Thursday, August 28, 2014

Gentiva's Labor Day


StrangeTony,

Thought your readers might enjoy these in honor of the upcoming Labor Day weekend.  Gentiva's overall rating on Glassdoor fell by 12% from six months ago, The Employee Relations bar continues its free fall at Gentiva.  Then again, these could be Human Abuse stretch goals.  How many employees were laid on the rack this week?

Anonymous (from Gentiva)

Monday, August 25, 2014

Fawning over Tony


StrangeTony,

The Gentiva Board of Directors, the group that will decide who wins the company, said this a few months ago:

In nominating Mr. (Tony) Strange for re-election as a director, our Board of Directors focused on his leadership and execution as our chief executive officer in growing Gentiva, his driving and integrating significant acquisitions by Gentiva and his setting and communicating the proper cultural and behavioral tone as important attributes and experience for his continuing to serve as one of our directors. 

It's hard to see how Tony grew hospice.  He finally confessed to Wall Street analysts he didn't have the key to unlock hospice marketing.  The Harden acquisition resulted in many hospices closing via a "branch rationalization."

The proper cultural and behavioral tone flowed down to the site level where we experienced no raises for years, until the paltriest crumb fell from the executive table.  However, we're back to no raises again.  Apparently we did not show enough gratitude for the morsel senior leaders tossed our way.

Strange does thank employees at the end of each investor call for what we do on a daily basis to enrich him and those who will decide our fate in the buyout.  I imagine all 42,000 Gentiva employees saying in unison, "Our pleasure!"

Everything about Gentiva is exceptional and it starts at the top.  I frequently take exception to them and their myopic actions.  Our leaders are unusual, uncommon, atypical and abnormal.  I'll add another "a word", abysmal.  It's the outcome of a health care world with the absolute wrong priorities.   

Anonymous (from Gentiva)

Thursday, August 21, 2014

Gentiva Winner Should be Revealed by Ides of September


StrangeTony,

Two bidders remain for Gentiva, Kindred and an unnamed investment firm.  They are in due diligence at the moment sharpening their pencils for a possible higher bid.  Benzinga reports that Kindred may have the upper hand. 

They suggest the unnamed investment firm is Formation Capital. owner of long term care provider Genesis.  Genesis is in the process of merging with Skilled Healthcare in a stock only deal.  Benzinga's story believes this stock deal would consume Formation Capital's time and resources, making it more likely Kindred will win Gentiva.

A stock for stock deal doesn't seem complex.  It does not require arranging any debt to fund the combination.  It's more like a merger than an acquisition.

Formation Capital has five unrealized affiliates, all in the post acute health care space.   Formation does not need to combine Gentiva with Genesis.  It could acquire Gentiva and keep it a stand alone company.  It could roll in its existing hospice and home health companies, LifeChoice Hospice (seven hospices) and Millenium Home Health (twelve home healths), which have nothing to do with Genesis.

Gentiva considered calling its higher interest debt in September 2014 and arranging lower rate financing.  It wanted to acquire other businesses in the hospice, home health and community care space.    Conceivably, Gentiva could remain a wholly owned Formation affiliate and fulfill this previously stated vision.

What if the unnamed investment firm is not Alpharetta based Formation Capital?  That means its back to the bidder with the deepest pocketbook and ability to raise debt.  

Gentiva senior leaders would love to be acquired by an investor that believes in them and their vision.  That sole criteria would give the unnamed investor an upper hand in the Gentiva boardroom.  The Ides of September should reveal Gentiva's winner.  Expect lots of silence until then.

Anonymous (from Gentiva)

Thursday, August 14, 2014

Gentiva Under Justice Department Investigation

StrangeTony,

Gentiva made the financial news:

On or about June 19, 2014, the Company received a Civil Investigative Demand from the U.S. Department of Justice, Western District of Missouri, under the federal False Claims Act requesting complete medical records for 14 hospice patients and other documents of Hospice Care of the Midwest, L.L.C., a subsidiary of Harden Healthcare Holdings, LLC (“Harden Holdings”), for the period from January 1, 2009 through June 19, 2014. The Company is in the process of complying with the demand for documents and is cooperating with the investigation.
What a difference ten days made in the telling of a prior story:

On or about June 9, 2014, Iowa Hospice, L.L.C., a subsidiary of Harden Holdings, received a Subpoena Duces Tecum (“Subpoena”) from the Office of Investigations, Kansas City Regional Office of the Office of Inspector General of the Department of Health and Human Services. The Subpoena requests complete medical records for 17 hospice patients and other documents of Iowa Hospice, L.L.C. for the period from January 1, 2007 through June 9, 2014. Harden Holdings is in the process of complying with the Subpoena and is cooperating with the investigation.

I wasn't sure there were any Harden Hospices left, given Gentiva acquired 69 then closed 50.  At least two remain and those are being investigated.

