Interactive Q&A: Bruce Shear, President and CEO of Pioneer Behavioral Health (PHC)

This is the latest in Seeking Alpha's series of interviews with leading companies of interest to our readers. Ours are interviews with a twist: the respondent has agreed to answer questions and respond to comments not from a single interviewer, but rather from our community of readers and contributors.

This interactive Q&A is with Bruce Shear, President and CEO of Pioneer Behavioral Health (PHC) or PHC, Inc. PHC is a national healthcare company. PHC operates companies that provide inpatient and outpatient behavioral health care services, clinical research and Internet- and telephonic-based referral services. The companies contract with national insurance companies, government payors, and major transportation and gaming companies, among others, to provide such services. For more information, please visit www.phc-inc.com. (See the latest PHC earnings call transcript and Roth Conference presentation transcript for more background on the company.)

PHC, Inc. has sponsored this interview, which works like this:

• Bruce briefly introduces himself and the issues he's focused on below.
• Readers and contributors can immediately start to post questions and remarks using the comment box below (Note: you need to sign up for free registration and be logged in to do so).
• Seeking Alpha editors will not filter or edit the questions and comments from readers, except to delete profane or hostile language.
• Bruce will respond to the questions and remarks beginning Monday, June 18th. Readers can track his answers and respond to them during that period.

Yahoo Finance readers may join the Q&A by following this link.

Over to Bruce:

• • •

Greetings and welcome. I’m Bruce Shear, CEO of Pioneer Behavioral Health (PHC).

I want to thank Seeking Alpha for providing this valuable opportunity to interact directly with current and potential shareholders and answer your questions.

The last year has been exciting for Pioneer as we prepare for our next phase of growth. During fiscal 2007, we have earned a listing on the American Stock Exchange, announced the largest contracts ever for two of our operating segments, and moved ahead with our plans to open a free-standing psychiatric and chemical dependency hospital near the rapidly growing city of Las Vegas.

Pioneer Behavioral Health is a national healthcare Company. We provide behavioral health services and products through contracts with government agencies, national insurance companies, as well as major transportation and gaming companies. We are incorporated under the name PHC, Inc. and are doing business as “Pioneer Behavioral Health.”

We operate three complementary business operating units:

Hospital and clinical services, including a significant facility at the Detroit Medical Center and soon our hospital in Henderson, Nevada.

Integrated delivery services, including smoking-cessation and critical incident services programs and Employee Assistance Programs for corporations, including 21 separate hotel and casino properties in Las Vegas, and

Clinical research through our Pivotal Research Centers subsidiary, where we contract with some of the largest pharmaceutical companies and perform clinical studies with a specialty in medications designed for conditions of the central nervous system. We have completed over 450 research studies in over 20 indications and are a recognized leader in this area.

Our mission is to help people gain and maintain physical, spiritual and emotional health.

I look forward to elaborating on our role and improving competitive position and look forward to your questions.

Please leave your questions by using the comment box below.

Thank you!

-- Bruce

This Q&A represents the opinion of PHC, Inc. management and is not intended to be a forecast of future events, a guarantee of future results nor investment advice. Except for the statements of historical fact, information presented herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general economic and business conditions, the ability to fund operations, the ability to forge partnerships and other factors over which PHC, Inc. has little or no control. PHC, Inc. assumes no obligation to publicly update or revise any forward-looking statements provided in this Q&A, or to correct any erroneous information presented in any investor questions herein.

Comments

[SeekingAlpha Editors:]

Bruce,

Thanks for conducting this interview.

Can you tell me what segment of your business you see as the primary growth driver in 2007?

Thank you.

Noah

2007 Jun 18 02:15 PM

[Bruce Shea...:]

Noah:
Thank you for your question. The behavioral health industry in general is experiencing strong growth, due to improved recognition of mental health issues, improved reimbursement and short supply. Our company is a major player in both the inpatient, outpatient and managed care segments of this growing market.

