Exhibit 99.1
MANORCARE
News Release
FOR IMMEDIATE RELEASE
CONTACT:
Geoffrey G. Meyers, Chief Financial Officer
419/252-5545
e-mail: gmeyers@hcr-manorcare.com
MANOR CARE REPORTS EARNINGS PER SHARE
OF 33 CENTS FOR FIRST QUARTER
TOLEDO, Ohio, April 25, 2003 -- Manor Care, Inc. (NYSE:HCR) announced
today that diluted first-quarter 2003 earnings per share were 33 cents,
consistent with guidance provided to Wall Street early in the quarter and
equaling the 33 cents per share before cumulative effect adjustment reported in
the first quarter of 2002. Earnings per share were 32 cents in 2002 after
cumulative effect.
Net revenues for the first quarter of 2003 were $731 million, compared
with $716 million for the year-ago quarter. Net income for the 2003 first
quarter was $31 million, compared with $34 million before cumulative effect in
the 2002 first quarter ($32 million after cumulative effect).
Paul A. Ormond, Manor Care chairman, president and CEO, said, "In the 2003
first quarter, we were able to achieve revenue growth over last year's first
quarter, a quarter that still benefited from results from our Mesquite, Texas
hospital (divested in April 2002) and a significantly higher Medicare
reimbursement rate. As has been the trend for many quarters, our successes going
into the new year generated substantial cash flow from operations, totaling more
than $80 million for the first quarter. This was supported by more favorable
cost trends that resulted in wage rate increases that now average less than 5
percent, and agency use that was less than half its year-ago level."
Early in the 2003 second quarter, Manor Care put in place a new financing
package to replace its credit facility expiring in September. A three-year $200
million bank credit facility was negotiated with a group of banks. In addition,
Manor Care completed the
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Manor Care Reports Earnings, Page 2
sale of $200 million of 10-year Senior Notes with a 6.25% coupon and the sale of
$100 million of 2.125% 20-year Convertible Senior Notes with a conversion rate
60 percent higher than the company's closing stock price on the day preceding
the offering date. The company's board of directors also authorized another $100
million for share repurchase, which is in addition to the $100 million announced
in January 2003. During the first quarter, $33 million of shares were
repurchased, and combined with those purchased so far in the second quarter,
more than $100 million of shares have been repurchased the first four months of
this year. "We expect to continue to aggressively purchase shares with proceeds
from the Convertible Senior Notes, as well as from cash generated from
operations," Mr. Ormond said. "But as conditions merit, we will also evaluate
other opportunities for the use of our cash, including selected acquisitions.
"Obviously, the significant reduction in Medicare reimbursement rates six
months ago has reduced revenues, and the lack of action in Washington is an
ongoing frustration. But that has not blunted successes on other fronts." In the
2003 first quarter, Manor Care:
- Continued to improve its skilled nursing center occupancy, which is at
a three-year high, and the mix of Medicare and private pay/insurance
revenues.
- Realized Medicaid rate increases of about 5 percent compared to last
year's quarter.
- Continued to achieve growth in its home health and hospice business,
with operating income growth outpacing revenue growth.
- Paid down nearly $30 million of debt.
- Acquired a nursing center the company was leasing and completed two
nursing home expansions. One expansion was begun, for a total of 15 in
progress at the end of the first quarter.
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"While we have been encouraged by initiatives in several states and at the
national level to curb patient liability claim trends by enacting a measure of
tort reform, costs at this time remain at a high, but stable, level," Mr. Ormond
said. "The initiatives in key states such as Florida, Ohio, Pennsylvania and
Texas are showing that legislators are beginning to understand that exorbitant
jury awards are hindering efforts to improve the quality of care and hiring and
retaining quality staff, not helping with these efforts.
"Our employees remain steadfast in their commitment to provide the level
of care needed and deserved by our residents. We will continue to fight for the
level of reimbursement that will enable us and others in our industry to provide
access to care for those most in need. At the same time, we will continue our
actions on a variety of other fronts to increase occupancy, improve our quality
mix of patients, grow complementary businesses along our continuum of care and
better manage those costs we can control."
At 9:00 a.m. Eastern Time today, Manor Care will hold a conference call to
discuss the company's results and performance for the 2003 first quarter. The
toll-free number for the call is 1-888-634-8435. Callers to this number will be
able to listen to the company's discussion and have the opportunity to ask
questions. The call will also be webcast live in the Investor Information
section of Manor Care's website www.hcr-manorcare.com. For those unable to
listen to the call live, a taped rebroadcast will be available beginning two
hours after completion of the live call. To access the rebroadcast, dial
1-800-642-1687. The conference ID number is 9639522. A recording of the call
will also be available on Manor Care's website.
