Exhibit 99.1
| CONTACT: RehabCare Group, Inc. |
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| Jay W. Shreiner |
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| Chief Financial Officer |
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| Betty Cammarata, Dir-Investor Relations | |||||||||
| Press: David Totaro, Senior Vice |
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| President, Corporate Marketing & |
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| Communications |
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| (314) 863-7422 or |
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| Financial Dynamics |
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| Gordon McCoun/Theresa Kelleher |
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| Press: Sean Leous (212) 850-5600 |
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FOR IMMEDIATE RELEASE
Thursday, March 8, 2007
REHABCARE REPORTS FOURTH QUARTER AND YEAR-END 2006 RESULTS
| • | 11.5 percent sequential improvement in operating performance before impairment charge |
| • | Strong revenue growth quarter-over-quarter and year-over-year due to acquisitions |
| • | Freestanding hospital division continues to deliver solid revenue and operating performance |
| • | Symphony integration and synergies ahead of plan, but Contract Therapy businesses achieve less than expected operating results |
ST. LOUIS, MO, March 8, 2007--RehabCare Group, Inc. (NYSE:RHB) today reported financial results for the quarter and year ended December 31, 2006. Comparative results for the quarter and year follow.
| Quarter Ended |
| Full Year Ended | ||||||||||
Amounts in millions, | December 31, |
| December 31, | ||||||||||
except per share data |
| 2006 |
|
| 2005 |
|
|
| 2006 |
|
| 2005 |
|
Consolidated Operating Revenues | $ | 182.2 |
| $ | 123.4 |
|
| $ | 614.8 |
| $ | 454.3 |
|
Consolidated Operating Earnings (a)(c)(d) |
| 4.7 |
|
| 3.5 |
|
|
| 21.0 |
|
| 33.3 |
|
Consolidated Net Earnings (Loss) (a)(b)(c)(d) |
| 2.1 |
|
| (31.8 | ) |
|
| 7.3 |
|
| (17.0 | ) |
Consolidated Diluted Earnings (Loss) per Share |
| 0.12 |
|
| (1.89 | ) |
|
| 0.42 |
|
| (1.01 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract Therapy Operating Revenues |
| 103.4 |
|
| 61.2 |
|
|
| 331.6 |
|
| 232.2 |
|
Contract Therapy Operating Earnings (Loss) |
| (1.3 | ) |
| 3.4 |
|
|
| (2.6 | ) |
| 12.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HRS Inpatient Operating Revenues |
| 32.0 |
|
| 34.8 |
|
|
| 130.8 |
|
| 141.2 |
|
HRS Outpatient Operating Revenues |
| 11.8 |
|
| 11.9 |
|
|
| 49.0 |
|
| 48.7 |
|
HRS Operating Revenues |
| 43.8 |
|
| 46.7 |
|
|
| 179.8 |
|
| 189.9 |
|
HRS Operating Earnings (c) |
| 7.3 |
|
| 2.2 |
|
|
| 23.7 |
|
| 22.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freestanding Hospitals Operating Revenues |
| 23.7 |
|
| 12.9 |
|
|
| 77.1 |
|
| 21.7 |
|
Freestanding Hospitals Operating Earnings (Loss) |
| — |
|
| (0.7 | ) |
|
| 0.6 |
|
| (0.6 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Healthcare Services Operating Revenues |
| 11.6 |
|
| 2.7 |
|
|
| 26.9 |
|
| 10.9 |
|
Other Healthcare Services Operating Earnings (Loss) |
| 1.0 |
|
| (0.1 | ) |
|
| 1.4 |
|
| (0.1 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in After Tax Loss of Affiliates (b) |
| — |
|
| (33.8 | ) |
|
| (3.0 | ) |
| (36.6 | ) |
(a) | Includes pretax stock-based compensation expense of $0.2 million and $1.7 million, or approximately $0.1 million and $1.0 million after tax, for the quarter and year ended December 31, 2006, respectively. |
(b) | Includes after tax losses on RehabCare’s equity investment in InteliStaf of $2.8 million for the year ended December 31, 2006 and $33.7 million and $36.5 million for the quarter and year ended December 31, 2005, respectively. |
(c) | Includes a pretax impairment charge on VitalCare intangible assets of $4.2 million for the quarter and year ended December 31, 2005. |
(d) | Includes a fourth quarter 2006 pretax write-off of $2.4 million associated with internally developed software, a $0.2 million second quarter 2006 reversal of restructuring charges and a $1.2 million fourth quarter 2005 charge for a legal settlement related to our former Healthcare Staffing division. These amounts have not been allocated to the operating earnings of our business segments. |
Page 2
REHABCARE REPORTS FOURTH QUARTER AND YEAR-END 2006 RESULTS
John H. Short, Ph.D., president and chief executive officer, commented, “Our operating revenues for the quarter increased 48 percent over the prior year primarily as a result of the inclusion of revenue from the Symphony Health Services acquisition, and the continued growth in our Freestanding Hospital business. We showed sequential improvement in profitability before an impairment charge, despite the challenges in absorbing the Symphony business which are affecting results in our Contract Therapy (CT) business.”
