Nobilis Health Corp (NRTSF)

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Nobilis Health Reports First Quarter 2018 Financial Results

HOUSTON, May 8, 2018 /PRNewswire/ -- Nobilis Health Corp. (NYSE American: HLTH) (NEO: HLTH) ("Nobilis" or the "Company") today announced its financial results for the first quarter ended March 31, 2018.

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First Quarter Highlights

First quarter Total Revenues were $64.5 million, a 5.6% decrease over the prior year period of $68.3 million; Ness Loss for the first quarter was $3.9 million, compared to a loss of $2.4 million in the prior corresponding period
First quarter Adjusted EBITDA1 increased to $5.1 million, a 152.7% increase compared to the prior year period of $2.0 million
Gross Margin in the first quarter increased by 2.8% to $4.3 million
Total case volumes in the first quarter increased by 19.0% to 5,275 cases
Total Operations Expense per case in the first quarter decreased by 21.2%
"Despite a reduction in top line revenues, we continued to see significant improvements in our margins and key efficiency metrics. Gross Margin edged up by nearly 60 basis points, Loss from Operations improved by 12.3%, and Total Operating Expense per case declined by 21.2%, year-over-year," said Harry Fleming, CEO.

"Total case volume for the first quarter was impacted by lower than anticipated case volumes from our physician partners offset by gains from higher than budgeted case volumes driven by our marketing efforts. The first quarter also marked the first full quarter of operations for our in-network Elite entities, acquired in the fourth quarter of 2017. Integration is nearing completion, and physician activity has remained strong from Q4 into Q1, which we attribute to mutually collaborative attitudes, a strong physician syndication, and the success of our marketing platform among our new physicians. Following full integration of Elite into the Nobilis system, we will begin looking for similar, in-network acquisition opportunities like Elite that can benefit from Nobilis' marketing operations."

First Quarter 2018 Results
Total revenues for the first quarter of 2018 were $64.5 million, a 5.6% decrease from $68.3 million in the prior year period. Total case volume increased by 844 cases to 5,275 cases, or 19.0%, compared to 4,431 cases in the prior corresponding period. The decrease in total revenue was primarily due to the loss of two key physician groups as well as the discontinuation of the Company's Lab Testing ancillary service-line. Lab Testing represented approximately $5.5 million dollars of revenue in Q1 of 2017 which did not re-occur in Q1 of 2018.

Revenue per case dipped to $12,219 in the first quarter due to the discontinuation of the Company's Lab Testing ancillary, as well as a higher proportion of Nobilis' case mix being derived from in-network sources, the growth of which has been a longstanding goal of management.

Net loss attributable to Nobilis for the first quarter of 2018 was $3.9 million, or $0.05 per fully diluted share, compared to a net loss of $2.4 million, or $0.03 per fully diluted share, in the first quarter of 2017.

Adjusted EBITDA1 for the first quarter of 2018, which adds back certain non-cash and non-recurring expenses, was $5.1 million, an increase of 152.7% over $2.0 million in the same quarter last year.

Total cash was $23.2 million and accounts receivable was $133.4 million as of March 31, 2018, compared to $22.5 million and $144.5 million, respectively, at December 31, 2017.

Full Year 2018 Guidance

Revenue in the range of $345.0 million to $355.0 million
Adjusted EBITDA in the range of $57.0 million to $62.0 million
Conference Call Information
Nobilis Health will host a conference call on May 8th, 2018, at 8:00 a.m. CDT (9:00 a.m. EDT) to discuss its financial results for the first quarter 2018. To participate in the conference call, please dial [phone] in the U.S. and Canada, and [phone] internationally. Please enter conference ID 5275098. 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 on March 12, 2018, as updated by other filings with the Securities and Exchange Commission.



Nobilis Health Corp.Consolidated Balance SheetsMarch 31, 2018 and December 31, 2017(in thousands, except share amounts)(unaudited)





March 31, 2018

December 31, 2017

Assets



Current Assets:



Cash

$ 23,239

$ 22,536

Trade accounts receivable, net of allowance of $3,629 and $2,598 at March 31, 2018 and December 31, 2017, respectively

133,362

144,522

Medical supplies

3,146

3,356

Prepaid expenses and other current assets

15,126

14,472

Total current assets

174,873

184,886

Property and equipment, net

49,035

51,559

Intangible assets, net

64,340

65,990

Goodwill

116,072

116,072

Deferred tax asset

10,933

9,951

Other long-term assets

2,580

2,580

Total Assets

$ 417,833

$ 431,038

Liabilities and Shareholders' Equity



Current Liabilities:



Trade accounts payable

$ 18,680

$ 24,312

Accrued liabilities

33,724

35,393

Current portion of capital leases

3,040

3,249

Current portion of long-term debt

3,766

3,766

Current portion of convertible promissory notes

6,750

4,250

Other current liabilities

13,786

16,324

Total current liabilities

79,746

87,294

Lines of credit

24,000

18,000

Long-term capital leases, net of current portion

12,025

12,667

Long-term debt, net of current portion

89,021

90,619

Convertible promissory notes, net of current portion

1,750

4,250

Warrant and stock option derivative liabilities

445

384

Other long-term liabilities

2,927

3,036

Total liabilities

209,914

216,250

Commitments and Contingencies



Contingently redeemable noncontrolling interest

16,947

17,161

Total shareholders' equity



Common shares, no par value, unlimited shares authorized, 78,183,802 shares issued and outstanding at March 31, 2018 and December 31, 2017

—

—

Additional paid in capital

226,624

225,790

Accumulated deficit

(79,101)

(75,245)

Total shareholders' equity attributable to Nobilis Health Corp.