Anonymous (from Gentiva)

Sunday, August 10, 2014

Qualifying EDBITA


StrangeTony,

Gentiva CFO Eric Slusser offered in the Q2 earnings call:

For 2014, we now expect full year net revenues to be in the range of $1.96 billion to $2.0 billion. Additionally, we have raised the lower end of our full year 2014 adjusted EBITDA guidance to $183 million to $195 million and our adjusted income attributable to Gentiva shareholders to $0.95 to $1.15 on a diluted per share basis. This outlook includes the full year impact of the Harden acquisition and the final 2014 Medicare Home Health and Hospice reimbursement rates issued by CMS, but excludes any ongoing losses from closed or sold locations as they are wound down and any acquisition-related expenses.
Flashback to the Harden acquistion where the company predicted:

On a pro-forma basis the company should be able to generate revenues between $2.1 and $2.2 billion, while adjusted EBITDA should come in between $210 and $220 million, excluding share-based compensation.  
 
That's a revenue shortfall of $104 to $200 million and EBDITA gap of $25 to $27 million from prior expectations.

Excluding acquisition related expenses is interesting.  Gentiva is spending big bucks on recruiting a suitor that will keep their top management team in place.  Barclays Capital, Greenberg Traurig, Kekst, Edge Healthcare Partners and MacKenzie Partners don't work cheap.  Will those costs ever be revealed? 

Slusser spoke to the company's commitment regarding capital expenditures:

CapEx, probably expected to stay fairly consistent. We're kind of in that $3 million-a-quarter mode. There's a little bit of increase, but moderate. As we have talked about, we -- the last piece of our integration work is to convert the Harden Home Health over to our GentivaLink system in the third quarter. By no means is that a significant amount, but that's a moderate increase for Q3, as that is completed this quarter. Other than that, when I look at what's in there and the expectations, I don't see anything significant beyond that roughly $3 million, $3.5 million a quarter.
Gentiva, with $2 billion in expected revenues, will spend a mere $12 to $14 million on capital items.  That's a mere 0.6% to 0.7% of net revenues.  Amedisys, with $1.25 billion in revenues in 2013, spent $18 million on capital expenditures. 

A commenter suggested Gentiva leaders are spit shinging the financials for potential buyers.  Today's underinvestment could be tomorrow's higher stock price.  A few months ago a Gentiva executive stated:

We've had some rocky years.  In this industry there's been a negative environment that's been out there in both the home health and hospice.  We all hope that will subside over time and we'll get back to focusing on the patient need, patient care and the industry will start to climb again.   
With attention on deals, deals and more deals and driving costs out via the OneGentiva initiative, patient need and patient care remain on the back burner. 

Management is clear on their priorities.  How many patients are aware of Gentiva senior leaders' needs?  Patients, especially those on hospice, should feel them directly or indirectly.  I pray it's not a direct hit from the Gentiva leadership bus.

Anonymous (from Gentiva)

Friday, August 8, 2014

Driving Service Right Out of Hospice

StrangeTony,

Your message on tormented managers struck home.  Our site's slow motion implosion recently accelerated.  Our staff exodus continues unabated.  Corporate types offer the excuse that hospice nurses burn out at X rate.  However, burnt out nurses leave hospice for another nursing specialty.  That's not the case with our nurses.  They don't leave hospice, nurses leave our hospice.

If turnover costs Gentiva $25,000 per job our branch manager cost the company well over $1 million in a few short years.  Our Medical Directors are tired of training nurses for our competitors, but the company seemingly does not care.

Of course it's hard to market chaos to prospective patients.  It's even harder to recruit good staff with an "abused ex-Gentiva" club in the community doing their best to enact revenge.  Our hospice deserves so much better from the company.  What goes around, comes around.  The question is when?

It can't happen until they wake up from their delusion.  "The stock certificates were hung by the chimney with care, with hopes that the White Knight would soon be here..."

Anonymous (from Gentiva)

Wednesday, August 6, 2014

OneGentiva's Q2 Results

StrangeTony,

Gentiva's second quarter investor call showed hospice revenue to be lower year over year. 

Hospice revenues were $172.3 million in the second quarter, down approximately 4% compared to $179.2 million in the second quarter of 2013.
This glaring drop came despite taking over 69 Harden hospices last fall.  Nine months ago I wrote:

Gentiva CEO Tony Strange beat the "hospice marketing equals home health marketing" drum for nearly two years on investor calls.  When hospice volumes didn't go up as predicted, Strange finally admitted they weren't the same. Yet, the OneGentiva reorganization includes:

"Each region will have a single-sales organization focused on the delivery of a unified comprehensive service offering to our referral sources. However, the product delivery systems for the 3 business lines will continue to function separately as they do today." 

If Gentiva hadn't unlocked the key to hospice marketing as a stand alone group, how will it do so in a unified offering? 

It didn't.  OneGentiva's third aim was to improve hospice revenues.  Wall Street is still waiting.  Longtime hospice staff shake their heads.

Gentiva yet again went in the opposite direction on deleveraging.

Our consolidated leverage ratio for the quarter was approximately 5.9 under our credit agreement.
However, Tony Strange was excited about cost reductions imposed:

I think David and the operating team -- division team here, Jeff and the 5 presidents in the field, I think they have done yeoman's work in getting out ahead of the costs on the cost side of One Gentiva. So I think from a cost perspective, I would tell you that we are where we expected to be or even further along from where we expected to be.
Those cost reductions included critical office staff and clinicians, at least in our hospice.  Our service pales in many ways from where we were.

Anonymous (from Gentiva)