Gentiva’s net revenues increase $487.5M to 17% in Q1 2014

Gentiva Health Services, Inc.May 7 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 first quarter 2014 results. 

Gentiva acquired Harden Healthcare Holdings, Inc. ("Harden") on October 18, 2013.  The Company's results for the three months ended March 31, 2014 included Harden's financial results.

First quarter 2014 financial highlights include: 

• Total net revenues of $487.5 million, an increase of 17% compared to $415.6 million for the quarter ended March 31, 2013. Net revenues included home health episodic revenues of $224.4 million, an increase of 8% compared to $207.4 million in the 2013 first quarter. Hospice revenues were $174.4 million, a decrease of 3% compared to $179.5 million in the 2013 first quarter. Community care revenues were $57.1 million in the first quarter of 2014.
• Net income attributable to Gentiva shareholders of $0.3 million, or $0.01 per diluted share, compared to net loss attributable to Gentiva shareholders of $207.2 million, or $6.73 per diluted share, for the first quarter of 2013. 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 $4.8 million, compared with $7.1 million in the comparable 2013 period. On a diluted per share basis, adjusted income attributable to Gentiva shareholders was $0.13 for the first quarter of 2014 as compared to $0.23 for the first quarter of 2013. First quarter 2014 adjusted income attributable to Gentiva shareholders was negatively impacted by approximately $0.05 due to widespread, severe weather conditions across the country.
• Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) was $39.0 million in the first quarter of 2014 as compared to $39.1 million in the first quarter of 2013. Adjusted EBITDA as a percentage of net revenues was 8.0% in the first quarter of 2014 versus 9.4% in the prior year period. First quarter 2014 Adjusted EBITDA was negatively impacted by approximately $2.7 million due to the aforementioned severe weather conditions.

Adjusted 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.

Cash Flow and Balance Sheet Highlights

At March 31, 2014, the Company reported cash and cash equivalents of $62.9 million, compared to $87.0 million at December 31, 2013.  Total outstanding debt was $1.17 billion as of March 31, 2014, compared to $1.18 billion at December 31, 2013.  Total Company days sales outstanding, or DSO's, was 50 days at March 31, 2014 compared to 49 days at December 31, 2013.

For the first quarter of 2014, net cash provided by operating activities was a negative $17.7 million, compared to a negative $20.6 million in the prior year period.  Free cash flow was a negative $20.9 million for the first quarter of 2014, compared to a negative $23.3 million in the prior year period.  As expected, cash flow for the first quarter of 2014 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 2014 Outlook

Gentiva reaffirmed its full-year 2014 outlook.  Net revenues are expected to be in the range of $1.9 billion to $2.1 billion and adjusted income attributable to Gentiva shareholders is expected 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 and the impact of any future acquisitions or divestitures, which can fluctuate significantly and may have a significant impact on net income.

Conference Call and Webcast Details

The Company will comment further on its first quarter 2014 results during its conference call and live webcast to be held today, Wednesday, May 7, 2014 at 10:00 a.m. Eastern Time. To participate in the call from the United States, Canada or an international location, dial (973) 935-2408 and reference call #31122421. The webcast is an audio-only, one-way event. Webcast listeners who wish to ask questions must participate in the conference call.