LAKE FOREST, Calif., Nov. 4, 2011 (GLOBE NEWSWIRE) -- Apria Healthcare Group Inc. ("Apria"), a quality, cost-efficient provider of home healthcare products and services in the United States, today announced its financial results for the quarter ended September 30, 2011.
2011 Third Quarter Highlights
Net revenues in the three months ended September 30, 2011 were $584.9 million, compared to $526.0 million in the three months ended September 30, 2010, an increase of $58.9 million or 11.2%. Revenue for the three months ended September 30, 2011 increased primarily due to an increase in home infusion therapy segment revenue and the previously announced acquisition of Praxair assets. The revenue increase was partially offset by the non-renewal or termination of, or changes to, certain payor contracts among other factors.
Net loss for the three months ended September 30, 2011 was $4.7 million.
EBITDA1 for the three months ended September 30, 2011 was $59.6 million.
Adjusted EBITDA before projected cost savings and synergies1 for the three months ended September 30, 2011 was $76.5 million.
2011 First Nine Months Highlights
Net revenues in the nine months ended September 30, 2011 were $1,698.0 million, compared to $1,553.1 million in the nine months ended September 30, 2010, an increase of $144.9 million or 9.3%. Revenue for the nine months ended September 30, 2011 increased primarily due to an increase in home infusion therapy segment revenue and the previously announced acquisition of Praxair assets. The revenue increase was partially offset by the non-renewal or termination of, or changes to, certain payor contracts among other factors.
Net loss for the nine months ended September 30, 2011 was $35.1 million.
EBITDA1 for the nine months ended September 30, 2011 was $146.3 million.
Adjusted EBITDA before projected cost savings and synergies1 for the nine months ended September 30, 2011 was $198.7 million.
Recent Events – Amended and Restated Asset Based Line ("ABL") Facility
On August 8, 2011, the Company entered into an amended and restated senior secured asset-based revolving credit facility, or ABL Facility. This amended and restated ABL Facility increased the borrowing capacity (subject to borrowing base) under the original ABL Facility from $150.0 million to $250.0 million. The ABL Facility continues to be secured by accounts receivable and inventory of the Company.
Certain Credit Statistics
Adjusted EBITDA before projected cost savings and synergies1 for the twelve months ended September 30, 2011 was $248.5 million.
Our net leverage ratio, defined as the ratio of net debt to Adjusted EBITDA1, was 3.7x at September 30, 2011.
Cost Reduction Initiatives Update
The following table summarizes our cost reduction initiatives as of September 30, 2011:
| (in millions) |
As of September 30, 2011 |
| Realized Savings to Date | $ 171.2 |
| Projected Cost Savings and Synergies Not Yet Realized | 10.1 |
| Total Expected Annual Savings | $ 181.3 |
Conference Call
As previously announced, Apria will hold a conference call to discuss its third quarter 2011 results on November 4, 2011 at 1:00 p.m. (Eastern Daylight Time). The conference call can be accessed live over the phone by dialing 866-900-5939 or, for international callers, 706-758-0130 or through the Investor Relations page of the Company's website at www.apria.com. The passcode for the live call is Apria.
A replay of the conference call will be available one hour after the call and can be accessed by dialing 855-859-2056 or, for international callers, 404-537-3406 or through the Investor Relations page of the Company's website. The passcode for the replay is 21592579. The replay will be available until November 18, 2011.
A financial results presentation will be made available immediately prior to the call on the Investor Relations page of the Company's website at www.apria.com.
Forward Looking Statements
Statements contained herein that are not historical facts and that reflect the current view of Apria's management about future events and financial performance are hereby identified as "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Some of these statements can be identified by terms and phrases such as "anticipate," "believe," "intend," "estimate," "expect," "continue," "could," "should," "may," "plan," "project," "predict" and similar expressions. The Company cautions that such "forward looking statements," including without limitation, those relating to the Company's future business prospects, revenue, working capital, professional liability expense, liquidity, capital needs, interest costs and income, wherever they occur in this or in other statements attributable to the Company, are necessarily estimates reflecting the judgment of the Company's senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the "forward looking statements." Factors that could cause our actual results to differ materially from those expressed or implied in such forward looking statements include but are not limited to current or future government regulation of the healthcare industry, exposure to professional liability lawsuits and governmental agency investigations, the adequacy of insurance coverage and insurance reserves, as well as those factors detailed under the caption "Risk Factors" and "Management's Discussion and Analysis of Financial Condition" in the Company's filings with the Securities and Exchange Commission. The Company's "forward looking statements" speak only as of the date hereof and the Company disclaims any intent or obligation to update "forward looking statements" herein to reflect changed assumptions, the occurrence of unanticipated events, or changes to future operating results over time.
