American Renal Associates finalizes restatement of company financials
American Renal Associates Holdings Inc. announced on Sept. 4 that it has completed its restatement of the company’s financials dating back to 2013.
The company said it filed its annual report with the Securities and Exchange Commission for the fiscal year ended Dec.31, 2018. In addition, the company has filed its quarterly reports on for the first and second fiscal quarters ended March 31, 2019 and June 30, 2019.
“The company has now completed its required periodic filings with the SEC and is back in compliance with its listing requirements under New York Stock Exchange rules,” American Renal said in a statement.
The 2018 Annual Report includes audited amended and restated financial statements and other financial information for the fiscal years ended Dec. 31, 2017 and 2016, unaudited restated financial information for the fiscal quarters and year-to-date periods ended March 31, June 30 and Sept. 30, 2018; March 31, June 30 and Sept. 30, 2017; and March 31, June 30 and Sept. 30, 2016, and selected financial data for the years ended Dec. 31, 2015 and 2014 derived from unaudited amended and restated financial statements, the company said. The 2018 Annual Report also includes adjustments affecting fiscal years prior to 2014 as a cumulative adjustment as of Dec. 31, 2013.
“On a cumulative basis, including fiscal year 2013 and periods prior to 2013, the restatement adjustments resulted in a net increase to income before income taxes of $5.4 million, while the restatement adjustments related to the restated periods resulted in a net decrease to income before income taxes of $15.2 million,” the company said. American Renal said the restatement adjustments primarily relate to revenue recognition and accounts receivable.
As a result of a review by the audit committee of the board of directors financial statements for the restated periods, the company has identified “certain material weaknesses in its internal controls over financial reporting,” American Renal said. “The company has taken and will continue to take actions to remediate these material weaknesses and to strengthen its internal controls over financial reporting, including putting in place new processes for revenue recognition and revenue accounting.”
The company also presented its outlook for the rest of 2019 and the year 2020. It expects total normalized treatment growth to be in a range of 7% to 7.5%, as compared to 6.1% in 2018, but revenue per treatment to decline by 2% to 3%, as compared to 2018. Commercial treatment mix is expected to be flat to slightly down, as compared to 12% in 2018, and approximately 80% of commercial treatments are expected to be in-network, as compared to approximately 60% in 2018, the company said.
“For the past several years, we have focused on growing our footprint through building relationships with nephrologists and opening new clinics,” Joseph Carlucci, the company chair and CEO, said. “These efforts have established ARA as a leading dialysis services provider in the United States, all while staying true to our commitment of being a differentiated partner to physicians and providing excellent patient care. We now believe it is important in our next phase of development that we increase our focus on improving operating efficiency and strengthening the balance sheet, while thoughtfully balancing the growth and development opportunities that remain ahead of us. By prioritizing these goals now, we believe we will be better positioned for growth beyond 2020.”