Medical Billing and ARM Firm Orion HealthCorp Announces Q1 Results

Orion HealthCorp, Inc. announced its financial results for the first quarter ended March 31, 2007.

For the three months ended March 31, 2007, net operating revenues were $8.3 million, a 48% increase over the $5.6 million for the same period in the prior year and a 22% increased over the $6.8 million reported in the fourth quarter of 2006. Net loss for the first quarter of 2007 was $786,000, or $0.01 per basic share, compared with net income of $771,000, or $0.07 per basic share, for the first quarter of 2006 and a net loss of $3.9 million for the fourth quarter of 2006. Results for the quarter ended March 31, 2007 included revenues and expenses for Rand Medical Billing and the On Line companies, which the Company acquired in December 2006. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $233,000 for the first quarter of 2007 as compared with an EBITDA loss of $73,000 for the first quarter ended March 31, 2006. (A reconciliation of EBITDA to net income for the first quarter is provided on the attached unaudited consolidated condensed statements of operations.)

Terrence L. Bauer, chief executive officer of Orion HealthCorp, said, “The positive momentum that began last year carried over into the first quarter. Revenue increased substantially both year over year and sequentially as our two recent acquisitions became fully integrated and positive contributors. Excluding discontinued operations, EBITDA was up to $233,000 compared with a loss of $73,000 in the first quarter of last year. Our results are consistent with our expectations, and we believe we can maintain this momentum throughout the remainder of the year.”

The results for the three months ended March 31, 2007 and 2006, respectively, include the consolidated results of Orion HealthCorp, including its two reportable segments: Practice Management, which provides business and management services to pediatric physician groups, and Revenue Cycle Management, which provides physician billing and collection services and practice management solutions, primarily to hospital-based physicians. The surgery center business operated under the name “SurgiCare” and certain assets of Integrated Physician Services (IPS) are reported as discontinued operations for the three months ended March 31, 2007 and 2006. Certain reclassifications have been made in the 2006 financial statements to conform to the reporting format in 2007. Such reclassifications had no effect on previously reported earnings. In addition, the first quarter 2006 financial statements were restated to reflect operations discontinued subsequent to the first quarter of 2006.

The Company also announced the results of its 2007 annual meeting of shareholders, which was held on May 9, 2007. With 98% of Orion’s shareholders casting their votes, Orion shareholders elected the following directors to serve until the annual meeting in 2008: Terrence L. Bauer; Paul H. Cascio; Michael J. Finn; David Crane; and Joseph M. Valley, Jr. In addition, shareholders ratified the appointment of UHY, L.L.P. as the Company’s independent public auditors for 2007.

In closing, Mr. Bauer added, “The healthcare environment is conducive to the growth of revenue cycle management and practice management companies. Increasing costs, complex regulations and decreased reimbursement are forcing physicians to seek outsourcing alternatives. With our head of business development, Jay McBurney, in place, we are actively pursuing multiple organic growth opportunities. In our view, we are ideally positioned to add value to physicians and create value for our shareholders.”