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FOR IMMEDIATE
RELEASE
Gentiva Health Services Reports Record Operational Income and Cash Balance
Third Quarter 2001 Results Highlighted by Significant Increase in Earnings Per Share and Further Balance Sheet Improvements Melville, N.Y., November 6, 2001—Gentiva Health Services (Nasdaq: GTIV), the nation's leading provider of specialty pharmaceutical and home health care services, today reported third quarter 2001 financial results, highlighted by diluted earnings of $0.24 per share, compared to $0.07, excluding special charges, for the corresponding quarter of 2000. The company also ended the quarter with a cash balance of $83.6 million, the highest amount ever reported by the company. Year to date 2001 diluted earnings per share were $0.61 per share, compared to a loss of $6.34 per share for the corresponding period of 2000. Excluding special charges, year to date diluted earnings per share were $0.71 in 2001 and $0.26 in 2000. Diluted cash earnings, excluding special charges, were $1.02 per share for the first nine months of 2001, compared to $0.58 per share for the corresponding period of 2000. After adjusting for the sale of the company's staffing and Canadian operations, which were sold in late 2000, year to date company net revenues increased 0.2 percent, to $1.02 billion, over the corresponding period of 2000. For the third quarter, after adjusting for the sale of the company's staffing and Canadian operations, company-wide net revenues decreased 2.0 percent, to $328 million, over the corresponding period of 2000, due primarily to the closure of 12 nursing branches, continued transitions to the new Medicare reimbursement system for home health and the national shortage of coagulation therapies, used in the treatment of hemophilia. "Gentiva's third quarter was characterized by three very significant accomplishments for our company," said Edward A. Blechschmidt, Gentiva's chairman, president and chief executive officer. "First, we substantially expanded our earnings per share this quarter over the same period last year, even while the national economic climate was somewhat lethargic. Second, we continued to improve Gentiva's overall balance sheet and cash position. And third, and perhaps most importantly, we ended this quarter continuing to position the company to expand revenues and build further on Gentiva's market leadership in two of health care's most dynamic sectors," said Blechschmidt. Gentiva, on October 29, 2001, reiterated that its previously announced 2001 earnings guidance of $0.90 to $1.00 per share and cash earnings per share of $1.30 to $1.40 remains unchanged. Specialty Pharmaceutical Services Year to date net revenues for Gentiva's specialty pharmaceutical services business were $547 million, a 6.1 percent increase over the corresponding period of 2000. For the third quarter 2001, net revenues for the specialty pharmaceutical services business were $172.7 million, a 1.1 percent decrease over the corresponding period of 2000, due largely to the continued product shortage of coagulation therapies used in the treatment of hemophilia, and lower sales of Oxandrin, used in the treatment of involuntary weight loss. Despite this, however, the third quarter was characterized by increased unit volume in specialty pharmaceutical therapies, including, most prominently, Flolan, an intravenous therapy used in the treatment of pulmonary arterial hypertension, intravenous immune globulin (IVIG), used in the treatment of primary immune deficiency and other diagnoses, and growth hormone, used in the treatment of growth hormone disorders. Operating margins for the specialty pharmaceutical business improved 120 basis points, to 10.8 percent, for the third quarter, compared with 9.6 percent for the second quarter. Operating contribution for the specialty pharmaceutical services business for the third quarter was $18.7 million, compared to $20 million for the corresponding period of 2000, impacted during the year to date and quarter by the shortage of coagulation therapies and by continued investment in expanding Gentiva's national specialty pharmaceutical and managed care sales force. Gentiva's specialty pharmaceutical business also continued to expand its commitment to clinical excellence and patient safety during the third quarter with its previously announced contract with Deltec Inc. for anti-free flow infusion pumps and its new clinical support line for pulmonary hypertension patients. "Gentiva ends the third quarter as a national leader in the specialty pharmaceutical marketplace, with some of the most exciting products and clinical expertise in this industry," said Blechschmidt. "Gentiva approaches 2002 well-positioned to continue capitalizing on the dynamic trends in biopharmaceutical advancement that make this industry one of the 21st century's most exciting." Home Health Services Year to date net revenues for the home health services business were $540.8 million, a 2.6 percent decrease over the corresponding period of 2000. For the third quarter 2001, net revenues for the home health services business were $175.5 million, a 1.8 percent decrease over the corresponding period of 2000. These decreases in home health services' revenue are due primarily to the closure of 12 nursing branches during the fourth quarter of 2000 and the continued transition to the new Medicare reimbursement methodology for home health care. Operating contribution for Gentiva's home health services business improved significantly, both year to date and for the third quarter. On a year to date basis, operating