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Gentiva Reports First Quarter 2009 Results
Date:4/30/2009

- Reaffirms 2009 Performance Outlook -

MELVILLE, N.Y., April 30 /PRNewswire-FirstCall/ -- Gentiva Health Services, Inc. (Nasdaq: GTIV), a leading provider of comprehensive home health services, today reported the following 2009 first quarter results:

  • Net revenues of $288.9 million for the quarter ended March 29, 2009 compared to $321.6 million, which included net revenues of $77.8 million from its CareCentrix business unit, for the quarter ended March 30, 2008. Excluding prior year's first quarter net revenues from CareCentrix, Gentiva's net revenues grew about $45 million, or 18% in the 2009 first quarter. The Company sold a majority interest in CareCentrix to Water Street Healthcare Partners on September 25, 2008.

  • Net income of $18.0 million, or $0.60 per diluted share, which included a non-recurring pre-tax net gain of $5.8 million or $0.19 per diluted share resulting from the 2009 first quarter sale of certain branch offices that specialized primarily in pediatric home health care services. These results compared to net income of $7.7 million or $0.27 per diluted share in the 2008 first quarter.

  • Excluding the net gain from the sale of the home health branch offices referred to above and special charges related to restructuring and integration activities, adjusted net income for the 2009 first quarter was $12.7 million, up 61% compared with the prior year period. On a diluted earnings per share basis, adjusted net income in the 2009 first quarter was $0.43, excluding special charges of $0.02 per diluted share, compared with $0.27 in the corresponding period of 2008.

  • A 19% increase in earnings before interest, taxes, depreciation and amortization (EBITDA) to $28.2 million in the first quarter of 2009; EBITDA as a percentage of net revenues improved to 9.8% in the first quarter of 2009 versus 7.4% in the prior-year period. EBITDA included restructuring and integration costs of $0.9 million in the first quarter of 2009 as compared to $0.3 million for the prior year period.

"Gentiva is off to a good start to 2009, both financially and operationally," said Gentiva CEO Tony Strange. "Our results for the quarter were again led by our Home Health segment as we focus on meeting the needs of the nation's growing senior population, for which home healthcare is a cost-effective and patient-preferred solution. The aggregate results of our other businesses also showed improved performance in the quarter, primarily driven by growth in hospice. Based on these solid first quarter results and our confidence that the Company will continue to execute on its strategy during the remainder of the year, we are today reaffirming our revenue and earnings outlook for 2009."

Gentiva reported these segment highlights for the quarter:

  • Home Health's 19% revenue growth to $257.7 million and operating contribution growth of 39% to $43.2 million.

  • Revenues in Gentiva's All Other segment - which includes hospice, respiratory therapy and home medical equipment, infusion therapy and consulting - increased 14% to $31.6 million, while operating contribution increased 14% to $3.2 million compared to the prior-year period.

During the 2009 first quarter, Gentiva generated $25 million in operating cash flow, repaid $14 million of its term loan and spent $4.8 million to repurchase 327,828 shares of its common stock. At March 29, 2009, the Company reported cash and cash equivalents of $79.6 million and long-term debt of $237 million.

Full-Year 2009 Outlook

Gentiva also reaffirmed its outlook for fiscal 2009 of full-year net revenues in a range of $1.14 billion to $1.18 billion. On a diluted earnings per share basis, adjusted net income is expected to be in a range between $1.72 and $1.80, excluding restructuring and integration costs which are estimated to range from $3 million to $5 million for the year. Gentiva's 2009 outlook represents an increase in net revenues of 8% to 11% and an increase in diluted earnings per share of 20% to 30% when compared with 2008 pro forma financial results, which reflect the Company's performance as if the CareCentrix divestiture had occurred at the beginning of fiscal 2008. The 2009 outlook excludes the $0.19 per diluted share net gain resulting from the sale of branches specializing primarily in pediatric home health services in the first quarter.

Non-GAAP Financial Measures

The information provided in this press release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission (SEC) rules. In accordance with SEC rules, the Company has provided, in the supplemental information and the footnotes to the tables, a reconciliation of those measures to the most directly comparable GAAP measures.

Conference Call and Web Cast Details

The Company will comment further on its first quarter 2009 results during its conference call and live web cast to be held Thursday, April 30, 2009 at 10:00 a.m. Eastern Time. To participate in the call from the United States, Canada or an international location, dial (973) 935-2408 and reference call #94103101. The web cast is an audio-only, one-way event. Web cast listeners who wish to ask questions must participate in the conference call. Log onto http://investors.gentiva.com/events.cfm to hear the web cast. A replay of the call will be available on April 30, beginning at approximately 1 p.m. ET, and will remain available continuously through May 7. To listen to a replay of the call from the United States, Canada or international locations, dial (800) 642-1687 or (706) 645-9291 and enter the following PIN at the prompt: 94103101. Visit http://investors.gentiva.com/events.cfm to access the web cast archive. This press release is accessible at http://investors.gentiva.com/releases.cfm and a transcript of the conference call is expected to be available on the site within 48 hours after the call.

