BRENTWOOD, TN, (August 5, 2019) – Diversicare Healthcare Services, Inc. (NASDAQ: DVCR), a premier provider of long-term care services, today announced its results for the second quarter ended June 30, 2019.
Second Quarter 2019 Highlights
- In the second quarter, the Company and the Department of Justice (“DOJ”) reached an agreement in principle to settle its ongoing investigation. As a result of this agreement, the Company increased its litigation contingency accrual by $3.1 million to a total of $9.5 million.
- The Company recognized an additional $20.0 million of non-cash income tax expense related to the increase in the valuation allowance against our deferred tax assets during the quarter.
- Adjusted EBITDA for the quarter was $0.6 million compared to $4.6 million for the year ago quarter.
- Our adjusted EBITDAR for the quarter was $16.4 million.
See below for a reconciliation of all GAAP and non-GAAP financial results.
Commenting on the quarter, Jay McKnight, President and Chief Executive Officer, said, “Our primary update for the quarter is the announcement that we have reached an agreement in principle to settle the ongoing DOJ investigation into the Company’s therapy practices dating back to 2010. This investigation period predates our leadership team and has been a significant distraction for quite some time. We still have some work ahead of us to finalize the agreement and related Corporate Integrity Agreement, but reaching this agreement in principle represents substantial progress in resolving this matter. We ask that our investors please refer to our updated SEC filings for further information.” Mr. McKnight continued, “You will note that we also increased the valuation allowance against our deferred tax assets this quarter via a non-cash tax expense item of $20 million. The accounting guidance related to matters like this is very complicated, but because of our government settlement and other financial factors we were required to complete the process of evaluating these assets this quarter. We believe we have significant positive financial evidence that we will continue to evaluate each quarter going forward.”
Mr. McKnight concluded, “We made significant progress on our exit from Kentucky this quarter, and we expect the transaction to close in the third quarter. Our industry continues to experience challenges and strong headwinds; however, I am proud and amazed by the level of commitment that our team members continue to exude in their efforts to deliver on our mission, which is improving every life we touch by providing exceptional healthcare and exceeding expectations.”
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James R. McKnight, Jr.
Chief Financial Officer