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8-K - ODYSSEY HEALTHCARE, INC. 8-K - ODYSSEY HEALTHCARE INC | a6084863.htm |
CONTACT:
R. Dirk
Allison
Senior
Vice President and Chief Financial Officer
(214)
922-9711
ODYSSEY
HEALTHCARE REPORTS
THIRD
QUARTER 2009 RESULTS
DALLAS, TEXAS (October 28,
2009) — Odyssey HealthCare, Inc. (NASDAQ: ODSY), one of the largest
providers of hospice care in the United States, today announced financial
results for the third quarter and nine months ended September 30,
2009.
For the
third quarter of 2009, net patient service revenue from continuing operations
increased 6.0% to $175.2 million, compared with $165.2 million for the third
quarter of 2008. The Company’s net income attributable to Odyssey
stockholders for the third quarter of 2009 was $11.6 million, or $0.35 per
diluted share, as compared with $5.9 million, or $0.18 per diluted share, for
the third quarter of 2008. The Company’s EBITDA from continuing
operations for the third quarter of 2009 was $22.3 million, compared with $13.6
million for the third quarter of 2008.
For the
nine months ended September 30, 2009, net patient service revenue from
continuing operations was $513.1 million, compared with $448.8 million for the
same nine-month period of 2008. The Company’s net income attributable
to Odyssey stockholders for the nine months ended September 30, 2009, was $28.8
million, or $0.87 per diluted share, as compared with $9.1 million, or $0.27 per
diluted share, for the same period of 2008. The Company’s EBITDA from
continuing operations for the first nine months of 2009 was $56.8 million,
compared with $31.6 million for the first nine months of 2008.
In
commenting on the results, Robert A. Lefton, president and chief executive
officer of Odyssey HealthCare, said, “I am extremely pleased with our operating
results for the third quarter. Our volume was very strong throughout
the third quarter with our average daily patient census increasing to 12,633 for
the third quarter of 2009 as compared with 12,329 for the third quarter of 2008,
an increase of 2.5%. On a same store basis, our average daily patient
census increased 1.8% over our average daily patient census for the third
quarter of 2008 and increased 2.9% on a sequential basis over the second quarter
of 2009. I am also pleased with the results in the expense
area. Our Adjusted Operating Expense per patient day, excluding ramp
down and integration expenses, decreased over the third quarter of 2008 and also
decreased on a sequential basis from the second quarter of 2009. In
addition to several cost saving initiatives that have delivered positive
results, the decrease in operating expenses per patient day also illustrates the
Company’s ability to leverage corporate and program level overhead expenses as
patient census increases.”
-MORE-
ODSY
Announces Third Quarter 2009 Results
Page
2
October
28, 2009
Lefton
added, “Our Medicare cap contractual amount for the third quarter was 1.3% of
gross revenue, which was in line with our expectations for the
quarter. The increase in the Medicare cap from the third quarter of
2008 was primarily focused in three sites. We have taken steps to
address patient mix issues in those markets with a program consolidation in one
of the markets and the development of an inpatient unit in another market, which
opened last week and is currently awaiting Medicare certification.”
The
increase in the Company’s bad debt expense in the third quarter of 2009 was due
in part to an increase in the Company’s allowance for uncollectible accounts as
of September 30, 2009, in response to increased pre-payment reviews by the
Company’s Medicare fiscal intermediaries in the third quarter.
On October
1, 2009, payments to Medicare participating hospices increased by approximately
1.4%. This increase includes the first year phase-out of the budget
neutrality adjustment factor (“BNAF”) used in computing the hospice wage
index. The phase-out of the BNAF will occur over a seven-year period
with 10% in the first year and an additional 15% in each of the following six
years.
