-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JYWcI/xBmpa7M4t6OEu0M222jKebmebCW1ZztkU+nHVI+BD4RMtWSs1E33uO+W7J H+vrt/XZSG3TsbKNGXtFrg== 0000891092-04-000608.txt : 20040210 0000891092-04-000608.hdr.sgml : 20040210 20040209215916 ACCESSION NUMBER: 0000891092-04-000608 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040209 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040210 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENTIVA HEALTH SERVICES INC CENTRAL INDEX KEY: 0001096142 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HEALTH SERVICES [8000] IRS NUMBER: 364335801 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15669 FILM NUMBER: 04579492 BUSINESS ADDRESS: STREET 1: 3 HUNTINGTON QUADRANGLE 2S CITY: MELVILLE STATE: NY ZIP: 11747-8943 BUSINESS PHONE: 6315017000 MAIL ADDRESS: STREET 1: 3 HUNTINGTON QUADRANGLE 2S CITY: MELVILLE STATE: NY ZIP: 11747-8943 FORMER COMPANY: FORMER CONFORMED NAME: OLSTEN HEALTH SERVICES HOLDING CORP DATE OF NAME CHANGE: 19991001 8-K 1 e16868_8k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (date of earliest event reported): February 9, 2004 GENTIVA HEALTH SERVICES, INC. (Exact name of registrant as specified in its charter) Delaware 1-15669 36-4335801 (State or other jurisdiction (Commission File No.) (IRS Employer of incorporation) Identification No.) 3 Huntington Quadrangle, 2S, Melville, New York 11747-8943 (Address of principal executive offices) (Zip Code) (631) 501-7000 (Registrant's telephone number, including area code) Item 7. Financial Statements and Exhibits. (c) Exhibits. The following exhibit is furnished herewith pursuant to Item 12: Exhibit No. Description - ----------- ----------- 99.1 Press Release Item 12. Results of Operations and Financial Condition. On February 9, 2004, Gentiva Health Services, Inc. (the "Company") issued a press release on the subject of 2003 fourth quarter and full year consolidated earnings for the Company. A copy of such release is attached hereto as Exhibit 99.1. In accordance with General Instruction B.6 of Form 8-K, the information in this Item 12 and Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such a filing. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GENTIVA HEALTH SERVICES, INC. (Registrant) /s/ John R. Potapchuk ------------------------------------- John R. Potapchuk Senior Vice President and Chief Financial Officer Date: February 9, 2004 EX-99.1 3 e16868ex99_1.txt PRESS RELEASE Exhibit 99.1 Gentiva(R) Reports Fourth Quarter and Full Year 2003 Results MELVILLE, N.Y., Feb. 9 /PRNewswire-FirstCall/ -- Gentiva Health Services, Inc. (Nasdaq: GTIV), the nation's largest provider of home health services, today announced its fourth quarter and year-end 2003 financial results, which reflect revenue and earnings growth in both periods compared to the prior year, and a strong balance sheet at year end, with cash and cash equivalents, restricted cash and short-term investments of $110 million. For the fourth quarter of 2003, net income was $41.8 million and diluted earnings per share (EPS) was $1.53, including a one-time tax benefit of $1.29 per diluted share. During the fourth quarter, it was determined that the Company's deferred tax assets should be recognized due to the Company's achieved earnings trends and outlook. As a result, the full valuation allowance against net deferred tax assets was reversed in the fourth quarter of 2003, resulting in an income tax benefit in the Statement of Operations of $35.0 million and an additional credit to Shareholders' Equity of $19.5 million. Excluding the tax benefits associated with reversal of the valuation allowance and assuming a normalized tax rate of 39 percent, Gentiva's fourth quarter income from continuing operations on a pro forma basis was $4.2 million, or $0.15 per diluted share, in the 2003 period versus $3.2 million, or $0.12 per diluted share in the 2002 period. (See Supplemental Information for a reconciliation between Income from Continuing Operations - As Reported and Income from Continuing Operations - Pro Forma.) Net revenues for the fourth quarter of 2003 of $203.9 million represented a $12.3 million, or 6.4%, increase from the $191.6 million reported in the fourth quarter of 2002. Revenue growth was fueled primarily by the Company's Medicare business for which fourth quarter revenues increased by $10.1 million, or 25.2%, over the same period a year earlier. Medicare growth was driven primarily by a more than 17% increase in new episodes serviced, a 3.3% reimbursement rate increase - representing $1.6 million -- that became effective for patients on service as of October 1, 2003, and operational and clinical process enhancements. For the fiscal year ended December 28, 2003, net revenues of $814.0 million represented a $45.5 million, or 5.9%, increase from the $768.5 million reported in fiscal year 2002. Net income for fiscal 2003 was $56.8 million, or $2.07 per diluted share, which included a tax benefit of $1.28 per diluted share related to the reversal of the deferred tax valuation allowance, compared with a loss of $49.0 million, or $1.87 per diluted share, for the corresponding period of 2002. Fiscal 2002 results included a loss from continuing operations, including restructuring and special charges, of $53.5 million or $2.05 per share; income from discontinued operations of $191.6 million, or $7.32 per share, relating to the operating results and the gain on the June 2002 sale of the Specialty Pharmaceutical Services business; and a loss on the cumulative effect of the accounting change relating to goodwill of $187.1 million, or $7.14 per share. Excluding the tax benefits discussed above and assuming a normalized tax rate of 39 percent, pro forma income from continuing operations for fiscal 2003 was $14.2 million, or $0.52 per diluted share, compared to $6.7 million, or $0.24 per diluted share, for fiscal 2002, excluding restructuring and special charges. "Gentiva had a very good quarter and a solid fiscal year, and this is another sign of our ability to deliver steady and more predictable performance in a dynamic health care marketplace," said Chairman and CEO Ron Malone. "We are aligning the goals of our expanded sales force with our branch nursing operations so that we compete even more effectively for Medicare business. At the same time, CareCentrix(R) continues to help commercial insurers find innovative and cost-effective solutions for delivering high quality care and superior customer service to their members. "We are managing Gentiva to realize the opportunities as a growing number of payors and patients recognize home health care for its effective solutions to spiraling costs," he added. "During fiscal 2003, we generated positive cash flow from operating activities of $30.7 million. In addition, our balance of cash items and short-term investments grew from $104 million at the end of the third quarter to $110 million at year end 2003, even though we spent nearly $5 million on share repurchases and $4 million on capital expenditures during the fourth quarter. Our strong balance sheet -- together with technological advances, recruitment and retention initiatives and a host of other tools -- establishes a solid foundation for pursuing our growth strategies in 2004 and beyond." Non-GAAP Financial Measures The information provided in the following tables 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 2003 results during its quarterly conference call and live web cast to be held tomorrow morning, February 10, 2004, at 10:00 a.m. Eastern Standard Time. To participate in the call from the United States or Canada, dial: (612) 326-1011. The web cast is an audio only, one-way event. Web cast listeners who wish to ask questions must participate in the conference call. To hear the web cast, log onto http://www.gentiva.com/investor/events.asp. This press release is also accessible at the same link, and a transcript of the conference call will be available on the site within 24 hours after the call. About Gentiva Health Services Gentiva Health Services is the nation's largest home health services provider. Gentiva serves patients through more than 350 direct service delivery units and through CareCentrix(R), which manages home health care services for many major managed care organizations throughout the United States. The Company is a single source for skilled nursing; physical, occupational, speech and neuro-rehabilitation services; social work; nutrition; disease management education and help with daily living activities, as well as other therapies and services. Gentiva's revenues are generated from commercial insurance, federal and state government programs and individual