About Apria Healthcare Group Inc.
Apria provides home respiratory therapy, home infusion therapy and home medical equipment services through approximately 550 locations in the United States. With over $2 billion in annual revenues, it is one of the nation's leading home healthcare companies. For more information, visit www.apria.com or www.coramhc.com.
1 This press release includes several metrics, including EBITDA, Adjusted EBITDA and Adjusted EBITDA before projected cost savings and synergies that are not calculated in accordance with Generally Accepted Accounting Principles ("GAAP"). See "Definition of Terms and Reconciliation of Non-GAAP Financial Measures" section at the end of this press release for the definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDA before projected cost savings and synergies and their reconciliation to net income (loss).
| Apria Healthcare Group Inc. | ||||
| Condensed Consolidated Balance Sheets | ||||
| September 30, 2011 |
December 31, 2010 |
|||
| (Unaudited) | ||||
| (in thousands, except share data) | ||||
| ASSETS | ||||
| CURRENT ASSETS | ||||
| Cash and cash equivalents | $ 57,927 | $ 109,137 | ||
| Accounts receivable, less allowance for doubtful accounts of $56,155 and $56,559 at September 30, 2011 and December 31, 2010, respectively | 325,876 | 282,798 | ||
| Inventories | 61,725 | 73,894 | ||
| Deferred income taxes | 68,764 | 58,028 | ||
| Deferred expenses | 3,209 | 3,061 | ||
| Prepaid expenses and other current assets | 21,103 | 20,221 | ||
| TOTAL CURRENT ASSETS | 538,604 | 547,139 | ||
| PATIENT SERVICE EQUIPMENT, less accumulated depreciation of $168,733 and $144,074 at September 30, 2011 and December 31, 2010, respectively | 201,902 | 169,878 | ||
| PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET | 93,266 | 83,893 | ||
| GOODWILL | 765,245 | 760,088 | ||
| INTANGIBLE ASSETS, NET | 576,874 | 578,957 | ||
| DEFERRED DEBT ISSUANCE COSTS, NET | 47,916 | 53,659 | ||
| OTHER ASSETS | 8,783 | 7,523 | ||
| TOTAL ASSETS | $ 2,232,590 | $ 2,201,137 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
| CURRENT LIABILITIES | ||||
| Accounts payable | $ 110,952 | $ 86,637 | ||
| Accrued payroll and related taxes and benefits | 77,842 | 59,073 | ||
| Other accrued liabilities | 120,625 | 90,447 | ||
| Deferred revenue | 29,589 | 26,504 | ||
| Current portion of long-term debt | 382 | 1,323 | ||
| TOTAL CURRENT LIABILITIES | 339,390 | 263,984 | ||
| LONG-TERM DEBT, net of current portion | 1,017,838 | 1,018,098 | ||
| DEFERRED INCOME TAXES | 221,177 | 222,743 | ||
| INCOME TAXES PAYABLE AND OTHER NON-CURRENT LIABILITIES | 22,743 | 31,000 | ||
| TOTAL LIABILITIES | 1,601,148 | 1,535,825 | ||
| COMMITMENTS AND CONTINGENCIES | ||||
| STOCKHOLDERS' EQUITY | ||||
| Common stock, $0.01 par value: 1,000 shares authorized; 100 shares issued at September 30, 2011 and December 31, 2010 | — | — | ||
| Additional paid-in capital | 689,736 | 688,458 | ||
| Accumulated deficit | (58,294) | (23,146) | ||
| TOTAL STOCKHOLDERS' EQUITY | 631,442 | 665,312 | ||
| $ 2,232,590 | $ 2,201,137 | |||
| Apria Healthcare Group Inc. | ||||||||
| Condensed Consolidated Statements of Operations | ||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
| 2011 | 2010 | 2011 | 2010 | |||||
| (Unaudited) | (Unaudited) | |||||||
| (in thousands) | ||||||||
| Net revenues: | ||||||||
| Fee for service arrangements | $ 542,391 | $ 486,027 | $ 1,572,304 | $ 1,433,562 | ||||
