Nobilis Health Reports Second Quarter 2017 Financial Results

Revenue Increases 29% Over Prior Year Period

HOUSTON, Aug. 2, 2017 /PRNewswire/ -- Nobilis Health Corp. (NYSE American: HLTH) ("Nobilis" or the "Company") today announced financial results for the second quarter ended June 30, 2017.

Second Quarter Highlights

    --  Revenue was $80.0 million, a 29.2% increase compared to the same quarter
        last year
    --  Net income attributable to Nobilis was $1.6 million, compared to $4.8
        million in the same quarter last year
    --  Adjusted EBITDA(1) was $10.1 million, a 18.1% increase compared to the
        same quarter last year

"Our strong second quarter operating results reflect the continued focus on our marketing and cost cutting initiatives, as well as diversification of our revenues," said Harry Fleming, Chief Executive Officer of Nobilis Health. "Total revenue and adjusted EBITDA for the second quarter grew by 29% and 18%, respectively, compared to the same period last year while total operating expenses and corporate costs as a percent of revenue decreased by 5% and 4%, respectively, compared to the same period in the prior year. Our businesses complement one another and as we enter the second half of the year we see continued revenue growth, particularly in the ancillary service lines.

"We continued to make solid progress reducing costs in the second quarter. The cost cuts we set out earlier this year remain on track and the focus for the second half of the year continues to be on growing our portfolio of facilities with improved efficiencies."

Second Quarter 2017 Results
Total revenue for the second quarter of 2017 increased to $80.0 million, a 29.2% increase over the same period in the prior year. Total case volume decreased by 266 cases to 4,597 cases, or 5.5%, compared to 4,863 cases in the prior corresponding period. Revenue per case increased to $17,394, or 36.7%, in the second quarter of 2017, as compared to $12,723 in the same period last year. The revenue per case increase was due to higher acuity cases, growth in our ancillary services and the addition of the vein business.

Net income attributable to Nobilis for the second quarter of 2017 was $1.6 million or $0.02 per fully diluted share, as compared to $4.8 million, or $0.06 per fully diluted share, in the second quarter of 2016. This was impacted by higher income tax, interest expense and increased profitability from our minority owned facilities.

Adjusted EBITDA(1) for the second quarter of 2017, which adds back certain non-cash and non-recurring expenses, was $10.1 million, an increase of 18.1% over $8.5 million in the same quarter last year.

Total cash was $29.2 million, accounts receivable was $110.4 million and total bank debt was $66.9 million as of June 30, 2017, compared to $24.6 million, $125.0 million and $65.5 million, respectively, at December 31, 2016.

Six Months Ended 2017 Results
Total revenue for the first six months of 2017 increased to $148.3 million, a 31.1% increase over the same prior year period. Total case volume for the first six months of 2017 increased by 191 cases to 9,028 cases, or 2.2%, compared to 8,837 cases in the same prior year period. Revenue per case increased to $16,423 or 28.3%, compared to $12,803 in the same prior year period. The increase in total revenue and total case volume for the first six months of 2017 compared to the prior corresponding period was due primarily to higher acuity cases, growth in our ancillary services and the addition of the vein business.

Net loss attributable to Nobilis for the first six months of 2017 was $0.8 million or $0.01 per fully diluted share, as compared to net loss attributable to Nobilis of $0.2 million or $0.00 per fully diluted share, in the same prior year period.

Adjusted EBITDA(1) for the first six months of 2017 was $12.1 million, an increase of 36.2% compared to Adjusted EBITDA(1) of $8.9 million for the same prior year period.

Full Year 2017 Guidance

Nobilis reiterates the full year 2017 guidance originally provided on March 13, 2017.

    --  Revenue in the range of $310.0 million to $325.0 million.
    --  Adjusted EBITDA(1 )of $40.0 million to $45.0 million.

Conference Call Information
Nobilis will host a conference call Thursday, August 3, 2017, at 8:00 a.m. CT (9:00 a.m. ET) to discuss its financial results for the second quarter of 2017. To participate in the conference call, please dial (844) 579-6824 in the U.S. and Canada, and +1 (763) 488-9145 internationally. Please enter conference ID 60257317. There will be a livestream of the conference call available at: http://investors.nobilishealth.com/investors/events-and-presentations/.

About Nobilis Health Corp.
Nobilis (www.NobilisHealth.com) is a full-service healthcare development and management company, with 24 locations across Texas and Arizona, including 4 hospitals, 10 ASCs and 10 clinics. In addition, Nobilis partners with an additional 35 facilities across the country. Marketing nine independent brands, Nobilis deploys a unique patient acquisition strategy driven by proprietary direct-to-consumer marketing technology, focusing on a specified set of procedures that are performed at our centers by local physicians.

