NASHVILLE, Tenn.--(BUSINESS WIRE)--July 27, 2004--Renal Care Group, Inc. (NYSE:RCI) today announced results for the second quarter and six months ended June 30, 2004. The Company also announced that it has entered into a definitive agreement to acquire a dialysis program serving more than 525 patients in Las Vegas, Nevada.
For the three months ended June 30, 2004, Renal Care Group's net revenues increased 38.0% to $340.9 million compared with net revenues of $247.1 million for the same period in 2003. Net income for the second quarter of 2004 rose 13.1% to $29.2 million compared with net income of $25.8 million in the second quarter of 2003. Diluted net income per share for the second quarter of 2004 increased 23.5% to $0.42 compared with diluted net income per share of $0.34 in the same quarter of 2003.
Gary A. Brukardt, the Company's president and chief executive officer, commented, "We are pleased to report solid second quarter results, and we continue to execute our business plan. The integration of National Nephrology Associates is nearing completion. We remain focused on making selective acquisitions using our customary disciplined approach, and we have been actively developing de novo facilities to grow the Company. The credit for another successful quarter goes to our 8,500 associates working in concert with our dedicated affiliated nephrologists on the front lines to deliver optimal care to our patients. We hope that recently introduced legislation will bolster the industry's efforts to address some of the most pressing issues facing those who suffer from ESRD."
For the six months ended June 30, 2004, Renal Care Group's net revenues increased 26.5% to $618.9 million compared with net revenues of $489.2 million for the same period in 2003. Net income for the first half of 2004 rose 24.6% to $59.3 million, compared with net income of $47.6 million in the same period of 2003. Diluted net income per share for the six months ended June 30, 2004, increased 31.3% to $0.84 compared with diluted net income per share of $0.64 for the same period in 2003.
GAAP results for the six months ended June 30, 2004, give effect to resolutions of contractual issues with payors that were unusual in amount and timing, which favorably impacted earnings per share by $0.04 per diluted share. Excluding the effect of these resolutions, non-GAAP net income for the six months ended June 30, 2004, was $56.4 million, or $0.80 per diluted share. GAAP results for the six months ended June 30, 2003, give effect to a non-recurring, after-tax charge of $0.05 per diluted share, related to a retirement package for the Company's former chairman and founder. Excluding the effect of the retirement package, non-GAAP net income for the six months ended June 30, 2003, was $50.9 million, or $0.68 per diluted share. Renal Care Group has decided to present the non-GAAP information to give investors a means of comparing the Company's normalized operational performance for the first half of 2004 with its operational performance in the same period in 2003, before the impact of the resolutions of the payor contract issues and the one-time charge related to the retirement package. A reconciliation between the non-GAAP results and the Company's GAAP results accompanies this press release.
David M. Dill, Renal Care Group's executive vice president and chief financial officer, commented, "This quarter is the first to include the operations of NNA in our combined results. We are pleased with the contribution that the transaction has made, and we remain confident in our future outlook."
Commenting on the Nevada dialysis program acquisition, Mr. Brukardt said, "Las Vegas is a new market for us, and Nevada represents our 32nd state. We believe it will offer excellent opportunities for growth and development leveraging our existing regional infrastructure. We are proud to affiliate with Renal Dialysis of Las Vegas, which will serve as medical director for the facilities."
The Nevada dialysis program provides care to more than 525 patients at three outpatient dialysis facilities, as well as providing acute dialysis services to seven hospitals. The agreement is subject to customary closing conditions, and the Company expects the transaction to be completed within the next several weeks. The Company did not disclose terms of the transaction.
Renal Care Group will hold a conference call to discuss this press release on Wednesday, July 28, 2004, 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, Inc. is a specialized dialysis services company that provides care to patients with kidney disease. The Company currently treats over 28,700 patients at more than 395 owned outpatient dialysis facilities in addition to providing acute dialysis services at more than 200 hospitals. Over 8,500 associates provide services across the Company's 31-state network. More information about Renal Care Group, Inc. may be found at www.renalcaregroup.com.
