Orion HealthCorp Announces First Quarter 2007 Results

  
    
  
  
    
      Orion HealthCorp, Inc. (AMEX: ONH) today announced its financial results 
      for the first quarter ended March 31, 2007.
    
    
      For the three months ended March 31, 2007, net operating revenues were 
      $8.3 million, a 48% increase over the $5.6 million for the same period 
      in the prior year and a 22% increased over the $6.8 million reported in 
      the fourth quarter of 2006. Net loss for the first quarter of 2007 was 
      $786,000, or $0.01 per basic share, compared with net income of 
      $771,000, or $0.07 per basic share, for the first quarter of 2006 and a 
      net loss of $3.9 million for the fourth quarter of 2006. Results for the 
      quarter ended March 31, 2007 included revenues and expenses for Rand 
      Medical Billing and the On Line companies, which the Company acquired in 
      December 2006. Earnings before interest, taxes, depreciation and 
      amortization (EBITDA) were $233,000 for the first quarter of 2007 as 
      compared with an EBITDA loss of $73,000 for the first quarter ended 
      March 31, 2006. (A reconciliation of EBITDA to net income for the first 
      quarter is provided on the attached unaudited consolidated condensed 
      statements of operations.)
    
    
      Terrence L. Bauer, chief executive officer of Orion HealthCorp, said, “The 
      positive momentum that began last year carried over into the first 
      quarter. Revenue increased substantially both year over year and 
      sequentially as our two recent acquisitions became fully integrated and 
      positive contributors. Excluding discontinued operations, EBITDA was up 
      to $233,000 compared with a loss of $73,000 in the first quarter of last 
      year. Our results are consistent with our expectations, and we believe 
      we can maintain this momentum throughout the remainder of the year.”
    
    
      The results for the three months ended March 31, 2007 and 2006, 
      respectively, include the consolidated results of Orion HealthCorp, 
      including its two reportable segments: Practice Management, which 
      provides business and management services to pediatric physician groups, 
      and Revenue Cycle Management, which provides physician billing and 
      collection services and practice management solutions, primarily to 
      hospital-based physicians. The surgery center business operated under 
      the name “SurgiCare” 
      and certain assets of Integrated Physician Services (IPS) are reported 
      as discontinued operations for the three months ended March 31, 2007 and 
      2006. Certain reclassifications have been made in the 2006 financial 
      statements to conform to the reporting format in 2007. Such 
      reclassifications had no effect on previously reported earnings. In 
      addition, the first quarter 2006 financial statements were restated to 
      reflect operations discontinued subsequent to the first quarter of 2006.
    
    
      The Company also announced the results of its 2007 annual meeting of 
      shareholders, which was held on May 9, 2007. With 98% of Orion’s 
      shareholders casting their votes, Orion shareholders elected the 
      following directors to serve until the annual meeting in 2008: Terrence 
      L. Bauer; Paul H. Cascio; Michael J. Finn; David Crane; and Joseph M. 
      Valley, Jr. In addition, shareholders ratified the appointment of UHY, 
      L.L.P. as the Company’s independent public 
      auditors for 2007.
    
    
      In closing, Mr. Bauer added, “The healthcare 
      environment is conducive to the growth of revenue cycle management and 
      practice management companies. Increasing costs, complex regulations and 
      decreased reimbursement are forcing physicians to seek outsourcing 
      alternatives. With our head of business development, Jay McBurney, in 
      place, we are actively pursuing multiple organic growth opportunities. 
      In our view, we are ideally positioned to add value to physicians and 
      create value for our shareholders.”
    
    
      The live broadcast of Orion HealthCorp’s first 
      quarter conference call will begin at 11:00 a.m. Eastern Time on 
      Tuesday, May 15, 2007. An online replay of the call will be available 
      for 30 days following the conclusion of the live broadcast. A link for 
      these events can be found on the Company’s 
      website at www.orionhealthcorp.com 
      or at www.earnings.com.
    
    
      Orion’s mission is to provide superior 
      billing, collections, practice, business and financial management 
      services for physicians, resulting in optimal profitability for its 
      clients and increased enterprise value for its stakeholders. For more 
      information on Orion HealthCorp, Inc., visit the Company’s 
      website at www.orionhealthcorp.com.
    
    
      Certain statements in this press release constitute “forward-looking 
      statements” within the meaning of the 
      Securities Act of 1933, as amended, and the Securities Exchange Act of 
      1934, as amended (the “Acts”). 
      Any statements contained herein that are not statements of historical 
      fact are deemed to be forward-looking statements, including all 
      statements regarding improving financial metrics and future growth.
    
