EXHIBIT 99.1
Matria Healthcare Exceeds Expectations with Record Earnings
for Third Quarter;
Company Reports Earnings Per Share of $0.39 From Continuing Operations
MARIETTA, Ga.--(BUSINESS WIRE)--Oct. 19, 2004--Matria Healthcare,
Inc. (NASDAQ/NM:MATR) today announced financial results for the third
quarter and nine months ended September 30, 2004.
Revenues for the third quarter of 2004 increased 20% to $76.0
million compared with $63.1 million in the third quarter of 2003.
Earnings from continuing operations for the third quarter of 2004 were
$4.2 million, or $0.39 per diluted common share, compared with $1.7
million, or $0.16 per diluted common share, in the 2003 third quarter.
The costs included in third quarter 2004 discontinued operations
relate to the collection of accounts receivable retained by the
Company in connection with its divested Pharmacy and Supplies
business. These costs will diminish as accounts receivable balances
decline. The third quarter 2004 loss from discontinued operations was
$917,000, or $0.09 per diluted common share, compared with earnings of
$707,000, or $0.07 per diluted common share, in the third quarter of
2003. Including the loss from discontinued operations with earnings
from continuing operations, third quarter of 2004 net earnings were
$3.3 million, or $0.30 per diluted common share, compared with net
earnings of $2.4 million, or $0.23 per diluted common share, in the
third quarter of 2003.
Third quarter of 2004 revenues for the Company's Health
Enhancement segment increased by 34% to $52.6 million compared with
$39.3 million in the third quarter of 2003. The Health Enhancement
segment is comprised of the Company's disease management business, its
foreign diabetes service operation and Facet Technologies, the
Company's diabetes product design, development and assembly operation.
Revenues for the disease management component increased 107% to $14.6
million in the third quarter of 2004 compared with $7.0 million in the
third quarter of 2003. Third quarter 2004 revenues for the foreign
diabetes business increased 19% to $15.8 million compared with $13.3
million in third quarter 2003, and Facet Technologies' revenues in the
third quarter of 2004 increased 17% to $22.2 million compared with
$19.0 million in the prior year's third quarter.
Third quarter of 2004 revenues for the Women's and Children's
Health segment were $23.4 million compared with revenues of $23.8
million in the third quarter of 2003. This business segment is
comprised of the Company's obstetrical home care clinical services and
maternity disease management services.
The nine month results for the period ended September 30, 2004,
include the effects of certain unusual items incurred by the Company
in the second quarter of 2004. These unusual items include a gain of
$56.1 million, or $32.8 million, net of taxes, resulting from the sale
of the Pharmacy and Supplies business that was reflected in earnings
from discontinued operations. The unusual items reflected in
continuing operations for this nine month period are a loss of $22.9
million, or $14.1 million, net of taxes, resulting from the retirement
of $120 million in aggregate principal amount of the Company's 11%
Senior Notes; $600,000, or $371,000, net of taxes, of additional
interest expense that was incurred due to the timing of the use of the
funds raised from the sale of the Company's 4.875% Convertible Senior
Subordinated Notes due 2024 to retire the 11% Senior Notes; and a
restructuring charge of $265,000, or $165,000, net of taxes.
For the nine month period ended September 30, 2004, revenues
increased 16% to $215.2 million compared with $185.1 million in the
same period of 2003. Excluding the unusual items described above,
earnings from continuing operations for the nine month period ended
September 30, 2004, were $7.3 million, or $0.68 per diluted common
share, compared with $3.7 million, or $0.36 per diluted common share,
in the similar 2003 period. In addition, for the first six months of
2004, the Company earned $0.09 per share from its divested Pharmacy
and Supplies business, which is reflected in discontinued operations.
Excluding these unusual items, earnings from discontinued operations
for the nine months ended September 30, 2004, were $70,000, or $0.01
per diluted common share, compared with $1.5 million, or $0.15 per
diluted common share, in the prior year's period. Excluding these
unusual items, net earnings for the nine months ended September 30,
2004, were $7.4 million, or $0.69 per diluted common share, compared
with $5.2 million, or $0.51 per diluted common share, for the same
period in 2003.
Including these unusual items, for the nine month period ended
September 30, 2004, net earnings were $25.5 million, or $2.48 per
diluted common share, loss from continuing operations was $7.4
million, or $0.72 per diluted common share, and earnings from
discontinued operations were $32.9 million, or $3.20 per diluted
common share.
Parker H. Petit, Chairman and Chief Executive Officer, stated, "We
are very pleased with our progress this year. Our third quarter
operating earnings showed a 38% increase over the third quarter of
last year. Disease management continues to win new business,
particularly from the Fortune 1000 employer market, Facet Technologies
is achieving its expectations for revenues and earnings growth and our
foreign diabetes services operation in Germany continues to generate
steady growth, capitalizing on the increasing demand for diabetes
products and services within the German healthcare system.
