Orion HealthCorp Announces Second Quarter 2007 Results

  
    
  
  
    
      Orion HealthCorp, Inc. (AMEX: ONH) today announced its financial results 
      for the second quarter and six months ended June 30, 2007.
    
    
      Terrence L. Bauer, chief executive officer of Orion HealthCorp, said, “We 
      continue to make progress as we strive to achieve our goal of becoming a 
      leading multi-regional physician billing, collections, practice 
      management and revenue cycle management company. We are working 
      diligently to improve existing operations and create organic growth, 
      while maintaining fiscal discipline and evaluating value-added 
      acquisitions. We are particularly focused on the cost savings and 
      operating efficiency opportunities available to us as a result of the 
      acquisitions completed in December. We are optimistic about the 
      remainder of the year.”
    
    
      For the three months ended June 30, 2007, net operating revenues were 
      $8.2 million, a 55.1% increase over the $5.3 million for the same period 
      in the prior year. Loss from continuing operations for the second 
      quarter of 2007 was $904,000, or $0.01 per basic share, compared with a 
      loss from continuing operations of $619,000, or $0.05 per basic share, 
      for the second quarter of 2006. Net income, including income from 
      discontinued operations of $1.0 million, was $116,000 for the second 
      quarter of 2007 compared with a net loss, including income from 
      discontinued operations of $139,000, of $480,000 for the second quarter 
      of 2006. Earnings before interest, taxes, depreciation and amortization 
      (EBITDA) were $162,000 for the second quarter of 2007 as compared with 
      an EBITDA loss of $92,000 for the second quarter ended June 30, 2006. (A 
      reconciliation of EBITDA to net income for the second quarter and six 
      months ended June 30, 2007 is provided on the attached unaudited 
      consolidated condensed statements of operations.)
    
    
      For the six months ended June 30, 2007, net operating revenues were 
      $16.5 million, a 51.3% increase over the $10.9 million for the same 
      period in the prior year. Loss from continuing operations for the first 
      half of 2007 was $1.7 million or $0.02 per basic share, compared with a 
      loss from continuing operations of $551,000, or $0.04 per basic share, 
      for the first half of 2006. Net loss, including income from discontinued 
      operations of $1.0 million, was $670,000, or $0.01 per basic share, 
      compared with net income, including income from discontinued operations 
      of $842,000, of $291,000, or $0.03 per basic share, for the first half 
      of 2006. EBITDA totaled $394,000 for the first six months of 2007 
      compared with an EBITDA loss of $166,000 for the prior year period.
    
    
      The results for the quarter and six months ended June 30, 2007, included 
      revenues and expenses for Rand Medical Billing and the On Line 
      companies, which the Company acquired in December 2006. In addition, 
      results for the three months and six months ended June 30, 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 Solutions (IPS) are reported 
      as discontinued operations for the three months and six months ended 
      June 30, 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 second quarter 2006 financial statements were restated to 
      reflect operations discontinued subsequent to the second quarter of 2006.
    
    
      In closing, Mr. Bauer added, “Although we are 
      disappointed by the fact that EBITDA in the second quarter of 2007 was 
      lower than EBITDA in the first quarter of the year, we have confidence 
      in our strategy and in the markets we serve. The demand for our services 
      is growing in a healthcare sector that continues to be stressed by 
      reimbursement reductions and cost pressures. Also, there are barriers to 
      entry that we have overcome, further distancing ourselves from current 
      and potential competitors. Our experience with physicians and reputation 
      for creating value for their practices set us apart. It is a 
      relationship business, and we have years of experience developing and 
      maintaining these critical physician partnerships.”
    
    
      The live broadcast of Orion HealthCorp’s 
      second quarter conference call will begin at 11:00 a.m. Eastern Time on 
      Friday, August 10, 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
          
        
        
        
        
          
            Six Months Ended
          
        
      
      
        
        
        
        
        
          
            June 30,
          
        
        
        
        
          
            June 30,
          
        
      
      
        
        
        
        
        
           
        
        
          
            2007
          
        
        
           
        
        
        
        
           
        
        
          
            2006
          
        
        
           
        
        
        
        
           
        
        
          
            2007
          
        
        
           
        
        
        
        
           
        
        
          
            2006
          
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net operating revenues
        
        
        
        
          $
        
        
          8,161
        
        
        
        
        
        
          $
        
        
          5,263
        
        
        
        
        
        
          $
        
        
          16,445
        
        
        
        
        
        
          $
        
        
          10,872
        
        
        
      
      
        
          Operating expenses
        
        
        
        
           
        
        
          8,708
        
        
           
        
        
        
        
           
        
        
          5,759
        
        
           
        
        
        
        
           
        
        
          17,468
        
        
           
        
        
        
        
           
        
        
          11,845
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Loss from continuing operations before other income (expense)
          
        
        
        
        
        
        
          (547
        
        
          )
        
        
        
        
        
        
          (496
        
        
          )
        
        
        
        
        
        
          (1,023
        
        
          )
        
