OKLAHOMA CITY, Aug. 12, 2014 (GLOBE NEWSWIRE) -- Foundation Healthcare, Inc. (OTC Markets:FDNH), which focuses on the development and management of surgical hospitals and related ancillary services, announced today the Company's financial results for the second quarter which ended June 30, 2014.
Highlights include:
- Revenue of $22.1 million for the quarter; a 2% increase from the second quarter of 2013
- Adjusted EBITDA of $1.5 million for the second quarter of 2014, compared to $3.0 million in the prior year quarter
- Cash on hand of $1.9 million as of June 30, 2014
"We are pleased with our results as we recorded an 8% increase in revenue at our majority owned hospitals for the second quarter of 2014 as compared to second quarter 2013. In addition we successfully refinanced our debt at the end of the quarter reducing our average cost of funds from 6.5% to 4.25% and extending debt amortization to reduce costs by $2 million annually," stated Stanton Nelson, CEO of Foundation Healthcare, Inc.
Second Quarter 2014 Financial Results:
Net revenues in the second quarter of 2014 were $22.1 million, up from $21.6 million in the second quarter of 2013. Our net revenues are composed of patient services, management fees from affiliates, and other revenue less our provision for doubtful accounts. Patient services revenue increased $1.3 million, or 7%, to $19.9 million during the three months ended June 30, 2014 compared with $18.6 million in the same period of 2013. The increase was primarily due to:
- An increase in average reimbursement per surgical case at East El Paso Physician Medical Center, LLC ("EEPMC") driven by an increase in inpatient spine cases resulted in an increase in patient service revenue of $0.5 million and;
- An increase in surgical case volume at Foundation Surgical Hospital of San Antonio ("FBH SA") driven by an increase in surgical case volume, primarily in spine and orthopedic cases, resulted in an increase in patient services revenue of $0.8 million.
Operating expenses increased $1.4 million or 6.8% to $23.1 million from $21.7 million during the three months ended June 30, 2014, compared with the second quarter of 2013. The increase in other operating expenses was primarily due to:
- $0.2 million of stock compensation expense;
- $0.3 million of salaries and benefits at legacy Graymark; and
- $0.1 million due to increased salaries and benefits resulting from a combination of normal annual salary increases and increased personnel required to manage our expanding hospital operations.$0.1 million in increased facility lease expense and higher professional service fees and;
- $0.7 million of other operating expenses at legacy Graymark.
We incurred certain onetime other operating expenses related to restructuring hospital based physician contracts at the El Paso hospital to reduce costs and improve operational efficiencies. We will begin to see the impact of the lower interest rates and operational efficiencies in the third quarter.
Our operations resulted in a net loss attributable to Foundation Healthcare common stock of $1.5 million during the second quarter of 2014, compared to net income of $0.6 million during the second quarter of 2013.
Adjusted EBITDA of $1.5 million for the 2014 second quarter compared to $3.0 million in the second quarter of 2013.
As of June 30, 2014, cash and cash equivalents totaled $1.9 million, compared to $4.0 million at March 31, 2014.
Conference Call
Foundation's CEO Stanton Nelson, and CFO, Hugh King will host a conference call today, followed by a question and answer period.
Date: Tuesday, August 12th
Time: 4:30 p.m. Eastern time
Dial-In Number: (877) 300-8521
The conference call will be broadcast live at the investor relations section of the Company's website at www.fdnh.com. Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. In addition, the replay will be available after the call at same website link above or by calling (877) 870-5176 using passcode: 10050755.
About Foundation Healthcare
Headquartered in Oklahoma City, Okla., Foundation Healthcare, Inc. (OTCQB:FDNH) focuses on the development and management of surgical hospitals and the inclusion of ancillary service lines. These additional service lines, such as hyperbarics, sleep labs, intraoperative monitoring, imaging and robotic surgery, truly make the Foundation specialty hospital environment unique.
The Company is also an industry leading ASC management and development company focused on partnering with physicians and employees to create an outstanding patient experience, while maximizing partner and shareholder value. The Company is a leader in offering turnkey management and development solutions for physician partners, as well as creating an optimal experience for the patients we serve. For more information, visit www.fdnh.com.
