Brentwood, TN (March 1, 2018) — Diversicare Healthcare Services, Inc. (NASDAQ:DVCR), a premier provider of long-term care services, today announced its results for the fourth quarter ended December 31, 2017. The Company’s revenue grew to $144.4 million, an increase of 6.9% year-over-year.
On February 22, 2018, the Board of Directors declared a quarterly dividend of $0.055 per share per common share payable to shareholders of record as of March 31, 2018, to be paid on April 13, 2018.
Fourth Quarter 2017 Highlights
- Net Revenue increased 6.9% to $144.4 million in the fourth quarter of 2017 from $135.0 million in the fourth quarter of 2016, primarily due to the 22 centers acquired during the fourth quarter of 2016.
- Net loss increased to $5.9 million in the fourth quarter of 2017 compared to net income of $1.4 million in the fourth quarter of 2016.
- The Tax Cuts and Jobs Act enacted on December 22, 2017 resulted in a non-cash Income Tax expense of $5.5 million in the fourth quarter of 2017 to reflect the reevaluation of the Company’s net deferred tax assets based on the U.S. Federal Tax Rate of 21.0%.
See below for a reconciliation of all GAAP and non-GAAP financial results.
Changes to the Board of Directors
The Company is sad to announce the unexpected passing of Wallace E. Olson, a director of the Company since 2002. Mr. Olson formerly served as Chairman of the Board of Directors and was a member of the Audit Committee, Compensation Committee and the Governance and Nominating Committee.
William C. O’Neil, Jr., a director of the Company since its inception, has notified the Company that he will not stand for re-election at the 2018 annual meeting and will retire from the Board effective immediately after the annual meeting. Mr. O’Neil is currently the chairman of the Compensation Committee and a member of both the Audit Committee and the Governance and Nominating Committee. The decision by Mr. O’Neil to retire is not based on any disagreement with the Company.
Effective March 2, 2018, the Board of Directors increased the size of the Board from seven to eight directors, which coupled with Mr. Olson’s death created two vacancies. The Board appointed Ben R. Leedle, Jr. and Leslie K. Morgan as new Directors, effective March 2, 2018, filling the vacancies. Neither Mr. Leedle nor Ms. Morgan has any related party transactions with the Company. Both Mr. Leedle and Ms. Morgan, along with the other directors except for Mr. O’Neil, will be presented to the shareholders for election as directors at the 2018 annual meeting of shareholders.
Ms. Morgan, age 40, is the general partner of the Olson Family Partnership, is Wallace Olson’s daughter, and is the co-founder of CareAssist, Inc., a licensed personal support services agency that provides non-medical home care in Chattanooga, Tennessee. She and her husband founded the company in 2008. Prior to joining CareAssist, Ms. Morgan was a benefits consultant with Unum and a securities associate with A.G. Edwards, both in Chattanooga Tennessee. Ms. Morgan earned her B.S. from University of Tennessee at Chattanooga in 2002.
Mr. Leedle, age 57, is currently the CEO of Blue Zones, LLC, a health innovation company dedicated to creating healthy communities across the United States. Mr. Leedle served as Chief Executive Officer of Healthways, Inc. (now Tivity Health, Inc.) from September 2003 until May 2015. He is also engaged as strategic advisor, director, and investor for several companies including BeHealth Solutions, a digital therapeutics company, Equality Health, a health plan for disparate populations, and Health Velocity Capital, a health technology and services innovation partner to entrepreneurs and investors.
Commenting on changes to the Board of Directors, Kelly Gill, Diversicare’s CEO, stated, “We are deeply saddened to announce the unexpected passing of our dear friend Wally, who has been a long-time supporter of the Company and an active Board Member. Additionally, we thank Bill for his many years of service to the Company. He has been a great advocate of the Company since its inception in 1994 and we will miss his contributions to the Board. We are excited to have Leslie and Ben join the Board and are confident that their experiences and backgrounds will make both of them strong additions to our Board at this critical time for our company. We believe they will provide valuable insight as we continue to grow as a company.”
Commenting on the results, Kelly Gill stated, “For the quarter we faced challenges widely seen in the industry related to skilled mix and occupancy; however, we made strides to limit the impact of these headwinds on our financial and operational performance.”
Mr. Gill noted, “Our reported results for the fourth quarter of 2017 reflect a significant one-time non-cash income tax expense of $5.5 million related to the estimated impact of the Tax Cuts and Job Act on our deferred tax assets and liabilities. We anticipate the new legislation to be beneficial, and future tax savings will be invested back into the Company to strengthen current operational and financial results, as well as fund our growth.”
Mr. Gill continued, “We continue to make overall progress across the Company with our quality of care outcomes measured under the 5 Star Rating System. I am particularly pleased to see an improvement in quality for the centers we acquired in 2016. As a key focus of our investment strategy, we continue to make ongoing investments in our newly acquired centers, which demonstrates our repeated ability to drive value into underperforming properties.”
Mr. Gill highlighted, “Our acquisitions from 2017 and 2016 have proved to be accretive, contributing $188.2 million of revenue during 2017, and EBITDA grew by 86.2% to $19.2 million compared to 2016.”
Mr. Gill concluded, “Once again I am very thankful for our dedicated and hardworking team members, who are the driving force behind the seamless transitions of newly acquired centers and the success of overall portfolio.”View Full Results
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Kelly J. Gill
Chief Executive Officer
James R. McKnight, Jr.
Chief Financial Officer