United American Healthcare Corporation Announces Improved Fiscal 2011 First Quarter Results

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United American Healthcare Corporation

Nov 22, 2010, 08:00 ET

DETROIT, Nov. 22, 2010 /PRNewswire-FirstCall/ -- United American Healthcare Corporation (OTCQB: UAHC) today announced financial results for the Company's fiscal first quarter ended Sept. 30, 2010, which included higher revenues and improved bottom line results.

Revenues for the first quarter were $2.1 million, an increase of 20.3% compared with revenues of $1.8 million for the first quarter of fiscal 2010. The increase was primarily the result of the inclusion of a full quarter of contract manufacturing revenues from UAHC's acquisition of Pulse Systems, LLC, which were partially offset by a decline in medical premiums from the expiration of the Company's contract with the Centers for Medicare & Medicaid Services (CMS) to offer a Medicare Advantage -- Special Needs Plan.

Total expenses decreased 2.5%, to $3.3 million in the fiscal 2011 first quarter, compared with total expenses of $3.4 million in the prior fiscal year's first quarter. Expenses for the quarter were impacted by the substantial reduction in medical expenses associated with the Company's discontinued CMS Medicare business, and partially offset by increases in marketing, general and administrative expenses, and depreciation and amortization expense, as well as the inclusion of cost of goods sold for UAHC's contract manufacturing business. For the first quarter of fiscal 2011, the Company reported a net loss of $1.4 million, or $0.15 per share, compared with a net loss of $1.6 million, or $0.19 per share, in the comparable quarter a year ago.

"We made significant progress in the first quarter as we worked to integrate our acquisition of Pulse Systems and begin pursuing long-term growth in the dynamic medical device industry," said John M. Fife, Chairman, President and CEO of United American Healthcare. "UAHC's first-quarter results offer our shareholders a clear view of the positive impact of Pulse Systems on our business, including top-line growth and improvements in our bottom line. Although we are pleased with the results of our efforts, we understand that more work lies ahead, as we seek to further reduce costs while growing revenue to achieve our ultimate goal of consistent profitability."

As of Sept. 30, 2010, UAHC reported cash, cash equivalents and restricted marketable securities of $3.3 million, compared with $4.4 million as of June 30, 2010. The decrease was primarily the result of negative operating cash flow of approximately $0.4 million in the first quarter as well as $0.3 million in payments on long-term debt and capital lease obligations. Earnings before interest, taxes, depreciation and amortization (EBITDA) improved to ($672,000) in the first quarter of fiscal 2011 from ($1.6 million) in the prior year's first quarter. UAHC's management and Board continued to evaluate a number of actions to reduce expenses and conserve cash, while focusing on top-line growth over the long-term. In this effort, the Company recently announced the consolidation and relocation of its corporate headquarters, from Detroit to Chicago, which is scheduled for completion by the end of the calendar year.

"We have come through a number of events, including the economic downturn and recent proxy contest, that have posed significant challenges for our Board and management team," concluded Fife. "By maintaining a clear focus on our strategic objectives, UAHC has emerged stronger and firmly committed to successfully integrating the Pulse acquisition and driving our future results. We see significant opportunities for long-term growth, and our newly seated Board looks forward to putting aside the differences highlighted in the recent contest and working together to achieve this potential."

About United American Healthcare Corporation

United American Healthcare Corporation (UAHC) is a provider of contract manufacturing services to the medical device industry, following its June 2010 acquisition of Pulse Systems, LLC, a leading provider to the medical device industry since 1998. UAHC has been a healthcare management company since 1985. For more information, please visit the Company's web site at www.uahc.com.

United American Healthcare Corporation Safe Harbor Statement

Forward-looking statements by United American Healthcare Corporation, including those in this announcement, involve known and unknown risks, which may cause actual results and corporate developments to differ materially from those expected. Factors that could cause results and developments to differ materially from expectations include, without limitation, the ongoing impact of the U.S. recession, the termination of the TennCare contract, the wind-down of our CMS Medicare business, the integration of the recent acquisition of Pulse Systems, LLC, the ongoing impact of the global credit and financial crisis and other changes in general economic conditions, the effects of state and federal regulations, the effects of any future acquisitions, and other risks described from time to time in each of United American Healthcare's SEC reports, including quarterly reports on Form 10-Q, annual reports on Form 10-K, and current reports on Form 8-K.

United American Healthcare Corporation and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data)
	Three Months Ended
	September 30
	2010		2009

Revenues
Contract manufacturing services	$	2,117	$	—
Medical premiums		—		1,760
Total revenues		2,117		1,760

Expenses
Cost of goods sold		1,091		—
Medical expenses		23		1,729
Marketing, general and administrative		2,162		1,634
Total expenses		3,276		3,363
Operating loss		(1,159)		(1,603)
Interest and other income (expense), net		(234)		40
Loss before income tax		(1,393)		(1,563)
Income tax expense (benefit)		—		—
Net loss	$	(1,393)	$	(1,563)

Net loss per common share – basic and diluted
Net loss per common share	$	(0.15)	$	(0.19)
Weighted average shares outstanding		9,562		8,138

United American Healthcare Corporation and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
	September 30, 2010			June 30, 2010
	September 30, 2010			June 30, 2010
Assets	(Unaudited)			(restated)
Current assets
Cash and cash equivalents	$	3,329	$	3,458
Accounts receivable, net		1,008		954
Inventories		283		209
Prepaid expenses and other		259		281
Total current assets		4,879		4,902

Property and equipment, net		853		895
Marketable securities – restricted		—		900
Goodwill		10,228		10,088
Other intangibles, net		3,016		3,327
Other assets		486		486
Total assets	$	19,462	$	20,598
Liabilities and Shareholders' Equity
Current liabilities
Long-term debt, current portion and net of discount	$	2,759	$	2,710
Accounts payable		1,143		675
Accounts payable – related party		219		—
Accrued expenses		656		745
Accrued purchase price		—		1,255
Redeemable preferred member units of Pulse, current portion and net of discount		276		228
Medical claims payable		63		84
Other current liabilities		27		40
Total current liabilities		5,143		5,737

Long-term debt, less current portion		2,659		2,923
Redeemable preferred member units of Pulse, net of discount and current portion		1,550		1,622
Deferred tax liability		301		—
Capital lease obligation		179		204
Interest rate swap obligation		104		95
Total liabilities		9,936		10,581

Commitments and contingencies
Shareholders' equity
Preferred stock, 5,000,000 shares authorized; none issued		—		—
Common stock, no par, 15,000,000 shares authorized; 9,772,156 and 8,164,117 shares issued and outstanding at September 30, 2010 and June 30, 2010, respectively		18,595		17,711
Additional paid in capital - stock options		1,722		1,703
Additional paid in capital - warrants		444		444
Accumulated deficit		(11,231)		(9,838)
Accumulated other comprehensive loss, net of tax		(4)		(3)
Total shareholders' equity		9,526		10,017
Total liabilities and shareholders' equity	$	19,462	$	20,598