“We continue to be highly focused on the successful integration of Symphony and progress there remains on track. The realization of savings in back office costs is running ahead of schedule, and our dedication to the rapid implementation of new technology into the over 400 RehabWorks sites to improve our staff utilization and overall efficiency is moving along at a steady pace. We are on track to complete the roll out by the end of the second quarter. We are well on our way to achieving the expected $10 to $14 million in annual cost savings and productivity gains once the roll out of our technology is complete and we continue to generate operating efficiencies.”
Dr. Short continued, “We maintained the momentum in our Freestanding Hospital division, opening our eighth hospital during the fourth quarter and generated 113 percent growth in same store contribution year-over-year. We are confident that the continued growth of our Freestanding Hospital division, both organically and through acquisitions and joint ventures, will be an anchor for both our continuum of care and our strategic markets.”
| Financial Overview of Fourth Quarter |
Net revenues for the fourth quarter 2006 were $182.2 million compared to $123.4 million from the year ago quarter, an increase of 47.6 percent. Acquisitions accounted for $56.9 million of the year-over-year increase in revenue. The overall revenue increase reflects the acquisition of Symphony, the start-ups of Arlington Rehabilitation Hospital in Arlington, Texas in December 2005 and Northwest Texas Rehabilitation Hospital in Amarillo, Texas in October 2006 and the 2006 acquisitions of New Orleans, Louisiana based Louisiana Specialty Hospital in June and Midland, Texas based RehabCare Rehabilitation Hospital – Permian Basin in July. These increases were partially offset by $2.9 million lower revenues in the Hospital Rehabilitation Services division.
Consolidated net earnings were $2.1 million in the fourth quarter 2006 compared to net losses of $31.8 million in the fourth quarter 2005. Earnings (loss) per share on a fully diluted basis for the fourth quarter 2006 were $0.12 compared to $(1.89) for the same period last year.
-MORE-
Page 3
REHABCARE REPORTS FOURTH QUARTER AND YEAR-END 2006 RESULTS
Consolidated net earnings for the fourth quarter of 2006 include a pretax charge of $2.4 million or $0.09 per diluted share after tax related to the write-off of an information systems project. During the fourth quarter and full year ended December 31, 2006, the Company recognized pretax stock-based compensation expense of approximately $0.2 million and $1.7 million, or approximately $0.01 and $0.06 per diluted share after tax, respectively.
The effective tax rate in the fourth quarter of 2006 was 9.8 percent to bring the effective tax rate for all of 2006 to 35.2 percent from the Company’s previous estimate of 39.5 percent. The decline in the effective tax rate is primarily attributable to a lower mix of taxable income in high tax rate states and due to the favorable resolution of certain previously accrued state tax exposures. Adjusting the full year 2006 effective tax rate to 35.2 percent resulted in an increase in diluted EPS of $0.04 for the fourth quarter and full year of 2006.
Consolidated net losses for the fourth quarter of 2005 include a $33.7 million loss, or $2.00 per diluted share, related to the Company’s equity investment in InteliStaf. The Company elected to abandon its remaining investment of $2.8 million in InteliStaf in the first quarter of 2006.
The Contract Therapy division’s net revenues for the fourth quarter of 2006 increased 69.0 percent to $103.4 million, compared to $61.2 million in the year ago quarter. The division’s operating loss for the quarter was $1.3 million compared to operating earnings in the prior year quarter of $3.4 million. As of December 31, 2006, the division operated in 1,197 locations versus 724 locations at December 31, 2005. The acquisition of Symphony’s RehabWorks’ operations, which added $41.8 million of revenue to the division, was the primary reason for the year-over-year fourth quarter increase in revenues and number of locations. Same store revenues for the legacy CT business grew at a rate of 3.3 percent.
Despite the substantial revenue growth, operating earnings for the division declined significantly year-over-year. This decline is partially attributable to operational challenges resulting from the integration of RehabWorks. Within the legacy CT business, revenue per minute of billable therapy service increased 2.2 percent from the prior year quarter, which was offset by a 1.4 percent decline in productivity, a 4.1 percent increase in wage and benefit rates and a 1.9 percent increase in contract labor usage.
