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Second Quarter Fiscal 2009 Highlights
-- Patient care revenue totaled $10.1 million, off less than one percent
from the same year-ago quarter
-- Signed agreement for sale of Pivotal Research Centers for a total
consideration of $5.0 million, of which $2.0 million is contingent on
future revenue
-- Established rate increases for major contracts effective January 1,
2009
Key Financial Indicators
(Dollars in thousands, except per-share amounts.)
Q2 FY2009 Q2 FY2008
----------- ------------
Total revenues* $ 11,020 $ 11,273
Patient care revenues 10,106 10,147
Net income (loss)* (404) 524
Earnings (loss) per share - Basic & Diluted* (0.02) 0.03
*From continuing operations. Income/loss includes start-up losses from
Seven Hills Behavioral Institute and Capstone Academy in the second fiscal
quarter of approximately $1.1 million.
Second Quarter 2009 Financial Results
For the second fiscal quarter ended December 31, 2008, net revenue from operations totaled $11.0 million (excluding discontinued operations). This represented a decrease of 2.2% from $11.3 million in the second quarter of fiscal 2008.
Patient care segment revenue totaled $10.1 million, off less than one percent from the same year-ago quarter. The slight decrease in patient care revenue was due primarily to the effect of general economic conditions offset partially by the contribution of newly opened operations.
Contract support services revenue from the company's Wellplace subsidiary decreased 19% to $0.9 million. This decrease is due to the expiration of a smoking cessation contract with a government contractor. The company has submitted a bid to continue and expand the contract should the contractor decide to continue the program. PHC expects to increase contract support service revenue through new contracts for EAP (Employee Assistance Programs) and smoking cessation programs.
Income from continuing operations was a loss of $843,000, as compared to income of $834,000 in the same period a year ago. The loss includes more than $790,000 in startup losses related to the company's Seven Hills Behavioral Institute and approximately $307,000 from startup expenses at Capstone Academy.
The net loss from continuing operations was $404,000 or ($0.02) per basic and fully diluted share (based on 20.1 million basic and fully diluted shares), which compares to net income from continuing operations in the same year ago quarter of $524,000 or $0.03 per basic and fully diluted share (based on 20.1 million basic shares and 20.5 million diluted shares). The loss includes approximately $1.1 million in aforementioned new facility startup expenses, plus expenses related to increased utilization of capitated contracts in the company's Harmony division. Losses at Harmony are not expected to continue due to improved margins from significant rate increases from two major renegotiated contracts which became effective January 1, 2009.
Second Quarter 2009 Operational Highlights
Pioneer announced at the end of December 2008 the final agreement for the sale of Pivotal Research Centers, which comprises the pharmaceutical studies segment, to Premier Research Group PLC for total consideration of up to $5.0 million. The divestiture of this business will allow Pioneer to focus on its core business of delivering behavioral health programs and services. This transaction is expected to close by the end of the current month.
During the quarter, the company advanced the development of its Capstone Academy in Detroit, Michigan, and in January 2009 officially opened this new facility. Capstone represents the next phase of PHC's efforts to provide expanded residential treatment services to adjudicated youth in the Detroit metropolitan area. In combination with the company's Detroit Behavioral Institute (DBI), this facility, if fully utilized, could double PHC's inpatient capacity in the area and has the potential to generate additional annual revenue of more than $5.0 million. With the addition of Capstone, the company will have 14 treatment centers across five states that offer behavioral health services.
Management Commentary
"As expected, this was a transitional quarter as we continued the startup at Capstone and worked toward CMS Medicare certification for Seven Hills," said Bruce A. Shear, Pioneer's president and CEO. "Excluding the startup losses of our new facilities in Henderson and Detroit, once again this quarter we continued our long tradition of operating profitably. In fact, this amount improved approximately $234,000 over the previous quarter and improved $388,000 over the same period a year ago."
