UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
________X__________ Quarterly report pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1997
___________________ Transition report pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the transition period from _____________ to _____________
Commission File No. 34-22090
THE MULTICARE COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3152527
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification #)
411 Hackensack Avenue
Hackensack, New Jersey 07601
Address of principal executive offices Zip Code
Registrant's telephone number, including area code (201) 488-8818
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes ___X___ No ______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 13, 1997
Common Stock ($.01 Par Value) 30,913,962
THE MULTICARE COMPANIES, INC.
Index
Page
Special note regarding forward-looking statements 1
Part I. Financial Information
Consolidated Balance Sheets
December 31, 1996 and June 30, 1997 2
Consolidated Statements of Operations
Three and six months ended June 30, 1996 and 1997 3
Consolidated Statements of Cash Flows
Six months ended June 30, 1996 and 1997 4
Notes to Consolidated Financial Statements 5-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-10
Part II. Other Information 11
Signatures 12
<PAGE 1>
THE MULTICARE COMPANIES, INC.
AND SUBSIDIARIES
Special Note Regarding Forward-Looking Statements
Certain statements in this Form 10-Q, including information set forth under
"Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations", constitute "Forward-Looking Statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"). The Multicare Companies, Inc. ("Multicare" or the "Company") desires
to take advantage of certain "safe harbor" provisions of the Reform Act and
is including this special note to enable the Company to do so. Although the
Company believes the assumptions accompanying such forward-looking statements
are reasonable, there can be no assurance that expected results will occur.
A significant variation between actual results and any of such assumptions
may cause actual results to differ materially from expectations. Reference
should be made to Multicare's Annual Report on Form 10-K for the year ended
December 31, 1996 for more specific information concerning such risks and
assumptions.
<PAGE 2>
<TABLE>
THE MULTICARE COMPANIES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
<CAPTION>
December 31, June 30,
1996 1997
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,150 3,293
Accounts receivable, net 102,234 121,267
Prepaid expenses and other current assets 18,419 21,292
Total current assets 121,803 145,852
Property, plant and equipment, net 443,019 447,817
Goodwill, net 157,298 170,804
Other assets 39,547 43,412
$ 761,667 807,885
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 26,948 34,490
Accrued liabilities 54,707 59,369
Current portion of long-term debt 821 643
Total current liabilities 82,476 94,502
Long-term debt 428,347 432,689
Deferred taxes 42,909 42,371
Contingent stock purchase commitment --- 765
Stockholders' equity:
Preferred stock, par value $.01, 7,000,000
shares authorized, none issued --- ---
Common stock, par value $.01, 70,000,000
shares authorized; 30,133,535 and
30,831,459 issued and outstanding in 1996
and 1997, respectively 301 308
Additional paid-in-capital 143,513 155,061
Retained earnings 64,121 82,189
Total stockholders' equity 207,935 237,558
$ 761,667 807,885
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE 3>
<TABLE>
THE MULTICARE COMPANIES, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
<CAPTION>
Three months Six months
ended ended
June 30, June 30,
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Net revenues $ 131,889 179,164 251,946 347,956
Expenses:
Operating expense 99,432 135,598 190,469 263,300
Corporate, general and
administrative expense 6,258 8,901 12,413 17,091
Lease expense 3,036 4,207 5,769 8,358
Depreciation and amortization
expense 5,553 7,213 10,207 14,083
Interest expense, net 6,621 6,984 12,084 14,168
Debenture conversion expense --- --- --- 785
Total expenses 120,900 162,903 230,942 317,785
Income before income taxes and
extraordinary item 10,989 16,261 21,004 30,171
Income tax expense 4,209 6,080 8,027 11,230
Income before extraordinary item 6,780 10,181 12,977 18,941
Extraordinary item - loss on
extinguishment of debt, net of tax
benefit --- -- 1,481 873
Net income $ 6,780 10,181 11,496 18,068
Income per common and common
equivalent share data:
Income before extraordinary item $ .25 .32 .47 .59
Net income $ .25 .32 .42 .57
Weighing average number of common
and common equivalent shares
outstanding 27,589 32,031 27,446 31,845
Income per common share assuming
full dilution:
Income before extraordinary item $ .24 .30 .46 .56
Net income $ .24 .30 .41 .54
Weighted average number of common
shares outstanding assuming full
dilution 32,565 36,656 32,511 36,652
