EXHIBIT 99.1 PRESS RELEASE: INTEGRATED HEALTHCARE HOLDINGS, INC. ANNOUNCES
SECOND QUARTER EARNINGS
IHHI ANNOUNCES SECOND QUARTER EARNINGS
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FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
LARRY ANDERSON
(714) 953-3659 OR (949) 322-9245
SANTA ANA, CA - November 16, 2007 - Integrated Healthcare Holdings, Inc.
("IHHI") (OTCBB: IHCH), the operator of four Orange County, California
hospitals, has reported its financial results for the second quarter ended
September 30, 2007.
Second Quarter Results
IHHI reported consolidated net operating revenues of $95.4 million for the three
months ended September 30, 2007, an increase of $10.1 million, or 11.8%, from
the comparable period in 2006. Operating income for the three months ended
September 30, 2007 was $4.1 million compared to an operating loss of $4.6
million for the same period in 2006. The consolidated net income for the three
months ended September 30, 2007 was $1.1 million, or $0.01 per share, versus a
net loss of $7.0 million, or $0.08 per share, during the same period of 2006.
The net loss for the same period in 2006 was $7.8 million before recognition of
the change in fair value of derivative (this is a non-GAAP measure).
For the six months ended September 30, 2007, IHHI reported consolidated net
operating revenues of $182.2 million, an increase of $5.9 million, or 3.3%, from
the comparable period in 2006. Operating income for the six months ended
September 30, 2007 was $1.3 million compared to an operating loss of $3.6
million for the same period in 2006. The consolidated net loss for the six
months ended September 30, 2007 was $4.7 million, or $0.04 per share, versus
$4.8 million, or $0.06 per share, during the same period of 2006. The net loss
for the same period in 2006 was $9.9 million before recognition of the change in
fair value of derivative, representing a significant improvement in operating
results during 2007 (this is a non-GAAP measure).
IHHI management evaluates and makes operating decisions using various
performance measures. In addition to GAAP results, we also consider other
measures, such as "adjusted" EBITDA (earnings before interest, taxes,
depreciation and amortization), which is a non-GAAP term. Please see "Use of
Non-GAAP Financial Information" below.
Our adjusted EBITDA for the three months ended September 30, 2007 was $4.9
million, an increase of $8.8 million from adjusted EBITDA of ($3.9) million for
the same period in 2006. Our adjusted EBITDA for the six months ended September
30, 2007 was $2.9 million, an increase of $5.2 million from adjusted EBITDA of
($2.3) million for the same period in 2006.
Bruce Mogel, IHHI CEO, stated, "We are gratified to report the result of
considerable progress moving these operations to a fiscally sound basis. This
was the result of concerted efforts by our facility personnel and increasingly
supportive medical staff and community."
Management attributes the improved operating results to a series of cost control
and revenue enhancement initiatives which it monitors with each affiliate
hospital on a weekly basis. During the three months ended September 30, 2007 and
2006, IHHI received $3.0 million and $0, respectively, in supplemental funding
for indigent care, and $3.0 million and $3.5 million during the six months ended
September 30, 2007 and 2006, respectively. Such supplemental fundings may or may
not occur in future periods. Management commented further that the improved
operating results do not yet reflect the reduced borrowing costs resulting from
its refinancing efforts which took effect on October 9, 2007. The results of the
refinancing are expected to be displayed in the Company's future results.
Use of Non-GAAP Financial Information
To supplement our financial results presented in accordance with GAAP, we use a
non-GAAP financial measure we call adjusted EBITDA and define as net income
(loss) excluding depreciation and amortization, share-based compensation
expense, interest expense, change in fair value of derivative, minority interest
in variable interest entity, and income taxes. We present this non-GAAP
financial measure as a supplement to our GAAP financial results to provide our
investors with additional information to evaluate our operating results. This
non-GAAP financial measure should be read in conjunction with our condensed
consolidated financial statements included in our filing of Form 10-Q with the
Securities and Exchange Commission on November 14, 2007. A reconciliation of net
income (loss) to adjusted EBITDA for the three and six months ended September
30, 2007 and 2006 follows:
INTEGRATED HEALTHCARE HOLDINGS, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO
ADJUSTED EBITDA (A NON-GAAP MEASURE)
(amounts in 000's)
THREE MONTHS ENDED SEPTEMBER 30, SIX MONTHS ENDED SEPTEMBER 30,
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2007 2006 2007 2006
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(restated) (restated)
Net income (loss), as reported $ 1,126 $ (7,004) $ (4,649) $ (4,816)
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Adjustments to net income (loss):
Depreciation and amortization 800 655 1,593 1,325
Share-based compensation expense 58 -- 58 --
Interest expense 3,081 3,407 6,168 6,653
Change in fair value of derivative -- (779) -- (5,104)
Minority interest in variable interest entity (117) (187) (236) (329)
Income taxes -- -- -- --
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3,822 3,096 7,583 2,545
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Adjusted EBITDA (non-GAAP) $ 4,948 $ (3,908) $ 2,934 $ (2,271)
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Forward Looking Statements
Statements in this press release regarding the business of IHHI which are not
historical in nature are "forward-looking statements." Forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those discussed or projected. Although we
believe that the expectations reflected in such forward-looking statements are
reasonable, we can give no assurance that such expectations will prove to be
correct. Actual results may differ materially from those anticipated, estimated,
or projected in the forward-looking statements due to various risks and
uncertainties, including those discussed in our Annual Report on Form 10-K for
the year ended March 31, 2007 under the caption "Risk Factors." Readers are
cautioned not to place undue reliance on forward-looking statements, which speak
only as of their dates. IHHI assumes no obligation to update any forward-looking
statements to reflect events or circumstances occurring after the date of this
press release.
