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ADVOCAT ANNOUNCES THIRD QUARTER RESULTS
FRANKLIN, Tenn. - (November 14, 2003) - Advocat Inc. (NASDAQ OTC: AVCA) today announced its results for the third quarter ended September 30, 2003. The Company
reported a net loss for common stock of $2.9 million, or $0.52 per share, in the third quarter of 2003 compared with a net loss for common stock of $2.4 million, or $0.44 per share, in the same period in
2002. Net revenues for the third quarter of 2003 increased 14.8% to $56.0 million compared with $48.8 million in the same period of 2002.
Third Quarter Results
The increase in net revenues for the third quarter was due primarily to higher patient revenues due to the lease for four Florida nursing homes, increased Medicare
utilization and increased Medicaid rates in certain statesthe addition of four nursing home leases entered during the second quarter of 2003. Advocat previously managed these homes under a management
contract. Patient revenues rose 17.0% to $49.4 million compared with $42.3$42.2 million in the third quarter of 2002. Growth in patient revenues was primarily due to the new nursing home leases,
increased Medicare utilization and increased Medicaid rates in certain states, partially offset by a slight decline in census in U.S. facilities, the sale of a nursing home in the fourth quarter of 2002, and the
expiration of Medicare temporary payment increases effective October 1, 2002.
Resident revenues decreased to $5.7 million in 2003 from $5.8 million in the third quarter of 2002. The decline in
resident revenues was attributable to the termination of leases on 16 assisted living properties during 2002, one assisted living facility during 2003 and the closure of another assisted living facility in 2003 and
a decline in census compared with the prior year in U.S. assisted living facilities.
Ancillary service revenues, prior to contractual allowances, increased to $8.8 million in 2003 from $7.2 million in
the third quarter of 2002 due to the new nursing home leases.lease of the Florida nursing homes. Management fees increased to $778,000 compared with $669,000 in the third quarter of 2002
primarily due to changes in the rate of currency exchange between the Canadian and U.S. dollars.
Total expenses increased to $58.7 million compared with $51.0 million in the third quarter of
2002. Operating expenses represented 86.5%87.9% of patient and resident revenues for the latest quarter compared with 83.8%85.1% of such revenues in the third quarter of 2002. The increase in operating
expenses was primarily attributable to the operating costs of the four new leased Florida nursing homes, including costs of professional liability claims, and cost increases related to wages and benefits.
Wages increased 15.7% to $25.6 million and professional liability cost rose 24.1% to $3.7 million compared with the third quarter of 2002
General and administrative costs were $3.8 million, or 6.8% of
revenues, compared with $3.5 million, or 7.1% of revenues, in the third quarter of 2002. Interest expense declined 9.3% to $865,000 compared with the prior third quarter due to reduced interest rates.
Nine Months Results
Net revenues increased to $157.8 million in the first nine months of 2003 compared with $149.9 million in 2002. Patient revenues accounted for the majority of the
growth since last year and were $137.6 million in 2003 compared with $124.2$124.1 million in the first nine months of 2002, with the increase primarily due to the new nursing home leases. Resident revenues
were $17.5 million compared with $23.6 million, reflecting the termination of leases on U.S. assisted living facilities. Management fees rose to $2.3 million in the 2003 period compared with $2.0 million for
the first nine months of 2002.
Total expenses were $171.1 million in 2003 compared with $156.1 million in 2002. Operating expenses represented 89.7%91.3% of patient and resident revenues for 2003
compared with 82.8%84.1% of such revenues in 2002. The majority of the increase in operating costs was due to the addition of the new nursing home leases.
Net loss to common stockholders for the
first nine months of 2003 was $13.9 million, or $2.53 per share, compared with $6.7 million, or $1.22 per share, in the first nine months of 2002.
Forward-looking statements made in this release involve a
number of risks and uncertainties, including but not limited to, uncertainty regarding the Company’s ability to restructure or refinance its debt, the impact of under-insured professional liability claims,
factors affecting the long-term care industry in general, governmental reimbursement, government regulation, health care reforms, the impact of future licensing surveys, changing economic and market conditions and
other risk factors detailed in the Company’s Securities and Exchange Commission filings. Advocat Inc. is not responsible for updating the information contained in this press release beyond the
published date, or for changes made to this document by wire services or Internet services.
Advocat Inc. provides long-term care services to nursing home patients and residents of assisted living
facilities in 9 states, primarily in the Southeast, and three provinces in Canada.
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