RehabWorks’ labor and benefit costs per billable minute during the quarter were 15.5 percent higher than that of the legacy CT business primarily due to significantly higher contract labor usage, lower therapist productivity and higher therapist labor costs. The conversion and training of over one third of the RehabWorks facilities to RehabCare’s operating system in the fourth quarter also significantly contributed to RehabWorks’ higher labor costs. RehabWorks’ higher cost structure, however, is partially compensated for by a more favorable revenue mix that yields higher revenue per minute of billable therapy service than the legacy CT
-MORE-
Page 4
REHABCARE REPORTS FOURTH QUARTER AND YEAR-END 2006 RESULTS
business. Fourth quarter 2006 combined division operating earnings were also impacted by the inclusion of redundant Symphony costs that had not yet been eliminated.
The Hospital Rehabilitation Services division’s fourth quarter net revenues decreased 6.3 percent to $43.8 million, compared to $46.7 million in the year ago quarter. As of December 31, 2006, HRS operated 172 programs compared to 179 at December 31, 2005. During the year, acute rehab units (ARUs) decreased from 120 to 115.
HRS operating revenues were lower due to an 8.0 percent decline in inpatient revenues and a 1.1 percent decline in outpatient revenues. The decline in inpatient revenues is attributable to a 6.8 percent year-over-year decline in average units operated and pricing pressure. Acute rehabilitation revenue also continues to be negatively impacted by the 75% Rule despite the one year delay in the phase-in of the implementation of the rule. While same store 75% Rule qualifying admissions increased by 3.8 percent from the prior year, total same store ARU admissions for the fourth quarter of 2006 were down 2.8 percent from the fourth quarter of 2005. On a full year basis, 75% Rule qualifying admissions increased by 5.0 percent while total same store ARU admissions declined 2.9 percent. On average, our units are currently operating at the 65% compliance level. In the outpatient business, same store revenue growth of 6.5 percent was not enough to offset an 8.9 percent decline in the average number of units operated during the quarter.
Year-over-year operating earnings for the division improved by $5.1 million to $7.3 million. Lower SG&A and bad debt expenses were partially offset by the effects of fewer same store ARU discharges and higher labor costs. Inpatient revenue per discharge increased 2.1 percent while inpatient labor and benefit costs per discharge, including contract labor, increased 5.9 percent compared to the year ago quarter. Average revenue per unit of outpatient service increased 4.1 percent while outpatient labor and benefit costs per unit of service increased 5.6 percent compared to the year ago quarter. Fourth quarter 2005 operating earnings also included a pretax impairment charge on VitalCare intangible assets of $4.2 million.
The Freestanding Hospital division’s net revenues for the fourth quarter of 2006 increased 84.1 percent to $23.7 million, compared to $12.9 million in the year ago quarter. This division was formed in August 2005 with the acquisition of four MeadowBrook hospitals and has since been expanded to a total of eight hospitals which were in operation during the fourth quarter of 2006. The eighth hospital, an inpatient rehabilitation facility in Amarillo, Texas, admitted its first patient in October 2006. Operating earnings for the quarter were break-even compared to an operating loss in the prior year quarter of $0.7 million. The division experienced a 22.2 percent increase in same store revenue year-over-year.
-MORE-
Page 5
REHABCARE REPORTS FOURTH QUARTER AND YEAR-END 2006 RESULTS
The division’s significant operating improvements on a same store basis were dampened by $0.9 million of start-up costs incurred by the division during the fourth quarter of 2006. The start-up costs relate to the Amarillo, Texas rehabilitation hospital and the North Kansas City, Missouri joint venture. The Amarillo facility also incurred $0.3 million of losses during its ramp-up following receipt of its Medicare licensure. The Company defines start-up costs as net operating losses incurred prior to approval of Medicare licensure.
Other Healthcare Services
Revenues from our Other Healthcare Services segment increased 16.1 percent sequentially to $11.6 million due largely to greater staff placement in our VTA Management Services business and new client growth from our two consulting businesses, Phase 2 Consulting and the Polaris Consulting Group. Operating earnings of $1.0 million were higher by $0.6 million sequentially also as a result of strong cost management programs instituted in all of the segment’s businesses.
Symphony Integration and Synergies
As previously reported, the Company expects to harvest $10-14 million of annualized cost savings and operational efficiencies by the end of 2007. To date, the integration and cost savings plans are ahead of schedule and the plan to close Symphony’s corporate office by June 30, 2007 is on track. Annualized net cost savings were approximately $6.1 million during the six months ended December 31, 2006. The net cost savings were achieved principally through headcount reductions in Symphony’s corporate offices offset by limited incremental cost additions in the Company’s corporate departments.
