PSAI Pediatric Services OF America (MM)

PSA HealthCare (Nasdaq: PSAI) announced today financial results for the third quarter of fiscal year 2006. Highlights of PSA's results for the third quarter ended June 30, 2006 include: -- Purchased, closed and began integration of select assets of Melmedica Children's Healthcare, Inc. -- Increased nursing hours staffed by nearly four percent, to 837,000 hours in the third quarter, from 806,000 hours in second quarter; and -- Continued strong cash collections For the third quarter of fiscal 2006, net revenue from continuing operations increased $1,143,000 to $44,645,000 as compared to $43,502,000 in the second quarter of fiscal year 2006. Net income was $624,000 in the third quarter of fiscal year 2006 as compared to $598,000 for the second quarter of fiscal year 2006. Diluted net income per share was $0.08 in both the second and third quarter of fiscal year 2006. "We are on schedule with the integration of the Melmedica Children's Healthcare operations and are rationalizing costs towards our internal pro-forma targets," said Daniel J. Kohl, President and CEO of PSA HealthCare. "In addition, our PDN nurse recruiting programs continued to have a positive impact on nursing hours staffed, and our PPEC business continues to perform well." "Despite the positive revenue trends exhibited in the PDN segment during the quarter, we must improve our PDN margins. These margins have declined slightly due to the amount of capital we have invested to recruit and integrate the nurses that we anticipate will help ensure long-term growth. This, coupled with the fact that the potential impact of the data breach on the Company in the fourth quarter cannot currently be quantified, does not allow us to reaffirm our previously provided earnings guidance for fiscal year 2006. It is important to remember that only $120,000 of pre-tax income represents a $0.01 of pre-tax earnings per share." Conference Call A conference call to discuss these results has been scheduled for Wednesday, August 9, 2006 at 11:00 a.m. ET. The dial-in number for all Participants is 800-374-1702. Note: To join the Q&A session, please press the asterisk followed by 1. If you are unable to listen to the live broadcast, replays of the conference call will be available until August 23, 2006 by dialing 800-642-1687. To connect with the replay of the conference call, please refer to the PSA HealthCare Earnings Call, Passcode: 2878473 #. PSA provides comprehensive pediatric home health care services through a network of over 100 branch offices in 20 states, including satellite offices and branch office start-ups. Through these offices, PSA provides a combination of services, including pediatric private duty nursing (PDN), pediatric day treatment centers (PPECs) and respiratory therapy and equipment services (RTES). Additional information on PSA may be found on the Company's website at http://www.psahealthcare.com. NOTE: This press release contains certain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) relating to future financial performance of PSA Healthcare (the "Company"). When used in this press release, the words "may," "targets," "goal," "will," "could," "should," "would," "believe," "feel," "expects," "confident," "anticipate," "estimate," "intend," "plan," "potential" and similar expressions may be indicative of forward-looking statements. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond the Company's control. The Company cautions that various factors, including the factors described hereunder and those discussed in the Company's other filings with the Securities and Exchange Commission, as well as general economic conditions, industry trends, the Company's anticipated uses of the proceeds from the sale of its Pharmacy Business, the integration of the Melmedica acquisition, the Company's ability to collect for equipment sold or rented, assimilate and manage previously acquired field operations, collect accounts receivable, including receivables related to acquired businesses and receivables under appeal, hire and retain qualified personnel and comply with and respond to billing requirements issues, including those related to the Company's billing and collection system, nurse shortages, competitive bidding, HIPAA regulations, Average Wholesale Price ("AWP") reductions, adverse litigation, workers' compensation losses, availability and cost of medical malpractice insurance and reduced state funding levels and nursing hours authorized by Medicaid programs, and the impact of changes resulting from the recently enacted Medicare Act, could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements of the Company made by or on behalf of the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of an unanticipated event. New factors emerge from time to time, and it is not possible for management to predict all