Exhibit 99.1
Beverly Enterprises Net Income from Continuing Operations
Up 30% for the Fourth Quarter and 54% for the
Year; Full-year EBITDA Totals $191 Million
FORT SMITH, Ark.--(BUSINESS WIRE)--March 15, 2005--Beverly
Enterprises, Inc. (NYSE: BEV) today announced that net income from
continuing operations totaled $14.9 million (13 cents per share
diluted) in the fourth quarter of 2004, up 30 percent from $11.4
million (10 cents per share diluted) in the same period in 2003.
Revenue for the fourth quarter of 2004 totaled $516.6 million, up
10 percent from the comparable period in 2003. (Revenues for both
periods have been adjusted to exclude discontinued operations.)
For the full year, 2004 net income from continuing operations
totaled $42.7 million (37 cents per share diluted), up 54 percent from
$27.7 million (26 cents per share diluted) in 2003. EBITDA(1) totaled
$190.8 million in 2004, up 22 percent from $156.2 million in 2003.
Revenues totaled nearly $2 billion in 2004, up 10.4 percent from 2003.
"Our solid operating and financial performance in the fourth
quarter reflects revenue and margin gains in Skilled Nursing
Facilities, as well as strong revenue and EBITDA improvements in Aegis
Therapies and AseraCare Hospice, compared with the year-earlier
period," said William R. Floyd, Chairman and Chief Executive Officer.
"Cash flow from operations more than doubled to $37.9 million,
compared to $16.4 million in the 2003 fourth quarter. This enabled us
to invest nearly $25 million in capital expenditures to fuel further
growth, while increasing our cash balance during the quarter by more
than $8 million."
Floyd continued: "For the full year, net income from continuing
operations totaled nearly $43 million in 2004, and included
refinancing costs of $41 million. Excluding refinancing expenses in
both periods, net income would have more than doubled from 2003
levels. Our EBITDA margin averaged 9.6 percent, an increase of 92
basis points from the prior year. The strong momentum we generated
during 2004 continues into 2005, and we reaffirm our EBITDA guidance
for this year - excluding costs associated with the Whitman /
Appaloosa expression of interest in BEI - of $210 million to $215
million."
(1) EBITDA is earnings from continuing operations before interest
expense (including costs related to early extinguishments of debt),
interest income, taxes, depreciation and amortization; EBITDA margin
is EBITDA as a percentage of total revenues.
Financial and Operating Highlights
General
-- 30% increase in 2004 fourth-quarter net income from continuing
operations primarily reflects revenue gains and margin
improvement in Nursing Facilities, as well as revenue
increases of 52% in Aegis Therapies (third party) and more
than 100% in AseraCare Hospice (comparisons based on 2003
fourth quarter).
-- The higher fourth quarter income level also reflects a 32%
reduction in interest expense due to lower debt levels and the
refinancings accomplished at lower interest rates during late
2003 and 2004. Fourth-quarter interest expense dropped from
$15.6 million in 2003 to $10.6 million in 2004.
-- Net income for the 2004 fourth quarter was $6.1 million (six
cents per share diluted), reflecting a net loss from
discontinued operations of $8.8 million (seven cents per share
diluted). Net income for the 2003 fourth quarter of $40.8
million (35 cents per share diluted), included net income of
$29.4 million (25 cents per share diluted) from discontinued
operations.
-- For the full year, 2004 net income totaled $28 million (25
cents per share diluted), which included a net loss from
discontinued operations of $14.6 million (12 cents per share
diluted). In 2003, full year net income of $80.5 million (74
cents per share diluted) reflected net income from
discontinued operations of $52.8 million (48 cents per share
diluted).
-- Results include refinancing costs of $40.9 million (33 cents
per share diluted) in 2004 and $6.6 million (6 cents per share
diluted) in 2003. Excluding these refinancing costs, net
income from continuing operations in 2004 would have been
$83.6 million (70 cents per share diluted), compared to $34.3
million (32 cents per share diluted) in 2003.
Nursing Facilities
-- 8% increase in fourth-quarter EBITDA and 23 basis-point
increase in EBITDA margin primarily reflect 5.3% revenue
growth, an increase of 193 basis points in Medicare revenue as
a percentage of total revenue and continuing effective
management of labor costs.
