Press Release
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Revenues for the third quarter increased 10 percent to $6.5 million from the $5.9 million reported in the fiscal third quarter of 2003. Revenue from the Company's Wellplace division increased 86 percent to $733,411 from $393,328 reported for the third quarter of last year. This increase in revenue is due to the start of the Michigan call center contract in March 2003 and the smoking cessation contract for the State of Kansas, which began in July 2003. Net loss applicable to common shareholders for the quarter, which includes a number of one time expenses, was $845,265, or $0.06 per diluted share, compared to net income of $130,811, or $0.01 per diluted share reported in the year ago period.
Revenues for the nine-month period ended March 31, 2004 increased nine percent to $19.1 million from $17.5 million for the comparable nine month period in fiscal 2003. Net loss applicable to common shareholders for the nine months was $789,457, or $0.06 per diluted share, compared to net income of $797,956 or $0.05 per diluted share in the comparable period last year.
The one-time expenses related to the settlement and interest expense totaled $947,500. Exclusive of these one-time events, the Company would have reported net income for the quarter of $102,235, or $0.01 per share.
"The events which transpired this quarter were necessary to properly
position us for both near and long-term success," commented Bruce A. Shear,
Pioneer's chairman and chief executive. "We have successfully financed and
completed the acquisition of Pivotal, which increases the size and
profitability of the Company and significantly strengthens our pharmaceutical
research division. We also successfully resolved the lawsuit brought against
our North Point facility, which will allow us to appropriately focus all of
our attention on operations and strategic initiatives to enhance long-term
shareholder value. The settlement and associated legal fees, coupled with the
costs related to the debt we initially planned to use for the Pivotal
acquisition have certainly impacted our results for the period, but I have no
doubt whatsoever that the Company is stronger today."
One-Time Expenses:
During the second quarter the company spent $370,000 on legal fees, and
$463,000 in a settlement regarding the medical malpractice lawsuit brought
against a clinician who worked for the company's North Point Mental Health
subsidiary prior to Pioneer's acquisition of North Point. As a result of this
situation, the Company incurred $1,031,249 of one-time expenses during the
nine months ended March 31, 2004.
The Company also experienced higher than normal interest expense during
the quarter related to the Company's initial plan to finance the acquisition
of Pivotal primarily through debt, which resulted in the up-front expensing of
$114,500 of financing costs, the amount that would have been amortized over
the term of the loan. In order to fund the acquisition, it was determined
that equity financing was more favorable for the company and its shareholders.
As a result of this one-time expense, interest expense and financing costs for
the quarter increased 72 percent to $219,116. Exclusive of this one-time
expense, interest expense for the quarter would have decreased 18 percent to
$104,616.
Mr. Shear continued, "We continued to see strong growth in our Wellplace
division, which benefited from the rollout of our services contract with Wayne
County, Michigan, along with implementation of a new smoking cessation program
in Kansas. The Company was recently notified that its contract with the State
of Nebraska will end in May, as it has not been funded by the State for a new
term. Our next initiative will be the expansion of our facilities and service
centers in Michigan. While revenue from our pharmaceutical research
operations declined during the quarter, we believe this trend will be reversed
under the proven leadership of Dr. Louis Kirby and Mr. Michael Colombo and the
Pivotal team. We have elected to consolidate our research operations under
the Pivotal brand name, and we have confidence that the team will
significantly broaden our opportunities in the pharmaceutical research
segment."
Capital Resources:
Subsequent to the end of the quarter, the company offered for sale an
aggregate of up to 1,918,196 shares of its Class A Common Stock and warrants
to purchase up to 479,549 shares of Class A Common Stock, providing proceeds
of $2,110,016 for the use in the acquisition of Pivotal Research Centers, LLC
and for working capital when it was determined that debt financing terms would
not be the most favorable for the Company.
As a result of the financing, the Company's balance sheet remained strong.
