Exhibit 99.1
BEI Second-Quarter Net Income
Totals $46.1 Million; Strong Operating Trends Continue
FORT SMITH, Ark.--(BUSINESS WIRE)--Aug. 4, 2005--Beverly
Enterprises, Inc. (BEI) (NYSE: BEV) today announced that net income
for the second quarter of 2005 totaled $46.1 million (37 cents per
share diluted), compared to a loss of $25.9 million (24 cents per
share diluted) in the same period of 2004. Net income for the two
periods reflected the following:
-- 2005 second-quarter expenses totaling $6.3 million (5 cents
per share diluted) relating to the process of selling the
company,
-- 2005 second-quarter pre-tax income of $13.0 million (10 cents
per share diluted) due to retroactive Medicaid rate increases
in Indiana, and
-- 2004 second-quarter expenses totaling $40.3 million (37 cents
per share diluted) related to early extinguishment of debt.
Excluding these items, net income from continuing operations
totaled $34.9 million (28 cents per share diluted) in the 2005
second-quarter, a 34 percent increase from $25.9 million (24 cents per
share diluted) in the year-earlier period. Discontinued operations
income of $4.6 million (4 cents per share diluted) in the 2005
second-quarter included a $3.7 million gain on the sale of two
facilities, compared to a loss of $11.6 million (11 cents per share
diluted) in the comparable 2004 period.
Revenues for the 2005 second-quarter totaled $564.1 million, up 17
percent from $483.6 million in the same period in 2004. Excluding
retroactive Indiana Medicaid rate adjustments, 2005 second-quarter
revenues were up 11 percent from the year-earlier period.
For the first six months - and excluding sale process expenses and
retroactive Medicaid rate adjustments - net income from continuing
operations totaled $61.4 million (50 cents per share diluted) in 2005,
a 29 percent increase from $47.5 million (44 cents per share diluted)
from the comparable 2004 period (excluding early debt extinguishment
costs in that year). Revenues for the 2005 first half were up 17
percent from the year-earlier period (11 percent excluding retroactive
Medicaid adjustments).
"We again achieved strong operating results in all of our major
business units - with Nursing Facilities, Aegis Therapies and
AseraCare Hospice each recording strong increases in revenues and
pre-tax income, compared to the year-earlier period," said William R.
Floyd, BEI Chairman and Chief Executive Officer. "Nursing Facility
gains from the 2004 second quarter were particularly impressive. Our
Medicare business as a percentage of total patient days was up nearly
140 basis points to 13.6 percent, occupancy rose 60 basis points to
89.1 percent and the EBITDA margin for Nursing Facilities increased
331 basis points to 11.6 percent (comparison excludes impact of
retroactive Medicaid rate adjustments).
"Our associates continue to achieve significant operating and
financial gains, despite the potential distraction the sale process
could have posed. I am extremely proud of the way they have responded
throughout a challenging period. Our associates remain dedicated to
providing quality care to our patients and clients, committed to
achieving the aggressive objectives we set for ourselves in 2005 and
determined to ensuring profitable growth in all our operations in the
years ahead."
Floyd continued: "Our EBITDA for the second quarter (excluding
retroactive Medicaid rate adjustments and sale process costs) totaled
$62.8 million and our overall EBITDA margin averaged 11.7 percent -
the highest margin in at least a decade. Based on the strong operating
and financial results we've achieved during the first half of 2005 -
and our expectation that performance trends will continue to be very
positive - we are raising our targeted EBITDA range from continuing
operations for the full year to between $225 million and $230 million,
up $15 million from the $210 million to $215 million range we
communicated in January."
* EBITDA is earnings from continuing operations before interest
expense, interest income, taxes, depreciation and amortization; EBITDA
for 2005 second quarter has been adjusted to exclude expenses relating
to the sale of the company and earnings relating to retroactive
Medicaid rate increases. EBITDA margin is EBITDA as a percentage of
total adjusted revenues.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
General
-- Second-quarter 2005 net income up 34 percent (comparison
excludes sale process costs and retroactive Medicaid rate
increases in Indiana for current quarter, as well as debt
extinguishment costs for prior-year period).
-- Net income increase primarily reflects revenue and margin
improvements in Nursing Facilities and Aegis Therapies.
-- Overall EBITDA margin averaged 11.7 percent for the 2005
second-quarter, up 78 basis points from the year-earlier
period (comparison excludes retroactive Medicaid revenues,
sale expenses and debt extinguishment costs).
