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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Prospect Medical Holdings, | AMEX:PZZ | AMEX | Ordinary Share |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
From May 2019 to May 2024
Prospect Medical Holdings, Inc. (NYSE Amex: PZZ) (“Prospect”), which owns and operates five hospitals and manages the medical care of HMO enrollees in southern California, today announced financial results for its fiscal 2009 third quarter ended June 30, 2009. Results for all periods exclude the Antelope Valley entities since their sale on August 1, 2008, with prior results reflected as discontinued operations. Results for the fiscal 2009 periods include Brotman Medical Center (“Brotman”), following Prospect’s April 14, 2009 acquisition of a majority ownership position in Brotman.
This quarter’s results reflect the Company’s further strengthened financial and operating position, following initiatives to improve core operations, operating blueprint, management culture and future growth platforms. During the fiscal 2009 third quarter, the Company recorded strong performances at each of its business segments. The Company continued its model of delivering high quality care, while reducing administrative costs and improving efficiencies throughout the organization. In combination, these actions allowed the Company to produce another strong quarterly performance, notwithstanding this being non-peak season for the Hospital Segment.
Over the last approximately 18 months, Prospect’s initiatives have included:
The Company is confident that its current operating model will successfully align with prospective healthcare reforms being legislated in Washington, DC. Prospect’s success has been deliberately built on providing quality acute and preventative care through its physician network and hospital operations, supported by a platform of effective expense and utilization management.
FISCAL 2009 THIRD QUARTER RESULTS
Consolidated revenues for the third quarter of fiscal 2009 rose 41.5% to $114.3 million from $80.9 million in the same period last year. Hospital Services revenues rose 111.6% to $66.5 million, including a $4.9 million revenue increase at Alta’s four hospitals and a $30.1 million quarterly contribution from Brotman. Revenues at the IPA Management segment decreased to $47.8 million from $49.4 million in the third quarter of fiscal 2008, the result of slightly higher unemployment and cancellation of certain unprofitable Medi-Cal contracts.
Operating income for the third quarter of fiscal 2009 increased 65.4% to $6.7 million from $4.1 million in the fiscal 2008 third quarter.
During the third quarter of fiscal 2009, interest expense was $8.7 million as compared to $6.6 million in the same period last year, due to increased rates and the assessment of default interest by the Company’s prior lenders, together with interest on Brotman debt. Non-cash gain related to changes in the fair market value of the Company’s interest rate swap arrangements totaled $3.7 million during the third quarter of fiscal 2009 as compared to a $4.9 million gain in the third quarter of fiscal 2008.
Net loss attributable to common stockholders for the fiscal 2009 third quarter was $0.2 million, or $0.01 per diluted share on approximately 20.5 million weighted average diluted shares outstanding, compared to a net loss of $5.5 million, or $0.46 per diluted share, on approximately 11.8 million weighted average diluted shares outstanding.
Adjusted EBITDA for the third quarter of fiscal 2009 increased 25% to $12.8 million from $10.2 million in the same period last year. For the trailing twelve month (TTM) period ended June 30, 2009, Adjusted EBITDA was $50.4 million. Brotman contributed approximately $0.1 million to the quarterly and TTM periods (see accompanying reconciliation tables in this release).
SEGMENT RESULTS
Hospital Services
Prospect’s Hospital Services segment consists of Alta’s four community-based hospitals in southern California (acquired in August 2007) plus the operations of Brotman. To facilitate same-store, year-over-year comparison, Brotman results have been separately identified in the following tables.