Forward Looking Statements
This press release contains certain forward-looking statements within the meaning of Canadian and United States securities laws, including the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements include all statements that do not relate solely to historical or current facts and may be identified by the use of words such as "may," "believe," "will," "expect," "project," "estimate," "anticipate," "plan" or "continue." These forward-looking statements are based on current plans and expectations and are subject to a number of risks, uncertainties and other factors which could significantly affect current plans and expectations and our future financial condition and results. These factors, which could cause actual results, performance and achievements to differ materially from those anticipated, include, but are not limited to our ability to successfully maintain effective internal controls over financial reporting; our ability to implement our business strategy, manage the growth in our business, and integrate acquired businesses; the risk of litigation and investigations, and liability claims for damages and other expenses not covered by insurance; the risk that payments from third-party payers, including government healthcare programs, may decrease or not increase as costs increase; adverse developments affecting the medical practices of our physician limited partners; our ability to maintain favorable relations with our physician limited partners; our ability to grow revenues by increasing case and procedure volume while maintaining profitability at the Nobilis Facilities; failure to timely or accurately bill for services; our ability to compete for physician partners, patients and strategic relationships; the risk of changes in patient volume and patient mix; the risk that laws and regulations that regulate payments for medical services made by government healthcare programs could cause our revenues to decrease; the risk that contracts are canceled or not renewed or that we are not able to enter into additional contracts under terms that are acceptable to us; and the risk of potential decreases in our reimbursement rates. The foregoing are significant factors we think could cause our actual results to differ materially from expected results. However, there could be additional factors besides those listed herein that also could affect us in an adverse manner.

We have not undertaken any obligation to publicly update or revise any forward-looking statements. All of our forward-looking statements speak only as of the date of the document in which they are made or, if a date is specified, as of such date. Subject to any mandatory requirements of applicable law, we disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any changes in events, conditions, circumstances or information on which the forward-looking statement is based. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing factors and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed on March 14, 2017, as updated by other filings with the Securities and Exchange Commission.


                                                Nobilis Health Corp.
                                            Consolidated Balance Sheets
                                        June 30, 2017 and December 31, 2016
                                        (in thousands, except share amounts)
                                                    (unaudited)


                                                              June 30,                  December
                                                                          2017            31, 2016
                                                                          ----            --------

    Assets

    Current Assets:

    Cash                                                                        $29,225             $24,572

    Trade accounts receivable,
     net of allowance of $750 at
     June 30, 2017 and                                                 110,419             124,951
    December 31, 2016

    Medical supplies                                                     3,463               4,468

    Prepaid expenses and other
     current assets                                                     12,999              10,083
                                                                        ------              ------

    Total current assets                                               156,106             164,074

    Property and equipment, net                                         40,883              36,723

    Intangible assets, net                                              20,769              19,618

    Goodwill                                                            69,397              62,018

    Deferred tax asset                                                  21,532              21,652

    Other long-term assets                                               1,402               1,350
                                                                         -----               -----

    Total Assets                                                               $310,089            $305,435
                                                                               ========            ========

    Liabilities and Shareholders' Equity

    Current Liabilities:

    Trade accounts payable                                                      $14,339             $22,184

    Accrued liabilities                                                 33,403              30,145

    Current portion of capital
     leases                                                              3,325               3,985

    Current portion of long-term
     debt                                                                2,127               2,220

    Current portion of
     convertible promissory note                                         2,500                   -

    Current portion of warrant
     and stock option derivative
     liabilities                                                             -                  3

    Other current liabilities                                            9,841               7,561
                                                                         -----               -----

    Total current liabilities                                           65,535              66,098
                                                                        ------              ------

    Lines of credit                                                     18,000              15,000

    Long-term capital leases,
     net of current portion                                             12,808              12,387

    Long-term debt, net of
     current portion                                                    46,828              48,323

    Convertible promissory notes,
     net of current portion                                              4,750               2,250

    Warrant and stock option
     derivative liabilities, net
     of current portion                                                    715                 899

    Other long-term liabilities                                          3,810               3,999
                                                                         -----               -----

    Total liabilities                                                  152,446             148,956

    Commitments and Contingencies

    Contingently redeemable
     noncontrolling interest                                            15,174              14,304

    Shareholder's Equity:

    Common shares, no par value, unlimited shares
     authorized, 77,805,014 shares
     issued and outstanding at June 30, 2017 and
      December 31, 2016

    Additional paid in capital                                         223,873             222,240