-- Capital investments, primarily to support business unit
growth, totaled $24.7 million in the 2005 second-quarter, more
than double the investment made in the year-earlier period.
-- Interest expense down 11 percent from 2004 second-quarter,
reflecting $21.4 million reduction in debt as well as lower
average interest costs due to refinancings.
Nursing Facilities
-- Indiana Medicaid rate adjustment (retroactive to July 1, 2003)
increased 2005 second-quarter revenue by $23.1 million and
raised related provider tax expense by $11.9 million, for net
benefit of $11.2 million. There also was a net adjustment to
pre-tax income of $1.8 million, recorded in the second
quarter, which related to the 2005 first-quarter Indiana
increase.
-- Excluding favorable impact of Indiana rate adjustment, 2005
second-quarter EBITDA increased 50 percent and EBITDA margin
rose 331 basis points (compared to year-earlier period).
-- EBITDA gains (excluding retroactive Indiana rate adjustment)
primarily reflect 7.1 percent revenue increase and
significantly improved patient mix.
-- Medicare patient days as a percentage of total patient days
averaged 13.6 percent for the 2005 second-quarter - the
highest level ever. It was up nearly 140 basis points from the
year-earlier period and up 33 basis points from the 2005
first-quarter, which was the previous high.
-- Medicare revenues as a percentage of total revenues averaged
30.9 percent, up 297 basis points from the 2004 second-quarter
(comparison excludes impact of retroactive Medicaid
increases).
-- Total Medicare revenues rose 16 percent, reflecting treatment
of higher acuity patients, increased patient volume and a 2.8
percent increase in rates (effective October 1, 2004).
-- Occupancy in the 323 facilities in continuing operations rose
60 basis points (compared to the 2004 second-quarter) to an
average of 89.1 percent.
Aegis Therapies / AseraCare
-- Aegis Therapies third-party revenues increased 24 percent
($7.1 million) over 2004 second-quarter. This gain reflects
continuing growth in its client base as well as 4 percent
volume-based growth in revenue per nursing home contract
during the past 12 months. Client-initiated turnover averaged
less than 3 percent for the quarter.
-- Aegis raised its EBITDA and EBITDA margin from 2004
second-quarter levels, primarily due to lower bad debt expense
associated with improved collections. Operating margins
remained in the mid-to-high teens.
-- Aegis continued its aggressive hiring of therapists during the
quarter, resulting in a 19 percent increase in
full-time-equivalent staff, compared to the 2004
second-quarter. Retention of existing staff averaged 91
percent.
-- AseraCare revenue again more than doubled (compared to the
2004 second-quarter), reflecting an increase of $9.6 million
from the July 30, 2004 acquisition of Hospice USA and an
increase of $4.5 million due to a gain in average daily census
in other hospice and home health locations.
-- Average daily hospice census was 2,425, more than double the
2004 second-quarter level - primarily reflecting the Hospice
USA acquisition, as well as the opening of five new start-up
hospice locations during the quarter. Excluding the
acquisition, average daily census was 1,441, up 30 percent
from the year-earlier period.
-- AseraCare also opened 2 home health agencies during the
quarter.
BEI stockholders may listen to a discussion by senior management
of the company's performance at 8:30 a.m. ET today by dialing
1-800-946-0713 or 1-719-457-2642 and entering reservation number
6375204. A recording of this conference call will be available from
11:30 a.m. ET today until midnight August 14. Stockholders may dial
1-888-203-1112 or 1-719-457-0820 and enter reservation number 6375204
to access the recording.
The statements in this press release 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, 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. 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.
Beverly Enterprises, Inc. and its operating subsidiaries are
leading providers of healthcare services to the elderly in the United
States. At June 30, 2005, it operated 345 skilled nursing facilities,
as well as 18 assisted living centers, and 63 hospice/home care
centers. Through Aegis Therapies, the company offers rehabilitative
services on a contract basis to nursing facilities operated by other
care providers.
BEVERLY ENTERPRISES, INC.
