Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K/A - Foundation Healthcare, Inc. | d729717d8ka.htm |
| EX-99.2 - EX-99.2 - Foundation Healthcare, Inc. | d729717dex992.htm |
Exhibit 99.1
Foundation HealthCare Reports
First Quarter 2014 Financial Results
OKLAHOMA CITY, OK—(May 15, 2014) – Foundation Healthcare, Inc. (OTC Markets: FDNH), which focuses on the development and management of surgical hospitals and related ancillary services, today reported financial results for the quarter ended March 31, 2014.
Highlights include:
| • | Revenue of $22.1 million for the quarter; an 18% increase from the first quarter of 2013 |
| • | Adjusted EBITDA of $0.9 million for the 2014 first quarter compared to $0.2 million in the first quarter of 2013 |
| • | Cash on hand of $4.0 million as of March 31, 2014 |
“Although the first quarter of 2014 was negatively impacted by severe weather at several of our facilities, we are pleased to announce an 18% increase in revenue for the first quarter 2014 when compared to first quarter 2013. We continue to focus on growing surgical volumes at our existing hospitals as well as look for opportunities to take controlling positions in our minority-owned hospitals as well as new hospital investment opportunities,” stated Stanton Nelson, CEO of Foundation Healthcare, Inc.
“In addition to growing volumes at our existing hospitals, we are actively pursuing opportunities to add ancillary services through hospital outpatient departments (HOPD) at our hospitals including outpatient surgery centers, imaging, oncology and pain management,” added Mr. Nelson.
First Quarter 2014 Financial Results:
Net revenues in the first quarter of 2014 were $22.1 million, up from $18.7 million in the first quarter of 2013. Our net revenues are composed of patient services, management fees from affiliates, equity in earnings of affiliates and other revenue less our provision for doubtful accounts. Patient services revenue increased $3.6 million, or 23%, to $19.5 million during the three months ended March 31, 2014 compared with $15.9 million in the first quarter of 2013. The increase was primarily due to:
| • | An increase in both outpatient surgical cases and inpatient spine cases resulted in an increase in patient service revenue of $1.5 million at EEPMC and; |
| • | An increase in surgical case volume and the average reimbursement per surgical case at Foundation Bariatric Hospital of San Antonio (“FBH SA”) which was driven by an increase in spine and orthopedic cases resulted in an increase in patient services revenue of $2.1 million. |
Operating expenses increased $3.7 million or 19% to $23.4 million from $19.7 million during the three months ended March 31, 2014, compared with the first quarter of 2013. The increase in other operating expenses was primarily due to stock compensation expense, expenses associated with the legacy Graymark Healthcare, Inc. business that are not included in the first quarter of 2013, increased supply costs related to higher surgical volume and increased legal and professional fees.
Our operations resulted in a net loss attributable to Foundation Healthcare common stock of $1.9 million during the first quarter of 2014, compared to net loss of $0.3 million during the first quarter of 2013.
Adjusted EBITDA was $893,973 for the 2014 first quarter compared to $151,190 in the first quarter of 2013.
As of March 31, 2014, cash and cash equivalents totaled $4.0 million, compared to $4.2 million at December 31, 2013.
Conference Call
Foundation’s CEO Stanton Nelson, along with Tom Michaud, Chairman of the Board and Mark Kidd, CFO will host a conference call today, followed by a question and answer period.
Date: Thursday, May 15th
Time: 4:30 p.m. Eastern time
Dial-In Number: (866) 515-2909
The conference call will be broadcast live at the investor relations section of the Company’s website at www.fdnh.com. Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. In addition, the replay will be available after the call at same website link above or by calling (866) 515-2909 using passcode: 84943344.
About Foundation Healthcare
Headquartered in Oklahoma City, Okla., Foundation Healthcare, Inc. (OTCQB: FDNH) focuses on the development and management of surgical hospitals and the inclusion of ancillary service lines. These additional service lines, such as hyperbarics, sleep labs, intraoperative monitoring, imaging and robotic surgery, truly make the Foundation specialty hospital environment unique.
The Company is also an industry leading ASC management and development company focused on partnering with physicians and employees to create an outstanding patient experience, while maximizing partner and shareholder value. The Company is a leader in offering turnkey management and development solutions for physician partners, as well as creating an optimal experience for the patients we serve. For more information, visit www.fdnh.com.