consumers. For more information, visit Gentiva's web site, www.gentiva.com, and its investor relations section at http://www.gentiva.com/investor. (in 000's, except per share data) 4th Quarter Fiscal Year -------------- -------------- 2003 2002 2003 2002 ---- ---- ---- ---- Statements of Operations Net revenues $203,869 $191,636 $814,029 $768,501 Cost of services sold 129,458 127,925 531,987 520,901 -------------------------------------- Gross profit 74,411 63,711 282,042 247,600 Selling, general and administrative expenses (66,002) (56,765) (252,334) (276,355) Depreciation and amortization (1,687) (1,720) (6,851) (7,185) -------------------------------------- Operating income (loss) 6,722 5,226 22,857 (35,940) Interest income, net 166 93 441 834 Income (loss) before income taxes from continuing operations 6,888 5,319 23,298 (35,106) Income tax benefit (expense) 34,883 (2,008) 33,468 (18,437) -------------------------------------- Income (loss) from continuing operations 41,771 3,311 56,766 (53,543) Discontinued operations, net of tax - - - 191,578 -------------------------------------- Income before cumulative effect of accounting change 41,771 3,311 56,766 138,035 Cumulative effect of accounting change, net of tax - 2,008 - (187,068) -------------------------------------- Net income (loss) $41,771 $5,319 $56,766 $(49,033) ====================================== Earnings per Share Basic: Income (loss) from continuing operations $1.62 $0.12 $2.16 $(2.05) Discontinued operations, net of tax $- $- $- $7.32 Cumulative effect of accounting change, net of tax $- $0.08 $- $(7.14) -------------------------------------- Net income (loss) $1.62 $0.20 $2.16 $(1.87) ====================================== Average shares outstanding 25,852 26,380 26,262 26,183 ====================================== Diluted: Income (loss) from continuing operations $1.53 $0.12 $2.07 $(2.05) Discontinued operations, net of tax $- $- $- $7.32 Cumulative effect of accounting change, net of tax $- $0.07 $- $(7.14) -------------------------------------- Net income (loss) $1.53 $0.19 $2.07 $(1.87) ====================================== Average shares outstanding 27,225 27,432 27,439 26,183 ====================================== Balance Sheets ASSETS Dec 28, 2003 Dec 29, 2002 ------------ ------------ Cash and cash equivalents $78,263 $101,241 Restricted cash 21,750 - Short-term investments 10,000 - Net receivables 132,998 125,078 Deferred tax assets 26,464 752 Prepaid expenses and other current assets 6,524 9,782 -------------------------- Total current assets 275,999 236,853 Fixed assets 15,135 13,025 Deferred tax assets, net 28,025 - Other assets 15,929 14,553 -------------------------- Total assets $335,088 $264,431 ========================== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $16,079 $16,865 Payroll and related taxes 12,932 12,377 Medicare liabilities 12,736 11,880 Cost of claims incurred but not reported 28,525 27,899 Obligations under insurance programs 37,200 37,829 Other accrued expenses 32,230 25,664 -------------------------- Total current liabilities 139,702 132,514 Other liabilities 18,207 18,869 Shareholders' equity 177,179 113,048 -------------------------- Total liabilities and shareholders' equity $335,088 $264,431 ========================== Common shares outstanding 25,598 26,385 ========================== Fiscal Year ---------------------- Statements of Cash Flows 2003 2002 ---- ---- OPERATING ACTIVITIES: Net income (loss) $56,766 $(49,033) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities Loss (Income) from discontinued operations - (191,578) Cumulative effect of accounting change - 187,068 Depreciation and amortization 6,851 7,185 Provision for doubtful accounts 7,684 4,936 Loss (gain) on sale / disposal of businesses and fixed assets (209) 951 Stock option tender offer - 21,388 Deferred income taxes (35,035) 12,837 Changes in assets and liabilities, net of acquisitions/divestitures Accounts receivable (15,604) 10,281 Prepaid expenses and other current assets 3,048 7,825 Current liabilities 7,065 6,393 Change in net assets held for sale - 3,300 Other, net 137 (3,024) -------------------------- Net cash provided by operating activities 30,703 18,529 -------------------------- INVESTING ACTIVITIES: Purchase of fixed assets - continuing operations (8,777) (4,116) Purchase