Psychiatric Solutions Reports Earnings Per Diluted Share Increase 72% In Third Quarter
FRANKLIN, Tenn., Oct. 28 /PRNewswire-FirstCall/ -- Psychiatric Solutions, Inc. ("PSI") today announced financial results for the third quarter and nine months ended September 30, 2004. Revenue for the quarter was $131,591,000, up 40% from $93,923,000 for the third quarter of 2003. Net income available to common stockholders increased 148% to $5,215,000 for the third quarter of 2004, from $2,103,000 for the third quarter last year. Earnings per diluted share increased 72% for the quarter to $0.31 from $0.18 for the third quarter of 2003, on a 30% increase in the diluted share count.
Revenue for the first nine months of 2004 increased 87% to $351,957,000 from $188,455,000 for the first nine months of 2003. Net income available to common stockholders increased 361% to $9,778,000 for the latest nine months from $2,121,000 for the comparable period in 2003, while earnings per diluted share increased 150% to $0.60 from $0.24. PSI's adjusted earnings per diluted share increased 48% to $0.83 for the first nine months of 2004 from $0.56 for the first nine months of 2003. Adjusted results for the first nine months of 2004 exclude a loss on refinancing of long-term debt of $6,407,000, or $0.23 per diluted share after tax. Adjusted results for the first nine months of 2003 exclude a net loss on the refinancing of long-term debt, change in the valuation of put warrants and reserve on stockholders notes of $5,159,000, or $0.32 per diluted share after tax. Please see page 7 for a reconciliation of adjusted earnings per diluted share with earnings per diluted share.
Commenting on the announcement, Joey Jacobs, Chairman, President and Chief Executive Officer of PSI, said, "We are pleased to report significant profitable growth for the third quarter of 2004 as a result of our continued substantial organic growth and accretive acquisitions. We again demonstrated strong execution of our internal growth strategies with an 8.5% increase in same-facility revenues for the third quarter. In addition to extending our record for same-facility revenue growth to eight consecutive quarters, our third quarter results included the 11 facilities acquired in June 2003, increasing the number of facilities in the same-facility base to 22. Once again, demand for our services was strong as reflected in the growth in same- facility patient days and admissions of 7.2% and 6.8%, respectively.
"PSI's third quarter financial results also reflected the nearly 50% growth in our total beds in operation to over 4,000 at the end of the third quarter from over 2,700 at the end of the third quarter last year. The majority of this increase came through our acquisitions of 12 inpatient facilities since the end of the third quarter last year. Because of the highly fragmented nature of the inpatient psychiatric business, we expect to continue to make acquisitions through our disciplined evaluation of potential transactions that meet our acquisition criteria."
Based on PSI's financial results for the third quarter and first nine months of 2004 and its assumptions regarding the fourth quarter of 2004, PSI today affirmed its established guidance for adjusted earnings per diluted share for 2004 in a range of $1.12 to $1.16. Adjusted earnings per diluted share exclude the first quarter loss on the refinancing of long-term debt of $6,407,000, or $0.23 per diluted share after tax.
In addition, PSI today established its guidance for earnings per diluted share for 2005 in a range of $1.35 to $1.40. This guidance does not include any impact from future acquisitions.
Mr. Jacobs concluded, "PSI's financial performance for the third quarter and first nine months of 2004 strongly supports our confidence in the Company's prospects for continued profitable growth. Even as we have demonstrated the strength of our operating and acquisition strategies during these periods, we have continued to refine and improve our business model to enhance our ability to meet increasing market demand for our services. In managing our rapid growth into a leading national provider of inpatient psychiatric care, we have also maintained a fundamental commitment to the highest quality care."
PSI will hold a conference call to discuss this release tomorrow at 10:00 a.m. Eastern time. Participants will have the opportunity to listen to the conference call over the Internet by going to http://www.psysolutions.com/ and clicking Investor Relations or by going to http://www.streetevents.com/ or http://www.fulldisclosure.com/ . Participants are encouraged to go to the selected web sites at least 15 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available at these sites shortly after the call through the end of business on November 28, 2004.
