01—Abstract
Summary
Summary of the 10-K/A filed August 11, 1995. Cited figures are marked; the original filing is the authoritative source.
Vencor, Inc. (now Ventas, Inc.) filed this Form 10-K/A (Amendment No. 1) for fiscal year 1994 to amend Items 1, 2, 6, 7, 8 and 14 in response to the Commission's review of its 1994 Form 10-K.
The company operates a network of long-term intensive care hospitals treating medically complex, chronically ill patients, plus its Vencare contract services division providing respiratory and subacute care to nursing homes and hospitals. As of December 31, 1994, it owned, leased or managed 32 intensive care hospitals, one general acute care hospital and one long-term hospital unit in 15 states with 2,511 licensed beds, and held Vencare contracts with 600 nursing facilities and 30 nursing facilities and hospitals. Financially, net revenues rose 41.7% to $400,018,000a in 1994, and net income increased 37.0% to $31,416,000, or $1.20 primary and $1.13 fully diluted per share.
Hospital operating expenses reached $298,077,000,b and corporate general and administrative expenses rose 87.5% to $22,213,000, primarily due to development of the ProTouch clinical information system. Total assets grew to $390,372,000 and long-term debt, net of current portion, was $141,899,000, including $115,000,000 of 6% convertible subordinated notes due 2002 and $26,000,000 drawn on the revolving credit line. Shareholders' equity increased to $183,727,000.
Cash and short-term investments fell to $3,055,000c at year-end 1994. Management plans to acquire or lease 10 to 12 additional long-term hospitals and enter 100 to 200 additional Vencare contracts over the next two to three years, with capital expenditures of approximately $100,000,000 in 1994 and similar amounts expected in 1995.
The company completed a 2,200,000-share public offering in the first quarter of 1995, intends to use part of the proceeds to repay its line of credit, and increased its revolving credit facility to $200,000,000d in January 1995. The filing also notes that a substantial share of revenues comes from Medicare and Medicaid (60% of 1994 net revenues), and that Florida rate-setting laws and potential reform legislation could adversely affect results.
02—Key points
Key Highlights
- Net revenues increased 41.7% to $400,018,000 in 1994, with hospital revenues up 43.5% to $396,766,000.
- Net income rose 37.0% to $31,416,000; primary EPS was $1.20 and fully diluted EPS was $1.13.
- The hospital network grew to 33 hospitals in operation at year-end 1994 from 26 in 1993, with 2,511 licensed beds across 15 states.
- Vencare contract services reached 9.7% of net revenues in 1994, up from 1.2% in 1993, with 600 respiratory therapy contracts and 30 subacute contracts.
- Government programs (Medicare and Medicaid) accounted for 60% of 1994 net revenues.
- Total assets were $390,372,000 and long-term debt, net of current portion, was $141,899,000, including $26,000,000 under the revolving line of credit.
- In the first quarter of 1995, the company issued 2,200,000 additional common shares in a public offering, and the revolving credit facility was increased to $200,000,000 in January 1995.
03—Questions
Frequently Asked Questions
How fast did Vencor's revenues and earnings grow in 1994?
Net revenues increased 41.7% to $400,018,000 in 1994 from $282,235,000 in 1993, and net income increased 37.0% to $31,416,000 from $22,924,000. Growth was driven by new hospital facilities, higher patient census and the expansion of Vencare contract services.
What drove the increase in corporate general and administrative expenses?
Corporate general and administrative expenses increased 87.5% to $22,213,000 in 1994, primarily attributable to the development and installation of the company's ProTouch clinical information system.
How much debt did the company carry and how is it structured?
At December 31, 1994, long-term debt net of the current portion was $141,899,000. This consisted of $115,000,000 of 6% convertible subordinated notes due 2002, convertible at $26.00 per share, plus $26,000,000 outstanding on the revolving line of credit, and capitalized lease obligations and other debt. The revolving credit line bears interest at a variable rate and is unsecured.
What growth does management plan for the next few years?
Management intends to purchase or lease 10 to 12 additional long-term hospitals over the next two to three years and to enter 100 to 200 additional Vencare service contracts during each of the next two to three years. Capital expenditures of approximately $100,000,000 were used in 1994 and similar amounts are expected in 1995, to be financed with internally generated and borrowed funds.
What regulatory risks could affect the company's revenues?
A substantial portion of revenues comes from Medicare and Medicaid. The filing notes that Florida regulates hospital rates, and that rate-setting or cost-containment legislation in Texas, California or other states could materially affect results. It also cites the possibility that Gramm-Rudman deficit reductions could reduce Medicare payments, and that health care reform legislation could have a material adverse impact, though the company stated it could not predict the form of any such legislation.
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