of such factors. Further, management cannot assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. -0- *T PSA HEALTHCARE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Data) Three Months Ended June 30, March 31, 2006 2006 ------- ------- Net revenue $44,645 $43,502 Costs and expenses: Costs of goods and services (exclusive of depreciation shown separately below) 23,233 22,300 Other operating costs and expenses Administrative and marketing salaries, wages and benefits 9,340 9,031 Business insurance 1,718 1,966 Overhead 3,685 3,784 ------- ------- Other operating costs and expenses 14,743 14,781 Corporate, general and administrative Salaries, wages and benefits 3,516 3,329 Business insurance 68 59 Professional services 784 1,044 Overhead 746 675 ------- ------- Corporate, general and administrative 5,114 5,107 Provision for doubtful accounts 274 19 Depreciation and amortization 1,069 1,013 ------- ------- Total costs and expenses 44,433 43,220 ------- ------- Operating income 212 282 Other income 46 5 Interest income 656 626 Interest expense - (4) ------- ------- Income from continuing operations before income tax expense 914 909 Income tax expense 358 334 ------- ------- Income from continuing operations 556 575 Discontinued operations: Income from discontinued operations before income tax (benefit) expense - - Income tax benefit (2) - ---- -------- Income from discontinued operations 2 - ------- ------- Gain on disposal of discontinued operations before income tax (benefit) expense 38 Income tax (benefit) expense (66) 15 ---- -------- Gain on disposal of discontinued operations 66 23 ------- ------- Net income $ 624 $ 598 ======= ======= Income per share data: Basic net income per share data: Income from continuing operations $ 0.07 $ 0.08 Income from discontinued operations 0.00 - Gain on disposal of discontinued operations 0.01 0.00 ------- ------- Net income $ 0.08 $ 0.08 ======= ======= Diluted net income per share data: Income from continuing operations $ 0.07 $ 0.08 Income from discontinued operations 0.00 - Gain on disposal of discontinued operations 0.01 0.00 ------- ------- Net income $ 0.08 $ 0.08 ======= ======= Weighted average shares outstanding: Basic 7,492 7,372 ======= ======= Diluted 7,492 7,372 ======= ======= CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION June 30, March 31, 2006 2006 --------- -------- Cash and cash equivalents $ 53,116 $ 57,458 Accounts receivable, less allowance for doubtful accounts 26,115 26,102 Total stockholders' equity 102,264 100,918 *T -0- *T Respiratory Therapy, Equipment and Consolidated Nursing PPEC Services Total --------------------------------------- Three Months Ended June 30, 2006 Net revenue $27,582 $ 2,746 $14,317 $44,645 Costs of goods and services (exclusive of depreciation shown separately below) Nursing and therapist salaries, wages, benefits and supplies 18,228 145 265 18,638 Pharmacy product and supplies - - 1,845 1,845 Disposables/Supplies 12 10 2,728 2,750 ------- ------- ------- ------- Total cost of goods and services 18,240 155 4,838 23,233 Other operating costs and expenses Administrative and marketing salaries, wages and benefits 3,631 1,528 4,181 9,340 Business Insurance 1,112 105 501 1,718 Overhead 1,444 437 1,804 3,685 ------- ------- ------- ------- Total operating costs and expenses 6,187 2,070 6,486 14,743 Provision for doubtful accounts 59 (62) 277 274 Depreciation 45 46 811 902 ------- ------- ------- ------- Branch office contribution margin $ 3,051 $ 537 $ 1,905 $ 5,493 ======= ======= ======= ======= Three Months Ended March 31, 2006 Net revenue $26,404 $ 2,799 $14,299 $43,502 Costs of goods and services (exclusive of depreciation shown separately below) Nursing and therapist salaries, wages, benefits and supplies 17,341 126 322 17,789 Pharmacy product and supplies - - 1,763 1,763 Disposables/Supplies 12 15 2,721 2,748 ------- ------- ------- ------- Total cost of goods and services 17,353 141 4,806 22,300 Other operating costs and expenses Administrative and marketing salaries, wages and benefits 3,408 1,502 4,121 9,031 Business Insurance 1,302 106 558 1,966 Overhead 1,400 441 1,943 3,784 ------- ------- ------- ------- Total operating costs and expenses 6,110 2,049 6,622 14,781 Provision for doubtful accounts 106 (46) (41) 19 Depreciation 38 46 767 851 ------- ------- ------- ------- Branch office contribution margin $ 2,797 $ 609 $ 2,145 $ 5,551 ======= ======= ======= ======= Three Months Three Months Ended Ended June 30, March 31, 2006 2006 ------------ ------------ Total profit for reportable segments $ 5,493 $ 5,551 Corporate, general and administrative (5,114) (5,107) Corporate depreciation and amortization (167) (162) Other income 46 5 Interest income 656 626 Interest expense - (4) ------------ ------------ Income from continuing operations, before income tax expense $ 914 $ 909 ======= ======= *T