Transcript PIONEER BEHAVIORAL HEALTH

PHC, Inc. dba
NYSE Amex:PHC
RENN GLOBAL ANNUAL MEETING AND INVESTOR CONFERENCE
Corporate Presentation
May 2010
© 2009 PHC, Inc. All Rights Reserved - Confidential
Safe Harbor Statement
In addition to historical facts or statements of current condition, this
presentation may contain forward-looking statements. The Company's
performance and financial results could differ materially from those reflected in
the forward-looking statements due to general financial, economic, regulatory
and political conditions or additional factors unknown to the Company at this
time, as well as more specific risks and uncertainties such as those set forth in
documents filed by the Company with the SEC (including, but not limited to, its
most recent reports on Form 8-K, Form 10-Q and Form 10-K, copies of which
are available upon request or over the Internet at www.sec.gov). Given these
risks and uncertainties, any or all of these forward-looking statements may
prove to be incorrect. Therefore, current or prospective investors are cautioned
not to place undue reliance on any such forward-looking statements.
Furthermore, the Company has no intent, and disclaims any obligation, to
update any such factors or forward-looking statements to reflect future events
or developments.
AMEX:
PHC
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PHC: What We do...
• PHC (dba Pioneer Behavioral Health), is a leading
provider of behavioral healthcare services
• In-patient & out-patient; acute & long-term
• Four markets: Michigan, Nevada, Utah, and Virginia
• Strong Growth & Outlook:

Record revenues: For FY ‘09 of $46.4 million,
$45.4
$46.4
FY '08
FY '09
$40.6
$32.2
up 2.2% year over year; 9 mos FY’10 $39.0 million, up 12.4%

Operated profitably for last five quarters with recent profitability
increasing

CMS certification anticipated for Seven Hills Behavioral Institute
would allow PHC to gain government reimbursement for many of
the services provided

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PHC
Opportunities for accelerated revenue growth & acquisitions
FY '06
FY '07
Annual Revenues
Continuing Operations
$ Millions
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Who we do it for....
• Individuals with psychiatric disorders, alcohol & drug dependency
• Corporate employees in the gaming & transportation industry via a
diversified marquee customer base:
Covering more than 1 million lives
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PHC
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Mental Health Care Market Drivers
Catalysts for Mental Health Treatment
• Events of 9-11 were tipping point for Americans to seek help; created an
unprecedented need for emergency workplace mental health services
• 22.5M Americans suffer from drug abuse; less than 4M receive treatment*
• 7.5% of US population (16.5M) had at least one major depressive episode (MDE) in
the previous year (2007)*
• Adults with MDE had more than double the rate of illicit drug use (27.4% vs. 12.8%)*
• 5.4M Americans experience severe and persistent mental illnesses†
• Students grades 9-12 who have seriously considered suicide: 16.9% (2005)
• Behavioral health care sector continues to benefit from lingering effects of facility
closures in the 1990s
• Total inpatient psychiatric hospital beds 44% lower than 1991 peak
*Thomson Healthcare report, June 2007.
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PHC
†Center for Mental Health Services, Mental Health, United States, 1996.
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Financial Impact of Mental Health Care
• Large, expanding market: $100 billion
spent annually on mental health treatment
• U.S. substance abuse treatment costs totaled
$20.7 billion in 2003, up 124% from $9.3
$20.7B
billion in 1986*
• Total economic cost of alcohol & drug abuse:
$246 billion annually
 $98 billion related to drug abuse†
*2007 National Survey on Drug Use & Health †The Lewin Group, 1998 (most recent data available)
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New Government Drivers
Supporting Legislation:
• Mental Health Parity Legislation signed into law on
October 3, 2008:

Requires group health insurance plans to provide equal access
and cost sharing for physical and mental health treatment

