Contact: George V. Hager, Jr. Exhibit 99.1
Executive Vice President & Chief Financial Officer
(610) 444-6350
GENESIS HEALTH VENTURES REPORTS SECOND QUARTER FISCAL 2003 RESULTS
o Strong Cash Flow Provides for $20 Million Debt Repayment and $17
Million Share Repurchase
o Sale of All Florida Assets Complete
o ElderCare Spin-Off Plan on Schedule
o NeighborCare Reports Strong Growth in Revenues and Earnings
KENNETT SQUARE, PA -- (May 1, 2003) -- Genesis Health Ventures, Inc. (NASDAQ:
GHVI) today announced income from continuing operations of $9.7 million ($0.23
per share) for the quarter ended March 31, 2003 compared to $28.3 million ($0.67
per share) in the same quarter in the prior year. Income from continuing
operations for the six months ended March 31, 2003 was $25.2 million ($0.61 per
share) compared to $44.8 million ($1.07 per share) in the same period in the
prior year.
During the quarter ended March 31, 2003, Genesis recognized costs of $3.6
million ($2.2 million after tax) related to its strategic planning initiatives
and transaction related expenses. During the prior year quarter ended March 31,
2002, Genesis recognized a $21.7 million ($13.2 million after tax) gain on an
arbitration award and $1.7 million ($1.0 million after tax) of debt
restructuring and reorganization costs. Excluding the effect of these items,
income from continuing operations was $11.8 million ($0.28 per share) in the
quarter ended March 31, 2003 compared to $16.1 million ($0.39 per share) in the
same period in the prior year. See attached reconciliation on page 7. The
decline in earnings is due to the impact of the Medicare "Cliff", which had the
impact of reducing income from continuing operations by $5.4 million ($0.13 per
share) and $10.5 million ($0.25 per share) for the second quarter and
year-to-date periods, respectively.
"NeighborCare, which generates approximately half of Genesis' consolidated
revenues, had an outstanding quarter," said Robert H. Fish, Chairman and Chief
Executive Officer. "NeighborCare's performance was fueled by strong top line
growth, improved customer mix and continued realization of operating
efficiencies gained through our best practices initiatives."
"The quality of our earnings is demonstrated by the substantial cash generated
during the quarter, which included $51 million of operating cash flow and $28
million from the sale of assets," noted Fish. "Our ability to generate
significant cash flow has allowed us to repay $20 million of debt in the second
quarter and $63 million in the current fiscal year, to repurchase approximately
$17 million of our common stock, and to increase our liquidity position, ending
the second quarter with over $133 million in cash."
Continued Solid Revenue Growth Driven by NeighborCare
Consolidated revenues for the second quarter ended March 31, 2003 grew 4.4% to
$647.6 million versus $620.4 million in the comparable period in the prior year.
For the six months ended March 31, 2003, revenues were $1,288.6 million versus
$1,229.9 million in the comparable period in the prior year.
Pharmacy revenues for the second quarter ended March 31, 2003 grew 8.5% to
$302.8 million versus $279.2 million in the comparable period in the prior year.
For the six months ended March 31, 2003, pharmacy revenues grew 8.4% to $597.9
million versus $551.8 million in the comparable period in the prior year.
NeighborCare's strong revenue growth was driven by drug inflation and an
increase in the acuity level of patients served.
Inpatient revenues for the second quarter ended March 31, 2003 remained
relatively flat at $298.6 million versus $299.1 million in the comparable period
in the prior year. For the six months ended March 31, 2003, inpatient revenues
were $601.5 million compared to $596.6 million in the same period in the prior
year. The impact of the Medicare Cliff on revenues, for the second quarter and
year to date of $8.9 million and $17.2 million, respectively, was partially
offset by growth in Medicaid and other payor rates. Medicaid rates, on average,
increased by approximately 6% in the second quarter versus the same period in
the prior year. Occupancy averaged 91% in the second quarter versus 92% in the
year ago quarter and Medicare mix, as a percentage of patient days, grew from
15.4% to 16.3%.
