-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gojf3oiWJc0zpTnitpKvIV5Yk+WRRIcG2kfJh65hU6GfftHDgFYOd1M/hv/Ze15+ q7imJYh5w18g/5BDlUBE9g== 0001157523-05-004658.txt : 20050512 0001157523-05-004658.hdr.sgml : 20050512 20050512094617 ACCESSION NUMBER: 0001157523-05-004658 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050512 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050512 DATE AS OF CHANGE: 20050512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVOCAT INC CENTRAL INDEX KEY: 0000919956 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 621559667 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12996 FILM NUMBER: 05822584 BUSINESS ADDRESS: STREET 1: 277 MALLORY STATION RD STREET 2: STE 130 CITY: FRANKLIN STATE: TN ZIP: 37067 BUSINESS PHONE: 6157717575 MAIL ADDRESS: STREET 1: 227 MALLORY STATION ROAD STREET 2: SUITE 130 CITY: FRANKLIN STATE: TN ZIP: 37064 8-K 1 a4886607.txt ADVOCAT INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) ------------------------------------------------ May 12, 2005 ADVOCAT INC. ------------ (Exact name of registrant as specified in its charter) Delaware 001-12996 62-1559667 -------- --------- ---------- (State or other jurisdiction of (Commission File Number) (Employer incorporation) Identification Number) 277 Mallory Station Road, Suite 130, Franklin, Tennessee 37067 -------------------------------------------------------------- (Address of principal executive offices) (615) 771-7575 -------------- (Registrant's telephone number, including area code) Not applicable -------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On May 12, 2005, the Registrant announced its results of operations for the first quarter ended March 31, 2005. A copy of the related press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference in its entirety. The information furnished pursuant to Item 12 herein, including Exhibit 99.1, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933. Item 9.01. Financial Statements and Exhibits. (c) Exhibits Number Exhibit ------ ------- 99.1 News Release dated May 12, 2005. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ADVOCAT INC. By: /s/ L. Glynn Riddle, Jr. ------------------------ L. Glynn Riddle, Jr. Chief Financial Officer Date: May 12, 2005 EXHIBIT INDEX - ------------- Number Exhibit - ------ ------- 99.1 News Release dated May 12, 2005. EX-99.1 2 a4886607ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Advocat Announces Results for First Quarter FRANKLIN, Tenn.--(BUSINESS WIRE)--May 12, 2005--Advocat Inc. (NASDAQ OTC: AVCA) today announced its results for the first quarter ended March 31, 2005. Advocat reported net income from continuing operations of $8.8 million, or $1.36 per diluted common share, for the first quarter of 2005 compared with a net income from continuing operations of $4.6 million, or $0.69 per diluted common share, in 2004. The 2005 results included a net benefit of $7.3 million related to professional liability expense compared with a similar benefit of $3.0 million in 2004. Net income for common stock for the first quarter was $8.9 million, or $1.38 per diluted share, compared with $4.6 million, or $0.71 per diluted share, in the first quarter of 2004. First Quarter Results Advocat's net revenues from continuing operations increased 6.9% to $51.8 million compared with $48.5 million in the first quarter of 2004. The increase in first quarter net revenues was primarily due to patient revenues that increased 6.9% to $48.7 million compared with $45.6 million in the first quarter of 2004. Higher patient revenues benefited from Medicare rate increases that were effective October 1, 2004, and increased Medicaid rates in certain states, partially offset by a 1.3% decline in census in 2005 compared with 2004. Resident revenues increased to $3.1 million in 2005 from $2.9 million in the first quarter of 2004. Ancillary service revenues, prior to contractual allowances, increased 5.5% to $9.9 million in 2005 from $9.4 million in the first quarter of 2004. Operating expenses increased to $40.8 million and represented 78.8% of patient and resident revenues for the first quarter of 2005 compared with $38.1 million, or 78.5% of such revenues, in the first quarter of 2004. The increase in operating expenses was primarily due to higher wage and benefit costs. The Company's results of continuing operations for the first quarter of 2005 included a $7.3 million net benefit for professional liability costs, compared with a similar benefit of $3.0 million in 2004. The benefit resulted from downward adjustments in the Company's self-insured reserves associated with professional liability claims. During 2005, the Company reduced its total recorded liabilities for self-insured professional liability risks associated with professional liability claims to $34.4 million, down from $42.9 million at December 31, 2004. The decrease in the total accrual resulted primarily from downward adjustments in the estimated liabilities for