GENTIVA HEALTH SERVICES INC - FORM 8-K - EX-99.1 - PRESS RELEASE - March 4, 2014

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8-K - FORM 8-K - GENTIVA HEALTH SERVICES INCa8-kcoverq42013earningsrel.htm
Exhibit 99.1


         

Press Release    


Financial and Investor Contact:
Eric Slusser
770-951-6101
eric.slusser@gentiva.com
or     John Mongelli
770-951-6496
john.mongelli@gentiva.com

Media Contact:
Scott Cianciulli
Brainerd Communicators
212-986-6667
cianciulli@braincomm.com


Gentiva® Health Services Reports Fourth Quarter and Full-Year 2013 Results

ATLANTA, GA, March 4, 2014 -- Gentiva Health Services, Inc. (NASDAQ: GTIV), one of the largest providers of home health, hospice and community care services in the United States, today reported fourth quarter and full-year 2013 results.

Gentiva acquired Harden Healthcare Holdings, Inc. ("Harden") on October 18, 2013. The Company's fourth quarter and full-year 2013 results included Harden's financial results from its acquisition date.

Additionally, during the fourth quarter of 2013, the Company announced a corporate restructuring initiative, referred to as "One Gentiva", to better align its home health, hospice and community care businesses under a common regional management structure and streamline the Company's management organization to meet reimbursement challenges. The corporate restructuring resulted in the closure of 46 branches during the fourth quarter of 2013. Additionally, the Company consolidated 31 overlapping branches as part of the integration of the Harden acquisition.

Full-year 2013 financial highlights include:

•
Total net revenues of $1.73 billion.
•
Loss attributable to Gentiva shareholders per diluted share of $18.75, including the impact of charges associated with the Company's One Gentiva initiative and the Harden acquisition, and an impairment of the Company's goodwill and other long-lived assets.
•
Adjusted income attributable to Gentiva shareholders per diluted share of $0.42.
•
Adjusted EBITDA of $135.0 million.

Fourth quarter 2013 financial highlights include:

1


▪
Total net revenues of $486.1 million, an increase of 14% compared to $425.0 million for the quarter ended December 31, 2012. Net revenues included home health episodic revenues of $225.9 million, an increase of 8% compared to $209.8 million in the 2012 fourth quarter. Hospice revenues were $180.8 million, a decrease of 3% compared to $187.3 million in the 2012 fourth quarter. Community Care revenues were $45.6 million from the Harden acquisition date through year-end 2013.

▪
Net loss attributable to Gentiva shareholders of $401.9 million, or $11.46 per diluted share, compared to net income of $8.6 million, or $0.28 per diluted share, for the fourth quarter of 2012. During the fourth quarter of 2013, the Company recorded non-cash impairment charges of $386.1 million based on an impairment of the Company's goodwill and other long-lived assets that was performed during the quarter.

▪
Adjusted loss attributable to Gentiva shareholders of $4.9 million, compared with income of $9.7 million in the comparable 2012 period. On a diluted per share basis, adjusted loss attributable to Gentiva shareholders was $0.14 for the fourth quarter of 2013 as compared to adjusted income attributable to Gentiva shareholders of $0.31 for the fourth quarter of 2012.

▪
Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) was $21.6 million in the fourth quarter of 2013 as compared to $44.2 million in the fourth quarter of 2012. Adjusted EBITDA as a percentage of net revenues was 4.4% in the fourth quarter of 2013 versus 10.4% in the prior year period.

Adjusted (loss) income attributable to Gentiva shareholders and Adjusted EBITDA exclude charges related to restructuring, legal settlements, acquisition and integration activities, losses on closed locations and other special items.

Highlights for the full-year 2013 include:

▪
Total net revenues of $1.73 billion, an increase of 1% compared to $1.71 billion for the prior year period. Net revenues included home health episodic revenues of $846.9 million, an increase of 2% as compared to $834.2 million in the comparable 2012 period. Hospice revenues were $715.2 million, a decrease of 6% compared to $764.8 million in the comparable 2012 period. Community Care revenues were $45.6 million from the Harden acquisition date through year-end 2013.

▪
Net loss attributable to Gentiva shareholders of $599.0 million, or $18.75 per diluted share, compared to net income of $26.8 million, or $0.87 per diluted share, in the prior year period. For the full-year 2013, the Company recorded non-cash impairment charges of $610.4 million based on impairment of the Company's goodwill and other long-lived assets.

