SOURCE: University General Health System, Inc.

University General Health System, Inc.

October 16, 2013 15:29 ET

University General Health System, Inc. 2012 Revenue Increases 59% to $113.2 Million

Shareholders' Equity Improves by $11.3 Million in Year Ended December 31, 2012; Company Reschedules Investor Conference Call to October 22, 2013

HOUSTON, TX--(Marketwired - Oct 16, 2013) - University General Health System, Inc. (OTCQB: UGHS), a diversified, integrated multi-specialty health delivery system, today announced its 2012 operating results, including a 59% improvement in total revenue, an increase in shareholders' equity of $11.3 million, and an increase in assets of $60.3 million. The Company will file its annual report on Form 10-K with the SEC on Monday, October 21, 2013.

The Company has rescheduled its investor conference call, which will now be held at 11:15 EDT on Tuesday, October 22, 2013, in order to allow shareholders ample time to review the Form 10-K prior to the call. Details for accessing the conference call are provided below.

FY2012 HIGHLIGHTS

  • Net patient revenue increased 52% to approximately $101.8 million, compared with approximately $67 million in the year ended December 31, 2011. The improvement in revenue was driven by increases in admissions, surgeries and adjusted patient days of 6.0%, 7.9% and 9.5%, respectively, relative to prior-year levels.

  • Resident revenue for the senior living business segment approximated $7.7 million, and support services revenue totaled $2.5 million. The Company's senior living properties achieved an overall occupancy rate of 93.1% in the year ended December 31, 2012. This was higher than the senior living industry's national average occupancy of approximately 89% for combined properties, as reported by the National Investment Center for the Senior Housing and Care Center for the fourth quarter 2012. 

  • Total revenue rose 59% to approximately $113.2 million, compared with approximately $71.2 million in 2011. Total revenue in 2012 included partial-year revenue contributions from the Company's UGH-Dallas hospital, which was acquired on December 14, 2012, and other hospital outpatient departments ("HOPDs") that were acquired during the course of the year. 

  • Patient revenue from Medicare and Medicaid, after contractual adjustments, accounted for approximately 33.0% and 37.4% of total patient revenue, and patient revenue from managed care contracts and other third-party payors accounted for approximately 75.0% and 58.9% of patient revenue, before provision for doubtful accounts, in 2012 and 2011, respectively. 

  • Total assets increased 53% to approximately $174.8 million as of December 31, 2012, compared with approximately $114.5 million at December 31, 2011.

  • Shareholders' equity improved by $11.3 million, from a negative ($0.6 million) at December 31, 2011 to approximately $10.7 million as of December 31, 2012.

  • Adjusted EBITDA improved 188% to approximately $28.3 million in 2012, versus approximately $9.8 million in 2011. (Adjusted EBITDA is a non-GAAP measure that is reconciled with GAAP results in a table at the end of this press release.).

  • Operating income increased 664% to approximately $19.1 million in 2012, versus approximately $2.5 million in the previous year, primarily due to the implementation of an aggressive internal and external growth strategies that had a significant positive impact upon revenues, along with successful cost-control initiatives.

  • The Company recorded a net loss attributable to common shareholders of ($3.9 million), or ($0.01) per share, in the most recent year, compared with a net loss attributable to common shareholders of ($2.6 million), or ($0.01) per share, in 2011. 

MANAGEMENT COMMENTS

"Our 59% increase in total revenue during 2012 was primarily attributable to a 9.5% increase in adjusted patient days and an increase in the number of surgeries performed at University General Hospital in Houston, combined with acquisitions that furthered the development and expansion of our health delivery system," commented Dr. Hassan Chahadeh, M.D., Chairman and Chief Executive Officer of University General Health System, Inc. "Our Adjusted EBITDA of $28.3 million was equivalent to approximately 25% of revenue, which substantially exceeded the EBITDA margins for our publicly traded competitors. We believe this is a direct reflection of our business model, which seeks to provide the highest quality of care within the most cost-effective and least restrictive environment."

"University General Health System entered 2013 as a much stronger company, well-positioned to execute its strategic growth strategy. Supported by a stronger balance sheet, our objectives for 2013 include the pursuit of additional acquisitions to build out our regional health care system in the Houston and Dallas markets. We are actively seeking to expand into additional new markets, as well. Longer-term, we plan to capitalize on opportunities created by the current regulatory and reimbursement environment, through acquisitions and facilities expansion and development. Our goal is to build diversified, integrated, multi-specialty health care delivery networks comprised of flagship acute care hospitals supported by complementary free-standing HOPDs and senior living facilities in an expanding number of markets. Utilizing our Support Services segment for revenue cycle management and concierge hospitality services, we believe the Company can capitalize on accretive acquisition opportunities. Based upon currently available information, we expect the Company's financial performance to improve substantially in 2013," concluded Dr. Chahadeh.

