DVCR - Earnings call transcript Q1 2019 | Diversicare Healthcare Services, Inc.

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Operator

Good afternoon and welcome to the Diversicare Healthcare Services 2019 First Quarter Conference Call. Today's call is being recorded. I would like to remind everyone that, in addition to historical information, certain comments made during this conference will be forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. And these statements involve risks and uncertainties, may cause actual events, results and/or performance to differ materially from those indicated by such statements.

You are encouraged to review the risk factors and forward-looking statements disclosures the company has provided in its annual report on Form 10-K for the fiscal year ended December 31, 2018, and today's Form 10-Q, as well as its other public filings with the Securities and Exchange Commission.

may on references financial call, today's be non-GAAP made measures. During in non-GAAP encouraged to and results furnished to are financial Form the press X-K. under review GAAP measures Investors those those measures release of the comparable our reconciliation turn now to Mr. call would I the over to like Jay McKnight, Executive Officer. President and Chief

Jay McKnight

to Thank encourage for this our a Diversicare's discussion filings. review our afternoon activities XXXX our before first factors you Good SEC you, B begin thank quarter I we to want quarter, investors Sidney. and risk our and joining earnings call. disclosures of and

As the Medicare others the therapy to we noted R past before practices, to and are program. our as by relating and is practices pre-admission the forms required evaluation in case industry, unresolved with our into forms our governmental required the investigations subject TennCare we by

facing substantial country. continue of some bed highest that also have We factors developing taken to our These in and and industry in certain jurisdictions strategic costs operating have presence challenges plan. into consideration professional our per the have in liability been the a other

of a five first $XX.X for the loss to Adjusted EBITDA adjusted we the of million for million quarter. quarter ago year $XX.X realized was $XXX,XXX to net loss compares to $XX the For compared ago of $X.X the for quarter the quarter. Sequentially, EBITDA million, XXXX. a net quarter compared quarter, $XX.X million, of year fourth million for the from

$XX.X% ago sale noting the primarily our of revenue in store $XXX.X your, The centers. the since centers mix was three quarter's comments. compared related Kentucky XXXX. from Massey QX It's the to worth was quarter of Kerry Diving down more the Our the CFO, for the to same XX.X% decrease to occupancy million guidance first total our for million, available had beds at results that highest about the will provide his served total was revenue the was quarter year skilled from $XXX.X Year-over-year XX.X% results, impact with quarter's of quarter. details mix lease XX.X%. accounting we've for the and decrease in our patient also down and skilled the into

that $X.XX by Medicare quarterly and managed year-over-year and takes $X.XX payment expected gains by PDPM structure respectively. rates $X.XX effect XX/X increased rates a lot We've of fluctuation our There increased Medicaid it be We've after care payment system while operating months. analysis in XXXX. coming to revenue is neutral in space Our in implementation new the believe our method the The of efficiency had of Medicare of for the potential completed new reimbursement. PDPM. our and will a our

the the We the is will the model current on get know methodology, patients. needs the guides philosophy provision are October our much very Diversicare but and new implementation we for closer payment care, to more consistent is the as with of that as delivering care line driven patient in positive released, our of with

our a two increase nursing industry which the seen X.X% providers, be basket addition, CMS increase skilled several for ago would proposed largest weeks In in years. net market

Our purchasing used actual will and calculated value-based influences. be in increase geographic

call. rates customarily Medicare We measures discuss adjustments. our historically Medicare market the been the basket on Our materially less increases than --our earnings quality have

measures. comparisons major Effective to effectively While rating and will that X-star released prior our all improving quality measures and to our staffing make a we update The moot. our of continue CMS to all survey, update skilled continue April to desire nursing the impacted Xst, our to ratings be also outcomes. all want impressive, quality facilities highlight re-rate measured domains, system

rating of snips severe The since staffing survey methodology the more third freeze. the domain. our according changes that now in place to lose the shared to domain As XXXX has will frozen prior past, staffing many the effect It's the been and be will predicted to we've encouraged. for for in the of lack update as portion stars one the include reductions as from in

we a for measures a leader, As residents. new been there domain, quality for and patients will measures be between historically where bifurcation long stay a short the quality and stay

will As for see predicted that many the domain, it's we staffing the QMS. star changes ratings for snips lose to

the the to in reporting on work our align for will are financial our the some Kerry a that leader specific will quality to confident turn that and We care. quickly remain call with systems over new team our With remarks statements. measurements I'll

Kerry Massey

you, Thank Jay.

us XXXX. which lease for are we As shared Xst, retrospective accounting adopting with the an industry. the financial have at to write common several of did statements; million and adoption our you used it million bottom covenants. $XXX new record on call, became liabilities however, beginning our elected impact standard line expedients, sheet this financial balance modified our standard standard, the January new and not across on method standard And Upon the effective practical required leased have impact the and did previous assets nor our us material a our on $XXX of on about leased accounting on The respectively.

