LAKE FOREST, Calif., March 11, 2013 (GLOBE NEWSWIRE) -- Apria Healthcare Group Inc. ("Apria" or the "Company"), a quality, cost-efficient provider of home healthcare products and services in the United States, today announced its financial results for the quarter and year ended December 31, 2012.
Recent Developments
Realignment of Management. As previously disclosed, the Company recently undertook certain management changes as part of its ongoing efforts to reduce corporate overhead and to better align management with the Company's two business segments: (1) home respiratory therapy/ home medical equipment and (2) home infusion therapy. These changes included the following:
- Effective November 29, 2012, John G. Figueroa was appointed Chief Executive Officer of the Company and Chairman of the Board of Directors, succeeding Norman C. Payson, M.D. In addition, effective November 29, 2012, Mr. Figueroa also assumed the role of Chief Executive Officer of the home infusion therapy segment, succeeding Daniel E. Greenleaf, who left the Company to pursue other business opportunities.
- On November 29, 2012, Dr. Payson retired from his positions as Chief Executive Officer and Chairman of the Board of Directors and, effective November 29, 2012, he entered into a services agreement with the Company pursuant to which he has agreed to act as a senior advisor to the Company and certain of its affiliates and has agreed to continue to serve as a member of our Board of Directors.
- Chris A. Karkenny, the Company's former Executive Vice President and Chief Financial Officer, left the Company on December 31, 2012 to pursue other business opportunities, and Peter A. Reynolds, the Chief Accounting Officer and Controller, assumed the role of Principal Financial Officer of the Company on January 1, 2013, in addition to his role as Chief Accounting Officer and Controller.
Restatement. The financial results disclosed in this earnings release reflect the announced restatement of the Company's financial results for the years ended December 31, 2011 and 2010, as well as the Company's interim condensed consolidated financial statements for each of the fiscal quarters during the years ended December 31, 2012, 2011 and 2010. A full description of the restatement, which pertains to (i) the manner in which the Company accounts for cash receipts from the sale of patient service equipment in its consolidated statement of cash flows and (ii) a workers compensation adjustment, is included in the Company's Current Report on Form 8-K filed today with the Securities and Exchange Commission ("SEC") and in the Annual Report on Form 10-K filed today with the SEC. The restatement resulted in no change to the Company's total cash flows for the years ended December 31, 2011 and 2010 and also did not impact the Company's consolidated statements of operations for the years ended December 31, 2011 and 2010.
2012 Fourth Quarter Highlights
Net revenues in the three months ended December 31, 2012 were $624.4 million, compared to $603.4 million in the three months ended December 31, 2011, an increase of $21.0 million or 3.5%. Revenue for the three months ended December 31, 2012 increased primarily due to increased volume in the home infusion therapy segment, partially offset by decreased volume in the home respiratory therapy and home medical equipment segment.
Adjusted EBITDA before projected cost savings and synergies1 for the three months ended December 31, 2012 was $73.9 million.
Net loss for the three months ended December 31, 2012 was $52.4 million. The Company's net loss for the three months ended December 31, 2012 reflects the following non-cash impairment charge based on the results of our impairment testing as of December 31, 2012 and the tax impact associated with the impairment charge:
(i) Trade name impairment of $70.0 million, all of which relates to the home respiratory therapy/home medical equipment reporting unit; and
(ii) Tax benefit of $27.6 million relating to the intangible assets impairment.
All of these items resulted in a $42.4 million increase in our net loss in the three months ended December 31, 2012.
EBITDA for the three months ended December 31, 2012 was $(16.0) million, which includes a $70.0 million non-cash impairment charge described above.
Full Year 2012 Highlights
Net revenues in the year ended December 31, 2012 were $2.44 billion, compared to $2.30 billion in the year ended December 31, 2011, an increase of $134.8 million or 5.9%. Revenue for the year ended December 31, 2012 increased primarily due to increased volume in the home infusion therapy segment and the home respiratory therapy and home medical equipment segment, as well as the acquisition of Praxair assets in March 2011.
