Exhibit 99
PHC, INC. ANNOUNCES FINANCIAL RESULTS FOR
THIRD QUARTER OF FISCAL 2004
FOR IMMEDIATE RELEASE
Company Contact: Investor Relations Contact:
PHC, Inc. Hayden Communications, Inc.
Bruce A. Shear Matthew Hayden
978-536-2777 843-272-4653
>> 3rd quarter revenues increase 10% compared to third quarter of 2003
>> Research activities reorganized under Pivotal Research Centers name
Peabody, MA, May 13, 2004 -- PHC, Inc., d.b.a. Pioneer Behavioral Health (OTC
Bulletin Board: PIHC), a leading provider of inpatient and outpatient behavioral
health services, today announced financial results for the third quarter and
nine-month period ended March 31, 2004. The results for the quarter and
nine-month period do not include the results from Pivotal Research Centers, the
operations of which Pioneer acquired in April, 2004. The results include
$947,500 in one-time expenses related to the acquisition of Pivotal, and the
disposition of a lawsuit the Company inherited from a previous acquisition.
Without these one time expenses the Company would have reported an operating
profit for both reporting periods.
Revenues for the third quarter increased 10 percent to $6.5 million from the
$5.9 million reported in the fiscal third quarter of 2003. Revenue from the
Company's Wellplace division increased 86 percent to $733,411 from $393,328
reported for the third quarter of last year. This increase in revenue is due to
the start of the Michigan call center contract in March 2003 and the smoking
cessation contract for the State of Kansas, which began in July 2003. Net loss
applicable to common shareholders for the quarter, which includes a number of
one time expenses, was $845,265, or $0.06 per diluted share, compared to net
income of $130,811, or $0.01 per diluted share reported in the year ago period.
Revenues for the nine-month period ended March 31, 2004 increased nine percent
to $19.1 million from $17.5 million for the comparable nine-month period in
fiscal 2003. Net loss applicable to common shareholders for the nine months was
$789,457, or $0.06 per diluted share, compared to net income of $797,956 or
$0.05 per diluted share in the comparable period last year.
The one-time expenses related to the settlement and interest expense totaled
$947,500. Exclusive of these one-time events, the Company would have reported
net income for the quarter of $102,235, or $0.01 per share.
"The events which transpired this quarter were necessary to properly position us
for both near and long-term success," commented Bruce A. Shear, Pioneer's
chairman and chief executive. "We have successfully financed and completed the
acquisition of Pivotal, which increases the size and profitability of the
Company and significantly strengthens our pharmaceutical research division. We
also successfully resolved the lawsuit brought against our North Point facility,
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which will allow us to appropriately focus all of our attention on operations
and strategic initiatives to enhance long-term shareholder value. The settlement
and associated legal fees, coupled with the costs related to the debt we
initially planned to use for the Pivotal acquisition have certainly impacted our
results for the period, but I have no doubt whatsoever that the Company is
stronger today."
One-Time Expenses:
During the third quarter the company spent $370,000 on legal fees, and $463,000
in a settlement regarding the medical malpractice lawsuit brought against a
clinician who worked for the company's North Point Mental Health subsidiary
prior to Pioneer's acquisition of North Point. As a result of this situation,
the Company incurred $1,031,249 of one-time expenses during the nine months
ended March 31, 2004.
The Company also experienced higher than normal interest expense during the
quarter related to the Company's initial plan to finance the acquisition of
Pivotal primarily through debt, which resulted in the up-front expensing of
$114,500 of financing costs, the amount that would have been amortized over the
term of the loan. In order to fund the acquisition, it was determined that
equity financing was more favorable for the company and its shareholders. As a
result of this one-time expense, interest expense and financing costs for the
quarter increased 72 percent to $219,116. Exclusive of this one-time expense,
interest expense for the quarter would have decreased 18 percent to $104,616.
Mr. Shear continued, "We continued to see strong growth in our Wellplace
division, which benefited from the rollout of our services contract with Wayne
County, Michigan, along with implementation of a new smoking cessation program
in Kansas. The Company was recently notified that its contract with the State of
Nebraska will end in May, as it has not been funded by the State for a new term.
Our next initiative will be the expansion of our facilities and service centers
in Michigan. While revenue from our pharmaceutical research operations declined
during the quarter, we believe this trend will be reversed under the proven
leadership of Dr. Louis Kirby and Mr. Michael Colombo and the Pivotal team. We
have elected to consolidate our research operations under the Pivotal brand
name, and we have confidence that the team will significantly broaden our
opportunities in the pharmaceutical research segment."