| Capitation arrangements | 42,483 | 39,987 | 125,661 | 119,506 | ||||
| TOTAL NET REVENUES | 584,874 | 526,014 | 1,697,965 | 1,553,068 | ||||
| Costs and expenses: | ||||||||
| Cost of net revenues: | ||||||||
| Product and supply costs | 190,241 | 167,198 | 558,563 | 488,265 | ||||
| Patient service equipment depreciation | 27,588 | 23,094 | 73,470 | 71,843 | ||||
| Home respiratory therapy services | 6,726 | 5,456 | 18,829 | 21,671 | ||||
| Nursing services | 10,677 | 9,258 | 31,204 | 27,258 | ||||
| Other | 4,322 | 2,978 | 10,796 | 9,871 | ||||
| TOTAL COST OF NET REVENUES | 239,554 | 207,984 | 692,862 | 618,908 | ||||
| Provision for doubtful accounts | 14,511 | 10,981 | 51,353 | 39,801 | ||||
| Selling, distribution and administrative | 307,810 | 271,157 | 907,508 | 787,738 | ||||
| Amortization of intangible assets | 1,172 | 1,035 | 3,370 | 3,777 | ||||
| TOTAL COSTS AND EXPENSES | 563,047 | 491,157 | 1,655,093 | 1,450,224 | ||||
| OPERATING INCOME | 21,827 | 34,857 | 42,872 | 102,844 | ||||
| Interest expense | 33,228 | 32,736 | 99,158 | 97,971 | ||||
| Interest income and other | 176 | (250) | (114) | (555) | ||||
| (LOSS) INCOME BEFORE TAXES | (11,577) | 2,371 | (56,172) | 5,428 | ||||
| Income tax (benefit) expense | (6,890) | 2,476 | (21,024) | 2,970 | ||||
| NET (LOSS) INCOME | $ (4,687) | $ (105) | $ (35,148) | $ 2,458 | ||||
| Apria Healthcare Group Inc. | |||||
| Condensed Consolidated Statements of Cash Flows | |||||
| Nine Months Ended September 30, | |||||
| 2011 | 2010 | ||||
| (Unaudited) | |||||
| (in thousands) | |||||
| OPERATING ACTIVITIES | |||||
| Net (loss) income | $ (35,148) | $ 2,458 | |||
| Items included in net (loss) income not requiring cash: | |||||
| Provision for doubtful accounts | 51,353 | 39,801 | |||
| Depreciation | 100,095 | 93,722 | |||
| Amortization of intangible assets | 3,370 | 3,777 | |||
| Amortization of deferred debt issuance costs | 9,130 | 7,919 | |||
| Deferred income taxes | (12,302) | 4,686 | |||
| Profit interest compensation | 2,278 | 3,194 | |||
| Loss on disposition of assets and other | 12,906 | 12,472 | |||
| Changes in operating assets and liabilities, exclusive of effects of acquisitions: | |||||
| Accounts receivable | (94,432) | (96,060) | |||
| Inventories | 1,356 | (1,223) | |||
| Prepaid expenses and other assets | (1,929) | (270) | |||
| Accounts payable, exclusive of book cash overdraft | 11,668 | 2,730 | |||
| Accrued payroll and related taxes and benefits | 18,578 | (4,152) | |||
| Income taxes payable | (11,290) | (2,126) | |||
| Deferred revenue, net of related expenses | 2,938 | (247) | |||
| Accrued expenses | 33,211 | 27,357 | |||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 91,782 | 94,038 | |||
| INVESTING ACTIVITIES | |||||
| Purchases of patient service equipment and property, equipment and improvements, exclusive of effects of acquisitions | (114,089) | (84,682) | |||
| Purchases of short-term investments | — | (8,087) | |||
| Maturities of short-term investments | — | 31,507 | |||
| Proceeds from disposition of assets | 162 | 634 | |||
| Cash paid for acquisitions | (23,478) | (2,260) | |||
| NET CASH USED IN INVESTING ACTIVITIES | (137,405) | (62,888) | |||
| FINANCING ACTIVITIES | |||||
| Payments on other long-term debt | (1,200) | (1,314) | |||
| Change in book cash overdraft included in accounts payable | — | (32,533) | |||
| Debt issuance costs | (3,387) | (3,590) | |||
| Cash paid on profit interest units | (1,000) | (78) | |||
