Exhibit 99.1
PHC, INC. ANNOUNCES RECORD REVENUE FOR THE THIRD QUARTER OF FISCAL 2007
Total Quarterly Revenues Rise to a Record $12.3 Million
Patient Care Revenue Increases 37%
FOR IMMEDIATE RELEASE
Company Contact: Investor Relations Contact:
- --------------- --------------------------
PHC, Inc. Hayden Communications, Inc.
Bruce A. Shear Brett Maas or Peter Seltzberg
978-536-2777 (646) 415-8972
FINANCIAL HIGHLIGHTS:
>> Net revenue up 23.8% to a record $12.3 million
>> 37.4% increase to a record $10.0 million in patient care revenue >> 3.4%
increase in patient days over the same period last year
>> Construction continues on the projected $12 million annual revenue
opportunity at Seven Hills Behavioral Institute and announced an expected
opening date in early 2008
>> Cash position increases to $4.3 million, up 134% vs. June 30, 2006
>> Stockholders' equity increases 25.4% to $16.9 million compared to June 30,
2006
Peabody, Mass., May 15, 2007 -- PHC, Inc., d.b.a. Pioneer Behavioral Health
(AMEX: PHC), a leading provider of inpatient and outpatient behavioral health
services, today announced record revenue for its fiscal third quarter and for
the nine month period ended March 31, 2007.
4
Key Financial Indicators
(all numbers in thousands, except per-share amounts)
Q3 2007 Q3 2006 Increase % Change
(decrease)
Consolidated revenues $12,318 $9,954 $2,364 23.8%
Patient care revenues $10,023 $7,293 $2,730 37.4%
Pharmaceutical study revenues $ 1,164 $1,523 $ (359) (23.6%)
Contract support service revenues $ 1,131 $1,138 $ (7) (0.6%)
Income from operations $ 638 $1,113 $ (475) (42.7)%
Pretax Income $ 519 $ 996 $ (477) (47.9)%
Net Income $ 316 $ 951 $ (635) (66.8%)
Earnings per share - Basic $ 0.02 $ 0.05 $(0.03) (60.0%)
Diluted $ 0.02 $ 0.05 $(0.03) (60.0%)
Financial Results
Total net revenue from operations increased 23.8 percent to a record $12.3
million for the three months ended March 31, 2007 from $10.0 million for the
three months ended March 31, 2006. For perspective, the third quarter revenue
was up 23.8 percent sequentially compared to the fiscal second quarter. Net
patient care revenue increased 37.4 percent to a record $10.0 million for the
quarter from $7.3 million for the same quarter last year. This increase in
revenue is due primarily to the addition of the 20 adjudicated juvenile beds at
Detroit Behavioral Institute, which contributed to a 3.4 percent increase in
patient days for the three months compared to the same period last year, and the
new contract with Behavioral Healthcare Options. Revenue from pharmaceutical
studies decreased 23.6 percent to $1.2 million for the quarter compared to $1.5
million for the three months ended March 31, 2006 due to the cyclical nature of
the pharmaceutical research business, where the size and number of clinical
trial starts and stops change daily. Contract support services revenue provided
by Wellplace was essentially unchanged at $1.1 million for both periods.
"Key initiatives we undertook during fiscal 2006, specifically related to our
Detroit Behavioral Institute operations and our Harmony Healthcare division,
have resulted in a return to our historic 20 percent top-line growth on both
sequential and year-over-year bases," commented Bruce A. Shear, President and
Chief Executive Officer of Pioneer Behavioral Health. "We believe this rate of
growth will be sustained for the balance of fiscal 2007 and throughout fiscal
year 2008 as we prepare to open our Seven Hills Behavioral Institute near Las
Vegas. This opening, currently expected in the first calendar quarter of 2008,
will mark the beginning of our next significant growth phase. We continue to set
new company records in terms of average quarterly bed count totals and patient
day levels, and look forward to accelerating this further as we progress with
our planned expansion in the Las Vegas metropolitan area."
Total operating expenses for the quarter increased 32.1 percent to $11.7 million
from $8.8 million during the third quarter of last year. Included in this
increase was a 31.5 percent increase in patient care expenses. The Company
continues to make investments in its Las Vegas market initiatives, including the
Seven Hills project and the Company's 10-year, $80 million agreement with Health
Plan of Nevada's Behavioral Healthcare Options network agreement, as announced
in late December. The increase in operating expenses also included an increase
in the Company's provision for doubtful accounts and a 52.7 percent increase in
administrative expenses, primarily due to various set-up and other
infrastructure costs necessitated by the expansion at Detroit Behavioral
Institute and costs related to the Company's new software installation that
cannot be capitalized.
Income from operations for the quarter was $638,155, a decrease of 42.7 percent
from the $1.1 million reported for the same period last year. Interest expense
of $168,797 was up 9.8 percent compared to the $153,594 reported for the third
quarter last year but decreased sequentially by 20.5 percent sequentially
compared to the second quarter of fiscal 2007.
5
Net income for the three months was $315,779, or $0.02 per fully diluted share
(based on 20.6 million fully diluted shares) compared to net income of $950,549,
or $0.05 per fully diluted share (based on 19.2 million shares) for the third
quarter last year.
