HealthCare Integrated Services, Inc. Reports Q3 1999 Financial Results
19 November 1999
HealthCare Integrated Services, Inc. Reports Third Quarter 1999 Financial Results; Company Reports 76% Increase in Revenues for First Nine Months of 1999
SHREWSBURY, N.J.--Nov. 18, 1999--HealthCare Integrated Services, Inc. today reported a 76% increase in revenues for the nine months ended September 30, 1999 of $17,158,179, as compared to the $9,760,201 in revenues reported for the nine months ended September 30, 1998. The Company s revenues for the three months ended September 30, 1999 increased by 65%, or $5,384,878, as compared to the $3,257,547 in revenues reported for the three months ended September 30, 1998.Earnings before interest, taxes, depreciation, amortization and preferred dividends ( Adjusted EBITDA ) for the nine months ended September 30, 1999 were $5,305,922 representing a 74% increase over Adjusted EBITDA of $3,057,738 for the nine months ended September 30, 1998.
The Company also reported operating income of $903,388 before minority interest in joint ventures, income taxes and preferred dividends, and net income of $1,595,249, or $0.14 and $0.12 per share based upon 11,356,974 basic and 20,080,895(1) diluted weighted average common shares outstanding, respectively, for the nine months ended September 30, 1999; as compared to operating income of $1,620,012 before minority interest in joint ventures and income taxes, and net income of $1,207,562, or $0.12 and $0.11 per share based upon 10,236,835 basic and 11,248,767 diluted weighted average common shares outstanding, respectively, for the nine months ended September 30, 1998.
For the three months ended September 30, 1999, the Company reported operating income of $77,155 before minority interest in joint ventures, income taxes and preferred dividends, and net income of $633,091, or $.06 and $.05 per share based upon 11,356,974 basic and 20,258,686(1) diluted weighted average common shares outstanding, respectively; as compared to operating income of $537,674 before minority interest in joint ventures and income taxes, and net income of $392,430, or $.04 and $.04 per share based upon 10,512,017 basic and 10,950,834 diluted weighted average common shares outstanding, respectively, for the three months ended September 30, 1998.
The improvement in net operating results for the three and nine months ended September 30, 1999, as compared to the three and nine months ended September 30, 1998, is primarily due to (i) the revenues and income generated by the multi-modality diagnostic imaging facilities acquired by the Company in October 1998, (ii) revenues and income generated by management and consulting services provided to two of the largest multi-specialty physician practices in New Jersey, (iii) the inclusion in the operating results for the second quarter of fiscal 1998 of a gain on sale of property, plant and equipment relating to the sale of a mobile MRI unit and (iv) the recognition of deferred tax assets for the three and nine months ended September 30, 1999 which amounted to approximately $808,000 and $1,654,000, respectively. The Company has additional deferred tax assets aggregating approximately $576,000 which the Company anticipates recognizing as an additional tax benefit in future periods.
The Company's operating results for the three months ended September 30, 1999 were negatively impacted, in part, due to The New Jersey Automobile Cost Reduction Act of 1998 (the "ACR ACT") which was implemented in the second quarter of fiscal 1999. The ACR ACT allows for the pre-certification of MRI and other diagnostic imaging procedures reimbursable through automobile insurance carriers before each procedure is performed. This requirement has caused some delays and decreases in MRI and other diagnostic imaging referrals during the third quarter of fiscal 1999 at several of the Company's facilities. In anticipation of, and in order to minimize the potential impact associated with, the ACR Act, in April 1999 the Company formed Atlantic Imaging, LLC ("Atlantic") a joint venture with Healthmark Alliance Inc. to develop, market and manage a statewide network of diagnostic imaging facilities. Atlantic has entered into a 5-year arrangement with National Healthcare Resources, Inc., a case management company, to provide for the delivery of certain diagnostic imaging services for 17 insurance companies through Atlantic's statewide network of approximately 90 diagnostic imaging facilities in New Jersey.
The following are consolidated condensed unaudited statements of operations for the periods indicated:
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
Revenues $5,384,878 $3,257,54 $17,158,179 $9,760,201
Operating
expenses 5,307,723 2,719,873 16,254,791 8,140,189
Income before
minority
interests
in joint
ventures
and income
taxes 77,155 537,674 903,388 1,620,012
Minority
interests
in joint
ventures 96,335 (132,230) (87,955) (379,950)
Income before
income taxes 173,490 405,444 815,433 1,240,062
Income
tax (benefit)
provision (782,600) 13,014 (1,603,864) 32,500
Net income 956,090 392,430 2,419,297 1,207,562
Preferred
dividends 322,999 -- 824,048 --
Net income
available to
common
shareholders $633,091 $392,430 $1,595,249 $1,207,562
Net income
per common
share - Basic $.06 $.04 $.14 $.12
Weighted average
common shares
outstanding
- Basic 11,356,974 10,512,017 11,356,974 10,236,835
Net income per
common
share - Diluted $.05 $.04 $.12 $.11
Weighted average
common shares
outstanding
-Diluted 20,258,686(1) 10,950,834 20,080,895(1) 11,248,76
(1) Upon the receipt of stockholder approval of the issuance of
the Series D Cumulative Accelerating Redeemable Preferred
Stock (the "Series D Stock") in October 1998, the holders of
the Series D Stock would become entitled to convert the
Series D Stock into 8,723,921 shares of common stock of the
Company. The Company anticipates redeeming the Series D Stock
prior to conversion; however, there can be no assurance that
the Company will be able to effectuate such redemption.
HealthCare Integrated Services, Inc. is a healthcare management and services company that provides state-of-the-art healthcare equipment, facilities and services to physicians, hospitals and other healthcare providers. The Company currently specializes in diagnostic imaging and physician management and consulting services. It operates 10 diagnostic imaging facilities located in Brooklyn and New York City, New York; Wayne, Edgewater, Ocean Township, Bloomfield, Voorhees (two facilities) and Northfield, New Jersey and Philadelphia, Pennsylvania; and manages two of the largest multi-specialty physician practices in New Jersey comprised of an aggregate of over 100 physicians, with 22 offices, treating over 160,000 patients.
This communication may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on the beliefs of the Company and its management. When used in this document, the words "anticipate," "believe," "continue," "estimate," "expect," "intend," "may," "should," and similar expressions are intended to identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions, including, but not limited to, the risk that the Company may not be able to implement its growth strategy in the intended manner, risks associated with the Company s need to redeem its convertible preferred stock, risks regarding currently unforeseen competitive pressures and risks affecting the Company s industry, such as increased regulatory compliance and changes in regulatory requirements, changes in payor reimbursement levels and technological changes. In addition, the Company s business, operations and financial condition are subject to the risks, uncertainties and assumptions which are described in the Company s reports and statements filed from time to time with the Securities and Exchange Commission. Should one or more of those risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein.