PHC, INC. ANNOUNCES RECORD REVENUES AND NET INCOME FOR ITS
FISCAL 2006 THIRD QUARTER
FOR IMMEDIATE RELEASE
Company Contact: Investor Relations Contact:
___________________ ___________________________
PHC, Inc. Hayden Communications, Inc.
Bruce A. Shear Matthew Hayden
978-536-2777 843-272-4653
>> Q3FY06 REVENUE INCREASED 13.6% TO $10.0 MILLION VS. $8.8 MILLION OVER
Q3FY05
>> Q3FY06 NET INCOME OF $950,549, $0.05 VS. $880,456, $0.05 FOR Q3FY05
>> Q3FY06 NON-PATIENT OPERATIONS REVENUE INCREASED 31.2% OVER Q3FY05
>> YEAR-TO-DATE REVENUES UP 11.3% FROM THE SAME PERIOD LAST YEAR
>> COMPANY BREAKS GROUND ON LAS VEGAS HOSPITAL
>> PIVOTAL RESEARCH SIGNS LARGEST CONTRACT IN COMPANY HISTORY - ENTERS PHASE I
MARKET
>> HARMONY AND WELLPLACE ANNOUNCE NEW CONTRACTS TO DRIVE INCREMENTAL GROWTH
Peabody, Mass., May 15, 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
third quarter financial results, for the quarter ended March 31, 2006.
Third Quarter and Recent Highlights:
o Pioneer's Pivotal Research Centers subsidiary recently initiated a
large Phase I study with a Fortune 500 global pharmaceutical company.
The contract, which is the largest in Pivotal's history and Pivotal's
first Major Phase I trial, involves the evaluation of a compound for
the treatment of patients with Type 2 (insulin resistant) Diabetes and
is anticipated to generate in excess of $1.1 million in revenue for
Pivotal, and could be as much as $2 million.
o Pioneer's Harmony Healthcare subsidiary was awarded a $300,000, 3-year
annual contract for Member Assistance Program (MAP) and Mental Health
Services for the Teamsters Local 631 Security Fund, effective June 1.
The Teamsters Local 631 Security Fund is a multi-employer,
Taft-Hartley Trust that provides benefits to approximately 4,900
employee participants in Southern Nevada.
o Harmony was selected as the EAP and Behavioral Health provider for a
number of the larger Casino's in Las Vegas. The new, multi-year
contract is effective April 1, and will cover more than 6,500 total
employees and more than 13,000 covered lives and is expected to
generate in excess of $400,000 in incremental business additions to
the existing Harmony Healthcare base of business.
o Pioneer broke ground for its Seven Hills Behavioral Institute, a
60-bed acute care psychiatric and chemical dependency hospital,
located in Henderson, Nevada on March 15, 2006. The facility will
increase Pioneer's total number of beds to approximately 250
nationwide and is expected to contribute annualized revenue of
approximately $8.5 million when fully operational. The Company expects
the facility to be open during the first calendar quarter of 2007.
Financial Results
Total net revenue from operations increased 13.6 percent to $10.0 million
compared to $8.8 million for the third quarter last year, and increased 14.4
percent sequentially compared to the $8.7 million for the second fiscal quarter
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of 2006. Net patient care revenue increased 8.3 percent to $7.3 million from the
$6.7 million for the same period last year, and increased 12.8 percent
sequentially compared to the $6.5 million for the second quarter of fiscal 2006.
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 14.5
percent increase in patient days. Revenue from pharmaceutical studies increased
38.1 percent to $1.5 million for the third quarter compared to $1.1 million for
the third quarter last year. Contract support services revenue provided by
Wellplace increased 22.9 percent to $1.1 million for the quarter compared to
$925,000 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 13.6 percent to $8.8 million
from $7.8 million during the third 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. In addition,
the Company's provision for doubtful accounts increased to $334,248 from
$217,756 in the year ago period while the total allowance for doubtful accounts
was $3.1 million, compared to $3.2 million as of December 31, 2005. The
percentage of bad debt expense to net patient care revenue decreased from 9.8
percent for the quarter ended September 30, 2005, to 7.4 percent for the quarter
ended December 31, 2005 to 4.6 percent for the current quarter ended March 31,
2006.
We have made incremental progress in our collection activity as we recognized a
trend in sequentially lower bad debt expense as a percentage of patient revenue
since the billing issue occurred in the first quarter, confirming our belief
that the strength of our payer mix is intact" commented Bruce A. Shear,
Pioneer's President and Chief Executive Officer. "We expect to have our new
billing system installed by the end of this year and believe it will have a
positive impact on operating efficiencies and functionality over the entire
organization."