Mr. Shear continued, "The reduction in our overall profitability was due to
investments related to the initiation of our Behavioral Healthcare Options
contract, one-time expenses related to our listing on the American Stock
Exchange, and reduced profitability at our Pivotal Research subsidiary. We have
begun to see an uptick in revenue at Pivotal in the fourth quarter, and there
are signs that this business is starting to accelerate based on our current
pipeline. In addition, our hospital census is running at a higher than normal
level during early May, a positive indicator for us. Finally, many of the direct
expenses related to the Las Vegas expansion are behind us, and we believe our
profitability will notably improve in the fourth quarter and into fiscal 2008."
This year's third fiscal quarter was the third consecutive quarter in which the
Company recorded an income tax provision assuming an estimated 39 percent
corporate tax rate, while in the prior-year's quarter, the Company recorded a
4.6 percent tax rate for the income tax provision. Had the Company incurred the
same 39 percent tax rate in the year-ago period, net income for the third
quarter of fiscal 2006 would have been $607,545.
The Company's provision for doubtful accounts in the quarter increased to
$426,812 from $334,248 in the year-ago same period. The percentage of bad debt
expense to net patient care revenue for the quarter ended March 31, 2007 was 4.3
percent compared to 4.6 percent last year as the Company's bad debt as a
percentage of revenues continued to decline.
For the nine-month period ended March 31, 2007, total net revenue from
operations increased 17.1 percent to $32.3 million compared to $27.6 million for
the first nine months last year. Net patient care revenue increased 26.3 percent
to $25.8 million for the nine months from $20.5 million for the same period last
year. Revenue from pharmaceutical studies decreased 21.1 percent to $3.1 million
for the nine-month period from $3.9 million for the same period last year.
Contract support services revenue provided by Wellplace increased 5.6 percent to
$3.4 million for the nine months from $3.2 million for the nine months ended
March 31, 2006.
Total operating expenses increased 20.5 percent for the nine months to $30.5
million from $25.3 million last year. Included in this increase was a 27.4
percent increase in patient care expenses in treatment centers and offset by a
7.1 percent decrease in patient care expenses related to pharmaceutical or
research studies. Contract support services expenses increased 21.3 percent to
$2.3 million for the nine months from $1.9 million last year. Administrative
expenses increased 28.3 percent to $10.5 million for the nine months from $8.2
million for the nine months ended March 31, 2006.
Year-to-date income from operations was $1.8 million for the first nine months
of 2007 compared to $2.3 million for the same period of fiscal 2006. Net income
was $860,150, or $0.05 per basic and $0.04 per fully diluted share (based on
19.6 million shares), compared to net income of $1.7 million, or $0.09 per basic
and fully diluted share (based on 19.2 million shares) last year. The Company's
blended average tax rate for the nine-month period this year was 39 percent as
compared to 11 percent in last year's same period. Adjusting last year's
nine-month result for this year's comparable tax rate, the Company's net income
would have been approximately $1.2 million.
Mr. Shear stated, "Based on current and anticipated population growth, Las Vegas
is likely to emerge as one of the largest cities in the United States during the
next decade. This region's hyper-growth creates increased demand for chemical
dependency treatment, psychiatric services and mental wellness programs and an
exceptional opportunity for Pioneer. Today, we are firmly entrenched as the
leader in this rapidly expanding market. Our diversified presence in the Las
Vegas area includes providing critical incident services programs and employee
assistance programs for 21 separate hotel and casino properties in Las Vegas,
inpatient hospitalization, outpatient services medication management,
psychological testing, crisis and triage care under a 10-year, $80 million
contract, and soon, our 60-bed hospital in Henderson, Nevada. This Las Vegas
6
expansion will mirror our presence in the Detroit market, and demonstrates our
strategic growth strategy. Pioneer strives to provide necessary chemical
dependency and mental health-related services in markets where demographics and
demand indicate high likelihoods of success. Our top line is currently
benefitting from our efforts to increase our presence in Detroit. Beginning in
calendar 2008, we will benefit, both on a top and bottom-line basis, from our
initiatives in southern Nevada."
The Company reported $4.3 million in cash as of March 31, 2007 compared to $1.8
million in June 30, 2006. The increase in the cash account was primarily due to
$2.0 million in new equity financing that the company received at the end of the
second fiscal quarter and cash generated from operations. Consequently, the
Company's balance sheet had a current ratio of 2.0 to 1 on March 31, 2007 and
stockholders' equity increased 25.4 percent to $16.9 million from $13.5 million
as of June 30, 2006.
Teleconference Information
The Company will host a conference call to discuss the fiscal 2007 third quarter
results on Tuesday, May 15, 2007 at 4:30 p.m. Eastern Time. Interested parties
within the United States can access the call by dialing 800-299-7928 and
international callers may dial 617-614-3926. Please use passcode 17716732. A
replay of the call also will be available until May 22, 2007 at 888-286-8010 for
callers within the United States, and 617-801-6888 for international callers.
