Exhibit 99.1
PHC, INC. ANNOUNCES FINANCIAL RESULTS FOR THE FIRST QUARTER OF FISCAL 2007
Management Expects To Announce Company's Largest Contract Award beginning in
Third Quarter of 2007
FOR IMMEDIATE RELEASE
Company Contact: Investor Relations Contact:
- --------------- --------------------------
PHC, Inc. Hayden Communications, Inc.
Bruce A. Shear Matt Hayden or Peter Seltzberg
978-536-2777 843-272-4653
FINANCIAL HIGHLIGHTS:
>> Record first quarter revenue
>> Corporate milestone of second consecutive quarter of revenues above $10
million
>> Net revenue increased 12.5% to $10.1 million over the same period last year
>> 23% increase in contract support revenues over the same period last year
>> 31% increase in patient days over the same period last year
>> Provision for doubtful accounts decreased 31.1% to $452,500 from $656,900
for the same period last year
Peabody, Mass., November 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 2007 first quarter financial results, for the period ended September 30,
2006.
Key Financial Indicators
(all numbers in thousands, except per-share amounts)
Q1 2007 Q1 2006 Increase % Change
(decrease)
Consolidated revenues $10,062 $8,945 $1,117 12.5%
Patient care revenues $ 7,876 $6,713 $1,163 17.3%
Pharmaceutical study
revenues $ 1,051 $1,306 $ (255) (19.5%)
Contract support service
revenues $1,134 $ 926 $ 208 22.5%
Income from operations $ 554 $ 601 $ (47) (7.8%)
Net Income* $ 283 $ 384 $ (101) (26.3%)
Earnings per share -
Basic $ 0.02 $ 0.02 $ 0.00 --
Diluted $ 0.01 $ 0.02 %(0.01) (50.0%)
* Fully taxed for the quarter ended September 30, 2007 (Q1 2007)
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Financial Results
Total net revenue from operations increased 12.5 percent to $10.1 million
compared to $8.9 million for the first quarter last year. Net patient care
revenue increased 17.3 percent to $7.9 million from the $6.7 million for the
same period last year. The increase was primarily due to a 31 percent increase
in patient days, and another 20 new beds at the Detroit Behavioral Institute.
Revenue from pharmaceutical studies decreased 19.6 percent to $1.1 million from
$1.3 million in the quarter due to inherent cyclicality and quarter-to-quarter
fluctuation within this segment. Contract support services revenue provided by
Wellplace increased 22.5 percent to $1.1 million for the quarter compared to
$925,800 for the same quarter last year, primarily due to the start of a smoking
cessation contract with a major government contractor.
Total operating expenses for the quarter increased 14.0 percent to $9.5
million from $8.3 million during the first quarter of last year. Included in
this increase was a 17 percent increase in administrative expenses which were
incurred to bolster the Company's receivable collections resources and to add
the appropriate level of staffing and space to support additional patients at
Detroit Behavioral Institute.
The Company's provision for doubtful accounts in the quarter decreased to
$452,500 from $656,900 in the year ago same period. The percentage of bad debt
expense to net patient care revenue for the quarter ended September 30, 2006 was
5.7 percent compared to 9.8 percent last year.
"Prospects for increasing our bed count, a key metric of our financial health,
have never been stronger, and we believe that for fiscal 2008, we can grow this
number in excess of 50 percent compared to a prior best for us of about 22
percent," commented Bruce Shear, CEO, of Pioneer Behavioral Health. "We are
particularly pleased to announce one particular significant new contract
underway that we anticipate signing, based on several months of negotiations,
prior to the end of this calendar year. If successful, this contract would
represent the largest contract in the Company's history and have a material
impact on both the revenue and operating profit beginning in calendar 2007,
while furthering PHC's leadership position in a critical geographic market.
While we lay the groundwork for our next growth phase in fiscal 2007 and 2008,
we continue to execute on our business plan as evidenced by our net revenues
topping the $10 million milestone for the second consecutive quarter. Patient
days increased more than 30 percent for the quarter, due to strong demand and
higher bedcount in our facilities. In our largest segment, treatment services,
we generated a 17.3 percent increase in revenue, despite significant ramp-up
costs, primarily related to increasing our investment in the Detroit Behavioral
Institute.
The increases in operating expenses included a $694,000, or 21.3 percent
increase in patient treatment care expenses, and a $241,000, or 40.3 percent
increase in contract support costs. Increases in administrative costs of
$466,000, or 17.7 percent over last year's period were primarily due to myriad
set-up and other infrastructure costs necessitated by the expansion underway at
Detroit Behavioral Institute. Interest expense for the quarter decreased 22.8
percent in the quarter due to a reduction of long term debt since last year's
same period.
Income from operations for the quarter was $554,000, down 7.9 percent from the
$601,000 reported for the same period last year. Net income for the three months
was $283,000, or $0.01 per fully diluted share (based on 19.3 million fully
diluted shares) compared to net income of $384,000, or $0.02 per fully diluted
share (based on 19.3 million shares) for the first quarter last year.
This year's first fiscal quarter was the first quarter in which the Company
recorded an income tax provision assuming an estimated 39 percent corporate tax
rate while in the prior-year quarter, the Company recorded a 20 percent tax rate
for the income tax provision. Had the Company incurred the same 39 percent tax
rate, net income for the first quarter of fiscal 2006 would have been $292,700,
which is comparable to this year.
