Exhibit 99.1
Advocat Inc. Announces 2005 Year End Results
BRENTWOOD, Tenn.--(BUSINESS WIRE)--March 29, 2006--Advocat Inc. (NASDAQ
OTC: AVCA) today announced its results for the fourth quarter and year ended
December 31, 2005.
Advocat Inc. provides long-term care services to nursing home patients in
eight states, primarily in the Southeast. The Company has 43 centers containing
4,505 licensed nursing beds.
2005 Results
Income Statement Highlights
Net income from continuing operations for 2005 was $30.6 million compared
to $12.5 million in 2004 which amounted to $4.69 per diluted share versus the
previous year's $1.93 per diluted share. The Company's results included a $4.0
million net benefit for professional liability costs compared to a $1.8 million
net benefit in 2004. Furthermore, in 2005 a benefit for income taxes of $13.8
million was recorded versus a provision of $266,000 in 2004. Net income, after
deducting a loss from discontinued operations of $5.3 million in 2005, was $25.0
million. In 2004, net income was $2.5 million after a loss from discontinued
operations of $9.7 million. For 2005 there were 6.5 million weighted average
shares outstanding on a fully diluted basis.
Revenue Highlights
For 2005, revenue grew to $203.7 million compared to $191.2 million in
2004. This increase of $12.5 million resulted mostly from Medicare rate
increases, higher Medicaid rates in certain states, and increased Medicare
utilization.
Balance Sheet Highlights
Shareholders' deficit decreased to $16.9 million at December 31, 2005,
from $41.9 million at last year end, primarily as a result of 2005 net income of
$25.0 million. Self-insured professional liability reserves were $34.5 million
at December 31, 2005, compared to $42.9 million at December 31, 2004. The
Company also reduced the valuation allowance on its deferred tax assets. The
Company previously had a full valuation allowance on its net deferred tax
assets, including tax loss carryforwards. Based on its improved performance, the
Company was able to reduce this valuation allowance.
More complete financials are available in the 2005 Form 10-K, which was
filed today with the SEC. Included in this press release are comparisons of 2005
versus 2004 years and fourth quarters, and there is a table presenting condensed
cash flows from operating activities of continuing operations as well as a
condensed balance sheet.
Mr. William Council, CEO of Advocat, stated, "Last year was a very good
one for Advocat and the progress so far in 2006 is positive. In this regard, we
recently reported new loan agreements with our primary bank lender. Revenue
improvements, excellent income gains, occupancy rate increases, improved
Medicare utilization rates, and the proposed sale of assisted living facilities
are main measurements of our success. Creating these results is a dedicated
Advocat staff that is committed to a program of quality care for our patients.
As a result of these efforts, several of our nursing centers were awarded public
recognition for excellence. Our goal is to become the leading nursing center
within each community we serve. Building reputation, strengthening our marketing
effort, and aesthetically upgrading the centers are ongoing processes for our
Company."
Occupancy and Medicare Utilization
The average rate of occupancy at the Company's nursing centers for 2005
was 76.2%, a total increase of 30 basis points over 2004. The average rate of
occupancy during the fourth quarter 2005 was 77.6%. This is 120 basis points
better than the same quarter last year. The quality mix of occupancy is also
very important. Medicare revenues were 30% of the totals for 2005 which was 70
basis points better than a year ago. For the fourth quarter, Medicare revenues
were 29.7% in 2005, which was 20 basis points better than 2004.
For 2005, Medicare patient days accounted for approximately 13.0% of total
patient days, compared to 12.7% for 2004. For the fourth quarter of 2005,
Medicare patient days were 13.0% of total patient days, compared to 12.3% for
the same quarter last year.
Liquidity and Capital Resources
As of December 31, 2005, the Company had $31.5 million of scheduled debt
maturities that must be repaid or refinanced during the next twelve months. The
Company is actively working with its lenders to address these issues. On March
17, 2006, the Company entered into a two year renewal of its term notes and
working capital line of credit agreement with its primary bank lender.
The Company expects to close during the second quarter of this year the
sale of 11 assisted living facilities in North Carolina for approximately $11.0
million, although no assurances can be given that this sale will be completed.
The Company has also entered into an agreement to sell its remaining assisted
living facility in North Carolina, which sale is subject to certain
contingencies. These facilities and three nursing centers are collateral for
mortgage debt with a commercial finance company totaling approximately $27.7
million as of December 31, 2005. These mortgages were scheduled to mature on
April 1, 2006, and the Company has entered into a 60 day extension for $17.7
million of this debt that is secured by the assisted living facilities and has
entered into a 90 day extension for $10.0 million of this debt that is secured
by the three nursing centers. The Company is actively working with this lender
in an effort to obtain a longer term extension of these debt maturities, but no
agreement has been reached, and no assurances can be made that these efforts
will be successful.
