LINCARE HOLDINGS INC. 
By ATLANTA, Feb. 18 /PRNewswire-FirstCall/ -- Gentiva Health Services, Inc. (Nasdaq: GTIV), a leading provider of home health and hospice services, today reported fourth quarter and full year fiscal 2009 results.
Highlights for the three and twelve months ended January 3, 2010 are presented as results from continuing operations. This presentation reflects the sale of Gentiva's respiratory therapy and home medical equipment and infusion therapy businesses in February 2010, which are reported as discontinued operations for all periods presented in this press release.
Fourth quarter 2009 highlights, which reflect 14 weeks of activity compared to 13 weeks in 2008, include:
-- Total net revenues from continuing operations of $310.0 million, an
increase of 16% compared to $267.3 million for the quarter ended
December 28, 2008. Total net revenues included home health episodic
revenues of $235.6 million, up 23% compared to $191.1 million in the
comparable 2008 period; and hospice revenues of $19.8 million, up 16%
from $17.1 million in the 2008 fourth quarter.
-- Income from continuing operations of $19.0 million, or $0.63 per diluted
share compared to net income of $11.9 million or $0.40 per diluted share
in the 2008 fourth quarter.
-- Adjusted income from continuing operations of $18.8 million, up 54%
compared with the prior year period. Adjusted income from continuing
operations, which excludes non-recurring transaction gains and special
charges related to restructuring and merger and acquisition activities,
was $0.63 per diluted share in the 2009 fourth quarter compared with
$0.41 per diluted share in the corresponding period of 2008.
-- Earnings before interest, taxes, depreciation and amortization (EBITDA)
attributable to continuing operations increased 25% to $34.0 million in
the fourth quarter of 2009 as compared to $27.1 million in the fourth
quarter of 2008. EBITDA as a percentage of net revenues improved to
11.0% in the fourth quarter of 2009 versus 10.1% in the prior-year
period. EBITDA in the 2008 period included restructuring and merger and
acquisition costs of $0.6 million.
"Gentiva finished 2009 with strong fourth quarter results, and we have set the stage for solid growth in 2010 as well," said Gentiva CEO Tony Strange. "We have done that by executing on core strategic initiatives and narrowing our focus to our home health and hospice operations. We enter 2010 with a business that is performing well and a strong balance sheet that gives us the financial flexibility to invest both internally and externally in initiatives that will further solidify our industry leadership."
Gentiva reported these highlights from continuing operations for the twelve months ended January 3, 2010, reflecting 53-weeks of activity in 2009 compared to 52-weeks in 2008:
-- Net revenues from continuing operations of $1.15 billion versus $1.24
billion in the prior year period. Net revenues in the 2008 period
included $232.7 million relating to CareCentrix, of which Gentiva sold a
majority ownership interest in September 2008. Excluding the revenue
contribution from CareCentrix, Gentiva's net revenues grew approximately
$144 million, or 14%, in the twelve month period ended January 3, 2010.
Total net revenues in 2009 included home health episodic revenues of
$861.8 million, up 23% compared to $701.2 million in 2008; and hospice
revenues of $74.3 million, up 20% from $61.9 million in 2008.
-- Income from continuing operations of $69.8 million, or $2.34 per diluted
share, which included (i) a non-recurring pre-tax net gain of $6.0
million or $0.20 per diluted share resulting primarily from the 2009
first quarter sale of certain branch offices that specialized in
pediatric home health care services; and, (ii) special pre-tax charges
of $2.4 million or $0.05 per diluted share relating to restructuring and
merger and acquisition costs. These results compared to income from
continuing operations of $151.4 million or $5.15 per diluted share in
the 2008 period which included a net gain of $3.72 per diluted share
from the sale of CareCentrix and special pre-tax charges of $2.7
million or $0.06 per diluted share relating to restructuring and merger
and acquisition costs.