of fixed assets - discontinued operations - (2,121) Proceeds from sale of assets / business 200 206,564 Acquisition of businesses (1,300) - Purchase of short-term investments (24,900) - Maturities of short-term investments 14,935 - Withdrawal from (deposits into) restricted cash (21,750) 35,164 -------------------------- Net cash provided by (used in) investing activities (41,592) 235,491 -------------------------- FINANCING ACTIVITIES: Proceeds from issuance of common stock 2,336 6,971 Repurchases of common stock (14,425) - Debt issuance costs - (1,321) Cash distribution to shareholders - (203,983) Payments for stock option tender - (21,388) Advance paid to Medicare program - (5,038) -------------------------- Net cash (used in) financing activities (12,089) (224,759) -------------------------- Net change in cash and cash equivalents (22,978) 29,261 Cash and cash equivalents at beginning of period 101,241 71,980 -------------------------- Cash and cash equivalents at end of period $78,263 $101,241 ========================== SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES For fiscal year 2003, in connection with the reversal of the valuation allowance, deferred tax benefits associated with stock compensation deductions of $19.5 million have been credited to shareholders' equity. For fiscal year 2002, in connection with the sale of the Company's Specialty Pharmaceutical Services business on June 13, 2002, the Company received 5,060,976 shares of common stock of Accredo Health, Incorporated, which were subsequently distributed to the Company's shareholders. 4th Quarter Fiscal Year -------------- -------------- 2003 2002 2003 2002 ---- ---- ---- ---- Supplemental Information Net Revenues: Medicare $50,160 $40,058 $178,662 $162,293 Medicaid and Other Government 39,430 42,102 165,151 167,411 Commercial Insurance and Other 114,279 109,476 470,216 438,797 -------------------------------------- Total net revenues $203,869 $191,636 $814,029 $768,501 ====================================== A reconciliation of income (loss) from continuing operations, average diluted shares outstanding and diluted earnings per share between As Reported and Pro Forma amounts follows (1): Income (loss) from Continuing Operations- As Reported $41,771 $3,311 $56,766 $(53,543) Add: income tax (benefit) expense - As Reported (2) (34,883) 2,008 (33,468) 18,437 -------------------------------------- Income (loss) before income taxes from continuing operations 6,888 5,319 23,298 (35,106) Add: restructuring and special charges (3) - - - 46,056 -------------------------------------- Income before income taxes and restructuring and special charges from continuing operations 6,888 5,319 23,298 10,950 Less: income tax expense - At assumed 39% rate 2,686 2,074 9,086 4,271 -------------------------------------- Income from Continuing Operations - Pro Forma $4,202 $3,245 $14,212 $6,679 ====================================== Average diluted shares outstanding - As Reported 27,225 27,432 27,439 26,183 Add: common stock equivalents (4) - - - 1,592 -------------------------------------- Average diluted shares outstanding - Pro Forma 27,225 27,432 27,439 27,775 ====================================== Diluted Earnings per Share Income (loss) from Continuing Operations - As Reported $1.53 $0.12 $2.07 $(2.05) ====================================== Income from Continuing Operations - Pro Forma $0.15 $0.12 $0.52 $0.24 ====================================== Notes: (1) Although Income from Continuing Operations - Pro Forma is a non-GAAP financial measure, management believes that the presentation of income from continuing operations as calculated using an effective tax rate of 39% and excluding restructuring and special charges is a useful adjunct to Income (Loss) from Continuing Operations - As Reported under GAAP because it measures the Company's performance in a consistent manner between the results for the fourth quarter and fiscal years 2003 and 2002. In addition, Income from Continuing Operations - Pro Forma facilitates comparison between Gentiva and other companies. Furthermore, due to the unusual historical relationship between income tax expense and income before income taxes from continuing operations as described in Note 2, the presentation of Income from Continuing Operations - Pro Forma incorporates an effective tax