SOURCE: First Choice Healthcare Solutions, Inc.

First Choice Healthcare Solutions, Inc.

November 15, 2016 08:30 ET

First Choice Healthcare Solutions Announces Third Quarter 2016 Results

MELBOURNE, FL--(Marketwired - Nov 15, 2016) - First Choice Healthcare Solutions, Inc. (OTCQB: FCHS) ("FCHS," "First Choice" or the "Company"), one of the nation's only non-physician-owned, publicly traded healthcare services companies focused on the delivery of total musculoskeletal solutions with an emphasis on Orthopaedic and Spine care, today reported its financial results for the three and nine months ended September 30, 2016.

Financial Highlights for the Comparable Nine Month Reporting Periods in 2016 and 2015, respectively:

  • Total revenues up 72% to $22.56 million from $13.12 million
  • Non-GAAP adjusted EBITDA* increased to $3.51 million from $2.62 million
  • Notwithstanding the one-time $9.21 million gain from the sale of Marina Towers and other property and improvements, net income attributable to First Choice totaled $1.05 million, or $0.04 earnings per diluted share, compared to approximately $165,200, or $0.01 earnings per diluted share

Financial Highlights for the Comparable Three Month Reporting Periods in 2016 and 2015, respectively:

  • Total revenues increased 22% to $7.70 million, up from $6.29 million
  • Non-GAAP adjusted EBITDA* totaled $1.45 million, compared to $1.85 million
  • Net income attributable to First Choice totaled approximately $545,000, or $0.02 earnings per diluted share, compared to approximately $631,281, or $0.03 earnings per diluted share

As of September 30, 2016, cash totaled $6.59 million, accounts receivable were $9.48 million and total stockholders' equity attributable to First Choice was $13.41 million. This compared to cash of $1.60 million, restricted cash of $360,000, accounts receivable of $6.62 million and total stockholders' equity attributable to First Choice of $2.12 million as of the end of December 2015.

Chris Romandetti, President and Chief Executive Officer of First Choice, stated, "While we are very pleased with our success in perpetuating revenue growth year-over-year, we are particularly gratified that our strategies to strengthen operating margins on total revenues has also continued to be positively impactful. Moreover, recruitment of new best-in-class physicians to our Space Coast, Florida care delivery platform continues to advance very well. Expansion initiatives being implemented in our ancillary services channels are also moving forward, while our Medical Centers of Excellence continue to sustain and further strengthen our overall profitability. And, given First Choice's strong working capital position, we are well positioned to assess and pursue a broad range of non-dilutive options for capital to finance even more dynamic growth in the future."

"All things considered, we are very pleased with our year-to-date progress. Looking ahead, we intend to persist in executing smart, purpose-driven business-building strategies that will allow us to achieve even more pronounced revenue and earnings growth in the coming year while notably enhancing sustainable long term value for our fellow shareholders," concluded Romandetti.

Public Conference Call & Webcast
First Choice's executive management team will host a conference this morning, beginning at 11:00 AM. Participants can register and access the conference call by dialing toll-free 866-682-6100. The conference call will also be webcasted, which can be accessed through First Choice's investor relations website by navigating to http://ir.myfchs.com/ and clicking on "Third Quarter 2016 Conference Call and Webcast." Participants will be required to register to access the call. For those who cannot listen to the live broadcast, a replay will be available shortly after the call on the investor relations page of First Choice's website, found at http://ir.myfchs.com/.

*About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use non-GAAP EBITDA, which is factored by adding back any non-cash or non-recurring gain or expense to the Net Income Attributable to First Choice. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We use this non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that this non-GAAP financial measure provides meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results. We believe that both management and investors benefit from referring to this non-GAAP financial measure in assessing our performance and when planning, forecasting, and analyzing future periods. This non-GAAP financial measure also facilitates management's internal comparisons to our historical performance and liquidity. We believe this non-GAAP financial measure is useful to investors both because they allow for greater transparency with respect to a key metric used by management in its financial and operational decision-making. For more information on this non-GAAP financial measure, please see the table captioned "Reconciliation of Non-GAAP Adjusted EBITDA Performance."

For additional details relating to First Choice's third quarter 2016 results, please refer to the Interim Report on Form 10-Q filed with the U.S. Securities and Exchange Commission and found at www.sec.gov.

   
   
FIRST CHOICE HEALTHCARE SOLUTIONS, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
             
    September 30,     December 31,  
    2016     2015  
    (unaudited)        
ASSETS                
Current assets                
Cash (amounts related to VIE of $1,445,090 and $1,556,303)   $ 6,591,035     $ 1,594,998  
Cash-restricted     -       359,414  
Accounts receivable, net (amounts related to VIE of $5,558,273 and $4,544,308)     9,477,069       6,623,894  
Employee loans (amounts related to VIE of $509,350 and $636,293)     783,009       672,293  
Prepaid and other current assets (amounts related to VIE of $269,352 and $183,465)     446,721       316,773  
Capitalized financing costs, current portion (amounts related to VIE of $-0- and $1,317)     -       39,533  
  Total current assets     17,297,834       9,606,905  
                 