Adjusted EBITDA before projected cost savings and synergies1 for the year ended December 31, 2012 was $269.4 million.
Net loss for the year ended December 31, 2012 was $260.4 million. The Company's net loss for 2012 reflects the following non-cash impairment charge based on the results of our impairment testing as of December 31, 2012 ($280.0 million charge in Q3 2012 and $70.0 million charge in Q4 2012) and the tax impact associated with the impairment charge:
(i) Trade name impairment of $350.0 million, $270.0 million of which relates to the home respiratory therapy/home medical equipment reporting unit and $80.0 million is allocated to the home infusion therapy reporting unit; and
(ii) Tax benefit of $131.6 million relating to the intangible assets impairment.
All of these items resulted in a $218.4 million increase in our net loss in the year ended December 31, 2012.
EBITDA for the year ended December 31, 2012 was $(143.9) million, which included the $350.0 million non-cash impairment charge described above.
Certain Credit Statistics
Our net leverage ratio, defined as the ratio of net debt to Adjusted EBITDA, was 3.7x at December 31, 2012.
Conference Call
As previously announced, Apria will hold a conference call to discuss its fourth quarter and fiscal 2012 results on March 11, 2013 at 1:00 p.m. (Eastern Daylight Time). The conference call can be accessed live over the phone by dialing 866-502-0105 or, for international callers, 210-591-1110 or through the Investor Relations page of the Company's website at www.apria.com. The passcode for the live call is Apria.
A replay of the conference call will be available two hours after the call and can be accessed by dialing 855-859-2056 or, for international callers, 404-537-3406 or through the Investor Relations page of the Company's website. The passcode for the replay is 20562744. The replay will be available until March 25, 2013.
A financial results presentation will be made available immediately prior to the call on the Investor Relations page of the Company's website at www.apria.com.
1This press release includes several metrics, including EBITDA, Adjusted EBITDA and Adjusted EBITDA before projected cost savings and synergies that are not calculated in accordance with Generally Accepted Accounting Principles ("GAAP"). See "Definition of Terms and Reconciliation of Non-GAAP Financial Measures" section at the end of this press release for the definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDA before projected cost savings and synergies and their reconciliation to net income (loss).
Forward Looking Statements
Statements contained herein that are not historical facts and that reflect the current view of Apria's management about future events and financial performance are hereby identified as "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Some of these statements can be identified by terms and phrases such as "anticipate," "believe," "intend," "estimate," "expect," "continue," "could," "should," "may," "plan," "project," "predict" and similar expressions. The Company cautions that such "forward looking statements," including without limitation, those relating to the Company's future business prospects, revenue, working capital, professional liability expense, liquidity, capital needs, interest costs and income, wherever they occur in this or in other statements attributable to the Company, are necessarily estimates reflecting the judgment of the Company's senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the "forward looking statements." Factors that could cause our actual results to differ materially from those expressed or implied in such forward looking statements include but are not limited to current or future government regulation of the healthcare industry, exposure to professional liability lawsuits and governmental agency investigations, the adequacy of insurance coverage and insurance reserves, control issues in the Company's internal controls and procedures, as well as other factors detailed under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition" in the Company's filings with the Securities and Exchange Commission. The Company's "forward looking statements" speak only as of the date hereof and the Company disclaims any intent or obligation to update "forward looking statements" herein to reflect changed assumptions, the occurrence of unanticipated events, or changes to future operating results over time.
About Apria Healthcare Group Inc.
