SOURCE: First Choice Healthcare Solutions, Inc.

First Choice Healthcare Solutions, Inc.

August 16, 2016 08:30 ET

First Choice Healthcare Solutions Reports Continued Profitability and Revenue Growth in Second Quarter 2016

Three Month Revenues Increased 77% to $7.65 Million, up From $4.32 Million; Six Month Revenues Rose 118% to $14.90 Million From $6.83 Million

Q216 Adjusted EBITDA* Increased to $838,000 From $124,000; Adjusted EBITDA* for the First Half of 2016 Rose to $2.06 Million From $772,000

MELBOURNE, FL--(Marketwired - Aug 16, 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 Orthopaedics, including spine care and treatment, today announced its second quarter results for the three and six months ended June 30, 2016.

Chris Romandetti, Chairman, President and CEO of First Choice, stated, "During the second quarter, our Company continued to benefit from high levels of execution at each of the Centers of Medical Excellence comprising our Melbourne, Florida platform. Our success in recruiting first rate Orthopaedic and Spine surgeons to our Melbourne practices, along with the addition of The B.A.C.K. Center and Crane Creek Surgery Center to our Melbourne platform, is helping to drive strong growth across several key metrics, including revenue, adjusted EBITDA and net income. Moreover, our strong cash position and operating leverage have begun to yield greater cost efficiencies and compelling expansion opportunities that should collectively serve to unlock strategic and financial benefits for our Company in coming quarters. We look forward to providing detailed insight into our results and growth initiatives on this morning's call."

Financial Highlights for Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015:

  • Total revenues rose 77% to a record $7,653,100 -- up from $4,324,315. The increase was mainly attributable to the integration of The B.A.C.K. Center ("TBC") and Crane Creek Surgery Center ("CCSC") into the First Choice platform, effective May 1, 2015 and October 1, 2015, respectively; as well as the addition of two new Board Certified Orthopaedic surgeons to the clinical staff at First Choice Medical Group -- Dr. Kenneth Sands and Dr. Raymond DeLorenzi -- late in the second quarter of this year.
    • Net patient service revenues rose 85% to $7.02 million from $3.80 million.

  • On a non-GAAP basis, adjusted EBITDA* rose 578% to $838,268 from $123,671. 

  • Net income increased to $153,137, or $0.01 earnings per basic and diluted share, from a net loss of $496,729, or $0.03 loss per basic and diluted share.

Financial Highlights for Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015:

  • Total revenues increased 118% to $14,894,853 from $6,829,482.
    • Net patient service revenues climbed 126% to $13,638,403 from $6,044,103.

  • On a non-GAAP basis, adjusted EBITDA* totaled $2,055,475, representing a 166% increase over $772,173 reported for the first half of 2015. With the sale of Marina Towers factored, adjusted EBITDA* rose to $11,267,821.

  • With the one-time gain from the sale of Marina Towers, net income climbed to $9,720,078, or $0.42 earnings per basic share and $0.36 earnings per diluted share, compared to a net loss of $466,040, or $0.03 loss per basic and fully diluted share. Notwithstanding the one-time gain from the building sale, net income totaled $507,732, or $0.02 earnings per basic and diluted share. 

Balance Sheet Highlights as of June 30, 2016 Compared to December 31, 2015

  • Cash totaled $7,785,602, up from cash and restricted cash of $1,954,412. 
  • Accounts receivable increased to $8,369,428 from $6,623,894.
  • Total liabilities dropped 46% to $10,558,074 from $19,585,255.
  • Total stockholders' equity climbed 360% to $13,969,630 from $3,038,733.

Conference Call and Webcast

First Choice will host a conference call and webcast for the investment community this morning, beginning at 11:00 AM Eastern Standard Time to discuss its financial results and recent corporate developments. 

Participants can register and access the conference call by dialing 866-682-6100 (U.S. and Canada dial-in) or 862-255-5401 (for international dial-in). 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/ir-calendar and clicking on "Second Quarter 2016 Conference Call and Webcast." 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. 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."

