For more information about any of these news releases, contact:
Jim Griffith
Senior Vice President
Investor Relations and Corporate Communications
Recent News Releases:
| November 21,2000 | Beverly Rehabilitation and Nautilus HPS Launch Program to Enhance Lives of Seniors Through Functional Independence |
| October 31, 2000 | Beverly Earns 10 Cents Per Share Diluted in Third Quarter, Before Previously Announced Special Charge |
| October 16, 2000 | Beverly Previews On-Target Third Quarter Operating Earnings, Announces Special Non-Cash Charge for Patient Care Liability Costs |
| October 5, 2000 | Jamie McLane Elected Beverly Director |
| August 1, 2000 | Beverly Earnings Continue on Plan at Eight Cents Per Share Diluted in Second Quarter |
| July 31, 2000 | William R. Floyd elected to Beverly Enterprises Board of Directors |
| May 25, 2000 | Beverly Announces Results of Annual Meeting of Stockholders; Sets Date for 2001 Annual Meeting |
| May 2, 2000 | Beverly First Quarter Earnings On Plan At Six Cents Per Share Diluted |
| March 29, 2000 | Douglas Babb Joins Beverly Enterprises as General Counsel |
| March 22, 2000 | Beverly Enterprises announces new President and COO |
| February 22, 2000 | Beverly Earns Six Cents Per Share Diluted in Fourth Quarter, Before Special Charges/Unusual Items |
| February 3, 2000 | Beverly Enterprises Finalizes Medicare Settlements |
| November 2, 1999 | Beverly Earns 10 Cents Per Share Diluted in Third Quarter Before Y2K Costs of $3.4 Million |
| August 20, 1999 | Beverly Records Special Charges Totaling $199 Million; Posts Second Quarter Loss |
| July 27, 1999 | Beverly Reaches Tentative Settlements of Medicare Investigations; Postpones Announcement of Second Quarter Results |
| May 27, 1999 | Beverly Announces Results of Annual Meeting of Stockholders -- Sets Date for 2000 Annual Meeting |
| April 22, 1999 | Beverly Earns 9 Cents Per Share From Operations in First Quarter |
| February 4, 1999 | Beverly Earns 20 Cents Per Share in Fourth Quarter Before Charges, Other Specific Costs |
NEWS RELEASES
Beverly Rehabilitation and Nautilus HPS Launch Program to Enhance Lives of Seniors Through Functional Independence
Nation's rehabilitation, nursing home leader to roll out program nationally
(Fort Smith, AR, November 21, 2000) -- Beverly Rehabilitation today announced a partnership with Nautilus Human Performance Systems (HPS) to provide strength training to elderly patients in select locations nationwide. Through a new program called "Freedom through Functionality," which is based on breakthrough new research, Beverly and Nautilus will offer exercise programs designed to enhance functional independence and improve quality of life for seniors.
The program will be housed in special Nautilus-equipped centers located within skilled nursing facilities owned or operated by Beverly Healthcare, the largest nursing home company in the nation. "Freedom through Functionality" will be launched in six locations across the United States (please see List of Pilot Locations below), serving as pilot training centers before the program expands to other locations. If successful, the program is expected to quickly grow to more than 400 locations.
"We are excited about working with Nautilus in the implementation of a much-needed strength training component to an already existent wellness component to nursing home care," said Cindy Susienka, president of Beverly Rehabilitation. "Research clearly demonstrates the remarkable improvement in mobility and quality of life for seniors who strength train, even if they have never exercised before."
Beverly will offer the "Freedom through Functionality" program as a four-tier program: inpatient, outpatient, wellness and restorative. Inpatient will offer the program to nursing facility residents as part of their rehabilitative program and outpatient will offer programs to seniors living outside the facility. The wellness program will offer the facility as a fitness center catering to the special concerns of the local senior population, and the restorative aspect of the program will address seniors who have completed a physical therapy program in-house and who want to continue to increase their strength. Beverly Rehabilitation and facility staff will be trained to oversee the programs. Special exercise guidelines will be addressed for such conditions as arthritis, asthma, cardiac rehab, diabetes types 1/2, hypertension, knee/shoulder problems, low back pain, obesity, osteoporosis and Parkinson's Disease.
The "Freedom Through Functionality" program is the result of a groundbreaking new research project conducted for Nautilus by Dr. Wayne Westcott, Gary Reinl, and other professionals at the Medical Center of the John Knox Village Campus in Orange City, Florida, a skilled nursing facility for seniors. The study documented improvements in mobility, strength and functional independence measurement (FIM) in seniors. Fourteen female and five male residents at the Center completed a 14-week strength training study. The participants averaged of 88.5 years of age. Exercise sessions averaged twice weekly. The results were dramatic, including 14.2% increase in functionality, an 81% increase in lower body strength, a 38% increase in upper body strength, and significantly improved flexibility and mobility.
"I have been involved in dozens of exercise research projects over the years," said Dr. Wayne Westcott, the study's designer and author of "Freedom through Functionality." "These findings without a doubt represent the most dramatic results of any research I have conducted. This group made great improvements in a short time. Of all the populations that benefit from strength-training, the elderly appear to respond best in terms of functional improvement."
"In an era where many senior care providers are cutting back on services, Beverly is to be commended for expanding its inpatient and wellness component," said Nautilus president Jim Teatum. "Beverly Rehabilitation sees the future. As baby boomers age, they will demand that their retirement settings foster independent living. Regular strength training is one proven way for seniors to gain and retain the independence they desire. The addition of a wellness program is one direct way to dramatically improve quality of life. This is a major breakthrough in providing the most important benefit of all: freedom. That's why Nautilus has developed fitness products and programs especially for seniors. Nautilus markets extend well beyond just 'fitness.' Our business greatly impacts the preventative and restorative health markets of the future."
"The bottom line is that it's never too late to improve one's strength," said Teatum. "By adding a Nautilus wellness program, Beverly Rehabilitation facilities will make a profound impact on the quality of their residents lives, not to mention savings in care costs. Nautilus is committed to bring strength training, with all its proven associated health benefits, to the elderly."
Nautilus is the preeminent manufacturer of selectorized and free weight equipment, with distribution in over 60 countries throughout the world. Based in Independence, VA, Nautilus is a wholly owned subsidiary of Direct Focus, Inc., which also owns the popular BowFlex home strength company.
Fort Smith, Arkansas-based Beverly Rehabilitation and Beverly Healthcare are wholly owned business units of Beverly Enterprises, Inc. (NYSE:BEV), one of the nation's leading elder care companies. Beverly Rehabilitation is a leading contract rehabilitation company, offering physical, speech and occupational rehabilitation therapy programs nationwide.
