k8_051210.htm

PHC Announces Strong Fiscal 2010 Third Quarter Results

Net Patient Care Revenues Increase 14.3%, Income From Operations Increases approximately $700,000 to $781,000. Net Income of $0.02 per share versus loss of $0.01 per share in year-earlier period.

PEABODY, Mass., May 12, 2010 (BUSINESS WIRE) -- PHC, Inc., d/b/a Pioneer Behavioral Health (NYSE Amex: PHC), ("Pioneer" or the "Company"), a leading provider of inpatient and outpatient behavioral health services, reported financial results for the Company's 2010 third fiscal quarter ended March 31, 2010. The results exclude the operations of the Company’s research division, Pivotal Research Centers, Inc. ("Pivotal"), which was sold during the 2009 third fiscal quarter and was accounted for as a discontinued operation in fiscal 2009.

Total net revenues from continuing operations increased 12.7% to $13.5 million for the three months ended March 31, 2010 compared to $12.0 million for the three months ended March 31, 2009. Net patient care revenues increased 14.3% to $12.7 million for the three months ended March 31, 2010 from $11.1 million for the three months ended March 31, 2009. The increase in revenues was due primarily to increased census across the Company's facilities, including higher census at Seven Hills Hospital in Las Vegas and the Company's new chemical dependency unit at Harbor Oaks Hospital in Michigan, which opened in September 2009. Contract support services revenue provided by Wellplace declined 6.7% to $0.8 million for the three months ended March 31, 2010 compared to $0.9 million for the same period last year. The decrease was due to decreases in covered lives under our EAP (Employee Assistance Program) contracts.

Income from operations improved to $781,000 for the 2010 fiscal third quarter compared to $98,000 in the same period a year ago. Income before taxes was $758,000 for the three-month period ended March 31, 2010 compared to $12,000 in the year-earlier period. Net income applicable to common shareholders was $0.5 million for the fiscal 2010 third quarter, or $0.02 per diluted share, compared to a net loss of $0.2 million or $0.01 per share in the fiscal 2009 third quarter. The fiscal 2009 third quarter results included an expense of $159,031 associated with Pivotal. The 2010 fiscal third quarter represented the Company's fifth consecutive quarter of profitability.

For the nine months ended March 31, 2010, total net revenues from continuing operations was $39.0 million compared to $34.7 million in the year earlier period. Net patient care revenues were $36.5 million for the nine months ended March 31, 2010 compared to $31.8 million in the previous year period. In the same nine-month period, income from operations was $1.7 million compared to a loss of $1.2 million in the same nine months in fiscal 2009. Net income applicable to common stockholders was $1.0 million for the nine months ended March 31, 2010, or $0.05 per diluted share compared to a net loss of $2.2 million, or a loss of $0.11 per share, for the previous year period. The net loss included a $1.4 million charge associated with the sale of Pivotal and related discontinued operations.

As of March 31, 2010, the Company had cash and cash equivalents of $3.3 million. Stockholders' equity improved from $16 million as of June 30, 2009 to $16.9 million as of March 31, 2010.

"We continue to generate strong operating results across all of our patient care facilities as reflected by the double digit increase in patient care revenue and strong sequential revenue growth," said Bruce A. Shear, Pioneer's president and CEO. "In addition to strong patient growth, profitability also increased, as gross margin from net patient care revenue increased from 44.5% in the year earlier period to 48.2% in the current quarter. Margins also improved sequentially due to a more favorable mix of patients. We continue to experience growing census across our facilities and believe there will be additional opportunities for organic expansion, such as the recently opened ten-bed adolescent unit at Seven Hills Behavioral Institute in Henderson, Nevada. The Hospital provides psychiatric, alcohol and drug addiction treatment for adolescents and adults, and is already operating at capacity. In addition to these opportunities, we are selectively pursuing acquisitions that would allow the Company to accelerate its growth. We expect the trends that we have experienced over the past year to continue."

The Company will hold a conference call at 4:15 p.m. eastern time today to discuss the results. Interested parties should dial (866) 362-5158 (domestically) or (617) 597-5397 (internationally) and use conference passcode 74366943. A replay of the call will be available for 30 days and can be accessed by dialing 888-286-8010 (domestically) or 617-801-6888 (internationally) and using passcode 63189881.

About PHC d/b/a Pioneer Behavioral Health

PHC, Inc., d/b/a Pioneer Behavioral Health, is a national healthcare company providing behavioral health services in five states, including substance abuse treatment facilities in Utah and Virginia, and inpatient and outpatient psychiatric facilities in Michigan, Pennsylvania, and Nevada. The Company also offers internet and telephonic-based referral services that includes employee assistance programs and critical incident services. Contracted services with government agencies, national insurance companies, and major transportation and gaming companies cover more than one million individuals. Pioneer helps people gain and maintain physical, spiritual and emotional health through delivering the highest quality, most culturally responsive and compassionate behavioral health care programs and services. For more information, visit www.phc-inc.com.

Statement under the Private Securities Litigation Reform Act of 1995

This press release may include "forward-looking statements" that are subject to risks and uncertainties. Forward-looking statements include information about possible or assumed future results of the operations or the performance of the Company and its future plans and objectives. Various future events or factors may cause the actual results to vary materially from those expressed in any forward-looking statements made in this press release. For a discussion of these factors and risks, see the Company's annual report on Form 10-K for the most recently ended fiscal year.

Contact:

PHC, Inc.

Bruce A. Shear, 978-536-2777

President & CEO

Investor Relations:

CEOcast, Inc.

