Exhibit 99.1
PHC, INC. ANNOUNCES RECORD REVENUES FOR ITS
FISCAL YEAR 2006 AND FOURTH QUARTER
FOR IMMEDIATE RELEASE
Company Contact: Investor Relations Contact:
__________________ _____________________________
PHC, Inc. Hayden Communications, Inc.
Bruce A. Shear Matt Hayden or Brett Maas
978-536-2777 843-272-4653
>> RECORD QUARTERLY REVENUE OF $10.4 MILLION: FIRST TIME QUARTERLY REVENUE
EXCEEDED $10 MILLION
>> Q4FY06 NET INCOME OF $2.1 MILLION or $0.12 VS. $1.1 MILLION or $0.06 FOR Q4
FY05 AFTER RECOGNITION OF DEFERRED TAX BENEFIT
>> Q4FY06 REVENUE INCREASED 12.3% TO $10.4 MILLION VS. $9.3 MILLION OVER
Q4FY05
>> Q4FY06 NON-PATIENT OPERATIONS REVENUE INCREASED 45.1% OVER Q4FY05
>> FISCAL FULL-YEAR REVENUES UP 11.6% VS. FY 2005
>> FULL-YEAR NET INCOME OF $3.8 MILLION, OR $0.20 PER FULLY DILUTED SHARE
AFTER RECOGNITION OF DEFERRED TAX BENEFIT
Peabody, Mass., September 19, 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 fourth-quarter and full-year financial results, for
the quarter and full-year periods ended June 30, 2006.
Key Financial Indicators
(all numbers in thousands, except per-share amounts)
Q4 2006 Q4 2005 Increase % Change
(decrease)
Consolidated revenues $10,412 $9,273 $1,139 12.3%
Patient care revenues $ 7,391 $7,191 $ 200 2.8%
Pharmaceutical study
revenues $ 1,886 $1,125 $ 761 67.6%
Contract support service
revenues $ 1,135 $ 957 $ 178 18.6%
Income from operations $ 921 $1,040 $ (119) (11.4%)
Net Income $ 2,150 $1,091 $1,059 97.1%
Earnings per share - Basic $0.12 $0.06 $0.06 100.0%
Earnings per share - Diluted $0.11 $0.06 $0.05 83.3%
(all numbers in thousands, except per-share amounts)
FY 2006 FY 2005 Increase % Change
(decrease)
Consolidated revenues $38,013 $34,063 $ 3,950 11.6%
Patient care revenues $27,862 $26,087 $ 1,775 6.8%
Pharmaceutical study revenues $ 5,799 $ 4,509 $ 1,290 28.6%
Contract support service
revenues $ 4,352 $ 3,467 $ 885 25.5%
Income from operations $ 3,184 $ 3,587 $ (403) (11.2%)
Net Income $ 3,832 $ 3,156 $ 676 21.4%
Earnings per share - Basic $0.21 $0.18 $0.03 16.6%
Earnings per share - Diluted $0.20 $0.17 $0.03 17.6%
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Other Fiscal 2006 Operational Highlights:
o Patient days increased more than 6,861 days for the 2006 fiscal year
compared to year-ago period.
o Broke ground on the Seven Hills Behavioral Institute, a 60-bed
psychiatric and chemical dependency hospital near Las Vegas.
o Pivotal subsidiary announced its largest contract ever-- a $1 million
study related to a diabetes compound for a major pharmaceutical
company.
o Pivotal is currently engaged in 46 enrolling studies and providing
care in an additional 93 studies.
o Harmony Healthcare subsidiary signed largest contract in history--new
revenue source began July 1, 2006.
Financial Results
Total net revenue from operations increased 12.3 percent to a record $10.4
million compared to $9.3 million for the fourth quarter last year. Net patient
care revenue increased 2.8 percent to $7.4 million from the $7.2 million for the
same period last year. The increase as compared to last year was primarily due
to the addition of the 20 new beds at the Detroit Behavioral Institute, which
contributed to a 16.2 percent increase in patient days for the year ended June
30, 2006. Revenue from pharmaceutical studies increased 67.6 percent to $1.9
million for the fourth quarter compared to $1.1 million for the fourth quarter
last year. Contract support services revenue provided by Wellplace increased
18.6 percent to $1.1 million for the quarter compared to $957,000 for the same
quarter last year, which resulted from the October 2005 commencement of a
smoking cessation contract with a major government contractor.
Total operating expenses for the quarter increased 15.3 percent to $9.4 million
from $8.2 million during the fourth quarter of last year. Included in this
increase were expenses related to ramping up new programs and services
associated with contracts signed during the previous two quarters.
The Company's provision for doubtful accounts decreased to $446,000 from
$472,000 in the year ago period while the total allowance for doubtful accounts
remained relatively stable at $3.1 million at March 31, 2006 and June 30, 2006.
The percentage of bad debt expense to net patient care revenue for the quarter
ended June 30, 2006 was 6.0 percent as compared to 6.6 percent for the year.