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE 4>
<TABLE>
THE MULTICARE COMPANIES, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
<CAPTION>
Six months ended
June 30,
1996 1997
<S> <C> <C>
Cash flows from operating activities:
Net cash provided by operating activities $ 6,217 21,762
Cash flows from investing activities:
Net marketable securities sold 202 ---
Assets and operations acquired (122,940) (14,932)
Capital expenditures (28,787) (28,077)
Proceeds from repayment of construction advances --- 13,100
Other assets (2,201) (5,632)
Net cash used in investing activities (153,726) (35,541)
Cash flows from financing activities:
Proceeds from exercise of stock options and
stock purchase plan 128 913
Proceeds from long-term debt 193,700 101,900
Payments of long-term debt (45,871) (86,837)
Debt issuance costs (2,406) (188)
Other 71 134
Net cash provided by financing activities 145,622 15,922
(Decrease) increase in cash and cash equivalents (1,887) 2,143
Cash and cash equivalents at beginning of period 3,921 1,150
Cash and cash equivalents at end of period $ 2,034 3,293
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE 5>
THE MULTICARE COMPANIES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1997
(Unaudited)
(In thousands, except share and per share data)
(1) Organization and Basis of Presentation
The Multicare Companies, Inc. and Subsidiaries (Multicare or the Company)
own, operate and manage skilled nursing facilities which provide long-term
care and specialty medical services in selected geographic regions within the
eastern and midwestern United States. In addition, the Company operates
assisted-living facilities, institutional pharmacies, medical supply
companies, outpatient rehabilitation centers and other ancillary healthcare
businesses.
The financial information as of June 30, 1997 and for the three and six
months ended June 30, 1996 and 1997, is unaudited and has been prepared in
conformity with the accounting principles and practices as reflected in the
Company's audited annual financial statements. The unaudited financial
statements contain all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position as of June
30, 1997 and the operating results and cash flows for the three and six
months ended June 30, 1996 and 1997. Results for interim periods are not
necessarily indicative of those to be expected for the year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto incorporated in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
(2) Pending Merger
On June 16, 1997 the Company entered into a definitive merger agreement under
which Genesis ElderCare Acquisition Corp. (GEC), a company formed by Genesis
Health Ventures, Inc. (Genesis), The Cypress Group LLC (Cypress) and The
Texas Pacific Group (TPG), will acquire the Company for $28.00 per share in
cash. In accordance with the terms of the agreement, GEC has commenced a
tender offer to acquire all of the Company's outstanding shares of common
stock at a price of $28.00 per share. The transaction is subject to a number
of conditions including required regulatory approvals and other conditions.
The merger agreement provides that it will terminate on September 15, 1997
(subject to extension by GEC to October 15, 1997, under certain
circumstances), unless extended by the Company and GEC. For more information
regarding the merger agreement, reference is made to the Company's Schedule
14D-9 dated June 20, 1997.
(3) Commitments and Contingencies
There are numerous legislative and executive initiatives at the federal and
state levels for comprehensive reforms affecting the payment for and
availability of healthcare services, including without limitation discussions
at the federal level concerning budget reductions and the implementation of
prospective payment systems for the Medicare and Medicaid programs. The
Company is unable to predict the impact of healthcare reform proposals on the
Company; however, it is possible that such proposals could have a material
adverse effect on the Company. Any changes in reimbursement levels under
Medicaid and Medicare and any changes in applicable government regulations
could significantly affect the profitability of the Company. Various cost
containment measures adopted by governmental pay sources have begun to limit
the scope and amount of reimbursable healthcare expenses. Additional
measures, including measures that have already been proposed in states in
which the Company operates, may be adopted in the future as federal and state
governments attempt to control escalating healthcare costs. There can be no
assurance that currently proposed or future healthcare legislation or other
changes in the administration or interpretation of governmental healthcare
programs will not have a material adverse effect on the Company. In
particular, changes to the Medicare reimbursement program that have been
proposed could materially adversely affect the Company.