"We also significantly advanced our managed care business in the Las Vegas area during the quarter with the renegotiation of capitated contracts which are structured to increase revenue and improve margins in this quarter," continued Shear. "As these new rates come into effect and our new facilities come more up to speed, we anticipate a return to company-wide profitability before the end of the current quarter.
"Given our progress in many areas this quarter, we continue to believe our fundamentals and prospects for growth have never been stronger. Our efforts to focus on our core business of patient care allowed us to sustain our revenue levels even in these trying economic times that have impacted other companies far more than us. Demand for our services remains strong and our industry is prospering. The recent signing of the Mental Health Parity bill is expected to serve as another strong market driver -- one from which we are in an ideal position to benefit substantially over the years to come."
Fiscal 2009 Guidance
Based on the continued expectation that the company's patient care revenue maintains its forecasted growth of more than 20% in fiscal 2009, management continues to see an achievable goal of income before taxes of 8-10% of net revenue as it approaches fiscal 2010.
"As we have indicated in our prior reporting," said Shear, "due to the substantial investments we have made in new facilities, we expect the most visible improvement of our performance in 2009 will come during the second half when our newest projects, like Capstone Academy, come up to speed."
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.
Date: Friday, February 13, 2009 Time: 10:00 a.m. Eastern time (7:00 a.m. Pacific time) Dial-In Number: 1-800-862-9098 International: 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. A replay of the call will be available after 1:00 p.m. Eastern time on the same day and until March 13, 2009:
Toll-free replay number: 1-800-695-1624 International replay number: 1-402-530-9026 (No passcode 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.
PHC, Inc., d/b/a Pioneer Behavioral Health, is a national healthcare company providing behavioral health services in five states, including substance abuse treatment facilities in Utah and Virginia, and inpatient and outpatient psychiatric facilities in Michigan, Pennsylvania, and Nevada. The company also offers internet and telephonic-based referral services that includes employee assistance programs and critical incident services. Contracted services with government agencies, national insurance companies, and major transportation and gaming companies cover more than one million individuals. Pioneer helps people gain and maintain physical, spiritual and emotional health through delivering the highest quality, most culturally responsive and compassionate behavioral health care programs and 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 STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
-------------------------- --------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
Revenues:
Patient care,
net $ 10,105,942 $ 10,147,332 $ 20,665,438 $ 20,302,549
Contract support
services 914,374 1,125,245 2,046,783 2,253,229
------------ ------------ ------------ ------------
Total revenues 11,020,316 11,272,577 22,712,221 22,555,778
------------ ------------ ------------ ------------
Operating expenses:
Patient care
expenses 5,906,307 5,472,592 12,064,464 10,768,666
Cost of contract
support services 771,505 823,571 1,599,284 1,626,219
Provision for
doubtful
accounts 308,329 342,342 754,143 764,568
Administrative
expenses 4,877,390 3,799,897 9,572,364 7,409,833
------------ ------------ ------------ ------------
Total
operating
expenses 11,863,531 10,438,402 23,990,255 20,569,286
------------ ------------ ------------ ------------
Income (loss) from
operations (843,215) 834,175 (1,278,034) 1,986,492
------------ ------------ ------------ ------------
Other income
(expense):
Interest income 44,206 52,504 95,475 85,039
Other income 24,888 18,472 55,742 32,571
Interest expense (96,306) (102,854) (177,948) (216,753)
------------ ------------ ------------ ------------
Total other
income
(expenses),
net (27,212) (31,878) (26,731) (99,143)