-- Adjusted income from continuing operations of $65.3 million, up 50%
compared with the prior year period. On a diluted earnings per share
basis, adjusted income from continuing operations in the 2009 period was
$2.19 compared with $1.49 in the corresponding period of 2008. Adjusted
income from continuing operations excludes non-recurring transaction
gains and special charges relating to restructuring and merger and
acquisition activities in both periods.
-- EBITDA attributable to continuing operations increased 19% to $125.0
million versus $105.2 million in the prior-year period.
-- Operating cash flow was $105.1 million in the 2009 period compared to
$70.7 million in the comparable 2008 period.
For the fourth quarter of 2009, the Company reported net income of $8.7 million or $0.29 per diluted share compared to $12.8 million or $0.43 per diluted share in the fourth quarter of 2008. For the full year, net income was $59.2 million or $1.98 per diluted share in 2009 compared to $153.5 million or $5.21 per diluted share in 2008. These results included non-recurring transaction gains and special charges as discussed above as well as the results from discontinued operations.
At January 3, 2010, the Company reported cash and cash equivalents of $152.4 million and outstanding debt under its credit agreement of $237.0 million.
Results from Discontinued Operations
Results of discontinued operations in 2009 included net revenues of $55.3 million, adjusted EBITDA, excluding asset impairment charges, of $4.4 million and a net loss of $10.6 million or $0.36 per diluted share. The net loss from discontinued operations consisted of an operating loss of $1.0 million or $0.04 per diluted share and a fourth quarter asset impairment charge of $9.6 million or $0.32 per diluted share. For the full year 2008, results of discontinued operations included net revenues of $52.3 million, EBITDA of $8.9 million and net income of $2.0 million or $0.06 per diluted share.
Full-Year 2010 Outlook
Gentiva announced its financial outlook for fiscal 2010. The Company expects net revenues will range between $1.23 billion to $1.26 billion and adjusted net income on a diluted earnings per share basis will range between $2.57 and $2.67. The 2010 estimates exclude the results from the divested businesses and corresponding charges, any future acquisitions and special items.
Gentiva's outlook is consistent with the past several years of strong episodic revenue growth in the Home Health business. Revenue growth in 2010 is expected to be driven primarily by organic volume growth and expansion of the Company's innovative specialty programs. Gentiva's 2010 revenue guidance incorporates the policy and payment updates for Medicare Home Health announced by the Centers for Medicare & Medicaid Services (CMS) on October 30, 2009. These updates to 2010 reimbursement rates include, among other items, a 2.0% market basket update, a 2.5% increase in the Medicare home health base rate resulting from the lowering of total outlier payment targets and a "case mix creep" reduction of 2.75%. Any changes to these published rates resulting from a healthcare reform bill currently being discussed in Washington would likely impact Gentiva's 2010 outlook.
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 measures to the most directly comparable GAAP measures.
Conference Call and Web Cast Details
The Company will comment further on its fourth quarter and fiscal 2009 results during its conference call and live web cast to be held Thursday, February 18, 2010 at 10:00 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 # 53810847. The web cast is an audio-only, one-way event. Web cast listeners who wish to ask questions must participate in the conference call. Log onto http://investors.gentiva.com/events.cfm to hear the web cast. A replay of the call will be available on February 18, beginning at approximately 1 p.m. ET, and will remain available continuously through February 25. To listen to a replay of the call from the United States, Canada or international locations, dial (800) 642-1687 or (706) 645-9291 and enter the following PIN at the prompt: 53810847. Visit http://investors.gentiva.com/events.cfm to access the web cast archive. This press release is accessible at http://investors.gentiva.com/releases.cfm and a transcript of the conference call is expected to be available on the site within 48 hours after the call.
About Gentiva Health Services, Inc.
Gentiva Health Services, Inc. is a leading provider of home health and hospice 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. For more information, visit Gentiva's web site, http://www.gentiva.com, and its investor relations section at http://investors.gentiva.com. GTIV-E
Financial and Investor Contact:
John R. Potapchuk
631-501-7035
john.potapchuk@gentiva.com
or Brandon Ballew
770-221-6700
brandon.ballew@gentiva.com
Media Contact:
Scott Cianciulli
Brainerd Communicators
212-986-6667
cianciulli@braincomm.com
(unaudited tables and notes follow)
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
----------- -----------
2009 2008 2009 2008
---- ---- ---- ----
Statements of Income (14 weeks) (13 weeks) (53 weeks) (52 weeks)
--------------------
Net revenues $310,024 $267,262 $1,152,460 $1,239,536
Cost of services
sold 149,173 130,483 553,530 682,024
------------------------ ----------------------
Gross profit 160,851 136,779 598,930 557,512
Selling, general and
administrative
expenses (131,165) (113,778) (490,866) (468,582)
Gain on sale of
assets and
business, net 251 61 5,998 107,933
Interest income 732 1,012 3,037 2,290
Interest expense and
other (1,346) (3,501) (9,211) (19,377)
------------------------ ----------------------
Income from continuing
operations before
income taxes and
equity in net
earnings from
affiliate 29,323 20,573 107,888 179,776
Income tax expense (10,603) (8,633) (39,164) (28,295)
Equity in net
earnings of
affiliate 293 (55) 1,072 (35)
------------------------ ----------------------
Income from
continuing
operations 19,013 11,885 69,796 151,446
Discontinued
operations, net of
tax (10,353) 926 (10,614) 2,004
------------------------ ----------------------
Net income $8,660 $12,811 $59,182 $153,450
======================== ======================
Earnings per Share
------------------
Basic earnings per
share:
Income from
continuing
operations $0.65 $0.41 $2.40 $5.30
Discontinued
operations,
net of tax (0.36) 0.03 (0.37) 0.07
------------------------ ----------------------
Net income $0.29 $0.44 $2.03 $5.37
======================== ======================
Weighted average
shares
outstanding 29,353 28,845 29,103 28,578
======================== ======================
Diluted earnings per
share:
Income from
continuing
operations $0.63 $0.40 $2.34 $5.15
Discontinued
operations,
net of tax (0.34) 0.03 (0.36) 0.06
------------------------ ----------------------
Net income $0.29 $0.43 $1.98 $5.21
======================== ======================
Weighted average
shares
outstanding 30,225 29,861 29,822 29,439
======================== ======================
Condensed Balance Sheets
------------------------
ASSETS Jan 3, 2010 Dec 28, 2008
------ ----------- ------------
Cash and cash
equivalents $152,410 $69,201
Accounts receivable,
net (A) 182,192 177,201
Deferred tax assets 17,205 11,933
Prepaid expenses
and other
current assets 13,904 13,141
Current assets held
for sale 2,549 -
------------------------
Total current
assets 368,260 271,476
Long-term
investments - 11,050
Note receivable 25,000 25,000
Investment in
affiliate 24,336 23,264
Fixed assets, net 65,913 63,815
Intangible assets,
net 251,793 250,432
Goodwill 299,534 308,213
Non-current assets
held for sale 8,689 -
Other assets 24,410 20,247
------------------------
Total assets $1,067,935 $973,497
========================
LIABILITIES AND
SHAREHOLDERS'
EQUITY
---------------
Accounts payable $8,982 $8,027
Payroll and related
taxes 23,463 17,869
Deferred revenue 36,359 32,976
Medicare liabilities 7,525 6,680
Obligations under
insurance programs 41,636 39,628
Other accrued
expenses 47,045 40,895
Current portion of
long-term debt 5,000 -
------------------------
Total current
liabilities 170,010 146,075
Long-term debt 232,000 251,000
Deferred tax
liabilities, net 73,259 64,262
Other liabilities 21,503 17,189
Shareholders' equity 571,163 494,971
------------------------
Total liabilities
and
shareholders'
equity $1,067,935 $973,497
========================
Common shares
outstanding 29,480 28,864
========================
(A) Accounts receivable, net included an allowance for doubtful accounts
of $9.3 million and $8.2 million at January 3, 2010 and December 28,
2008, respectively. Accounts receivable, net included $10.2 million
at January 3, 2010 and $8.8 million at December 28, 2008 relating to
discontinued operations; such receivables were retained by the Company
following the disposition of the respiratory therapy and home medical
equipment and infusion therapy businesses in February 2010.
