EX-99 2 a5535085ex99.txt EXHIBIT 99 Exhibit 99 Psychiatric Solutions Reports Third Quarter Financial Results Income from Continuing Operations Increases 31% to $0.38 Per Share Affirms 2007 Earnings Guidance and Establishes 2008 Earnings Guidance in a Range of $1.83 to $1.87 FRANKLIN, Tenn.--(BUSINESS WIRE)--Nov. 1, 2007 --Psychiatric Solutions, Inc. ("PSI") (NASDAQ: PSYS) today announced financial results for the third quarter and nine months ended September 30, 2007. Income from continuing operations was $0.38 per diluted share for the third quarter of 2007, up 31.0% from $0.29 per diluted share for the third quarter of 2006. Total revenue grew 58.5% to a record $402.0 million during the third quarter from $253.7 million for the third quarter of 2006. Same-facility revenue increased 8.3% to $254.7 million compared to the same period in 2006. Growth in same-facility revenue was primarily driven by a 6.9% increase in same-facility revenue per patient day as well as 1.5% growth in same-facility patient days. Consolidated adjusted EBITDA increased 61.8% to $68.9 million for the third quarter, reflecting a 17.1% margin. Same-facility adjusted EBITDA margin expanded 150 basis points to 21.6% compared to 20.1% during the third quarter of 2006. Adjusted EBITDA margin for all facilities was 19.8%, down slightly compared to the third quarter of last year primarily as a result of the acquisition of a large number of lower margin facilities within the last twelve months. A reconciliation of GAAP and non-GAAP financial results can be found on pages 6 and 7. Joey Jacobs, Chairman, President and Chief Executive Officer of PSI, stated, "Our results for the third quarter and first nine months of 2007 confirm our strength in operating new and existing inpatient facilities efficiently while providing high quality care to patients with mental illness. In a highly fragmented industry experiencing rising demand and limited capacity, PSI is positioned to produce further significant profitable growth and improved stockholder value in the years ahead." Based primarily on operating and financial results for the third quarter and first nine months of 2007, PSI affirmed its guidance for adjusted earnings from continuing operations for 2007 of $1.47 to $1.49 per diluted share, representing an annual growth rate in a range of 29% to 31% compared to 2006. PSI also established its 2008 guidance for adjusted earnings from continuing operations in the range of $1.83 to $1.87 per diluted share, reflecting growth of 23% to 27%. The Company's earnings guidance excludes the one-time loss on refinancing of debt in 2007 and does not include the impact from any future acquisitions. PSI will hold a conference call to discuss third quarter financial results at 10:00 a.m. Eastern time on Friday, November 2, 2007. 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 November 16, 2007. 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) PSI's ability to successfully integrate the Horizon Health Corporation operations; (2) potential competition which alters or impedes PSI's acquisition strategy by decreasing PSI's ability to acquire additional inpatient facilities on favorable terms; (3) the ability of PSI to improve the operations of acquired inpatient facilities; (4) the ability to maintain favorable and continuing relationships with physicians who use PSI's facilities; (5) the ability to receive timely additional financing on terms acceptable to PSI to fund PSI's acquisition strategy and capital expenditure needs; (6) risks inherent to the health care industry, including the impact of unforeseen changes in regulation, reimbursement rates from federal and state health care programs or managed care companies and exposure to claims and legal actions by patients and others; and (7) PSI's ability to comply with applicable licensure and accreditation requirements. 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 approximately 10,000 beds in 31 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 Nine Months Ended September 30, September 30, ----------------------------------------- 2007 2006 2007 2006 --------- --------- ----------- --------- Revenue $402,021 $253,696 $1,078,585 $742,534 Salaries, wages and employee benefits (including share- based compensation of $4,423, $2,059, $12,006 and $10,449 for the respective three and nine month periods 2007 and 2006) 223,902 143,920 599,137 420,490 Professional fees 40,565 24,072 106,629 70,827 Supplies 21,820 14,494 59,745 42,766 Rentals and leases 5,747 3,274 15,391 9,906 Other operating expenses 38,517 23,038 105,026 70,428 Provision for doubtful accounts 7,019 4,401 20,958 13,756 Depreciation and amortization 8,525 5,194 22,037 14,745 Interest expense 22,253 10,059 53,669 28,537 Loss on refinancing of long- term debt - - 8,179 - --------- --------- ----------- --------- 368,348 228,452 990,771 671,455 --------- --------- ----------- --------- Income from