HOUSTON, TX--(Marketwire - Nov 15, 2012) - University General Health System, Inc. (
Highlights for the quarter ended September 30, 2012:
- Net patient revenue increased 71.3% to approximately $31.9 million, compared with approximately $18.6 million in the quarter ended September 30, 2011. Average daily inpatient census at University General Hospital increased by 15.0% relative to prior-year levels, reflecting an average occupancy rate of 66.7%. The increase in net patient revenue was primarily attributable to the ongoing execution of the Company's physician-centric, integrated health delivery system strategy.
- Resident revenue for the senior living business segment approximated $2.0 million, support services revenue totaled $0.7 million, and other revenue totaled $1.5 million in the most recent quarter. The senior living properties reported continued stable utilization, with an overall occupancy rate in excess of 94% for the quarter ended September 30, 2012.
- Total revenue rose 74% to $36.0 million, compared with $20.6 million in the third quarter of 2011. Total revenue in the third quarter of 2011 did not include revenue from acquired hospital outpatient departments (HOPDs), which are now reported in the Company's hospital business segment.
- Net patient revenue from Medicare and Medicaid, excluding a provision for doubtful accounts, accounted for approximately 26.6% of total net patient revenue, and revenue from commercial and managed care providers accounted for approximately 72.6% of net patient revenue, during the quarter ended September 30, 2012. This compared with 34.0% of total net patient revenue from Medicare and Medicaid and 62.8% from commercial and managed care providers in the prior-year quarter. Self-pay revenue decreased from 3.2% of total net patient revenue in the quarter ended September 30, 2011 to 0.8% in the quarter ended September 30, 2012. The provision for doubtful accounts increased to 9.9% of patient revenue in the most recent quarter, versus 1.9% in the comparable 2011 period.
- Operating income improved 362% to approximately $11.7 million in the third quarter of 2012, versus approximately $2.5 million in the prior-year quarter, primarily due to the increase in revenue, along with the success of cost-containment measures implemented in the fourth quarter of 2011.
- In connection with the issuance of preferred stock in a private placement in April 2012, wherein the Company received approximately $3.7 million from accredited investors and institutions, the Company also issued warrants at an original issue discount. After deducting fees and expenses, the net proceeds from this capital raise approximated $3.1 million. Primarily due to an increase in the Company's stock price since April 2012, the Company recorded a non-cash derivative expense and change in the fair market value of the derivatives totaling $5.7 million in the most recent quarter.
- The Company recorded net income attributable to common shareholders of $2.0 million, or $0.01 per share, in the most recent quarter, compared with net income attributable to common shareholders of $1.0 million, or $0.00 per share, in the comparable quarter of 2011.
- Adjusted EBITDA for the quarter increased 212% to approximately $14.4 million in the most recent quarter, versus approximately $4.6 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).
- Total shareholders' equity improved to $8.5 million at September 30, 2012, from ($573,472) at December 31, 2011.
"This was a great quarter for the Company, and we are pleased that our financial results reflect management's ongoing commitment to the development of our physician-centric health delivery system," commented Dr. Hassan Chahadeh, M.D., Chairman and Chief Executive Officer of University General Health System, Inc. "Financially, our revenues grew by 74% relative to the third quarter of 2011, and our operating income increased more than 360% from prior-year levels. In addition we have made great progress with our lenders and have significantly improved our balance sheet, thereby positioning the Company for greater growth in 2013."
Highlights for the nine months ended September 30, 2012:
- Net patient revenue increased 44.4% to approximately $75.0 million, compared with approximately $51.9 million in the nine months ended September 30, 2011.
- Resident revenue for the senior living business segment approximated $5.7 million, support services revenue totaled $1.6 million, and other revenue totaled $1.9 million in the first nine months of 2012. The senior living properties reported continued stable utilization, with an overall occupancy rate in excess of 93% for the most recent nine-month period.
- Total revenue rose 56% to $84.2 million, compared with $54.0 million in the first nine months of 2011. Year-to-date total revenue in 2011 did not include a full year of revenue from acquired senior living segment, support services; nor did it include revenues from acquired hospital outpatient departments (HOPDs), which are now reported in the Company's hospital business segment.
