Nobilis Health Corp. announced its financial results for the second quarter ended June 30, 2018.
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
346-207-6342
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SOURCE Nobilis Health Corp.
Company Codes: AMEX:HLTH
