Foundation HealthCare Reports Fourth Quarter and Annual 2015 Financial Results
FOUNDATION HEALTHCARE ANNUAL REVENUE GROWS 22 PERCENT TO $127.5 MILLION; ADJUSTED EBITDA INCREASED 35 PERCENT TO $14.2 MILLION
OKLAHOMA CITY, March 16, 2016 /PRNewswire/ -- Foundation HealthCare, Inc. (OTCQB: FDNH), which is an owner and operator of surgical hospitals, announced today the Company's final financial results for the fourth quarter and year ended December 31, 2015.
Highlights include:
- Annual net revenues increased 22 percent to $127.5 million.
- Annual adjusted EBITDA increased 35 percent to $14.2 million.
- Annual patient service revenue grew by 26 percent at majority owned hospitals.
- Houston hospital acquired December 31, 2015. Expected to be immediately accretive to EBITDA.
"We are very pleased with the results of operations for 2015 and recognize this growth is driven by our unwavering commitment to patient care. We view this commitment as a key differentiator in our business model," said Stanton Nelson, CEO of Foundation HealthCare. "I am pleased to announce that our El Paso hospital was just awarded the Foundation Center of Excellence Award for Nursing Services. In 2015, our San Antonio hospital was awarded the Center of Excellence for Orthopedics as well as the Blue Cross Distinction award for Bariatric Surgery. Our physician partners and our clinical teams continue to deliver an unparalleled level of quality which is why our patient satisfaction scores continue to be among the highest in the country."
"Foundation HealthCare reported impressive growth during the 2015. Total revenues grew 22 percent compared to 2014 and patient service revenues grew 26 percent compared to last year," said Nelson. "This continued revenue growth validates our business strategy of recruiting top tier physicians, providing our patients with an unparalleled health experience and expanding ancillary services."
"During the third quarter of 2015, we reached capacity in our San Antonio hospital and announced the construction of another operating room and the addition to two patient rooms for post-surgical care. This expansion, which will be completed this month, will increase our surgical capacity by 25 percent in San Antonio. Unfortunately, the construction during November and December did have an inhibiting effect on fourth quarter volumes and revenues," said Nelson. "In addition, our surgical volume in El Paso was modestly lower than expected during 4Q."
"We announced the acquisition of University General Hospital in Houston effective December 31, 2015," said Nelson. "We have subsequently rebranded the facility "Foundation Surgical Hospital of Houston." This facility is located in a great market and is an excellent addition to the Foundation family of surgically focused hospitals. In 2016, we expect strong growth due to continued solid performance in El Paso, the expansion in San Antonio and the addition of Foundation Surgical Hospital of Houston. We believe we have built an infrastructure that can support additional hospitals and we are actively seeking to add majority-owned surgical hospitals to our business."
Fourth Quarter 2015 Financial Results:
Net revenues and equity in earnings of affiliates in the fourth quarter of 2015 were collectively $32.1 million, down 1.2 percent from $31.7 million in the fourth quarter of 2014. Our net revenues are composed of patient services, less our provision for doubtful accounts, management fees from affiliates and other revenue. Patient services revenue (net of the provision for doubtful accounts) increased $0.7 million, or 2.4 percent, to $29.0 million during the three months ended December 31, 2015 as compared to $28.3 million in the same period of 2014.
Operating expenses for the fourth quarter of 2015 were $32.3 million compared to $28.9 million in the fourth quarter of 2014. The increase is due primarily to increased purchased services cost directly related to the increased net revenues generated from ancillary services.
During the fourth quarter of 2015, Foundation reported a $2.8 million gain (net of income taxes) on the sale of its 20% interest in the real estate of the Sherman, Texas hospital. The operating unit of the Sherman hospital was sold in the second quarter of 2015.
Our operations resulted in a net income attributable to Foundation HealthCare common stock of $1.6 million during the fourth quarter of 2015, compared to a net income of $1.2 million during the fourth quarter of 2014.
Adjusted EBITDA was $3.0 million for the 2015 fourth quarter compared to $4.7 million in the fourth quarter of 2014. This was primarily related to the lower surgical volume in San Antonio and El Paso.
