LAKE FOREST, Calif., Feb. 10, 2005 (PRIMEZONE) -- Apria Healthcare Group Inc. (NYSE:AHG), the nation's leading home healthcare company, today announced its financial results for the quarter and fiscal year ended December 31, 2004. Revenues were $376.4 million in the fourth quarter, a 5.7% increase over revenues of $356.3 million for the comparable period in 2003. Net income for the fourth quarter was $27.3 million or $.55 per share (diluted), compared to $29.9 million or $.58 per share for the fourth quarter of 2003. Revenues for the year ended December 31, 2004 were $1,451 million, a 5.1% increase over 2003 revenues of $1,381 million. Net income for 2004 was $114.0 million or $2.27 per share, compared to $116.0 million or $2.15 per share in 2003.
Adjustment for Comparability
Reported net income for the quarter and year ended December 31, 2004 includes the write-off of unamortized debt issuance costs of $2.7 million, associated with the November 2004 refinancing of the Company's bank loans. Management believes it is useful to compare results for the 2003 and 2004 periods after adjusting 2004 net income and earnings per share to exclude this charge. For the fourth quarter 2004, net income as so adjusted would be $29.0 million or $.59 per share and for the full year 2004, net income as so adjusted would be $115.7 million or $2.31 per share.
As previously reported, the Company's overall revenue growth rate and earnings were impacted by the Medicare respiratory medication reimbursement cuts ($3.7 million for the fourth quarter and $15.2 million for the year) and the Company's decision not to renew its contract with Gentiva CareCentrix, Inc. Excluding those effects, revenue growth was 10.8% for the fourth quarter and 9.6% for the year.
Earnings before interest, taxes, depreciation and amortization (EBITDA) was $88.1 million for the fourth quarter of 2004 compared to $89.2 million for the fourth quarter of 2003. EBITDA is presented as a supplemental performance measure and is not meant to be considered as an alternative to net income or cash flows from operating activities or any other measure calculated in accordance with generally accepted accounting principles. Further, EBITDA may not be comparable to similarly titled measures used by other companies. A table reconciling EBITDA to net income is presented at the bottom of the condensed consolidated statements of income included in this release.
During the fourth quarter, Apria closed one acquisition for $1.6 million, bringing the total number of acquisitions for the year to 27 for an aggregate consideration of $148.7 million. Days sales outstanding improved to 52 days at December 31, 2004 from 55 days reported at September 30, 2004. This trend is primarily attributable to the timing of acquisitions in 2004. Delays in billing occur as patient data from acquisitions is converted to Apria's systems and as Medicare provider numbers for newly acquired locations are obtained.
"In the third quarter of 2004, we reported an increase in operating expenses due primarily to integration activities related to the unprecedented number of acquisitions that we closed in the second and third quarters, and one-time costs associated with Sarbanes-Oxley compliance activities and other consulting expenses," said Lawrence M. Higby, Apria's Chief Executive Officer. "While we are still incurring integration costs for the late third quarter acquisitions, we are happy to report that fourth quarter sales, distribution and administrative expenses have decreased to 54.5% of net revenues, compared to 55.0% in the third quarter. When comparing the fourth quarter of 2004 to the 53.2% reported in the fourth quarter of 2003, the issues noted above must be considered in conjunction with the lower revenue base resulting from the Medicare reimbursement reductions. We continue to monitor our expenses as we introduce a number of productivity initiatives aimed at lowering our costs."
2005 Outlook
In December 2004, The Centers for Medicare and Medicaid Services ("CMS") announced that the Office of Inspector General ("OIG") needed to collect additional information before the 2005 fee schedules for oxygen could be finalized. CMS further announced in January 2005, that since the data from the OIG had not yet been received, CMS will continue to pay the 2004 fee schedule amounts for oxygen claims until the 2005 fee schedules are finalized. CMS noted that 2005 claims that were paid based on 2004 fee schedule amounts would not be retroactively adjusted. When CMS determines this fee, the Company will provide earnings per share guidance for 2005.
