Diversicare Healthcare Services Inc. (NASDAQ:DVCR) Q4 2018 Earnings Conference Call Transcript
Feb 28, 2019 • 05:00 pm ET
Good afternoon, and welcome to the Diversicare Healthcare Services 2018 Fourth Quarter Conference Call. Today's call is being recorded.
I would like to remind everyone that in addition to historical information, certain comments made during this conference will be forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, and these statements provide -- these statements involve risks and uncertainties that may cause actual events, results and/or performance to differ materially from those indicated by such statements. You are encouraged to review the risk factors and forward-looking statement disclosures the Company has provided in its annual report on Form 10-K for the fiscal year ended December 31st, 2018, as well as its other public filings with the Securities and Exchange Commission.
During today's call, references may be made on non-GAAP financial measures. Investors are encouraged to review those non-GAAP financial measures and the reconciliation of those measures to the comparable GAAP results in our press release furnished under Form 8-K.
I would now like to turn the call over to Mr. Jay McKnight, President and Chief Executive Officer.
James R. McKnight
Thank you, Chris. Good afternoon, and thank you for joining Diversicare's 2018 fourth quarter earnings call.
Before we begin the discussion of our activities this quarter, I want to encourage our investors to review our disclosures and risk factors in our SEC filings. As we've noted before, and as is the case with others in our industry, we're subject to unresolved governmental investigations into our therapy practices, our practices relating to the pre-admission evaluation forms required by TennCare, and the PASRR forms required by the Medicare program. We also continue to have a substantial presence in certain jurisdictions that have some of the highest professional liability costs per bed in the country. These factors and others challenging -- challenges facing our industry have been taken into consideration in developing our operating and strategic direction.
In the third quarter, we announced that we were under contract to sell three centers in Kentucky, which we have previously classified as assets held for sale. We closed the sale on December 1st to the sales price of $18.7 million, realizing a $4.8 million net gain on the sale. The proceeds from the sale were applied against debt as required by our loan agreements.
For the fourth quarter, we recognized net income of $400,000 compared to a net loss of $5.9 million for the year-ago quarter. EBITDAR for the quarter was $20.6 million, compared to $18.3 million for the year ago quarter. Adjusted EBITDAR for the quarter of $16 million compares to $17.4 million from the fourth quarter of 2017.
I mentioned last quarter that we will continue to provide clarity around the changes in lease accounting. We adopted the new lease accounting standard effective January 1st, 2019. As a result, we will begin, in the first quarter of 2019, recognizing all leases on the balance sheet as right-of-use assets and corresponding lease liability. Under lease accounting guidance, we