Year-To-Date 2015 Financial Results:
Net revenues for the year ended December 31, 2015 were $127.5 million, up 22 percent from $104.8 million reported for the year ended December 31, 2014. Patient services revenue (net of the provision for doubtful accounts) increased $23.7 million, or 26 percent, to $114.8 million during the year ended December 31, 2015 as compared to $91.1 million in the same period of 2014.
The increase was primarily due to increased revenue at our El Paso hospital generated by more complex cases and increased revenues from ancillary services.
Operating expenses for the year ended December 31, 2015 were $121.3 million compared to $101.6 million for 2014. The increase is due primarily to increased purchased services cost directly related to the increased net revenues generated from ancillary services.
Our operations, including the gain on the sale of our minority interest in the Sherman, Texas hospital and real estate resulted in a net income attributable to Foundation HealthCare common stock of $5.2 million during the year ended December 31, 2015, compared to a net loss of $2.1 million during 2014. Net income per Foundation common share for the year ended December 31, 2015 was $0.30 compared to a net loss of $0.12 per share in the prior year.
Annual Adjusted EBITDA as of December 31, 2015 was $14.2 million compared to $10.6 million for 2014.
At December 31, 2015, cash and cash equivalents totaled $5.1 million, compared to $2.9 million at December 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: March 16, 2016
Time: 4:30 p.m. Eastern time
Dial-In Number: (888) 348-6454
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, a replay will be available after the call at the Foundation website or by calling (877) 870-5176 using passcode: 10082263.
About Foundation HealthCare – Headquartered in Oklahoma City, Okla., Foundation HealthCare owns and/or operates four surgical hospitals and ten surgery centers in seven states. Physicians who operate in our facilities currently provide general surgeries and surgeries in such specialties as orthopedics, neurosurgery, pain management, podiatry, gynecology, optometry, gastroenterology and pediatric ENT (tubes/adenoids).
Foundation HealthCare's management seeks to operate each facility efficiently and effectively such that patients receive high quality, cost effective care. The Foundation team seeks to improve the performance of each hospital by recruiting physicians to operate in its facilities and incorporating additional ancillary services in their markets. These additional service lines, such as toxicology, wound care, sleep management, radiology and imaging, 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.
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 non-recurring gains. 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.
CONTACT: Company Contact:
Foundation HealthCare, Inc.
Stanton Nelson, CEO
Tel 405-608-1715
Primary contact: Brooks O'Neil, 952-239-7677 ([email protected])
| FOUNDATION HEALTHCARE, INC. |
|||||||
| Reconciliation of Income (Loss) from Continuing Operations to EBITDA from Continuing Operations |
|||||||
| (Unaudited) |
|||||||
| For the Three Months Ended |
For the Year Ended |
||||||
| December 31, |
December 31, |
||||||
| 2015 |
2014 |
2015 |
2014 |
||||
| Income (loss) from continuing operations, net of taxes |
$ 504,632 |
$ 2,859,137 |
$ 5,949,374 |
$ 2,872,015 |
|||
| EBITDA adjustments: |
|||||||
| Plus: Interest expense, net |
232,652 |
280,859 |
1,059,855 |
1,610,791 |
|||
| Plus: Provision (benefit) for income taxes |
(604,574) |
217 |
(718,612) |
(851,788) |
|||