Reg G disclaimer – reconciling GAAP Net Income with EBITDA and Adjusted EBITDA
Foundation is providing EBITDA information, which is defined as net income plus interest, income taxes, depreciation and amortization expense and earnings or losses from discontinued operations, and Adjusted EBITDA which is defined as EBITDA plus impairment charges minus extraordinary gain, net of tax. EBITDA and Adjusted EBITDA are a compliment to our GAAP results. EBITDA and Adjusted EBITDA are commonly used by management and investors as a measure of leverage capacity, debt service ability and liquidity. EBITDA and Adjusted EBITDA are not considered a measure of financial performance under U.S. generally accepted accounting principles (GAAP), and the items excluded from EBITDA and Adjusted EBITDA are significant components in understanding and assessing our financial performance. EBITDA and Adjusted EBITDA should not be considered in isolation or as an alternative to, or superior to, such GAAP measures as net income, cash flows provided by or used in operating, investing or financing activities or other financial statement data presented in our consolidated financial statements as an indicator of financial performance or liquidity. Reconciliations of non-GAAP financial measures are provided in the news release in the accompanying tables. Since EBITDA and Adjusted EBITDA are not a measure determined in accordance with GAAP and is susceptible to varying calculations, EBITDA, and Adjusted EBITDA as presented, may not be comparable to other similarly titled measures of other companies.
Important Cautions Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based on the Company’s current expectations, forecasts and assumptions. Forward-looking statements involve risks and uncertainties that could cause actual outcomes and results to differ materially from the Company’s expectations, forecasts and assumptions. These risks and uncertainties include risks and uncertainties not in the control of the Company, including, without limitation, the risk that Company will be unable to refinance a majority of its debt, maintain enough liquidity to execute its business plan, continue as a going concern and other risks including those enumerated and described in the Company’s filings with the Securities and Exchange Commission, which filings are available on the SEC’s website at www.sec.gov. Unless otherwise required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACT: Company Contact:
Foundation Healthcare, Inc.
Stanton Nelson
Chief Executive Officer
Tel 405-608-1703
FOUNDATION HEALTHCARE, INC.
Reconciliation of Loss from Continuing Operations to EBITDA from Continuing Operations
For the Three Months Ended March 31, 2014 and 2013
(Unaudited)
| 2014 | 2013 | |||||||
| Loss from continuing operations, net of taxes |
$ | (1,005,193 | ) | $ | (1,431,766 | ) | ||
| EBITDA adjustments: |
||||||||
| Plus: Interest expense, net |
496,121 | 466,669 | ||||||
| Plus: Provision (benefit) for income taxes |
(852,005 | ) | — | |||||
| Plus: Depreciation and amortization |
1,466,268 | 1,116,687 | ||||||
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|
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| Total EBITDA adjustments |
1,110,384 | 1,583,356 | ||||||
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| EBITDA from continuing operations |
$ | 105,191 | $ | 151,590 | ||||
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| EBITDA from continuing operations |
$ | 105,191 | $ | 151,590 | ||||
| Adjusted EBITDA adjustment: |
||||||||
| Plus: Stock compensation |
788,782 | — | ||||||
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| Total Adjusted EBITDA adjustments |
788,782 | — | ||||||
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| Adjusted EBITDA |
$ | 893,973 | $ | 151,590 | ||||
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FOUNDATION HEALTHCARE, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
| March 31, 2014 |
December 31, 2013 |
|||||||
| ASSETS |
||||||||
| Cash and cash equivalents |
$ | 3,958,742 | $ | 4,212,076 | ||||
| Accounts receivable, net of allowances for doubtful accounts of $2,536,980 and $4,778,915, respectively |
12,655,299 | 12,755,642 | ||||||
| Receivables from affiliates |
854,987 | 848,002 | ||||||
| Supplies inventories |
1,940,870 | 1,931,142 | ||||||
| Prepaid and other current assets |
4,805,921 | 4,302,885 | ||||||
| Current assets from discontinued operations |
199,032 | 518,629 | ||||||
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| Total current assets |
24,414,851 | 24,568,376 | ||||||
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| Property and equipment, net |
11,479,697 | 12,073,986 | ||||||
| Equity method investments in affiliates |
5,600,880 | 5,699,093 | ||||||
| Intangible assets, net |
10,624,754 | 11,138,621 | ||||||
| Goodwill |
973,927 | 973,927 | ||||||
| Other assets |
226,784 | 244,598 | ||||||
| Other assets from discontinued operations |
513,379 | 576,228 | ||||||
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| Total assets |
$ | 53,834,272 | $ | 55,274,829 | ||||
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| LIABILITIES, PREFERRED NONCONTROLLING INTEREST AND SHAREHOLDERS’ DEFICIT | ||||||||