contribution for the home health services business improved 32 percent, to $39.5 million, compared to $30 million for the corresponding period of 2000. For the third quarter, operating contribution for the home health services business improved 52 percent, to $11.9 million, compared to $7.8 million for the third quarter 2000. Operating margins for the home health services business were 6.8 percent for the third quarter, an increase from the 4.4 percent reported in the corresponding period of 2000. "This has been a transitional year for our home health business," said Blechschmidt. "We have adopted new clinical protocols to improve utilization and clinical outcomes. We are encouraged that we have positioned the business to build on our market leadership and to grow the company's home health revenues in 2002, while continuing to increase profitability. We also see the opportunity to expand further on our market leadership in various niches of the home health industry," he said. During the quarter, Gentiva also expanded one of its niche programs, Rehab Without Walls (RWW), which opened new locations in Boston, Chicago, Fort Lauderdale and Minneapolis, and announced additional accreditations for a number of RWW programs around the country. Conference Call Details Gentiva will comment further on its third quarter operating results in its previously announced quarterly conference call, which will be held this morning, November 6, 2001, at 11 a.m. Eastern Standard Time. To participate in the call from the United States or Canada, call (800) 230-1093. To participate from outside the United States or Canada, call (612) 332-0637. Gentiva Health Services (Nasdaq: GTIV), a Fortune 1000 company, is the nation's leading provider of specialty pharmaceutical and home health care services. With more than 300 locations in the United States, the company had approximately $1.5 billion in 2000 net revenues. For more information, visit Gentiva's Web site, www.gentiva.com. Investor Contact: John J. Collura
Executive Vice President, Chief Financial Officer and Treasurer
Gentiva Health Services
(631) 501-7437 | (in $000's except per share) | 3rd Quarter | Nine Months | | | 2001 | 2000 | 2001 | 2000 | | Statement of Operations | | | | | | Net Revenues | 328,262 | 380,325 | 1,020,884 | 1,148,202 | | Cost of Services Sold | 216,162 | 262,160 | 678,719 | 772,911 | | Gross Profit | 112,100 | 118,165 | 342,165 | 375,291 | | SG&A Expenses | 105,748 | 245,930 | 326,097 | 496,247 | | Operating Profit (Loss) | 6,352 | (127,765) | 16,068 | (120,956) | | Interest Income (Expense), net | 319 | (2,270) | (266) | (8,618) | | Income (Loss) before Income Taxes | 6,671 | (130,035) | 15,802 | (129,574) | | Income Tax Expense | 425 | 311 | 1,126 | 507 | | Net Income (Loss) | 6,246 | (130,346) | 14,676 | (130,081) | | Net Income (Loss) per Share - Basic | 0.26 | (6.30) | 0.65 | (6.34) | | Net Income (Loss) per Share - Diluted | 0.24 | (6.30) | 0.61 | (6.34) | | | | | | | | Supplemental Information | | | | | | Net Income excluding Special Charges | 6,246 | 1,600 | 17,417 | 5,806 | | Cash Net Income (Loss) (1) | 8,836 | (127,529) | 22,513 | (121,591) | | Depreciation Expense | 3,833 | 5,029 | 12,212 | 15,817 | | Amortization of Goodwill | 2,590 | 2,817 | 7,836 | 8,490 | | Diluted Earnings (Loss) per Share | | | | | | Excluding Special Charges | 0.24 | 0.07 | 0.71 | 0.26 | | Cash Net Income (Loss) (1) | 0.33 | (6.14) | 0.91 | (6.00) | | Cash Net Income excluding Special Charges (1) | 0.33 | 0.21 | 1.02 | 0.58 | | (1) Cash Net Income excludes amortization of goodwill, net of taxes. | |
| Key Balance Sheet Information | Sep. 30, 2001 | Jul. 1, 2001 | Dec. 31, 2000 | Oct. 1, 2000 | | Cash and Cash Equivalents | 83,586 | 77,070 | 452 | 3,106 | | Net Receivables | 366,303 | 384,896 | 419,178 | 447,493 | | Inventories | 48,709 | 48,813 | 51,111 | 72,908 | | Long-Term Debt | _ | _ | _ | 75,690 | | Convertible Preferred Trust Securities | _ | 19,400 | 20,000 | 20,000 | | Shareholders’ Equity | 611,960 | 585,118 | 566,149 | 534,879 | |
| (in $000's) | 3rd Quarter | Nine Months | | | 2001 | 2000 | 2001 | 2000 | | Segment Information | | | | | | Net Revenues | | | | | | Specialty Pharmaceutical Services | 172,740 | 174,606 | 546,955 | 515,500 | | Home Health Services | 175,496 | 178,715 | 540,818 | 555,426 | | Intersegment Revenues | (19,974) | (18,250) | (66,889) | (51,746) | | Subtotal | 328,262 | 335,071 | 1,020,884 | 1,019,180 | | Staffing and Canada | - | 45,254 | - | 129,022 | | Total Net Revenue | 328,262 | 380,325 | 1,020,884 | 1,148,202 | | Operating Contribution | | | | | | Specialty Pharmaceutical Services | 18,733 | 19,975 | 52,652 | 63,396 | | Home Health Services | 11,901 | 7,824 | 39,454 | 29,971 | | Corporate Expenses | (17,859) | (19,934) | (52,979) | (61,093) | | Subtotal | 12,775 | 7,865 | 39,127 | 32,274 | | Staffing and Canada | _ | 4,241 | _ | 9,893 | | Special Charges | _ | (132,025) | (3,011) | (138,816) | | EBITDA | 12,775 | (119,919) | 36,116 | (96,649) | |
Information contained in this news release, other than historical information, should be considered forward-looking, and is subject to various risk factors and uncertainties. For instance, the company’s strategies and operations involve risks of competition, changing market conditions, changes in laws and regulations affecting its industries and numerous other factors discussed in this release and in the company’s filings with the Securities and Exchange Commission. Accordingly, actual results may differ materially from those anticipated in any forward-looking statements.
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