About Gentiva Health Services, Inc.

Gentiva Health Services, Inc. is a leading provider of comprehensive home health services, delivering innovative, high quality care to patients across the United States. Gentiva is a single source for skilled nursing; physical, occupational, speech and neurorehabilitation services; hospice services; social work; nutrition; disease management education; help with daily living activities; respiratory therapy and home medical equipment; infusion therapy services; and other therapies and services. For more information, visit Gentiva's web site, http://www.gentiva.com, and its investor relations section at http://investors.gentiva.com. GTIV-E

(tables and notes follow)

        (in 000's, except per share data)                      1st Quarter
                                                               -----------
                                                           2009          2008
                                                           ----          ----
    Statements of Income
    --------------------
        Net revenues                                   $288,917      $321,633
        Cost of services and goods sold                 140,809       185,110
                                                        -------       -------
        Gross profit                                    148,108       136,523
        Selling, general and administrative
         expenses                                     (125,355)     (117,880)
        Gain on sale of business, net                     5,832             -
        Interest expense                                (3,192)       (6,093)
        Interest income                                     801           667
                                                            ---           ---
        Income before income taxes                       26,194        13,217
        Income tax expense                                8,450         5,494
                                                          -----         -----
        Income before equity in net earnings of
         affiliate                                       17,744         7,723
        Equity in net earnings of affiliate                 278             -
                                                            ---           ---
        Net income                                      $18,022        $7,723
                                                        =======        ======

      Earnings per Share
      ------------------
        Net income:
           Basic                                          $0.62         $0.27
                                                          =====         =====
           Diluted                                        $0.60         $0.27
                                                          =====         =====

        Average shares outstanding:
           Basic                                         28,944        28,282
                                                         ======        ======
           Diluted                                       29,829        29,043
                                                         ======        ======

    Condensed Balance Sheets
    ------------------------
      ASSETS                                       Mar 29, 2009  Dec 28, 2008
      ------                                       ------------  ------------
        Cash and cash equivalents                       $79,559       $69,201
        Short-term investments (A)                        2,550             -
        Accounts receivable, net (B)                    181,591       177,201
        Deferred tax assets                              13,363        11,933
        Prepaid expenses and other current
         assets                                          15,766        13,141
                                                        -------       -------
             Total current assets                       292,829       271,476

        Long-term investments (A)                         8,500        11,050
        Note receivable                                  25,000        25,000
        Investment in affiliate                          23,542        23,264
        Fixed assets, net                                65,159        63,815
        Intangible assets, net                          249,228       250,432
        Goodwill                                        308,155       308,213
        Other assets                                     20,290        20,247
                                                       --------      --------
            Total assets                               $992,703      $973,497
                                                       ========      ========

      LIABILITIES AND SHAREHOLDERS' EQUITY
      ------------------------------------
        Accounts payable                                 $6,433        $8,027
        Payroll and related taxes                        26,738        17,869
        Deferred revenue                                 38,407        32,976
        Medicare liabilities                              7,154         6,680
        Obligations under insurance programs             39,102        39,628
        Other accrued expenses                           39,533        40,895
                                                        -------       -------
             Total current liabilities                  157,367       146,075

        Long-term debt                                  237,000       251,000
        Deferred tax liabilities, net                    66,299        64,262
        Other liabilities                                17,071        17,189
        Shareholders' equity                            514,966       494,971
                                                       --------      --------
             Total liabilities and shareholders'
              equity                                   $992,703      $973,497
                                                       ========      ========

        Common shares outstanding                        28,803        28,864
                                                         ======        ======

    (A) Short-term and long-term investments consisted of AAA-rated auction
    rate securities.  Short-term investments were presented net of a valuation
    allowance of $0.4 million, the charge for which was recorded in
    interest expense in the 2009 first quarter.  At March 29, 2009 and
    December 28, 2008, long-term investments were presented net of a valuation
    allowance of $1.5 million and $1.9 million, respectively.

    (B) Accounts receivable, net, included an allowance for doubtful accounts
    of $7.5 million and $8.2 million at March 29, 2009 and December 28, 2008,
    respectively.


        (in 000's)                                           1st Quarter
                                                             -----------
    Condensed Statements of Cash Flows                      2009      2008
    ----------------------------------                      ----      ----
      OPERATING ACTIVITIES:
      Net income                                         $18,022    $7,723
      Adjustments to reconcile net income to net cash
       provided by operating activities:
        Depreciation and amortization                      5,487     5,151
        Amortization of debt issuance costs                  399       287
        Provision for doubtful accounts                    1,410     2,600
        Equity-based compensation expense                  1,805     1,736
        Windfall tax benefits associated with equity-
         based compensation                                 (547)   (1,235)
        Loss on sale of auction rate securities              450         -
        Gain on sale of business, net                     (5,832)        -
        Equity in net earnings of affiliate                 (278)        -
        Deferred income taxes                                427     4,848
      Changes in assets and liabilities, net of effects
       from acquisitions and dispositions:
        Accounts receivable                               (5,800)  (19,598)
        Prepaid expenses and other current assets         (2,565)   (2,151)
        Current liabilities                               11,976     8,825
      Other, net                                              42       (51)
                                                          ------     -----
      Net cash provided by operating activities           24,996     8,135
                                                          ------     -----

      INVESTING ACTIVITIES:
      Purchase of fixed assets                            (5,671)   (6,624)
      Proceeds from sale of business, net of cash
       transferred                                         5,619         -
      Acquisition of businesses, net of cash acquired          -   (47,405)
      Purchases of short-term investments available-
       for-sale                                                -   (28,000)
      Maturities of short-term investments available-
       for-sale                                                -    44,900
                                                             ---   -------
      Net cash used in investing activities                  (52)  (37,129)
                                                             ---   -------

      FINANCING ACTIVITIES:
      Proceeds from issuance of common stock               3,899     4,119
      Windfall tax benefits associated with equity-
       based compensation                                    547     1,235
      Borrowings under revolving credit facility               -    12,000
      Home Health Care Affiliates debt repayments              -    (7,420)
      Debt issuance costs                                      -      (432)
      Repayments under the Company's term loan           (14,000)        -
      Repurchases of common stock                         (4,813)        -
      Repayment of capital lease obligations                (219)     (307)
                                                         -------    ------
      Net cash (used in) provided by financing
       activities                                        (14,586)    9,195
                                                         -------   -------

      Net change in cash and cash equivalents             10,358   (19,799)
      Cash and cash equivalents at beginning of period    69,201    36,181
                                                         -------   -------
      Cash and cash equivalents at end of period         $79,559   $16,382
                                                         =======   =======

      SUPPLEMENTAL DISCLOSURES OF CASH FLOW
       INFORMATION:

      Interest paid                                       $3,117    $5,702
      Income taxes paid                                   $1,489      $417


        (in 000's)
     Supplemental Information                                 1st Quarter
    -------------------------                                 -----------
                                                            2009      2008
                                                            ----      ----
    Segment Information (1)
      Net revenues
        Home Health                                     $257,745  $217,000
        CareCentrix                                            -    77,848
        All Other (5)                                     31,571    27,729
        Intersegment revenues                               (399)     (944)
                                                        --------  --------
      Total net revenues (5)                            $288,917  $321,633
                                                        ========  ========

      Operating contribution (3)
        Home Health                                      $43,225   $31,202
        CareCentrix (4)                                        -     6,326
        All Other                                          3,230     2,845
                                                         -------   -------
      Total operating contribution                        46,455    40,373
      Corporate expenses                                (18,215)  (16,579)
      Gain on sale of business, net                        5,832         -
      Depreciation and amortization                      (5,487)   (5,151)
      Interest expense, net                              (2,391)   (5,426)
                                                         -------   -------
      Income before income taxes                         $26,194   $13,217
                                                         =======   =======


                                                              1st Quarter
                                                              -----------
                                                            2009      2008
                                                            ----      ----
      Net Revenues by Major Payer Source:
        Medicare
          Home Health                                   $186,070  $145,106
          Other                                           20,057    16,200
                                                        --------  --------
          Total Medicare                                 206,127   161,306
        Medicaid and local government                     28,142    31,566
        Commercial Insurance and Other:
           Paid at episodic rates                         16,130    11,146
           Other                                          38,518   117,615
                                                        --------  --------
           Total Commercial Insurance and Other           54,648   128,761
                                                        --------  --------
             Total net revenues                         $288,917  $321,633
                                                        ========  ========


    A reconciliation of EBITDA to Net income - As Reported
     amounts follows: (2)                                     1st Quarter
                                                              -----------
                                                            2009      2008
                                                            ----      ----
        EBITDA (3)                                       $28,240   $23,794
        Gain on sale of business, net                      5,832         -
        Depreciation and amortization                    (5,487)   (5,151)
        Interest expense, net                            (2,391)   (5,426)
                                                          ------    ------
        Income before income taxes                        26,194    13,217
        Income tax expense (6)                           (8,450)   (5,494)
                                                          ------    ------
        Income before equity in net earnings of
         affiliate                                        17,744     7,723
        Equity in net earnings of affiliate                  278         -
                                                         -------    ------
        Net income - As Reported                         $18,022    $7,723
                                                         =======    ======


     Notes:
    (1) The Company's senior management evaluates performance and allocates
    resources based on operating contributions of the operating segments,
    which exclude corporate expenses, depreciation, amortization, and
    interest expense (net), but include revenues and all other costs directly
    attributable to the specific segment.