LIST OF PILOT LOCATIONS
|
Sleepy Hollow Nursing Home |
Annandale, Virginia |
|
Beverly Manor |
Burbank, California |
|
Beverly Health and Rehabilitation |
Van Nuys, California |
|
Beverly Healthcare |
Greenville, North Carolina |
|
Hillcrest Rehabilitation |
Wayzata, Minnesota (St. Paul) |
|
Heritage Square |
Greenfield, Wisconsin |
Beverly Earns 10 Cents Per Share Diluted in Third Quarter,
Before Previously Announced Special Charge
(FORT SMITH, ARKANSAS, October 31, 2000) -- Beverly Enterprises, Inc. (NYSE: BEV) today announced that it earned 10 cents per share diluted in the third quarter of 2000, before a previously announced charge primarily related to increased reserves for patient care liability costs in Florida. After the special pre-tax non-cash charge of $49,043,000, there was a net loss for the 2000 third quarter of $22,471,000 (22 cents per share diluted). This compares to net income in the 1999 third quarter of $7,897,000 (eight cents per share diluted), after Year 2000 (Y2K) remediation costs of $3,423,000.
Revenues totaled $665,889,000 in the 2000 third quarter, compared to $638,331,000 in the year-earlier period. The 4.3 percent increase in revenues reflects a strong increase in per diem nursing home rates (average rates up 7.5 percent for Medicaid, 6.5 percent for private/other and 4.4 percent for Medicare) that more than offset a 25-facility reduction in the average number of homes operated, compared to the 1999 third quarter. Net operating revenues for nursing homes in operation for at least a year increased 7 percent over the comparable period in 1999, and the operating margin (earnings before interest, taxes, depreciation, amortization and special charges as a percentage of total net operating revenues) rose by 11 basis points.
"I’m pleased with the progress our operating units are making and with the renewed commitment I see throughout the company to increased accountability," said David R. Banks, Chairman and Chief Executive Officer. "I’m also encouraged that Congress has recognized the need to restore some of the unintended reductions in Medicare funding."
For the nine months ended September 30, 2000, Beverly recorded a net loss of $7,688,000 (eight cents per share diluted) on revenues of $1,968,704,000. For the same period the year earlier, Beverly recorded a net loss of $102,053,000 ($1.00 per share diluted) on revenues of $1,907,038,000. The 1999 period included special charges of $202,447,000 related to settlements of federal government investigations and Y2K remediation costs of $10,672,000.
Nursing home occupancy averaged 86.9 percent for the 2000 third quarter, down 21 basis points from the year-earlier period, but up 12 basis points from the second quarter of 2000. Medicare census was 9.2 percent of total patient days in the 2000 third quarter, up slightly from the 1999 period but down 33 basis points sequentially.
The third quarter operating margin for the entire company rose 17 basis points from the second quarter to just over 9 percent, the highest quarterly operating margin achieved during 2000. Compared to the 1999 third quarter, however, the margin declined by nearly one half a percentage point.
(On October 16, 2000, Beverly disclosed that it would record a charge of approximately $50 million, primarily related to patient care liability costs in Florida. That announcement also discussed the process Beverly follows in accruing for patient care liability costs and the provisions Beverly has made for insurance coverage.)
Beverly shareholders may listen today at 8:30 a.m. EST to a discussion by senior management of the Company’s performance and prospects by dialing . A recording of this conference call will be available from 10:30 a.m. EST today until 6:00 p.m. EST Friday, November 3. Shareholders may dial or and enter reservation 16601870# to access the recording.
This release and the subsequent conference call are intended to be disclosure through methods reasonably designed to provide broad, non-exclusionary distribution to the public in compliance with the Securities and Exchange Commission’s Fair Disclosure Regulation.
In addition, they may contain forward-looking statements, including statements related to expected 2000 performance, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include: national and local economic conditions, including their effect on the availability and cost of labor and materials; the effect of government regulations and changes in regulations governing the healthcare industry, including the Company’s compliance with such regulations; changes in Medicare and Medicaid payment levels and methodologies and the application of such methodologies by the government and its fiscal intermediaries; liabilities and other claims asserted against the Company, including patient care liabilities, as well as the resolution of lawsuits brought about by the announcement of the federal government investigations or the settlements of such investigations; the ability to predict future reserves related to patient care liabilities; the ability to attract and retain qualified personnel; the availability and terms of capital to fund acquisitions and capital improvements; the competitive environment in which the Company operates; the ability to maintain and increase census levels; and demographic changes. These and other risks and uncertainties that could affect future results are addressed in the Company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q.
Back to Index
Beverly Previews On-Target Third Quarter Operating Earnings, Announces Special Non-Cash Charge for Patient Care Liability Costs
(FORT SMITH, ARKANSAS, October 16, 2000) -- Consistent with the Securities and Exchange Commission's new fair disclosure guidelines, Beverly Enterprises, Inc. (NYSE: BEV) today makes the following announcements prior to presentations this week and next at institutional investor conferences:
- Earnings from operations for the third quarter ended September 30, 2000 - before a special charge discussed below - are expected to meet Beverly's internal targets and analysts' current consensus estimates of 10 cents per share.
- Beverly will record a special pre-tax non-cash charge against earnings of approximately $50 million, primarily related to increasing reserves for patient care liability costs in Florida. This special charge is based on a recently completed study by an independent actuarial firm.
Beverly plans to announce detailed third quarter results on October 31, before trading begins on the New York Stock Exchange. At 8:30 a.m. Eastern Time on that date, company management plans to discuss operating and financial performance on a conference call open to all interested parties. The number for the call is . The company will not make disclosures beyond those contained in this announcement about third quarter operating earnings or the special charge until that time.
David R. Banks, Chairman and Chief Executive Officer, made the following comments about the special charge for patient liability costs:
- "We have been accruing for patient liability costs this year at a rate of $3 million per month, which is double the accrual rate for the same period in 1999. Based on what our advisors now counsel, the current rate is inadequate. As a result, it's prudent to increase patient care liability reserves."
- "Our accruals for patient care liability costs have been based on studies conducted annually by an independent actuary. In 2000, we began to have studies conducted semi-annually. These studies include analyses of actual liability claims against Beverly and other nursing home companies, as well as trends in jury awards and negotiated settlements. Actuarial projections primarily reflect the frequency of claims and the average settlement amount, and are not significantly impacted by a single large verdict."
- "Because of aggregate insurance coverage we have in place until April 30, 2002, as well as the maturing of older claims, we believe that this special charge increases our reserves to the point where all liabilities for 2000 and prior year claims are adequately addressed. Although it is difficult to predict, we also believe that, because of this aggregate protection, our expense accruals for 2001 related to patient care liabilities nationwide will not exceed $60 million."
- "These sharp escalations in costs for patient care liabilities are the result of a unique set of legislative and litigation circumstances in Florida that are being exploited by trial lawyers. Even though our nursing homes in Florida represent about 10 percent of the total beds we operate, they account for 70 percent of our total patient care liability costs nationwide."