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INTEGRATED HEALTHCARE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in 000's, except per share amounts)
(unaudited)
THREE MONTHS ENDED SEPTEMBER 30, SIX MONTHS ENDED SEPTEMBER 30,
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2007 2006 2007 2006
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(restated) (restated)
Net operating revenues $ 95,376 $ 85,343 $ 182,168 $ 176,335
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Operating expenses:
Salaries and benefits 51,122 48,467 99,951 95,427
Supplies 12,277 12,325 24,580 24,353
Provision for doubtful accounts 7,353 9,167 15,584 18,840
Other operating expenses 17,323 16,662 34,180 35,017
Loss on sale of accounts receivable 2,411 2,630 4,997 4,969
Depreciation and amortization 800 655 1,593 1,325
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91,286 89,906 180,885 179,931
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Operating income (loss) 4,090 (4,563) 1,283 (3,596)
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Other income (expense):
Interest expense, net (3,081) (3,407) (6,168) (6,653)
Change in fair value of derivative -- 779 -- 5,104
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(3,081) (2,628) (6,168) (1,549)
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Income (loss) before provision for income
taxes and minority interest 1,009 (7,191) (4,885) (5,145)
Provision for income taxes -- -- -- --
Minority interest in variable interest entity 117 187 236 329
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Net income (loss) $ 1,126 $ (7,004) $ (4,649) $ (4,816)
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Per Share Data:
Income (loss) per common share
Basic $ 0.01 ($ 0.08) ($ 0.04) ($ 0.06)
Diluted $ 0.01 ($ 0.08) ($ 0.04) ($ 0.06)
Weighted average shares outstanding
Basic 136,870 85,013 126,643 84,684
Diluted 190,370 85,013 126,643 84,684
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INTEGRATED HEALTHCARE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in 000's, except par value)
(unaudited)
SEPTEMBER 30, MARCH 31,
2007 2007
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ASSETS
Current assets:
Cash and cash equivalents $ 1,470 $ 7,844
Restricted cash 20 4,968
Accounts receivable, net of allowance for doubtful
accounts of $1,822 and $2,355, respectively 21,466 19,370
Security reserve funds 18,332 7,990
Deferred purchase price receivable 12,543 16,975
Inventories of supplies 5,918 5,944
Due from governmental payers 7,557 1,378
Prepaid expenses and other current assets 9,134 8,097
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Total current assets 76,440 72,566
Property and equipment, net 56,951 58,172
Other assets 325 --
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Total assets $ 133,716 $ 130,738
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Debt, current $ 72,341 $ 72,341
Accounts payable 47,677 41,443
Accrued compensation and benefits 13,392 12,574
Warrant liability, current 10,700 14,906
Due to governmental payers 1,903 922
Other current liabilities 20,011 20,687
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Total current liabilities 166,024 162,873
Capital lease obligations, net of current portion
of $264 and $251, respectively 5,706 5,834
Minority interest in variable interest entity 1,480 1,716
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Total liabilities 173,210 170,423
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Commitments, contingencies and subsequent events
Stockholders' deficiency:
Common stock, $0.001 par value; 250,000 shares authorized;
137,096 and 116,304 shares ssued and outstanding, respectively 137 116
Additional paid in capital 30,408 25,589
Accumulated deficit (70,039) (65,390)
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Total stockholders' deficiency (39,494) (39,685)
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Total liabilities and stockholders' deficiency $ 133,716 $ 130,738
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INTEGRATED HEALTHCARE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in 000's)
(unaudited)
Six months ended September 30,
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2007 2006
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(restated)
Cash flows from operating activities:
Net loss $ (4,649) $ (4,816)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization of property and equipment 1,593 1,325
Provision for doubtful accounts 15,584 9,673
Amortization of debt issuance costs and intangible assets -- 483
Change in fair value of derivative -- (5,103)
Minority interest in net loss of variable interest entity (236) (409)
Noncash share-based compensation expense 58 --
Changes in operating assets and liabilities:
Accounts receivable (17,680) (11,872)
Security reserve funds (10,342) 8,610
Deferred purchase price receivables 4,432 (4,695)
Inventories of supplies 26 148
Due from governmental payers (6,179) (1,127)
Prepaid expenses, other current assets, and other assets (1,363) 1,446
Accounts payable 6,234 3,409
Accrued compensation and benefits 818 467
Due to governmental payers 981 1,952
Other current liabilities (675) (1,478)
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Net cash used in operating activities (11,398) (1,987)
-------- --------
Cash flows from investing activities:
Decrease in restricted cash 4,948 --
Additions to property and equipment (372) (164)
-------- --------
Net cash provided by (used in) investing activities 4,576 (164)
-------- --------
Cash flows from financing activities:
Proceeds from long term debt -- 2,000
Issuance of common stock 576 --
Variable interest entity distribution -- (180)
Payments on capital lease obligations (128) (48)
-------- --------
Net cash provided by financing activities 448 1,772
-------- --------
Net decrease in cash and cash equivalents (6,374) (379)
Cash and cash equivalents, beginning of period 7,844 4,970
-------- --------
Cash and cash equivalents, end of period $ 1,470 $ 4,591
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