 | 20 |
Deferred provision (benefit): | |||
Federal | (1,284) | (783) | 798 |
State | (285) | (439) | 39 |
Total deferred | (1,569) | (1,222) | 837 |
Provision (benefit) for income taxes of continuing operations | $ (1,030) | $ 916 | $ 857 |
Income Taxes (Income Tax Reconciliation) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract] | |||
Provision (benefit) for federal income taxes at statutory rates | $ (889) | $ 1,247 | $ 784 |
Provision for state income taxes, net of federal benefit | 120 | 688 | 76 |
Valuation allowance changes affecting the provision for income taxes | (45) | (534) | (66) |
Employment tax credits | (529) | (1,249) | (169) |
Nondeductible expenses | 453 | 862 | 123 |
Stock based compensation expense | (62) | (105) | 3 |
Other | (78) | 7 | 106 |
Provision (benefit) for income taxes of continuing operations | $ (1,030) | $ 916 | $ 857 |
Commitments and Contingencies (Schedule of Future Operating Lease Payments) (Details) $ in Thousands |
Dec. 31, 2016
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2017 | $ 57,051 |
2018 | 58,076 |
2019 | 59,165 |
2020 | 60,231 |
2021 | 61,191 |
Thereafter | 836,102 |
Total committed under long term operating leases | $ 1,131,816 |
Commitments and Contingencies (Schedule of Leasehold Improvement) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Net | $ 7,075 | $ 7,459 |
Omega Healthcare Investors, Inc | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Leasehold improvement | 921,000 | 921,000 |
Accumulated amortization | (737,000) | (631,000) |
Net | $ 184,000 | $ 290,000 |
Quarterly Financial Information (Unaudited) (Schedule of Selected Quarterly Financial Information) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||
Patient revenues, net | $ 135,000 | $ 97,313 | $ 95,805 | $ 97,945 | $ 97,977 | $ 98,105 | $ 96,288 | $ 95,225 | $ 426,063 | $ 387,595 | $ 344,192 | ||||||||||||
Professional liability expense | 2,479 | [1] | 1,977 | [1] | 1,934 | [1] | 2,066 | [1] | 1,972 | [2] | 2,069 | [2] | 1,926 | [2] | 2,155 | [2] | 8,456 | 8,122 | 7,216 | ||||
Income (loss) from continuing operations | 1,438 | (958) | (2,150) | (74) | 1,271 | 669 | 807 | 5 | (1,744) | 2,752 | 1,450 | ||||||||||||
Loss from discontinued operations | (13) | (17) | 0 | (37) | (328) | (238) | (299) | (263) | (67) | (1,128) | 3,258 | ||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO DIVERSICARE HEALTHCARE SERVICES, INC. | $ 1,425 | $ (975) | $ (2,150) | $ (111) | $ 943 | $ 431 | $ 508 | $ (258) | $ (1,811) | $ 1,624 | $ 4,733 | ||||||||||||
Basic net income per common share | |||||||||||||||||||||||
Income (loss) from continuing operations (in dollars per share) | $ 0.24 | $ (0.16) | $ (0.35) | $ (0.01) | $ 0.21 | $ 0.11 | $ 0.13 | $ 0.00 | $ (0.28) | $ 0.45 | $ 0.21 | ||||||||||||
Discontinued operations (in dollars per share) | 0.00 | 0.00 | 0.00 | (0.01) | (0.05) | (0.04) | (0.05) | (0.04) | (0.01) | (0.18) | 0.54 | ||||||||||||
Net income (loss) (in dollars per share) | 0.24 | (0.16) | (0.35) | (0.02) | 0.16 | 0.07 | 0.08 | (0.04) | (0.29) | 0.27 | 0.75 | ||||||||||||
Diluted net income per common share | |||||||||||||||||||||||
Income (loss) from continuing operations (in dollars per share) | 0.24 | (0.16) | (0.35) | (0.01) | 0.20 | 0.11 | 0.13 | 0.00 | (0.28) | 0.44 | 0.20 | ||||||||||||
Discontinued operations (in dollars per share) | 0.00 | 0.00 | 0.00 | (0.01) | (0.05) | (0.04) | (0.05) | (0.04) | (0.01) | (0.18) | 0.52 | ||||||||||||
Diluted net income (loss) per common share (in dollars per share) | $ 0.24 | $ (0.16) | $ (0.35) | $ (0.02) | $ 0.15 | $ 0.07 | $ 0.08 | $ (0.04) | $ (0.29) | $ 0.26 | $ 0.72 | ||||||||||||
|
Schedule II - Valuation of Qualifying Accounts of Continuing Operations (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
||||||
Allowance for doubtful accounts | ||||||||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||||||
Balance at Beginning of Period | $ 8,180 | $ 6,044 | $ 3,879 | |||||
Charged to Costs and Expenses | 7,163 | 7,507 | 5,710 | |||||
Charged to Other Accounts | 0 | 0 | 0 | |||||
Other | 0 | 0 | 0 | |||||
(Write-offs) net of Recoveries | (5,017) | (5,371) | (3,545) | |||||
Balance at End of Period | 10,326 | 8,180 | 6,044 | |||||
Professional Liability Reserve | ||||||||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||||||
Balance at Beginning of Period | 21,618 | 25,163 | 27,067 | |||||
Charged to Costs and Expenses | 6,423 | 5,213 | 5,930 | |||||
Charged to Other Accounts | [1] | 0 | 1,010 | 2,440 | ||||
Other | 114 | 0 | 0 | |||||
Payments | [2] | (8,178) | (9,768) | (10,274) | ||||
Balance at End of Period | 19,977 | 21,618 | 25,163 | |||||
Workers Compensation Reserve | ||||||||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||||||
Balance at Beginning of Period | 227 | 250 | 176 | |||||
Charged to Costs and Expenses | 372 | 364 | 372 | |||||
Charged to Other Accounts | [1] | 0 | 0 | 0 | ||||
Other | 0 | 0 | 18 | |||||
Payments | [2] | (428) | (387) | (316) | ||||
Balance at End of Period | 171 | 227 | 250 | |||||
Health Insurance Reserve | ||||||||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||||||
Balance at Beginning of Period | 686 | 687 | 843 | |||||
Charged to Costs and Expenses | 8,896 | 6,294 | 6,748 | |||||
Charged to Other Accounts | [1] | 0 | 0 | 237 | ||||
Other | (137) | 0 | 0 | |||||
Payments | [2] | (8,426) | (6,295) | (7,141) | ||||
Balance at End of Period | $ 1,019 | $ 686 | $ 687 | |||||
|
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