- "Independent actuarial studies confirm similar cost experiences and trends for other nursing home businesses in Florida, particularly large multi-state operators. It appears that they have been targeted by certain trial lawyers."
- "We simply cannot permit an unfair litigation climate in Florida to threaten our financial viability or to jeopardize our ability to provide quality care for the elderly in the 28 other states in which we operate. We are aggressively examining a full range of alternatives for our Florida nursing homes."
Additional information
Beverly Operations in Florida
- Beverly operates 49 nursing homes and four assisted living centers in Florida, where 6,040 employees care each day for 6,250 residents. Total assets for these operations at year-end 1999 were approximately $263 million, and they generated $264 million in revenues that year.
- Since January 1, 1995, Beverly has invested a total of $122 million in its Florida nursing homes ($86 million for new construction and $36 million for expansions, renovations and improvements).
Florida's Inequitable Legislative/Litigation Environment
- Florida is unique in that its laws are skewed against the nursing home industry and in favor of trial attorneys.
- Florida law treats nursing homes differently than it treats hospitals and physicians:
- For nursing homes, the statute of limitations for any alleged violation of patient rights is four years; for hospitals and physicians, it is two years.
- For nursing homes, there is no limitation on compensatory or punitive damages. For hospitals and physicians, the medical malpractice system promotes arbitration and, by arbitration, imposes limits on compensatory damages and prohibits punitive damages.
- The well-intentioned "patient bill of rights" is being exploited by trial lawyers for their personal gain. Virtually unlimited attorney fees and costs are made part of any plaintiff action, regardless of the damages.
- Attempts have been made for the past four years to reform Florida's tort laws and level the playing field for nursing homes. These reform efforts have been defeated by the powerful trial lawyer lobby, aided by certain "consumer advocate" groups who are funded by these same lawyers.
- A 19-member Task Force on the Availability and Affordability of Long Term Care headed by Florida Lieutenant Governor Frank Brogan is charged with preparing proposals by year-end for consideration by Florida's legislature next year. It is hoped that this "Brogan Commission" will produce meaningful reform for the future. Changing a litigious culture historically biased against nursing homes will be a formidable task, however.
Beverly Insurance Coverage
- Beverly has taken several strategic actions in recent years in an effort to establish some limits to its exposure for patient care liability costs.
- In terms of insurance coverage:
- Beverly directly insures the first $1-3 million (depending on the policy year) per individual incident through its wholly owned captive insurance company
- Beverly has purchased excess insurance that provides coverage above this initial layer.
- This excess insurance also caps Beverly's aggregate exposure for all incidents at $60 million per year through April 30, 2002.
- Beverly also has obtained "retroactive insurance" coverage of $95 million for all claims incurred on or before April 30, 1998.
This news release may contain forward-looking statements, including statements related to expected 2000 performance, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include: national and local economic conditions, including their effect on the availability and cost of labor and materials; the effect of government regulations and changes in regulations governing the healthcare industry, including the Company's compliance with such regulations; changes in Medicare and Medicaid payment levels and methodologies and the application of such methodologies by the government and its fiscal intermediaries; liabilities and other claims asserted against the Company, including patient care liabilities, as well as the resolution of lawsuits brought about by the announcement of the federal government investigations or the settlements of such investigations; the ability to predict future reserves related to patient care liabilities; the ability to attract and retain qualified personnel; the availability and terms of capital to fund acquisitions and capital improvements; the competitive environment in which the Company operates; the ability to maintain and increase census levels; and demographic changes. These and other risks and uncertainties that could affect future results are addressed in the Company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q.
Beverly Enterprises, Inc. (NYSE:BEV), through its operating subsidiaries, operates 536 skilled nursing facilities, as well as 37 assisted living centers, 178 outpatient therapy clinics, and 61 home care and hospice agencies.
Back to IndexJamie McLane Elected Beverly Director
(FORT SMITH, ARKANSAS, October 5, 2000) - Beverly Enterprises, Inc. (NYSE: BEV) today announced that James W. (Jamie) McLane has been elected to fill an additional seat on the company's Board of Directors. McLane, 61, has served in senior executive positions in the healthcare, insurance and banking industries, as well as with the federal government.
From 1997 to early 2000, he was president and chief operating officer of NovaCare, Inc., a leading physical rehabilitation firm, which was sold in late 1999. He previously served as executive vice president of Aetna Life and Casualty and as chief executive officer of Aetna Health Plans. Prior to joining Aetna in 1991, McLane worked for 17 years in positions of increasing responsibility with Citicorp's investment banking and global insurance businesses.
He previously held senior positions in the Executive Branch of the federal government, serving from 1969 to 1974 as Executive Assistant to the Secretary of the Department of Health, Education and Welfare, as Staff Assistant to the President, and as Deputy Director of the Cost of Living Council, managing the country's wage and price controls program.
McLane earned a bachelor of arts degree from Yale University and a master's degree in business administration from Harvard Business School. He served as a U.S. Navy officer in the Pacific during the Vietnam War.
McLane also serves as a Board Director of HealthAxis.com, UltraTouch, Inc. and Axiom Venture Partners. He is a former chairman of Outward Bound USA and is involved with various civic organizations in his hometown of Philadelphia, PA.
Beverly Enterprises Inc., through its subsidiaries, operates more than 525 nursing homes, 180 outpatient therapy clinics, 30 assisted living facilities, and 60 home care and hospice centers. Beverly's operating units include Beverly Healthcare, the nation's largest nursing home company, as well as Beverly Care Alliance, a leader in physical, occupational and speech rehabilitation therapy, home care and hospice programs.
Back to IndexBeverly Earnings Continue On Plan at Eight Cents Per Share Diluted in Second Quarter
(FORT SMITH, ARKANSAS, August 1, 2000) -- Beverly Enterprises, Inc. (NYSE: BEV) today announced that net income for the second quarter of 2000 totaled $8,522,000 (eight cents per share diluted), compared to a net loss of $115,857,000 ($1.13 per share diluted) in the same quarter of the prior year. The 1999 totals reflect special pre-tax charges of $200,542,000 related to settlements of Federal Medicare investigations and remediation costs related to the Year 2000 (Y2K) issue of $4,263,000.
Revenues for the second quarter of 2000 were $655,888,000, up 3.5 percent from the prior year’s second quarter total of $633,678,000, primarily because of increases in Medicare, Medicaid and private per diem rates for nursing home care.
For the six months ended June 30, 2000, net income totaled $14,783,000 (15 cents per share diluted) on revenues of $1,302,815,000. For the first half of 1999, Beverly recorded a net loss of $109,950,000 ($1.07 per share diluted) on revenues of $1,268,707,000. The 1999 period included special charges for Federal government settlements of $202,447,000 and Y2K remediation costs of $7,249.000.
