Exhibit 99.1
FOR IMMEDIATE RELEASE
Company Contact: Investor Relations Contact:
PHC, Inc. Liolios Group, Inc.
Bruce A. Shear, President & CEO Ron Both/Geoffrey Plank
Tel 978-536-2777 Tel 949.574.3860
PHC REPORTS RECORD FOURTH QUARTER AND FISCAL YEAR 2007
Peabody, Mass. -- September 25, 2007 -- PHC, Inc., d.b.a. Pioneer Behavioral
Health (AMEX:PHC), a leading provider of inpatient and outpatient behavioral
health services and pharmaceutical research, announced financial results for the
fourth quarter and fiscal year 2007 ended June 30, 2007.
Fourth Quarter and Fiscal 2007 Financial Highlights
o Record revenues at $12.8 million, up 23% over Q4 FY2006
o Record quarterly income before taxes up 68% over same year-ago quarter
o Quarterly net income up 62% sequentially to $0.8 million or $0.04 per share
o Patient care revenue increased 38% for Q4 FY07 over Q4 FY06;
o Fifth consecutive year of record revenues; up 19% year-over-year to $45.1
million
o Fiscal year income before taxes totaled $2.8 million vs. $2.7 million in
fiscal 2006
o Fiscal year net income of $1.7 million, or $0.09 per fully diluted share
Key Financial Indicators (In thousands, except per-share amounts.)
Q4 2007 vs. Q4 2006 Q4 2007 Q4 2006 Change % Change
Consolidated revenues $12,795 $10,412 $2,383 23%
Patient care revenues 10,177 7,391 2,786 38%
Net income before taxes 1,421 848 573 68%
Net Income* 822 2,364 (1,542) (65%)
Earnings per share - Basic* 0.04 0.13 (0.09) (69%)
Earnings per share - Diluted* 0.04 0.12 (0.08) (67%)
FY 2007 vs. FY 2006 FY2007 FY 2006
Consolidated revenues $45,127 $38,013 $7,114 19%
Patient care revenues 36,023 27,862 8,161 29%
Net income before taxes 2,829 2,735 94 3%
Net Income* 1,682 4,045 (2,363) (58%)
Earnings per share - Basic* 0.09 0.22 (0.13) (59%)
Earnings per share - Diluted* 0.09 0.21 (0.12) (57%)
* Includes one-time gain of $1.6 million in Fiscal Year 2006 due to the change
in the valuation allowance
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Operational Highlights for Fiscal 2007
o Patient days increased 5,291 days year-over-year, primarily due to an
increase of 20 additional beds.
o PHC's Harmony Healthcare subsidiary signed a ten-year, $80 Million contract
with a major healthcare provider. This was the largest in company history
and is expected to increase Harmony's annual revenue by 160%.
o Construction of the Seven Hills Behavioral Institute near Las Vegas, Nevada
continues, keeping it on track to opening in early 2008. Seven Hills is
projected to contribute annualized revenue of approximately $12 million,
with higher margins than the company's other inpatient facilities.
o Reduced cost of capital by successfully renegotiating the company's line of
credit, increasing it to $6.5 million and at a lower, more conventional
interest rate.
o The Boston Globe added PHC to its "Globe 100" list of top performing
companies in Massachusetts.
o Common Stock began trading on the American Stock Exchange.
Fourth Quarter Financial Results
For the three months ended June 30, 2007 and compared to the same quarter a year
ago:
Total net revenue from operations increased 23% to a record $12.8 million as
compared to $10.4 million a year ago. The increase is primarily attributable to
an increase in net revenue of the company's patient care segment, which was up
38% to $10.2 million from $7.4 million last year. This was offset by a 22%
decrease in revenue from the pharmaceutical studies segment, which totaled $1.5
million as compared to $1.9 million last year. Contract support services revenue
provided by PHC's Wellplace subsidiary was essentially unchanged from last year
at $1.1 million.
Income from operations for the quarter totaled $1.2 million, an increase of 32%
from $921,000 reported a year ago. Net Income before taxes increased 68% to a
record $1.4 million from $848,000 a year ago.
Net income was $822,000 or $0.04 per fully diluted share (based on 20.5 million
fully diluted shares), a decrease of 65% compared to net income of $2.4 million
or $0.12 per fully diluted share (based on 19.3 million shares) last year, due
to last year's tax loss carry forward recapture. However, net income in the
fourth fiscal quarter represented an increase of 160% over the third fiscal
quarter net income of $316,000 or $0.02 per fully diluted share (based on 20.6
million fully diluted shares).
Total operating expenses for the quarter increased 22% to $11.6 million from
$9.5 million last year. Included in this increase were expenses related to
ramping up new programs and services associated with new contracts and the Seven
Hills Behavioral Institute.
The company's provision for doubtful accounts increased to $706,700 in the
quarter from $445,600 a year ago. The percentage of bad debt expense to net
patient care revenue for the quarter was 6.9% percent as compared to 5.3%
percent for the year.