Manor Care, Inc., through its operating group HCR Manor Care, is the
leading owner and operator of long-term care centers in the United States. The
company's 61,000 employees provide high-quality care for patients, residents and
clients through a network of more than 500 long-term care centers, assisted
living facilities, outpatient rehabilitation clinics, and home health care and
hospice offices. Alliances and other ventures supply high-quality pharmaceutical
products and management services for professional organizations. The company
operates primarily under the respected
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Heartland, ManorCare and Arden Courts names. Manor Care is committed to being
the preeminent care provider in the industry. Shares are traded on the New York
Stock Exchange under the ticker symbol HCR.
Statements contained in this press release that are not historical facts
may be forward-looking statements within the meaning of federal law. Such
forward-looking statements reflect management's beliefs and assumptions and are
based on information currently available to management. The forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results, performance or achievements of the company to differ
materially from those expressed or implied in such statements. Such factors are
identified in the public filings made by the company with the Securities and
Exchange Commission and include changes in the health care industry because of
political and economic influences, changes in regulations governing the
industry, changes in reimbursement levels including those under the Medicare and
Medicaid programs, changes in the competitive marketplace, and changes in
current trends in the cost and volume of general and professional liability
claims. There can be no assurance that such factors or other factors will not
affect the accuracy of such forward-looking statements.
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Manor Care Reports Earnings, page 5
Manor Care, Inc.
Consolidated Statements of Income (unaudited)
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Three months ended March 31,
2003 2002
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(In thousands, except earnings per share)
Revenues $730,520 $715,987
Expenses
Operating 611,487 590,330
General and administrative 30,709 29,927
Depreciation and amortization 31,674 31,769
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673,870 652,026
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Income before other income (expenses) and income taxes 56,650 63,961
Other income (expenses):
Interest expense (8,875) (9,944)
Gain (loss) on sale of assets 189 (944)
Equity in earnings of affiliated companies 1,541 736
Interest income and other 701 609
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Total other expenses, net (6,444) (9,543)
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Income before income taxes 50,206 54,418
Income taxes 19,078 20,679
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Income before cumulative effect 31,128 33,739
Cumulative effect of change in accounting for goodwill (1,314)
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Net income $ 31,128 $ 32,425
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Earnings per share - basic and diluted:
Income before cumulative effect $ .33 $ .33
Cumulative effect (.01)
-------- --------
Net income $ .33 $ .32
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Weighted average shares:
Basic 93,659 101,094
Diluted 94,504 102,146
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Manor Care Reports Earnings, page 6
Manor Care, Inc.
Condensed Consolidated Balance Sheets (unaudited)
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March 31, December 31,
2003 2002
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(In thousands)
Cash $ 16,044 $ 30,554
Other current assets 468,639 480,263
Property and equipment 1,538,005 1,534,339
Other 263,923 261,776
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Total assets $ 2,286,611 $ 2,306,932
=========== ===========
Current liabilities $ 367,473 $ 641,864
Long-term debt 608,923 373,112
Other long-term liabilities 294,833 275,909
Shareholders' equity 1,015,382 1,016,047
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Total liabilities and shareholders' equity $ 2,286,611 $ 2,306,932
=========== ===========
Shares outstanding 93,457 95,052
YTD shares repurchased $33.1 million 1,775
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Selected Statistics (unaudited)
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Quarter ended March 31,
2003 2002
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Occupancy 88% 87%
Revenue allocation:
Private and other 36% 36%
Medicare 32% 32%
Medicaid 32% 32%
Quality Mix 68% 68%
Per Diems:
Private and other (excluding assisted living) $188.90 $180.37
Private and other (assisted living) $104.45 $99.75
Medicare $310.30 $332.97
Medicaid $128.28 $121.46
Number of Facilities:
Skilled nursing facilities 296 298
Assisted living facilities:
Springhouses 16 16
Arden Courts 54 52
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Total 70 68
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Number of Beds:
Skilled nursing facilities 41,205 41,450
Assisted living facilities 5,457 5,370
Outpatient therapy clinics 92 94
Home health offices 88 88
Skilled nursing facility wage rate increases
first quarter 2003 to 2002 4%
Cash flow from operations (in millions): $81 $96
Capital Expenditures (in millions):
Maintenance and renovations $21 $17
New construction $3 $6
HCR-PR03-6 -30- 4/25/03rr