PHC Reports Fourth Quarter and Fiscal Year 2008 Results
PHC, Inc., d.b.a. Pioneer Behavioral Health (AMEX: PHC), a leading provider of inpatient and outpatient behavioral health services, reported financial results for the company’s fourth quarter and fiscal year ended June 30, 2008.
Fourth Quarter Fiscal 2008 Financial and Operating Highlights — Q4 2008 revenues of $12.8 million unchanged from same year-ago quarter, and increased 5% sequentially. — Patient care revenue increased 2% vs. Q4 2007. — Contract support revenue decreased 1% vs. Q4 2007. — Patient days increased 6.2% vs. Q4 2007. — Started admitting patients to the newly opened Seven Hills Behavioral Institute in Henderson, Nevada, which is expected to generate approximately $12 million annually, along with higher margins than PHC’s other inpatient facilities. — Secured building site for two new behavioral treatment facilities as part of new major expansion in Las Vegas, with one planned to have the capacity to generate more than $25 million annually. Fiscal Year 2008 Financial and Operating Highlights — Fiscal 2008 record revenues of $50.3 million increased $5.2 million or 12% over fiscal 2007, attributable to improvement in core patient care business. — Patient care revenue rose 13% over previous year to a record $40.9 million. — Contract support revenue increased slightly over FY2007. — Patient days increased 6.5% vs. FY2007. Key Financial Indicators (Dollars in thousands, except per-share amounts.) Q4 FY2008 Q4 FY2007 FY2008 FY2007 ——– ——— ——— ——— Total revenues $ 12,779 $ 12,795 $ 50,320 $ 45,127 Patient care revenues 10,372 10,177 40,856 36,023 Income before Pivotal impairment Loss* 342 1,421 2,691 2,829 Net income* (loss) (1,021) 822 417 1,682 Earnings (loss) per share – Basic* (0.05) 0.04 0.02 0.09 Earnings (loss) per share – Diluted* (0.05) 0.04 0.02 0.09 *Includes start-up losses from new Hospital of $652,000 for Q4 FY2008 and $765,000 for the full year FY2008.
Management Commentary
“The five percent improvement in net revenues over the previous quarter helped bring in another record breaking year in annual revenue,” said Bruce A. Shear, Pioneer’s president and CEO, “and we achieved yet another profitable quarter despite incurring more than $652,000 in startup losses of our new Seven Hills Behavioral Institute.”
“While we have been enjoying solid growth in patient care, we are also seeing an increase in utilization of our capitated contracts,” continued Shear. “This has triggered the process of renegotiating these agreements for future periods, with the potential for increased revenue and improved margins for this segment of our business.
“Now with the Seven Hills facility approaching breakeven, the divesture of Pivotal we announced yesterday, and no major construction or startups planned for the next two years, we have better clarity into the growth of our business in 2009. We expect our patient care revenue to grow more than 20% in fiscal 2009, along with an achievable goal of income before taxes of 8-10% of net revenue as we approach fiscal 2010. The visible improvement will come during the second half of 2009, as our newest projects, particularly our Capstone Academy in Detroit, come up to speed.”
Fourth Quarter 2008 Financial Results
For the fourth quarter ended June 30, 2008, total net revenue from operations totaled $12.8 million, which was virtually unchanged from the fourth quarter of fiscal 2007. Patient care segment revenue increased 2% to $10.4 million from the same year ago quarter, while contract support services revenue from the company’s Wellplace subsidiary decreased 1% to $1.1 million.
Pioneer announced yesterday a plan to divest the operations of its Pivotal Research Centers, which comprise the pharmaceutical studies segment, and focus on its core business that delivers behavioral health programs and services. The company signed a letter of intent for the purchase of Pivotal by a major research organization for approximately $4.5 million net cash to Pioneer. The company took a write down of $1,771,000 to reflect the decreased value of the intangible assets of Pivotal, which closely reflects the potential selling price of Pivotal. In the fourth quarter, the pharmaceutical studies segment revenues declined 13% to $1.3 million.
Excluding the Pivotal impairment loss, income from operations for the fourth quarter totaled $380,000, a decline of 69% from the same period a year ago. Income before taxes and the impairment loss decreased 76% to $342,000 from the same year-ago period. This decrease is primarily attributable to a $183,000 or 124% decrease in income from operations by the company’s pharmaceutical studies business segment.
Net income for the quarter (excluding the Pivotal impairment loss) was $206,000 or $0.01 per fully diluted share (based on 20.5 million fully diluted shares), which declined 75% from net income of $822,000 or $0.04 per fully diluted share (based on 20.5 million shares) for the fourth quarter of fiscal 2007. Excluding the impairment loss, this represented the company’s 25th consecutive profitable quarter, which was sustained while incurring substantial startup losses from the company’s new Seven Hills facility that started admitting patients in May of this year.
The company continued to reduce long-term debt and revolving credit note balances, decreasing these amounts from the previous quarter by $291,000 to total $2.6 million at June 30, 2008.
Full Fiscal Year 2008 Financial Results
For the full fiscal year 2008 ended June 30, 2008, total net revenue from operations increased 12% over the previous year to a record $50.3 million. This six consecutive record annual revenue is primarily attributable to the company’s patient care segment that achieved an increase of revenue of 13% over the previous year to a record $40.9 million.
Excluding the impairment loss, income from operations for the fiscal year was $2.9 million, a decline of 4% from fiscal 2007. Income before taxes and the impairment loss decreased 5% to $2.7 million as compared to fiscal 2007. This decrease is primarily the result of start up losses for Seven Hills Behavioral Institute of approximately $765,000 and an increase in the number of inpatient bed days under the company’s capitated contracts.
Net income (prior to the impairment loss of Pivotal) for the 2008 fiscal year was $1.6 million, or $0.08 per fully diluted share (based on 20.5 million fully diluted shares), a decrease of 11% compared to net income of $1.7 million, or $0.09 per fully diluted share (based on 19.7 million shares) in fiscal 2007.
The company reduced long-term debt and revolving credit note balances from the previous fiscal year by $881,900, to total $2.6 million at June 30, 2008. Cash and cash equivalents totaled $3.3 million at June 30, 2008, as compared $3.4 million at the end of previous fiscal year.
Teleconference Information
PHC will host a conference call today at 4:30 p.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 October 25, 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.
PHC, Inc., d/b/a Pioneer Behavioral Health, is a national healthcare company providing behavioral health services in four states, including substance abuse treatment facilities in Utah and Virginia, and inpatient and outpatient psychiatric facilities in Michigan and Nevada. The company also offers internet and telephonic-based referral services that includes EAP 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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended For the Years June 30, June 30, 2008 2007 2008 2007 ———– ———– ———– ———– Revenues: Patient care, net $10,372,134 $10,176,816 $40,856,077 $36,022,529 Pharmaceutical studies 1,276,431 1,474,816 4,922,790 4,564,314 Contract support services 1,130,037 1,143,236 4,541,260 4,540,634 ———– ———– ———– ———– Total revenues 12,778,602 12,794,868 50,320,127 45,127,477 ———– ———– ———– ———– Operating expenses: Patient care