Patient care operating expenses increased 39% as compared to the same year-ago
period, reflecting the ramp up on new major contracts and hospital completion.
Pharmaceutical patient care expenses increased 9% and contract support expenses
increased nearly 3%. The increase in patient care expense reflects the company's
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
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Nevada's Behavioral Healthcare Options network agreement announced in December
2006.
"This second consecutive quarter of record-breaking revenue exceeded our
expectations," said Bruce A. Shear, Pioneer's president and CEO. "It was driven
by a 38% expansion of our patient care revenues. The quarter-over-quarter
increase in our net profit is reflective of the fact that direct expense related
to our Las Vegas contract expansion is behind us, and we see this income growth
trend continuing as our new Seven Hills facility comes on line in fiscal 2008."
Full Year Fiscal 2007 Financial Results
For the 12 months ended June 30, 2007, as compared to the previous fiscal year:
Total net revenue was $45.1 million, a 19% increase from $38.0 million in the
previous year --representing the fifth consecutive year of record revenue. The
increase is largely due to a 29% increase in net patient care revenues, which
increased to $36.0 million from $27.9 million in fiscal 2006. The improvement in
net patient care revenue is mostly the result of a new capitated contract. This
was offset by a 21% year-over-year decrease in pharmaceutical study revenues
which total $4.6 million versus $5.8 million in fiscal 2006. This decrease is
largely due to the delay in the start of some significant studies and an
unusually large study that occurred in the last half of fiscal 2006. Contract
support services revenue increased 4% from $4.4 million to $4.5 million
year-over-year, primarily due to increases in contract rates.
Total operating expenses were $42.1 million, an increase of 21% from $34.8
million in fiscal 2006. The increase was primarily due to a 38% increase in
patient care expense resulting from increased patient census and utilization of
patient services. The provision for bad debt remained approximately the same as
the previous year at $1.9 million and administrative expenses increased 13% to
$12.7 million.
Income from operations for the fiscal year was $3.0 million, a 5% decrease from
$3.2 million in fiscal 2006. Net income was $1.7 million or $0.09 per basic and
fully diluted share (based on 19.3 million shares), a decrease of 58% from $4.1
million or $0.21 per basic and $0.20 per fully diluted share (based on 18.2
million shares) in the prior year. This decrease is primarily the result of a
$1.1 million provision for tax expense recorded in fiscal 2007, as compared to
$1.3 million in income tax benefit recorded in fiscal 2006.
Income before taxes increased 3% to a record $2.8 million from $2.7 million in
fiscal 2006. This increase was primarily due to the two new contracts added
during the year that are projected to increase gross revenues by $10 million
annually and increased patient census. This increase is significant since it
includes ramp-up costs of these contracts and uncapitalized costs of the
Meditech software implementation in progress and the construction in progress of
the Seven Hills Behavioral Institute.
"Fiscal 2007 was an excellent year for Pioneer, as we realized a number of major
milestones across our organization," said Shear. "Our Harmony Healthcare
subsidiary signed the largest contract in company history and we started
construction on our new major facility near Las Vegas. Our success was reflected
in another year of record revenues and record pre-tax profit, as well as record
stockholders' equity. Supported by an expanded and more favorable credit
facility, our pipeline for new business and outlook for internal expansion has
never been stronger. This has set the stage for another record year in fiscal
2008."
The company's cash and equivalents totaled $3.4 million at June 30, 2007, an
increase from $1.6 million at the end of the previous fiscal year. Total net
receivables from patient care at 2007 fiscal year end was $6.6 million, a
decrease of 6% from $7.0 million at the previous year end. The balance sheet
current ratio was 2:1 at June 30, 2007. Stockholders' equity increased 36% to a
record $18.3 million at June 30, 2007 from $13.5 million at the end of the
previous year.
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Teleconference Information
PHC will host a conference call today at 4:30 p.m., Eastern Time. A question and
answer session will follow management's presentation.
To participate in the call, dial the appropriate number 5-10 minutes prior to
the start time, request the PHC conference call and provide the conference ID.
Domestic callers: 1-800-683-1525
International callers: 1-973-872-3197
Conference ID#: 9241101
A web simulcast of the call can be accessed via PHC's website at
www.phc-inc.com. The call will be available for replay starting at 7:30 p.m.
Eastern Time until October 25, 2007:
Toll-Free Replay number: 1-877-519-4471
International Replay number: 1-973-341-3080
Replay PIN #: 9241101
If you have any difficulty connecting with the conference call or webcast,
please contact the Liolios Group at 949-574-3860.
About PHC, Inc.
PHC, dba 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.
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.