Annual Meeting of Stockholders
The Company also announced that its Board of Directors has established March 11, 2005 as the record date for its Annual Meeting of Stockholders, which will be held on April 20, 2005. The only scheduled item of business for the Annual Meeting will be the reelection of seven of its Directors. Two of the Company's current Directors, Ralph Whitworth, Chairman, and Beverly Benedict Thomas, have decided not to stand for reelection.
In commenting on his decision, Mr. Whitworth, a principal of Relational Investors, LLC, said, "Serving as Apria's Chairman during its spectacular transformation since April of 1998 is among the most satisfying experiences in my business career. Apria is now the unrivaled industry leader and our stock price has appreciated 330%, giving our shareholders a 20% annualized return over that period. My decision does not reflect my view of Apria's future prospects, but rather my evolving priorities. With Apria solidly positioned for continued excellent performance, I will now be able to devote additional attention to more pressing ongoing projects."
The Board has elected David L. Goldsmith, who has served on Apria's Board for 18 years, to be Chairman of the Board following the Annual Meeting of Stockholders. "Besides being the largest individual shareholder on Apria's Board," noted Mr. Whitworth, "David has an ideal combination of leadership qualities and industry expertise. He is superbly qualified to lead Apria's Board as it addresses the opportunities and challenges ahead. He has my unequivocal endorsement and the unanimous support of the Board."
Apria provides home respiratory therapy, home infusion therapy and home medical equipment through approximately 475 branches serving patients in 50 states. With over $1.4 billion in annual revenues, it is the nation's leading homecare company.
This release may contain statements regarding anticipated future developments that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Results may differ materially as a result of the risk factors included in the Company's filings with the Securities and Exchange Commission and other factors over which the Company has no control.
(Financial tables attached)
APRIA HEALTHCARE GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, December 31,
(dollars in thousands) 2004 2003
---------------------------------------------------------------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 39,399 $ 160,553
Accounts receivable, net
of allowance for
doubtful accounts 219,364 196,413
Inventories, net 40,295 29,089
Other current assets 49,252 43,280
---------- ----------
TOTAL CURRENT ASSETS 348,310 429,335
PATIENT SERVICE
EQUIPMENT, NET 224,801 209,551
PROPERTY, EQUIPMENT &
IMPROVEMENTS, NET 51,012 50,192
OTHER ASSETS, NET 483,541 354,357
---------- ----------
TOTAL ASSETS $1,107,664 $1,043,435
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and
accrued liabilities $ 173,435 $ 160,738
Current portion of
long-term debt 4,901 31,522
---------- ----------
TOTAL CURRENT
LIABILITIES 178,336 192,260
LONG-TERM DEBT, net of
current portion 474,846 469,241
OTHER NON-CURRENT
LIABILITIES 48,298 15,986
---------- ----------
TOTAL LIABILITIES 701,480 677,487
STOCKHOLDERS' EQUITY 406,184 365,948
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,107,664 $1,043,435
========== ==========
APRIA HEALTHCARE GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Years Ended
December 31, December 31,
--------------------- ---------------------
(dollars in thousands,
except per share data) 2004 2003 2004 2003
---------------------------------------------------------------------
Respiratory therapy $ 255,822 $ 241,595 $ 990,857 $ 930,406
Infusion therapy 63,911 61,205 246,662 241,860
Home medical