    (2) EBITDA, a non-GAAP financial measure, is defined as income before
    interest expense (net of interest income), income taxes, depreciation and
    amortization.  Management uses EBITDA to evaluate overall performance and
    compare current operating results with other companies in the healthcare
    industry.  EBITDA should not be considered in isolation or as a
    substitute for net income, operating income or cash flow statement data
    determined in accordance with accounting principles generally accepted in
    the United States.  Because EBITDA is not a measure of financial
    performance under accounting principles generally accepted in the United
    States and is susceptible to varying calculations, it may not be
    comparable to similarly titled measures in other companies.

    (3) Operating contribution and EBITDA for the first quarter of 2009 and
    2008 included special charges of $0.9 million and $0.3 million,
    respectively.  The special charges, which included restructuring and
    integration costs and costs and professional fees associated with merger
    and acquisition activities, were reflected as follows for segment
    reporting (dollars in millions):


                                                              1st Quarter
                                                              -----------
                                                            2009      2008
                                                            ----      ----
        Home Health                                         $0.1      $0.1
        Corporate expenses                                   0.8       0.2
                                                            ----      ----
        Total                                               $0.9      $0.3
                                                            ====      ====


    (4) Operating contribution for CareCentrix, in which the Company sold a
    majority ownership interest on September 25, 2008, was comprised of the
    following (dollars in thousands):


                                                              1st Quarter
                                                              -----------
                                                            2009      2008
                                                            ----      ----
        Gross profit                                          $-   $14,290
        Selling, general and administrative expenses           -    (8,077)
        Add: depreciation                                      -       113
                                                              --    ------
        Operating contribution                                $-    $6,326
                                                              ==    ======


    (5) Certain reclassifications have been made to the 2008 first quarter
    statement of income and supplemental information to conform to the
    current year presentation.  The primary impact of the reclassifications
    was to reduce (i) net revenues in All Other and (ii) cost of services and
    goods sold by approximately $2.1 million in the 2008 first quarter
    relating to the reimbursement of nursing home room and board charges for
    hospice patients.  The Company believes that this presentation better
    conforms to industry practice.

    (6) The Company's effective tax rate was 32.3% for the first quarter of
    2009, and 41.6% for the first quarter of 2008.  During the first quarter
    of 2009, the Company recorded a pre-tax gain, net of transaction costs,
    of $5.8 million relating to the sale of several branch offices that
    specialized primarily in pediatric home health care services.  There was
    no income tax expense relating to the gain on sale of business due to the
    utilization of a capital loss carryforward.  Excluding the impact of the
    gain on sale of businesses, the Company's effective tax rate would have
    been 41.5% for the first quarter of 2009.

Forward-Looking Statement

Certain statements contained in this news release, including, without limitation, statements containing the words "believes," "anticipates," "intends," "expects," "assumes," "trends" and similar expressions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon the Company's current plans, expectations and projections about future events. However, such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, among others, the following: economic and business conditions, including the ability to access capital markets; demographic changes; changes in, or failure to comply with, existing governmental regulations; legislative proposals for healthcare reform; changes in Medicare and Medicaid reimbursement levels; effects of competition in the markets in which the Company operates; liability and other claims asserted against the Company; ability to attract and retain qualified personnel; availability and terms of capital; loss of significant contracts or reduction in revenues associated with major payer sources; ability of customers to pay for services; business disruption due to natural disasters or terrorist acts; ability to successfully integrate the operations of acquisitions the Company may make and achieve expected synergies and operational efficiencies within expected time-frames; effect on liquidity of the Company's debt service requirements; and changes in estimates and judgments associated with critical accounting policies and estimates. For a detailed discussion of certain of these and other factors that could cause actual results to differ from those contained in this news release, please refer to the Company's various filings with the Securities and Exchange Commission (SEC), including the "Risk Factors" section contained in the Company's annual report on Form 10-K for the year ended December 28, 2008.

         Financial and Investor Contact:  John R. Potapchuk
                                          631-501-7035
                                          john.potapchuk@gentiva.com

                                       or Brandon Ballew
                                          770-221-6700
                                          brandon.ballew@gentiva.com

         Media Contact:                   Jennifer Gery-Egan
                                          Brainerd Communicators
                                          212-986-6667
                                          gery@braincomm.com


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SOURCE Gentiva Health Services, Inc.
Copyright©2009 PR Newswire.
All rights reserved


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