LAKE FOREST, Calif., Oct. 21, 2004 (PRIMEZONE) -- Apria Healthcare Group Inc. (NYSE:AHG), the nation's leading home healthcare company, today announced its financial results for the quarter ended September 30, 2004. Revenues were $364.6 million, a 5.3% increase over revenues of $346.3 million for the third quarter of 2003. Net income for the third quarter was $29.8 million or $.60 per share (diluted) compared to $28.9 million or $.54 per share (diluted) for the comparable quarter of 2003. The Company's overall growth rate was impacted by the Medicare respiratory medication reimbursement cuts ($3.8 million for the quarter and $11.5 million year-to-date) and the Company's decision not to renew its contract with Gentiva CareCentrix, Inc. Excluding those effects, revenue growth was 10.5% for the quarter.
Earnings before interest, taxes, depreciation and amortization (EBITDA) was $85.6 million for the third quarter of 2004 compared to $85.9 million for the third 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 third quarter of 2004, we closed an additional six acquisitions totaling $37 million, resulting in year-to-date purchases of 26 businesses for an approximate value of $147 million," said Lawrence M. Higby, Apria's Chief Executive Officer. "In fact, during the second and third quarters we had an unprecedented nineteen acquisitions totaling $104 million representing 75% more business than we acquired in the comparable period of 2003. This abnormally high level of acquisitions, a good long-term move strategically, had some short-term impacts:
-- Labor temporarily increased from normal levels as new patients
were integrated into our operations.
-- Days sales outstanding increased to 55 days for the third
quarter, up four days from the prior year quarter. The
increase is the result of the delays in billing Medicare
while awaiting new provider numbers for all of the locations
added by the acquisitions."
"In addition," noted Mr. Higby, "we had higher fuel prices and one-time costs associated with Sarbanes-Oxley compliance activities and consulting expenses that contributed to our costs being, in total, about $4 million above our forecast. An adjustment to reduce our effective tax rate for the year from 38% to 36.1%, stemming from the culmination of a state tax inter-company pricing study, more than offset these cost increases. To insure that we can reverse the higher labor and other expense trends that we saw in the third quarter, we have already taken actions that we believe will lead to cost reductions of at least $4 million in the fourth quarter."
"For the year, we continue to expect revenue to grow in the 5 to 6 percent range due to the acquisitions and the expansion of our respiratory business, and we now believe that earnings per share will grow in the 6 to 8 percent range."
"As for 2005, we applaud the responsible leadership and policy work of Secretary Thompson; Mark McClellan, MD, CMS Administrator; Leslie Norwalk, Deputy Administrator; and Herb Kuhn, Director; as well as the Government Accountability Office (GAO), congressional leaders and members of the Administration who recognized the need for a service fee in connection with providing respiratory medications to patients in their homes. We appreciate the outreach efforts of the Administration to better understand all of the patient care and provider cost issues associated with this very important decision. Although we await the final rule later this month, we are optimistic that the service fee recently endorsed by CMS will ensure that Medicare beneficiaries will continue to have access to these respiratory medications and related homecare in 2005 and beyond."