| Plus: Depreciation and amortization |
1,625,167 |
1,345,334 |
5,697,962 |
5,550,162 |
|||
| Total EBITDA adjustments |
1,253,245 |
1,626,410 |
6,039,205 |
6,309,165 |
|||
| EBITDA from continuing operations |
$ 1,757,877 |
$ 4,485,547 |
$ 11,988,579 |
$ 9,181,180 |
|||
| EBITDA from continuing operations |
$ 1,757,877 |
$ 4,485,547 |
$ 11,988,579 |
$ 9,181,180 |
|||
| Adjusted EBITDA adjustment |
|||||||
| Plus: Stock compensation expense |
1,002,548 |
195,801 |
1,637,413 |
1,387,087 |
|||
| Plus: S-1 filing expenses |
- |
- |
318,863 |
- |
|||
| Plus: Acquisition expenses |
272,729 |
- |
272,729 |
- |
|||
| Total Adjusted EBITDA adjustments |
1,275,277 |
195,801 |
2,229,005 |
1,387,087 |
|||
| Adjusted EBITDA |
$ 3,033,154 |
$ 4,681,348 |
$ 14,217,584 |
$ 10,568,267 |
|||
| FOUNDATION HEALTHCARE, INC. |
|||
| Condensed Consolidated Balance Sheets |
|||
| (Unaudited) |
|||
| December 31, |
December 31, |
||
| 2015 |
2014 |
||
| ASSETS |
|||
| Cash and cash equivalents |
$ 5,062,492 |
$ 2,860,025 |
|
| Accounts receivable, net of allowance for doubtful |
30,383,942 |
18,971,435 |
|
| Receivables from affiliates |
509,886 |
1,157,184 |
|
| Supplies inventories |
3,566,940 |
1,863,175 |
|
| Prepaid and other current assets |
4,161,620 |
4,487,873 |
|
| Current assets from discontinued operations |
197,307 |
342,441 |
|
| Total current assets |
43,882,187 |
29,682,133 |
|
| Property and equipment, net |
53,515,123 |
13,465,190 |
|
| Equity method investments in affiliates |
3,012,631 |
3,558,020 |
|
| Intangible assets, net |
7,022,170 |
9,080,395 |
|
| Goodwill |
10,594,819 |
973,927 |
|
| Other assets |
1,259,029 |
437,809 |
|
| Other assets from discontinued operations |
8,713 |
2,329,395 |
|
| Total assets |
$ 119,294,672 |
$ 59,526,869 |
|
| LIABILITIES, PREFERRED NONCONTROLLING INTEREST |
|||
| Liabilities: |
|||
| Accounts payable |
$ 9,060,060 |
$ 10,364,160 |
|
| Accrued liabilities |
12,877,711 |
10,223,388 |
|
| Preferred noncontrolling interests dividends payable |
157,887 |
195,212 |
|
| Short-term debt |
308,769 |
456,784 |
|
| Current portion of long-term debt |
10,429,750 |
5,023,048 |
|
| Other current liabilities |
590,827 |
1,052,543 |
|
| Current liabilities from discontinued operations |
1,735,615 |
839,791 |
|
| Total current liabilities |
35,160,619 |
28,154,926 |
|
| Long-term debt, net of current portion |
69,954,911 |
24,737,719 |
|
| Deferred lease incentive |
7,672,745 |
8,608,716 |
|
| Other liabilities |
6,479,181 |
5,424,313 |
|
| Total liabilities |
119,267,456 |
66,925,674 |
|
| Preferred noncontrolling interest |
6,960,000 |
8,700,000 |
|
| Commitments and contingencies (Note 10) |
|||
| Foundation Healthcare shareholders' deficit: |
|||
| Preferred stock $0.0001 par value, 10,000,000 |
— |
— |
|
| Common stock $0.0001 par value, 500,000,000 shares authorized; |
1,730 |
1,726 |
|
| Paid-in capital |
20,885,915 |
19,321,267 |
|
| Accumulated deficit |
(32,130,178) |
(37,265,044) |
|
| Total Foundation Healthcare shareholders' deficit |
(11,242,533) |
(17,942,051) |
|
| Noncontrolling interests |
4,309,749 |
1,843,246 |
|
| Total deficit |
(6,932,784) |
(16,098,805) |
|
| Total liabilities, preferred noncontrolling interest and shareholders' deficit |
$ 119,294,672 |
$ 59,526,869 |
|
| FOUNDATION HEALTHCARE, INC. |
|||
| Condensed Consolidated Statements of Operations |
|||
| For the Three Months Ended December 31, 2015 and 2014 |
|||
| (Unaudited) |
|||
| 2015 |
2014 |
||
| Net Revenues: |
|||
| Patient services |
$ 31,341,845 |
$ 30,612,740 |
|
| Provision for doubtful accounts |
(2,358,193) |
(2,318,957) |
|
| Net patient services revenue |
28,983,652 |
28,293,783 |
|