David R. Banks, Chairman and Chief Executive Officer, made the following comments about the company’s performance and outlook:
- "Our nursing home operations continue to perform on-target, even though we still are challenged by the high cost and tight availability of labor, and by unpredictable and escalating patient liability costs."
- "Nursing home occupancy averaged 86.8 percent for the second quarter, up 30 basis points from the year-earlier period but down 50 basis points from the first quarter of 2000. Medicare census was 9.6 percent of total patient days in the second quarter of 2000, reflecting a seasonal decline from the first quarter but increases during each month from the levels achieved during the second quarter of 1999."
- "Our average daily rate for Medicare patients during the second quarter of 2000 was on-projection at $267.70, a 5.3 percent increase over the average per diem in the first quarter. We expect to experience this same rate in the third quarter, and then see an increase to about $280 for the fourth quarter, which is the per diem rate we had projected for that period in our 2000 Performance Plan."
- "Our weighted-average wage rate for the 2000 second quarter was up 6.8 percent from the year-earlier period. Some of this increase is due to Medicaid rate improvements in several states that required a portion of the rate increase to be ‘passed-through’ in the form of higher wages. We have actively lobbied for this type of legislation, which provides long-overdue recognition of the important work performed by our caregivers and which should supplement our own efforts to improve recruiting and retention."
- "Our performance plan for the balance of 2000 calls for improved operating results, compared to the first half of this year and also to the third and fourth quarters of 1999. This plan includes a series of initiatives we’ve recently launched, which are designed to increase revenues and reduce overhead costs. We are encouraged by the initial results we’ve achieved."
Beverly shareholders may listen today to a 7:30 a.m. CDT discussion by senior management of the Company’s performance by dialing . A recording of this conference call will be available from 9:30 a.m. CDT today until 5:00 p.m. CDT Friday, August 4. Shareholders may dial or and enter reservation 15795893# to access the recording.
This news release and related conference call may contain forward-looking statements, including statements related to expected 2000 performance, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include: national and local economic conditions; the effect of government regulations and changes in regulations governing the healthcare industry, including the Company’s compliance with such regulations; changes in Medicare and Medicaid payment levels; liabilities and other claims asserted against the Company, including patient care liabilities as well as the resolution of lawsuits brought about by the announcement of the federal government investigations or the settlements of such investigations; the ability to attract and retain qualified personnel; the availability and terms of capital to fund acquisitions and capital improvements; the competitive environment in which the Company operates; the ability to maintain and increase census levels; demographic changes; and the availability and cost of labor and materials. These and other risks and uncertainties that could affect future results are addressed in the Company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q.
Back to IndexWilliam R. Floyd elected to Beverly Enterprises Board of Directors
(FORT SMITH, ARKANSAS, July 31, 2000)—Beverly Enterprises, Inc. (NYSE:BEV) today announced the election of William R. Floyd to its Board of Directors.
Mr. Floyd joined Beverly Enterprises in April of this year as president and chief operating officer. Prior to joining Beverly, Floyd had achieved an impressive record of accomplishments in hospitality, consumer packaged goods, restaurant operations, and marketing and information services, and had held senior management positions with industry leaders including PepsiCo, Pillsbury and Gillete. Most recently, Floyd was chief executive officer of Choice Hotels International, the second largest franchiser in the world, with more than 3800 properties in 30 countries generating system sales of nearly $3 billion.
Mr. Floyd earned B.A. and M.B.A. degrees from the University of Pennsylvania and its Wharton School of Business. He also serves on the Board of Trustees for Valley Forge Military Academy.
Beverly Enterprises, Inc. (NYSE:BEV), through its subsidiaries, operates more than 550 nursing homes (skilled nursing centers), 180 outpatient therapy clinics, 30 assisted living facilities, and 60 home care and hospice centers. Beverly’s operating units include Beverly Healthcare, the national’s largest nursing home company, as well as Beverly Care Alliance, a leader in physical, occupational and speech rehabilitation therapy, home care and hospice programs.
Back to IndexBeverly Announces Results of Annual Meeting of Stockholders; Sets Date for 2001 Annual Meeting
(FORT SMITH, ARKANSAS, May 25, 2000) -- Beverly Enterprises, Inc. (NYSE: BEV) reported that, at today's annual meeting, stockholders elected all nominees to the Company's Board of Directors and ratified the appointment of Ernst and Young LLP as independent auditors for 2000.
Beverly also announced that next year’s annual meeting of stockholders tentatively has been set for Thursday, May 24, 2001. All stockholder proposals to be considered for inclusion in next year’s proxy statement must be submitted in writing for receipt by December 21, 2000.
Beverly Enterprises, Inc. (NYSE:BEV), through its subsidiaries, operates more than 550 nursing homes (skilled nursing centers), 180 outpatient therapy clinics, 30 assisted living facilities and 60 home care and hospice centers.
Back to IndexBeverly First Quarter Earnings On Plan At Six Cents Per Share Diluted
(FORT SMITH, ARKANSAS, May 2, 2000)-- Beverly Enterprises, Inc. (NYSE:BEV) today announced that net income for the first quarter of 2000 totaled $6,261,000, up six percent from $5,907,000 reported for the same quarter of 1999. Earnings per share diluted totaled six cents for each period.
Revenues totaled $646,927,000 in the 2000 first quarter, compared to $635,029,000 in the year-earlier period. The nearly two percent increase reflects higher nursing home revenues, partially offset by lower revenues for home care and outpatient therapy operations.
David R. Banks, Chairman and Chief Executive Officer, made the following comments about the company’s performance and outlook:
- "We met internal financial objectives for the first quarter, due in large measure to on-target performance by our nursing home operations."
- "The availability and cost of labor continues to be a major challenge for us, and we’re focusing on more effective ways to recruit and retain caregivers. Our weighted average wage rate for the 2000 first quarter was up 6.3 percent from the year-earlier period. We are encouraged, however, that the sequential rate of growth has not accelerated."
- Our performance plan for the second quarter of 2000 reflects a modest increase in operating results as compared to the first quarter. This reflects the favorable impact of Medicare rate increases that began April 1, under the provisions of last fall’s Balanced Budget Refinement Act."
- "Nursing home occupancy averaged 87.3 percent for the first quarter, down about 30 basis points from the fourth quarter of 1999. Medicare census for the first quarter of 2000 grew by more than a full percentage point from the fourth quarter of 1999 to 10.4 percent, the highest level in nearly two years."
Beverly shareholders may listen today to a 7:30 a.m. CDT discussion by senior management of the company’s performance by dialing . A recording of this conference call will be available from 9:30 a.m. CDT today until 5:00 p.m. CDT Friday, May 5. Shareholders may dial and enter reservation 14941855# to access the recording.