Three Months Ended June 30
2009 2008Alta
Brotman
Consolidated
($ in 000s) (unaudited) Net hospital services revenues $ 36,332 $ 30,138 $ 66,470 $ 31,413 Operating expenses: Hospital operating expenses 23,243 28,035 51,278 20,764 General and administrative 3,264 3,333 6,597 3,219 Depreciation and amortization 1,007 263 1,270 1,020 Total operating expenses 27,514 31,631 59,145 25,003 Operating income (loss) $ 8,820 $ (1,493 ) $ 7,327 $ 6,410Nine Months Ended June 30
2009 2008
Alta
Brotman
Consolidated
($ in 000s) (unaudited) Net hospital services revenues $ 109,563 $ 30,138 $ 139,701 $ 91,096 Operating expenses: Hospital operating expenses 68,246 28,035 96,281 59,732 General and administrative 9,480 3,333 12,813 8,755 Depreciation and amortization 2,834 263 3,098 3,085 Total operating expenses 80,560 31,631 112,192 71,572 Operating income (loss) $ 29,003 $ (1,493 ) $ 27,509 $ 19,524Net hospital services revenues for the third quarter of fiscal 2009 increased by 111.6% to $66.5 million from $31.4 million in the same period last year, primarily reflecting the inclusion of Brotman in the 2009 quarter. On a “same-store” basis, higher revenues were attributable to further increases in Medicare and Medi-Cal admissions at the Company’s Alta hospitals.
Total hospital operating expenses increased to $59.1 million for the fiscal 2009 third quarter, due primarily to costs associated with the higher volumes at the Company’s Alta hospitals, as well as approximately $31.6 million due to inclusion of Brotman in the current quarter.
Hospital operating income for the third quarter of fiscal 2009 rose 14.3% to $7.3 million from $6.4 million in the third quarter of fiscal 2008, which increase was comprised of a $2.4 million increase at the Company’s existing Alta hospitals, offset by a $1.5 million quarterly operating loss for Brotman.
IPA Management
($ in 000s) (unaudited)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2009
2008
2009
2008
Total managed care revenues $ 47,848 $ 49,448 $ 144,138 $ 150,697 Total managed care cost of revenues 36,968 38,973 111,535 120,448 Gross margin 10,880 10,475 32,603 30,249 General and administrative 7,286 7,263 21,961 22,265 Depreciation and amortization 889 879 2,644 2,609 Total non-medical expenses 8,175 8,142 24,605 24,874 Income from unconsolidated joint venture535
955
1,482
2,124
Operating income $ 3,240 $ 3,288 $ 9,480 $ 7,499Managed care revenues for the third quarter of fiscal 2009 decreased by approximately $1.6 million, or 3.2%, compared with the third quarter of fiscal 2008 with slightly higher unemployment and cancellation of certain unprofitable Medi-Cal contracts.
Gross margin increased to 22.7% from 21.1% in the third quarter of fiscal 2008, due primarily to a more profitable mix of business and continued cost management.
General and administrative (“G&A”) expense for the third quarter of fiscal 2009 were unchanged at $7.3 million compared to the third quarter of fiscal 2008.
Income from unconsolidated joint venture amounted to approximately $0.5 million in the third quarter of fiscal 2009 as compared to approximately $1.0 million in the third quarter of fiscal 2008 due to positive risk pool income in the 2008 period.
IPA operating income for the third quarter of fiscal 2009 decreased 1.5% to $3.2 million from $3.3 million in the third quarter of fiscal 2008 as a result of the above-referenced items.
Use of Adjusted EBITDA
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization and other amounts considered by management to be non-recurring) is not a measure of financial performance under generally accepted accounting principles (“GAAP”). Management believes Adjusted EBITDA, in addition to operating income, net income and other GAAP measures, is a useful indicator of the Company’s financial and operating performance and its ability to generate cash flows from operations that are available for taxes, capital expenditures and debt service. Investors should recognize that Adjusted EBITDA might not be comparable to similarly-titled measures for other companies. This measure should be considered in addition to, and not as a substitute for, or superior to, any measure of performance prepared in accordance with GAAP. Reconciliations of Adjusted EBITDA amounts to the most directly comparable GAAP measures for each of the quarterly periods in fiscal 2008 and 2009 are included in the financial information provided as part of this release.