- Net patient revenue from Medicare and Medicaid, excluding a provision for doubtful accounts, accounted for approximately 29.2% of total net patient revenue, and revenue from commercial and managed care providers accounted for approximately 65.1% of net patient revenue, during the nine months ended September 30, 2012. This compared with 34.7% of total net patient revenue from Medicare and Medicaid and 61.2% from commercial and managed care providers in the corresponding period of the previous year. Self-pay revenue increased from 4.1% of total net patient revenue in the nine months ended September 30, 2011 to 5.7% in the nine months ended September 30, 2012. The provision for doubtful accounts increased to 9.3% of patient revenue in the first nine months of 2012, versus 1.9% in the comparable 2011 period.
- Operating income improved 454% to approximately $23.6 million in the first nine months of 2012, versus approximately $4.3 million in the prior-year period.
- Primarily due to an increase in the Company's stock price since April 2012, the Company recorded a non-cash derivative expense and change in the fair market value of the derivatives totaling $6.0 million in the first nine months of 2012.
- The Company recorded net income attributable to common shareholders of $3.3 million, or $0.01 per share, in the nine months ended September 30, 2012, compared with net income attributable to common shareholders of $0.4 million, or $0.00 per share, in the comparable period of 2011.
- Adjusted EBITDA for the nine months ended September 30, 2012 increased 203% to approximately $29.7 million, versus approximately $9.8 million in the first nine months of 2011 (EBITDA is a non-GAAP measure that is reconciled with GAAP results in a table at the end of this press release).
"The Company's improvement in operating efficiencies during 2012 is clearly evident in EBITDA margins, which improved from 22.3% of total revenue in the third quarter of 2011 to 39.9% of total revenue in the most recent quarter," noted Donald W. Sapaugh, President of University General Health System, Inc. "EBITDA margin for the nine months ended September 30, 2012 increased to 35.3% of total revenue, compared with 18.2% in the prior-year period."
"The third quarter reflects continued positive quarter-on-quarter growth, which we believe validates our physician-centric, integrated, diversified regional delivery system and lays a foundation for further expansion in the Houston area and replication in other markets," concluded Sapaugh.
Use of Non-GAAP Financial Measures
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 represents a key measure of the Company's operating performance that is used by management to evaluate operating performance by excluding certain 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 its performance, results of operations and financial position for the following reasons:
- 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;
- It provides an assessment of controllable expenses and affords management the ability to make decisions that are expected to facilitate the achievement of current financial goals and optimal financial performance; and
- It is an indication of whether adjustments to current spending decisions are necessary.
Investor Conference Call
Management of University General Health System will host a conference call Thursday, November 15, 2012 at 11:15 am EST. Shareholders and other interested parties may participate in the conference call by dialing 877-374-8416 (international participants dial 412-317-6716) and requesting participation in the "University General Health System Conference Call" at least five minutes before 11:15 am EST.
A replay of the conference call will be available one hour after the call through November 23, 2012 at 9:00 am EST by dialing 877-344-7529 (international participants dial 412-317-0088) and entering the conference ID# 10021216. A transcript will also be posted on the investor section of the Company's website at http://www.ughs.net.
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, a number of diagnostic imaging and physical therapy clinics, a sleep clinic, 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.
The Company is headquartered in Houston, Texas, and its common stock trades on the OTCQB under the symbol "UGHS".
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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.
