-----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, NMixqMCxwZ8vrFVGaEsJFaSO4WYi5XeakjtaX2bteI0pTDSb/kMrKmdcOLVCYsu2 YAkYenS6tH1pN7nxnUJMNQ== 0001157523-05-009876.txt : 20051109 0001157523-05-009876.hdr.sgml : 20051109 20051109093224 ACCESSION NUMBER: 0001157523-05-009876 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20051109 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051109 DATE AS OF CHANGE: 20051109 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: 051188050 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 a5015980.txt ADVOCAT 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) ------------------------------------------------ November 9, 2005 ADVOCAT INC. ------------ (Exact name of registrant as specified in its charter) Delaware 001-12996 62-1559667 -------- --------- ---------- (State or other jurisdiction (Commission (Employer Identification of incorporation) File Number) Number) 1621 Galleria Boulevard, Brentwood, TN 37027 -------------------------------------------- (Address of principal executive offices) (615) 771-7575 -------------- (Registrant's telephone number, including area code) 277 Mallory Station Road, Suite 130, Franklin, Tennessee 37067 -------------------------------------------------------------- (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 November 9, 2005, the Registrant announced its results of operations for the third quarter ended September 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 2.02 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 November 9, 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: November 9, 2005 EXHIBIT INDEX - ------------- Number Exhibit - ------ ------- 99.1 News Release dated November 9, 2005. EX-99.1 2 a5015980ex99_1.txt EXHIBIT 99.1 - PRESS RELEASE Exhibit 99.1 Advocat Announces Results for Third Quarter BRENTWOOD, Tenn.--(BUSINESS WIRE)--Nov. 9, 2005--Advocat Inc. (NASDAQ OTC: AVCA) today announced its results for the third quarter ended September 30, 2005. Advocat reported net income from continuing operations of $1.8 million, or $0.27 per diluted common share, for the third quarter of 2005 compared with a net income from continuing operations of $182,000, or $0.02 per diluted common share, in 2004. Net income for common stock for the third quarter was $1.7 million, or $0.27 per diluted share, compared with a net loss for common stock of $289,000, or $0.05 per diluted share, in the third quarter of 2004. "Advocat reported higher revenues, operating income and net income in the third quarter, and continued to generate strong cash flows from operations," stated William R. Council, III, president and CEO of Advocat. "We continue to focus on strengthening our operations and are pleased with our improved results." "During the third quarter, we acquired the Briarcliff Health Care Center, a 120-bed skilled nursing facility in Oak Ridge, Tennessee. We have operated the Briarcliff facility under a lease agreement since 1990. We purchased the nursing home for approximately $6.7 million and financed the transaction with a commercial finance company. We believe our ability to secure this credit underscores the solid progress we have made in improving our financial condition." Third Quarter Results Advocat's net revenues from continuing operations increased 5.3% to $54.5 million compared with $51.7 million in the third quarter of 2004. The increase in third quarter net revenues was primarily due to patient revenues that increased 5.4% to $51.3 million compared with $48.6 million in the third quarter of 2004. Patient revenues benefited from Medicare rate increases that were effective October 1, 2004, increased Medicare utilization, increased Medicaid rates in certain states and a 0.7% increase in census in 2005 compared with 2004. Medicare revenues increased to 29.5% of patient revenues in 2005, up from 28.5% in 2004. Resident revenues increased to $3.2 million in 2005 from $3.1 million in the third quarter of 2004. Ancillary service revenues, prior to contractual allowances, increased 22.3% to $10.9 million in 2005 from $8.9 million in the third quarter of 2004. Operating expenses increased to $42.8 million and represented 78.5% of patient and resident revenues for the third quarter of 2005 compared with $40.3 million, or 77.9% of such revenues, in the third 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 third quarter of 2005 included professional liability costs that declined to $1.0 million compared with $2.5 million in 2004. The provision for current liability claims recorded during the three months ended September 30, 2005, was partially offset by downward adjustments in the liability primarily resulting from the quarterly actuarial valuations, resulting in a net expense of $1.0 million in the period. These reductions from the quarterly actuarial valuation were primarily the result of the effects of settlements of certain claims for amounts less than had been reserved in prior periods and the resulting effect of these settlements on the assumptions inherent to the actuarial estimate. 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 September 30, 2005, the Company has recorded total liabilities for reported professional liability claims and estimates for incurred but unreported claims of $34.4 million, and has current debt obligations of $48.3 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. Nine Months Results Net revenues increased to $159.0 million in the first nine months of 2005 compared with $149.2 million in 2004. Patient revenues increased to $149.4 million in 2005 compared with $140.1 million in the first nine months of 2004. Resident revenues were $9.5 million compared with $9.2 million. Ancillary service revenues, prior to contractual allowances, increased to $31.1 million in 2005 from $27.4 million in 2004. Operating expenses were $123.6 million in 2005 and represented 77.8% of patient and resident revenues compared with $116.9 million, or 78.4% of such revenues, in 2004. The increase in operating expenses was primarily due to higher wage and benefit costs. Professional liability expense for the first nine months of 2005 resulted in a net benefit of $4.8 million compared with a net