Gentiva Health Services net revenues decrease 5% to $415.6M in first quarter 2013

Gentiva Health Services, Inc.May 9 2013

Gentiva Health Services, Inc. (NASDAQ: GTIV), the largest provider of home health and hospice services in the United States based on revenue, today reported first quarter 2013 results. 

First quarter 2013 financial highlights include: 

• Total net revenues of $415.6 million, a decrease of 5% compared to $435.7 million for the quarter ended March 31, 2012.  During the quarter, total net revenues were negatively impacted by the 2013 home health Medicare rate reduction, the initial effects of sequestration and the sale or closure of branches in the prior year.  Excluding the impact of branches sold or closed, total net revenues would have been down 3% compared to the first quarter of 2012.  Net revenues included home health episodic revenues of $207.4 million, a decline of 2% compared to $210.6 million in the 2012 first quarter.  Hospice revenues were $179.5 million, a decrease of 8% compared to $195.7 million in the 2012 first quarter.  Hospice represented 43% of total net revenues in the first quarter of 2013, compared to 45% in the 2012 first quarter.
• Net loss attributable to Gentiva shareholders of $207.2 million, or $6.73 per diluted share, compared to Net income attributable to Gentiva shareholders of $4.8 million, or $0.16 per diluted share, for the first quarter of 2012.  During the first quarter of 2013, the Company recorded non-cash impairment charges of $224.3 million based on an interim impairment test of the Company's goodwill and other long-lived assets that was performed during the quarter.  
• Adjusted income attributable to Gentiva shareholders of $7.1 million, compared with $7.4 million in the comparable 2012 period. On a diluted per share basis, adjusted income attributable to Gentiva shareholders was $0.23 for the first quarter of 2013 as compared to $0.24 for the first quarter of 2012, prior to the $0.03 add-back in the first quarter of 2012 for credit agreement amendment expenses.  First quarter 2013 Adjusted income attributable to Gentiva shareholders was negatively impacted by the typical seasonality associated with higher federal and state unemployment taxes in the first quarter of the year and one less day associated with the leap year in 2012.
• Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) was $39.1 million in the first quarter of 2013 as compared to $41.9 million in the first quarter of 2012.  Adjusted EBITDA as a percentage of net revenues was 9.4% in the first quarter of 2013 versus 9.6% in the prior year period. Excluding the credit agreement amendment expenses discussed above, Adjusted EBITDA would have been $43.1 million in the first quarter of 2012. 

"I am pleased with our overall results this quarter, which met our expectations despite a continued challenging reimbursement and regulatory environment," said Gentiva CEO Tony Strange.

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

Cash Flow and Balance Sheet Highlights

At March 31, 2013, the Company reported cash and cash equivalents of $159.6 million, compared to $207.1 million at December 31, 2012.  Total outstanding debt was $910.2 million as of March 31, 2013, compared to $935.2 million at December 31, 2012.  Total Company days sales outstanding, or DSO's, was 52 days at March 31, 2013 compared to 51 days at December 31, 2012.

For the first quarter of 2013, net cash provided by operating activities was a negative $20.6 million, compared to a negative $34.7 million in the prior year period.  Free cash flow was a negative $23.3 million for the first quarter of 2013, compared to negative $38.5 million in the prior year period.  As expected, cash flow for the first quarter of 2013 was impacted by the timing of interest payments on the Company's senior notes and compensation related expenses.  Free cash flow is calculated as net cash provided by operating activities less capital expenditures.

Full-Year 2013 Outlook

Gentiva reaffirmed its full year 2013 outlook.  Net revenues are expected to be in the range of $1.69 billion to $1.73 billion, including a $21.0 million year-over-year negative impact from branches closed or sold in the prior year.  Adjusted income attributable to Gentiva shareholders is expected to be in the range of $0.90 to $1.10 on a diluted per share basis, based on an estimated 31.0 million shares outstanding.