continuing operations before income taxes 33,673 25,244 87,814 71,079 Provision for income taxes 12,831 9,593 33,457 27,010 --------- --------- ----------- --------- Income from continuing operations 20,842 15,651 54,357 44,069 Loss from discontinued operations, net of income tax benefit of $322, $78, $800 and $608 for the respective three and nine month periods 2007 and 2006 (517) (127) (1,300) (992) --------- --------- ----------- --------- Net income $ 20,325 $ 15,524 $ 53,057 $ 43,077 ========= ========= =========== ========= Basic earnings per share: Income from continuing operations $ 0.38 $ 0.29 $ 1.00 $ 0.83 Loss from discontinued operations, net of taxes (0.01) - (0.02) (0.01) --------- --------- ----------- --------- Net income $ 0.37 $ 0.29 $ 0.98 $ 0.82 ========= ========= =========== ========= Diluted earnings per share: Income from continuing operations $ 0.38 $ 0.29 $ 0.98 $ 0.81 Loss from discontinued operations, net of taxes (0.01) - (0.02) (0.01) --------- --------- ----------- --------- Net income $ 0.37 $ 0.29 $ 0.96 $ 0.80 ========= ========= =========== ========= Shares used in computing per share amounts: Basic 54,278 53,114 54,064 52,849 Diluted 55,415 54,266 55,343 54,077 PSYCHIATRIC SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands) September 30, December 31, 2007 2006 ------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 22,398 $ 18,572 Accounts receivable, less allowance for doubtful accounts of $34,946 and $18,672, respectively 241,838 179,050 Prepaids and other 68,716 45,364 ------------- ------------ Total current assets 332,952 242,986 Property and equipment, net of accumulated depreciation 680,541 539,758 Cost in excess of net assets acquired 1,089,053 760,268 Other assets 66,765 37,910 ------------- ------------ Total assets $2,169,311 $1,580,922 ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 29,676 $ 25,222 Salaries and benefits payable 79,990 66,236 Other accrued liabilities 71,667 45,855 Current portion of long-term debt 5,903 2,386 ------------- ------------ Total current liabilities 187,236 139,699 Long-term debt, less current portion 1,176,553 740,921 Deferred tax liability 53,650 44,924 Other liabilities 28,158 27,599 ------------- ------------ Total liabilities 1,445,597 953,143 Minority interest 4,433 - Stockholders' equity: Common stock, $0.01 par value, 125,000 shares authorized; 54,608 and 53,421 issued and outstanding, respectively 546 534 Additional paid-in capital 562,159 523,193 Retained earnings 156,576 104,052 ------------- ------------ Total stockholders' equity 719,281 627,779 ------------- ------------ Total liabilities and stockholders' equity $2,169,311 $1,580,922 ============= ============ PSYCHIATRIC SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Nine Months Ended September 30, --------------------- 2007 2006 ---------- ---------- Operating activities: Net income $ 53,057 $ 43,077 Adjustments to reconcile net income to net cash provided by continuing operating activities: Depreciation and amortization 22,037 14,745 Share-based compensation 12,006 10,449 Loss on refinancing of long-term debt 8,179 - Amortization of loan costs and bond premium 1,591 1,225 Loss from discontinued operations 1,300 992 Change in income tax assets and liabilities 8,219 24,270 Changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable (18,557) (11,721) Prepaids and other current assets 648 (3,685) Accounts payable (6,784) (2,038) Salaries and benefits payable (766) 4,740 Accrued liabilities and other liabilities 297 1,416 ---------- ---------- Net cash provided by continuing operating activities 81,227 83,470 Net cash used in discontinued operating activities (493) (2,677) ---------- ---------- Net cash provided by operating activities 80,734 80,793 Investing activities: Cash paid for acquisitions, net of cash acquired (462,729) (167,065) Capital purchases of leasehold improvements, equipment and software (48,361) (20,880) Other assets (750) 35 ---------- ---------- Net cash used in investing activities (511,840) (187,910) Financing activities: Borrowings on long-term debt 481,875 - Principal payments on long-term debt (40,220) (274) Net (decrease) increase in revolving credit facility borrowings (11,000) 52,000 Payment of loan and stock issuance costs (6,603) (101) Costs to refinance long-term debt (7,127) - Excess tax benefits from share-based payment arrangements 4,072 5,771 Proceeds from issuance of common stock upon exercise of stock options 13,935 5,456 ---------- ---------- Net cash provided by financing activities 434,932 62,852 ---------- ---------- Net increase (decrease) in cash 3,826 (44,265) Cash and cash equivalents at beginning of the period 18,572 54,699 ---------- ---------- Cash and cash equivalents at end of the period $ 22,398 $ 10,434 ========== ========== Effect of Acquisitions: Assets acquired, net of cash acquired $ 533,084 $ 182,056 Liabilities assumed (52,653) (10,745) Long-term