        
        
        
        
        
          (973
        
        
          )
        
      
      
        
          Other income (expense), net
        
        
        
        
           
        
        
          (357
        
        
          )
        
        
        
        
           
        
        
          (123
        
        
          )
        
        
        
        
           
        
        
          (697
        
        
          )
        
        
        
        
           
        
        
          422
        
        
           
        
      
      
        
          Loss from continuing operations
        
        
        
        
        
        
          (904
        
        
          )
        
        
        
        
        
        
          (619
        
        
          )
        
        
        
        
        
        
          (1,719
        
        
          )
        
        
        
        
        
        
          (551
        
        
          )
        
      
      
        
          
            Income from operations of discontinued components
          
        
        
        
        
           
        
        
          1,020
        
        
           
        
        
        
        
           
        
        
          139
        
        
           
        
        
        
        
           
        
        
          1,050
        
        
           
        
        
        
        
           
        
        
          842
        
        
           
        
      
      
        
          Net income (loss)
        
        
        
        
          $
        
        
          116
        
        
           
        
        
        
        
          $
        
        
          (480
        
        
          )
        
        
        
        
          $
        
        
          (670
        
        
          )
        
        
        
        
          $
        
        
          291
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Weighted average common shares outstanding:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
        
        
          105,503
        
        
        
        
        
        
        
        
          12,591
        
        
        
        
        
        
        
        
          105,498
        
        
        
        
        
        
        
        
          12,510
        
        
        
      
      
        
          Diluted
        
        
        
        
        
        
          105,503
        
        
        
        
        
        
        
        
          12,591
        
        
        
        
        
        
        
        
          105,498
        
        
        
        
        
        
        
        
          89,319
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income (loss) per share:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          
            Net loss per share from continuing operations
          
        
        
        
        
          $
        
        
          (0.01
        
        
          )
        
        
        
        
          $
        
        
          (0.05
        
        
          )
        
        
        
        
          $
        
        
          (0.02
        
        
          )
        
        
        
        
          $
        
        
          (0.04
        
        
          )
        
      
      
        
          
            Income per share from discontinued operations
          
        
        
        
        
           
        
        
          0.01
        
        
           
        
        
        
        
           
        
        
          0.01
        
        
           
        
        
        
        
           
        
        
          0.01
        
        
           
        
        
        
        
           
        
        
          0.07
        
        
           
        
      
      
        
          Net income (loss) per share
        
        
        
        
          $
        
        
          0.00
        
        
           
        
        
        
        
          $
        
        
          (0.04
        
        
          )
        
        
        
        
          $
        
        
          (0.01
        
        
          )
        
        
        
        
          $
        
        
          0.03
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Diluted
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          
            Net loss per share from continuing operations
          
        
        
        
        
          $
        
        
          (0.01
        
        
          )
        
        
        
        
          $
        
        
          (0.05
        
        
          )
        
        
        
        
          $
        
        
          (0.02
        
        
          )
        
        
        
        
          $
        
        
          (0.01
        
        
          )
        
      
      
        
          
            Income per share from discontinued operations
          
        
        
        
        
           
        
        
          0.01
        
        
           
        
        
        
        
           
        
        
          0.01
        
        
           
        
        
        
        
           
        
        
          0.01
        
        
           
        
        
        
        
           
        
        
          0.01
        
        
           
        
      
      
        
          Net income (loss) per share
        
        
        
        
          $
        
        
          0.00
        
        
           
        
        
        
        
          $
        
        
          (0.04
        
        
          )
        
        
        
        
          $
        
        
          (0.01
        
        
          )
        
        
        
        
          $
        
        
          0.00
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Reconciliation of EBITDA to net income (loss):
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          EBITDA
        
        
        
        
          $
        
        
          162
        
        
        
        
        
        
          $
        
        
          (92
        
        
          )
        
        
        
        
          $
        
        
          394
        
        
        
        
        
        
          $
        
        
          (166
        
        
          )
        
      
      
        
          Less: Depreciation and amortization
        
        
        
        
        
        
          (709
        
        
          )
        
        
        
        
        
        
          (404
        
        
          )
        
        
        
        
        
        
          (1,417
        
        
          )
        
        
        
        
        
        
          (808
        
        
          )
        
      
      
        
          Less: Total other income (expenses), net
        
        
        
        
        
        
          (357
        
        
          )
        
        
        
        
        
        
          (123
        
        
          )
        
        
        
        
        
        
          (697
        
        
          )
        
        
        
        
        
        
          423
        
        
        
      
      
        
          
            Less: Income from operations of discontinued components
          
        
        
        
        
           
        
        
          1,020
        
        
           
        
        
        
        
           
        
        
          139
        
        
           
        
        
        
        
           
        
        
          1,050
        
        
           
        
        
        
        
           
        
        
          842
        
        
           
        
      
      
        
          Net income (loss)
        
        
        
        
          $
        
        
          116
        
        
           
        
        
        
        
          $
        
        
          (480
        
        
          )
        
        
        
        
          $
        
        
          (670
        
        
          )
        
        
        
        
          $
        
        
          291
        
        
           
        
      
    
    
      
        
          
            ORION HEALTHCORP, INC.
          