(Financial Highlights Follow)
|University General Health System, Inc.|
|Consolidated Balance Sheets|
|September 30, 2012||December 31, 2011|
|Cash and cash equivalents||$||5,342,072||$||538,018|
|Accounts receivable, less allowance for doubtful accounts of $13,692,865 and $7,070,327||23,442,899||10,913,361|
|Receivables from related parties||-||658,764|
|Prepaid expenses and other assets||3,997,465||1,275,104|
|Total Current Assets||34,275,532||15,293,424|
|Investments in unconsolidated affiliates||847,323||687,323|
|Property, equipment and leasehold improvements, net||67,993,247||66,437,316|
|Intangible assets, net||6,282,500||7,649,000|
|Other non-current assets, net||2,304,228||2,234,985|
|Total Long-Term Assets||106,401,483||99,208,498|
|LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)|
|Payables to related parties||2,155,945||2,493,088|
|Accrued acquisition cost||521,401||1,007,380|
|Income tax payable||6,112,440||-|
|Lines of credit||-||8,451,025|
|Notes payable, current portion||21,483,002||28,982,331|
|Notes payable to related parties, current portion||2,170,143||2,798,783|
|Capital lease obligations, current portion||2,491,850||5,943,685|
|Capital lease obligations to related party, current portion||257,713||239,409|
|Total Current Liabilities||63,926,118||73,794,063|
|Lines of credit, less current portion||12,269,000||-|
|Notes payable, less current portion||21,342,197||8,459,474|
|Notes payable to related parties, less current portion||-||1,983,514|
|Capital lease obligations, less current portion||240,945||34,893|
|Capital lease obligations to related party, less current portion||30,609,920||30,803,450|
|Total Long-Term Liabilities||64,462,062||41,281,331|
|Commitments and contingencies|
|Series C, convertible preferred stock, $0.001 par value, 20,000,000 shares authorized, 4,200 and 0 shares issued and outstanding, respectively ($1,000 stated value)||3,797,633||-|
|Shareholders' Equity and (Deficit)|
|Preferred, par value $0.001, 20,000,000 shares authorized, Preferred stock Series B - 3,000 shares issued and outstanding||3||3|
|Common stock, par value $0.001, 480,000,000 shares authorized, 325,654,031 and 283,440,226 shares issued and outstanding||325,653||283,440|
|Total shareholders' equity (deficit)||3,398,207||(5,906,432||)|
|Total equity (deficit)||8,491,202||(573,472||)|
|Total Liabilities and Shareholders' Equity (Deficit)||$||140,677,015||$||114,501,922|
|University General Health System, Inc.|
|Consolidated Statements of Income|
|Three Months Ended |
|Nine Months Ended |
|Patient service revenues, net of contractual adjustments||$||35,351,438||$||18,966,579||$||82,675,939||$||52,919,032|
|Provision for doubtful accounts||(3,494,644||)||(369,469||)||(7,682,475||)||(994,619||)|
|Net patient service revenue less provision for bad debts||31,856,794||18,597,110||74,993,464||51,924,413|
|Senior living revenues||1,969,785||1,723,571||5,746,643||1,723,571|
|Support services revenues||702,542||168,279||1,581,606||168,279|
|Salaries, wages and benefits||10,448,799||8,263,837||27,466,450||21,211,247|
|Management fees (includes related party fees of $0 for each of the three months ended and $0 and $461,814 for the nine months ended)||-||1,412,385||-||4,105,767|
|General and administrative expenses (includes related party expenses of $372,697 and $1,434,662 for the three months ended and $1,054,340 and $4,129,789 for the nine months ended)||7,222,741||4,886,019||19,117,554||12,542,252|
|Gain on extinguishment of liabilities||(618,353||)||(1,947,134||)||(3,521,879||)||(3,411,479||)|
|Depreciation and amortization (includes related party expenses of $171,290 for each of the three months ended and $513,870 for each of the nine months ended)||2,443,747||2,104,016||5,938,840||5,624,132|
|Total operating expenses||24,317,711||18,118,735||60,613,603||49,735,372|
|Other income (expense)|
|Interest expense, net of interest income of $20,000 each of the three months ended and $60,000 each for the nine months ended (includes related party interest expense $571,394 and $641,293 for the three months ended and $1,734,144 and $1,815,568 for the nine months ended)||(1,363,821||)||(1,349,023||)||(4,187,121||)||(3,574,146||)|
|Change in fair value of derivatives||(5,173,513||)||-||(4,256,980||)||-|
|Income before income tax||4,656,665||1,183,198||13,363,615||677,694|
|Income tax expense||2,271,631||99,000||5,777,762||261,000|
|Income before noncontrolling interest||2,385,034||1,084,198||7,585,853||416,694|
|Net income (loss) attributable to noncontrolling interests||212,131||(38,748||)||239,966||(38,748||)|