-- Occupancy at the 324 facilities in continuing operations
increased 95 basis points to an average of 89.4% for the 2004
fourth quarter, compared to the fourth quarter of 2003.
-- Medicare per diem rates rose 6.2% (fourth quarter of 2004,
compared to the year-earlier period) -- reflecting a 2.8%
increase in Medicare rates (effective October 1, 2004) and
treatment of higher-acuity patients.
-- Medicaid per diem rates increased 5.7% (4.9% net of the cost
of provider taxes) and private/managed-care rates were up 3.3%
(compared to the 2003 fourth quarter).
-- The weighted-average wage rate rose 4.3%, compared to the 2003
fourth quarter. This modest increase reflects more efficient
facility staffing resulting from the labor management system
implemented in early 2004.
-- Nursing patient receivables at the end of the 2004 fourth
quarter were down $47 million from the end of 2003 and totaled
$179 million (less than 35 days sales outstanding).
-- For the full year, EBITDA was up 24% and EBITDA margin rose
120 basis points, compared to 2003. Medicare revenue increased
166 basis points to 28.3% of total revenue.
Aegis Therapies / AseraCare Hospice
-- Increase of 52% in Aegis Therapies third-party revenues over
2003 fourth quarter. Results primarily reflect net addition of
75 new customers during the year and 28% increase in revenue
per nursing home contract.
-- EBITDA margins for Aegis in 2004 averaged in the mid-teens,
more than twice the average margin for other providers of
therapy services. Aegis margins were slightly lower compared
to 2003, reflecting higher labor costs due to the current
tight market for therapists. Aegis has taken aggressive
actions to expand its therapist recruiting program, and during
2004 hired more than 1,900 therapists. It plans to hire an
additional 2,300 therapists in 2005. EBITDA margins for 2005
are expected to continue in the mid-teens.
-- AseraCare Hospice revenues more than doubled (compared to 2003
fourth quarter), reflecting incremental revenue of $8 million
from the July 30 acquisition of Hospice USA, as well as
revenue gains totaling $3.8 million due to a 31% increase in
average daily census in core business locations.
-- Average daily census -- excluding the Hospice USA acquisition
-- was 1,303 for the 2004 fourth quarter, an increase of 31%
from the year-earlier period and 7% from the 2004 third
quarter. Including the acquisition, average daily census for
the 2004 fourth quarter was 2,207, an increase of 123% from
the 2003 fourth quarter and up 23% from the 2004 third
quarter.
-- AseraCare more than doubled the number of its hospice
locations during 2004 -- to 51 from 21 at the end of the prior
year.
BEI stockholders may listen to a discussion by senior management
of the company's performance at 8:30 a.m. ET today by dialing
1-800-500-0311 or 1-719-457-2698 and entering reservation number
4602680. A recording of this conference call will be available from
11:30 a.m. ET today until midnight Friday, March 25. Stockholders may
dial 1-888-203-1112 or 1-719-457-0820 and enter reservation number
4602680 to access the recording.
IMPORTANT INFORMATION
On March 14, 2005, Beverly Enterprises, Inc. ("BEI") filed a
preliminary proxy statement with the Securities and Exchange
Commission relating to BEI's solicitation of proxies with respect to
its 2005 annual meeting of stockholders. Prior to the annual meeting,
BEI will furnish a definitive proxy statement to its stockholders. BEI
URGES INVESTORS AND SECURITY HOLDERS TO READ THE PROXY STATEMENT
BECAUSE IT CONTAINS IMPORTANT INFORMATION. You may obtain BEI's proxy
statement, any amendments or supplements to the proxy statement and
other relevant documents free of charge at www.sec.gov or at
www.beverlycorp.com under the tab "Investor Information" and then
under the heading "SEC Filings." You may also obtain a free copy of
BEI's proxy statement, any amendments and supplements to the proxy
statement and other relevant documents by writing to Beverly
Enterprises, Inc. at One Thousand Beverly Way, Fort Smith, Arkansas
72919, Attn: Investor Relations.