"For the first time, we surpassed the $10 million milestone in quarterly
revenues, as we benefited from continued growth in all three of our segments,"
commented Bruce A. Shear, Pioneer's President and Chief Executive Officer. "From
a collections perspective, we continue to progress incrementally and recognize a
positive trend in lower bad debt expense as a percentage of patient revenue
since the software problem occurred in the first quarter, confirming our belief
that the correct payer mix is intact. We expect our new billing system to be
installed and online by April 1, 2007 and believe it will have a positive impact
on operating efficiencies and functionality throughout the organization."
Notable increases in operating expenses were a 43.5 percent increase in patient
care expense in the Company's pharmaceutical business, a 29.2 percent increase
in cost of contract support services and a 13.5 percent increase in
administrative expenses as compared to the year-ago period. Pharmaceutical
patient care expenses increased largely due to increased stipends paid to
patients who participate in the studies and increased professional fees.
Contract support expenses increased due to the new services provided under the
previously announced contracts. Increases in administrative expenses related to
personnel for the opening of additional beds at Detroit Behavioral Institute and
non-capital expenses related to Seven Hills Behavioral Institute.
Income from operations for the quarter was $920,982, down 11.4 percent from the
$1 million reported for the same period last year. Net income for the three
months was $2.2 million, or $0.11 per fully diluted share (based on 19.2 million
fully diluted shares) compared to net income of $1.0 million, or $0.06 per fully
diluted share (based on 18.3 million shares) for the fourth quarter last year.
The Company's income tax benefit was $1.3 million, or $.07 per share, for the
quarter, versus $171,892 in the fourth quarter last year due to the recognition
of the Company's net operating loss carry-forward at June 30, 2006. After
factoring in the change in taxes and the start-up expenses in Michigan and Las
Vegas, net income surpassed that of last year's fiscal fourth quarter.
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For the full-year period ended June 30, 2006, the Company reported revenue of
$38.0 million, an increase of 11.6 percent compared to the $34.1 million for the
full year period ended June 30, 2005. Net patient care revenues were $27.9
million, up 6.8 percent compared to the $26.1 million for last year.
Pharmaceutical study revenues increased 28.6 percent to $5.8 million from the
$4.5 million reported for the same period last year. Contract support services
revenue increased 25.5 percent to $4.4 million from $3.5 million last year.
Total operating expenses were $34.8 million, an increase of 14.3 percent from
the $30.5 million for fiscal 2005, including a 50.4 percent increase in the
Company's bad debt expense to $1.9 million due to the previously disclosed
software problem and a 16.0 percent increase in administrative expenses. Income
from operations was $3.2 million, a decrease of 11.2 percent compared to the
$3.6 million reported last year. Net income for the fiscal year period was $3.8
million or $0.21 per basic and $0.20 per fully diluted share (based on 19.1
million shares), compared with net income of $3.2 million or $0.18 per basic and
$0.17 per fully diluted share (based on 18.4 million shares) for last year. This
included an income tax benefit of $1.1 million or $0.06 per fully diluted share
for the 2006 fiscal year.
"Fiscal 2006 was an important year for Pioneer, as we set the stage for the next
growth phase of the company," Mr. Shear continued. "Each of our business units
experienced milestone events. We broke ground on the Seven Hills Behavioral
Institute, a 60-bed acute psychiatric hospital near Las Vegas. This is the most
substantial project in the company's history and we continue to work closely
with major referral sources to ensure rapid utilization upon opening the new
facility. We see this as similar demographically to our Detroit expansion, with
significant demand in the local population and a noticeable lack of adequate
facilities currently available in the region. Our clinical research division
secured the largest contract in its history, its first Phase I contract, and
this agreement is expected to yield revenues of more than $1 million. Wellplace
and Harmony have also contributed with previously announced contracts that will
accelerate our growth rate. These initiatives should fuel growth in fiscal 2007
and 2008."
The Company reported $1.8 million in cash as of June 30, 2006, up from $957,437
as of March 31, 2006 and from $917,630 on June 30, 2005. Total net receivables
from patient care for the fourth quarter of 2006, were $7.0 million, which was a
10.5 percent increase from $6.3 million at June 30, 2005. The Company's balance
sheet reported a current ratio of 1.9:1 on June 30, 2006. Stockholders' equity
increased 45.5 percent to $13.2 million on June 30, 2006 from $9.1 million on
June 30, 2005.
Teleconference Information
__________________________
The Company will conduct a conference call to discuss the fiscal 2006 fourth
quarter results on Tuesday, September 26, 2006, at 9 a.m. Eastern Time.
Interested parties within the United States can access the call by dialing
1-866-578-5788 and international callers may dial 1-617-213-8057. Please use
passcode 14252397. A replay of the call also will be available until September
26, 2006 at 1-888-286-8010 for callers within the United States, and
1-617-801-6888 for international callers. Please use passcode 54288230 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 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, and 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.
