Pediatric Services of America, Inc. Announces Fourth Quarter and Year End Results for Fiscal Year 2005

Business Wire, Dec 14, 2005

NORCROSS, Ga. -- Pediatric Services of America, Inc. (Nasdaq: PSAI) announces financial results for the fourth quarter and twelve months of fiscal year 2005.

The highlights of PSAI's results for the fiscal year ended September 30, 2005, include:

--Year-over-year revenue growth of six percent

--A record number of nursing hours staffed -- 3,169,000; approximately a six percent increase

--Record cash on hand of over $19.0 million, with cash collections of 105 percent of quarterly net revenue

--Fully compliant with Section 404 of the Sarbanes Oxley Act

For the twelve months ended September 30, 2005, net revenue increased six percent to $172,200,000 from $162,600,000 in the same period of fiscal year 2004. Net income was $5,666,000 for the twelve months ended September 30, 2005, as compared to net income of $4,012,000 for the twelve months ended September 30, 2004. Diluted net income per share was $0.79 in the twelve months ended September 30, 2005, as compared to $0.58 for the twelve months ended September 30, 2004.

For the fourth quarter of fiscal 2005, net revenue from continuing operations decreased two percent to $42,406,000 from $43,481,000 in the third quarter of fiscal year 2005. Consolidated net income was $1,559,000 in the fourth quarter of fiscal year 2005 as compared to $1,474,000 for the third quarter of fiscal year 2005. Diluted net income per share was $0.21 in the fourth quarter of fiscal year 2005 as compared to $0.20 in the third quarter of fiscal year 2005. The increases in net income and earnings per share were aided by an income tax benefit in the fourth quarter of approximately $120,000 due to the expected utilization of state tax net operating loss carryforwards and select state tax credits, related to the sale of the Pharmacy business.

"Despite the disruptions that Hurricanes Katrina and Rita dealt our operations in the fourth quarter, we were able to achieve our full-year earnings guidance," said Daniel J. Kohl, President and CEO of PSAI. "We had excellent cash collections throughout the year and our cash on hand was over $19,000,000 at year end. In addition, we staffed a record number of nursing hours this fiscal year.

"Of primary significance, subsequent to fiscal year-end, we completed the sale of our Pharmacy business to the Accredo Health Group, Inc. for approximately $72 million," continued Mr. Kohl. "With this strategic milestone accomplished, we will retire our outstanding debt and focus our energy on growing our Private Duty Nursing (PDN) and PPEC businesses through a combination of same store growth, acquisitions and start-ups, while improving the efficiency and profitability of our RTES business."

For fiscal year 2006, the Company expects that EPS from continuing operations will be in the range of $0.16 to $0.19 per diluted share. This guidance is inclusive of approximately $0.13 related to the expensing of stock options, and approximately $0.07 due to the write-off of deferred financing fees. In addition, PSAI expects to record EPS from discontinued operations in the range of $3.30 to $3.50, which includes the gain on the sale of the Pharmacy business, as well as certain retained obligations.

Conference Call

A conference call to discuss these results has been scheduled for Wednesday, December 14, 2005, 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 December 27, 2005, by dialing 800-642-1687. To connect with the replay of the conference call, please refer to the Pediatric Services of America, Inc. Earnings Call, Passcode: 3175000 #.

PSAI provides comprehensive pediatric home health care services through a network of over 100 branch offices in 19 states, including satellite offices and branch office start-ups. Through these offices PSAI 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 PSAI may be found on the Company's website at http://www.psakids.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 Pediatric Services of America, Inc. (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 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.