Property, plant and equipment, net of accumulated depreciation of $1,065,517 and $3,075,648 (amounts related to VIE of $717,557 and $773,808)     2,629,309       8,613,502  
                 
Other assets                
Goodwill (amount relating to VIE of $899,465)     899,465       899,465  
Deferred costs, net of amortization of $457,079 and $215,096     2,769,348       3,011,331  
Patient list, net of accumulated amortization of $90,000 and $75,000     210,000       225,000  
Patents, net of accumulated amortization of $52,525 and $38,200     233,975       248,300  
Investments (amounts related to VIE of $22,005 and $16,914)     22,005       16,914  
Deferred tax asset     181,029       -  
Deposits     2,571       2,571  
  Total other assets     4,318,393       4,403,581  
                 
Total assets   $ 24,245,536     $ 22,623,988  
                 
                 
LIABILITIES AND EQUITY                
Current liabilities                
Accounts payable and accrued expenses (amounts related to VIE of $1,751,197 and $2,319,056)   $ 2,827,742     $ 3,937,244  
Accounts payable, related party (amount related to VIE of $251,588)     251,588       251,588  
Stock-based payable     253,991       1,198,900  
Advances     -       43,082  
AMT tax payable     181,029       -  
Settlement payable     -       600,000  
Line of credit, short term (amount related to VIE of $439,524 and $416,888)     2,939,524       2,566,888  
Note payable, related party, current portion (amount related to VIE of $-0- and $428,645)     -       428,645  
Notes payable, current portion (amount related to VIE of $1,021 and $10,341)     517,666       7,652,941  
Unearned revenue     43,650       42,704  
Deferred rent, short term portion (amount related to VIE of $237,620 and $118,810)     237,620       118,810  
  Total current liabilities     7,252,810       16,840,802  
                 
Long term debt:                
Deposits held     41,930       67,432  
Notes payable, long term portion     143,856       535,822  
Deferred rent, long term portion (amount related to VIE of $2,200,603 and $2,141,199)     2,253,060       2,141,199  
  Total long term debt     2,438,846       2,744,453  
                 
Total liabilities     9,691,656       19,585,255  
                 
Equity                
Preferred stock, $0.01 par value; 1,000,000 shares authorized, Nil issued and outstanding     -       -  
Common stock, $0.001 par value; 100,000,000 shares authorized, 24,238,613 and 22,867,626 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively     24,239       22,868  
Common stock subscription     -       175,000  
Additional paid-in capital     22,393,921       21,196,792  
Accumulated deficit     (9,009,899 )     (19,274,917 )
Total stockholders' equity attributable to First Choice Healthcare Solutions, Inc.     13,408,261       2,119,743  
Non-controlling interest (note 14)      1,145,619       918,990  
  Total equity      14,553,880       3,038,733  
                 
Total liabilities and equity   $  24,245,536     $ 22,623,988  
                 
   
FIRST CHOICE HEALTHCARE SOLUTIONS, INC  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(unaudited)  
             
    Three months ended September 30,     Nine months ended September 30,  
    2016     2015     2016     2015  
Revenues:                                
Patient Service Revenue   $ 7,403,084     $ 5,775,986     $ 21,571,205     $ 11,871,574  
Provision for bad debts     (319,319 )     -       (849,037 )     (51,485 )
Net patient service revenue less provision for bad debts     7,083,765       5,775,986       20,722,168       11,820,089  
Rental Revenue     585,978       516,136       1,842,428       1,301,515  
  Total Revenue     7,669,743       6,292,122       22,564,596       13,121,604  
                                 
Operating expenses:                                
Salaries and benefits     3,158,172       2,240,109       9,077,783       5,311,710  
Other operating expenses     1,405,489       670,923       4,166,139       1,685,830  
General and administrative     2,404,996       2,234,647       7,346,614       4,437,801  
Depreciation and amortization     195,821       273,263       631,571       558,189  
  Total operating expenses     7,164,478       5,418,942       21,222,107       11,993,530  
                                 
Net income from operations     505,265       873,180       1,342,489       1,128,074  
                                 
Other income (expense):                                
Gain on sale of property and improvements     -       -       9,212,346       -  
Miscellaneous income (expense)     135,544       (18,400 )     241,213       22,719  
Amortization financing costs     -       (20,592 )     (15,654 )     (60,507 )
Interest expense, net     (56,560 )     (202,907 )     (288,748 )     (925,045 )
  Total other expense     78,984       (241,899 )     9,149,157       (962,833 )
                                 
Net income before provision for income taxes     584,249       631,281       10,491,646       165,241  
                                 
Income taxes (benefit)     -       -       -       -  
                                 
Net income     584,249       631,281       10,491,646       165,241  
                                 
Non-controlling interest     (39,309 )     -       (226,628 )     -  
                                 
NET INCOME ATTRIBUTABLE TO FIRST CHOICE HEALTHCARE SOLUTIONS, INC.   $ 544,940     $ 631,281     $ 10,265,018     $ 165,241  
                                 