------------ ------------ ------------ ------------
Income (loss)
before taxes (870,427) 802,297 (1,304,765) 1,887,349
Income tax
(benefit)
provision (466,634) 277,807 (506,053) 739,064
------------ ------------ ------------ ------------
Income (Loss) from
continuing
operations (403,793) 524,490 (798,712) 1,148,285
Discontinued
operations - net
of tax provision -
Pivotal (1,312,280) (42,658) (1,250,064) 133,558
------------ ------------ ------------ ------------
Net income (loss)
applicable to
common
shareholders $ (1,716,073) $ 481,832 $ (2,048,776) $ 1,281,843
============ ============ ============ ============
Basic net income
(loss) per common
share
Continuing
operations $ (0.02) $ 0.03 $ (0.04) $ 0.05
Discontinued
operations (0.07) (0.01) (0.06) 0.01
------------ ------------ ------------ ------------
$ (0.09) $ 0.02 $ (0.10) $ 0.06
============ ============ ============ ============
Basic weighted
average number of
shares outstanding 20,131,080 20,143,636 20,154,583 20,140,208
Diluted net income
(loss) per common
share
Continuing
Operations $ (0.02) $ 0.03 $ (0.04) $ 0.05
Discontinued
operations (0.07) (0.01) (0.06) 0.01
------------ ------------ ------------ ------------
$ (0.09) $ 0.02 $ (0.10) $ 0.06
============ ============ ============ ============
Diluted weighted
average number of
shares outstanding 20,131,080 20,485,294 20,154,583 20,494,963
PHC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, June 30,
------------ ------------
2008 2008
------------ ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,003,243 $ 3,142,226
Accounts receivable, net of allowance for
doubtful accounts of $2,382,826 at
December 31, 2008 and $2,230,371 at
June 30, 2008 6,490,297 6,439,733
Other receivables - third party 170,633 --
Prepaid expenses 336,382 491,503
Prepaid income taxes 432,651 269,074
Other receivables and advances 729,011 623,295
Deferred income tax asset - current 2,339,077 967,999
Assets held for sale - Pivotal 3,437,578 5,313,993
------------ ------------
Total current assets 14,938,872 17,247,823
Accounts receivable, non-current 35,000 35,000
Other receivables 62,073 71,889
Property and equipment, net 5,047,243 4,382,421
Deferred income tax asset - non-current 472,000 528,840
Deferred financing costs, net of amortization
of $363,174 and $286,413 at December 31,
2008 and June 30, 2008 409,067 470,829
Goodwill 969,098 969,098
Other assets 2,652,884 2,784,965
------------ ------------
Total assets $ 24,586,237 $ 26,490,865
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,346,251 $ 1,318,421
Current maturities of long-term debt 653,465 651,379
Revolving credit note 1,124,319 977,203
Current portion of obligations under capital
leases 122,582 170,285
Accrued payroll, payroll taxes and benefits 1,699,403 1,528,640
Accrued expenses and other liabilities 1,312,753 1,434,983
Liabilities held for sale - Pivotal 762,676 1,128,470
------------ ------------
Total current liabilities 7,021,449 7,209,381
Long-term debt, net of current maturities 1,181,447 393,705
Obligations under capital leases 184,442 229,274
------------ ------------
Total liabilities 8,387,338 7,832,360
------------ ------------
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, 19,825,899
and 19,806,147 shares issued at December
31, 2008 and June 30, 2008, respectively 198,259 198,061
Class B common stock, $.01 par value,
2,000,000 shares authorized, 775,080 and
775,672 issued and outstanding at December
31, 2008 and June 30, 2008, respectively,
each convertible into one share of Class A
common stock 7,751 7,757
Additional paid-in capital 27,477,729 27,388,821
Treasury stock, 689,290 and 387,698 shares
of Class A common stock at December 31, 2008
and June 30, 2008, respectively, at cost (1,185,846) (685,916)
Accumulated deficit (10,298,994) (8,250,218)
------------ ------------
Total stockholders' equity 16,198,899 18,658,505
------------ ------------
Total liabilities and stockholders'
equity $ 24,586,237 $ 26,490,865
============ ============
Company Contact: PHC, Inc. Bruce A. Shear President & CEO Tel: 978-536-2777 Investor Relations Contact: Liolios Group, Inc. Ron Both or Cody Slach Email Contact Tel: 949-574-3860
SOURCE: Pioneer Behavioral Health
http://www2.marketwire.com/mw/emailprcntct?id=7A10F9D8CB22488B