EX-20 3 g79249exv20.txt COPY OF PRESS RELEASE EXHIBIT 20 PSYCHIATRIC SOLUTIONS, INC. PSI CONTACT: Joey A. Jacobs President and Chief Executive Officer (615) 312-5700 PSYCHIATRIC SOLUTIONS REPORTS THIRD-QUARTER FINANCIAL RESULTS ---------------------------- EARNS $0.35 PER DILUTED SHARE YEAR-TO-DATE ON FULLY TAXED PRO FORMA BASIS, EXCLUDING NONRECURRING GAINS ---------------------------- REAFFIRMS FULL-YEAR 2002 EARNINGS GUIDANCE FRANKLIN, Tenn. (November 11, 2002) - Psychiatric Solutions, Inc. ("PSI") (Nasdaq: PSYS) today announced financial results for the third quarter and nine months ended September 30, 2002. For the third quarter, revenue was $32,280,000, an increase of 224.6% from $9,944,000 for the third quarter of 2001. EBITDA (earnings before interest, taxes, depreciation and amortization) was $3,695,000, up 147.5% from $1,493,000. Income from continuing operations for the quarter increased 104.8% to $1,606,000 from $784,000 for the third quarter of 2001. Earnings per diluted share from continuing operations rose 46.7% to $0.22 for the third quarter of 2002 from $0.15 for the comparable period last year. For the first nine months of 2002, revenue increased 220.9% to $78,090,000 from $24,338,000 for the same prior-year period. EBITDA rose 129.7% to $8,896,000 from $3,873,000. Income from continuing operations for the latest nine months increased 110.3% to $3,218,000 from $1,530,000 for the same period last year. Income from continuing operations per diluted share for the quarter was $0.54, up 74.2% from $0.31 per diluted share for the first nine months of 2001. PSI's fully taxed pro forma net income, excluding nonrecurring items, was $2,819,000, or $0.35 per diluted share, for the first nine months of 2002, and pro forma EBITDA was $11,883,000. Fully taxed pro forma results assume both that PSI's mergers with PMR Corporation and with Riveredge Hospital, which were effective August 5, 2002 and July 1, 2002, respectively, were effective January 1, 2002, and that PSI paid income tax using an effective rate of 40%. The nonrecurring items include a nonrecurring gain of $1,964,000 ($1,178,000 after tax) in recoveries of allowance for doubtful accounts from PMR's collection of fully reserved accounts receivable and a nonrecurring gain of $609,000 ($365,000 after tax) related to PMR's sales of assets prior to the merger with PSI. For more information on PSI's pro forma results, please see Unaudited Pro Forma Results on page 3. Commenting on the announcement, Joey Jacobs, president and chief executive officer of PSI, said, "We are pleased to report significant profitable growth for the third quarter of 2002. Consistent with our strategic objective of becoming a leading provider of inpatient psychiatric services, the increase in our third-quarter revenue was primarily driven by the expansion of our hospital business to five freestanding psychiatric hospitals at the end of the third quarter from two at the same time in 2001. Having completed the purchases of two of these hospitals on September 1, 2001, one on November 1, 2001, one on December 1, 2001, and one on July 1, 2002, we anticipate that our results for the fourth quarter will also benefit from full-quarter operation of the five hospitals relative to the comparable quarter last year. -MORE- PSYS Reports Third-Quarter Results Page 2 November 11, 2002 "Based on PSI's performance for the third quarter and year-to-date, as well as our expectations for the fourth quarter, we reaffirm our previously announced guidance for full-year 2002 pro forma earnings per diluted share, excluding nonrecurring items, of $0.40 to $0.48, assuming no additional acquisitions of psychiatric hospitals. We also continue to expect growth in earnings per diluted share for 2003 in excess of 15%, also assuming no additional acquisitions. We intend to achieve these estimates primarily by producing internal growth within our existing hospital operations. As we have begun to demonstrate with our initial hospital acquisitions, we believe we have significant prospects for expanding revenue and profit at these facilities through introducing new programs, implementing enhanced marketing and attracting additional physicians to the facilities. In addition, we also expect to