Pharmacy Margin Expansion Offsets Impact of Cliff
Consolidated EBITDA, as adjusted, for the second quarter ended March 31, 2003,
was $47.5 million compared to $54.2 million for the same period in the prior
year. The decline in EBITDA was caused by the impact of the Medicare Cliff, as
described above, and the impact of harsh weather experienced in the Northeast,
which increased year over year utility and snow removal costs by approximately
$1.5 million. These amounts were offset by improvements in operating
performance, notably in NeighborCare.
NeighborCare's EBITDA for the second quarter ended March 31, 2003 was $31.0
million compared to $26.9 million in the same period in the prior year. For the
six months ended March 31, 2003, NeighborCare's EBITDA was $59.2 million
compared to $53.1 million in the same period in the prior year. Pharmacy EBITDA
margins increased to 9.6% this quarter versus 8.8% in the comparable quarter in
the prior year primarily driven by NeighborCare's margin expansion initiatives.
These initiatives, which began during the latter half of fiscal 2002, are now
being realized in NeighborCare profitability. NeighborCare's EBITDA grew 15% in
this year's second quarter versus the same quarter in the prior year, as
compared to a 7% growth rate in the first quarter of 2003 versus the same
quarter in the prior year.
Inpatient EBITDA for the second quarter ended March 31, 2003 was $26.6 million
compared to $35.4 million in the same period in the prior year. For the six
months ended March 31, 2003, inpatient EBITDA was $56.6 million compared to
$72.2 million in the same period in the prior year. The decline in EBITDA was
primarily driven by the Medicare Cliff and the impact of harsh weather. Expense
growth in the quarter moderated, principally due to slower nursing labor costs,
including both employed and agency labor, which declined to 6% year over year as
agency utilization was substantially reduced.
2
Progress on Strategic Initiatives
Exit from ElderCare Operations in Florida Complete
On April 30, 2003, Genesis completed the sale of its nine skilled nursing
facilities and the transfer of leasehold rights in one skilled nursing facility
and one assisted living facility in Florida for $26.3 million, of which $6
million is represented by a note receivable. In a separate transaction, on March
31, 2003, Genesis completed the sale of its remaining four Florida assisted
living facilities for $8.5 million in cash.
The Florida properties would have contributed approximately $25.2 million to
revenues and a loss of $0.4 million ($0.01 per share) in income from continuing
operations in the second quarter of 2003 if they had not been classified as
discontinued. With the completion of these transactions, Genesis has
significantly reduced its exposure to patient liability costs, which appear to
be stabilizing due to tort reform efforts, but which remain extraordinarily high
in the state of Florida.
Spin-Off
On February 12, 2003, Genesis announced that its Board of Directors had approved
a plan to spin-off its eldercare business in what is expected to be a tax-free
transaction to shareholders by the end of the calendar year.
In the second quarter of 2003, Genesis submitted a private letter ruling request
to the Internal Revenue Service regarding the tax-free nature of the
distribution of shares of the independent eldercare company. The process is
expected to be completed in the fiscal fourth quarter of 2003.
Genesis expects to file with the Securities and Exchange Commission a
registration statement relating to the independent eldercare company's
securities during the Company's third fiscal quarter. The securities
registration process is expected to be completed in the fiscal fourth quarter of
2003.
NeighborCare Operational Best Practices
NeighborCare continues implementation of its margin expansion initiatives. These
initiatives specifically address operating costs related to packaging, labor and
quality assurance through enhanced automation and process re-engineering. This
program has been rolled out in all seven pharmacy regions.
Share Repurchase Program
On March 20, 2003, Genesis announced that its Board of Directors had authorized
the Company to repurchase up to $50 million of the Company's common stock. As of
March 31, 2003, Genesis had repurchased approximately $17 million of the
Company's common stock or 1.1 million common shares, through privately
negotiated transactions and in the open market, representing 2.6% of the common
shares outstanding. Since the end of the quarter, Genesis has repurchased an
additional $4 million of common stock.
3
Discontinued Operations
On October 1, 2001, the Company adopted the provisions of Statement of Financial
Accounting Standards, No. 144 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" ("SFAS 144"). Under SFAS
144, discontinued businesses or assets held for sale are removed from the
results of continuing operations and presented as a separate line on the
statement of operations.