Apria provides home respiratory therapy, home infusion therapy and home medical equipment services through approximately 530 locations in the United States. With $2.4 billion in annual revenues, it is one of the nation's leading home healthcare companies. For more information, visit www.apria.com or www.coramhc.com.
| Apria Healthcare Group Inc. | |||
| Condensed Consolidated Balance Sheets | |||
| December 31, 2012 | December 31, 2011 | ||
| (As Restated) | |||
| (in thousands, except share data) | |||
| ASSETS | |||
| CURRENT ASSETS | |||
| Cash and cash equivalents | $ 27,080 | $ 29,096 | |
| Accounts receivable, less allowance for doubtful accounts of $53,017 and $53,934 at December 31, 2012 and December 31, 2011, respectively | 344,421 | 337,212 | |
| Inventories | 68,075 | 57,683 | |
| Deferred income taxes | — | 168 | |
| Deferred expenses | 3,798 | 3,681 | |
| Prepaid expenses and other current assets | 16,890 | 23,927 | |
| TOTAL CURRENT ASSETS | 460,264 | 451,767 | |
| PATIENT SERVICE EQUIPMENT, less accumulated depreciation of $185,774 and $176,526 at December 31, 2012 and December 31, 2011, respectively | 186,460 | 166,769 | |
| PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET | 76,823 | 83,768 | |
| GOODWILL | 258,725 | 258,725 | |
| INTANGIBLE ASSETS, NET | 133,781 | 485,366 | |
| DEFERRED DEBT ISSUANCE COSTS, NET | 30,207 | 44,636 | |
| OTHER ASSETS | 26,448 | 11,513 | |
| TOTAL ASSETS | $ 1,172,708 | $ 1,502,544 | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | |||
| CURRENT LIABILITIES | |||
| Accounts payable | $ 157,530 | $ 135,572 | |
| Accrued payroll and related taxes and benefits | 70,547 | 69,217 | |
| Deferred income taxes | 986 | — | |
| Other accrued liabilities | 74,464 | 66,694 | |
| Deferred revenue | 27,785 | 28,649 | |
| Current portion of long-term debt | 25,195 | 10,301 | |
| TOTAL CURRENT LIABILITIES | 356,507 | 310,433 | |
| LONG-TERM DEBT, net of current portion | 1,017,515 | 1,017,755 | |
| DEFERRED INCOME TAXES | 68,907 | 200,225 | |
| INCOME TAXES PAYABLE AND OTHER NON-CURRENT LIABILITIES | 61,203 | 49,480 | |
| TOTAL LIABILITIES | 1,504,132 | 1,577,893 | |
| COMMITMENTS AND CONTINGENCIES | |||
| STOCKHOLDERS' DEFICIT | |||
| Common stock, $0.01 par value: 1,000 shares authorized; 100 shares issued at December 31, 2012 and December 31, 2011 | — | — | |
| Additional paid-in capital | 695,211 | 690,870 | |
| Accumulated deficit | (1,026,635) | (766,219) | |
| TOTAL STOCKHOLDERS' DEFICIT | (331,424) | (75,349) | |
| $ 1,172,708 | $ 1,502,544 | ||
| Apria Healthcare Group Inc. | ||||
| Condensed Consolidated Statements of Operations | ||||
|
Three Months Ended December 31, |
Year Ended December 31, |
|||
| 2012 | 2011 | 2012 | 2011 | |
| (Unaudited) | ||||
| (in thousands) | ||||
| Net revenues: | ||||
| Fee for service arrangements | $ 578,537 | $ 561,183 | $ 2,254,467 | $ 2,133,487 |
| Capitation arrangements | 45,841 | 42,231 | 181,769 | 167,892 |
| TOTAL NET REVENUES | 624,378 | 603,414 | 2,436,236 | 2,301,379 |
| Costs and expenses: | ||||
| Cost of net revenues: | ||||
| Product and supply costs | 225,911 | 199,287 | 863,140 | 757,850 |
| Patient service equipment depreciation | 20,098 | 20,916 | 81,481 | 94,386 |
| Non-cash impairment of patient service equipment – home respiratory therapy/home medical equipment reporting unit | — | 45,500 | — | 45,500 |
| Home respiratory therapy services | 6,314 | 6,551 | 27,271 | 25,380 |
| Nursing services | 10,479 | 10,891 | 42,833 | 42,095 |
| Other | 4,216 | 4,326 | 17,410 | 15,122 |
