TORRANCE, Calif., Nov. 10 /PRNewswire/ -- Total Renal Care Holdings, Inc. (NYSE: TRL), the second-largest (and largest independent) worldwide provider of integrated dialysis services, today announced revenues, earnings and earnings per share for the third quarter and nine months ended September 30, 1999.
On a normalized basis, before the unusual items described below, the Company's revenues were $371 million for the third quarter and $1,087 million for the nine months. Normalized net income and earnings per share were $11.4 million and $0.14 for the third quarter, respectively.
The Company recognized $17.1 million in aggregate unusual items in the third quarter:
-- An $8.0 million charge to accounts receivable relating to the Minnesota
Laboratory that includes a $4.1 million increase to the allowance for
doubtful accounts and a $3.9 million increase in contractual
allowances.
-- $3.6 million for severance and related payments for departed senior
executives, for certain employees in the Company's Argentina operations
and certain costs for a retention program for current employees.
-- A $3.3 million charge relating to the now-divested corporate jet,
including $2.6 million of non-cash costs recognized as "other gains
(losses)" on the income statement.
-- A $1.1 million charge arising from obtaining the amendments and waiver
from our bank syndicate in August 1999.
-- An additional $1.1 million relating to closing of a dialysis facility
as well as a settlement of an old Renal Treatment Centers lawsuit.
Kent J. Thiry, who joined the Company as Chairman of the Board and CEO on October 18, said, "We are now focused on a total review and evaluation of the company, in order to restore its value for shareholders while preserving its strength in the marketplace. We continue to work through the infrastructure and financial challenges that were created by the historical rapid growth of the Company and plan to complete this comprehensive review prior to releasing our year-end 1999 financial statements. In addition, we have retained Donaldson, Lufkin & Jenrette to advise the Company on refinancing options, which include raising capital. We are also separately exploring the sale of selected assets outside the continental United States, in order to pay down some of our debt."
George B. DeHuff, III, TRL's President and Chief Operating Officer, said, "The charges taken during the quarter include certain unusual expenses arising from our continuing review of all our billing and accounting systems as well as our expense structure. Our ongoing review of the accounts receivable, reserves and billing and collection practices will include but not be limited to our Tacoma billing office, Florida laboratory and international operations, during the fourth quarter. We will complete this review prior to releasing our year-end 1999 financial statements and it may result in increased allowances. Our collection efforts continue to be strong in Berwyn and we have seen improvement through the third quarter and during October in the Tacoma billing office."
During the third quarter of 1999, the Company slowed its acquisition program and has added approximately 600 patients and 9 dialysis centers, including approximately 550 patients in 8 domestic facilities and approximately 50 patients in 1 center internationally. The Company does not plan to complete any acquisitions during the fourth quarter of 1999 and into early 2000 except for one small transaction that it is contractually obligated to complete.
Additionally, the Company has opened 20 new owned or managed facilities in 1999 and expects to complete approximately 5 additional facilities by the end of this year. The Company's same-store treatment growth for the third quarter was 7.0% and was 6.5% for the nine months of 1999. The Company's Days Sales Outstanding for the third quarter were 115 days, which is flat in relation to second quarter.
The Company also announced that its lenders have agreed to a waiver of certain covenants in its credit facilities with which the Company would not have been in compliance.
