Exhibit 99.1
[LOGO]
Gentiva
HEALTH SERVICES
- --------------------------------------------------------------------------------
Press Release
Financial and Investor Contact:
John R. Potapchuk
631-501-7035
john.potapchuk@gentiva.com
Media Contact:
David Fluhrer
631-501-7102
516-857-7231
david.fluhrer@gentiva.com
FOR IMMEDIATE RELEASE
Gentiva(R) Reports First Quarter 2005 Results
Melville, N.Y., May 4, 2005 -- Gentiva Health Services, Inc. (NASDAQ: GTIV), the
nation's largest provider of comprehensive home health services, today reported
net income of $4.1 million, or $0.17 per diluted share, for the first quarter
ended April 3, 2005, compared to $9.2 million, or $0.34 per diluted share, for
the corresponding period of 2004.
Results for the fiscal 2004 first quarter included special items related
to Medicare, which contributed $8.0 million to net revenues and approximately
$0.18 per diluted share. Excluding the impact of the special items, Net Income -
As Adjusted for the first quarter of 2004 was $4.3 million, or $0.16 per diluted
share. See the supplemental information for a reconciliation between "Net Income
- - As Reported" and "Net Income - As Adjusted."
First quarter 2005 net revenues were $207.1 million versus $213.9 million
in the comparable period of 2004, including the special items. Net of the
special items, first quarter 2004 net revenues were $205.9 million.
Medicare revenues -- net of special items -- rose 13.1% from the prior
year, representing Gentiva's seventh consecutive quarter of double-digit
Medicare growth. The increase was primarily driven by growth in admissions,
including admissions to specialty programs.
Medicaid and Local Government revenues declined 6.4% for the first quarter
of 2005 as the Company continued to pursue its strategy of limiting
participation in certain low-margin Medicaid and state and county programs,
while increasing skilled visits in selected state programs.
Commercial Insurance and Other revenues for the first quarter of 2005 were
$108.7 million, down 3.1% from the $112.1 million reported in the same period a
year earlier. Revenues derived from CIGNA HealthCare
3 Huntington Quadrangle, 200S, Melville, NY 11747-4627
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declined 12.0% due primarily to lower than anticipated revenues from capitated
plans. Excluding the CIGNA business, Commercial Insurance and Other revenues for
the first quarter rose 9.1%, driven by CareCentrix' services to TriWest
Healthcare Alliance and other managed care customers.
Gentiva also announced today that, beginning with the first quarter of
2005, the Company will report on two business segments: Home Healthcare Services
and CareCentrix(R). The Home Healthcare Services segment comprises financial
results generated by direct home nursing and therapy services, including
specialty programs, Gentiva Rehab Without Walls(R) and Gentiva Consulting. The
CareCentrix segment comprises results from Gentiva's ancillary care benefit
management and coordination of integrated homecare services for managed care
organizations and health benefit plans.
As a result of this change, the Company has included 2004 segment
reporting beginning with the first quarter, so that appropriate comparisons can
be made with the corresponding periods of fiscal 2005. Following are first
quarter 2005 and 2004 results for the two new segments:
Home Healthcare Services - Segment net revenues for the first quarter of
2005 were $133.1 million, a 3.0% decrease from the $137.2 million reported in
the same period a year earlier, which included $8.0 million of special items
related to Medicare. Net of the special items, first quarter 2005 segment net
revenues rose 3.0% over the prior year period. Operating contribution for the
first quarter of 2005 was $11.6 million as compared to $21.3 million in the same
quarter of 2004. Excluding special items, operating contribution decreased 12.4%
from the $13.3 million reported for the same period of 2004. The decline was due
primarily to investments in recruiting and training more than 140 new, full-time
field clinicians required to meet growing capacity requirements, and in certain
markets, lower than anticipated revenue per Medicare admission.