Restatement of First Quarter 2016 Adjusted EBITDA
In the press release dated May 17, 2016 relating to the Company's first quarter 2016 financial results, the Company provided Non-GAAP Financial Measures relating to its Adjusted EBITDA results. However, it was discovered that the Adjusted EBITDA results failed to add back net interest expenses in its reported calculations. The corrected Adjusted EBITDA calculations for the first quarter 2016 periods are provided in the charts below.

For additional details relating to First Choice's first 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
         
    June 30,   December 31,
    2016   2015
    (unaudited)    
ASSETS                
Current assets                
Cash (amounts related to VIE of $1,300,391 and $1,556,303)   $ 7,785,602     $ 1,594,998  
Cash-restricted     -       359,414  
Accounts receivable, net (amounts related to VIE of $5,324,747 and $4,544,308)     8,369,428       6,623,894  
Employee loans (amounts related to VIE of $1,084,406 and $636,293)     1,084,406       672,293  
Prepaid and other current assets (amounts related to VIE of $151,147 and $183,465)     221,156       316,773  
Capitalized financing costs, current portion (amounts related to VIE of $-0- and $1,317)     -       39,533  
  Total current assets     17,460,592       9,606,905  
                 
Property, plant and equipment, net of accumulated depreciation of $1,058,933 and $3,075,648 (amounts related to VIE of $735,079 and $773,808)     2,644,783       8,613,502  
                 
Other assets                
Goodwill (amount relating to VIE of $899,465)     899,465       899,465  
Deferred costs, net of amortization of $376,418 and $215,096     2,850,009       3,011,331  
Patient list, net of accumulated amortization of $85,000 and $75,000     215,000       225,000  
Patents, net of accumulated amortization of $47,750 and $38,200     238,750       248,300  
Investments (amounts related to VIE of $22,005 and $16,914)     22,005       16,914  
Deferred tax asset     181,029       -  
Deposits     16,071       2,571  
  Total other assets     4,422,329       4,403,581  
                 
Total assets   $ 24,527,704     $ 22,623,988  
                 
                 
LIABILITIES AND EQUITY                
Current liabilities                
Accounts payable and accrued expenses (amounts related to VIE of $2,278,994 and $2,319,056)   $ 3,305,834     $ 3,937,244  
Accounts payable, related party (amount related to VIE of $251,588)     251,588       251,588  
Stock based payable     601,833       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 $4,128 and $10,341)     513,506       7,652,941  
Unearned revenue     26,354       42,704  
Deferred rent, short term portion (amount related to VIE of $237,620 and $118,810)     237,620       118,810  
  Total current liabilities     8,057,288       16,840,802  
                 
Long term debt:                
Deposits held     58,234       67,432  
Notes payable, long term portion     275,125       535,822  
Deferred rent, long term portion (amount related to VIE of $2,141,198 and $2,141,199)     2,167,427       2,141,199  
  Total long term debt     2,500,786       2,744,453  
                 
Total liabilities     10,558,074       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 June 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     (9,554,839 )     (19,274,917 )
Total stockholders' equity attributable to First Choice Healthcare Solutions, Inc.     12,863,321       2,119,743  
Non-controlling interest (note 15)     1,106,309       918,990  
  Total equity     13,969,630       3,038,733  
                 
Total liabilities and equity   $ 24,527,704     $ 22,623,988  
                 
 
FIRST CHOICE HEALTHCARE SOLUTIONS, INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
                 
    Three months ended June 30,   Six months ended June 30,
    2016   2015   2016   2015
Revenues:                                
Patient Service Revenue   $ 7,290,456     $ 3,810,299     $ 14,168,121     $ 6,095,587  
Provision for bad debts     (267,194 )     (6,260 )     (529,718 )     (51,484 )
Net patient service revenue less provision for bad debts     7,023,262       3,804,039       13,638,403       6,044,103  
Rental Revenue     629,838       520,276       1,256,450       785,379  
  Total Revenue     7,653,100       4,324,315       14,894,853       6,829,482  
                                 