Balance Sheet
At December 31, 2006 the Company had approximately $9.4 million in cash and cash equivalents, $113.5 million in outstanding debt under its revolving credit facility and $7.1 million in subordinated long-term debt related to various acquisitions. During the fourth quarter of 2006, the Company paid down approximately $8.8 million in long term debt. Days sales outstanding increased sequentially from 77.1 days at September 30, 2006 to 77.9 days at December 31, 2006. The increase is due to an increase in Contract Therapy receivables partially offset by improvement in Freestanding Hospital receivables.
For the year 2006, the Company generated cash from operations of $19.5 million and expended approximately $14.9 million for capital expenditures for equipment, facility build-outs and information systems. The Company also expended approximately $136.0 million in cash, net of cash acquired, for the acquisition of new businesses.
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Page 6
REHABCARE REPORTS FOURTH QUARTER AND YEAR-END 2006 RESULTS
Legislative Update
In the fourth quarter, Congress provided relief to the industry by continuing the current auto-exception process for the Part B Therapy Caps through December, 2007 which benefits our contract therapy business. Congress also rescinded a proposed 5.1 percent physician fee schedule reduction which benefits our contract therapy and outpatient businesses as it relates to Part B services.
The Senate recently introduced Bill 543 calling for a permanent freeze to the implementation of the 75% Rule for inpatient rehabilitation hospitals at the 60% level and codifying the way fiscal intermediaries determine medical necessity. A companion bill in the House is anticipated.
In 2004, CMS established the 25% Rule for long-term acute care hospitals (LTACHs). Under the rule, reimbursement to LTACHs under the higher LTACH Prospective Payment System (PPS) payment schedule for patients admitted from a co-located hospital is limited to 25% of the patients referred from such co-located hospital. Reimbursement for patients that exceed the 25% level would be on the lower inpatient prospective payment system (IPPS) payment schedule. The Company’s LTACH in New Orleans, Louisiana has been statutorily exempt from that rule. On January 25, 2007, CMS issued a proposed new rule that would apply the 25% Rule to all LTACHs, including the nineteen that have been previously statutorily exempt. The Company vigorously opposes the new rule proposal. As a result of the proposed rule, during 2007 the Company could experience an impairment charge for some or all of the value of its $5.4 million intangible asset assigned to the statutory exemption.
2007 Margin Improvement Initiatives
The Company will not be providing annual revenue and earnings per share guidance for 2007. The following is a brief update of the most significant initiatives being implemented:
Contract Therapy
We believe that this segment can return to our historical 5-6% operating margins for the year of 2008. Several initiatives are being implemented including:
| • | Continuing our review of low margin contracts with the objective of improving productivity, raising rates and exiting unprofitable business. |
| • | Reducing our reliance on contract labor through recruiting enhancements including the expansion of our campus relations initiatives. |
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Page 7
REHABCARE REPORTS FOURTH QUARTER AND YEAR-END 2006 RESULTS
| • | Revising the division’s sales criteria for new contracts and focusing sales efforts on the division’s 87 strategic markets. This may reduce the division’s backlog and openings in 2007. |
| • | Reorganizing the division’s operations to provide more focused oversight and training to its site level managers. |
| • | Completing the roll out of the RehabCare point-of-service technology platform to all RehabWorks sites by the end of the second quarter. This will continue to unfavorably impact productivity during this period. |
Hospital Rehabilitation Services
We believe this segment will experience some modest growth in discharges in 2007. The division is currently operating at the 65% compliance threshold. Several initiatives are being implemented including:
| • | Increasing the number of operating units. |
| • | Reorganizing management of the division to provide more oversight and training to field operations. |
| • | Improving performance of the division’s medical directors and aggressive management of the denial process. |
| • | Re-focusing on performance of the hospital-based outpatient segment. |
Freestanding Hospitals
We anticipate mature facility EBITDA margins before corporate overhead of 17-19 percent. Several initiatives are being implemented including:
| • | Opening one rehab hospital and one LTACH with substantial construction completed on a second LTACH in the second half of 2007. The start-up costs associated with these openings will impact second half operating profits. |
| • | Developing three to five new joint venture projects. |
Other Healthcare Services
| • | We anticipate continued growth in revenue and earnings in 2007. |
Conclusion
Dr. Short concluded, “2006 has been a year of significant growth for RehabCare, albeit with some near term challenges that we are aggressively addressing to improve our market position and operating performance.