SUPPLEMENTARY INFORMATION
Quarter Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Number of Nursing Home Facilities:
Owned 263 265 263 265
Leased 82 91 82 91
---------- ---------- ---------- ----------
Total 345 (1) 356 345 (1) 356
========== ========== ========== ==========
Number of Beds:
Owned 27,049 27,410 27,049 27,410
Leased 9,113 10,023 9,113 10,023
---------- ---------- ---------- ----------
Total 36,162 (1) 37,433 36,162 (1) 37,433
========== ========== ========== ==========
Assisted Living
Centers 18 18 18 18
Hospice/Home Care
Centers 63 26 63 26
Outpatient Clinics - 10 - 10
Continuing Operations:
Nursing Patient Days 2,718,000 2,733,000 5,420,000 5,482,000
Nursing Home Occupancy
(based on operational
beds) 89.07% 88.47% 89.19% 88.55%
Operational beds 33,295 33,931 33,295 33,931
Patient Mix (based on
patient days):
Medicaid 69.76% 70.69% 69.80% 70.34%
Medicare 13.58% 12.22% 13.41% 12.53%
Private & Other 16.66% 17.09% 16.79% 17.13%
Sources of Revenue
(based on $):(2)
Medicaid 47.81% 50.51% 47.92% 50.01%
Medicare 30.90% 27.93% 30.74% 28.41%
Private & Other 21.29% 21.56% 21.34% 21.58%
Nursing Average per
diem rate (including
ancillaries) $174.74 $159.97 $172.59 $158.96
Hospice Average Daily
Census 2,425 1,105 2,344 1,044
Aegis Outside
Contracts 618 575 618 575
Wages and related
expenses as a % of
revenues 54.16% 56.72% 54.16% 56.91%
(1) 22 Nursing Home Facilities are held for sale as of June 30, 2005.
(2) Excludes the retroactive Medicaid rate adjustments in Indiana and
Pennsylvania.
BEVERLY ENTERPRISES, INC.
SUPPLEMENTARY INFORMATION
ANALYSIS OF REVENUES
Quarter Ended Six Months Ended
June 30, June 30,
------------------- ---------------------
2005 2004 2005 2004
--------- --------- ----------- ---------
REVENUES (In thousands)
- --------
NURSING FACILITIES:
MEDICAID $284,507 $244,772 $ 569,197 $481,360
MEDICARE 124,719 107,693 246,215 220,484
PRIVATE & OTHER 89,948 88,423 180,325 174,394
--------- --------- ----------- ---------
SUBTOTAL 499,174 440,888 995,737 876,238
AEGIS THERAPIES 37,000 29,868 73,204 57,048
ASERACARE 26,306 12,183 50,349 23,153
OTHER 1,618 690 2,976 3,170
--------- --------- ----------- ---------
TOTALS $564,098 $483,629 $1,122,266 $959,609
========= ========= =========== =========
NURSING PATIENT DAYS (In thousands)
- --------------------
MEDICAID 1,896 1,932 3,783 3,856
MEDICARE 369 334 727 687
PRIVATE & OTHER 453 467 910 939
--------- --------- ----------- ---------
TOTALS 2,718 2,733 5,420 5,482
========= ========= =========== =========
NURSING PER DIEM RATES (Including Ancillaries)
- ----------------------
MEDICAID(1) $ 137.45 $ 124.98 $ 134.47 $ 123.51
MEDICARE - PART A 337.99 322.61 338.68 320.70
PRIVATE & OTHER 162.13 155.03 161.73 154.03
--------- --------- ----------- ---------
TOTALS(2) $ 174.74 $ 159.97 $ 172.59 $ 158.96
========= ========= =========== =========
(1) Excludes the retroactive Medicaid rate adjustments in Indiana and
Pennsylvania.
(2) Weighted Average Rates
BEVERLY ENTERPRISES, INC.
SUPPLEMENTARY INFORMATION
ANALYSIS OF OTHER OPERATING AND ADMINISTRATIVE EXPENSES
(In thousands)
Quarter Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
SUPPLIES $30,084 $27,674 59,255 55,610
FOOD 9,335 9,546 18,511 18,954
UTILITIES 13,354 11,745 28,311 27,656
OTHER CONTROLLABLES 52,976 51,194 107,093 99,861
REAL ESTATE RENTAL 7,851 7,608 15,690 14,958
EQUIPMENT RENTAL 4,862 4,355 10,062 8,432
OTHER NONCONTROLLABLES (1) 37,144 14,821 84,590 27,260
--------- --------- --------- ---------
TOTALS $155,606 $126,943 $323,512 $252,731
========= ========= ========= =========
(1) 2005 increases primarily relate to additional provider tax
expense.
