|
ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
|
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62-1559667
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(State or other jurisdiction of
incorporation or organization)
|
|
(IRS Employer
Identification No.)
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1621 Galleria Boulevard, Brentwood, TN
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37027
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
|
Name of each Exchange on which registered
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Common Stock, $0.01 par value per share
|
OTCQX
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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¨
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Table of Contents
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|||
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Page
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Part I
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|
|
|
Item 1.
|
|
Business
|
|
Item 1A.
|
|
Risk Factors
|
|
Item 1B.
|
|
Unresolved Staff Comments
|
|
Item 2.
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Properties
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|
Item 3.
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|
Legal Proceedings
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Item 4.
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Mine Safety Disclosures
|
|
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Part II
|
|
|
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Item 5.
|
|
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
Item 6.
|
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Selected Consolidated Financial Data
|
|
Item 7.
|
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
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|
Item 7A.
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Quantitative and Qualitative Disclosures about Market Risk
|
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Item 8.
|
|
Financial Statements and Supplementary Data
|
|
Item 9.
|
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
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Item 9A.
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|
Controls and Procedures
|
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Item 9B.
|
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Other Information
|
|
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Part III
|
|
|
|
Item 10.
|
|
Directors, Executive Officers and Corporate Governance
|
|
Item 11.
|
|
Executive Compensation
|
|
Item 12.
|
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
|
Item 13.
|
|
Certain Relationships and Related Transactions, and Director Independence
|
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Item 14.
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Principal Accountant Fees and Services
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|
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Part IV
|
|
|
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Item 15.
|
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Exhibits and Financial Statement Schedules
|
|
Item 16.
|
|
Form 10-K Summary
|
|
Number of
Centers
|
|
Licensed Nursing
Beds (1)
|
|
Available Nursing
Beds (1)
|
|||
Operating Locations:
|
|
|
|
|
|
|||
Alabama
|
20
|
|
|
2,385
|
|
|
2,318
|
|
Florida
|
1
|
|
|
79
|
|
|
79
|
|
Indiana
|
1
|
|
|
158
|
|
|
158
|
|
Kansas
|
6
|
|
|
464
|
|
|
464
|
|
Mississippi
|
9
|
|
|
1,039
|
|
|
1,004
|
|
Missouri
|
3
|
|
|
339
|
|
|
339
|
|
Ohio
|
4
|
|
|
403
|
|
|
393
|
|
Tennessee
|
5
|
|
|
617
|
|
|
551
|
|
Texas
|
13
|
|
|
1,845
|
|
|
1,662
|
|
|
62
|
|
|
7,329
|
|
|
6,968
|
|
Classification:
|
|
|
|
|
|
|||
Owned
|
15
|
|
|
1,365
|
|
|
1,250
|
|
Leased
|
47
|
|
|
5,964
|
|
|
5,718
|
|
Total
|
62
|
|
|
7,329
|
|
|
6,968
|
|
(1)
|
The number of Licensed Nursing Beds is based on the regulatory licenses for the nursing center. The Company reports its occupancy based on licensed nursing beds. The number of Available Nursing Beds represents Licensed Nursing Beds reduced by beds removed from service. Available Nursing Beds is subject to change based upon the needs of the centers, including configuration of patient rooms, common usage areas and offices, status of beds (private, semi-private, ward, etc.) and renovations. The number of Licensed and Available Nursing Beds does not include 397 Licensed Assisted Living/Residential Beds, all of which are also available. These beds are excluded from the bed counts as our operating statistics such as occupancy are calculated using Nursing Beds only.
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
As reported
|
|
As reported
|
|
As reported
|
|||||||||||||||
Medicaid
|
$
|
222,560
|
|
|
46.9
|
%
|
|
$
|
215,924
|
|
|
45.4
|
%
|
|
$
|
249,204
|
|
|
51.6
|
%
|
Medicare
|
80,798
|
|
|
17.0
|
%
|
|
84,959
|
|
|
17.8
|
%
|
|
122,043
|
|
|
25.3
|
%
|
|||
Managed Care
|
50,323
|
|
|
10.6
|
%
|
|
48,879
|
|
|
10.3
|
%
|
|
39,162
|
|
|
8.1
|
%
|
|||
Private Pay and other
|
121,339
|
|
|
25.5
|
%
|
|
126,360
|
|
|
26.5
|
%
|
|
72,402
|
|
|
15.0
|
%
|
|||
Total
|
$
|
475,020
|
|
|
100.0
|
%
|
|
$
|
476,122
|
|
|
100.0
|
%
|
|
$
|
482,811
|
|
|
100.0
|
%
|
•
|
difficulties integrating acquired operations, personnel and accounting and information systems, or in realizing projected efficiencies and cost savings;
|
•
|
diversion of management's attention from other business concerns;
|
•
|
potential loss of key team members or customers of acquired companies;
|
•
|
entry into markets in which we may have limited or no experience;
|
•
|
increased indebtedness and reduced ability to access additional capital when needed;
|
•
|
assumption of unknown liabilities or regulatory issues of acquired companies, including failure to comply with healthcare regulations or to establish internal financial controls; and
|
•
|
straining of our resources, including internal controls relating to information and accounting systems, regulatory compliance, logistics and others.
|
State
|
|
Centers
|
|
Leased Beds
|
|
Owned Beds
|
|
Total Operational Beds (1)
|
||||
Alabama
|
|
20
|
|
|
2,079
|
|
|
306
|
|
|
2,385
|
|
Florida
|
|
1
|
|
|
79
|
|
|
—
|
|
|
79
|
|
Indiana
|
|
1
|
|
|
172
|
|
|
—
|
|
|
172
|
|
Kansas
|
|
6
|
|
|
—
|
|
|
483
|
|
|
483
|
|
Mississippi
|
|
9
|
|
|
1,039
|
|
|
—
|
|
|
1,039
|
|
Missouri
|
|
3
|
|
|
455
|
|
|
—
|
|
|
455
|
|
Ohio
|
|
4
|
|
|
651
|
|
|
—
|
|
|
651
|
|
Tennessee
|
|
5
|
|
|
497
|
|
|
120
|
|
|
617
|
|
Texas
|
|
13
|
|
|
1,370
|
|
|
475
|
|
|
1,845
|
|
Total
|
|
62
|
|
|
6,342
|
|
|
1,384
|
|
|
7,726
|
|
(1)
|
The number of Operational Beds includes 397 Licensed Assisted Living/Residential Beds.
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Patient revenues, net
|
|
$
|
475,020
|
|
|
100.0
|
%
|
|
$
|
476,122
|
|
|
100.0
|
%
|
|
$
|
482,811
|
|
|
100.0
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating
|
|
380,870
|
|
|
80.2
|
%
|
|
381,178
|
|
|
80.1
|
%
|
|
389,916
|
|
|
80.8
|
%
|
|||
Lease and rent expense
|
|
52,990
|
|
|
11.2
|
%
|
|
49,231
|
|
|
10.3
|
%
|
|
48,248
|
|
|
10.0
|
%
|
|||
Professional liability
|
|
6,996
|
|
|
1.5
|
%
|
|
6,498
|
|
|
1.4
|
%
|
|
7,992
|
|
|
1.7
|
%
|
|||
Litigation contingency expense
|
|
3,100
|
|
|
0.7
|
%
|
|
6,400
|
|
|
1.3
|
%
|
|
—
|
|
|
—
|
%
|
|||
General & administrative
|
|
28,009
|
|
|
5.9
|
%
|
|
30,237
|
|
|
6.4
|
%
|
|
31,342
|
|
|
6.5
|
%
|
|||
Depreciation and amortization
|
|
9,122
|
|
|
1.9
|
%
|
|
9,991
|
|
|
2.1
|
%
|
|
9,252
|
|
|
1.9
|
%
|
|||
Lease termination receipts
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(180
|
)
|
|
—
|
%
|
|||
|
|
481,087
|
|
|
101.4
|
%
|
|
483,535
|
|
|
101.6
|
%
|
|
486,570
|
|
|
100.9
|
%
|
|||
Operating loss
|
|
(6,067
|
)
|
|
(1.4
|
)%
|
|
(7,413
|
)
|
|
(1.6
|
)%
|
|
(3,759
|
)
|
|
(0.9
|
)%
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other income
|
|
281
|
|
|
0.1
|
%
|
|
160
|
|
|
—
|
%
|
|
472
|
|
|
0.1
|
%
|
|||
Gain on bargain purchase
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
925
|
|
|
0.2
|
%
|
|||
Gain on sale of investment in unconsolidated affiliate
|
|
—
|
|
|
—
|
%
|
|
308
|
|
|
0.1
|
%
|
|
733
|
|
|
0.2
|
%
|
|||
Hurricane costs
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(232
|
)
|
|
—
|
%
|
|||
Interest expense, net
|
|
(5,994
|
)
|
|
(1.3
|
)%
|
|
(5,533
|
)
|
|
(1.2
|
)%
|
|
(5,353
|
)
|
|
(1.1
|
)%
|
|||
Debt retirement costs
|
|
—
|
|
|
—
|
%
|
|
(267
|
)
|
|
(0.1
|
)%
|
|
—
|
|
|
—
|
%
|
|||
|
|
(5,713
|
)
|
|
(1.2
|
)%
|
|
(5,332
|
)
|
|
(1.2
|
)%
|
|
(3,455
|
)
|
|
(0.6
|
)%
|
|||
Loss from continuing operations before income taxes
|
|
(11,780
|
)
|
|
(2.6
|
)%
|
|
(12,745
|
)
|
|
(2.8
|
)%
|
|
(7,214
|
)
|
|
(1.5
|
)%
|
|||
Benefit (provision) for income taxes
|
|
(15,694
|
)
|
|
(3.3
|
)%
|
|
1,481
|
|
|
0.3
|
%
|
|
(2,534
|
)
|
|
(0.5
|
)%
|
|||
Loss from continuing operations
|
|
$
|
(27,474
|
)
|
|
(5.9
|
)%
|
|
$
|
(11,264
|
)
|
|
(2.5
|
)%
|
|
$
|
(9,748
|
)
|
|
(2.0
|
)%
|
|
|
December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Licensed Nursing Center Beds:
|
|
|
|
|
|
|
|||
Owned
|
|
1,365
|
|
|
1,365
|
|
|
1,607
|
|
Leased
|
|
5,964
|
|
|
6,849
|
|
|
6,849
|
|
Total
|
|
7,329
|
|
|
8,214
|
|
|
8,456
|
|
Facilities:
|
|
|
|
|
|
|
|||
Owned
|
|
15
|
|
|
15
|
|
|
18
|
|
Leased
|
|
47
|
|
|
57
|
|
|
58
|
|
Total
|
|
62
|
|
|
72
|
|
|
76
|
|
Contractual Obligations
|
|
Total
|
|
Less than
1 year
|
|
1 to 3
Years
|
|
3 to 5
Years
|
|
After
5 Years
|
||||||||||
Long-term debt obligations (1)
|
|
$
|
81,239
|
|
|
$
|
7,905
|
|
|
$
|
73,283
|
|
|
$
|
51
|
|
|
$
|
—
|
|
Settlement obligations (2)
|
|
2,230
|
|
|
2,230
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases (3)
|
|
463,724
|
|
|
50,819
|
|
|
104,600
|
|
|
107,700
|
|
|
200,605
|
|
|||||
Required capital expenditures under operating leases (4)
|
|
18,698
|
|
|
2,081
|
|
|
4,162
|
|
|
4,161
|
|
|
8,294
|
|
|||||
Total
|
|
$
|
565,891
|
|
|
$
|
63,035
|
|
|
$
|
182,045
|
|
|
$
|
111,912
|
|
|
$
|
208,899
|
|
(1)
|
Long-term debt obligations include scheduled future payments of principal and interest of long-term debt and amounts outstanding on our finance lease obligations. Our long-term debt obligations decreased $3.6 million between December 31, 2018 and December 31, 2019. See Note 7, "Long-Term Debt, Interest Rate Swap and Finance Lease Obligations" to the consolidated financial statements included in this report for additional information.
|
(2)
|
Settlement obligations relate to professional liability cases that are expected to be paid within the next twelve months. The professional liabilities are included in our current portion of self-insurance reserves.
|
(3)
|
Represents minimum annual lease payments (exclusive of taxes, insurance, and maintenance costs) under our operating lease agreements, which does not include renewals. Our operating lease obligations decreased $161.2 million between December 31, 2018 and December 31, 2019, which was due to scheduled rent payments, as well as the exit from the State of Kentucky. See Note 6, "Leases" to the consolidated financial statements included in this report for additional information.
|
(4)
|
Includes annual expenditure requirements under operating leases. Our required capital expenditures decreased $7.9 million between December 31, 2018 and December 31, 2019. The decrease is due to the exit from the State of Kentucky.