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PHC, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 30,
2007 2006
__________ _________
ASSETS
Current assets:
Cash and cash equivalents $3,395,173 $1,820,105
Accounts receivable, net of allowance for
doubtful accounts of $3,764,585
and $3,100,586 at June 30, 2007 and 2006,
respectively 6,524,387 6,955,475
Pharmaceutical research receivables 1,942,268 1,470,019
Prepaid expenses 688,600 490,655
Other receivables and advances 868,628 751,791
Deferred tax assets 2,354,000 3,110,000
___________ ___________
Total current assets 15,817,073 14,598,045
___________ ___________
Accounts receivable, non-current 35,000 40,000
Other receivables 91,697 53,457
Property and equipment, net 2,121,191 1,799,888
Deferred financing costs, net of amortization of
$143,376 and $106,422 at June
30, 2007 and 2006, respectively 163,733 117,023
Customer relationships, net of amortization of
$380,000 and $260,000 at June 30, 2007
and 2006, respectively 2,020,000 2,140,000
Goodwill 3,508,576 2,664,643
Other assets 3,465,356 571,931
___________ ___________
Total assets $27,178,609 $21,984,987
=========== ===========
LIABILITIES
Current liabilities:
Accounts payable $ 1,261,841 $ 1,509,659
Current maturities of long-term debt 1,134,300 918,013
Revolving credit note 1,518,742 1,603,368
Deferred revenue 433,301 385,742
Current portion of obligations under capital
leases 205,858 57,881
Accrued payroll, payroll taxes and benefits 1,631,693 1,619,672
Accrued expenses and other liabilities 1,702,772 1,026,419
___________ ___________
Total current liabilities 7,888,507 7,120,754
Long-term debt, less current maturities 381,255 1,021,546
Obligations under capital leases 226,706 61,912
Deferred tax liabilities 432,000 325,000
___________ ___________
Total liabilities 8,928,468 8,529,212
___________ ___________
Commitments and contingent liabilities
STOCKHOLDERS' EQUITY
Preferred stock, 1,000,000 shares authorized,
none issued or outstanding -- --
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Class A Common Stock, $.01 par value; 30,000,000
shares authorized, 19,622,076 and 17,874,966
shares issued at June 30, 2007 and 2006,
respectively 196,221 178,749
Class B common stock, $.01 par value; 2,000,000 shares
authorized, 775,760 and 775,760 issued and
outstanding at June 30, 2007 and 2006,
respectively, each convertible into one share of
Class A Common Stock 7,758 7,758
Additional paid-in capital 26,812,808 23,718,197
Treasury stock, 199,098 and 199,098 class A
common shares at cost at June 30, 2007 and 2006,
respectively. (191,700) (191,700)
Accumulated deficit (8,574,946) (10,257,229)
___________ ___________
Total stockholders' equity 18,250,141 13,455,775
___________ ___________
Total liabilities and stockholders'
equity $27,178,609 $21,984,987
=========== ===========
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PHC, INC. AND SUBSIDIARIES
Consolidated Statements of Income
For the Years Ended June 30,
2007 2006 2005
____ ____ ____
Revenues:
Patient care, net $36,022,529 $27,861,701 $26,087,088
Pharmaceutical study 4,564,314 5,799,815 4,509,338
Contract support services 4,540,634 4,351,576 3,466,832
___________ ___________ ___________
Total revenues 45,127,477 38,013,092 34,063,258
___________ ___________ ___________
Operating expenses:
Patient care expenses 19,738,357 14,269,540 12,905,286
Patient care expenses,
pharmaceutical 2,182,357 2,242,900 1,676,749
Cost of contract support services 3,102,551 2,676,340 2,197,518
Provision for doubtful accounts 1,933,499 1,912,516 1,272,037
Administrative expenses 12,722,007 11,210,296 9,667,138
Administrative expenses,
pharmaceutical 2,438,802 2,517,074 2,757,118
___________ ___________ ___________
Total operating expenses 42,117,573 34,828,666 30,475,846
___________ ___________ ___________
Income from operations 3,009,904 3,184,426 3,587,412
___________ ___________ ___________
Other income (expense):
Interest income 159,946 68,397 73,176
Interest expense (649,166) (606,893) (654,871)
Other income, net 308,599 89,449 76,760
___________ ___________ ___________
Total other expense, net (180,621) (449,047) (504,935)
___________ ___________ ___________
Income before income taxes 2,829,283 2,735,379 3,082,477
Benefit from (provision for) income
taxes (1,147,000) 1,310,103 73,423
___________ ___________ ___________
Net income $ 1,682,283 $ 4,045,482 $3,155,900
============ =========== ===========
Basic net income per common share $ 0.09 $ 0.22 $ 0.18
============ =========== ============
Basic weighted average number of shares
outstanding 19,287,665 18,213,901 17,574,678
=========== ========== ============
Fully diluted net income per common
share $ 0.09 $ 0.21 $ 0.17
=========== =========== ============
Fully diluted weighted average number
of shares outstanding 19,704,697 19,105,193 5 18,364,076
=========== =========== ============
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