Cash increased from $494,991 to $963,737. Shareholder's equity increased
11 percent, to $2.1 million, up from $1.9 million as of June 30, 2003. The
Company continued to reduce its long-term debt obligation. Long-term debt at
the end of March was $2.3 million, down from $2.9 million as of June 30, 2003.
About Pioneer Behavioral Health
Pioneer Behavioral Health's core business provides inpatient and
outpatient behavioral healthcare services. The company contracts with
national insurance companies, major transportation and gaming companies to
provide behavioral health services. Pioneer also owns and operates
Wellplace.com, a leading Internet-based provider of behavioral health services
to consumers and professionals. For more information, please visit our web
site at www.phc-inc.com or www.haydenir.com.
This press release may include forward-looking statements that are subject
to risks and uncertainties. Forward-looking statements include information
about possible or assumed future results of the operations or the performance
of the company and its future plans and objectives. Various future events or
factors may cause the actual results to vary materially from those expressed
in any forward-looking statements made in this press release (or during the
associated conference call). These factors and risks are discussed in the
company's annual report on Form 10-KSB for the years ended June 30, 2003 and
2002, copies of which were filed with the Securities and Exchange Commission,
and in our quarterly reports on Form 10-Q filed with the Securities and
Exchange Commission since October 2003.
For further information, please contact Bruce A. Shear of PHC, Inc., +1-978-536-2777, or investor relations, Matthew Hayden of Hayden Communications, Inc., +1-843-272-4653, for PHC, Inc.
PHC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
March 31, March 31,
2004 2003 2004 2003
Revenues:
Patient care,
net $5,583,625 $5,341,816 $16,323,589 $15,863,921
Contract support
services 733,411 393,328 2,240,550 943,513
Pharmaceutical
study 155,152 136,690 500,044 711,957
Total revenues 6,472,188 5,871,834 19,064,183 17,519,391
Operating expenses:
Patient care
expenses 3,201,426 2,638,772 9,033,540 7,877,313
Cost of contract
support services 546,667 354,632 1,667,041 855,862
Provision for
doubtful accounts 227,196 196,195 1,113,033 818,652
Website expenses 73,191 54,770 219,537 168,345
Administrative
expenses 3,096,804 2,369,205 7,446,760 6,631,883
Total
operating
expenses 7,145,284 5,613,574 19,479,911 16,352,055
Income (loss)
from operations (673,096) 258,260 (415,728) 1,167,336
Other expenses:
Interest income 20,888 3,119 26,070 10,943
Other income 26,059 22,830 77,472 75,206
Interest expense
and financing
costs (219,116) (127,324) (466,150) (419,455)
Total other
expenses (172,169) (101,375) (362,608) (333,306)
Income (loss)
before provision
for income taxes (845,265) 156,885 (778,336) 834,030
Provision for income
taxes -- 26,074 11,121 36,074
Income (loss)
applicable to
common
shareholders * $(845,265) $130,811 $(789,457) $797,956
Income (loss)
per share
information:
Basic income per
common share $(0.06) $0.01 $(0.06) $0.06
Basic weighted
average number
of shares
outstanding 14,402,988 14,099,929 14,149,261 13,963,138
Diluted income
per common share $(0.06) $0.01 $(0.06) $0.05
Diluted weighted
average number
of shares
outstanding 14,402,988 14,814,570 14,149,261 14,577,540
* Includes one-time expenses of $947,500
BALANCE SHEET HIGHLIGHTS
March 31st June 30th
2004 2003
Cash $963,737 $494,991
Total Current Assets 7,287,710 6,145,489
Net Property and Equipment 1,296,454 1,295,113
Total Assets $10,537,082 $9,411,723
Total Current Liabilities $7,934,987 $5,409,312
Total Long Term Debt 432,301 2,030,285
Total Liabilities $8,390,950 $7,476,466
Shareholder's Equity $2,146,132 $1,935,257
Total Liabilities and Equity $10,537,082 $9,411,723