equipment/other 56,704 53,469 213,930 208,679
---------- ---------- ---------- ----------
NET REVENUES 376,437 356,269 1,451,449 1,380,945
GROSS PROFIT 268,636 256,656 1,043,830 1,004,202
Provision for
doubtful accounts 10,019 12,931 48,567 51,154
Selling,
distribution and
administrative
expenses 205,000 189,564 787,496 747,799
Amortization of
intangible assets 2,073 1,507 6,712 3,650
---------- ---------- ---------- ----------
OPERATING INCOME 51,544 52,654 201,055 201,599
Interest expense,
net 4,901 5,021 20,020 15,026
Write-off of debt
issuance costs 2,730 -- 2,730 --
---------- ---------- ---------- ----------
INCOME BEFORE
TAXES 43,913 47,633 178,305 186,573
Income tax expense 16,645 17,736 64,297 70,581
---------- ---------- ---------- ----------
NET INCOME $ 27,268 $ 29,897 $ 114,008 $ 115,992
========== ========== ========== ==========
Income per common
share- assuming
dilution $ 0.55 $ 0.58 $ 2.27 $ 2.15
========== ========== ========== ==========
Weighted average
number of common
shares
outstanding 49,326 51,888 50,159 54,066
Reconciliation --
EBITDA:
Reported net
income $ 27,268 $ 29,897 $ 114,008 $ 115,992
Add back:
Interest
expense, net 4,901 5,021 20,020 15,026
Add back:
Write-off debt
issuance costs 2,730 -- 2,730 --
Add back: Income
tax expense 16,645 17,736 64,297 70,581
Add back:
Depreciation 34,439 35,021 140,762 135,952
Add back:
Amortization of
intangible
assets 2,073 1,507 6,712 3,650
---------- ---------- ---------- ----------
Adjusted EBITDA $ 88,056 $ 89,182 $ 348,529 $ 341,201
========== ========== ========== ==========
Reconciliation --
adjusted net
income and EPS:
Reported net
income $ 27,268 $ 29,897 $ 114,008 $ 115,992
Add back:
Write-off debt
issuance costs,
net of taxes 1,695 -- 1,695 --
---------- ---------- ---------- ----------
Adjusted net
income $ 28,963 $ 29,897 $ 115,703 $ 115,992
========== ========== ========== ==========
Reported EPS --
assuming dilution $ 0.55 $ 0.58 $ 2.27 $ 2.15
Add back:
Write-off of debt
issuance costs,
net of taxes 0.04 -- 0.04 --
---------- ---------- ---------- ----------
Adjusted EPS $ 0.59 $ 0.58 $ 2.31 $ 2.15
========== ========== ========== ==========
APRIA HEALTHCARE GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Years Ended
December 31,
-------------------------
(dollars in thousands) 2004 2003
---------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 114,008 $ 115,992
Items included in net
income not requiring
cash:
Provision for
doubtful accounts 48,567 51,154
Depreciation and
amortization 147,474 139,602
Deferred income
taxes and other 23,384 17,197
Changes in operating
assets and liabilities,
exclusive of effects of
acquisitions (57,422) (60,040)
--------- ---------
NET CASH PROVIDED
BY OPERATING
ACTIVITIES 276,011 263,905
--------- ---------
INVESTING ACTIVITIES
Purchases of patient
service equipment and
property, equipment
and improvements,
exclusive of effects
of acquisitions (141,755) (144,007)
Proceeds from
disposition of assets 211 774
Cash paid for
acquisitions,
including payments of
deferred
consideration (144,234) (99,403)
--------- ---------
NET CASH USED IN
INVESTING
ACTIVITIES (285,778) (242,636)
--------- ---------
FINANCING ACTIVITIES
Net payments on debt (28,346) 225,066
Capitalized debt
issuance costs (2,775) (6,649)
Outstanding checks
included in accounts
payable 1,419 632
Issuance of common
stock 18,315 12,323
Repurchases of common
stock, net (100,000) (118,471)
--------- ---------
NET CASH (USED IN)
PROVIDED BY
FINANCING ACTIVITIES (111,387) 112,901
--------- ---------
NET DECREASE IN CASH
AND CASH EQUIVALENTS (121,154) 134,170
Cash and cash
equivalents at
beginning of year 160,553 26,383
--------- ---------
CASH AND CASH
EQUIVALENTS AT END OF
PERIOD $ 39,399 $ 160,553
========= =========