"Additionally, Women's and Children's Health had a good quarter
and has developed some promising opportunities from a number of state
Medicaid programs," Petit continued. "With the dramatic rise in
Medicaid births in relation to commercial births and the
disproportionately high incidence of preterm births in the Medicaid
population, this market sector presents a significant opportunity for
our Women's and Children's Health business. To further advance this
strategy, we have recently added Stan Watson, a long-standing member
of the Georgia House of Representatives and former Matria manager, to
our staff as our new Director of Government Affairs."
Petit concluded, "We also continue to make excellent progress in
the improvement of our balance sheet and our liquidity, ending the
quarter with cash and cash equivalents of $28.4 million. We are on
target to meet our interest expense savings estimate resulting from
our second quarter refinancing. For the third quarter 2004, interest
expense was down $2.1 million compared with the same quarter in 2003,
which annualizes to an $8.3 million reduction from our prior interest
expense run rate."
The Company expects fourth quarter revenues to be between $74
million and $78 million and earnings per diluted share from continuing
operations to be in the range of $0.34 to $0.36. The Company's
earnings per share guidance does not take into account the dilution
from the Company's Convertible Senior Subordinated Notes. Last week,
the FASB issued new regulations regarding the treatment of
contingently convertible debt instruments. As a result, the FASB will
now require inclusion of these shares in earnings per share
computations effective for reporting periods ending after December 15,
2004. This will result in an approximate $0.02 dilution for fourth
quarter 2004 earnings per diluted share. The Company is considering a
modification to the Notes, which may have the result of reducing the
dilutive impact of the new regulations.
Matria also reported that the current covered lives included in
its disease management programs were 23.5 million at September 30,
2004. At the end of 2003, the Company reported 14.2 million covered
lives, and at the end of 2002, the Company had 7.2 million covered
lives in its disease management programs.
A listen-only simulcast and replay of Matria Healthcare's third
quarter conference call will be available on-line at the Company's
website at www.matria.com or at www.fulldisclosure.com on October 20,
2004, beginning at 10:30 a.m. Eastern time.
Matria Healthcare is a leading provider of comprehensive disease
management programs to health plans and employers. Matria manages the
following major chronic diseases and episodic conditions - diabetes,
cardiovascular diseases, respiratory diseases, high-risk obstetrics,
cancer, chronic pain and depression. Headquartered in Marietta,
Georgia, Matria has more than 40 offices in the United States and
internationally. More information about Matria can be found on-line at
www.matria.com.
This press release contains forward-looking statements. Such
statements include, but are not limited to, the Company's financial
expectations for the fourth quarter of 2004, the continued growth of
the Company's disease management business, the ability of the Company
to capitalize on strategic opportunities in the disease management
market, the ability of the Company to gain business from the Medicaid
sector of the Women's and Children's Health market, the effect of a
modification of the Company's Convertible Senior Subordinated Notes on
the dilution resulting from new FASB regulations and the continued
impact of the Company's interest expense savings. These statements are
based on current information and beliefs and are not guarantees of
future performance. Among the important factors that could cause
actual results to differ materially from those indicated by such
forward-looking statements include the Company's inability to achieve
its financial expectations for the fourth quarter 2004, the
possibility that continued demand for the Company's disease
management-related programs will diminish or not continue to grow,
failure of the Company's disease management business to generate
growth in revenues and earnings, failure to capitalize on strategic
opportunities in the disease management market, failure to reduce the
dilution resulting from the new FASB regulations, failure of interest
expense savings to continue at its current level, failure of the
Company's Medicaid strategy to generate growth for the Women's and
Children's Health business, failure to achieve the revenue
expectations for the Company's newly awarded business, delays or
problems in implementation or management of new disease management
contracts, failure to expand relationships with pharmaceutical
companies or to generate revenues from any such alliances, failure of
the expansion strategy in the Women's and Children's Health business
to generate growth for that business, developments in the healthcare
industry, third-party actions over which Matria does not have control,
regulatory requirements applicable to Matria's business, the Company's
inability to grow profitably through acquisitions and the risk factors
detailed from time to time in Matria's periodic reports and
registration statements filed with the Securities and Exchange
Commission, including Matria's Annual Report on Form 10-K for the year
ended December 31, 2003. By making these forward-looking statements,
Matria does not undertake to update them in any manner except as may
be required by Matria's disclosure obligations in filings it makes
with the Securities and Exchange Commission under the federal
securities laws.