Certain statements in this press release, particularly those of Mr. Brukardt and Mr. Dill, 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, believe, will and the like, include 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; and the integration of acquired companies. 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 annual report on Form 10-K for the year ended December 31, 2003, as amended, its current report on Form 8-K as filed with the SEC on April 19, 2004; 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 Six Months Ended
June 30, June 30,
------------------ ------------------
2004 2003 2004 2003
-------- -------- -------- --------
Net revenue $340,854 $247,061 $618,882 $489,204
Operating costs and expenses:
Patient care costs 229,849 159,998 409,221 317,475
General and administrative
expenses 27,341 21,187 50,017 47,475
Provision for doubtful
accounts 8,049 6,468 15,159 12,880
Depreciation and
amortization 14,900 11,579 27,063 21,877
-------- -------- -------- --------
Total operating costs and
expenses 280,139 199,232 501,460 399,707
Income from operations 60,715 47,829 117,422 89,497
Interest expense, net 5,765 165 6,730 450
-------- -------- -------- --------
Income before minority
interest and income taxes 54,950 47,664 110,692 89,047
Minority interest 7,690 6,029 14,904 12,337
-------- -------- -------- --------
Income before income taxes 47,260 41,635 95,788 76,710
Provision for income taxes 18,077 15,822 36,518 29,145
-------- -------- -------- --------
Net income $ 29,183 $ 25,813 $ 59,270 $ 47,565
======== ======== ======== ========
Diluted net income per share $ 0.42 $ 0.34 $ 0.84 $ 0.64
======== ======== ======== ========
Diluted weighted average
shares outstanding 69,227 74,897 70,225 74,522
======== ======== ======== ========
RENAL CARE GROUP, INC.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
June 30, December 31,
2004 2003
---------- ------------
(unaudited)
ASSETS:
Current assets:
Cash and cash equivalents $ 44,182 $ 50,295
Accounts receivable, net 231,629 173,679
Other current assets 81,021 68,130
---------- ----------
Total current assets 356,832 292,104
Property, plant and equipment, net 289,427 224,397
Goodwill, intangible assets and other
assets, net 664,825 303,372
---------- ----------
TOTAL ASSETS $1,311,084 $ 819,873
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Total current liabilities $ 218,553 $ 169,437
Long-term debt, net of current portion 490,635 2,652
Other long-term liabilities 89,252 76,939
---------- ----------
Total liabilities 798,440 249,028
---------- ----------
Stockholders' equity:
Common stock, $0.01 par value, 150,000
and 90,000 shares authorized,
81,572 and 80,465 shares issued,
respectively 816 805
Treasury stock, 14,514 and 9,961 shares,
respectively (372,249) (234,404)
Additional paid-in capital 394,777 374,414
Retained earnings 489,300 430,030
---------- ----------
Total stockholders' equity 512,644 570,845
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,311,084 $ 819,873
========== ==========
RENAL CARE GROUP, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Six Months Ended
June 30,
------------------
2004 2003
--------- --------
Operating Activities:
Net income $ 59,270 $ 47,565
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 27,063 21,877
Loss on disposal of property and equipment 564 312
Income applicable to minority interest 14,904 12,337
Distributions to minority shareholders (9,906) (12,381)
Deferred income taxes 7,889 -
Changes in operating assets and
liabilities, net of effects from
acquisitions (18,605) 5,404
--------- --------
Net cash provided by operating
activities 81,179 75,114
--------- --------
Investing Activities:
Cash paid for acquisitions, net of cash acquired (230,746) (5,492)
Purchases of property and equipment, net (45,031) (34,517)
Change in other assets (5,299) (780)
--------- --------
Net cash used in investing activities (281,076) (40,789)
--------- --------
Financing Activities:
Net proceeds from issuance of long-term debt 325,000 -
Payments on long-term debt (4,063) -
Net payments under line of credit and capital
leases (2,101) (7,240)
Net proceeds from issuance of common stock 12,793 22,280
Repurchase of treasury shares (137,845) (4,380)
--------- --------
Net cash provided by financing
activities 193,784 10,660
--------- --------
(Decrease) increase in cash and cash equivalents (6,113) 44,985
Cash and cash equivalents, at beginning of period 50,295 38,359
--------- --------
Cash and cash equivalents, at end of period $ 44,182 $ 83,344
========= ========
RENAL CARE GROUP, INC.
