Diversicare Healthcare Services (OTCQX: DVCR) published its earnings details on Tuesday, reporting a net loss from continuing operations at -$2.9 million, or -43 cents per share in the third quarter.
During the third quarter of 2020, Diversicare reported a net income of $3.2 million from operations, or 48 cents per share.
The Brentwood, Tenn.-based skilled nursing operator pointed to its inability to apply Provider Relief Fund (PRF) monies to offset lost revenue during the third quarter. The provider has received $51.6 million in PRF as of Sept. 30; $6 million of this fund offset lost revenue during the second quarter, and $3.7 million for the same purpose during the third quarter in 2020.
Pending its merger with DAC Acquisition LLC, Diversicare did not have an earnings call for the third financial quarter ending Sept. 30, instead just publishing its report for the quarter.
“As a result of the COVID-19 pandemic, we have recognized less revenue and increased operating expenses, but we have received additional stimulus funds through the [Public Health and Social Services Emergency Fund, PHSSEF] since the start of the pandemic, which have been used and are expected to continue to be used to mitigate the impact of the reduced revenues and increased operating expenses,” Diversicare said in a statement.
Nursing home operator Diversicare in August agreed to merge with DAC, a limited liability company in Delaware, for $10.10 per share. Diversicare is slated to become a wholly owned subsidiary of DAC and a special meeting of stockholders will be held Nov. 18 to vote on the proposed merger.
If a majority of Diversicare’s stockholders approve the merger, the transaction is due to be completed by the fourth financial quarter, the provider said in a statement. Diversicare’s board of directors are reportedly in favor of the transaction, and they collectively own 33.4% of shares.
Diversicare’s holdings include 61 nursing homes across eight states for a total of 7,250 licensed nursing beds. DAC currently has a 100-plus skilled nursing facility portfolio.
The provider recently applied for Phase 4 of the PHSSEF and American Rescue Plan rural funding program, Diversicare said, but it’s unclear whether the company will receive additional payments through these distributions.
Occupancy recovered slightly compared to last year’s third quarter, from 66.7% to 67.2%, but the provider said it incurred $7.2 million in additional health care-related expenses including labor costs, personal protective equipment (PPE), testing and infection control supplies.
To date, Diversicare recognized $41.1 million of its $51.6 million as other operating income; $2.3 million offset mentioned COVID-19 health care expenses during the third financial quarter and $2.5 million to finance capital improvements related to COVID, the provider said.
Its remaining $8.1 million PRF allotment was classified as “deferred income,” Diversicare noted in its earning statement.
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