benefit of $2.2 million in the same period of 2004. During the nine months ended September 30, 2005, the Company reduced its total recorded liabilities for self-insured professional liability risks to $34.4 million, down from $42.9 million at December 31, 2004. Downward adjustments in the liability primarily resulting from the quarterly actuarial valuations were partially offset by the provision for current liability claims recorded during the nine months ended September 30, 2005, resulting in a net benefit of $4.8 million in the period. Net income from continuing operations for the first nine months of 2005 was $12.2 million, or $1.87 per diluted common share, compared with $8.3 million, or $1.29 per share, in the first nine months of 2004. Net income for common stock for the first nine months of 2005 was $12.1 million, or $1.90 per diluted share, compared with $6.7 million, or $1.08 per diluted share, in the same period of 2004. The 2005 results include income of $141,000 from discontinued operations compared with a loss of $1.4 million in the same period of 2004. Third Quarter Conference Call Advocat will conduct a conference call to discuss its third quarter 2005 earnings release on November 10, 2005, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). To participate in the Company's call, dial 866-800-8651 or 617-614-2704 and enter passcode 25570245. A live broadcast of the conference call will also be available on the Internet at the Company's web site, www.irinfo.com/avc, as well as www.earnings.com and www.streetevents.com. A replay of the broadcast will be available until November 24, 2005, at the same web sites. Forward-Looking Statements 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 Three For the Nine Months Months Ended September 30, Ended September 30, 2005 2004 2005 2004 --------- --------- --------- --------- REVENUES: Patient revenues, net $51,261 $48,620 $149,426 $140,058 Resident revenues 3,229 3,115 9,543 9,162 --------- --------- --------- --------- Net revenues 54,490 51,735 158,969 149,220 --------- --------- --------- --------- EXPENSES: Operating 42,799 40,283 123,602 116,940 Lease 3,972 3,827 11,950 11,494 Professional liability 984 2,500 (4,837) (2,185) General and administrative 3,391 3,396 10,577 9,316 Depreciation and amortization 1,273 1,171 3,719 3,540 --------- --------- --------- --------- Total expenses 52,419 51,177 145,011 139,105 --------- --------- --------- --------- OPERATING INCOME 2,071 558 13,958 10,115 --------- --------- --------- --------- OTHER INCOME (EXPENSE): Foreign currency transaction gain 258 303 136 496 Interest income 132 111 401 155 Interest expense (868) (758) (2,417) (2,280) --------- --------- --------- --------- (478) (344) (1,880) (1,629) --------- --------- --------- --------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 1,593 214 12,078 8,486 PROVISION (BENEFIT) FOR INCOME TAXES (170) 32 (150) 186 --------- --------- --------- --------- NET INCOME FROM CONTINUING OPERATIONS 1,763 182 12,228 8,300 --------- --------- --------- --------- INCOME (LOSS) FROM DISCONTINUED OPERATIONS: Operating loss, net of tax provision of $0, $0, $0 and $150, respectively - (473) (250) (1,513) Gain on sale, net of tax provision of $0, $30, $0 and $424, respectively 8 77 391 159 --------- --------- --------- --------- Net income (loss) from discontinued operations 8 (396) 141 (1,354) --------- --------- --------- --------- NET INCOME (LOSS) 1,771 (214) 12,369 6,946 PREFERRED STOCK DIVIDENDS, ACCRUED BUT NOT PAID 81 75 237 221 --------- --------- --------- --------- NET INCOME (LOSS) FOR COMMON STOCK $1,690 $(289) $12,132 $6,725 ========= ========= ========= ========= NET INCOME (LOSS) PER COMMON SHARE: Per common share - basic Income from continuing operations $0.29 $0.02 $2.09 $1.43 Income (loss) from discontinued operations 0.00 (0.07) 0.03 (0.24) --------- --------- --------- --------- $0.29 $(0.05) $2.12 $1.19 ========= ========= ========= ========= Per common share - diluted Income from continuing operations $0.27 $0.02 $1.87 $1.29 Income (loss) from discontinued operations 0.00 (0.07) 0.03 (0.21) --------- --------- --------- --------- $0.27 $(0.05) $1.90 $1.08 ========= ========= ========= ========= WEIGHTED AVERAGE SHARES: Basic 5,725 5,695 5,725 5,647 ========= ========= ========= ========= Diluted 6,498 5,695 6,498 6,407 ========= ========= ========= ========= ADVOCAT INC. CASH FLOWS FROM OPERATING ACTIVITIES (Unaudited) (In thousands) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 --------- --------- --------- --------- NET INCOME $1,771 $(214) $12,369 $6,946 Income (loss) from discontinued operations 8 (396) 141 (1,354) --------- --------- --------- --------- Net income from continuing operations 1,763 182 12,228 8,300 Adjustments to reconcile net income from continuing operations to net cash provided by operating activities: Depreciation and amortization 1,273 1,171 3,719 3,540 Provision for doubtful accounts 492 465 1,212 1,170 Provision for (benefit from) accrual for self-insured professional liability, net 830 2,341 (5,291) (2,760) Payment of professional liability costs (967) (778) (3,198) (2,145) Amortization of deferred balances 65 90 265 272 Provision for leases in excess of cash payments 59 139 168 417 Foreign currency transaction gain (258) (303) (136) (496) Non-cash interest expense 41 39 122 114 Non-cash interest income (101) (95) (323) (125) --------- --------- --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES BEFORE CHANGES IN OTHER ASSETS AND LIABILITIES 3,197 3,251 8,766 8,287 CHANGES IN OTHER ASSETS AND LIABILITIES AFFECTING OPERATING ACTIVITIES: Receivables, net (246) (1,241) (1,848) (167) Prepaid expenses and other assets (713) (1,402) (1,928) (1,056) Trade accounts payable and occurred expenses 501 126 1,137 (2,539) --------- --------- --------- --------- Net cash provided by continuing operations 2,739 734 6,127 4,525 Net cash provided (used) by discontinued operations -- (57) (59) 738 --------- --------- --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES $2,739 $677 $6,068 $5,263 ========= ========= ========= ========= CONTACT: Advocat Inc. William R. Council, 615-771-7575 -----END PRIVACY-ENHANCED MESSAGE-----