During the second quarter of fiscal 2003, the Company classified as discontinued
operations all of its Florida skilled nursing facilities and its one remaining
assisted living facility in Florida (as discussed above), and two skilled
nursing and four assisted living facilities located in other states.
Other Considerations
Strategic Planning, Severance and Other Related Costs
In the second quarter of fiscal 2003, the Company recorded expenses of $2.6
million principally associated with consulting expenses related to
NeighborCare's margin expansion initiatives and the evaluation of strategic
alternatives.
Transaction Related Expenses
During the second quarter of fiscal 2003, the Company recognized an additional
$1.0 million of costs associated with the proposed NCS Healthcare transaction.
For the six months ended March 31, 2003, the Company realized a net gain of
approximately $10.2 million on the NCS Healthcare break-up fee.
Financial Summary
Excluding the impact of strategic planning, severance and other related costs
and transaction related expenses in the quarter ended March 31, 2003, and a
$21.7 million gain on an arbitration award and $1.7 million of debt
restructuring and reorganization costs in the quarter ended March 31, 2002,
results for the quarter ended March 31, 2003 as compared to the same quarter in
the prior year are presented below and have been labeled `as adjusted'.
As reported As adjusted
Quarter ended Quarter ended
March 31, March 31,
2003 2002 2003 2002
---- ---- ---- ----
EBITDA (in millions) $44.0 $74.2 $47.5 $54.2
Income from Continuing Operations
(in millions) $9.7 $28.3 $11.8 $16.8
Income from Continuing Operations
Per Share - Diluted $0.23 $0.67 $0.28 $0.39
See attached reconciliation on page 7
4
Outlook
The Company is reaffirming its guidance for the fiscal year 2003. Income from
continuing operations on a GAAP basis is projected to be between $50.3 million
($1.23 per share) and $52.5 million ($1.28 per share). As adjusted for our
projected strategic planning, severance and other related costs and transaction
related net gains in the fiscal year 2003, income from continuing operations on
a non-GAAP basis is projected to be between $56.6 million ($1.38 per share) and
$58.7 million ($1.43 per share). See attached reconciliation on page 12.
Conference Call
Genesis Health Ventures will host a conference call and webcast at 9:30 a.m. EDT
on May 1, 2003 to discuss its financial results for the second quarter.
Investors can access the conference call by phone at (888) 428-4480 or live via
webcast through the home page of the Genesis web site at http://www.ghv.com. A
replay of the call will also be posted on the home page of the Genesis web site
at http://www.ghv.com.
About Genesis Health Ventures
Genesis Health Ventures (NASDAQ: GHVI) provides healthcare services to America's
elders through a network of NeighborCare pharmacies and Genesis ElderCare
skilled nursing and assisted living facilities. Other Genesis healthcare
services include rehabilitation and respiratory therapy, group purchasing, and
diagnostics.
Visit our website at http://www.ghv.com
------------------
Statements made in this release, and in our other public filings and releases,
which are not historical facts contain "forward-looking" statements (as defined
in the Private Securities Litigation Reform Act of 1995) that involve risks and
uncertainties and are subject to change at any time. These forward-looking
statements may include, but are not limited to, statements containing words such
as "anticipate," "believe," "plan," "estimate," "expect," "intend," "may" and
similar expressions. Such forward looking statements include, without
limitation, statements contained under the heading "Outlook" and statements
regarding the effect of the exit from eldercare operations in Florida, the
effect and timing of the spin-off of our eldercare operations and the effect of
the NeighborCare operational best practices. Factors that could cause actual
results to differ materially include, but are not limited to, the following:
costs, delays and other difficulties related to the spin-off, changes in the
reimbursement rates or methods of payment from Medicare or Medicaid, or the
implementation of other measures to reduce reimbursement for our services;
changes in pharmacy legislation and payment formulas; the expiration of
enactments providing for additional government funding; efforts of third party
payors to control costs; the impact of federal and state regulations; changes in
payor mix and payment methodologies; further consolidation of managed care
organizations and other third party payors; competition in our business; an
increase in insurance costs and potential liability for losses not covered by,
or in excess of, our insurance; competition for qualified staff in the
healthcare industry; our ability to control operating costs, and generate
sufficient cash flow to meet operational and financial requirements; an economic
downturn or changes in the laws affecting our business in those markets in which
we operate; the terms of any share repurchase; and that there can be no
assurance that any spin-off transaction will be completed and if completed will
increase shareholder value.
