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Third Quarter FY2008 Financial and Operational Highlights
-- Revenues of $12.1 million decreased $175,000 or 1% vs. Q3 2007, due to
a weakness in the non-core pharmaceutical research revenue, offset by
increases from core patient care and contract support
-- Patient care revenue increased 1% vs. Q3 2007
-- Contract support revenue increased 4% vs. Q3 2007
-- Patient days increased 8% vs. Q3 2007
-- Announced the grand opening of Seven Hills Behavioral Institute near
Las Vegas, Nevada. Seven Hills is projected to contribute annualized
revenue of approximately $12 million, along with higher margins than PHC's
other inpatient facilities, during fiscal 2009.
Key Financial Indicators
(In thousands, except per-share amounts.)
Q3 FY2008 vs. Q3 FY2007 Q3 2008 Q3 2007 Change % Change Consolidated revenues $ 12,143 $ 12,318 $ (175) (1%) Patient care revenues $ 10,165 $ 10,023 $ 142 1% Income from operations - core business* $ 717 $ 674 $ 43 6% Net Income Before Taxes $ 255 $ 519 $ (264) (51%) Net Income $ 156 $ 316 $ (160) (51%) Earnings per share - Basic $ 0.01 $ 0.02 $ (0.01) (50%) Earnings per share - Diluted $ 0.01 $ 0.02 $ (0.01) (50%) *Patient care and contract support, excluding pharmaceutical research segment.
Financial Results
For the third quarter ended March 31, 2008, total net revenue from operations decreased 1% to $12.1 million, as compared to $12.3 million in the same year-ago quarter. This decrease is primarily attributable to a decrease in net revenue from the company's pharmaceutical studies segment, which was down 31% to $0.8 million from $1.2 million in the same year-ago period. Revenue from the patient care segment increased 1% to $10.2 million, as compared to $10.0 million for the same quarter last year. Contract support services revenue provided by the company's Wellplace subsidiary increased 4% to $1.2 million, as compared to $1.1 million in the same year-ago quarter.
Income from operations for the quarter totaled $0.3 million, a decrease of 55% from the $0.6 million reported for the same period last year. Net income before taxes decreased 51% to $0.3 million from $0.5 million for the same year-ago period. This decrease is primarily attributable to a $0.4 million decrease in net income from operations by the company's pharmaceutical studies business segment, offset by a 6% increase in net income from operations in the company's core patient care business.
Net income for the quarter was $0.2 million, or $0.01 per fully diluted share (based on 20.5 million fully diluted shares), a decrease of 51% compared to net income of $0.3 million, or $0.02 per fully diluted share (based on 20.6 million shares) for the third quarter of last year. This represents the company's 24th consecutive profitable quarter, which was sustained while incurring significant startup costs for the company's new Seven Hills facility.
"Aside from the effect of what we see as a temporary decrease in our pharmaceutical research revenue, we continued to see both revenues and income rise due to the strengths of our core operations," said Pioneer's president and CEO Bruce A. Shear, "In fact, timing was everything this quarter, since soon after the quarter ended, Pivotal initiated its largest Phase I Alzheimer's Disease trial for a major national sponsor."
Continued Shear: "The major highlight for the quarter, however, was announcing the long-awaited grand opening of our new Seven Hills Behavioral Institute. This is our first facility built from the ground up and it required significant start up costs that will continue until it reaches anticipated profitability late in the current quarter. Despite some $200,000 in such costs incurred in the third quarter, this segment of our business still achieved strong net income from operations, and allowed us to continue our record of sustained overall profitability over the last two years.
"Also during the third quarter we made great progress toward identifying potential acquisitions, as well as submitting proposals for the continued expansion of our Wellplace division. Our cash position is strong and we are focused on delivering margins companywide during fiscal 2009 that are consistent with expectations now that Seven Hills is open and has begun to admit patients this week. The opportunities for growth of our company have never been better, and we are excited and highly confident about our future."
Teleconference Information
PHC will host a conference call today at 10:00 a.m. Eastern Time. A question and answer session will follow management's presentation.
To participate in the call, dial the appropriate number 5-10 minutes prior to the start time, request the PHC conference call and provide the conference ID.
Domestic callers: 1-800-862-9098 International callers: 1-785-424-1051 Conference ID#: 7PHC
A web simulcast of the call can be accessed via PHC's website at www.phc-inc.com. The call will be available for replay starting at 7:30 p.m. Eastern Time until June 14, 2008:
Toll-Free Replay number: 1-800-753-6120 International Replay number: 1-402-220-0684 (No pass code required)
If you have any difficulty connecting with the conference call or webcast, please contact the Liolios Group at 949-574-3860.
About PHC, Inc.
Pioneer Behavioral Health operates companies that provide inpatient and outpatient behavioral health care services, clinical research and Internet- and telephonic-based referral services. The companies contract with national insurance companies, government payors, and major transportation and gaming companies, among others, to provide such services. For more information, visit www.phc-inc.com.
Statement under the Private Securities Litigation Reform Act of 1995
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. For a discussion of these factors and risks, see the company's annual report on Form 10-K for the most recently ended fiscal year.
