First Surgical Announces Third Quarter Financial Results

HOUSTON--([ BUSINESS WIRE ])--First Surgical Partners Inc. (OTCBB:FSPI) (?First Surgical? or the ?Company?), which provides non-emergency surgeries through its two ambulatory surgery centers and a general acute care hospital, today announced its financial results for the third quarter ended September 30, 2011.

"We are very pleased with our strong year-over-year financial improvements. With the recent addition of five new surgeon partners, we believe the Company is well positioned to further increase case volumes, driving long-term revenue growth and increased shareholder value."

Revenues for the three months ended September 30, 2011 were $13.8 million, an increase of 43.9% from $9.6 million for the third quarter of 2010. Total cases increased to 1,698 for the three months ended September 30, 2011, as compared to 1,484 for the three months ended September 30, 2010.

Net income was $1.8 million, an increase of 77.1% from $1.0 million for the third quarter of 2010. Net margin improved 23.4%, from 10.7% in the third quarter of 2010 to 13.2% in the third quarter of 2011. Earnings per basic and diluted share were $0.04, up from $0.03 per basic and diluted share in the same period a year ago. Cash and cash equivalents totaled $993,970 as of September 30, 2011.

Anthony Rotondo, CEO of First Surgical, stated, ?We are very pleased with our strong year-over-year financial improvements. With the recent addition of five new surgeon partners, we believe the Company is well positioned to further increase case volumes, driving long-term revenue growth and increased shareholder value.?

About First Surgical Partners Inc:

First Surgical Partners Inc. (?First Surgical?) operates two ambulatory surgery centers and a general acute care hospital in the Houston area. The surgeons that utilize First Surgical?s facilities perform non-emergency surgeries at these locations. The procedures performed include bariatric; ear, nose and throat; reconstructive and cosmetic plastics, orthopedics, pain management, neurosurgery and podiatry, all of which are often completed on an outpatient or short-stay basis. Each of First Surgical?s facilities resides within its own limited partnership, which is wholly owned by First Surgical. First Surgical?s website is [ www.firstsurgical.com ].

Forward-Looking Statements

Certain statements contained in this press release may constitute "forward-looking statements." Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors as disclosed in our filings with the Securities and Exchange Commission located at their website ([ http://www.sec.gov ]). In addition to these factors, actual future performance, outcomes, and results may differ materially because of more general factors. The forward-looking statements included in this press release represent the Company's views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of the press release.

FIRST SURGICAL PARTNERS INC.
(FORMERLY, ARKSON NUTRACEUTICALS, INC.)
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
?	?		?	As of
				September 30, 2011			?	December 31, 2010
								?
								?
Assets
								?
Current Assets
	Cash and Cash Equivalents			$	993,970			$	266,708
	Accounts Receivable, net				28,834,621				22,874,493
	Inventory				1,157,832				1,413,275
	Prepaid Expenses and Other Current Assets				221,895				298,104
				?				?
		Total Current Assets			31,208,318				24,852,579
								?
Property and Equipment, net					14,162,851				14,946,782
								?
Other Assets, net					50,996				64,379
				?				?
		Total Assets		$	45,422,165	?		$	39,863,740	?
								?
Liabilities and Shareholders' Equity
								?
Current Liabilities
	Accounts Payable			$	8,255,375			$	9,634,602
	Accrued Expenses				1,925,832				1,380,223
	Lines of Credit				4,271,049				1,521,250
	Current Taxes				6,047,899				1,194,128
	Current Portion of Long-Term Debt
		and Capital Lease Obligations			1,223,272				1,238,277
				?				?
		Total Current Liabilities			21,723,427				14,968,480
								?
Long-Term Liabilities
	Long-Term Debt and Capital Lease Obligations, Net
		of Current Portion			13,475,839				13,699,670
	Deferred Taxes				-				3,282,622
	Other Long-Term Liabilities				132,730				74,130
				?				?
		Total Long-Term Liabilities			13,608,569				17,056,422
								?
Commitments and Contingencies
								?
Shareholders' Equity
	Preferred Stock, $0.0001 par value, 50,000,000 shares
		authorized, zero issued and outstanding, respectively			-				-
	Common Stock, $0.0001 par value, 200,000,000 shares authorized,
		40,750,006 and 40,000,006 shares issued and outstanding, respectively			4,075				4,000
	Additional Paid-In Capital				10,499,135				11,716,594
	Accumulated Deficit				(413,041	)			(3,881,756	)
				?				?
		Total Shareholders' Equity			10,090,169				7,838,838
				?				?
		Total Liabilities and Shareholders' Equity		$	45,422,165	?		$	39,863,740	?
?