CareCentrix - Segment net revenues for the first quarter of 2005 were
$78.9 million, a 3.9% decline from the $82.1 million reported in the same period
a year earlier. Operating contribution for the first quarter of 2005 was $6.8
million, up 6.7% from the $6.4 million reported in same period a year earlier.
The increase was due to efficiencies from the 2004 reconfiguration of the
CareCentrix home medical equipment provider network and the impact of new
business, offset by lower revenues from CIGNA.
During the first quarter of 2005, Gentiva repurchased 472,500 shares of
its common stock at an aggregate cost of $7.6 million. On April 14, 2005, the
Company announced that its Board of Directors had authorized a new share
repurchase program of up to 1.5 million shares. As of April 3, 2005, Gentiva
reported cash items and short-term investments of $103.6 million versus $113.0
million as of January 2, 2005, the end of fiscal 2004.
"The fundamentals of our business remain strong, and we experienced strong
referrals and double-digit increases in Medicare admissions and revenues,"
Gentiva Chairman and CEO Ron Malone said. "We are continuing to invest in our
business while we are also evaluating the investments of prior quarters and
adjusting resources as needed to improve our performance. We are keenly focused
on executing plans to increase revenues, control costs and deliver on our
commitments."
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Gentiva's May 1, 2005 acquisition of the home health operations of
Heritage Home Care Services, Inc., Utah's leading home healthcare provider, is
expected to increase Gentiva's annualized revenues by more than $20 million, and
will be accretive to the Company's fiscal 2005 results.
The Securities and Exchange Commission recently announced a postponement
in the effective period for adopting the provisions of Financial Accounting
Standards Board Statement No. 123R, Share-Based Payment, from quarterly periods
to annual periods beginning on or after June 15, 2005. As a result, Gentiva has
elected to implement this accounting rule in fiscal 2006 rather than the second
half of 2005, which would have resulted in an expense of $0.06 to $0.08 per
diluted share.
Gentiva has updated its 2005 financial outlook due to the following
factors: the delay in the implementation of accounting rules on equity-based
compensation until fiscal 2006; the acquisition of Heritage Home Care Services,
Inc.; a conservative view toward revenues from the CIGNA relationship based on
first quarter experience; and the Company's decision to make investments in the
improvement of clinical capacity and branch operations.
As a result, the 2005 outlook for net income has been changed to an
expected range of $0.75 to $0.83 per diluted share compared to the previous
outlook of $0.72 to $0.80 per diluted share, on average shares outstanding of
approximately 25 million. The net revenue outlook remains unchanged in a range
between $870 million and $890 million.
Non-GAAP Financial Measures
The information provided in the following tables 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 measures to the most directly comparable GAAP measures.
Conference Call and Web Cast Details
The Company will comment further on its first quarter 2005 results during its
conference call and live web cast to be held Thursday, May 5, 2005, at 10:00
a.m. Eastern Time. To participate in the call from the United States or Canada,
dial: (612) 332-0634. The web cast is an audio only, one-way event. Web cast
listeners who wish to ask questions must participate in the conference call. To
hear the web cast, log onto http://www.gentiva.com/investor/events.asp. This
press release is also accessible at the same link, and a transcript of the
conference call will be available on the site within 24 hours after the call.
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About Gentiva Health Services, Inc.
Gentiva Health Services, Inc. is the nation's largest provider of comprehensive
home health services. Gentiva serves patients through more than 350 direct
service delivery units within approximately 250 locations in 35 states, and
through CareCentrix(R), which manages home healthcare services for many major
managed care organizations throughout the United States and delivers them in all
50 states through a network of more than 2,000 third-party provider locations,
as well as Gentiva locations. The Company is a single source for skilled
nursing; physical, occupational, speech and neurorehabilitation services; social
work; nutrition; disease management education; and help with daily living
activities, as well as other therapies and services. Gentiva's revenues are
generated from commercial insurance, federal and state government programs and
individual consumers. For more information, visit Gentiva's web site,
www.gentiva.com, and its investor relations section at
http://www.gentiva.com/investor.