<PAGE 6>
The Company is from time to time subject to claims and suits arising in the
ordinary course of business. In the opinion of management, the ultimate
resolution of pending legal proceedings will not have a material effect on
the Company's consolidated financial statements.
(4) Capital Stock and Net Income Per Share
In May 1996, the Company effected a three-for- two stock split in the form of
a 50% stock dividend. All references to average number of shares outstanding
and per share amounts have been restated to reflect the stock split. The
computation of primary earnings per share is based on the weighted average
number of outstanding shares during the period and includes when their effect
is dilutive, common stock equivalents consisting of certain shares subject to
stock options. Fully diluted earning per share additionally assumes the
conversion of the Company's Convertible Subordinated Debentures.
Net income used in the computation of fully diluted earnings per share was
determined on the assumption that the convertible debentures were converted
and net income was adjusted for the amounts representing interest and
amortization of debt issuance costs, net of tax effect.
In February 1997 the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share," ("FASB 128") which is required to be adopted
on December 31, 1997. At that time, the Company will be required to change
the method currently used to compute earnings per share and to restate all
prior periods. The impact of FASB 128 on the calculation of earnings per
share amounts is not expected to be material.
In March 1997 the Company issued put options on 43,700 shares of its common
stock which expire September 30, 1997. As of June 30, 1997 the balance in
the contingent stock purchase commitment is the amount the Company would have
been obligated to pay if the put options were exercised.
(5) Acquisitions
In February 1996, the Company completed the acquisition of Concord Health
Group, Inc. (Concord). The Company acquired the outstanding capital stock
and warrants of Concord for approximately $75,000 including transaction
costs, repaid approximately $41,000 of debt, and assumed historical debt of
approximately $4,000. Total goodwill approximated $61,000.
In December 1996, the Company completed the acquisition of The A.D.S. Group
(A.D.S.). The Company paid approximately $10,000, repaid or assumed
approximately $29,800 in debt, financed $51,000 through a lease facility,
and issued 554,973 shares of its common stock for A.D.S.. Total goodwill
approximated $29,900.
<PAGE 7>
The following unaudited pro forma financial information gives effect to the
acquisitions of Concord and A.D.S. as if such transactions occurred on January
1, 1996:
<TABLE>
<CAPTION>
Pro forma
Six months ended
June 30, 1996
<S> <C>
Net revenues $ 288,512
Income before extraordinary item 14,280
Net income 12,799
Income before extraordinary item per common and
common equivalent share assuming full dilution .49
Net income per common and common equivalent share
assuming full dilution .45
</TABLE>
<PAGE 8>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
The Company has experienced significant growth, primarily through
acquisitions of long-term care facilities and ancillary businesses and
increased utilization of specialty medical services. It is the Company's
strategy to expand through construction and development of new facilities and
selective acquisitions with geographically concentrated operations.
Summarized below are the recent significant acquisitions completed in 1996:
- In February 1996, the Company acquired the outstanding capital stock of
Concord Health Group, Inc., a long-term care provider through 15 long-term
care facilities with approximately 2,600 beds and ancillary businesses in
Pennsylvania.
- In December 1996, the Company acquired The A.D.S Group, which owns,
operates or manages over 50 long-term care and assisted-living facilities
with over 4,200 licensed beds, principally in Massachusetts.
Results of Operations
Net Revenues. Net revenues for the six months ended June 30, 1997 increased
38% or $96.0 million from the same period last year to $348.0 million. Net
revenues for the quarter ended June 30, 1997 increased 36% or $47.3 million
from the same period last year to $179.2 million.
Of the net revenues increase for the six months ended June 30, 1997, 24% is
attributable to the inclusion of results for the Company's recent
acquisitions. The internal growth rate of revenues amounted to 14% in the
six months ended June 30, 1997, resulting mainly from increases in payor
rates and changes in census mix, development and opening of additional beds,
and growth in specialty medical service revenues. The revenues increase for
the quarter ended June 30, 1997 was due to results from recent acquisitions
of 21% and internal growth of 15%.
