Hythiam Announces Third Quarter Results

http://www.businesswire.com/news/home/20091109006506/en

LOS ANGELES--(Business Wire)--
Hythiam, Inc. (NASDAQ:HYTM) today announced financial results for the third
quarter and nine months ended September 30, 2009, which include the consolidated
results from Comprehensive Care Corporation (CompCare) through January 20, 2009,
the disposition date. As a result of the January 20, 2009 sale, the Company`s
results treat CompCare as a Discontinued Operation.

"With the Ford® Motor Company agreement and financing completed, we are focused
on concluding deals in the later stages of our pipeline," said Rick Anderson,
Hythiam`s President and COO. "We expect to finish the implementation of the Ford
agreement in the Fourth Quarter of 2009, and we expect revenue to begin in the
First Quarter of 2010. In addition, we are carefully managing the Company`s
existing resources to achieve critical objectives. As part of our sales process,
we are gaining traction by offering an integrated solution to customers who
recognize the significant cost of substance dependence in their populations and
the current fragmented approaches to treatment. We continue to work toward
securing final agreements with customers in longer sales cycles, and are also
expanding our pipeline," Anderson concluded.

CONSOLIDATED

The company reported a consolidated net loss of $8.8 million, or $0.16 per share
for the third quarter of 2009. This compares with a 2008 third quarter
consolidated net loss of $6.3 million, or $0.11 per share, which includes
$141,000 of income from discontinued operations, or $0.01 per share. The
consolidated net loss for the nine months ended September 30, 2009 amounted to
$10.7 million, or $0.19 per share, which includes $10.4 million of income from
discontinued operations, or $0.19 per share. This compares with a consolidated
loss of $31.1 million for the same period in 2008, or $0.57 per share, which
includes a $5.4 million loss from discontinued operations, or $0.10 per share.

CONTINUING OPERATIONS

For the 2009 third quarter, the Company reported revenues of $268,000 from its
continuing operations (healthcare services business), compared to revenues from
continuing operations of $1.3 million during the comparable period last year.
The decrease in healthcare services revenues was primarily attributable to the
difficult economy and the Company's decision to streamline operations by
reducing operating costs and resources supporting private-pay to focus on
managed care opportunities. There were a total of 46 patients treated with the
PROMETA Treatment Program in the third quarter of 2009, compared to 134 patients
treated in the third quarter of 2008. During the third quarter of 2009, there
were 14 licensee sites contributing to revenues, versus 36 in the same period
last year.

Loss from continuing operations for the 2009 third quarter was $8.8 million, or
$0.16 per share, versus a loss of $6.4 million, or $0.12 per share, in the third
quarter of 2008. Included in the 2009 third quarter loss were consolidated
non-cash charges for depreciation, amortization and stock-based compensation
expense of $1.4 million, compared to $3.6 million in non-cash charges in the
same period in 2008. The loss for the 2009 third quarter also included a $54,000
loss on the partial extinguishment of debt, a $25,000 "other-than-temporary"
loss on auction-rate securities and a non-cash charge of $4.8 million from the
change in fair value of the Company's warrant liabilities. These charges in the
2009 third quarter were partially offset by a $160,000 gain on the sale of
marketable securities. The loss from continuing operations for the 2008 third
quarter included a non-cash gain of $3.8 million from the change in fair value
of the Company's warrant liabilities.

For the nine months ended September 30, 2009, revenues for continuing operations
were $1.3 million, compared to revenues of $5.3 million in the same period in
2008. The decrease in healthcare services revenues was primarily attributable to
the difficult economy and the Company's decision to streamline operations by
reducing operating costs and resources supporting private-pay to focus on
managed care opportunities. Net loss from continuing operations for nine months
ended September 30, 2009 was $21.2 million, or $0.38 per share, compared to a
net loss of $25.6 million, or $0.47 per share, for the nine months ended
September 30, 2008. The net loss for the nine months ended September 30, 2009
included non-cash charges for depreciation, amortization and stock-based
compensation expenses of $5.2 million, compared to $9.0 million for similar
expenses in the same period in 2008. The net loss for the nine months ended
September 30, 2009 also included impairment charges of $1.1 million related to
property, equipment and intangible assets, a $330,000 loss on partial
extinguishment of debt and $185,000 of impairment charges related to
"other-than-temporary" losses on auction rate securities and a non-cash charge
of $4.7 million from the change in fair value of the Company's warrant
liabilities. The loss from continuing operations for the same period in 2008
included a non-cash gain of $4.7 million from the change in fair value of the
Company's warrant liabilities.

As of September 30, 2009, the Company had consolidated cash, cash equivalents,
and marketable securities of approximately $7.1 million, excluding auction rate
securities of $9.2 million.

In an effort to continue enhancing the Company`s ability to fund ongoing
operations, management further reduced yearly operating expenses by an
additional $5.7 million during the nine months ended September 30, 2009. The
Company will continue to manage expenses, and is focused on signing new
agreements with health plans for its Catasys offering.