| Management fees from affiliates |
1,009,170 |
1,337,685 |
|
| Other revenue |
1,744,151 |
1,090,737 |
|
| Revenues |
31,736,973 |
30,722,205 |
|
| Equity in earnings of affiliates |
391,193 |
939,482 |
|
| Operating Expenses: |
|||
| Salaries and benefits |
9,516,422 |
6,955,774 |
|
| Supplies |
7,184,251 |
6,617,114 |
|
| Other operating expenses |
14,000,847 |
13,957,445 |
|
| Depreciation and amortization |
1,625,167 |
1,345,334 |
|
| Total operating expenses |
32,326,687 |
28,875,667 |
|
| Other Income (Expense): |
|||
| Interest expense, net |
(232,652) |
(280,859) |
|
| Other income |
331,231 |
354,193 |
|
| Net other (expense) |
98,579 |
73,334 |
|
| Income from continuing operations, before taxes |
(99,942) |
2,859,354 |
|
| Benefit (provision) for income taxes |
604,574 |
(217) |
|
| Income from continuing operations, net of taxes |
504,632 |
2,859,137 |
|
| Income from discontinued operations, net of tax |
2,830,002 |
263,631 |
|
| Net income |
3,334,634 |
3,122,768 |
|
| Less: Net income attributable to noncontrolling interests |
1,532,473 |
1,772,567 |
|
| Net income attributable to Foundation Healthcare |
1,802,160 |
1,350,201 |
|
| Preferred noncontrolling interests dividends |
(157,887) |
(195,213) |
|
| Net income attributable to Foundation Healthcare common stock |
$ 1,644,273 |
$ 1,154,988 |
|
| Earnings per common share (basic and diluted): |
|||
| Net income (loss) attributable to continuing operations |
$ (0.07) |
$ 0.05 |
|
| Income from discontinued operations, net of tax |
0.16 |
0.02 |
|
| Net income per share, attributable to |
$ 0.09 |
$ 0.07 |
|
| Weighted average number of common and diluted shares outstanding |
17,271,513 |
17,080,451 |
|
| FOUNDATION HEALTHCARE, INC. |
|||
| Condensed Consolidated Statements of Operations |
|||
| For the Years Ended December 31, 2015 and 2014 |
|||
| (Unaudited) |
|||
| 2015 |
2014 |
||
| Net Revenues: |
|||
| Patient services |
$ 121,197,748 |
$ 96,219,746 |
|
| Provision for doubtful accounts |
(6,359,423) |
(5,118,194) |
|
| Net patient services revenue |
114,838,325 |
91,101,552 |
|
| Management fees from affiliates |
5,449,354 |
5,394,666 |
|
| Other revenue |
5,852,145 |
5,361,931 |
|
| Revenues |
126,139,824 |
101,858,149 |
|
| Equity in earnings of affiliates |
1,369,488 |
2,979,293 |
|
| Operating Expenses: |
|||
| Salaries and benefits |
33,870,730 |
29,273,542 |
|
| Supplies |
27,759,861 |
24,000,276 |
|
| Other operating expenses |
53,928,367 |
42,767,477 |
|
| Depreciation and amortization |
5,697,962 |
5,550,162 |
|
| Total operating expenses |
121,256,920 |
101,591,457 |
|
| Other Income (Expense): |
|||
| Interest expense, net |
(1,059,855) |
(1,610,791) |
|
| Other income |
38,226 |
385,033 |
|
| Net other (expense) |
(1,021,629) |
(1,225,758) |
|
| Income from continuing operations, before taxes |
5,230,762 |
2,020,227 |
|
| Benefit for income taxes |
718,612 |
851,788 |
|
| Income from continuing operations, net of taxes |
5,949,374 |
2,872,015 |
|
| Income (loss) from discontinued operations, net of tax |
6,593,188 |
(357,452) |
|
| Net income |
12,542,562 |
2,514,563 |
|
| Less: Net income attributable to noncontrolling interests |
6,645,210 |
3,827,439 |
|
| Net income (loss) attributable to Foundation Healthcare |
5,897,352 |
(1,312,876) |
|
| Preferred noncontrolling interests dividends |
(706,395) |
(780,853) |
|
| Net income (loss) attributable to Foundation Healthcare common stock |
$ 5,190,957 |
$ (2,093,729) |
|
| Earnings per common share (basic and diluted): |
|||
| Net loss attributable to continuing operations |
$ (0.08) |
$ (0.10) |
|
| Income (loss) from discontinued operations, net of tax |
0.38 |
(0.02) |
|
| Net income (loss) per share, attributable to |
$ 0.30 |
$ (0.12) |
|
| Weighted average number of common and diluted shares outstanding |
17,267,301 |
17,080,451 |
|
| FOUNDATION HEALTHCARE, INC. |
|||
| Condensed Consolidated Statements of Cash Flows |
|||
| For the Years Ended December 31, 2015 and 2014 |
|||
| (Unaudited) |
|||
| 2015 |
2014 |
||
| Operating activities: |
|||
| Net income |
$ 12,542,562 |
$ 2,514,563 |
|
| Less: Income (loss) from discontinued operations, net of tax |
6,593,188 |
(357,452) |
|
| Income from continuing operations, net of tax |
5,949,374 |
2,872,015 |
|
| Adjustments to reconcile net income (loss) from continuing operations, net of tax, to net |
|||
| Depreciation and amortization |
5,697,962 |
5,550,162 |
|
| Deferred tax benefit |
- |
(1,154,252) |
|
| Stock-based compensation, net of cashless vesting |
1,564,652 |
1,064,854 |
|
| Provision for doubtful accounts |
6,359,423 |
5,118,194 |
|
| Equity in earnings of affiliates |
(1,369,488) |
(2,979,293) |
|
| Changes in assets and liabilities: |
|||
| Accounts receivable, net of provision for doubtful accounts |
(17,771,930) |
(11,333,987) |
|
| Receivables from affiliates |
647,298 |
(309,182) |
|
| Supplies inventories |
(1,703,765) |
67,967 |
|
| Prepaid and other current assets |
326,253 |
(1,528,377) |
|
| Other assets |
(10,821,220) |
(193,211) |
|
| Accounts payable |
(1,304,100) |
(1,284,827) |
|
| Accrued liabilities |
2,784,061 |
6,383,015 |
|
| Other current liabilities |
(461,716) |
(3,613,586) |
|
| Other liabilities |
118,897 |
4,274,861 |
|
| Net cash provided by (used in) operating activities from continuing operations |
(9,984,299) |
2,934,353 |
|
| Net cash provided by (used in) operating activities from discontinued operations |
1,566,595 |
(488,300) |
|
| Net cash provided by (used in) operating activities |
(8,417,704) |
2,446,053 |
|
| Investing activities: |
|||
| Purchase of property and equipment |
(43,599,313) |
(4,884,948) |
|
| Disposal of property and equipment |
165,000 |
1,807 |
|
| Proceeds from sale of equity investment |
— |
178,000 |
|
| Distributions from affiliates |
1,914,877 |
2,778,257 |
|
| Net cash used in investing activities from continuing operations |
(41,519,436) |
(1,926,884) |
|
| Net cash provided by investing activities from discontinued operations |
8,388,233 |
— |
|
| Net cash used in investing activities |
(33,131,203) |
(1,926,884) |
|
| Financing activities: |
|||
| Debt proceeds |
81,745,831 |
32,885,948 |
|
| Debt payments |
(31,269,952) |
(26,284,135) |
|
| Preferred noncontrolling interest dividends |
(743,720) |
(781,052) |
|
| Preferred noncontrolling interest redemptions |
(1,740,000) |
— |
|
| Distributions to noncontrolling interests |
(4,234,784) |
(3,731,252) |
|
| Proceeds from noncontrolling interests |
— |
112,167 |
|
| Net cash provided by financing activities from continuing operations |
43,757,375 |
2,201,676 |
|
| Net cash used in financing activities from discontinued operations |
— |
(4,072,896) |
|
| Net cash provided by (used in) financing activities |
43,757,375 |
(1,871,220) |
|
| Net change in cash and cash equivalents |
2,208,467 |
(1,352,051) |
|
| Cash and cash equivalents at beginning of period |
2,860,025 |
4,212,076 |
|
| Cash and cash equivalents at end of period |
$ 5,068,492 |
$ 2,860,025 |
|
| Cash Paid for Interest and Income Taxes: |
|||
| Interest expense |
$ 1,059,855 |
$ 2,052,213 |
|
| Interest expense, discontinued operations |
$ — |
$ 168,733 |
|
| Income taxes, continuing operations |
$ 1,600,000 |
$ 3,255,623 |
|
SOURCE Foundation HealthCare, Inc.
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