Psychiatric Solutions, Inc. (“PSI”) (NASDAQ: PSYS) today
announced financial results for the fourth quarter and year ended
December 31, 2009. Revenue was $463.0 million for the quarter, an
increase of 8.1% from $428.4 million for the fourth quarter of
2008. Income from continuing operations attributable to PSI
stockholders grew 22.9% to $29.7 million from $24.2 million. Income
from continuing operations attributable to PSI stockholders per
diluted share increased 23.3% to $0.53 for the fourth quarter of
2009 from $0.43 for the fourth quarter of 2008.
Revenue for the year ended December 31, 2009 was $1.805 billion,
up 6.4% from $1.696 billion for 2008. Income from continuing
operations attributable to PSI stockholders increased 14.3% to
$120.1 million from $105.0 million. Income from continuing
operations attributable to PSI stockholders per diluted share rose
14.4% to $2.14 for 2009 from $1.87 for 2008.
“PSI produced solid earnings growth for the fourth quarter of
2009 as strong growth in admissions and patient days, combined with
our continuing productivity and expense control initiatives,
produced improved margins for the quarter compared with the fourth
quarter of 2008,” remarked Joey Jacobs, Chairman, President and
Chief Executive Officer of PSI.
For the fourth quarter, PSI achieved a 6.1% increase in
same-facility revenue from the fourth quarter of 2008. This
increase was primarily driven by 6.0% comparable quarter growth in
patient days. PSI’s same-facility EBITDA margin rose to 21.5% for
the latest quarter from 19.1% for the fourth quarter of 2008, while
consolidated adjusted EBITDA margin increased to 17.8% from 17.0%.
For full-year 2009, same-facility EBITDA margin increased to 21.6%
from 20.8% for 2008, and consolidated adjusted EBITDA margin
improved to 18.2% from 17.9%. A reconciliation of all GAAP and
non-GAAP financial results in this release can be found on
page 6.
PSI produced net cash from continuing operating activities of
$50.6 million for the fourth quarter of 2009, funding all of the
Company’s capital expenditures for the quarter of $35.1 million.
PSI applied both free cash flow and the proceeds from the
previously announced fourth quarter sale of the employee assistance
program business to Aetna primarily to debt reduction. As a result,
PSI’s ratio of debt to total capitalization improved to 53.5% at
the end of 2009 from 56.2% at the end of the third quarter of 2009
and 59.6% at the end of 2008. In addition, the ratio of debt to
adjusted EBITDA for the trailing 12 months improved to 3.6 at the
end of 2009 from 4.0 at the end of the third quarter of 2009 and
4.3 at the end of 2008.
PSI today established its guidance for 2010 earnings from
continuing operations attributable to PSI stockholders per diluted
share in a range of $2.27 to $2.31. The Company’s guidance does not
include the impact from any future acquisitions.
PSI will hold a conference call to discuss its fourth quarter
financial results at 10:00 a.m. Eastern time on Wednesday, February
24, 2010. A live webcast of the conference call will be available
at www.psysolutions.com in the “Investors” section of the site or
at www.earnings.com. The webcast will be available through the end
of business on March 12, 2010.
This press release contains forward-looking statements within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements include statements other than those made solely with
respect to historical fact and are based on the intent, belief or
current expectations of PSI and its management. PSI’s business and
operations are subject to a variety of risks and uncertainties that
might cause actual results to differ materially from those
projected by any forward-looking statements. Factors that could
cause such differences include, but are not limited to: (1) general
economic and business conditions; (2) PSI’s ability to comply with
applicable licensure and accreditation requirements; (3) risks
inherent to the health care industry, including government
investigations, the impact of unforeseen changes in regulation,
decreases in reimbursement rates from federal and state health care
programs or managed care companies and exposure to claims and legal
actions by patients, stockholders and others; (4) the ability to
receive timely additional financing on terms acceptable to PSI to
fund PSI's acquisition strategy and capital expenditure needs; and
(5) PSI’s ability to improve the operations of its inpatient
facilities and successfully integrate recently acquired operations.
The forward-looking statements herein are qualified in their
entirety by the risk factors set forth in PSI's filings with the
Securities and Exchange Commission. PSI undertakes no obligation to
update any forward-looking statements, whether as a result of new
information, future events or otherwise. Readers should not place
undue reliance on forward-looking statements, which reflect
management's views only as of the date hereof.
PSI offers an extensive continuum of behavioral health programs
to critically ill children, adolescents and adults and is the
largest operator of owned or leased freestanding psychiatric
inpatient facilities with over 11,000 beds in 32 states, Puerto
Rico and the U.S. Virgin Islands. PSI also manages freestanding
psychiatric inpatient facilities for government agencies and
psychiatric inpatient units within medical/surgical hospitals owned
by others.