About the PROMETA®
Treatment Program

Hythiam's PROMETA Treatment Program is designed for use by health care providers
seeking to treat individuals diagnosed with dependencies to alcohol, cocaine or
methamphetamine, as well as combinations of these drugs. The PROMETA Treatment
Program includes nutritional supplements, FDA-approved oral and IV medications
used off-label and separately administered in a unique dosing algorithm, as well
as psychosocial or other recovery-oriented therapy chosen by the patient and his
or her treatment provider. As a result, PROMETA represents an innovative
approach to managing alcohol, cocaine, or methamphetamine dependence that is
designed to address physiological, nutritional, and psychosocial aspects of the
disease, and is thereby intended to offer patients an opportunity to achieve
sustained recovery. To learn more, please visit www.prometainfo.com.

About Hythiam®

Hythiam, Inc. provides, through its CatasysTM offering, behavioral health
management services to health plans, employers and unions through a network of
licensed and company managed healthcare providers. The Catasys substance
dependence program is built around medical and psychosocial interventions,
including the patented PROMETA® Treatment Program for alcoholism and stimulant
dependence. The PROMETA Treatment Program, which integrates behavioral,
nutritional, and medical components, is also available on a private-pay basis
through licensed treatment providers and company managed treatment centers.
Hythiam does not practice medicine or manufacture, distribute, or sell any
medications and has no relationship with any manufacturers or distributors of
medications used in the PROMETA Treatment Program. For further information,
please visit www.hythiam.com.

Forward-Looking Statements

Except for statements of historical fact, the matters discussed in this press
release are forward looking and made pursuant to the Safe Harbor provisions of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements reflect numerous assumptions and involve a variety of risks and
uncertainties, many of which are beyond the company's control that may cause
actual results to differ materially from stated expectations. These risk factors
include, among others, limited operating history, lack of statistically
significant formal research studies, the risk that substance dependence
solutions might not be effective, difficulty in developing, exploiting and
protecting proprietary technologies, intense competition and substantial
regulation in the healthcare industry; and additional risks factors as discussed
in the reports filed by Hythiam, Inc. with the Securities and Exchange
Commission, which are available on its website at http://www.sec.gov.

Hythiam, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet Data
(unaudited)

September 30, December 31,
(in thousands) 2009 2008

ASSETS

Cash and cash equivalents $ 7,068 $ 9,756
Marketable securities, at fair value 9,209 146
Restricted cash - 24
Receivables, net 305 654
Prepaids and other current assets 265 357
Current assets of discontinued operations - 3,053
Total Current Assets 16,847 13,990

Marketable securities, at fair value - 10,072
Property and equipment, net 1,060 2,625
Intangible assets, net 2,717 3,257
Deposits and other assets 210 318
Non-current assets of discontinued operations - 1,604
Total Assets $ 20,834 $ 31,866

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable $ 2,555 $ 3,396
Accrued compensation and benefits 776 1,476
Accrued liabilities 2,069 2,082
Short-term debt 9,582 9,835
Current liabilities of discontinued operations - 8,675
Total Current Liabilities 14,982 25,464

Warrant liabilities 6,112 156
Other long-term liabilities 154 208
Non-current liabilities from discontinued operations - 4,930
Total Liabilities 21,248 30,758

Stockholders' equity (Deficit) (414 ) 1,108

Total Liabilities and Stockholders' Equity $ 20,834 $ 31,866

Hythiam, Inc. and Subsidiaries
Consolidated Statements of Operations
(unaudited)

Three Months Ended Nine Months Ended
(in thousands, except per share data) September 30, September 30,
2009 2008 2009 2008
Revenues
Healthcare services $ 268 $ 1,258 $ 1,346 $ 5,295
Total revenues 268 1,258 1,346 5,295

Operating expenses
Cost of healthcare services $ 68 $ 330 502 1,335
General and administrative expenses 3,878 9,351 14,007 29,466
Impairment losses - - 1,113 -
Research and development - 713 - 2,986
Depreciation and amortization 273 510 979 1,419
Total operating expenses $ 4,219 $ 10,904 $ 16,601 $ 35,206

Loss from operations $ (3,951 ) $ (9,646 ) $ (15,255 ) $ (29,911 )

Non-operating income (expenses)
Interest & other income 19 113 142 738
Interest expense (221 ) (637 ) (999 ) (1,149 )
Loss on extinguishment of debt (54 ) - (330 ) -
Gain on the sale of marketable securities 160 - 160 -
Other than temporary impairment of
marketable securities (25 ) - (185 ) -
Change in fair value of warrant liabilities (4,767 ) 3,758 (4,683 ) 4,713

Loss from continuing operations before provision for income taxes $ (8,839 ) $ (6,412 ) $ (21,150 ) $ (25,609 )

Provision for income taxes 3 6 13 23
Loss from continuing operations $ (8,842 ) $ (6,418 ) $ (21,163 ) $ (25,632 )

Discontinued Operations:
Results from discontinued operations, net of tax $ - $ 141 $ 10,449 $ (5,449 )

Net loss $ (8,842 ) $ (6,277 ) $ (10,714 ) $ (31,081 )

Continuing operations $ (0.16 ) $ (0.12 ) $ (0.38 ) $ (0.47 )
Discontinued operations - 0.01 0.19 (0.10 )
Net loss per share $ (0.16 ) $ (0.11 ) $ (0.19 ) $ (0.57 )

Weighted number of shares outstanding 56,373 54,629 55,509 54,479

Investor Relations:
Patricia Aguirre
Hythiam, Inc.
(310) 444-4333
paquirre@hythiam.com

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