    
      The forward-looking statements in this press release are based on 
      current beliefs, estimates and assumptions concerning the operations, 
      future results, and prospects of Orion HealthCorp, Inc. and the other 
      companies described herein. As actual operations and results may 
      materially differ from those assumed in forward-looking statements, 
      there is no assurance that forward-looking statements will prove to be 
      accurate. Forward-looking statements are subject to the safe harbors 
      created in the Acts. Any number of factors could affect future 
      operations and results, including without limitation, changes in federal 
      or state healthcare laws and regulations and third party payer 
      requirements, changes in costs of supplies, the loss of major customers, 
      increases in labor and employee benefit costs, increases in interest 
      rates on the Company’s indebtedness as well 
      as general market conditions, competition and pricing, and the Company’s 
      ability to successfully implement its business strategies and integrate 
      acquisitions, including the expense and impact of any potential 
      acquisitions and the ability to obtain necessary approvals and 
      financing. Orion HealthCorp, Inc. undertakes no obligation to update 
      publicly any forward-looking statements, whether as a result of new 
      information or future events.
    
    
      
        
           
        
      
      
        
          
            ORION HEALTHCORP, INC.
          
        
      
      
        
          
            Unaudited Consolidated Condensed Statements of Operations
          
        
      
      
        
          
            (in thousands, except per share amounts)
          
        
      
      
        
           
        
      
      
        
        
        
        
        
          
            Three Months Ended
          
        
      
      
        
        
        
        
        
          
            March 31,
          
        
      
      
        
        
        
        
        
          
            2007 
          
        
        
        
        
          
            2006 
          
        
      
      
        
        
        
        
        
          
            (Unaudited)
          
        
        
        
        
          
            (Unaudited)
          
        
      
      
        
          Net operating revenues
        
        
        
        
          $8,285 
        
        
        
        
          $5,609 
        
      
      
        
          Operating expenses
        
        
        
        
          8,761 
        
        
        
        
          6,087 
        
      
      
        
           
        
      
      
        
          Loss from continuing operations before other income (expense)
        
        
        
        
          (476)
        
        
        
        
          (478)
        
      
      
        
          Other income (expense), net
        
        
        
        
          (340)
        
        
        
        
          546 
        
      
      
        
          Income (loss) from continuing operations
        
        
        
        
          (816)
        
        
        
        
          68 
        
      
      
        
          Income from operations of discontinued components
        
        
        
        
          30 
        
        
        
        
          703 
        
      
      
        
           
        
      
      
        
          Net income (loss)
        
        
        
        
          $(786)
        
        
        
        
          $771 
        
      
      
        
           
        
      
      
        
          Weighted average common shares outstanding:
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
          105,493 
        
        
        
        
          12,428 
        
      
      
        
          Diluted
        
        
        
        
          105,493 
        
        
        
        
          84,127 
        
      
      
        
           
        
      
      
        
          Income (loss) per share:
        
        
        
        
        
        
        
        
        
      
      
        
          Basic:
        
        
        
        
        
        
        
        
        
      
      
        
          Net income (loss) per share from continuing operations
        
        
        
        
          $(0.01)
        
        
        
        
          $0.01 
        
      
      
        
          Net income per share from discontinued operations
        
        
        
        
          0.00 
        
        
        
        
          0.06 
        
      
      
        
          Net income (loss) per share
        
        
        
        
          $(0.01)
        
        
        
        
          $0.07 
        
      
      
        
           
        
      
      
        
          Diluted:
        
        
        
        
        
        
        
        
        
      
      
        
          Net income (loss) per share from continuing operations
        
        
        
        
          $(0.01)
        
        
        
        
          $0.00 
        
      
      
        
          Net income per share from discontinued operations
        
        
        
        
          0.00 
        
        
        
        
          0.01 
        
      
      
        
          Net income (loss) per share
        
        
        
        
          $(0.01)
        
        
        
        
          $0.01 
        
      
      
        
           
        
      
      
        
           
        
      
      
        
          Reconciliation of EBITDA to net loss:
        
        
        
        
        
        
        
        
        
      
      
        
          EBITDA
        
        
        
        
          $233 
        
        
        
        
          $(73)
        
      
      
        
          Less: Depreciation and amortization
        
        
        
        
          (709)
        
        
        
        
          (405)
        
      
      
        
          Less: Total other income (expenses), net
        
        
        
        
          (340)
        
        
        
        
          546 
        
      
      
        
          
            Less: Income from operations of discontinued components, including 
            net gain on disposal
          
        
        
        
        
          30 
        
        
        
        
          703 
        
      
      
        
          Net income (loss)
        
        
        
        
          $(786)
        
        
        
        
          $771 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            ORION HEALTHCORP, INC.
          