BEVERLY ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30, December 31,
2005 2004
----------- -------------
(Unaudited) (Note)
ASSETS
Current assets:
Cash and cash equivalents $212,588 $215,665
Accounts receivable - less allowance for
doubtful accounts: 2005 - $24,819; 2004 -
$26,320 293,860 235,477
Notes receivable, less allowance for
doubtful notes: 2005 - $2,210 ; 2004 -
$1,686 4,730 2,786
Operating supplies 8,919 9,181
Assets held for sale 11,665 14,898
Prepaid expenses and other 39,961 37,266
----------- -------------
Total current assets 571,723 515,273
Property and equipment, net 656,807 653,656
Other assets:
Goodwill, net 122,087 124,066
Other, less allowance for doubtful accounts
and notes: 2005 - $1,472; 2004 - $1,538 71,133 68,390
----------- -------------
Total other assets 193,220 192,456
----------- -------------
$1,421,750 $1,361,385
=========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $62,685 $67,778
Accrued wages and related liabilities 89,959 104,037
Accrued interest 3,339 3,602
General and professional liabilities 58,187 54,216
Federal government settlement obligations 15,019 14,359
Liabilities held for sale - 676
Other accrued liabilities 101,969 83,097
Current portion of long-term debt 10,735 12,240
----------- -------------
Total current liabilities 341,893 340,005
Long-term debt 541,023 545,943
Other liabilities and deferred items 198,683 203,024
Commitments and contingencies
Stockholders' equity:
Preferred stock, shares authorized:
25,000,000 - -
Common stock, shares issued: 2005 -
117,778,518; 2004 - 116,621,715 11,778 11,662
Additional paid-in capital 908,900 902,053
Accumulated deficit (472,029) (532,804)
Treasury stock, at cost: 8,283,316 (108,498) (108,498)
----------- -------------
Total stockholders' equity 340,151 272,413
----------- -------------
$1,421,750 $1,361,385
=========== =============
Note: The balance sheet at December 31, 2004 has been derived from the
audited consolidated financial statements at that date but does not
include all of the information and footnotes required by accounting
principles generally accepted in the United States for complete
financial statements.
BEVERLY ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Six Months Ended
June 30,
-------------------
2005 2004
--------- ---------
Cash flows from operating activities:
Net income (loss) $60,775 $(2,484)
Adjustments to reconcile net income to net cash
provided by (used for) operating activities,
including discontinued operations:
Depreciation and amortization 34,612 31,709
Provision for reserves on accounts, notes
and other receivables, net 4,214 8,704
Amortization of deferred financing costs 1,411 1,519
Asset impairments, workforce reductions and
other unusual items (25) 4,707
Costs related to early extinguishments of
debt - 40,254
Costs related to the sales process of the
Company 25,052 -
Losses (gains) on dispositions of
facilities and other assets, net (2,759) 1,072
Insurance related accounts (6,361) 3,225
Changes in operating assets and
liabilities, net of acquisitions and
dispositions:
Accounts receivable (69,664) (80,220)
Prepaid expenses and other receivables (3,636) 5,255
Accounts payable and other accrued
expenses (15,278) (30,344)
Income taxes payable 6,187 (1,525)
Other, net 839 (3,848)
--------- ---------
Total adjustments (25,408) (19,492)
--------- ---------
Net cash provided by (used for)
operating activities 35,367 (21,976)
Cash flows from investing activities:
Capital expenditures (45,180) (21,913)
Proceeds from dispositions of facilities
and other assets, net 14,158 21,341
Collections on notes receivable 53 6,871
Proceeds from (payments for) designated
funds, net 153 (827)
Proceeds from Beverly Funding Corporation
investment - 28,956
Other, net (5,740) (20,269)
--------- ---------
Net cash provided by (used for)
investing activities (36,556) 14,159
Cash flows from financing activities:
Proceeds from issuance of new debt 5,200 211,384
Repayments of long-term debt (11,625) (204,423)
Proceeds from exercise of stock options 4,842 636
Deferred financing costs paid (305) (42,132)
--------- ---------
Net cash used for financing activities (1,888) (34,535)
--------- ---------
Net decrease in cash and cash equivalents (3,077) (42,352)
Cash and cash equivalents at beginning of period 215,665 258,815
--------- ---------
Cash and cash equivalents at end of period $212,588 $216,463
========= =========
Supplemental schedule of cash flow information:
Cash paid (received) during the year for:
Interest, net of amounts capitalized $20,239 $26,105
Income tax payments (refunds), net (4,267) 4,372
Beverly Enterprises, Inc.