Facility Improvements
As announced last summer, Omega, a real estate investment trust and our
largest financial partner, is providing additional financing of up to $5 million
for the renovation of facilities leased by the Company. The first project was
completed in early January and three additional projects are in progress. Two
other projects are in the design phase.
Conference Call
A conference call has been scheduled to discuss the fourth quarter and
year end results for the period ended December 31, 2005, on Thursday, March 30,
2006 at 1:00 P.M. central time (2:00 P.M. eastern time).
The conference call information is as follows:
Date: Thursday, March 30, 2006
Time: 1:00 P.M. Central Time, 2:00 P.M. Eastern
Webcast Links:
http://phx.corporate-ir.net/playerlink.zhtml?c=77083&s=wm&e=1235156
www.streetevents.com
www.earnings.com
www.irinfo.com/avc
Dial in numbers: (866) 277-1184 (domestic) or
(617) 597-5360 (international)
Passcode: 77584680
A replay of the conference call will be accessible two hours after its
completion through April 13, 2006 by dialing (617) 801-6888 and entering
passcode 75328937.
Forward-Looking Statements
Forward-looking statements made in this release involve a number of risks
and uncertainties, including but not limited to, uncertainty regarding our
ability to complete all of the described transactions and restructure the
remaining debt, changes in governmental reimbursement, government regulation and
health care reforms, the increased cost of borrowing under our credit
agreements, covenant waivers from our lenders, possible amendments to our credit
agreements, ability to control ultimate professional liability costs, the
accuracy of our estimate of our anticipated professional liability expense, the
impact of future licensing surveys, the outcome of regulatory proceedings
alleging violations of laws and regulations governing quality of care or
violations of other laws and regulations applicable to our business, changing
economic conditions as well as other risk factors detailed in the Company's
Securities and Exchange Commission filings. The Company has provided additional
information in its Annual Report on Form 10-K for the fiscal year ended December
31, 2005, as well as in other filings with the Securities and Exchange
Commission, which readers are encouraged to review for further disclosure of
other factors that could cause actual results to differ materially from those
indicated in the forward-looking statements. Advocat Inc. is not responsible for
updating the information contained in this press release beyond the published
date, or for changes made to this document by wire services or Internet
services.
For additional information about the Company, visit Advocat's web site:
http://www.irinfo.com/avc
-Financial Tables to Follow-
ADVOCAT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2005 2004
----------- -----------
ASSETS:
Current Assets
Cash and cash equivalents $ 7,070 $ 5,829
Restricted cash 625 773
Receivables, net 18,147 16,073
Deferred income taxes 1,004 -
Other current assets 5,180 3,325
--------- ---------
Total current assets 32,026 26,000
Property and equipment, net 39,421 36,835
Deferred income taxes 12,856 -
Note receivable, net 5,198 5,214
Other assets, net 4,261 4,343
--------- ---------
TOTAL ASSETS $ 93,762 $ 72,392
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT:
Current Liabilities
Short-term debt and current portion
of long-term debt and settlement
promissory notes $ 47,419 $ 45,953
Trade accounts payable 4,415 4,905
Accrued expenses:
Payroll and employee benefits 8,495 6,826
Current portion of self-
insurance reserves 5,952 10,002
Other current liabilities 5,715 3,803
--------- ---------
Total current liabilities 71,996 71,489
Noncurrent Liabilities
Settlement promissory notes,
less current portion 128 1,071
Self-insurance reserves, less
current portion 29,041 32,695
Other noncurrent liabilities 4,717 4,559
--------- ---------
Total noncurrent liabilities 33,886 38,325
REDEEMABLE CONVERTIBLE PREFERRED STOCK 4,750 4,432
SHAREHOLDERS' DEFICIT (16,870) (41,854)
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
DEFICIT $ 93,762 $ 72,392
========= =========
ADVOCAT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
For the For the
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
