University General Health System, Inc. 2012 Revenue Increases 59% to $113.2 Million

University General Health System, Inc. 2012 Revenue Increases 59% to $113.2 
Million 
Shareholders' Equity Improves by $11.3 Million in Year Ended December
31, 2012; Company Reschedules Investor Conference Call to October 22,
2013 
HOUSTON, TX -- (Marketwired) -- 10/16/13 --  University General
Health System, Inc. (OTCQB: UGHS), a diversified, integrated
multi-specialty health delivery system, today announced its 2012
operating results, including a 59% improvement in total revenue, an
increase in shareholders' equity of $11.3 million, and an increase in
assets of $60.3 million. The Company will file its annual report on
Form 10-K with the SEC on Monday, October 21, 2013.  
The Company has rescheduled its investor conference call, which will
now be held at 11:15 EDT on Tuesday, October 22, 2013, in order to
allow shareholders ample time to review the Form 10-K prior to the
call. Details for accessing the conference call are provided below. 
FY2012 HIGHLIGHTS  


 
--  Net patient revenue increased 52% to approximately $101.8 million,
    compared with approximately $67 million in the year ended December 31,
    2011. The improvement in revenue was driven by increases in
    admissions, surgeries and adjusted patient days of 6.0%, 7.9% and
    9.5%, respectively, relative to prior-year levels.
    
    
--  Resident revenue for the senior living business segment approximated
    $7.7 million, and support services revenue totaled $2.5 million. The
    Company's senior living properties achieved an overall occupancy rate
    of 93.1% in the year ended December 31, 2012. This was higher than the
    senior living industry's national average occupancy of approximately
    89% for combined properties, as reported by the National Investment
    Center for the Senior Housing and Care Center for the fourth quarter
    2012.
    
    
--  Total revenue rose 59% to approximately $113.2 million, compared with
    approximately $71.2 million in 2011. Total revenue in 2012 included
    partial-year revenue contributions from the Company's UGH-Dallas
    hospital, which was acquired on December 14, 2012, and other hospital
    outpatient departments ("HOPDs") that were acquired during the course
    of the year.
    
    
--  Patient revenue from Medicare and Medicaid, after contractual
    adjustments, accounted for approximately 33.0% and 37.4% of total
    patient revenue, and patient revenue from managed care contracts and
    other third-party payors accounted for approximately 75.0% and 58.9%
    of patient revenue, before provision for doubtful accounts, in 2012
    and 2011, respectively.
    
    
--  Total assets increased 53% to approximately $174.8 million as of
    December 31, 2012, compared with approximately $114.5 million at
    December 31, 2011.
    
    
--  Shareholders' equity improved by $11.3 million, from a negative ($0.6
    million) at December 31, 2011 to approximately $10.7 million as of
    December 31, 2012.
    
    
--  Adjusted EBITDA improved 188% to approximately $28.3 million in 2012,
    versus approximately $9.8 million in 2011. (Adjusted EBITDA is a
    non-GAAP measure that is reconciled with GAAP results in a table at
    the end of this press release.).
    
    
--  Operating income increased 664% to approximately $19.1 million in
    2012, versus approximately $2.5 million in the previous year,
    primarily due to the implementation of an aggressive internal and
    external growth strategies that had a significant positive impact upon
    revenues, along with successful cost-control initiatives.
    
    
--  The Company recorded a net loss attributable to common shareholders of
    ($3.9 million), or ($0.01) per share, in the most recent year,
    compared with a net loss attributable to common shareholders of ($2.6
    million), or ($0.01) per share, in 2011.

