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| 8-K - UNIVERSITY GENERAL HEALTH SYSTEM 8-K - UNIVERSITY GENERAL HEALTH SYSTEM, INC. | universitygeneralhealth8k.htm |
Exhibit 99.1
University General Health System, Inc. Reports 146% Increase in Operating Income on 24% Higher Revenue for First Quarter of 2012
First Quarter Net Income of $489,438 Compares With Prior-Year Net Loss of ($439,768)
HOUSTON, TX--(Marketwire - May 10, 2012) - University General Health System, Inc. (OTCQB: UGHS) (PINKSHEETS: UGHS), a diversified, integrated multi-specialty health delivery system, today announced improved operating results for the first quarter of 2012. The Company will host an investor conference call at 4:15 p.m. Eastern Time today to discuss first quarter operating results and other topics of interest (see details below).
Highlights for the quarter ended March 31, 2012:
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Net patient revenue increased 7.6% to approximately $16.6 million, compared with approximately $15.4 million in the quarter ended March 31, 2011. Average daily inpatient census at University General Hospital increased by 6.3% relative to prior-year levels, reflecting an average occupancy rate of 49.3%. The increase in net patient revenue was primarily attributable to the ongoing execution of the Company’s physician-centric, integrated health delivery system strategy.
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Resident revenue for the senior living business segment approximated $1.9 million, support services revenue totaled $483,700, and other revenue totaled $117,189 in the most recent quarter. The senior living properties reported continued stable utilization, with an overall occupancy rate in excess of 92% for the quarter ended March 31, 2012.
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Total revenue rose 23.6% to $19.1 million, compared with $15.4 million in the first quarter of 2011. Total revenue in the 2011 quarter did not include revenue from senior living and support services, as these business segments were acquired during the second half of 2011.
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Net patient revenue, less provision for bad debt, from Medicare and Medicaid accounted for approximately 36.2% of total net patient revenue, and revenue from managed care contracts and other third party payors accounted for approximately 63.1% of net patient revenue for the quarter ended March 31, 2012. This compared with 37.2% of total net patient revenue from Medicare and Medicaid and 60.7% from managed care contracts and other third-party payors in the prior-year quarter. Self-pay revenue increased from 3.9% of total net patient revenue in the quarter ended March 31, 2011 to 9.1% in the quarter ended March 31, 2012. The provision for bad debt was 8.4% in the most recent quarter, versus 1.8% in the comparable 2011 period.
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Operating income improved 145.7% to approximately $2.0 million in the three months ended March 31, 2012, versus approximately $0.8 million in the prior-year quarter, primarily due to the increase in revenue, along with cost containment measures implemented in the fourth quarter of 2011.
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The Company recorded net income attributable to common shareholders of $489,438, or $0.00 per share, in the most recent quarter, compared with a net loss attributable to common shareholders of ($439,768), or ($0.00) per share, in the comparable quarter of 2011.
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EBITDA for the quarter increased 44.8% to approximately $3.7 million in the most recent quarter, versus approximately $2.6 million in the first quarter of 2011 (EBITDA is a non-GAAP measure that is reconciled with GAAP results in a table at the end of this press release).
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Shareholders’ equity improved to ($108,610) at March 31, 2012, from ($407,469) at December 31, 2011.
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"Our 23.6% increase in total revenue this quarter was attributable to the mid-year acquisitions of TrinityCare Senior Living and Autimis, higher inpatient occupancy rates at our flagship University General Hospital, and the continued implementation of our integrated health delivery model," commented Dr. Hassan Chahadeh, M.D., Chairman and Chief Executive Officer of University General Health System, Inc. "We also reported positive net income, as profitability improved by approximately $929,000 relative to last year's first quarter, reflecting higher revenue and our ability to control costs while expanding our regional health care network in the Houston area."
"We believe recently announced private equity investments in the Company by accredited investors and institutions will allow us to continue to strengthen our balance sheet and prepare University General for further expansion in Houston and other metropolitan markets. We also expect pending and completed strategic acquisitions to be accretive to our integrated health care system and to our financial performance during the balance of 2012. This quarter, University General Health System celebrated its first year as a public company, and we believe the strategy we have developed provides a strong foundation from which to grow revenue, earnings and shareholder value in coming years."
