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 ANNOUNCES FIRST-QUARTER EARNINGS
BOARD ANNOUNCES QUARTERLY DIVIDEND OF 14 CENTS PER COMMON SHARE
TOLEDO, Ohio, April 23, 2004 -- Manor Care, Inc. (NYSE:HCR) today
announced first-quarter net income of $41.1 million, or 46 cents per diluted
share, compared with $31.1 million, or 33 cents per share, a year ago. During
the 2004 first quarter, we sold four skilled nursing centers and other assets,
which combined with related actions, resulted in a net gain of approximately one
cent per diluted share.
Revenues in the 2004 first quarter were $797 million, an increase of $67
million, or 9.1 percent, from the 2003 first quarter.
Manor Care's Board of Directors declared a quarterly cash dividend on the
company's common stock of 14 cents per share, which is payable on May 21, 2004
to shareholders of record on May 7, 2004.
Paul A. Ormond, Manor Care chairman, president and CEO, said, "The new
year has started off on positive footing, as each of our major businesses
improved on its operating performance from the previous year. The percentage of
Medicare revenues for the 2004 first quarter increased by five percentage
points, reflecting both the rate increases enacted last October and significant
growth in Medicare patient census. Our quality mix of Medicare, private pay and
managed care/insurance revenues rose to a new high of 69 percent. The hospice
and home health care business had another strong quarter, with hospice census
exceeding 4,500 for the first time during the quarter
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Manor Care Reports Earnings, Page 2
and pushing hospice and home health care revenues to $92 million, up 26 percent
from the prior year. Our outpatient rehabilitation clinics generated an 11
percent increase in revenues from the 2003 first quarter.
Operating cash flow once again was robust at $109 million, with uses of
funds enabling the company to:
o Repurchase $24 million of its shares.
o Increase its dividend 12 percent in January to 14 cents per common
share.
o Reduce net debt.
Cash was also invested back in operations for facility maintenance and upgrades.
In addition, Manor Care:
o Completed the $36 million purchase of four Ohio nursing centers that
were being leased.
o Completed two nursing center expansions, started two more, with a
total of 16 currently under way.
o Continued construction on two new skilled nursing centers.
In addition, the company continued the rationalization of its skilled nursing
center portfolio by divesting four Texas nursing centers and moving forward with
negotiations to pare select centers which are underperforming or do not fit
strategic growth plans. Total asset sale proceeds during the quarter were $17
million.
Managing costs remained a high focus area, with increases in wage rates
being maintained in the 4 percent range. Staffing and ancillary expenses
increased at a faster rate, reflecting the continuing shift to patients
requiring more intensive care.
Manor Care's proactive management initiatives and stable claims activity
enabled it to continue to benefit from the lower general liability accrual rate
that was established in the fourth quarter of 2003. But effective tort reform is
still needed in several states, particularly Florida, to ensure access to
high-quality care is not jeopardized for those who are most in need. During the
first three months of this year, the industry made a strong push with
legislators in Florida to emphasize the seriousness of this issue and
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Manor Care Reports Earnings, Page 3
the inadequacy of prior legislation in rectifying the situation. The industry
remains hopeful that its ongoing efforts to encourage enactment of reasonable
tort reform legislation will be successful.
"During the first quarter, we continued on our sound path that is leading
to improved revenues and income," Mr. Ormond said. "We are focused on those
areas that benefit from our strengths and which at the same time can generate
the revenue and earnings streams that foster growth. The strength of our balance
sheet, and our presence in high-demand markets, diverse specialty services and
unmatched caregiver team keep us moving forward. With these successes, there are
still uncertainties, and four months into the year we are still cautious about
areas such as Medicaid funding and progress toward more meaningful tort reform.
Average Medicaid rates were up 4 percent from a year ago, but a number of states
are still struggling with significant budget challenges, and 2004 rate increases
remain uncertain in several key markets. We will continue to move aggressively
forward in those areas we can manage and control, and will press on just as
aggressively to make the case that appropriate funding for the care of those in
need must be a high legislative priority, as is legislation that provides relief
from unreasonable jury awards and settlement demands."
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 2004 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 6547189. This rebroadcast will be
available until midnight, April 30. A recording of the call will also be
available on Manor Care's website for 90 days.
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Manor Care Reports Earnings, Page 4
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 skilled nursing centers, assisted
living facilities, outpatient rehabilitation clinics, and hospice and home
health care offices. Alliances and other ventures supply high-quality
pharmaceutical products and management services for professional organizations.
The company operates primarily under the respected 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, changes in current
trends in the cost and volume of general and professional liability claims, and
our ability to complete the previously announced settlement with the Department
of Justice. 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,
2004 2003
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(In thousands, except earnings per share)
Revenues $ 797,338 $ 730,520
Expenses
Operating 659,358 611,487
General and administrative 34,791 30,709
Depreciation and amortization 31,747 31,674
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725,896 673,870
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Income before other income (expenses) and
income taxes 71,442 56,650
Other income (expenses):
Interest expense (10,719) (8,875)
Gain on sale of assets 2,405 189
Equity in earnings of affiliated companies 2,053 1,541
Interest income and other 563 701
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Total other expenses, net (5,698) (6,444)
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Income before income taxes 65,744 50,206
Income taxes 24,654 19,078
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Net income $ 41,090 $ 31,128
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Earnings per share:
Basic $ .47 $ .33
Diluted $ .46 $ .33
Weighted average shares:
Basic 88,195 93,659
Diluted 89,991 94,504
Cash dividends declared per common share $ .14
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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,
2004 2003
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(In thousands)
Cash $ 126,519 $ 86,251
Other current assets 507,386 499,148
Property and equipment 1,530,440 1,514,250
Other 293,519 297,062
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Total assets $ 2,457,864 $ 2,396,711
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Current liabilities $ 428,149 $ 387,502
Long-term debt 657,872 659,181
Other long-term liabilities 376,520 374,923
Shareholders' equity 995,323 975,105
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Total liabilities and shareholders' equity $ 2,457,864 $ 2,396,711
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Shares outstanding 89,075 89,014
YTD shares repurchased $24.1 million 682
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Selected Statistics (unaudited)
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Quarter ended March 31,
2004 2003
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Occupancy 88% 88%
Revenue allocation:
Private and other 32% 36%
Medicare 37% 32%
Medicaid 31% 32%
Quality Mix 69% 68%
Per Diems:
Private and other (excluding assisted living) $197.07 $188.90
Private and other (assisted living) $109.13 $104.45
Medicare $333.37 $310.30
Medicaid $133.22 $128.28
Number of Facilities:
Skilled nursing facilities 289 296
Assisted living facilities:
Springhouses 15 16
Arden Courts 54 54
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Total 69 70
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Number of Beds:
Skilled nursing facilities 40,117 41,205
Assisted living facilities 5,399 5,457
Outpatient therapy clinics 91 92
Hospice and home health offices 90 88
Skilled nursing facility wage rate increases
first quarter 2004 to 2003 4%
Cash flow from operations (in millions): $109 $81
Capital Expenditures (in millions):
Maintenance and renovations $ 20 $21
Purchased leased facilities $ 36
New construction $ 6 $ 3
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