Investor Conference Call

Management of University General Health System will host a conference call Tuesday, October 22, 2013 at 11:15 a.m. EDT. Shareholders and other interested parties may participate in the conference call by dialing 877-374-8416 (international participants dial 412-317-6716) and requesting participation in the "University General Health System Conference Call" at least five minutes before 11:15 am EDT. 

A replay of the conference call will be available one hour after the call through October 30, 2013 at 9:00 am EDT by dialing 877-344-7529 (international participants dial 412-317-0088) and entering the conference ID# 10035630. 

NON-GAAP FINANCIAL MEASURES (ADJUSTED EBITDA)

Adjusted EBITDA is a measure of operating performance that is not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). Adjusted EBITDA should not be considered in isolation or as a substitute for net income (loss), income from operations or cash flows provided by or used in operations, as determined in accordance with GAAP. Adjusted EBITDA is a key measure of the Company's operating performance used by management to focus on operating performance and management without mixing in items of income and expense that relate to the financing and capitalization of the business. The Company defines Adjusted EBITDA as net income (loss) before provision (benefit) for income taxes, non-operating (income) expense items, (gain) loss on sale of assets, depreciation and amortization (including non-cash impairment charges), amortization of deferred gain, non-cash stock-based compensation expense.

The Company believes Adjusted EBITDA is useful to investors in evaluating our performance, results of operations and financial position for the following reasons:

  • It is helpful in identifying trends in day-to-day performance because the items excluded have little or no significance to day-to-day operations;
  • It provides an assessment of controllable expenses and affords management the ability to make decisions that are expected to facilitate meeting current financial goals and achieve optimal financial performance; and
  • It is an indication of whether adjustments to current spending decisions are necessary. 

ABOUT UNIVERSITY GENERAL HEALTH SYSTEM, INC.

University General Health System, Inc. ("University General") is a diversified, integrated multi-specialty health care provider that delivers physician-centric, high quality patient-oriented services by providing timely, innovative health solutions that are uniquely competitive, efficient, and adaptive in today's health care delivery environment. The Company currently operates two hospitals, three ambulatory surgical centers, a number of diagnostic imaging, physical therapy and sleep clinics, and a hyperbaric wound care center in the Houston and Dallas metropolitan areas. Also, University General owns three senior living facilities, manages six senior living facilities, and owns a Support Services company that provides revenue cycle and luxury facilities management services.

The Company is headquartered in Houston, Texas, and its common stock trades on the OTCQB under the symbol "UGHS".

FORWARD-LOOKING STATEMENTS

The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements related to the future financial performance of the Company. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, successful execution of growth strategies, product development and acceptance, the impact of competitive services and pricing, general economic conditions, and other risks and uncertainties described in the Company's periodic filings with the Securities and Exchange Commission.

(Financial Highlights Follow)

   
University General Health System, Inc.  
Consolidated Balance Sheets  
             
    December 31,  
    2012     2011  
ASSETS                
Current Assets                
Cash and cash equivalents   $ 1,188,230     $ 538,018  
Accounts receivable, less allowance for doubtful accounts of $21,422,475 and $7,070,327     20,941,005       10,913,361  
Inventories     1,458,089       1,908,177  
Receivables from related parties     -       658,764  
Prepaid expenses and other assets     3,986,378       1,275,104  
Current deferred taxes     1,729,150       -  
  Total Current Assets     29,302,852       15,293,424  
                 
Long-Term Assets                
Property, equipment and leasehold improvements, net     96,965,889       66,437,316  
Intangible assets, net     5,919,000       7,649,000  
Deferred tax assets     659,405       -  
Goodwill     39,271,829       22,199,874  
Other non-current assets, net     2,721,587       2,922,308  
  Total Long-Term Assets     145,537,710       99,208,498  
                 
  Total Assets   $ 174,840,562     $ 114,501,922  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                
Current Liabilities                
Accounts payable   $ 9,699,411     $ 11,874,720  
Payables to related parties     2,133,053       2,493,088  
Accrued expenses     11,938,589       7,516,940  
Accrued acquisition cost     -       1,007,380  
Taxes payable     1,610,836       4,171,826  
Income tax payable     11,813,198       -  
Deferred revenue     238,846       314,876  
Lines of credit     -       8,451,025  
Notes payable, current portion     26,089,305       28,982,331  
Notes payable to related parties, current portion     1,853,380       2,798,783  
Capital lease obligations, current portion     564,747       5,943,685  
Capital lease obligations to related party, current portion     262,053       239,409  
Derivative liability     4,897,053       -  
  Total Current Liabilities     71,100,471       73,794,063  
                 