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The Company reported $1.8 million in cash as of September 30, 2006, largely
unchanged from June 30, 2006. Total net receivables from patient care for the
first quarter of 2006, were $7.1 million, which was a 2.9 percent increase from
$6.9 million at June 30, 2006. The Company's balance sheet had a current ratio
of 2:1 on September 30, 2006 and stockholders' equity increased 3.1 percent to
$13.8 million as of September 30, 2006 from $13.5 million as of June 30, 2006.
Mr. Shear concluded, "This was a solid start to what we believe will be a year
of growth and continued profitability. In late fiscal 2007, we expect to open
our Seven Hills Behavioral Institute in the fast growing metropolitan area of
Las Vegas. We continue to have active and productive discussions with key
constituents in the region, reinforcing our confidence in our ability to quickly
fill this important facility due to strong demand and the lack of alternatives
in the region. These discussions are also leading to a substantial network of
supporters, further demonstrating that we continue to be a leader in the
behavioral health care industry."
Teleconference Information
The Company will host a conference call to discuss the fiscal 2007 first
quarter results on Tuesday, November 14, 2006 at 4:15 p.m. Eastern Time.
Interested parties within the United States can access the call by dialing
800-299-6183 and international callers may dial 617-801-9713. Please use
passcode 25512706. A replay of the call also will be available until November
21, 2006 at 888-286-8010 for callers within the United States, and 617-801-6888
for international callers. Please use passcode 24225834 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.
Statement under the Private Securities Litigation Reform Act of 1995:
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
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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
September 30, June 30,
ASSETS 2006 2006
(unaudited)
Current assets:
Cash and cash equivalents $1,774,410 $ 1,820,105
Accounts receivable, net of
allowance for doubtful accounts of
$3,155,365 at September 30, 2006 and
$3,100,586 at June 30, 2006 7,167,055 6,955,475
Pharmaceutical receivables 1,474,353 1,470,019
Prepaid expenses 948,474 490,655
Other receivables and advances 907,769 751,791
Deferred income tax asset 2,960,768 3,110,000
_________ _________
Total current assets 15,232,829 14,598,045
Accounts receivable, non-current 35,000 40,000
Other receivable 47,680 53,457
Property and equipment, net 1,943,734 1,799,888
Deferred financing costs, net of
amortization of $115,661 at September
30, 2006 and $106,422 June 30, 2006 107,785 117,023
Customer relationships, net of amortization
of $290,000 at September 30, 2006 and
$260,000 at June 30, 2006 2,110,000 2,140,000
Goodwill 2,664,643 2,664,643
Other assets 555,377 571,931
_________ _________
Total assets $22,697,048 $ 21,984,987
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,831,519 $ 1,518,615
Current maturities of long-term debt 872,518 909,057
Revolving credit note 1,777,931 1,603,368
Deferred revenue 246,286 385,742
Current portion of obligations under capital
leases 146,660 57,881
Accrued payroll, payroll taxes and benefits 1,632,449 1,619,672
Accrued expenses and other liabilities 1,052,408 1,026,419
_________ _________
Total current liabilities 7,559,771 7,120,754
Long-term debt 890,997 1,021,546
Obligations under capital leases 47,075 61,912
Deferred tax liability 325,000 325,000
_________ _________
Total liabilities 8,822,843 8,529,212
========= =========
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, 17,953,463
and 17,874,966 shares issued at September
30, 2006 and June 30, 2006, respectively 179,535 178,749
Class B common stock, $.01 par value,
2,000,000 shares authorized, 775,760
issued and outstanding at September 30,
2006 and June 30, 2006, respectively,
each convertible into one share of Class
A common Stock 7,758 7,758
Additional paid-in capital 23,852,558 23,718,197
Treasury stock, 199,098 shares of Class A
common stock at September 30,
2006 and June 30, 2006, at cost (191,700) (191,700)
Accumulated deficit (9,973,946) (10,257,229)
___________ _____________
Total stockholders' equity 13,874,205 13,455,775
Total liabilities and stockholders' equity $22,697,048 $21,984,987
=========== ===========
See Notes to Condensed Consolidated Financial Statements
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PHC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30,
2006 2005
Revenues:
Patient care, net $ 7,876,432 $ 6,712,980
Pharmaceutical studies 1,051,383 1,306,009
Contract support services 1,134,391 925,837
__________ ____________
Total revenues 10,062,206 8,944,826
__________ ____________
Operating expenses:
Patient care expenses 3,955,652 3,261,911
Patient care expenses, pharmaceutical 486,937 563,154
Cost of contract support services 838,555 597,795
Provision for doubtful accounts 452,525 656,887
Administrative expenses 3,095,455 2,629,676
Administrative expenses, pharmaceutical 679,108 633,999
__________ ____________
Total operating expenses 9,508,232 8,343,422
__________ ____________
Income from operations 553,974 601,404
__________ ____________
Other income (expense):
Interest income 32,849 22,864
Other income (943) 10,785
Interest expense (119,830) (155,218)
__________ ____________
Total other expenses, net (87,924) (121,569)
__________ ____________
Income before provision for taxes 466,050 479,835
Provision for income taxes 182,767 95,628
__________ ____________
Net income $ 283,283 $384,207
========== ============
Basic net income per common share $ 0.02 $ 0.02
============ =============
Basic weighted average number of shares
outstanding 18,514,142 18,099,342
=========== =============
Fully diluted net income per common share $ 0.01 $ 0.02
============ =============
Fully diluted weighted average number of
shares outstanding 19,296,638 19,270,164
=========== =============
See Notes to Condensed Consolidated Financial Statements.
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