The forward-looking statements involve known and unknown risks, uncertainties
and other factors that are, in some cases, beyond our control. We caution
investors that any forward-looking statements made by us are not guarantees of
future performance. We disclaim any obligation to update any such factors or to
announce publicly the results of any revisions to any of the forward-looking
statements to reflect future events or developments.
# # #
5
GENESIS HEALTH VENTURES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Three Months Ended Three Months Ended
March 31, 2003 March 31, 2002
----------- -----------
Net revenues:
Inpatient services $ 298,638 $ 299,139
Pharmacy services 302,844 279,179
Other revenue 46,070 42,101
----------- -----------
Total net revenues 647,552 620,419
----------- -----------
Operating expenses:
Salaries, wages and benefits 281,707 258,743
Cost of sales 190,017 178,425
Other operating expenses 121,346 122,664
Strategic planning, severance and other related costs 2,593 -
Net expense (gain) from break-up fee and other settlements 969 (21,678)
Depreciation and amortization expense 16,083 14,686
Lease expense 6,957 6,368
Interest expense 9,889 10,862
----------- -----------
Income before debt restructuring and reorganization costs,
income tax expense, equity in net income (loss) of unconsolidated
affiliates and minority interests 17,991 50,349
Debt restructuring and reorganization costs - 1,700
----------- -----------
Income before income tax expense, equity in net income (loss)
of unconsolidated affiliates and minority interests 17,991 48,649
Income tax expense 7,018 18,974
----------- -----------
Income before equity in net income (loss) of unconsolidated
affiliates and minority interests 10,973 29,675
Equity in net income (loss) of unconsolidated affiliates 541 (141)
Minority interests (1,180) (595)
----------- -----------
Income from continuing operations before preferred stock dividends 10,334 28,939
Preferred stock dividends 666 630
----------- -----------
Income from continuing operations 9,668 28,309
Loss from discontinued operations, net of taxes (5,004) (3,367)
----------- -----------
Net income attributed to common shareholders $ 4,664 $ 24,942
=========== ===========
Per Common Share Data:
Basic:
Income from continuing operations $ 0.23 $ 0.69
Loss from discontinued operations (0.12) (0.08)
Net income $ 0.11 $ 0.61
Weighted average shares 41,641,179 41,168,498
Diluted:
Income from continuing operations $ 0.23 $ 0.67
Loss from discontinued operations (0.12) (0.08)
Net income $ 0.11 $ 0.59
Weighted average shares 41,641,179 43,300,745
6
GENESIS HEALTH VENTURES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 2003 AND 2002
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Six Months Ended Six Months Ended
March 31, 2003 March 31, 2002
-------------- --------------
Net revenues:
Inpatient services $ 601,533 $ 596,634
Pharmacy services 597,911 551,784
Other revenue 89,119 81,447
----------- -----------
Total net revenues 1,288,563 1,229,865
----------- -----------
Operating expenses:
Salaries, wages and benefits 556,160 512,907
Cost of sales 376,769 350,524
Other operating expenses 243,831 246,020
Strategic planning, severance and other related costs 9,838 -
Net gain from break-up fee and other settlements (11,337) (21,678)
Depreciation and amortization expense 32,195 29,309
Lease expense 13,903 13,084
Interest expense 20,809 21,928
----------- -----------
Income before debt restructuring and reorganization costs,
income tax expense, equity in net income of unconsolidated
affiliates and minority interests 46,395 77,771
Debt restructuring and reorganization costs - 1,700
----------- -----------
Income before income tax expense, equity in net income
of unconsolidated affiliates and minority interests 46,395 76,071
Income tax expense 18,095 29,668
----------- -----------
Income before equity in net income of unconsolidated
affiliates and minority interests 28,300 46,403
Equity in net income of unconsolidated affiliates 592 391
Minority interests (2,295) (752)
----------- -----------
Income from continuing operations before preferred stock dividends 26,597 46,042
Preferred stock dividends 1,349 1,260