(Tables and notes follow)
(in 000's, except per share data) 1st Quarter
-----------------
2005 2004
---- ----
Statements of Income
Net revenues $ 207,107 $ 213,905
Cost of services sold 127,229 130,643
----------------------
Gross profit 79,878 83,262
Selling, general and administrative expenses (71,759) (66,369)
Depreciation and amortization (1,736) (1,845)
----------------------
Operating income 6,383 15,048
Interest income, net 463 82
----------------------
Income before income taxes 6,846 15,130
Income tax expense (2,721) (5,900)
----------------------
Net income $ 4,125 $ 9,230
======================
Earnings per Share
Net income:
Basic $ 0.18 $ 0.36
======================
Diluted $ 0.17 $ 0.34
======================
Average shares outstanding:
Basic 23,445 25,542
======================
Diluted 24,892 27,084
======================
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Condensed Balance Sheets Apr 3, Jan 2,
ASSETS 2005 2005
----------------------
Cash, cash equivalents and restricted cash $ 78,572 $ 31,924
Short-term investments 25,000 81,100
Net receivables 137,045 132,002
Deferred tax assets 23,329 23,861
Prepaid expenses and other current assets 7,946 6,057
----------------------
Total current assets 271,892 274,944
Fixed assets 19,182 19,687
Deferred tax assets, net 20,545 21,233
Other assets 16,520 16,234
----------------------
Total assets $ 328,139 $ 332,098
======================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 23,385 $ 25,896
Payroll and related taxes 16,521 9,356
Medicare liabilities 8,589 9,949
Cost of claims incurred but not reported 25,512 27,361
Obligations under insurance programs 34,229 34,660
Other accrued expenses 28,358 31,117
----------------------
Total current liabilities 136,594 138,339
Other liabilities 21,977 21,819
Shareholders' equity 169,568 171,940
----------------------
Total liabilities and shareholders' equity $ 328,139 $ 332,098
======================
Common shares outstanding 23,343 23,722
======================
Note: Cash, cash equivalents and restricted cash includes restricted cash of
$22.0 million at April 3, 2005 and January 2, 2005.
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1st Quarter
-----------------
Condensed Statements of Cash Flows 2005 2004
---- ----
OPERATING ACTIVITIES:
Net income $ 4,125 $ 9,230
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 1,736 1,845
Provision for doubtful accounts 1,495 2,047
Deferred income taxes 1,220 5,172
Changes in assets and liabilities, net of
acquisitions (8,815) (8,927)
Other, net (61) (13)
----------------------
Net cash (used in) provided by operating
activities (300) 9,354
----------------------
INVESTING ACTIVITIES:
Purchase of fixed assets (1,230) (3,370)
Purchases of short-term investments
available-for-sale (40,400) (20,000)
Maturities of short-term investments
available-for-sale 96,500 10,000
----------------------
Net cash provided by (used in) investing
activities 54,870 (13,370)
----------------------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 1,085 1,039
Changes in book overdrafts (1,358) (825)
Repurchases of common stock (7,582) (5,830)
Repayment of capital lease obligations (67) (96)
----------------------
Net cash used in financing activities (7,922) (5,712)
----------------------
Net change in cash, cash equivalents and
restricted cash 46,648 (9,728)
Cash, cash equivalents and restricted cash
at beginning of period 31,924 97,438
----------------------
Cash, cash equivalents and restricted cash
at end of period $ 78,572 $ 87,710
======================
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1st Quarter
-----------------
2005 2004
---- ----
Supplemental Information
Net Revenues by Major Payer Source:
Medicare (1) $ 61,762 $ 62,601
Medicaid and local government 36,644 39,167
Commercial insurance and other 108,701 112,137
----------------------
Total net revenues $ 207,107 $ 213,905
======================
A reconciliation of net income between
As Reported and As Adjusted amounts, and
the related diluted earnings per share, follow (2):
Net income - As Reported $ 4,125 $ 9,230
Add: income tax expense - As Reported 2,721 5,900
----------------------
Income before income taxes - As Reported 6,846 15,130
Less: Medicare cost report settlement (1) -- (9,003)
Add: Revenue adjustment for estimated
Medicare repayment (1) -- 1,000
