SOURCE: Pioneer Behavioral Health

November 08, 2007 16:05 ET

PHC Reports Financial Results for First Quarter of Fiscal 2008

Revenues Up 26% Over Same Year-Ago Quarter

PEABODY, MA--(Marketwire - November 8, 2007) - PHC, Inc., d.b.a. Pioneer Behavioral Health (AMEX: PHC), a leading provider of inpatient and outpatient behavioral health services and pharmaceutical research, announced financial results for the first quarter ended September 30, 2007.

Q1 2008 Financial and Operational Highlights

--  Record first quarter revenues of $12.7 million, increased 26% vs. Q1
    '07.
--  Record first quarter net income of $0.8 million or $0.04 per share,
    increased 182% vs. Q1 '07.
--  First quarter patient care revenue increased 29% vs. Q1 '07.
--  Patient days increased 5% primarily due to an increase of 20
    additional beds vs. Q1 '07.
--  Balance sheet continued to strengthen: Total liabilities reduced by
    $1.5 million vs. Q4 '07, primarily due to revolving debt reduction.
--  Construction of the Seven Hills Behavioral Institute near Las Vegas,
    Nevada remains on track to open in early 2008. Seven Hills is projected to
    contribute annualized revenue of approximately $12 million, with higher
    margins than PHC's other inpatient facilities.
--  Company purchased 150,000 PHC treasury shares in the open market.
    

Key Financial Indicators
(In thousands, except per-share amounts.)

Q1 2008 vs. Q1 2007                   Q1 2008   Q1 2007    Change   %Change
Consolidated revenues                $ 12,704  $ 10,062  $  2,642       26%
Patient care revenues                $ 10,143  $  7,876  $  2,267       29%
Net Income Before Taxes              $  1,307  $    466  $    841      180%
Net Income                           $    800  $    283  $    517      182%
Earnings per share - Basic           $   0.04  $   0.02  $   0.02      100%
Earnings per share - Diluted         $   0.04  $   0.01  $   0.03      300%

First Quarter Financial Results

For the three months ended September 30, 2007 and compared to the same quarter a year ago:

Total net revenue from operations increased 26% to $12.7 million, as compared to $10.1 million for the three months ended September 30, 2006. This increase is primarily attributable to an increase in net revenue of the company's patient care segment, which was up 29% to $10.1 million from $7.9 million in the same year-ago period. Revenue from the pharmaceutical studies segment increased 35% to $1.4 million as compared to $1.1 million for the same quarter last year. Contract support services revenue provided by the company's Wellplace subsidiary remained relatively stable at $1.1 million.

Income from operations for the quarter totaled $1.4 million, an increase of 151% from the $0.6 million reported for the same period last year. Net income before taxes increased 180% to a record $1.3 million from $0.5 million for the same year-ago period.

Net income for the quarter was $0.8 million, or $0.04 per fully diluted share (based on 20.6 million fully diluted shares), an increase of 182% compared to net income of $0.3 million, or $0.01 per fully diluted share (based on 19.3 million shares) for the first quarter last year.

Total operating expenses for the quarter increased 19% to $11.3 million from the $9.5 million reported during the first quarter of last year. Included in this increase were expenses of approximately $100,000 related to new programs and services associated with new contracts and the Seven Hills Behavioral Institute.

The company's provision for doubtful accounts decreased to $0.4 million for the quarter, compared to $0.5 million in the same quarter last year. The percentage of bad debt expense to net patient care revenue for the quarter was 4% as compared to 6% for the same period last year.

Patient care operating expenses increased 31% as compared to the same year-ago period, reflecting the expenses related to new major contracts. Pharmaceutical patient care expenses increased 25% and contract support expenses decreased 4%. The increase in patient care expense reflects the company's investments in its Las Vegas market initiatives, including the Seven Hills project and the company's 10-year, $80 million agreement with Behavioral Healthcare Options announced in December 2006.

"This was the best first quarter in company history," said Bruce A. Shear, Pioneer's president and CEO. "It was driven by a strong 29% expansion of our patient care revenues. The increase in our net profit versus the same quarter last year, once again demonstrates the return on our investment in our Las Vegas market expansion. This occurred despite incurring another $100,000 in expenses designed to enhance future returns. We continue to expect the income expansion trend to be sustained as our new Seven Hills facility comes on line in 2008. Given this as well as our days sales outstanding and debt balances declining, we remain in a strong position for growth."

