TRL--press release
TORRANCE, California, August 10, 1999 – Total Renal Care Holdings, Inc. (NYSE: TRL), the second largest (and largest independent) worldwide provider of integrated dialysis services, today announced revenues, earnings and earnings per share for the second quarter and six months ended June 30, 1999.
On a normalized basis, before the unusual items described below, the Company's revenues were $364 million for the second quarter ended June 30, 1999 and $716.2 million for the six month period ended June 30, 1999. Net income was $16.2 million for the quarter and $36.2 million for the six month period. Earnings per share were $0.20 for the second quarter and $0.44 for the six month period.
The Company, on a normalized basis, had operating income that was $22.0 million below its expectations for the second quarter. $10.5 million of this shortfall reflects lower than expected revenues. During the second quarter, the Company's Berwyn billing office (which bills 45% of the Company's domestic dialysis revenues) had revenues per treatment of $254 compared to $243 for the Company's Tacoma billing office (which bills 55% of the Company's domestic dialysis revenues). This difference primarily reflects Tacoma's historical collection performance and resulted in the $10.5 million shortfall. The Company's operating expenses for the second quarter were $11.5 million higher than projected.
The Company recognized the following unusual items in the second quarter:
A $35.0 million charge for accounts receivable at the Company's Tacoma billing office that includes a $24.0 million increase in provision for doubtful accounts for the second quarter relating to accounts receivable greater than six months old, and a $11.0 million increase in contractual allowances.
A $16.6 million write-off of minority investments and loans to dialysis-related businesses, which is higher than the original $10 million estimate in our July 18, 1999 press release.
A $4.5 million charge for the resolution of outstanding vendor claims for goods and services provided in earlier periods. These vendor claims were originally estimated in our July 18, 1999 press release at between $8-10 million.
A $2.5 million charge for non-recurring expense items including costs associated with the now-disposed-of corporate jet and expensing capitalized acquisition costs for transactions that will not be consummated.
A $13.2 million charge for the under-accrual of accounts payable as of March 31, 1999 which will result in a restatement of the Company's financial statements for the first quarter of 1999.
"These charges are the result of the strains placed on our financial infrastructure due to our significant historical growth as well as systems conversions during the first half of 1999. We are now completely focused on strengthening our financial infrastructure, internal controls and collection processes in Tacoma," stated George B. DeHuff, III, TRC's interim Chief Executive Officer. "We have seen significant improvements in our collection efforts at our Berwyn billing office throughout 1999 and are implementing similar systems and process improvements in our Tacoma office."
During the first six months of 1999, the Company has added through acquisitions and management agreements over 3,100 patients and 45 dialysis centers, including approximately 2,050 patients in 25 domestic facilities, over 400 patients under management contracts in 3 facilities, and approximately 650 patients in 17 centers internationally. Additionally, the Company has opened 13 owned or managed de novo facilities in 1999 and expects to complete approximately 15 additional facilities by the end of this year. The Company's same-store treatment growth for the second quarter was 7.3%.
"We are pleased with our strategic acquisitions during 1999. We have achieved over 75% of our 1999 acquisition targets and will complete only a limited number of strategic transactions during the remainder of 1999," stated DeHuff. "We are well positioned for long-term growth and will continue to be a leading player in one of the most attractive segments of health care services. Management's focus is on strengthening our financial infrastructure and improving cash collections. After achieving these improvements, we will reassess the pace of our growth strategy....
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