The COVID-19 pandemic led to an additional $32 million in healthcare-related expenses last year for Diversicare, and the Brentwood, TN-based skilled nursing operator expects 2021 will be another year of the same, according to the firm’s fourth-quarter and year-end 2020 earnings call late Thursday.
“During 2020, we experienced reduced occupancy at our centers and incurred additional expenses preparing for and responding to the COVID-19 pandemic,” said Jay McKnight, Diversicare’s president and CEO. “We anticipate that during 2021, we will continue to incur significant expense and lost revenue arising from the pandemic.”
The company reported fourth-quarter net income of $2 million from continuing operations and earnings before interest, taxes and amortization of $4.8 million. In addition, the pandemic drove a 10% decrease in occupancy from the prior-year quarter, which translated into $14.2 million of lost revenue from fewer Medicaid, private-pay and hospice patients. McKnight also noted that the firm now has $25.9 million of deferred stimulus to be used this year.
“The current guidance calls for the majority of our federal stimulus to be used by as early as June 30 of this year,” he said. “Without an extension of the time period for utilization or additional stimulus grants, the second half of our year could be financially challenging.”
On a brighter note, however, the firm’s partnership with Reliant Rehabilitation, announced in November, provided the firm with an improvement of approximately $1 million for the quarter. Also in the fourth quarter, Diversicare exited the lone SNF that it operated in Florida and completed a related amendment of its master lease with Omega Healthcare Investors.
“As our operations generate free cash flow, we intend to invest in our team of caregivers, invest in our physical plants where we care for our patients and residents, move forward with complementary services and improved programming in our current services, and when it makes sense, we will invest in smart acquisitions adjacent to or in our current footprint,” McKnight said. “We believe that these activities have the potential to increase the value of the company by improving scale and operational efficiency. We do not know what the long-term effect of the pandemic will be, but we are focused on moving forward with lessons learned and optimism about the future.”