Dan Schustack, 212-732-4300

PHC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
		March 31,		June 30,
		2010		2009
ASSETS
Current assets:
Cash and cash equivalents	$	3,266,591	$	3,199,344
Accounts receivable, net of allowance for doubtful accounts of $ 2,878,903 at
March 31, 2010 and $2,430,618 at June 30, 2009		8,472,136		6,315,693
Other receivables-third party		--		170,633
Prepaid expenses		593,187		441,945
Prepaid income taxes		225,936		33,581
Other receivables and advances		751,867		674,357
Deferred income tax asset – current		923,625		923,625
Total current assets		14,233,342		11,759,178
Restricted cash		512,197		512,197
Accounts receivable, non-current		40,447		35,000
Other receivables		63,490		55,627
Property and equipment, net		4,640,095		4,687,110
Deferred income tax asset – non-current		1,902,354		1,902,354
Deferred financing costs, net of amortization of $546,338 and $436,440 at
March 31, 2010 and June 30, 2009		225,903		335,801
Goodwill		969,098		969,098
Other assets		2,305,118		2,435,628
Total assets	$	24,892,044	$	22,691,993
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,551,707	$	1,375,436
Current maturities of long-term debt		795,793		652,837
Revolving credit note		1,282,757		863,404
Current portion of obligations under capital leases		111,185		103,561
Accrued payroll, payroll taxes and benefits		2,043,835		1,570,639
Accrued expenses and other liabilities		1,285,386		1,111,321
Total current liabilities		7,070,663		5,677,198
Long-term debt, net of current maturities		304,235		488,426
Obligations under capital leases		48,174		132,368
Long-term accrued liabilities		523,299		350,178
Total liabilities		7,946,371		6,648,170
Stockholders’ equity:
Preferred Stock, 1,000,000 shares authorized, none issued or outstanding		--		--
Class A common stock, $.01 par value, 30,000,000 shares authorized,
19,867,826 and 19,840,793 shares issued at March 31, 2010 and June 30,
2009, respectively		198,678		198,408
Class B common stock, $.01 par value, 2,000,000 shares authorized, 775,021
and 775,080 issued and outstanding at March 31, 2010 and June 30,
2009, respectively, each convertible into one share of Class A common stock		7,750		7,751
Additional paid-in capital		27,886,437		27,667,597
Treasury stock, 896,804 and 626,541 shares of Class A common stock at
March 31, 2010 and June 30, 2009, respectively, at cost		(1,423,980)		(1,125,707)
Accumulated deficit		(9,723,212)		(10,704,226)
Total stockholders’ equity		16,945,673		16,043,823
Total liabilities and stockholders’ equity	$	24,892,044	$	22,691,993

PHC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		Three Months Ended				Nine Months Ended
		March 31,				March 31,
		2010		2009		2010		2009
Revenues:
Patient care, net	$	12,692,869	$	11,106,894	$	36,452,909	$	31,772,332
Contract support services		839,305		899,275		2,591,256		2,946,058
Total revenues		13,532,174		12,006,169		39,044,165		34,718,390
Operating expenses:
Patient care expenses		6,576,086		6,167,572		19,454,431		18,232,036
Cost of contract support services		733,603		718,979		2,202,584		2,318,263
Provision for doubtful accounts		547,810		413,077		1,476,128		1,167,220
Administrative expenses		4,893,235		4,609,001		14,259,979		14,181,365
Total operating expenses		12,750,734		11,908,629		37,393,122		35,898,884

Income (loss) from operations		781,440		97,540		1,651,043		(1,180,494)

Other income (expense):
Interest income		39,023		39,553		101,130		135,028
Other income		18,260		43,680		141,921		99,422
Interest expense		(80,520)		(168,705)		(241,998)		(346,653)

Total other income (expense), net		(23,237)		(85,472)		1,053		(112,203)

Income (loss) before taxes		758,203		12,068		1,652,096		(1,292,697)
Income tax (benefit) provision		289,031		4,680		671,081		(501,373)

Income (loss) from continuing operations		469,172		7,388		981,015		(791,324)

Discontinued operations – net of tax benefit of $100,760 and $892,784 for the three months and nine months ended March 31, 2009, respectively – Pivotal		--		(159,031)		--		(1,409,095)

Net income (loss) applicable to common shareholders	$	469,172	$	(151,643)	$	981,015	$	(2,200,419)

Basic net income (loss) per common share
Continuing operations	$	0.02	$	0.00	$	0.05	$	(0.04)
Discontinued operations		--		(0.01)		--		(0.07)
	$	0.02	$	(0.01)	$	0.05	$	(0.11)

Basic weighted average number of shares outstanding		19,762,241		20,017,703		19,854,099		20,109,622

Diluted net income (loss) per common share

Continuing operations	$	0.02	$	0.00	$	0.05	$	(0.04)
Discontinued operations		--		(0.01)		--		(0.07)
	$	0.02	$	(0.01)	$	0.05	$	(0.11)

Diluted weighted average number of shares outstanding		19,861,449		20,017,703		19,963,141		20,109,622

1-33323	04-2601571
(Commission File Number)	(I.R.S. Employer Identification No.)



200 Lake Street, Suite 102, Peabody, Massachusetts	01960
(Address of Principal Executive Offices)	(Zip Code)

	⁭ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	⁭ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	⁭ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	⁭ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c))

		PHC, INC.



	Date: May 12, 2010	By: /s/ Bruce A. Shear__________
		Bruce A. Shear, President
		and Chief Executive Officer