NYSE: HLTH 1.25 +0.00 +0% Volume: 111,412 June 20, 2018

Nobilis Health Reports Fourth Quarter and Full Year 2017 Financial Results

March 08, 2018

Full Year 2017 Total Revenues of $299.7 million Increased 4.9% Over Prior Year

HOUSTON, March 8, 2018 /PRNewswire/ -- Nobilis Health Corp. (NYSE American: HLTH) ("Nobilis" or the "Company") today announced financial and operational results for the fourth quarter and full year ended December 31, 2017.

Nobilis Health Corp.

Full Year and Fourth Quarter Highlights

  • Full year total revenue of $299.7 million, a 4.9% increase over prior year
  • Full year net income of $3.8 million, compared to prior year net income of $6.4 million; net income impacted by $6.2 million deferred tax asset adjustment
  • Full year Adjusted EBITDA1 of $41.4 million, an increase of 21.9% over the prior year Adjusted EBITDA1 of $34.0 million
  • Full year cash from operations of $26.4 million, compared to $1.6 million in the prior year
  • Fourth quarter total revenues of $86.8 million, compared to $101.9 million in the prior year
  • Fourth quarter net income of $3.6 million, compared to $9.4 million in the prior year; net income impacted by $6.2 million deferred tax asset adjustment
  • Fourth quarter Adjusted EBITDA1 of $22.6 million, an increase of 8.9% over the prior year Adjusted EBITDA1 of $20.8 million

"We are pleased to report 2017 year over year growth in revenue and Adjusted EBITDA of 4.9% and 21.9%, respectively," said Harry Fleming, Chief Executive Officer of Nobilis Health. "We made great progress reducing overall costs last year as evidenced by improvements in gross margins, operating income and net income, absent the impact of tax reform. We achieved this despite an estimated loss of $15-$20 million of revenues in the Houston market resulting from Hurricane Harvey. 2017 was a big year for us--we made significant progress on our in-network strategy with the acquisitions of Elite Surgical Affiliates, Hamilton Vein Center, DeRosa Medical and Mountain West Surgery Center. As we enter 2018, we will continue to focus on improving operational efficiency, increasing in-network revenues and expanding the continuum of care we offer our patients through enhanced alignment with primary care physician practices and growth of our vertically integrated services lines."

Fourth Quarter 2017 Financial Results

Total revenue for the fourth quarter of 2017 was $86.8 million, a 14.8% decrease over the same period in the prior year. Revenues in the fourth quarter of 2017 continued to be impacted by Hurricane Harvey (Houston, Texas is our largest market) and the shift away from low margin lab business. Total case volume decreased by 161 cases to 5,846 cases in the fourth quarter of 2017, as compared to the same period in the prior year. Fourth quarter 2017 revenue per case decreased to $14,848 as compared to prior year's revenue per case of $16,966.

Net income attributable to Nobilis for the fourth quarter of 2017 was $3.6 million, or $0.05 per fully diluted share, as compared to the prior period of $9.4 million, or $0.12 per fully diluted share. Fourth quarter net income was impacted by $6.2 million deferred tax asset write-down. Absent of this write-down, net income for the fourth quarter would have been $9.8 million.

Adjusted EBITDA1 for the fourth quarter of 2017, which adds back certain non-cash and non-recurring expenses, was $22.6 million, an increase of 8.9% over Adjusted EBITDA1 of $20.8 million for the same period in the prior year.

Total cash was $22.5 million, accounts receivable was $144.5 million and total debt was $120.9 million as of December 31, 2017, compared to $24.6 million, $125.0 million and $67.8 million, respectively, at December 31, 2016. Operating cash for the year was $26.4 million versus $1.6 million in 2016.

Full Year 2017 Financial Results

Total revenue for 2017 increased to $299.7 million, a 4.9% increase over the prior year. Total case volume decreased by 1,184 cases, or 5.9%, to 18,757 in 2017, compared to the prior year. Revenue per case increased to $15,979 for 2017, as compared to $14,329 in the prior year, reflecting the impact of higher acuity case mix.

