Diversicare ‘A Very Different Company’ After Kentucky Exit, Touts 7.5% Medicare Rate Boost

Despite a net loss for the quarter, skilled nursing operator Diversicare Healthcare Services (OTCQX: DVCR) touted its performance at the end of 2019, pointing to a 7.5% Medicare rate boost and generally positive performance under the new Patient-Driven Payment Model (PDPM).

“With our portfolio changes behind us after the Kentucky exit and the implementation of the new Medicare payment system, we had the best quarter of the year and achieved an EBITDAR of $16.2 million,” CEO Jay McKnight said in a Thursday statement announcing the operator’s fourth quarter 2019 results. “Our industry continues to experience challenges, but our team is focused on providing high-quality care using new, innovative approaches while performing as efficiently as possible.”

The Brentwood, Tenn.-based Diversicare posted a net loss of $1.4 million for the last three months of 2019, down from $2.7 million during the same period in 2018.

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The operator pulled down a $1.7 million increase in Medicare rates during the fourth quarter, a gain of 7.5% from the prior year, though a drop in average Medicare census led to a $2.2 million — or 9.5% — decline in Medicare revenue, the company reported.

The last year has brought several milestones, both positive and negative, for the operator: Back in August, Diversicare was removed from the Nasdaq after its market value fell below the exchange’s minimum level; the company’s shares promptly shifted to the over-the-counter market.

But Diversicare was also able to pull off a 10-facility deal that saw the operator exit the Kentucky market last September, a key part of the provider’s portfolio restructuring strategy, and end a nearly decade-long Department of Justice investigation into its therapy practices by reaching a $9.5 million settlement with the federal government last month.

“We are a very different company than we were a year ago and are ready to move forward in 2020,” McKnight said in the Thursday statement.

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