Conference Call
Management will host a conference call on Thursday, August 20, 2009 at 1:00 pm ET / 10:00 am PT, to discuss these results. Interested parties may participate in the call by dialing (866) 267-2584(Domestic) or (706) 634-4739 (International) approximately 10 minutes before the call is scheduled to begin and ask to be connected to the Prospect Medical Holdings conference call. The conference call will be broadcast live over the internet at the following link:
http://investor.shareholder.com/media/eventdetail.cfm?eventid=71761&CompanyID=PROSPECT&e=1&mediaKey=FD1088B6F9BDB79FFAEA6E426404E661
To listen to the live call on the internet, go to the website at least 15 minutes early to register, download and install any necessary audio software. If you are unable to participate in the live call, the conference call will be archived and can be accessed for approximately 30 days.
ABOUT PROSPECT MEDICAL HOLDINGS
Prospect Medical Holdings operates five community-based hospitals in the greater Los Angeles area and manages the medical care of approximately 178,000 individuals enrolled in HMO plans in Southern California, through a network of approximately 14,000 specialist and primary care physicians.
This press release contains forward-looking statements. Additional written or oral forward-looking statements may be made by Prospect from time to time, in filings with the Securities and Exchange Commission, or otherwise. Statements contained herein that are not historical facts are forward-looking statements. Investors are cautioned that forward-looking statements, including the statements regarding anticipated or expected results, involve risks and uncertainties which may affect the Company's business and prospects, including those outlined in Prospect's Form 10-K filed on December 29, 2008 and other SEC filings. Any forward-looking statements contained in this press release represent our estimates only as of the date hereof, or as of such earlier dates as are indicated, and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.
Prospect Medical Holdings, Inc.
Condensed Consolidated Statements of Operations
($ in 000s, except per share data)
(Unaudited)
Three months ended June 30,
Nine months ended June 30,
2009
2008
2009
2008
Revenues: Net hospital services revenues $ 66,470 $ 31,413 $ 139,701 $ 91,096 Managed care revenues 47,848 49,448 144,138 150,697 Total revenues 114,318 80,861 283,839 241,793 Operating expenses: Hospital operating expenses 51,278 20,764 96,281 59,732 Managed care cost of revenues 36,968 38,973 111,535 120,448 General and administrative 17,740 16,122 43,505 43,057 Depreciation and amortization 2,162 1,903 5,751 5,712 Total operating expenses 108,148 77,762 257,072 228,949 Operating income from unconsolidated joint venture 535 955 1,482 2,124 Operating income 6,705 4,054 28,249 14,968 Other (income) expense: Investment income (33 ) (81 ) (101 ) (523 ) Interest expense and amortization of deferred financing costs 8,682 6,562 21,396 16,055 (Gain) loss in value of interest rate swap arrangements (3,694 ) (4,948 ) 5,019 (4,072 ) Loss on debt extinguishment―
8,309 ― 8,309 Total other (income) expense, net 4,954 9,842 26,313 19,769 Income (loss) from continuing operations before income taxes 1,751 (5,788 ) 1,936 (4,801 ) Provision (benefit) for income taxes 1,989 (2,083 ) 2,065 (1,728 ) Loss from continuing operations before minority interest (237 ) (3,705 ) (129 ) (3,073 ) Minority interest 1 3 5 12 Loss from continuing operations (238 ) (3,708 ) (134 ) (3,085 ) Income (loss) from discontinued operations, net of tax ― 188 ― (203 ) Net loss before preferred dividend (238 ) (3,520 ) (134 ) (3,288 ) Dividend to preferred stockholders ― (1,932 ) ― (5,797 ) Net loss attributable to common stockholders $ (238 ) $ (5,452 ) $ (134 ) $ (9,085 ) Per share data: Net loss per share attributable to common stockholders: Basic $ (0.01 ) $ (0.46 ) $ (0.01 ) $ (0.77 ) Diluted $ (0.01 ) $ (0.46 ) $ (0.01 ) $ (0.77 ) Weighted average shares outstanding Basic 20,520 11,783 20,152 11,759 Diluted 20,520 11,783 20,152 11,759Prospect Medical Holdings, Inc.