Reg G disclaimer – reconciling GAAP Net Income with EBITDA and Adjusted EBITDA
Foundation is providing EBITDA information, which is defined as net income plus interest, income taxes, depreciation and amortization expense and earnings or losses from discontinued operations, and Adjusted EBITDA which is defined as EBITDA plus impairment charges minus extraordinary gain, net of tax. EBITDA and Adjusted EBITDA are a complement to our GAAP results. EBITDA and Adjusted EBITDA are commonly used by management and investors as a measure of leverage capacity, debt service ability and liquidity. EBITDA and Adjusted EBITDA are not considered a measure of financial performance under U.S. generally accepted accounting principles (GAAP), and the items excluded from EBITDA and Adjusted EBITDA are significant components in understanding and assessing our financial performance. EBITDA and Adjusted EBITDA should not be considered in isolation or as an alternative to, or superior to, such GAAP measures as net income, cash flows provided by or used in operating, investing or financing activities or other financial statement data presented in our consolidated financial statements as an indicator of financial performance or liquidity. Reconciliations of non-GAAP financial measures are provided in the news release in the accompanying tables. Since EBITDA and Adjusted EBITDA are not a measure determined in accordance with GAAP and is susceptible to varying calculations, EBITDA, and Adjusted EBITDA as presented, may not be comparable to other similarly titled measures of other companies.
Important Cautions Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based on the Company's current expectations, forecasts and assumptions. Forward-looking statements involve risks and uncertainties that could cause actual outcomes and results to differ materially from the Company's expectations, forecasts and assumptions. These risks and uncertainties include risks and uncertainties not in the control of the Company, including, without limitation, the risk that Company will maintain enough liquidity to execute its business plan, continue as a going concern and other risks including those enumerated and described in the Company's filings with the Securities and Exchange Commission, which filings are available on the SEC's website at www.sec.gov. Unless otherwise required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
| FOUNDATION HEALTHCARE, INC. | ||||
| Reconciliation of Loss from Continuing Operations to EBITDA from Continuing Operations | ||||
|
(Unaudited) |
||||
| For the Three Months Ended | For the Six Months Ended | |||
| June 30, | June 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Loss from continuing operations, net of taxes | $ (664,027) | $ 1,169,037 | $ (1,669,220) | $ (262,729) |
| EBITDA adjustments: | ||||
| Plus: Interest expense, net | 503,759 | 556,103 | 1,005,232 | 1,022,772 |
| Plus: Provision (benefit) for income taxes | -- | -- | (852,005) | -- |
| Plus: Depreciation and amortization | 1,423,384 | 1,229,374 | 2,884,301 | 2,346,061 |
| Total EBITDA adjustments | 1,927,143 | 1,785,477 | 3,037,528 | 3,368,833 |
| EBITDA from continuing operations | $ 1,263,116 | $ 2,954,514 | $ 1,368,308 | $ 3,106,104 |
| EBITDA from continuing operations | $ 1,263,116 | $ 2,954,514 | $ 1,368,308 | $ 3,106,104 |
| Adjusted EBITDA adjustment: | ||||
| Plus: Stock compensation | 217,334 | -- | 1,006,115 | -- |
| Total Adjusted EBITDA adjustments | 217,334 | -- | 1,006,115 | -- |
| Adjusted EBITDA | $ 1,480,450 | $ 2,954,514 | $ 2,374,423 | $ 3,106,104 |
| FOUNDATION HEALTHCARE, INC. | ||
| Condensed Consolidated Balance Sheets | ||
| (Unaudited) | ||
| June 30, | December 31, | |
| 2014 | 2013 | |
| ASSETS | ||
| Cash and cash equivalents | $ 1,875,669 | $ 4,212,076 |
| Accounts receivable, net of allowances for doubtful accounts of $ and $, respectively | 13,045,004 | 12,755,642 |
| Receivables from affiliates | 938,538 | 848,002 |
| Supplies inventories | 1,906,963 | 1,931,142 |
| Prepaid and other current assets | 9,038,400 | 4,302,885 |
| Current assets from discontinued operations | 165,030 | 518,629 |
| Total current assets | 26,969,604 | 24,568,376 |
| Property and equipment, net | 10,780,857 | 12,073,986 |
| Equity method investments in affiliates | 5,804,919 | 5,699,093 |
| Intangible assets, net | 10,110,886 | 11,138,621 |
| Goodwill | 973,927 | 973,927 |
| Other assets | 446,274 | 244,598 |
| Other assets from discontinued operations | 450,529 | 576,228 |
| Total assets | $ 55,536,996 | $ 55,274,829 |
| LIABILITIES, PREFERRED NONCONTROLLING INTEREST AND SHAREHOLDERS' DEFICIT | ||