This news release and related conference call may contain forward-looking statements, including statements related to expected 2000 performance, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include: national and local economic conditions; the effect of government regulations and changes in regulations governing the healthcare industry, including the Company’s compliance with such regulations; changes in Medicare and Medicaid payment levels; liabilities and other claims asserted against the Company, including patient care liabilities as well as the resolution of lawsuits brought about by the announcement of the federal government investigations or the settlements of such investigations; the ability to attract and retain qualified personnel; the availability and terms of capital to fund acquisitions and capital improvements; the competitive environment in which the Company operates; the ability to maintain and increase census levels; demographic changes; and the availability and cost of labor and materials. These and other risks and uncertainties that could affect future results are addressed in the Company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q.
Douglas Babb Joins Beverly Enterprises as General Counsel
(FORT SMITH, ARKANSAS, March 29, 2000) – Beverly Enterprises, Inc. (NYSE: BEV) today announced that Douglas J. Babb will be joining our company on April 3 as Executive Vice President, General Counsel and Corporate Secretary.
Doug comes to Beverly after a successful career at Burlington Northern Santa Fe – a major railroad corporation with $9 billion in revenues, 45,000 employees and operations in 28 states. He joined Burlington Northern in 1978 as an attorney, became general counsel for corporate law in 1984 and vice president / general counsel in 1986. More recently, Doug has served Burlington as senior vice president and chief of staff and then as head of its Merchandise Business unit, responsible for $3 billion in revenue from chemicals, forest products, consumer products, and metals and minerals operations.
He earned a Bachelor of Arts degree from the University of Minnesota and a Doctorate in Jurisprudence from the University of South Carolina.
Doug brings us a wealth of experience in corporate law, as well as operations management talent.
Beverly Enterprises announces new President and COO
(FORT SMITH, ARKANSAS, March 22, 2000) – Beverly Enterprises, Inc. (NYSE: BEV) today announced that William R. Floyd is joining the company as President and Chief Operating Officer, effective April 10.
Floyd has achieved an impressive record of accomplishments in hospitality, consumer-packaged goods, restaurant operations and marketing, and information services. He’s held senior management positions with recognized industry leaders, including PepsiCo, Pillsbury and Gillette. Most recently, Floyd was chief executive officer of Choice Hotels International, the second-largest franchiser in the world, with 3,800 properties in 30 countries generating system sales of nearly $3 billion.
Floyd’s academic record is equally impressive, with B.A. and MBA degrees from the University of Pennsylvania and its Wharton School of Business.
"Bill brings a wealth of operations experience to Beverly, as well as a fresh point of view to our industry," said David Banks, Chairman of the Board and Chief Executive Officer." He has demonstrated his capabilities by improving results under a variety of challenging business circumstances, and is looking forward to helping us at Beverly reach our full potential."
Beverly Earns Six Cents Per Share Diluted in Fourth Quarter, Before Special Charges/Unusual Items
(FORT SMITH, ARKANSAS, February 22, 2000)-- Beverly Enterprises, Inc. (NYSE:BEV) today announced that it earned six cents per share diluted in the fourth quarter of 1999, before special charges and other unusual items, compared on a similar basis to 20 cents per share diluted in the fourth quarter of 1998.
After unusual pre-tax charges of $60,003,000 and Year 2000 (Y2K) remediation costs of $1,730,000, there was a net loss for the 1999 fourth quarter of $32,594,000 (32 cents per share diluted), compared to a net loss of $87,527,000 (86 cents per share diluted) in the year earlier period. The 1998 fourth quarter included unusual pre-tax charges of $168,368,000, Y2K remediation costs of $5,844,000, expenses of $1,369,000 related to federal government investigations of Medicare cost-allocation practices and a $1,660,000 extraordinary charge, net of tax.
Revenues totaled $643,969,000 in the 1999 fourth quarter, compared to $707,230,000 in the year-earlier period. The revenue reduction reflects a 14 percent drop in Medicare per diem rates, a one percentage-point decline in nursing home average occupancy from the 1998 fourth quarter and continued pricing pressure on outpatient therapy clinics by managed-care organizations.
The 1999 fourth quarter unusual pre-tax charges include:
- $28,418,000 related to (a) restructuring of agreements with Nationwide Health Properties, Inc. on certain leased facilities that will result in a stronger portfolio of properties for Beverly, (b) severance and other workforce reduction expenses, and (c) asset impairment charges; and
- $31,585,000 related to increased insurance reserves for patient care and other claims liabilities, primarily related to operations in the State of Florida.
For the full year 1999 and including the unusual fourth-quarter items, as well as investigation costs and charges totaling $202,447,000 related to previously announced settlements of government Medicare investigations and Y2K remediation costs of $12,402,000, Beverly reported a net loss of $134,647,000 ($1.31 per share diluted) on revenues totaling $2,551,007,000. Excluding these unusual items, Beverly’s net income for full-year 1999 totaled $38,509,000 (37 cents per share diluted).
David R. Banks, Chairman and Chief Executive Officer, made the following comments about the company’s performance and outlook:
- "The dramatic shift in Medicare payment systems, coupled with an increasingly punitive approach to regulatory enforcement, severely damaged the financial capabilities of several long-term care providers, large and small, in 1999. At least ten percent of all nursing home beds in this country are now being operated by bankrupt providers."
- "Our strategy has been to provide quality care in a cost-effective operating environment. Because of this, as well as a conservative approach to cash management, we were able to weather the financial hardships of Medicare Prospective Payment. We lowered capital expenditures and acquisition costs by two-thirds from 1998 levels, while still investing $95 million – well above the minimum level required – to maintain, improve and expand our nursing home operations. In addition, we were able to reduce total funded debt during 1999 by more than $125 million."
- "Last fall’s Balanced Budget Refinement Act, which restored a portion of the deeper-than-intended cuts in Medicare spending, should result in an increase in Medicare billings for Beverly of about $20 million in 2000. This includes the favorable financial impact of converting approximately 300 of our nursing homes to the full federal rate effective January 1 of this year."
- "During the last six months of 1999, we raised our average nursing home occupancy by more than a full percentage point, to 87.6 percent, compared to 86.5 percent for the second quarter of 1999. Our Performance Plan for 2000 is based on a similar increase in occupancy."
- "The availability and cost of labor continues to be a major operating and financial challenge. Our weighted average wage rate for the 1999 fourth quarter was up 6.4 percent from the year-earlier period and reflected steady increases throughout the year, which continue into 2000. Improving recruiting, retention and training of caregivers is a major focus for us this year."
- "Our Plan calls for operating earnings (earnings before interest, taxes, depreciation and amortization) to increase over 1999 levels by approximately 7 to 9 percent."
- "Florida has become a particularly difficult environment for even the best of nursing home operators. Industry costs per bed in Florida for alleged patient care liability issues are nearly eight times higher than the average in the other 49 states. That’s the result of certain plaintiff attorneys exploiting that state’s well-intentioned ‘patient rights’ laws, which provide attorneys a strong financial incentive to bring suit. Not surprising, half of the industry’s total patient liability costs go to lawyers."