rate, which may be more representative of the Company's normalized rate. Management also believes that the restructuring and special charges recorded in the second quarter of fiscal 2002 should be excluded from Income from Continuing Operations - Pro Forma for fiscal year 2002, as these costs represent non-recurring charges associated with business realignment activities related to the sale of the SPS business and other costs described in Note 3. For these reasons, management believes that Income from Continuing Operations - Pro Forma is useful to investors. Investors should not view Income from Continuing Operations - Pro Forma as an alternative to the GAAP measure of Income (Loss) from Continuing Operations. (2) For the fourth quarter and fiscal year 2003, the Company recorded income tax benefits of approximately $34.9 million and $33.5 million, respectively, due primarily to the reversal of the valuation allowance against net deferred tax assets in the fourth quarter of fiscal 2003. During the fiscal year 2002, income tax expense relating to continuing operations was $18.4 million. The estimated income tax expense includes a provision of $26.9 million that was recorded in the first quarter of fiscal 2002 to establish a valuation allowance against certain deferred tax assets that were recorded with the adoption of FAS No. 142 and the subsequent write-off of goodwill; the corresponding tax benefit for the same amount was recorded in the cumulative effect of accounting change line during the 2002 period. (3) Restructuring and special charges recorded by Gentiva during the fiscal year 2002 aggregated $46.1 million, of which $6.3 million was recorded in cost of services sold and $39.8 million was recorded in selling, general and administrative expenses. These charges consisted primarily of restructuring charges relating to severance and lease payments associated with the realignment and consolidation of business activities of $6.8 million; cash payments and related expenses in connection with the Company's tender offer to purchase and cancel outstanding stock options of $21.4 million; settlement costs of $7.7 million; a refinement of the estimation process associated with the Company's actuarially determined workers' compensation and professional liability insurance reserves of $6.3 million; and, asset writedowns and the write-off of deferred debt issuance costs associated with the terminated credit facility of $3.8 million. (4) The computations of diluted earnings per share for the Company's Income from Continuing Operations - Pro Forma for the fiscal year 2002 include the effect of an incremental 1,592,000 shares that would be issuable upon the assumed exercise of stock options under the treasury stock method. For purposes of the computation of diluted earnings (loss) per share for the Company's Income (Loss) from Continuing Operations - As Reported for the fiscal year 2002, these incremental shares were excluded, since their inclusion would be antidilutive on earnings. 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. Such factors include, among others, general economic and business conditions; demographic changes; changes in, or failure to comply with, existing governmental regulations; legislative proposals for health care reform; changes in Medicare and Medicaid reimbursement levels; effects of competition in the markets the Company operates in; 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 payor sources; ability of customers to pay for services; a material shift in utilization within capitated agreements; and changes in estimates and judgments associated with critical accounting policies. For a detailed discussion 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 29, 2002. Financial and Investor Contact: John R. Potapchuk 631-501-7035 john.potapchuk@gentiva.com Media Contact: David Fluhrer 631-501-7102 516-857-7231 david.fluhrer@gentiva.com SOURCE Gentiva Health Services, Inc. -0- 02/09/2004 /CONTACT: Financial and Investor - John R. Potapchuk, +1-631-501-7035, john.potapchuk@gentiva.com; or Media - David Fluhrer, +1-631-501-7102, +1-516-857-7231, david.fluhrer@gentiva.com, both of Gentiva Health Services, Inc./ /Web site: http://www.gentiva.com / (GTIV) CO: Gentiva Health Services, Inc. ST: New York IN: MTC HEA SU: ERN CCA -----END PRIVACY-ENHANCED MESSAGE-----