Long-Term Liabilities                
Lines of credit, less current portion     12,579,933       -  
Notes payable, less current portion     46,947,860       8,459,474  
Notes payable to related parties, less current portion     -       1,983,514  
Capital lease obligations, less current portion     387,095       34,893  
Capital lease obligations to related party, less current portion     30,541,396       30,803,450  
  Total Long-Term Liabilities     90,456,284       41,281,331  
                 
Total Liabilities     161,556,755       115,075,394  
                 
Commitments and contingencies                
                 
Series C, convertible preferred stock, $0.001 par value, 20,000,000 shares authorized, 3,379 and 0 shares issued and outstanding, respectively ($1,000 stated value)     2,566,308
      -
 
                 
Shareholders' Equity and (Deficit)                
Preferred, par value $0.001, 20,000,000 shares authorized, Preferred stock Series B - 3,000 shares issued and outstanding    
3
     
3
 
Common stock, par value $0.001, 480,000,000 shares authorized, 343,459,294 and 283,440,226 shares issued and outstanding, respectively    
343,459
     
283,440
 
Additional paid-in-capital     65,419,774       49,078,223  
Shareholders' receivables     (2,828,251 )     (2,219,068 )
Accumulated deficit     (57,186,915 )     (53,049,030 )
  Total shareholders' equity (deficit)     5,748,070       (5,906,432 )
Noncontrolling interest     4,969,429       5,332,960  
  Total equity (deficit)     10,717,499       (573,472 )
  Total Liabilities and Shareholders' Equity (Deficit)   $ 174,840,562     $ 114,501,922  
                   
                   
   
University General Health System, Inc.  
Consolidated Statements of Income  
             
    Year Ended December 31,  
    2012     2011  
Revenues                
  Patient service revenues, net of contractual adjustments   $ 112,184,538     $ 68,302,619  
  Provision for doubtful accounts     (10,384,706 )     (1,332,434 )
  Net patient service revenue less provision for doubtful accounts     101,799,832       66,970,185  
  Senior living revenues     7,712,750       3,564,514  
  Support services revenues     2,501,449       465,639  
  Other revenues     1,209,227       174,211  
    Total revenues     113,223,258       71,174,549  
                 
Operating expenses                
  Salaries, wages and benefits     39,627,334       29,157,012  
  Medical supplies     16,194,606       13,202,829  
  Management fees (includes related party fees of $0 and $461,814, respectively)     -       5,346,456  
  General and administrative expenses (includes related party expenses of $1,921,501 and $5,944,441, respectively)     32,766,205       18,078,907  
  Gain on extinguishment of liabilities     (3,644,068 )     (4,441,449 )
  Depreciation and amortization (includes related party expenses of $685,162 and $685,162, respectively)     9,215,713       7,336,710  
    Total operating expenses     94,159,790       68,680,465  
                     
Operating income     19,063,468       2,494,084  
Other income (expense)                
Interest expense, net of interest income of $85,000 and $67,068 (includes related party interest expense $2,289,287 and $2,513,922)     (6,111,582 )     (4,938,603 )
Other income (expense)     (381,026 )     500,000  
Direct investor expense     (6,853,356 )     -  
Change in fair market value of derivatives     (4,937,170 )     -  
Income (loss) before income tax     780,334       (1,944,519 )
  Income tax expense     4,564,195       443,862  
Loss before noncontrolling interest     (3,783,861 )     (2,388,381 )
Net income (loss) attributable to noncontrolling interests     363,531       (182,814 )
Net loss attributable to the Company   $ (3,420,330 )   $ (2,571,195 )
                 
Less: Cash dividend-Convertible Preferred C Stock     (46,921 )     -  
Less: Accretion non-cash dividend-Convertible Preferred C Stock     (512,190 )     -  
                 
Net loss attributable to common shareholders   $ (3,979,441 )   $ (2,571,195 )
                 
Basic and diluted loss per share data:                
                 
  Basic loss per common share   $ (0.01 )   $ (0.01 )
                 
  Basic weighted average shares outstanding     311,995,342       254,401,405  
                 
  Diluted loss per common share   $ (0.01 )   $ (0.01 )
                 
  Diluted weighted average shares outstanding     311,995,342       254,401,405  
                   
                   
   