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Page 8
REHABCARE REPORTS FOURTH QUARTER AND YEAR-END 2006 RESULTS
We are encouraged by the sequential improvement in profitability before the asset impairment charge. As we move into 2007, we will be focused on improving our margins, cash flow, and reducing debt.”
About RehabCare Group
Established in 1982 and headquartered in St. Louis, MO, RehabCare (www.rehabcare.com) is a leading provider of rehabilitation program management services in partnership with nearly 1,400 hospitals and skilled nursing facilities in 43 states, the District of Columbia and Puerto Rico. The company also operates freestanding rehabilitation hospitals and long-term acute care hospitals across the country. RehabCare is pleased to be included in the Russell 2000 and Standard and Poor’s Small Cap 600 Indices.
A listen-only simulcast of RehabCare’s fourth quarter conference call will be available on the Company’s web site at www.rehabcare.com, under For Our Investors, Webcasts, and online at www.earnings.com, beginning at 10:00 Eastern time today. An online replay will be available until March 29, 2007. A telephonic replay of the call will be available beginning at approximately 1:00 P.M. Eastern time today and ending at midnight on March 29, 2007. The dial-in number for the replay is (630) 652-3041 and the access code is 16800688.
This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties may include but are not limited to, our ability to consummate acquisitions and other partnering relationships at reasonable valuations; our ability to integrate acquisitions and partnering relationships within the expected timeframes and to achieve the revenue, cost savings and earnings levels from such acquisitions and relationships at or above the levels projected; our ability to comply with the terms of our borrowing agreements; changes in governmental reimbursement rates and other regulations or policies affecting reimbursement for the services provided by us to clients and/or patients; the operational, administrative and financial effect of our compliance with other governmental regulations and applicable licensing and certification requirements; our ability to attract new client relationships or to retain and grow existing client relationships through expansion of our service offerings and the development of alternative product offerings; the future financial results of any unconsolidated affiliates; the adequacy and effectiveness of our operating and administrative systems; our ability to attract and the additional costs of attracting and retaining administrative, operational and professional employees; shortages
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Page 9
REHABCARE REPORTS FOURTH QUARTER AND YEAR-END 2006 RESULTS
of qualified therapists and other healthcare personnel; significant increases in health, workers compensation and professional and general liability costs; litigation risks of our past and future business, including our ability to predict the ultimate costs and liabilities or the disruption of our operations; competitive and regulatory effects on pricing and margins; our ability to effectively respond to fluctuations in our census levels and number of patient visits; the proper functioning of our information systems; natural disasters and other unexpected events which could severely damage or interrupt our systems and operations; and general and economic conditions, including efforts by governmental reimbursement programs, insurers, healthcare providers and others to contain healthcare costs.
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REHABCARE REPORTS FOURTH QUARTER AND YEAR-END 2006 RESULTS Page 10
I. Condensed Consolidated Statements of Earnings | ||||||||||||||
(Unaudited; amounts in thousands, except per share data) | ||||||||||||||