MATRIA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2004 2003 2004 2003
-------- -------- -------- --------
Revenues $75,995 $63,069 $215,171 $185,148
Cost of revenues 43,152 36,604 124,334 108,710
Selling and
administrative expenses 23,951 19,508 69,569 56,669
Provision for
doubtful accounts 910 1,133 1,688 3,679
Amortization of
intangible assets 50 75 150 225
-------- -------- -------- --------
Operating earnings from
continuing operations 7,932 5,749 19,430 15,865
Interest expense, net (1,261) (3,347) (8,693) (10,449)
Other income, net 111 321 225 786
Loss on retirement
of senior notes -- -- (22,886) --
-------- -------- -------- --------
Earnings (loss) from
continuing operations
before income taxes 6,782 2,723 (11,924) 6,202
Income tax benefit (expense) (2,572) (1,054) 4,555 (2,462)
-------- -------- -------- --------
Earnings (loss) from
continuing operations 4,210 1,669 (7,369) 3,740
Discontinued Operations:
Earnings (loss) from
discontinued operations,
net of tax (917) 707 70 1,500
Gain on disposal of
discontinued operations,
net of tax -- -- 32,799 --
-------- -------- -------- --------
Earnings (loss) from
discontinued operations (917) 707 32,869 1,500
-------- -------- -------- --------
Net earnings $3,293 $2,376 $25,500 $5,240
======== ======== ======== ========
Net earnings (loss)
per common share:
Basic:
Continuing operations $0.41 $0.16 $(0.72) $0.37
Discontinued operations (0.09) 0.07 3.20 0.15
-------- -------- -------- --------
$0.32 $0.23 $2.48 $0.52
======== ======== ======== ========
Diluted:
Continuing operations $0.39 $0.16 $(0.72) $0.36
Discontinued operations (0.09) 0.07 3.20 0.15
-------- -------- -------- --------
$0.30 $0.23 $2.48 $0.51
======== ======== ======== ========
Weighted average
shares outstanding:
Basic 10,356 10,158 10,297 10,118
Diluted 10,846 10,507 10,297 10,301
MATRIA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
Sept. 30, Dec. 31,
2004 2003
-------- --------
ASSETS
Current assets:
Cash, cash equivalents
and short-term investments $28,430 $9,008
Trade accounts receivable, net 48,391 37,274
Inventories 23,008 22,261
Other receivables 13,790 28,888
Net assets of discontinued operations sold -- 37,559
Prepaid expenses and other current assets 10,911 10,290
-------- --------
Total current assets 124,530 145,280
Property and equipment, net 20,682 19,228
Intangible assets, net 134,610 134,315
Deferred income taxes 12,671 26,524
Other assets 5,699 8,135
-------- --------
$298,192 $333,482
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt
and obligations under capital leases $1,488 $803
Accounts payable, principally trade 26,869 40,977
Other accrued liabilities 25,170 41,339
-------- --------
Total current liabilities 53,527 83,119
Long-term debt and obligations under capital
leases, excluding current installments 85,725 121,005
Other long-term liabilities 6,454 5,811
-------- --------
Total liabilities 145,706 209,935
Shareholders' equity 152,486 123,547
-------- --------
$298,192 $333,482
======== ========
MATRIA HEALTHCARE, INC.
RECONCILIATION OF NET EARNINGS TO EARNINGS FROM CONTINUING OPERATIONS
EXCLUDING UNUSUAL ITEMS
(Amounts in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2004 2003 2004 2003
-------- -------- -------- --------
Net earnings $3,293 $2,376 $25,500 $5,240
Less gain on disposal of
discontinued operations,
net of tax -- -- (32,799) --
Add loss on retirement of
senior notes, net of tax -- -- 14,144 --
Add additional interest due
to timing of retirement of
senior notes, net of tax -- -- 371 --
Add restructuring charges,
net of tax -- -- 165 --
-------- -------- -------- --------
Net earnings, excluding
unusual items 3,293 2,376 7,381 5,240
Less earnings (loss) from
discontinued operations (917) 707 70 1,500
-------- -------- -------- --------
Earnings from continuing
operations, excluding
unusual items $4,210 $1,669 $7,311 $3,740
======== ======== ======== ========
Net earnings (loss) per common
share, as reported:
Basic:
Continuing Operations $0.41 $0.16 $(0.72) $0.37
Discontinued Operations (0.09) 0.07 3.20 0.15
-------- -------- -------- --------
$0.32 $0.23 $2.48 $0.52
======== ======== ======== ========
Diluted:
Continuing Operations $0.39 $0.16 $(0.72) $0.36
Discontinued Operations (0.09) 0.07 3.20 0.15
-------- -------- -------- --------
$0.30 $0.23 $2.48 $0.51
======== ======== ======== ========
Net earnings (loss) per common
share, excluding unusual items:
Basic:
Continuing Operations $0.41 $0.16 $0.71 $0.37
Discontinued Operations (0.09) 0.07 0.01 0.15
-------- -------- -------- --------
$0.32 $0.23 $0.72 $0.52
======== ======== ======== ========
Diluted:
Continuing Operations $0.39 $0.16 $0.68 $0.36
Discontinued Operations (0.09) 0.07 0.01 0.15
-------- -------- -------- --------
$0.30 $0.23 $0.69 $0.51
======== ======== ======== ========
Shares used in calculating net
earnings (loss) per share,
excluding unusual items:
Weighted average shares
outstanding, basic 10,356 10,158 10,297 10,118
Shares issuable from
assumed exercise of options 490 349 456 183
-------- -------- -------- --------
Weighted average shares
outstanding, diluted 10,846 10,507 10,753 10,301
======== ======== ======== ========
CONTACT: Matria Healthcare Inc., Marietta
Stephen M. Mengert, 770-767-4500