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NASHVILLE, Tenn.--(BUSINESS WIRE)--Oct. 26, 2004--Renal Care Group, Inc. (NYSE:RCI - News) today announced results for the third quarter and nine months ended September 30, 2004.
For the three months ended September 30, 2004, Renal Care Group's net revenues increased 40.3% to $356.1 million compared with net revenues of $253.8 million for the same period in 2003. Net income for the third quarter of 2004 rose 14.8% to $30.5 million compared with net income of $26.5 million in the third quarter of 2003. Diluted net income per share for the third quarter of 2004 increased 25.7% to $0.44 compared with diluted net income per share of $0.35 in the same quarter of 2003.
Gary A. Brukardt, Renal Care Group's president and chief executive officer, commented, "During third quarter 2004, we faced significant weather-related challenges along the Gulf Coast, but we remained focused on delivering optimal care to all of our patients. Associates placed the needs of our patients ahead of their own personal interests throughout the crisis. Looking ahead, our dynamic culture and the strong commitment of our 8,800 associates enables us to set aggressive, but achievable, clinical and financial objectives for 2005, reaffirming our goal of achieving, on average, 15% growth in earnings per share."
For the nine months ended September 30, 2004, Renal Care Group's net revenues increased 31.2% to $975.0 million compared with net revenues of $743.0 million for the same period in 2003. Net income for the nine months ended September 30, 2004, rose 21.1% to $89.7 million, compared with net income of $74.1 million in the same period of 2003. Diluted net income per share for the nine months ended September 30, 2004, increased 29.3% to $1.28 compared with diluted net income per share of $0.99 for the same period in 2003.
GAAP results for the nine months ended September 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 nine months ended September 30, 2004, was $86.8 million, or $1.24 per diluted share. GAAP results for the nine months ended September 30, 2003, give effect to a non-recurring, after-tax charge of $0.04 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 nine months ended September 30, 2003, was $77.5 million, or $1.03 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 nine months ended September 30, 2004, with its operational performance in the same period in 2003, before the impact of the one-time benefit related to resolutions of the payor contract issues and the one-time charge for 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, "In the third quarter, we experienced modest organic volume growth, but we believe we can achieve 3-5% same-market treatment growth over the long-term. We are extremely pleased with the contribution of NNA reflected in our operating results. We are disclosing our key clinical and financial objectives for 2005."
Fiscal 2005 Corporate Objectives:
Hematocrit Level 75% of patients over 33%
Kt/V 85% of patients over 1.4
Revenues $1.5 - $1.6 billion
Earnings per Share $1.95 - $2.05
Same-Market Treatment Growth 3% - 5%
Same-Market Revenue Growth 5% - 8%
Patients 32,500 - 33,500
Treatments 4.7- 4.9 million
Capital Expenditures $90 - $100 million
Acquisition Target 1,000 -1,500 patients
Renal Care Group will hold a conference call to discuss this press release on Wednesday, October 27, 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 serves over 29,700 patients at more than 410 owned outpatient dialysis facilities in addition to providing acute dialysis services at more than 200 hospitals. Over 8,800 associates provide services across the Company's 33-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 and the fiscal 2005 corporate objectives, 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: payment reductions by private insurers, hospitals or managed care organizations; changes in the Medicare and Medicaid programs; 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 its quarterly reports on Form 10-Q for the quarters ended March 31, 2004 and June 30, 2004. 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 Nine Months Ended
September 30, September 30,
------------------ ------------------
2004 2003 2004 2003
-------- -------- -------- --------
Net revenue $356,111 $253,835 $974,993 $743,039
Operating costs and expenses:
Patient care costs 239,400 164,962 648,621 482,437
General and administrative
expenses 26,336 21,225 76,353 68,700
Provision for doubtful
accounts 8,464 6,556 23,623 19,436
Depreciation and
amortization 15,344 11,365 42,407 33,242
-------- -------- -------- --------
Total operating costs and
expenses 289,544 204,108 791,004 603,815
Income from operations 66,567 49,727 183,989 139,224
Interest expense, net 6,869 76 13,599 526
-------- -------- -------- --------
Income before minority
interest and income taxes 59,698 49,651 170,390 138,698
Minority interest 10,158 6,837 25,062 19,174
-------- -------- -------- --------
Income before income taxes 49,540 42,814 145,328 119,524
Provision for income taxes 19,072 16,269 55,590 45,414
-------- -------- -------- --------
Net income $ 30,468 $ 26,545 $ 89,738 $ 74,110
======== ======== ======== ========
Diluted net income per share $ 0.44 $ 0.35 $ 1.28 $ 0.99
======== ======== ======== ========
Diluted weighted average
shares outstanding 69,339 75,626 69,930 74,889
======== ======== ======== ========
RENAL CARE GROUP, INC.