  
MANAGEMENT COMMENTS 
"Our 59% increase in total revenue during 2012 was primarily
attributable to a 9.5% increase in adjusted patient days and an
increase in the number of surgeries performed at University General
Hospital in Houston, combined with acquisitions that furthered the
development and expansion of our health delivery system," commented
Dr. Hassan Chahadeh, M.D., Chairman and Chief Executive Officer of
University General Health System, Inc. "Our Adjusted EBITDA of $28.3
million was equivalent to approximately 25% of revenue, which
substantially exceeded the EBITDA margins for our publicly traded
competitors. We believe this is a direct reflection of our business
model, which seeks to provide the highest quality of care within the
most cost-effective and least restrictive environment." 
"University General Health System entered 2013 as a much stronger
company, well-positioned to execute its strategic growth strategy.
Supported by a stronger balance sheet, our objectives for 2013
include the pursuit of additional acquisitions to build out our
regional health care system in the Houston and Dallas markets. We are
actively seeking to expand into additional new markets, as well.
Longer-term, we plan to capitalize on opportunities created by the
current regulatory and reimbursement environment, through
acquisitions and facilities expansion and development. Our goal is to
build diversified, integrated, multi-specialty health care delivery
networks comprised of flagship acute care hospitals supported by
complementary free-standing HOPDs and senior living facilities in an
expanding number of markets. Utilizing our Support Services segment
for revenue cycle management and concierge hospitality services, we
believe the Company can capitalize on accretive acquisition
opportunities. Based upon currently available information, we expect
the Company's financial performance to improve substantially in
2013," concluded Dr. Chahadeh.  
Investor Conference Call 
Management of University General Health System will host a conference
call Tuesday, October 22, 2013 at 11:15 a.m. EDT. Shareholders and
other interested parties may participate in the conference call by
dialing 877-374-8416 (international participants dial 412-317-6716)
and requesting participation in the "University General Health System
Conference Call" at least five minutes before 11:15 am EDT.  
A replay of the conference call will be available one hour after the
call through October 30, 2013 at 9:00 am EDT by dialing 877-344-7529
(international participants dial 412-317-0088) and entering the
conference ID# 10035630.  
NON-GAAP FINANCIAL MEASURES (ADJUSTED EBITDA)  
Adjusted EBITDA is a measure of operating performance that is not
calculated in accordance with U.S. generally accepted accounting
principles ("GAAP"). Adjusted EBITDA should not be considered in
isolation or as a substitute for net income (loss), income from
operations or cash flows provided by or used in operations, as
determined in accordance with GAAP. Adjusted EBITDA is a key measure
of the Company's operating performance used by management to focus on
operating performance and management without mixing in items of
income and expense that relate to the financing and capitalization of
the business. The Company defines Adjusted EBITDA as net income
(loss) before provision (benefit) for income taxes, non-operating
(income) expense items, (gain) loss on sale of assets, depreciation
and amortization (including non-cash impairment charges),
amortization of deferred gain, non-cash stock-based compensation
expense.  
The Company believes Adjusted EBITDA is useful to investors in
evaluating our performance, results of operations and financial
position for the following reasons:  


 
--  It is helpful in identifying trends in day-to-day performance because
    the items excluded have little or no significance to day-to-day
    operations;
--  It provides an assessment of controllable expenses and affords
    management the ability to make decisions that are expected to
    facilitate meeting current financial goals and achieve optimal
    financial performance; and
--  It is an indication of whether adjustments to current spending
    decisions are necessary.

  
ABOUT UNIVERSITY GENERAL HEALTH SYSTEM, INC.  
University General Health System, Inc. ("University General") is a
diversified, integrated multi-specialty health care provider that
delivers physician-centric, high quality patient-oriented services by
providing timely, innovative health solutions that are uniquely
competitive, efficient, and adaptive in today's health care delivery
environment. The Company currently operates two hospitals, three
ambulatory surgical centers, a number of diagnostic imaging, physical
therapy and sleep clinics, and a hyperbaric wound care center in the
Houston and Dallas metropolitan areas. Also, University General owns
three senior living facilities, manages six senior living facilities,
and owns a Support Services company that provides revenue cycle and
luxury facilities management services. 
The Company is headquartered in Houston, Texas, and its common stock
trades on the OTCQB under the symbol "UGHS". 
FORWARD-LOOKING STATEMENTS  
The information in this news release includes certain forward-looking
statements that are based upon assumptions that in the future may
prove not to have been accurate and are subject to significant risks
and uncertainties, including statements related to the future
financial performance of the Company. Although the Company believes
that the expectations reflected in the forward-looking statements are
reasonable, it can give no assurance that such expectations or any of
its forward-looking statements will prove to be correct. Factors that
could cause results to differ include, but are not limited to,
successful execution of growth strategies, product development and
acceptance, the impact of competitive services and pricing, general
economic conditions, and other risks and uncertainties described in
the Company's periodic filings with the Securities and Exchange
Commission. 
(Financial Highlights Follow) 


 
                                                                            
                   University General Health System, Inc.                   
                        Consolidated Balance Sheets                         
                                                                            