Legislation becomes effective October 2009 and implemented
by most plans on January 1, 2010
• In addition, the new economic stimulus plan includes
more than $80 billion to be used for state-level
healthcare needs
• 32 million new insureds through healthcare reform
legislation
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Most Important Driver: Treatment Works
According to a major U.S. Dept of Health & Human Services study,
negative consequences of drug abuse decrease dramatically following
treatment, improving many aspects of a patient’s life:
Bothered by
Primary Drug Related Medical Mental Health
Use
Visits
Problems
Criminal Arrest
Welfare
Dependence
Homelessness
-10.8%
-35.0%
-50.0%
-42.7%
-53.0%
-64.3%
Source: National Treatment Improvement Evaluation, HHS 1997 (most recent of its kind). See: http://ncadi.samhsa.gov/govstudy/f027/
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PHC’s Operating Structure
Operating Units
Patient Care
via Hospital
& Clinical Services
Contract Support
& Integrated
Delivery Services
Capstone Academy
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PHC Revenue Mix
Fiscal 2010- 9 months ended 3/31/2010
Contract
Support
Services
$2.6 M –
6.6%
Patient
Care
$36.4M –
93.4%
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PHC
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PHC Hospital & Clinical Services
Highland
Ridge
• 41-bed
psychiatric &
chemical
dependency
hospital
• Near Salt Lake
City, UT
• Currently
exploring
opportunities for
expansion
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PHC
Mount Regis Harbor Oaks
Center
Hospital
• 25-bed alcohol &
drug abuse
treatment facility
• Near Roanoke, VA
• Specializes in
chemical
dependency and
dual diagnosis
• Recently added
transportation
residential track
• 70-bed
acute/long-term
psychiatric
hospital
• Eastern Detroit
metroplex in New
Baltimore, MI
New chemical
dependency unit
Capstone
Academy
Seven Hills
Behavioral
Institute
• Recently Moved
to a new facility
• New 55-bed
hospital
• Expanded beyond
50 beds to 66
beds
• Henderson, NV (17
miles SW of
downtown, Las
Vegas), in high-
• Potential future
growth with
continued
utilization of
Detroit sites
growth area
• Expected key revenue
driver; $12M
annually projected.
• CMS certification
• Capstone
opened 1-09
pending
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PHC Bed Count Growth
380
255
244
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PHC
122
131
FY03
FY04
160
FY05
180
186
FY06
FY07
FY08
FY09 FY10 Proj.
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Integrated Delivery Services
Harmony
Healthcare
WellPlace
Pioneer Counseling
Centers
• Largest provider of
behavioral health services
to the gaming and
transportation industries
• Comprehensive employee • Comprehensive outpatient
assistance program
mental health and
support, after-hour crisis & substance abuse clinics
phone support, and
• Serving the populations of
managed care services
• Three locations
Oakland, Macomb, and
• Detroit Medical Center and
Northern Wayne counties
• Multi-specialty outpatient
Midvale, UT locations
in Southwest Lower
treatment clinic: treatment
Michigan
for personal, emotional,
• Clients include: CSX,
and drug or alcohol
Union Pacific Railroad,
related problems
Canadian Pacific, Sierra
Health
• Major expansion of newest
location began May 2010
• Operates Wayne County,
MI call center contract
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Harmony Healthcare
• 10-Year, $100 million mental health contract with Behavioral
Healthcare Options, subsidiary of United Healthcare, (NYSE: UNH)
 Largest in company history, started 1/1/07
 More than doubled Harmony's annual run-rate: $5M to ~$13M
• Strong presence in Southern Nevada region
 Established relationships with 21 casino and resort properties
 Combined, PHC of Nevada will provide mental & behavioral
healthcare services to 600,000+ consumers in So. Nevada
 Presence strengthened with Seven Hills Behavioral Institute opened
May 2008
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Major New Las Vegas Expansion
Las Vegas, Nevada Expansion announced April 2008
• Secured 93,000 sq ft building site for two new behavioral
treatment facilities ~15 miles SW of downtown
Henderson, NV
SHBS
• A 7,000 sq ft behavioral health outpatient facility opened
June 2009
• Planning an additional 45,000 sq ft, three-story
behavior/medical complex on the site
• ~100 beds & capacity to generate >$25M annually