|
(in thousands)
|
|
Year Ended December 31,
|
|||||||||||||
|
|
2019
|
|
2018
|
|
Change
|
|
%
|
|||||||
PATIENT REVENUES, net
|
|
$
|
475,020
|
|
|
$
|
476,122
|
|
|
$
|
(1,102
|
)
|
|
(0.2
|
)%
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|||||||
Operating
|
|
380,870
|
|
|
381,178
|
|
|
(308
|
)
|
|
(0.1
|
)%
|
|||
Lease and rent expense
|
|
52,990
|
|
|
49,231
|
|
|
3,759
|
|
|
7.6
|
%
|
|||
Professional liability
|
|
6,996
|
|
|
6,498
|
|
|
498
|
|
|
7.7
|
%
|
|||
Litigation contingency expense
|
|
3,100
|
|
|
6,400
|
|
|
(3,300
|
)
|
|
(51.6
|
)%
|
|||
General and administrative
|
|
28,009
|
|
|
30,237
|
|
|
(2,228
|
)
|
|
(7.4
|
)%
|
|||
Depreciation and amortization
|
|
9,122
|
|
|
9,991
|
|
|
(869
|
)
|
|
(8.7
|
)%
|
|||
Total expenses
|
|
481,087
|
|
|
483,535
|
|
|
(2,448
|
)
|
|
(0.5
|
)%
|
|||
OPERATING LOSS
|
|
(6,067
|
)
|
|
(7,413
|
)
|
|
1,346
|
|
|
18.2
|
%
|
|||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|||||||
Other income
|
|
281
|
|
|
160
|
|
|
121
|
|
|
75.6
|
%
|
|||
Gain on sale of investment in unconsolidated affiliate
|
|
—
|
|
|
308
|
|
|
(308
|
)
|
|
(100.0
|
)%
|
|||
Interest expense, net
|
|
(5,994
|
)
|
|
(5,533
|
)
|
|
(461
|
)
|
|
(8.3
|
)%
|
|||
Debt retirement costs
|
|
—
|
|
|
(267
|
)
|
|
267
|
|
|
100.0
|
%
|
|||
|
|
(5,713
|
)
|
|
(5,332
|
)
|
|
(381
|
)
|
|
(7.1
|
)%
|
|||
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
|
(11,780
|
)
|
|
(12,745
|
)
|
|
965
|
|
|
7.6
|
%
|
|||
BENEFIT (PROVISION) FOR INCOME TAXES
|
|
(15,694
|
)
|
|
1,481
|
|
|
(17,175
|
)
|
|
N/M
|
|
|||
LOSS FROM CONTINUING OPERATIONS
|
|
$
|
(27,474
|
)
|
|
$
|
(11,264
|
)
|
|
$
|
(16,210
|
)
|
|
(143.9
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
NET LOSS PER COMMON SHARE:
|
|
|
|
|
|
|
|
|
|||||||
Continuing operations per common share - basic
|
|
$
|
(4.25
|
)
|
|
$
|
(1.77
|
)
|
|
$
|
(2.48
|
)
|
|
(140.1
|
)%
|
Continuing operations per common share - dilutive
|
|
$
|
(4.25
|
)
|
|
$
|
(1.77
|
)
|
|
$
|
(2.48
|
)
|
|
(140.1
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
6,459
|
|
|
6,372
|
|
|
|
|
|
|||||
Dilutive
|
|
6,459
|
|
|
6,372
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
Year Ended December 31,
|
|||||||||||||
|
|
2018
|
|
2017
|
|
Change
|
|
%
|
|||||||
PATIENT REVENUES, net
|
|
$
|
476,122
|
|
|
$
|
482,811
|
|
|
$
|
(6,689
|
)
|
|
(1.4
|
)%
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|||||||
Operating
|
|
381,178
|
|
|
389,916
|
|
|
(8,738
|
)
|
|
(2.2
|
)%
|
|||
Lease and rent expense
|
|
49,231
|
|
|
48,248
|
|
|
983
|
|
|
2.0
|
%
|
|||
Professional liability
|
|
6,498
|
|
|
7,992
|
|
|
(1,494
|
)
|
|
(18.7
|
)%
|
|||
Litigation contingency expense
|
|
6,400
|
|
|
—
|
|
|
6,400
|
|
|
100
|
%
|
|||
General and administrative
|
|
30,237
|
|
|
31,342
|
|
|
(1,105
|
)
|
|
(3.5
|
)%
|
|||
Depreciation and amortization
|
|
9,991
|
|
|
9,252
|
|
|
739
|
|
|
8.0
|
%
|
|||
Lease termination receipts
|
|
—
|
|
|
(180
|
)
|
|
180
|
|
|
100.0
|
%
|
|||
Total expenses
|
|
483,535
|
|
|
486,570
|
|
|
(3,035
|
)
|
|
(0.6
|
)%
|
|||
OPERATING LOSS
|
|
(7,413
|
)
|
|
(3,759
|
)
|
|
(3,654
|
)
|
|
(97.2
|
)%
|
|||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|||||||
Other income
|
|
160
|
|
|
472
|
|
|
(312
|
)
|
|
(66.1
|
)%
|
|||
Gain on bargain purchase
|
|
—
|
|
|
925
|
|
|
(925
|
)
|
|
(100.0
|
)%
|
|||
Gain on sale of investment in unconsolidated affiliate
|
|
308
|
|
|
733
|
|
|
(425
|
)
|
|
(58.0
|
)%
|
|||
Hurricane costs
|
|
—
|
|
|
(232
|
)
|
|
232
|
|
|
100.0
|
%
|
|||
Interest expense, net
|
|
(5,533
|
)
|
|
(5,353
|
)
|
|
(180
|
)
|
|
(3.4
|
)%
|
|||
Debt retirement costs
|
|
(267
|
)
|
|
—
|
|
|
(267
|
)
|
|
(100.0
|
)%
|
|||
|
|
(5,332
|
)
|
|
(3,455
|
)
|
|
(1,877
|
)
|
|
(54.3
|
)%
|
|||
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
|
(12,745
|
)
|
|
(7,214
|
)
|
|
(5,531
|
)
|
|
(76.7
|
)%
|
|||
BENEFIT (PROVISION) FOR INCOME TAXES
|
|
1,481
|
|
|
(2,534
|
)
|
|
4,015
|
|
|
158.4
|
%
|
|||
LOSS FROM CONTINUING OPERATIONS
|
|
$
|
(11,264
|
)
|
|
$
|
(9,748
|
)
|
|
$
|
(1,516
|
)
|
|
(15.6
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
NET LOSS PER COMMON SHARE:
|
|
|
|
|
|
|
|
|
|||||||
Continuing operations per common share - basic
|
|
$
|
(1.77
|
)
|
|
$
|
(1.55
|
)
|
|
$
|
(0.22
|
)
|
|
(14.2
|
)%
|
Continuing operations per common share - dilutive
|
|
$
|
(1.77
|
)
|
|
$
|
(1.55
|
)
|
|
$
|
(0.22
|
)
|
|
(14.2
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
6,372
|
|
|
6,279
|
|
|
|
|
|
|||||
Dilutive
|
|
6,372
|
|
|
6,279
|
|
|
|
|
|
|
Year Ended
December 31, |
||||||||
|
2019
|
|
|
|
2018
|
||||
Skilled nursing occupancy
|
77.5
|
%
|
|
|
|
78.1
|
%
|
||
As a percent of total census:
|
|
|
|
|
|
||||
Medicaid census
|
68.9
|
%
|
|
|
|
68.3
|
%
|
||
Medicare census
|
9.3
|
%
|
|
|
|
10.4
|
%
|
||
Managed Care census
|
4.6
|
%
|
|
|
|
4.5
|
%
|
||
As a percent of total revenues:
|
|
|
|
|
|
||||
Medicaid revenues
|
46.9
|
%
|
|
|
|
45.4
|
%
|
||
Medicare revenues
|
17.0
|
%
|
|
|
|
17.8
|
%
|
||
Managed Care revenues
|
10.6
|
%
|
|
|
|
10.3
|
%
|
||
Average rate per day:
|
|
|
|
|
|
||||
Medicare
|
$
|
462.39
|
|
|
|
|
$
|
451.21
|
|
Medicaid
|
$
|
179.25
|
|
|
|
|
$
|
176.79
|
|
Managed Care
|
$
|
392.94
|
|
|
|
|
$
|
390.64
|
|
|
Year Ended
December 31, |
||||||||||
|
2018
|
|
2017
|
|
|
||||||
|
As reported
|
|
As reported
|
|
Change
|
||||||
Same-store revenue
|
$
|
466,826
|
|
|
$
|
472,910
|
|
|
$
|
(6,084
|
)
|
2017 acquisition revenue
|
9,296
|
|
|
4,553
|
|
|
4,743
|
|
|||
2017 disposition revenue
|
—
|
|
|
5,348
|
|
|
(5,348
|
)
|
|||
Total revenue
|
$
|
476,122
|
|
|
$
|
482,811
|
|
|
$
|
(6,689
|
)
|
|
Year Ended
December 31, |
||||||||
|
2018
|
|
|
|
2017
|
||||
|
As reported
|
|
|
|
As reported
|
||||
Skilled nursing occupancy
|
78.1
|
%
|
|
|
|
78.7
|
%
|
||
As a percent of total census:
|
|
|
|
|
|
||||
Medicaid census
|
68.3
|
%
|
|
|
|
68.4
|
%
|
||
Medicare census
|
10.4
|
%
|
|
|
|
10.9
|
%
|
||
Managed Care census
|
4.5
|
%
|
|
|
|
4.3
|
%
|
||
As a percent of total revenues:
|
|
|
|
|
|
||||
Medicaid revenues
|
51.8
|
%
|
|
|
|
51.6
|
%
|
||
Medicare revenues
|
24.1
|
%
|
|
|
|
25.3
|
%
|
||
Managed Care revenues
|
8.7
|
%
|
|
|
|
8.1
|
%
|
||
Average rate per day:
|
|
|
|
|
|
||||
Medicare
|
$
|
451.21
|
|
|
|
|
$
|
452.52
|
|
Medicaid
|
$
|
176.79
|
|
|
|
|
$
|
172.62
|
|
Managed Care
|
$
|
390.64
|
|
|
|
|
$
|
378.15
|
|
|
Year Ended
December 31, |
||||||||||
|
2018
|
|
2017
|
|
|
||||||
|
As reported
|
|
As reported
|
|
Change
|
||||||
Same-store operating expenses
|
$
|
374,356
|
|
|
$
|
382,134
|
|
|
$
|
(7,778
|
)
|
2017 acquisition operating expenses
|
6,822
|
|
|
3,640
|
|
|
$
|
3,182
|
|
||
2017 disposition operating expenses
|
—
|
|
|
4,142
|
|
|
$
|
(4,142
|
)
|
||
Total operating expenses
|
$
|
381,178
|
|
|
$
|
389,916
|
|
|
(8,738
|
)
|
|
Requirement
|
|
Level at
December 31, 2019 |
Credit Facility:
|
|
|
|
Minimum fixed charge coverage ratio
|
1.01:1.00
|
|
Waived
|
Minimum adjusted EBITDA
|
$9.5 million
|
|
$10.0 million
|
Current ratio (as defined in agreement)
|
1.00:1.00
|
|
1.20:1.00
|
Mortgaged Centers:
|
|
|
|
EBITDAR (mortgaged centers)
|
$10.0 million
|
|
$13.9 million
|
Affiliated Revolver:
|
|
|
|
Minimum fixed charge coverage ratio
|
1:00:1:00
|
|
1.30:1:00
|
Minimum adjusted EBITDA
|
$0.8 million
|
|
$0.9 million
|
•
|
our ability to successfully operate all of our centers,
|
•
|
our ability to increase census and occupancy rates at our centers,
|
•
|
changes in governmental reimbursement, including the new Patient-Driven Payment Model that was implemented in October 2019,
|
•
|
our ability to comply with the Settlement Agreement entered with the Department of Justice and the State of Tennessee,
|
•
|
our ability to comply with the Corporate Integrity Agreement entered in conjunction with the Settlement Agreement with the government, including the results of annual claims audits required thereunder.
|
•
|
government regulation,
|
•
|
the impact of the Affordable Care Act, efforts to repeal or further modify the Affordable Care Act, and other health care reform initiatives,
|
•
|
any increases in the cost of borrowing under our credit agreements,
|
•
|
our ability to comply with covenants contained in those credit agreements,
|
•
|
our ability to extend or replace our current credit facility,
|
•
|
our ability to comply with the terms of our master lease agreements,
|
•
|
our ability to renew or extend our leases at or prior to the end of the existing lease terms,
|
•
|
the outcome of professional liability lawsuits and claims, including claims related to our discontinued operations,
|
•
|
our ability to control ultimate professional liability costs,
|
•
|
the accuracy of our estimate of our anticipated professional liability expense,
|
•
|
the impact of future licensing surveys,
|
•
|
laws and regulations governing quality of care or other laws and regulations applicable to our business including HIPAA and laws governing reimbursement from government payors,
|
•
|
the costs of investing in our business initiatives and development,
|
•
|
our ability to control costs,
|
•
|
our ability to attract and retain qualified healthcare professionals,
|
•
|
changes to our valuation of deferred tax assets,
|
•
|
changing economic and competitive conditions,
|
•
|
changes in anticipated revenue and cost growth,
|
•
|
changes in the anticipated results of operations,
|
•
|
the effect of changes in accounting policies as well as others.