Use of Non-GAAP Financial Measures
Adjusted EBITDA
Adjusted EBITDA is a measure of operating performance that is not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). Adjusted EBITDA should not be considered in isolation or as a substitute for net income (loss), income from operations or cash flows provided by or used in operations, as determined in accordance with GAAP. Adjusted EBITDA is a key measure of the Company's operating performance used by management to focus on operating performance and management without mixing in items of income and expense that relate to the financing and capitalization of the business. The Company defines Adjusted EBITDA as net income (loss) before provision (benefit) for income taxes, non-operating (income) expense items, (gain) loss on sale of assets, depreciation and amortization (including non-cash impairment charges), amortization of deferred gain, and non-cash stock-based compensation expense.
The Company believes Adjusted EBITDA is useful to investors in evaluating our performance, results of operations and financial position for the following reasons:
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It is helpful in identifying trends in day-to-day performance because the items excluded have little or no significance to day-to-day operations;
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It provides an assessment of controllable expenses and affords management the ability to make decisions that are expected to facilitate meeting current financial goals and achieve optimal financial performance; and
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It is an indication of whether adjustments to current spending decisions are necessary.
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Investor Conference Call
Management of University Health System will host a conference call today -- Thursday, May 10, 2012 -- at 4:15 p.m. EDT. Shareholders and other interested parties may participate in the conference call by dialing 877-317-6789 (international participants dial 412-317-6789) and requesting participation in the "University General Health System Conference Call" at least five minutes before 4:15 pm EDT on May 10, 2012.
A replay of the conference call will be available one hour after the call through May 17, 2012 at 9:00 am EDT by dialing 877-344-7529 (international participants dial 412-317-0088) and entering the conference ID# 10014224.
About University General Health System, Inc.
University General Health System, Inc. ("University General") is a diversified, integrated multi-specialty health care provider that delivers concierge physician and patient-oriented services by providing timely, innovative health solutions that are uniquely competitive, efficient, and adaptive in today's health care delivery environment. The Company currently operates one hospital, two ambulatory surgical centers and a Hyperbaric Wound Care Center in the Houston area. Also, University General owns three senior living facilities, manages six senior living facilities, and owns a Support Services company that provides revenue cycle and luxury facilities management services.
Forward-Looking Statements
The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements related to the future financial performance of the Company. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, successful execution of growth strategies, product development and acceptance, the impact of competitive services and pricing, general economic conditions, and other risks and uncertainties described in the Company's periodic filings with the Securities and Exchange Commission.
For Additional Information, Please Contact:
Donald Sapaugh
President
(713) 375-7557
dsapaugh@ughs.net
R. Jerry Falkner, CFA
RJ Falkner & Company, Inc.
Investor Relations Counsel
(830) 693-4400
info@rjfalkner.com
Michael Porter
President, Porter, LeVay & Rose
Investor Relations
212-564-4700
Michael@plrinvest.com
(Financial Highlights Follow)
UNIVERSITY GENERAL HEALTH SYSTEM, INC.