2005 and 2004 Continuing Operations EBITDA (as adjusted)
Reconciliation
(In millions)
Quarter Ended
June 30,
---------------
2005 2004
------- -------
Revenues $564.1 $483.6
Less: Retroactive Indiana revenue adjustment 26.9 -
------- -------
Revenues, as adjusted $537.2 $483.6
EBITDA, as adjusted $62.8 $52.8
Less:
Depreciation and amortization (17.4) (15.0)
Interest expense, net (8.8) (10.8)
Costs related to early extinguishment of debt - (40.3)
Costs related to the sales process of the Company (6.3) -
Add back:
Retroactive Indiana adjustment, net 13.0 -
------- -------
Pre-tax income $43.3 $(13.3)
======= =======
Beverly Enterprises, Inc.
Projected 2005 Continuing Operations EBITDA Range Reconciliation
(In millions)
Projected EBITDA $225.0 $230.0
Less:
Depreciation and amortization (72.0) (72.0)
Interest expense (43.0) (43.0)
Add back:
Interest income 6.0 6.0
------- -------
Pre-tax income $116.0 $121.0
======= =======
Beverly Enterprises, Inc.
2005 and 2004 Nursing EBITDA (as adjusted)
Reconciliation
(In millions)
Quarter Ended
June 30,
---------------
2005 2004
------- -------
Revenues $499.2 $440.9
Less: Retroactive Indiana revenue adjustment 26.9 -
------- -------
Revenues, as adjusted $472.3 $440.9
EBITDA, as adjusted $54.6 $36.4
Less:
Depreciation and amortization (15.0) (12.5)
Interest expense, net (1.3) (1.6)
Add back:
Retroactive Indiana adjustment, net 13.0 -
------- -------
Pre-tax income $51.3 $22.3
======= =======
BEVERLY ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
Quarter Ended Six Months Ended
June 30, June 30,
------------------- ---------------------
2005 2004 2005 2004
--------- --------- ----------- ---------
Revenues $564,098 $483,629 $1,122,266 $959,609
Costs and expenses:
Wages and related 305,519 274,308 607,779 546,118
Provision for
insurance and
related items 27,547 30,584 57,032 58,176
Other operating and
administrative 155,606 126,943 323,512 252,731
Depreciation and
amortization 17,446 15,034 34,052 29,762
Asset impairments,
workforce reductions
and other unusual
items 93 (1,023) (23) 1,801
--------- --------- ----------- ---------
Total costs and
expenses 506,211 445,846 1,022,352 888,588
--------- --------- ----------- ---------
Income before other income
(expenses) 57,887 37,783 99,914 71,021
Other income (expenses):
Interest expense (10,779) (12,108) (21,347) (23,876)
Costs related to
early extinguishment
of debt - (40,254) - (40,254)
Interest income 1,964 1,320 4,027 2,843
Costs related to the
sales process of the
Company (6,331) - (25,052) -
Net gains (losses) on
dispositions 539 (5) 623 32
--------- --------- ----------- ---------
Total other
expenses, net (14,607) (51,047) (41,749) (61,255)
--------- --------- ----------- ---------
Income (loss) before
provision for income taxes
and discontinued operations 43,280 (13,264) 58,165 9,766
Provision for income taxes 1,731 1,060 3,278 2,502
--------- --------- ----------- ---------
Income (loss) before
discontinued operations 41,549 (14,324) 54,887 7,264
Discontinued operations, net
of taxes: for the quarters
2005 - $137 and 2004 -
$(78); for the six months
2005 - $(1,358) and 2004 -
$345 4,570 (11,599) 5,888 (9,748)
--------- --------- ----------- ---------
Net income (loss) $46,119 $(25,923) $60,775 $(2,484)
========= ========= =========== =========
Net income (loss) per share
of common stock:
Basic:
Before discontinued
operations $0.38 $(0.13) $0.50 $0.07
Discontinued
operations 0.04 (0.11) 0.06 (0.09)
--------- --------- ----------- ---------
Net income (loss) per
share of common
stock $0.42 $(0.24) $0.56 $(0.02)
========= ========= =========== =========
Shares used to
compute basic net
income (loss) per
share 109,484 107,464 109,113 107,398
========= ========= =========== =========
Diluted:
Before discontinued
operations $0.33 $(0.13) $0.45 $0.07
Discontinued
operations 0.04 (0.11) 0.04 (0.09)
--------- --------- ----------- ---------
Net income (loss) per
share of common
stock $0.37 $(0.24) $0.49 $(0.02)
========= ========= =========== =========
Shares used to
compute diluted net
income (loss) per
share 127,140 107,464 126,735 108,476
========= ========= =========== =========
CONTACT: Beverly Enterprises, Inc.
Investor Contact:
James M. Griffith, 479-201-5514
or
News Media Contact:
Blair C. Jackson, 479-201-5263
www.beverlycorp.com