|
Exhibit
|
|
|
Number
|
|
Description of Exhibits
|
3.1
|
|
|
Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement No. 33-76150 on Form S-1, filed in paper - hyperlink is not required pursuant to Rule 105 of Regulation S-T).
|
|
|
|
|
|
|
Certificate of Designation of Registrant (incorporated by reference to Exhibit 3.5 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2006).
|
|
|
|
|
|
3.3
|
|
|
Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement No. 33-76150 on Form S-1, filed in paper - hyperlink is not required pursuant to Rule 105 of Regulation S-T).
|
|
|
|
|
|
|
Bylaw Amendment adopted November 5, 2007 (incorporated by reference to Exhibit 3.4 to the Company's annual report on Form 10-K for the year ended December 31, 2007).
|
|
|
|
|
|
3.5
|
|
|
Amendment to Certificate of Incorporation dated March 23, 1995 (incorporated by reference to Exhibit A of Exhibit 1 to the Company's Form 8-A filed March 30, 1995, filed in paper - hyperlink is not required pursuant to Rule 105 of Regulation S-T).
|
|
|
|
|
|
|
Certificate of Designation of Registrant (incorporated by reference to Exhibit 3.4 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2001).
|
|
|
|
|
|
|
|
Certificate of Ownership and Merger of Diversicare Healthcare Services, Inc. with and into Advocat Inc. (incorporated by reference to Exhibit 3.1 to the Company's current report on Form 8-K filed March 14, 2013).
|
|
|
|
|
|
|
|
Amendment to Certificate of Incorporation dated June 9, 2016 (incorporated by reference to Exhibit 3.8 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2016).
|
|
|
|
|
|
|
|
Bylaw Second Amendment adopted April 14, 2016 (incorporated by reference to Exhibit 3.9 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2017.
|
|
|
|
|
|
4.1
|
|
|
Form of Common Stock Certificate (incorporated by reference to Exhibit 4 to the Company's Registration Statement No. 33-76150 on Form S-1, filed in paper - hyperlink is not required pursuant to Rule 105 of Regulation S-T).
|
|
|
|
|
4.2
|
|
|
Description of each class of securities registered under Section 12 of the Exchange Act.
|
|
|
|
|
*10.1
|
|
|
Master Agreement and Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.6 to the Company's Registration Statement No. 33-76150 on Form S-1, filed in paper - hyperlink is not required pursuant to Rule 105 of Regulation S-T).
|
|
|
|
|
10.2
|
|
|
Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.8 to the Company's Registration Statement No. 33-76150 on Form S-1, filed in paper - hyperlink is not required pursuant to Rule 105 of Regulation S-T).
|
|
|
|
|
|
|
Management Agreement effective October 1, 2000, between Diversicare Leasing Corp. and Diversicare Management Services Co. (incorporated by reference to Exhibit 10.85 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000).
|
|
|
|
|
|
|
|
Advocat Inc. 2005 Long-Term Incentive Plan (incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A filed on April 20, 2006).
|
|
|
|
|
|
|
|
First Amendment to the Advocat Inc. 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.63 to the Company's annual report on Form 10-K for the year ended December 31, 2008).
|
|
|
|
|
|
|
|
Advocat Inc. 2010 Long-Term Incentive Plan (incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A filed on April 28, 2010).
|
|
|
|
|
|
*10.7
|
|
|
First Amendment to the Diversicare Healthcare Services, Inc. 2010 Long-Term Incentive Plan (incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A filed on April 26, 2017).
|
|
|
|
|
|
|
|
|
|
Amended Employment Agreement effective July 6, 2018, between James R. McKnight, Jr. and Diversicare Healthcare Services, Inc. (incorporated by reference to Exhibit 10.1 to the Company's current report on Form 8-K filed September 20, 2018).
|
|
|
|
|
|
**10.27
|
|
|
Master Lease Agreement Effective October 1, 2018 by and between the Company and Omega Healthcare Investors (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018).
|
|
|
|
|
|
|
Amended and Restated Guaranty in favor of Omega Healthcare Investors, Inc. dated October 1, 2018. (incorporated by reference to Exhibit 10.46 to the Company's Annual Report on Form 10-K for the year ended December 31, 2018).
|
|
|
|
|
|
|
|
Amended and Restated Security Agreement dated October 1, 2018 by and among the Company and a syndicate of financial institutions and banks (incorporated by reference to Exhibit 10.48 to the Company's Annual Report on Form 10-K for the year ended December 31, 2018).
|
|
|
|
|
|
|
|
Asset Purchase Agreement dated October 30, 2018 by and between Diversicare of Fulton, LLC, Diversicare of Fulton Properties, LLC, Diversicare of Clinton, LLC, Diversicare of Clinton Properties, LLC, Diversicare of Glasgow, LLC and Fulton Nursing and Rehabilitation LLC, Holiday Fulton Propco LLC, Birchwood Nursing and Rehabilitation LLC, Padgett Clinton Propco LLC and Westwood Nursing and Rehabilitation LLC (incorporated by reference to Exhibit 10.47 to the Company's Annual Report on Form 10-K for the year ended December 31, 2018).
|
|
|
|
|
|
|
|
Fourth Amendment to Second Amended and Restated Term Loan and Security Agreement dated December 1, 2018 (incorporated by reference to Exhibit 10.49 to the Company's Annual Report on Form 10-K for the year ended December 31, 2018).
|
|
|
|
|
|
|
|
Sixth Amendment to Third Amended and Restated Revolving Loan and Security Agreement dated December 1, 2018 (incorporated by reference to Exhibit 10.50 to the Company's Annual Report on Form 10-K for the year ended December 31, 2018).
|
|
|
|
|
|
|
|
Seventh Amendment to Third Amended and Restated Revolving Loan and Security Agreement dated May 13, 2019 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019).
|
|
|
|
|
|
|
|
Fifth Amendment to Second Amended and Restated Term Loan and Security Agreement dated May 13, 2019 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019).
|
|
|
|
|
|
|
|
First Amendment to Omega Master Lease Agreement dated August 20, 2019 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019).
|
|
|
|
|
|
|
|
Eighth Amendment to Third Amended and Restated Revolving Loan and Security Agreement dated February 25, 2020.
|
|
|
|
|
|
|
|
Sixth Amendment to Second Amended and Restated Term Loan and Security Agreement dated February 25, 2020.
|
|
|
|
|
|
|
|
First Amendment to Revolving Loan and Security Agreement dated February 25, 2020.
|
|
|
|
|
|
|
|
Settlement Agreement with the U.S. Department of Justice and the State of Tennessee dated February 14, 2020.
|
|
|
|
|
|
|
|
Corporate Integrity Agreement with the Office of the Inspector General of CMS dated February 14, 2020.
|
|
|
|
|
|
|
|
Subsidiaries of the Registrant.
|
|
|
|
|
|
|
|
Consent of BDO USA, LLP.
|
|
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a).
|
|
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a).
|
|
|
|
|
/s/ Chad A. McCurdy
|
/s/ Robert Z. Hensley
|
Chad A. McCurdy
|
Robert Z. Hensley
|
Chairman of the Board and Director
|
Director
|
March 5, 2020
|
March 5, 2020
|
|
|
/s/ James R. McKnight, Jr.
|
/s/ Leslie K. Morgan
|
James R. McKnight, Jr.
|
Leslie K. Morgan
|
President and Chief Executive Officer
|
Director
|
Director
|
March 5, 2020
|
March 5, 2020
|
|
|
|
/s/ Robert A. McCabe, Jr.
|
/s/ Richard M. Brame
|
Robert A. McCabe, Jr.
|
Richard M. Brame
|
Director
|
Director
|
March 5, 2020
|
March 5, 2020
|
|
|
/s/ Ben R. Leedle, Jr.
|
|
Ben R. Leedle, Jr.
|
|
Director
|
|
March 5, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
2019
|
|
2018
|
|
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
CURRENT ASSETS:
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
||||||||
Cash
|
|
$
|
2,710
|
|
|
$
|
2,685
|
|
|
Current portion of long-term debt and finance lease obligations
|
|
$
|
3,498
|
|
|
$
|
12,449
|
|
Receivables
|
|
60,521
|
|
|
66,257
|
|
|
Current portion of operating lease liability
|
|
23,736
|
|
|
—
|
|
||||
Self-insurance receivables
|
|
1,011
|
|
|
4,475
|
|
|
Trade accounts payable
|
|
14,641
|
|
|
15,659
|
|
||||
Other receivables
|
|
2,534
|
|
|
1,191
|
|
|
Current liabilities of discontinued operations
|
|
—
|
|
|
86
|
|
||||
Prepaid expenses and other current assets
|
|
5,056
|
|
|
4,659
|
|
|
Accrued expenses:
|
|
|
|
|
||||||
Income tax refundable
|
|
484
|
|
|
1,115
|
|
|
Payroll and employee benefits
|
|
16,780
|
|
|
19,471
|
|
||||
Current assets of discontinued operations
|
|
—
|
|
|
155
|
|
|
Self-insurance reserves, current portion
|
|
13,829
|
|
|
13,158
|
|
||||
Total current assets
|
|
72,316
|
|
|
80,537
|
|
|
Other current liabilities
|
|
11,545
|
|
|
9,522
|
|
||||
|
|
|
|
|
|
Total current liabilities
|
|
84,029
|
|
|
70,345
|
|
||||||
|
|
|
|
|
|
NONCURRENT LIABILITIES:
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
Long-term debt and finance lease obligations, less current portion and deferred financing costs, net
|
|
70,637
|
|
|
60,984
|
|
||||||
PROPERTY AND EQUIPMENT, at cost
|
|
132,775
|
|
|
127,644
|
|
|
Operating lease liability, less current portion
|
|
295,636
|
|
|
—
|
|
||||
Less accumulated depreciation and amortization
|
|
(85,020
|
)
|
|
(76,801
|
)
|
|
Self-insurance reserves, less current portion
|
|
16,291
|
|
|
16,057
|
|
||||
Property and equipment, net
|
|
47,755
|
|
|
50,843
|
|
|
Litigation contingency
|
|
9,000
|
|
|
6,400
|
|
||||
|
|
|
|
|
|
Other noncurrent liabilities
|
|
1,691
|
|
|
6,656
|
|
||||||
|
|
|
|
|
|
Total noncurrent liabilities
|
|
393,255
|
|
|
90,097
|
|
||||||
OTHER ASSETS:
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
||||||||
Operating lease right-of-use assets
|
|
310,238
|
|
|
—
|
|
|
SHAREHOLDERS’ DEFICIT:
|
|
|
|
|
||||||
Deferred income taxes, net
|
|
—
|
|
|
15,851
|
|
|
Common stock, authorized 20,000 shares, $.01 par value, 6,908 and 6,751 shares issued, and 6,676 and 6,519 shares outstanding, respectively
|
|
69
|
|
|
68
|
|
||||
Deferred leasehold costs
|
|
—
|
|
|
206
|
|
|
Treasury stock at cost, 232 shares of common stock
|
|
(2,500
|
)
|
|
(2,500
|
)
|
||||
Other noncurrent assets
|
|
4,323
|
|
|
3,244
|
|
|
Paid-in capital
|
|
24,026
|
|
|
23,413
|
|
||||
Acquired leasehold interest, net
|
|
5,736
|
|
|
6,307
|
|
|
Accumulated deficit
|
|
(59,079
|
)
|
|
(23,016
|
)
|
||||
Noncurrent assets of discontinued operations
|
|
—
|
|
|
2,256
|
|
|
Accumulated other comprehensive income
|
|
568
|
|
|
837
|
|
||||
Total other assets
|
|
320,297
|
|
|
27,864
|
|
|
Total shareholders’ deficit
|
|
(36,916
|
)
|
|
(1,198
|
)
|
||||
|
|
$
|
440,368
|
|
|
$
|
159,244
|
|
|
|
|
$
|
440,368
|
|
|
$
|
159,244
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
PATIENT REVENUES, net
|
$
|
475,020
|
|
|
$
|
476,122
|
|
|
$
|
482,811
|
|
EXPENSES:
|
|
|
|
|
|
||||||
Operating
|
380,870
|
|
|
381,178
|
|
|
389,916
|
|
|||
Lease and rent expense
|
52,990
|
|
|
49,231
|
|
|
48,248
|
|
|||
Professional liability
|
6,996
|
|
|
6,498
|
|
|
7,992
|
|
|||
Litigation contingency expense
|
3,100
|
|
|
6,400
|
|
|
—
|
|
|||
General and administrative
|
28,009
|
|
|
30,237
|
|
|
31,342
|
|
|||
Depreciation and amortization
|
9,122
|
|
|
9,991
|
|
|
9,252
|
|
|||
Lease termination receipts
|
—
|
|
|
—
|
|
|
(180
|
)
|
|||
Total expenses
|
481,087
|
|
|
483,535
|
|
|
486,570
|
|
|||
OPERATING LOSS
|
(6,067
|
)
|
|
(7,413
|
)
|
|
(3,759
|
)
|
|||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
||||||
Other income
|
281
|
|
|
160
|
|
|
472
|
|
|||
Gain on bargain purchase
|
—
|
|
|
—
|
|
|
925
|
|
|||
Gain on sale of investment in unconsolidated affiliate
|
—
|
|
|
308
|
|
|
733
|
|
|||
Hurricane costs
|
—
|
|
|
—
|
|
|
(232
|
)
|
|||
Interest expense, net
|
(5,994
|
)
|
|
(5,533
|
)
|
|
(5,353
|
)
|
|||
Debt retirement costs
|
—
|
|
|
(267
|
)
|
|
—
|
|
|||
Total other income (expense)
|
(5,713
|
)
|
|
(5,332
|
)
|
|
(3,455
|
)
|
|||