This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements other than those made solely with respect to historical fact and are based on the intent, belief or current expectations of PSI and its management. PSI's business and operations are subject to a variety of risks and uncertainties that might cause actual results to differ materially from those projected by any forward- looking statements. Factors that could cause such differences include, but are not limited to: (1) potential competition which alters or impedes PSI's acquisition strategy by decreasing PSI's ability to acquire additional facilities on favorable terms; (2) the ability of PSI to improve the operations of acquired facilities; (3) the ability to maintain favorable and continuing relationships with physicians who use PSI's facilities; (4) the ability to receive timely additional financing on terms acceptable to PSI to fund PSI's acquisition strategy and capital expenditure needs; (5) risks inherent to the health care industry, including the impact of unforeseen changes in regulation, reimbursement rates from federal and state health care programs or managed care companies and exposure to claims and legal actions by patients and others; and (6) potential difficulties in integrating the operations of PSI with recently acquired operations. The forward-looking statements herein are qualified in their entirety by the risk factors set forth in PSI's filings with the Securities and Exchange Commission, including the factors listed in the Annual Report on Form 10-K for fiscal year 2003 filed on March 25, 2004 under the caption "Risk Factors." PSI undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date hereof.
Psychiatric Solutions, Inc. offers an extensive continuum of behavioral health programs to critically ill children, adolescents and adults through its operation of 34 owned or leased freestanding psychiatric inpatient facilities with more than 4,000 beds. The Company also manages freestanding psychiatric inpatient facilities for government agencies and psychiatric inpatient units within medical/surgical hospitals owned by others.
PSYCHIATRIC SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, in thousands except for per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Revenue $131,591 $93,923 $351,957 $188,455 Salaries, wages and employee benefits 72,259 49,973 191,368 96,494 Professional fees 13,951 10,795 38,620 22,123 Supplies 8,689 5,891 22,648 10,574 Rentals and leases 2,557 1,622 6,433 2,404 Other operating expenses 14,365 13,093 39,923 30,218 Provision for bad debts 3,417 1,218 8,080 3,875 Depreciation and amortization 2,628 1,887 7,096 3,621 Interest expense, net 5,105 5,566 14,077 9,363 Loss on refinancing long-term debt - 157 6,407 4,744 Change in valuation of put warrants - - - 960 Change in reserve on stockholder notes - - - (545) 122,971 90,202 334,652 183,831 Income from continuing operations before income taxes 8,620 3,721 17,305 4,624 Provision for income taxes 3,274 1,414 6,576 2,122 Income from continuing operations 5,346 2,307 10,729 2,502 Income (loss) from discontinued operations, net of taxes 18 111 (295) 111 Net income 5,364 2,418 10,434 2,613 Accrued preferred stock dividends 149 315 656 492 Net income available to common stockholders $5,215 $2,103 $9,778 $2,121 Basic earnings per share: Income from continuing operations $0.35 $0.23 $0.74 $0.25 Income (loss) from discontinued operations, net of taxes - 0.01 (0.02) 0.01 $0.35 $0.24 $0.72 $0.26 Diluted earnings per share: Income from continuing operations $0.31 $0.17 $0.62 $0.23 Income (loss) from discontinued operations, net of taxes - 0.01 (0.02) 0.01 $0.31 $0.18 $0.60 $0.24 Shares used in computing per share amounts: Basic 14,796 8,628 13,629 8,177 Diluted 17,535 13,515 17,383 10,978 PSYCHIATRIC SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) September 30, December 31, 2004 2003 (Unaudited) ASSETS Current assets: Cash $17,722 $44,954 Accounts receivable, less allowance for doubtful accounts of $10,688 (unaudited) and $7,491, respectively 77,096 56,616 Prepaids and other 8,563 11,075 Total current assets 103,381 112,645 Property and equipment, net of accumulated depreciation 194,043 149,589 Cost in excess of net assets acquired, net 132,786 68,970 Contracts, net 2,374 2,850 Other assets 21,292 13,604 Total assets $453,876 $347,658 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $10,407 $11,417 Salaries and benefits payable 29,086 13,074 Other accrued liabilities 26,407 19,979 Current portion of long-term debt 860 1,023 