Other notable increases in operating expenses were a 24.2 percent in patient
care expense in the Company's pharmaceutical business, a 37.1 percent increase
in cost of contract support services and a 16.8 percent increase in
administrative expenses as compared to the year ago period. The increase in
patient care expense in the pharmaceutical business was necessary to support the
Company's over 38 percent revenue growth in this segment. 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 Detroit Behavioral Institute and pre-construction expenses
for the Las Vegas hospital.
Income from operations for the quarter was $1,112,980, above the $982,872
reported for the same period last year. Net income for the three months was
$950,549, or $0.05 per fully diluted share (based on 19.2 million shares)
compared to net income of $880,456, or $0.05 per fully diluted share (based on
18.7 million shares) for the third quarter last year. The net income for the
third quarter of 2006 increased 174.1 percent sequentially from $346,782
reported in the second quarter of 2006. The Company's provision for income taxes
was $45,427 for the quarter, versus no provision for income taxes in the
prior-year period due to the Company's net operating loss carry-forwards.
"The third fiscal quarter and year-to-date periods represent some of the most
important strategic events in the Company's history," Mr. Shear continued. "We
reported major announcements in each of our three business units, which
collectively will drive future top line growth and profitability, particularly
as we enter our 2007 fiscal year. We broke ground on the Seven Hills Medical
Complex, our biggest project in the Company's history, a 60-bed acute
psychiatric hospital in Las Vegas, and we have already secured commitments from
major referral sources to ensure a rapid utilization upon opening the new
facility. Similar to our Detroit expansion, we anticipate high demand and census
due to the lack of adequate facilities currently available. Our Clinical
research division continues to grow, supported by signing its largest contract
to date. This significant Phase I contract is expected to yield revenues over a
$1 million, which could ultimately be as high as $2 million. Wellplace and
Harmony have also contributed with previously announced contracts that will
accelerate our growth rate. As our core business continues to grow we anticipate
a moderation in overall operating expenses leading to higher future levels of
profit and margin improvements."
For the first nine months of fiscal 2006, the Company reported revenue of $27.6
million, an increase of 11.3 percent compared to the $24.8 million for the first
nine months of last year. Net patient care revenues were $20.5 million, an
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increase of 8.3 percent compared to the $18.9 million reported for the first
nine months of last year. Pharmaceutical study revenues increased 15.6 percent
to $3.9 million from the $3.4 million reported for the same period last year.
Contract support services revenue increased 28.1 percent to $3.2 million from
$2.5 million last year. Total operating expenses were $25.3 million, an increase
of 13.9 percent from the $22.2 million for the first nine months of fiscal 2005,
including a 83.2 percent increase in the Company's bad debt expense to $1.5
million due to the previously mentioned software billing issue and a 16.9
percent increase in administrative expenses. Income from operations was $2.3
million, a decrease of 11.2 percent compared to the $2.5 million reported last
year. Net income for the nine-month period was $1.7 million or $0.09 per fully
diluted share (based on 19.2 million shares), compared with net income of $2.1
million or $0.11 per fully diluted share (based on 18.2 million shares) for the
same period last year.
The Company reported $957,437 in cash as of March 31, 2006, up from $917,630 on
June 30, 2005. Total net receivables from patient care for the third quarter of
2006, were $6.6 million which was a 5.0 percent increase from $6.3 million at
June 30, 2005. The Company's balance sheet reported a current ratio of 1.7:1 on
March 31, 2006. Stockholders' equity increased 19.1 percent to $10.8 million on
March 31, 2006 from $9.1 million on June 30, 2005
Teleconference Information
The Company will conduct a conference call to discuss the fiscal 2006 third
quarter results on Monday, May 15, 2006, at 4:30 p.m. Eastern Time. Interested
parties within the United States can access the call by dialing 866-825-3209 and
international callers may dial 617-213-8061. Please use passcode 80392926. A
replay of the call also will be available until May 22, 2006 at 888-286-8010 for
callers within the United States, and 617-801-6888 for international callers.