                                                       December 31,         
                                               ---------------------------- 
                                                    2012           2011     
                                               -------------  ------------- 
                    ASSETS                                                  
Current Assets                                                              
Cash and cash equivalents                      $   1,188,230  $     538,018 
Accounts receivable, less allowance for                                     
 doubtful accounts of $21,422,475 and                                       
 $7,070,327                                       20,941,005     10,913,361 
Inventories                                        1,458,089      1,908,177 
Receivables from related parties                           -        658,764 
Prepaid expenses and other assets                  3,986,378      1,275,104 
Current deferred taxes                             1,729,150              - 
                                               -------------  ------------- 
  Total Current Assets                            29,302,852     15,293,424 
                                                                            
Long-Term Assets                                                            
Property, equipment and leasehold                                           
 improvements, net                                96,965,889     66,437,316 
Intangible assets, net                             5,919,000      7,649,000 
Deferred tax assets                                  659,405              - 
Goodwill                                          39,271,829     22,199,874 
Other non-current assets, net                      2,721,587      2,922,308 
                                               -------------  ------------- 
  Total Long-Term Assets                         145,537,710     99,208,498 
                                                                            
                                               -------------  ------------- 
  Total Assets                                 $ 174,840,562  $ 114,501,922 
                                               =============  ============= 
                                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                              
Current Liabilities                                                         
Accounts payable                               $   9,699,411  $  11,874,720 
Payables to related parties                        2,133,053      2,493,088 
Accrued expenses                                  11,938,589      7,516,940 
Accrued acquisition cost                                   -      1,007,380 
Taxes payable                                      1,610,836      4,171,826 
Income tax payable                                11,813,198              - 
Deferred revenue                                     238,846        314,876 
Lines of credit                                            -      8,451,025 
Notes payable, current portion                    26,089,305     28,982,331 
Notes payable to related parties, current                                   
 portion                                           1,853,380      2,798,783 
Capital lease obligations, current portion           564,747      5,943,685 
Capital lease obligations to related party,                                 
 current portion                                     262,053        239,409 
Derivative liability                               4,897,053              - 
                                               -------------  ------------- 
  Total Current Liabilities                       71,100,471     73,794,063 
                                                                            
Long-Term Liabilities                                                       
Lines of credit, less current portion             12,579,933              - 
Notes payable, less current portion               46,947,860      8,459,474 
Notes payable to related parties, less current                              
 portion                                                   -      1,983,514 
Capital lease obligations, less current                                     
 portion                                             387,095         34,893 
Capital lease obligations to related party,                                 
 less current portion                             30,541,396     
30,803,450 
                                               -------------  ------------- 
  Total Long-Term Liabilities                     90,456,284     41,281,331 
                                               -------------  ------------- 
                                                                            
Total Liabilities                                161,556,755    115,075,394 
                                                                            
Commitments and contingencies                                               
                                                                            
Series C, convertible preferred stock, $0.001      2,566,308              - 
 par value, 20,000,000 shares authorized,                                   
 3,379 and 0 shares issued and outstanding,                                 
 respectively ($1,000 stated value)                                         
                                                                            
Shareholders' Equity and (Deficit)                                          
Preferred, par value $0.001, 20,000,000 shares                              
 authorized, Preferred stock Series B - 3,000                               
 shares issued and outstanding                             3              3 
Common stock, par value $0.001, 480,000,000                                 
 shares authorized, 343,459,294 and                                         
 283,440,226 shares issued and outstanding,                                 
 respectively                                        343,459        283,440 
Additional paid-in-capital                        65,419,774     49,078,223 
Shareholders' receivables                         (2,828,251)    (2,219,068)
Accumulated deficit                              (57,186,915)   (53,049,030)
                                               -------------  ------------- 
  Total shareholders' equity (deficit)             5,748,070     (5,906,432)
Noncontrolling interest                            4,969,429      5,332,960 
                                               -------------  ------------- 
  Total equity (deficit)                          10,717,499       (573,472)
                                               -------------  ------------- 
  Total Liabilities and Shareholders' Equity                                
   (Deficit)                                   $ 174,840,562  $ 114,501,922 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                   University General Health System, Inc.                   
                     Consolidated Statements of Income                      
                                                                            
                                                  Year Ended December 31,   
                                               ---------------------------- 
                                                    2012           2011     
                                               -------------  ------------- 
Revenues                                                                    
  Patient service revenues, net of contractual                              
   adjustments                                 $ 112,184,538  $  68,302,619 
  Provision for doubtful accounts                (10,384,706)    (1,332,434)
                                               -------------  ------------- 
  Net patient service revenue less provision                                
   for doubtful accounts                         101,799,832     66,970,185 
  Senior living revenues                           7,712,750      3,564,514 
  Support services revenues                        2,501,449        465,639 
  Other revenues                                   1,209,227        174,211 
                                               -------------  ------------- 
    Total revenues                               113,223,258     71,174,549 
                                                                            