debt assumed (8,702) (4,246) Common stock issued (9,000) - ---------- ---------- Cash paid for acquisitions, net of cash acquired $ 462,729 $ 167,065 ========== ========== PSYCHIATRIC SOLUTIONS, INC. RECONCILIATION OF NET INCOME TO ADJUSTED INCOME FROM CONTINUING OPERATIONS (Unaudited, in thousands except for per share amounts) Three Months Nine Months Ended Ended September 30, September 30, --------------- --------------- 2007 2006 2007 2006 ------- ------- ------- ------- Net income $20,325 $15,524 $53,057 $43,077 Plus reconciling items: Discontinued operations, net of taxes 517 127 1,300 992 Provision for income taxes 12,831 9,593 33,457 27,010 ------- ------- ------- ------- Income from continuing operations before income taxes 33,673 25,244 87,814 71,079 Loss on refinancing of long-term debt - - 8,179 - ------- ------- ------- ------- Adjusted income from continuing operations before income taxes 33,673 25,244 95,993 71,079 Adjusted provision for income taxes 12,831 9,593 36,573 27,010 ------- ------- ------- ------- Adjusted income from continuing operations(a) $20,842 $15,651 $59,420 $44,069 ======= ======= ======= ======= Income from continuing operations per diluted share $ 0.38 $ 0.29 $ 0.98 $ 0.81 ======= ======= ======= ======= Adjusted income from continuing operations per diluted share(a) $ 0.38 $ 0.29 $ 1.07 $ 0.81 ======= ======= ======= ======= Diluted shares used in computing per share amounts 55,415 54,266 55,343 54,077 (a) PSI believes its calculation of adjusted income from continuing operations per diluted share provides a better measure of the Company's ongoing performance and provides better comparability to prior periods because it excludes items not related to the Company's core business operations. Adjusted income from continuing operations per diluted share should not be considered as a measure of financial performance under accounting principles generally accepted in the United States, and the items excluded from it are significant components in understanding and assessing financial performance. Because adjusted income from continuing operations per diluted share is not a measurement determined in accordance with accounting principles generally accepted in the United States and is thus susceptible to varying calculations, it may not be comparable as presented to other similarly titled measures of other companies. PSYCHIATRIC SOLUTIONS, INC. RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS TO EBITDA AND ADJUSTED EBITDA (Unaudited, in thousands) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2007 2006 2007 2006 ---------- ------- -------- -------- Income from continuing operations $20,842 $15,651 $ 54,357 $ 44,069 Provision for income taxes 12,831 9,593 33,457 27,010 Interest expense 22,253 10,059 53,669 28,537 Depreciation and amortization 8,525 5,194 22,037 14,745 ---------- ------- -------- -------- EBITDA(a) 64,451 40,497 163,520 114,361 Other expenses: Loss on refinancing of long- term debt - - 8,179 - Share-based compensation 4,423 2,059 12,006 10,449 ---------- ------- -------- -------- Adjusted EBITDA(a) $68,874 $42,556 $183,705 $124,810 ========== ======= ======== ======== (a) EBITDA and adjusted EBITDA are non-GAAP financial measures. EBITDA is defined as income from continuing operations before interest expense (net of interest income), income taxes, depreciation and amortization. Adjusted EBITDA is defined as income from continuing operations before interest expense (net of interest income), income taxes, depreciation, amortization, share-based compensation 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 September 30, ----------------------- % 2007 2006 Change ----------- ----------- ------- Same-facility results: Revenue $ 254,680 $ 235,171 8.3% Admissions 25,888 25,738 0.6% Patient days 454,129 447,533 1.5% Average length of stay(a) 17.5 17.4 0.6% Revenue per patient day(b) $ 561 $ 525 6.9% EBITDA margin 21.6% 20.1% 150 bps Total facility results: Revenue $ 359,295 $ 240,749 49.2% Admissions 36,749 26,250 40.0% Patient days 642,650 459,518 39.9% Average length of stay(a) 17.5 17.5 0.0% Revenue per patient day(b) $ 559 $ 524 6.7% EBITDA margin 19.8% 20.0% -20 bps Nine Months Ended September 30, ----------------------- % 2007 2006 Change ----------- ----------- ------- Same-facility results: Revenue $ 736,222 $ 688,222 7.0% Admissions 79,846 77,887 2.5% Patient days 1,341,105 1,320,133 1.6% Average length of stay(a) 16.8 16.9 -0.6% Revenue per patient day(b) $ 549 $ 521 5.4% EBITDA margin 21.3% 19.9% 140 bps Total facility results: Revenue $ 991,299 $ 704,282 40.8% Admissions 103,608 79,458 30.4% Patient days 1,788,185 1,356,138 31.9% Average length of stay(a) 17.3 17.1 1.2% Revenue per patient day(b) $ 554 $ 519 6.7% EBITDA margin 19.8% 19.8% 0 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. CONTACT: Psychiatric Solutions, Inc. Brent Turner, 615-312-5700 Executive Vice President, Finance and Administration