| NET CASH USED IN FINANCING ACTIVITIES | (5,587) | (37,515) | |||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (51,210) | (6,365) | |||
| Cash and cash equivalents at beginning of period | 109,137 | 158,163 | |||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 57,927 | $ 151,798 | |||
| Apria Healthcare Group Inc. | |||||||||
| 3rd Quarter 2011 Financial Summary | |||||||||
|
Three Months Ended September 30, |
$ Variance |
% Variance |
|||||||
| ($ in millions) | 2011 | 2010 | Fav/(Unfav) | Fav/(Unfav) | |||||
| Net Revenue | $ 584.9 | $ 526.0 | $ 58.9 | 11.2% | |||||
| Gross Profit | 345.3 | 318.0 | 27.3 | 8.6% | |||||
| % Margin | 59.0% | 60.5% | |||||||
| Provision for Doubtful Accounts | 14.5 | 11.0 | (3.5) | (31.8)% | |||||
| % of Net Revenue | 2.5% | 2.1% | |||||||
| Selling, Distribution and Administrative | 307.8 | 271.2 | (36.6) | (13.5)% | |||||
| % of Net Revenue | 52.6% | 51.6% | |||||||
| Adjusted EBITDA Before Projected Cost Savings and Synergies | 76.5 | 86.0 | (9.5) | (11.0)% | |||||
| % of Net Revenue | 13.1% | 16.3% | |||||||
| Net Loss | (4.7) | (0.1) | (4.6) | (4,600.0)% | |||||
| EBITDA | 59.6 | 67.1 | (7.5) | (11.2)% | |||||
|
Nine Months Ended September 30, |
$ Variance |
% Variance |
|||
| ($ in millions) | 2011 | 2010 | Fav/(Unfav) | Fav/(Unfav) | |
| Net Revenue | $ 1,698.0 | $ 1,553.1 | $ 144.9 | 9.3% | |
| Gross Profit | 1,005.1 | 934.2 | 70.9 | 7.6% | |
| % Margin | 59.2% | 60.1% | |||
| Provision for Doubtful Accounts | 51.4 | 39.8 | (11.6) | (29.1)% | |
| % of Net Revenue | 3.0% | 2.6% | |||
| Selling, Distribution and Administrative | 907.5 | 787.7 | (119.8) | (15.2)% | |
| % of Net Revenue | 53.4% | 50.7% | |||
| Adjusted EBITDA Before Projected Cost Savings and Synergies | 198.7 | 257.5 | (58.8) | (22.8)% | |
| % of Net Revenue | 11.7% | 16.6% | |||
| Net (Loss) Income | (35.1) | 2.4 | (37.5) | (1,562.5)% | |
| EBITDA | 146.3 | 200.3 | (54.0) | (27.0)% | |
Service Line Revenue Performance
| ($ in millions) |
Three Months Ended September 30, |
$ Variance |
% Variance |
||
| 2011 | 2010 | Fav/(Unfav) | Fav/(Unfav) | ||
| Home Respiratory Therapy and Home Medical Equipment | $ 293.4 | $ 270.2 | $ 23.2 | 8.6% | |
| Home Infusion Therapy | 291.5 | 255.8 | 35.7 | 14.0% | |
| Total Net Revenue | $ 584.9 | $ 526.0 | $ 58.9 | 11.2% | |
| ($ in millions) |
Nine Months Ended September 30, |
$ Variance |
% Variance |
||
| 2011 | 2010 | Fav/(Unfav) | Fav/(Unfav) | ||
| Home Respiratory Therapy and Home Medical Equipment | $ 862.1 | $ 821.7 | $ 40.4 | 4.9% | |
| Home Infusion Therapy | 835.9 | 731.4 | 104.5 | 14.3% | |
| Total Net Revenue | $ 1,698.0 | $ 1,553.1 | $ 144.9 | 9.3% | |
Cash and Cash Equivalents, Capitalization & Certain Credit Statistics
The following table indicates the cash and cash equivalents, capitalization and certain credit statistics as of September 30, 2011:
| ($ in millions) |
September 30, 2011 |
| Cash and Cash Equivalents | $ 57.9 |
| Debt | |
| Asset Based Revolving Credit Facility | — |
| Series A-1 Notes | 700.0 |
| Series A-2 Notes | 317.5 |
| Capital Leases & Other | 0.7 |
| Total Debt | $ 1,018.2 |
| Shareholders' Equity | 631.4 |
| Total Capitalization | $ 1,649.6 |
| Net Leverage Ratio Calculations | |
| Net Debt1 | $ 960.3 |
| Adjusted EBITDA2 | $ 258.6 |
| Net Leverage Ratio3 | 3.7× |
1 Net debt is defined as total debt less cash and cash equivalents. This amount does not reflect outstanding letters of credit.