----------- -----------
Income from continuing operations 25,248 44,782
Loss from discontinued operations, net of taxes (8,647) (4,241)
----------- -----------
Net income attributed to common shareholders $ 16,601 $ 40,541
=========== ===========
Per Common Share Data:
Basic:
Income from continuing operations $ 0.61 $ 1.09
Loss from discontinued operations (0.21) (0.10)
Net income $ 0.40 $ 0.99
Weighted average shares 41,594,523 41,102,279
Diluted:
Income from continuing operations $ 0.61 $ 1.07
Loss from discontinued operations (0.21) (0.10)
Net income $ 0.40 $ 0.97
Weighted average shares - income from continuing operations 43,829,594 43,230,208
Weighted average shares - net income 41,594,523 43,230,208
7
GENESIS HEALTH VENTURES, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
Reconciliation of as reported to as adjusted income from
continuing operations (in thousands, except Three Months Ended Three Months Ended
share and per share amounts) March 31, 2003 March 31, 2002
-------------- --------------
Income from continuing operations - as reported $ 9,668 $ 28,309
Add back:
Strategic planning, severance and other related costs 2,593 -
Net expense (gain) from break-up fee and other settlements 969 (21,678)
Debt restructuring and reorganization costs - 1,700
Tax impact of items added back above (1,389) 7,791
----------- -----------
Income from continuing operations as adjusted $ 11,841 $ 16,122
Assumed conversion of preferred stock - 630
----------- -----------
Income from continuing operations as adjusted
to calculate diluted per share results $ 11,841 $ 16,752
----------- -----------
Income per share from continuing operations - diluted $ 0.28 $ 0.39
----------- -----------
Weighted average shares - diluted 41,641,179 43,300,745
=========== ===========
- -------------------------------------------------------------------------------------------------------------------
Reconciliation of income from continuing operations
to EBITDA as reported and as adjusted Three Months Ended Three Months Ended
(in thousands) March 31, 2003 March 31, 2002
------------ --------------
Income from continuing operations - as reported $ 9,668 $ 28,309
Add back:
Preferred stock dividends 666 630
Equity in net income or loss of unconsolidated affiliates (541) 141
Minority interests 1,180 595
Income tax expense 7,018 18,974
Interest expense 9,889 10,862
Depreciation and amortization expense 16,083 14,686
----------- -----------
EBITDA as reported $ 43,963 $ 74,197
Net expense (gain) from break-up fee and other settlements 969 (21,678)
Strategic planning, severance and other related costs 2,593 -
Debt restructuring and reorganization costs - 1,700
----------- -----------
EBITDA as adjusted $ 47,525 $ 54,219
=========== ===========
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Reconciliation of as reported to as adjusted income from
continuing operations (in thousands, except Six Months Ended Six Months Ended
share and per share amounts) March 31, 2003 March 31, 2002
-------------- -------------
Income from continuing operations - as reported $ 25,248 $ 44,782
Add back:
Strategic planning, severance and other related costs 9,838 -
Net gain from break-up fee and other settlements (11,337) (21,678)
NCS financing cost with pharmacy supplier (included in cost of sales) 601 -
Debt restructuring and reorganization costs - 1,700
Tax impact of items added back above 350 7,791
------------ -----------
Income from continuing operations as adjusted $ 24,700 $ 32,595
Assumed conversion of preferred stock - 1,260
------------ -----------
Income from continuing operations as adjusted
to calculate diluted per share results $ 24,700 $ 33,855
------------ -----------
Income per share from continuing operations - diluted $ 0.59 $ 0.78
------------ -----------
Weighted average shares - diluted 41,594,523 43,230,208
============ ===========
- -------------------------------------------------------------------------------------------------------------------
Reconciliation of income from continuing operations
to EBITDA as reported and as adjusted Six Months Ended Six Months Ended
(in thousands) March 31, 2003 March 31, 2002
------------- --------------