(in 000's)
Fiscal Year
-----------
Condensed Statements of Cash Flows 2009 2008
---------------------------------- ---- ----
OPERATING ACTIVITIES: (53 weeks) (52 weeks)
Net income $59,182 $153,450
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 22,796 22,044
Amortization of debt issuance costs 1,335 1,753
Provision for doubtful accounts 9,958 11,010
Equity-based compensation expense 5,182 5,757
Windfall tax benefits associated with
equity-based compensation (1,683) (2,227)
Realized loss on auction rate securities 1,000 -
Write-down of goodwill associated with
discontinued operations 9,611 -
Gain on sale of assets and business, net (5,998) (107,933)
Equity in net earnings of affiliate (1,072) 35
Deferred income taxes 3,103 14,127
Changes in assets and liabilities, net of
effects from acquisitions and dispositions:
Accounts receivable (14,556) (25,555)
Prepaid expenses and other current assets (4,949) (2,118)
Current liabilities 20,246 (750)
Other, net 953 1,107
---------------------
Net cash provided by operating activities 105,108 70,700
---------------------
INVESTING ACTIVITIES:
Purchase of fixed assets (24,857) (24,004)
Proceeds from sale of assets and business,
net of cash transferred 6,800 83,160
Acquisition of businesses, net of cash
acquired (11,175) (60,736)
Purchases of short-term investments
available-for-sale - (28,000)
Sale of short-term investments available-for-
sale 12,000 46,250
Withdrawal from restricted cash - 22,014
---------------------
Net cash (used in) provided by investing
activities (17,232) 38,684
---------------------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 13,338 11,547
Windfall tax benefits associated with equity-
based compensation 1,683 2,227
Borrowings under revolving credit facility - 24,000
Home Health Care Affiliates debt repayments - (7,420)
Debt issuance costs - (557)
Repayments under the Company's term loan (14,000) (83,000)
Repurchases of common stock (4,813) -
Repayment of capital lease obligations (875) (1,147)
---------------------
Net cash used in financing activities (4,667) (54,350)
---------------------
Net change in cash and cash equivalents 83,209 55,034
Cash and cash equivalents at beginning of
year 69,201 14,167
---------------------
Cash and cash equivalents at end of year $152,410 $69,201
=====================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $8,599 $21,081
Income taxes paid $32,389 $10,561
(in 000's)
Supplemental Information (1) 4th Quarter Fiscal Year
--------------------------- ----------- -----------
2009 2008 2009 2008
---- ---- ---- ----
Segment Information (2)(5) (14 weeks) (13 weeks) (53 weeks) (52 weeks)
Net revenues
Home Health $290,218 $250,179 $1,078,126 $946,645
Hospice 19,806 17,083 74,334 61,857
CareCentrix - - - 232,717
Intersegment revenues - - - (1,683)
-------------------- ----------------------
Total net revenues $310,024 $267,262 $1,152,460 $1,239,536
==================== ======================
Operating contribution (6)
Home Health $53,286 $45,894 $195,018 $166,775
Hospice 3,259 704 11,118 3,845
CareCentrix (7) - - - 18,074
-------------------- ----------------------
Total operating
contribution 56,545 46,598 206,136 188,694
Corporate administrative
expenses (22,574) (19,487) (81,185) (83,449)
Gain on sale of assets and
business, net 251 61 5,998 107,933
Depreciation and
amortization (4,285) (4,110) (16,887) (16,315)
Interest expense, net (8) (614) (2,489) (6,174) (17,087)
-------------------- ----------------------
Income from continuing
operations before income
taxes and equity in net
earnings from affiliate $29,323 $20,573 $107,888 $179,776
==================== ======================
4th Quarter Fiscal Year
----------- -----------
2009 2008 2009 2008
---- ---- ---- ----
Net Revenues by Major
Payer Source:
Medicare