Please use passcode 12768524 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, 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:
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
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, June 30,
ASSETS 2006 2005
_______ ___________ ___________
(unaudited)
Current assets:
Cash and cash equivalents $ 957,437 $ 917,630
Accounts receivable, net of allowance
for doubtful accounts of
$3,117,247 at March 31, 2006
and $1,956,984 at June 30, 2005 6,601,905 6,265,381
Pharmaceutical receivables 1,977,983 1,414,340
Prepaid expenses 521,297 146,988
Other receivables and advances 612,196 638,654
Deferred income tax asset 1,415,344 1,375,800
___________ ___________
Total current assets 12,086,162 10,758,793
Accounts receivable, non-current 45,000 65,000
Other receivable 97,350 84,422
Property and equipment, net 1,865,042 1,516,114
Deferred financing costs, net of amortization
of $110,910 at March 31,
2006 and $76,234 June 30, 2005 126,262 145,938
Customer relationships, net of amortization
of $230,000 at March 31,
2006 and $140,000 at June 30, 2005 2,170,000 2,260,000
Goodwill 2,704,389 2,648,209
Other assets 506,139 417,172
___________ ___________
Total assets $19,600,344 $ 17,895,648
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
____________________________________
Current liabilities:
Accounts payable $ 1,618,948 $ 907,569
Current maturities of long-term debt 881,832 769,599
Revolving credit note 2,040,605 2,385,629
Deferred revenue 225,290 85,061
Current portion of obligations under capital
leases 59,265 29,777
Accrued payroll, payroll taxes and benefits 1,414,659 1,411,653
Accrued expenses and other liabilities 763,093 1,063,189
___________ ___________
Total current liabilities 7,003,692 6,652,477
Long-term debt 1,281,275 1,900,022
Obligations under capital leases 75,446 12,210
Deferred tax liability 244,874 229,000
___________ ___________
Total liabilities 8,605,287 8,793,709
___________ ___________
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, 17,617,764
and 17,490,818 shares issued at March 31,
2006 and June 30, 2005, respectively 176,178 174,908
Class B common stock, $.01 par value,
2,000,000 shares authorized, 776,962
and 776,991 issued and outstanding at
March 31, 2006 and June 30, 2005,
respectively, each convertible into one
share of Class A common Stock 7,769 7,770
Additional paid-in capital 23,623,983 23,377,059
Treasury stock, 199,098 shares and 181,738
shares of Class A common stock at March
31, 2006 and June 30, 2005 respectively,
at cost (191,700) (155,087)
Accumulated deficit (12,621,173) (14,302,711)
___________ ___________
Total stockholders' equity 10,995,057 9,101,939
Total liabilities and stockholders' equity $19,600,344 $17,895,648
============ ============
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PHC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2006 2005 2006 2005
__________ _________ __________ __________
Revenues:
Patient care, net $7,292,804 $6,734,949 $20,471,140 $18,895,774
Pharmaceutical studies 1,523,277 1,103,205 3,913,370 3,384,347
Contract support services 1,137,878 925,528 3,216,788 2,510,277
__________ _________ __________ __________
Total revenues 9,953,959 8,763,682 27,601,298 24,790,398
__________ _________ __________ __________
Operating expenses:
Patient care expenses 3,787,166 3,533,279 10,341,470 9,541,581
Patient care expenses,
pharmaceutical 552,477 444,999 1,626,465 1,247,106
Cost of contract support
services 713,438 520,475 1,898,300 1,595,478
Provision for doubtful
accounts 334,248 217,756 1,466,903 800,503
Administrative expenses 2,815,164 2,410,474 8,193,940 7,008,636
Administrative expenses,
pharmaceutical 638,486 653,827 1,810,776 2,049,492
__________ _________ __________ __________
Total operating
expenses 8,840,979 7,780,810 25,337,854 22,242,796
__________ _________ __________ __________
Income from operations 1,112,980 982,872 2,263,444 2,547,602
__________ _________ __________ __________
Other income (expense):
Interest income 11,281 15,004 49,542 49,535
Other income 25,309 31,568 57,357 58,060
Interest expense (153,594) (148,988) (483,150) (491,840)
__________ _________ __________ __________
Total other expenses,
net (117,004) (102,416) (376,251) (384,245)
__________ _________ __________ __________
Income before provision
for taxes 995,976 880,456 1,887,193 2,163,357
Provision for income taxes 45,427 -- 205,655 98,469
__________ _________ __________ __________
Net income $ 950,549 $880,456 $1,681,538 $2,064,888
========== ========= ========== ==========
Basic net income per
common share $ 0.05 $ 0.05 $ 0.09 $ 0.12
========== ========= ========== ==========
Basic weighted average
number of shares
outstanding 18,187,750 17,648,412 18,145,789 17,474,155
========== ========= ========== ==========
Fully diluted net income
per common share $ 0.05 $ 0.05 $ 0.09 $ 0.11
========== ========= ========== ==========
Fully diluted weighted
average number of
shares outstanding 19,212,589 18,690,012 19,242,777 18,234,480
========== ========= ========== ===========
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