EX-99.1 2 g88965exv99w1.txt EX-99.1 PRESS RELEASE EXHIBIT 99.1 [AMERICAN HOMEPATIENT LOGO] NEWS RELEASE Contacts: Joseph F. Furlong or Marilyn O'Hara President and CEO Executive VP and CFO (615) 221-8884 (615) 221-8884 PRIMARY CONTACT FOR IMMEDIATE RELEASE AMERICAN HOMEPATIENT REPORTS FINANCIAL RESULTS FOR THE FIRST QUARTER ENDED MARCH 31, 2004 BRENTWOOD, Tenn. (May 4, 2004) - American HomePatient, Inc. (OTC: AHOM) today reported net income of $1.0 million and revenues of $84.8 million for the first quarter ended March 31, 2004. The Company's revenues of $84.8 million for the first quarter of 2004 represent an increase of $2.3 million, or 2.8%, over the first quarter of 2003. The Company's growth in revenues in the first quarter of 2004 was all internally generated though its sales and marketing efforts. Revenue in the current quarter was reduced by approximately $1.9 million as a result of an approximate 15.8 % reduction in the Medicare reimbursement rates for inhalation drugs effective January 1, 2004. The sale of inhalation drugs comprised approximately 12% of the Company's total revenues for the first quarter of 2004. The Company's net income of $1.0 million for the first quarter of 2004 compares to net income of $4.3 million for the first quarter of 2003. Net income for the first quarter of 2003 included approximately $0.9 million of reorganization items and excluded approximately $5.0 million in non-default interest expense that would have been incurred had the Company not sought bankruptcy protection. Earnings before interest, taxes, depreciation, and amortization (EBITDA) is a non-GAAP financial measurement that is calculated as earnings before interest, taxes, depreciation and amortization. EBITDA for the first quarter of 2004 and for the first quarter of 2003 was $12.1 million and $10.0 million, respectively. For the first quarter of 2004, adjusted EBITDA (calculated as EBITDA before reorganization items and other income/expense) was $12.0 million or 14.2% of revenues. For the first quarter of 2003, adjusted EBITDA was $11.0 million or 13.3% of revenues. Overall, operating expenses decreased in the first quarter of 2004 compared to the first quarter of 2003 by approximately $0.2 million, primarily due to lower bad debt expense for 2004. As a percent of revenues, bad debt expense declined from 3.8% in 2003 to 3.3% in 2004. The reduction in bad debt expense primarily is the result of continued operational improvements and processing efficiencies at the Company's billing centers. REIMBURSEMENT CHANGES In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act") was signed into law. Several provisions in the Act, as described below, will have a material adverse impact on the Company's future operating results and financial condition. Effective January 1, 2004, the reimbursement rate for inhalation drugs used with a nebulizer was reduced from 95% of the average wholesale price to 80% of the average wholesale price. Effective January 1, 2005, the reimbursement rate for inhalation drugs is scheduled to be further reduced to the average manufacturers' selling price plus six percent (ASP + 6%). As this 2005 reimbursement rate will not cover the cost of providing inhalation drugs, management believes that the Company and other providers of inhalation drugs will exit the inhalation drug business, thereby creating difficulties for Medicare beneficiaries to obtain these drugs. Also effective January 1, 2005, the reimbursement rates for 16 durable medical equipment and respiratory items will be reduced to the median Federal Employee Health Benefit Plan rates. The Act also includes a freeze in reimbursement rates for certain durable medical equipment fixing reimbursement rates at those in effect on October 1, 2003, until the roll out of a national competitive bidding system scheduled to begin in 2007. In addition to the reimbursement changes contained in the Act, the executive branch of the federal government recently released the fiscal year 2005 budget for the Department of Health and Human Services that contained a provision to eliminate the Medicare capped rental program. If this provision of the budget is approved, the fourteenth and fifteenth month rental and semi-annual maintenance payments for certain durable medical equipment items rented to our patients would be eliminated. Management is taking a number of steps in an effort to reduce the expected impact of these reimbursement reductions, including initiatives to grow revenues, improve productivity, and reduce costs. The Company also is undertaking a number of efforts, including lobbying lawmakers and regulators, aimed at addressing the Medicare patient drug availability issues created by the inhalation drug reimbursement reductions scheduled for January 1, 2005, with the hope of modifying the pricing changes for inhalation drugs. The magnitude of the adverse impact that these reimbursement reductions will have on the Company's future operating results and financial condition will depend upon the success of these efforts and there can be no assurance that these efforts will be successful. American HomePatient, Inc. is one of the nation's largest home health care providers with 285 centers in 35 states. Its product and service offerings include respiratory services, infusion therapy, parenteral and enteral nutrition, and medical equipment for patients in their home. American