Net income attributable to Nobilis for 2017 was $3.8 million, or $0.05 per fully diluted share, as compared to $6.4 million, or $0.08 per fully diluted share, in the same period the prior year. Absent the effects of recent tax reform legislation, net income for 2017 would have been $10.0 million.

Adjusted EBITDA1 for the year ended 2017, which adds back certain non-cash and non-recurring expenses, was $41.4 million, a 21.9% increase over Adjusted EBITDA1 of $34.0 million for the prior year.

Full Year 2018 Guidance

  • Revenue in the range of $345.0 million to $355.0 million
  • Adjusted EBITDA of $57.0 million to $62.0 million

Conference Call Information

Nobilis Health will host a conference call on March 8, 2018, at 8:00 a.m. CT (9:00 a.m. ET) to discuss its financial results for the fourth quarter and full year 2017. To participate in the conference call, please dial (866) 393-4306 in the U.S. and Canada, and +1 (734) 385-2616 internationally. Please enter conference ID 9329879. There will be a livestream of the conference call available at: http://investors.nobilishealth.com/investors/events-and-presentations/.

About Nobilis Health Corp.

Nobilis Health (www.Nobilishealth.com) is a full-service healthcare development and management company, with more than 30 locations across Texas and Arizona, including hospitals, ambulatory surgery centers, and multi-specialty clinics. In addition, Nobilis Health partners with more than 30 facilities across the country. Marketing nine independent brands, Nobilis Health deploys a unique patient acquisition strategy driven by proprietary, direct-to-consumer marketing technology, focusing on a specified set of procedures that are performed at its facilities by local physicians. Nobilis Health's business model connects patients with physicians and delivers the highest quality healthcare.

Forward Looking Statements

This press release contains certain forward-looking statements within the meaning of Canadian and United States securities laws, including the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements include all statements that do not relate solely to historical or current facts and may be identified by the use of words such as "may," "believe," "will," "expect," "project," "estimate," "anticipate," "plan" or "continue." These forward-looking statements are based on current plans and expectations and are subject to a number of risks, uncertainties and other factors which could significantly affect current plans and expectations and our future financial condition and results. These factors, which could cause actual results, performance and achievements to differ materially from those anticipated, include, but are not limited to our ability to successfully maintain effective internal controls over financial reporting; our ability to implement our business strategy, manage the growth in our business, and integrate acquired businesses; the risk of litigation and investigations, and liability claims for damages and other expenses not covered by insurance; the risk that payments from third-party payers, including government healthcare programs, may decrease or not increase as costs increase; adverse developments affecting the medical practices of our physician limited partners; our ability to maintain favorable relations with our physician limited partners; our ability to grow revenues by increasing case and procedure volume while maintaining profitability at the Nobilis Facilities; failure to timely or accurately bill for services; our ability to compete for physician partners, patients and strategic relationships; the risk of changes in patient volume and patient mix; the risk that laws and regulations that regulate payments for medical services made by government healthcare programs could cause our revenues to decrease; the risk that contracts are canceled or not renewed or that we are not able to enter into additional contracts under terms that are acceptable to us; and the risk of potential decreases in our reimbursement rates. The foregoing are significant factors we think could cause our actual results to differ materially from expected results. However, there could be additional factors besides those listed herein that also could affect us in an adverse manner.

We have not undertaken any obligation to publicly update or revise any forward-looking statements. All of our forward-looking statements speak only as of the date of the document in which they are made or, if a date is specified, as of such date. Subject to any mandatory requirements of applicable law, we disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any changes in events, conditions, circumstances or information on which the forward-looking statement is based. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing factors and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed by March 16, 2018, as updated by other filings with the Securities and Exchange Commission.

