Nobilis Health Reports Second Quarter 2018 Financial Results

 

HOUSTON, Aug. 2, 2018 /PRNewswire/ -- Nobilis Health Corp. (NYSE American: HLTH) (NEO: HLTH) ("Nobilis" or the "Company") today announced its financial results for the second quarter ended June 30, 2018.

"In the second quarter of 2018, we continued to see a positive, yet familiar, trend in our key operating metrics. Gross margin remained strong in the second quarter measuring 15.9% of total revenues; total operating expense per case dropped by 35.0% year-over-year, and Net Income to Nobilis totaled $0.9 million in the second quarter, despite a year-over-year $10.8 million reduction in top line revenues. The year-over-year change in top line revenues in the second quarter can be attributed to the discontinuation of our lab testing ancillary, representing about $8.3 million of non-recurring revenue in the second quarter. Net income was impacted by an additional $1.3 million of amortization related to the Elite acquisition. Excluding that impact, net income for the second quarter 2018 would have increased to $2.2 million.

Total Adjusted EBITDA1 for the second quarter of 2018 was $11.4 million, representing an increase of $1.4 million, or 13.7%, from the prior corresponding period. As a percent of revenues, Adjusted EBITDA1 increased from 12.6% in Q2 of 2017, to 16.5% of revenues in Q2 of 2018, gaining 390 basis points. Adjusted EBITDA1 for the first six months of 2018 increased to $16.5 million, or 36.9%, from $12.1 million in the prior corresponding period. Adjusted EBITDA1 for the trailing twelve months ended June 30th, 2018 totaled $45.8 million, versus $37.2 million for the trailing twelve month period ended June 30th, 2017," said Harry Fleming, CEO.

Second Quarter 2018 Results

Total revenues for the second quarter of 2018 were $69.2 million, a 13.5% decrease over the same prior year period. Total case volume increased by 1,644 cases to 6,241 cases, or 35.8%, compared to 4,597 cases in the prior corresponding period. The decrease in total revenue was largely driven by the impact of the implementation of ASC 606 and the loss of the company's Lab Testing ancillary business. The addition of the Elite entities and the two new in-network ASCs contributed positively during the second quarter, offsetting the loss of the physician group mentioned on the first quarter earnings call, as well as the continued softness experienced in the Houston market.

Revenue per case dipped to $11,086 in the second quarter 2018 from $17,394 in the prior corresponding period. This decrease can be attributed to the loss of lab testing revenues and a larger in-network case mix in 2018.

Net income attributable to Nobilis for the second quarter of 2018 was $0.9 million, or $0.01 per fully diluted share, compared to a net income of $1.6 million, or $0.02 per fully diluted share, in the second quarter of 2017.

Adjusted EBITDA1 for the second quarter of 2018, which adds back certain non-cash and non-recurring expenses, was $11.4 million, an increase of 13.7% over $10.1 million in the same quarter last year.

Total cash was $16.5 million and accounts receivable was $143.7 million as of June 30, 2018, compared to $22.5 million and $144.5 million, respectively, at December 31, 2017.

Six Months Ended June 2018 Results

Total revenues for the six months ended June 30, 2018 were $133.5 million, a 9.9% decrease over the same prior year period. Total case volume for the first six months of 2018 increased by 2,488 cases to 11,516 cases, or 27.6%, compared to 9,028 cases in the prior corresponding period. The decrease in total revenue during the first six months of 2018 was driven by the same factors influencing the revenue shortfall experienced in the second quarter, which was the discontinuation of the Lab Testing business and the impact of the change in accounting guidance. Lab Testing represented approximately $13.8 million dollars of revenue in the first six months of 2017 which did not re-occur in 2018, and the full year impact of the change in accounting is $6.8 million.

Revenue per case dipped to $11,595 in the first six months of 2018 from $16,423 in the prior 2017 period due to the loss of lab testing revenues in 2018 as well as a higher portion of Nobilis' case mix being comprised of in-network volume.