Capital Resources:
Subsequent to the end of the quarter, the company offered for sale an aggregate
of up to 1,918,196 shares of its Class A Common Stock and warrants to purchase
up to 479,549 shares of Class A Common Stock, providing proceeds of $2,110,016
for the use in the acquisition of Pivotal Research Centers, LLC and for working
capital when it was determined that debt financing terms would not be the most
favorable for the Company.
As a result of the financing, the Company's balance sheet remained strong. Cash
increased from $494,991 to $963,737. Shareholder's equity increased 11 percent,
to $2.1 million, up from $1.9 million as of June 30, 2003.
The Company continued to reduce its long-term debt obligation. Long-term debt at
the end of March was $2.3 million, down from $2.9 million as of June 30, 2003.
About Pioneer Behavioral Health
Pioneer Behavioral Health's core business provides inpatient and outpatient
behavioral healthcare services. The company contracts with national insurance
companies, major transportation and gaming companies to provide behavioral
health services. Pioneer also owns and operates Wellplace.com, a leading
Internet-based provider of behavioral health services to consumers and
professionals. For more information, please visit our web site at
www.phc-inc.com or www.haydenir.com.
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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 (or during the associated
conference call). These factors and risks are discussed in the company's annual
report on Form 10-KSB for the years ended June 30, 2003 and 2002, copies of
which were filed with the Securities and Exchange Commission, and in our
quarterly reports on Form 10-Q filed with the Securities and Exchange Commission
since October 2003.
- tables follow -
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PHC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended
March 31, March 31,
2004 2003 2004 2003
_________________________________________________________
Revenues:
Patient care, net $ 5,583,625 $ 5,341,816 $16,323,589 $15,863,921
Contract support services 733,411 393,328 2,240,550 943,513
Pharmaceutical study 155,152 136,690 500,044 711,957
__________ ____________ ___________ ___________
Total revenues 6,472,188 5,871,834 19,064,183 17,519,391
__________ ____________ ___________ ___________
Operating expenses:
Patient care expenses 3,201,426 2,638,772 9,033,540 7,877,313
Cost of contract support services 546,667 354,632 1,667,041 855,862
Provision for doubtful accounts 227,196 196,195 1,113,033 818,652
Website expenses 73,191 54,770 219,537 168,345
Administrative expenses 3,096,804 2,369,205 7,446,760 6,631,883
__________ ____________ ___________ ___________
Total operating expenses 7,145,284 5,613,574 19,479,911 16,352,055
__________ ____________ ___________ ___________
Income (loss) from operations (673,096) 258,260 (415,728) 1,167,336
__________ ____________ ___________ ___________
Other expenses:
Interest income 20,888 3,119 26,070 10,943
Other income 26,059 22,830 77,472 75,206
Interest expense and financing
costs (219,116) (127,324) (466,150) (419,455)
__________ ____________ ___________ ___________
Total other expenses (172,169) (101,375) (362,608) (333,306)
__________ ____________ ___________ ___________
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Income (loss) before provision for income
taxes (845,265) 156,885 (778,336) 834,030
Provision for income taxes -- 26,074 11,121 36,074
__________ ____________ ___________ ___________
Income (loss) applicable to common
shareholders * $ (845,265) $ 130,811 $ (789,457) $ 797,956
__________ ____________ ___________ ___________
Income (loss) per share information:
Basic income per common share $ (0.06) $ 0.01 $ (0.06) $ 0.06
__________ ____________ ___________ ___________
Basic weighted average number of
shares outstanding 14,402,988 14,099,929 14,149,261 13,963,138
__________ ____________ ___________ ___________
Diluted income per common share $ (0.06) $ 0.01 $ (0.06) $ 0.05
__________ ____________ ___________ ___________
Diluted weighted average number of
shares outstanding 14,402,988 14,814,570 14,149,261 14,577,540
__________ ____________ ___________ ___________
* Includes one-time expenses of $947,500
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BALANCE SHEET HIGHLIGHTS
March 31st June 30th
2004 2003
Cash $ 963,737 $494,991
Total Current Assets 7,287,710 6,145,489
Net Property and Equipment 1,296,454 1,295,113
Total Assets $ 10,537,082 $ 9,411,723
Total Current Liabilities $7,934,987 $ 5,409,312
Total Long Term Debt 432,301 2,030,285
Total Liabilities $8,390,950 $ 7,476,466
Shareholder's Equity $2,146,132 $ 1,935,257
Total Liabilities and Equity $ 10,537,082 $ 9,411,723
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