FIRST SURGICAL PARTNERS INC.
(FORMERLY, ARKSON NUTRACEUTICALS, INC.)
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
?
?		?	For the Three Months Ended							?	For the Nine Months Ended
			September 30,								September 30,
			?	2011	?	?	?	2010	?		?	2011	?	?	?	2010	?
															?
Net Revenue			$	13,826,508			$	9,610,214			$	38,599,962			$	34,599,464
															?
Operating Expenses
	Salaries and Benefits			3,239,553				2,544,530				10,137,810				7,873,630
	Medical Supplies			2,533,212				1,807,499				7,668,861				6,037,801
	Bariatric Program Sponsorship			1,200,000				1,200,000				3,600,000				3,600,000
	Management Fees			484,452				441,542				1,404,520				1,401,306
	Rent			458,681				496,302				1,468,494				1,395,076
	Depreciation and Amortization			564,831				323,243				1,637,637				1,017,494
	Other Operating Expenses			2,343,708				1,557,015				6,501,909				4,400,563
			?				?				?				?
	Total Operating Expenses			10,824,436				8,370,131				32,419,231				25,725,870
															?
Other Income and Expenses
	Interest Expense			(328,280	)			(210,743	)			(940,867	)			(649,711	)
			?				?				?				?
	Total Other Income and Expenses			(328,280	)			(210,743	)			(940,867	)			(649,711	)
			?				?				?				?
Income Before Income Taxes				2,673,792				1,029,340				5,239,864				8,223,883
															?
Income Taxes				851,024				-				1,771,149				-
			?				?				?				?
	Net Income		$	1,822,768	?		$	1,029,340	?		$	3,468,715	?		$	8,223,883	?
															?
Basic and Diluted Income
	per Common Share		$	0.04	?		$	0.03	?		$	0.09	?		$	0.21	?
															?
Weighted average number of common shares
	outstanding - basic and fully diluted		?	40,733,701	?		?	39,964,347	?		?	40,428,760	?		?	39,964,347	?
															?
Dividends declared per common share			$	0.0275	?		$	-	?		$	0.0650	?		$	-	?
?

Prior to the Company?s acquisition by Piper, on December 1, 2010, all of the net income from the Company?s subsidiaries, First Street Surgical Center, L.P., First Surgical Woodlands, L.P., and First Street Hospital, L.P. passed through to the then-limited partners of each of the Company?s subsidiaries and the Company, therefore, had no corporate tax obligation to record. Had the acquisition by Piper occurred on January 1, 2010, the Company would have incurred the following pro-forma income tax expense for the three and nine months ended September 30, 2010:

	?	Pro Forma for the Three Months Ended September 30, 2010		?	?	Pro Forma for the Nine Months Ended September 30, 2010


Current Taxes		$	360,269			$	2,878,359
							?
Deferred Taxes		?	-			?	-
Total		$	360,269			$	2,878,359
?

FIRST SURGICAL PARTNERS INC.
(FORMERLY, ARKSON NUTRACEUTICALS, INC.)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
?
?	?	?		?	For the Nine Months Ended
					September 30,
					?	2011	?	?	?	2010	?
									?
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net Income				$	3,468,715			$	8,223,883
	Adjustments to Reconcile Net Income to Net Cash
	Provided by Operating Activities:
		Depreciation and Amortization				1,637,637				1,007,305
		Stock Compensation				468,914				-
		Common Shares Issued for Services				937,828				-
	Changes in Operating Assets and Liabilities:
		Accounts Receivable				(5,960,128	)			(205,163	)
		Inventory				255,443				(153,916	)
		Other Current Assets				43,141				(257,387	)
		Accounts Payable and Accrued Expenses				(785,795	)			(83,098	)
		Other Long Term Liabilities				58,600				(219	)
		Current and Deferred Taxes Payable				1,571,149				-
					?				?
			Net Cash Provided by Operating Activities		?	1,695,503	?		?	8,531,405	?
									?
CASH FLOWS FROM INVESTING ACTIVITIES:
	Capital Expenditures					(840,323	)			(3,462,659	)
					?				?
			Net Cash Used in Investing Activities		?	(840,323	)		?	(3,462,659	)
									?
CASH FLOWS FROM FINANCING ACTIVITIES:
	Borrowings on Line of Credit					2,934,799				351,449
	Repayments on Line of Credit					(185,000	)			(60,000	)
	Proceeds from Issuance of Long-Term Debt					629,234				2,952,078
	Repayment of Long-Term Debt and Capital Lease Obligations					(882,826	)			(1,310,900	)
	Dividends Paid					(2,624,126	)			-
	Partner Contributions					-				75,700
	Partner Distributions					-				(6,556,875	)
					?				?
			Net Cash Used in Financing Activities		?	(127,918	)		?	(4,548,548	)
									?
NET INCREASE IN CASH AND CASH EQUIVALENTS						727,262				520,198
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD					?	266,708	?		?	261,594	?
CASH AND CASH EQUIVALENTS AT END OF PERIOD					$	993,970	?		$	781,792	?
									?
SUPPLEMENTAL CASH FLOW INFORMATION:
	Cash Paid for Interest				$	911,948	?		$	607,300	?
									?
	Cash Paid for Taxes				$	472,000	?		$	231,558	?
?

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First Surgical Announces Third Quarter Financial Results