▪
Adjusted income attributable to Gentiva shareholders of $13.8 million, compared with $37.7 million in the 2012 period. On a diluted per share basis, adjusted income attributable to Gentiva shareholders was $0.42 for 2013 as compared with $1.23 in the corresponding period of 2012.

▪
Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) was $135.0 million as compared to $180.5 million in the 2012 period. Adjusted EBITDA as a percentage of net revenues was 7.8% versus 10.5% in the prior year period.

Cash Flow and Balance Sheet Highlights

2


During the fourth quarter of 2013, Gentiva entered into a new $925 million senior secured credit facility as part of the Harden transaction. The Company used the new credit facility and available cash to fund the cash portion of the Harden purchase price during the fourth quarter of 2013.
   
At December 31, 2013, the Company reported cash and cash equivalents of $87.0 million, down from $183.3
million at September 30, 2013. Total outstanding debt was $1.18 billion as of December 31, 2013, compared to $910.2 million at September 30, 2013. Total Company days sales outstanding, or DSO’s, was 49 days at December 31, 2013, down from 50 days at September 30, 2013.

For the fourth quarter of 2013, net cash provided by operating activities was $18.5 million, compared to $51.3 million in the prior year period. Free cash flow was $13.7 million for the fourth quarter of 2013, compared to $48.8 million in the prior year period.

Full-year 2013 free cash flow was $18.0 million. Free cash flow is calculated as net cash provided by operating activities less capital expenditures.

Full-Year 2014 Outlook Comments

For 2014, Gentiva expects full-year net revenues to be in the range of $1.9 billion to $2.1 billion and adjusted income attributable to Gentiva shareholders to be in the range of $0.85 to $1.15 on a diluted per share basis.

Gentiva's 2014 outlook includes the full-year impact of its Harden acquisition and the final 2014 Medicare home health and hospice reimbursement rates issued by the Centers for Medicare and Medicaid Services (CMS). The 2014 outlook excludes any ongoing losses from closed locations as the operations are wound down.

Non-GAAP Financial Measures

The information provided in this press release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission (SEC) rules. In accordance with SEC rules, the Company has provided, in the supplemental information and the footnotes to the tables, a reconciliation of those historical measures to the most directly comparable GAAP measures.

A reconciliation of adjusted income attributable to Gentiva shareholders to net income, the most directly comparable GAAP measure, is not accessible on a forward-looking basis without unreasonable effort due to the inherent difficulties in predicting the costs of restructuring, legal settlements and merger and acquisition activities, the results of discontinued operations and the impact of any future acquisitions or divestitures, which can fluctuate significantly and may have a significant impact on net income.

Conference Call and Webcast Details

The Company will comment further on its fourth quarter and full-year 2013 results during its conference call and live webcast to be held today, Tuesday, March 4, 2014 at 9:00 a.m. Eastern Time. To participate in the call from the United States, Canada or an international location, dial (973) 935-2408 and reference call #71298142. The webcast is an audio-only, one-way event. Webcast listeners who wish to ask questions must participate in the conference call. Log onto http://investors.gentiva.com/events.cfm to hear the webcast. A replay of the call will be available on March 4 and will remain available continuously through March 11. To listen to a replay of the call from the United States, Canada or international locations dial (800) 585-8367 or

3

(404) 537-3406 and enter the following PIN at the prompt: 71298142. Visit http://investors.gentiva.com/events.cfm to access the webcast archive. This press release is accessible at http://investors.gentiva.com/releases.cfm and a transcript of the conference call will be posted on the Company’s website.

About Gentiva Health Services, Inc.

