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NASHVILLE, Tenn.--(BUSINESS WIRE)--Oct. 28, 2003-- Renal Care Group,
Inc. (NYSE:RCI - News) today announced results for the third quarter
and nine months ended September 30, 2003, and announced a $200 million
increase in the Company's stock repurchase program.
For the third quarter ended September 30, 2003, Renal Care Group's net
revenues increased 9.6% to $253.8 million compared with net revenues
of $231.5 million for the same period in 2002. Net income for the third
quarter of 2003 rose 13.3% to $26.5 million compared with net income
of $23.4 million in the same period in 2002. Net income per share for
the third quarter of 2003 increased 15.2% to $0.53 compared with net
income per share of $0.46 in the same quarter of last year. For the third
quarter ended September 30, 2003, same-market treatment growth was 5.0%
and same-market revenue growth was 7.2%.
Gary Brukardt, the Company's president and chief executive officer,
commented, "Renal Care Group's third quarter and year-to-date results
reflect the continued strong performance of our operations. In an increasingly
challenging operating environment, we are growing our business by providing
patients with the high quality of treatment and service that they deserve.
Our ability to improve both our quality of care and our revenue base
while employing strict financial discipline at both the corporate and
facility levels is a critical element in our profitability."
For the nine months ended September 30, 2003, Renal Care Group's net
revenues increased 12.5% to $743.0 million compared with net revenues
of $660.4 million for the same period in 2002. After giving effect to
the previously disclosed retirement package for former chairman and founder,
Sam Brooks, described below, GAAP net income was $74.1 million, and GAAP
net income per share was $1.48 for the nine-month period ended September
30, 2003. For the nine months ended September 30, 2003, same-market treatment
growth was 5.3% and same-market revenue growth was 8.4%.
In the first quarter of 2003, Renal Care Group recorded a non-recurring,
after-tax charge of $3.4 million, or $0.07 per share, related to the
retirement package for Mr. Brooks. Excluding the effect of the retirement
package, non-GAAP net income for the nine months ended September 30,
2003, rose 14.7% to $77.5 million compared with GAAP net income of $67.6
million in the nine months ended September 30, 2002. Excluding the effect
of the retirement package, non-GAAP net income per share for the nine-month
period ended September 30, 2003, increased 17.4% to $1.55 compared with
GAAP net income per share of $1.32 in the nine months ended September
30, 2002. The Company has decided to present non-GAAP net income and
net income per share information to give investors a means of comparing
the Company's operational performance for the nine months ended September
30, 2003, to its performance in the same period in 2002, before giving
effect to the impact of the non-recurring charge related to Mr. Brooks'
retirement package. A reconciliation of the non-GAAP results discussed
in this paragraph and the Company's GAAP results is included in the Unaudited
Condensed Consolidated Income Statements accompanying this press release.
Increase in Share Repurchase Program
Renal Care Group's Board of Directors has authorized a $200 million
increase in the Company's existing stock repurchase program, bringing
the total amount authorized under the program to $450 million. Through
October 24, 2003, the Company had repurchased approximately $129 million
of its common stock under the repurchase program, leaving approximately
$321 million available for repurchases through December 2004. Subject
to obtaining approval of its lenders and compliance with applicable volume
and other legal restrictions, Renal Care Group intends to acquire an
additional $250 million of its common stock before the end of the first
quarter of 2004.
Dirk Allison, executive vice president and chief financial officer,
said, "Renal Care Group has been built upon our Company's commitment
to providing optimal care for our patients and increasing value for our
shareholders. We view the Company's ability to use its exceptionally
strong balance sheet to expand the share repurchase program as an important
measure to enhance shareholder value and achieve our financial objectives."
The Company intends to repurchase its stock from time to time at prices
prevailing in the open market or in privately negotiated transactions
on conditions acceptable to the Company. The actual number of shares
repurchased, the timing of purchases and the price paid will be at the
Company's discretion and will depend on market conditions and other relevant
factors. Repurchased shares are held in Renal Care Group's treasury and
will be available for resale and for general corporate purposes. As of
October 24, 2003, the Company had approximately 48.9 million common shares
issued and outstanding, excluding approximately 4.0 million shares held
in treasury.
2004 Corporate Objectives
Mr. Allison outlined the Company's clinical and financial objectives
for 2004 saying, "As we have done in the past, we are disclosing
our key clinical and financial performance objectives for 2004. Should
there be any material changes to these objectives, we will make an announcement
to that effect."