The Company's quality mix of private, Medicare and insurance revenues was 67%
of revenues for the six months and quarter ended June 30, 1997 compared to
64% in the similar periods of 1996. Occupancy rates were 91% for the six
months ended June 30, 1997 compared to 92% in the similar period of 1996.
Occupancy rates were 92% for the three months ended June 30, 1997 and 1996.
Operating Expense and Margins. Operating expenses for the six months ended
June 30, 1997 increased 38% or $72.8 million from the comparable period in
1996 to $263.3 million. Operating expenses for the three months ended June
30, 1997 increased 36% or $36.2 million from the comparable period in 1996 to
$135.6 million. The increases in operating expenses for the six and three
month periods ended June 30, 1997 reflect the inclusion of results for the
recent acquisitions of $46.2 million and $20.2 million, respectively. The
remainder of the increase resulted primarily from higher salaries, wages and
benefits for cost of living increases and the expanded utilization of
salaried therapists and nursing staffing levels to support higher patient
acuities and more complex product lines.
Operating margins before interest and debenture conversion expense remained
consistent at 13% of net revenues for the three and six months ended June 30,
1997 and 1996. Income before interest, taxes, depreciation, amortization and
lease expense (EBITDAR) remained consistent at 19% of net revenues for the
six months ended June 30, 1997 and 1996. Income before interest, taxes,
depreciation, amortization and lease expense (EBITDAR) is 19% of net revenues
for the three months ended June 30, 1997 and 20% of net revenues for the
three months ended June 30, 1996.
Corporate, General and Administrative Expense. Corporate, general and
administrative expense remained consistent at approximately 5% of net
revenues for the three and six month periods ended June 30, 1996 and 1997.
The expenses include resources devoted to operations, finance, legal, risk
management, and information systems in order to support the Company's
operations.
Lease Expense. Lease expense for the six months ended June 30, 1997
increased 45% or $2.6 million from the same period last year to $8.4 million.
In the second quarter of 1997 lease expense increased 39% or $1.2 million
from the same period last year to $4.2 million. The increases were primarily
due to the inclusion of lease expense relating to a recent acquisition.
<PAGE 9>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued.
Depreciation and Amortization Expense. Depreciation and amortization expense
for the six months ended June 30, 1997 increased 38% to $14.1 million and 30%
to $7.2 million from the comparable periods in 1996. The increases were
primarily due to the inclusion of depreciation and amortization relating to
recent acquisitions.
Interest Expense, net. Net interest expense for the six months ended June
30, 1997 increased 17% from the same period in 1996 to $14.2 million, while
net interest expense for the second quarter of 1997 increased 5% to $7.0
million from the same period a year ago. This is primarily a result of
increased borrowings under the Company's credit facility in connection with
the financing of recent acquisitions. These increases have been offset by
decreases relating to the conversion of the Company's convertible debt and
the purchase of the Company's senior notes.
Debenture Conversion Expense. Debenture conversion expense for the six
months ended June 30, 1997 relates to the premium paid in January 1997 to
convert $11 million of convertible debentures into common stock.
Liquidity and Capital Resources
The Company believes that working capital from operating cash flows and lines
of credit are adequate for continuing operations, debt service, and
anticipated capital expenditures. At June 30, 1997, the Company had working
capital of $51.4 million, compared to $39.3 million at December 31, 1996.
In January 1997 the Company purchased $6.5 million of its 12.5% Senior
Subordinated Notes resulting in annual interest savings of more than $.4
million based on the Company's incremental borrowing rate under existing
credit lines. In addition, in January 1997 $11 million of the Company's
Convertible Debentures were converted into common stock.
Cash flow from operations was $21.8 million for the six months ended June 30,
1997 compared to cash from operations of $6.2 million in the comparable
period of 1996. Net accounts receivable were $121.3 million at June 30, 1997
compared to $102.2 million at December 31, 1996. The increase in net
accounts receivable is attributable to the recent acquisitions, the
utilization of specialty medical services for higher acuity level patients,
and the timing of third-party interim and settlement payments. The allowance
for doubtful accounts represents approximately 8% and 10% of gross accounts
receivable at June 30, 1997 and December 31, 1996, respectively.
