Fourth Quarter and Year-End 2009 Results
Company Records Non-cash Impairment Charges and Provides 2010 Guidance
LOUISVILLE, KY (March 8, 2010) – ResCare, Inc. (NASDAQ: RSCR) today announced results for the fourth quarter and year ended December 31, 2009.
Fourth Quarter 2009 Financial Results
Revenues for the fourth quarter of 2009 were $387.2 million, a decrease of 2% from the prior year period due primarily to the loss of two Job Corps centers during 2009, recent rate reductions in certain states and changes in contract awards and program cuts in our Education unit. During the fourth quarter of 2009, the Company recorded pre-tax, non-cash charges totaling $72.0 million ($47.1 million, net of tax, or $1.63 per diluted common share) as a result of the partial impairment of goodwill and other long-lived assets at three of its reporting units. The Company also increased its legal reserves by $5.0 million. Net loss attributable to common shareholders was $41.8 million, or $1.45 per diluted common share, for the fourth quarter of 2009, compared with net income of $12.6 million, or $0.44 per diluted common share, in the same period of 2008. The 2008 period included a $4.1 million ($2.5 million, net of tax, or $0.07 per diluted common share) reduction of the legal reserves established during the second quarter of 2008.
Adjusted Net Income attributable to common shareholders, which excludes the aforementioned impairment and legal charges, was $7.2 million, or $0.25 per diluted common share, in the fourth quarter of 2009. Adjusted EBITDA for the fourth quarter of 2009 was $23.3 million compared with $31.3 million in the prior year quarter.
Full Year 2009 Financial Results
Revenues for full year 2009 increased 2% over 2008 to $1.58 billion. Net loss attributable to common shareholders was $9.4 million, or $0.33 per diluted common share. This compares with net income of $31.3 million, or $1.09 per diluted common share, in 2008, which included a pre-tax charge of $20.3 million ($12.4 million, net of tax, or $0.37 per diluted common share) relating to four resolved legal matters. Adjusted Net Income attributable to common shareholders for the full year 2009 was $34.9 million, or $1.21 per diluted common share. Adjusted EBITDA for 2009 was $106.3 million versus $120.3 million in 2008. Reconciliations of non-GAAP financial measures follow on pages 4, 5 and 9 of this release.
On February 1, 2010, the Company announced that it had amended its senior secured credit facility, increasing the revolver capacity by $25 million to $275 million, and extending the maturity to July 2013.
Ralph G. Gronefeld, Jr., president and chief executive officer, said, “Our financial performance for 2009 did not reach the level we had envisioned at the beginning of the year. We were unable to achieve our revenue and profitability goals for the year as most of the state and local governments we serve were coping, and continue to cope, with substantial budgetary shortfalls. Nevertheless, the need and demand for our services remain strong, and we have demonstrated our ability to deliver these services in a cost effective manner.
“With strong operating cash flows, which more than doubled over 2008, we reduced debt by $61 million, or 23%, during 2009. We managed our working capital and maintained a solid balance sheet, giving us a platform on which to take advantage of ever-present growth opportunities. Our financial strength, the needs of the people we serve and our experience give us great confidence in the long-term future of our company.”
2010 Guidance
The Company expects revenues of approximately $1.6 billion and diluted earnings per common share in the range of $1.05 to $1.15. The 2010 guidance assumes:
- Organic growth offsetting anticipated rate and volume reductions.
- Extension of the Medicaid funding provisions of the American Recovery and Reinvestment Act through June 30, 2011.
- Reauthorization of funding under the Workforce Investment Act and Temporary Assistance for Needy Families.
- No additional financial impact from legal matters or potential healthcare reform legislation.
A listen-only simulcast of ResCare’s fourth quarter and year-end 2009 conference call will be available on‑line at www.rescare.com on March 9, 2010, beginning at 9:00 a.m. Eastern Time and a replay available at 11:00 a.m. Eastern Time.
ResCare, with 35 years of experience helping people reach their highest level of independence, is one of the largest providers of home care to the elderly and persons with disabilities. It also offers residential and support services to people with intellectual and developmental disabilities and provides education, vocational training and job placement for people of all ages and skill levels. Based in Louisville, Kentucky, ResCare and its more than 46,000 dedicated employees serve daily more than 65,000 people in 41 states, Washington, D.C., Puerto Rico and in a number of international locations. For more information about ResCare, please visit the Company’s website at www.rescare.com.
From time to time, ResCare makes forward-looking statements in its public disclosures, including statements relating to expected financial results, revenues that might be expected from new or acquired programs and facilities, its development and acquisition activities, reimbursement under federal and state programs, financing plans, compliance with debt covenants and other risk factors, and various trends favoring privatization of government programs. In ResCare’s filings under the federal securities laws, including its annual, periodic and current reports, the Company identifies important factors that could cause its actual results to differ materially from those anticipated in forward-looking statements. Please refer to the discussion of those factors in the Company’s filed reports. Statements related to expected financial results are as of this date only, and ResCare does not assume any responsibility to update these statements.