The
Company also announced an update to the previously disclosed investigation
conducted by the U.S. Department of Justice (“DOJ”) of alleged violations of the
Federal False Claims Act and various state false claims acts related to
VistaCare, Inc., a subsidiary of the Company, that arose from alleged conduct
occurring prior to the Company’s acquisition of VistaCare. The basis
of the investigation is now known to be a qui tam complaint filed by a
former employee of VistaCare, which has been unsealed. In connection
with the unsealing of the complaint, the DOJ has filed a notice with the court
declining to intervene in the qui tam action at this
time. While this should not be viewed as a final assessment by the
DOJ of the merits of this qui
tam action, the Company considers this to be a positive
development.
Conference
Call
Odyssey
will host a conference call to discuss the third quarter 2009 results on
Thursday, October 29, 2009, at 9:00 a.m. Central Time (10:00 a.m. Eastern
Time). The call will be broadcast live and can be accessed through
the Investor Relations section of the Company’s website at www.odsyhealth.com or
at www.earnings.com. An
online archive of the broadcast, commencing approximately two hours after the
live call, will also be available for two weeks.
Based in
Dallas, Texas, Odyssey is one of the largest providers of hospice care in the
country in terms of both average daily patient census and number of
locations. Odyssey seeks to improve the quality of life of terminally
ill patients and their families by providing care directed at managing pain and
other discomforting symptoms and by addressing the psychosocial and spiritual
needs of patients and their families.
-MORE-
ODSY
Announces Third Quarter 2009 Results
Page 3
October
28, 2009
Earnings
before interest, taxes, depreciation and amortization (“EBITDA”) is a non-GAAP
financial measure included in this press release and is reconciled to the
comparable GAAP financial measure in the tables attached to this press
release.
As a
result of adopting SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51, at the
start of fiscal 2009, the Company has changed its income statement presentation
of noncontrolling interests (previously shown as minority
interest). Minority interest is no longer separately reported as a
reduction to net income but is instead shown below net income under the heading
“net income attributable to noncontrolling interests.” The
calculation of earnings per share is based on income attributable to Odyssey
stockholders. The Company’s third quarter Form 10-Q filing with the
SEC will contain additional information regarding the accounting and reporting
impact of the Company’s adoption of SFAS 160.
Certain
statements contained in this press release and that will be contained in the
presentation are forward-looking statements within the meaning of the federal
securities laws. Such forward-looking statements are based on
management’s current expectations and are subject to known and unknown risks,
uncertainties and assumptions which may cause the forward-looking events and
circumstances discussed in this press release and in the presentation to differ
materially from those anticipated or implied by the forward-looking
statements. Additional risks, uncertainties and assumptions include,
but are not limited to, general market conditions; adverse changes in
reimbursement levels under Medicare and Medicaid programs; government and
private party legal proceedings and investigations; adverse changes in the
Medicare payment cap limits and increases in the Company’s estimated Medicare
cap contractual adjustment; declines in patient census growth; increases in
inflation including inflationary increases in patient care costs; the Company’s
ability to effectively implement the Company’s 2009 operations and development
strategies; the Company’s ability to successfully integrate and operate acquired
hospice programs; the Company’s dependence on patient referral sources and
potential adverse changes in patient referral practices of those referral
sources; the ability to attract and retain healthcare professionals; increases
in the Company’s bad debt expense due to various factors including an increase
in the volume of pre-payment reviews by the Company’s Medicare fiscal
intermediaries; adverse changes in the state and federal licensure and
certification laws and regulations; adverse results of regulatory surveys;
delays in licensure and/or certification; cost of complying with the terms and
conditions of the Company’s corporate integrity agreement; adverse changes in
the competitive environment in which the Company operates; changes in state or
federal income, franchise or similar tax laws and regulations; adverse impact of
natural disasters; changes in the Company’s estimate of additional compensation
costs under FASB Statement No. 123(R); and the disclosures contained under the
headings “Government Regulation and Payment Structure” in “Item 1. Business” and
“Item 1A. Risk Factors” of Odyssey’s Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 13, 2009, and in its other filings
with the Securities and Exchange Commission. Many of these factors
are beyond the ability of the Company to control or predict. Given
these uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements, which reflect management’s views only as of the date
hereof. The Company undertakes no obligation to revise or update any
of the forward-looking statements or publicly announce any updates or revisions
to any of the forward-looking statements contained in this press release and in
the presentation to reflect any change in the Company’s expectations with regard
thereto or any change in events, conditions, circumstances or assumptions
underlying such statements.
