-----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, IZdfMLeHoMn61ZA59RP7WEJzCuVDMWUL7pq+c/ylmy9Cueu40TOpMUNf9WYIjWGk JPgLd7inzcP9NfsgbYDc8w== 0001157523-05-007340.txt : 20050811 0001157523-05-007340.hdr.sgml : 20050811 20050811093902 ACCESSION NUMBER: 0001157523-05-007340 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050811 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050811 DATE AS OF CHANGE: 20050811 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: 051015285 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 a4950555.txt ADVOCAT INC. 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) August 11, 2005 ADVOCAT INC. (Exact name of registrant as specified in its charter) Delaware 001-12996 62-1559667 -------- ---------- ---------- (State or other jurisdiction (Commission File Number) (Employer Identification of incorporation) 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 August 11, 2005, the Registrant announced its results of operations for the second quarter ended June 30, 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 August 11, 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: August 11, 2005 EXHIBIT INDEX Number Exhibit 99.1 News Release dated August 11, 2005. EX-99.1 2 a4950555ex991.txt EXHIBIT 99.1 Exhibit 99.1 Advocat Announces Results for Second Quarter FRANKLIN, Tenn.--(BUSINESS WIRE)--Aug. 11, 2005--Advocat Inc. (NASDAQ OTC: AVCA) today announced its results for the second quarter ended June 30, 2005. Advocat reported net income from continuing operations of $1.6 million, or $0.25 per diluted common share, for the second quarter of 2005 compared with a net income from continuing operations of $3.6 million, or $0.55 per diluted common share, in 2004. Net income for common stock for the second quarter was $1.6 million, or $0.25 per diluted share, compared with $2.4 million, or $0.38 per diluted share, in the second quarter of 2004. The 2005 results included a $1.5 million expense for professional liability costs compared with a $1.7 million net benefit in 2004. The 2004 results also included a $1.1 million ($0.17 per diluted share) loss from discontinued operations. Second Quarter Results Advocat's net revenues from continuing operations increased 7.5% to $52.6 million compared with $49.0 million in the second quarter of 2004. The increase in second quarter net revenues was primarily due to patient revenues that increased 7.8% to $49.5 million compared with $45.9 million in the second quarter of 2004. Patient revenues benefited from Medicare rate increases that were effective October 1, 2004, increased Medicare utilization, and increased Medicaid rates in certain states, partially offset by a 0.2% decline in census in 2005 compared with 2004. Medicare revenues increased to 30.8% of patient revenues in 2005, up from 29.5% in 2004. Resident revenues increased to $3.2 million in 2005 from $3.1 million in the second quarter of 2004. Ancillary service revenues, prior to contractual allowances, increased 12.9% to $10.3 million in 2005 from $9.1 million in the second quarter of 2004. Operating expenses increased to $40.0 million and represented 75.9% of patient and resident revenues for the second quarter of 2005 compared with $38.6 million, or 78.7% of such revenues, in the second 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 second quarter of 2005 included $1.5 million in professional liability costs compared with a net benefit of $1.7 million in 2004. The 2004 benefit resulted from downward adjustments in the Company's self-insured reserves associated with professional liability claims. The 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 June 30, 2005, the Company has recorded total liabilities for reported professional liability claims and estimates for incurred but unreported claims of $34.5 million, and has current debt obligations of $43.9 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. Six Months Results Net revenues increased to $104.5 million in the first six months of 2005 compared with $97.5 million in 2004. Patient revenues were $98.2 million in 2005 compared with $91.4 million in the first six months of 2004. Resident revenues were $6.3 million compared with $6.0 million. Ancillary service revenues, prior to contractual allowances, increased to $20.2 million in 2005 from $18.5 million in 2004. Operating expenses were $80.8 million in 2005 and represented 77.3% of patient and resident revenues compared with $76.7 million, or 