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
(11,780
|
)
|
|
(12,745
|
)
|
|
(7,214
|
)
|
|||
BENEFIT (PROVISION) FOR INCOME TAXES
|
(15,694
|
)
|
|
1,481
|
|
|
(2,534
|
)
|
|||
LOSS FROM CONTINUING OPERATIONS
|
(27,474
|
)
|
|
(11,264
|
)
|
|
(9,748
|
)
|
|||
INCOME (LOSS) FROM DISCONTINUED OPERATIONS:
|
|
|
|
|
|
||||||
Operating income (loss), net of income tax provision of ($517), ($731) and ($4,209), respectively
|
(9,322
|
)
|
|
(957
|
)
|
|
4,921
|
|
|||
Gain on lease modification, net of tax
|
733
|
|
|
—
|
|
|
—
|
|
|||
Gain on sale of assets, net of tax
|
—
|
|
|
4,825
|
|
|
—
|
|
|||
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
|
(8,589
|
)
|
|
3,868
|
|
|
4,921
|
|
|||
NET LOSS
|
$
|
(36,063
|
)
|
|
$
|
(7,396
|
)
|
|
$
|
(4,827
|
)
|
NET INCOME (LOSS) PER COMMON SHARE:
|
|
|
|
|
|
||||||
Per common share – basic
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
(4.25
|
)
|
|
$
|
(1.77
|
)
|
|
$
|
(1.55
|
)
|
Discontinued operations
|
(1.33
|
)
|
|
0.61
|
|
|
0.78
|
|
|||
|
$
|
(5.58
|
)
|
|
$
|
(1.16
|
)
|
|
$
|
(0.77
|
)
|
Per common share – diluted
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
(4.25
|
)
|
|
$
|
(1.77
|
)
|
|
$
|
(1.55
|
)
|
Discontinued operations
|
(1.33
|
)
|
|
0.61
|
|
|
0.78
|
|
|||
|
$
|
(5.58
|
)
|
|
$
|
(1.16
|
)
|
|
$
|
(0.77
|
)
|
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK
|
$
|
—
|
|
|
$
|
0.17
|
|
|
$
|
0.22
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
||||||
Basic
|
6,459
|
|
|
6,372
|
|
|
6,279
|
|
|||
Diluted
|
6,459
|
|
|
6,372
|
|
|
6,279
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
NET LOSS
|
$
|
(36,063
|
)
|
|
$
|
(7,396
|
)
|
|
$
|
(4,827
|
)
|
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
||||||
Change in fair value of cash flow hedge, net of tax
|
(269
|
)
|
|
279
|
|
|
976
|
|
|||
Less: reclassification adjustment for amounts recognized in net loss
|
—
|
|
|
(151
|
)
|
|
(462
|
)
|
|||
Total other comprehensive income (loss)
|
(269
|
)
|
|
128
|
|
|
514
|
|
|||
COMPREHENSIVE LOSS
|
$
|
(36,332
|
)
|
|
$
|
(7,268
|
)
|
|
$
|
(4,313
|
)
|
|
Common Stock
|
|
Treasury Stock
|
|
Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Total
Shareholders' Equity (Deficit)
|
||||||||||||||||||
|
Shares Issued
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
BALANCE, DECEMBER 31, 2016
|
6,592
|
|
|
$
|
66
|
|
|
232
|
|
|
$
|
(2,500
|
)
|
|
$
|
21,935
|
|
|
$
|
(8,276
|
)
|
|
$
|
195
|
|
|
$
|
11,420
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,827
|
)
|
|
—
|
|
|
(4,827
|
)
|
||||||
Common stock dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
(1,431
|
)
|
|
—
|
|
|
(1,384
|
)
|
||||||
Issuance/redemption of equity grants, net
|
95
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
|
—
|
|
|
—
|
|
|
(94
|
)
|
||||||
Interest rate cash flow hedge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
514
|
|
|
514
|
|
||||||
Stock based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
833
|
|
|
—
|
|
|
—
|
|
|
833
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
BALANCE, DECEMBER 31, 2017
|
6,687
|
|
|
67
|
|
|
232
|
|
|
(2,500
|
)
|
|
22,720
|
|
|
(14,534
|
)
|
|
709
|
|
|
6,462
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,396
|
)
|
|
—
|
|
|
(7,396
|
)
|
||||||
Common stock dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
(1,086
|
)
|
|
—
|
|
|
(1,055
|
)
|
||||||
Issuance/redemption of equity grants, net
|
64
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(218
|
)
|
|
—
|
|
|
—
|
|
|
(217
|
)
|
||||||
Interest rate cash flow hedge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
128
|
|
|
128
|
|
||||||
Stock based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
880
|
|
|
—
|
|
|
—
|
|
|
880
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
BALANCE, DECEMBER 31, 2018
|
6,751
|
|
|
68
|
|
|
232
|
|
|
(2,500
|
)
|
|
23,413
|
|
|
(23,016
|
)
|
|
837
|
|
|
(1,198
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,063
|
)
|
|
—
|
|
|
(36,063
|
)
|
||||||
Issuance/redemption of equity grants, net
|
157
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
—
|
|
|
41
|
|
||||||
Interest rate cash flow hedge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(269
|
)
|
|
(269
|
)
|
||||||
Stock based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
573
|
|
|
—
|
|
|
—
|
|
|
573
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
BALANCE, DECEMBER 31, 2019
|
6,908
|
|
|
$
|
69
|
|
|
232
|
|
|
$
|
(2,500
|
)
|
|
$
|
24,026
|
|
|
$
|
(59,079
|
)
|
|
$
|
568
|
|
|
$
|
(36,916
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(36,063
|
)
|
|
$
|
(7,396
|
)
|
|
$
|
(4,827
|
)
|
Income (loss) from discontinued operations
|
(8,589
|
)
|
|
3,868
|
|
|
4,921
|
|
|||
Loss from continuing operations
|
(27,474
|
)
|
|
(11,264
|
)
|
|
(9,748
|
)
|
|||
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
9,122
|
|
|
9,991
|
|
|
9,252
|
|
|||
Provision for doubtful accounts
|
—
|
|
|
—
|
|
|
8,202
|
|
|||
Deferred income tax provision (benefit)
|
15,421
|
|
|
(926
|
)
|
|
2,040
|
|
|||
Provision for self-insured professional liability, net of cash payments
|
4,739
|
|
|
2,325
|
|
|
1,342
|
|
|||
Stock based and deferred compensation
|
573
|
|
|
1,127
|
|
|
1,027
|
|
|||
Debt retirement costs
|
—
|
|
|
267
|
|
|
—
|
|
|||
Provision for leases, net of cash payments
|
3,897
|
|
|
(106
|
)
|
|
(936
|
)
|
|||
Amortization of right-of-use assets
|
21,890
|
|
|
—
|
|
|
—
|
|
|||
Litigation contingency expense
|
3,100
|
|
|
6,400
|
|
|
—
|
|
|||
Gain on sale of assets and unconsolidated affiliate
|
—
|
|
|
(308
|
)
|
|
(733
|
)
|
|||
Gain on bargain purchase
|
—
|
|
|
—
|
|
|
(925
|
)
|
|||
Deferred bonus
|
—
|
|
|
—
|
|
|
761
|
|
|||
Other
|
1,507
|
|
|
415
|
|
|
524
|
|
|||
Changes in other assets and liabilities affecting operating activities:
|
|
|
|
|
|
||||||
Receivables
|
9,200
|
|
|
(2,289
|
)
|
|
(10,721
|
)
|
|||
Prepaid expenses and other assets
|
(6,693
|
)
|
|
(5,926
|
)
|
|
385
|
|
|||
Trade accounts payable and accrued expenses
|
(1,793
|
)
|
|
6,010
|
|
|
1,589
|
|
|||
Operating lease liabilities
|
(21,154
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by continuing operations
|
12,335
|
|
|
5,716
|
|
|
2,059
|
|
|||
Net cash provided by (used in) discontinued operations
|
(7,003
|
)
|
|
(65
|
)
|
|
10,001
|
|
|||
Net cash provided by operating activities
|
5,332
|
|
|
5,651
|
|
|
12,060
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Purchase of property and equipment
|
(4,980
|
)
|
|
(7,531
|
)
|
|
(8,423
|
)
|
|||
Acquisition of property and equipment through business combination
|
—
|
|
|
—
|
|
|
(8,750
|
)
|
|||
Proceeds from unconsolidated affiliate
|
—
|
|
|
308
|
|
|
1,100
|
|
|||
Net cash used in continuing operations
|
(4,980
|
)
|
|
(7,223
|
)
|
|
(16,073
|
)
|
|||
Net cash provided by (used in) discontinued operations
|
6
|
|
|
17,653
|
|
|
(1,307
|
)
|
|||
Net cash provided by (used in) investing activities
|
(4,974
|
)
|
|
10,430
|
|
|
(17,380
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Repayment of debt and finance lease obligations
|
(12,541
|
)
|
|
(36,684
|
)
|
|
(30,154
|
)
|
|||
Proceeds from issuance of debt
|
12,500
|
|
|
21,689
|
|
|
37,067
|
|
|||
Financing costs
|
(333
|
)
|
|
(146
|
)
|
|
(195
|
)
|
|||
Issuance and redemption of employee equity awards
|
41
|
|
|
(217
|
)
|
|
(94
|
)
|
|||
Payment of common stock dividends
|
—
|
|
|
(1,054
|
)
|
|
(1,384
|
)
|
|||
Payment for preferred stock restructuring
|
—
|
|
|
(508
|
)
|
|
(659
|
)
|
|||
Net cash provided by (used in) continuing operations
|
(333
|
)
|
|
(16,920
|
)
|
|
4,581
|
|
|||
Net cash provided by (used in) discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
(333
|
)
|
|
(16,920
|
)
|
|
4,581
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
NET INCREASE (DECREASE) IN CASH
|
$
|
25
|
|
|
$
|
(839
|
)
|
|
$
|
(739
|
)
|
CASH, beginning of period
|
2,685
|
|
|
3,524
|
|
|
4,263
|
|
|||
CASH, end of period
|
$
|
2,710
|
|
|
$
|
2,685
|
|
|
$
|
3,524
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
||||||
Cash payments of interest, net of amounts capitalized
|
$
|
5,390
|
|
|
$
|
6,074
|
|
|
$
|
5,404
|
|
Cash payments of income taxes
|
$
|
432
|
|
|
$
|
498
|
|
|
$
|
847
|
|
SUPPLEMENTAL INFORMATION ON NON-CASH INVESTING AND FINANCING TRANSACTIONS:
|
|
|
|
|
|
||||||
Acquisition of equipment through finance lease
|
$
|
483
|
|
|
$
|
689
|
|
|
$
|
507
|
|
Acquisition of operating leases through adoption of ASC Topic 842
|
$
|
389,403
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Lease modification
|
$
|
(48,877
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Buildings and improvements
|
-
|
5 to 40 years
|
Leasehold improvements
|
-
|
2 to 10 years
|
Furniture, fixtures and equipment
|
-
|
2 to 15 years
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Acquired leasehold interest, gross
|
$
|
10,652
|
|
|
$
|
10,652
|
|
Accumulated amortization
|
(4,916
|
)
|
|
(4,345
|
)
|
||
Acquired leasehold interest, net
|
$
|
5,736
|
|
|
$
|
6,307
|
|
2020
|
|
$
|
534
|
|
2021
|
|
534
|
|
|
2022
|
|
534
|
|
|
2023
|
|
534
|
|
|
2024
|
|
534
|
|
|
Thereafter
|
|
3,066
|
|
|
|
|
$
|
5,736
|
|
December 31, 2019
|
|
Fair Value Measurements - Assets (Liabilities)
|
||||||||||||||
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Interest rate swap
|
|
$
|
(57
|
)
|
|
$
|
—
|
|
|
$
|
(57
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
Fair Value Measurements - Assets (Liabilities)
|
||||||||||||||
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Interest rate swap
|
|
$
|
384
|
|
|
$
|
—
|
|
|
$
|
384
|
|
|
$
|
—
|
|
|
Twelve Months Ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
As reported
|
|
As reported
|
|
As reported
|
|||||||||||||||
Medicaid
|
$
|
222,560
|
|
|
46.9
|
%
|
|
$
|
215,924
|
|
|
45.4
|
%
|
|
$
|
249,204
|
|
|
51.6
|
%
|
Medicare
|
80,798
|
|
|
17.0
|
%
|
|
84,959
|
|
|
17.8
|
%
|
|
122,043
|
|
|
25.3
|
%
|
|||
Managed Care
|
50,323
|
|
|
10.6
|
%
|
|
48,879
|
|
|
10.3
|
%
|
|
39,162
|
|
|
8.1
|
%
|
|||
Private Pay and other
|
121,339
|
|
|
25.5
|
%
|
|
126,360
|
|
|
26.5
|
%
|
|
72,402
|
|
|
15.0
|
%
|
|||
Total
|
$
|
475,020
|
|
|
100.0
|
%
|
|
$
|
476,122
|
|
|
100.0
|
%
|
|
$
|
482,811
|
|
|
100.0
|
%
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Medicaid
|
$
|
21,998
|
|
|
$
|
27,532
|
|
Medicare
|
11,811
|
|
|
15,706
|
|
||
Managed Care
|
9,103
|
|
|
8,126
|
|
||
Private Pay and other
|
17,609
|
|
|
14,893
|
|
||
Total accounts receivable
|
$
|
60,521
|
|
|
$
|
66,257
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Land
|
$
|
5,265
|
|
|
$
|
5,283
|
|
Buildings and leasehold improvements
|
84,544
|
|
|
82,111
|
|
||
Furniture, fixtures and equipment
|
42,966
|
|
|
40,250
|
|
||
|
132,775
|
|
|
127,644
|
|
||
Less: accumulated depreciation
|
(85,020
|
)
|
|
(76,801
|
)
|
||
Net property and equipment
|
$
|
47,755
|
|
|
$
|
50,843
|
|
|
|
Classification
|
|
December 31, 2019
|
||
Assets
|
|
|
|
|
||
Operating lease assets
|
|
Operating lease right-of-use assets
|
|
$
|
310,238
|
|
Finance lease assets
|
|
Property and equipment, net (a)
|
|
906
|
|
|
Total leased assets
|
|
|
|
$
|
311,144
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|
|
||
Current
|
|
|
|
|
||
Operating
|
|
Current portion of operating lease liability
|
|
$
|
23,736
|
|
Finance
|
|
Current portion of long-term debt and finance lease obligations, net
|
|
231
|
|
|
Noncurrent
|
|
|
|
|
||
Operating
|
|
Operating lease liability, less current portion
|
|
295,636
|
|
|
Finance
|
|
Long-term debt and finance lease obligations, less current portion and deferred financing costs, net
|
|
445
|
|
|
Total lease liabilities
|
|
|
|
$
|
320,048
|
|
|
|
|
|
|
||
(a) Finance lease assets are recorded net of accumulated amortization of $1,522 as of December 31, 2019.