Condensed Consolidated Balance Sheets
($ in 000s)
June 30,
September 30,
2009
2008
(unaudited)
ASSETS
Current assets: Cash and cash equivalents $ 31,587 $ 33,583 Restricted cash 1,745 ― Investments, primarily restricted certificates of deposit 665 637 Patient accounts receivable, net of allowance for doubtful accounts of $11,509 and $3,891 at June 30, 2009 and September 30, 2008 39,307 18,314 Government program receivables 3,606 4,365 Risk pool receivables 194 338 Other receivables 1,222 2,598 Third party settlements 2,990 217 Notes receivable current portion 62 224 Refundable income taxes, net ― 2,654 Deferred income taxes, net 5,788 5,788 Inventories 4,185 1,460 Prepaid expenses and other current assets 4,479 2,776 Total current assets 95,830 72,954 Property, improvements and equipment: Land and land improvements 31,028 18,452 Buildings 27,047 22,233 Leasehold improvements 2,028 1,505 Equipment 20,140 10,628 Furniture and fixtures 913 912 81,156 53,730 Less accumulated depreciation and amortization (13,219 ) (7,911 ) Property, improvements and equipment, net 67,937 45,819 Notes receivables, long term portion 371 238 Deposits and other assets 391 778 Deferred financing costs, net 3,045 662 Goodwill 150,046 128,877 Other intangible assets, net 44,553 47,740 Total assets $ 362,174 $ 297,068LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities: Accrued medical claims and other healthcare costs payable $ 17,863 $ 20,480 Accounts payable and other accrued liabilities 28,548 16,296 Accrued salaries, wages and benefits 22,745 11,257 Due to government payer 13,834 ― Income taxes payable 64 ― Payable to Creditors’ Trust 1,000 ― Current portion of capital leases 1,137 341 Current portion of long-term debt 900 12,100 Interest rate swap liability – current 11,032 ― Other current liabilities 693 107 Total current liabilities 97,816 60,581 Long-term debt, net of current portion 160,399 131,921 Deferred income taxes 26,522 24,433 Malpractice reserve 2,706 786 Capital leases, net of current portion 542 442 Interest rate swap liability – non-current ― 6,013 Total liabilities 287,985 224,176 Minority interest 86 81 Total shareholders’ equity 74,103 72,811 Total liabilities and shareholders’ equity $ 362,174 $ 297,068Adjusted EBITDA Reconciliation(Unaudited) ($ in millions)
A reconciliation of Adjusted EBITDA (also referred to as “Normalized EBITDA” in Management discussions) to the most directly comparable GAAP measure in accordance with SEC Regulation G follows, for each of the quarters of fiscal 2008 and fiscal 2009.
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Operating income – per earnings release (1) $ 4.1 $ 6.4 $ 4.1 $ 8.7 $ 9.9 $ 11.6 $ 6.7 Depreciation and amortization 1.9 1.9 1.9 2.1 1.8 1.8 2.2 Prior CEO severance1.3 Stock based compensation (2) 1.3 0.3 0.3 0.2 All other adjustments (3) 2.4 1.6 2.9 (0.5 ) 0.3 3.7 Adjusted EBITDA – Quarterly (4) $ 8.4 $ 9.9 $ 10.2 $ 11.6 $ 12.0 $ 14.0 $ 12.8
Adjusted EBITDA – Trailing Twelve Month (TTM)
$ 40.1 $ 50.4 Net Debt: Adjusted TTM EBITDA Ratio: Ending Debt $ 161.3Less: Ending cash, equivalents and investments
(34.0 ) Ending Net Debt $ 127.3 Net Debt: Adjusted TTM EBITDA Ratio 2.5(1)
Operating income for all of fiscal 2008 is not intended to be identical to the sum of the quarterly operating income per prior earnings releases due primarily to classification of the results of discontinued operations.(2)
Stock-based compensation charges during the first three quarters of fiscal 2008 were less than $50,000 per quarter; as such do not appear on this reconciliation, where amounts have been rounded to the nearest $100,000.(3)
Comprised of amounts considered by management to be non-recurring, including certain legacy IPA costs, special investigation costs, restatement costs, prior lender costs, and certain Brotman one-time costs.(4)
Brotman contributed approximately $0.1 million during Q3 09.
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