Bill Floyd is the President and CEO of Beverly Enterprises. He recently talked about how a new focus on profitable growth is beginning to pay off. Beverly operates 368 skilled nursing facilities, 20 assisted living centers and 24 hospice centers. The company also contracts rehabilitation services through its Aegis Therapies business.
Q Beverly started 2004 with a promising first quarter. Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased to 9% and your three principal business units were well ahead of last year. How do you account for the improvement?
A Our first quarter results clearly reflect our increasing focus on profitable growth. And I should point out that this growth is being generated on a more solid business platform than we’ve ever had in the past. We’ve seen strong growth trends in each of our businesses during the first quarter, as well as improved operating and quality of care metrics. We are revising our guidance and raising our targeted EBITDA range for continuing operations in 2004 to between $175 million and $180 million.
Q Is it safe to say your expanded Alzheimer’s programs are making a positive contribution?
A We have 97 units in operation, including five for the care of patients with advanced stages of the disease. Fifty-five of those units are averaging occupancy of 90% or greater. Since we began this program five years ago, the net addition to our census at these facilities totals about 400 residents. This increase is roughly the equivalent to the impact of building five or six new nursing homes at about three quarters of the cost.
Q And how is your new labor management system making a contribution?
A It enables us to address staffing requirements at individual facilities on a far more accurate, timely, and effective basis, while still continuing to improve the quality of care we provide. It also helped us reduce the use of temporary labor in our nursing facilities.
Q Aegis Therapies also saw outside revenues increase by 70% from a year ago. Is therapy back in play?
A Aegis significantly increased business with existing customers and also added a net 37 new customers. This clearly is a business we want to grow even more aggressively, and we are exploring acquisitions that fit strategically and that will be accretive to earnings.