selectively grow our psychiatric unit management business through new contracts with general acute care hospitals. "While our guidance for 2002 and 2003 excludes the impact of additional psychiatric hospital acquisitions, we are continuing to pursue a focused external growth strategy designed to expand our ownership of psychiatric hospitals through acquisitions. We believe the industry environment - with a large population of insured beneficiaries in the U.S., increasing demand for psychiatric services and rising reimbursement rates - remains favorable for further industry consolidation. We also believe PSI has the management capabilities and financial position to continue to implement its acquisition strategy as the primary vehicle for achieving its long-term goal of becoming the country's leading provider of inpatient psychiatric services." This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include statements regarding intent, belief or current expectations of PSI and its management. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause PSI's actual results to differ materially from the results discussed in the forward-looking statements. Risks and uncertainties that might cause such differences include, but are not limited to: (1) potential competition which alters or impedes PSI's acquisition strategy by decreasing PSI's ability to acquire additional hospitals on favorable terms; (2) the ability of PSI to improve the operations of acquired hospitals; (3) the ability to maintain favorable and continuing relationships with physicians who use PSI's facilities; (4) the limited operating history of PSI; (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 healthcare industry, including the impact of unforeseen changes in regulation, reimbursement rates from federal and state healthcare programs or managed care companies and exposure to claims and legal actions by patients and others; and (7) potential difficulties in integrating the operations of PSI with PMR. The forward-looking statements herein are qualified in their entirety by the risk factors set forth in PSI's joint proxy statement/prospectus on Form S-4, dated July 11, 2002, under the caption "Risk Factors." A copy of the Form S-4 may be obtained from the Public Reference Branch of the SEC at 450 Fifth Street NW, Washington, DC at prescribed rates. PSI undertakes no obligation to update any forward-looking statements, whether as a result of news information, future events or otherwise. Psychiatric Solutions, Inc. offers an extensive continuum of behavioral health programs to critically ill children, adolescents and adults through its ownership and operation of freestanding psychiatric inpatient hospitals and its management of psychiatric units within general acute care hospitals owned by others. At September 30, 2002, PSI owned and operated five freestanding hospitals and managed 48 psychiatric units. -MORE- PSYS Announces Third-Quarter Results Page 3 November 11, 2002 UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF EARNINGS OF PMR AND PSYCHIATRIC SOLUTIONS NINE MONTHS ENDED SEPTEMBER 30, 2002 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PSI HISTORICAL PRO FORMA PRO FORMA PRO FORMA(1) PMR ADJUSTMENTS COMBINED ------------ ---------- ----------- --------- Revenue $ 92,242 $ 13,011 $ -- $ 105,253 ------------ ---------- ---------- --------- Expenses: Salaries, wages and employee benefits 52,265 1,513 -- 53,778 Professional fees 11,555 1,814 (1,044)(2) 12,325 Rentals and leases 689 264 -- 953 Other operating expenses 14,533 9,532 -- 24,065 Provision for (recovery of) doubtful accounts 2,249 (1,964) -- 285 Depreciation and amortization 1,362 181 -- 1,543 Special charge -- 1,425 (2,034)(3) (609) ------------ ---------- ----------- --------- Total expenses 82,653 12,765 (3,078) 92,340 Interest expense (5,638) (4) -- (5,642) Other income - interest -- 209 (209)(4) -- ------------ ---------- ----------- --------- Earnings from continuing operations before taxes 3,951 451 2,869 7,271 Provision (benefit) for taxes 66 (3,255) (5) (3,189) ------------ ---------- ----------- --------- Net earnings from continuing operations $ 3,885 $ 3,706 $ 2,869 $ 10,460 ============ ========== =========== ========= Net earnings per common