2 For the twelve months ended September 30, 2011.
3 Net leverage ratio is defined as the ratio of net debt to Adjusted EBITDA. The net leverage ratio calculated using Adjusted EBITDA before projected cost savings and synergies is 3.9×.
Definition of Terms and Reconciliation of Non-GAAP Financial Measures
This press release includes several metrics which are not calculated in accordance with GAAP, including EBITDA, Adjusted EBITDA, Adjusted EBITDA before projected cost savings and synergies and Free Cash Flow. EBITDA, Adjusted EBITDA, Adjusted EBITDA before projected cost savings and synergies and Free Cash Flow are not recognized terms under GAAP and do not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, these measures are not intended to be measures of Free Cash Flow available for management's discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Our presentation of EBITDA, Adjusted EBITDA, Adjusted EBITDA before projected cost savings and synergies and Free Cash Flow may not be comparable to other similarly titled measures of other companies. We believe that such measures provide useful information about our financial condition and covenant compliance under the indenture governing our Series A-1 Notes and Series A-2 Notes and in our ABL Facility to investors and we compensate for the limitations of using non-GAAP financial measures by presenting them together with GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.
EBITDA is defined as net income (loss) before interest expense, net, income tax expense and depreciation and amortization.
Adjusted EBITDA is defined as net income (loss) before interest expense, net, income tax expense and depreciation and amortization, further adjusted to exclude certain non-cash items, costs incurred related to initiatives, other adjustment items and projected cost savings and synergies permitted in calculating covenant compliance under the indenture governing our Series A-1 Notes and Series A-2 Notes and the credit agreement governing our ABL Facility.
Adjusted EBITDA before projected cost savings and synergies is defined as Adjusted EBITDA less the projected cost savings and synergies that we expect to realize in connection with cost savings, restructuring and other similar initiatives.
Free Cash Flow is defined as cash provided by operating activities less purchases of patient service equipment and property, equipment and improvements, exclusive of effects of acquisitions.
The following tables provide reconciliation of EBITDA, Adjusted EBITDA, Adjusted EBITDA before projected cost savings and synergies and Free Cash Flow for the periods presented to the respective most closely comparable financial measures calculated in accordance with GAAP.
Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA before projected cost savings and synergies
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
LTM September 30, |
|||
| (in millions) | 2011 | 2010 | 2011 | 2010 | 2011 |
| Net (Loss) Income | $ (4.7) | $ (0.1) | $ (35.1) | $ 2.4 | $ (55.0) |
| Interest expense, net | 33.6 | 32.4 | 99.0 | 97.4 | 131.5 |
| Income tax (benefit) expense | (6.9) | 2.5 | (21.0) | 3.0 | (31.9) |
| Depreciation and amortization | 37.6 | 32.3 | 103.4 | 97.5 | 134.6 |
| EBITDA | 59.6 | 67.1 | 146.3 | 200.3 | 179.2 |
| Non-cash items | 5.4 | 4.3 | 15.2 | 15.7 | 21.1 |
| Costs incurred related to initiatives | 9.7 | 12.4 | 32.0 | 33.3 | 40.7 |
| Other adjustments | 1.8 | 2.2 | 5.2 | 8.2 | 7.5 |
| Adjusted EBITDA Before Projected Cost Savings and Synergies | $ 76.5 | $ 86.0 | $ 198.7 | $ 257.5 | 248.5 |
| Projected cost savings and synergies | 10.1 | ||||
| Adjusted EBITDA | $ 258.6 | ||||
Definition of Terms and Reconciliation of Non-GAAP Financial Measures (continued)
Reconciliation of Free Cash Flow
| (in millions) |
Three Months Ended September 30, 2011 |
Nine Months Ended September 30, 2011 |
| Net Loss | $ (4.7) | $ (35.1) |
| Non-cash items | 64.4 | 166.8 |
| Change in operating assets and liabilities | 13.5 | (39.9) |
| Net cash provided by operating activities | 73.2 | 91.8 |
| Less: Purchases of patient service equipment and property, equipment and improvements | (37.7) | (114.1) |
| Free Cash Flow | $ 35.5 | $ (22.3) |