expenses 5,688,721 5,443,225 22,133,200 19,738,357 Patient care expenses, pharmaceutical 619,841 672,134 2,752,520 2,182,357 Cost of contract support services 869,139 799,929 3,390,224 3,102,551 Provision for doubtful accounts 342,660 706,704 1,311,431 1,933,499 Administrative expenses 4,207,079 3,328,041 15,464,544 12,722,007 Administrative expenses, pharmaceutical 671,705 632,054 2,377,082 2,438,802 Impairment loss, Pivotal 1,771,000 – 1,771,000 – ———– ———– ———– ———– Total operating expenses 14,170,145 11,582,087 49,200,001 42,117,573 ———– ———– ———– ———– Income (loss) from operations (1,391,543) 1,212,781 1,120,126 3,009,904 ———– ———– ———– ———– Other income (expense): Interest income 46,682 40,514 194,310 159,946 Other income/expense 13,527 316,107 54,729 308,599 Interest expense (97,419) (148,098) (448,852) (649,166) ———– ———– ———– ———– Total other expenses, net (37,210) 208,523 (199,813) (180,621) ———– ———– ———– ———– Income (loss) before income taxes (1,428,753) 1,421,304 920,313 2,829,283 Benefit from (provision for) income taxes 408,187 (599,171) (503,001) (1,147,000) ———– ———– ———– ———– Net income (loss) $(1,020,566) $ 822,133 $ 417,312 $ 1,682,283 =========== =========== =========== =========== Basic net income (loss) per common share $ (0.05) 0.04 0.02 0.09 =========== =========== =========== =========== Basic weighted average number of shares outstanding 20,198,572 20,039,987 20,166,659 19,287,665 =========== =========== =========== =========== Fully diluted net income (loss) per common share $ (0.05) $ 0.04 $ 0.02 $ 0.09 =========== =========== =========== =========== Fully diluted weighted average number of shares outstanding 20,489,842 20,542,040 20,464,255 19,704,697 =========== =========== =========== =========== RECONCILIATION OF NON-GAAP INCOME STATEMENTS (Unaudited) Three Months Ended For the Years June 30, June 30, 2008 2007 2008 2007 ———– ———– ———– ———– Revenues: Patient care, net $10,372,134 $10,176,816 $40,856,077 $36,022,529 Pharmaceutical studies 1,276,431 1,474,816 4,922,790 4,564,314 Contract support services 1,130,037 1,143,236 4,541,260 4,540,634 ———– ———– ———– ———– Total revenues 12,778,602 12,794,868 50,320,127 45,127,477 ———– ———– ———– ———– Operating expenses: Patient care expenses 5,688,721 5,443,225 22,133,200 19,738,357 Patient care expenses, pharmaceutical 619,841 672,134 2,752,520 2,182,357 Cost of contract support services 869,139 799,929 3,390,224 3,102,551 Provision for doubtful accounts 342,660 706,704 1,311,431 1,933,499 Administrative expenses 4,207,079 3,328,041 15,464,544 12,722,007 Administrative expenses, pharmaceutical 671,705 632,054 2,377,082 2,438,802 Impairment loss, Pivotal 1,771,000 – 1,771,000 – ———– ———– ———– ———– Total operating expenses 14,170,145 11,582,087 49,200,001 42,117,573 ———– ———– ———– ———– Income (loss) from operations (1,391,543) 1,212,781 1,120,126 3,009,904 ———– ———– ———– ———– Impairment loss, Pivotal 1,771,000 – 1,771,000 – ———– ———– ———– ———– Non-GAAP Income before Pivotal Impairment loss 379,457 1,212,781 2,891,126 3,009,904 Other income (expense): Interest income 46,682 40,514 194,310 159,946 Other income/expense 13,527 316,107 54,729 308,599 Interest expense (97,419) (148,098) (448,852) (649,166) ———– ———– ———– ———– Total other expenses, net (37,210) 208,523 (199,813) (180,621) ———– ———– ———– ———– Non-GAAP Income (loss) before income taxes and impairment loss $ 342,247 $ 1,421,304 $ 2,691,313 $ 2,829,283
Company Contact: PHC, Inc. Bruce A. Shear President & CEO Tel: 978-536-2777 Investor Relations Contact: Liolios Group, Inc. Scott Kitcher or Ron Both Email Contact Tel: 949-574-3860
SOURCE: PHC, Inc., d.b.a. Pioneer Behavioral Health