Fiscal 2004 Corporate Objectives:
| Hematocrit Level | 75% of patients over 33% |
| Kt/V | 85% of patients over 1.4 |
| Revenues | $1.1 - $1.2 billion |
| Earnings per Share | $2.20 - $2.30 |
| Same-Market Treatment Growth | 5% - 6% |
| Same-Market Revenue Growth | 5% - 7% |
| Patients | 25,000 - 26,000 |
| Treatments | 3.5 - 3.7 million |
| Capital Expenditures | $70 - $80 million |
| Acquisition Target | 1,500 - 2,000 patients |
Mr. Allison continued, "In the coming year, we expect to face lower
reimbursement rates from at least two states' Medicaid programs and pricing
pressure from managed care payors. Without assuming any share repurchases,
we believe these factors will limit our earnings per share percentage
growth to the mid to high single digits over 2003 levels. Assuming we
meet our objective to repurchase a total of $250 million of common stock
by March 31, 2004, our earnings per share should be between $2.40 and
$2.50. As the healthcare industry experiences additional pricing pressure,
our management team will continue its efforts to identify and pursue
attractive new growth opportunities."
Renal Care Group will hold a conference call to discuss this press release
on Wednesday, October 29, 2003, at 11:00 a.m. Eastern Time. A listen-only
simulcast, as well as a 12-month replay, of the conference call to discuss
this press release will be available online at the Company's website
at www.renalcaregroup.com.
Renal Care Group is a specialized dialysis services company that provides
care to patients with kidney disease. The Company treats over 21,300
patients at more than 280 owned outpatient dialysis facilities, in addition
to providing acute dialysis services at more than 120 hospitals. Over
6,500 associates provide services across the Company's 27-state network.
More information about Renal Care Group, Inc. can be found at www.renalcaregroup.com.
Certain statements in this press release, particularly those of Mr.
Brukardt and Mr. Allison, constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements, which are usually preceded by words
like expect, plan, intend, will and the like, include statements regarding
our clinical and financial objectives for 2004, our plans for repurchases
of common stock under our stock repurchase program and any other statements
that necessarily depend on future events. These forward-looking statements
reflect management's expectations and are based upon currently available
information. These forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause actual results,
performance or achievements of Renal Care Group to differ materially
from those expressed in or implied by the forward-looking statements,
including risks related to: changes in the Medicare and Medicaid programs;
payment reductions by private insurers, hospitals or managed care organizations;
changes in the health care delivery, financing or reimbursement systems;
risks related to the drug Epogen (EPO); compliance with health care and
other applicable laws; the integration of acquired companies; and dependence
on executive officers. These and other factors affecting the Company
are discussed in more detail in Renal Care Group's reports filed with
the Securities and Exchange Commission, including without limitation
Renal Care Group's most recent annual report on Form 10-K and any quarterly
reports on Form 10-Q filed after that annual report. Copies of these
filings are available from Renal Care Group upon request.
RENAL CARE GROUP, INC.
Unaudited Condensed Consolidated Income Statements
(in thousands, except per share data)
Three Months Ended
September 30,
------------------
2003 2002
-------- --------
GAAP (1) GAAP (1)
-------- --------
Net revenue $253,835 $231,542
Operating costs and expenses:
Patient care costs 164,962 151,722
General and administrative
expenses 21,225 19,686
Provision for
doubtful accounts 6,556 6,008
Depreciation and
amortization 11,365 10,402
-------- --------
Total operating cost
and expenses 204,108 187,818
Income from operations 49,727 43,724
Interest expense, net 76 569
-------- --------
Income before minority
interest and income taxes 49,651 43,155
Minority interest 6,837 5,364
-------- --------
Income before income taxes 42,814 37,791
Provision for income taxes 16,269 14,361
-------- --------
Net income $26,545 $23,430
======== ========
Diluted net income per share $0.53 $0.46
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Weighted average
shares outstanding 50,417 50,518
======== ========
Nine Months Ended
September 30,
--------------------------------------
2003 2002
--------------------------- --------
Non-
GAAP (1) Difference GAAP (2) GAAP (1)
-------- -------- -------- --------
Net revenue $743,039 $ -- $743,039 $660,389
Operating costs and expenses:
Patient care costs 482,437 -- 482,437 432,184
General and administrative
expenses 68,700 (5,430) 63,270 56,033
Provision for
doubtful accounts 19,436 -- 19,436 17,228
Depreciation and
amortization 33,242 -- 33,242 29,697
-------- -------- -------- --------
Total operating cost
and expenses 603,815 (5,430) 598,385 535,142
Income from operations 139,224 5,430 144,654 125,247
Interest expense, net 526 -- 526 880
-------- -------- -------- --------
Income before minority
interest and income taxes 138,698 5,430 144,128 124,367
Minority interest 19,174 -- 19,174 15,381
-------- -------- -------- --------
Income before income taxes 119,524 5,430 124,954 108,986
Provision for income taxes 45,414 2,063 47,477 41,421
-------- -------- -------- --------
Net income $74,110 $3,367 $77,477 $67,565
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Diluted net income per share $1.48 $0.07 $1.55 $1.32
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Weighted average
shares outstanding 49,926 49,926 49,926 51,036
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(1) Reflects operating results based on U.S. Generally Accepted
Accounting Principles (GAAP).
(2) Non-GAAP amounts exclude a Board-approved retirement package for
Sam Brooks in the first quarter of 2003 and the related tax
effect.
RENAL CARE GROUP, INC.