Apria provides home respiratory therapy, home infusion therapy and home medical equipment through more than 470 branches serving patients in 50 states. With nearly $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
September 30, December 31,
(dollars in thousands) 2004 2003
--------------------------------------------------------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 38,858 $ 160,553
Accounts receivable, net of
allowance for doubtful accounts 223,862 196,413
Inventories, net 33,437 29,089
Other current assets 52,555 43,280
---------- ----------
TOTAL CURRENT ASSETS 348,712 429,335
PATIENT SERVICE EQUIPMENT, NET 229,172 209,551
PROPERTY, EQUIPMENT & IMPROVEMENTS,
NET 49,231 50,192
OTHER ASSETS, NET 483,476 354,357
---------- ----------
TOTAL ASSETS $1,110,591 $1,043,435
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LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued
liabilities $ 192,577 $ 158,574
Current portion of long-term debt 34,994 31,522
---------- ----------
TOTAL CURRENT LIABILITIES 227,571 190,096
LONG-TERM DEBT, net of current
portion 466,649 469,241
OTHER NON-CURRENT LIABILITIES 42,829 18,150
---------- ----------
TOTAL LIABILITIES 737,049 677,487
STOCKHOLDERS' EQUITY 373,542 365,948
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,110,591 $1,043,435
========== ==========
APRIA HEALTHCARE GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(dollars in thousands, --------------------- ---------------------
except per share data) 2004 2003 2004 2003
--------------------------------------------------------------------
Respiratory therapy $ 245,957 $ 233,543 $ 735,035 $ 688,811
Infusion therapy 63,639 60,821 182,751 180,655
Home medical equipment/
other 54,972 51,959 157,226 155,210
---------- ---------- ---------- ----------
NET REVENUES 364,568 346,323 1,075,012 1,024,676
GROSS PROFIT 262,592 253,194 775,194 747,546
Provision for doubtful
accounts 12,268 12,507 38,548 38,223
Selling, distribution
and administrative
expenses 200,619 189,748 582,496 558,235
Amortization of
intangible assets 1,854 732 4,639 2,143
---------- ---------- ---------- ----------
OPERATING INCOME 47,851 50,207 149,511 148,945
Interest expense, net 5,210 3,664 15,119 10,005
---------- ---------- ---------- ----------
INCOME BEFORE TAXES 42,641 46,543 134,392 138,940
Income tax expense 12,807 17,686 47,651 52,845
---------- ---------- ---------- ----------
NET INCOME $ 29,834 $ 28,857 $ 86,741 $ 86,095
========== ========== ========== ==========
Income per common share-
assuming dilution $ 0.60 $ 0.54 $ 1.72 $ 1.57
========== ========== ========== ==========
Weighted average number
of common shares
outstanding 49,792 53,532 50,436 54,792
Reconciliation -- EBITDA:
Reported net income $ 29,834 $ 28,857 $ 86,741 $ 86,095
Add back: Interest
expense, net 5,210 3,664 15,119 10,005
Add back: Income tax
expense 12,807 17,686 47,651 52,845
Add back: Depreciation 35,847 34,937 106,323 100,931
Add back: Amortization
of intangible assets 1,854 732 4,639 2,143
---------- ---------- ---------- ----------
EBITDA $ 85,552 $ 85,876 $ 260,473 $ 252,019
========== ========== ========== ==========
APRIA HEALTHCARE GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended
September 30,
----------------------
(dollars in thousands) 2004 2003
--------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 86,741 $ 86,095
Items included in net income
not requiring cash:
Provision for doubtful
accounts 38,548 38,223
Depreciation and amortization 110,962 103,074
Deferred income taxes and
other 24,378 18,473
Changes in operating assets and
liabilities, exclusive of
effects of acquisitions (62,835) (47,188)
--------- ---------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 197,794 198,677
--------- ---------
INVESTING ACTIVITIES
Purchases of patient service
equipment and property,
equipment and improvements,
exclusive of effects of
acquisitions (111,890) (116,544)
Proceeds from disposition of
assets 158 419
Cash paid for acquisitions,
including payments of deferred
consideration (116,120) (88,791)
--------- ---------
NET CASH USED IN INVESTING
ACTIVITIES (227,852) (204,916)
--------- ---------
FINANCING ACTIVITIES
Net payments on debt (5,695) 235,115
Capitalized debt issuance costs (37) (6,584)
Outstanding checks included in
accounts payable (1,689) (5,785)
Repurchases of common stock,
net (84,216) (108,377)
--------- ---------
NET CASH USED IN FINANCING
ACTIVITIES (91,637) 114,369
--------- ---------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (121,695) 108,130
Cash and cash equivalents at
beginning of year 160,553 26,383
--------- ---------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 38,858 $ 134,513
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