Higher taxes pushed nursing home operator Advocat, Inc.’s fourth quarter earnings down 26 percent to 28 cents a share, compared with 38 cents a year ago.
The Brentwood, Tenn.-based company said last week that it set aside $1.3 million for taxes in the quarter ended December 31, 2007. After taxes, Advocat made $1.8 million in the fourth quarter of 2007, compared to $2.4 million a year earlier when it received a tax benefit of $408,000.
The earnings decline came despite revenue increasing by nearly 29 percent to $71.2 million. Advocat said revenues at centers open at least one year increased more than 5 percent. Occupancy rates, however, remained flat at 79.1 percent, compared with 79.2 percent in the fourth quarter of 2006. The firm’s occupancy rate is well below the Industry average of 90 percent cited by some experts.
For the full year, Advocat earned $1.49 a share on $9.5 million in net income from continuing operations, compared with earnings of $3.42 a share on $22.4 million in 2006. Before taxes the company had a profit of $15.8 million for the year compared with $12.9 million in 2006. Revenues totaled $245 million, up from $214 million in 2006. Higher Medicare and Medicaid rates helped reduce bad debt expense by $600,000 in 2007 compared to 2006, on a same center basis.
Advocat provides long-term care at 50 nursing homes, located primarily in the southeast. The company began a major renovations initiative in 2005 and completed seven facilities before the fourth quarter 2007. Advocat said renovations on two other facilities are to be completed by the third quarter of 2008, while renovation on two more facilities will begin in the second quarter.
Advocat also said its application to operate and construct a 90-bed replacement facility in West Virginia was approved by regulatory officials there last month. Once final appeals, if any, are resolved Advocat said it will arrange financing and begin construction.