First Physicians Capital Group, Inc. (“FPCG” or the “Company”)
(OTCBB:FPCG) provided in a press release issued today a strategic
and operations update for the Company’s first fiscal quarter ended
December 31, 2010.
As communicated in January 2011, FPCG has undertaken several
strategic initiatives to reorganize its operations in response to
local market economic conditions and the expected impact of changes
in healthcare law. In pursuit of this reorganization, we are
divesting underperforming facilities and reducing or outsourcing
administrative functions to better align cost structures and
business volume. The Company’s strategy is transitioning away from
exclusively majority ownership in healthcare delivery companies to
a focus on the opportunistic retention or acquisition of minority
ownership positions. Additionally, the Company plans on providing
healthcare management services for our facilities in conjunction
with strategic partners and to secure financing for equipment and
real estate used by our healthcare entities. The Company will also
pursue acquisitions of, investments in, or strategic partnerships
with other companies providing similar services in its markets.
Since the beginning of the current fiscal year 2011, the Company
has:
- Completed the sales of The Chandler
Clinic in December 2010 and Johnston Memorial Hospital in
Tishomingo in January 2011.
- Entered into Letters of Intent for the
complete or partial sale of additional operating assets, or for the
formation of strategic partnerships with respect to its remaining
portfolio of operating assets.
- Formed First Physicians Realty Group,
LLC, its wholly-owned real estate subsidiary, and acquired the real
estate holdings from its portfolio of Oklahoma assets (Southern
Plains Medical Group) and related entities.
- Established a line of credit of up to
$1.5 million at First Physicians Realty Group. The Company has
received an initial deposit of $350,000 with additional borrowings
subject to final terms and conditions.
- Continued to focus on bringing its
working capital ratios closer to preferred industry levels over
time by working in partnership with new and existing vendors and
lenders, and removing underperforming operations as a first
step.
Preliminary financial highlights for the quarter include:
- Net Revenue from Services of $8.7
million and EBITDA of ($0.6) million.
- EBITDA before FPCG Corporate Overhead
of ($0.1) million.
- Pro Forma EBITDA before FPCG Corporate
Overhead of $0.5 million. Pro Forma EBITDA factors in adjustments
made for: 1) sales of The Chandler Clinic and Johnston Memorial
Hospital; 2) reduction in back office and administrative functions
as part of these sales; and 3) removal of non-recurring and
transaction-related expenses in remaining assets.
While the Company believes that its financial performance,
working capital position, and liquidity ratios may improve as it
completes the potential transactions currently in LOI, there can be
no guarantee of success. Such success is contingent upon completing
certain transactions and related financings currently under
review.
Table 1. First Physicians Capital Group, Inc. Preliminary
Unaudited Consolidated Income Statement for Fiscal Quarter Ended
December 31, 2010 (in thousands)
Fiscal Qtr
Ended
12/31/09 Fiscal Qtr
Ended 12/31/10 FPCG FPCG Assets Sold/
Pro Forma Pro Forma Consol Consol
Held for Sale Adj(1) FPCG
Consol
Revenue from services $ 10,328 $
8,748 $ 1,118 $ (64 )
$ 7,566
Cost and expenses:
Selling, general and
administrative expenses
11,398 9,332 1,379 (379 ) 7,574
Amortization of stock-based
Compensation
278 258 - - 258
Impairment of long-lived
assets and goodwill
- - - - -
Depreciation and amortization
319 354 29 -
325
Total costs and expenses
11,995 9,944
1,408 (379 ) 8,157
Operating income
(1,667 ) (1,196 ) (291 )
315 (590 )
Interest expense
(706 ) (376 ) (21 ) - (355 )
Other income (expense)
436
(2)
19 - - 19
Minority interest
(180 ) (120 ) - -
(120 )
Net loss from operations
before taxation and non-cash
beneficial conversion feature
(2,117 ) (1,673 ) (312 )
315 (1,046 )
Taxation
- - - - - Non-cash beneficial conversion
feature preferred dividend
(47 ) - - - -
Net loss allocable to
common stockholders
$ (2,164 ) $ (1,673 )
$ (312 ) $ 315 $
(1,046 )
EBITDA(3)
$ (1,063 )(4) $ (565
) $ (261 ) $ 315 $
12
FPCG Corporate Overhead
(790 ) (452 ) - - (452 )
EBITDA less
FPCG Corporate Overhead
$ (273 ) $ (113 )
$ (261 ) $ 315 $
463
Notes:
(1) Adjusts for significant reductions in Oklahoma
administrative and back-office overhead and removal of
non-recurring and transaction-related expenses.(2) Other Income for
fiscal quarter ended December 31, 2009 includes $429K in insurance
proceeds received in November 2009.(3) EBITDA calculated as
follows: Operating Income plus Other Income plus Depreciation and
Amortization + Amortization of Stock-based Compensation +
Impairment of long-lived assets and goodwill (if any).(4) EBITDA
for fiscal quarter ended December 31, 2009 excludes $429K of Other
Income (insurance proceeds received in November 2009).