        
      
      
        
          
            Consolidated Condensed Balance Sheets
          
        
      
      
        
          
            (in thousands, except share amounts)
          
        
      
      
        
           
        
      
      
        
        
        
        
        
          
            March 31,
          
        
        
        
        
          
            Dec. 31,
          
        
      
      
        
        
        
        
        
          
            2007 
          
        
        
        
        
          
            2006 
          
        
      
      
        
        
        
        
        
          
            (Unaudited)
          
        
        
        
        
        
      
      
        
          Current assets:
        
        
        
        
        
        
        
        
        
      
      
        
          Cash and cash equivalents
        
        
        
        
          $249 
        
        
        
        
          $644 
        
      
      
        
          Accounts receivable, net
        
        
        
        
          3,395 
        
        
        
        
          3,575 
        
      
      
        
          Inventory
        
        
        
        
          366 
        
        
        
        
          278 
        
      
      
        
          Prepaid expenses and other current assets
        
        
        
        
          635 
        
        
        
        
          407 
        
      
      
        
          Assets held for sale
        
        
        
        
          524 
        
        
        
        
          502 
        
      
      
        
          Total current assets
        
        
        
        
          5,169 
        
        
        
        
          5,406 
        
      
      
        
           
        
      
      
        
          Property and equipment, net
        
        
        
        
          676 
        
        
        
        
          711 
        
      
      
        
           
        
      
      
        
          Other long-term assets:
        
        
        
        
        
        
        
        
        
      
      
        
          Intangible assets, including goodwill, net
        
        
        
        
          21,628 
        
        
        
        
          22,158 
        
      
      
        
          Other assets, net
        
        
        
        
          1,807 
        
        
        
        
          1,908 
        
      
      
        
          Total other long-term assets
        
        
        
        
          23,435 
        
        
        
        
          24,066 
        
      
      
        
          Total assets
        
        
        
        
          $29,280 
        
        
        
        
          $30,183 
        
      
      
        
           
        
      
      
        
          Current liabilities:
        
        
        
        
        
        
        
        
        
      
      
        
          Accounts payable and accrued expenses
        
        
        
        
          $6,480 
        
        
        
        
          $6,938 
        
      
      
        
          Current portion of capital lease obligations and long-term debt
        
        
        
        
          2,282 
        
        
        
        
          1,847 
        
      
      
        
          Current portion of long-term debt held by related parties
        
        
        
        
          550 
        
        
        
        
          325 
        
      
      
        
          Liabilities held for sale
        
        
        
        
          163 
        
        
        
        
          159 
        
      
      
        
          Total current liabilities
        
        
        
        
          9,475 
        
        
        
        
          9,269 
        
      
      
        
           
        
      
      
        
          Long-term liabilities:
        
        
        
        
        
        
        
        
        
      
      
        
          Capital lease obligations and long-term debt, net of current portion
        
        
        
        
          6,858 
        
        
        
        
          6,989 
        
      
      
        
          Long-term debt, net of current portion, held by related parties
        
        
        
        
          4,256 
        
        
        
        
          4,541 
        
      
      
        
          Total long-term liabilities
        
        
        
        
          11,114 
        
        
        
        
          11,530 
        
      
      
        
           
        
      
      
        
          Stockholders' equity:
        
        
        
        
        
        
        
        
        
      
      
        
          
            Preferred stock, par value $0.001; 20,000,000 shares authorized; 
            no shares issued and outstanding
          
        
        
        
        
          -- 
        
        
        
        
          -- 
        
      
      
        
          
            Common stock, Class A, par value $0.001; 300,000,000 shares 
            authorized and 105,499,487 and 105,374,487 shares issued and 
            outstanding at March 31, 2007 and December 31, 2006, respectively
          
        
        
        
        
          105 
        
        
        
        
          105 
        
      
      
        
          
            Common stock, Class D, par value $0.001; 50,000,000 shares 
            authorized and 24,658,955 shares issued and outstanding at March 
            31, 2007 and December 31, 2006
          
        
        
        
        
          25 
        
        
        
        
          25 
        
      
      
        
          Additional paid-in capital
        
        
        
        
          63,969 
        
        
        
        
          63,876 
        
      
      
        
          Accumulated deficit
        
        
        
        
          (55,370)
        
        
        
        
          (54,584)
        
      
      
        
          Treasury stock - at cost; 9,140 shares
        
        
        
        
          (38)
        
        
        
        
          (38)
        
      
      
        
          Total stockholders' equity
        
        
        
        
          8,691 
        
        
        
        
          9,384 
        
      
      
        
          Total liabilities and stockholders' equity
        
        
        
        
          $29,280 
        
        
        
        
          $30,183