| TOTAL COST OF NET REVENUES | 267,018 | 287,471 | 1,032,135 | 980,333 |
| Provision for doubtful accounts | 19,643 | 18,198 | 65,786 | 69,551 |
| Selling, distribution and administrative | 311,021 | 317,892 | 1,244,411 | 1,225,400 |
| Amortization of intangible assets | 218 | 1,108 | 1,706 | 4,478 |
| Non-cash impairment of property, equipment and improvements – home respiratory therapy/home medical equipment reporting unit | — | 12,100 | — | 12,100 |
| Non-cash impairment of goodwill, intangible and long-lived assets | 70,000 | 600,268 | 350,000 | 600,268 |
| TOTAL COSTS AND EXPENSES | 667,900 | 1,237,037 | 2,694,038 | 2,892,130 |
| OPERATING LOSS | (43,522) | (633,623) | (257,802) | (590,751) |
| Interest expense | 33,773 | 33,421 | 134,962 | 132,579 |
| Interest income and other | (361) | (576) | (1,443 ) | (690) |
| LOSS BEFORE TAXES | (76,934) | (666,468) | (391,321 ) | (722,640) |
| Income tax expense (benefit) | (24,572) | 45,708 | (130,905) | 24,684 |
| NET LOSS | $ (52,362) | $ (712,176) | $ (260,416) | $ (747,324) |
| Apria Healthcare Group Inc. | ||
| Condensed Consolidated Statements of Cash Flows | ||
|
Year Ended December 31, |
||
| 2012 | 2011 | |
| (As Restated) | ||
| (in thousands) | ||
| OPERATING ACTIVITIES | ||
| Net loss | $ (260,416) | $ (747,324) |
| Items included in net loss not requiring cash: | ||
| Provision for doubtful accounts | 65,786 | 69,551 |
| Depreciation | 112,248 | 129,130 |
| Amortization of intangible assets | 1,706 | 4,478 |
| Non-cash impairment of goodwill, intangible and long-lived assets | 350,000 | 657,868 |
| Amortization of deferred debt issuance costs | 14,429 | 12,521 |
| Deferred income taxes | (130,164) | 35,343 |
| Profit interest compensation | 3,519 | 3,009 |
| Gain on sale of patient service equipment and other | (27,106) | (22,311) |
| Changes in operating assets and liabilities, exclusive of effects of acquisitions: | ||
| Accounts receivable | (72,995) | (123,965) |
| Inventories | (10,392) | 4,551 |
| Prepaid expenses and other assets | (7,898) | (4,967) |
| Accounts payable | 27,045 | 34,520 |
| Accrued payroll and related taxes and benefits | 1,330 | 9,953 |
| Income taxes payable | (2,774) | (11,993) |
| Deferred revenue, net of related expenses | (981) | 1,525 |
| Accrued expenses | 22,266 | 8,455 |
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 85,603 | 60,344 |
| INVESTING ACTIVITIES | ||
| Purchases of patient service equipment and property, equipment and improvements, exclusive of effects of acquisitions | (149,645) | (163,083) |
| Proceeds from sale of patient service equipment and other | 46,670 | 41,637 |
| Cash paid for acquisitions | (121) | (23,478) |
| NET CASH USED IN INVESTING ACTIVITIES | (103,096) | (144,924) |
| FINANCING ACTIVITIES | ||
| Proceeds from ABL Facility | 465,000 | 10,000 |
| Payments on ABL Facility | (450,000) | — |
| Payments on other long-term debt | (345) | (1,365) |
| Debt issuance costs | — | (3,499) |
| Equity contribution | 1,000 | 1,000 |
| Cash paid on profit interest units | (178) | (1,597) |
| NET CASH USED IN FINANCING ACTIVITIES | 15,477 | 4,539 |
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (2,016) | (80,041) |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 29,096 | 109,137 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 27,080 | $ 29,096 |
| Apria Healthcare Group Inc. | ||||
| 4th Quarter and Full Year 2012 Financial Summary | ||||
|
Three Months Ended December 31, |
$ Variance Fav/(Unfav) |
% Variance Fav/(Unfav) |
||
| ($ in millions) | 2012 | 2011 | ||