- "The rising cost of patient care liability in Florida is a significant factor in the $32 million increase in insurance reserves we booked in the 1999 fourth quarter. We will continue to closely monitor the economics of doing business in that deteriorating environment."
Beverly Enterprises Finalizes Medicare Settlements
(FORT SMITH, ARKANSAS, February 3, 2000) – Beverly Enterprises, Inc. (NYSE: BEV) today announced that it has signed agreements with the Office of Inspector General (OIG) of the Department of Health and Human Services and the United States Department of Justice (DOJ) finalizing Beverly’s previously announced tentative settlements stemming from the government’s investigation into the company’s allocation of nursing labor costs under the Medicare program during the years 1992-1998.
The final written agreements resolve both civil and criminal matters, and include a corporate integrity agreement, providing for a reporting and compliance program to be overseen by the company and the OIG. The provisions of the settlements are consistent with the company’s expectations as disclosed in July and August of last year and include the planned disposition of 10 nursing homes operated by a single Beverly subsidiary, which will continue to operate and staff the nursing homes until new owners are found.
"There were no surprises in the terms of the settlements. We worked diligently to ensure that any agreements we reached did not impede our ability to continue providing quality care for our residents under a new government payment system," said David Banks, Chairman and CEO of Beverly. "I want to reassure our family members and the provider community that the issues surrounding these settlements had nothing to do with resident eligibility under Medicare nor did they question the quality – or provision – of care at our nursing homes. We value our relationships in the communities we serve and want there to be no confusion; these settlements were in no way related to the quality of patient care."
Banks continued: "Beverly continues to have a relatively strong balance sheet and positive cash flow, even after incurred and anticipated costs related to these settlements, and we expect to continue to be a viable force in the long-term care industry. We are relieved to put this issue behind us so that we can focus more sharply on the key factors that drive our business results and that continued to challenge us throughout 1999, including nursing home occupancy levels, labor cost and availability, patient liability costs and an increasingly punitive regulatory environment. It is difficult at this time to predict what impact, if any, the settlements will have on these factors."
In the criminal plea agreement, which will be entered late today in the United States District Court for the Northern District of California in San Francisco, Beverly Enterprises – California, Inc., an indirect subsidiary of Beverly Enterprises, Inc., will plead guilty to one count of fraud via inter-state carrier in connection with a cost report relating to one facility and 10 counts of making false statements to Medicare. In so doing, that company acknowledges that errors were made by individual employees in the submission of ten cost reports to Medicare. These 10 cost reports represent .8% of the 1,370 Medicare cost reports filed by Beverly subsidiaries in 1996 and 1997 and .2% of the 4,680 cost reports filed by Beverly subsidiaries for the period investigated by the government.
Under the settlements, as previously announced, Beverly will reimburse the government $170 million, of which $25 million will be paid within 30 days. Beverly will pay the balance over an eight-year period, interest-free, by accepting pro rata reductions in its periodic interim Medicare payments totaling $145 million. Under the criminal settlement, the Beverly subsidiary will pay a fine of approximately $5 million.
No individual, officer, director, employee or other agent or affiliate of Beverly Enterprises, Inc., or BE-California was or will be charged. All agreements are effective upon entering of the plea.
Beverly Earns 10 Cents Per Share Diluted in Third Quarter Before Y2K Costs of $3.4 Million
(FORT SMITH, ARKANSAS, November 2, 1999)-- Beverly Enterprises, Inc. (NYSE:BEV) today announced that it earned ten cents per share diluted in the third quarter of 1999, before costs associated with remediating the year 2000 issue. After remediation costs of $3,423,000 in the third quarter of 1999 and $2,041,000 in the same period of 1998, net income for the current years third quarter totaled $7,897,000 (eight cents per share diluted), compared to $21,335,000 (21 cents per share diluted) for the 1998 period. The 1999 third quarter also included imputed interest costs related to tentative settlements of government investigations totaling $2,069,000.
Revenues totaled $638,331,000 in the 1999 third quarter and $700,635,000 in the year-earlier period. The revenue reduction from the 1998 quarter reflects a sharp drop in Medicare per diem rates, a decline of nearly two percentage points in average nursing home occupancy and the operation of 10 fewer nursing homes.
For the nine months ended September 30, 1999, Beverly recorded a loss of $102,053,000 ($1.00 per share diluted), after Y2K remediation costs of $10,672,000 and items related to the federal government investigations totaling $204,516,000. For the same period in 1998, Beverly earned $56,506,000 (54 cents per share diluted), after pre-tax charges of $3,875,000 for Y2K remediation and $496,000 for investigation costs, as well as a $4,415,000 charge, net of tax, due to changes in accounting rules for start-up costs.
Nine-month revenues for 1999 totaled $1,907,038,000, compared to $2,115,710,000 in the year-earlier period.
David R. Banks, Chairman and Chief Executive Officer, made the following comments about third-quarter performance:
- "Our nursing home operations continue to be adversely affected by severe cuts in Medicare spending necessitated by the Balanced Budget Act of 1997. Despite extensive cost-reduction efforts over the past several months, operating margins in the third quarter were significantly lower than in the same period of 1998."
- "The availability and cost of labor has become an increasingly challenging issue during 1999, a reflection of strong overall economic conditions and low unemployment rates in virtually all of our markets. Our weighted average wage rate has increased nearly six percent from last years third quarter, and has grown steadily throughout 1999."
- "Higher wage costs have more than offset an increase in average occupancy from the second quarter. Our average occupancy rate was up 61 basis points sequentially, but still remains nearly two percentage points below the third quarter of 1998."
- "Despite a very challenging operating environment, we made meaningful reductions in funded long-term debt and finalized amended lending agreements with our banking group during the third quarter, under terms well within our expectations."
- "We continue to negotiate with the federal government to finalize the agreements related to investigations of nursing labor cost allocations in the Medicare program. This issue has been a major distraction at all levels of our company, and I believe it has prevented us from focusing as sharply as we should have on key operating fundamentals. I am hopeful the agreements can be finalized by year-end, but the process is complex and a more precise timetable is difficult to establish."
Beverly Records Special Charges Totaling $199 Million; Posts Second Quarter Loss
(FORT SMITH, ARKANSAS, August 20, 1999) - Beverly Enterprises, Inc. (NYSE:BEV) today announced that it recorded a loss for the second quarter of $115,857,000 or $1.13 per share diluted. The loss primarily reflects special pre-tax charges totaling $199,043,000 or $1.22 per share diluted related to previously announced tentative settlements of Federal investigations into the allocation of nursing labor costs to the Medicare Program. The loss also includes costs associated with Year 2000 remediation of $4,263,000 and with the government investigations of $1,499,000.
