First Choice Healthcare Solutions Inc (FCHS)

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First Choice Healthcare Solutions Reports 2017 Results and Update on Strategic Partnership with Steward Health Care

MELBOURNE, Fla., April 03, 2018 (GLOBE NEWSWIRE) -- First Choice Healthcare Solutions, Inc. (OTCQB:FCHS) ("First Choice" or the "Company"), a fully integrated, non-physician-owned, publicly traded healthcare delivery platform providing a full life cycle of orthopedic and spine care for patients through diagnosis, treatment and recovery, today reported its financial results for the year ended December 31, 2017.

Chris Romandetti, President and CEO of First Choice, stated, “2017 was a transformative year for First Choice, having achieved several significant milestones in our business that have successfully laid the foundation for future growth. Most notable is our strategic partnership with Steward Health Care (“Steward") which provides us with a large geographic opportunity to rollout our unique delivery platform to Steward’s nationwide hospital network. Additionally, Steward’s $7.5 million investment in First Choice as part of this relationship demonstrates their confidence in our business model and commitment to our partnership going forward. Since the closing, we have been working closely on the integration of the FCHS platform into Steward’s network.”

Recent Operational Highlights

Closed strategic partnership with Steward, the largest private hospital operator in the United States, to expand the FCHS business model into Steward’s national footprint.
Received investment of $7.5 million from Steward in exchange for 5 million shares of FCHS stock.
Acquired an additional 25% ownership interest in Crane Creek Surgery Center (“Crane Creek”) bringing its total ownership interest to 65%.
Assumed management responsibility of Crane Creek and appointed an experienced senior healthcare executive and administrator, Luis Allende-Ruiz, to lead operations.
Strengthened management team with the hiring of Steve Ryland, Director of Physical/Occupational Therapy and Michael Lamb, Director of Ancillary Services.
Appointed Sheila Schweitzer to the Board of Directors.
Financial Results for Full Year 2017
Total revenue was $28.7 million for the full year 2017, a decrease of approximately 2.0% from $29.5 million the prior year. Net patient service revenue was $26.5 million of total revenue in 2017, and rental revenue was $2.3 million. This is compared to net patient service revenue of $27.0 million and rental revenue of $2.4 million for the full year 2016.

Net loss from operations was $4.4 million for the full year 2017, compared to net income from operations of $0.1 million for the prior year.

Non-GAAP adjusted EBITDA was $2.5 million for the full year 2017, compared to $3.3 million for the prior year. *

In the year ended 2017, the Company changed its estimates of the allowance for doubtful accounts related to its customers, primarily based on historical experience of write-offs of outstanding accounts receivable. This change resulted in an increase compared to the year ended December 31, 2016 to the allowance for doubtful accounts by approximately $3.2 million in the year ended 2017.

Conference Call and Webcast Information
The Company will host a conference call with the investment community on Tuesday, April 3rd at 11:00 a.m. Eastern Time featuring remarks by Chris Romandetti, President and CEO of First Choice, and Phillip Keller, CFO of First Choice.

To access the call, please use the following information:
Date: Tuesday, April 3, 2018
Time: 11:00 a.m. EDT, 8:00 a.m. PDT
Toll-free dial-in number: [phone]
International dial-in number: [phone]
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Julie Hardesty at 321-725-0090 extension 288.

The conference call will be broadcast live and available for replay at https://www.webcaster4.com/Webcast/Page/1527/25257 and via the investor relations section of the Company's website at http://ir.myfchs.com/.

(*) Use of Non-GAAP Financial Information
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use non-GAAP EBITDA. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We use non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that this non-GAAP financial measure provides meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results. We believe that both management and investors benefit from referring to this non-GAAP financial measure in assessing our performance and when planning, forecasting, and analyzing future periods. This non-GAAP financial measure also facilitates management's internal comparisons to our historical performance and liquidity. We believe this non-GAAP financial measure is useful to investors both because they allow for greater transparency with respect to a key metric used by management in its financial and operational decision-making. For more information on this non-GAAP financial measure, please see the table captioned "Reconciliation of non-GAAP Adjusted EBITDA Performance".