Gentiva Health Services, Inc. is one of the nation's largest providers of home health, hospice and community care services, delivering innovative, high quality care to patients across the United States. Gentiva is a single source for skilled nursing; physical, occupational, speech and neurorehabilitation services; hospice services; social work; nutrition; disease management education; help with daily living activities; and other therapies and services. GTIV-G

(unaudited tables and notes follow)




4

Gentiva Health Services, Inc. and Subsidiaries
Condensed Consolidated Financial Statements and Supplemental Information
(Unaudited)

 
 
(in 000's, except per share data)
4th Quarter
 
Fiscal Year
 
 
 
2013
 
2012
 
2013
 
2012
Condensed Statements of Comprehensive (Loss) Income
 
 
 
 
 
 
 
 
 
Net revenues
$
486,137

 
$
425,017

 
$
1,726,644

 
$
1,712,804

 
 
Cost of services sold
281,182

 
229,254

 
942,180

 
908,741

 
 
Gross profit
204,955

 
195,763

 
784,464

 
804,063

 
 
Selling, general and administrative expenses
(219,082
)
 
(156,924
)
 
(701,716
)
 
(655,766
)
 
 
Goodwill, intangibles and other long-lived asset impairment
(386,116
)
 
—

 
(610,436
)
 
(19,132
)
 
 
Gain on sale of businesses
—

 
2,567

 
—

 
8,014

 
 
Interest income
638

 
650

 
2,704

 
2,661

 
 
Interest expense and other
(44,239
)
 
(23,546
)
 
(113,088
)
 
(92,608
)
 
 
(Loss) income before income taxes and equity in net loss of CareCentrix
(443,844
)
 
18,510

 
(638,072
)
 
47,232

 
 
Income tax benefit (expense)
42,022

 
(6,373
)
 
39,565

 
(17,251
)
 
 
Equity in net loss of CareCentrix
—

 
(3,307
)
 
—

 
(2,301
)
 
 
Net (loss) income
(401,822
)
 
8,830

 
(598,507
)
 
27,680

 
 
Less: Net income attributable to noncontrolling interests
(62
)
 
(260
)
 
(487
)
 
(884
)
 
 
Net (loss) income attributable to Gentiva shareholders
$
(401,884
)
 
$
8,570

 
$
(598,994
)
 
$
26,796

 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive (loss) income
$
(401,822
)
 
$
8,830

 
$
(598,507
)
 
$
27,680

 
 
 
 
 
 
 
 
 
 
 
Earnings per Share
 
 
 
 
 
 
 
 
 
Net (loss) income attributable to Gentiva shareholders:
 
 
 
 
 
 
 
 
 
Basic
$
(11.46
)
 
$
0.28

 
$
(18.75
)
 
$
0.88

 
 
Diluted
$
(11.46
)
 
$
0.28

 
$
(18.75
)
 
$
0.87

 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
35,054

 
30,548

 
31,954

 
30,509

 
 
Diluted
35,054

 
30,891

 
31,954

 
30,687



5

 
 
(in 000's)
 
 
 
Condensed Balance Sheets
 
 
 
 
ASSETS
Dec 31, 2013
 
Dec 31, 2012
 
 
Cash and cash equivalents
$
86,957

 
$
207,052

 
 
Accounts receivable, net (A)
289,905

 
251,080

 
 
Deferred tax assets
28,153

 
12,263

 
 
Prepaid expenses and other current assets
64,746

 
45,632

 
 
Total current assets
469,761

 
516,027

 
 
 
 
 
 
 
 
Notes receivable from CareCentrix
28,471

 
28,471

 
 
Fixed assets, net
49,375

 
41,414

 
 
Intangible assets, net
256,282

 
193,613

 
 
Goodwill
390,081

 
656,364

 
 
Other assets
68,647

 
75,045

 
 
Total assets
$
1,262,617

 
$
1,510,934

 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
Current portion of long-term debt
$
45,325

 
$
25,000

 
 
Accounts payable
15,659

 
13,445

 
 
Payroll and related taxes
64,857

 
45,357

 
 
Deferred revenue
43,864

 
37,444

 
 
Medicare liabilities
23,894

 
27,122

 
 
Obligations under insurance programs
82,634

 
56,536

 
 
Accrued nursing home costs
22,219

 
18,428

 
 
Other accrued expenses
77,018

 
66,567

 
 
Total current liabilities
375,470

 
289,899

 
 
 
 
 
 
 
 
Long-term debt
1,124,432

 
910,182

 
 
Deferred tax liabilities, net
9,825

 
42,165

 
 
Other liabilities
53,084

 
33,988

 
 
Total equity
(300,194
)
 
234,700

 
 
Total liabilities and equity
$
1,262,617

 
$
1,510,934

 
 
 
 
 
 
 
 
Common shares outstanding
36,375

 
30,748


(A) Accounts receivable, net included an allowance for doubtful accounts of $10.7 million and $8.8 million at December 31, 2013 and December 31, 2012, respectively.