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Wellplace Positioned For Growth
• Renewed a major deal to
service 2.2M citizens of Wayne
County, MI
• Increased marketing effort
underway to achieve better
economies of scale and expansion
into other areas of the
Department of Defense
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PHC
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Three Months/ Fiscal Year
Comparison
Three Months
Ended
March 31,
FY2010
FY2009
Total Revenue
$13.5 M
$12.0M
Patient Care Revenues
$12.7M
$11.1M
$781,000
$98,000
$1,128
$336
Income Before Taxes
$758,000
$12,000
*Net Income (loss)
$500,000
$(200,000)
$0.02
$(0.01)
Income from Operations
EBITDA
Diluted Earnings Per
Common Share
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Year/Year Annual Record Growth*
$45.4
$46.4
FY '08
FY '09
$40.6
$29.6
$22.9
FY '03
$32.2
$25.4
FY '04
FY '05
FY '06
FY '07
*Continuing Operations in Millions (excluding Pivotal revenue). Fiscal Year Ended June 30
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2010 Fiscal Third Quarter Highlights
Quarter Ended 3/30/2010 :
• Total Net Revenues increased 12.7% to $13.5 million
• Increased census at Seven Hills Hospital in Las Vegas and overall across facilities
• Income from operations improved $683,000 to $781,000 compared to Income from
Operations of $98,000 in year-earlier period
•
The 2010 fiscal third quarter represented the company’s fifth consecutive quarter of
profitability.
• Strong sequential revenue and profit growth
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Balance Sheet Summary
03/31/10
06/30/09
$3.3M
$3.2M
Current Assets
$14.2M
$11.8M
Total Assets
$24.9M
$22.7M
Total Current Liabilities
$7.1M
$5.7M
Long-Term Debt
$300K
$500K
Total Liabilities
$8.0M
$6.6M
Shareholders Equity
$ 16.9M
$16.0M
Liabilities + SE
$24.9M
$22.7M
Cash & Cash Equivalents
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New Expansion in Detroit, Michigan
Expanding youth services in Detroit, Michigan, with enrollment
in new Capstone Academy underway January 2009:
• Capstone represents next phase of PHC's efforts to provide
expanded residential treatment services to adjudicated youth in
the Detroit Metro Area
• DBI has been successfully delivering similar programs since 2004
• Additional expansion opportunities under consideration
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PHC
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Stock Repurchase Program
Buyback program initiated June 2008 that authorizes repurchase of up to
one million common shares on the open market extended through June
2010.
Plan was executed because management believes PHC’s fundamentals and
prospects for growth have never been stronger:
• Excluding startup losses from new facilities in Henderson, NV and
Detroit, MI, PHC continues long tradition of operating profitably
• Demand for services is strong and industry is prospering
• New Mental Health Parity bill expected to serve as strong market driver
AMEX:
PHC
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PHC Management Team
Bruce A. Shear
• CEO and Director since 1980
• VP, Financial Affairs of PHC 1976-1980
• 20+ years on Federation of American
Health Systems Board of Governors
• Board of trustees for the National
Association of Psychiatric Health
Systems
Robert H. Boswell
• Senior VP since February 1999
Paula C. Wurts
• Chief Financial Officer since 1989
• Assistant Clerk since 1996
• Assist. Treasurer 1993-2000;
currently Treasurer
• Accounting Manager 1985-1989
Alexander N. Luvall
• Executive Vice President since
September 2004
• Experienced attorney
• Exec. VP of PHC 1992 to 1999
• Administrator of PHC’s Highland Ridge
Hospital facility 1989 to 1994
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Investment Considerations
NYSE Amex:PHC
 A leading provider of behavioral healthcare services
 Strong market drivers, including new federal regs
 Strong revenue growth and increasing
profitability
 Multiple new facilities coming up-to-speed, driving
growth & profitability in FY2010
 Stock repurchase program continuing
AMEX:
PHC
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For More Information
Company Contact
Investor Relations
Bruce A. Shear
President & CEO
PHC Inc.
200 Lake Street
Dan Schustack
Suite 102
CEOcast, Inc.
Peabody, MA 01960
Tel (212) 732-4300
Tel 978-536-2777
Fax (212) 732-1132
Fax 978-536-2677
www.ceocast.com
www.phc-inc.com
[email protected]
AMEX:
PHC
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