Advocat Inc. (AVCA, Financial) filed Quarterly Report for the period ended 2010-03-31.
Advocat Inc. has a market cap of $37.5 million; its shares were traded at around $6.55 with a P/E ratio of 16.4 and P/S ratio of 0.1. The dividend yield of Advocat Inc. stocks is 3%.AVCA is in the portfolios of Jim Simons of Renaissance Technologies LLC.
There are certain per-person annual Medicare Part B reimbursement limits on therapy services. Subject to certain exceptions, the limits effective January 1, 2010 impose a $1,860 per patient annual ceiling on physical and speech therapy services, and a separate $1,860 per patient annual ceiling on occupational therapy services. The Centers for Medicare and Medicaid Services (CMS) established an exception process to permit therapy services in certain situations, and the majority of services provided by us are reimbursed under the exceptions. The exceptions process expired as of December 31, 2009 but in March 2010, Congress passed temporary legislation which retroactively extended the exceptions process to the period of January 1, 2010 through March 31, 2010. The Patient Protection Act discussed above extended the exceptions process through December 31, 2010. If the exception process is discontinued, it is expected that the reimbursement limitations will reduce therapy revenues and negatively impact our operating results and cash flows.
CMS issued regulations that became effective October 1, 2009 that prohibit us from billing Medicare Part B for certain enteral nutrition, urological, ostomy and tracheostomy supplies. Beginning October 1, these services are now provided by third parties. We are still required to provide the labor for the delivery of service but no longer a supplier and not entitled to any compensation. These regulations will result in reductions of annual revenue and net income of approximately $1.3 million and $0.3 million, respectively.
Patient revenues increased to $70.2 million in 2010 from $67.7 million in 2009, an increase of $2.5 million, or 3.6%. This increase is primarily due to higher patient census and increased Medicaid rates in certain states, partially
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Advocat Inc. has a market cap of $37.5 million; its shares were traded at around $6.55 with a P/E ratio of 16.4 and P/S ratio of 0.1. The dividend yield of Advocat Inc. stocks is 3%.AVCA is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Effective March 31, 2010, we terminated operations of four nursing centers in Florida under a lease that, as amended, would have expired in August 2010. The operating margins of the four facilities subject to this lease did not meet our goals. These four homes contributed revenues of $6.9 million and $5.7 million and net income of $0.2 million and $36,000 during the three months ended March 31, 2010 and 2009, respectively. The facilities were, on average, 50 years old (including three of our ten oldest facilities), with several structural limitations that significantly impaired marketing ability in the very competitive marketplace in Florida. Limitations included multiple three- and four-bed wards (a total of 61 wards representing 223 licensed beds, or approximately 53% of the total licensed beds for these facilities) and limited common areas, parking and therapy space. Three of the 4 buildings were substantially landlocked, without the ability to expand to eliminate the structural challenges. The fourth building was in an economically challenged area. We believe these buildings will require replacement or extensive capital investment within five to ten years to remain competitive. In the near term, prospects for future reimbursement increases in Florida are limited and rate reductions have been proposed, as the state of Florida faces multi-billion dollar deficits.There are certain per-person annual Medicare Part B reimbursement limits on therapy services. Subject to certain exceptions, the limits effective January 1, 2010 impose a $1,860 per patient annual ceiling on physical and speech therapy services, and a separate $1,860 per patient annual ceiling on occupational therapy services. The Centers for Medicare and Medicaid Services (CMS) established an exception process to permit therapy services in certain situations, and the majority of services provided by us are reimbursed under the exceptions. The exceptions process expired as of December 31, 2009 but in March 2010, Congress passed temporary legislation which retroactively extended the exceptions process to the period of January 1, 2010 through March 31, 2010. The Patient Protection Act discussed above extended the exceptions process through December 31, 2010. If the exception process is discontinued, it is expected that the reimbursement limitations will reduce therapy revenues and negatively impact our operating results and cash flows.
CMS issued regulations that became effective October 1, 2009 that prohibit us from billing Medicare Part B for certain enteral nutrition, urological, ostomy and tracheostomy supplies. Beginning October 1, these services are now provided by third parties. We are still required to provide the labor for the delivery of service but no longer a supplier and not entitled to any compensation. These regulations will result in reductions of annual revenue and net income of approximately $1.3 million and $0.3 million, respectively.
Patient revenues increased to $70.2 million in 2010 from $67.7 million in 2009, an increase of $2.5 million, or 3.6%. This increase is primarily due to higher patient census and increased Medicaid rates in certain states, partially
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