INFORMATION REGARDING PARTICIPANTS
Information regarding the names, affiliation and interests of
individuals who may be deemed participants in the solicitation of
proxies for BEI's 2005 annual meeting of stockholders is contained in
the preliminary proxy statement filed by BEI with the Securities and
Exchange Commission on March 14, 2005.
FORWARD-LOOKING STATEMENTS
The statements in this document relating to matters that are not
historical facts are forward-looking statements based on management's
beliefs and assumptions using currently available information and
expectations as of the date hereof. Forward-looking statements are not
guarantees of future performance and involve certain risks and
uncertainties, including the risks and uncertainties detailed from
time to time in BEI's filings with the Securities and Exchange
Commission. In addition, our results of operations, financial
condition and cash flows also may be adversely impacted by the
unsolicited indication of interest in an acquisition of BEI by Arnold
Whitman, Formation Capital, LLC, Appaloosa Management, LP, Franklin
Mutual Advisors, LLC and Northbrook NBV, LLC, and related actions
taken by this group, including the nomination of candidates for
election to BEI's board of directors. These actions may impact our
ability to attract and retain customers, management and employees and
may result in the incurrence of significant advisory fees, litigation
costs and other expenses. Although BEI believes that the expectations
reflected in such forward-looking statements are reasonable, it cannot
give any assurances that these expectations will prove to be correct.
BEI assumes no duty to publicly update or revise such statements,
whether as a result of new information, future events or otherwise.
BEI, through its operating subsidiaries, is a leading provider of
healthcare services to the elderly in the United States. BEI currently
operates 347 skilled nursing facilities, as well as 18 assisted living
centers, and 56 hospice and home care centers. Through Aegis
Therapies, BEI also offers rehabilitative services on a contract basis
to facilities operated by other care providers.
BEVERLY ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
Quarter Ended Year Ended
December 31, December 31,
------------------- -----------------------
2004 2003 2004 2003
--------- --------- ----------- -----------
Revenues $516,573 $470,247 $1,988,852 $1,802,026
Costs and expenses:
Wages and related 298,167 277,717 1,147,743 1,078,548
Provision for insurance
and related items 39,178 28,782 127,653 109,377
Other operating and
administrative 137,107 121,280 522,603 462,144
Depreciation and
amortization 16,239 15,420 62,166 58,807
Adjustment related to
California
investigation
settlement - - - (925)
Asset impairments,
workforce reductions
and other unusual items (740) 1,153 448 3,825
--------- --------- ----------- -----------
Total costs and
expenses 489,951 444,352 1,860,613 1,711,776
--------- --------- ----------- -----------
Income before other income
(expenses) 26,622 25,895 128,239 90,250
Other income (expenses):
Interest expense (10,569) (15,553) (45,637) (63,314)
Costs related to early
extinguishments of debt (505) (6,634) (40,935) (6,634)
Interest income 1,397 1,809 5,485 5,363
Net gains (losses) on
dispositions (218) 23 396 422
Gain on sale of equity
investment - 6,686 - 6,686
--------- --------- ----------- -----------
Total other expenses,
net (9,895) (13,669) (80,691) (57,477)
--------- --------- ----------- -----------
Income before provision for
income taxes and
discontinued operations 16,727 12,226 47,548 32,773
Provision for income taxes 1,852 779 4,890 5,069
--------- --------- ----------- -----------
Income before discontinued
operations 14,875 11,447 42,658 27,704
Discontinued operations,
net of taxes: for the
quarters 2004 - $(231) and
2003 - $3,378; for the
years 2004 - $55 and 2003
- $3,378 (8,770) 29,359 (14,637) 52,764
Net income $6,105 $40,806 $28,021 $80,468
========= ========= =========== ===========
Net income (loss) per share
of common stock:
Basic:
Before discontinued
operations $0.14 $0.11 $0.40 $0.26
Discontinued
operations (0.08) 0.27 (0.14) 0.49
--------- --------- ----------- -----------
Net income per share
of common stock $0.06 $0.38 $0.26 $0.75
========= ========= =========== ===========
Shares used to
compute basic net
income (loss) per
share 108,153 107,201 107,749 106,582
========= ========= =========== ===========
Diluted:
Before discontinued
operations $0.13 $0.10 $0.37 $0.26
Discontinued
operations (0.07) 0.25 (0.12) 0.48
--------- --------- ----------- -----------
Net income per share
of common stock $0.06 $0.35 $0.25 $0.74
========= ========= =========== ===========
Shares used to
compute diluted net
income (loss) per
share 125,031 119,999 124,334 109,922
========= ========= =========== ===========
BEVERLY ENTERPRISES, INC.