| Liabilities: |
||||||||
| Accounts payable |
$ | 10,627,288 | $ | 11,648,987 | ||||
| Accrued liabilities |
5,148,921 | 4,114,915 | ||||||
| Preferred noncontrolling interests dividends payable |
121,878 | 195,411 | ||||||
| Short term debt |
6,183,610 | 5,664,827 | ||||||
| Current portion of long-term debt |
10,592,445 | 7,919,179 | ||||||
| Other current liabilities |
3,031,628 | 4,391,587 | ||||||
| Current liabilities from discontinued operations |
5,507,982 | 5,620,697 | ||||||
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| Total current liabilities |
41,213,752 | 39,555,603 | ||||||
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| Long-term debt, net of current portion |
5,988,737 | 10,031,732 | ||||||
| Other liabilities |
15,112,635 | 12,255,809 | ||||||
| Other liabilities from discontinued operations |
— | 9,969 | ||||||
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| Total liabilities |
62,315,124 | 61,853,113 | ||||||
| Preferred noncontrolling interest |
8,700,000 | 8,700,000 | ||||||
| Commitments and contingencies (Note 9) |
||||||||
| Foundation Healthcare shareholders’ deficit: |
||||||||
| Preferred stock $0.0001 par value, 10,000,000 authorized; no shares issued and outstanding |
— | — | ||||||
| Common stock $0.0001 par value, 500,000,000 shares authorized; 171,323,381 and 163,834,886 issued and outstanding, respectively |
17,132 | 16,383 | ||||||
| Paid-in capital |
18,759,152 | 18,241,756 | ||||||
| Accumulated deficit |
(37,066,821 | ) | (35,171,315 | ) | ||||
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| Total Foundation Healthcare shareholders’ deficit |
(18,290,537 | ) | (16,913,176 | ) | ||||
| Noncontrolling interests |
1,109,685 | 1,634,892 | ||||||
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| Total deficit |
(17,180,852 | ) | (15,278,284 | ) | ||||
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| Total liabilities, preferred noncontrolling interest and shareholders’ deficit |
$ | 53,834,272 | $ | 55,274,829 | ||||
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FOUNDATION HEALTHCARE, INC.
Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 2014 and 2013
(Unaudited)
| 2014 | 2013 | |||||||
| Net Revenues: |
||||||||
| Patient services |
$ | 19,513,483 | $ | 15,860,660 | ||||
| Management fees from affiliates |
1,269,306 | 1,738,228 | ||||||
| Equity in earnings of affiliates |
527,083 | 1,216,715 | ||||||
| Other revenue |
1,118,326 | 474,889 | ||||||
| Provision for doubtful accounts |
(361,517 | ) | (636,851 | ) | ||||
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| Revenues |
22,066,681 | 18,653,641 | ||||||
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| Operating Expenses: |
||||||||
| Salaries and benefits |
7,977,419 | 6,338,097 | ||||||
| Supplies |
4,941,370 | 4,500,940 | ||||||
| Other operating expenses |
9,042,701 | 7,756,021 | ||||||
| Depreciation and amortization |
1,466,268 | 1,116,687 | ||||||
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| Total operating expenses |
23,427,758 | 19,711,745 | ||||||
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| Other Income (Expense): |
||||||||
| Interest expense, net |
(496,121 | ) | (466,669 | ) | ||||
| Other income |
— | 93,007 | ||||||
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| Net other (expense) |
(496,121 | ) | (373,662 | ) | ||||
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| Income (loss) from continuing operations, before taxes |
(1,857,198 | ) | (1,431,766 | ) | ||||
| Benefit for income taxes |
852,005 | — | ||||||
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| Income (loss) from continuing operations, net of taxes |
(1,005,193 | ) | (1,431,766 | ) | ||||
| Loss from discontinued operations, net of tax |
(312,323 | ) | — | |||||
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| Net income (loss) |
(1,317,516 | ) | (1,431,766 | ) | ||||
| Less: Net income attributable to noncontrolling interests |
384,921 | (1,092,031 | ) | |||||
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| Net income (loss) attributable to Foundation Healthcare |
(1,702,437 | ) | (339,735 | ) | ||||
| Preferred noncontrolling interests dividends |
(193,069 | ) | — | |||||
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| Net income (loss) attributable to Foundation Healthcare common stock |
$ | (1,895,506 | ) | $ | (339,735 | ) | ||
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| Earnings per common share (basic and diluted): |
||||||||
| Net income (loss) attributable to continuing operations attributable to Foundation Healthcare common stock |
$ | (0.01 | ) | $ | (0.00 | ) | ||
| Loss from discontinued operations, net of tax |
(0.00 | ) | — | |||||
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| Net income (loss) per share, attributable to Foundation Healthcare common stock |
$ | (0.01 | ) | $ | (0.00 | ) | ||
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| Weighted average number of common and diluted shares outstanding |
167,329,517 | 162,523,276 | ||||||
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FOUNDATION HEALTHCARE, INC.
