CONTACT:
R. Dirk Allison
Senior Vice President and Chief Financial Officer
(214) 922-9711
ODYSSEY HEALTHCARE REPORTS
FIRST QUARTER 2010 RESULTS
DALLAS, TEXAS (April 28, 2010) — Odyssey HealthCare, Inc. (NASDAQ: ODSY), one of the largest providers of hospice care in the United States, today announced financial results for the first quarter ended March 31, 2010.
For the first quarter of 2010, net patient service revenue from continuing operations increased 2.4% to $171.5 million, compared with $167.5 million for the first quarter of 2009. The Company’s net income attributable to Odyssey stockholders for the first quarter of 2010 was $13.4 million, or $0.40 per diluted share, as compared with $8.7 million, or $0.26 per diluted share, for the first quarter of 2009. The Company’s EBITDA from continuing operations for the first quarter of 2010 was $25.1 million, compared with $17.1 million for the first quarter of 2009.
In commenting on the results, Robert A. Lefton, president and chief executive officer of Odyssey HealthCare, said, “Overall, I am pleased with our results for the first quarter of 2010, with net income attributable to Odyssey stockholders increasing by 53.7% over the first quarter of 2009. I am particularly pleased with our expense management during the quarter, with adjusted operating expenses per patient day decreasing from $137.16 for the first quarter of 2009 to $132.03 for the first quarter of 2010. On a sequential basis, adjusted operating expenses per patient day for the first quarter of 2010 were essentially flat compared with $132.12 for the fourth quarter of 2009. With respect to the Medicare cap, our admission volume helped reduce our Medicare cap contractual adjustment to 0.7% of gross patient service revenue for the first quarter of 2010 as compared with 0.8% for the first quarter of 2009 and 1.1% for the fourth quarter of 2009.”
In closing, Mr. Lefton added, “Due to our progress in reducing claims subject to additional document requests from our Medicare fiscal intermediaries, we reduced our bad debt expense as a percentage of net revenue to 0.9% for the first quarter of 2010 as compared with 1.4% for the first quarter of 2009 and 1.5% for the fourth quarter of 2009. As a result of our good operating results and collection efforts, we ended the first quarter of 2010 with a cash balance of $141.9 million.”
The Company also announced that its hospice programs in Alameda County, California, and Salem, Oregon, received their Medicare certification during the first quarter of 2010.
ODSY Announces First Quarter 2010 Results
Page 2
April 28, 2010
Conference Call
Odyssey will host a conference call to discuss the first quarter 2010 results on Thursday, April 29, 2010, 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.
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.
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 2010 operations and development strategies; the Company’s dependence on patient referral sources and potential adverse changes in patient referral practices of those referral sources; the Company’s ability to successfully integrate and operate acquired hospice programs; 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 o f 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 stock-based compensation costs; 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 10, 2010, 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.
ODSY Announces First Quarter 2010 Results
Page 3
April 28, 2010
ODYSSEY HEALTHCARE, INC. AND SUBSIDIARIES
UNAUDITED SELECTED OPERATING DATA
| | | Three Months Ended March 31, | |
| | | | | | | |
Continuing Operations:(1) | | | | | | |
| Admissions | | | 12,744 | | | | 12,702 | |
| Discharges | | | 12,692 | | | | 12,725 | |
| Average daily census | | | 12,323 | | | | 12,186 | |
| Discharge average length of stay | | | 87 | | | | 83 | |
| Gross revenue per patient day | | $ | 159.22 | | | $ | 158.03 | |
| Medicare cap as % of gross revenue | | | 0.7 | % | | | 0.8 | % |
| Net revenue per patient day | | $ | 154.63 | | | $ | 152.75 | |
| Operating expense per patient day | | $ | 133.66 | | | $ | 138.25 | |
Adjusted operating expense per patient day(2) | | $ | 132.03 | | | $ | 137.16 | |
| Bad debt expense as % of net revenue | | | 0.9 | % | | | 1.4 | % |
| | | | | | | | | |
Same-Facility:(3) | | | | | | | | |
| Admissions | | | 12,710 | | | | 12,702 | |
| Average daily census | | | 12,269 | | | | 12,186 | |
| Average length of stay | | | 87 | | | | 83 | |
