Diversicare Healthcare Services (DVCR) 8 Aug 202020 Q2 Earnings call transcript

Greetings! And welcome to Diversicare’s Q2 2020 Conference Call.

During this presentation, all participants are in a listen-only mode. Afterwards we’ll conduct a question-and-answer session. [Operator Instructions] As a reminder, today's conference is being recorded on Thursday, August 06, 2020. It’s my pleasure to turn the conference over to Alexa Karpinski, VP with Diversicare. ahead. go Please

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may the to non-GAAP to the today's made conference I to measures review During Officer. like results under President would release Form Executive now over non-GAAP X-K. ahead. the furnished measures. encouraged Please reconciliation financial and those be references McKnight, measures and the and our Jay comparable Investors Chief those are go to press hand call, to GAAP of financial

such events, conference XXXX. addition performance Private and these Healthcare differ in afternoon to risks statements results welcome Litigation forwarded-looking Good statements, of meaning of remind actual indicated I historical be recorded. from Safe those to may Pamela. of Today's certain you, within the And and/or cause will Thank call by being materially that uncertainties second to Securities provisions statement. the Reform information, Act Services made Harbor the and quarter the Diversicare involve XXXX is call. to this during conference would everyone comments like

statements company the with XX-Q quarterly and Commission. its for June Form the Securities disclosures quarter December You XX, to provided Exchange XXXX forward-looking on year it’s public annual as factors Form on as for the and report XXXX, filings in reviews the has its XX-K report in well the are ending and encouraged risk XX, ended other

made GAAP the Investors review During be comparable Chief of and to like and Officer. call may release I measures furnished to and the measures McKnight, now the Executive Jay President Form press those today's those our the X-K. call, over non-GAAP encouraged references results are reconciliation financial non-GAAP to under to financial to would turn measures.

second Thank Good XXXX And quarter thank joining Alexa. you, call. you afternoon. for Diversicare's earnings

the jurisdictions and we future and in operating financial I'm industry. a focus consideration into shared industry have These some As challenges some Officer some in-depth the predict on for questions. taken have will more had will of liability impact impact to time spend factors have some of and second Also, cost Massey, liability our professional per Financial in we a bed developing that we company on quarter, to highest have time facing the in going cannot our other direction. conclude and been and discussing results COVID-XX have for provide we pandemic exposure the continue of with specific country. strategic on professional our information Chief certain before, our costs. substantial the COVID-XX our Kerry the quarter's the with

Our very continues in team perform to times. difficult admirably

with privilege and worked found conditions The and region amaze continue to patients, tirelessly. together and and it's members are residents First together to changing our our of team them. take along operations has center been and teams serve have our to ways challenge enormous to manage new with innovative working care very that to support team a team us adaptive working

last quarter, we the trend, beginning and improving an saw As that of into XXXX. ended we shared on XXXX

well. expected. We Despite second for largely federal the by crisis, along of improved an financial during another was would of X.X quarter where we million quarter not continuing net the income with are million Medicaid recognized one, COVID-XX the ended quarter we state our of quarter X.X operations. first thought the The they impact with and We results follow for stimulus the year, the be quarter, in of X.X means the earlier million add-ons. but second

has We at PPE. money In quarter extra the enabled decreased us X% additional we saw a also served of absorb an incurred time these year. decrease has related in for X.X when expenses expenses prior the served COVID to testing million staffing, stimulus patient The census patients from materially.

year. year for ago, While the this mix from skilled XX% quarter to improved our XX.X%

provide XX. Our believe his since recover in from respective which We received the only have expenses. census our may very key we can some efforts or in money federal on our detail line stimulus dollars for industry be with in more take much will be has our revenue is months states. to The pandemic, stimulus federal not operating June declined will prepared this COVID-XX This related decline census we this believe more if years. lost remarks. Kerry used in

working in broadly are Alabama, through Texas, and the have see which Tennessee felt are federal states Notable March, additional combat their have temporarily the they the skilled nursing facilities states to virus hospice utilization funds. assist of really for dollars Medicaid impact as of of this our of received the providers We of rates increased FMAP pandemic. Medicaid Some for and it but to to part us quarter. began that

XXXX We country the experience. XXXX members setting. highlights these residents residents with rapid we virus. a XX% As over our our Between from or or July, we dealing groups that testing have centers. updates. test care that test In asymptomatic facility and most positives, each members directly page skilled you We've of encourage positive term the XX in long with, test CMS of will today, and positive approximately patients announced had the positive. for been website our XX% website about That had and in company's receive qualifying recent every We team which device of means in of are information XX team testing the dealt for need certain that COVID-XX to desperate have maintain government. that on our review the includes for update COVID-XX a patients, have nursing

The those a and we of have them machines shipping started first has already. received phase of couple

We next testing are appreciative centers all of this the look months. effort and in to of over devices getting forward these our few

lower widely and which We Long have a testing as were resource been care term kits, the and has a we for designated feel initially mistake shared was setting allocation. priority discussed

to positive but and availability, properly to national, Testing and state that also able we our negative improve. room We have can but local still have is cohort so improvement seen patients, in to we test for some requirements. us key meet reporting be

each able of the results week, and the lab purchasing and partners to to centers. tests to wait tests the for forward ship are of us see administering in requiring administer We look tests being results. and all thousands our We

Focusing results. on the financial

for million the For a $XX.X EBITDA was a for a second XXXX the loss to we favorably realized quarter ago million the EBITDA second EBITDA $X.X million improvement. $X.X of of net quarter. for year quarter, compared very compares income loss $X.X for million. $XX million to million operations of quarter continuing of net $X.X from the