        
      
      
        
          
            Consolidated Condensed Balance Sheets
          
        
      
      
        
          
            (in thousands, except share amounts)
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          
            June 30,
          
        
        
        
        
          
            Dec. 31,
          
        
      
      
        
        
        
        
        
          
            2007
          
        
        
        
        
          
            2006
          
        
      
      
        
        
        
        
        
          
            (Unaudited)
          
        
        
        
        
        
      
      
        
          Current assets:
        
        
        
        
        
        
        
        
        
      
      
        
          Cash and cash equivalents
        
        
        
        
          $
        
        
          277
        
        
        
        
        
        
          $
        
        
          644
        
        
        
      
      
        
          Accounts receivable, net
        
        
        
        
        
        
          3,508
        
        
        
        
        
        
        
        
          3,575
        
        
        
      
      
        
          Inventory
        
        
        
        
        
        
          251
        
        
        
        
        
        
        
        
          278
        
        
        
      
      
        
          Prepaid expenses and other current assets
        
        
        
        
        
        
          577
        
        
        
        
        
        
        
        
          407
        
        
        
      
      
        
          Assets held for sale
        
        
        
        
           
        
        
          --
        
        
           
        
        
        
        
           
        
        
          502
        
        
           
        
      
      
        
          Total current assets
        
        
        
        
        
        
          4,613
        
        
        
        
        
        
        
        
          5,406
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Property and equipment, net
        
        
        
        
        
        
          617
        
        
        
        
        
        
        
        
          711
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Other long-term assets:
        
        
        
        
        
        
        
        
        
      
      
        
          Intangible assets, including goodwill, net
        
        
        
        
        
        
          21,097
        
        
        
        
        
        
        
        
          22,158
        
        
        
      
      
        
          Other assets, net
        
        
        
        
           
        
        
          2,643
        
        
           
        
        
        
        
           
        
        
          1,908
        
        
           
        
      
      
        
          Total other long-term assets
        
        
        
        
           
        
        
          23,740
        
        
           
        
        
        
        
           
        
        
          24,066
        
        
           
        
      
      
        
          Total assets
        
        
        
        
          $
        
        
          28,970
        
        
           
        
        
        
        
          $
        
        
          30,183
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Current liabilities:
        
        
        
        
        
        
        
        
        
      
      
        
          Accounts payable and accrued expenses
        
        
        
        
          $
        
        
          6,219
        
        
        
        
        
        
          $
        
        
          6,938
        
        
        
      
      
        
          Current portion of capital lease obligations and long-term debt
        
        
        
        
        
        
          2,363
        
        
        
        
        
        
        
        
          1,847
        
        
        
      
      
        
          Current portion of long-term debt held by related parties
        
        
        
        
        
        
          850
        
        
        
        
        
        
        
        
          325
        
        
        
      
      
        
          Liabilities held for sale
        
        
        
        
           
        
        
          --
        
        
           
        
        
        
        
           
        
        
          159
        
        
           
        
      
      
        
          Total current liabilities
        
        
        
        
           
        
        
          9,432
        
        
           
        
        
        
        
           
        
        
          9,269
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Long-term liabilities:
        
        
        
        
        
        
        
        
        
      
      
        
          Capital lease obligations and long-term debt, net of current portion
        
        
        
        
        
        
          6,663
        
        
        
        
        
        
        
        
          6,989
        
        
        
      
      
        
          Long-term debt, net of current portion, held by related parties
        
        
        
        
           
        
        
          3,969
        
        
           
        
        
        
        
           
        
        
          4,541
        
        
           
        
      
      
        
          Total long-term liabilities
        
        
        
        
           
        
        
          10,632
        
        
           
        
        
        
        
           
        
        
          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 105,504,032 and 105,374,487 shares issued and 
            outstanding at June 30, 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 June 
            30, 2007 and December 31, 2006
          
        
        
        
        
        
        
          25
        
        
        
        
        
        
        
        
          25
        
        
        
      
      
        
          Additional paid-in capital
        
        
        
        
        
        
          64,068
        
        
        
        
        
        
        
        
          63,876
        
        
        
      
      
        
          Accumulated deficit
        
        
        
        
        
        
          (55,254
        
        
          )
        
        
        
        
        
        
          (54,584
        
        
          )
        
      
      
        
          Treasury stock - at cost; 9,140 shares
        
        
        
        
           
        
        
          (38
        
        
          )
        
        
        
        
           
        
        
          (38
        
        
          )
        
      
      
        
          Total stockholders' equity
        
        
        
        
           
        
        
          8,906
        
        
           
        
        
        
        
           
        
        
          9,384
        
        
           
        
      
      
        
          Total liabilities and stockholders' equity
        
        
        
        
          $
        
        
          28,970
        
        
           
        
        
        
        
           
        
        
          30,183