Operating expenses                                                          
  Salaries, wages and benefits                    39,627,334     29,157,012 
  Medical supplies                                16,194,606     13,202,829 
  Management fees (includes related party fees                              
   of $0 and $461,814, respectively)                       -      5,346,456 
  General and administrative expenses                                       
   (includes related party expenses of                                      
   $1,921,501 and $5,944,441, respectively)       32,766,205     18,078,907 
  Gain on extinguishment of liabilities           (3,644,068)    (4,441,449)
  Depreciation and amortization (includes                                   
   related party expenses of $685,162 and                                   
   $685,162, respectively)                         9,215,713      7,336,710 
                                               -------------  ------------- 
    Total operating expenses                      94,159,790     68,680,465 
                                               -------------  ------------- 
                                                                            
Operating income                                  19,063,468      2,494,084 
Other income (expense)                                                      
Interest expense, net of interest income of                                 
 $85,000 and $67,068 (includes related party                                
 interest expense $2,289,287 and $2,513,922)      (6,111,582)    (4,938,603)
Other income (expense)                              (381,026)       500,000 
Direct investor expense                           (6,853,356)             - 
Change in fair market value of derivatives        (4,937,170)             - 
                                               -------------  ------------- 
Income (loss) before income tax                      780,334     (1,944,519)
  Income tax expense                               4,564,195        443,862 
                                               -------------  ------------- 
Loss before noncontrolling interest               (3,783,861)    (2,388,381)
Net income (loss) attributable to                                           
 noncontrolling interests                            363,531       (182,814)
                                               -------------  ------------- 
Net loss attributable to the Company           $  (3,420,330) $  (2,571,195)
                                               =============  ============= 
                                                                            
Less: Cash dividend-Convertible Preferred C                                 
 Stock                                               (46,921)             - 
Less: Accretion non-cash dividend-Convertible                               
 Preferred C Stock                                  (512,190)             - 
                                                                            
                                               -------------  ------------- 
Net loss attributable to common shareholders   $  (3,979,441) $  (2,571,195)
                                               =============  ============= 
                                                                            
Basic and diluted loss per share data:                                      
                                                                            
  Basic loss per common share                  $       (0.01) $       (0.01)
                                               =============  ============= 
                                                                            
  Basic weighted average shares outstanding      311,995,342    254,401,405 
                                               =============  ============= 
                                                                            
  Diluted loss per common share                $       (0.01) $       (0.01)
                                               =============  ============= 
                                                                            
  Diluted weighted average shares outstanding    311,995,342    254,401,405 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                   University General Health System, Inc.                   
                   Consolidated Statements of Cash Flows                    
                                                                            