periods prior to the current period, which were partially offset by the provision for liability related to claims incurred in the current period. These self-insurance reserves are assessed on a quarterly basis, with changes in estimated losses being recorded in the consolidated statements of operations in the period identified. Professional liability costs include cash and non-cash charges recorded based on current actuarial reviews. The actuarial reviews include estimates of known claims and an estimate of claims that may have occurred, but have not yet been reported to the Company. As of March 31, 2005, the Company reported a liability of $34.4 million, including reported professional liability claims and estimates for incurred but unreported claims, and has current debt obligations of $45.0 million. The Company does not have cash or available resources to pay in full this current debt, the accrued professional liability claims or any significant portion of either and has limited resources available to meet its anticipated operating, capital expenditure and debt service requirements during 2005. Reimbursement Updates President Bush's proposed federal budget for the fiscal year beginning October 1, 2005, includes several reductions that will adversely affect Advocat's revenues if implemented. The budget eliminates the reimbursement of add-ons for high acuity patients under the Resource Utilization Group (RUG) that, if implemented, will reduce revenue and operating cash flow by approximately $3.6 million per year. In addition, the proposed reduction of reimbursement for cross-over bad debt expense may reduce the Company's revenue and operating cash flow by approximately $150,000 per year when fully phased in. Forward-looking statements made in this release involve a number of risks and uncertainties, including but not limited to, uncertainty regarding the Company's ability to restructure or refinance its debt, the impact of under-insured professional liability claims, the accuracy of the Company's estimate of its anticipated professional liability expense, factors affecting the long-term care industry in general, governmental reimbursement, government regulation, health care reforms, the impact of future licensing surveys, changing economic and market conditions and other risk factors detailed in the Company's Securities and Exchange Commission filings. The Company has provided additional information in its Annual Report on Form 10-K for the fiscal year ended December 31, 2004, as well as in other filings with the Securities and Exchange Commission, which readers are encouraged to review for further disclosure of other factors that could cause actual results to differ materially from those indicated in the forward-looking statements. Advocat Inc. is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet services. Advocat Inc. provides long-term care services to nursing home patients and residents of assisted living facilities in nine states, primarily in the Southeast. For additional information about the Company, visit Advocat's web site: http://www.irinfo.com/avc ADVOCAT INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data) Three Months Ended March 31, 2005 2004 -------- -------- REVENUES: Patient revenues, net $48,712 $45,562 Resident revenues 3,132 2,947 -------- -------- Net revenues 51,844 48,509 -------- -------- EXPENSES: Operating 40,846 38,092 Lease 3,891 3,832 Professional liability (7,287) (2,983) General and administrative 3,613 3,024 Depreciation and amortization 1,235 1,196 -------- -------- Total expenses 42,298 43,161 -------- -------- OPERATING INCOME 9,546 5,348 -------- -------- OTHER INCOME (EXPENSE): Foreign currency transaction loss (56) -- Interest income 117 5 Interest expense (769) (765) -------- -------- (708) (760) -------- -------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 8,838 4,588 PROVISION FOR INCOME TAXES -- 32 -------- -------- NET INCOME FROM CONTINUING OPERATIONS 8,838 4,556 -------- -------- INCOME (LOSS) FROM DISCONTINUED OPERATIONS: Operating income (loss), net of taxes of $0 and $123, respectively (250) 136 Gain on sale, net of taxes of $0 and $0, respectively 376 -- -------- -------- Net income from discontinued operations 126 136 -------- -------- NET INCOME 8,964 4,692 -------- -------- PREFERRED STOCK DIVIDENDS, ACCRUED BUT NOT PAID 78 72 -------- -------- NET INCOME FOR COMMON STOCK $8,886 $4,620 ======== ======== NET INCOME PER COMMON SHARE: Per common share - basic Income from continuing operations $1.53 $0.81 Income from discontinued operations 0.02 0.02 -------- -------- $1.55 $0.83 ======== ======== Per common share - diluted Income from continuing operations $1.36 $0.69 Income from discontinued operations 0.02 0.02 -------- -------- $1.38 $0.71 ======== ======== WEIGHTED AVERAGE SHARES: Basic 5,725 5,563 ======== ======== Diluted 6,499 6,602 ======== ======== CONTACT: Advocat Inc. William R. Council, III, 615-771-7575 -----END PRIVACY-ENHANCED MESSAGE-----