Supplemental Operating Data and Reconciliation of Net Income to EBITDA
(dollars in thousands, except per treatment data)
Three Months Ended
September 30,
------------------
2003 2002
-------- --------
GAAP (1) GAAP (1)
-------- --------
Operating Data:
Patients 21,301 19,955
Treatments 822,551 773,257
Same-market treatment growth 5.0% 5.9%
Same-market revenue growth 7.2% 12.3%
Patient revenue per treatment $308 $298
EBITDA (3) $61,092 $54,126
Reconciliation of Net Income
to EBITDA:
Net income $26,545 $23,430
Depreciation and amortization 11,365 10,402
Interest expense, net 76 569
Minority interest 6,837 5,364
Provision for income taxes 16,269 14,361
-------- ---------
EBITDA $61,092 $54,126
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Nine Months Ended
September 30,
--------------------------------------
2003 2002
---------------------------- --------
Non-
GAAP (1) Difference GAAP (2) GAAP (1)
-------- -------- -------- --------
Operating Data:
Patients 21,301 21,301 19,955
Treatments 2,415,805 2,415,805 2,227,230
Same-market treatment growth 5.3% 5.3% 5.8%
Same-market revenue growth 8.4% 8.4% 12.8%
Patient revenue per treatment $307 $307 $294
EBITDA (3) $172,466 $5,430 $177,896 $154,944
Reconciliation of Net Income
to EBITDA:
Net income $74,110 $3,367 $77,477 $67,565
Depreciation and amortization 33,242 -- 33,242 29,697
Interest expense, net 526 -- 526 880
Minority interest 19,174 -- 19,174 15,381
Provision for income taxes 45,414 2,063 47,477 41,421
-------- -------- -------- --------
EBITDA $172,466 $5,430 $177,896 $154,944
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(1) Reflects operating results based on U.S. Generally Accepted
Accounting Principles (GAAP).
(2) Non-GAAP amounts exclude a Board-approved retirement package for
Sam Brooks in the first quarter of 2003 and the related tax
effect.
(3) The Company defines EBITDA as net earnings or loss before
minority interest, interest expense (net), provision for income
taxes, depreciation and amortization and all non-cash charges.
The Company includes EBITDA because it generally considers EBITDA
to be a good indicator of the Company's ability to generate cash
flow in order to fund liabilities and reinvest in the Company and
its business. EBITDA is not a measurement of financial
performance under accounting principles generally accepted in the
U.S. and should not be considered a substitute for net income or
loss as a measure of performance, or to cash flow as a measure of
liquidity.
RENAL CARE GROUP, INC.
Condensed Consolidated Balance Sheets
(in thousands)
Sept. 30, Dec. 31,
2003 2002
-------- --------
ASSETS: (Unaudited)
Current assets:
Cash and cash equivalents $121,128 $38,359
Accounts receivable, net 157,218 152,440
Other current assets 41,310 55,062
-------- --------
Total current assets 319,656 245,861
Property, plant and equipment, net 214,858 202,972
Goodwill, intangibles and other assets, net 304,652 291,290
-------- --------
TOTAL ASSETS $839,166 $740,123
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Total current liabilities $149,715 $135,380
Long-term debt 2,673 10,161
Other liabilities 58,001 50,694
-------- --------
Total liabilities 210,389 196,235
-------- --------
Stockholders' equity:
Common stock, $.01 par value, 90,000
shares authorized, 52,882 and 51,176 shares
issued, respectively 529 512
Treasury stock, 3,998 and 2,983
shares, respectively (129,195) (93,953)
Additional paid-in capital 355,359 309,355
Retained earnings 402,084 327,974
-------- --------
Total stockholders' equity 628,777 543,888
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $839,166 $740,123
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RENAL CARE GROUP, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended
September 30,
2003 2002
-------- --------
Operating Activities:
Net income $74,110 $67,565
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 33,242 29,697
Loss on disposal of property and equipment 443 --
Income applicable to minority interest 19,174 15,381
Distributions to minority shareholders (16,819) (5,461)
Deferred income taxes 7,950 --
Changes in operating assets and liabilities,
net of effects from acquisitions 30,163 20,183
-------- --------
Net cash provided by operating activities 148,263 127,365
In vesting Activities:
Purchases of property and equipment (44,043) (49,413)
Cash paid for acquisitions (14,154) (19,904)
Change in other assets (1,968) (843)
-------- --------
Net cash used in investing activities (60,165) (70,160)
-------- --------
Financing Activities:
Net repayment of debt (7,208) (1,574)
Repurchase of treasury shares (35,242) (62,696)
Net proceeds from issuance of common stock 37,121 16,548
Investment by joint venture partner -- 2,896
-------- --------
Net cash used in financing activities (5,329) (44,826)
-------- --------
Increase in cash and cash equivalents 82,769 12,379
Cash and cash equivalents, at beginning of period 38,359 27,423
-------- --------
Cash and cash equivalents, at end of period $121,128 $39,802
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Contact:
Renal Care Group, Inc., Nashville
R. Dirk Allison, 615/345-5500
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