|
|
|
|
|
Year Ended
|
||
|
|
Classification
|
|
December 31, 2019
|
||
Operating lease cost (a)
|
|
Lease and rent expense
|
|
$
|
52,990
|
|
Finance lease cost:
|
|
|
|
|
||
Amortization of finance lease assets
|
|
Depreciation and amortization
|
|
263
|
|
|
Interest on finance lease liabilities
|
|
Interest expense, net
|
|
48
|
|
|
Short term lease cost
|
|
Operating expense
|
|
649
|
|
|
Net lease cost
|
|
|
|
$
|
53,950
|
|
|
|
|
|
|
||
(a) Includes variable lease costs, which are immaterial
|
|
|
|
As of December 31, 2019
|
||||||||||
|
|
Operating Leases (a)
|
|
Finance Leases (a)
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
2020
|
|
$
|
50,819
|
|
|
$
|
269
|
|
|
$
|
51,088
|
|
2021
|
|
51,788
|
|
|
242
|
|
|
52,030
|
|
|||
2022
|
|
52,812
|
|
|
179
|
|
|
52,991
|
|
|||
2023
|
|
53,857
|
|
|
37
|
|
|
53,894
|
|
|||
2024
|
|
53,843
|
|
|
14
|
|
|
53,857
|
|
|||
After 2024
|
|
200,605
|
|
|
—
|
|
|
200,605
|
|
|||
Total lease payments
|
|
$
|
463,724
|
|
|
$
|
741
|
|
|
$
|
464,465
|
|
Less: Interest
|
|
(144,352
|
)
|
|
(65
|
)
|
|
(144,417
|
)
|
|||
Present value of lease liabilities
|
|
$
|
319,372
|
|
|
$
|
676
|
|
|
$
|
320,048
|
|
|
|
|
|
|
|
|
||||||
(a) Operating and Finance lease payments exclude options to extend lease terms that are not reasonably certain of being exercised.
|
|
|
December 31, 2019
|
|
|
|
Weighted-average remaining lease term (years)
|
|
|
Operating leases
|
|
8.81
|
Finance leases
|
|
3.00
|
Weighted-average discount rate
|
|
|
Operating leases
|
|
8.9%
|
Finance leases
|
|
6.1%
|
|
|
Year Ended
|
||
|
|
December 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
||
Operating cash flows for operating leases
|
|
$
|
55,485
|
|
Operating cash flows for finance leases
|
|
48
|
|
|
Financing cash flows for finance leases
|
|
471
|
|
|
Acquisition of operating leases though adoption of Topic 842
|
|
389,403
|
|
|
Lease modification
|
|
$
|
(48,877
|
)
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Mortgage loan
|
$
|
49,743
|
|
|
$
|
51,730
|
|
Acquisition loan
|
9,400
|
|
|
6,900
|
|
||
Revolver
|
14,000
|
|
|
15,000
|
|
||
Affiliated revolver
|
1,000
|
|
|
—
|
|
||
|
74,143
|
|
|
73,630
|
|
||
Plus finance lease obligations
|
857
|
|
|
928
|
|
||
Less current portion
|
(3,498
|
)
|
|
(12,449
|
)
|
||
|
71,502
|
|
|
62,109
|
|
||
Less deferred financing costs, net
|
(865
|
)
|
|
(1,125
|
)
|
||
Long-term debt and finance lease obligation, net
|
$
|
70,637
|
|
|
$
|
60,984
|
|
|
2019
|
|
2018
|
||||
Write-off of deferred financing costs
|
$
|
—
|
|
|
$
|
267
|
|
Deferred financing costs capitalized
|
$
|
333
|
|
|
$
|
146
|
|
2020
|
$
|
3,085
|
|
2021
|
71,058
|
|
|
Total
|
$
|
74,143
|
|
2020
|
$
|
461
|
|
2021
|
242
|
|
|
2022
|
178
|
|
|
2023
|
37
|
|
|
2024
|
15
|
|
|
Total
|
933
|
|
|
Amounts related to interest
|
(76
|
)
|
|
Principal payments on finance lease obligation
|
$
|
857
|
|
(1)
|
The Company did not issue any options or other equity grants that would require application of the Black-Scholes-Merton equity grant valuation model during the years ended December 31, 2019 and 2017. All equity grants during these periods were restricted common shares which are valued using an intrinsic valuation method based on market price.
|
|
|
Year Ended
December 31,
|
||||||||||
|
|
2019(1)
|
|
2018
|
|
2017(1)
|
||||||
Weighted average grant date fair value
|
|
$
|
—
|
|
|
$
|
3.05
|
|
|
$
|
—
|
|
Total intrinsic value of exercises
|
|
$
|
3
|
|
|
$
|
115
|
|
|
$
|
2
|
|
(1)
|
The Company did not issue any options or other equity grants that would require application of the Black-Scholes-Merton equity grant valuation model during the years ended December 31, 2019 and 2017. All equity grants during this period were restricted common shares which are valued using an intrinsic valuation method based on market price.
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
||||||||
|
|
Average
|
|
|
|
Intrinsic
|
|
|
|
Intrinsic
|
||||||||
Range of
|
|
Exercise
|
|
Grants
|
|
Value-Grants
|
|
Grants
|
|
Value-Grants
|
||||||||
Exercise Prices
|
|
Prices
|
|
Outstanding
|
|
Outstanding
|
|
Exercisable
|
|
Exercisable
|
||||||||
$8.14 to $10.21
|
|
$
|
8.83
|
|
|
45
|
|
|
$
|
—
|
|
|
35
|
|
|
$
|
—
|
|
$5.45 to $5.86
|
|
$
|
5.71
|
|
|
31
|
|
|
$
|
—
|
|
|
31
|
|
|
$
|
—
|
|
|
|
|
|
76
|
|
|
|
|
66
|
|
|
|
|
|
|
Weighted
|
|||
|
SOSARs/
|
|
Average
|
|||
|
Options
|
|
Exercise Price
|
|||
Outstanding, December 31, 2018
|
122
|
|
|
$
|
7.29
|
|
Granted
|
—
|
|
|
—
|
|
|
Exercised
|
(2
|
)
|
|
2.37
|
|
|
Expired or cancelled
|
(44
|
)
|
|
7.06
|
|
|
Outstanding, December 31, 2019
|
76
|
|
|
$
|
7.55
|
|
|
|
|
|
|||
Exercisable, December 31, 2019
|
66
|
|
|
$
|
7.46
|
|
|
|
|
Weighted
|
|||
|
|
|
Average
|
|||
|
Restricted
|
|
Grant Date
|
|||
|
Shares
|
|
Fair Value
|
|||
Outstanding, December 31, 2018
|
120
|
|
|
$
|
8.77
|
|
Granted
|
151
|
|
|
3.93
|
|
|
Dividend Equivalents
|
—
|
|
|
—
|
|
|
Vested
|
(57
|
)
|
|
8.91
|
|
|
Cancelled
|
(7
|
)
|
|
5.97
|
|
|
Outstanding, December 31, 2019
|
207
|
|
|
$
|
5.28
|
|
|
|
|
Weighted
|
|||
|
|
|
Average
|
|||
|
Restricted
|
|
Grant Date
|
|||
|
Share Units
|
|
Fair Value
|
|||
Outstanding, December 31, 2018
|
43
|
|
|
$
|
9.26
|
|
Granted
|
36
|
|
|
3.93
|
|
|
Dividend Equivalents
|
—
|
|
|
—
|
|
|
Vested
|
(31
|
)
|
|
9.54
|
|
|
Cancelled
|
—
|
|
|
—
|
|
|
Outstanding December 31, 2019
|
48
|
|
|
$
|
5.08
|
|
9.