University General Health System, Inc.  
Consolidated Statements of Cash Flows  
             
    Year Ended December 31,  
    2012     2011  
Cash flows from operating activities:                
  Net loss   $ (3,783,861 )   $ (2,388,381 )
  Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                
    Depreciation and amortization     9,215,713       7,336,710  
    Provision for doubtful accounts     10,384,706       1,332,434  
    Gain on sale of assets and other, net     (37,451 )     (500,000 )
    Gain on extinguishment of liabilities     (3,644,068 )     (4,441,449 )
    Deferred income tax benefits     (2,388,555 )     -  
    Warrants issuance costs     392,609       -  
    Direct investor expense     6,853,356       -  
    Change in fair market value of derivatives     4,937,170       -  
  Net changes in operating assets and liabilities:                
    Accounts receivable     (18,869,744 )     (3,567,069 )
    Related party receivables and payables     298,729       202,681  
    Inventories     484,349       (142,442 )
    Prepaid expenses and other assets     (2,108,971 )     (587,189 )
    Accounts payable, accrued expenses and taxes payable     6,583,479       (77,842 )
    Deferred revenues     (76,030 )     290,501  
      Net cash provided by (used in) operating activities     8,241,431       (2,542,046 )
Cash flows from investing activities:                
  Additions and acquisitions to property, equipment and leasehold improvements     (5,850,056 )     (831,107 )
  Business acquisitions, net of cash acquired     (2,180,203 )     211,910  
  Investments in unconsolidated affiliates     (249,493 )     (187,323 )
      Net cash used in investing activities     (8,279,752 )     (806,520 )
Cash flows from financing activities:                
  Proceeds from revolving credit facility borrowings     39,253,933       -  
  Payments of revolving credit facility borrowings     (26,674,000 )     -  
  Distributions to noncontrolling interests     (172,762 )     -  
  Redemption of common stock     -       (50,000 )
  Issuance of common stock     5,403,832       7,298,000  
  Issuance of preferred stock     3,794,669       -  
  Dividend paid on Preferred C Convertible Stock     (158,444 )     -  
  Borrowings under notes payable     12,890,617       2,717,662  
  Payments on notes payable     (16,945,280 )     (5,779,381 )
  Payments on debt issuance costs     (1,511,251 )     (425,000 )
  Borrowings under notes payable to related party     34,976       3,944,633  
  Payments on notes payable to related party     (453,057 )     (2,138,171 )
  Payments on capital leases     (6,084,266 )     (3,835,837 )
  Payments on capital leases obligation to related party     (239,409 )     (137,076 )
  Payments on line of credits     (8,451,025 )     -  
      Net cash provided by financing activities     688,533       1,594,830  
                 
Net (decrease) increase in cash and cash equivalents     650,212       (1,753,736 )
Cash and cash equivalents:                
  Beginning of period     538,018       2,291,754  
  End of period   $ 1,188,230     $ 538,018  
Supplemental disclosures of cash flow information:                
  Interest paid   $ 6,194,924     $ 1,975,813  
  Income taxes paid   $ 385,966     $ 628,040  
Supplemental noncash investing activities:                
  Property and equipment additions financed   $ 819,236     $ -  
Supplemental noncash financing activities:                
  Exchange of debt for common stock on February 2011   $ -     $ 3,500,000  
  Issuance of common stock on February 2011   $ -     $ 2,219,068  
  Issuance of common stock to affiliate for termination of service agreement   $ -     $ 1,000,000  
  Transfer of accrued interest, account payables and capital lease obligation to debt obligation   $ -     $ 5,177,912  
  Noncash consideration paid for acquisitions   $ 37,164,490     $ 26,337,192  
  Issuance of common stock in 2012   $ 1,237,682     $ -  
  Transfer from related party and account payables to debt obligations   $ 2,510,836     $ -  
  Issuance on conversions of preferred stock   $ 1,324,600     $ -  
  Derivative ceases to exist   $ 7,702,031     $ -  
  Dividend on Preferred C Convertible Stock   $ 46,921     $ -  
                   
                   
       
    Adjusted EBITDA 2012  
    Twelve Months Ended
December 31, 2012
 
    2012     2011  
Net income (loss) attributable to the Company   $ (3,420,330 )   $ (2,571,195 )
(Income) loss attributable to noncontrolling interests   $ (363,531 )   $ 182,814  
Provision (benefit) for income taxes     4,564,195       443,862  
Other non-operating expense (income)     381,026       (500,000 )
Interest expense:                
  Debt and lease obligations     6,196,582       5,005,671  
Interest (income)     (85,000 )     (67,068 )
Direct investor expense     6,853,356       -  
Change in fair value of derivatives     4,937,170       -  
Depreciation and amortization     9,215,713       7,336,710  
Adjusted EBITDA   $ 28,279,181     $ 9,830,794  
                 
                 

Contact Information

  • For Additional Information, Please Contact:

    Donald Sapaugh
    President
    (713) 375-7557 x 105
    dsapaugh@ughs.net

    or

    R. Jerry Falkner, CFA
    RJ Falkner & Company, Inc.
    Investor Relations Counsel
    (830) 693-4400
    info@rjfalkner.com