-------- -------- -------- --------
(Unaudited)(Unaudited)
REVENUES:
Patient revenues, net $ 53,744 $ 50,674 $203,658 $191,224
-------- -------- -------- --------
EXPENSES:
Operating 39,652 38,297 155,512 147,842
Lease 3,911 3,814 15,836 15,283
Professional liability 851 264 (3,962) (1,834)
General and
administrative 3,424 3,032 13,311 11,692
Depreciation 922 827 3,493 3,228
Asset impairment
and other charges - 219 - 219
-------- -------- -------- --------
48,760 46,453 184,190 176,430
-------- -------- -------- --------
OPERATING INCOME 4,984 4,221 19,468 14,794
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Foreign currency
transaction gain 25 288 161 784
Interest income 133 131 534 286
Interest expense (965) (789) (3,382) (3,069)
-------- -------- -------- --------
(807) (370) (2,687) (1,999)
-------- -------- -------- --------
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 4,177 3,851 16,781 12,795
PROVISION (BENEFIT) FOR
INCOME TAXES (13,705) 38 (13,820) 266
-------- -------- -------- --------
NET INCOME FROM
CONTINUING OPERATIONS 17,882 3,813 30,601 12,529
INCOME (LOSS ) FROM
DISCONTINUED OPERATIONS:
Operating loss, net of
tax provision (benefit)
of $394, $(20), $359
and $88, respectively (4,957) (8,109) (5,698) (10,038)
Gain on sale, net of
tax provision of $0,
$12 , $0 and $436,
respectively 8 131 399 290
-------- -------- -------- --------
NET LOSS FROM DISCONTINUED
OPERATIONS (4,949) (7,978) (5,299) (9,748)
-------- -------- -------- --------
NET INCOME (LOSS) 12,933 (4,165) 25,302 2,781
PREFERRED STOCK DIVIDENDS,
ACCRUED BUT NOT PAID 81 76 318 297
-------- -------- -------- --------
NET INCOME (LOSS)
FOR COMMON STOCK $ 12,852 $ (4,241) $ 24,984 $ 2,484
======== ======== ======== ========
NET INCOME (LOSS) PER
COMMON SHARE:
Per common share - basic
Income from continuing
operations $ 3.11 $ 0.66 $ 5.29 $ 2.16
Loss from discontinued
operations (0.87) (1.40) (0.93) (1.72)
-------- -------- -------- --------
$ 2.24 $ (0.74) $ 4.36 $ 0.44
======== ======== ======== ========
Per common share - diluted
Income from continuing
operations $ 2.75 $ 0.58 $ 4.69 $ 1.93
Loss from discontinued
operations (0.76) (1.23) (0.81) (1.51)
-------- -------- -------- --------
$ 1.99 $ (0.65) $ 3.88 $ 0.42
======== ======== ======== ========
WEIGHTED AVERAGE COMMON SHARES:
Basic 5,725 5,699 5,725 5,660
======== ======== ======== ========
Diluted 6,499 6,476 6,498 6,437
======== ======== ======== ========
ADVOCAT INC.
CONDENSED STATEMENTS OF CASH FLOWS FROM OPERATING ACTIVITIES OF
CONTINUING OPERATIONS
(In thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
--------- --------- --------- ---------
(Unaudited)(Unaudited)
NET INCOME (LOSS) $ 12,933 $ (4,165) $ 25,302 $ 2,781
Net loss from
discontinued operations (4,949) (7,978) (5,299) (9,748)
--------- --------- --------- ---------
Net income from continuing
operations 17,882 3,813 30,601 12,529
Adjustments to
reconcile net income
from continuing
operations to net
cash provided by
continuing operations:
Depreciation 922 827 3,493 3,228
Provision for
doubtful accounts 342 283 1,560 1,359
Deferred income
taxes, net (13,860) - (13,860) -
Provision for
(benefit from)
accrual for
self-insured
professional
liability, net 697 113 (4,569) (2,560)
Payment of professional
liability costs (913) (1,141) (4,111) (3,286)
Amortization of
deferred balances 80 114 342 386
Provision for
leases in excess
of cash payments (10) 50 158 467
Asset impairment and
other charges - 219 - 219
Foreign currency
transaction gain (25) (288) (161) (784)
Non-cash interest
expense 42 39 164 153
Non-cash interest
income (105) (104) (428) (229)
--------- --------- --------- ---------
NET CASH PROVIDED BY OPERATING
ACTIVITIES BEFORE CHANGES IN
OTHER ASSETS AND LIABILITIES 5,052 3,925 13,189 11,482
CHANGES IN OTHER ASSETS AND
LIABILITIES AFFECTING
OPERATING ACTIVITIES:
Receivables, net (1,950) (1,689) (3,798) (1,856)
Prepaid expenses and
other assets (588) (490) (2,516) (1,546)
Trade accounts
payable and
occurred expenses 1,608 23 2,745 (2,516)
--------- --------- --------- ---------
NET CASH PROVIDED BY OPERATING
ACTIVITIES OF CONTINUING
OPERATIONS $ 4,122 $ 1,769 $ 9,620 $ 5,564
========= ========= ========= =========
CONTACT: Advocat Inc., Brentwood
William R. Council, III, 615-771-7575
or
Cameron Associates
Investor Relations: Rodney O'Connor, 212-554-5470