2007 Jun 19 08:35 AM

[SeekingAlpha Editors:]

Bruce: What is the status of the Mental Healthcare Parity Act? What does it mean for PHC?

2007 Jun 18 03:32 PM

[Bruce Shea...:]

Joe:

Thank you for your question. We are very optimistic about the passage of the parity act this year. Both the senate and house version are being aggressively pushed forward with a strong contingency from both parties.

Approval of this legislation will provide even further recognition that mental health issues in this country need to be addressed and adequately reimbursed, therefore, continuing to increase the demand for our services.

2007 Jun 19 08:39 AM

[Ralph F:]

Hi Bruce, thanks for doing this interview. Can you talk about your margins -- what do they look like for different kinds of services, and is there much leverage in your model as you grow?

2007 Jun 18 04:12 PM

[Bruce Shea...:]

Ralph:

Thank you for your question. We don't give guidance on our margins. In regard to leverage, we do anticipate and are beginning to experience the benefits of leverage as a result of Pioneer's growth in Nevada's managed care business and would anticipate additional leverage when our Seven Hills Hospital opens.

2007 Jun 19 08:44 AM

[Frank Li:]

Thanks for taking our questions, Bruce. 3 related questions, if I may:

1. Which companies do you view as your main competitors, and of them who are you most nervous about and why?
2. What are your main competitive advantages?
3. How high are the barriers to entry in your business?

2007 Jun 18 04:15 PM

[Bruce Shea...:]

Frank:

Thank you for your questions. Our competitors are different in each market, as are the barriers to entry. Our competitive advantage is our longevity in this business, as well as being identified as the highest quality, most customer service oriented company in each market.

2007 Jun 19 08:47 AM

[amotamed:]

Hi Bruce,

Could you please talk about the strength of your competetive position in your core detroit and las vegas markets. How do you see this evolving? At what approximate revenue run rate do you see your company after the completion of your planned new facility openings? What gives you confidence that the new openings will be a success? Thanks in advance.

2007 Jun 19 11:02 AM

[Bruce Shea...:]

Ali:

Thank you for your question. When our Las Vegas hospital opens, we will be operating the most comprehensive behavioral health delivery network in the Las Vegas market. With our outpatient clinics and hospital, we can successfully be the one-stop behavioral health provider and meet all the needs of any major insurer or employer. In regard to the Detroit market, we continue to be presented with additional opportunities to expand our delivery network. Detroit is a unique market and we are methodically evaluating each business opportunity before execution. When these projects become operational, our company should be approximately double the size it was 6/30/06.

2007 Jun 20 08:36 AM

[SeekingAlpha Editors:]

Bruce,
Are tragedies such as the Virginia Tech shooting, Hurricane Katrina, the Kansas Hurricanes and even 9-11 impacting your business?
Josh

2007 Jun 20 08:26 AM

[Bruce Shea...:]

Josh:

Thank you for your question. All of the national tragedies that you mention have further brought to the national forefront the mental health crisis in America. These events have caused government agencies, major employers and insurance companies to strengthen their commitment to providing adequate reimbursement to treat those suffering from mental health ailments. I mentioned in the past that our national parity act is moving through the legislative branches and we are hopeful a bill will be signed by the president soon.

2007 Jun 20 08:41 AM

[Frank Li:]

Bruce, thanks for answering my questions above. Can you be more specfic about competitors than "Our competitors are different in each market"?

2007 Jun 20 09:41 AM

[Bruce Shea...:]

Dear Frank:

Each market that we do business in has a cross-section of psychiatric services that include free-standing psychiatric hospitals and psychiatric programs in med/surg hospitals. Las Vegas, NV and Salt Lake City, UT have the lowest number of beds relative to their population base.

2007 Jun 21 02:37 PM

[SeekingAlpha Editors:]

This Seeking Alpha interactive Q & A is now closed for further questions. Thank you very much to Bruce Shear of Pioneer Behavioral Health, and to our readers who participated.

~ The Seeking Alpha Team

2007 Jun 21 02:23 AM