Adjusting to million government $X $X.X of item, include million. quarter our related expense was XXXX settlement. of second that improvement our for The year-over-year EBITDA

ago compared $XXX to patient was $XXX.X million quarter year store million for revenue same quarter. the Our for the

available occupancy from XX.X% beds total with to Our XX.X% down mix XX%. skilled for increasing XX.X%, was to from

Texas. include does Our managed that not that, for to Please With respectively. quarterly the Medicare and in $X.XX, rate the and note Kerry by Medicaid and statements. $XX.XX, turn remarks Medicaid the on financial increased increases of call some year-over-year the specific rates care temporary and our Tennessee I'll $XX.XX Alabama, over impact

Thank you, Jay.

year continuing focus fourth continued we quarter in a to year, our an favorable in started XXXX. off on results our prior As second his costs trend work of quarter. the well that operational including into Jay draw the increased we the noted favorable comments, The the structure completed from

during The of As that stimulus received from on operations, our more and increase care of our increase rates Medicare, additional for year offset of second resulted to the revenue have money declined increase Patient our $X.X the serve the that second part quarter, we operating unfavorable in managed the from COVID-XX broadly we million provided began to impacts. Jay referenced, the prior increased. million expenses these experience $XXX,XXX our revenue centers from impact patient representing quarter. helped volume an in prior continuing and The $XXX.X Medicaid the an approximately of over was which quarter quarter.

a the revenue from patients decline from reimbursement Texas, partially with in the and a incremental million that federal of Families the of other from participation continue in corresponding served Tennessee funds the experienced QIPP resulted we million our Alabama, of increased well the temporary of $XX.X CARES result have we healthcare which pandemic. must to expenses the recognize rate income Today quarter. federal stimulus received under the $X.X million stimulus PPPHCE increase offset we be as the of against $X.X to program, from offset related in of program. First The perform COVID-XX support million operating federal increased as for quality decrease Act was second Coronavirus in in the $X.X as in for Texas Medicaid used hospice lost revenue patient benchmarks pandemic The state Act connection and Response benefited revenue under by also and matching the that Act. We

over future relation to periods expect impacts. the unfavorable We funds to in remaining stimulus anticipated recognize those

an XX.X% for were preparing as and which labor additional impact the centers million by the centers other expenses were affected supplies patients quarter of residents was and control our or of and our in revenue operating at up operating expenses, of for XX% infection of of potential by expenses revenue million providing of also the expenses COVID-XX a in of and or the $X.X prior on Our outbreaks. pandemic including operations, The year patient percentage were that our quarter million that increase to from million $XX.X revenue. incurred of $XX.X care driven $X.X the

efficiencies we our Excluding the prior current year over the decreased for improve or legal continue G&A administrative COVID-XX of previously the expenses from support $XXX,XXX expenses, decreased benefit also from our drive X.X% operations revenue the $X.X centers. of patient of the in expenses quarter initiatives to made million, functions The cost on we or patient the to to million, structure. that operating quarter X% resulted $X.X General our reduction from revenue. of of from through impact and of expenses operating our

quarter Lease from prior claims. or due fluctuate the the to -- half existing Liability $X.X expense in from for of quarter. million, the with often Our expenses year changes settle approximately from professional expense of costs X.X% with compared dollars, of and current increased defend insurance by The $XXX,XXX incurred the to XXXX. in was prior prior master Kentucky studies, from liability million, Professional results connection lease to our of period of party actuarial from million the revenue. exit of to revenue to the $X.X premiums amendment the million quarter year X.X% for Omega period or quarter during a third of resulted quarter and $XX.X our increase third

in Golden Living. master we years quarters, in our we early with stated lease As have previous and of agreements are the Omega

rent leases for GAAP result, more pay. is we a that the As cash than operating actual these rent expense

includes these lease Agreements. Master approximately line expense of associated $XXX,XXX quarter straight with the Our rent non-cash for Lease

was $X.X turn the quarter quarter. $XX back Jay, the for Adjusting I our million the discussion quarter lease now to That was the for call financial million, closing expense, concludes Our prior of EBITDA QX from second some over an million. adjusted remarks. for will results. EBITDA improvement $X.X the of for

rule increase annual ago, days our Medicare CMS for was finalized. few A the

basket changed increase market uses payment The October X. was Our industry X.X% in reimburse the rule. will Medicare methodology to CMS not a final effective PDPM that receive us

the company’s other positive under Texas our had items necessarily over to the and on a and COVID, the that I prior and a expense or profile, COVID work have a What financial support. all our of right overhead related not is program risk This quarter impact performance despite QIPP stimulus size results. structure, improved was the year that material mean of by but improvement because

want ended heroic earlier, through in an with our track we As Diversicare, here materially time Again, exemplary for we up recognize an industry. they're would a centers have team our to and I different be got at we doing working unprecedented been here mentioned where thought work our on hard in we very way.

by care open is We’ll reminding like As mission custom, questions. remarks now for we'd call we our every statement improve this today. our life conclude This the call to touch and providing expectation. concludes by of exceptional you exceeding prepared our to health

call our our future joining Services, with for and you all you sharing quarters. in Diversicare We thank today. results and appreciate operator you, Thank in forward interest Healthcare look your to

We all conclude your for day. you. again, ask the lines. call and that and your thank today. conference Once for a disconnect participation, great you Thank you And have does please that you thank