Legislative and regulatory action and government budgetary constraints could
change the timing of payments and reimbursement rates of the Medicare and
Medicaid programs in the future. These changes could have a material adverse
effect on the Company's future operating results and cash flows.
There are numerous legislative and executive initiatives at the federal and
state levels for comprehensive reforms affecting the payment for and
availability of healthcare services, including without limitation discussions
at the federal level concerning budget reductions and the implementation of
prospective payment systems for the Medicare and Medicaid programs. The
Company is unable to predict the impact of healthcare reform proposals on the
Company; however, it is possible that such proposals could have a material
adverse effect on the Company. Any changes in reimbursement levels under
Medicaid and Medicare and any changes in applicable government regulations
could significantly affect the profitability of the Company. Various cost
containment measures adopted by governmental pay sources have begun to limit
the scope and amount of reimbursable healthcare expenses. Additional
measures, including measures that have already been proposed in states in
which the Company operates, may be adopted in the future as federal and state
governments attempt to control escalating healthcare costs. There can be no
assurance that currently proposed or future healthcare legislation or other
changes in the administration or interpretation of governmental healthcare
programs will not have a material adverse effect on the Company. In
particular, changes to the Medicare reimbursement program that have been
proposed could materially adversely affect the Company.
The Company anticipates its capital requirements for the construction of new
facilities and the expansion and renovation of existing facilities to
approximate $60 million over the next twelve months based on existing
construction commitments and plans.
<PAGE 10>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued.
On June 16, 1997 the Company entered into a definitive merger agreement under
which Genesis ElderCare Acquisition Corp. (GEC), a company formed by Genesis
Health Ventures, Inc. (Genesis), The Cypress Group LLC (Cypress) and The
Texas Pacific Group (TPG), will acquire the Company for $28.00 per share in
cash. In accordance with the terms of the agreement, GEC has commenced a
tender offer to acquire all of the Company's outstanding shares of common
stock. Upon consummation of the tender offer a change of control will occur
under the Company's credit agreement and the indenture governing its 12.5%
Senior Subordinated Notes, as well as certain leases and financings to which
the Company or its subsidiaries is a party, and the Company will be obligated
to repay outstanding amounts thereunder. The transaction is subject to
required regulatory approvals and other conditions.
<PAGE 11>
Part II-Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Stockholders was held on May 14, 1997.
(b) The following matters were voted upon and approved at the Annual Meeting
of Stockholders: (i) the election of three directors with 28,496,756 votes
cast in favor and 71,027 negative votes; (ii ) a proposal to amend the
Company's Amended and Restated 1993 Stock Option Plan with 18,298,447 votes
cast in favor, 8,244,585 negative votes and, 10,800 abstentions and 2,013,951
non-votes; (iii) a proposal to ratify the appointment of KPMG Peat Marwick
LLP as the Company's independent auditors for the year ending December 31,
1997 with 28,258,135 votes cast in favor, 6,120 negative votes and 303,528
abstentions.
Item 5. Other Information.
On June 16, 1997 the Company entered into a definitive merger agreement under
which a company formed by Genesis Health Ventures, Inc. (Genesis), The
Cypress Group LLC (Cypress) and The Texas Pacific Group (TPG) will acquire
the Company for $28.00 per share in cash. In accordance with the terms of
the agreement, GEC has commenced a tender offer to acquire all of the
Company's outstanding shares of common stock. The transaction is subject to
required regulatory approvals and other conditions. The merger agreement
provides that it will terminate on September 15, 1997 (subject to extension
by GEC to October 15, 1997, under certain circumstances), unless extended by
the Company and GEC.
Item 6.
(a) Exhibits.
Exhibit No.
2.1 Agreement and Plan of Merger, dated as of June 16, 1997, among The
Multicare Companies, Inc. and Genesis ElderCare Corp. (f.k.a. Waltz Corp.)
and Genesis ElderCare Acquisition Corp. (f.k.a. Waltz Acquisition Corp.) *
2.2 Tender Agreement and Irrevocable Proxy, dated as of June 16, 1997,
among Genesis ElderCare Corp. (f.k.a. Waltz Corp.), Genesis ElderCare
Acquisition Corp. (f.k.a. Waltz Acquisition Corp.) and Moshael J. Straus.*
2.3 Tender Agreement and Irrevocable Proxy, dated as of June 16, 1997,
among Genesis ElderCare Corp. (f.k.a. Waltz Corp.), Genesis ElderCare
Acquisition Corp. (f.k.a. Waltz Acquisition Corp.) and Daniel E. Straus.*
11 Statement re computation of per share earnings
27 Financial Data Schedule
99 Press Release dated June 16, 1997
* Incorporated by reference from the Company's Schedule 14D-9, dated June 20,
1997.