Condensed Consolidated Balance Sheets
(in thousands)
September 30, December 31,
2004 2003
---------- ---------
(unaudited)
ASSETS:
Current assets:
Cash and cash equivalents $ 41,953 $ 50,295
Accounts receivable, net 253,157 173,679
Other current assets 82,557 68,130
---------- ---------
Total current assets 377,667 292,104
Property, plant and equipment, net 302,704 224,397
Goodwill, intangible assets and other assets, net 709,108 303,372
---------- ---------
TOTAL ASSETS $1,389,479 $ 819,873
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Total current liabilities $ 239,540 $ 169,437
Long-term debt, net of current portion 493,921 2,652
Other long-term liabilities 106,945 76,939
---------- ---------
Total liabilities 840,406 249,028
---------- ---------
Stockholders' equity:
Common stock, $0.01 par value, 150,000 and
90,000 shares authorized,
81,888 and 80,465 shares issued,
respectively 820 805
Treasury stock, 14,514 and 9,961 shares,
respectively (372,249) (234,404)
Additional paid-in capital 401,779 374,414
Retained earnings 519,768 430,030
Accumulated comprehensive loss, net of tax (1,045) -
---------- ---------
Total stockholders' equity 549,073 570,845
---------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,389,479 $ 819,873
========== =========
RENAL CARE GROUP, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended
September 30,
-----------------
2004 2003
------- --------
Operating Activities:
Net income $ 89,738 $ 74,110
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 42,407 33,242
Loss on disposal of property and equipment 624 443
Income applicable to minority interest 25,062 19,174
Distributions to minority shareholders (11,409) (16,819)
Deferred income taxes 10,734 7,950
Changes in operating assets and
liabilities,
net of effects from acquisitions (21,062) 30,163
--------- --------
Net cash provided by operating
activities 136,094 148,263
--------- --------
Investing Activities:
Cash paid for acquisitions, net of cash
acquired (274,644) (14,154)
Purchases of property and equipment, net (66,463) (44,043)
Change in other assets (7,185) (1,968)
--------- --------
Net cash used in investing activities (348,292) (60,165)
--------- --------
Financing Activities:
Net proceeds from issuance of long-term debt 325,000 -
Payments on long-term debt (8,125) -
Net borrowings (payments) under line of credit
and capital leases 7,027 (7,208)
Net proceeds from issuance of common stock 17,799 37,121
Repurchase of treasury shares (137,845) (35,242)
--------- --------
Net cash provided by (used in)
financing activities 203,856 (5,329)
--------- --------
(Decrease) increase in cash and cash equivalents (8,342) 82,769
Cash and cash equivalents, at beginning of period 50,295 38,359
--------- --------
Cash and cash equivalents, at end of period $ 41,953 $121,128
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RENAL CARE GROUP, INC.
Supplemental GAAP to Non-GAAP Reconciliation
(unaudited, in thousands, except per share data)
Nine Months Ended
September 30, 2004
----------------------------
Non-
GAAP(1) Difference GAAP(2)
-------- ---------- --------
Net revenue $974,993 $(4,700) $970,293
Operating costs and expenses:
Patient care costs 648,621 - 648,621
General and administrative expenses 76,353 - 76,353
Provision for doubtful accounts 23,623 - 23,623
Depreciation and amortization 42,407 - 42,407
-------- -------- --------
Total operating costs and expenses 791,004 - 791,004
Income from operations 183,989 (4,700) 179,289
Interest expense, net 13,599 - 13,599
-------- -------- --------
Income before minority interest
and income taxes 170,390 (4,700) 165,590
Minority interest 25,062 - 25,062
-------- -------- --------
Income before income taxes 145,328 (4,700) 140,628
Provision for income taxes 55,590 (1,786) 53,804
-------- ------- --------
Net income $ 89,738 $(2,914) $ 86,824
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Diluted net income per share $ 1.28 $ (0.04) $ 1.24
======== ======= ========
Weighted average shares outstanding 69,930 69,930 69,930
======== ======= ========
Nine Months Ended
September 30, 2003
--------------------------
Non-
GAAP(1) Difference GAAP(3)
-------- ---------- -------
Net revenue $743,039 $ - $743,039
Operating costs and expenses:
Patient care costs 482,437 - 482,437
General and administrative expenses 68,700 (5,430) 63,270
Provision for doubtful accounts 19,436 - 19,436
Depreciation and amortization 33,242 - 33,242
-------- -------- --------
Total operating costs and expenses 603,815 (5,430) 598,385
Income from operations 139,224 5,430 144,654
Interest expense, net 526 - 526
-------- -------- --------
Income before minority interest
and income taxes 138,698 5,430 144,128
Minority interest 19,174 - 19,174
-------- -------- --------
Income before income taxes 119,524 5,430 124,954
Provision for income taxes 45,414 2,063 47,477
-------- ------- --------
Net income $ 74,110 $ 3,367 $ 77,477
======== ======= ========
Diluted net income per share $ 0.99 $ 0.04 $ 1.03
======== ======= ========
Weighted average shares outstanding 74,889 74,889 74,889
======== ======= ========
(1) Reported operating results in accordance with accounting
principles generally accepted in the United States (GAAP).
(2) Non-GAAP amounts in 2004 exclude resolutions of payor contract
issues recorded in the first quarter of 2004 that were unusual in
amount and timing and the related tax effect.
(3) Non-GAAP amounts in 2003 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 operating data)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ----------------------
2004 2003 2004 2003
---------- -------- ---------- ----------
Operating Data:
Patients 29,332 21,301 29,332 21,301
Treatments 1,125,021 822,551 3,080,520 2,415,805
Same-market treatment
growth 3.2% 5.0% 3.6% 5.3%
Same-market revenue
growth 7.2% 7.2% 7.5% 8.4%
Patient revenue per
treatment $ 314 $ 308 $ 315 $ 307
Reconciliation of Net
Income to EBITDA(1):
Net income $ 30,468 $ 26,545 $ 89,738 $ 74,110
Non-recurring retirement
charge - - - 5,430
Depreciation and
amortization 15,344 11,365 42,407 33,242
Interest expense, net 6,869 76 13,599 526
Minority interest 10,158 6,837 25,062 19,174
Provision for income
taxes 19,072 16,269 55,590 45,414
---------- -------- ---------- ----------
EBITDA(1) $ 81,911 $ 61,092 $ 226,396 $ 177,896
========== ======== ========== ==========
(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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