Genesis reports a loss after restructuring costs

Operator of 50 nursing facilities in Maryland has optimistic outlook

Nursing homes

May 05, 2000|By M. William Salganik | M. William Salganik,SUN STAFF

Genesis Health Ventures, trying to avoid bankruptcy by renegotiating terms with its lenders, reported a loss of $21.5 million, or 44 cents a share yesterday, for the quarter ended March 31, after a number of one-time restructuring charges. The result was in line with analysts' expectations.

Based in Kennett Square, Pa., Genesis operates about 50 nursing homes in Maryland.

In the year-earlier quarter, Genesis lost $3.1 million, or 9 cents a share, but the results are not comparable because Genesis now includes in its financial results the numbers from Multicare, a nursing home chain it operates under contract. Genesis owns a minority share in Multicare.

Revenue from continuing operations was $603.2 million in the quarter. In the year-earlier period, again not directly comparable because it did not include Multicare, revenue was $464.6 million. In the quarter ended Dec. 31, the first that included Multicare, revenue was $583.0 million, so the most recent quarter represented a 3.5 percent increase over the previous one.

Genesis also showed a slight improvement in earnings before interest, taxes, depreciation and amortization (EBITDA): $64.4 million in the most recent quarter, up 0.6 percent from $64.0 million in the previous quarter.

"Despite the difficult reimbursement and regulatory environment, we showed solid revenue growth and generated higher levels of EBITDA over the prior quarter," Michael R. Walker, chairman and chief executive officer, said in a statement accompanying the earnings release. "While positive trends won't erase the need for debt restructuring, they send clear signals that Genesis is a capable organization run by employees focused on a common vision."

Nursing home chains have been troubled since the federal government cut Medicare rates. Four of the largest seven, including Sparks-based Integrated Health Services, are operating under bankruptcy protection.

In a move some analysts said could be a prelude to a bankruptcy filing, Genesis announced in March that it had missed an interest payment and was negotiating with its lenders to restructure its $1.5 billion debt.

Genesis shares gained 6.25 cents to close at 50 cents.

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