Net loss attributable to Nobilis for the first six months of 2018 was $3.0 million, or $0.04 per fully diluted share, compared to a net loss of $0.8 million, or $0.01 per fully diluted share, in the same prior year period.

Adjusted EBITDA1 for the first six months of 2018, which adds back certain non-cash and non-recurring expenses, was $16.5 million, an increase of 36.9% over $12.1 million in the same quarter last year.

Revised Full Year 2018 Guidance

  • Revenue in the range of $315.0 million to $330.0 million
  • Adjusted EBITDA in the range of $56.0 million to $59.0 million

Conference Call Information

Nobilis Health will host a conference call Thursday morning, at 8:00 a.m. CDT (9:00 a.m. EDT) to discuss its financial results for the second quarter 2018. To participate in the conference call, please dial (833) 233-4454 in the U.S. and Canada, and +1 (647) 689-4133 internationally. Please enter conference ID 1348089. There will be a livestream of the conference call available at: http://investors.nobilishealth.com/investors/events-and-presentations/.

About Nobilis Health Corp.

Nobilis Health (www.NobilisHealth.com) is a full-service healthcare development and management company, with more than 30 locations across Texas and Arizona, including hospitals, ambulatory surgery centers, and multi-specialty clinics. In addition, Nobilis Health partners with more than 30 facilities across the country. Marketing nine independent brands, Nobilis Health deploys a unique patient acquisition strategy driven by proprietary, direct-to-consumer marketing technology, focusing on a specified set of procedures that are performed at its facilities by local physicians. Nobilis Health's business model connects patients with physicians and delivers the highest quality healthcare.

Forward Looking Statements

This press release contains certain forward-looking statements within the meaning of Canadian and United States securities laws, including the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements include all statements that do not relate solely to historical or current facts and may be identified by the use of words such as "may," "believe," "will," "expect," "project," "estimate," "anticipate," "plan" or "continue." These forward-looking statements are based on current plans and expectations and are subject to a number of risks, uncertainties and other factors which could significantly affect current plans and expectations and our future financial condition and results. These factors, which could cause actual results, performance and achievements to differ materially from those anticipated, include, but are not limited to our ability to successfully maintain effective internal controls over financial reporting; our ability to implement our business strategy, manage the growth in our business, and integrate acquired businesses; the risk of litigation and investigations, and liability claims for damages and other expenses not covered by insurance; the risk that payments from third-party payers, including government healthcare programs, may decrease or not increase as costs increase; adverse developments affecting the medical practices of our physician limited partners; our ability to maintain favorable relations with our physician limited partners; our ability to grow revenues by increasing case and procedure volume while maintaining profitability at the Nobilis Facilities; failure to timely or accurately bill for services; our ability to compete for physician partners, patients and strategic relationships; the risk of changes in patient volume and patient mix; the risk that laws and regulations that regulate payments for medical services made by government healthcare programs could cause our revenues to decrease; the risk that contracts are canceled or not renewed or that we are not able to enter into additional contracts under terms that are acceptable to us; and the risk of potential decreases in our reimbursement rates. The foregoing are significant factors we think could cause our actual results to differ materially from expected results. However, there could be additional factors besides those listed herein that also could affect us in an adverse manner.

We have not undertaken any obligation to publicly update or revise any forward-looking statements. All of our forward-looking statements speak only as of the date of the document in which they are made or, if a date is specified, as of such date. Subject to any mandatory requirements of applicable law, we disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any changes in events, conditions, circumstances or information on which the forward-looking statement is based. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing factors and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed on March 12, 2018, as updated by other filings with the Securities and Exchange Commission.