Quarter End Quarter End Year End
Sept. 30, Dec. 31, Dec. 31,
1998 1998 1998
Treatments 1,284,000 1,342,000 4,912,000
Patients 36,400 39,500 39,500
Centers 477 508 508
Normalized Revenue/Treatment $248 $253 $245
Quarter End Quarter End Quarter End
March 31, June 30, Sept. 30,
1999 1999 1999
Treatments 1,391,000 1,467,000 1,510,000
Patients 42,100 44,000 45,000
Centers 541 564 569
Normalized Revenue/Treatment $253 $248 $246
Total Renal Care Holdings, Inc, based in Torrance, California, is the second-largest (and largest independent) worldwide provider of integrated dialysis services for patients suffering from chronic kidney failure. The Company owns and operates high-quality, free-standing kidney dialysis centers and home peritoneal dialysis programs in 34 states, as well as Washington, D.C., Puerto Rico, Guam, Argentina and several European countries. It also provides high quality acute hemodialysis services to inpatients at approximately 320 hospitals. As of October 15, 1999, Total Renal Care operated 570 outpatient dialysis facilities serving approximately 45,000 patients, including more than 4,000 patients in 51 centers under Total Renal Care management. Total Renal Care also operates ESRD laboratory and pharmacy facilities, as well as vascular access management, transplant services and ESRD clinical research programs.
This release contains forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding potential strengthening of operations and financial performance and involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the uncertainties associated with governmental regulation, general economic and other market conditions, and the "risk factors" set forth in the Company's filings with the Securities and Exchange Commission, including but not limited to (1) the risks inherent in the Company's growth strategy, (2) possible changes in Medicare and Medicaid reimbursement rates, (3) dependence on physician referrals, (4) risks associated with operations outside the United States, and (5) the amount of leverage the Company has obligations to pay. The forward-looking statements should be considered in light of these risks and uncertainties.
TOTAL RENAL CARE HOLDINGS, INC.
NORMALIZED INCOME STATEMENT
ADJUSTED FOR UNUSUAL ITEMS
THREE MONTHS ENDED SEPTEMBER 30, 1999
(in 000's, except EPS data)
Actual Adjustments Normalized
Net operating revenues $366,968 $3,900 (a) $370,868
Operating expenses:
Facilities 250,765 (857)(b) 249,908
General and administrative 32,725 (4,069)(c) 28,656
Provision for doubtful
accounts 17,002 (4,100)(a) 12,902
Depreciation & amortization 29,175 29,175
Total operating expenses 329,667 320,641
Operating income 37,301 50,227
Interest expense (28,862) 434 (d) (28,428)
Other financing costs (629) 629 (e) 0
Interest income 1,241 1,241
Other gains (losses) (3,320) 3,152 (f) (168)
Pre-tax income 5,731 22,872
Income taxes 2,285 9,900
Minority interest 1,586 1,586
Net income 1,860 11,386
Earnings per share $0.02 $0.14
Shares outstanding 81,561 81,561
(a) $3,900 increase in contractual allowances relating to revenues at the
Company's Minneapolis Laboratory and a $4,100 increase in provision
for doubtful accounts relating to the Minnesota Laboratory.
(b) Employee severance costs associated with the restructuring of the
Company's Argentina operations.
(c) Includes $1,719 of executive severance, $729 in cash expense
associated with the now divested corporate jet, $540 for RTC
litigation settlement, and $1,081 for employee retention program
costs, primarily for stock option amendments, of which $955 was a
non-cash charge.
(d) $434 of penalty interest expense in connection with the August waiver.
(e) $629 for expense related to August bank credit amendments.
(f) Includes a $2,577 non-cash loss on the disposition of the corporate
jet and $575 in costs associated with the closing of a dialysis
facility.
