PHC announces second-quarter fiscal 2010 results

Feb 11 2010

PHC, Inc., d/b/a Pioneer Behavioral Health (NYSE Amex: PHC), “Pioneer” or (the “Company”), a leading provider of inpatient and outpatient behavioral health services, reported financial results for the Company's 2010 second fiscal quarter ended December 31, 2009. The results exclude the operations of the Company`s research division, Pivotal Research Centers, Inc. ("Pivotal"), which was sold during the 2009 third fiscal quarter and was accounted for as a discontinued operation.

“We reported another quarter of improved operating results and GAAP profitability in what is seasonally the slowest period of the year due to the holiday season”

Total net revenue from continuing operations increased 16.7% to $12.9 million for the three months ended December 31, 2009 compared to $11.0 million for the three months ended December 31, 2008. The revenue increase is due to higher net patient care revenue, which was partially offset by a decline in contract services revenue. The fiscal second quarter is seasonally the Company’s slowest.

Net patient care revenue increased 18. 7% to $12.0 million for the three months ended December 31, 2009 from $10.1 million for the three months ended December 31, 2008. The increase in revenue was due primarily to increased census across the Company’s facilities, including higher census at Seven Hills Hospital in Las Vegas and the Company’s new chemical dependency unit at Harbor Oaks Hospital in Michigan which opened in September 2009. Contract support services revenue provided by Wellplace declined 4.6% to $0.8 million for the three months ended December 31, 2009 compared to $0.9 million in the year earlier period. The decrease was due to the expiration of the Company's smoking cessation contract with a government contractor in the first quarter of last year. The Company expects to increase this revenue through new contracts for EAP (Employee Assistance Programs).

Income from operations improved $1.4 million to $0.5 million for the 2010 fiscal second quarter compared to a loss of $(0.8) million in the same period a year ago. The 2010 fiscal second quarter results were impacted by an expense of approximately $135,000 incurred in connection with a lease termination. Income before taxes was $0.5 million for the three-month period ended December 31, 2009 compared to a pre-tax loss of $0.9 million in the year-earlier period. Net income applicable to common shareholders was $0.3 million for the fiscal 2010 second quarter, or $0.01 per diluted share, compared to a net loss of $1.7 million or $0.09 per share in the fiscal 2009 second quarter. The fiscal 2009 second quarter results included a loss of $1.3 million associated with the sale of Pivotal. The 2010 fiscal second quarter represented the Company’s fourth consecutive quarter of profitability.

For the six months ended December 31, 2009, total net revenue from continuing operations was $25.5 million compared to $22.7 million in the year earlier period. Net patient care revenue was $23.8 million for the six months ended December 31, 2009 compared to $20.7 million in the previous year period. In the same six-month period, income from operations was $0.9 million compared to a loss of $1.3 million in the six months in fiscal 2009. Net income applicable to common stockholders was $0.5 million for the six months ended December 31, 2009, or $0.03 per diluted share compared to a net loss of $2.0 million, or a loss of $0.10 per share, for the previous year period.

As of December 31, 2009, the Company had cash and cash equivalents of $2.8 million. Stockholders’ equity improved from $16.0 million as of June 30, 2009 to $16.4 million as of December 31, 2009.

"We reported another quarter of improved operating results and GAAP profitability in what is seasonally the slowest period of the year due to the holiday season,” said Bruce A. Shear, Pioneer's president and CEO. “Despite this, net patient care revenue increased sequentially, and profitability, as reflected by gross margins in net patient care revenue increased from 41.6% in the year earlier period to 46.3% in the current quarter, due to a more favorable mix of patients. We continue to experience growing utilization across our facilities, and believe that as implementation of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 is applied to payers beginning mid-year, that utilization will accelerate. While we expect that there will continue to be opportunities to reinvest in our business, we believe our solid balance sheet also allows us to selectively pursue acquisitions that would allow the Company to accelerate its growth. We expect operating results will continue to improve and believe the future is exciting.”