Exhibit 99.1
/C O R R E C T I O N -- PHC, Inc. /
Wednesday February 15, 10:04 am ET
In the news release, PHC, Inc. (OTC Bulletin Board: PIHC - News) Announces
Fiscal 2006 Second Quarter Financial Results, issued yesterday, Feb. 14, by PHC,
Inc. over PR Newswire, we are advised by a representative of the company that
the second paragraph, second sentence should read, "24.7 percent increase in
patient days" rather than "7.9 percent increase" and the second paragraph,
fourth sentence should read "tobacco cessation services which began in November
of 2005 for a major government contractor" rather than "for a United States
Government Agency" as originally issued inadvertently. Complete corrected
release follows:
PHC, INC. ANNOUNCES FISCAL 2006 SECOND QUARTER
FINANCIAL RESULTS
FOR IMMEDIATE RELEASE
Company Contact: Investor Relations Contact:
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PHC, Inc. Hayden Communications, Inc.
Bruce A. Shear Matthew Hayden
978-536-2777 843-272-4653
>> Q2FY06 REVENUE OF $8.7 MILLION VS. $8.1 MILLION IN Q2FY05
>> Q2FY06 EPS OF $.02 VS. $.02 IN Q2 FY05
>> Q2FY06 NON-PATIENT OPERATIONS REVENUE INCREASED 5.6% VS. Q2FY05
>> YEAR-TO-DATE REVENUES UP 10.1% FROM THE SAME PERIOD LAST YEAR
>> GROUND BREAKING FOR LAS VEGAS HOSPITAL SCHEDULED FOR MARCH 15, 2006
Peabody, Mass., February 14, 2006 -- PHC, Inc., d.b.a. Pioneer Behavioral Health
(OTC Bulletin Board: PIHC), a leading provider of inpatient and outpatient
behavioral health services and pharmaceutical research, today announced its
fiscal 2006 second quarter financial results, for the quarter ended December 31,
2005.
Total net revenue from operations increased 7.8 percent to $8.7 million for
the three months ended December 31, 2005 compared to $8.1 million for the second
quarter of fiscal 2005. Net patient care revenue increased 8.6 percent to $6.5
million from $6.0 million for the second quarter of fiscal 2005, due primarily
to the addition of the 30 adjudicated juvenile beds at Detroit Behavioral
Institute, which helped generate a 24.7 percent increase in patient days.
Revenue from pharmaceutical studies decreased 9.2 percent to $1.1 million for
the quarter compared to $1.2 million for the same quarter last year. Contract
support services revenue provided by Wellplace increased 24.9 percent to $1.2
million for the quarter compared to $923,323 for the same quarter last year,
which resulted from the October 2004 expansion in Wellplace's Michigan call
center contract and the tobacco cessation services which began in November of
2005 for a major government contractor.
Total operating expenses for the quarter increased 10.3 percent to $8.2 million
from $7.4 million during the second quarter of last year. Included in this
increase was a 44.8 percent increase in the Company's bad debt expense to
$475,768 compared to the year-ago period related to the previously announced
technical issue in the Company's billing software at its Harbor Oaks Hospital
facility during the first quarter of fiscal 2006. However, bad debt expense
decreased 27.6 percent sequentially or by $181,119 compared to the first
quarter. The failure of the billing software during the first quarter had a
residual effect on the Company's billing and receipt of collections during the
second quarter, resulting in an increase in the aging of those related
receivables which was responsible for an increase in the Company's overall
allowance for doubtful accounts and bad debt expenses. With the billing system
properly operating, management expects the reserve requirement will decrease in
future quarters as collection activity returns to more normalized levels. The
Company expects to collect a significant portion of the receivables in the third
fiscal quarter. Also impacting operating expenses was a 13.7 percent increase in
administrative expenses, resulting from increased administrative payroll and
employee benefits directly related to the opening of the new 20-bed unit at the
Detroit Behavioral Institute.
Income from operations for the quarter was $549,060 a decrease of 19.2 percent
compared to the $679,895 reported for the same period last year. Cash flow from
operations for the six months ended December 31, 2005 was $873,743 and the
company incurred $627,776 in capital expenditures for the six month period
related to the Company's expansion.
Net income applicable to common shareholders for the three months was $346,782,
or $0.02 per fully diluted share, compared to $408,804, or $0.02 per fully
diluted share, for the second quarter of fiscal 2005. This was derived utilizing
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19.3 million fully diluted shares compared to 18.5 million fully diluted shares
for the respective reporting periods. The Company's provision for income taxes
decreased to $64,600 with an effective tax rate of 15.7 percent compared to 15.1
percent in the year-ago period.