|Net income attributable to the Company||$||2,597,165||$||1,045,450||$||7,825,819||$||377,946|
|Less: Dividend-Convertible Preferred C Stock||(129,547||)||-||(129,547||)||-|
|Less: Deemed dividend-Convertible Preferred C Stock||(4,349,980||)||-||(4,349,980||)||-|
|Net income attributable to common shareholders||$||(1,882,362||)||$||1,045,450||$||3,346,292||$||377,946|
|Basic and diluted income per share data:|
|Basic earnings per common share||$||(0.01||)||$||0.00||$||0.01||$||0.00|
|Basic weighted average shares outstanding||325,144,781||276,379,591||306,101,581||235,075,067|
|Diluted earnings per common share||$||(0.01||)||$||0.00||$||0.01||$||0.00|
|Diluted weighted average shares outstanding||364,932,417||276,379,591||345,889,217||235,075,067|
|University General Health System, Inc.|
|Consolidated Statements of Cash Flows|
|Nine Months Ended |
|Cash flows from operating activities:|
|Adjustments to reconcile net income to net cash provided by (used in ) operating activities:|
|Depreciation and amortization||5,938,840||5,624,132|
|Provision for doubtful accounts||7,682,475||994,619|
|Gain on sales of assets||(11,583||)||-|
|Gain on extinguishment of liabilities||(3,521,879||)||(3,411,479||)|
|Change in fair value of derivative liabilities||4,256,980||-|
|Net changes in operating assets and liabilities:|
|Related party receivables and payables||321,621||222,513|
|Prepaid expenses and other assets||(2,033,897||)||(46,793||)|
|Accounts payable, accrued expenses and taxes payable||2,750,062||(1,465,474||)|
|Net cash provided by (used in) operating activities||4,892,156||(3,227,152||)|
|Cash flows from investing activities:|
|Additions to property, equipment and leasehold improvements||(2,009,359||)||(598,960||)|
|Cash (used in) acquired in connection with acquisition||(222,594||)||397,755|
|Investments in unconsolidated affiliates||(160,000||)||(115,000||)|
|Net cash used in investing activities||(2,391,953||)||(316,205||)|
|Cash flows from financing activities:|
|Redemption of common stock||-||(50,000||)|
|Distribution to noncontrolling interests||(172,762||)||-|
|Issuance of common stock||5,195,827||7,120,000|
|Cash dividends paid||(76,160||)||(3,496||)|
|Issuance of Series C convertible preferred stock, net issuance costs||3,344,669||-|
|Proceeds from revolving credit facility borrowings||12,269,000||-|
|Payments of revolving credit facility borrowings||(8,451,025||)||-|
|Borrowings under notes payable||8,122,781||3,500|
|Payments on notes payable||(13,155,873||)||(3,481,189||)|
|Payment on debt issuance costs||(798,251||)||-|
|Borrowings under notes payable to related party||43,685||3,944,633|
|Payments on notes payable to related party||(145,003||)||(1,848,396||)|
|Payments on capital leases||(3,697,810||)||(3,733,632||)|
|Payments on capital leases obligation to related party||(175,227||)||(76,858||)|
|Net cash provided by financing activities||2,303,851||1,874,562|
|Net increase (decrease) in cash and cash equivalents||4,804,054||(1,668,795||)|
|Cash and cash equivalents:|
|Beginning of period||538,018||2,291,754|
|End of period||$||5,342,072||$||622,959|
|Supplemental disclosures of cash flow information:|
|Income taxes paid||$||383,434||$||5,443,470|
|Supplemental noncash investing activities:|
|Property and equipment additions financed||$||819,236||$||-|
|Supplemental noncash financing activities:|
|Exchange of debt for common stock||$||-||$||3,500,000|
|Issuance of common stock||$||670,000||$||2,130,000|
|Issuance of common stock to affiliate for termination of service agreement||$||-||$||1,000,000|
|Transfer of related party debt to third party debt||$||2,510,836||$||-|
|Noncash consideration paid for acquisitions||$||7,789,624||$||24,753,735|
|UNIVERSITY GENERAL HEALTH SYSTEM, INC.|
|Adjusted EBITDA Calculation|
|Three Months Ended September 30,|
|Net income (loss) attributable to the Company||$||2,597,165||$||1,045,450|
|Provision (benefit) for income taxes||2,271,631||99,000|
|Other non-operating expense (income)||-||-|
|Debt and lease obligations||1,383,821||1,369,023|
|Change in fair value of derivatives||5,173,513||-|
|Depreciation and amortization||2,443,737||2,104,016|
|Nine Months Ended September 30,|
|Net income (loss) attributable to the Company||$||7,825,819||$||377,946|
|Provision (benefit) for income taxes||5,777,762||261,000|
|Other non-operating expense (income)||(11,583||)||-|
|Debt and lease obligations||4,247,121||3,574,146|
|Change in fair value of derivatives||4,256,980||-|
|Depreciation and amortization||5,938,840||5,624,132|