78.6% of such revenues, in 2004. The increase in operating expenses was primarily due to higher wage and benefit costs. Net income from continuing operations for the first six months of 2005 was $10.5 million, or $1.60 per diluted common share, compared with $8.1 million, or $1.27 per share, in the first six months of 2004. Net income for common stock for the first six months of 2005 was $10.4 million, or $1.62 per diluted share, compared with $7.0 million, or $1.12 per diluted share, in the same period of 2004. The 2005 results include income of $0.1 million from discontinued operations compared with a loss of $1.0 million in the same period of 2004. Reimbursement Update The President's proposed budget for the fiscal year beginning October 1, 2005 includes the effects of the refinement of the Resource Utilization Group ("RUG") system and provides for the elimination of the reimbursement add-ons for high acuity patients. The final rule issued by the Centers for Medicare and Medicaid ("CMS") includes the elimination of the add-ons and other offsetting adjustments to the reimbursement received, including a market basket adjustment of approximately 3.1% designed to increase reimbursement for the effects of inflation. The market basket adjustment will become effective October 1, 2005, and will increase the Company's revenue and operating cash flow by approximately $1.6 million annually. The eliminations of the add-ons and other offsetting adjustments will be effective January 1, 2006, and will decrease the Company's revenue and operating cash flow by approximately $2.5 million annually. The net effect of the CMS rule, once all adjustments are in effect, will be to reduce the Company's revenue and operating cash flow by approximately $0.9 million per year. 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) For the For the Three Months Six Months Ended June 30, Ended June 30, 2005 2004 2005 2004 -------- -------- -------- -------- REVENUES: Patient revenues, net $49,453 $45,876 $98,165 $91,438 Resident revenues 3,182 3,100 6,314 6,047 -------- -------- -------- -------- Net revenues 52,635 48,976 104,479 97,485 -------- -------- -------- -------- EXPENSES: Operating 39,957 38,565 80,803 76,657 Lease 4,087 3,835 7,978 7,667 Professional liability 1,466 (1,702) (5,821) (4,685) General and administrative 3,573 2,896 7,186 5,920 Depreciation and amortization 1,211 1,173 2,446 2,369 -------- -------- -------- -------- Total expenses 50,294 44,767 92,592 87,928 -------- -------- -------- -------- OPERATING INCOME 2,341 4,209 11,887 9,557 -------- -------- -------- -------- OTHER INCOME (EXPENSE): Foreign currency transaction gain (loss) (66) 193 (122) 193 Interest income 152 39 269 44 Interest expense (780) (757) (1,549) (1,522) -------- -------- -------- -------- (694) (525) (1,402) (1,285) -------- -------- -------- -------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 1,647 3,684 10,485 8,272 PROVISION FOR INCOME TAXES 20 122 20 154 -------- -------- -------- -------- NET INCOME FROM CONTINUING OPERATIONS 1,627 3,562 10,465 8,118 -------- -------- -------- -------- INCOME (LOSS) FROM DISCONTINUED OPERATIONS: Operating loss, net of tax provision of $0, $27, $0 and $150, respectively - (1,176) (250) (1,040) Gain on sale, net of tax provision of $0, $394, $0 and $394 respectively 7 82 383 82 -------- -------- -------- -------- Net income (loss) from discontinued operations 7 (1,094) 133 (958) -------- -------- -------- -------- NET INCOME 1,634 2,468 10,598 7,160 PREFERRED STOCK DIVIDENDS, ACCRUED BUT NOT PAID 78 74 156 146 -------- -------- -------- -------- NET INCOME FOR COMMON STOCK $1,556 $2,394 $10,442 $7,014 ======== ======== ======== ======== NET INCOME PER COMMON SHARE: Per common share - basic Income from continuing operations $0.27 $0.61 $1.80 $1.42 Income (loss) from discontinued operations 0.00 (0.19) 0.02 (0.17) -------- -------- -------- -------- $0.27 $0.42 $1.82 $1.25 ======== ======== ======== ======== Per common share - diluted Income from continuing operations $0.25 $0.55 $1.60 $1.27 Income (loss) from discontinued operations 0.00 (0.17) 0.02 (0.15) -------- -------- -------- -------- $0.25 $0.38 $1.62 $1.12 ======== ======== ======== ======== WEIGHTED AVERAGE SHARES: Basic 5,725 5,682 5,725 5,622 ======== ======== ======== ======== Diluted 6,498 6,411 6,498 6,382 ======== ======== ======== ======== CONTACT: Advocat Inc. William R. Council, III, 615-771-7575 -----END PRIVACY-ENHANCED MESSAGE-----