Home Health $212,288 $176,508 $782,492 $648,022
Other 18,472 15,645 68,815 56,173
-------------------- ----------------------
Total Medicare 230,760 192,153 851,307 704,195
Medicaid and local
government 22,264 29,770 94,181 122,526
Commercial Insurance and
Other:
Paid at episodic rates 23,337 14,544 79,284 53,183
Other 33,663 30,795 127,688 359,632
-------------------- ----------------------
Total commercial
insurance and other 57,000 45,339 206,972 412,815
------ ------ ------- -------
Total net revenues $310,024 $267,262 $1,152,460 $1,239,536
==================== ======================
A reconciliation of EBITDA to Net
income - As Reported amounts
follows: (3)
4th Quarter Fiscal Year
----------- -----------
2009 2008 2009 2008
---- ---- ---- ----
EBITDA (6) $33,971 $27,111 $124,951 $105,245
Gain on sale of assets
and business, net 251 61 5,998 107,933
Depreciation and
amortization (4,285) (4,110) (16,887) (16,315)
Interest expense, net (8) (614) (2,489) (6,174) (17,087)
-------------------- ----------------------
Income from continuing
operations before income
taxes and equity in net
earnings from affiliate 29,323 20,573 107,888 179,776
Income tax expense (9) (10,603) (8,633) (39,164) (28,295)
Equity in net earnings of
affiliate 293 (55) 1,072 (35)
-------------------- ----------------------
Income from continuing
operations 19,013 11,885 69,796 151,446
Discontinued operations,
net of tax (4) (10,353) 926 (10,614) 2,004
-------------------- ----------------------
Net income - As Reported $8,660 $12,811 $59,182 $153,450
==================== ======================
Notes:
1) Basis of Presentation and Comparability between Reporting Periods - The presentation format in the accompanying financial statements and supplemental information has changed as compared to prior earnings releases. The principal changes involve (A) the classification of the results of the respiratory therapy and home medical equipment ("HME") and infusion therapy ("IV") businesses as discontinued operations as more fully described in Note 4 and (B) the composition of segment information and the classification of corporate administrative expenses as more fully described in Note 5. Previously reported quarterly and full year results have been restated to conform to the current period's presentation format.
In addition, there are various items that affect the comparability of reported results between the 2008 and 2009 periods. These items include the following:
-- 2008 full year results reflect CareCentrix activity, including net
revenues of $232.7 million, EBITDA of $12.4 million and a gain on the
September 2008 sale of a majority ownership interest in this business of
$107.9 million. 2009 quarterly and full year results reflect Gentiva's
equity in the net earnings of CareCentrix as well as interest income on
the CareCentrix note receivable. See Note 7.
-- Due to the 2009 first quarter sale of certain branch offices that
specialized primarily in pediatric home health care services, net
revenues were lower by $6 million for the 2009 fourth quarter and $20
million for the 2009 year as compared to the prior year periods. 2009
full year results reflect a pre-tax gain of $6.0 million or $0.20 per
diluted share relating to the sale of the pediatric branches and other
assets.
-- In comparing the 2008 and 2009 reporting periods, incremental net
revenues related to acquired businesses approximated $4 million in the
fourth quarter and $21 million for the full year of 2009.
-- Special charges relating to restructuring and merger and acquisition
activities were $0.06 per diluted share in 2008 and $0.05 per diluted
share in 2009. These charges were $600,000 or $0.01 per share in the
2008 fourth quarter while there were no special charges in the fourth
quarter of 2009.