<PAGE 12>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
The Multicare Companies, Inc.
STEPHEN R. BAKER
By: ______________________________
Stephen R. Baker
Executive Vice President
and Chief Financial Officer
August 13, 1997
EXHIBIT 11
<TABLE>
The Multicare Companies, Inc.
Computation of earnings per share
June 30, 1997
(Unaudited)
(in thousands, except per share data)
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Income per common and common
equivalent share:
Income before extraordinary item $ 6,780 10,181 12,977 18,941
Net Income $ 6,780 10,181 11,496 18,068
Weighted average number of common and
common equivalent shares outstanding 27,589 32,031 27,446 31,845
Income before extraordinary item per
common and common equivalent share $ .25 .32 .47 .59
Net income per common and common
equivalent share $ .25 .32 .42 .57
Income per common and common
equivalent share assuming full
dilution:
Income before extraordinary item $ 6,780 10,181 12,977 18,941
Net income 6,780 10,181 11,496 18,068
Adjustments to income:
Interest expense and amortization of
debt issuance costs relating to
convertible debt, net of tax 985 864 1,982 1,740
Adjusted net income $ 7,765 11,045 13,478 19,808
Weighted average number of common and
common equivalent shares outstanding 27,589 32,315 27,535 32,257
Convertible debt shares 4,976 4,341 4,976 4,395
Adjusted shares 32,565 36,656 32,511 36,652
Income before extraordinary item per
common share assuming full dilution $ .24 .30 .46 .56
Net income per common share assuming
full dilution $ .24 .30 .41 .54
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MULTICARE
COMPANIES, INC. FORM 10-Q QUARTERLY REPORT FOR THE SIX-MONTH PERIOD ENDED JUNE
30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,293
<SECURITIES> 0
<RECEIVABLES> 121,267
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 145,852
<PP&E> 447,817
<DEPRECIATION> 0
<TOTAL-ASSETS> 807,885
<CURRENT-LIABILITIES> 94,502
<BONDS> 432,689
0
0
<COMMON> 308
<OTHER-SE> 237,250
<TOTAL-LIABILITY-AND-EQUITY> 807,885
<SALES> 0
<TOTAL-REVENUES> 347,956
<CGS> 0
<TOTAL-COSTS> 263,300
<OTHER-EXPENSES> 8,358
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,168
<INCOME-PRETAX> 30,171
<INCOME-TAX> 11,230
<INCOME-CONTINUING> 18,941
<DISCONTINUED> 0
<EXTRAORDINARY> 873
<CHANGES> 0
<NET-INCOME> 18,068
<EPS-PRIMARY> .57
<EPS-DILUTED> .54
</TABLE>
Exhibit 99
FOR IMMEDIATE RELEASE Contact: Robert P. Borchert
Director,
Corporate Communications
(201) 525-5932
MULTICARE REPORTS RECORD SECOND QUARTER RESULTS
-- Revenues Increase 36%; Net Income Up 50% --
HACKENSACK, NJ, August 6, 1997 -- The Multicare Companies, Inc. (NYSE:MUL)
today announced record financial results for the second quarter and six month
period ended June 30, 1997. In comparing the second quarter of 1997 with the
same period in 1996:
- Revenues increased 35.8% to $179.2 million from $131.9 million.
- Income before income taxes and extraordinary item rose 48.0% to $16.3
million compared with $11.0 million.
- Net income increased 50.2% to $10.2 million, or $0.30 per share versus
$6.8 million, or $0.24 per share.
- Quality mix, or percent of revenues from non-Medicaid sources,
remained high at 67% compared with 64%.
- Occupancy at the Company's facilities was 92% in both periods.
