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PART I - FINANCIAL INFORMATION

Item 1. Financial statements

Earnings (loss) per common share attributable to Integrated Healthcare Holdings, Inc. stockholders
Basic $ (0.05 ) $ 0.05 $ (0.06 ) $ 0.04
Diluted $ (0.05 ) $ 0.05 $ (0.06 ) $ 0.04

INTEGRATED HEALTHCARE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in 000's, except par value)

(unaudited)

December 31, March 31,
2012 2012
ASSETS
Current assets:
Cash and cash equivalents $ 10,175 $ 11,829
Restricted cash 9 10
Accounts receivable, net of allowance for doubtful accounts of $23,656 and $18,201, respectively 59,035 53,599
Inventories of supplies, at cost 6,788 6,855
Due from governmental payers 6,710 5,183
Hospital quality assurance receivable 7,722 2,436
Prepaid insurance 741 366
Prepaid income taxes 2,238 892
Other prepaid expenses and current assets 8,719 8,339
Total current assets 102,137 89,509

Property and equipment, net 61,861 55,529
Debt issuance costs, net – 64
Total assets $ 163,998 $ 145,102

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Revolving line of credit $ 28,806 $ 14,000
Accounts payable 62,768 52,700
Accrued compensation and benefits 20,171 19,847
Accrued insurance retentions 11,846 14,377
Hospital quality assurance payable 7,225 –
Warrant liability, current 134 –
Due to governmental payers 414 –
Other current liabilities 4,043 3,242
Total current liabilities 135,407 104,166

Debt, noncurrent 46,350 45,000
Warrant liability, noncurrent 3,084 1,641
Capital lease obligations, net of current portion of $1,035 and $891, respectively 6,938 5,944
Total liabilities 191,779 156,751

Commitments, contingencies and subsequent events

Stockholders' deficiency:
Integrated Healthcare Holdings, Inc. stockholders' deficiency:
Common stock, $0.001 par value; 800,000 shares authorized; 255,307 shares issued and outstanding 255 255
Additional paid in capital 62,911 62,911
Accumulated deficit (86,092 ) (71,828 )
Total Integrated Healthcare Holdings, Inc. stockholders' deficiency (22,926 ) (8,662 )
Noncontrolling interests (4,855 ) (2,987 )
Total stockholders' deficiency (27,781 ) (11,649 )

Total liabilities and stockholders' deficiency $ 163,998 $ 145,102



The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.




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INTEGRATED HEALTHCARE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in 000's, except per share amounts)

(unaudited)



Three months ended
December 31, Nine months ended
December 31,
2012 2011 2012 2011

Patient service revenues (net of contractual allowances and discounts) $ 101,020 $ 123,033 $ 331,983 $ 306,398
Provision for bad debts (11,995 ) (9,034 ) (35,430 ) (25,851 )
Net patient service revenues 89,025 113,999 296,553 280,547

Operating expenses:
Salaries and benefits 54,391 56,101 160,669 162,499
Supplies 13,969 14,004 41,998 40,217
Other operating expenses 28,967 32,038 97,072 61,213
Depreciation and amortization 1,029 997 2,947 3,164
98,356 103,140 302,686 267,093

Operating income (loss) (9,331 ) 10,859 (6,133 ) 13,454

Other expense:
Interest expense, net (3,389 ) (2,446 ) (8,838 ) (7,768 )
Income from electronic health records incentive program 6,802 6,802
Gain (loss) on warrants (1,182 ) 256 (1,577 ) 39
(4,571 ) 4,612 (10,415 ) (927 )

Income (loss) before income tax provision (benefit) (13,902 ) 15,471 (16,548 ) 12,527
Income tax provision (benefit) (89 ) 2,812 (1,967 ) 2,012
Net income (loss) (13,813 ) 12,659 (14,581 ) 10,515
Net (income) loss attributable to noncontrolling interests (Note 9) 439 (117 ) 317 (336 )

Net income (loss) attributable to Integrated Healthcare Holdings, Inc. $ (13,374 ) $ 12,542 $ (14,264 ) $ 10,179

Per Share Data (Note 8):
Earnings (loss) per common share attributable to Integrated Healthcare Holdings, Inc. stockholders
Basic $ (0.05 ) $ 0.05 $ (0.06 ) $ 0.04
Diluted $ (0.05 ) $ 0.05 $ (0.06 ) $ 0.04
Weighted average shares outstanding
Basic 255,307 255,307 255,307 255,307
Diluted 255,307 256,839 255,307 256,848



The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.




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