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: 1-800-683-1525
International callers: 1-973-872-3197
Conference ID#: 9414911

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 December 8, 2007:

Toll-Free Replay number: 1-877-519-4471
International Replay number: 1-973-341-3080
Replay PIN #: 9414911

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. These companies contract with national insurance companies, government payors, and major transportation and gaming companies, among others, to provide such services. For more information, please 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

                                              September 30,    June 30,
                                                   2007          2007
ASSETS                                        -------------  -------------
                                               (unaudited)
Current assets:
  Cash and cash equivalents                   $   2,759,303  $   3,395,173
  Accounts receivable, net of allowance for
   doubtful accounts of $2,878,902 at
   September 30, 2007 and $3,764,585 at
   June 30, 2007                                  6,694,412      6,524,387
  Pharmaceutical receivables                      1,723,159      1,942,268
  Prepaid expenses                                  687,390        688,600
  Other receivables and advances                    960,527        868,628
  Deferred income tax asset                       1,596,796      2,015,000
                                              -------------  -------------
    Total current assets                         14,421,587     15,434,056
  Accounts receivable, non-current                   35,000         35,000
  Other receivable                                   85,619         91,697
  Property and equipment, net                     2,371,375      2,121,191
  Deferred financing costs, net of
   Amortization of $179,136 at September 30,
   2007 and $143,377 June 30, 2007                  578,105        613,865
  Customer relationships, net of amortization
   of $410,000 at September 30, 2007 and
   $380,000 at June 30, 2007                      1,990,000      2,020,000
  Goodwill                                        3,508,576      3,508,576
  Other assets                                    3,305,609      3,465,356
                                              -------------  -------------
    Total assets                              $  26,295,871  $  27,289,741
                                              =============  =============
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                            $   1,322,824  $   1,261,841
  Current maturities of long-term debt            1,120,110      1,134,300
  Revolving credit note                             562,496      1,518,742
  Deferred revenue                                  270,492        433,301
  Current portion of obligations under capital
   leases                                           195,024        205,858
  Accrued payroll, payroll taxes and benefits     1,744,386      1,631,693
  Accrued expenses and other liabilities          1,458,130      1,702,772
                                              -------------  -------------
    Total current liabilities                     6,673,462      7,888,507
  Long-term debt                                    623,455        831,387
  Obligations under capital leases                  187,612        226,706
  Deferred tax liability                             93,000         93,000
                                              -------------  -------------
    Total liabilities                             7,577,529      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, 19,622,076
   and 19,622,076 shares issued at September
   30, 2007 and June 30, 2007, respectively         196,221        196,221

  Class B common stock, $.01 par value,
   2,000,000 shares authorized, 775,760 issued
   and outstanding at September 30, 2007 and
   June 30, 2007, respectively, each
   Convertible into one share of Class A
   common Stock                                       7,758          7,758
  Additional paid-in capital                     26,875,513     26,812,808
  Treasury stock, 349,098 shares of Class A
   common stock at September 30, 2007 and
   199,098 at June 30, 2007, at cost               (586,215)      (191,700)
Accumulated deficit                              (7,774,935)    (8,574,946)
                                              -------------  -------------
Total stockholders' equity                       18,718,342     18,250,141
                                              -------------  -------------
Total liabilities and stockholders' equity    $  26,295,871  $  27,289,741
                                              =============  =============



                        PHC, INC.  AND SUBSIDIARIES

                    Consolidated Statements of Income

                                                    Three Months Ended
                                                      September 30,
                                                    2007          2006
                                                ------------  ------------

Revenues:
  Patient care, net                             $ 10,143,435  $  7,876,432
  Pharmaceutical studies                           1,420,965     1,051,383
  Contract support services                        1,139,766     1,134,391
                                                ------------  ------------
    Total revenues                                12,704,166    10,062,206
                                                ------------  ------------
Operating expenses:
  Patient care expenses                            5,296,074     4,054,966
  Patient care expenses, pharmaceutical              609,792       486,937
  Cost of contract support services                  802,648       838,555
  Provision for doubtful accounts                    422,226       452,525
  Administrative expenses                          3,609,936     2,996,141
  Administrative expenses, pharmaceutical            571,856       679,108
                                                ------------  ------------
    Total operating expenses                      11,312,532     9,508,232
                                                ------------  ------------

Income from operations                             1,391,634       553,974
                                                ------------  ------------
  Other income (expense):
    Interest income                                   32,535        32,849
    Other (expense) income                            14,099          (943)
    Interest expense                                (131,381)     (119,830)
                                                ------------  ------------

      Total other expenses, net                      (84,747)      (87,924)
                                                ------------  ------------

Income before provision for taxes                  1,306,887       466,050
Provision for income taxes                           506,876       182,767
                                                ------------  ------------

Net income                                      $    800,011  $    283,283
                                                ============  ============

Basic net income per common share               $       0.04  $       0.02
                                                ============  ============

Basic weighted average number of shares
 outstanding                                      20,136,781    18,514,142
                                                ============  ============

Diluted net income per common share             $       0.04  $       0.01
                                                ============  ============

Diluted weighted average number of shares
 outstanding                                      20,601,828    19,296,638
                                                ============  ============

Contact Information

  • Company Contact:
    PHC, Inc.
    Bruce A. Shear
    President & CEO
    Tel: 978-536-2777

    Investor Relations Contact:
    Liolios Group, Inc.
    Ron Both
    Tel: 949-574-3860