    Accumulated deficit                                               (79,855)           (79,042)
                                                                       -------             -------

    Total shareholders' equity
     attributable to Nobilis
     Health Corp.                                                      144,018             143,198

    Noncontrolling interests                                           (1,549)            (1,023)
                                                                        ------              ------

    Total shareholders' equity                                         142,469             142,175
                                                                       -------             -------

    Total Liabilities and
     Shareholders' Equity                                                      $310,089            $305,435
                                                                               ========            ========


                                                                    Nobilis Health Corp.
                                                           Consolidated Statements of Operations
                                                     (in thousands, except share and per share amounts)
                                                                        (unaudited)


                                     Three Months Ended                         Six Months Ended June
                                          June 30,                                                   30,


                                            2017                     2016                              2017       2016
                                            ----                     ----                              ----       ----

    Revenues:

       Patient and net
        professional fees                           $77,073                                        $55,176             $141,974     $101,533

       Contracted
        marketing revenues                 1,573                    4,668                             2,952      8,150

       Factoring revenues                  1,316                    2,027                             3,338      3,461
                                           -----                    -----                             -----      -----

             Total revenues               79,962                   61,871                           148,264    113,144

    Operating expenses:

       Salaries and
        benefits                          15,417                   12,591                            30,738     25,168

       Drugs and supplies                 12,579                   12,177                            25,323     24,197

       General and
        administrative                    35,150                   27,474                            68,838     52,483

       Depreciation and
        amortization                       2,728                    1,981                             5,066      4,510
                                           -----                    -----                             -----      -----

             Total operating
              expenses                    65,874                   54,223                           129,965    106,358

    Corporate expenses:

       Salaries and
        benefits                           3,623                    2,030                             6,062      3,312

       General and
        administrative                     2,595                    4,497                             6,848     10,408

       Legal expenses                        405                      990                               976      2,575

       Depreciation                           80                       76                               163        130
                                             ---                      ---                               ---        ---

             Total corporate
              expenses                     6,703                    7,593                            14,049     16,425
                                           -----                    -----                            ------     ------

             Income (loss) from
              operations                   7,385                       55                             4,250    (9,639)

    Other expense (income):

       Change in fair
        value of warrant
        and stock                            188                  (1,657)                            (187)   (1,699)
       option derivative liabilities

       Interest expense                    1,363                      687                             2,618      1,371

       Other expense
        (income), net                        330                  (1,159)                               72    (2,813)
                                             ---                   ------                               ---     ------

             Total other expense
              (income)                     1,881                  (2,129)                            2,503    (3,141)
                                           -----                   ------                             -----     ------

    Income (Loss)
     before income
     taxes and
     noncontrolling
     interests                             5,504                    2,184                             1,747    (6,498)

    Income tax expense
     (benefit), net                        2,249                    (331)                              698    (2,249)
                                           -----                     ----                               ---     ------

             Net income (loss)             3,255                    2,515                             1,049    (4,249)
                                           -----                    -----                             -----     ------

    Net income (loss)
     attributable to
     noncontrolling
     interests                             1,670                  (2,291)                            1,862    (4,090)
                                           -----                   ------                             -----     ------

    Net income (loss)
     attributable to
     Nobilis Health
     Corp.                                           $1,585                                         $4,806               $(813)      $(159)
                                                     ======                                         ======                =====        =====

    Net income (loss)
     per basic common
     share                                            $0.02                                          $0.06              $(0.01)  $        -
                                                      =====                                          =====               ====== ===      ===

    Net income (loss)
     per fully diluted
     common share                                     $0.02                                          $0.06              $(0.01)  $        -
                                                      =====                                          =====               ====== ===      ===

    Weighted average
     shares outstanding
     (basic)                          77,805,014               76,754,950                        77,805,014 75,780,695
                                      ==========               ==========                        ========== ==========

    Weighted average
     shares outstanding
     (fully diluted)                  78,115,242               77,616,886                        77,805,014 75,780,695
                                      ==========               ==========                        ========== ==========


                                  Nobilis Health Corp.
                          Consolidated Statements of Cash Flows
                                     (in thousands)
                                       (unaudited)


                                        Six Months Ended June 30,

                                                   2017                2016
                                                   ----                ----

    CASH FLOWS FROM
     OPERATING
     ACTIVITIES:

     Net
      income
      (loss)                                                $1,049          $(4,249)

     Adjustments to
      reconcile net loss
      to net cash
      provided by
      operating
      activities:

      Depreciation
      and
      amortization                                5,229               4,640

      Share-
      based
      compensation                                1,630               3,504