6

 
 
(in 000's)
 
 
 
 
 
 
Fiscal Year
Condensed Statements of Cash Flows
2013
 
2012
 
OPERATING ACTIVITIES:
 
 
 
 
Net (loss) income
$
(598,507
)
 
$
27,680

 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization
20,110

 
26,580

 
 
Amortization of debt issuance costs
14,715

 
13,761

 
 
Write-off of debt issuance costs
16,085

—

—

 
 
Provision for doubtful accounts
6,730

 
4,066

 
 
Equity-based compensation expense
8,210

 
7,645

 
 
Windfall tax benefits associated with equity-based compensation
(119
)
 
(88
)
 
 
Goodwill, intangibles and other long-lived asset impairment
610,436

 
19,132

 
 
Gain on sale of businesses, net
—

 
(8,014
)
 
 
Equity in net loss of CareCentrix
—

 
2,301

 
 
Deferred income tax (benefit) expense
(36,660
)
 
23,513

 
Changes in assets and liabilities, net of effects from acquisitions and dispositions:
 
 
 
 
 
Accounts receivable
910

 
34,882

 
 
Prepaid expenses and other current assets
(17,966
)
 
(15,447
)
 
 
Current liabilities
7,163

 
(15,979
)
 
Other, net
5,998

 
5,936

 
Net cash provided by operating activities
37,105

 
125,968

 
 
 
 
 
 
 
INVESTING ACTIVITIES:
 
 
 
 
Purchase of fixed assets
(19,075
)
 
(11,779
)
 
Proceeds from sale of businesses, net of cash transferred
508

 
9,220

 
Proceeds from the sale of assets
203

 
—

 
Acquisition of businesses, net of cash acquired
(359,435
)
 
(22,335
)
 
Net cash used in investing activities
(377,799
)
 
(24,894
)
 
 
 
 
 
 
 
FINANCING ACTIVITIES:
 
 
 
 
Proceeds from issuance of common stock
3,231

 
3,980

 
Windfall tax benefits associated with equity-based compensation
119

 
88

 
Proceeds from issuance of debt
817,525

 
—

 
Borrowings under revolving credit facility
27,000

 
—

 
Payment of contingent consideration accrued at acquisition date
(1,675
)
—

—

 
Repayment of long-term debt
(610,182
)
 
(52,943
)
 
Repurchase of common stock
—

 
(4,974
)
 
Debt issuance costs
(15,187
)
 
(4,125
)
 
Minority interest capital contribution
1,600

—

—

 
Distribution to minority interests
(750
)
—

(825
)
 
Other
(1,082
)
 
(135
)
 
Net cash provided by (used in) financing activities
220,599

 
(58,934
)
 
 
 
 
 
 
 
Net change in cash and cash equivalents
(120,095
)
 
42,140

 
Cash and cash equivalents at beginning of period
207,052

 
164,912

 
Cash and cash equivalents at end of period
$
86,957

 
$
207,052

 
 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 
 
 
 
 
 
 
 
 
 
Interest paid
$
75,880

 
$
78,783

 
Income taxes paid
$
1,057

 
$
4,375

 
 
 
 
 
 
 
 
 
Fiscal Year
A reconciliation of Free cash flow to Net cash provided by operating activities follows:
2013
 
2012
 
 
Net cash provided by operating activities
$
37,105

 
$
125,968

 
 
Less: Purchase of fixed assets
(19,075
)
 
(11,779
)
 
 
Free cash flow
$
18,030

 
$
114,189


7

 
 
(in 000's)
 
 
 
 
 
 
 
Supplemental Information
4th Quarter
 
Fiscal Year
 
 
 
2013
 
2012
 
2013
 
2012
Segment Information (2)
 
 
 
 
 
 
 
 
Net revenues
 
 
 
 
 
 
 
 
 
Home Health
$
259,707

 
$
237,698

 
$
965,848

 
$
948,019

 
 
Hospice
180,824

 
187,319

 
715,190

 
764,785

 
 
Community Care
45,606

 
—

 
45,606

 
—

 
Total net revenues
$
486,137

 
$
425,017

 
$
1,726,644

 
$
1,712,804

 
 
