HORC Horizon Health Corp (MM)

Horizon Health Corporation (NASDAQ:HORC) today announced results for the fourth fiscal quarter and fiscal year ended August 31, 2005. As the Company previously announced, results for the fourth quarter include significant non-recurring charges related to the restructuring of the EAP Services group, the termination of all at-risk managed care contracts, and the sale of Procare One Nurses, LLC ("Procare"). In the fourth quarter, the Company incurred approximately $3.1 million in non-recurring restructuring charges for the EAP Services group. In addition, the Company incurred approximately $1.3 in charges, primarily legal reserves for Procare, and recognized a loss of approximately $3.1 million on the divestiture of Procare. The following schedule removes the non-recurring charges from the actual fourth quarter 2005 results shown in the table below and presents the operating results of Procare, and the loss on its divestiture, as discontinued operations for purposes of comparison with the prior period. -0- *T Fourth Quarter Adjustments for Non-recurring Charges (In millions, except per share data) Quarter Ended August 31, ----------------------------------------------------- 2005 Non- 2005 Recurring 2005 2004 Actual Charges Adjusted Actual Change --------- ---------- ---------- ---------- ---------- Revenues $ 56.6 $ - $ 56.6 $ 46.5 21.6% Expenses 56.8 3.1 53.7 43.9 --------- ---------- ---------- ---------- Income from continuing operations (0.2) (3.1) 2.9 2.6 8.8% Discontinued Operations: (Loss) income from discontinued operations, net (1.1) (1.3) 0.2 0.2 Loss on disposal of discontinued operations, net (3.1) (3.1) - - --------- ---------- ---------- ---------- Discontinued operations (4.2) (4.4) 0.2 0.2 Net Income $ (4.4) $ (7.5) $ 3.1 $ 2.8 10.6% ========= ========== ========== ========== Diluted EPS - Continuing Operations $ (0.01) $ (0.20) $ 0.19 $ 0.23 (19.8%) Diluted EPS - Discontinued Operations (0.28) (0.29) 0.01 0.02 --------- ---------- ---------- ---------- Diluted EPS $ (0.29) $ (0.49) $ 0.20 $ 0.25 (18.5%) ========= ========== ========== ========== *T Comparing the fourth quarter 2005, adjusted to exclude the non-recurring charges, and the fourth quarter of 2004, revenues increased 21.6% to $56.6 million versus revenues of $46.5 million in the same period of the prior year. Income from continuing operations adjusted increased 8.8% to $2.9 million, compared to income from continuing operations of $2.6 million in the same period of the prior year. Net income adjusted increased 10.6% to $3.1 million compared to $2.8 million in the same period of the prior fiscal year. Income from continuing operations adjusted was $0.19 per diluted share versus $0.23 in the prior year quarter and net income adjusted was $0.20 per diluted share versus $0.25 per diluted share in the prior year. Earnings per share amounts in the fourth quarter of 2005 include the dilutive effect of the additional shares issued in the follow-on offering completed March 16, 2005. During fiscal 2005, the Company incurred approximately $4.0 million in non-recurring restructuring charges for the EAP Services group. In addition, the Company incurred approximately $1.3 in non-recurring charges, primarily legal reserves for Procare, and recognized a loss of approximately $3.1 million on the divestiture of Procare. The following schedule removes the non-recurring charges from the actual fourth quarter 2005 results shown in the table below and presents the operating results of Procare, and the loss on its divestiture, as discontinued operations for purposes of comparison with the prior period. -0- *T Fiscal 2005 Adjustments for Non-recurring Charges (In millions, except per share data) Year Ended August 31, ----------------------------------------------------- Non- 2005 Recurring 2005 2004 Actual Charges Adjusted Actual Change --------- ---------- ---------- --------- ---------- Revenues $ 207.4 $ - $ 207.4 $ 161.8 28.2% Expenses 198.6 4.0 194.6 151.6 --------- ---------- ---------- --------- Income from continuing operations 8.8 (4.0) 12.8 10.2 25.2% Discontinued Operations: (Loss) income from discontinued operations, net (0.5) (1.3) 0.8 0.6 Loss on disposal of discontinued operations, net (3.1) (3.1) - - --------- ---------- ---------- --------- Discontinued