Income from continuing operations - as reported $ 25,248 $ 44,782
Add back:
Preferred stock dividends 1,349 1,260
Equity in net income of unconsolidated affiliates (592) (391)
Minority interests 2,295 752
Income tax expense 18,095 29,668
Interest expense 20,809 21,928
Depreciation and amortization expense 32,195 29,309
------------ -----------
EBITDA as reported $ 99,399 $ 127,308
Net gain from break-up fee and other settlements (11,337) (21,678)
Strategic planning, severance and other related costs 9,838 -
NCS financing cost with pharmacy supplier (included in cost of sales) 601 -
Debt restructuring and reorganization costs - 1,700
------------ -----------
EBITDA as adjusted $ 98,501 $ 107,330
============ ===========
8
GENESIS HEALTH VENTURES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2003 AND SEPTEMBER 30, 2002
(IN THOUSANDS)
March 31, 2003 September 30, 2002
-------------- ------------------
Assets:
Current assets:
Cash and equivalents $ 133,481 $ 148,030
Restricted investments in marketable securities 15,850 15,074
Accounts receivable, net 370,243 369,969
Inventory 68,003 64,734
Prepaid expenses and other current assets 46,586 47,850
Assets held for sale 40,314 46,134
---------- ----------
Total current assets 674,477 691,791
---------- ----------
Property, plant and equipment, net 743,241 795,928
Assets held for sale 21,551 -
Restricted investments in marketable securities 71,769 71,073
Other long-term assets 39,823 51,042
Investments in unconsolidated affiliates 12,084 14,143
Identifiable intangible assets, net 24,726 25,795
Goodwill 341,854 339,723
---------- ----------
Total assets $1,929,525 $1,989,495
========== ==========
Liabilities and Shareholders' Equity:
Current liabilities:
Current installments of long-term debt $ 53,606 $ 40,744
Accounts payable and accrued expenses 181,100 202,041
---------- ----------
Total current liabilities 234,706 242,785
---------- ----------
Long-term debt 571,616 648,939
Deferred income taxes 50,089 37,191
Self-insurance liability reserves 52,347 42,019
Other long-term liabilities 48,787 48,989
Minority interests 10,901 10,684
Redeemable preferred stock, including accrued dividends 46,114 44,765
Shareholders' equity 914,965 914,123
---------- ----------
Total liabilities and shareholders' equity $1,929,525 $1,989,495
========== ==========
- ------------------------------------------------------------------------------------------------------------------------------------
Rollforward of book value per share
(in thousands) (in thousands)
---------------------------- ----------------------- ---------------------------
Shareholders' equity Common shares Book value per share (1)
---------------------------- ----------------------- ---------------------------
Balance at September 30, 2002 $ 914,123 41,501 $ 22.03
Net income attributed to common shareholders 16,601 -
Accumulated other comprehensive loss (1,589) -
Issuance of common stock 2,745 206
Repurchase of common stock (16,915) (1,103)
---------------------------- ----------------------- ---------------------------
Balance at March 31, 2003 $ 914,965 40,604 $ 22.53
============================ ======================= ===========================
(1) Excluding redeemable preferred stock.
9
GENESIS HEALTH VENTURES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE AND SIX MONTHS ENDED MARCH 31, 2003 AND 2002
(IN THOUSANDS)
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
March 31, 2003 March 31, 2002 March 31, 2003 March 31, 2002
-------------- -------------- -------------- --------------
Cash flows from operating activities:
Net income attributed to common shareholders $ 4,664 $ 24,942 $ 16,601 $ 40,541
Net charges included in operations not requiring funds 32,647 24,886 63,019 59,896
Changes in assets and liabilities:
Accounts receivable (5,917) (9,918) (22,742) (16,247)
Accounts payable and accrued expenses 3,497 (3,518) (7,622) 24,585
Refinancing of pharmacy supplier credit terms - (42,000) - (42,000)
Receipt of break-up fee, net of costs 10,580 - 10,580 -
Other, net 5,786 (1,170) 4,761 125
--------- -------- --------- --------
Net cash provided by (used in) operating activities before
debt restructuring and reorganization costs 51,257 (6,778) 64,597 66,900