the $XXX.X Our which $XXX.X million for quarter of compares quarter unfavorably million. reported year prior was to revenue the

quarter which were quarter of representing primarily or the the fourth the revenue during $X.X million, to X.X% Year-over-year occupancy increases the and in As centers sale and XXXX $XXX.X expenses mentioned, in compared remaining XXXX. first those skilled the was impacts. driver mitigate Medicaid mix. decrease $X.X the due care for helped mix same decrease resulted decreased Jay rates reimbursement The million three primary million the of operating quarter. of a of $X.X of store managed which lower revenue was less for to was current million revenue Total unfavorable Kentucky of driven by for quarter

to expenses primarily a the revenue quarter-over-recorder As reduction percentage due year prior administrative $XXX,XXX by XXXX. revenue, XX.X% a General which also of and operating QX, decreased G&A as to in was expenses taxes. increased related from X.X% first to approximately for salaries percentage compared of X.X% XX.X% expenses of quarter. QX decreased the to quarter from

of comparison development. revenue expense the prior quarters recent liability in to been $X.X year continue million expense or has professional higher liability in as increased X.X% Our an of and trend QX to quarter $X.X claims Professional for X% we or million revenue. of experience increased of

are We the our agreements early years of Golden in master and lease Living. Omega with

significantly As earning our we expense is GAAP leases that these a result, for operating cash pay. the rent actual outpacing

non-cash revenue the expense for non-cash increase to was increased throughout straight-line continue $XX.X lease rent will expense XX.X% driven in for prior million primarily us million Our of million be expense. The quarter. $X.X This quarter-over-quarter quarter year or rent the from significant by $X.X of of XXXX. increase straight-line impact

year, we the million expense For cash than rent $X.X more expect to payments. rent GAAP recognize actual

period exclusive of on rent will to to EBITDA the the for of results, of use Given impact of straight-line million illustrates to for continue million period our QX EBITDA as the quarter a operating impact EBITDA XXXX. we $XX.X performance. non-cash operating rent of results compared benchmark our first measurement $XX.X expense. was

over net for now our call the financial For turn loss shareholders to closing Jay $X.X attributable will concludes quarter, back remarks. the was million. I Q discussion to results. of some That

Jay McKnight

you. Thank

we that questions, to to about moving going initiatives I'd some Diversicare. at have like Before talk

rewards processes industry in Quality our begun meaningful light initiative certain majority removed cost. additional Program to with a infrastructure. reimbursement of this operating to The improve to in approximately an QUIP within non-facility the high-quality our in-depth into We're with physicians redefine Incentive We've could Texas in the be or reduce company. to operating for first headwinds. earn our centers opportunity streamlined We've look encouraged the our has opportunity drive XX% financial efforts The is overhead providers the next that of our been to based This in efficiency Payment at the entry of organization and the program by results Texas. processes our and certain structure Texas.

these of benefits in the efforts quarters. see to expect the future We

this of December would ten do received the if June minimum a notice not likely we removed such their meet market on capitalization minimum from $XX exchange. delisting, be on over-the-counter requirement, we have XXth. did to NASDAQ transition days will no trading we our in consecutive trading we but aware, time, million from not you're work that before our meet with the their meet did NASDAQ the for the we we At minimum If and continue as to the As not update exchange threshold matter. XXXX,

we today's today. also the will concludes custom, investigation. is every conclude passion We'll improve be than our As we'd our of team this reminding we and recognized life recognize what's call exceptional Diversicare XX-Q would Healthcare to members to of questions. Please you healthcare like unable their filing all for call providing pursuit shared the like statement. our mission remember, our prepared achievement by relentless related We for and in a discuss to of of expectations. our government by to open mission To and open exceeding our to touch been now remarks more industry be leader. This goal our

Operator

[Operator Instructions] with of Our comes question Tony first Texas. Cardona ERS from

open. is line Your

Tony Cardona

Senate to of near if your you could And Thanks. then bill passes, Can named accrue views Provider benefit expect follow ratings? it impact discuss the the the that CMS change Texas how talk And up your you Good do on in Quality type likelihood you staffing about evening. new pass? the you Program the will what financial term? think can star also and a as Participation

Jay McKnight

have don't a comment. predictive can't have pass. data bill whether --I I part, any will or I second the as a not On don't to

first and is a one. change the you asked very portion RN about good The the question CMS in

is of days a have center coverage can now it have penalized. closely in could coverage was of RN seek to shift amount coverage a believe XXX% followed before at you being didn't per RN that have it past If shifts they all a not That there's a seven that have have four days our quarter. I We centers. been number certain and the RN quarter

move but to that we're we're So appropriately sure make there's to potential working past a there it. staffing

Tony Cardona

operations? And impact would your then a staffing how on much be current changes the of financial

Jay McKnight

our on are XX-hour this at our best RN time. Tony, I centers. don't scheduled coverage an to have that have at already the to we estimate of ability

Tony Cardona

then on would and you what you financial accrue? Senate it of it bill, does benefit Got if an have pass the theoretically just type done to analysis just see guys

Jay McKnight

we Q&A End Nothing that disclose now. could of

Operator

the call like turn McKnight. to this you. I'm questions back Jay I no Thank And would showing at further to time.

Jay McKnight

quarters. Thank we forward and you Thank you in to future operator. results And Healthcare Diversicare for our appreciate with our sharing call in joining your you, interest Services look today.

Operator

disconnect. Ladies in and a gentlemen, all thank program the conference. great today's for you have may Everyone day. conclude and you participating This does

Diversicare Healthcare Services (DVCR) 5 May 192019 Q1 Earnings call transcript