American HomePatient, Inc. (OTCBB: AHOM), one of the nation’s
largest home health care providers, today announced its financial
results for the second quarter and six months ended June 30,
2010.
Revenues for the second quarter of 2010 were $69.2 million
compared to $66.0 million for the second quarter of 2009,
representing an increase of $3.2 million, or 4.8%. Revenues for the
six months ended June 30, 2010 were $136.2 million compared to
$132.2 million for the same period in 2009, representing an
increase of $4.0 million, or 3.0%. The increase in revenue is
primarily attributable to growth in the Company’s core respiratory
product lines of oxygen and sleep therapy, partially offset by
reductions in revenue associated with non-respiratory home medical
equipment and infusion therapy as a result of the Company’s
continued reduction in emphasis of these less profitable product
lines.
Operating expenses declined in the second quarter of 2010
compared to the second quarter of 2009 by approximately $0.5
million, or 1.4%. Operating expenses for the six months ended June
30, 2010 compared to the same period in 2009 declined by $1.1
million, or 1.6%. The decrease in operating expenses is primarily
the result of improved operating efficiencies.
Earnings before interest, taxes, depreciation, and amortization
(EBITDA) is a non-GAAP financial measurement that is calculated as
net income excluding interest, taxes, depreciation and
amortization. Adjusted EBITDA (EBITDA excluding debt restructuring
and tender offer expenses (discussed below) and gain on
extinguishment of debt) was $11.7 million, or 16.9% of net revenue,
for the second quarter of 2010 compared to $8.4 million, or 12.7%
of net revenue, for the same period of 2009. Adjusted EBITDA was
$19.7 million, or 14.4% of net revenue, for the six months ended
June 30, 2010 compared to $15.7 million, or 11.9% of net revenue,
for the same period of 2009.
Net income for the second quarter of 2010 was $0.9 million, or
$0.05 per diluted share, compared to a net loss of $(4.0) million,
or $(0.23) per diluted share, for the second quarter of 2009. Net
loss for the six months ended June 30, 2010 was $(2.9) million, or
$(0.17) per diluted share, compared to $(9.2) million, or $(0.52)
per diluted share, for the same period in 2009.
The increase in adjusted EBITDA and net income in the current
year is primarily the result of growth in the Company’s core
respiratory product lines and continued improvement in operating
efficiencies. Net income in the current year also includes gain on
extinguishment of debt of $1.5 million.
Prior to January 1, 2010, the Company accounted for its
50%-owned joint ventures as equity investments. Effective January
1, 2010, the Company began consolidating its 50%-owned joint
ventures as a result of the Company’s adoption of Accounting
Standards Update 2009-17, which is effective for periods beginning
after December 15, 2009. For comparative purposes, prior period
financial statements have been revised to reflect consolidation of
the 50%-owned joint ventures retrospectively.
Secured Debt Maturity and
Restructuring Transactions
The Company had secured debt of $226.4 million that was due to
be repaid on August 1, 2009. As previously announced, the Company
entered into an agreement with its senior debt holders and its
largest stockholder, an investment fund managed by Highland Capital
Management, to complete transactions that are intended to result in
a going-private transaction followed by a restructuring of the
Company’s secured debt. Per the terms of the restructuring
agreement, the Company retired approximately $10.2 million of its
outstanding secured debt obligations held by a single entity at a
15% discount. Also, per the terms of the restructuring agreement,
the Company successfully reincorporated in Nevada effective June
30, 2010, and the new Nevada entity commenced a tender offer to
acquire all outstanding shares of stock not held by Highland
managed accounts for $0.67 per share. If the tender offer is
completed, the stock of American HomePatient would cease to be
publicly traded.
American HomePatient, Inc. is one of the nation’s largest home
health care providers with operations in 33 states. Its product and
service offerings include respiratory services, infusion therapy,
parenteral and enteral nutrition, and medical equipment for
patients in their home. American HomePatient, Inc.’s common stock
is currently traded in the over-the-counter market or, on
application by broker-dealers, in the NASD’s Electronic Bulletin
Board under the symbol AHOM or AHOM.OB.
American HomePatient, Inc. prepares its financial statements in
accordance with U.S. generally accepted accounting principles
(GAAP). American HomePatient, Inc. also provides information
related to non-GAAP financial measurements such as EBITDA, and from
time to time, other non-GAAP financial measurements that adjust for
certain items outside of the ordinary course of its business. To
enable interested parties to reconcile non-GAAP measures to the
Company’s GAAP financial statements, the Company clearly defines
EBITDA and quantifies all other adjustments to GAAP measurements
(see Schedule B). The Company provides EBITDA information, a widely
used non-GAAP financial measurement, as a performance measure to
assist in analyzing the Company’s operations and in comparing the
Company to its competitors. The Company provides other non-GAAP
financial measurements that adjust for certain items outside of the
ordinary course of business in order to assist in comparing the
Company’s current operating performance to its historical
performance. These adjustments typically reflect non-recurring
items but sometimes reflect items, such as dispositions of assets
and restructuring charges that are not technically non-recurring
but are outside of the ordinary course of operations. Investors
should note that such measures may not be comparable to similarly
titled measures used by other companies, and investors are
encouraged to use this information only in connection with the
information contained in the Company’s GAAP financial
statements.