                               Nobilis Health Corp. and Subsidiaries

                                    Consolidated Balance Sheets

                                June 30, 2018 and December 31, 2017

                                (in thousands, except share amounts)

                                            (unaudited)


                                             June 30,                December 31,
                                                   2018                          2017
                                                   ----                          ----

    Assets

    Current Assets:

    Cash                                                    $16,531                      $22,536

    Trade
     accounts                              respectively
     receivable,
     net of
     allowance
     of $0 and
     $2,598 at
     June 30,
     2018 and
     December
     31, 2017,                                  143,699                         144,522

    Medical
     supplies                                     3,236                           3,356

    Prepaid
     expenses
     and other
     current
     assets                                      14,484                          14,472
                                                 ------                          ------

    Total
     current
     assets                                     177,950                         184,886

    Property
     and
     equipment,
     net                                         46,173                          51,559

    Intangible
     assets,
     net                                         62,695                          65,990

    Goodwill                                    116,072                         116,072

    Deferred
     tax asset                                   10,710                           9,951

    Other long-
     term
     assets                                       2,571                           2,580
                                                  -----                           -----

    Total
     Assets                                                $416,171                     $431,038
                                                           ========                     ========

    Liabilities and
     Shareholders' Equity

    Current Liabilities:

    Trade
     accounts
     payable                                                $23,790                      $24,312

    Accrued
     liabilities                                 29,516                          35,393

    Current
     portion of
     capital
     leases                                       2,992                           3,249

    Current
     portion of
     long-term
     debt                                         3,764                           3,766

    Current
     portion of
     convertible
     promissory
     notes                                        5,750                           4,250

    Other
     current
     liabilities                                 14,665                          16,324
                                                 ------                          ------

    Total
     current
     liabilities                                 80,477                          87,294

    Lines of
     credit                                      26,000                          18,000

    Long-term
     capital
     leases,
     net of
     current
     portion                                     11,303                          12,667

    Long-term
     debt, net
     of current
     portion                                     88,072                          90,619

    Convertible
     promissory
     notes, net
     of current
     portion                                      1,750                           4,250

    Warrant and
     stock
     option
     derivative
     liabilities                                    228                             384

    Other long-
     term
     liabilities                                  2,853                           3,036
                                                  -----                           -----

    Total
     liabilities                                210,683                         216,250
                                                -------                         -------

    Commitments and
     Contingencies

     Contingently
     redeemable
     noncontrolling
     interest                                    15,765                          17,161

    Total shareholders' equity

    Common
     shares, no                            outstanding
     par value,                            at June
     unlimited                             30, 2018
     shares                                and
     authorized,                           December
     78,250,469                            31, 2017
     and
     78,183,802
     shares
     issued and                                       -                              -

    Additional
     paid in
     capital                                    227,735                         225,790

    Accumulated
     deficit                                   (78,212)                       (75,245)
                                                -------                         -------

    Total
     shareholders'
     equity
     attributable
     to Nobilis
     Health
     Corp.                                      149,523                         150,545

     Noncontrolling
     interests                                   40,200                          47,082
                                                 ------                          ------

    Total
     shareholders'
     equity                                     189,723                         197,627
                                                -------                         -------

    Total
     Liabilities
     and
     Shareholders'
     Equity                                                $416,171                     $431,038
                                                           ========                     ========

 

                                                                        Nobilis Health Corp. and Subsidiaries

                                                                        Consolidated Statements of Operations

                                                                  (in thousands, except share and per share amounts)

                                                                                     (unaudited)


                                        Three Months Ended June 30,                           Six Months Ended June 30,


                                           2018                    2017                       2018                         2017
                                           ----                    ----                       ----                         ----

    Revenues:

      Net patient and
       professional fees                           $64,479                                           $77,073                     $126,961  $141,974

      Contracted marketing
       revenues                           2,309                                1,573                                 2,444           2,952

      Factoring revenues                  1,561                                1,316                                 2,370           3,338

      Other revenue                         840                                    -                                1,758               -
                                            ---                                  ---                                -----             ---

        Total revenues                   69,189                               79,962                               133,533         148,264