|
NET LOSS PER COMMON SHARE
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator: Loss:
|
|
|
|
|
|
|
||||||
Loss from continuing operations
|
|
$
|
(27,474
|
)
|
|
$
|
(11,264
|
)
|
|
$
|
(9,748
|
)
|
Income (loss) from discontinued operations, net of income taxes
|
|
(8,589
|
)
|
|
3,868
|
|
|
4,921
|
|
|||
Net loss
|
|
$
|
(36,063
|
)
|
|
$
|
(7,396
|
)
|
|
$
|
(4,827
|
)
|
|
|
|
|
|
|
|
||||||
Denominator: Basic Weighted Average Common Shares Outstanding:
|
|
6,459
|
|
|
6,372
|
|
|
6,279
|
|
|||
|
|
|
|
|
|
|
||||||
Basic net loss per common share
|
|
|
|
|
|
|
||||||
Loss from continuing operations
|
|
$
|
(4.25
|
)
|
|
$
|
(1.77
|
)
|
|
$
|
(1.55
|
)
|
Income (loss) from discontinued operations
|
|
|
|
|
|
|
||||||
Operating income (loss), net of taxes
|
|
(1.33
|
)
|
|
0.61
|
|
|
0.78
|
|
|||
Discontinued operations, net of taxes
|
|
(1.33
|
)
|
|
0.61
|
|
|
0.78
|
|
|||
Basic net loss per common share
|
|
$
|
(5.58
|
)
|
|
$
|
(1.16
|
)
|
|
$
|
(0.77
|
)
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator: Loss from continuing operations
|
|
$
|
(27,474
|
)
|
|
$
|
(11,264
|
)
|
|
$
|
(9,748
|
)
|
Income (loss) from discontinued operations, net of income taxes
|
|
(8,589
|
)
|
|
3,868
|
|
|
4,921
|
|
|||
Net loss
|
|
$
|
(36,063
|
)
|
|
$
|
(7,396
|
)
|
|
$
|
(4,827
|
)
|
|
|
|
|
|
|
|
||||||
Basic weighted average common shares outstanding
|
|
6,459
|
|
|
6,372
|
|
|
6,279
|
|
|||
Denominator: Diluted Weighted Average Common Shares Outstanding:
|
|
6,459
|
|
|
6,372
|
|
|
6,279
|
|
|||
|
|
|
|
|
|
|
||||||
Diluted net loss per common share
|
|
|
|
|
|
|
||||||
Loss from continuing operations
|
|
$
|
(4.25
|
)
|
|
$
|
(1.77
|
)
|
|
$
|
(1.55
|
)
|
Income (loss) from discontinued operations
|
|
|
|
|
|
|
||||||
Operating income (loss), net of taxes
|
|
(1.33
|
)
|
|
0.61
|
|
|
0.78
|
|
|||
Discontinued operations, net of taxes
|
|
(1.33
|
)
|
|
0.61
|
|
|
0.78
|
|
|||
Diluted net loss per common share
|
|
$
|
(5.58
|
)
|
|
$
|
(1.16
|
)
|
|
$
|
(0.77
|
)
|
|
2019
|
|
2018
|
|
2017
|
SOSARs/Options Excluded
|
76,000
|
|
114,000
|
|
45,000
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current provision (benefit) :
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
197
|
|
|
$
|
(143
|
)
|
|
$
|
272
|
|
State
|
|
76
|
|
|
(412
|
)
|
|
222
|
|
|||
|
|
273
|
|
|
(555
|
)
|
|
494
|
|
|||
Deferred provision (benefit):
|
|
|
|
|
|
|
||||||
Federal
|
|
12,439
|
|
|
(529
|
)
|
|
2,544
|
|
|||
State
|
|
2,982
|
|
|
(397
|
)
|
|
(504
|
)
|
|||
|
|
15,421
|
|
|
(926
|
)
|
|
2,040
|
|
|||
Provision (benefit) for income taxes of continuing operations
|
|
$
|
15,694
|
|
|
$
|
(1,481
|
)
|
|
$
|
2,534
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Provision (benefit) for federal income taxes at statutory rates
|
|
$
|
(2,469
|
)
|
|
$
|
(2,676
|
)
|
|
$
|
(2,453
|
)
|
Provision (benefit) for state income taxes, net of federal benefit
|
|
(106
|
)
|
|
(564
|
)
|
|
322
|
|
|||
Valuation allowance changes affecting the provision for income taxes
|
|
19,002
|
|
|
(147
|
)
|
|
(498
|
)
|
|||
Employment tax credits
|
|
(210
|
)
|
|
(49
|
)
|
|
(173
|
)
|
|||
Nondeductible expenses
|
|
122
|
|
|
1,899
|
|
|
401
|
|
|||
Stock based compensation expense
|
|
80
|
|
|
15
|
|
|
(29
|
)
|
|||
Effect of Tax Cuts and Jobs Creation Act
|
|
—
|
|
|
—
|
|
|
4,514
|
|
|||
Rate actualization
|
|
(1,349
|
)
|
|
—
|
|
|
(36
|
)
|
|||
Other
|
|
624
|
|
|
41
|
|
|
486
|
|
|||
Provision (benefit) for income taxes of continuing operations
|
|
$
|
15,694
|
|
|
$
|
(1,481
|
)
|
|
$
|
2,534
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Deferred tax assets (liabilities):
|
|
|
|
|
||||
Net operating loss and other carryforwards
|
|
$
|
859
|
|
|
$
|
324
|
|
Credit carryforwards
|
|
3,118
|
|
|
2,878
|
|
||
Accounts receivable
|
|
4,852
|
|
|
4,570
|
|
||
Prepaid expenses
|
|
(1,015
|
)
|
|
(1,022
|
)
|
||
Interest rate limitation
|
|
971
|
|
|
148
|
|
||
Right-of-use lease
|
|
2,351
|
|
|
—
|
|
||
Depreciation
|
|
1,863
|
|
|
1,318
|
|
||
Tax goodwill and intangibles
|
|
(1,066
|
)
|
|
(1,079
|
)
|
||
Stock-based compensation
|
|
183
|
|
|
197
|
|
||
Accrued liabilities
|
|
504
|
|
|
896
|
|
||
Accrued rent
|
|
380
|
|
|
1,914
|
|
||
Kentucky and Kansas acquisition costs
|
|
—
|
|
|
3
|
|
||
Impairment of long-lived assets
|
|
176
|
|
|
191
|
|
||
Interest rate swap
|
|
(4
|
)
|
|
(152
|
)
|
||
Hedge Ineffectiveness
|
|
(155
|
)
|
|
(168
|
)
|
||
Noncurrent self-insurance liabilities
|
|
6,363
|
|
|
5,997
|
|
||
Restitution
|
|
2,445
|
|
|
—
|
|
||
Other
|
|
30
|
|
|
64
|
|
||
|
|
21,855
|
|
|
16,079
|
|
||
Less valuation allowance
|
|
(21,855
|
)
|
|
(228
|
)
|
||
|
|
$
|
—
|
|
|
$
|
15,851
|
|
|
|
Quarter
|
||||||||||||||
2019
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Patient revenues, net
|
|
$
|
117,550
|
|
|
$
|
117,967
|
|
|
$
|
118,630
|
|
|
$
|
120,873
|
|
Professional liability expense (1)
|
|
1,851
|
|
|
1,594
|
|
|
1,737
|
|
|
1,814
|
|
||||
Loss from continuing operations
|
|
(1,574
|
)
|
|
(22,616
|
)
|
|
(1,916
|
)
|
|
(1,368
|
)
|
||||
Loss from discontinued operations
|
|
(1,772
|
)
|
|
(1,980
|
)
|
|
(2,958
|
)
|
|
(1,879
|
)
|
||||
Net loss (2)
|
|
$
|
(3,346
|
)
|
|
$
|
(24,596
|
)
|
|
$
|
(4,874
|
)
|
|
$
|
(3,247
|
)
|
|
||||||||||||||||
Basic net loss per common share:
|
||||||||||||||||
Loss from continuing operations
|
|
$
|
(0.24
|
)
|
|
$
|
(3.49
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.22
|
)
|
Loss from discontinued operations
|
|
(0.28
|
)
|
|
(0.31
|
)
|
|
(0.45
|
)
|
|
(0.29
|
)
|
||||
Net loss per common share
|
|
$
|
(0.52
|
)
|
|
$
|
(3.80
|
)
|
|
$
|
(0.75
|
)
|
|
$
|
(0.51
|
)
|
(1)
|
The Company's quarterly results are significantly affected by the amounts recorded for professional liability expense, as discussed further in Note 11, "Commitments and Contingencies". The amount of expense recorded for professional liability in each quarter of 2019 is set forth in the table above.
|
(2)
|
The loss in the second quarter of 2019 is inclusive of a full valuation allowance of $20.0 million.
|
|
|
Quarter
|
||||||||||||||
2018
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Patient revenues, net
|
|
$
|
119,043
|
|
|
$
|
119,327
|
|
|
$
|
119,036
|
|
|
$
|
118,716
|
|
Professional liability expense (1)
|
|
1,539
|
|
|
1,755
|
|
|
1,604
|
|
|
1,600
|
|
||||
Loss from continuing operations
|
|
(738
|
)
|
|
(327
|
)
|
|
(7,512
|
)
|
|
(2,687
|
)
|
||||
Income from discontinued operations
|
|
635
|
|
|
17
|
|
|
114
|
|
|
3,102
|
|
||||
Net income (loss)
|
|
$
|
(103
|
)
|
|
$
|
(310
|
)
|
|
$
|
(7,398
|
)
|
|
$
|
415
|
|
|
||||||||||||||||
Basic net income (loss) per common share:
|
||||||||||||||||
Loss from continuing operations
|
|
$
|
(0.12
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(1.18
|
)
|
|
$
|
(0.42
|
)
|
Income from discontinued operations
|
|
0.11
|
|
|
—
|
|
|
0.02
|
|
|
0.48
|
|
||||
Net income (loss) per common share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(1.16
|
)
|
|
$
|
0.06
|
|
(1)
|
The Company's quarterly results are significantly affected by the amounts recorded for professional liability expense, as discussed further in Note 11, "Commitments and Contingencies". The amount of expense recorded for professional liability in each quarter of 2018 is set forth in the table above.
|
Description
|
|
Balance at Beginning of Period
|
|
Impact of ASC 606 Adoption (1)
|
|
Additions Charged to Costs and Expenses
|
|
Deductions
|
|
Balance at End of Period
|
Year ended
December 31, 2019: Allowance for doubtful accounts
|
|
$—
|
|
$—
|
|
$—
|
|
$—
|
|
$—
|
Year ended
December 31, 2018: Allowance for doubtful accounts
|
|
$14,235
|
|
$(14,235)
|
|
$—
|
|
$—
|
|
$—
|
Year ended
December 31, 2017: Allowance for doubtful accounts
|
|
$10,326
|
|
$—
|
|
$8,958
|
|
$(5,049)
|
|
$14,235
|
Column A
|
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
||||
|
|
|
|
|
|
Additions
|
|
|
|
Deductions
|
|
|
Description
|
|
Balance at
Beginning
of Period
|
|
Charged
to
Costs and
Expenses
|
|
Charged
to Other
Accounts (2)
|
|
Other
|
|
Payments (1)
|
|
Balance at
End of
Period
|
Year ended
December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional Liability Reserve
|
|
$27,201
|
|
$10,435
|
|
$—
|
|
$(3,020)
|
|
$(7,226)
|
|
$27,390
|
Workers Compensation
Reserve |
|
$618
|
|
$400
|
|
$—
|
|
$—
|
|
$(97)
|
|
$921
|
Health Insurance
Reserve |
|
$1,396
|
|
$16,733
|
|
$—
|
|
$—
|
|
$(16,319)
|
|
$1,810
|
Year ended
December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional Liability Reserve
|
|
$20,057
|
|
$8,865
|
|
$—
|
|
$5,475
|
|
$(7,196)
|
|
$27,201
|
Workers Compensation
Reserve |
|
$867
|
|
$(18)
|
|
$—
|
|
$—
|
|
$(231)
|
|
$618
|
Health Insurance
Reserve |
|
$1,326
|
|
$14,369
|
|
$—
|
|
$—
|
|
$(14,299)
|
|
$1,396
|
Year ended
December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional Liability Reserve
|
|
$19,977
|
|
$7,935
|
|
$—
|
|
$—
|
|
$(7,855)
|
|
$20,057
|
Workers Compensation
Reserve |
|
$171
|
|
$995
|
|
$—
|
|
$—
|
|
$(299)
|
|
$867
|
Health Insurance
Reserve |
|
$1,019
|
|
$13,769
|
|
$—
|
|
$—
|
|
$(13,462)
|
|
$1,326
|
(1)
|
Payments for the Professional Liability Reserve include amounts paid for claims settled during the period as well as payments made under structured arrangements for claims settled in earlier periods.
|
(2)
|
The Company has presented the results of certain divestiture and lease termination transactions as discontinued operations. The amounts charged to Other Accounts represent the amounts charged to discontinued operations.