| Net Revenue | $ 624.4 | $ 603.4 | $ 21.0 | 3.5 % |
| Gross Profit | 357.4 | 361.4(c) | (4.0) | (1.1) % |
| % Margin | 57.2% | 59.9% | ||
| Provision for Doubtful Accounts | 19.6 | 18.2 | (1.4) | (7.7) % |
| % of Net Revenue | 3.1% | 3.0% | ||
| Selling, Distribution and Administrative | 311.0 | 317.9 | 6.9 | 2.2 % |
| % of Net Revenue | 49.8% | 52.7% | ||
| Non-Cash Impairment of Intangible Assets | 70.0 | 657.9(d) | 587.9 | 89.4 % |
| % of Net Revenue | 11.2% | 109.0% | ||
| Net Loss | (52.4)(a) | (712.2)(e) | 659.8 | 92.6 % |
| EBITDA | (16.0)(b) | (603.4)(f) | 587.4 | 97.3 % |
| Adjusted EBITDA Before Projected Cost Savings and Synergies | 73.9 | 70.6 | 3.3 | 4.7 % |
| % of Net Revenue | 11.8% | 11.7% | ||
(a) Net loss for the quarter ended December 31, 2012 reflects the following non-cash impairment charge based on the results of our impairment testing as of December 31, 2012 and the tax impact associated with the impairment charge:
(i) Trade name impairment of $70.0 million, all of which relates to the home respiratory therapy/home medical equipment reporting unit; and
(ii) Tax benefit of $27.6 million relating to the intangible assets impairment.
All of these items resulted in a $42.4 million increase in our net loss in the quarter ended December 31, 2012.
(b) EBITDA for the quarter ended December 31, 2012 includes a $70.0 million non-cash impairment charge described above.
(c) Gross profit excludes the $45.5 million patient service equipment impairment for comparability purposes. It is included in the non-cash impairment of goodwill, intangibles and long-lived assets line below.
(d) In connection with the annual impairment test for the year ended December 31, 2011, we recorded the following non-cash impairment charges of $657.9 million, of which $654.3 million relates to our home respiratory therapy/home medical equipment reporting unit:
(i) Goodwill impairment of $509.9 million;
(ii) Trade name impairment of $60.0 million ($56.4 million of which relates to the home respiratory therapy/home medical equipment reporting unit and $3.6 million of which relates to the home infusion therapy reporting unit);
(iii) Capitated relationships intangible asset impairment of $30.4 million;
(iv) Patient service equipment impairment of $45.5 million; and
(v) Property, equipment and improvements impairment of $12.1 million.
(e) Net loss for the quarter ended December 31, 2011 includes the non-cash impairment charges listed below based on the results of our 2011 annual impairment testing, the tax impact associated with the impairment charges and charges related to deferred tax valuation allowances. Except as noted, all of the impairment charges relate to the home respiratory therapy/home medical equipment reporting unit.
(i) Goodwill impairment of $509.9 million;
(ii) Trade name impairment of $60.0 million ($56.4 million of which relates to the home respiratory therapy/home medical equipment reporting unit and $3.6 million of which relates to the home infusion therapy reporting unit);
(iii) Capitated relationships intangible asset impairment of $30.4 million;
(iv) Patient service equipment impairment of $45.5 million;
(v) Property, equipment and improvements impairment of $12.1 million;
(vi) Tax benefit relating to the goodwill, intangible and long-lived assets impairment of $166.9 million; and
(vii) Valuation allowance against our net deferred tax assets of $220.5 million.
All of these items resulted in a $711.5 million increase in our net loss in the quarter ended December 31, 2011.