PSYCHIATRIC SOLUTIONS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (Unaudited, in thousands except for per
share amounts) Three Months Ended
December 31, Year Ended December 31,
2009 2008 2009
2008 Revenue $ 462,957 $ 428,436 $ 1,805,361 $
1,696,116
Salaries, wages and employee
benefits (including share-based compensation of $3,981, $4,901,
$17,505 and $19,913 the respective three and twelve month periods
in 2009 and 2008)
258,397 237,130 1,005,204 938,363 Professional fees 42,453 41,487
166,785 162,491 Supplies 23,023 22,571 92,572 92,393 Rentals and
leases 4,962 4,895 20,131 20,635 Other operating expenses 46,181
46,188 172,868 162,980 Provision for doubtful accounts 9,845 8,455
36,414 34,334 Depreciation and amortization 11,874 10,309 44,778
38,843 Interest expense 18,286 18,465
71,549 75,982 415,021
389,500 1,610,301 1,526,021
Income from continuing operations before income taxes 47,936
38,936 195,060 170,095 Provision for income taxes 18,509
14,821 74,889 64,457
Income from continuing operations 29,427 24,115 120,171
105,638 Loss from discontinued operations, net of taxes
(1,997 ) (132 ) (2,461 ) (81 ) Net income
27,430 23,983 117,710 105,557 Less: Net income attributable to
noncontrolling interest 245 38
(93 ) (604 ) Net income attributable to PSI stockholders $
27,675 $ 24,021 $ 117,617 $ 104,953
Basic earnings per share: Income from continuing operations
attributable to PSI stockholders $ 0.53 $ 0.43 $ 2.16 $ 1.89 Loss
from discontinued operations, net of taxes (0.03 ) -
(0.04 ) - Net income attributable to
PSI stockholders $ 0.50 $ 0.43 $ 2.12 $ 1.89
Diluted earnings per share: Income from continuing
operations attributable to PSI stockholders $ 0.53 $ 0.43 $ 2.14 $
1.87 Loss from discontinued operations, net of taxes (0.04 )
- (0.04 ) - Net income
attributable to PSI stockholders $ 0.49 $ 0.43 $ 2.10
$ 1.87 Shares used in computing per share
amounts: Basic 55,622 55,676 55,564 55,408 Diluted 56,233 56,428
56,116 56,267 Amounts attributable to PSI stockholders:
Income from continuing operations, net of taxes $ 29,672 $ 24,153 $
120,078 $ 105,034 Loss from discontinued operations, net of taxes
(1,997 ) (132 ) (2,461 ) (81 ) Net
income $ 27,675 $ 24,021 $ 117,617 $ 104,953
PSYCHIATRIC SOLUTIONS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands)
December 31, 2009
2008 ASSETS Current assets: Cash and cash
equivalents $ 6,815 $ 51,271
Accounts receivable, less
allowance for doubtful accounts of $51,894 and $48,383,
respectively
249,439 241,459 Other current assets 105,166 174,780
Total current assets 361,420 467,510 Property and equipment, net of
accumulated depreciation 931,730 820,453 Cost in excess of net
assets acquired 1,153,111 1,139,242 Other assets 60,979
78,785 Total assets $ 2,507,240 $ 2,505,990
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 35,397 $ 34,609 Salaries and benefits payable
81,129 83,539 Other accrued liabilities 62,036 81,065 Current
portion of long-term debt 4,940 34,391 Total current
liabilities 183,502 233,604 Long-term debt, less current portion
1,182,139 1,280,006 Deferred tax liability 81,137 69,471 Other
liabilities 25,790 28,067 Total liabilities 1,472,568
1,611,148 Redeemable noncontrolling interest 4,337 4,957 Total
stockholders' equity 1,030,335 889,885 Total
liabilities and stockholders' equity $ 2,507,240 $ 2,505,990
PSYCHIATRIC SOLUTIONS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited, in thousands)
Year Ended December 31, 2009
2008 Operating activities: Net
income $ 117,710 $ 105,557
Adjustments to reconcile net
income to net cash provided by continuing operating activities:
Depreciation and amortization 44,778 38,843 Amortization of loan
costs and bond discount 5,300 2,213 Share-based compensation 17,505
19,913 Change in income tax assets and liabilities 20,050 (5,034 )
Loss from discontinued operations, net of taxes 2,461 81
Changes in operating assets and
liabilities, net of effect of acquisitions:
Accounts receivable (3,911 ) (17,755 ) Prepaids and other current
assets 8,024 (4,612 ) Accounts payable (1,391 ) 2,891 Salaries and
benefits payable (6,219 ) 1,731 Accrued liabilities and other
liabilities 1,104 (4,567 ) Net cash provided
by continuing operating activities 205,411 139,261 Net cash
provided by discontinued operating activities 983
2,522 Net cash provided by operating activities
206,394 141,783
Investing activities: Cash paid for
acquisitions, net of cash acquired (32,910 ) (121,156 ) Cash paid
for real estate acquisitions (19,341 ) - Capital purchases of
property and equipment (130,674 ) (121,930 ) Other assets
1,229 (1,318 ) Net cash used in continuing investing
activities (181,696 ) (244,404 ) Net cash provided by (used in)
discontinued investing activities 67,692
(41,811 ) Net cash used in investing activities (114,004 ) (286,215