share from continuing operations: Basic $ 0.50 $ 0.48 $ 1.36 ============ ========== ========= Diluted (6) $ 0.48 $ 0.46 $ 1.26 ============ ========== ========= Shares used in computing earnings per share: Basic 7,704 7,704 7,704 Diluted (6) 8,528 8,528 8,528 ADJUSTED PRO FORMA COMBINED Net earnings from continuing operations $ 7,271 Collection of accounts receivable (1,964) Gain on sale of assets (609) --------- Net earnings from continuing operations, excluding nonrecurring items 4,699 Income taxes at 40% 1,880 --------- Fully taxed net earnings from continuing operations, excluding nonrecurring items $ 2,819 ========= Fully taxed net earnings from continuing operations, excluding nonrecurring items per diluted share(7) $ 0.35 ========= Shares used in computing diluted earnings per share(7) 8,106
(1) Includes 6 months pro forma income statement for Riveredge Hospital, acquired effective 7/1/02. (2) To eliminate merger transaction related costs incurred in the 3rd quarter. (3) To eliminate the effect of severance payments to former PMR employees made as a result of the PSI acquisition. (4) To reflect lost interest income due to reduction in cash, cash equivalents and short-term investments balances. (5) PMR tax net operating loss carryforwards will be subject to limitation under change in ownership provisions of Internal Revenue Code Section 382 and, as a result, the ability to recognize the tax net operating losses will be dependent upon future earnings of the company. (6) Diluted earnings per share is increased by convertible interest of $243 for the nine-month period, divided by diluted weighted average shares outstanding. Diluted weighted average shares outstanding includes the dilutive effect of convertible debt, stock options and warrants outstanding. (7) Convertible debt becomes anti-dilutive when non-recurring items are excluded. -MORE- PSYS Reports Third-Quarter Results Page 4 November 11, 2002 PSYCHIATRIC SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED, IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------- -------------------- 2002 2001 2002 2001 ------- ------- ------- ------- Revenue $32,280 $ 9,944 $78,090 $24,338 Salaries, wages and employee benefits 17,131 5,762 44,625 14,277 Professional fees 3,897 1,619 10,284 3,882 Supplies 1,432 231 3,664 335 Rentals and leases 260 87 637 175 Other operating expenses 5,037 570 8,314 1,471 Provision for bad debts 903 182 2,038 325 Depreciation and amortization 425 265 1,222 734 Interest expense 1,589 444 4,088 1,609 ------- ------- ------- ------- 30,674 9,160 74,872 22,808 ------- ------- ------- ------- Income from continuing operations 1,606 784 3,218 1,530 Income from discontinued operations -- 1,429 -- 1,645 ------- ------- ------- ------- Net income $ 1,606 $ 2,213 $ 3,218 $ 3,175 ======= ======= ======= ======= Earnings per common share from continuing operations: Basic $ 0.24 $ 0.16 $ 0.58 $ 0.31 ======= ======= ======= ======= Diluted(1) $ 0.22 $ 0.15 $ 0.54 $ 0.31 ======= ======= ======= ======= Earnings per common share from discontinued operations: Basic $ -- $ 0.29 $ -- $ 0.33 ======= ======= ======= ======= Diluted $ -- $ 0.25 $ -- $ 0.28 ======= ======= ======= ======= Earnings per common share: Basic $ 0.24 $ 0.44 $ 0.58 $ 0.63 ======= ======= ======= ======= Diluted(1) $ 0.22 $ 0.40 $ 0.54 $ 0.60 ======= ======= ======= ======= Shares used in computing per share amounts: Basic 6,687 4,997 5,563 5,015 Diluted(2) 7,561 5,678 5,934 5,697
(1) Diluted earnings per share is increased by convertible interest of $81 for the third quarter of 2002 and 2001 and $243 for the first nine months of 2001, divided by diluted weighted average shares outstanding. (2) Diluted weighted average shares outstanding includes the dilutive effect of convertible debt, stock options and warrants outstanding. -MORE- PSYS Reports Third-Quarter Results Page 5 November 11, 2002 PSYCHIATRIC SOLUTIONS, INC. SELECTED BALANCE SHEET DATA (UNAUDITED, IN THOUSANDS)
SEPTEMBER 30, December 31, 2002 2001 ------------- ------------ Cash $ 2,862 $ 1,262 Working capital 2,405 (3,624) Total assets 87,049 54,294 Long-term debt, less current portion 34,989 20,951 Total stockholders' equity 29,345 9,238
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