TOTAL RENAL CARE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three months and Nine months ended September 30, 1999 and 1998
Three Months
1999 1998
STATEMENTS OF INCOME
Net operating revenues $366,968,000 $318,585,000
Operating expenses:
Facilities 250,765,000 200,925,000
General and administrative 32,725,000 18,274,000
Provision for doubtful accounts 17,002,000 8,997,000
Depreciation and amortization 29,175,000 24,205,000
Write-off of investments
and loans -- --
Merger and related costs -- --
Total operating expenses 329,667,000 252,401,000
Operating income 37,301,000 66,184,000
Interest expense, net of
capitalized interest (28,862,000) (19,805,000)
Other financing costs (629,000) --
Interest income and other 1,241,000 963,000
Other gains (losses) (3,320,000) --
Income before income taxes,
minority interests,
extraordinary item and
cumulative effect of change
in accounting principle 5,731,000 47,342,000
Income taxes 2,285,000 18,102,000
Income before minority
interests, extraordinary
item and cumulative effect
of change in accounting
principle 3,446,000 29,240,000
Minority interests in income
of consolidated subsidiaries 1,586,000 1,859,000
Income (loss) before
extraordinary item and
cumulative effect of change in
accounting principle 1,860,000 27,381,000
Extraordinary loss, net of
tax of $ 7,668,000 -- --
Cumulative effect of change in
accounting principle, net of
tax of $4,300,000 -- --
Net income (loss) $1,860,000 $27,381,000
Earnings (loss) per common
share:
Income (loss) before
extraordinary item and
cumulative effect of change in
accounting principle $ 0.02 $0.34
Extraordinary loss, net of tax
Cumulative effect of change
in accounting principle, net of
tax
Net income (loss) $0.02 $0.34
Weighted average number of
common shares outstanding 81,165,000 80,858,000
Earnings (loss) per common
share-assuming dilution:
Income (loss) before
extraordinary item and
cumulative effect of change in
accounting principle $0.02 $ 0.33
Extraordinary loss, net of tax
Cumulative effect of change in
accounting principle, net of tax
Net income (loss) $0.02 $0.33
Weighted average number of common
shares and equivalents
outstanding -- assuming
dilution 81,561,000 87,052,000
Nine Months
1999 1998
STATEMENTS OF INCOME
Net operating revenues $1,072,405,000 $865,684,000
Operating expenses:
Facilities 734,528,000 551,244,000
General and administrative 86,003,000 52,789,000
Provision for doubtful
accounts 63,187,000 23,539,000
Depreciation and
amortization 83,592,000 66,604,000
Write-off of investments
and loans 16,600,000 --
Merger and related costs -- 79,435,000
Total operating expenses 983,910,000 773,611,000
Operating income 88,495,000 92,073,000
Interest expense, net of
capitalized interest (75,999,000) (50,866,000)
Other financing costs (629,000) (9,823,000)
Interest income and other 4,505,000 3,627,000
Other gains (losses) (3,520,000) --
Income before income taxes,
minority interests,
extraordinary item and
cumulative effect of
change in accounting
principle 12,852,000 35,011,000
Income taxes 5,608,000 31,062,000
Income before minority
interests, extraordinary
item and cumulative effect
of change in accounting
principle of change in
accounting principle 7,244,000 3,949,000
Minority interests in income
of consolidated subsidiaries 6,425,000 4,817,000
Income (loss) before
extraordinary item and
cumulative effect of change
in accounting principle 819,000 (868,000)
Extraordinary loss, net
of tax of $ 7,668,000 -- 12,744,000
Cumulative effect of change
in accounting principle, net
of tax of $4,300,000 -- 6,896,000
Net income (loss) $819,000 $ (20,508,000)
Earnings (loss) per common share:
Income (loss) before
extraordinary item and
cumulative effect of change in
accounting principle $ 0.01 $(0.01)
Extraordinary loss, net of tax (0.16)
Cumulative effect of change
in accounting principle, net
of tax (0.09)
Net income (loss) $0.01 $(0.26)
Weighted average number of
common shares outstanding 81,148,000 79,982,000
Earnings (loss) per common
share-assuming dilution:
Income (loss) before
extraordinary item and
cumulative effect of
change in accounting
principle $0.01 $(0.01)
Extraordinary loss, net
of tax (0.16)
Cumulative effect of change
in accounting principle,
net of tax (0.09)
Net income (loss) $0.01 (0.26)
Weighted average number of
common shares and equivalents
outstanding
- assuming dilution 81,600,000 79,982,000
SOURCE Total Renal Care Holdings, Inc.
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