|
|
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| ||||||||||
|
| Three Months Ended |
| Full Year Ended | ||||||||||
|
| December 31, |
| December 31, | ||||||||||
|
|
| 2006 |
|
| 2005 |
|
|
| 2006 |
|
| 2005 |
|
Operating revenues |
| $ | 182,247 |
| $ | 123,438 |
|
| $ | 614,793 |
| $ | 454,266 |
|
Costs & expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
| 150,140 |
|
| 94,492 |
|
|
| 497,694 |
|
| 343,230 |
|
Selling, general & administrative: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divisions |
|
| 11,360 |
|
| 9,402 |
|
|
| 42,413 |
|
| 35,852 |
|
Corporate |
|
| 9,501 |
|
| 8,737 |
|
|
| 37,034 |
|
| 27,051 |
|
Depreciation & amortization |
|
| 4,191 |
|
| 3,060 |
|
|
| 14,537 |
|
| 10,655 |
|
Impairment of assets |
|
| 2,351 |
|
| 4,211 |
|
|
| 2,351 |
|
| 4,211 |
|
Restructuring |
|
| — |
|
| — |
|
|
| (191 | ) |
| — |
|
Total costs & expenses |
|
| 177,543 |
|
| 119,902 |
|
|
| 593,838 |
|
| 420,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings, net |
|
| 4,704 |
|
| 3,536 |
|
|
| 20,955 |
|
| 33,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net |
|
| 1 |
|
| 27 |
|
|
| (50 | ) |
| 59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
| (2,411 | ) |
| (123 | ) |
|
| (5,031 | ) |
| (375 | ) |
Earnings before income taxes, equity in net loss of affiliates and minority interests |
|
| 2,294 |
|
| 3,440 |
|
|
| 15,874 |
|
| 32,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
| (225 | ) |
| (1,394 | ) |
|
| (5,589 | ) |
| (13,345 | ) |
Equity in net loss of affiliates |
|
| (17 | ) |
| (33,826 | ) |
|
| (3,029 | ) |
| (36,588 | ) |
Minority interests |
|
| 11 |
|
| — |
|
|
| 24 |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
| $ | 2,063 |
| $ | (31,780 | ) |
| $ | 7,280 |
| $ | (16,982 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share |
| $ | 0.12 |
| $ | (1.89 | ) |
| $ | 0.42 |
| $ | (1.01 | ) |
Weighted average diluted shares outstanding |
|
| 17,289 |
|
| 16,821 |
|
|
| 17,243 |
|
| 16,751 |
|
II. Condensed Consolidated Balance Sheets | ||||||||
(Amounts in thousands) | ||||||||
|
| Unaudited |
|
| ||||
|
| December 31, |
| December 31, | ||||
|
| 2006 |
| 2005 | ||||
Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 9,430 |
|
| $ | 28,103 |
|
Accounts receivable, net |
|
| 153,688 |
|
|
| 85,541 |
|
Deferred tax assets |
|
| 6,065 |
|
|
| 6,359 |
|
Other current assets |
|
| 8,932 |
|
|
| 7,295 |
|
Total current assets |
|
| 178,115 |
|
|
| 127,298 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
| 31,833 |
|
|
| 27,495 |
|
Excess of cost over net assets acquired, net |
|
| 167,440 |
|
|
| 94,960 |
|
Intangible assets |
|
| 36,950 |
|
|
| 7,560 |
|
Investments in unconsolidated affiliates |
|
| 3,295 |
|
|
| 6,324 |
|
Other assets |
|
| 10,663 |
|
|
| 9,288 |
|
|
| $ | 428,296 |
|
| $ | 272,925 |
|
Liabilities & Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current portion of long-term debt |
| $ | 5,559 |
|
| $ | 3,408 |
|
Payables & accruals |
|
| 86,574 |
|
|
| 63,226 |
|
Total current liabilities |
|
| 92,133 |
|
|
| 66,634 |
|
|
|
|
|
|
|
|
|
|
Long-term debt, less current portion |
|
| 115,000 |
|
|
| 4,059 |
|
Other non-current liabilities |
|
| 10,298 |
|
|
| 3,984 |
|
Minority interest |
|
| 86 |
|
|
| — |
|
Stockholders’ equity |
|
| 210,779 |
|
|
| 198,248 |
|
|
| $ | 428,296 |
|
| $ | 272,925 |
|
-MORE-
REHABCARE REPORTS FOURTH QUARTER AND YEAR-END 2006 RESULTS Page 11
III. Operating Statistics | ||||||||||||||
(Unaudited; dollars in thousands) | ||||||||||||||
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|
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|
|
|
|
|
|
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| |
| Three Months Ended |
| Full Year Ended | |||||||||||
| December 31, |
| December 31, | |||||||||||
|
| 2006 |
|
