Odyssey HealthCare Reports First Quarter 2010 Results

DALLAS--(BUSINESS WIRE)-- Odyssey HealthCare, Inc. (NASDAQ: ODSY), one of the largest providers of hospice care in the United States, today announced financial results for the first quarter ended March 31, 2010.

For the first quarter of 2010, net patient service revenue from continuing operations increased 2.4% to $171.5 million, compared with $167.5 million for the first quarter of 2009. The Company’s net income attributable to Odyssey stockholders for the first quarter of 2010 was $13.4 million, or $0.40 per diluted share, as compared with $8.7 million, or $0.26 per diluted share, for the first quarter of 2009. The Company’s EBITDA from continuing operations for the first quarter of 2010 was $25.1 million, compared with $17.1 million for the first quarter of 2009.

In commenting on the results, Robert A. Lefton, president and chief executive officer of Odyssey HealthCare, said, “Overall, I am pleased with our results for the first quarter of 2010, with net income attributable to Odyssey stockholders increasing by 53.7% over the first quarter of 2009. I am particularly pleased with our expense management during the quarter, with adjusted operating expenses per patient day decreasing from $137.16 for the first quarter of 2009 to $132.03 for the first quarter of 2010. On a sequential basis, adjusted operating expenses per patient day for the first quarter of 2010 were essentially flat compared with $132.12 for the fourth quarter of 2009. With respect to the Medicare cap, our admission volume helped reduce our Medicare cap contractual adjustment to 0.7% of gross patient service revenue for the first quarter of 2010 as compared with 0.8% for the first quarter of 2009 and 1.1% for the fourth quarter of 2009.”

In closing, Mr. Lefton added, “Due to our progress in reducing claims subject to additional document requests from our Medicare fiscal intermediaries, we reduced our bad debt expense as a percentage of net revenue to 0.9% for the first quarter of 2010 as compared with 1.4% for the first quarter of 2009 and 1.5% for the fourth quarter of 2009. As a result of our good operating results and collection efforts, we ended the first quarter of 2010 with a cash balance of $141.9 million.”

The Company also announced that its hospice programs in Alameda County, California, and Salem, Oregon, received their Medicare certification during the first quarter of 2010.

Conference Call

Odyssey will host a conference call to discuss the first quarter 2010 results on Thursday, April 29, 2010, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time). The call will be broadcast live and can be accessed through the Investor Relations section of the Company’s website at www.odsyhealth.com or at www.earnings.com. An online archive of the broadcast, commencing approximately two hours after the live call, will also be available for two weeks.

Based in Dallas, Texas, Odyssey is one of the largest providers of hospice care in the country in terms of both average daily patient census and number of locations. Odyssey seeks to improve the quality of life of terminally ill patients and their families by providing care directed at managing pain and other discomforting symptoms and by addressing the psychosocial and spiritual needs of patients and their families.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is a non-GAAP financial measure included in this press release and is reconciled to the comparable GAAP financial measure in the tables attached to this press release.

Certain statements contained in this press release and that will be contained in the presentation are forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements are based on management’s current expectations and are subject to known and unknown risks, uncertainties and assumptions which may cause the forward-looking events and circumstances discussed in this press release and in the presentation to differ materially from those anticipated or implied by the forward-looking statements. Additional risks, uncertainties and assumptions include, but are not limited to, general market conditions; adverse changes in reimbursement levels under Medicare and Medicaid programs; government and private party legal proceedings and investigations; adverse changes in the Medicare payment cap limits and increases in the Company’s estimated Medicare cap contractual adjustment; declines in patient census growth; increases in inflation including inflationary increases in patient care costs; the Company’s ability to effectively implement the Company’s 2010 operations and development strategies; the Company’s dependence on patient referral sources and potential adverse changes in patient referral practices of those referral sources; the Company’s ability to successfully integrate and operate acquired hospice programs; the ability to attract and retain healthcare professionals; increases in the Company’s bad debt expense due to various factors including an increase in the volume of pre-payment reviews by the Company’s Medicare fiscal intermediaries; adverse changes in the state and federal licensure and certification laws and regulations; adverse results of regulatory surveys; delays in licensure and/or certification; cost of complying with the terms and conditions of the Company’s corporate integrity agreement; adverse changes in the competitive environment in which the Company operates; changes in state or federal income, franchise or similar tax laws and regulations; adverse impact of natural disasters; changes in the Company’s estimate of additional stock-based compensation costs; and the disclosures contained under the headings “Government Regulation and Payment Structure” in “Item 1. Business” and “Item 1A. Risk Factors” of Odyssey’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2010, and in its other filings with the Securities and Exchange Commission. Many of these factors are beyond the ability of the Company to control or predict. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements, which reflect management’s views only as of the date hereof. The Company undertakes no obligation to revise or update any of the forward-looking statements or publicly announce any updates or revisions to any of the forward-looking statements contained in this press release and in the presentation to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions, circumstances or assumptions underlying such statements.