147,523

150,545

Noncontrolling interests

43,449

47,082

Total shareholders' equity

190,972

197,627

Total Liabilities and Shareholders' Equity

$ 417,833

$ 431,038



Nobilis Health Corp.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)





Three Months EndedMarch 31,


2018

2017




Revenues:



Patient and net professional fees

$ 63,513

$ 64,901

Contracted marketing revenues

135

1,379

Factoring revenues

809

2,022

Total revenues

64,457

68,302

Operating expenses:



Salaries and benefits

16,227

15,321

Drugs and supplies

9,915

12,744

General and administrative

28,323

33,688

Bad debt expense, net

1,031

—

Depreciation and amortization

4,631

2,338

Total operating expenses

60,127

64,091

Corporate expenses:



Salaries and benefits

2,611

2,439

General and administrative

3,545

4,253

Legal expenses

830

571

Depreciation

94

83

Total corporate expenses

7,080

7,346

Loss from operations

(2,750)

(3,135)

Other expense (income):



Change in fair value of warrant and stock option derivative liabilities

61

(375)

Interest expense

2,885

1,255

Other income, net

(1,851)

(258)

Total other expense (income)

1,095

622

Loss before income taxes and noncontrolling interests

(3,845)

(3,757)

Income tax benefit, net

(704)

(1,551)

Net loss

(3,141)

(2,206)

Net income attributable to noncontrolling interests

711

192

Net loss attributable to Nobilis Health Corp.

$ (3,852)

$ (2,398)

Net loss per basic common share

$ (0.05)

$ (0.03)

Net loss per fully diluted common share

$ (0.05)

$ (0.03)

Weighted average shares outstanding (basic)

78,183,802

77,805,014

Weighted average shares outstanding (fully diluted)

78,183,802

77,805,014



Nobilis Health Corp.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)




Three Months Ended March 31,


2018

2017

CASH FLOWS FROM OPERATING ACTIVITIES:



Net loss

$ (3,141)

$ (2,206)

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



Depreciation and amortization

4,725

2,421

Provision for bad debts

1,031

—

Share-based compensation

835

1,264

Change in fair value of warrant and stock option derivative liabilities

61

(375)

Deferred income taxes

(982)

(1,831)

Loss on sale of property and equipment

61

—

Loss from equity method investment

—

61

Amortization of deferred financing fees

340

109

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



Trade accounts receivable

10,129

22,966

Medical supplies

210

802

Prepaid expenses and other current assets

(656)

(2,514)

Trade accounts payable and accrued liabilities

(7,301)

(5,170)

Other current liabilities

(2,537)

1,194

Other long-term liabilities

(110)

(189)

Net cash provided by operating activities

2,665

16,532

CASH FLOWS FROM INVESTING ACTIVITIES:



Purchase of property and equipment

(641)

(3,506)

Proceeds on sale of property and equipment

22

—

Acquisitions, net of cash acquired

—

(7,883)

Net cash used for investing activities

(619)

(11,389)

CASH FLOWS FROM FINANCING ACTIVITIES:



Distributions to noncontrolling interests

(4,554)

(1,200)

Payments on capital lease obligations

(851)

773

Proceeds from line of credit

6,000

3,000

Payments on debt

(1,938)

(656)

Deferred financing fees

—

(466)

Net cash (used for) provided by financing activities

(1,343)

1,451

NET INCREASE IN CASH

703

6,594

CASH — Beginning of period

22,536

24,572

CASH — End of period

$ 23,239

$ 31,166



Nobilis Health Corp.

Reconciliation of Non-GAAP Financial Measures

(in thousands)





Three Months Ended March 31,


2018

2017




Net income (loss) attributable to Nobilis Health Corp.

(3,852)

(2,398)

Interest

2,885

1,255

Income tax expense (benefit), net

(704)

(1,551)

Depreciation and amortization

4,725

2,421

EBITDA

3,054

(273)




Non-cash compensation expenses

835

1,264

Change in fair value of warrant and stock option derivative liabilities

61

(375)

Acquisition expenses

829

634

Non-recurring expenses

307

763

Adjusted EBITDA1

5,086

2,013



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, 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:
Joel Lehr
Assistant Vice President, Corporate Communications
[e-mail]346-207-6342


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SOURCE Nobilis Health Corp.