Bruce A. Shear, Pioneer's President and Chief Executive Officer, commented,
"Building off our record performance last year, the Company continues to report
top-line growth and consistent profitability. We are focused on laying the
foundation for our next growth phase, which will be driven by the opening of our
Seven Hills Medical Complex in Henderson, Nevada, the continued expansion at the
Detroit Medical Center and further revenue contributions from our new smoking
cessation program. Management has worked diligently to build a foundation which
will contribute to solid operating results for the balance of the year while
accelerating the momentum into fiscal 2007."
For the first six months of fiscal 2006, the Company reported revenue of $17.6
million, an increase of 10.1 percent compared to the $16.0 million for the first
six months of last year. Net patient care revenues were $13.2 million, an
increase of 8.4 percent compared to the $12.2 million reported for the first six
months of last year. Pharmaceutical study revenues increased 4.8 percent to $2.4
million from the $2.3 million reported for the same period last year. Contract
support services revenue increased 31.1 percent to $2.1 million from $1.6
million last year. Total operating expenses were $16.5 million, an increase of
14.1 percent from the $14.5 million for the first six months of fiscal 2005,
including a 94.4 percent increase in the Company's bad debt expense to $1.13
million due to the previously mentioned software billing issue and a 17.0
percent increase in administrative expenses. Income from operations was $1.1
million, a decrease of 26.5 percent compared to the $1.6 million reported last
year. Net income applicable to common shareholders for the six-month period was
$730,989 or $0.04 per fully diluted share, compared with net income of $1.2
million or $0.06 per fully diluted share for the same period last year. 19.3
million and 18.3 million fully diluted shares were used to calculate earnings
per share for the respective periods.
The Company's balance sheet reported a current ratio of 1.6:1 on December 31,
2005. Shareholders' equity increased 9.8 percent to $10.0 million on December
31, 2005 from $9.1 million on June 30, 2005. The Company reported $1.0 million
in cash as of December 31, 2005, up from $917,630 on June 30, 2005. Total
receivables for the second quarter of 2006 were $8.7 million versus $5.9 million
during the comparable period in fiscal 2005. Bad debt expense increased 44.8% to
$475,768 for the second quarter from $328,638 last year, but were down
sequentially from $656,887 recorded during the first quarter of 2006. DSO's,
allowance for doubtful accounts and bad debt expense all increased due to the
software problems which slowed the billing process and diverted staff attention
from collections, while we reentered the receivables into the new software.
Since the Company's policy is to maintain reserves based on the age of its
receivables, this delay in the billing and collection process increased the
amount and age of the Company's receivables therefore, increasing the reserves
required by formula and the bad debt expense. The system is now operating and
management expects the reserve requirement will decrease in future quarters as
collection activity has now become more normalized. The Company expects bad debt
expense in the third quarter to be below our previously reported levels.
Mr. Shear continued, "While the accounts receivables balance reported on
December 31st were still at elevated levels, we have made significant progress
in the resolution of the technical issue which impacted collections at our
largest inpatient facility, and required the increase in our allowance for
doubtful accounts and bad debt expense. We expect the reserve requirement will
decrease in future quarters as collection activity has now become more
normalized and anticipate bad debt expense in the third quarter to be below our
second quarter reported levels. The billing platform is operating properly and
the new software system which will be implemented later this year is expected to
ensure this issue will not reoccur, while providing incremental benefits to our
organization."
Teleconference Information
The Company will conduct a conference call to discuss the fiscal 2006 second
quarter results on Tuesday, February 14, 2006, at 9 a.m. Eastern Time.
Interested parties within the United States can access the call by dialing
866-510-0710, and international callers may dial 617-597-5378. Please use
passcode 10821525. A replay of the call also will be available until February
21, 2006 at 888-286-8010 for callers within the United States, and 617-801-6888
for international callers. Please use passcode 99645912 for the replay. This
call is being webcast by CCBN, and can be accessed at PHC, Inc.'s web site at
www.phc-inc.com. The webcast is also being distributed over CCBN's Investor
Distribution Network to both institutional and individual investors. Individual
investors can listen to the call through CCBN's individual investor center at
www.fulldisclosure.com, or by visiting any of the investor sites in CCBN's
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Individual Investor Network. Institutional investors can access the call via
CCBN's password-protected event management site, StreetEvents, at
www.streetevents.com.
About Pioneer Behavioral Health
Pioneer Behavioral Health operates companies that provide inpatient and
outpatient behavioral health care services, clinical research, Internet and
telephonic-based referral services. The 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 or www.haydenir.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.