NOBILIS HEALTH CORP.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

(unaudited)



December 31, 2017


December 31, 2016

Assets




Current Assets:




Cash

$

22,536



$

24,572


Trade accounts receivable, net of allowance for bad debts of $2,598 and $750 at December 31, 2017 and 2016, respectively

144,522



124,951


Medical supplies

3,356



4,468


Prepaid expenses and other current assets

14,472



10,083


Total current assets

184,886



164,074


Property and equipment, net

51,559



36,723


Intangible assets, net

65,990



19,618


Goodwill

116,072



62,018


Deferred tax asset

9,951



21,652


Other long-term assets

2,580



1,350


Total Assets

$

431,038



$

305,435


Liabilities and Shareholders' Equity




Current Liabilities:




Trade accounts payable

$

24,312



$

22,184


Accrued liabilities

35,393



30,145


Current portion of capital leases

3,249



3,985


Current portion of long-term debt

3,766



2,220


Current portion of convertible promissory note

4,250




Current portion of warrant and stock option derivative liabilities



3


Other current liabilities

16,324



7,561


Total current liabilities

87,294



66,098


Lines of credit

18,000



15,000


Long-term capital leases, net of current portion

12,667



12,387


Long-term debt, net of current portion

90,619



48,323


Convertible promissory note, net of current portion

4,250



2,250


Warrant and stock option derivative liabilities, net of current portion

384



899


Other long-term liabilities

3,036



3,999


Total liabilities

216,250



148,956


Commitments and contingencies




Contingently redeemable noncontrolling interest

17,161



14,304


Shareholders' Equity:




Common shares, no par value, unlimited shares authorized, 78,183,802 and 77,805,014 shares issued and outstanding at December 31, 2017 and 2016, respectively




Additional paid in capital

225,790



222,240


Accumulated deficit

(75,245)



(79,042)


Total shareholders' equity attributable to Nobilis Health Corp.

150,545



143,198


Noncontrolling interests

47,082



(1,023)


Total shareholders' equity

197,627



142,175


Total Liabilities and Shareholders' Equity

$

431,038



$

305,435


 

NOBILIS HEALTH CORP.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share amounts)

(unaudited)



Three Months Ended
December 31,


Year Ended
December 31,


2017


2016


2017


2016









Revenues:








Patient and net professional fees

$

80,752



$

97,012



$

282,240



$

264,211


Contracted marketing revenues

3,045



2,592



8,208



13,346


Factoring revenues

3,004



2,313



9,269



8,187


Total revenues

86,801



101,917



299,717



285,744


Operating expenses:








Salaries and benefits

17,336



14,397



63,809



52,774


Drugs and supplies

13,167



17,341



48,876



57,011


General and administrative

27,615



41,170



124,024



126,848


Bad debt (recovery) expense

2,402



(385)



2,402



(385)


Depreciation and amortization

3,478



2,077



11,260



8,539


Total operating expenses

63,998



74,600



250,371



244,787


Corporate expenses:








Salaries and benefits

2,695



1,897



11,706



6,974


General and administrative

2,739



3,913



12,839



18,897


Legal expenses

506



645



2,149



4,755


Depreciation

87



84



343



293


Total corporate expenses

6,027



6,539



27,037



30,919


Income from operations

16,776



20,778



22,309



10,038


Other (income) expense:








Change in fair value of warrant and stock option derivative liabilities

(74)



(1,014)



(432)



(2,580)


Interest expense

2,009



1,884



6,007



3,999


Other (income) expense, net

(6,762)



41



(6,547)



(2,970)


Total other (income) expense

(4,827)



911



(972)



(1,551)


Income before income taxes and noncontrolling interests

21,603



19,867



23,281



11,589


Income tax expense (benefit)

12,372



$

6,253



13,000



4,487


Net income

9,231



13,614



10,281



7,102


Net income attributable to noncontrolling interests

5,635



$

4,247



6,484



653


Net income attributable to Nobilis Health Corp.