--------- -------- --------- --------
Cash paid for debt restructuring and reorganization costs (662) (6,208) (993) (32,182)
--------- -------- --------- --------
Net cash provided by (used in) operating activities 50,595 (12,986) 63,604 34,718
--------- -------- --------- --------
Cash flows from investing activities:
Capital expenditures (14,123) (9,152) (26,952) (19,973)
Net sales (purchases) of restricted marketable securities 8,184 (7,370) (909) (13,039)
Acquisition of rehabilitation services business - - (5,436) -
Sale (purchase) of eldercare assets 28,198 - 29,556 (10,453)
Other 5,518 7,599 6,022 5,245
--------- -------- --------- --------
Net cash provided by (used in) investing activities 27,777 (8,923) 2,281 (38,220)
--------- -------- --------- --------
Cash flows from financing activities:
Repayment of long-term debt and payment of sinking
fund requirements (20,127) (10,880) (63,496) (34,349)
Proceeds from issuance of long-term debt - 47,000 - 80,000
Repurchase of common stock (16,938) - (16,938) -
Other (2,000) - - -
--------- -------- --------- --------
Net cash (used in) provided by financing activities (39,065) 36,120 (80,434) 45,651
--------- -------- --------- --------
Net increase (decrease) in cash and equivalents $ 39,307 $ 14,211 $ (14,549) $ 42,149
Cash and equivalents:
Beginning of period 94,174 60,077 148,030 32,139
--------- -------- --------- --------
End of period $ 133,481 $ 74,288 $ 133,481 $ 74,288
========= ======== ========= ========
10
GENESIS HEALTH VENTURES, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
Segment Data (dollars in thousands) March 31, 2003 March 31, 2002 March 31, 2003 March 31, 2002
-------------- -------------- -------------- --------------
Inpatient services
Revenue $ 298,638 $ 299,139 $ 601,533 $ 596,634
EBITDA - $ 26,612 35,351 56,564 72,180
EBITDA - % 8.9% 11.8% 9.4% 12.1%
Pharmacy services (including intersegment amounts)
Revenue $ 322,455 $ 305,808 $ 637,573 $ 604,660
EBITDA - $ 31,003 26,867 59,204 53,132
EBITDA - % 9.6% 8.8% 9.3% 8.8%
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
Selected Operating Statistics March 31, 2003 March 31, 2002 March 31, 2003 March 31, 2002
-------------- -------------- -------------- --------------
Occupancy 91.0% 92.1% 91.2% 92.2%
Patient Days:
Private and other 315,445 342,623 653,279 701,871
Medicare 261,567 250,412 506,756 475,996
Medicaid 1,026,632 1,028,549 2,088,947 2,107,175
---------- ---------- ---------- ----------
Total Days 1,603,644 1,621,584 3,248,982 3,285,042
========== ========== ========== ==========
Per Diems:
Private and other $ 201.98 $ 197.69 $ 201.93 $ 196.04
Medicare $ 312.76 $ 342.42 $ 311.24 $ 343.07
Medicaid $ 144.25 $ 136.06 $ 144.45 $ 135.03
Nursing labor costs per patient day:
Employed labor $ 72.62 $ 65.02 $ 71.27 $ 63.70
Agency labor $ 5.96 $ 8.90 $ 6.49 $ 9.23
---------- ---------- ---------- ----------
Total $ 78.58 $ 73.92 $ 77.76 $ 72.93
========== ========== ========== ==========
Pharmacy beds served 250,207 250,046 249,480 250,375
Institutional pharmacy revenue per bed $ 1,124 $ 1,065 $ 2,234 $ 2,108
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GENESIS HEALTH VENTURES, INC.
EARNINGS GUIDANCE (UNAUDITED)
Reconciliation of GAAP to non-GAAP Low end High end
projected earnings guidance of range of range
-------------------------- --------------------------
$ $ per share * $ $ per share *
-------------------------- --------- ----------------
Projected income from continuing operations (GAAP) $ 50,332 $ 1.23 $ 52,480 $ 1.28
Add back:
Strategic planning, severance and other related costs 20,988 20,988
Net expense (gain) from break-up fee and other settlements (11,337) (11,337)
NCS financing cost with pharmacy supplier
(included in cost of sales) 601 601
Tax impact of items added back above (3,998) (3,998)
-------------------------- ---------------------------
Projected income from continuing operations -
as adjusted (non-GAAP) $ 56,586 $ 1.38 $ 58,734 $ 1.43
========================== ========= ================
* - $ per common share on a diluted basis, assuming the conversion of redeemable
preferred stock to common stock.
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