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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
Consolidated Balance Sheets
June 30,
2006 2005
__________ _________
ASSETS
Current assets:
Cash and cash equivalents $ 1,820,105 $ 917,630
Accounts receivable, net of allowance for
doubtful accounts of $3,100,586 and $1,956,984
at June 30, 2006 and 2005, respectively 6,955,475 6,265,381
Pharmaceutical research receivables 1,470,019 1,414,340
Prepaid expenses 465,208 146,988
Other receivables and advances 751,791 638,654
Deferred tax assets 2,922,000 1,375,800
____________ ___________
Total current assets 14,384,598 10,758,793
____________ ___________
Accounts receivable, non-current 40,000 65,000
Other receivables 53,457 84,422
Property and equipment, net 1,799,888 1,516,114
Deferred financing costs, net of amortization of
$120,149 and $76,234 at June 30, 2006 and 2005,
respectively 117,023 145,938
Customer relationships, net of amortization
of $260,000 and $140,000 at June 30, 2006 and
2005, respectively 2,140,000 2,260,000
Goodwill 2,664,643 2,648,209
Other assets 571,931 417,172
____________ ___________
Total assets $21,771,540 $17,895,648
============ ===========
LIABILITIES
Current liabilities:
Accounts payable $ 1,518,615 $ 907,569
Current maturities of long-term debt 909,057 769,599
Revolving credit note 1,603,368 2,385,629
Deferred revenue 385,742 85,061
Current portion of obligations under capital
leases 57,881 29,777
Accrued payroll, payroll taxes and benefits 1,619,672 1,411,653
____________ ___________
Accrued expenses and other liabilities 1,026,419 1,063,189
____________ ___________
Total current liabilities 7,120,754 6,652,477
Long-term debt, less current maturities 1,021,546 1,900,022
Obligations under capital leases 61,912 12,210
Deferred tax liabilities 325,000 229,000
____________ ___________
Total liabilities 8,529,212 8,793,709
____________ ___________
Commitments and contingent liabilities
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, 17,874,966 and 17,490,818
shares issued at June 30, 2006 and 2005,
respectively 178,749 174,908
Class B common stock, $.01 par value; 2,000,000
shares authorized, 775,760 and 776,991 issued
and outstanding at June 30, 2006 and 2005,
respectively, each convertible into one share
of class A common stock 7,758 7,770
Additional paid-in capital 23,718,197 23,377,059
Treasury stock, 199,098 and 181,738 class A common
shares at cost at June 30, 2006 and 2005,
respectively. (191,700) (155,087)
Accumulated deficit (10,470,676) (14,302,711)
____________ ___________
Total stockholders' equity 13,242,328 9,101,939
____________ ___________
Total liabilities and stockholders' equity $21,771,540 $17,895,648
============ ===========
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PHC, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the Quarter ended For the Year Ended
June 30, June 30,
2006 2005 2006 2005
__________ __________ ___________ ___________
Revenues:
Patient care, net $7,390,561 $ 7,191,314 $27,861,701 $26,087,088
Pharmaceutical study 1,886,445 1,124,991 5,799,815 4,509,338
Contract support services 1,134,788 956,555 4,351,576 3,466,832
__________ __________ ___________ ___________
Total revenues 10,411,794 9,272,860 38,013,092 34,063,258
__________ __________ ___________ ___________
Operating expenses:
Patient care expenses 3,928,070 3,363,705 14,269,540 12,905,286
Patient care expenses,
pharmaceutical 616,435 429,643 2,242,900 1,676,749
Cost of contract support
services 778,040 602,040 2,676,340 2,197,518
Provision for doubtful
accounts 445,613 471,534 1,912,516 1,272,037
Administrative expenses 3,016,356 2,658,502 11,210,296 9,667,138
Administrative expenses,
pharmaceutical 706,298 707,626 2,517,074 2,757,118
__________ __________ ___________ ___________
Total operating expenses 9,490,812 8,233,050 34,828,666 30,475,846
__________ __________ ___________ ___________
Income from operations 920,982 1,039,810 3,184,426 3,587,412
__________ __________ ___________ ___________
Other income (expense):
Interest income 18,855 23,641 68,397 73,176
Interest expense (123,743) (163,031) (606,893) (654,871)
__________ __________ ___________ ___________
Other income, net 32,092 18,700 89,449 76,760
__________ __________ ___________ ___________
Total other expense, net (72,796) (120,690) (449,047) (504,935)
__________ __________ ___________ ___________
Income before income taxes 848,186 919,120 2,735,379 3,082,477
Benefit from income taxes (1,302,311) (171,892) (1,096,656) (73,423)
__________ __________ ___________ ___________
Net income * $ 2,150,497 $ 1,091,012 $ 3,832,035 $3,155,900
=========== =========== =========== =========
Basic net income per common
share * $ 0.12 $ 0.06 $ 0.21 $ 0.18
=========== =========== ========== ===========
Basic weighted average number
of shares outstanding 18,418,985 17,574,678 18,213,901 17,574,678
=========== =========== ========== ===========
Fully diluted net income
per common share * $ 0.11 $ 0.06 $ 0.20 $ 0.17
=========== =========== ========== ===========
Fully diluted weighted
average number of shares
outstanding 19,252,220 18,364,076 19,105,193 18,364,076
=========== =========== ========== ===========
* Includes income from deferred tax benefit of $1,545,200 and $209,392 for
the fiscal years ended June 30, 2006 and 2005, respectively.
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