Gentiva Health Services first-quarter total net revenues up 7.5% to $297.1 million

Gentiva Health Services, Inc.May 6 2010

Gentiva Health Services, Inc. (Nasdaq: GTIV), a leading provider of home health and hospice services, today reported first quarter 2010 results.

Highlights for the three months ended April 4, 2010 as presented below reflect results from continuing operations. Discontinued operations represent results of Gentiva's respiratory therapy and home medical equipment and infusion therapy businesses which were sold on February 1, 2010.

First quarter 2010 highlights include:  

• Total net revenues of $297.1 million, an increase of 7.5% compared to $276.4 million for the quarter ended March 29, 2009. Net revenues included home health episodic revenues of $228.5 million, up 13% compared to $202.2 million in the comparable 2009 period, and hospice revenues of $19.7 million, up approximately 12% from $17.6 million in the 2009 first quarter. 
• Income from continuing operations of $10.3 million, or $0.34 per diluted share which included special pre-tax charges of $15.5 million or $0.31 per diluted share relating primarily to the impact of recent settlements of two previously disclosed open legal matters. The special charges included (i) settlement costs and legal fees of $5.6 million related to a three-year old commercial contractual dispute involving the Company's former subsidiary, CareCentrix, (ii) incremental charges of $9.5 million in connection with an agreement in principle, subject to final approvals, between the Company and the Department of Health and Human Services, Office of the Inspector General ("OIG") to resolve the matters which were subject to a 2003 OIG subpoena relating to the Company's cost reports for the 1998 to 2000 periods and (iii) restructuring and merger and acquisition costs of $0.4 million. Income from continuing operations in the first quarter of 2009 was $18.2 million or $0.61 per diluted share and included (i) a non-recurring pre-tax net gain of $5.8 million or $0.19 per diluted share resulting from the sale of certain branch offices that specialized primarily in pediatric home health care services and (ii) restructuring and merger and acquisition costs of $0.9 million or $0.02 per diluted share.
• Adjusted income from continuing operations of $19.7 million, up 53% compared with the prior year period. Adjusted income from continuing operations, which excludes the aforementioned special charges as well as the non-recurring transaction gain, was $0.65 per diluted share in the 2010 first quarter compared with $0.44 per diluted share in the corresponding period of 2009.
• Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) attributable to continuing operations increased 33% to $37.2 million in the first quarter of 2010 as compared to $28.0 million in the first quarter of 2009.  Adjusted EBITDA as a percentage of net revenues improved to 12.5% in the first quarter of 2010 versus 10.1% in the prior-year period. Adjusted EBITDA excludes the aforementioned special charges.

"Gentiva's solid first quarter performance was driven by patient admission growth of more than 10% and improving profitability as we continue to narrow our strategic focus to our home health and hospice operations," said Gentiva CEO Tony Strange. "The recent passage of healthcare reform legislation brings with it clarity on reimbursement for the next several years and we will continue to work closely with policymakers on future refinements to these regulations as they are implemented."

Results of discontinued operations in the first quarter 2010 included a net loss of $1.0 million or $0.03 per diluted share as compared to a net loss of $0.2 million or $0.01 per diluted share in the first quarter of 2009.

For the first quarter of 2010, the Company reported net income of $9.3 million or $0.31 per diluted share compared to $18.0 million or $0.60 per diluted share in the first quarter of 2009. These results included special charges and the non-recurring transaction gain discussed above as well as the results from discontinued operations.

At April 4, 2010, the Company reported cash and cash equivalents of $168.9 million and outstanding debt under its credit agreement of $232.0 million.

Full-Year 2010 Outlook

Gentiva reaffirmed its outlook for fiscal 2010 full-year net revenues in a range of $1.23 billion to $1.26 billion and raised its outlook for adjusted net income from continuing operations on a diluted earnings per share basis to between $2.67 and $2.75 as compared to prior guidance of between $2.57 and $2.67. Gentiva raised its earnings outlook for fiscal 2010 based on its strong first quarter operating earnings performance and the passage of the Patient Protection and Affordable Care Act which created a 3% add-on to Medicare payments made for home health services to patients in rural areas effective April 1, 2010. The 2010 estimates exclude net special charges of between $0.30 and $0.35 per diluted share, the results of discontinued operations and the impact of any future acquisitions.