|
Description
|
|
Balance at Beginning of Period
|
|
Additions Charged to Costs and Expenses (1)
|
|
Deductions
|
|
Balance at End of Period
|
Year ended December 31, 2019: Deferred Tax Valuation Allowance
|
|
$228
|
|
$21,657
|
|
$—
|
|
$21,885
|
Year ended December 31, 2018: Deferred Tax Valuation Allowance
|
|
$377
|
|
$—
|
|
$(149)
|
|
$228
|
Year ended December 31, 2017: Deferred Tax Valuation Allowance
|
|
$732
|
|
$—
|
|
$(355)
|
|
$377
|
BORROWER:
ADVOCAT FINANCE, INC. DIVERSICARE MANAGEMENT SERVICES CO. DIVERSICARE LEASING CORP. STERLING HEALTH CARE MANAGEMENT, INC. DIVERSICARE TEXAS I, LLC DIVERSICARE HOLDING COMPANY, LLC DIVERSICARE KANSAS, LLC DIVERSICARE LEASING COMPANY II, LLC DIVERSICARE PROPERTY CO., LLC |
||
By:
|
/s/Kerry D. Massey
|
|
Name:
|
Kerry D. Massey
|
|
Its:
|
Executive Vice President and Chief Financial Officer
|
SENIOR CARE CEDAR HILLS, LLC
SENIOR CARE GOLFCREST, LLC
SENIOR CARE GOLFVIEW, LLC
SENIOR CARE SOUTHERN PINES, LLC
|
|||
BY:
|
SENIOR CARE FLORIDA LEASING, LLC, its sole member
|
||
|
BY:
|
DIVERSICARE LEASING CORP., its sole member
|
|
|
By:
|
/s/Kerry D. Massey
|
|
|
Name:
|
Kerry D. Massey
|
|
|
Its:
|
Executive Vice President and Chief Financial Officer
|
SENIOR CARE FLORIDA LEASING, LLC
DIVERSICARE AFTON OAKS, LLC
DIVERSICARE BRIARCLIFF, LLC
DIVERSICARE CHISOLM, LLC
DIVERSICARE HARTFORD, LLC
DIVERSICARE PINEDALE, LLC
DIVERSICARE WINDSOR HOUSE, LLC
DIVERSICARE ROSE TERRACE, LLC
DIVERSICARE THERAPY SERVICES, LLC
DIVERSICARE CLINTON, LLC
DIVERSICARE HIGHLANDS, LLC |
|||
BY:
|
DIVERSICARE LEASING CORP., its sole member
|
||
|
By:
|
/s/Kerry D. Massey
|
|
|
Name:
|
Kerry D. Massey
|
|
|
Its:
|
Executive Vice President and Chief Financial Officer
|
|
|
DIVERSICARE BALLINGER, LLC
DIVERSICARE DOCTORS, LLC
DIVERSICARE ESTATES, LLC
DIVERSICARE KATY, LLC
DIVERSICARE NORMANDY TERRACE, LLC
DIVERSICARE TREEMONT, LLC
DIVERSICARE PARIS, LLC
|
|||
BY:
|
DIVERSICARE TEXAS I, LLC, its sole member
|
||
|
By:
|
/s/Kerry D. Massey
|
|
|
Name:
|
Kerry D. Massey
|
|
|
Its:
|
Executive Vice President and Chief Financial Officer
|
DIVERSICARE OF CHANUTE, LLC
DIVERSICARE OF COUNCIL GROVE, LLC
DIVERSICARE OF HAYSVILLE, LLC
DIVERSICARE OF SEDGWICK, LLC
DIVERSICARE OF HUTCHINSON, LLC
DIVERSICARE OF LARNED, LLC
|
|||
BY:
|
DIVERSICARE KANSAS, LLC
its sole member
|
||
|
|
||
|
By:
|
/s/Kerry D. Massey
|
|
|
Name:
|
Kerry D. Massey
|
|
|
Its:
|
Executive Vice President and Chief Financial Officer
|
By:
|
DIVERSICARE LEASING COMPANY II, LLC, its sole member
|
Name:
|
Kerry D. Massey
|
Its:
|
Executive Vice President and Chief Financial Officer
|
By:
|
DIVERSICARE PROPERTY CO., LLC, its sole member
|
Its:
|
Executive Vice President and Chief Financial Officer
|
By:
|
DIVERSICARE HOLDING COMPANY, LLC, its sole member
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Name:
|
Kerry D. Massey
|
Its:
|
Executive Vice President and Chief Financial Officer
|
By:
|
DIVERSICARE LEASING COMPANY III, LLC, its sole member
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Acknowledged and Agreed:
DIVERSICARE HEALTHCARE SERVICES, INC.
By: /s/James R. McKnight, Jr. Name: James R. McKnight, Jr. Its: President and Chief Executive Officer |
||
|
|
|
LENDER:
BANKERS TRUST COMPANY
|
||
By: /s/Jon M. Doll
|
|
|
Name:
|
Jon M. Doll
|
|
Its:
|
Vice President
|
|
LENDER:
BOKF, NA D/B/A BANK OF OKLAHOMA
|
||
By: /s/Brian Puckett
|
|
|
Name:
|
Brian Puckett
|
|
Its:
|
Senior Vice President
|
|
LENDER:
CIT BANK, N.A.
|
||
By: /s/Richard Reynoso
|
|
|
Name:
|
Richard Reynoso
|
|
Its:
|
Vice President
|
|
LENDER:
OPUS BANK,
a California commercial bank |
||
By: /s/Sangjin Na________________________
|
|
|
Name:
|
Sangjin Na
|
|
Its:
|
Vice President
|
|
LENDER:
FRANKLIN SYNERGY BANK
|
||
By: /s/Lisa Fletcher
|
|
|
Name:
|
Lisa Fletcher
|
|
Its:
|
Senior Vice President
|
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
President and Chief Executive Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Year 1:
|
$1,610,000 ($134,167/month)
|
Year 2 (on or prior to June 1, 2017):
|
$1,680,000 ($140,000/month)
|
Year 2 (on and after July 1, 2017):
|
$1,830,000 ($152,500/month)
|
Year 3:
|
$1,920,000 ($160,000/month)
|
Year 4:
|
$2,010,000 ($167,500/month)
|
Year 5:
|
$2,110,000 ($175,833/month)
|
Year 6:
|
$2,220,000 ($185,000/month)
|
BORROWER:
|
||
DIVERSICARE AFTON OAKS, LLC
|
||
DIVERSICARE BRIARCLIFF, LLC
|
||
DIVERSICARE CHISOLM, LLC
|
||
DIVERSICARE HARTFORD, LLC
|
||
DIVERSICARE WINDSOR HOUSE, LLC
|
||
|
||
By:
|
Diversicare Leasing Corp., its sole member
|
|
|
By:
|
/s/Kerry D. Massey
|
|
Name: Kerry D. Massey
|
|
|
Its: Executive Vice President and Chief Financial Officer
|
|
DIVERSICARE OF CHANUTE, LLC
|
||
DIVERSICARE OF COUNCIL GROVE, LLC
|
||
DIVERSICARE OF HAYSVILLE, LLC
|
||
DIVERSICARE OF SEDGWICK, LLC
|
||
DIVERSICARE OF HUTCHINSON, LLC
|
||
DIVERSICARE OF LARNED, LLC
|
||
By:
|
Diversicare Kansas, LLC, its sole member
|
|
|
By:
|
/s/Kerry D. Massey
|
|
Name: Kerry D. Massey
|
|
|
Its: Executive Vice President and Chief Financial Officer
|
DIVERSICARE PROPERTY CO., LLC
|
||
|
|
|
|
By:
|
/s/Kerry D. Massey
|
|
Name: Kerry D. Massey
|
|
|
Its: Executive Vice President and Chief Financial Officer
|
DIVERSICARE AFTON OAKS PROPERTY, LLC
|
||
DIVERSICARE BRIARCLIFF PROPERTY, LLC
|
||
DIVERSICARE CHANUTE PROPERTY, LLC
|
||
DIVERSICARE CHISOLM PROPERTY, LLC
|
||
DIVERSICARE COUNCIL GROVE PROPERTY, LLC
|
||
DIVERSICARE HAYSVILLE PROPERTY, LLC
|
||
DIVERSICARE HARTFORD PROPERTY, LLC
|
||
DIVERSICARE HILLCREST PROPERTY, LLC
|
||
DIVERSICARE LAMPASAS PROPERTY, LLC
|
||
DIVERSICARE LARNED PROPERTY, LLC
|
||
DIVERSICARE SEDGWICK PROPERTY, LLC
|
||
DIVERSICARE WINDSOR HOUSE PROPERTY, LLC
|
||
DIVERSICARE YORKTOWN PROPERTY, LLC
|
||
DIVERSICARE HUTCHINSON PROPERTY, LLC
|
||
DIVERSICARE SELMA PROPERTY, LLC
|
||
By:
|
Diversicare Property Co., LLC, its sole member
|
|
|
By:
|
/s/Kerry D. Massey
|
|
Name: Kerry D. Massey
|
|
|
Its: Executive Vice President and Chief Financial Officer
|
DIVERSICARE OF SELMA, LLC
|
||
By:
|
Diversicare Holding Company, LLC, its sole member
|
|
|
By:
|
/s/Kerry D. Massey
|
|
Name: Kerry D. Massey
|
|
|
Its: Executive Vice President and Chief Financial Officer
|
Acknowledged and Agreed:
DIVERSICARE HEALTHCARE SERVICES, INC.
By: /s/James R. McKnight, Jr. Name: James R. McKnight, Jr. Its: President and Chief Executive Officer |
LENDER:
|
OPUS BANK,
a California commercial bank |
By: /s/Sangjin Na
Name: Sangjin Na
Its: Vice President
|
|
|
LENDER:
|
|
FRANKLIN SYNERGY BANK
|
|
By:
|
/s/Lisa Fletcher
|
|
Name: Lisa Fletcher
|
|
Its: Senior Vice President
|
|
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
President and Chief Executive Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Its:
|
Executive Vice President and Chief Financial Officer
|
BORROWER AGENT:
DIVERSICARE MANAGEMENT SERVICES CO. |
||
By:
|
/s/Kerry D. Massey
|
|
Name:
|
Kerry D. Massey
|
|
Its:
|
Executive Vice President and Chief Financial Officer
|
BORROWER:
DIVERSICARE HILLCREST, LLC
DIVERSICARE LAMPASAS, LLC
DIVERSICARE YORKTOWN, LLC
|
|||
BY:
|
DIVERSICARE LEASING CORP., its sole member
|
||
|
By:
|
/s/Kerry D. Massey
|
|
|
Name:
|
Kerry D. Massey
|
|
|
Its:
|
Executive Vice President and Chief Financial Officer
|
|
|
DIVERSICARE HUMBLE, LLC
|
|||
BY:
|
DIVERSICARE TEXAS I, LLC, its sole member
|
||
|
By:
|
/s/Kerry D. Massey
|
|
|
Name:
|
Kerry D. Massey
|
|
|
Its:
|
Executive Vice President and Chief Financial Officer
|
Acknowledged and Agreed:
DIVERSICARE HEALTHCARE SERVICES, INC.
By: /s/James R. McKnight, Jr.________________ Name: James R. McKnight, Jr. Its: President and Chief Executive Officer |
||
|
|
|
LENDER:
BANKERS TRUST COMPANY
|
||
By: /s/Jon M. Doll
|
|
|
Name:
|
Jon M. Doll
|
|
Its:
|
Vice President
|
|
LENDER:
BOKF, NA D/B/A BANK OF OKLAHOMA
|
||
By: /s/Brian Puckett
|
|
|
Name:
|
Brian Puckett
|
|
Its:
|
Senior Vice President
|
|
LENDER:
CIT BANK, N.A.
|
||
By: /s/Richard Reynoso
|
|
|
Name:
|
Richard Reynoso
|
|
Its:
|
Vice President
|
|
LENDER:
OPUS BANK,
a California commercial bank |
||
By: /s/Sangjin Na
|
|
|
Name:
|
Sangjin Na
|
|
Its:
|
Vice President
|
|
LENDER:
FRANKLIN SYNERGY BANK
|
||
By: /s/Lisa Fletcher
|
|
|
Name:
|
Lisa Fletcher
|
|
Its:
|
Senior Vice President
|
|
Its:
|
Executive Vice President and Chief Financial Officer
|
a.
|
Any liability arising under Title 26, U.S. Code (Internal Revenue Code);
|
b.
|
Any criminal liability;
|
c.
|
Except as explicitly stated in this Agreement, any administrative liability, including mandatory exclusion from Federal health care programs;
|
d.
|
Any liability to the United States (or its agencies) for any conduct other than the Covered Conduct;
|
e.
|
Any liability based upon obligations created by this Agreement;
|
f.
|
Any liability of individuals;
|
g.
|
Any liability for express or implied warranty claims or other claims for defective or deficient products or services, including quality of goods and services;
|
h.
|
Any liability for failure to deliver goods or services due; and
|
i.
|
Any liability for personal injury or property damage or for other consequential damages arising from the Covered Conduct.
|
a.
|
Any criminal, civil, or administrative liability arising under the State of Tennessee’s revenue codes;
|
c.
|
Any liability to Tennessee for any conduct other than the TennCare Covered Conduct;
|
e.
|
Any liability for express or implied warranty claims or other claims for defective or deficient products or services, including quality of goods and services;
|
h.
|
Any liability of individuals; or
|
i.
|
Any liability to the State of Tennessee individual consumers or state program payers for claims involving unfair and/or deceptive acts or practices and/or violations of consumer protection laws.
|
(1)
|
the matters covered by this Agreement;
|
(2)
|
the United States’ audit(s) and civil and any criminal investigation(s) of the matters covered by this Agreement;
|
(3)
|
Diversicare’s investigation, defense, and corrective actions undertaken in response to the United States’ audit(s) and civil and any criminal investigation(s) in connection with the matters covered by this Agreement (including attorneys’ fees);
|
(4)
|
the negotiation and performance of this Agreement;
|
(5)
|
the payment Diversicare makes to the United States pursuant to this Agreement and any payments that Diversicare may make to Relators, including costs and attorneys’ fees; and
|
(6)
|
the negotiation of, and obligations undertaken pursuant to the CIA to: (i) retain an independent review organization to perform annual reviews as described in Section III of the CIA; and (ii) prepare and submit reports to the OIG-HHS
|
a.
