Prospect Medical Holdings, Inc. (NASDAQ: PZZ) (“Prospect”), which
owns and operates five community-based hospitals and manages the medical
care of approximately 177,000 HMO enrollees in southern California,
today announced financial results for its fiscal 2009 fourth quarter and
year ended September 30, 2009.
Prospect continued to demonstrate success at growing and diversifying
revenues, reducing operating and administrative costs, strengthening its
capital structure, and efficiently delivering quality, coordinated acute
and preventative patient care through its Medical Group and Hospital
segments, generating continued strong results for the fourth quarter and
full year of fiscal 2009. On a consolidated basis, Prospect generated
double-digit increases in revenues, operating income and Adjusted
EBITDA, and, excluding non-recurring charges, operated profitably. The
Company’s Hospital Services segment grew both organically and as a
result of increasing its stake in Brotman Medical Center, Inc.
(“Brotman”) to 72% effective April 14, 2009. Profitability at the
Medical Group segment rose for both the fourth quarter and full year of
fiscal 2009. Cash and investments rose by more than $5 million in the
fourth quarter, and Prospect’s $15 million revolving credit facility
remains undrawn.
The Company’s ability to efficiently deliver quality, cost effective
healthcare through its Hospital and Medical Group segments has enabled
it to succeed despite the difficult California marketplace. The Company
believes that the California marketplace may improve due to a number of
factors, including:
-
The number of beds and hospitals in California continues to decrease
and significant cost, seismic and other regulatory barriers exist to
adding new beds, even as the population ages;
-
The Governor’s budget contemplates $2.4 billion in additional funds
for healthcare and social services, including a $1.1 billion increase
to the Department of Health Care Services due to caseload and rate
adjustments in Medi-Cal;
-
$1.6 billion additional Federal Funds pursuant to Assembly Bill 1383
are expected to become available to California in 2010, including
additional reimbursements expected to benefit Prospect;
-
Expected favorable provisions in federal health care legislation,
including greater access for the uninsured population, protection for
hospital reimbursement rates and favorable treatment for
cost-effective providers of healthcare;
-
Medicaid per diems and Disproportionate Share Hospital (DSH) payments
in California are considerably below national averages; and
-
Californians are currently utilizing less acute care than the national
averages (admissions, in-patient days and ER visits).
Prospect’s operating model, which has proven successful in this
difficult southern California market, provides the Company with a high
degree of confidence that it can continue to successfully operate within
California and elsewhere under prospective healthcare reforms being
legislated in Washington, DC.
Finally, the Company intends to continue its focus on further improving
its existing operations, exploring opportunities to expand organically,
and pursuing strategic acquisitions within California and in other parts
of the country.
CONSOLIDATED RESULTS OVERVIEW
Consolidated revenues for the fiscal 2009 fourth quarter rose 35% to
$118.4 million from $87.7 million in the same period last year, due
primarily to a $30.1 million contribution from Brotman. Consolidated
revenues for all of fiscal 2009 rose 22% to $402.2 million from $329.5
million last year, due to a $60.2 million contribution from Brotman and
an $18.6 million increase in revenues generated by the core Alta
hospitals, offset by a $6.1 million decline in managed care revenues.
Operating income for the fiscal 2009 fourth quarter rose 38% to $12.0
million from $8.7 million in the same period last year, with the 2009
increase comprised of additional contributions of $3.1 million from the
Hospital Segment and $0.7 million from the Medical Group Segment.
Operating income for all of fiscal 2009 rose 70% to $40.3 million from
$23.7 million last year, with the 2009 increase comprised of additional
contributions of $11.1 million from the Hospital Segment and an
additional $2.6 million contribution from the Medical Group Segment.
Net loss attributable to common stockholders for the fiscal 2009 fourth
quarter was $2.3 million, or $0.11 per diluted share, on approximately
20.6 million diluted shares outstanding, as compared to a net income
attributable to common stockholders of $6.5 million, or $0.32 per
diluted share, in the fiscal 2008 fourth quarter, on approximately 20.6
million diluted shares outstanding. The net loss for the 2009 fourth
quarter included non-recurring charges of $2.6 million in prepayment
penalties incurred when refinancing the prior debt and related interest
rate swap termination costs of $6.9 million. Net income for the 2008
fourth quarter included a gain of $6.4 million, or $0.31 per share, from
the sale of discontinued operations and preferred stock dividends of
$1.0 million.
For all of fiscal 2009, the net loss attributable to common stockholders
was $2.4 million, or $0.12 per diluted share, on approximately 20.5
million weighted average shares outstanding, as compared to a net loss
attributable to common stockholders for fiscal 2008 of $2.6 million, or
$0.20 per diluted share, on approximately 12.9 million weighted average
shares outstanding. The fiscal 2009 net loss included $14.7 million of
non-recurring charges from prior debt financing matters. The fiscal 2008
net loss included a gain in the value of interest rate swap arrangements
of approximately $3.1 million, a loss on debt extinguishment of $8.3
million, a gain of $6.2 million from the sale of discontinued operations
and preferred stock dividends of $6.8 million.
All accrued preferred stock dividends were eliminated during August
2008, in connection with the conversion of preferred stock to common
stock.