PHC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, June 30,
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ASSETS 2008 2007
------------ ------------
Current assets: (unaudited)
Cash and cash equivalents $ 3,555,153 $ 3,395,173
Accounts receivable, net of allowance for
doubtful accounts of $2,864,042 at March
31, 2008 and $3,764,583 at June 30, 2007 6,654,422 6,524,387
Pharmaceutical receivables 1,743,179 1,942,268
Prepaid expenses 599,960 688,600
Other receivables and advances 633,366 868,628
Deferred income tax asset 1,263,214 2,015,000
------------ ------------
Total current assets 14,449,294 15,434,056
Accounts receivable, non-current 35,000 35,000
Other receivables 74,090 91,697
Property and equipment, net 2,442,574 2,121,191
Deferred financing costs, net of
amortization of $243,907 and $150,124 at
March 31, 2008 and June 30, 2007 506,587 613,865
Customer relationships, net of amortization
of $470,000 at March 31, 2008 and $380,000
at June 30, 2007, respectively 1,930,000 2,020,000
Goodwill 3,508,576 3,508,576
Other assets 4,729,491 3,465,356
------------ ------------
Total assets $ 27,675,612 $ 27,289,741
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,202,709 $ 1,261,841
Current maturities of long-term debt 1,235,822 1,134,300
Revolving credit note 1,063,738 1,518,742
Deferred revenue 153,734 433,301
Current portion of obligations under capital
leases 173,899 205,858
Accrued payroll, payroll taxes and benefits 1,606,959 1,631,693
Accrued expenses and other liabilities 1,591,838 1,702,772
------------ ------------
Total current liabilities 7,028,699 7,888,507
Long-term debt, net of current maturities 595,317 831,387
Obligations under capital leases 247,607 226,706
Deferred tax liability 93,000 93,000
------------ ------------
Total liabilities 7,964,623 9,039,600
------------ ------------
Stockholders' equity:
Preferred Stock, 1,000,000 shares
authorized, none issued or outstanding -- --
Class A common stock, $.01 par value,
30,000,000 shares authorized, 19,786,059
and 19,622,076 shares issued at March 31,
2008 and June 30, 2007, respectively 197,860 196,221
Class B common stock, $.01 par value,
2,000,000 shares authorized, 775,760 issued
and outstanding at March 31, 2008 and June
30, 2007, respectively, each convertible
into one share of Class A common stock 7,758 7,758
Additional paid-in capital 27,265,105 26,812,808
Treasury stock, 362,698 shares and 199,098
shares of Class A common stock at March 31,
2008 and June 30, 2007, respectively, at
cost (622,666) (191,700)
Accumulated deficit (7,137,068) (8,574,946)
------------ ------------
Total stockholders' equity 19,710,989 18,250,141
------------ ------------
Total liabilities and stockholders'
equity $ 27,675,612 $ 27,289,741
============ ============
PHC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2008 2007 2008 2007
----------- ----------- ----------- -----------
Revenues:
Patient care, net $10,164,933 $10,022,611 $30,439,569 $25,845,713
Pharmaceutical
studies 803,541 1,164,195 3,646,359 3,089,498
Contract support
services 1,174,455 1,131,237 3,455,597 3,397,398
----------- ----------- ----------- -----------
Total revenues 12,142,929 12,318,043 37,541,525 32,332,609
----------- ----------- ----------- -----------
Operating expenses:
Patient care
expenses 5,675,813 5,808,401 16,444,479 14,295,132
Patient care
expenses,
pharmaceutical 706,073 601,737 2,132,679 1,510,223
Cost of contract
support services 894,866 776,893 2,521,085 2,302,622
Provision for
doubtful accounts 204,203 426,812 968,771 1,226,795
Administrative
expenses 3,847,632 3,467,960 11,257,465 9,393,966
Administrative
expenses,
pharmaceutical 527,764 598,085 1,705,377 1,806,748
----------- ----------- ----------- -----------
Total operating
expenses 11,856,351 11,679,888 35,029,856 30,535,486
----------- ----------- ----------- -----------
Income from operations 286,578 638,155 2,511,669 1,797,123
----------- ----------- ----------- -----------
Other income (expense):
Interest income 62,589 52,775 147,628 119,432
Other income 8,631 (3,430) 41,202 (7,508)
Interest expense (102,733) (168,797) (351,433) (501,068)
----------- ----------- ----------- -----------
Total other
expenses, net (31,513) (119,452) (162,603) (389,144)
----------- ----------- ----------- -----------
Income before provision
for taxes 255,065 518,703 2,349,066 1,407,979
Provision for income
taxes 99,030 202,924 911,188 547,829
----------- ----------- ----------- -----------
Net income applicable
to common
shareholders $ 156,035 $ 315,779 $ 1,437,878 $ 860,150
=========== =========== =========== ===========
Basic net income per
common share $ 0.01 $ 0.02 $ 0.07 $ 0.05
=========== =========== =========== ===========
Basic weighted average
number of shares
outstanding 20,188,228 19,858,979 20,166,242 19,037,806
=========== =========== =========== ===========
Diluted net income per
common share $ 0.01 $ 0.02 $ 0.07 $ 0.04
=========== =========== =========== ===========
Diluted weighted
average number of
shares outstanding 20,477,709 20,626,118 20,485,241 19,644,201
=========== =========== =========== ===========
Company Contact: PHC, Inc. Bruce A. Shear President & CEO Tel: 978-536-2777 Investor Relations Contact: Liolios Group, Inc. Scott Kitcher or Geoffrey Plank Tel: 949-574-3860
SOURCE: Pioneer Behavioral Health