Prospect Medical Holdings Reports Fiscal 2008 Fourth Quarter and Year-End Financial Results

Business Wire, Dec 29, 2008

Conference Call Scheduled for Thursday, January 8, at 2:00 pm ET/11:00 am PT

Q4 FY 2008 Highlights Compared to Q4 FY 2007

* Revenues increased 31% to $87.7 million from $67.0 million

* Operating income increased to $8.7 million compared to an operating loss of $27.2 million, following that year's $27.5 million (continuing operations portion) non-cash, pre-tax write down of goodwill and other intangibles at Prospect's legacy IPA operation

* Net income attributable to common stockholders of $6.5 million, or $0.32 per diluted share, compared to a net loss attributable to common stockholders of $34.4 million, or $3.25 per diluted share, which included the above-referenced write down

* Adjusted EBITDA of $11.6 million for Q4 2008

FY 2008 Full Year Highlights Compared to FY 2007

* Revenues increased 103% to $329.5 million from $162.6 million

* Operating income of $23.7 million compared to an operating loss of $27.5 million, following the above-referenced write down

* Net loss attributable to common stockholders of $2.6 million, which included a one-time $8.3 million non-cash loss on debt extinguishment, $3.1 million gain on interest rate swap arrangements and $6.8 million non-cash dividend to preferred stockholders, compared to a net loss attributable to common stockholders of $34.6 million

* Adjusted EBITDA of $40.1 million for fiscal 2008

LOS ANGELES -- Prospect Medical Holdings, Inc. (NYSE Alternext US: PZZ) ("Prospect"), which owns and operates four community-based hospitals and manages the medical care of approximately 194,000 HMO enrollees in southern California, today announced financial results for its fiscal 2008 fourth quarter and year ended September 30, 2008. These results include the operations of the ProMed Entities ("ProMed"), acquired on June 1, 2007, and Alta Hospitals System ("Alta"), acquired on August 8, 2007, since their acquisition dates. Results for all periods exclude the Antelope Valley entities, since their sale on August 1, 2008 and pre-sale results have been classified as discontinued operations in the consolidated financial statements.

The Company continues to focus on improving operating efficiencies, rationalizing costs and strengthening its financial position and credit profile. Cash and equivalents at fiscal year end were $33.6 million, an increase of approximately $11.5 million over the prior year. The Company continues to meet all of its debt obligations, including making additional principal payments, as it works down its acquisition-related debt.

CONSOLIDATED RESULTS OVERVIEW

Consolidated revenues for the fourth quarter of fiscal 2008 rose 31.0% to $87.7 million, from $67.0 million in the same period last year, due primarily to an increased contribution of approximately $20.1 million from Alta. Consolidated revenues for all of fiscal 2008 rose 102.7% to $329.5 million, from $162.6 million last year, due primarily to an increased contribution of approximately $111.1 million from Alta and an increased contribution of approximately $60.8 million from ProMed.

Operating income for the fiscal 2008 fourth quarter was $8.7 million, compared to an operating loss of $27.2 million in the same period last year. Operating income for fiscal 2008 was $23.7 million, compared to an operating loss of $27.5 million for fiscal 2007.

Net income attributable to common stockholders for the fourth quarter of fiscal 2008 was $6.5 million, or $0.32 per diluted share, on approximately 20.6 million diluted shares outstanding, as compared to a net loss attributable to common stockholders of $34.4 million, or $3.25 per diluted share, in the fourth quarter of fiscal 2007, on approximately 10.6 million diluted shares outstanding. Net income for the 2008 fourth quarter included a loss on interest rate swap arrangements of approximately $976,000 as compared to a loss of approximately $868,000 in the prior year period. The fiscal 2008 quarter included preferred stock dividends of approximately $962,000, as compared to preferred stock dividends of approximately $1.1 million in the fiscal 2007 quarter.

For fiscal 2008, the net loss attributable to common stockholders was approximately $2.6 million, or $0.20 per basic and diluted share, on approximately 12.9 million weighted average shares outstanding, as compared to a net loss attributable to common stockholders for fiscal 2007 of $34.6 million, or $4.08 per basic and diluted share, on approximately 8.5 million weighted average shares outstanding. The net loss for fiscal 2008 included a one-time $8.3 million non-cash loss on debt extinguishment and a gain on interest rate swap arrangements of approximately $3.1 million, as compared to a loss of approximately $868,000 in the prior year period. For fiscal 2008, the impact of recording preferred stock dividends amounted to approximately $6.8 million, as compared to approximately $1.1 million in fiscal 2007.

All accrued preferred stock dividends were forgiven during August 2008, in connection with the conversion of preferred stock to common stock.