Total current liabilities 66,760 45,493 Long-term debt, less current portion 243,492 173,980 Deferred tax liability 9,926 6,762 Other liabilities 4,557 4,779 Total liabilities 324,735 231,014 Series A convertible preferred stock, $0.01 par value, 6,000 shares authorized; 1,818 and 4,545 shares outstanding at September 30, 2004 and December 31, 2003, respectively 10,117 25,316 Stockholders' equity: Common stock, $0.01 par value, 48,000 shares authorized; 15,084 and 11,937 issued and outstanding at September 30, 2004 and December 31, 2003, respectively 151 119 Additional paid-in capital 108,971 91,423 Notes receivable from stockholders - (338) Accumulated unrealized losses (4) (4) Accumulated earnings 9,906 128 Total stockholders' equity 119,024 91,328 Total liabilities and stockholders' equity $453,876 $347,658 PSYCHIATRIC SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Nine Months Ended September 30, 2004 2003 Operating Activities Net income $10,434 $ 2,613 Adjustments to reconcile net income to net cash provided by continuing operating activities: Loss (income) from discontinued operations, net of taxes 295 (111) Depreciation and amortization 7,096 3,621 Provision for doubtful accounts 8,080 3,875 Accretion of detachable warrants - 159 Non-cash stock compensation expense - 14 Amortization of loan costs 706 945 Loss on refinancing long-term debt 6,407 4,744 Change in deferred tax liability 5,979 1,742 Change in valuation of put warrants - 960 Change in reserve on stockholder notes - (545) Long-term interest accrued - 124 Changes in operating assets and liabilities: Accounts receivable (11,118) (11,980) Prepaids and other assets 1,969 2,963 Accounts payable (5,141) (1,895) Salaries and benefits payable 7,215 (2,022) Accrued liabilities and other liabilities 3,907 8,026 Net cash provided by operating activities 35,829 13,233 Investing Activities: Cash paid for acquisitions, net of cash acquired (115,842) (97,480) Purchase of long-term securities - (971) Capital purchases of property and equipment (11,166) (3,089) Other assets (1,834) (1,455) Net cash used in investing activities (128,842) (102,995) Financing Activities: Net principal borrowings on long-term debt 69,206 77,615 Refinancing of long-term debt (3,844) - Payment of loan and issuance costs (2,027) (5,451) Proceeds from issuance of series A convertible preferred stock - 25,000 Proceeds from repayment of stockholder notes 338 - Proceeds from issuance of common stock 2,108 202 Net cash provided by financing activities 65,781 97,366 Net (decrease) increase in cash (27,232) 7,604 Cash at beginning of the period 44,954 2,392 Cash at end of the period $17,722 $ 9,996 Significant Non-cash Transactions: Issuance of common stock upon conversion of series A convertible preferred stock $15,791 $- Issuance of common stock upon conversion of convertible debt $- $ 4,588 Issuance of common stock upon exercise of warrants $- $ 2,979 Effect of Acquisitions: Assets acquired, net of cash acquired $108,782 $181,601 Liabilities assumed 7,060 (28,825) Long-term debt issued - (55,296) Cash paid for acquisitions, net of cash acquired $115,842 $97,480
Psychiatric Solutions, Inc. Reconciliation of Adjusted Earnings Per Diluted Share to Earnings Per Diluted
Share (Unaudited) (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Net income $5,364 $2,418 $10,434 $2,613 Plus reconciling items: Discontinued operations, net of taxes (18) (111) 295 (111) Provision for income taxes 3,274 1,414 6,576 2,122 Income before income taxes 8,620 3,721 17,305 4,624 Loss on refinancing long-term debt - 157 6,407 4,744 Change in valuation of put warrants - - - 960 Change in reserve on stockholder notes - - (545) Adjusted income before income taxes 8,620 3,878 23,712 9,783 Provision for income taxes 3,274 1,474 9,011 3,718 Discontinued operations, net of taxes 18 111 (295) 111 Adjusted net income(a) $5,364 $2,515 $14,406 $6,176 Earnings per diluted share $0.31 $0.18 $0.60 $0.24 Fully taxed adjusted earnings per diluted share(a)(b) $0.31 $0.19 $0.83 $0.56 Diluted shares used in computing per share amounts: Earnings per share 17,535 13,515 17,383 10,978 Fully taxed adjusted earnings per share(b) 17,535 13,515 17,383 11,301 (a) PSI believes its calculation of adjusted earnings per diluted share provides a better measure of the Company's ongoing performance and provides better comparability to prior periods because it excludes items not related to the Company's core business operations and it is not influenced by fluctuations in the Company's stock price. Adjusted earnings per