-MORE-
ODSY
Announces Third Quarter 2009 Results
Page 4
October
28, 2009
ODYSSEY
HEALTHCARE, INC. AND SUBSIDIARIES
UNAUDITED
SELECTED OPERATING DATA
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Continuing
Operations:(1)
|
||||||||||||||||
Admissions
|
12,034 | 11,843 | 37,267 | 34,735 | ||||||||||||
Discharges
|
12,014 | 11,732 | 36,898 | 34,297 | ||||||||||||
Average
daily census
|
12,633 | 12,329 | 12,364 | 11,226 | ||||||||||||
Discharge
average length of stay
|
84.5 | 86.4 | 82.1 | 85.5 | ||||||||||||
Gross
revenue per patient day
|
$ | 156.77 | $ | 150.83 | $ | 156.78 | $ | 150.93 | ||||||||
Medicare
cap as % of gross revenue
|
1.3 | % | 0.7 | % | 0.5 | % | 0.8 | % | ||||||||
Net
revenue per patient day
|
$ | 150.78 | $ | 145.68 | $ | 152.00 | $ | 145.90 | ||||||||
Operating
expense per patient day
|
$ | 133.15 | $ | 135.38 | $ | 136.61 | $ | 137.54 | ||||||||
Adjusted
operating expense per patient day(2)
|
$ | 131.59 | $ | 131.84 | $ | 135.19 | $ | 133.14 | ||||||||
Bad
debt expense as % of net revenue
|
2.3 | % | 1.6 | % | 1.7 | % | 1.7 | % | ||||||||
Same-Facility:(3)
|
||||||||||||||||
Admissions
|
11,921 | 11,843 | 36,911 | 34,735 | ||||||||||||
Average
daily census
|
12,557 | 12,329 | 12,290 | 11,226 | ||||||||||||
Average
length of stay
|
84.8 | 86.4 | 82.5 | 85.5 |
(1)
|
Continuing
operations excludes the operations of hospices that the Company classifies
as discontinued operations.
|
(2)
|
Adjusted
operating expense per patient day for the three months ended September 30,
2009, excludes depreciation and amortization expenses of $1.50 and $0.06
per patient day of care, respectively. Adjusted operating
expense per patient day for the three months ended September 30, 2008,
excludes ramp down and integration expenses of $1.24 and $0.56 per patient
day of care, respectively, and excludes depreciation and amortization
expenses of $1.68 and $0.06 per patient day of care,
respectively. Adjusted operating expense per patient day for
the nine months ended September 30, 2009, excludes depreciation and
amortization expenses of $1.36 and $0.06 per patient day of care,
respectively. Adjusted operating expense per patient day for
the nine months ended September 30, 2008, excludes ramp down and
integration expenses of $1.83 and $0.67 per patient day of care,
respectively, and excludes depreciation and amortization expenses of $1.82
and $0.08 per patient day of care,
respectively.
|
(3)
|
Same-facility
information includes Odyssey hospice programs that have been in operation
for the entire period of each period presented and Medicare certified for
at least 12 months.