|
developing and implementing policies, procedures, and practices designed to ensure compliance with the requirements set forth in this CIA and with Federal health care program requirements;
|
b.
|
making periodic (at least quarterly) reports regarding compliance matters in person to the Board of Directors of Diversicare (Board) and shall be authorized to report on such matters to the Board at any time. Written documentation of the Compliance Officer’s reports to the Board shall be made available to OIG upon request; and
|
c.
|
monitoring the day-to-day compliance activities engaged in by Diversicare as well as any reporting obligations created under this CIA.
|
a.
|
meeting at least quarterly to review and oversee Diversicare’s compliance program, including but not limited to the performance of the Compliance Officer and Compliance Committee;
|
b.
|
submitting to OIG a description of the documents and other materials it reviewed, as well as any additional steps taken, such as the engagement of an independent advisor or other third-party resources, in its oversight of the compliance program and in support of making the resolution below during each Reporting Period; and
|
c.
|
for each Reporting Period of the CIA, adopting a resolution, signed by each member of the Board summarizing its review and oversight of Diversicare’s compliance with Federal health care program requirements and the obligations of this CIA.
|
d.
|
for the first and third Reporting Periods of the CIA, the Board shall retain an individual or entity with expertise in compliance with Federal health care program requirements (Compliance Expert) to perform a review of the effectiveness of Diversicare’s Compliance Program (Compliance Program Review). The Compliance Expert shall create a work plan for the Compliance Program Review and prepare a written report about the Compliance Program Review. The written report (Compliance Program Review Report) shall include a description of the Compliance Program Review and any recommendations with respect to Diversicare’s compliance program. The Board shall review the Compliance Program Review Report as part of its review and oversight of Diversicare’s compliance program. A copy of the Compliance Program Review report shall be provided to OIG in each Annual Report submitted by Diversicare. In addition, copies of any materials provided to the Board by the Compliance Expert, along with minutes of any meetings between the Compliance Expert and the Board, shall be made available to OIG upon request.
|
B.
|
Written Standards
|
C.
|
Training and Education
|
a.
|
Engagement of Independent Review Organization. Within 90 days after the Effective Date, Diversicare shall engage an entity (or entities), such as an accounting, auditing, or consulting firm (hereinafter “Independent Review Organization” or “IRO”), to perform the reviews listed in this Section III.D. The applicable requirements relating to the IRO are outlined in Appendix A to this CIA, which is incorporated by reference.
|
b.
|
Retention of Records. The IRO and Diversicare shall retain and make available to OIG, upon request, all work papers, supporting documentation, correspondence, and draft reports (those exchanged between the IRO and Diversicare) related to the reviews.
|
c.
|
Access to Records and Personnel. Diversicare shall ensure that the IRO has access to all records and personnel necessary to complete the reviews listed in this Section III.D and that all records furnished to the IRO are accurate and complete.
|
a.
|
an “Ineligible Person” shall include an individual or entity who:
|
i.
|
is currently excluded from participation in any Federal health care program; or
|
ii.
|
has been convicted of a criminal offense that falls within the scope of 42 U.S.C. § 1320a-7(a) but has not yet been excluded.
|
b.
|
“Exclusion List” means the HHS/OIG List of Excluded Individuals/Entities (LEIE) (available through the Internet at http://www.oig.hhs.gov).
|
a.
|
Diversicare shall screen all prospective Covered Persons against the Exclusion List prior to engaging their services and, as part of the hiring or contracting process or medical staff credentialing process, shall require such Covered Persons to disclose whether they are Ineligible Persons.
|
b.
|
Diversicare shall screen all current Covered Persons against the Exclusion List within 90 days after the Effective Date and on a monthly basis thereafter.
|
c.
|
Diversicare shall implement a policy requiring all Covered Persons to disclose immediately if they become an Ineligible Person.
|
a.
|
a substantial Overpayment;
|
b.
|
a matter that a reasonable person would consider a probable violation of criminal, civil, or administrative laws applicable to any Federal health care program for which penalties or exclusion may be authorized;
|
c.
|
the employment of or contracting with or having as a member of the active medical staff a Covered Person who is an Ineligible Person as defined by Section III.G.1.a; or
|
d.
|
the filing of a bankruptcy petition by Diversicare.
|
a.
|
a complete description of all details relevant to the Reportable Event, including, at a minimum, the types of claims, transactions or other conduct giving rise to the Reportable Event; the period during which the conduct occurred; and the names of individuals and entities believed to be implicated, including an explanation of their roles in the Reportable Event;
|
b.
|
a statement of the Federal criminal, civil or administrative laws that are probably violated by the Reportable Event, if any;
|
c.
|
the Federal health care programs affected by the Reportable Event;
|
d.
|
a description of the steps taken by Diversicare to identify and quantify any Overpayments; and
|
e.
|
a description of Diversicare’s actions taken to correct the Reportable Event and prevent it from recurring.
|
a.
|
the identity of the Ineligible Person and the job duties performed by that individual;
|
b.
|
the dates of the Ineligible Person’s employment or contractual relationship or medical staff membership;
|
c.
|
a description of the Exclusion List screening that Diversicare completed before and/or during the Ineligible Person’s employment or contract or medical staff membership and any flaw or breakdown in the screening process that led to the hiring or contracting with or credentialing the Ineligible Person;
|
d.
|
a description of how the Ineligible Person was identified; and
|
e.
|
a description of any corrective action implemented to prevent future employment or contracting with or credentialing an Ineligible Person.
|
IV.
|
SUCCESSOR LIABILITY
|
a.
|
to the best of his or her knowledge, except as otherwise described in the report, Diversicare has implemented and is in compliance with all of the requirements of this CIA;
|
b.
|
he or she has reviewed the report and has made reasonable inquiry regarding its content and believes that the information in the report is accurate and truthful; and
|
c.
|
he or she understands that the certification is being provided to and relied upon by the United States
|
a.
|
a Compliance Officer;
|
b.
|
Compliance Directors
|
c.
|
a Compliance Committee;
|
d.
|
the Board compliance obligations and the engagement of a Compliance Expert, the performance of a Compliance Program Review and the preparation of a Compliance Program Review Report, as required by Section III.A.4;
|
e.
|
the management certification obligations and the development and implementation of a written process for Certifying Employees, as required by Section III.A.5;
|
f.
|
written Policies and Procedures;
|
g.
|
the development of a written training plan and the training and education of Covered Persons and Board members;
|
h.
|
a risk assessment and internal review process;
|
i.
|
a Disclosure Program;
|
j.
|
Ineligible Persons screening and removal requirements;
|
k.
|
notification of Government investigations or legal proceedings;
|
l.
|
policies and procedures regarding the repayment of Overpayments; and
|
m.
|
reporting of Reportable Events.
|
a.
|
repeated violations or a flagrant violation of any of the obligations under this CIA, including, but not limited to, the obligations addressed in Section X.A;
|
b.
|
a failure by Diversicare to report a Reportable Event, take corrective action, or make the appropriate refunds, as required in Section III.J;
|
c.
|
a failure to respond to a Demand Letter concerning the payment of Stipulated Penalties in accordance with Section X.C; or
|
d.
|
a failure to engage and use an IRO in accordance with Section III.D, Appendix A, or Appendix B.
|
a.
|
the alleged material breach has been cured; or
|
b.
|
the alleged material breach cannot be cured within the 30 day period, but that: (i) Diversicare has begun to take action to cure the material breach; (ii) Diversicare is pursuing such action with due diligence; and (iii) Diversicare has provided to OIG a reasonable timetable for curing the material breach.
|
a.
|
Diversicare cured such breach within 30 days of its receipt of the Notice of Material Breach; or
|
b.
|
the alleged material breach could not have been cured within the 30 day period, but that, during the 30 day period following Diversicare’s receipt of the Notice of Material Breach: (i) Diversicare had begun to take action to cure the material breach; (ii) Diversicare pursued such action with due diligence; and (iii) Diversicare provided to OIG a reasonable timetable for curing the material breach.
|
A.
|
IRO Engagement
|
B.
|
IRO Qualifications
|
C.
|
IRO Responsibilities
|
a.
|
Overpayment: The amount of money Diversicare has
|
b.
|
Patient Stay: A covered Medicare Part A stay in a Subject
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c.
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Paid Claim: A claim submitted by Diversicare and for which
|
d.
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Population: The Population shall be defined as all Patient
|
a.
|
eligibility for skilled nursing, rehabilitation therapy services, and
|
b.
|
required physician orders;
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e.
|
provision of nursing, therapy, and non-therapy ancillary services according to the individualized care plans;
|
Advocat Finance, Inc.
|
Diversicare Afton Oaks, LLC
|
Diversicare Afton Oaks Property, LLC
|
Diversicare Ballinger, LLC
|
Diversicare Briarcliff, LLC
|
Diversicare Briarcliff Property, LLC
|
Diversicare Chanute Property, LLC
|
Diversicare Chisolm, LLC
|
Diversicare Chisolm Property, LLC
|
Diversicare of Clinton, LLC
|
Diversicare of Clinton Property, LLC
|
Diversicare Council Grove Property, LLC
|
Diversicare Doctors, LLC
|
Diversicare Estates, LLC
|
Diversicare Hartford, LLC
|
Diversicare Hartford Property, LLC
|
Diversicare Haysville Property, LLC
|
Diversicare Highlands, LLC
|
Diversicare Hillcrest, LLC
|
Diversicare Hillcrest Property, LLC
|
Diversicare Holding Company, LLC
|
Diversicare Humble, LLC
|
Diversicare Hutchinson Property, LLC
|
Diversicare Kansas, LLC
|
Diversicare Katy, LLC
|
Diversicare Lampasas, LLC
|
Diversicare Lampasas Property, LLC
|
Diversicare Larned Property, LLC
|
Diversicare Leasing Company II, LLC
|
Diversicare Leasing Company III, LLC
|
Diversicare Leasing Corp.
|
Diversicare Management Services Co.
|
Diversicare Normandy Terrace, LLC
|
Diversicare of Avon, LLC
|
Diversicare of Big Springs, LLC
|
Diversicare of Bradford Place, LLC
|
Diversicare of Chanute, LLC
|
Diversicare of Chateau, LLC
|
Diversicare of Council Grove, LLC
|
Diversicare of Fulton, LLC
|
Diversicare of Glasgow, LLC
|
Diversicare of Greenville, LLC
|
Diversicare of Haysville, LLC
|
Diversicare of Hutchinson, LLC
|
Diversicare of Larned, LLC
|
Diversicare of Nicholasville, LLC
|
Diversicare of Providence, LLC
|
Diversicare of Riverside, LLC
|
Diversicare of Sedgwick, LLC
|
Diversicare of Selma, LLC
|
Diversicare of Seneca Place, LLC
|
Diversicare of Siena Woods, LLC
|
Diversicare of St. Joseph, LLC
|
Diversicare of St. Theresa, LLC
|
Diversicare Paris, LLC
|
Diversicare Pharmacy Holdings, LLC
|
Diversicare Pinedale, LLC
|
Diversicare Property Co., LLC
|
Diversicare Rose Terrace, LLC
|
Diversicare Sedgwick Property, LLC
|
Diversicare Selma Property, LLC
|
Diversicare Texas I, LLC
|
Diversicare Therapy Services, LLC
|
Diversicare Treemont, LLC
|
Diversicare Windsor House, LLC
|
Diversicare Windsor House Property, LLC
|
Diversicare Yorktown, LLC
|
Diversicare Yorktown Property, LLC
|
Diversicare of Amory, LLC
|
Diversicare of Arab, LLC
|
Diversicare of Batesville, LLC
|
Diversicare of Bessemer, LLC
|
Diversicare of Boaz, LLC
|
Diversicare of Brookhaven, LLC
|
Diversicare of Eupora, LLC
|
Diversicare of Foley, LLC
|
Diversicare of Hueytown, LLC
|
Diversicare of Lanett, LLC
|
Diversicare of Montgomery, LLC
|
Diversicare of Oneonta, LLC
|
Diversicare of Oxford, LLC
|
Diversicare of Pell City, LLC
|
Diversicare of Ripley, LLC
|
Diversicare of Riverchase, LLC
|
Diversicare of Southaven, LLC
|
Diversicare of Tupelo, LLC
|
Diversicare of Tylertown, LLC
|
Diversicare of Winfield, LLC
|
Diversicare of Meridian, LLC
|
Senior Care Cedar Hills, LLC
|
Senior Care Florida Leasing, LLC
|
Senior Care Golfcrest, LLC
|
Senior Care Golfview, LLC
|
Senior Care Southern Pines, LLC
|
SHC Risk Carrier, Inc.
|
Sterling Health Care Management, Inc.
|
|
/s/ James R. McKnight, Jr.
|
James R. McKnight, Jr.
|
President and Chief Executive Officer
|
|
/s/ Kerry D. Massey
|
Kerry D. Massey
|
Executive Vice President and Chief Financial Officer
|