(f) EBITDA for the quarter ended December 31, 2011 includes $657.9 million of goodwill, intangible and long-lived asset non-cash impairment charges, of which $654.3 million relates to our home respiratory therapy/home medical equipment reporting unit.
| Apria Healthcare Group Inc. | ||||
| 4th Quarter and Full Year 2012 Financial Summary | ||||
|
Year Ended December 31, |
$ Variance Fav/(Unfav) |
% Variance Fav/(Unfav) |
||
| ($ in millions) | 2012 | 2011 | ||
| Net Revenue | $ 2,436.2 | $ 2,301.4 | $ 134.8 | 5.9 % |
| Gross Profit | 1,404.1 | 1,366.5(c) | 37.6 | 2.8 % |
| % Margin | 57.6% | 59.4% | ||
| Provision for Doubtful Accounts | 65.8 | 69.6 | 3.8 | 5.5 % |
| % of Net Revenue | 2.7% | 3.0% | ||
| Selling, Distribution and Administrative | 1,244.4 | 1,225.4 | (19.0) | (1.6) % |
| % of Net Revenue | 51.1% | 53.2% | ||
| Non-Cash Impairment of Intangible Assets | 350.0 | 657.9(d) | 307.9 | 46.8 % |
| % of Net Revenue | 14.4% | 28.6% | ||
| Net Loss | (260.4)(a) | (747.3)(e) | 486.9 | 65.2 % |
| EBITDA | (143.9)(b) | (457.0)(f) | 313.1 | 68.5 % |
| Adjusted EBITDA Before Projected Cost Savings and Synergies | 269.4 | 269.3 | 0.1 | 0.0 % |
| % of Net Revenue | 11.1% | 11.7% | ||
(a) Net loss for the year ended December 31, 2012 reflects the following non-cash impairment charge based on the results of our impairment testing as of December 31, 2012 ($280.0 million charge in Q3 2012 and $70.0 million charge in Q4 2012) and the tax impact associated with the impairment charge:
(i) Trade name impairment of $350.0 million, $270.0 million of which relates to the home respiratory therapy/home medical equipment reporting unit and $80.0 million is allocated to the home infusion therapy reporting unit; and
(ii) Tax benefit of $131.6 million relating to the intangible assets impairment.
All of these items resulted in a $218.4 million increase in our net loss in the year ended December 31, 2012.
(b) EBITDA for the year ended December 31, 2012 includes a $350.0 million non-cash impairment charge described above.
(c) Gross profit excludes the $45.5 million patient service equipment impairment for comparability purposes. It is included in the non-cash impairment of goodwill, intangibles and long-lived assets line below.
(d) In connection with the annual impairment test for the year ended December 31, 2011, we recorded the following non-cash impairment charges of $657.9 million, of which $654.3 million relates to our home respiratory therapy/home medical equipment reporting unit:
(i) Goodwill impairment of $509.9 million;
(ii) Trade name impairment of $60.0 million ($56.4 million of which relates to the home respiratory therapy/home medical equipment reporting unit and $3.6 million of which relates to the home infusion therapy reporting unit);
(iii) Capitated relationships intangible asset impairment of $30.4 million;
(iv) Patient service equipment impairment of $45.5 million; and
(v) Property, equipment and improvements impairment of $12.1 million.
(e) Net loss for the year ended December 31, 2011 includes the non-cash impairment charges listed below based on the results of our 2011 annual impairment testing, the tax impact associated with the impairment charges and charges related to deferred tax valuation allowances. Except as noted, all of the impairment charges relate to the home respiratory therapy/home medical equipment reporting unit.
(i) Goodwill impairment of $509.9 million;
(ii) Trade name impairment of $60.0 million ($56.4 million of which relates to the home respiratory therapy/home medical equipment reporting unit and $3.6 million of which relates to the home infusion therapy reporting unit);
(iii) Capitated relationships intangible asset impairment of $30.4 million;
(iv) Patient service equipment impairment of $45.5 million;
(v) Property, equipment and improvements impairment of $12.1 million;
(vi) Tax benefit relating to the goodwill, intangible and long-lived assets impairment of $166.9 million; and
(vii) Valuation allowance against our net deferred tax assets of $220.5 million.
