Symbol List Views
FlashQuotes InfoQuotes
Stock Details
Summary Quote Real-Time Quote After Hours Quote Pre-market Quote Historical Quote Option Chain
CHARTS
Basic Chart Interactive Chart
COMPANY NEWS
Company Headlines Press Releases Market Stream
STOCK ANALYSIS
Analyst Research Guru Analysis Stock Report Competitors Stock Consultant Stock Comparison
FUNDAMENTALS
Call Transcripts Annual Report Income Statement Revenue/EPS SEC Filings Short Interest Dividend History
HOLDINGS
Ownership Summary Institutional Holdings Insiders
(SEC Form 4)
 Save stocks for next time

Prospect Medical Holdings Inc. (PZZ)

F4Q09 Earnings Call

December 21, 2009 4:15 pm ET

Executives

Sam Lee – CEO

Mike Heather – CFO

Devin Sullivan – The Equity Group

Analysts

Doug Dieter – Imperial Capital

Miles Highsmith - RBC

Jacques Cornet – Gates Capital

Shaun Park – Ice Canyon

Nelson Obis – Winfield Capital

Presentation

Operator

Welcome to the 2009 fourth quarter and fiscal year-end conference call. (Operator Instructions) I will now turn the conference over to Devin Sullivan. Please go ahead Mr. Sullivan.

Devin Sullivan

Thank you. Good afternoon everyone. Thank you for joining us today for Prospect Medical Holdings’ fourth quarter and year-end financial results conference call. Our speakers today will be Sam Lee, Chairman and Chief Executive Officer of Prospect Medical, and Mike Heather, Chief Financial Officer. Also on the call is Adam Goldston, Prospect’s Senior Vice President.

Before turning things over to Mr. Lee, I would like to remind everyone that statements made during today’s call may contain forward-looking statements which are not historical facts. Investors are cautioned that forward-looking statements including statements regarding anticipated or expected results involve risks and uncertainties which may affect the company’s business and prospects including those outlined in prospects Form 10-K which was filed earlier today and other filings.

Any forward-looking statements made during this call represent management’s estimates only as of the date hereof or as of such earlier dates as are indicated and should not be relied upon as representing estimates as of any subsequent date. While Prospect may elect to update forward-looking statements at some point in the future, it specifically disclaims any obligation to do so even if its estimates change.

With that I would now like to turn the call over to Mr. Sam Lee, Chairman, and Chief Executive Officer of Prospect Medical.

Sam Lee

Thanks Devin. Thank you all for joining us today. This morning we reported solid financial results highlighted by double digit increases in revenues, operating income and adjusted EBITDA as we continued to tightly manage expenses and improve the operations of both our hospital and medical group segments as well as fortify our capital structure.

Any successes as operators is predicated on a model driven by three primary factors here at Prospect. First, revenue diversification, meaning providing high quality services and minimizing our revenue volatility by being a peer play driven by the dramatic and sometimes dramatic reimbursement changes reflecting operating focuses and precluding investment in long-term operating discipline and decision making, all driving efficiencies and continued cost effectiveness.

Secondly, a highly data centric or data driven approach to managing costs throughout the organization. Thirdly, driving services revenues by offering quality care in a cost effective manner which is an attractive proposition for patients, payors and physicians. This model has served us well in the past for many years. We are implementing it in all of our operations and we look forward to other acquisition situations where we can apply the same model to create value.

To get a little bit into the details of the operations and the company from the past, three things; First, from a financial perspective Q4 and full year revenues rose by 35% and 22% respectively with the inclusion of Brotman as of mid April of this past year and strong organic revenue growth at our existing Alta Hospitals combined to put us at about $470 million of revenue run rate. Operating income rose 38% and 70% with Q4 and full year respectively, reflecting our ability to organically grow revenues, disciplined revenue cycle management and closely managing medical and operating costs.

Adjusted EBITDA rose 26% and 33% respectively to $14.6 million and $53.4 million up from $11.6 million and $40.1 million for last year’s fourth quarter and fiscal year respectively. Q4 adjusted EBITDA was 14% higher than Q3 with very little by way of adjustments or non-recurring type items in that number. The small net loss for Q4 and fiscal year 2009 included approximately $9.7 million and $14.7 million respectively in non-recurring costs related to exiting our prior debt situation including terminating the related interest rate swaps that were required by the prior financing.

That number is also after the non-cash stock compensation expense of about $1 million for fiscal year 2009 and we now have the strongest balance sheet in our history with nearly $40 million of cash and investments, a $15 million undrawn revolver over 4.5 years until our primary borrowings mature and a net leverage ratio of just 2.6 which is down from 3.0 as of when we closed the high yield back in July of this past year. Of course, underpinnings of these favorable financial results are side by side with a strong host of operating statistics.

Almost all of the hospital census and operating metrics, some of this data can be found in the 10-K and all of it is we think a testament to a sound operating model being well executed and the management and leadership that executed it and most importantly to the high quality of care that is being provided at each of our facilities and medical groups, the leadership of our physicians, nursing and clinical management staff.

Despite a challenging employment picture pressuring commercial enrollment we were nevertheless able to increase our medical group segment profitably by just over $2.6 million this past year. In addition we generated a good number of new senior members as well as hospital admissions through our cost realization efforts, proving that our diversified model is working. As many of you who follow us know, we have devoted significant focus and efforts towards improving the operations of our medical groups. During fiscal 2009 in addition to the strong profitability improvement growth we were able to maintain a 76.8% medical cost ratio. That is an improvement from an already respectable 78.3% in the prior year. This through better reimbursement levels, tight control and appropriate utilization management.

Read the rest of this transcript for free on seekingalpha.com