Net income per common share, basic   $ 0.02     $ 0.03     $ 0.44     $ 0.01  
                                 
Net income per common share, diluted   $ 0.02     $ 0.03     $ 0.39     $ 0.01  
                                 
Weighted average number of common shares outstanding, basic     24,238,613       20,958,877       23,664,723       19,249,783  
                                 
Weighted average number of common shares outstanding, diluted     27,751,946       22,992,211       26,998,057       21,583,117  
   
   
FIRST CHOICE HEALTHCARE SOLUTIONS, INC  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(unaudited)  
             
    Nine months ended September 30,  
    2016     2015  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net Income   $ 10,491,646     $ 165,241  
Adjustments to reconcile net income to cash (used in) provided by operating activities:                
Depreciation and amortization     631,571       558,189  
Amortization of financing costs     15,654       60,507  
Bad debt expense     849,037       51,485  
Gain on sale of property     (9,212,346 )     -  
Common stock issued in connection with loan extension     -       227,000  
Note payable issued in settlement of litigation     -       50,749  
Stock-based compensation     668,591       859,991  
Changes in operating assets and liabilities:                
Accounts receivable     (3,702,212 )     (1,678,545 )
Prepaid expenses and other     (129,948 )     203,699  
Restricted funds     359,414       (77,378 )
Employee loans     (110,716 )     (19,728 )
Accounts payable and accrued expenses     (1,718,516 )     140,254  
Settlement payable     (600,000 )     -  
Deposits     (25,502 )     (5,469 )
Deferred rent     230,671       39,603  
Unearned income     946       3,941  
  Net cash (used in) provided by operating activities     (2,251,710 )     579,539  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Cash from variable interest entity     -       679,673  
Proceeds from sale of property     15,113,497       -  
Payment of acquisition deposit     -       (141,352 )
Purchase of equipment     (239,418 )     (92,609 )
  Net cash provided by investing activities     14,874,079       445,712  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
(Repayments) proceeds from advances     (43,082 )     431,406  
Payments on lines of credit     372,636       (331,162 )
Net payments on notes payable     (7,955,886 )     (653,023 )
  Net cash used in financing activities     (7,626,332 )     (552,779 )
                 
Net increase in cash and cash equivalents     4,996,037       472,472  
Cash and cash equivalents, beginning of period     1,594,998       279,087  
                 
Cash and cash equivalents, end of period   $ 6,591,035     $ 751,559  
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                
Cash paid during the period for interest   $ 288,748     $ 925,045  
Cash paid during the period for taxes   $ -     $ -  
                 
Supplemental Disclosure on non-cash investing and financing activities:                
Common stock issued in settlement of accrued expenses   $ 481,900     $ 15,000  
Common stock issued for future services   $ -     $ 1,153,777  
Common stock issued in settlement of related party advances   $ -     $ 655,407  
Common stock issued in settlement of convertible note and interest   $ -     $ 2,236,907  
Fair value of options issued to acquire management control of variable interest entity   $ -     $ 3,226,427  
                 
                 
FIRST CHOICE HEATLHCARE SOLUTIONS, INC.
RECONCILIATION OF NON-GAAP ADJUSTED EBITDA PERFORMANCE
(Unaudited)
 
    Three Months Ended September 30,   Nine Months Ended September 30,
    2016   2015   2016     2015
Net Income Attributable to FCHS   $ 544,940   $ 631,281   $ 10,265,018     $ 165,241
Gain on sale of property and improvements     -     -     (9,212,346 )     -
Depreciation and amortization     195,822     273,263     631,571       558,189
Amortization of financing costs     -     20,592     15,654       60,507
Bad debt expense     319,319     -     849,037       51,485
Stock-based compensation     322,158     720,241     720,174       859,991
Interest expense, net     56,560     202,907     288,748       925,045
Adjusted EBITDA   $ 1,438,799   $ 1,848,284   $ 3,557,856     $ 2,620,458
                           
                           

About First Choice Healthcare Solutions, Inc.
Headquartered in Melbourne, Florida, First Choice Healthcare Solutions (FCHS) is implementing a defined growth strategy aimed at expanding its network of non-physician-owned medical centers of excellence, which concentrate on treating patients in the following specialties: Orthopaedics, Spine Surgery, Neurology, Interventional Pain Management and related diagnostic and ancillary services in key expansion markets throughout the Southeastern U.S. Serving Florida's Space Coast, the Company's flagship integrated platform currently administers over 100,000 patient visits each year and is comprised of First Choice Medical Group, The B.A.C.K. Center and Crane Creek Surgery Center. For more information, please visit www.myfchs.com, www.myfcmg.com, www.thebackcenter.net and www.cranecreeksurgerycenter.com.

Safe Harbor Statement
Certain information set forth in this news announcement may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of First Choice Healthcare Solutions, Inc. Such forward-looking statements are based on current expectations, estimates and projections about the Company's industry, management beliefs and certain assumptions made by its management. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Information concerning factors that could cause the Company's actual results to differ materially from those contained in these forward-looking statements can be found in the Company's periodic reports on Form 10-K and Form 10-Q, and in its Current Reports on Form 8-K, filed with the Securities and Exchange Commission. Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise to reflect future events or circumstances or reflect the occurrence of unanticipated events.

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