All of these items resulted in a $711.5 million increase in our net loss in the year ended December 31, 2011.
(f) EBITDA for the year ended December 31, 2011 includes $657.9 million of goodwill, intangible and long-lived asset non-cash impairment charges, of which $654.3 million relates to our home respiratory therapy/home medical equipment reporting unit.
| Segment Revenue Performance | ||||
| ($ in millions) |
Three Months Ended December 31, |
$ Variance | % Variance | |
| 2012 | 2011 | Fav/(Unfav) | Fav/(Unfav) | |
| Home Respiratory Therapy and Home Medical Equipment | $ 310.1 | $ 314.5 | $ (4.4) | (1.4) % |
| Home Infusion Therapy | 314.3 | 288.9 | 25.4 | 8.8 % |
| Total Net Revenue | $ 624.4 | $ 603.4 | $ 21.0 | 3.5 % |
| ($ in millions) |
Year Ended December 31, |
$ Variance | % Variance | |
| 2012 | 2011 | Fav/(Unfav) | Fav/(Unfav) | |
| Home Respiratory Therapy and Home Medical Equipment | $ 1,214.6 | $ 1,173.9 | $ 40.7 | 3.5 % |
| Home Infusion Therapy | 1,221.6 | 1,127.5 | 94.1 | 8.3 % |
| Total Net Revenue | $ 2,436.2 | $ 2,301.4 | $ 134.8 | 5.9 % |
Cash and Cash Equivalents, Capitalization & Certain Credit Statistics
The following table indicates the cash and cash equivalents, capitalization and certain credit statistics as of December 31, 2012:
($ in millions) December 31,
2012Cash and Cash Equivalents $ 27.1 Debt Asset Based Revolving Credit Facility 25.0 Series A-1 Notes 700.0 Series A-2 Notes 317.5 Capital Leases & Other 0.2 Total Debt $ 1,042.7 Shareholders' Deficit (331.4) Total Capitalization $ 711.3 Net Leverage Ratio Calculations Net Debt1 $ 1,015.6 Adjusted EBITDA2 $ 277.4 Net Leverage Ratio3 3.7x
1 Net debt is defined as total debt less cash and cash equivalents. This amount does not reflect outstanding letters of credit.
2 For the twelve months ended December 31, 2012.
3 Net leverage ratio is defined as the ratio of net debt to Adjusted EBITDA. The net leverage ratio calculated using Adjusted EBITDA before projected cost savings and synergies was 3.8x.
Definition of Terms and Reconciliation of Non-GAAP Financial Measures
This press release includes several metrics which are not calculated in accordance with GAAP, including EBITDA, Adjusted EBITDA, Adjusted EBITDA before projected cost savings and synergies and Free Cash Flow. EBITDA, Adjusted EBITDA, Adjusted EBITDA before projected cost savings and synergies and Free Cash Flow are not recognized terms under GAAP and do not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, these measures are not intended to be measures of Free Cash Flow available for management's discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Our presentation of EBITDA, Adjusted EBITDA, Adjusted EBITDA before projected cost savings and synergies and Free Cash Flow may not be comparable to other similarly titled measures of other companies. We believe that such measures provide useful information about our financial condition and covenant compliance under the indenture governing our Series A-1 Notes and Series A-2 Notes and in our ABL Facility to investors and we compensate for the limitations of using non-GAAP financial measures by presenting them together with GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.
EBITDA is defined as net income (loss) before interest expense, net, income tax expense and depreciation and amortization.
Adjusted EBITDA is defined as net income (loss) before interest expense, net, income tax expense and depreciation and amortization, further adjusted to exclude certain non-cash items, costs incurred related to initiatives, other adjustment items and projected cost savings and synergies permitted in calculating covenant compliance under the indenture governing our Series A-1 Notes and Series A-2 Notes and the credit agreement governing our ABL Facility.