|
-MORE-
ODSY
Announces Third Quarter 2009 Results
Page 5
October
28, 2009
ODYSSEY
HEALTHCARE, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME
(in
thousands, except per share amounts)
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
patient service revenue
|
$ | 175,234 | $ | 165,241 | $ | 513,061 | $ | 448,766 | ||||||||
Operating
expenses:
|
||||||||||||||||
Direct
hospice care
|
99,871 | 97,144 | 297,770 | 262,976 | ||||||||||||
General
and administrative – hospice care
|
32,967 | 32,997 | 100,898 | 94,604 | ||||||||||||
General
and administrative – support center
|
16,072 | 18,882 | 48,718 | 51,832 | ||||||||||||
Provision
for uncollectible accounts
|
4,025 | 2,573 | 8,894 | 7,803 | ||||||||||||
Depreciation
|
1,744 | 1,903 | 4,605 | 5,609 | ||||||||||||
Amortization
|
71 | 65 | 212 | 232 | ||||||||||||
Income
from continuing operations before other income (expense)
|
20,484 | 11,677 | 51,964 | 25,710 | ||||||||||||
Other
income (expense):
|
||||||||||||||||
Interest
income
|
96 | 362 | 384 | 1,552 | ||||||||||||
Interest
expense
|
(1,562 | ) | (2,058 | ) | (5,054 | ) | (5,379 | ) | ||||||||
(1,466 | ) | (1,696 | ) | (4,670 | ) | (3,827 | ) | |||||||||
Income
from continuing operations before provision for income
taxes
|
19,018 | 9,981 | 47,294 | 21,883 | ||||||||||||
Provision
for income taxes
|
7,150 | 3,530 | 17,497 | 7,839 | ||||||||||||
Income
from continuing operations
|
11,868 | 6,451 | 29,797 | 14,044 | ||||||||||||
Loss
from discontinued operations, net of tax
|
(88 | ) | (429 | ) | (562 | ) | (4,857 | ) | ||||||||
Net
income
|
11,780 | 6,022 | 29,235 | 9,187 | ||||||||||||
Less:
Net income attributable to noncontrolling
interests
|
199 | 135 | 416 | 115 | ||||||||||||
Net
income attributable to Odyssey stockholders
|
$ | 11,581 | $ | 5,887 | $ | 28,819 | $ | 9,072 | ||||||||
Income
(loss) per common share:
|
||||||||||||||||
Basic:
|
||||||||||||||||
Continuing
operations attributable to Odyssey stockholders
|
$ | 0.35 | $ | 0.19 | $ | 0.89 | $ | 0.43 | ||||||||
Discontinued
operations attributable to Odyssey stockholders
|
(0.00 | ) | (0.01 | ) | (0.01 | ) | (0.15 | ) | ||||||||
Net
income attributable to Odyssey stockholders
|
$ | 0.35 | $ | 0.18 | $ | 0.88 | $ | 0.28 | ||||||||
Diluted:
|
||||||||||||||||
Continuing
operations attributable to Odyssey stockholders
|
$ | 0.35 | $ | 0.19 | $ | 0.89 | $ | 0.42 | ||||||||
Discontinued
operations attributable to Odyssey stockholders
|
(0.00 | ) | (0.01 | ) | (0.02 | ) | (0.15 | ) | ||||||||
Net
income attributable to Odyssey stockholders
|
$ | 0.35 | $ | 0.18 | $ | 0.87 | $ | 0.27 | ||||||||
Weighted
average shares outstanding:
|
||||||||||||||||
Basic
|
32,932 | 32,670 | 32,880 | 32,656 | ||||||||||||
Diluted
|
33,332 | 33,052 | 33,167 | 33,227 | ||||||||||||
Amounts
attributable to Odyssey stockholders:
|
||||||||||||||||
Income
from continuing operations, net of tax
|
$ | 11,669 | $ | 6,316 | $ | 29,381 | $ | 13,929 | ||||||||
Loss
from discontinued operations, net of tax
|
(88 | ) | (429 | ) | (562 | ) | (4,857 | ) | ||||||||
Net income
|
$ | 11,581 | $ | 5,887 | $ | 28,819 | $ | 9,072 |
-MORE-
ODSY
Announces Third Quarter 2009 Results
Page 6
October
28, 2009
ODYSSEY
HEALTHCARE, INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEET
(in
thousands, except share amounts)
Sept.
30,
2009
|
Dec.