operations (3.6) (4.4) 0.8 0.6 Net Income $ 5.2 $ (8.4) $ 13.6 $ 10.8 26.1% ========= ========== ========== ========= Diluted EPS - Continuing Operations $ 0.66 $ (0.30) $ 0.96 $ 0.90 6.7% Diluted EPS - Discontinued Operations (0.27) (0.33) 0.06 0.05 --------- ---------- ---------- --------- Diluted EPS $ $0.39 $ (0.63) $ 1.02 $ 0.95 7.6% ========= ========== ========== ========= *T Comparing fiscal 2005, adjusted to exclude the non-recurring charges, to the prior year, revenues increased 28.2% to $207.4 million versus revenues of $161.8 million for the previous fiscal year. Income from continuing operations adjusted increased 25.2% to $12.8 million, compared to income from continuing operations of $10.2 million in the prior fiscal year. Net income adjusted increased 26.1% to $13.6 million versus net income of $10.8 million in the prior fiscal year. Income from continuing operations adjusted increased 6.7% to $0.96 per diluted share versus income from continuing operations of $0.90 per diluted share in the prior year. Earnings per diluted share adjusted increased 7.6% to $1.02 versus $0.95 in the prior year. Earnings per share amounts for fiscal 2005 include the dilutive effect of the additional shares issued in the follow-on offering completed March 16, 2005. Per the above schedule, diluted earnings per share for fiscal 2005, excluding one-time charges for the EAP Services restructuring and the divestiture of Procare, was $1.02 and therefore consistent with previously stated guidance. At August 31, 2005, the Company was debt free, had available cash of approximately $8.1 million, and had approximately $118.6 million available under it's revolving credit facility, after deducting letters of credit. Mr. Ken Newman, chairman and chief executive officer of Horizon Health, said, "We are pleased with the many significant accomplishments of fiscal 2005 including: the acquisition of three freestanding behavioral hospitals; the restructure of our EAP Services group and the termination of all our at-risk managed care contracts; a secondary stock offering which raised proceeds of $58.4; a portion of which was used to repay all our outstanding debt; the amendment of our credit facility to increase availability from $90 million to $125 million; and the divestiture of our specialty nurse staffing business. Growth for the 2005 fiscal year, achieved through accretive acquisitions and internal growth, was substantial. Importantly, the completion of our fiscal 2005 objectives leaves us well positioned both strategically and financially to continue our stated strategy for growth in the area of behavioral healthcare services." Due to the divestiture of Procare One Nurses, LLC effective August 29, 2005, the Company is revising its previously announced earnings guidance for fiscal 2006 from $1.14 to $1.18 per diluted share to $1.08 to $1.12 per diluted share. As is customary for the Company, the 2006 earnings guidance does not include the effect of any future acquisitions. A listen-only simulcast and a 30-day replay of Horizon's fourth quarter and fiscal 2005 results call will be available online on October 26, 2005, beginning at 10:00 a.m. Central Time through the Company's website at www.horizonhealth.com or at www.earnings.com. Horizon Health is a leading contract manager of clinical services for acute care hospitals and employers and an owner of behavioral health care facilities. The statements contained herein based on future expectations rather than on historical facts are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties. Numerous factors as outlined in the SEC Report filed by the Company could cause actual results to differ materially from those in any such forward-looking statements. There can be no assurance that statements made in this press release relating to future events will be achieved. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. -0- *T HORIZON HEALTH CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In Thousands, except per share and statistical data) For the Three For the Twelve Months Months Ended August 31, Ended August 31, ------------------- ------------------- 2005 2004 2005 2004 --------- --------- --------- --------- Revenues $56,589 $46,528 $207,392 $161,824 Cost of Services (exclusive of depreciation shown separately below) 46,661 34,839 160,032 121,554 Selling, general and administrative 6,276 4,892 23,220 18,834 Provision for doubtful accounts 2,294 1,019 4,382 869 Impairment loss on building 1,015 - 1,015 - Depreciation and amortization 1,002 906 3,387 2,795 --------- --------- --------- --------- Operating (loss) income (659) 4,872 15,356 17,772 Interest expense (net of interest and other income) 10 (572) (1,298) (1,307) --------- --------- --------- --------- Income before income taxes, minority interest and discontinued operations (649) 4,300 14,058 16,465 Income tax provision (411) 1,659 5,332 6,252 Minority interest, net (15) -- (15) -- --------- --------- --------- --------- Income from continuing operations (223) 2,641 8,741 10,213 Discontinued Operations: (Loss) income from discontinued operations, net (1,078) 154 (488) 562 Loss on disposal of discontinued operations, net (3,102) -- (3,102) -- --------- --------- --------- --------- Discontinued operations (4,180) 154 (3,590) 562 Net income $(4,403) $2,795 $5,151 $10,775 ========= ========= ========= ========= Basic earnings per common share(1) Continuing operations $(0.02) $0.24 $0.68 $0.94 Discontinued operations (0.28) 0.02 (0.28) 0.05 --------- --------- --------- --------- $(0.30) $0.26 $0.40 $0.99 Diluted earnings per common share (1) Continuing operations $(0.01) $0.23 $0.66 $0.90 Discontinued operations (0.28) 0.02 (0.27) 0.05 --------- --------- --------- --------- $(0.29) $0.25 $0.39 $0.95 ========= ========= ========= ========= Weighted average shares outstanding(1) Basic 14,843 10,937 12,829 10,849 ========= ========= ========= ========= Diluted 15,424 11,371 13,306 11,346 ========= ========= ========= ========= (1) The number of shares and per share amounts have been restated to reflect the impact of the June 15, 2005 stock split. HORIZON HEALTH CONSOLIDATED BALANCE SHEETS (In Thousands, except per share and statistical data) August 31, August 31, 2005 2004 ---------- ---------- Cash $ 8,089 $ 1,908 Accounts receivable (net) 28,876 22,059 Other current assets 15,066 4,823 Other current assets - discontinued operations 1,322 -- ---------- ---------- Total current assets 53,353 28,790 Property and equipment (net) 51,698 28,801 Goodwill and other intangible assets (net) 81,086 87,244 Other long-term assets 1,752 430 Other long-term assets - discontinued operations 655 -- ---------- ---------- Total assets $ 188,544 $ 145,265 ========== ========== Current liabilities $ 32,209 $ 23,230 Other current liabilities - discontinued operations 1,654 -- Other liabilities 3,874 1,570 Long-term debt -- 40,000 Deferred taxes 3,693 4,641 Other long-term liabilities - discontinued operations 128 -- ---------- ---------- Total liabilities 41,558 69,441 Minority interest 3,865 -- Stockholders' equity 143,121 75,824 ---------- ---------- Total liabilities and stockholders' equity $ 188,544 $ 145,265 ========== ========== SUMMARY STATISTICAL DATA As of August 31, ------------------------------------------------------ 2005 2004 2003 2002 2001 ---------- ---------- ---------- ---------- ---------- Covered lives 4,063,389 3,565,084 3,217,406 2,349,197 2,208,938 Number of contract locations: Contract locations in operation 123 132 127 131 124 Contract locations signed & unopened 12 8 15 11 14 ---------- ---------- ---------- ---------- ---------- Total contract locations 135 140 142 142 138 ========== ========== ========== ========== ========== Services Covered by Contracts: Inpatient 121 129 126 127 123 Partial Hospital- ization 10 17 25 31 40 Outpatient 21 24 21 21 17 Home Health 1 2 3 3 3 CQI+ 110 105 109 108 120 Types of Treatment Programs: Geropsychiatric 79 85 87 106 109 Adult psychiatric 43 49 48 44 45 Substance abuse 2 4 4 2 1 Physical rehabilitation 28 33 32 28 24 Other behavioral health 4 4 8 2 4 Owned/Leased Freestanding Behavioral Health Hospitals: Total net revenues (000's) $23,179 $10,069 --- --- --- Number of facilities at period end 5 2 --- --- --- Licensed Beds 806 267 --- --- --- Weighted average available beds 520 177 --- --- --- Patient days 36,418 19,639 --- --- --- Admissions 2,807 1,041 --- --- --- Average length of stay 13.0 18.9 --- --- --- Revenue per patient day $636 $513 --- --- --- Occupancy based on weighted average available beds 76.1% 72.5% --- --- --- *T