- Revenues from specialty medical services, which includes institutional
pharmacy, sub-acute care, rehabilitative therapies and medical supplies,
grew 37% to $71.8 million from $52.4 million and accounted for 40% of
revenues in both years.
In comparing the first half 1997 to the first half 1996:
- Revenues increased 38.1% to $348.0 million from $251.9 million.
- Income before income taxes and extraordinary item increased 43.6% to
$30.2 million compared with $21.0 million.
- Net income before extraordinary item (loss on extinguishment of debt)
increased 46.0% to $18.9 million, or $0.56 per share, compared with
$13.0 million, or $0.46 per share.
- Net income increased 57.2% to $18.1 million, or $0.54 per share,
compared with $11.5 million, or $0.41 per share.
- more -
Multicare Second Quarter Results
Page 2
August 6, 1997
"Multicare's operating performance continues to be driven by the dedication
and focus of our managers and employees to provide the highest level of
quality patient care services in all of our facilities," said Daniel E.
Straus, president and co-chief executive officer of Multicare. "We believe
that the quality of our assets and success of our growth strategy will be
translated into exceptional returns for all Multicare shareholders through
the Genesis transaction."
On June 16, 1997, the Company announced that it had signed a definitive
agreement through which a company formed by Genesis Health Ventures, Inc.
(NYSE: GHV), The Cypress Group LLC and The Texas Pacific Group (TPG), will
acquire Multicare for $28.00 per share in cash, resulting in a transaction
value of $1.4 billion, including the assumption or repayment of debt. In
accordance with the terms of the merger, Genesis, Cypress and TPG have
commenced a tender offer to acquire a majority of the outstanding shares.
The transaction is subject to required regulatory approvals and other
conditions and is expected to close by September 30, 1997.
Founded in 1984, The Multicare Companies, Inc. is a leading provider of high
quality, cost-effective long-term care and specialty medical services.
Multicare owns, leases or manages 156 facilities with more than 16,000 beds
in 11 states, and is the market share leader in New Jersey, Massachusetts and
West Virginia. Multicare also owns and operates a number of ancillary health
care businesses, including a significant institutional pharmacy operation
servicing over 30,000 beds through eight locations. The Company's long-term
care services include skilled nursing care, sub-acute care, assisted living,
home health care and related support activities traditionally provided in
long-term care facilities.
NOTE: This news release contains forward-looking statements which are
subject to certain risks and uncertainties. Although Multicare believes the
assumptions accompanying such forward-looking statements are reasonable,
there can be no assurance that expected results will occur. A significant
variation between actual results and any of such assumptions may cause actual
results to differ materially from expectations. For more specific
information concerning such risks and uncertainties, refer to Multicare's
Form 10-Q to be filed for the period ended June 30, 1997, Form 10-K for the
year ended December 31, 1996 and other Securities and Exchange Commission
filings.
- Tables to Follow -
<PAGE 3>
<TABLE>
THE MULTICARE COMPANIES, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
<CAPTION>
Three months Six months
ended ended
June 30, June 30,
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Net revenues $ 131,889 179,164 251,946 347,956
Expenses:
Operating expense 99,432 135,598 190,469 263,300
Corporate, general and administrative
expense 6,258 8,901 12,413 17,091
Lease expense 3,036 4,207 5,769 8,358
Depreciation and amortization expense 5,553 7,213 10,207 14,083
Interest expense, net 6,621 6,984 12,084 14,168
Debenture conversion expense --- --- --- 785
Total expenses 120,900 162,903 230,942 317,785
Income before income taxes and
extraordinary item 10,989 16,261 21,004 30,171
Income tax expense 4,209 6,080 8,027 11,230
Income before extraordinary item 6,780 10,181 12,977 18,941
Extraordinary item - loss on
extinguishment of debt,
net of tax benefit --- --- 1,481 873
Net income $ 6,780 10,181 11,496 18,068
Income per common share assuming full
dilution:
Income before extraordinary item $ .24 .30 .46 .56
Net income $ .24 .30 .41 .54
Weighted average number of common
shares outstanding assuming full
dilution 32,565 36,656 32,511 36,652
</TABLE>
