Accredo Health, Inc. Announces Record First Quarter Results, Increases Estimates for Fiscal Year 2003 and Declares a Three-for-Two Stock Split.Business Editors MEMPHIS Memphis, city, ancient Egypt Memphis (mĕm`fĭs), ancient city of Egypt, capital of the Old Kingdom (c.3100–c.2258 B.C.), at the apex of the Nile delta and 12 mi (18 km) from Cairo. , Tenn.--(BUSINESS WIRE)--Nov. 4, 2002 First Quarter Earnings Increase 138% Accredo Health, Incorporated (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ACDO ACDO Air Carrier District Office ACDO Assistant Command Duty Officer ) today reported record results for its first quarter ended September 30, 2002. Net earnings increased 138% to $13,970,000, or $0.43 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the quarter ended September 30, 2002 compared to $5,877,000, or $0.22 per diluted share, for the same period in fiscal 2002. Revenues for the quarter increased 154% to $321,765,000 compared to $126,648,000 for the same period in fiscal 2002. In addition, gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. improved to 20.5% and earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
"We are extremely pleased with the company's performance including our record revenues and earnings achieved in the first quarter as we again exceeded our estimates," said David D. Stevens, Accredo chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "This continued growth is being driven by an increase in patients and market share from our core products, the addition of new products and the integration of our recent acquisitions," continued Mr. Stevens. "Furthermore, our increased margin is the result of better product mix, favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. product acquisition terms and the economic benefits of operating a significantly larger company. Many of these gains have been accelerated due to the rapid integration of the Specialty Pharmaceutical Services (SPS (Standby Power System) A UPS system that switches to battery backup upon detection of power failure. See UPS. SPS - Symbolic Programming System. Assembly language for IBM 1620. ) division into the Accredo family of companies. The results generated by the SPS acquisition continue to exceed our expectations." The Company also announced that its Board of Directors has approved a three-for-two stock split to be effective in the form of a 50% stock dividend. The stock split will result in one additional share of common stock being issued for every two shares held by the shareholders of record at the close of business on November 15, 2002. The additional shares will be distributed on December 2, 2002. Accredo Health, Incorporated currently has approximately 31,539,000 shares of common stock outstanding. The Company noted that its agreement with Bio-Technology General Corp. ("BTG BTG BIT (Built-In Test) Target Generator BTG Bridging the Gap BTG British Technology Group BtG Betreuungsgesetz (Germany) BTG Biomass Technology Group BV BTG Begbies Traynor Group ") for the distribution of the products Oxandrin(R), for the treatment of involuntary involuntary adj. or adv. without intent, will, or choice. Participation in a crime is involuntary if forced by immediate threat to life or health of oneself or one's loved ones, and will result in dismissal or acquittal. INVOLUNTARY. weight loss, and Delatestryl(R), to treat testosterone testosterone (tĕstŏs`tərōn), principal androgen, or male sex hormone. One of the group of compounds known as anabolic steroids, testosterone is secreted by the testes (see testis) but is also synthesized in small quantities in the deficiency, was recently renegotiated. Historically, Accredo has recognized revenue and cost of sales for the distribution of these products and received a management fee from BTG for the related distribution services. In the fiscal third quarter, Accredo will begin a transition to distributing the products on a consignment The delivery of goods to a carrier to be shipped to a designated person for sale. A Bailment of goods for sale. A consignment is an arrangement resulting from a contract in which one person, the consignor, either ships or entrusts goods to another, the basis and record only a transaction fee received from BTG. This will result in Accredo not recording the revenues and the related cost of sales for the consigned inventory that was previously recorded. BTG will be establishing direct relationships with the wholesalers. Joel Kimbrough, Accredo's chief financial officer commented, "The new arrangement with BTG will reduce revenues by approximately $21 million per quarter once the transition is completed and will have minimal impact on earnings." In addition, Accredo intends to sell its infertility infertility, inability to conceive or carry a child to delivery. The term is usually limited to situations where the couple has had intercourse regularly for one year without using birth control. business during the fiscal third quarter. The infertility business was acquired as part of the BioPartners In Care, Inc. (BPC BPC British Potato Council BPC