Please use passcode 49570860 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 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 -
7
PHC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, June 30,
ASSETS 2007 2006
___________ __________
(unaudited)
Current assets:
Cash and cash equivalents $ 4,250,075 $ 1,820,105
Accounts receivable, net of allowance for
doubtful accounts of $3,393,907 at March 31,
2007 and $3,100,586 at June 30, 2006 6,974,749 6,955,475
Pharmaceutical receivables 1,926,604 1,470,019
Prepaid expenses 647,252 490,655
Other receivables and advances 722,484 751,791
Deferred income tax asset 2,605,645 3,110,000
___________ __________
Total current assets 17,126,809 14,598,045
Accounts receivable, non-current 35,000 40,000
Other receivable 47,680 53,457
Property and equipment, net 2,312,231 1,799,888
Deferred financing costs, net of amortization
of $134,138 at March 31,
2007 and $106,422 June 30, 2006 89,307 117,023
Customer relationships, net of amortization of
$350,000 at March 31, 2007
and $260,000 at June 30, 2006 2,050,000 2,140,000
Goodwill 3,508,576 2,664,643
Other assets 1,703,529 571,931
___________ __________
Total assets $26,873,132 $21,984,987
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable (includes short term notes
payable of $166,646 and $8,956) $ 1,832,105 $ 1,518,615
Current maturities of long-term debt 1,156,028 909,057
Revolving credit note 1,256,127 1,603,368
Deferred revenue 500,716 385,742
Current portion of obligations under capital
leases 210,945 57,881
Accrued payroll, payroll taxes and benefits 2,173,886 1,619,672
Accrued expenses and other liabilities 1,367,111 1,026,419
___________ __________
Total current liabilities 8,496,918 7,120,754
Long-term debt 1,010,498 1,021,546
Obligations under capital leases 168,763 61,912
Deferred tax liability 325,000 325,000
___________ __________
Total liabilities 10,001,179 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, 19,369,833
and 17,874,966 shares issued at March 31,
2007 and June 30, 2006, respectively 193,698 178,749
Class B common stock, $.01 par value, 2,000,000
shares authorized, 775,760 issued and
outstanding at March 31, 2007 and June 30,
2006, respectively, each convertible into
one share of Class A common Stock 7,758 7,758
Additional paid-in capital 26,259,276 23,718,197
Treasury stock, 199,098 shares of Class A
common stock at March 31, 2007 and June
30, 2006, at cost (191,700) (191,700)
Accumulated deficit (9,397,079) (10,257,229)
___________ __________
Total stockholders' equity 16,871,953 13,455,775
___________ __________
Total liabilities and stockholders' equity $26,873,132 $21,984,987
=========== ===========
8
PHC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2007 2006 2007 2006
___________ ___________ ___________ ___________
Revenues:
Patient care, net $10,022,611 $ 7,292,804 $25,845,713 $20,471,140
Pharmaceutical studies 1,164,195 1,523,277 3,089,498 3,913,370
Contract support services 1,131,237 1,137,878 3,397,398 3,216,788
___________ ___________ ___________ ___________
Total revenues 12,318,043 9,953,959 32,332,609 27,601,298
___________ ___________ ___________ ___________
Operating expenses:
Patient care expenses 4,978,321 3,787,166 13,177,504 10,341,470
Patient care expenses,
pharmaceutical 601,737 552,477 1,510,223 1,626,465
Cost of contract support
services 776,893 713,438 2,302,622 1,898,300
Provision for doubtful accounts 426,812 334,248 1,226,795 1,466,903
Administrative expenses 4,298,040 2,815,164 10,511,594 8,193,940
Administrative expenses,
pharmaceutical 598,085 638,486 1,806,748 1,810,776
___________ __________ ___________ ___________
Total operating expenses 11,679,888 8,840,979 30,535,486 25,337,854
___________ ___________ ___________ ___________
Income from operations 638,155 1,112,980 1,797,123 2,263,444
___________ ___________ ___________ ___________
Other income (expense):
Interest income 52,775 11,281 119,432 49,542
Other income (expense) (3,430) 25,309 (7,508) 57,357
Interest expense (168,797) (153,594) (501,068) (483,150)
___________ ___________ ___________ ___________
Total other expenses, net (119,452) (117,004) (389,144) (376,251)
___________ ___________ ___________ ___________
Income before provision for taxes 518,703 995,976 1,407,979 1,887,193
Provision for income taxes 202,924 45,427 547,829 205,655
___________ ___________ ___________ ___________
Net income $ 315,779 $ 950,549 $ 860,150 $ 1,681,538
=========== =========== =========== ============
Basic net income per common share $ 0.02 $ 0.05 $ 0.05 $ 0.09
=========== =========== =========== ============
Basic weighted average number of
shares utstanding 19,858,979 18,187,750 19,037,806 18,145,789
=========== =========== =========== ============
Fully diluted net income per common
share $ 0.02 $ 0.05 $ 0.04 $ 0.09
=========== =========== =========== ============
Fully diluted weighted average
number of shares outstanding 20,626,118 19,212,589 19,644,201 19,242,777
=========== =========== =========== ============
9