 
 
 
 
 
 
 
 
 
Operating contribution (4)
 
 
 
 
 
 
 
 
 
Home Health
$
21,782

 
$
30,918

 
$
113,809

 
$
125,445

 
 
Hospice
2,587

 
30,707

 
78,810

 
133,133

 
 
Community Care
6,385

 
—

 
6,385

 
—

 
Total operating contribution
30,754

 
61,625

 
199,004

 
258,578

 
 
 
 
 
 
 
 
 
 
 
Corporate administrative expenses
(38,703
)
 
(17,580
)
 
(96,146
)
 
(83,700
)
 
Goodwill, intangibles and other long-lived asset impairment (5)
(386,116
)
 
—

 
(610,436
)
 
(19,132
)
 
Depreciation and amortization
(6,178
)
 
(5,206
)
 
(20,110
)
 
(26,581
)
 
Gain on sale of businesses (6)
—

 
2,567

 
—

 
8,014

 
Interest expense and other, net (7)
(43,601
)
 
(22,896
)
 
(110,384
)
 
(89,947
)
 
(Loss) income before income taxes and equity in net loss of CareCentrix
$
(443,844
)
 
$
18,510

 
$
(638,072
)
 
$
47,232

 
 
 
 
 
 
 
 
 
 
 
Home Health operating contribution margin %
8.4%
 
13.0%
 
11.8%
 
13.2%
 
Hospice operating contribution margin %
1.4%
 
16.4%
 
11.0%
 
17.4%
 
Community Care operating contribution margin %
14.0%
 
—%
 
14.0%
 
—%
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter
 
Fiscal Year
 
Net Revenues by Major Payer Source:
2013
 
2012
 
2013
 
2012
 
 
Medicare
 
 
 
 
 
 
 
 
 
Home Health
$
209,647

 
$
187,291

 
$
787,333

 
$
749,042

 
 
Hospice
169,104

 
176,524

 
667,901

 
715,514

 
 
Total Medicare
378,751

 
363,815

 
1,455,234

 
1,464,556

 
 
Medicaid and local government
62,242

 
17,551

 
116,607

 
74,424

 
 
Commercial insurance and other:
 
 
 
 
 
 
 
 
 
Paid at episodic rates
16,235

 
22,472

 
59,557

 
85,200

 
 
Other
28,909

 
21,179

 
95,246

 
88,624

 
 
Total commercial insurance and other
45,144

 
43,651

 
154,803

 
173,824

 
 
Total net revenues
$
486,137

 
$
425,017

 
$
1,726,644

 
$
1,712,804

 
 
 
4th Quarter
 
Fiscal Year
A reconciliation of Adjusted EBITDA to Net (loss) income attributable to Gentiva shareholders follows:
2013
 
2012
 
2013
 
2012
 
Adjusted EBITDA (3)
$
21,571

 
$
44,246

 
$
134,962

 
$
180,548

 
Cost savings, restructuring, legal settlement and acquisition and integration costs (4)
(24,955
)
 
(201
)
 
(27,539
)
 
(5,670
)
 
Impact of closed locations
(4,565
)
 
—

 
(4,565
)
 
—

 
Goodwill, intangibles and other long-lived asset impairment (5)
(386,116
)
 
—

 
(610,436
)
 
(19,132
)
 
Gain on sale of businesses (6)
—

 
2,567

 
—

 
8,014

 
EBITDA (4)
(394,065
)
 
46,612

 
(507,578
)
 
163,760

 
Depreciation and amortization
(6,178
)
 
(5,206
)
 
(20,110
)
 
(26,581
)
 
Interest expense and other, net (7)
(43,601
)
 
(22,896
)
 
(110,384
)
 
(89,947
)
 
(Loss) income before income taxes and equity in net loss of CareCentrix
(443,844
)
 
18,510

 
(638,072
)
 
47,232

 
Income tax benefit (expense) (8)
42,022

 
(6,373
)
 
39,565

 
(17,251
)
 
Equity in net loss of CareCentrix
—

 
(3,307
)
 
—

 
(2,301
)
 
Net (loss) income
(401,822
)
 
8,830

 
(598,507
)
 
27,680

 
Less: Net income attributable to noncontrolling interests
(62
)
 
(260
)
 
(487
)
 
(884
)
 
