Prospect Medical Holdings, Inc. (AMEX: PZZ) (“Prospect”),
which manages the medical care of approximately 240,000 HMO enrollees
and operates four community hospitals in southern California, today
announced that it has completed its review of the pre-acquisition
financial statements of Alta Healthcare System, Inc. (“Alta”)
and is now actively moving forward with completing the restatement of
those financial statements and filing of its delayed SEC reports.
In November 2007, under the direction of the Audit Committee of Prospect’s
Board of Directors, Prospect initiated an internal review of facts and
circumstances leading to a potential restatement of Alta’s
audited and unaudited financial statements for periods pre-dating
Prospect’s August 8, 2007 acquisition of Alta,
which was previously a privately-owned company. The Audit Committee was
assisted in this review by independent counsel and various advisers. As
indicated, the review has now been concluded.
During the review, the Audit Committee did not find any intentional
wrongdoing in the preparation of the Alta financial statements, but
confirmed that Alta’s fiscal 2006 financial
statements needed to be restated in order for them to present fairly the
financial position and results of operations as of and for the year
ended December 31, 2006. Management continues to expect that any
resulting decrease in Alta's 2006 pre-tax income will be less than $5
million. The Audit Committee has recommended, and Prospect’s
Board of Directors has approved, measures to strengthen internal control
over Alta’s financial reporting, consistent
with the requirements of a public company. Management has already begun
to implement many of those measures and plans to implement the remainder
by the end of this calendar year.
With the Alta review now completed, Prospect expects to be able to meet
its previously announced schedule for filing the Form 8-K/A, containing
the restated Alta financial statements, by the end of March 2008; and
filing Prospect’s 2007 Form 10-K for the year
ended September 30, 2007 and Form 10-Q for the quarter ended December
31, 2007 before the end of April 2008. This will bring Prospect current
in its SEC filings. Prospect expects to file its Form 10-Q for the
quarter ended March 31, 2008 by the May 15, 2008 deadline for that
filing.
ABOUT THE COMPANY
Prospect Medical Holdings operates four community-based
hospitals in the greater Los Angeles area and manages the medical
care of individuals enrolled in HMO plans in Southern California,
through a network of over 9,000 specialist and primary care physicians.
This press release contains forward-looking statements. Additional
written or oral forward-looking statements may be made by Prospect from
time to time, in filings with the Securities and Exchange Commission, or
otherwise. Statements contained herein that are not historical facts are
forward-looking statements. Investors are cautioned that forward-looking
statements, including the statements regarding anticipated or expected
results, and the future introduction of new products, involve risks and
uncertainties which may affect the Company's business and prospects,
including those outlined in Prospect's Form 10-K filed on December 28,
2006, its Form 10-Q filed on August 20, 2007, and those arising from
Prospect's acquisition of Alta, the debt incurred by Prospect in
connection with the Alta acquisition, and any impact on Alta’s
historical financial statements that may result from completion of
Prospect's review and analysis of those financial statements. Any
forward-looking statements contained in this press release represent our
estimates only as of the date hereof, or as of such earlier dates as are
indicated, and should not be relied upon as representing our estimates
as of any subsequent date. While we may elect to update forward-looking
statements at some point in the future, we specifically disclaim any
obligation to do so, even if our estimates change.
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