Consolidated Balance Sheets
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March 31
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December 31,
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2012
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2011
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ASSETS
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Current assets
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Cash and cash equivalents
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$
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423,894
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$
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538,018
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Accounts receivables, net
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11,480,073
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10,913,361
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Inventories
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1,897,444
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1,908,177
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Receivables from related parties
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584,021
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658,764
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Prepaid expenses and other assets
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960,576
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1,275,104
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Total current assets
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15,346,008
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15,293,424
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Investments in unconsolidated affiliates
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687,323
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687,323
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Property and equipment, net
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76,241,012
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77,012,883
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Intangible assets
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1,110,000
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1,140,000
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Goodwill
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18,299,310
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18,299,310
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Other assets
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1,964,611
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2,234,985
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Total assets
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$
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113,648,264
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$
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114,667,925
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LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
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Current liabilities
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Accounts payable
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$
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10,680,342
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$
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11,874,720
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Payables to related parties
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2,507,940
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2,493,088
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Accrued expenses
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8,841,149
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7,516,940
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Accrued acquisition cost
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1,007,380
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1,007,380
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Taxes Payable
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4,943,678
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4,171,826
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Deferred revenue
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349,322
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314,876
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Lines of credit
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8,451,025
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8,451,025
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Notes payable, current portion
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27,298,071
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28,982,331
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Notes payable to related parties, current portion
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2,754,455
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2,798,783
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Capital lease obligations, current portion
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5,976,202
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5,943,685
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Capital lease obligation to related party, current portion
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249,154
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239,409
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Total current liabilities
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73,058,718
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73,794,063
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Lines of credit
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-
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-
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Notes payable, less current portion
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7,840,348
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8,459,474
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Notes payable to related parties, less current portion
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1,910,040
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1,983,514
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Capital lease obligations, less current portion
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215,259
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34,893
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Capital lease obligation payable to related party, less current portion
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30,732,509
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30,803,450
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Total liabilities
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113,756,874
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115,075,394
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Commitments and contingencies
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-
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-
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Shareholders’ equity (deficit)
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Preferred stock, $0.001 par value, 20,000,000 shares authorized, 3,000 shares issued and outstanding
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3
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3
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Common stock, $0.001 par value, 480,000,000 shares authorized; 283,440,226 shares issued and outstanding
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283,440
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283,440
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Additional paid in capital
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48,905,461
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49,078,223
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Shareholders’ receivables
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(2,239,068)
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(2,219,068)
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Accumulated deficit
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(52,393,589)
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(52,883,027)
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Total shareholders’ deficit
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(5,443,753)
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(5,740,429)
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Non-controlling interest
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5,335,143
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5,332,960
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Total equity (deficit)
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(108,610)
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(407,469)
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Total liabilities and shareholders’ equity (deficit)
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$
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113,648,264
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$
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114,667,925
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UNIVERSITY GENERAL HEALTH SYSTEM, INC.
Consolidated Statements of Operations
(Unaudited)
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Three Months Ended
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March 31,
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2012
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2011
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Revenues
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Net patient service revenues, net of contractual adjustments and provision for bad debt
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$ | 16,617,733 | $ | 15,443,233 | ||||
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Resident revenues
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1,868,433 | - | ||||||
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Support services revenues
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483,700 | - | ||||||
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Other revenues
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117,189 | 5,982 | ||||||
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Total revenues
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19,087,055 | 15,449,215 | ||||||
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Operating expenses
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Salaries, benefits, and other employee costs
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8,281,991 | 6,134,717 | ||||||
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Medical supplies
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2,932,125 | 3,160,635 | ||||||
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Management fees
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- | 1,389,655 | ||||||
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General and administrative expenses
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4,227,502 | 3,484,039 | ||||||
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Gain on extinguishment of liabilities
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(96,739 | ) | (1,303,366 | ) | ||||
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Depreciation and amortization
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1,725,173 | 1,762,607 | ||||||
| Total operating expenses | 17,070,052 |
14,628,287
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| Operating income | 2,017,003 |
820,928
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Interest expense
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(1,437,965 | ) | (1,179,696 | ) | ||||
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Other Income
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11,583 | - | ||||||
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Income (loss) before income tax
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590,621 | (358,768 | ) | |||||
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State income tax expense
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99,000 | 81,000 | ||||||
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Income (loss) before non-controlling interest
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$ | 491,621 | (439,768 | ) | ||||
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Net income attributable to non-controlling interests
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(2,183 | ) | - | |||||
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Net income (loss) attributable to Company
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$ | 489,438 | $ | (439,768 | ) | |||
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Basic and diluted earnings (loss) per share data:
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Basic and diluted earnings (loss) per share
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$ | 0.00 | $ | (0.00 | ) | |||
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Basic and diluted weighted average shares outstanding
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283,440,226 | 174,728,566 | ||||||
UNIVERSITY GENERAL HEALTH SYSTEM, INC.