Net (loss) income attributable to Gentiva shareholders
$
(401,884
)
 
$
8,570

 
$
(598,994
)
 
$
26,796


8

A reconciliation of Adjusted (loss) income attributable to Gentiva shareholders to Net (loss) income (all items presented are net of tax): (3)
 
 
 
 
 
 
 
 
 
 
 
4th Quarter
 
Fiscal Year
 
 
 
2013
 
2012
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted (loss) income attributable to Gentiva shareholders
$
(4,901
)
 
$
9,686

 
$
13,757

 
$
37,679

 
 
Cost savings, restructuring, legal settlement and acquisition and integration costs (4)
(16,277
)
 
(139
)
 
(17,847
)
 
(3,385
)
 
 
Goodwill, intangibles and other long-lived asset impairment (5)
(366,453
)
 
—

 
(580,651
)
 
(11,352
)
 
 
Impact of closed locations
(2,442
)
 
—

 
(2,442
)
 
—

 
 
Gain on sale of businesses (6)
—

 
1,516

 
—

 
4,765

 
 
Write-off of prepaid debt issuance costs
(11,811
)
 
—

 
(11,811
)
 
—

 
 
Equity in net loss of CareCentrix
—

 
(3,307
)
 
—

 
(2,301
)
 
 
Tax valuation allowance on OIG legal settlement
—

 
814

 
—

 
1,390

 
 
(Loss) income attributable to Gentiva shareholders
(401,884
)
 
8,570

 
(598,994
)
 
26,796

 
 
Add back: Net income attributable to noncontrolling interests
62

 
260

 
487

 
884

 
 
Net (loss) income
$
(401,822
)
 
$
8,830

 
$
(598,507
)
 
$
27,680

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted (loss) income attributable to Gentiva shareholders per diluted share
$
(0.14
)
 
$
0.31

 
$
0.42

 
$
1.23

 
 
Cost savings, restructuring, legal settlement and acquisition and integration costs (4)
(0.46
)
 
—

 
(0.56
)
 
(0.11
)
 
 
Goodwill, intangibles and other long-lived asset impairment (5)
(10.45
)
 
—

 
(18.17
)
 
(0.37
)
 
 
Impact of closed locations
(0.07
)
 
—

 
(0.07
)
 
—

 
 
Gain on sale of businesses (6)
—

 
0.05

 
—

 
0.16

 
 
Write-off of prepaid debt issuance costs
(0.34
)
 
—

 
(0.37
)
 
—

 
 
Equity in net loss of CareCentrix
—

 
(0.11
)
 
—

 
(0.08
)
 
 
Tax valuation allowance on OIG legal settlement
—

 
0.03

 
—

 
0.04

 
 
(Loss) income attributable to Gentiva shareholders per diluted share
(11.46
)
 
0.28

 
(18.75
)
 
0.87

 
 
Add back: Net income attributable to noncontrolling interests
—

 
0.01

 
0.02

 
0.03

 
 
Net (loss) income per diluted share
$
(11.46
)
 
$
0.29

 
$
(18.73
)
 
$
0.90

 
 
Operating Metrics
4th Quarter
 
Fiscal Year
 
 
 
2013
 
2012
 
2013
 
2012
 
 
Home Health
 
 
 
 
 
 
 
 
 
Episodic admissions
52,300

 
49,300

 
199,000

 
198,000

 
 
Total episodes
79,300

 
71,900

 
293,200

 
287,800

 
 
Episodes per admission
1.52

 
1.46

 
1.47

 
1.45

 
 
Revenue per episode
$
2,850

 
$
2,920

 
$
2,890

 
$
2,900

 
 
 
 
 
 
 
 
 
 
 
 
Hospice
 
 
 
 
 
 
 
 
 
Admissions
13,000

 
12,600

 
50,500

 
51,500

 
 
Average daily census
13,500

 
13,200

 
12,900

 
13,600

 
 
Patient days (in thousands)
1,243

 
1,213

 
4,711

 
4,959

 
 
Revenue per patient day (a)
$
145

 
$
155

 
$
152

 
$
154

 
 
Length of stay at discharge (in days)
107

 
105

 
100

 
96

 
 
Services by patient type:
 
 
 
 
 
 
 
 
 
Routine
98%
 
98%
 
98%
 
98%
 
 
General Inpatient & Other
2%
 
2%
 
2%
 
2%
 
 
 
 
 
 
 
 
 
 
 
 
Community Care
 
 
 
 
 
 
 
 
 
Billed hours (in thousands)
3,600

 
—

 
3,600

 
—

 
 
Revenue per hour
$
13

 
$
—

 
$
13

 
$
—

(a) Revenue per patient day for Q4, 2013, includes approximately $6.9 million of hospice billing revenue adjustments. Excluding this adjustment, the revenue per patient day would be $151.