      Change
      in
      fair
      value
      of
      warrant
      and
      stock
      option
      derivative
      liabilities                                 (187)            (1,699)

      Deferred
      income
      taxes                                         120             (2,770)

     Gain
      on
      sale
      of
      property
      and
      equipment                                       -              (265)

     Loss
      (earnings)
      from
      equity
      method
      investment                                    108             (1,078)

      Amortization
      of
      deferred
      financing
      fees                                          233                  66

      Capital
      lease
      interest
      payments                                    (594)              (745)

     Changes in operating
      assets and
      liabilities, net of
      assets acquired and
      liabilities
      assumed:

         Trade
         accounts
         receivable                              15,279              14,961

         Medical
         supplies                                 1,300               (231)

         Prepaid
         expenses
         and
         other
         current
         assets                                 (2,714)              (785)

         Other
         long-
         term
         assets                                       -                174

         Trade
         accounts
         payable
         and
         accrued
         liabilities                            (5,130)            (5,801)

         Other
         current
         liabilities                              2,280                 352

         Other
         long-
         term
         liabilities                              (303)                275

         Distributions
         from
         equity
         method
         investments                                  -              1,085
                                                    ---              -----

           Net
            cash
            provided
            by
            operating
            activities                           18,300               7,434
                                                 ------               -----


    CASH FLOWS FROM
     INVESTING
     ACTIVITIES:

         Purchase
         of
         property
         and
         equipment                              (3,208)            (1,717)

         Purchase
         of
         equity
         method
         investment                                   -              (609)

        Note
         receivable,
         net                                          -                150

         Acquisition,
         net
         of
         cash
         acquired                               (7,883)                  -
                                                 ------

            Net
             cash
             used
             for
             investing
             activities                        (11,091)            (2,176)
                                                -------              ------


    CASH FLOWS FROM
     FINANCING
     ACTIVITIES:

         Distributions
         to
         noncontrolling
         interests                              (1,520)            (4,964)

         Proceeds
         from
         exercise
         of
         stock
         options                                      -              2,067

         Payments
         on
         capital
         lease
         obligations                            (2,214)            (2,017)

         Proceeds
         from
         line
         of
         credit                                   3,000               3,500

         Payments
         on
         debt                                   (1,356)              (688)

         Deferred
         financing
         fees                                     (466)                  -
                                                   ----                 ---

             Net
              cash
              used
              for
              financing
              activities                        (2,556)            (2,102)
                                                 ------              ------


    NET
     INCREASE
     IN
     CASH                                         4,653               3,156

    CASH
     -
     Beginning
     of
     period                                      24,572              15,666
                                                 ------              ------

    CASH
     -
     End
     of
     period                                                $29,225           $18,822
                                                           =======           =======


                                                       Nobilis Health Corp.

                                           Reconciliation of Non-GAAP Financial Measures

                                                          (in thousands)


                              Three Months Ended                        Six Months Ended June
                                   June 30,                                               30,

                                     2017                    2016                           2017      2016
                                     ----                    ----                           ----      ----


    Net income (loss)
     attributable to Nobilis
     Health Corp.                             $1,585                                     $4,806             $(813) $(159)

    Interest                        1,363                     687                          2,618     1,371

    Income tax expense
     (benefit), net                 2,249                   (331)                           698   (2,249)

    Depreciation and
     amortization                   2,808                   2,057                          5,229     4,640
                                    -----                   -----                          -----     -----

    EBITDA                                    $8,005                                     $7,219             $7,732  $3,603


    Non-cash compensation
     expenses                                   $570                                     $1,668             $1,835  $3,504


    Change in fair value of
     warrant and stock option
     derivative liabilities           188                 (1,657)                         (187)  (1,699)

    Acquisition expenses              558                     818                          1,192     1,183

    Non-recurring expenses            732                     462                          1,495     2,271

    Adjusted EBITDA(1)                       $10,053                                     $8,510            $12,067  $8,862
                                             =======                                     ======            =======  ======

(1 Use of Non-GAAP Financial Measures)

Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, non-cash compensation expenses, change in fair value of warrant and stock option derivative liabilities, acquisition expenses, and non-recurring expenses. Adjusted EBITDA should not be considered a measure of financial performance required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA is an analytical indicator used by management and the health care industry to evaluate company performance, allocate resources and measure leverage and debt service capacity. Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA is not a measurement determined in accordance with U.S. GAAP and is thus susceptible to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies.

Contact Information:
Tuan Tran
Vice President, Investor Relations
IR@nobilishealth.com
346-207-6342

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SOURCE Nobilis Health Corp.