| 2005 |
|
|
| 2006 |
|
| 2005 |
| |
Contract Therapy |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Operating revenues | $ | 103,422 |
| $ | 61,209 |
|
| $ | 331,603 |
| $ | 232,193 |
| |
Operating expenses |
| 89,694 |
|
| 48,619 |
|
|
| 282,871 |
|
| 185,268 |
| |
Division SG&A |
| 6,164 |
|
| 4,091 |
|
|
| 21,826 |
|
| 16,121 |
| |
Corporate SG&A (a) |
| 6,883 |
|
| 3,938 |
|
|
| 22,812 |
|
| 13,953 |
| |
Depreciation and amortization |
| 1,953 |
|
| 1,117 |
|
|
| 6,661 |
|
| 4,190 |
| |
Operating earnings (loss) | $ | (1,272 | ) | $ | 3,444 |
|
| $ | (2,567 | ) | $ | 12,661 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Average number of locations |
| 1,251 |
|
| 765 |
|
|
| 1,018 |
|
| 749 |
| |
End of period number of locations |
| 1,197 |
|
| 724 |
|
|
| 1,197 |
|
| 724 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Hospital Rehabilitation Services (HRS) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Operating revenues |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Inpatient | $ | 32,008 |
| $ | 34,805 |
|
| $ | 130,758 |
| $ | 141,152 |
| |
Outpatient |
| 11,808 |
|
| 11,935 |
|
|
| 49,040 |
|
| 48,680 |
| |
Total | $ | 43,816 |
| $ | 46,740 |
|
| $ | 179,798 |
| $ | 189,832 |
| |
Operating expenses |
| 30,268 |
|
| 31,702 |
|
|
| 126,604 |
|
| 129,921 |
| |
Division SG&A |
| 3,482 |
|
| 3,919 |
|
|
| 15,125 |
|
| 16,227 |
| |
Corporate SG&A (a) |
| 1,534 |
|
| 3,300 |
|
|
| 9,668 |
|
| 11,304 |
| |
Depreciation and amortization |
| 1,229 |
|
| 1,452 |
|
|
| 4,740 |
|
| 5,631 |
| |
Impairment of intangible assets |
| - |
|
| 4,211 |
|
|
| - |
|
| 4,211 |
| |
Operating earnings | $ | 7,303 |
| $ | 2,156 |
|
| $ | 23,661 |
| $ | 22,538 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Average number of programs |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Inpatient |
| 136 |
|
| 146 |
|
|
| 137 |
|
| 145 |
| |
Outpatient |
| 39 |
|
| 43 |
|
|
| 41 |
|
| 42 |
| |
Total |
| 175 |
|
| 189 |
|
|
| 178 |
|
| 187 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
End of period number of programs |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Inpatient |
| 133 |
|
| 138 |
|
|
| 133 |
|
| 138 |
| |
Outpatient |
| 39 |
|
| 41 |
|
|
| 39 |
|
| 41 |
| |
Total |
| 172 |
|
| 179 |
|
|
| 172 |
|
| 179 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Freestanding Hospitals |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Operating revenues | $ | 23,672 |
| $ | 12,860 |
|
| $ | 77,101 |
| $ | 21,706 |
| |
Operating expenses |
| 21,501 |
|
| 12,170 |
|
|
| 67,955 |
|
| 19,944 |
| |
Division SG&A |
| 482 |
|
| 774 |
|
|
| 1,983 |
|
| 1,380 |
| |
Corporate SG&A (a) |
| 790 |
|
| 188 |
|
|
| 3,676 |
|
| 243 |
| |
Depreciation and amortization |
| 874 |
|
| 477 |
|
|
| 2,844 |
|
| 793 |
| |
Operating earnings (loss) | $ | 25 |
| $ | (749 | ) |
| $ | 643 |
| $ | (654 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
End of period number of facilities |
| 8 |
|
| 5 |
|
|
| 8 |
|
| 5 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Other Healthcare Services |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Operating revenues (b) | $ | 11,578 |
| $ | 2,692 |
|
| $ | 26,859 |
| $ | 10,891 |
| |
Operating earnings (loss) |
| 1,021 |
|
| (95 | ) |
|
| 1,400 |
|
| (58 | ) | |
| (a) | During the quarter and full year ended December 31, 2006, the Company incurred $216 and $1,697 of stock-based compensation expense. These costs have been allocated to the divisions as part of corporate SG&A. |
| (b) | Includes intercompany revenues, at market rates, of $241 and $568 for the quarter and full year ended December 31, 2006, respectively, and $63 and $356 for the quarter and full year ended December 31, 2005, respectively. |
-MORE-
REHABCARE REPORTS FOURTH QUARTER AND YEAR-END 2006 RESULTS Page 12
IV. Key Statistics