 

ODYSSEY HEALTHCARE, INC. AND SUBSIDIARIES

UNAUDITED SELECTED OPERATING DATA

 
    Three Months Ended

March 31,

2010     2009
Continuing Operations:(1)
Admissions 12,744 12,702
Discharges 12,692 12,725
Average daily census 12,323 12,186
Discharge average length of stay 87 83
Gross revenue per patient day $ 159.22 $ 158.03
Medicare cap as % of gross revenue 0.7 % 0.8 %
Net revenue per patient day $ 154.63 $ 152.75
Operating expense per patient day $ 133.66 $ 138.25
Adjusted operating expense per patient day(2) $ 132.03 $ 137.16
Bad debt expense as % of net revenue 0.9 % 1.4 %
 
Same-Facility:(3)
Admissions 12,710 12,702
Average daily census 12,269 12,186
Average length of stay 87 83
 

(1)

Continuing operations excludes the operations of hospices that the Company classifies as discontinued operations.

(2)

Adjusted operating expense per patient day for the three months ended March 31, 2010, excludes depreciation and amortization expenses of $1.58 and $0.05 per patient day of care, respectively. Adjusted operating expense per patient day for the three months ended March 31, 2009, excludes depreciation and amortization expenses of $1.03 and $0.06 per patient day of care, respectively.

(3)

Same-facility information includes Odyssey hospice programs that have been in operation for the entire period of each period presented and Medicare certified for at least 12 months.
 

ODYSSEY HEALTHCARE, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

 
    Three Months Ended

March 31,

2010     2009
Net patient service revenue $ 171,496 $ 167,532
Operating expenses:
Direct hospice care 96,401 98,455
General and administrative – hospice care 32,694 33,800
General and administrative – support center 15,801 15,805
Provision for uncollectible accounts 1,533 2,364
Depreciation 1,745 1,129
Amortization   58     70  
Income from continuing operations before other income (expense) 23,264 15,909
 
Other income (expense):
Interest income 67 166
Interest expense   (1,438 )   (1,885 )
  (1,371 )   (1,719 )
Income from continuing operations before provision for income taxes 21,893 14,190
Provision for income taxes   8,115     5,283  
Income from continuing operations 13,778 8,907
Loss from discontinued operations, net of income taxes   (126 )   (52 )
Net income 13,652 8,855
Less: Net income attributable to noncontrolling interests   253     136  
Net income attributable to Odyssey stockholders $ 13,399   $ 8,719  
 
Income (loss) per common share:
Basic:
Continuing operations attributable to Odyssey stockholders $ 0.41 $ 0.27
Discontinued operations attributable to Odyssey stockholders   (0.01 )    
Net income attributable to Odyssey stockholders $ 0.40   $ 0.27  
Diluted:
Continuing operations attributable to Odyssey stockholders $ 0.40 $ 0.27
Discontinued operations attributable to Odyssey stockholders       (0.01 )
Net income attributable to Odyssey stockholders $ 0.40   $ 0.26  
 
Weighted average shares outstanding:
Basic 33,344 32,801
Diluted 33,790 32,950
 
Amounts attributable to Odyssey stockholders:
Income from continuing operations, net of income taxes $ 13,525 $ 8,771
Loss from discontinued operations, net of income taxes   (126 )   (52 )
Net income $ 13,399   $ 8,719  
 

ODYSSEY HEALTHCARE, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 
    March 31,

2010

    Dec. 31,

2009

ASSETS
Current assets:
Cash and cash equivalents $ 141,909 $ 128,632

Accounts receivable from patient services, net of allowance for uncollectible accounts of $13,106 and $12,462 at March 31, 2010, and December 31, 2009, respectively