Consolidated Statements of Cash Flows
(Unaudited)
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Three Months Ended
March 31,
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2012
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2011
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Cash flows from operating activities:
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Net income (loss)
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$ | 491,621 | $ | (439,768 | ) | |||
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Adjustments to reconcile net income (loss) to net cash provided by (used in ) operating activities:
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Depreciation and amortization
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1,725,173 | 1,762,607 | ||||||
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Provision for doubtful accounts
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1,396,912 | 290,803 | ||||||
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Gain on sales of assets
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(11,583 | ) | - | |||||
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Gain on extinguishment of liabilities
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(96,739 | ) | (1,303,366 | ) | ||||
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Net changes in operating assets and liabilities:
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Accounts receivable
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(1,963,624 | ) | (931,820 | ) | ||||
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Related party receivables and payables
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89,595 | (387,673 | ) | |||||
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Inventories
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10,733 | (148,448 | ) | |||||
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Prepaid expenses and other assets
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343,406 | (96,597 | ) | |||||
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Accounts payable, accrued expenses and taxes payable
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951,097 | (3,772,955 | ) | |||||
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Deferred revenues
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34,446 | - | ||||||
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Net cash provided by (used in) operating activities
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2,971,037 | (5,027,217 | ) | |||||
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Cash flows from investing activities:
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Additions to property, equipment and leasehold improvements
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(295,319 | ) | (176,744 | ) | ||||
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Net cash used in investing activities
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(295,319 | ) | (176,744 | ) | ||||
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Cash flows from financing activities:
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Redemption of common stock
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- | (50,000 | ) | |||||
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Distribution to noncontrolling interests
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(172,762 | ) | - | |||||
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Issuance of common stock
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- | 7,120,000 | ||||||
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Payments on notes payable
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(2,275,465 | ) | (1,752,559 | ) | ||||
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Borrowings under notes payable to related party
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- | 2,953,500 | ||||||
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Payments on notes payable to related party
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(118,398 | ) | (1,681,646 | ) | ||||
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Payments on capital leases
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(162,021 | ) | (3,528,229 | ) | ||||
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Payments on capital leases obligation to related party
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(61,196 | ) | (23,925 | ) | ||||
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Net cash (used in) provided by financing activities
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(2,789,842 | ) | 3,037,141 | |||||
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Net decrease in cash and cash equivalents
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(114,124 | ) | (2,166,820 | ) | ||||
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Cash and cash equivalents:
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Beginning of period
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538,018 | 2,291,754 | ||||||
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End of period
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$ | 423,894 | $ | 124,934 | ||||
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Supplemental disclosures of cash flow information:
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Interest paid
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$ | 1,245,269 | $ | 268,426 | ||||
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Income taxes paid
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$ | 383,434 | $ | 3,244,931 | ||||
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Supplemental noncash investing activities:
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Property and equipment additions financed
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$ | 374,904 | $ | - | ||||
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Supplemental noncash financing activities:
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Exchange of debt for common stock in February 2011
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$ | - | $ | 3,500,000 | ||||
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Issuance of common stock in February 2011
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$ | - | $ | 2,130,000 | ||||
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Issuance of common stock to affiliate for termination of service agreement
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$ | - | $ | 1,000,000 | ||||
UNIVERSITY GENERAL HEALTH SYSTEM, INC.
Adjusted EBITDA Calculation
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Three Months Ended
March 31,
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2012
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2011
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Net income (loss)
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$ | 489,438 | $ | (489,438 | ) | |||
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Provision (benefit) for income taxes
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99,000 | 81,000 | ||||||
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Other non-operating expense (income)
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(11,583 | ) | - | |||||
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Interest expense:
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Debt and lease obligations
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1,457,965 | 1,179,696 | ||||||
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Interest income
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(20,000 | ) | - | |||||
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Depreciation and amortization
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1,725,173 | 1,762,607 | ||||||
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Adjusted EBITDA
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$ | 3,739,993 | $ | 2,583,535 | ||||