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Notes:
1.
The comparability between reporting periods has been affected by the following items:
a.    The Company completed several acquisitions, including the Harden transaction on October 18, 2013, and closed a significant number of branch operations, affecting the reporting periods presented. As a result of these activities, the Company’s net revenues comparisons were positively impacted for both the fourth quarter and full-year 2013 by approximately $91 million as compared to the corresponding periods of 2012.
2.
The Company’s senior management evaluates performance and allocates resources based on operating contributions of the operating segments, which exclude corporate expenses, depreciation, amortization, interest income, and interest expense and other, but includes revenue and all other costs directly attributable to the specific segment.
3.
Adjusted EBITDA, a non-GAAP financial measure, is defined as income before interest expense and other (net of interest income), income taxes, depreciation and amortization and excluding charges relating to (i) cost savings, restructuring, legal settlements, and acquisition and integration activities, (ii) EBITDA impact of closed locations, (iii) goodwill, intangibles and other long-lived asset impairment and (iv) gain on sale of businesses. Management uses Adjusted EBITDA to evaluate overall performance and compare current operating results with other companies in the healthcare industry. Adjusted EBITDA should not be considered in isolation or as a substitute for income from continuing operations, net income, operating income or cash flow statement data determined in accordance with accounting principles generally accepted in the United States. Since Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States and is susceptible to varying calculations, it may not be comparable to similarly titled measures in other companies.
Adjusted income attributable to Gentiva shareholders is defined as Adjusted EBITDA attributable to Gentiva shareholders, excluding (i) tax reserves relating to the OIG settlement, (ii) equity in net loss of CareCentrix and (iii) write-off of prepaid debt issuance costs.
4.
Operating contribution and EBITDA included charges relating to cost savings initiatives, legal settlements and acquisition and integration activities of $25.0 million and $27.5 million for the fourth quarter and full year 2013, respectively. For the fourth quarter and full year 2012, the Company recorded charges of $0.2 million and $5.7 million, respectively.
For the fourth quarter and full year 2013, the Company recorded charges associated with cost savings initiatives of $8.5 million and $8.7 million, respectively. For the fourth quarter and full year 2013, acquisition and integration activities of $16.5 million and $18.8 million, respectively, primarily related to the Company's acquisition of Harden. These costs consisted of legal, accounting and other professional fees and expenses.
For the fourth quarter and full year 2012, the Company recorded charges associated with cost savings initiatives of $0.2 million and $1.7 million, respectively. For the full year 2012, the Company recorded legal settlement reserves of $5.0 million, associated with the tentative settlement of the Wilkie wage and hour lawsuit, partially offset by a reduction in cost savings charges of $1.0 million, primarily relating to favorable lease settlements associated with the Company's branch closures.
These charges were reflected as follows for segment reporting purposes (dollars in millions):
 
4th Quarter
 
Fiscal Year
 
2013
2012
 
2013
2012
Home Health
$
3.2

$
—

 
$
3.3

$
5.6

Hospice
7.6

0.3

 
8.2

0.4

Community Care
—

—

 
—

—

Corporate expenses
14.2

(0.1
)
 
16.0

(0.3
)
Total
$
25.0

$
0.2

 
$
27.5

$
5.7

5.
During the full year 2013, the Company recorded non-cash charges of $610.4 million related to goodwill, intangibles and other long-lived assets. The Company performed its annual impairment test as of December 31, 2013 for its Home Health, Hospice and Community Care reporting units. Based on this assessment, for the year ended December 31, 2013, the Company recorded a non-cash impairment charge associated with its Hospice reporting unit of approximately $386.1 million.
At March 31, 2013, the Company performed an interim impairment test of its Hospice reporting unit due to lower than expected average daily census and higher than expected discharge rates during the quarter. Based on the results of the interim impairment test, the Company recorded a non-cash impairment charge relating to goodwill