Safe Harbor Statement
Certain information set forth in this news announcement may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of First Choice Healthcare Solutions, Inc. Such forward-looking statements are based on current expectations, estimates and projections about the Company's industry, management beliefs and certain assumptions made by its management. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Information concerning factors that could cause the Company's actual results to differ materially from those contained in these forward-looking statements can be found in the Company's periodic reports on Form 10-K and Form 10-Q, and in its Current Reports on Form 8-K, filed with the Securities and Exchange Commission. Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise to reflect future events or circumstances or reflect the occurrence of unanticipated events.

About First Choice Healthcare Solutions, Inc.
Headquartered in Melbourne, Florida, First Choice Healthcare Solutions (FCHS) is implementing a defined growth strategy aimed at expanding its network of non-physician-owned medical centers of excellence, which concentrate on treating patients in the following specialties: Orthopaedics, Spine Surgery, Interventional Pain Management, Physical Therapy and other ancillary and diagnostic services in key expansion markets throughout the U.S. Serving Florida's Space Coast, the Company's flagship integrated platform currently administers over 100,000 patient visits each year and is comprised of First Choice Medical Group, The B.A.C.K. Center and Crane Creek Surgery Center. For more information, please visit http://www.myfchs.com, http://www.myfcmg.com, http://www.thebackcenter.net and http://www.cranecreeksurgerycenter.com.

Contact Information:
First Choice Healthcare Solutions, Inc.
Julie Hardesty
Phone: [phone] ext. 288
Email: [e-mail]

Investor Contact:
Valter Pinto / Allison Soss
KCSA Strategic Communications
Phone: [phone]
Email: [e-mail]

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2017 AND 2016
2017 2016
ASSETS
Current assets
Cash $ 2,015,534 $ 4,593,638
Accounts receivable, net 8,699,714 9,536,830
Employee loans 1,155,109 820,341
Prepaid and other current assets 676,931 422,512
Total current assets 12,547,288 15,373,321

Property, plant and equipment, net 2,295,162 2,544,816

Other assets
Total other assets 3,908,781 4,227,957

Total assets $ 18,751,232 $ 22,146,094


LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued expenses $ 2,379,404 $ 2,083,231
Accounts payable, related party 251,588 251,588
AMT tax payable 223,899 181,029
Line of credit, short term 1,540,024 1,539,524
Notes payable, current portion 29,552 519,452
Unearned revenue 44,607 26,936
Deferred rent, short term portion 105,171 237,923
Total current liabilities 4,574,245 4,839,683

Long term liabilities:
Deposits held 41,930 41,930
Notes payable, long term portion 60,146 14,531
Deferred rent, long term portion 2,589,568 2,293,594
Total long term liabilities 2,691,644 2,350,055

Total liabilities 7,265,889 7,189,738

Equity
Preferred stock - -
Common stock 27,357 24,631
Additional paid in capital 25,185,487 24,020,610
Treasury stock (249,265 ) -
Accumulated deficit (13,989,018 ) (10,100,534 )
Total stockholders' equity attributable to FCHS 10,974,561 13,944,707
Non-controlling interest (note 12) 510,782 1,011,649
Total equity 11,485,343 14,956,356
Total liabilities and equity $ 18,751,232 $ 22,146,094


FIRST CHOICE HEALTHCARE SOLUTIONS, INC
CONSOLIDATED STATEMENTS OF OPERATIONS

For the year ended December 31,
2017 2016
Revenues:
Patient Service Revenue $ 30,678,449 $ 27,978,106
Allowance for bad debts (4,209,820 ) (924,916 )
Net patient service revenue less provision for bad debts 26,468,629 27,053,190
Rental Revenue 2,275,418 2,410,892
Total Revenue 28,744,047 29,464,082