Supplemental GAAP to Non-GAAP Reconciliation
(unaudited, in thousands, except per share data)
Six Months Ended June 30,
-----------------------------------
2004
-----------------------------------
Non-
GAAP(1) Difference GAAP(2)
----------- ----------- -----------
Net revenue $618,882 $(4,700) $614,182
Operating costs and expenses:
Patient care costs 409,221 - 409,221
General and administrative
expenses 50,017 - 50,017
Provision for doubtful accounts 15,159 - 15,159
Depreciation and amortization 27,063 - 27,063
----------- ----------- -----------
Total operating costs and
expenses 501,460 - 501,460
Income from operations 117,422 (4,700) 112,722
Interest expense, net 6,730 - 6,730
----------- ----------- -----------
Income before minority interest
and income taxes 110,692 (4,700) 105,992
Minority interest 14,904 - 14,904
----------- ----------- -----------
Income before income taxes 95,788 (4,700) 91,088
Provision for income taxes 36,518 (1,786) 34,732
----------- ----------- -----------
Net income $ 59,270 $(2,914) $ 56,356
=========== =========== ===========
Diluted net income per share $ 0.84 $ (0.04) $ 0.80
=========== =========== ===========
Weighted average shares
outstanding 70,225 70,225 70,225
=========== =========== ===========
Six Months Ended June 30,
-----------------------------------
2003
-----------------------------------
Non-
GAAP(1) Difference GAAP(3)
----------- ----------- -----------
Net revenue $489,204 $ - $489,204
Operating costs and expenses:
Patient care costs 317,475 - 317,475
General and administrative
expenses 47,475 (5,430) 42,045
Provision for doubtful accounts 12,880 - 12,880
Depreciation and amortization 21,877 - 21,877
----------- ----------- -----------
Total operating costs and
expenses 399,707 (5,430) 394,277
Income from operations 89,497 5,430 94,927
Interest expense, net 450 - 450
----------- ----------- -----------
Income before minority interest
and income taxes 89,047 5,430 94,477
Minority interest 12,337 - 12,337
----------- ----------- -----------
Income before income taxes 76,710 5,430 82,140
Provision for income taxes 29,145 2,063 31,208
----------- ----------- -----------
Net income $ 47,565 $ 3,367 $ 50,932
=========== =========== ===========
Diluted net income per share $ 0.64 $ 0.05 $ 0.68
=========== =========== ===========
Weighted average shares outstanding 74,522 74,522 74,522
=========== =========== ===========
(1) Reflects operating results based on accounting principles
generally accepted in the United States (GAAP).
(2) Non-GAAP amounts exclude resolutions of payor contract issues
that were unusual in amount and timing.
(3) Non-GAAP amounts exclude a Board-approved retirement package
recorded 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(1)
(unaudited, dollars in thousands, except per treatment data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ----------------------
2004 2003 2004 2003
---------- -------- ---------- ----------
Operating Data:
Patients 28,748 21,197 28,748 21,197
Treatments 1,095,250 809,413 1,955,499 1,593,254
Same-market treatment
growth 3.7% 5.3% 3.6% 5.4%
Same-market revenue
growth 7.0% 8.0% 7.6% 9.0%
Patient revenue per
treatment $ 311 $ 304 $ 316 $ 306
Reconciliation of Net
Income to EBITDA(1):
Net income $ 29,183 $ 25,813 $ 59,270 $ 47,565
Non-recurring retirement
charge - - - 5,430
Depreciation and
amortization 14,900 11,579 27,063 21,877
Interest expense, net 5,765 165 6,730 450
Minority interest 7,690 6,029 14,904 12,337
Provision for income
taxes 18,077 15,822 36,518 29,145
---------- -------- ---------- ----------
EBITDA(1) $ 75,615 $ 59,408 $ 144,485 $ 116,804
========== ======== ========== ==========
(1) 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,
such as the non-recurring charge for the retirement package for
our former chairman and founder recorded in the first quarter of
2003. 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 GAAP 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.
Contact:
Renal Care Group, Inc., Nashville
Terry L. Proveaux, 615-345-5577
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