Pacific Health Care Organization, Inc. (PHCO) reported its financial results for the second quarter of 2026, revealing a total revenue of $1.77 million, a 3% increase from $1.73 million in the same period last year. However, the company experienced a significant decline in net income, which fell by 49% to $327,008 compared to $636,907 in the prior year. For the first half of 2026, total revenues decreased by 8% to $3.27 million, down from $3.55 million in the first half of 2025, while net income also dropped by 44% to $520,677.
The decline in revenue was primarily attributed to the termination of services for significant customers, which impacted the Health Care Organization (HCO) and Medical Provider Network (MPN) segments. HCO revenue decreased by 40% year-over-year for the first half of 2026, while MPN revenue fell by 9%. In contrast, the medical bill review segment saw a 22% increase in revenue, driven by a higher volume of bill reviews, and utilization review revenue grew by 12% due to increased referrals. The company noted that the overall decrease in revenue was partially offset by growth in these service lines.
Operationally, PHCO's total expenses for the second quarter decreased by 1% to $1.41 million, compared to $1.42 million in the same quarter of 2025. The company reported a reduction in salaries and wages by 9%, reflecting a decrease in employee headcount. However, professional fees increased by 22%, primarily due to costs associated with external consultants. The company also noted a significant drop in other income, which fell to $94,229 from $592,116 in the previous year, largely due to the absence of Employee Retention Credit (ERC) refunds received in 2025.
Looking ahead, PHCO's management expressed concerns about the impact of economic conditions on customer retention and the potential for further revenue declines. The company is actively pursuing strategies to expand its customer base and reduce reliance on major clients, which currently account for a significant portion of its revenue. Despite the challenges, PHCO remains focused on enhancing its service offerings and exploring potential acquisitions to drive future growth. The company believes that its current cash position and anticipated cash flows will be sufficient to support operations in the near term.
About PACIFIC HEALTH CARE ORGANIZATION INC
Pacific Health Care Organization, Inc. specializes in workers' compensation cost containment services in California. It manages healthcare networks, including Health Care Organizations and Medical Provider Networks, to control medical treatment costs and ensure timely, appropriate care. The company offers bill review, utilization management, case management, and dispute resolution services, primarily serving employers, insurers, and administrators to reduce claims expenses and improve injury recovery outcomes.
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