Operating expenses:
Salaries and benefits 16,291,238 13,696,590
Other operating expenses 10,327,434 9,271,684
General and administrative 5,593,705 5,534,446
Depreciation and amortization 941,836 821,709
Total operating expenses 33,154,213 29,324,429

Net (loss) income from operations (4,410,166 ) 139,653

Other income (expense):
Gain on sale of property and improvements - 9,207,846
Miscellaneous income (expense) 120,799 278,358
Amortization financing costs - (15,654 )
Interest expense, net (99,984 ) (343,161 )
Total other income 20,815 9,127,389

Net (loss) income before provision for income taxes (4,389,351 ) 9,267,042

Income taxes (benefit) - -

Net (loss) income (4,389,351 ) 9,267,042

Non-controlling interest (note 10) 500,867 (92,659 )

NET (LOSS) INCOME ATTRIBUTABLE TO FIRST CHOICE HEALTHCARE SOLUTIONS, INC. $ (3,888,484 ) $ 9,174,383

Net (loss) income per common share, basic $ (0.15 ) $ 0.38

Net (loss) income per common share, diluted $ (0.15 ) $ 0.37

Weighted average number of common shares outstanding, basic 26,658,926
23,843,239

Weighted average number of common shares outstanding, diluted 26,658,926 24,643,239


FIRST CHOICE HEALTHCARE SOLUTIONS, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS

For the year ended December 31,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) Income $ (4,389,351 ) $ 9,267,042
Adjustments to reconcile net (loss) income to cash used in operating activities:
Depreciation and amortization 941,836 821,709
Amortization of financing costs - 15,654
Bad debt expense 4,209,820 924,916
Gain on sale of property - (9,207,846 )
Stock based compensation 1,167,603 1,276,681
Changes in operating assets and liabilities:
Accounts receivable (3,372,704 ) (3,837,852 )
Prepaid expenses and other current assets (266,819 ) (105,739 )
Restricted funds - 359,414
Employee loans (334,768 ) (148,048 )
Accounts payable and accrued expenses 296,173 (2,502,528 )
Income taxes payable 42,870 -
Settlement payable - (600,000 )
Deposits 302 (25,502 )
Deferred rent 132,752 271,508
Unearned income 17,671 (15,768 )
Net cash used in operating activities (1,554,615 ) (3,506,359 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property - 15,113,497
Purchase of equipment (330,439 ) (254,627 )
Net cash (used in) provided by investing activities (330,439 ) 14,858,870

CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayments) of advances - (43,082 )
Proceeds from notes payable 86,713 -
Proceeds from line of credit 500 372,636
Payment to acquire previously issued warrants - (600,000 )
Purchase of treasury stock (249,265 ) -
Net payments on notes payable (530,998 ) (8,083,425 )
Net cash provided by (used in) financing activities (693,050 ) (8,353,871 )

Net increase in cash, cash equivalents and restricted cash (2,578,104 ) 2,998,640
Cash and cash equivalents, beginning of period 4,593,638 1,594,998

Cash, cash equivalents and restricted cash, end of period $ 2,015,534 $ 4,593,638
FIRST CHOICE HEALTHCARE SOLUTIONS, INC
RECONCILIATION OF NON-GAAP ADJUSTED EBITDA PERFORMANCE

For the year ended December 31,
2017 2016
NET (LOSS) INCOME ATTRIBUTABLE TO FIRST CHOICE HEALTHCARE SOLUTIONS $ (3,888,484 ) $ 9,174,383
Interest 99,984 343,161
Taxes - -
Depreciation and Amortization 941,836 837,363
Bad Debt 4,209,820 924,916
Stock Based Compensation 1,144,147 1,276,681
Gain on Sale of Building - (9,207,846 )
Adjusted EBITDA $ 2,507,303 $ 3,348,658