----------------------
Income before income taxes - As Adjusted 6,846 7,127
Less: income tax expense - At normalized rate 2,721 2,780
----------------------
Net income - As Adjusted $ 4,125 $ 4,347
======================
Diluted Earnings per Share
Net income - As Reported $ 0.17 $ 0.34
======================
Net income - As Adjusted $ 0.17 $ 0.16
======================
Segment Information
Net revenues
Home Healthcare Services $ 133,083 $ 137,205
CareCentrix 78,934 82,123
Intersegment revenues (4,910) (5,423)
----------------------
Total net revenues $ 207,107 $ 213,905
======================
Operating contribution
Home Healthcare Services $ 11,606 $ 21,251
CareCentrix 6,842 6,414
----------------------
Total operating contribution 18,448 27,665
Corporate expenses (10,329) (10,772)
Depreciation and amortization (1,736) (1,845)
Interest income, net 463 82
----------------------
Income before income taxes $ 6,846 $ 15,130
======================
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Notes:
1) Medicare revenues for the first quarter of fiscal 2004 included
approximately $9.0 million received in settlement of the Company's appeal
filed with the U.S. Provider Reimbursement Review Board ("PRRB") related
to the reopening of all of its 1997 cost reports, net of a $1 million
estimated repayment to Medicare in connection with services rendered to
certain patients since the inception of the Prospective Payment
Reimbursement System in October 2000. The Centers for Medicare & Medicaid
Services determined that homecare providers should have received lower
reimbursements for certain services rendered to beneficiaries discharged
from inpatient hospitals within fourteen days immediately preceding
admission to home healthcare.
2) Although "Net Income - As Adjusted" is a non-GAAP financial measure,
management believes that the presentation of net income as calculated,
excluding the PRRB settlement and the estimated Medicare repayment as
described in Note 1, is a useful adjunct to "Net Income - As Reported"
under GAAP because it measures the Company's performance in a consistent
manner between the results for the first quarters of fiscal years 2005 and
2004. Management also believes that the PRRB settlement in the first
quarter of fiscal 2004, reduced by the Medicare estimated repayment,
should be excluded from "Net Income - As Adjusted" as these items relate
to reimbursement activities as described in Note 1. For these reasons,
management believes that "Net Income - As Adjusted" is useful to
investors. Investors should not view "Net Income - As Adjusted" as an
alternative to the GAAP measure of net income.
Forward-Looking Statement
Certain statements contained in this news release, including, without
limitation, statements containing the words "believes," "anticipates,"
"intends," "expects," "assumes," "trends" and similar expressions, constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are based upon Gentiva
Health Services, Inc.'s ("the Company") current plans, expectations and
projections about future events. However, such statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, general
economic and business conditions; demographic changes; changes in, or failure to
comply with, existing governmental regulations; legislative proposals for health
care reform; changes in Medicare and Medicaid reimbursement levels; effects of
competition in the markets the Company operates in; liability and other claims
asserted against the Company; ability to attract and retain qualified personnel;
availability and terms of capital; loss of significant contracts or reduction in
revenues associated with major payer sources; ability of customers to pay for
services; business disruption due to natural disasters or terrorist acts; a
material shift in utilization within capitated agreements; and changes in
estimates and judgments associated with critical accounting policies. For a
detailed discussion of these and other factors that could cause actual results
to differ from those contained in this news release, please refer to the
Company's various filings with the Securities and Exchange Commission (SEC),
including the "risk factors" section contained in the Company's annual report on
Form 10-K, as amended, for the year ended January 2, 2005.
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