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: (866) 682-6100
International dial-in number: (404) 267-0373

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 www.myfchs.comwww.myfcmg.comwww.thebackcenter.net and www.cranecreeksurgerycenter.com.

Contact Information:
First Choice Healthcare Solutions, Inc.
Julie Hardesty
Phone: 321-725-0090 ext. 288
Email: IR@myfchs.com

Investor Contact:
Valter Pinto / Allison Soss
KCSA Strategic Communications
Phone: +1 (212) 896-1254/+1 (212) 896-1267
Email: FCHS@KCSA.com

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    
                                   

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