Operating expenses:                                
Salaries and benefits     3,139,042       2,125,481       5,919,611       3,071,601  
Other operating expenses     1,573,376       563,422       2,760,650       1,014,907  
General and administrative     2,535,741       1,649,870       4,941,618       2,203,154  
Depreciation and amortization     136,800       144,417       435,750       284,926  
  Total operating expenses     7,384,959       4,483,190       14,057,629       6,574,588  
                                 
Net income (loss) from operations     268,141       (158,875 )     837,224       254,894  
                                 
Other income (expense):                                
Gain on sale of property and improvements     23,378       -       9,212,346       -  
Miscellaneous income (expense)     46,812       40,369       105,669       41,119  
Amortization financing costs     (329 )     (19,229 )     (15,654 )     (39,915 )
Interest expense, net     (51,053 )     (358,994 )     (232,188 )     (722,138 )
  Total other expense     18,807       (337,854 )     9,070,173       (720,934 )
                                 
Net income (loss) before provision for income taxes     286,949       (496,729 )     9,907,397       (466,040 )
                                 
Income taxes (benefit)     -       -       -       -  
                                 
Net income (loss)     286,949       (496,729 )     9,907,397       (466,040 )
                                 
Non-controlling interest (note 15)     (133,812 )     -       (187,319 )     -  
                                 
NET INCOME (LOSS) ATTRIBUTABLE TO FIRST CHOICE HEALTHCARE SOLUTIONS, INC.   $ 153,137     $ (496,729 )   $ 9,720,078     $ (466,040 )
                                 
Net income (loss) per common share, basic   $ 0.01     $ (0.03 )   $ 0.42     $ (0.03 )
                                 
Net income (loss) per common share, diluted   $ 0.01     $ (0.03 )   $ 0.36     $ (0.03 )
                                 
Weighted average number of common shares outstanding, basic     23,862,943       18,999,475       23,374,625       18,533,559  
                                 
Weighted average number of common shares outstanding, diluted     27,196,277       18,999,475       26,707,959       18,533,559  
                                 
 
FIRST CHOICE HEALTHCARE SOLUTIONS, INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
    Six Months Ended June 30,
    2016   2015
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net Income (loss)   $ 9,907,397     $ (466,040 )
Adjustments to reconcile net income (loss) to cash (used in) provided by operating activities:                
Depreciation and amortization     435,750       338,700  
Amortization of financing costs     15,654       39,915  
Bad debt expense     529,718       51,484  
Gain on sale of property     (9,212,346 )     -  
Common stock issued in connection with loan extension     92,000       227,000  
Stock based compensation     334,433       139,750  
Changes in operating assets and liabilities:                
Accounts receivable     (2,275,252 )     (556,635 )
Prepaid expenses and other     95,617       237,431  
Restricted funds     359,414       (54,563 )
Employee loans     (412,113 )     (103,654 )
Accounts payable and accrued expenses     (650,425 )     160,359  
Settlement payable     (600,000 )     -  
Deposits     (22,698 )     (5,469 )
Deferred rent     145,038       39,603  
Unearned income     (16,350 )     22,113  
  Net cash (used in) provided by operating activities     (1,274,163 )     69,994  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Cash from variable interest entity     -       679,673  
Proceeds from sale of property     15,113,497       -  
Purchase of equipment     (149,507 )     (40,065 )
  Net cash provided by investing activities     14,963,990       639,608  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
(Repayments) proceeds from advances     (43,082 )     129,000  
Proceeds from lines of credit     372,636       355,656  
Net payments on notes payable     (7,828,777 )     (418,780 )
  Net cash (used in) provided by financing activities     (7,499,223 )     65,876  
                 
Net increase in cash and cash equivalents     6,190,604       775,478  
Cash and cash equivalents, beginning of period     1,594,998       279,087  
                 