Table 2. First Physicians Capital Group, Inc. Consolidated
Income Statement for Fiscal Year Ended September 30, 2010 (in
thousands)
Fiscal Year
Ended
9/30/09 Fiscal Year
Ended 9/30/10 FPCG FPCG Assets Sold/
Pro Forma Consol Consol Held for Sale
FPCG
Consol
Revenue from services $ 39,090 $
39,502 $ 5,170 $ 34,332
Cost and expenses:
Selling, general and
administrative expenses
44,075 44,153 8,137 36,016
Amortization of stock-based
compensation
1,245 1,077 - 1,077
Impairment of long-lived
assets and goodwill
209 187 - 187
Depreciation and amortization
1,102 1,383 124
1,259
Total costs and expenses
46,631 46,800
8,262 38,538
Operating income
(7,541 ) (7,298 ) (3,092
) (4,206 )
Interest income
42 42 4 38
Interest expense
(2,094 ) (2,012 ) (824 ) (1,188 )
Other income (expense)
(281 )
453
(1)
-
453
(1)
Minority interest
(177 ) (681 ) - (681 )
Net
loss from operations
before taxation and non-cash
beneficial conversion feature
(10,051 ) (9,496 ) (3,913
) (5,583 )
Taxation
- - - - Non-cash beneficial conversion
feature preferred dividend
(317 ) (48 ) - (48 )
Net loss allocable to
common stockholders
$ (10,368 ) $ (9,544 )
$ (3,913 ) $ (5,631 )
EBITDA(2)
$ (5,266 ) $ (4,626
)(3) $ (2,968 ) $
(1,658 )(3)
FPCG Corporate Overhead
(3,607 ) (2,660 ) - (2,660 )
EBITDA less
FPCG Corporate Overhead
$ (1,659 ) $ (1,966 )
$ (2,968 ) $ 1,002
Notes:
(1) Other Income for fiscal year ended September 30, 2010
includes $429K in insurance proceeds received in November 2009.(2)
EBITDA calculated as follows: Operating Income plus Other Income
plus Depreciation and Amortization + Amortization of Stock-based
Compensation + Impairment of long-lived assets and goodwill (if
any).(3) EBITDA for fiscal year ended September 30, 2010 excludes
$429K of Other Income (insurance proceeds received in November
2009).
Important Notice
It should be noted that EBITDA is a financial measure that is
not recognized under accounting principles generally accepted in
the United States of America (GAAP). EBITDA should not be
considered as an alternative to, or more meaningful than, net
income, operating income, cash flows from operations or other
traditional indications of a company’s operating performance or
liquidity that are derived in accordance with GAAP. In addition,
the Company’s calculations of EBITDA may not be comparable to
similarly titled measures being disclosed by other companies,
limiting their usefulness as comparative measures. The Company
discloses EBITDA as it is a commonly referred to financial metric
used in the investing community to evaluate the performance of
companies in our industry. The Company believes that disclosure of
EBITDA is helpful to those reviewing its performance, as EBITDA
provides information on the Company’s ability to meet debt service,
capital expenditure and working capital requirements and management
believes that EBITDA is also a useful indicator of the Company’s
operating performance.
To better facilitate comparisons from reporting period to
reporting period on the productivity of our healthcare facilities
operations, non-GAAP supplemental information is provided. The
Company highlights:
- Revenue from Services
- EBITDA less FPCG Corporate
Overhead
- FPCG Corporate Overhead, our overhead
expense at the corporate holding company
About First Physicians Capital Group, Inc.
First Physicians Capital Group, Inc. is an operator of
healthcare services firms in the U.S. For more information, please
visit www.fpcapitalgroup.com.
Safe-Harbor Statement under the Private Securities Litigation
Reform Act of 1995: This press release may contain forward-looking
information within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), including
all statements that are not statements of historical fact regarding
the intent, belief or current expectations of the Company, its
directors or its officers with respect to, among other things: (i)
the Company’s financing plans; (ii) trends affecting the Company’s
financial condition or results of operations; (iii) the Company’s
growth strategy and operating strategy; and (iv) the declaration
and payment of dividends. The words “may,” “would,” “will,”
“expect,” “estimate,” “anticipate,” “believe,” “intend” and similar
expressions and variations thereof are intended to identify
forward-looking statements. Investors are cautioned that any such
forward-looking statements are not guarantees of future performance
and involve risks and uncertainties, many of which are beyond the
Company’s ability to control, and that actual results may differ
materially from those projected in the forward-looking statements
as a result of various factors including the risks disclosed in the
Company’s Forms 10-K and 10-Q filed with the Securities Exchange
Commission.
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