SUPPLEMENTARY INFORMATION
Quarter Ended Year Ended
December 31, December 31,
--------------------- -----------------------
2004 2003 2004 2003
--------- --------- ---------- ----------
Number of Nursing Home
Facilities:
Owned 264 275 264 275
Leased 87 98 87 98
--------- --------- ---------- ----------
Total 351(1) 373 351(1) 373
========= ========= ========== ==========
Number of Beds:
Owned 27,448 28,667 27,448 28,667
Leased 9,547 10,768 9,547 10,768
--------- --------- ---------- ----------
Total 36,995(1) 39,435 36,995(1) 39,435
========= ========= ========== ==========
Assisted Living Centers 18 20 18 20
Hospice/Home Care Centers 52 23 52 23
Outpatient Clinics 10(1) 10 10(1) 10
Nursing Patient Days 2,795,000 2,816,000 11,129,000 11,180,000
Nursing Home Occupancy -
Continuing Ops (based on
operational beds) 89.38% 88.43% 88.85% 88.16%
Operational beds 33,962 34,656 33,962 34,656
Patient Mix (based on
patient days):
Medicaid 71.39% 70.94% 70.94% 70.61%
Medicare 11.45% 11.67% 11.97% 11.76%
Private & Other 17.16% 17.39% 17.09% 17.63%
Sources of Revenue
(based on $):
Medicaid 49.76% 52.18% 50.12% 52.17%
Medicare 28.99% 27.06% 28.31% 26.65%
Private & Other 21.25% 20.76% 21.57% 21.18%
Nursing Average per diem
rate (including
ancillaries) $163.94 $154.28 $160.60 $149.57
Hospice Average Daily
Census 2,207 991 1,522 895
Aegis Outside Contracts 585 510 585 510
Wages and related
expenses as a %
of revenues 57.72% 59.06% 57.71% 59.85%
(1) 27 Nursing Home Facilities and 10 Outpatient Clinics are held for
sale as of December 31, 2004.
BEVERLY ENTERPRISES, INC.
SUPPLEMENTARY INFORMATION
ANALYSIS OF REVENUES
Quarter Ended Year Ended
December 31, December 31,
------------------- -----------------------
2004 2003 2004 2003
--------- --------- ----------- -----------
REVENUES (In thousands)
- --------
NURSING FACILITIES:
MEDICAID $255,856 $245,842 $ 998,486 $ 942,617
MEDICARE 108,859 105,240 435,348 396,003
PRIVATE & OTHER 94,621 85,102 360,637 341,800
--------- --------- ----------- -----------
SUBTOTAL 459,336 436,184 1,794,471 1,680,420
AEGIS THERAPIES 32,823 21,563 121,846 77,007
ASERACARE 23,205 11,408 65,604 39,164
OTHER 1,209 1,092 6,931 5,435
--------- --------- ----------- -----------
TOTALS $516,573 $470,247 $1,988,852 $1,802,026
========= ========= =========== ===========
NURSING PATIENT DAYS (In thousands)
- --------------------
MEDICAID 1,995 1,998 7,895 7,894
MEDICARE 320 329 1,332 1,314
PRIVATE & OTHER 480 489 1,902 1,972
--------- --------- ----------- -----------
TOTALS 2,795 2,816 11,129 11,180
========= ========= =========== ===========
NURSING PER DIEM RATES (Including Ancillaries)
- ----------------------
MEDICAID $ 128.97 $ 122.00 $ 125.58 $ 118.31
MEDICARE - PART A 340.32 320.31 326.77 301.33
PRIVATE & OTHER 156.26 151.26 156.02 149.18
--------- --------- ----------- -----------
TOTALS(1) $ 163.94 $ 154.28 $ 160.60 $ 149.57
========= ========= =========== ===========
(1) Weighted Average Rates
BEVERLY ENTERPRISES, INC.
SUPPLEMENTARY INFORMATION
ANALYSIS OF OTHER OPERATING AND ADMINISTRATIVE EXPENSES
(In thousands)
Quarter Ended Year Ended
December 31, December 31,
------------------- -------------------
2004 2003 2004 2003
--------- --------- --------- ---------
SUPPLIES $29,388 $28,093 $113,680 $107,126
FOOD 9,813 10,948 38,472 42,327
UTILITIES 13,355 12,889 53,848 51,573
OTHER CONTROLLABLES 57,717 45,978 212,123 169,310
REAL ESTATE RENTAL 7,633 7,477 30,158 30,569
EQUIPMENT RENTAL 4,967 3,544 18,205 15,756
OTHER NONCONTROLLABLES 14,234 12,351 56,117 45,483
--------- --------- --------- ---------
TOTALS $137,107 $121,280 $522,603 $462,144
========= ========= ========= =========
BEVERLY ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
December 31,
-----------------------
2004 2003
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $215,665 $258,815
Accounts receivable - less allowance for
doubtful accounts: 2004 - $26,320; 2003 -
$31,615 235,477 164,635
Notes receivable, less allowance for doubtful
notes: 2004 - $1,686 ; 2003 - $3,336 2,786 13,724
Operating supplies 9,181 10,425
Assets held for sale 14,898 3,498
Investment in Beverly Funding Corporation - 31,342
Prepaid expenses and other 37,266 33,377
----------- -----------
Total current assets 515,273 515,816
Property and equipment, net 653,656 694,220
Other assets:
Goodwill, net 124,066 57,102
Other, less allowance for doubtful accounts
and notes: 2004 - $1,538; 2003 - $2,120 68,390 79,283
----------- -----------
Total other assets 192,456 136,385
----------- -----------
$1,361,385 $1,346,421
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $67,778 $67,572
Accrued wages and related liabilities 104,037 116,717
Accrued interest 3,602 6,896
General and professional liabilities 54,216 93,736
Federal government settlement obligations 14,359 13,125
Liabilities held for sale 676 672
Other accrued liabilities 83,097 102,289
Current portion of long-term debt 12,240 13,354
----------- -----------
Total current liabilities 340,005 414,361
Long-term debt 545,943 552,873
Other liabilities and deferred items 203,024 141,001
Commitments and contingencies
Stockholders' equity:
Preferred stock, shares authorized:
25,000,000 - -
Common stock, shares issued: 2004 -
116,621,715; 2003 - 115,594,806 11,662 11,559
Additional paid-in capital 902,053 895,950
Accumulated deficit (532,804) (560,825)
Treasury stock, at cost: 8,283,316 (108,498) (108,498)
----------- -----------
Total stockholders' equity 272,413 238,186
----------- -----------
$1,361,385 $1,346,421
=========== ===========
BEVERLY ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years Ended December 31,
------------------------------
2004 2003 2002
--------- --------- ----------
Cash flows from operating activities:
Net income (loss) $28,021 $80,468 $(146,090)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities, including
discontinued operations:
Depreciation and amortization 64,301 69,663 88,943
Provision for reserves on
patient, notes and other
receivables, net 8,815 21,605 55,570
Amortization of deferred
financing costs 2,754 4,474 3,096
Florida insurance reserve
adjustment - - 22,179
Special charge and adjustment
related to California
investigation settlement - (925) 6,300
Adjustment related to
settlements of federal
government investigations - - (9,441)
Asset impairments, workforce
reductions and other unusual
items 4,790 7,459 85,773
Costs related to early
extinguishments of debt 40,935 6,634 -
Cumulative effect of change in
accounting for goodwill - - 77,171
Losses (gains) on dispositions
of facilities and other
assets, net 725 (81,508) (1,855)
Insurance related accounts 6,523 (32,727) 8,411
Changes in operating assets and
liabilities, net of