10

of approximately $220.8 million. As part of that analysis, the Company reviewed the valuation of its owned real estate utilized in the Hospice business. The analysis indicated that two of the Company's hospice inpatient units had estimated fair values lower than their carrying values and, as such, the Company recorded a non-cash impairment charge of approximately $1.9 million.
In addition, the Company conducted an evaluation of the various systems used to support its field operations. In connection with that review, the Company made a strategic decision to replace its business intelligence software platform and, as such, recorded a non-cash impairment charge, related to developed software, of approximately $1.6 million.
During the third quarter of 2012, the Company initiated an effort to re-brand all of its branch operations under the single Gentiva name. In connection with this re-branding effort, the Company recorded a $19.1 million non-cash write-off of existing trade name balances for the year 2012.
6.
During the fourth quarter of 2012, the Company completed the sale of its Phoenix area hospice operations to Banner Health, an Arizona non-profit corporation, pursuant to an asset purchase agreement for cash consideration of $3.5 million.
During the second quarter of 2012, the Company completed the sale of eight home health branches and four hospice branches in Louisiana, pursuant to an asset purchase agreement, for total consideration of approximately $6.4 million. The Company received proceeds of approximately $5.9 million for the full year 2012 and established a receivable of approximately $0.5 million, which the Company received during the second quarter of 2013.
Effective May 31, 2012, the Company completed the sale of its Gentiva consulting business to MP Healthcare Partners, LLC pursuant to an asset purchase agreement, for cash consideration of approximately $0.3 million.
In connection with the sales, the Company recorded a gain on sale of businesses of approximately $2.6 million and $8.0 million for the fourth quarter and full year 2012, respectively.
7.
Interest expense and other for the year 2013 and 2012 included charges of approximately $19.1 million and $0.5 million, respectively, relating to the write-off of deferred debt issuance costs and fees associated with the Company entering a new credit agreement, dated October 18, 2013 and for the 2012 period, write-off of deferred debt issuance costs related to Amendment No. 3 to the Company's former credit agreement.
8.
The Company’s effective tax rate was a tax benefit of 9.5% and 6.2% for the fourth quarter and full year 2013, respectively, as compared to a tax provision of 34.4% and 36.5% for the fourth quarter and full year 2012, respectively. The Company's effective tax rate for adjusted income from continuing operations was a tax provision of 41.0% and 41.3% for the fourth quarter and full year 2013, respectively, as compared to 38.4% and 39.8% for the fourth quarter and full year 2013, respectively.


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Forward-Looking Statements
Certain statements contained in this news release, including, without limitation, statements containing the words "believes," "anticipates," "intends," "expects," "assumes," "trends" and similar expressions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon the Company's current plans, expectations and projections about future events. However, such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, among others, the following: economic and business conditions; demographic changes; changes in, or failure to comply with, existing governmental regulations; the impact on our Company of healthcare reform legislation and its implementation through governmental regulations; legislative proposals for healthcare reform; changes in Medicare, Medicaid and commercial payer reimbursement levels; the outcome of any inquiries into the Company’s operations and business practices by governmental authorities; compliance with any corporate integrity agreement affecting the Company's operations; effects of competition in the markets in which the Company operates; liability and other claims asserted against the Company; ability to attract and retain qualified personnel; ability to access capital markets; availability and terms of capital; loss of significant contracts or reduction in revenues associated with major payer sources; ability of customers to pay for services; business disruption due to severe weather conditions, natural disasters, pandemic outbreaks, terrorist acts or cyber-attacks; availability, effectiveness, stability and security of the Company's information technology systems; ability to successfully integrate the operations of acquisitions the Company may make and achieve expected synergies and operational efficiencies within expected time-frames; ability to maintain compliance with its financial covenants under the Company’s credit agreement; effect on liquidity of the Company's debt service requirements; and changes in estimates and judgments associated with critical accounting policies and estimates. For a detailed discussion of certain of these and other factors that could cause actual results to differ from those contained in this news release, please refer to the Company's various filings with the Securities and Exchange Commission, including the "Risk Factors" section contained in the Company's annual report on Form 10-K for the year ended December 31, 2012.
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GENTIVA HEALTH SERVICES INC Reports