| Liabilities: | ||
| Accounts payable | $ 10,288,809 | $ 11,648,987 |
| Accrued liabilities | 5,829,474 | 4,114,915 |
| Preferred noncontrolling interests dividends payable | 193,069 | 195,411 |
| Short term debt | 630,478 | 5,664,827 |
| Current portion of long-term debt | 3,146,727 | 7,919,179 |
| Other current liabilities | 3,553,701 | 4,391,587 |
| Current liabilities from discontinued operations | 1,249,217 | 5,620,697 |
| Total current liabilities | 24,891,475 | 39,555,603 |
| Long-term debt, net of current portion | 25,511,099 | 10,031,732 |
| Other liabilities | 15,215,544 | 12,255,809 |
| Other liabilities from discontinued operations | — | 9,969 |
| Total liabilities | 65,618,118 | 61,853,113 |
| Preferred noncontrolling interest | 8,700,000 | 8,700,000 |
| Commitments and contingencies (Note 9) | ||
| Foundation Healthcare shareholders' deficit: | ||
| Preferred stock $ par value, authorized; shares issued and outstanding | — | — |
| Common stock $ par value, shares authorized; and issued and outstanding, respectively | 17,132 | 16,383 |
| Paid-in capital | 18,939,344 | 18,241,756 |
| Accumulated deficit | (38,573,934) | (35,171,315) |
| Total Foundation Healthcare shareholders' deficit | (19,617,458) | (16,913,176) |
| Noncontrolling interests | 836,336 | 1,634,892 |
| Total deficit | (18,781,122) | (15,278,284) |
| Total liabilities, preferred noncontrolling interest and shareholders' deficit | $ 55,536,996 | $ 55,274,829 |
| See Accompanying Notes to Condensed Consolidated Financial Statements | ||
| FOUNDATION HEALTHCARE, INC. | ||
| Condensed Consolidated Statements of Operations | ||
| For the Three Months Ended June 30, 2014 and 2013 | ||
| (Unaudited) | ||
| 2014 | 2013 | |
| Net Revenues: | ||
| Patient services | $ 19,909,721 | $ 18,626,077 |
| Provision for doubtful accounts | (875,574) | (1,090,563) |
| Net patient services revenue | 19,034,147 | 17,535,514 |
| Management fees from affiliates | 1,434,769 | 1,787,621 |
| Other revenue | 1,610,651 | 2,321,984 |
| Revenues | 22,079,567 | 21,645,119 |
| Equity in earnings of affiliates | 895,767 | 1,837,146 |
| Operating Expenses: | ||
| Salaries and benefits | 7,094,381 | 6,457,281 |
| Supplies | 5,693,006 | 5,833,285 |
| Other operating expenses | 8,925,671 | 8,147,336 |
| Depreciation and amortization | 1,423,384 | 1,229,374 |
| Total operating expenses | 23,136,442 | 21,667,276 |
| Other Income (Expense): | ||
| Interest expense, net | (503,759) | (556,103) |
| Other income (expense) | 840 | (89,849) |
| Net other (expense) | (502,919) | (645,952) |
| Income (loss) from continuing operations, before taxes | (664,027) | 1,169,037 |
| Benefit for income taxes | — | — |
| Income (loss) from continuing operations, net of taxes | (664,027) | 1,169,037 |
| Loss from discontinued operations, net of tax | (188,716) | — |
| Net income (loss) | (852,743) | 1,169,037 |
| Less: Net income attributable to noncontrolling interests | 461,301 | 211,944 |
| Net income (loss) attributable to Foundation Healthcare | (1,314,044) | 957,093 |
| Preferred noncontrolling interests dividends | (193,069) | (318,331) |
| Net income (loss) attributable to Foundation Healthcare common stock | $ (1,507,113) | $ 638,762 |
| Earnings per common share (basic and diluted): | ||
| Net income (loss) attributable to continuing operations attributable to Foundation Healthcare common stock | $ (0.01) | $ 0.00 |
| Loss from discontinued operations, net of tax | 0.00 | 0.00 |
| Net income (loss) per share, attributable to Foundation Healthcare common stock | $ (0.01) | $ 0.00 |
| Weighted average number of common and diluted shares outstanding | 171,285,897 | 162,523,276 |
| Pro forma income information (Note 3): | ||
| Pro forma provision for income taxes | $ 363,695 | |
| Pro forma net income attributable to Foundation Healthcare common stock | $ 593,398 | |
| Pro forma basic and diluted net income per share | $ 0.00 | |
| FOUNDATION HEALTHCARE, INC. | ||
| Condensed Consolidated Statements of Operations | ||
| For the Six Months Ended June 30, 2014 and 2013 | ||
| (Unaudited) | ||
| 2014 | 2013 | |
| Net Revenues: | ||
| Patient services | $ 39,423,203 | $ 34,486,737 |
| Provision for doubtful accounts | (1,237,090) | (1,727,414) |
| Net patient services revenue | 38,186,113 | 32,759,323 |
| Management fees from affiliates | 2,704,072 | 3,525,849 |
| Other revenue | 2,821,173 | 2,796,873 |
| Revenues | 43,711,358 | 39,082,045 |
| Equity in earnings of affiliates | 1,422,852 | 3,053,861 |
| Operating Expenses: | ||
| Salaries and benefits | 14,978,240 | 12,795,378 |
| Supplies | 10,634,377 | 10,334,225 |