$

3,596



$

9,367



$

3,797



$

6,449


Net income per basic common share

$

0.05



$

0.12



$

0.05



$

0.08


Net income per fully diluted common share

$

0.05



$

0.12



$

0.05



$

0.08


Weighted average shares outstanding (basic)

77,994,408



77,070,944



77,852,752



76,453,128


Weighted average shares outstanding (fully diluted)

78,248,772



77,844,014



78,188,597



77,562,495










 

NOBILIS HEALTH CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



Years ended December 31,


2017


2016

CASH FLOWS FROM OPERATING ACTIVITIES:




Net income

$

10,281



$

7,102


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

11,603



8,832


Provision (recoupment) for bad debts, net

2,402



(385)


Share-based compensation

2,706



6,192


Change in fair value of warrant and stock option derivative liabilities

(432)



(2,580)


Deferred income taxes

11,701



3,383


Impairment charges

1,500



688


Gain on sale of property and equipment



(265)


Gain on derecognition of liabilities through settlement

(3,711)




Loss (earnings) from equity method investment

108



(938)


Amortization of deferred financing fees

734



1,034


Changes in operating assets and liabilities, net of assets acquired and liabilities assumed:




Trade accounts receivable

(14,737)



(28,517)


Medical supplies

1,407



216


Prepaid expenses and other current assets

(4,042)



(7,106)


Other long-term assets

(219)



(6)


Trade accounts payable and accrued liabilities

5,010



11,031


Other current liabilities

2,400



1,293


Other long-term liabilities

(321)



508


Distributions from equity investments



1,085


Net cash provided by operating activities

26,390



1,567






CASH FLOWS FROM INVESTING ACTIVITIES:




Purchase of property and equipment

(5,152)



(5,541)


Purchase of equity method investment



(609)


Note receivable, net



150


Acquisitions, net of cash acquired

(62,268)



(17,239)


     Net cash used for investing activities

(67,420)



(23,239)






CASH FLOWS FROM FINANCING ACTIVITIES:




Distributions to noncontrolling interests

(2,646)



(7,059)


Proceeds from exercise of stock options



2,322


Proceeds from exercise of stock warrants



130


Payments on capital lease obligations

(4,467)



(3,613)


Proceeds from line of credit

3,000



23,213


Payments from line of credit



(11,213)


Proceeds from debt

50,000



58,940


Payments on debt

(2,013)



(29,713)


Deferred financing fees

(4,880)



(2,429)


     Net cash provided by financing activities

38,994



30,578






NET (DECREASE) INCREASE IN CASH

(2,036)



8,906


CASH — Beginning of year

24,572



15,666


CASH — End of year

$

22,536



$

24,572


 

NOBILIS HEALTH CORP.

RECONCILIATION ON NON-GAAP FINANCIAL MEASURES

(in thousands)

(unaudited)












Three Months Ended
December 31,


Twelve Months Ended
December 31,



2017


2016


2017


2016










Net income attributable to Nobilis Health Corp.


$

3,596



$

9,367



$

3,797



$

6,449


Interest


2,009



1,884



6,007



3,999


Income taxes


12,372



$

6,253



13,000



4,487


Depreciation and amortization


3,565



2,161



11,603



8,832


EBITDA


$

21,542



$

19,665



$

34,407



$

23,767











Non-cash compensation expenses


$

(68)



$

966



$

2,705



$

6,191


Change in fair value of warrant and stock option derivative liabilities


(74)



(1,014)



(432)



(2,580)


Acquisition expenses


1,530



496



3,294



2,315


Non-recurring expenses


(296)



674



1,441



4,292


Adjusted EBITDA1


$

22,634



$

20,787



$

41,415



$

33,985



1 Use of Non-GAAP Financial Measures

Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, non-cash compensation expenses, change in fair value of warrant and stock option derivative liabilities, acquisition expenses, bargain purchase gain and non-recurring expenses. Adjusted EBITDA should not be considered a measure of financial performance required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA is an analytical indicator used by management and the health care industry to evaluate company performance, allocate resources and measure leverage and debt service capacity. Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA is not a measurement determined in accordance with U.S. GAAP and is thus susceptible to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies.

Contact Information:

Tuan Tran
Vice President, Investor Relations
IR@nobilishealth.com
713-355-8614

 

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SOURCE Nobilis Health Corp.