    Operating expenses:

      Salaries and
       benefits                          16,187                               15,417                                32,414          30,738

      Drugs and supplies                 10,501                               12,579                                20,416          25,323

      General and
       administrative                    26,353                               35,150                                54,676          68,838

      Depreciation and
       amortization                       5,114                                2,728                                 9,745           5,066
                                          -----                                -----                                 -----           -----

        Total operating
         expenses                        58,155                               65,874                               117,251         129,965

    Corporate expenses:

      Salaries and
       benefits                           2,975                                3,623                                 5,586           6,062

      General and
       administrative                     3,197                                2,595                                 6,742           6,848

      Legal expenses                        638                                  405                                 1,468             976

      Depreciation                           94                                   80                                   188             163
                                            ---                                  ---                                   ---             ---

        Total corporate
         expenses                         6,904                                6,703                                13,984          14,049
                                          -----                                -----                                ------          ------

    Income from
     operations                           4,130                                7,385                                 2,298           4,250

    Other (income) expense:

      Change in fair value
       of warrant and
       stock                              (217)                                 188                                 (156)          (187)

       option derivative liabilities

      Interest expense                    3,292                                1,363                                 6,177           2,618

      Other (income)
       expense, net                     (1,180)                                 330                               (2,113)             72
                                         ------                                  ---                                ------             ---

        Total other expense               1,895                                1,881                                 3,908           2,503
                                          -----                                -----                                 -----           -----

    Income (Loss) before
     income taxes and
     noncontrolling
     interests                            2,235                                5,504                               (1,610)          1,747

    Income tax expense
     (benefit), net                         495                                2,249                                 (209)            698
                                            ---                                -----                                  ----             ---

    Net income (loss)                     1,740                                3,255                               (1,401)          1,049

    Net income
     attributable to
     noncontrolling
     interests                              855                                1,670                                 1,566           1,862
                                            ---                                -----                                 -----           -----

    Net income (loss)
     attributable to
     Nobilis Health
     Corp. (Basic)                                    $885                                            $1,585                     $(2,967)   $(813)
                                                      ====                                            ======                      =======     =====

    Net income (loss)
     per basic common
     share                                           $0.01                                             $0.02                      $(0.04)  $(0.01)
                                                     =====                                             =====                       ======    ======

    Net income (loss)
     per fully diluted
     common share                                    $0.01                                             $0.02                      $(0.04)  $(0.01)
                                                     =====                                             =====                       ======    ======

    Weighted average
     shares outstanding
     (basic)                         78,186,000                           77,805,014                            78,184,907      77,805,014
                                     ==========                           ==========                            ==========      ==========

    Weighted average
     shares outstanding
     (fully diluted)                 82,153,945                           78,115,242                            78,184,907      77,805,014
                                     ==========                           ==========                            ==========      ==========

 

                               Nobilis Health Corp. and Subsidiaries

                               Consolidated Statements of Cash Flows

                                           (in thousands)

                                            (unaudited)


                                               Six Months Ended June 30,

                                            2018                    2017
                                            ----                    ----

    CASH FLOWS FROM OPERATING
     ACTIVITIES:

     Net
      income
      (loss)                                       $(1,401)                        $1,049

     Adjustments to reconcile
      net income (loss) to net
      cash provided by
      operating activities:

      Depreciation
      and
      amortization                         9,933                             5,229

     Share-
      based
      compensation                         1,681                             1,630

     Change in
      fair
      value of
      warrant
      and
      stock
      option
      derivative
      liabilities                          (156)                            (187)

     Deferred
      income
      taxes                                (759)                              120

     Loss on
      sale of
      property
      and
      equipment                               61                                 -

     Loss from
      equity
      method
      investment                               -                              108

      Amortization
      of
      deferred
      financing
      fees                                   670                               233

     Changes in operating
      assets and liabilities,
      net of assets acquired
      and liabilities assumed:

        Trade
         accounts
         receivable                          823                            15,279

        Medical
         supplies                            120                             1,300

        Prepaid
         expenses
         and
         other
         current
         assets                             (12)                          (2,714)

        Other
         long-
         term
         assets                                9                                 -

        Trade
         accounts
         payable
         and
         accrued
         liabilities                     (6,399)                          (5,130)

        Other
         current
         liabilities                     (1,659)                            2,280

        Other
         long-
         term
         liabilities                       (183)                            (303)

           Net cash
            provided
            by
            operating
            activities                     2,728                            18,894
                                           -----                            ------


    CASH FLOWS FROM INVESTING
     ACTIVITIES:

        Purchase
         of
         property
         and
         equipment                       (1,338)                          (3,802)

        Proceeds
         on sale
         of
         property
         and
         equipment                            22                                 -

         Acquisitions,
         net of
         cash
         acquired                              -                          (7,883)

        Sale of
         additional
         ownership
         interest
         in
         subsidiaries                        263                                 -
                                             ---                               ---

            Net cash
             used for
             investing
             activities                  (1,053)                         (11,685)
                                          ------                           -------


    CASH FLOWS FROM FINANCING
     ACTIVITIES:

         Distributions
         to
         noncontrolling
         interests                       (9,840)                          (1,520)

        Principal
         payments
         on
         capital
         lease
         obligations                     (1,621)                          (2,214)

        Proceeds
         from
         line of
         credit                            8,000                             3,000

        Payments
         on debt                         (4,219)                          (1,356)

        Deferred
         financing
         fees                                  -                            (466)
                                             ---                             ----

             Net cash
              used for
              financing
              activities                 (7,680)                          (2,556)
                                          ------                            ------


    NET
     INCREASE
     (DECREASE)
     IN CASH                             (6,005)                            4,653

    CASH -
     Beginning
     of
     period                               22,536                            24,572
                                          ------                            ------

    CASH -
     End of
     period                                         $16,531                        $29,225
                                                    =======                        =======

 

                                                         Nobilis Health Corp. and Subsidiaries

                                                     Reconciliation of Non-GAAP Financial Measures

                                                                     (in thousands)


                              Three Months Ended June 30,                        Six Months Ended June 30,

                                 2018                    2017                    2018                      2017
                                 ----                    ----                    ----                      ----


    Net income (loss)
     attributable to Nobilis
     Health Corp.                           $885                                         $1,585                 $(2,967)  $(813)

    Interest                    3,292                             1,363                              6,177          2,618

    Income tax expense
     (benefit), net               495                             2,249                              (209)           698

    Depreciation and
     amortization               5,208                             2,808                              9,933          5,229
                                -----                             -----                              -----          -----

    EBITDA                      9,880                             8,005                             12,934          7,732


    Non-cash compensation
     expenses                     846                               570                              1,681          1,835

    Change in fair value of
     warrant and stock option
     derivative liabilities     (217)                              188                              (156)         (187)

    Acquisition expenses          619                               558                              1,448          1,192

    Non-recurring expenses        306                               732                                613          1,495

    Adjusted EBITDA(1)                   $11,434                                        $10,053                  $16,520  $12,067
                                         =======                                        =======                  =======  =======

1 Use of Non-GAAP Financial Measures

Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, non-cash compensation expenses, change in fair value of warrant and stock option derivative liabilities, acquisition expenses, and non-recurring expenses. Adjusted EBITDA should not be considered a measure of financial performance required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA is an analytical indicator used by management and the health care industry to evaluate company performance, allocate resources and measure leverage and debt service capacity. Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA is not a measurement determined in accordance with U.S. GAAP and is thus susceptible to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies.

Contact Information:

Joel Lehr

Assistant Vice President, Corporate Communications

IR@nobilishealth.com

346-207-6342

 

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SOURCE Nobilis Health Corp.

Company Codes: AMEX:HLTH

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