HomePatient, Inc.'s common stock is currently traded in the over-the-counter market or, on application by broker-dealers, in the NASD's Electronic Bulletin Board under the symbol AHOM or AHOM.OB. American HomePatient, Inc. provides information related to non-GAAP financial measurements such as, EBITDA, adjusted EBITDA and, from time to time, other non-GAAP financial measurements that adjust for certain items outside of the ordinary course of its business. To enable interested parties to reconcile non-GAAP measures to the Company's GAAP financial statements, the Company clearly defines EBITDA and adjusted EBITDA, and quantifies all other adjustments to GAAP measurements (see Schedule B). The Company provides EBITDA information, a widely used non-GAAP financial measurement, to assist in analyzing the Company's financial performance and in comparing the Company to its competitors. The Company provides other non-GAAP financial measurements, such as adjusted EBITDA, that adjust for certain items outside of the ordinary course of business in order to assist in comparing the Company's current performance to its historical performance. These adjustments typically reflect non-recurring items but sometimes reflect items, such as dispositions of assets and restructuring charges that are not technically non-recurring but are outside of the ordinary course of operations. Investors should note that such measures may not be comparable to similarly titled measures used by other companies, and investors are encouraged to use this information only in connection with the information contained in the Company's GAAP financial statements. Certain statements made in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause the Company's actual results or performance to materially differ from any future results or performance expressed or implied by such forward-looking statements. These statements involve risks and uncertainties, including, without limitation, risks and uncertainties regarding reimbursement reductions and the Company's ability to mitigate the impact of the reductions. These risks and uncertainties are in addition to other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company cautions investors that any forward-looking statements made by the Company are not necessarily indicative of future performance. The Company is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet services. AMERICAN HOMEPATIENT, INC. SCHEDULE A SUMMARY FINANCIAL DATA (In thousands, except per share data)
THREE MONTHS ENDED MARCH 31, ---------------------------- 2004 2003 ---------- ----------- (UNAUDITED) Revenues, net $ 84,773 $ 82,507 Cost of sales and related services 18,617 17,293 Cost of rentals and other revenues, including rental equipment depreciation 9,343 8,426 Operating expenses, including bad debt expense 47,059 47,236 General and administrative expenses 4,289 4,546 Earnings from unconsolidated joint ventures (1,052) (1,230) Depreciation, excluding rental equipment, and amortization 833 925 Interest expense (income), net 4,650 (72) Other (income) expense, net (25) 94 -------- -------- INCOME FROM OPERATIONS BEFORE REORGANIZATION ITEMS AND INCOME TAXES 1,059 5,289 Reorganization items -- 852 -------- -------- INCOME FROM OPERATIONS BEFORE INCOME TAXES 1,059 4,437 Provision for income taxes 100 100 -------- -------- NET INCOME $ 959 $ 4,337 ======== ======== Basic income per common share $ 0.06 $ 0.26 Diluted income per common share $ 0.06 $ 0.24
MARCH 31, DECEMBER 31, 2004 2003 -------- ------------ (UNAUDITED) Cash and equivalents $ 6,919 $ 2,571 Restricted cash 650 400 Net patient receivables 58,137 56,940 Other receivables 1,340 1,935 -------- -------- Total receivables 59,477 58,875 Other current assets 18,102 20,606 -------- -------- Total current assets 85,148 82,452 Property and equipment, net 57,891 56,831 Goodwill 121,834 121,834 Other assets 20,634 22,923 -------- -------- TOTAL ASSETS $285,507 $284,040 ======== ======== Accounts payable $ 20,172 $ 17,518 Current portion of long-term debt and capital leases 10,998 11,720 Other current liabilities 32,045 33,097 -------- -------- Total current liabilities 63,215 62,335 Long-term debt and capital leases, less current portion 251,194 251,194 3,882 4,262 -------- -------- Total liabilities 318,291 317,791 Minority interest 506 498 Total shareholders' deficit (33,290) (34,249) -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $285,507 $284,040 ======== ========
AMERICAN HOMEPATIENT, INC. SCHEDULE B RECONCILIATION OF GAAP FINANCIAL STATEMENTS TO NON-GAAP FINANCIAL MEASUREMENTS (Unaudited) (In thousands)
THREE MONTHS ENDED MARCH 31, ---------------------------- 2004 2003 -------- -------- Net cash provided by operating activities $ 10,399 $ 9,862 Adjustments to reconcile cash provided by operating activities to EBITDA: Equity in earnings of unconsolidated joint ventures 553 696 Minority interest (70) (88) Changes in assets and liabilities (4,054) (678) Reorganization items paid, net of reorganization expense 475 211 Provision for income taxes 100 100 Interest expense (income), net 4,650 (72) -------- -------- Earnings before interest, taxes, depreciation, and amortization (EBITDA) $ 12,053 $ 10,031 Add: Reorganization items -- 852 Other (income) expense, net (25) 94 -------- -------- Adjusted EBITDA (EBITDA before reorganization items and other (income) expense, net) $ 12,028 $ 10,977 ======== ========