| (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 March 31, 2010, excludes depreciation and amortization expenses of $1.58 and $0.05 per patient day of care, respectively. Adjusted operating expense per patient day for the three months ended March 31, 2009, excludes depreciation and amortization expenses of $1.03 and $0.06 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. |
ODSY Announces First Quarter 2010 ResultsPage 4
April 28, 2010
ODYSSEY HEALTHCARE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
| | | Three Months Ended March 31, | |
| | | | | | | |
| Net patient service revenue | | $ | 171,496 | | | $ | 167,532 | |
| Operating expenses: | | | | | | | | |
| Direct hospice care | | | 96,401 | | | | 98,455 | |
| General and administrative – hospice care | | | 32,694 | | | | 33,800 | |
| General and administrative – support center | | | 15,801 | | | | 15,805 | |
| Provision for uncollectible accounts | | | 1,533 | | | | 2,364 | |
| Depreciation | | | 1,745 | | | | 1,129 | |
| Amortization | | | 58 | | | | 70 | |
| Income from continuing operations before other income (expense) | | | 23,264 | | | | 15,909 | |
| | | | | | | | | |
| Other income (expense): | | | | | | | | |
| Interest income | | | 67 | | | | 166 | |
| Interest expense | | | (1,438 | ) | | | (1,885 | ) |
| | | | (1,371 | ) | | | (1,719 | ) |
| Income from continuing operations before provision for income taxes | | | 21,893 | | | | 14,190 | |
| Provision for income taxes | | | 8,115 | | | | 5,283 | |
| Income from continuing operations | | | 13,778 | | | | 8,907 | |
| Loss from discontinued operations, net of income taxes | | | (126 | ) | | | (52 | ) |
| Net income | | | 13,652 | | | | 8,855 | |
| Less: Net income attributable to noncontrolling interests | | | 253 | | | | 136 | |
| Net income attributable to Odyssey stockholders | | $ | 13,399 | | | $ | 8,719 | |
| | | | | | | | | |
| Income (loss) per common share: | | | | | | | | |
| Basic: | | | | | | | | |
| Continuing operations attributable to Odyssey stockholders | | $ | 0.41 | | | $ | 0.27 | |
| Discontinued operations attributable to Odyssey stockholders | | | (0.01 | ) | | | – | |
| Net income attributable to Odyssey stockholders | | $ | 0.40 | | | $ | 0.27 | |
| Diluted: | | | | | | | | |
| Continuing operations attributable to Odyssey stockholders | | $ | 0.40 | | | $ | 0.27 | |
| Discontinued operations attributable to Odyssey stockholders | | | – | | | | (0.01 | ) |
| Net income attributable to Odyssey stockholders | | $ | 0.40 | | | $ | 0.26 | |
| | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | |
| Basic | | | 33,344 | | | | 32,801 | |
| Diluted | | | 33,790 | | | | 32,950 | |
| | | | | | | | | |
| Amounts attributable to Odyssey stockholders: | | | | | | | | |
| Income from continuing operations, net of income taxes | | $ | 13,525 | | | $ | 8,771 | |
| Loss from discontinued operations, net of income taxes | | | (126 | ) | | | (52 | ) |
| Net income | | $ | 13,399 | | | $ | 8,719 | |
ODSY Announces First Quarter 2010 ResultsPage 5
April 28, 2010
ODYSSEY HEALTHCARE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
| | | | | | | |
| ASSETS | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 141,909 | | | $ | 128,632 | |
| Accounts receivable from patient services, net of allowance for uncollectible accounts | | | | | | | | |
of $13,106 and $12,462 at March 31, 2010, and December 31, 2009, respectively | | | 104,601 | | | | 110,593 | |
| Income taxes receivable | | | – | | | | 352 | |
| Deferred tax assets | | | 10,805 | | | | 10,235 | |
| Prepaid expenses and other current assets | | | 5,011 | | | | 6,017 | |
Total current assets | | | 262,326 | | | | 255,829 | |
| Property and equipment, net of accumulated depreciation | | | 19,907 | | | | 20,700 | |
| Deferred loan costs, net | | | 2,851 | | | | 3,033 | |
| Long-term investments | | | 12,434 | | | | 12,425 | |
| Intangibles, net of accumulated amortization | | | 19,193 | | | | 19,251 | |
| Goodwill | | | 192,057 | | | | 191,766 | |
| Total assets | | $ | 508,768 | | | $ | 503,004 | |
| | | | | | | | | |
| LIABILITIES AND EQUITY | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 3,002 | | | $ | 4,016 | |
| Accrued compensation | | | 26,090 | | | | 31,729 | |
| Accrued nursing home costs | | | 17,870 | | | | 18,144 | |
| Accrued Medicare cap contractual adjustments | | | 13,399 | | | | 18,798 | |
| Income taxes payable | | | 4,664 | | | | 1,504 | |