- tables follow -
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PHC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, June 30,
ASSETS 2005 2005
(unaudited)
_____________ ___________
Current assets:
Cash and cash equivalents $ 1,028,610 $ 917,630
Accounts receivable, net of allowance for
doubtful accounts of $3,173,004 at December
31,2005 and $1,956,984 at June 30, 2005 6,673,756 6,265,381
Pharmaceutical receivables 1,361,227 1,414,340
Prepaid expenses 496,153 146,988
Other receivables and advances 561,959 638,654
Deferred income tax asset 1,415,344 1,375,800
___________ ____________
Total current assets 11,537,049 10,758,793
Accounts receivable, non-current 50,000 65,000
Other receivable 120,213 84,422
Property and equipment, net 1,901,434 1,516,114
Deferred financing costs, net of amortization of
$95,557 at December 31, 2005 and $76,234 June
30, 2005 126,615 145,938
Customer relationships, net of amortization of
$200,000 at December 31, 2005 and $140,000 at
June 30, 2005 2,200,000 2,260,000
Goodwill 2,704,389 2,648,209
Other assets 436,317 417,172
___________ ____________
Total assets $19,076,017 $17,895,648
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,857,219 $ 907,569
Current maturities of long-term debt 843,409 769,599
Revolving credit note 2,523,035 2,385,629
Deferred revenue 80,479 85,061
Current portion of obligations under capital
leases 46,312 29,777
Accrued payroll, payroll taxes and benefits 1,321,616 1,411,653
Accrued expenses and other liabilities 601,735 1,063,189
___________ ____________
Total current liabilities 7,273,805 6,652,477
Long-term debt 1,505,567 1,900,022
Obligations under capital leases 55,304 12,210
Deferred tax liability 244,874 229,000
___________ ____________
Total liabilities 9,079,550 8,793,709
___________ ____________
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, 17,603,118 and
17,490,818 shares issued at December 31, 2005
and June 30, 2005, respectively 176,031 174,908
Class B common stock, $.01 par value, 2,000,000
shares authorized, 776,991 issued and outstanding
December 31, 2005 and June 30, 2005 each
convertible into one share of Class A common
Stock 7,770 7,770
Additional paid-in capital 23,576,088 23,377,059
Treasury stock, 191,098 shares and 181,738 shares
of Class A common stock at December 31 and June
30, respectively, at cost (191,700) (155,087)
Accumulated deficit (13,571,722) (14,302,711)
___________ ____________
Total stockholders' equity 9,996,467 9,101,939
___________ ____________
Total liabilities and stockholders' equity $19,076,017 $17,895,648
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PHC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
2005 2004 2005 2004
_____________________ _____________________
Revenues:
Patient care, net $6,465,356 $5,951,326 $13,178,336 $12,160,825
Pharmaceutical studies 1,084,084 1,194,552 2,390,093 2,281,142
Contract support services 1,153,073 923,323 2,078,910 1,584,749
__________ __________ __________ __________
Total revenues 8,702,513 8,069,201 17,647,339 16,026,716
__________ __________ __________ __________
Operating expenses:
Patient care expenses 3,292,393 2,967,320 6,554,304 6,008,302
Patient care expenses,
pharmaceutical 510,834 412,144 1,073,988 802,107
Cost of contract support services 587,067 558,094 1,184,862 1,075,003
Provision for doubtful accounts 475,768 328,638 1,132,655 582,747
Administrative expenses 2,749,100 2,418,501 5,378,776 4,598,162
Administrative expenses,
pharmaceutical 538,291 704,609 1,172,290 1,395,665
__________ __________ __________ __________
Total operating expenses 8,153,453 7,389,306 16,496,875 14,461,986
__________ __________ __________ __________
Income from operations 549,060 679,895 1,150,464 1,564,730
__________ __________ __________ __________
Other income (expense):
Interest income 15,397 17,492 38,261 34,531
Other income 21,263 13,683 32,048 26,492
Interest expense (174,338) (229,797) (329,556) (342,852)
__________ __________ __________ __________
Total other expenses, net (137,678) (198,622) (259,247) (281,829)
__________ __________ __________ __________
Income before provision for taxes 411,382 481,273 891,217 1,282,901
Provision for income taxes 64,600 72,469 160,228 98,469
__________ __________ __________ __________
Net income $346,782 $408,804 $730,989 $1,184,432
========== ========== ========== ==========
Basic net income per common share $ 0.02 $ 0.02 $ 0.04 $ 0.07
========== ========== ========== ==========
Basic weighted average number of
shares Outstanding 18,159,188 17,417,238 18,125,265 17,388,921
========== ========== ========== ==========
Fully diluted net income per
common share $ 0.02 $ 0.02 $ 0.04 $ 0.06
========== ========== ========== ==========
Fully diluted weighted average
number of shares outstanding 19,301,486 18,471,375 19,302,592 18,274,631
========== ========== ========== ==========
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