acquisitions and dispositions:
Accounts receivable (72,082) (13,968) 7,896
Operating supplies 352 1,467 3,081
Prepaid expenses and other
receivables 5,155 (2,502) 988
Accounts payable and other
accrued expenses (8,584) 117 (85,335)
Income taxes payable (904) 16,103 9,790
Other, net (5,141) (6,499) (9,844)
--------- --------- ----------
Total adjustments 47,639 (10,607) 262,723
--------- --------- ----------
Net cash provided by
operating activities 75,660 69,861 116,633
Cash flows from investing activities:
Capital expenditures (62,718) (43,984) (100,103)
Proceeds from dispositions of
facilities and other assets,
net 15,557 275,039 169,471
Payments for acquisitions, net
of cash acquired (71,352) (459) -
Collections on notes receivable 38,089 8,689 1,616
Payments for designated funds,
net (1,009) (5,183) (260)
Proceeds from Beverly Funding
Corporation investment 28,956 - -
Other, net (17,502) (14,914) (8,389)
--------- --------- ----------
Net cash provided by (used
for) investing activities (69,979) 219,188 62,335
Cash flows from financing activities:
Proceeds from issuance of long-
term debt 211,384 250,000 5,000
Repayments of long-term debt (219,428) (313,352) (116,496)
Repayments of off-balance sheet
financing - (69,456) (42,901)
Proceeds from exercise of stock
options 3,592 1,108 1,699
Deferred financing and other
costs (including those related
to early extinguishments of
debt) (44,379) (13,979) (168)
--------- --------- ----------
Net cash used for financing
activities (48,831) (145,679) (152,866)
--------- --------- ----------
Net increase (decrease) in cash and
cash equivalents (43,150) 143,370 26,102
Cash and cash equivalents at beginning
of year 258,815 115,445 89,343
--------- --------- ----------
Cash and cash equivalents at end of
year $215,665 $258,815 $115,445
========= ========= ==========
Supplemental schedule of cash flow
information:
Cash paid (received) during the year for:
Interest, net of amounts
capitalized $46,356 $67,710 $65,658
Income tax payments (refunds), net 5,849 (7,656) (3,705)
Beverly Enterprises, Inc.
Projected 2005 Continuing Operations EBITDA
Range Reconciliation
(In millions)
Projected EBITDA $210.0 $215.0
Depreciation and amortization 73.0 73.0
Interest expense 43.0 43.0
Interest income (1.0) (1.0)
--------- ---------
Pre-tax income $95.0 $100.0
========= =========
Beverly Enterprises, Inc.
2004 and 2003 Continuing Operations EBITDA
Reconciliation
(In millions)
December 31,
2004 2003
--------- ----------
Revenues $1,988.9 $1,802.0
EBITDA $190.8 $156.2
Depreciation and amortization 62.2 58.8
Costs related to early extinguishments of debt 40.9 6.6
Interest expense, net 40.2 58.0
--------- ----------
Pre-tax income $47.5 $32.8
========= ==========
Beverly Enterprises, Inc.
2004 and 2003 Nursing Actual EBITDA
Reconciliation
(In millions)
Quarter Ended Year Ended
December 31, December 31,
------------------- -------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Revenues $459.3 $436.2 $1,794.5 $1,680.4
EBITDA $39.8 $36.8 $152.2 $122.3
Depreciation and amortization 13.9 12.7 52.7 49.7
Costs related to early
extinguishments of debt 0.5 - 0.5 -
Interest expense, net 1.3 1.6 5.7 8.7
--------- --------- --------- ---------
Pre-tax income $24.1 $22.5 $93.3 $63.9
========= ========= ========= =========
Beverly Enterprises, Inc.
2004 Arkansas Facilities EBITDA
Reconciliation
(In millions)
December 31,
2004
---------------
Revenues $78.0
EBITDA $7.8
Depreciation and amortization 2.5
Interest expense, net 0.2
---------------
Pre-tax income $5.1
===============
CONTACT: Beverly Enterprises, Inc.
James M. Griffith, 479-201-5514 (Investors)
jim_griffith@beverlycorp.com
or
Blair C. Jackson, 479-201-5263 (News Media)
blair_jackson@beverlycorp.com