Diversicare Healthcare Services has announced a tentative settlement agreement with the Department of Justice over disputed therapy billing practices.
A final figure was not mentioned during a second-quarter earnings call Monday, but the company announced it had increased its litigation contingency accrual by $3.1 million, to a total of $9.5 million.
Diversicare President and CEO Jay McKnight said an agreement in principle had been reached regarding the DOJ’s investigation. He noted that once the settlement is finalized, the company will begin to pay the balance over the next five years, starting with an initial payment of $500,000.
“This investigation period predates our leadership team and has been a significant distraction for quite some time,” McKnight said in a release. “We still have some work ahead of us to finalize the agreement and related Corporate Integrity Agreement, but reaching this agreement in principle represents substantial progress in resolving this matter.”
During the call, McKnight also noted the company’s net loss from continuing operations was $24.6 million ($3.80 per share) in the second quarter, up from losses of $300,000 ($0.05 per share) for the year-previous period
Earnings also were down: EBITDA was $600,000, compared to $4.6 million in 2018. The company reported adjusted EDITDAR for the quarter was $16.4 million.
Meanwhile, patient revenues for the period were $135.4 million — a decrease of $5.7 million from a year earlier.
In addition, the company took a $20 million non-cash income tax expense related to the increase in valuation allowance against deferred tax assets during the quarter.
McKnight also announced that a deal to complete the company’s exit from Kentucky should be finalized during the third quarter.
