Gentiva Health Services reports decreased net revenues for 2009 third quarter

Gentiva Health Services, Inc.Oct 29 2009

Gentiva Health Services, Inc. (Nasdaq: GTIV), a leading provider of comprehensive home health services, today reported the following 2009 third quarter results:

• Net revenues of $295.6 million for the quarter ended September 27, 2009 compared to $345.2 million, which included net revenues of $75.5 million from its CareCentrix business unit, for the quarter ended September 28, 2008. Excluding prior year's third quarter net revenues from CareCentrix, Gentiva's net revenues grew over $25 million, or 9% in the 2009 third quarter. The Company sold a majority ownership interest in CareCentrix to Water Street Healthcare Partners on September 25, 2008.

• Net income of $15.4 million, or $0.52 per diluted share compared to net income of $120.9 million or $4.07 per diluted share in the 2008 third quarter. Third quarter 2008 results included a non-recurring gain of $107.9 million or $3.67 per diluted share relating to the sale of a majority ownership interest in CareCentrix.

• Adjusted net income for the 2009 third quarter was $15.9 million, up 27% compared with the prior year period. On a diluted earnings per share basis, adjusted net income in the 2009 third quarter was $0.54 per diluted share compared with $0.42 per diluted share in the corresponding period of 2008. Adjusted net income for both third quarter periods excludes special charges of $0.02 per diluted share relating to restructuring and merger and acquisition activities. In addition, adjusted 2008 third quarter results exclude a non-recurring gain relating to the sale of a majority ownership interest in CareCentrix.

• Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 8% to $31.0 million in the third quarter of 2009. EBITDA as a percentage of net revenues improved to 10.5% in the third quarter of 2009 versus 8.3% in the prior-year period. EBITDA included restructuring and integration costs of $0.9 million in the third quarter of 2009 as compared to $1.4 million for the prior year period.

"Gentiva continues to execute well on its business strategy and we are well on track to achieve our full year 2009 financial outlook, with expectations toward the higher end of the earnings range," said Gentiva CEO Tony Strange. "Growth trends in both our Home Health and Hospice business units remain solid as we intensify our focus on serving the needs of the nation's growing high-acuity senior population. We are delivering on the key initiatives that will grow our company, including increasing the penetration of our specialty care programs, recruiting and retaining the best caregivers in the business, and operating efficiently, with a strong balance sheet."

Gentiva reported these segment highlights for the quarter:

• Home Health revenue growth of 9% to $261.4 million and operating contribution growth of 7% to $41.4 million.

• Revenues in the All Other segment - which includes hospice, respiratory therapy and home medical equipment, infusion therapy and consulting - increased 11% to $34.6 million, while operating contribution increased 70% to $5.0 million compared to the prior-year period.

Gentiva reported these highlights for the nine months ended September 27, 2009:

• Net revenues of $882.6 million versus $1.01 billion in the prior year period. Net revenues in the 2008 period included approximately $232.7 million relating to CareCentrix. Excluding the revenue contribution from CareCentrix, Gentiva's net revenues grew about $103 million, or 13%, in the nine-month period ended September 27, 2009.

• Net income of $50.5 million, or $1.70 per diluted share which included (i) a non-recurring pre-tax net gain of $5.7 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 and (ii) special pre-tax charges of $2.4 million or $0.05 per diluted share relating to restructuring and merger and acquisition costs. These results compared to net income of $140.6 million or $4.80 per diluted share in the 2008 period which included a net gain of $3.72 per diluted share from the sale of CareCentrix and special pre-tax charges of $2.1 million or $0.04 per diluted share relating to restructuring and merger and acquisition costs.

• Adjusted net income was $46.3 million, up 41% compared with the prior year period. On a diluted earnings per share basis, adjusted net income in the 2009 period was $1.56 compared with $1.12 in the corresponding period of 2008. Adjusted net income excludes non-recurring transaction gains and special charges relating to restructuring and merger and acquisition activities in both periods.

• EBITDA increased 13% to $94.7 million versus $84.1 million in the prior-year period.

• Operating cash flow was $76.5 million in the 2009 period compared to $51.1 million in the comparable 2008 period.

At September 27, 2009, the Company reported cash and cash equivalents of $120.3 million and long-term debt of $237.0 million.

Full-Year 2009 Outlook

Gentiva announced that it is reaffirming its revenue and earnings outlook for fiscal 2009. Gentiva anticipates full-year 2009 net revenues will range between $1.19 billion to $1.21 billion. On a diluted earnings per share basis, adjusted net income is expected to be in a range between $2.04 and $2.10 per diluted share. Gentiva's 2009 outlook represents an increase in net revenues of 12% to 14% and an increase in adjusted net income per diluted share of 45% to 50% 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 special charges relating to restructuring and merger and acquisition costs which are expected to range between $3 million and $4 million for the year and non-recurring charges and credits. The outlook includes the impact of recently announced acquisitions and also reflects 53 weeks of activity in fiscal 2009.