(Unaudited; dollars in thousands, except per share data)
|
| Q1 |
|
| Q2 |
|
| Q3 |
|
| Q4 |
|
|
| 3/31/06 |
|
| 6/30/06 |
|
| 9/30/06 |
|
| 12/31/06 |
|
|
| Actual |
|
| Actual |
|
| Actual |
|
| Actual |
|
CONSOLIDATED P&L STATEMENT |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues | $ | 121,718 |
| $ | 127,666 |
| $ | 183,162 |
| $ | 182,247 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
| 97,240 |
|
| 101,074 |
|
| 149,240 |
|
| 150,140 |
|
Selling, general and administrative: |
|
|
|
|
|
|
|
|
|
|
|
|
Divisions |
| 9,156 |
|
| 9,690 |
|
| 12,207 |
|
| 11,360 |
|
Corporate |
| 8,549 |
|
| 8,080 |
|
| 10,904 |
|
| 9,501 |
|
Depreciation and amortization |
| 2,904 |
|
| 2,957 |
|
| 4,485 |
|
| 4,191 |
|
Impairment of assets |
| - |
|
| - |
|
| - |
|
| 2,351 |
|
Restructuring |
| - |
|
| (191 | ) |
| - |
|
| - |
|
Total costs and expenses |
| 117,849 |
|
| 121,610 |
|
| 176,836 |
|
| 177,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings | $ | 3,869 |
| $ | 6,056 |
| $ | 6,326 |
| $ | 4,704 |
|
Other income (expense), net |
| (39 | ) |
| 13 |
|
| (25 | ) |
| 1 |
|
Interest expense, net |
| (68 | ) |
| (153 | ) |
| (2,399 | ) |
| (2,411 | ) |
Earnings before income taxes, equity in net |
|
|
|
|
|
|
|
|
|
|
|
|
loss of affiliates and minority interests |
| 3,762 |
|
| 5,916 |
|
| 3,902 |
|
| 2,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes |
| (1,486 | ) |
| (2,337 | ) |
| (1,541 | ) |
| (225 | ) |
Equity in loss of affiliates |
| (2,841 | ) |
| (102 | ) |
| (69 | ) |
| (17 | ) |
Minority interests |
| - |
|
| 3 |
|
| 10 |
|
| 11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL NET EARNINGS |
| (565 | ) |
| 3,480 |
|
| 2,302 |
|
| 2,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share | $ | (0.03 | ) | $ | 0.20 |
| $ | 0.13 |
| $ | 0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOSPITAL REHABILITATION SERVICES |
|
|
|
|
|
|
|
|
|
|
|
|
INPATIENT DIVISION |
|
|
|
|
|
|
|
|
|
|
|
|
Acute |
|
|
|
|
|
|
|
|
|
|
|
|
Average Number of Programs |
| 120 |
|
| 120 |
|
| 119 |
|
| 117 |
|
Revenue | $ | 31,105 |
| $ | 30,321 |
| $ | 30,145 |
| $ | 29,493 |
|
Patient Days |
| 142,880 |
|
| 141,433 |
|
| 141,381 |
|
| 139,647 |
|
Discharges |
| 11,671 |
|
| 11,607 |
|
| 11,546 |
|
| 11,337 |
|
Subacute (includes VitalCare) |
|
|
|
|
|
|
|
|
|
|
|
|
Average Number of Programs |
| 18 |
|
| 16 |
|
| 17 |
|
| 19 |
|
Revenue | $ | 2,502 |
| $ | 2,305 |
| $ | 2,372 |
| $ | 2,515 |
|
Patient Days |
| 38,398 |
|
| 32,323 |
|
| 32,295 |
|
| 31,371 |
|
Discharges |
| 843 |
|
| 658 |
|
| 690 |
|
| 757 |
|
OUTPATIENT DIVISION |
|
|
|
|
|
|
|
|
|
|
|
|
Average Number of Programs |
| 42 |
|
| 43 |
|
| 40 |
|
| 39 |
|
Revenue | $ | 12,844 |
| $ | 12,567 |
| $ | 11,821 |
| $ | 11,808 |
|
Patient Visits |
| 299,003 |
|
| 292,203 |
|
| 272,800 |
|
| 266,237 |
|
TOTAL HOSPITAL REHABILITATION SERVICES |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Earnings | $ | 5,525 |
| $ | 4,698 |
| $ | 6,135 |
| $ | 7,303 |
|
Operating Earnings Margin |
| 11.9 | % |
| 10.4 | % |
| 13.8 | % |
| 16.7 | % |
CONTRACT THERAPY DIVISION |
|
|
|
|
|
|
|
|
|
|
|
|
Average Number of Facilities |
| 749 |
|
| 790 |
|
| 1,274 |
|
| 1,251 |
|
Revenue | $ | 57,438 |
| $ | 63,053 |
| $ | 107,690 |
| $ | 103,422 |
|
Operating Earnings | $ | (1,334 | ) | $ | 703 |
| $ | (664 | ) | $ | (1,272 | ) |
Operating Earnings Margin |
| -2.3 | % |
| 1.1 | % |
| -0.6 | % |
| -1.2 | % |
Average Revenue per Facility | $ | 76.7 |
| $ | 79.8 |
| $ | 84.5 |
| $ | 82.7 |
|
FREESTANDING HOSPITALS |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue | $ | 15,153 |
| $ | 16,880 |
| $ | 21,396 |
| $ | 23,672 |
|
Operating Earnings | $ | (322 | ) | $ | 502 |
| $ | 438 |
| $ | 25 |
|
Patient Days |
| 13,179 |
|
| 15,048 |
|
| 19,723 |
|
| 21,503 |
|
Discharges |
| 725 |
|
| 820 |
|
| 1,091 |
|
| 1,255 |
|
-END-