Gentiva Health Services' total net revenues increase 14% to $486.1 million in Q4 2013

Gentiva Health Services, Inc.Mar 4 2014

Gentiva Health Services, Inc. (NASDAQ: GTIV), one of the largest providers of home health, hospice and community care services in the United States, today reported fourth quarter and full-year 2013 results. 

Gentiva acquired Harden Healthcare Holdings, Inc. ("Harden") on October 18, 2013.  The Company's fourth quarter and full-year 2013 results included Harden's financial results from its acquisition date. 

Additionally, during the fourth quarter of 2013, the Company announced a corporate restructuring initiative, referred to as "One Gentiva", to better align its home health, hospice and community care businesses under a common regional management structure and streamline the Company's management organization to meet reimbursement challenges.  The corporate restructuring resulted in the closure of 46 branches during the fourth quarter of 2013.  Additionally, the Company consolidated 31 overlapping branches as part of the integration of the Harden acquisition.  

Full-year 2013 financial highlights include:

• Total net revenues of $1.73 billion.
• Loss attributable to Gentiva shareholders per diluted share of $18.75,  including the impact of charges associated with the Company's One Gentiva initiative and the Harden acquisition, and an impairment of the Company's goodwill and other long-lived assets.
• Adjusted income attributable to Gentiva shareholders per diluted share of $0.42.
• Adjusted EBITDA of $135.0 million.

Fourth quarter 2013 financial highlights include: 

• Total net revenues of $486.1 million, an increase of 14% compared to $425.0 million for the quarter ended December 31, 2012.  Net revenues included home health episodic revenues of $225.9 million, an increase of 8% compared to $209.8 million in the 2012 fourth quarter.  Hospice revenues were $180.8 million, a decrease of 3% compared to $187.3 million in the 2012 fourth quarter.  Community Care revenues were $45.6 million from the Harden acquisition date through year-end 2013.
• Net loss attributable to Gentiva shareholders of $401.9 million, or $11.46 per diluted share, compared to net income of $8.6 million, or $0.28 per diluted share, for the fourth quarter of 2012.  During the  fourth quarter of 2013, the Company recorded non-cash impairment charges of $386.1 million based on an impairment of the Company's goodwill and other long-lived assets that was performed during the quarter.
• Adjusted loss attributable to Gentiva shareholders of $4.9 million, compared with income of $9.7 million in the comparable 2012 period. On a diluted per share basis, adjusted loss attributable to Gentiva shareholders was $0.14 for the fourth quarter of 2013 as compared to adjusted income attributable to Gentiva shareholders of  $0.31 for the fourth quarter of 2012.
• Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) was $21.6 million in the fourth quarter of 2013 as compared to $44.2 million in the fourth quarter of 2012.  Adjusted EBITDA as a percentage of net revenues was 4.4% in the fourth quarter of 2013 versus 10.4% in the prior year period. 

Adjusted (loss) income attributable to Gentiva shareholders and Adjusted EBITDA exclude charges related to restructuring, legal settlements, acquisition and integration activities, losses on closed locations and other special items.

Highlights for the full-year 2013 include: 

• Total net revenues of $1.73 billion, an increase of 1% compared to $1.71 billion for the prior year period. Net revenues included home health episodic revenues of $846.9 million, an increase of 2% as compared to $834.2 million in the comparable 2012 period.  Hospice revenues were $715.2 million, a decrease of 6% compared to $764.8 million in the comparable 2012 period.  Community Care revenues were $45.6 million from the Harden acquisition date through year-end 2013.
• Net loss attributable to Gentiva shareholders of $599.0 million, or $18.75 per diluted share, compared to net income of $26.8 million, or $0.87 per diluted share, in the prior year period. For the full-year 2013, the Company recorded non-cash impairment charges of $610.4 million based on impairment of the Company's goodwill and other long-lived assets. 
• Adjusted income attributable to Gentiva shareholders of $13.8 million, compared with $37.7 million in the 2012 period. On a diluted per share basis, adjusted income attributable to Gentiva shareholders was $0.42 for 2013 as compared with $1.23 in the corresponding period of 2012. 
• Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) was $135.0 million as compared to $180.5 million in the 2012 period.  Adjusted EBITDA as a percentage of net revenues was 7.8% versus 10.5% in the prior year period.

Cash Flow and Balance Sheet Highlights

During the fourth quarter of 2013, Gentiva entered into a new $925 million senior secured credit facility as part of the Harden transaction.  The Company used the new credit facility and available cash to fund the cash portion of the Harden purchase price during the fourth quarter of 2013. 

At December 31, 2013, the Company reported cash and cash equivalents of $87.0 million, down from $183.3 million at September 30, 2013.  Total outstanding debt was $1.18 billion as of December 31, 2013, compared to $910.2 million at September 30, 2013. Total Company days sales outstanding, or DSO's, was 49 days at December 31, 2013, down from 50 days at September 30, 2013.

For the fourth quarter of 2013, net cash provided by operating activities was $18.5 million, compared to  $51.3 million in the prior year period.  Free cash flow was $13.7 million for the fourth quarter of 2013, compared to $48.8 million in the prior year period.  

Full-year 2013 free cash flow was $18.0 million.  Free cash flow is calculated as net cash provided by operating activities less capital expenditures.

Full-Year 2014 Outlook Comments

For 2014, Gentiva expects full-year net revenues to be in the range of $1.9 billion to $2.1 billion and adjusted income attributable to Gentiva shareholders to be in the range of $0.85 to $1.15 on a diluted per share basis.

Gentiva's 2014 outlook includes the full-year impact of its Harden acquisition and the final 2014 Medicare  home health and hospice reimbursement rates issued by the Centers for Medicare and Medicaid Services (CMS).  The 2014 outlook excludes any ongoing losses from closed locations as the operations are wound down.

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 income attributable to Gentiva shareholders 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.