)
Financing activities: Net (decrease) increase in
revolving credit facility (229,333 ) 149,333 Borrowings on
long-term debt 106,500 - Principal payments on long-term debt
(5,093 ) (6,067 ) Payment of loan and issuance costs (9,903 ) (59 )
Distributions to noncontrolling interests (723 ) - Excess tax
benefits from share-based payment arrangements 1,678 3,052
Repurchase of common stock upon restricted stock vesting (1,057 )
(271 ) Proceeds from exercises of common stock options 1,085
9,745 Net cash (used in) provided by financing
activities (136,846 ) 155,733 Net (decrease)
increase in cash (44,456 ) 11,301 Cash and cash equivalents at
beginning of the period 51,271 39,970
Cash and cash equivalents at end of the period $ 6,815 $
51,271
Effect of Acquisitions: Assets
acquired, net of cash acquired $ 39,147 $ 124,687 Liabilities
assumed (6,237 ) (3,531 ) Cash paid for acquisitions,
net of cash acquired $ 32,910 $ 121,156
PSYCHIATRIC SOLUTIONS, INC. RECONCILIATION OF INCOME FROM
CONTINUING OPERATIONS TO EBITDA AND ADJUSTED EBITDA
(Unaudited, in thousands) Three
Months Ended December 31, Year Ended December
31, 2009 2008 2009
2008 Income from continuing operations
attributable to PSI stockholders $ 29,672 $ 24,153 $ 120,078 $
105,034 Provision for income taxes 18,509 14,821 74,889 64,457
Interest expense 18,286 18,465 71,549 75,982 Depreciation and
amortization 11,874 10,309 44,778
38,843 EBITDA(a) 78,341 67,748 311,294 284,316 Other expenses:
Share-based compensation 3,981 4,901 17,505
19,913 Adjusted EBITDA(a) $ 82,322 $ 72,649 $ 328,799 $
304,229 (a)
EBITDA and adjusted EBITDA are
non-GAAP financial measures. EBITDA is defined as income from
continuing operations attributable to stockholders before interest
expense (net of interest income), income taxes, depreciation and
amortization. Adjusted EBITDA is defined as income from continuing
operations attributable to stockholders before interest expense
(net of interest income), income taxes, depreciation, amortization,
and other items included in the caption above labeled “Other
expenses”. These other expenses may occur in future periods but the
amounts recognized can vary significantly from period to period and
do not directly relate to the ongoing operations of our health care
facilities. PSI’s management relies on EBITDA and adjusted EBITDA
as the primary measures to review and assess operating performance
of its facilities and their management teams. PSI believes it is
useful to investors to provide disclosures of its operating results
on the same basis as that used by management. Management and
investors also review EBITDA and adjusted EBITDA to evaluate PSI’s
overall performance and to compare PSI’s current operating results
with corresponding periods and with other companies in the health
care industry. You should not consider EBITDA and adjusted EBITDA
in isolation or as a substitute for net income, operating cash
flows or other cash flow statement data determined in accordance
with accounting principles generally accepted in the United States.
Because EBITDA and adjusted EBITDA are not measures of financial
performance under accounting principles generally accepted in the
United States and are susceptible to varying calculations, they may
not be comparable to similarly titled measures of other
companies.
PSYCHIATRIC SOLUTIONS, INC. OPERATING STATISTICS -
OWNED FACILITIES (Unaudited) (Revenue in
thousands) Three Months Ended December
31, % 2009
2008 Change Same-facility results: Revenue $ 420,668
$ 396,661 6.1 % Admissions 43,922 39,627 10.8 % Patient days
724,193 683,122 6.0 % Average length of stay(a) 16.5 17.2 -4.1 %
Revenue per patient day(b) $ 581 $ 581 0.0 % EBITDA margin 21.5 %
19.1 % 240 bps Total facility results: Revenue $ 430,136 $
396,661 8.4 % Admissions 45,086 39,627 13.8 % Patient days 735,202
683,122 7.6 % Average length of stay(a) 16.3 17.2 -5.2 % Revenue
per patient day(b) $ 585 $ 581 0.7 % EBITDA margin 21.5 % 19.1 %
240 bps
Year Ended December 31, % 2009
2008 Change Same-facility results: Revenue $
1,654,258 $ 1,571,141 5.3 % Admissions 174,874 163,616 6.9 %
Patient days 2,845,536 2,749,658 3.5 % Average length of stay(a)
16.3 16.8 -3.0 % Revenue per patient day(b) $ 581 $ 571 1.8 %
EBITDA margin 21.6 % 20.8 % 80 bps Total facility results:
Revenue $ 1,678,449 $ 1,571,141 6.8 % Admissions 177,967 163,616
8.8 % Patient days 2,881,063 2,749,658 4.8 % Average length of
stay(a) 16.2 16.8 -3.6 % Revenue per patient day(b) $ 583 $ 571 2.1
% EBITDA margin 21.5 % 20.8 % 70 bps (a) Average length of
stay is defined as patient days divided by admissions. (b) Revenue
per patient day is defined as owned facility revenue divided by
patient days.
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