diluted share should not be considered as a measure of financial performance under accounting principles generally accepted in the United States, and the items excluded from it are significant components in understanding and assessing financial performance. Because adjusted earnings per diluted share is not a measurement determined in accordance with accounting principles generally accepted in the United States and is thus susceptible to varying calculations, it may not be comparable as presented to other similarly titled measures of other companies. (b) For purposes of calculating adjusted earnings per diluted share, includes 323 diluted shares for the nine months ended September 30, 2003 representing convertible debt that is anti-dilutive for purposes of calculating earnings per diluted share. Also for the nine months ended September 30, 2003, interest on convertible debt of $124 has been added to adjusted net income for purposes of calculating adjusted earnings per diluted share. Psychiatric Solutions, Inc. Reconciliation of Net Income to EBITDA and Adjusted EBITDA (Unaudited) (In thousands) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Income from continuing operations $5,346 $2,307 $10,729 $2,502 Provision for income taxes 3,274 1,414 6,576 2,122 Interest expense 5,105 5,566 14,077 9,363 Depreciation and amortization 2,628 1,887 7,096 3,621 EBITDA 16,353 11,174 38,478 17,608 Stock compensation expense - 5 - 14 Other expenses: Loss on refinancing long-term debt - 157 6,407 4,744 Change in valuation of put warrants - - - 960 Change in reserve on stockholder notes - - (545) Total other expenses - 157 6,407 5,159 Adjusted EBITDA(a) $16,353 $11,336 $44,885 $22,781 (a) EBITDA and adjusted EBITDA are non-GAAP financial measures. EBITDA is defined as net income (loss) before discontinued operations, interest expense (net of interest income), income taxes, depreciation and amortization. Adjusted EBITDA is defined as net income (loss) before discontinued operations, interest expense (net of interest income), income taxes, depreciation, amortization, stock compensation and other items included in the caption above labeled "Other expenses". These other expenses may occur in future periods but the amounts recognized can vary significantly from period to period and do not directly relate to the ongoing operations of our health care facilities. PSI's management relies on EBITDA and adjusted EBITDA as the primary measures to review and assess operating performance of its facilities and their management teams. PSI believes it is useful to investors to provide disclosures of its operating results on the same basis as that used by management. Management and investors also review EBITDA and adjusted EBITDA to evaluate PSI's overall performance and to compare PSI's current operating results with corresponding periods and with other companies in the health care industry. You should not consider EBITDA and adjusted EBITDA in isolation or as a substitute for net income, operating cash flows or other cash flow statement data determined in accordance with accounting principles generally accepted in the United States. Because EBITDA and adjusted EBITDA are not measures of financial performance under accounting principles generally accepted in the United States and are susceptible to varying calculations, they may not be comparable to similarly titled measures of other companies. Psychiatric Solutions, Inc. Operating Statistics - Owned Facilities (Unaudited) (Revenue in thousands) Three Months Ended Nine Months Ended September 30, % September 30, % 2004 2003 Chg. 2004 2003 Chg. Same-facility results: Revenue $80,823 $74,461 8.5% $158,066 $145,510 8.6% Admissions 8,483 7,942 6.8% 19,040 18,041 5.5% Patient days 202,729 189,072 7.2% 352,149 333,361 5.6% Average length of stay(a) 23.9 23.8 0.4% 18.5 18.5 0.0% Revenue per patient day(b) $399 $394 1.3% $449 $436 3.0% Total facility results: Revenue $114,391 $74,461 53.6% $300,906 $145,510 106.8% Admissions 13,849 7,942 74.4% 35,897 18,041 99.0% Patient days 270,142 189,072 42.9% 722,801 333,361 116.8% Average length of stay(a) 19.5 23.8 (18.1)% 20.1 18.5 8.6% Revenue per patient day(b) $423 $394 7.4% $416 $436 (4.6)% (a) Average length of stay is defined as patient days divided by admissions. (b) Revenue per patient day is defined as owned facility revenues divided by patient days.Psychiatric Solutions, Inc.
CONTACT: Brent Turner, Vice President, Treasurer and Investor Relationsof Psychiatric Solutions, Inc., +1-615-312-5700
Web site: http://www.psysolutions.com/