Gentiva Health Services Reports Fourth Quarter and Full-Year 2012 Results

 Gentiva Health Services, Inc. (NASDAQ: GTIV), the largest provider of home health and hospice services in the United States based on revenue, today reported fourth quarter and full-year 2012 results.

Full-year 2012 financial highlights include:
• Total net revenues of $1.71 billion.
• Adjusted income from continuing operations on a diluted per share basis of $1.27, excluding the  $0.03 impact from credit agreement amendment fees incurred in the first quarter of 2012 and the $0.01 impact from Hurricane Sandy in the fourth quarter of 2012.
• Adjusted EBITDA of $180.5 million.

Fourth quarter 2012 financial highlights include:
• Total net revenues of $425.0 million, a decrease of 5% compared to $449.2 million for the quarter ended December 31, 2011 due to the impact of the significant home health Medicare rate reduction in 2012 and the sale or closure of branches related to the Company's comprehensive review of its branch structure in the third quarter of 2011.  Excluding the impact of branches sold or closed, total net revenues would have been down 2% compared to the fourth quarter of 2011. Net revenues included home health episodic revenues of $209.8 million, a decline of 3% compared to $217.1 million in the 2011 fourth quarter.  Hospice revenues were $187.3 million, a decrease of 6% compared to $200.3 million in the 2011 fourth quarter.  Hospice represented 44% of total net revenues in the fourth quarter of 2012, compared to 45% in the 2011 fourth quarter.
• Income from continuing operations attributable to Gentiva shareholders of $8.6 million, or $0.28 per diluted share, compared to income of $3.4 million, or $0.11per diluted share, for the fourth quarter of 2011.
• Adjusted income from continuing operations attributable to Gentiva shareholders of $9.7 million, compared with $11.3 million in the comparable 2011 period. On a diluted per share basis, adjusted income from continuing operations attributable to Gentiva shareholders was $0.31 for the fourth quarter of 2012 as compared to $0.37 for the fourth quarter of 2011. Excluding the $0.01 impact of Hurricane Sandy, adjusted income from continuing operations attributable to Gentiva shareholders was $0.32 on a diluted per share basis for the fourth quarter of 2012.
• Adjusted earnings before interest, taxes, depreciation and amortization attributable to continuing operations (Adjusted EBITDA) was $44.2 million in the fourth quarter of 2012 as compared to $47.1 million in the fourth quarter of 2011.  Adjusted EBITDA as a percentage of net revenues was 10.4% in the fourth quarter of 2012 versus 10.5% in the prior year period.

Adjusted income from continuing operations attributable to Gentiva shareholders and Adjusted EBITDA exclude charges related to restructuring, legal settlements, acquisition and integration activities and other special items.

Highlights for the full-year 2012 include:
• Total net revenues of $1.71 billion, a decrease of 5% compared to $1.80 billion for the prior year period due to the impact of the significant home health Medicare rate reduction in 2012 and the sale or closure of branches related to the Company's comprehensive review of its branch structure in the third quarter of 2011. Net revenues included home health episodic revenues of $834.2 million, a decline of 5% as compared to $876.9 million in the comparable 2011 period.  Hospice revenues were $764.8 million, a decrease of 3% compared to $786.2 million in the comparable 2011 period.
• Income from continuing operations attributable to Gentiva shareholders of $26.8 million, or $0.87 per diluted share, compared to a loss of $458.8 million, or$15.13 per diluted share, in the prior year period.
• Adjusted income from continuing operations attributable to Gentiva shareholders of $37.7 million, compared with $49.2 million in the 2011 period. On a diluted per share basis, adjusted income from continuing operations attributable to Gentiva shareholders was $1.23 for 2012 as compared with $1.60 in the corresponding period of 2011.  Excluding the $0.03 impact from expenses associated with the March 6, 2012 credit agreement amendment and the $0.01impact from Hurricane Sandy, adjusted income from continuing operations attributable to Gentiva shareholders was $1.27 on a diluted per share basis for the 2012 period as compared to $1.68 in the prior year period, which excluded an $0.08 impact from refinancing charges.
• Adjusted earnings before interest, taxes, depreciation and amortization attributable to continuing operations (Adjusted EBITDA) was $180.5 million as compared to $199.2 million in the 2011 period.  Adjusted EBITDA as a percentage of net revenues was 10.5% versus 11.1% in the prior year period.

For the fourth quarter of 2012, the Company reported net income attributable to Gentiva shareholders of $8.6 million, or $0.28 per diluted share, compared to net income of $4.6 million, or $0.15 per diluted share, in the fourth quarter of 2011. For the full-year 2012, net income attributable to Gentiva shareholders was $26.8 million, or $0.87 per diluted share, compared with a net loss of $450.5 million, or $14.85 per diluted share, for the full-year 2011. These results included charges related to the special items discussed above as well as the results from discontinued operations.

Cash Flow and Balance Sheet Highlights

At December 31, 2012, the Company reported cash and cash equivalents of $207.1 million, compared to $156.0 million at September 30, 2012.  Total outstanding debt was $935.2 million as of December 31, 2012, compared to $938.1 million at September 30, 2012.  Total Company days sales outstanding, or DSO's, was 51 days at December 31, 2012, down from 52 days at September 30, 2012.

For the fourth quarter of 2012, net cash provided by operating activities was $51.3 million, compared to negative $9.2 million in the prior year period.  Free cash flow was $48.8 million for the fourth quarter of 2012, compared to negative $13.9 million in the prior year period. 

Full-year 2012 free cash flow was $114.2 million.  Free cash flow is calculated as net cash provided by operating activities less capital expenditures.

Full-Year 2013 Outlook Comments

The Company will provide its 2013 guidance once the final sequestration rules have been issued by the Centers for Medicare and Medicaid Services (CMS) given the current uncertainties associated with when and how sequestration will be implemented.

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 historical measures to the most directly comparable GAAP measures.

A reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure, is not accessible on a forward-looking basis without unreasonable effort due to the inherent difficulties in predicting the costs of restructuring, legal settlements and merger and acquisition activities, the results of discontinued operations and the impact of any future acquisitions or divestitures, which can fluctuate significantly and may have a significant impact on net income.
About Gentiva Health Services, Inc.

Gentiva Health Services, Inc. is the nation's largest provider of home health and hospice services based on revenue, 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; and other therapies and services. GTIV-G

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