Excluding these special charges and costs, Beverly earned $13,169,000 or 13 cents per share diluted in the second quarter of 1999, compared to $22,455,000 or 21 cents per share diluted in the year-earlier period.
Revenues for the second quarter totaled $663,678,000 in 1999, compared to $717,648,000 in the 1998 period. The decline is primarily the result of the June 1998 sale of Beverlys transitional hospital business, the operation of 13 fewer nursing homes and the adverse impact of the Medicare Prospective Payment System (PPS), which became effective for Beverly nursing homes on January 1, 1999.
For the six months ended June 30, 1999, Beverly recorded a loss of $109,950,000 ($1.07 per share diluted), compared to net income of $35,171,000 (33 cents per share diluted) in 1998. Total revenues for the first half were $1,268,707,000 in 1999 and $1,415,075,000 in 1998.
As previously announced, nursing home occupancy averaged 86.5 percent for the 1999 second quarter, down 120 basis points from the first quarter of 1999. However, occupancy has increased during the third quarter and currently stands at 87.2 percent.
Also previously announced were tentative settlements of Federal Medicare investigations, which still are subject to completion of definitive settlement documents, satisfaction of certain conditions and court approval.
Under the tentative civil settlement, if consummated, Beverly would reimburse the government $170 million, of which $25 million would be paid within 30 days of the execution of a formal agreement. Beverly would pay the balance over an eight-year period, interest-free, by accepting pro rata reductions in its periodic interim Medicare payments totaling $145 million. In addition, Beverly would resubmit certain Medicare filings to reflect reduced direct labor costs.
Under the tentative criminal settlement, if consummated, a Beverly subsidiary would pay a fine of approximately $5 million. This settlement would result in the exclusion of that subsidiarys nursing homes - no more than 10 facilities - from Medicare and Medicaid programs.
The special charges related to these matters and taken during the 1999 second quarter include:
- $128.8 million for the net present value of the tentative civil and criminal settlements,
- $17 million for impairment losses on the subsidiarys nursing homes that would be excluded from the Medicare and Medicaid programs,
- $39 million for certain prior year cost-report items affected by the tentative settlements,
- $3.1 million in refinancing costs necessitated by the tentative settlements, and
- $11.1 million in reserves for other investigation and settlement-related costs.
These charges and related matters are discussed in Beverlys Form 10-Q, which is being filed today with the Securities and Exchange Commission.
This news release may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include: national and local economic conditions; the effect of government regulations and changes in regulations governing the healthcare industry on the Companys operation, including its compliance with such regulations; changes in Medicare and Medicaid payment levels; final resolution of the federal government investigations discussed above and other related lawsuits; the ability to renegotiate the Companys existing credit agreements and other debt affected by the tentative settlements of the investigations discussed above; the ability to attract and retain qualified personnel; the availability and terms of capital to fund acquisitions and capital improvements; the competitive environment in which the Company operates; demographic changes; the ability of the Company to implement initiatives to improve census; the ability of the Company and its significant vendors, suppliers and payors to timely locate and correct all relevant computer codes and identify and remediate date-sensitive embedded chips prior to the year 2000, and the availability and cost of labor and materials. These and other risks and uncertainties that could affect future results are addressed in the Company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q.
Beverly Reaches Tentative Settlements of Medicare Investigations; Postpones Announcement of Second Quarter Results
(FORT SMITH, ARKANSAS, July 27, 1999)-- Beverly Enterprises, Inc. (NYSE:BEV) today announced that it has reached a tentative understanding with the U.S. Department of Justice on potential settlements of the previously announced Federal investigations into the allocation of nursing labor hours to the Medicare Program. The understanding is subject to completion and execution of definitive settlement documents, satisfaction of certain conditions and court approval.Beverly plans to record special pre-tax charges in the 1999 second quarter for the potential settlements and related matters totaling between $175 million and $225 million. Announcement of financial results for the quarter ended June 30 will be postponed until no later than August 20.
Because the potential settlements are not yet final, Beverly will not elaborate on the matter.
Based on preliminary results for the second quarter, Beverly earned 13 cents per share diluted from operations, before costs associated with Year 2000 remediation and with the Medicare investigation. Nursing home occupancy averaged 86.5 percent, a decline of 200 basis points from the second quarter of 1998 and more than 100 basis points from the first quarter of 1999.
"Our continuing cost-reduction efforts enabled us to meet operating earnings targets, despite disappointing occupancy levels in the second quarter," said David R. Banks, Chairman of the Board and Chief Executive Officer. "Our financial targets for the balance of this year assume significant increases in occupancy. We have launched a series of initiatives to improve our performance in this critical area, but it is too early to gauge their effectiveness. If occupancy does not improve, efficiencies alone will not produce operating earnings (excluding Year 2000 remediation, as well as Medicare investigation charges and related on-going costs) in the third and fourth quarters above second-quarter levels."
Banks continued: "We hope to put the government investigation behind us, and are studying the impact the potential settlements will have on our on-going operations. Weve discussed this matter with our banking group and have received assurances that, when necessary, waivers will be granted to give us time to amend certain financial covenants in our debt agreements.
"For the longer-term, we look forward to continually improving our performance under a totally new Medicare payment system. Beverly is a cost-effective provider of quality care, and the segment of the population we serve will grow dramatically in the years ahead. Weve worked hard to build a solid financial foundation and to upgrade our portfolio of resources people, facilities and business operations. Weve successfully worked our way out of challenging situations in the past, and believe we can transform Beverly into an even better company in the years ahead."
This news release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include resolution of the Federal government investigations discussed above, successful implementation of operational changes required by PPS, national and local economic conditions, the effect of government regulation, the competitive environment in which the Company operates, and the availability and cost of labor and materials. These and other risks and uncertainties that could affect future results are addressed in the Company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q.
Beverly Announces Results of Annual Meeting of Stockholders --Sets Date for 2000 Annual Meeting --
(FORT SMITH, ARKANSAS, May 27, 1999) -- Beverly Enterprises, Inc. (NYSE: BEV) reported that, at today's annual meeting, stockholders elected all nominees to the Company's Board of Directors and ratified the appointment of Ernst and Young LLP as independent auditors for 1999.
Beverly also announced that at its organizational meeting following the stockholders meeting, its Board of Directors scheduled next years annual meeting of stockholders for Thursday, May 25, 2000.
Beverly Earns Nine Cents Per Share From Operations in First Quarter
(FORT SMITH, ARKANSAS, April 22, 1999)-- Beverly Enterprises, Inc. (NYSE:BEV) today announced that it earned nine cents per share diluted in the first quarter of 1999 from operations, before costs associated with Year 2000 remediation and with an on-going government investigation of cost-allocation practices within the Medicare program. After pre-tax remediation costs of $2,986,000 and investigation costs of $1,905,000, Beverly's first quarter net income per share diluted was six cents in 1999, compared to 13 cents in the prior year's first quarter. First quarter 1999 revenues totaled $635,029,000, compared to $697,427,000 in 1998.
