ONH Orion Healthcorp, Inc.

Orion HealthCorp, Inc. (AMEX: ONH) today announced its financial results for the fourth quarter and year ended December 31, 2006. For the three months ended December 31, 2006, net operating revenues were $6.8 million compared with $5.7 million for the same period in the prior year. Net loss was $3.9 million, or $0.18 per basic share, for the fourth quarter of 2006 compared with a net loss of $4.3 million, or $0.36 per basic share, for the prior year period. The net loss for the quarter ended December 31, 2006, included a net loss from discontinued components of $3.1 million, or $0.14 per share, including a charge for the impairment of intangible assets of $3.0 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) was a loss of $481,000 for the fourth quarter of 2006 as compared with an EBITDA loss of $165,665 for the quarter ended December 31, 2005. (A reconciliation of EBITDA to net income for the fourth quarter and year-end is provided on the attached consolidated statements of operations.) Terrence L. Bauer, chief executive officer of Orion HealthCorp, said, �2006 was a year of progress, adding to the momentum we have established since our formation in 2004. Beginning in early 2005, we restructured, refocused, developed a fiscally disciplined culture and, more recently, started laying the ground work for the future by expanding our footprint through complementary acquisitions. In addition, in 2006, we strengthened our balance sheet with a significant refinancing and the addition of new investors. The past year has been the most productive thus far and gives us additional traction for a successful 2007.� For the year ended December 31, 2006, net operating revenues were $23.4 million compared with $22.8 million for the same period in the prior year. Loss from continuing operations was $2.0 million, or $0.10 per basic share, for the year ended December 31, 2006, compared with a loss from continuing operations of $5.9 million, or $0.57 per basic share, for the same period in 2005. Net loss, including loss from discontinued operations of $2.0 million, was $4.1 million, or $0.20 per basic share, for the year ended December 31, 2006, compared with a net loss, including a loss from discontinued operations of $14.6 million, which included a charge for impairment of intangible assets of $9.8 million, of $20.4 million, or $1.98 per basic share, for the same period in 2005. EBITDA loss totaled $759,000 for the year ended December 31, 2006, compared with an EBITDA loss of $2.7 million for the prior year period. The results for the three months and year ended December 31, 2006 and 2005, 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� is reported as discontinued operations for the three months and year ended December 31, 2006 and 2005. Certain reclassifications have been made in the 2005 financial statements to conform to the reporting format in 2006. Such reclassifications had no effect on previously reported earnings. The most significant reclassifications related to the presentation of discontinued operations for comparative purposes. The Company also announced that Jay McBurney has been named to the newly created position of Director of New Business Development, where he will be responsible for new business development for Orion�s revenue cycle management segment. Mr. McBurney brings to Orion more than ten years of experience in the billing and collections industry. Previously, he served as Senior Director of Business Development for Per-S� Technologies, which was recently acquired by McKesson Corporation. During his eight years with Per-S�, we believe Mr. McBurney was among the top producers in the company. Mr. McBurney is a graduate of the University of Texas. In closing, Mr. Bauer added, �Jay is a tremendous addition to our management team, and we are looking forward to the impact that he will have on our organic growth initiatives. Jay is one of many reasons for us to be very optimistic about Orion�s future. The demand for our services is increasing and the market remains highly fragmented. The pressures on physicians� incomes are escalating, and we offer a realistic solution to the challenges facing the medical community. We have an experienced, successful management team and an expanding market presence. All of us at Orion are very excited about where we can go from here.� The live broadcast of Orion HealthCorp�s fourth quarter and year-end conference call will begin at 11:00 a.m. Eastern Time on Wednesday, April 4, 2007. An online replay of the call will be available for 30 days following the conclusion of the live broadcast. A link for these events can be found on the Company�s website at www.orionhealthcorp.com or at www.earnings.com. Orion�s mission is to provide superior billing, collections, practice, business and financial management services for physicians, resulting in optimal profitability for its clients and increased enterprise value for its stakeholders. For more information on Orion HealthCorp, Inc., visit the Company�s website at www.orionhealthcorp.com. Certain statements in this press release constitute �forward-looking statements� within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the �Acts�). Any statements contained herein that are