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2014 and 2013
(Unaudited)
| 2014 | 2013 | |||||||
| Operating activities: |
||||||||
| Net income (loss) |
$ | (1,317,516 | ) | $ | (1,431,766 | ) | ||
| Less: Loss from discontinued operations, net of tax |
(312,323 | ) | — | |||||
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| Income (loss) from continuing operations |
(1,005,193 | ) | (1,431,766 | ) | ||||
| Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
1,466,268 | 1,116,687 | ||||||
| Stock-based compensation, net of cashless vesting |
518,145 | — | ||||||
| Provision for doubtful accounts |
361,517 | 636,851 | ||||||
| Equity in earnings of affiliates |
(527,083 | ) | (1,216,715 | ) | ||||
| Changes in assets and liabilities – |
||||||||
| Accounts receivable, net of provision for doubtful accounts |
(261,174 | ) | (2,111,768 | ) | ||||
| Receivables from affiliates |
(6,985 | ) | (35,691 | ) | ||||
| Supplies Inventories |
(9,728 | ) | 38,020 | |||||
| Prepaid and other current assets |
(503,036 | ) | (246,902 | ) | ||||
| Other assets |
17,814 | — | ||||||
| Accounts payable |
(1,021,699 | ) | (1,437,536 | ) | ||||
| Accrued liabilities |
1,034,006 | 3,286,995 | ||||||
| Other current liabilities |
(1,359,959 | ) | 30,000 | |||||
| Other liabilities |
2,856,826 | (3,905 | ) | |||||
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| Net cash provided by (used in) operating activities from continuing operations |
1,559,719 | (1,375,730 | ) | |||||
| Net cash provided by operating activities from discontinued operations |
76,726 | — | ||||||
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| Net cash provided by (used in) operating activities |
1,636,445 | (1,375,730 | ) | |||||
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| Investing activities: |
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| Purchase of property and equipment |
(358,112 | ) | (2,612,598 | ) | ||||
| Distributions from affiliates |
625,296 | 1,266,100 | ||||||
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| Net cash provided by (used in) investing activities from continuing operations |
267,184 | (1,346,498 | ) | |||||
| Net cash provided by investing activities from discontinued operations |
— | — | ||||||
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| Net cash provided by (used in) investing activities |
267,184 | (1,346,498 | ) | |||||
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| Financing activities: |
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| Debt proceeds |
$ | 767,923 | $ | 3,431,211 | ||||
| Debt payments |
(1,618,869 | ) | (1,383,326 | ) | ||||
| Preferred noncontrolling interests dividends |
(266,602 | ) | (424,594 | ) | ||||
| Distributions to noncontrolling interests |
(910,128 | ) | (37,444 | ) | ||||
| Distributions to member |
— | (377,930 | ) | |||||
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| Net cash provided by (used in) financing activities from continuing operations |
(2,027,676 | ) | 1,207,917 | |||||
| Net cash (used in) financing activities from discontinued operations |
(129,287 | ) | — | |||||
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| Net cash provided by (used in) financing activities |
(2,156,963 | ) | 1,207,917 | |||||
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| Net change in cash and cash equivalents |
(253,334 | ) | (1,514,311 | ) | ||||
| Cash and cash equivalents at beginning of period |
4,212,076 | 3,037,067 | ||||||
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| Cash and cash equivalents at end of period |
$ | 3,958,742 | $ | 1,522,756 | ||||
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| Cash Paid for Interest and Income Taxes: |
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| Interest expense |
$ | 504,509 | $ | 443,709 | ||||
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| Interest expense, discontinued operations |
$ | 62,234 | $ | — | ||||
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| Income taxes, continuing operations |
$ | 1,950,000 | $ | — | ||||
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