31,
2008
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 94,697 | $ | 56,043 | ||||
Short-term
investments
|
4,100 | – | ||||||
Accounts receivable from patient services, net of allowance for uncollectible accounts of $12,068 and $9,789 | ||||||||
at
September 30, 2009 and December 31, 2008, respectively
|
121,758 | 127,922 | ||||||
Income
taxes receivable
|
649 | 66 | ||||||
Deferred
tax asset
|
9,884 | 13,319 | ||||||
Prepaid
expenses and other current assets
|
6,478 | 7,906 | ||||||
Assets
of discontinued operations
|
– | 2,067 | ||||||
Total current
assets
|
237,566 | 207,323 | ||||||
Property
and equipment, net of accumulated depreciation
|
21,763 | 22,816 | ||||||
Goodwill
|
189,521 | 189,521 | ||||||
Long-term
investments
|
12,501 | 16,659 | ||||||
Licenses
|
11,295 | 11,295 | ||||||
Trademarks
|
7,235 | 7,235 | ||||||
Other
assets
|
– | 1,227 | ||||||
Intangibles,
net of accumulated amortization
|
4,117 | 4,875 | ||||||
Total
Assets
|
$ | 483,998 | $ | 460,951 | ||||
LIABILITIES
AND EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 3,950 | $ | 4,906 | ||||
Accrued
compensation
|
30,033 | 27,493 | ||||||
Accrued
nursing home costs
|
17,258 | 16,478 | ||||||
Accrued
Medicare cap contractual adjustments
|
17,877 | 23,719 | ||||||
Other
accrued expenses
|
42,252 | 45,904 | ||||||
Current
maturities of long-term debt
|
27,603 | 6,394 | ||||||
Total current
liabilities
|
138,973 | 124,894 | ||||||
Long-term
debt, less current maturities
|
89,177 | 116,681 | ||||||
Deferred
tax liability
|
16,607 | 13,610 | ||||||
Other
liabilities
|
4,590 | 3,233 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity:
|
||||||||
Common stock, $0.001 par value: 75,000,000 shares authorized, 38,290,008 and 38,137,834 shares issued | ||||||||
at September 30, 2009 and December 31, 2008, respectively, and 32,942,936 and 32,790,762 shares | ||||||||
outstanding
at September 30, 2009 and December 31, 2008,
respectively
|
38 | 38 | ||||||
Additional
paid-in capital
|
121,192 | 117,732 | ||||||
Retained
earnings
|
182,659 | 153,840 | ||||||
Accumulated
other comprehensive loss
|
(1,586 | ) | (1,585 | ) | ||||
Treasury
stock, at cost, 5,347,072 shares held at September 30, 2009 and
December 31, 2008
|
(69,954 | ) | (69,954 | ) | ||||
Total
Odyssey stockholders’ equity
|
232,349 | 200,071 | ||||||
Noncontrolling
interests
|
2,302 | 2,462 | ||||||
Total
equity
|
234,651 | 202,533 | ||||||
Total
Liabilities and Equity
|
$ | 483,998 | $ | 460,951 |
-MORE-
ODSY
Announces Third Quarter 2009 Results
Page 7
October
28, 2009
ODYSSEY
HEALTHCARE, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands)
Nine
Months Ended
September
30,
|
||||||||
2009
|
2008
|
|||||||
Operating
Activities:
|
||||||||
Net
income attributable to Odyssey stockholders
|
$ | 28,819 | $ | 9,072 | ||||
Adjustments
to reconcile net income to net cash provided by operating activities
and discontinued operations:
|
||||||||
Loss
from discontinued operations, net of tax
|
562 | 4,857 | ||||||
Net
income attributable to noncontrolling interests
|
416 | 115 | ||||||
Loss
on write-down of property
|
– | 150 | ||||||
Depreciation
and amortization
|
4,817 | 5,841 | ||||||