-- The 2009 fourth quarter includes 14 weeks of activity while the full
year 2009 has 53 weeks compared to 13 weeks and 52 weeks, respectively,
in the 2008 periods. These differences stem from the Company's policy of
ending each fiscal year on the Sunday nearest to December 31st. As a
result of the extra week, the 2009 reporting periods included about $20
million of incremental net revenues which has a positive impact on the
comparison to prior periods of approximately 7.5 percent for the quarter
and 1.5 percent for the year. The incremental profitability resulting
from the extra week was marginal due to the impact of vacation pay and
temporary help during the holiday season.
Furthermore, the 2008 fourth quarter and fiscal year reporting periods include the impact of the reclassifications to reduce Hospice (i) net revenues and (ii) cost of services sold by approximately $2.2 million and $8.6 million, respectively, relating to the reimbursement of nursing home room and board charges for hospice patients. This reclassification conforms to the current year presentation.
2) The Company's senior management evaluates performance and allocates resources based on operating contributions of the operating segments, which exclude corporate administrative expenses, depreciation, amortization, and interest expense (net), but include revenues and all other costs directly attributable to the specific segment.
3) EBITDA, a non-GAAP financial measure, is defined as income before interest expense (net of interest income), income taxes, depreciation and amortization. Management uses EBITDA to evaluate overall performance and compare current operating results with other companies in the healthcare industry. EBITDA should not be considered in isolation or as a substitute for net income, operating income or cash flow statement data determined in accordance with accounting principles generally accepted in the United States. Because 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. EBITDA presented in the Supplemental Information relates to the Company's continuing operations.
4) In February 2010, the Company consummated the sale of its HME and IV businesses to a subsidiary of Lincare Holdings, Inc. (Nasdaq: LNCR). The financial results of these two operating segments are reported as discontinued operations in the accompanying condensed consolidated financial statements. HME and IV net revenues and operating results for the periods presented were as follows (dollars in thousands):
4th Quarter Fiscal Year
----------- -----------
2009 2008 2009 2008
---- ---- ---- ----
Net revenues $15,105 $13,513 $55,281 $52,328
================= =================
Income (loss) before income
taxes $(10,759) $1,458 $(11,164) $3,154
Income tax (expense)
benefit 406 (532) 550 (1,150)
----------------- -----------------
Discontinued operations, net
of tax $(10,353) $926 $(10,614) $2,004
================= =================
Capital expenditures related to discontinued operations amounted to $5.8 million and $5.1 million for fiscal years 2009 and 2008, respectively. Depreciation and amortization expense relating to discontinued operations amounted to $1.8 million and $5.9 million for the fourth quarter and fiscal year 2009, respectively, and $1.4 million and $5.7 million for the fourth quarter and fiscal year 2008, respectively.
For the fourth quarter and fiscal year of 2009, loss before income taxes included an asset impairment charge of $9.6 million relating to the write-down of goodwill associated with these businesses. There was no income tax benefit recorded in connection with the goodwill write-down.
The condensed balance sheet as of January 3, 2010 reflects the classification of certain assets of these businesses as held for sale and presents the debt repayment required for lenders approval of the transaction as a current liability.
The Company expects to record additional losses of between $2 million and $3 million as discontinued operations in 2010 in connection with various lease costs and severance payments resulting from the sale of the HME and IV businesses.