| Other accrued expenses | | | 43,135 | | | | 42,683 | |
| Current maturities of long-term debt | | | 41,625 | | | | 38,675 | |
Total current liabilities | | | 149,785 | | | | 155,549 | |
| Long-term debt, less current maturities | | | 71,999 | | | | 76,527 | |
| Deferred tax liability | | | 15,028 | | | | 15,171 | |
| Other liabilities | | | 4,345 | | | | 4,597 | |
| Commitments and contingencies | | | – | | | | – | |
| Equity: | | | | | | | | |
| Odyssey stockholders’ equity: | | | | | | | | |
| Common stock, $0.001 par value: 75,000,000 shares authorized, 38,894,728 and | | | | | | | | |
| 38,549,833 shares issued at March 31, 2010, and December 31, 2009, respectively | | | 39 | | | | 39 | |
| Additional paid-in capital | | | 128,637 | | | | 125,716 | |
| Retained earnings | | | 207,830 | | | | 194,431 | |
| Accumulated other comprehensive loss, net of income taxes | | | (1,367 | ) | | | (1,481 | ) |
| Treasury stock, at cost, 5,347,072 shares held at March 31, 2010 and December 31, 2009 | | | (69,954 | ) | | | (69,954 | ) |
| Total Odyssey stockholders’ equity | | | 265,185 | | | | 248,751 | |
| Noncontrolling interests | | | 2,426 | | | | 2,409 | |
| Total equity | | | 267,611 | | | | 251,160 | |
| Total liabilities and equity | | $ | 508,768 | | | $ | 503,004 | |
ODSY Announces First Quarter 2010 ResultsPage 6
April 28, 2010
ODYSSEY HEALTHCARE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| | | Three Months Ended March 31, | |
| | | | | | | |
| Operating Activities: | | | | | | |
| Net income attributable to Odyssey stockholders | | $ | 13,399 | | | $ | 8,719 | |
| Adjustments to reconcile net income to net cash provided by operating activities and | | | | | | | | |
| discontinued operations: | | | | | | | | |
| Loss from discontinued operations, net of income taxes | | | 126 | | | | 52 | |
| Net income attributable to noncontrolling interests | | | 253 | | | | 136 | |
| Loss on disposal of property and equipment | | | 6 | | | | – | |
| Depreciation and amortization | | | 1,803 | | | | 1,199 | |
| Amortization of deferred loan costs | | | 182 | | | | 183 | |
| Share-based compensation expense | | | 1,557 | | | | 1,093 | |
| Deferred income taxes | | | (777 | ) | | | 3,808 | |
| Provision for uncollectible accounts | | | 1,533 | | | | 2,364 | |
| Changes in operating assets and liabilities, net of acquisitions: | | | | | | | | |
| Accounts receivable from patient services | | | 4,458 | | | | (7,108 | ) |
| Prepaid expenses and other current assets | | | 1,266 | | | | 909 | |
| Accounts payable, accrued nursing home costs, accrued Medicare cap contractual | | | | | | | | |
| adjustments and other accrued expenses | | | (10,898 | ) | | | (3,497 | ) |
| Net cash provided by operating activities and discontinued operations | | | 12,908 | | | | 7,858 | |
| | | | | | | | | |
| Investing Activities: | | | | | | | | |
| Cash paid for acquisitions, net of cash acquired | | | (219 | ) | | | (205 | ) |
| Purchases of property and equipment, net | | | (980 | ) | | | (1,648 | ) |
Net cash used in investing activities | | | (1,199 | ) | | | (1,853 | ) |
| | | | | | | | | |
| Financing Activities: | | | | | | | | |
| Proceeds from exercise of stock options | | | 1,242 | | | | 26 | |
| Cash paid for partnership distributions | | | (236 | ) | | | (31 | ) |
| Tax benefit from share-based compensation | | | 2,140 | | | | 9 | |
| Payments on credit facility | | | (1,578 | ) | | | (1,598 | ) |
Net cash provided by (used in) financing activities | | | 1,568 | | | | (1,594 | ) |
| | | | | | | | | |
| Net increase in cash and cash equivalents | | | 13,277 | | | | 4,411 | |
| Cash and cash equivalents, beginning of period | | | 128,632 | | | | 56,043 | |
| Cash and cash equivalents, end of period | | $ | 141,909 | | | $ | 60,454 | |
ODSY Announces First Quarter 2010 ResultsPage 7
April 28, 2010
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 March 31, | |
| | | | | | | |
| Net income attributable to Odyssey stockholders | | $ | 13,399 | | | $ | 8,719 | |
| Add: | | | | | | | | |
| Net income attributable to noncontrolling interests | | | 253 | | | | 136 | |
| Loss from discontinued operations, net of taxes | | | 126 | | | | 52 | |
| Provision for income taxes | | | 8,115 | | | | 5,283 | |
| Interest expense | | | 1,438 | | | | 1,885 | |
| Interest income | | | (67 | ) | | | (166 | ) |
| Depreciation | | | 1,745 | | | | 1,129 | |
| Amortization | | | 58 | | | | 70 | |
| EBITDA | | $ | 25,067 | | | $ | 17,108 | |