The declines in revenues and net income are primarily the result of the federal government's Medicare Prospective Payment System (PPS), which became effective for Beverly's skilled nursing operations January 1, 1999.
"We cannot minimize the adverse impact of PPS on our operating and financial performance during the first quarter," said David R. Banks, Chairman of the Board and Chief Executive Officer. "However, we also cannot overstate the importance of the preparations we've been making for a successful transition to this radically different payment system. We believe that difficult strategic decisions, conservative financial management, and significant investments in information technology and in training during recent years leave us well-positioned for longer-term success. We're very encouraged by the initial results we've achieved under PPS. There is still much to do to bring new operating and care protocols to optimum levels, but we look forward to continuing improvements throughout the year."
Beverly Healthcare reported significantly lower operating earnings and revenues compared to the first quarter of 1998, on both actual and same facility bases. However, the same-facility operating margin for skilled nursing facilities declined by only nine basis points.
Beverly Care Alliance exceeded internal operating profit targets. This reflects operating improvements and greater than anticipated staff reductions and efficiencies at Beverly Rehabilitation, which provides therapy services to Beverly skilled nursing centers.
Nursing center occupancy was down more than 140 basis points compared to the first quarter of 1998, and was nearly 90 basis points off fourth quarter 1998 levels. Lower occupancy levels also were experienced by other long-term care providers during their conversion to PPS.
"We support the objectives of PPS and believe this new payment system can lead to the delivery of quality care in a more cost-effective manner. I am pleased with our better than expected level of cost reductions, which reflect our quick response to lower census so far in 1999. I am even more pleased that our cost reductions did not jeopardize the high quality standards we've established for patient care," Banks added. "We are concerned, however, that the current level of Medicare cost reductions is nearly double the amount that Congress intended for skilled nursing centers. The unintended severity of these funding cuts, if not remedied, could ultimately create access and quality of care issues for our nation's elderly."
This news release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include successful implementation of the operational changes required by PPS, national and local economic conditions, the effect of government regulation, the competitive environment in which the Company operates, and the availability and cost of labor and materials. These and other risks and uncertainties that could affect future results are addressed in the Company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q.
SUPPLEMENTARY INFORMATION
PRO FORMA ANALYSIS OF 1999 EARNINGS
(In thousands, except per share amounts)
| Quarter ended March 31, 1999 |
|
| Income before provision for income taxes, as reported | $ 9,377 |
| Adjustments for non-recurring items: | |
|
2,986 |
|
$ 1,905 |
| Income before provision for income taxes, as adjusted | 14,268 |
| Provision for income taxes | 5,279 |
| Net income, as adjusted | $ 8,989 |
| Basic income per common share, as adjusted | $ 0.09 |
| Weighted average shares used to compute basic income per common share, as adjusted | 102,480 |
| Diluted income per common share, as adjusted | $ 0.09 |
| Weighted average shares used to compute diluted income per common share, as adjusted | 102,693 |
Beverly Earns 20 Cents Per Share in Fourth Quarter Before Charges, Other Specific Costs
(FORT SMITH, ARKANSAS, February 4, 1999)-- Beverly Enterprises, Inc. (NYSE:BEV) today announced that it earned 20 cents per share diluted in the fourth quarter of 1998, before previously announced charges and before costs associated with Year 2000 remediation and with an on-going government investigation of cost-allocation practices within the Medicare program. After pre-tax charges of $168,368,000, remediation and investigation costs of $5,844,000 and $1,369,000, respectively, and extraordinary after-tax charges totaling $6,075,000, there was a net loss for the fourth quarter of $91,942,000 (90 cents per share diluted). Fourth quarter 1998 revenues totaled $707,230,000.
The fourth quarter pre-tax charges include costs related to (a) the transfer of previously self-insured workers' compensation and patient care liabilities to an outside insurer, (b) impairment of assets, partially related to the federal government's adoption of the Prospective Payment System, and (c) workforce reductions designed to reduce costs. There also was a fourth-quarter after-tax extraordinary charge of $1,660,000 related to debt refinancings and a cumulative effect after-tax adjustment of $4,415,000 resulting from the adoption of a new accounting standard regarding pre-opening costs for new facilities. The cumulative effect of these charges and adjustments, which are primarily non-cash, will not have an adverse impact on Beverly's debt covenants.
"Our primary business focus during the fourth quarter was on the transition from a cost-based reimbursement method for Medicare to the new Prospective Payment System," said David R. Banks, Chairman of the Board and Chief Executive Officer. "We knew that converting to the dramatically different care protocols demanded by PPS would be a gradual process that inevitably would hamper our efforts to maximize fourth quarter operations. Nevertheless, we believe we struck the right balance between short-term performance and long-term potential. As a result, we were able to meet or exceed our internal operating earnings objective for the twelfth consecutive quarter and still complete preparations that we believe leave us competitively well-positioned for PPS."Banks continued: "Our initial experience under PPS confirms the soundness of our strategic decisions in 1995 to significantly reduce reliance on ancillary services and to begin aggressive cost-reduction efforts. As a result, PPS did not present major surprises or disappointments for us. There still are several process and operational uncertainties associated with PPS, however, and these factors make it difficult to estimate the impact of PPS on future financial performance. Our current Performance Plan reflects 1999 operating earnings in the range of 60 to 70 cents per share. Our Plan anticipates relatively stronger performance in the second half of 1999, as PPS implementation issues are resolved."
For the full year 1998, and including all charges and remediation/investigation costs, Beverly reported a net loss of $31,021,000 (30 cents per share diluted) on revenues totaling $2,822,940,000. Excluding these items, Beverly's 1998 net income totaled $83,895,000 (80 cents per share diluted).
For the fourth quarter of 1997, Beverly reported a net loss of $7,973,000 (seven cents per share diluted) on revenues totaling $781,429,000. The 1997 period included results from Pharmacy Corporation of America (PCA), a former subsidiary that was separated from Beverly and merged into another company on December 3, 1997. That transaction resulted in one-time costs totaling $44,000,000. Excluding PCA results and related transaction costs, Beverly's net income in the fourth quarter 1997 would have been $21,050,000 (19 cents per share diluted).
For the full year 1997, Beverly's reported net income totaled $58,593,000 (57 cents per share diluted) on revenues totaling $3,230,300,000. Excluding PCA results and related transaction costs, Beverly's 1997 net income would have totaled $73,941,000 (67 cents per share diluted).
This news release contains forward-looking statements regarding earnings expectations made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include successful implementation of the operational changes required by PPS during the transitional period, national and local economic conditions, the effect of government regulation, the competitive environment in which the Company operates, and the availability and cost of labor and materials. These and other risks and uncertainties that could affect future results are addressed in the Company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q.