Brewton-Parker College (Mt Vernon, GA) BPC Bible Presbyterian Church BPC Bangladesh Petroleum Corporation (Chittagong, Bangladesh) BPC British Pharmaceutical Codex ) acquisition in December, 2001. The sale will reduce revenues by approximately $1.5 to $2.0 million per quarter after the sale is complete, with no corresponding reduction in earnings. "While the infertility segment is a rapid growth business, it does not meet Accredo's chronic product or margin criteria, nor do we enjoy a preferred relationship with any of the manufacturers. Therefore, it does not fit into our future plans," commented Mr. Stevens. Mr. Kimbrough added, "We are pleased with the continued overall revenue growth, which will be supplemented in the next two quarters with revenue from the seasonal drug Synagis Synagis™ Immunology A humanized monoclonal antibody for preventing winter RSV in children. See RSV. (R) for the treatment of RSV RSV respiratory syncytial virus; Rous sarcoma virus. RSV abbr. respiratory syncytial virus RSV 1 Respiratory syncytial virus, see there 2 Rous sarcoma virus, see there in infants. Even with the change in the terms of the BTG agreement and the planned sale of the infertility business, we are leaving our previously announced FY 2003 revenue estimates unchanged at $1.45 billion to $1.50 billion. However, due to the improvement in margins achieved in the September quarter, we are increasing our previously announced earnings estimates. We estimate that for our fiscal year ending June 30, 2003, we will achieve earnings per share of $2.00 to $2.07. This is an increase from the estimates announced last quarter, when we gave earnings per share estimates of $1.87 to $1.97." These estimates assume no new indications for current product lines, new product launches or acquisitions and do not give effect to the three-for-two stock split. In addition to the previous discussions, we are providing the following questions and answers related to our operating results and our on-going business: Q1) Why did gross profit margins improve to 20.5% in the September quarter and what is the outlook for future quarters? A1) For the September quarter, gross profit margins improved to 20.5% compared to 15.5% in the same quarter last year. The improvement is primarily a result of product mix changes. We derived a larger percentage of our revenues from higher margin products in the September quarter when compared to the same quarter last year. We also benefited from lower factor and IVIG IVIG Intravenous immunoglobulin, see there product acquisition cost during the quarter. We expect our overall gross margin percentage to be in the 19.0% to 19.5% range in the second and third quarters of fiscal 2003. The anticipated decrease from the 20.5% gross margin percentage achieved in the September quarter can be attributed to sales of the seasonal drug Synagis(R), which has a lower gross margin than the composite gross margin. Q2) Why were general and administrative expenses 9.6% of revenue compared to 6.7% in the same quarter last year? A2) The general and administrative expenses increased to 9.6% in the September quarter from 6.7% in the same quarter last year primarily as a result of product mix. Our higher margin products, which were a larger percentage of our total revenues in the September 2002 quarter, have higher general and administrative expenses than many of the other product lines we distribute. We expect G&A as a percentage of total revenues to decline to a range of 8.5% to 9.0% in the second and third quarters of fiscal 2003 due to revenues from the seasonal drug Synagis(R). Q3) Why was bad debt expense 2.1% of revenue compared to .8% in the same quarter last year? A3) The increase in bad debts as a percentage of revenues is primarily due to the SPS acquisition, which resulted in an increase in the percentage of our revenues that were reimbursed by major medical benefit plans versus prescription card benefits. The majority of the reimbursements provided by major medical benefit plans are subject to much higher co-payment and deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). amounts resulting in higher bad debts. Q4) What is the status of the disposition of the SPS division's acute pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. business? A4) On January 2, 2002, upon the announcement of our intent to purchase the SPS division of Gentiva Health Services Gentiva Health Services, headquartered in Long Island, New York, is one of the largest providers of health care and specialty pharmaceutical services in the United States. A publicly traded NASDAQ: GTIV company,[1] , Inc., we stated our intent to retain only certain chronic therapies included in the SPS's revenues. The remaining acute pharmacy services business would be held for sale and disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of prior to December 31, 2002. After reviewing offers for the sale of the acute pharmacy services business, we have decided to retain the acute accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and either sell the remaining acute branch assets