5) The Company adopted changes to its presentation of segment information in the fourth quarter of 2009. The changes involve (i) the classification of HME and IV operating segment results as discontinued operations, (ii) the reclassification of results of the Company's consulting business from All Other to the Home Health segment and (iii) the classification of certain administrative support functions that had previously been allocated among the Company's operating segments to corporate administrative expenses. As a result, the Company's segment information now reflects two reportable segments: Home Health and Hospice. Prior quarterly and full year information has been restated to conform to the new presentation. Trend information for the reportable segments and corporate administrative expenses is presented below (dollars in thousands):
2009
----------------------------------------------
Home Health
segment: Q1 Q2 Q3 Q4 FY
----------------------------------------------
Revenue $258,754 $266,587 $262,567 $290,218 $1,078,126
Operating
contribution $45,713 $51,608 $44,411 $53,286 $195,018
Hospice segment:
Revenue $17,610 $18,251 $18,667 $19,806 $74,334
Operating
contribution $1,981 $2,723 $3,155 $3,259 $11,118
Corporate
administrative
expenses $20,635 $19,943 $18,033 $22,574 $81,185
2008
----------------------------------------------
Home Health
segment: Q1 Q2 Q3 Q4 FY
----------------------------------------------
Revenue $218,087 $237,924 $240,455 $250,179 $946,645
Operating
contribution $34,601 $43,570 $42,710 $45,894 $166,775
Hospice segment:
Revenue $13,962 $14,375 $16,437 $17,083 $61,857
Operating
contribution $1,258 $1,153 $730 $704 $3,845
Corporate
administrative
expenses $19,956 $21,963 $22,043 $19,487 $83,449
6) Operating contribution and EBITDA for the fiscal year of 2009 included special charges of $2.4 million. For the fourth quarter and fiscal year of 2008, operating contribution and EBITDA included special charges of $0.6 million and $2.7 million, respectively. The special charges, which included restructuring and integration costs and costs and professional fees associated with merger and acquisition activities, were reflected as follows for segment reporting (dollars in millions):
4th Quarter Fiscal Year
----------- -----------
2009 2008 2009 2008
---- ---- ---- ----
Home Health $- $0.1 $1.4 $0.4
Corporate administrative expenses - 0.5 1.0 2.3
----------- -----------
Total $- $0.6 $2.4 $2.7
=========== ===========
7) Fiscal 2008 operating contribution for CareCentrix, in which the Company sold a majority ownership interest on September 25, 2008, was comprised of the following (dollars in thousands):
Fiscal Year
2008
----
Gross profit $42,539
Selling, general and administrative expenses (24,850)
Add: depreciation 385
--------
Operating contribution $18,074
========
In addition, corporate administrative expenses for the year 2008 included $5.7 million associated with support services for the CareCentrix business.
8) Interest expense, net for fiscal year 2009 included realized losses on auction rate securities of approximately $1.0 million.
9) The Company's effective tax rate relating to its continuing operations was 36.2% and 36.3% for the fourth quarter and fiscal year 2009, respectively, and 42.0% and 15.7% for the fourth quarter and fiscal year 2008, respectively.
During fiscal year 2008, the Company recorded a pre-tax gain, net of transaction costs, of $107.9 million and an income tax benefit of approximately $1.6 million relating to the sale of a majority interest in its CareCentrix unit. The CareCentrix transaction generated a capital loss carryforward for federal tax purposes. During fiscal year 2009, the Company recorded a pre-tax gain, net of transaction costs, of $6.0 million relating primarily to the sale of several branch offices that specialized in pediatric home health care services. There was no income tax expense relating to the gain on sale of assets in 2009 due to the utilization of a capital loss carryforward. Excluding the impact of the non-recurring gains, the Company's effective tax rate relating to its continuing operations would have been 38.4% for fiscal year 2009 and 41.6% for fiscal year 2008.
Forward-Looking Statement
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, including the ability to access capital markets; demographic changes; changes in, or failure to comply with, existing governmental regulations; legislative proposals for healthcare reform; changes in Medicare and Medicaid reimbursement levels; 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; 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 natural disasters or terrorist acts; ability to successfully integrate the operations of acquisitions the Company may make and achieve expected synergies and operational efficiencies within expected time-frames; 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 (SEC), including the "Risk Factors" section contained in the Company's annual report on Form 10-K for the year ended December 28, 2008.
SOURCE Gentiva Health Services, Inc.