not statements of historical fact are deemed to be forward-looking statements, including all statements regarding improving financial metrics and future growth. The forward-looking statements in this press release are based on current beliefs, estimates and assumptions concerning the operations, future results, and prospects of Orion HealthCorp, Inc. and the other companies described herein. As actual operations and results may materially differ from those assumed in forward-looking statements, there is no assurance that forward-looking statements will prove to be accurate. Forward-looking statements are subject to the safe harbors created in the Acts. Any number of factors could affect future operations and results, including without limitation, changes in federal or state healthcare laws and regulations and third party payer requirements, changes in costs of supplies, the loss of major customers, increases in labor and employee benefit costs, increases in interest rates on the Company�s indebtedness as well as general market conditions, competition and pricing, and the Company�s ability to successfully implement its business strategies, including the impact and expense of any potential acquisitions and the ability to integrate acquired operations and to obtain necessary approvals and financing. Orion HealthCorp, Inc. undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information or future events. ORION HEALTHCORP, INC. Consolidated Statements of Operations (in thousands, except per share amounts) � Three Months Ended Year Ended December 31, December 31, 2006� 2005� 2006� 2005� (Unaudited) (Unaudited) Net operating revenues $6,814� $5,656� $23,401� $22,845� Operating expenses 7,816� 6,299� 25,892� 28,365� � Loss from continuing operations before other income (expense) (1,002) (643) (2,491) (5,520) Other income (expense), net 128� (92) 427� (355) Minority interest earnings in partnership --� --� --� (6) Loss from continuing operations (874) (735) (2,064) (5,881) Income (loss) from operations of discontinued components, including gain (loss) on disposal (3,058) (3,602) (2,064) (14,558) � Net loss $(3,932) $(4,337) $(4,128) $(20,439) � Weighted average common shares outstanding: Basic 21,510� 12,076� 20,268� 10,345� Diluted 21,510� 12,076� 20,268� 10,345� � Net loss per share, basic and diluted: Net loss per share from continuing operations $(0.04) $(0.06) $(0.10) $(0.57) Loss per share from discontinued operations (0.14) (0.30) (0.10) (1.41) Net loss per share $(0.18) $(0.36) $(0.20) $(1.98) � Reconciliation of EBITDA to net loss: EBITDA $(481) $(166) $(759) $(2,725) Less: Depreciation and amortization (521) (477) (1,732) (2,795) Less: Total other income (expenses), net 128� (92) 427� (355) Less: Minority interest loss in partnership --� --� --� (6) Less: Loss from operations of discontinued components, including net loss on disposal (3,058) (3,602) (2,064) (14,558) Net loss $(3,932) $(4,337) $(4,128) $(20,439) � ORION HEALTHCORP, INC. Consolidated Balance Sheets (in thousands, except share amounts) � Dec. 31, Dec. 31, 2006� 2005� � Current assets: Cash and cash equivalents $644� $299� Accounts receivable, net 3,575� 2,798� Inventory 278� 206� Prepaid expenses and other current assets 407� 716� Assets held for sale 502� 976� Total current assets 5,406� 4,995� � Property and equipment, net 711� 742� � Other long-term assets: Intangible assets, including goodwill, net 22,158� 16,289� Other assets, net 1,908� 92� Total other long-term assets 24,066� 16,381� Total assets $30,183� $22,118� � Current liabilities: Accounts payable and accrued expenses $6,938� $6,738� Other current liabilities --� 25� Current portion of capital lease obligations and long-term debt 1,847� 2,861� Current portion of long-term debt held by related parties 325� 1,463� Liabilities held for sale 159� 452� Total current liabilities 9,269� 11,539� � Long-term liabilities: Capital lease obligations and long-term debt, net of current portion 6,989� 3,085� Long-term debt, net of current portion, held by related parties 4,541� 1,000� Minority interest in partnership --� 35� Total long-term liabilities 11,530� 4,120� � Stockholders' equity: Preferred stock, par value $0.001; 20,000,000 shares authorized; no shares issued and outstanding --� --� Common stock, Class A, par value $0.001; 300,000,000 and 70,000 shares authorized and 105,374,487 and 12,428,042 shares issued and outstanding at December 31, 2006 and December 31, 2005, respectively 105� 12� Common stock, Class B, par value $0.001; 0 and 25,000,000 shares authorized and 0 and 10,448,470 shares issued and outstanding at December 31, 2006 and December 31, 2005, respectively --� 11� Common stock, Class C, par value $0.001; 0 and 2,000,000 shares authorized and 0 and 1,437,572 shares issued and outstanding at December 31, 2006 and December 31, 2005, respectively --� 2� Common stock, Class D, par value $0.001; 50,000,000 and 0 shares authorized and 24,658,955 and 0 shares issued and outstanding at December 31, 2006 and 2005, respectively 25� --� Additional paid-in capital 63,876� 56,928� Accumulated deficit (54,584) (50,456) Treasury stock - at cost; 9,140 shares (38) (38) Total stockholders' equity 9,384� 6,459� Total liabilities and stockholders' equity $30,183� $22,118