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Gentiva Health Services, Inc. (GTIV)

Q1 2009 Earnings Call Transcript

April 30, 2009 10:00 am ET


Steve Paige – SVP, General Counsel and Secretary

Tony Strange – CEO and President

John Potapchuk – EVP, CFO and Treasurer


Ralph Giacobbe – Credit Suisse

Darren Lehrich – Deutsche Bank

Newton Juhng – BB&T Capital

Brian Tanquilut – Jefferies & Company

Whit Mayo – Robert W. Baird

John Ransom – Raymond James

Sheryl Skolnick – CRT Capital



Good morning, my name is Brandy, and I will be your conference operator today. At this time, I would like to welcome everyone to Gentiva Health Services First Quarter 2009 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer period. (Operator instructions)

As a reminder, this conference call is being recorded today, April 30th, 2009. It is now my pleasure to turn the floor over to Steve Paige, General Counsel. Sir, you may begin your conference.

Steve Paige

Good morning everyone. I am Steve Paige, General Counsel of Gentiva Health Services and this is Gentiva’s first quarter 2009 earnings call. Speaking on the call today are Tony Strange, Chief Executive Officer and President; and John Potapchuk, our Chief Financial Officer.

We hope that each of you had a chance to review the company’s earnings report, which we released this morning. All statements made during this call relating to future results and events are forward-looking statements that are based on our current expectations.

Actual results could differ materially from those projected in forward-looking statements because of a number of risk factors and uncertainties which are discussed in our annual and quarterly SEC filings and in the cautionary statements contained in our press release and on our website.

Our call today will be consistent with the SEC’s Regulation FD. We encourage participants to ask their questions during the call since we have certain limitations on comments that can be made in individual inquiries.

Today’s call will also conform to Regulation G regarding the reconciliation of GAAP and non-GAAP disclosure. As a result, we will not discuss non-GAAP financial measures on this call except for those set forth in our press release.

You may access a replay of this call on our website for the next seven days. A transcript of the call will be posted on our site within the next 36 hours and will be available for the next 12 months.

Following today’s prepared remarks, we will open the call to questions. Please limit your initial comments to one question and one follow up, so that we can accommodate as many callers as possible in the allotted time.

Let me now turn the call over to Gentiva’s CEO, Tony Strange.

Tony Strange

Thanks Steve, and good morning, everyone. Gentiva started 2009 with a very good first quarter. Our financial results are on track with our plans for the year and we reaffirmed our 2009 guidance in our earnings press release issued this morning.

Revenue for the first quarter totaled approximately $289 million, which represents growth of 18% over last year’s first quarter excluding CareCentrix of which the majority interest was sold in Q3 of 2008. Our EBITDA for Q1 was up 19% to $28.2 million, and our adjusted net income came in at $0.43 for the quarter, 59% increase over last year.

Our core Home Health business continued to lead to the way for Gentiva in Q1. Home Health revenues were up 19% in first quarter compared to last year to $258 million, that’s also sequentially higher than the $249 million that we reported for the fourth quarter.

Along with our financial results, I am pleased with the progress that we have made on several of our operational fronts. We’ve increased our specialty offerings to 315 programs in the field. In the first quarter, we rolled out 15 new programs and have ramped up to a pace that should meet our target of a 120 new programs in 2009.

I am specifically proud of the outcomes that are being achieved with these programs and the important that they will play in our communications to policy makers about the value of Home Health and the impact that it can have on the overall healthcare spin. I will have more to say about in just a few minutes.

Along with our specialty programs, another key strategy in Home Health is increasing both the capacity and the productivity of our clinician base. On the capacity front, Gentiva had an outstanding recruiting effort for the first quarter by adding over 200 new clinicians as the demand for the home care services continues to increase, it is imperative that we create the capacity to support the growth and manage the cost appropriately.

We continue to make progress on our effort to convert clinicians to a pay-per-visit structure. This strategy allows the company to flex its direct cost structure with the changes in revenue, while at the same time allowing the clinician to exert more control over their income.

In Q1 of 2009, 70% of our clinicians repaid on a per-visit basis up 10 percentage points from the 60% in Q4 of 2008, while we will never be at a 100%. I would expect this trend to continue over the next couple of quarters as we identify areas to further improve productivity. I am also proud to report that the first quarter marked our ninth straight quarter of reduced turnover.

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