104,601 110,593
Income taxes receivable 352
Deferred tax assets 10,805 10,235
Prepaid expenses and other current assets   5,011     6,017  
Total current assets 262,326 255,829
Property and equipment, net of accumulated depreciation 19,907 20,700
Deferred loan costs, net 2,851 3,033
Long-term investments 12,434 12,425
Intangibles, net of accumulated amortization 19,193 19,251
Goodwill   192,057     191,766  
Total assets $ 508,768   $ 503,004  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 3,002 $ 4,016
Accrued compensation 26,090 31,729
Accrued nursing home costs 17,870 18,144
Accrued Medicare cap contractual adjustments 13,399 18,798
Income taxes payable 4,664 1,504
Other accrued expenses 43,135 42,683
Current maturities of long-term debt   41,625     38,675  
Total current liabilities 149,785 155,549
Long-term debt, less current maturities 71,999 76,527
Deferred tax liability 15,028 15,171
Other liabilities 4,345 4,597
Commitments and contingencies
Equity:
Odyssey stockholders’ equity:
Common stock, $0.001 par value: 75,000,000 shares authorized, 38,894,728 and 38,549,833 shares issued at March 31, 2010, and December 31, 2009, respectively 39 39
Additional paid-in capital 128,637 125,716
Retained earnings 207,830 194,431
Accumulated other comprehensive loss, net of income taxes (1,367 ) (1,481 )
Treasury stock, at cost, 5,347,072 shares held at March 31, 2010 and December 31, 2009   (69,954 )   (69,954 )
Total Odyssey stockholders’ equity 265,185 248,751
Noncontrolling interests   2,426     2,409  
Total equity   267,611     251,160  
Total liabilities and equity $ 508,768   $ 503,004  
 

ODYSSEY HEALTHCARE, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 
    Three Months Ended

March 31,

2010     2009
Operating Activities:
Net income attributable to Odyssey stockholders $ 13,399 $ 8,719
Adjustments to reconcile net income to net cash provided by operating activities and discontinued operations:
Loss from discontinued operations, net of income taxes 126 52
Net income attributable to noncontrolling interests 253 136
Loss on disposal of property and equipment 6
Depreciation and amortization 1,803 1,199
Amortization of deferred loan costs 182 183
Share-based compensation expense 1,557 1,093
Deferred income taxes (777 ) 3,808
Provision for uncollectible accounts 1,533 2,364
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable from patient services 4,458 (7,108 )
Prepaid expenses and other current assets 1,266 909
Accounts payable, accrued nursing home costs, accrued Medicare cap contractual adjustments and other accrued expenses   (10,898 )   (3,497 )
Net cash provided by operating activities and discontinued operations   12,908     7,858  
 
Investing Activities:
Cash paid for acquisitions, net of cash acquired (219 ) (205 )
Purchases of property and equipment, net   (980 )   (1,648 )
Net cash used in investing activities   (1,199 )   (1,853 )
 
Financing Activities:
Proceeds from exercise of stock options 1,242 26
Cash paid for partnership distributions (236 ) (31 )
Tax benefit from share-based compensation 2,140 9
Payments on credit facility   (1,578 )   (1,598 )
Net cash provided by (used in) financing activities   1,568     (1,594 )
 
Net increase in cash and cash equivalents 13,277 4,411
Cash and cash equivalents, beginning of period   128,632     56,043  
Cash and cash equivalents, end of period $ 141,909   $ 60,454  
 

ODYSSEY HEALTHCARE, INC. AND SUBSIDIARIES

UNAUDITED EBITDA RECONCILIATION

(in thousands)

 

This press release includes the non-GAAP financial measure of EBITDA. The following table reconciles this non-GAAP financial measure to net income attributable to Odyssey stockholders, which Odyssey believes is the most comparable GAAP financial measure:
 
   

Three Months Ended

March 31,

2010     2009
Net income attributable to Odyssey stockholders $ 13,399 $ 8,719
Add:
Net income attributable to noncontrolling interests 253 136
Loss from discontinued operations, net of taxes 126 52
Provision for income taxes 8,115 5,283
Interest expense 1,438 1,885
Interest income (67 ) (166 )
Depreciation 1,745 1,129
Amortization   58     70  
EBITDA $ 25,067   $ 17,108  



CONTACT:

Odyssey HealthCare, Inc.
R. Dirk Allison, 214-922-9711
Senior Vice President and Chief Financial Officer

KEYWORDS:   United States  North America  Texas

INDUSTRY KEYWORDS:   Health  Hospitals  Other Health  Nursing  General Health

MEDIA:

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