How much did nursing home chain Beverly Enterprises, Fort Smith, Ark., want to flee litigious Florida?
Enough that last week it said it was selling 49 skilled-nursing and four assisted-living facilities in the state for $165 million-or a loss of about $70 million compared with the valuations of the properties on its Dec. 31, 2000, balance sheet. Beverly said it expects the sale to NMC of Florida to close in the fourth quarter.
Beverly, like Canada-based Extendicare, and National HealthCare Corp., Murfreesboro, Tenn., said it is leaving Florida because of the costs of defending and settling resident-liability lawsuits, and the resulting sky-high premiums for liability insurance.
Not even the prospect of tort reform could sway the company. William Floyd, Beverly's chief executive officer, chief operating officer and president, told analysts in February that "our Florida nursing homes are a barrier to growth." Even though the Florida Legislature passed a measure that limited the damages that could be awarded in some lawsuits and was generally praised by the industry, Beverly forged ahead with its plans to exit the state.
The 53 facilities in the deal produced $267 million of Beverly's $2.6 billion in revenue in 2000. Although the sale will reduce revenue and prompt Beverly to take a charge of $6 million to $10 million for the second quarter ended June 30, the company expects the sale to improve its operating results by 9 cents to 12 cents per share in 2002. Beverly lost $52.3 million, or 50 cents per share, on $659.5 million in revenue in the first quarter.
Beverly owns one remaining skilled-nursing facility in Florida that it intends to sell to an unnamed buyer. The 50 nursing homes have a total of 6,185 beds, while the four assisted-living facilities have 315 beds. In Beverly's 2000 annual report, the Florida assets were valued at $237 million.
Including the facilities to be sold in Florida, Beverly operates 526 skilled-nursing facilities, 34 assisted-living facilities, 56 home health and hospice agencies, and 161 outpatient therapy clinics.