Adjusted EBITDA before projected cost savings and synergies is defined as Adjusted EBITDA less the projected cost savings and synergies that we expect to realize in connection with cost savings, restructuring and other similar initiatives.
Free Cash Flow is defined as cash provided by operating activities less purchases of patient service equipment and property, equipment and improvements, net of proceeds from the sale of patient service equipment and other, exclusive of effects of acquisitions.
The following tables provide reconciliation of EBITDA, Adjusted EBITDA, Adjusted EBITDA before projected cost savings and synergies and Free Cash Flow for the periods presented to the respective most closely comparable financial measures calculated in accordance with GAAP.
Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA before projected cost savings and synergies
|
Three Months Ended December 31, |
Year Ended December 31, |
|||
| (in millions) | 2012 | 2011 | 2012 | 2011 |
| Net Loss | $ (52.4) | $ (712.2) | $ (260.4) | $ (747.3) |
| Interest expense, net | 33.4 | 33.0 | 133.5 | 132.0 |
| Income tax expense (benefit) | (24.5) | 45.7 | (130.9) | 24.7 |
| Depreciation and amortization | 27.5 | 30.1 | 113.9 | 133.6 |
| EBITDA | (16.0) | (603.4) | (143.9) | (457.0) |
| Non-cash impairment of goodwill, intangible and long-lived assets | 70.0 | 657.9 | 350.0 | 657.9 |
| Non-cash items | 5.5 | 7.0 | 22.9 | 22.1 |
| Costs incurred related to Initiatives and non-recurring items | 12.6 | 7.4 | 33.4 | 39.3 |
| Other adjustments | 1.8 | 1.7 | 7.0 | 7.0 |
| Adjusted EBITDA Before Projected Cost Savings and Synergies | $ 73.9 | $ 70.6 | $ 269.4 | $ 269.3 |
| Projected cost savings and synergies | 8.0 | 4.0 | ||
| Adjusted EBITDA | $ 277.4 | $ 273.3 | ||
Reconciliation of Free Cash Flow
| (in millions) |
Three Months Ended December 31, 2012 |
Year Ended December 31, 2012 |
| Net Loss | $ (52.4) (a) | $ (260.4) (c) |
| Non-cash items | 55.4 (b) | 390.4 (d) |
| Change in operating assets and liabilities | 5.2 | (44.4) |
| Net cash provided by operating activities | 8.2 | 85.6 |
| Purchases of patient service equipment, property, equipment and improvements | (28.7) | (149.7) |
| Proceeds from sale of patient service equipment and other | 12.2 | 46.7 |
| Free Cash Flow | $ (8.3) | $ (17.4) |
(a) Net loss for the quarter ended December 31, 2012 reflects the following non-cash impairment charge based on the results of our impairment testing as of December 31, 2012 and the tax impact associated with the impairment charge:
(i) Trade name impairment of $70.0 million, all of which relates to the home respiratory therapy/home medical equipment reporting unit; and
(ii) Tax benefit of $27.6 million relating to the intangible assets impairment.
All of these items resulted in a $42.4 million increase in our net loss in the quarter ended December 31, 2012.
(b) EBITDA for the quarter ended December 31, 2012 includes a $70.0 million non-cash impairment charge described above.
(c) Net loss for the year ended December 31, 2012 reflects the following non-cash impairment charge based on the results of our impairment testing as of December 31, 2012 ($280.0 million charge in Q3 2012 and $70.0 million charge in Q4 2012) and the tax impact associated with the impairment charge:
(i) Trade name impairment of $350.0 million, $270.0 million of which relates to the home respiratory therapy/home medical equipment reporting unit and $80.0 million is allocated to the home infusion therapy reporting unit; and
(ii) Tax benefit of $131.6 million relating to the intangible assets impairment.
All of these items resulted in a $218.4 million increase in our net loss in the year ended December 31, 2012.
(d) Includes a $350.0 million non-cash impairment charge described above.