                                                  Year Ended December 31,   
                                               ---------------------------- 
                                                    2012           2011     
                                               -------------  ------------- 
Cash flows from operating activities:                                       
  Net loss                                     $  (3,783,861) $  (2,388,381)
  Adjustments to reconcile net loss to net                                  
   cash provided by (used in) operating                                     
   activities:                                                              
    Depreciation and amortization                  9,215,713      7,336,710 
    Provision for doubtful accounts               10,384,706      1,332,434 
    Gain on sale of assets and other, net            (37,451)      (500,000)
    Gain 
on extinguishment of liabilities         (3,644,068)    (4,441,449)
    Deferred income tax benefits                  (2,388,555)             - 
    Warrants issuance costs                          392,609              - 
    Direct investor expense                        6,853,356              - 
    Change in fair market value of derivatives     4,937,170              - 
  Net changes in operating assets and                                       
   liabilities:                                                             
    Accounts receivable                          (18,869,744)    (3,567,069)
    Related party receivables and payables           298,729        202,681 
    Inventories                                      484,349       (142,442)
    Prepaid expenses and other assets             (2,108,971)      (587,189)
    Accounts payable, accrued expenses and                                  
     taxes payable                                 6,583,479        (77,842)
    Deferred revenues                                (76,030)       290,501 
                                               -------------  ------------- 
      Net cash provided by (used in) operating                              
       activities                                  8,241,431     (2,542,046)
                                               -------------  ------------- 
Cash flows from investing activities:                                       
  Additions and acquisitions to property,                                   
   equipment and leasehold improvements           (5,850,056)      (831,107)
  Business acquisitions, net of cash acquired     (2,180,203)       211,910 
  Investments in unconsolidated affiliates          (249,493)      (187,323)
                                               -------------  ------------- 
      Net cash used in investing activities       (8,279,752)      (806,520)
                                               -------------  ------------- 
Cash flows from financing activities:                                       
  Proceeds from revolving credit facility                                   
   borrowings                                     39,253,933              - 
  Payments of revolving credit facility                                     
   borrowings                                    (26,674,000)             - 
  Distributions to noncontrolling interests         (172,762)             - 
  Redemption of common stock                               -        (50,000)
  Issuance of common stock                         5,403,832      7,298,000 
  Issuance of preferred stock                      3,794,669              - 
  Dividend paid on Preferred C Convertible                                  
   Stock                                            (158,444)             - 
  Borrowings under notes payable                  12,890,617      2,717,662 
  Payments on notes payable                      (16,945,280)    (5,779,381)
  Payments on debt issuance costs                 (1,511,251)      (425,000)
  Borrowings under notes payable to related                                 
   party                                              34,976      3,944,633 
  Payments on notes payable to related party        (453,057)    (2,138,171)
  Payments on capital leases                      (6,084,266)    (3,835,837)
  Payments on capital leases obligation to                                  
   related party                                    (239,409)      (137,076)
  Payments on line of credits                     (8,451,025)             - 
                                               -------------  ------------- 
      Net cash provided by financing                                        
       activities                                    688,533      1,594,830 
                                               -------------  ------------- 
                                                                            
Net (decrease) increase in cash and cash                                    
 equivalents                                         650,212     (1,753,736)
Cash and cash equivalents:                                                  
  Beginning of period                                538,018      2,291,754 
                                               -------------  ------------- 
  End of period                                $   1,188,230  $     538,018 
                                               =============  ============= 
Supplemental disclosures of cash flow                                       
 information:                                                               
  Interest paid                                $   6,194,924  $   1,975,813 
  Income taxes paid                            $     385,966  $     628,040 
Supplemental noncash investing activities:                                  
  Property and equipment additions financed    $     819,236  $           - 
Supplemental noncash financing activities:                                  
  Exchange of debt for common stock on                                      
   February 2011                               $           -  $   3,500,000 
  Issuance of common stock on February 2011    $           -  $   2,219,068 
  Issuance of common stock to affiliate for                                 
   termination of service agreement            $           -  $   1,000,000 
  Transfer of accrued interest, account                                     
   payables and capital lease obligation to                                 
   debt obligation                             $           -  $   5,177,912 
  Noncash consideration paid for acquisitions  $  37,164,490  $  26,337,192 
  Issuance of common stock in 2012             $   1,237,682  $           - 
  Transfer from related party and account                                   
   payables to debt obligations                $   2,510,836  $           - 
  Issuance on conversions of preferred stock   $   1,324,600  $           - 
  Derivative ceases to exist                   $   7,702,031  $           - 
  Dividend on Preferred C Convertible Stock    $      46,921  $           - 
                                                                            
                                                                            
                                                                            
                                                   Adjusted EBITDA 2012     
                                                   Twelve Months Ended      
                                                     December 31, 2012      
                                                    2012           2011     
                                               -------------  ------------- 
Net income (loss) attributable to the Company  $  (3,420,330) $  (2,571,195)
(Income) loss attributable to noncontrolling                                
 interests                                     $    (363,531) $     182,814 
Provision (benefit) for income taxes               4,564,195        443,862 
Other non-operating expense (income)                 381,026       (500,000)
Interest expense:                                                           
  Debt and lease obligations                       6,196,582      5,005,671 
Interest (income)                                    (85,000)       (67,068)
Direct investor expense                            6,853,356              - 
Change in fair value of derivatives                4,937,170              - 
Depreciation and amortization                      9,215,713      7,336,710 
                                               -------------  ------------- 
Adjusted EBITDA                                $  28,279,181  $   9,830,794 
                                               =============  ============= 

  
For Additional Information, Please Contact: 
Donald Sapaugh
President
(713) 375-7557 x 105
dsapaugh@ughs.net 
or 
R. Jerry Falkner, CFA
RJ Falkner & Company, Inc.
Investor Relations Counsel
(830) 693-4400
info@rjfalkner.com 
 
 
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