| Other operating expenses | 18,154,125 | 15,903,357 |
| Depreciation and amortization | 2,884,301 | 2,346,061 |
| Total operating expenses | 46,651,043 | 41,379,021 |
| Other Income (Expense): | ||
| Interest expense, net | (1,005,232) | (1,022,772) |
| Other income (expense) | 840 | 3,158 |
| Net other (expense) | (1,004,392) | (1,019,614) |
| Income (loss) from continuing operations, before taxes | (2,521,225) | (262,729) |
| Benefit for income taxes | 852,005 | — |
| Income (loss) from continuing operations, net of taxes | (1,669,220) | (262,729) |
| Loss from discontinued operations, net of tax | (501,038) | -- |
| Net income (loss) | (2,170,258) | (262,729) |
| Less: Net income attributable to noncontrolling interests | 846,223 | (880,087) |
| Net income (loss) attributable to Foundation Healthcare | (3,016,481) | 617,358 |
| Preferred noncontrolling interests dividends | (386,138) | (599,207) |
| Net income (loss) attributable to Foundation Healthcare common stock | $ (3,402,619) | $ 18,151 |
| Earnings per common share (basic and diluted): | ||
| Net income (loss) attributable to continuing operations attributable to Foundation Healthcare common stock | $ (0.02) | $ 0.00 |
| Loss from discontinued operations, net of tax | 0.00 | 0.00 |
| Net income (loss) per share, attributable to Foundation Healthcare common stock | $ (0.02) | $ 0.00 |
| Weighted average number of common and diluted shares outstanding | 169,318,636 | 162,523,276 |
| Pro forma income information (Note 3): | ||
| Pro forma provision for income taxes | $ 234,596 | |
| Pro forma net income attributable to Foundation Healthcare common stock | $ (216,445) | |
| Pro forma basic and diluted net income per share | $ 0.00 | |
| FOUNDATION HEALTHCARE, INC. | ||
| Condensed Consolidated Statements of Cash Flows | ||
| For the Six Months Ended June 30, 2014 and 2013 | ||
| (Unaudited) | ||
| 2014 | 2013 | |
| Operating activities: | ||
| Net income (loss) | $ (2,170,258) | $ (262,729) |
| Less: Loss from discontinued operations, net of tax | (501,038) | — |
| Income from continuing operations | (1,669,220) | (262,729) |
| Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities: | ||
| Depreciation and amortization | 2,884,301 | 2,346,061 |
| Stock-based compensation, net of cashless vesting | 698,337 | — |
| Provision for doubtful accounts | 1,237,090 | 1,727,414 |
| Equity in earnings of affiliates | (1,422,852) | (3,053,861) |
| Changes in assets and liabilities -- | ||
| Accounts receivable, net of provision for doubtful accounts | (1,526,452) | (4,430,322) |
| Receivables from affiliates | (90,536) | (763,329) |
| Supplies Inventories | 24,179 | (39,940) |
| Prepaid and other current assets | (4,735,515) | (387,398) |
| Other assets | (201,676) | — |
| Accounts payable | (1,360,178) | (67,654) |
| Accrued liabilities | 1,714,559 | 3,435,092 |
| Other current liabilities | (837,886) | — |
| Other liabilities | 2,959,735 | 23,272 |
| Net cash (used in) operating activities from continuing operations | (2,326,114) | (1,473,394) |
| Net cash (used in) operating activities from discontinued operations | (330,293) | — |
| Net cash (used in) operating activities | (2,656,407) | (1,473,394) |
| Investing activities: | ||
| Purchase of property and equipment | (563,436) | (2,897,420) |
| Distributions from affiliates | 1,317,026 | 3,011,245 |
| Net cash provided by (used in) investing activities from continuing operations | 753,590 | 113,825 |
| Net cash provided by investing activities from discontinued operations | — | — |
| Net cash provided by (used in) investing activities | 753,590 | 113,825 |
| Financing activities: | ||
| Debt proceeds | 28,468,812 | 4,575,738 |
| Debt payments | (22,796,246) | (2,976,299) |
| Preferred noncontrolling interests dividend | (388,481) | (776,644) |
| Distributions to noncontrolling interests | (1,644,779) | (37,446) |
| Distributions to member | — | (747,680) |
| Net cash provided by financing activities from continuing operations | 3,639,306 | 37,669 |
| Net cash (used in) financing activities from discontinued operations | (4,072,896) | — |
| Net cash provided by (used in) financing activities | (433,590) | 37,669 |
| Net change in cash and cash equivalents | (2,336,407) | (1,321,900) |
| Cash and cash equivalents at beginning of period | 4,212,076 | 3,037,067 |
| Cash and cash equivalents at end of period | $ 1,875,669 | $ 1,715,167 |
| Cash Paid for Interest and Income Taxes: | ||
| Interest expense | $ 1,162,072 | $ 957,230 |
| Interest expense, discontinued operations | $ 168,733 | $— |
| Income taxes, continuing operations | $ 1,950,000 | $— |