Amortization
of debt issue costs
|
546 | 704 | ||||||
Stock-based
compensation
|
3,792 | 3,403 | ||||||
Deferred
tax expense
|
6,439 | 1,678 | ||||||
Tax
benefit (expense) realized for stock option exercises
|
97 | (16 | ) | |||||
Provision
for uncollectible accounts
|
8,894 | 7,803 | ||||||
Changes
in operating assets and liabilities, net of acquisitions:
|
||||||||
Accounts
receivable
|
(2,525 | ) | (28,536 | ) | ||||
Other
current assets and other assets
|
2,087 | (1,133 | ) | |||||
Accounts
payable, accrued nursing home costs, accrued
Medicare cap and other accrued
expenses
|
(4,235 | ) | 6,260 | |||||
Net
cash provided by operating activities and discontinued
operations
|
49,709 | 10,198 | ||||||
Investing
Activities:
|
||||||||
Cash
paid for acquisitions, net of cash acquired, and procurement of
licenses
|
(205 | ) | (122,259 | ) | ||||
Cash
received from the sale of hospice programs and property
|
1,490 | 210 | ||||||
Decrease
in investments
|
– | 32,693 | ||||||
Purchase
of property and equipment, net
|
(5,584 | ) | (2,788 | ) | ||||
Net cash used in investing
activities
|
(4,299 | ) | (92,144 | ) | ||||
Financing
Activities:
|
||||||||
Proceeds
from issuance of common stock
|
213 | 246 | ||||||
Cash
received from sale of partnership interests and partnership
distributions
|
(577 | ) | 554 | |||||
Tax
(benefit) expense realized for stock option exercises
|
(97 | ) | 16 | |||||
Payments
of debt issue costs
|
– | (4,315 | ) | |||||
Proceeds
from issuance of debt
|
– | 130,000 | ||||||
Payments
on debt
|
(6,295 | ) | (3,251 | ) | ||||
Net cash (used in) provided by
financing activities
|
(6,756 | ) | 123,250 | |||||
Net
increase in cash and cash equivalents
|
38,654 | 41,304 | ||||||
Cash
and cash equivalents, beginning of period
|
56,043 | 12,386 | ||||||
Cash
and cash equivalents, end of period
|
$ | 94,697 | $ | 53,690 | ||||
Supplemental
Cash Flow Information:
|
||||||||
Interest
paid
|
$ | 4,574 | $ | 4,475 | ||||
Income
taxes paid
|
$ | 13,193 | $ | 1,524 |
-MORE-
ODSY
Announces Third Quarter 2009 Results
Page 8
October
28, 2009
ODYSSEY
HEALTHCARE, INC. AND SUBSIDIARIES
UNAUDITED
EBITDA RECONCILIATION
(in
thousands)
This press
release includes the non-GAAP financial measure of EBITDA. The
following table reconciles this non-GAAP financial measure to net income
attributable to Odyssey stockholders, which Odyssey believes is the most
comparable GAAP financial measure:
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
income attributable to Odyssey stockholders
|
$ | 11,581 | $ | 5,887 | $ | 28,819 | $ | 9,072 | ||||||||
Add:
|
||||||||||||||||
Net
income attributable to noncontrolling
interests
|
199 | 135 | 416 | 115 | ||||||||||||
Loss
from discontinued operations, net
of taxes
|
88 | 429 | 562 | 4,857 | ||||||||||||
Provision
for income taxes
|
7,150 | 3,530 | 17,497 | 7,839 | ||||||||||||
Interest
expense
|
1,562 | 2,058 | 5,054 | 5,379 | ||||||||||||
Interest
income
|
(96 | ) | (362 | ) | (384 | ) | (1,552 | ) | ||||||||
Depreciation
|
1,744 | 1,903 | 4,605 | 5,609 | ||||||||||||
Amortization
|
71 | 65 | 212 | 232 | ||||||||||||
EBITDA
|
$ | 22,299 | $ | 13,645 | $ | 56,781 | $ | 31,551 |
-END-