Certain statements made in this press release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are based on management’s current expectations and
include known and unknown risks, uncertainties and other factors,
many of which the Company is unable to predict or control, that may
cause the Company’s actual results or performance to materially
differ from any future results or performance expressed or implied
by such forward-looking statements. These statements involve risks
and uncertainties, including, without limitation, risks and
uncertainties regarding the restructuring plan and its components
(including the self-tender offer), the ability to complete the
restructuring plan and the effect of not completing the
restructuring plan, the status of the Company’s secured debt,
current and future reimbursement rates, and reimbursement
reductions and the Company’s ability to mitigate the impact of the
reductions. These risks and uncertainties are in addition to risks,
uncertainties, and other factors detailed from time to time in the
Company’s filings with the Securities and Exchange Commission. The
Company cautions investors that any forward-looking statements made
by the Company are not necessarily indicative of future
performance. The Company is not responsible for updating the
information contained in this press release beyond the published
date, or for changes made to this document by wire services or
Internet services.
American HomePatient,
Inc. Schedule A Summary Financial Data (In
thousands, except per share data)
Three Months Ended June 30, Six Months
Ended June 30, 2010 2009
2010 2009 (unaudited)
(unaudited) Revenues, net $ 69,176 $ 65,996 $ 136,181
$ 132,156 Cost of sales and related services 14,135 13,997 28,704
28,375 Cost of rentals and other revenues, including rental
equipment depreciation 7,824 8,292 15,889 16,860 Operating expenses
34,134 34,616 68,591 69,681 Bad debt expense 1,521 917 3,317 2,213
General and administrative expenses 6,051 5,177 11,167 10,303
Depreciation, excluding rental equipment, and amortization 879
1,014 1,811 2,038 Interest expense, net 3,723 3,822 7,521 7,688
Other income, net (625 ) (100 ) (712 ) (86 ) Change of control
income (3 ) (3 ) (6 ) (6 ) Gain on extinguishment of debt
(1,524 ) - (1,524 ) -
Income (loss) from operations before income taxes
3,061 (1,736 ) 1,423 (4,910
) Provision for income taxes 1,090 1,266 2,225 2,430
Net income (loss) 1,971
(3,002 ) (802 ) (7,340 )
Less: Net income attributable to the noncontrolling interest
(1,117 ) (987 ) (2,113 ) (1,817 )
Net income
(loss) attributable to American HomePatient, Inc. $
854 $ (3,989 ) $
(2,915 ) $ (9,157 ) Basic
income (loss) per common share attributable to American
HomePatient, Inc common shareholders $ 0.05 $ (0.23 ) $ (0.17 ) $
(0.52 ) Diluted income (loss) per common share attributable to
American HomePatient, Inc common shareholders $ 0.05 $ (0.23 ) $
(0.17 ) $ (0.52 )
June
30, December 31, 2010 2009
(unaudited) Cash and cash equivalents $ 15,095 $
23,613 Restricted cash - 250 Net patient receivables 31,657 29,447
Other receivables 253 521 Total
receivables 31,910 29,968 Net inventories 11,682 12,240 Other
current assets 7,863 6,690 Total
current assets 66,550 72,761 Property and equipment, net 33,968
33,790 Goodwill 123,621 123,621 Other assets 16,582
16,977
Total Assets $ 240,721
$ 247,149 Current portion of
long-term debt and capital leases $ 217,155 $ 229,120 Accounts
payable 19,510 14,153 Other current liabilities 23,619
21,765 Total current liabilities 260,284
265,038 Long-term debt and capital leases, less current
portion - 3 Deferred tax liability 14,010 12,031 Other noncurrent
liabilities 83 82 Total liabilities
274,377 277,154 American HomePatient, Inc. shareholders'
deficit (41,259 ) (37,411 ) Noncontrolling interest 7,603
7,406 Total shareholders' deficit
(33,656 ) (30,005 )
Total Liabilities and Shareholders'
Deficit $ 240,721 $ 247,149
American
HomePatient, Inc.
Schedule B
Reconciliation of Non-GAAP Financial Measurements to GAAP
Financial Statements (In thousands)
Three Months Ended June
30, Six Months Ended June 30, 2010
2009 2010 2009
(unaudited) (unaudited) Net income (loss) $
854 $ (3,989 ) $ (2,915 ) $ (9,157 ) Add: Provision
for income taxes 1,090 1,266 2,225 2,430 Interest expense,
net 3,723 3,822 7,521 7,688 Rental equipment depreciation
5,823 6,060 11,592 12,470 Other depreciation and
amortization 879 1,014 1,811
2,038 Earnings before interest, taxes,
depreciation, and amortization (EBITDA) $ 12,369 $ 8,173
$ 20,234 $ 15,469 Debt restructuring
and tender offer expenses (Note A) 853 192 943 223 Gain on
extinguishment of debt (Note B) (1,524 ) - (1,524 ) -
Adjusted EBITDA $ 11,698 $ 8,365 $ 19,653 $
15,692 Note A: Debt restructuring and tender
offer expenses are excluded to determine adjusted EBITDA, as the
expenses are non-recurring. Note B: Gain on extinguishment
of debt is excluded to determine adjusted EBITDA, as the gain is
non-recurring.