Cash and cash equivalents, end of period   $ 7,785,602     $ 1,054,565  
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                
Cash paid during the period for interest   $ 237,943     $ 594,211  
Cash paid during the period for taxes   $ -     $ -  
                 
Supplemental Disclosure on non-cash investing and financing activities:                
Common stock issued in settlement of accrued expenses   $ 597,067     $ 15,000  
Common stock issued in settlement of convertible note and interest   $ -     $ 811,200  
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)
 
    As Originally Reflected in Q116 Results Press Release
    Three Months Ended March 31,
    2016   2015
Net Income (Loss) Attributable to FCHS   $ 9,566,941     $ 30,689
Gain on sale of property and improvements     (9,188,968 )     -
Depreciation and amortization     298,950       140,509
Amortization of financing costs     15,325       20,686
Bad debt expense     262,524       45,224
Stock-based compensation     81,300       48,250
Interest expense, net              
Adjusted EBITDA   $ 1,036,072     $ 285,358
               
    Restated
    Three Months Ended March 31,
    2016   2015
Net Income (Loss) Attributable to FCHS   $ 9,566,941     $ 30,689
Gain on sale of property and improvements     (9,188,968 )     -
Depreciation and amortization     298,950       140,509
Amortization of financing costs     15,325       20,686
Bad debt expense     262,524       45,224
Stock-based compensation     81,300       48,250
Interest expense, net     181,135       363,144
Adjusted EBITDA   $ 1,217,207     $ 648,502
               
         
    Three Months Ended June 30,   Six Months Ended June 30,
    2016   2015   2016   2015
Net Income (Loss) Attributable to FCHS   $ 153,137     $ (496,729 )   $ 9,720,078     $ (466,040 )
Gain on sale of property and improvements     (23,378 )     -       (9,212,346 )     -  
Depreciation and amortization     136,800       144,417       435,750       284,926  
Amortization of financing costs     329       19,229       15,654       39,915  
Bad debt expense     267,194       6,260       529,718       51,484  
Stock-based compensation     253,133       91,500       334,433       139,750  
Interest expense, net     51,053       358,994       232,188       722,138  
Adjusted EBITDA   $ 838,268     $ 123,671     $ 2,055,475     $ 772,173  
                                 
 
FIRST CHOICE HEATLHCARE SOLUTIONS, INC.
RECONCILIATION OF NON-GAAP ADJUSTED EBITDA PERFORMANCE WITH
GAIN ON SALE OF PROPERTY INCLUDED
(Unaudited)
 
    As Originally Reflected in Q116 Results Press Release
    Three Months Ended March 31,
    2016   2015
Net Income (Loss) Attributable to FCHS   $ 9,566,941   $ 30,689
Depreciation and amortization     298,950     140,509
Amortization of financing costs     15,325     20,686
Bad debt expense     262,524     45,224
Stock-based compensation     81,300     48,250
Interest expense, net            
Adjusted EBITDA   $ 10,225,040   $ 285,358
             
    Restated
`   Three Months Ended March 31,
    2016   2015
Net Income (Loss) Attributable to FCHS   $ 9,566,941   $ 30,689
Depreciation and amortization     298,950     140,509
Amortization of financing costs     15,325     20,686
Bad debt expense     262,524     45,224
Stock-based compensation     81,300     48,250
Interest expense, net     181,135     363,144
Adjusted EBITDA   $ 10,406,175   $ 648,502
             
         
    Three Months Ended June 30,   Six Months Ended June 30,
    2016   2015   2016   2015
Net Income (Loss) Attributable to FCHS   $ 153,137   $ (496,729 )   $ 9,720,078   $ (466,040 )
Depreciation and amortization     136,800     144,417       435,750     284,926  
Amortization of financing costs     329     19,229       15,654     39,915  
Bad debt expense     267,194     6,260       529,718     51,484  
Stock-based compensation     253,133     91,500       334,433     139,750  
Interest expense, net     51,053     358,994       232,188     722,138  
Adjusted EBITDA   $ 861,646   $ 123,671     $ 11,267,821   $ 772,173  
                             

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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