to individual regional home infusion therapy home infusion therapy The IV administration of therapeutics–analgesics, antibiotics, chemotherapy, parenteral nutrition–outside of a formal healthcare environment. See Hyperalimentation, Patient-controlled analgesics, TPN. providers or close the branches that are not sold. Accordingly, negotiations have been entered into and some contracts executed. We expect to receive approximately $30 to $35 million in cash from the collection of the acute accounts receivable and the sale of the remaining acute assets. We expect to have fully divested the acute business by December 31, 2002. As previously announced, the Company's conference call to discuss the first quarter results is scheduled for Monday, November 4, 2002, at 9:00 a.m. CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. . The conference call will be web-cast live on the Accredo Health, Incorporated web site. Interested parties may access the web-cast at www.accredohealth.com beginning at 9:00 a.m. CST on November 4, 2002. A replay of the call will be available, and there will also be a playback Playback could mean:
In addition to historical information, certain of the statements in the preceding paragraphs, particularly those anticipating future financial performance, business prospects and growth and operating strategies constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements may be identified by words such as anticipate, believe, estimate, expect, intend, predict, hope or similar expressions. Such statements, which include estimated financial information or results and the quoted comments of Mr. Stevens and Mr. Kimbrough above, are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements, including, without limitation, the loss of a biopharmaceutical relationship, our inability to sell existing products, difficulties integrating the SPS division, the impact of pharmaceutical industry regulation, the difficulty of predicting FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. and other regulatory authority Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities approvals, the regulatory environment and changes in healthcare policies and structure, acceptance and demand for new pharmaceutical products and new therapies, the impact of competitive products and pricing, the ability to obtain products from suppliers, reliance on strategic alliances, the ability to expand through joint ventures and acquisitions, the ability to maintain pricing arrangements with suppliers that preserve margins, the need for and ability to obtain additional capital, the seasonality and variability of operating results, the Company's ability to implement its strategies and achieve its objectives and the risks and uncertainties described in reports filed by Accredo with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , including without limitation, cautionary statements under the heading "Risk Factors" made in Accredo's 2002 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. .
Accredo Health, Incorporated
Condensed Consolidated Statements of Income
(amounts in thousands, except share data)
(Unaudited)
Three Months Ended
September 30
2002 2001
Net patient revenues $312,535 $122,295
Other revenue 8,885 3,907
Equity in net income of joint ventures 345 446
------------- -----------
Total revenues 321,765 126,648
Cost of sales 255,825 107,012
------------- -----------
Gross profit 65,940 19,636
General & administrative 30,744 8,481
Bad debts 6,608 1,055
Depreciation and amortization 2,711 691
------------- -----------
Income from operations 25,877 9,409
Interest income (expense), net (2,075) 514
Minority interest in consolidated subsidiary (484) (319)
------------- -----------
Net income before income taxes 23,318 9,604
Provision for income taxes 9,348 3,727
------------- -----------
Net income $13,970 $5,877
============= ===========
Earnings per share:
Basic $0.44 $0.23
Diluted $0.43 $0.22
Weighted average shares outstanding:
Basic 31,404,139 25,996,817
Diluted 32,206,432 26,848,897
Condensed Consolidated Balance Sheets
(amounts in thousands)
(Unaudited)
September 30, June 30,
2002 2002
Cash & cash equivalents $10,886 $42,913
Accounts receivable, net 330,725 335,253
Other current assets 151,227 155,043
Fixed assets, net 28,227 23,796
Other assets 366,645 367,824
------------- -----------
Total assets $887,710 $924,829
============= ===========
Current liabilities $197,894 $223,429
Long-term debt 194,375 224,688
Other liabilities 6,198 5,658
Stockholders' equity 489,243 471,054
------------- -----------
Total liabilities and stockholders' equity $887,710 $924,829
============= ===========
Condensed Consolidated Statements of Cash Flow
(amounts in thousands)
(Unaudited)
Three Months Ended
September 30
2002 2001
Net cash provided by operating activities $3,997 $4,461
Net cash used in investing activities (7,382) (6,385)
Net cash provided by (used in) financing
activities (28,642) 728
------------- -----------
Increase (decrease) in cash and cash
equivalents $(32,027) $(1,196)
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