Accredo Health, Inc. Announces Record Fourth Quarter Results.Business Editors/Health/Medical Writers 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)--Sept. 4, 2003 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 the quarter ended June June: see month. 30, 2003. Revenues for the quarter increased 75% to $329,056,000 compared to $188,242,000 for the same period in fiscal 2002. Net income for the quarter increased 125% to $17,239,000, or $0.36 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, compared to $7,678,000, or $0.18 per diluted share, for the same period in fiscal 2002. For the year, revenues increased 110% to $1,373,336,000 compared to $653,573,000 in fiscal 2002. For the year, net income was $29,535,000, or $0.61 per diluted share, compared to $29,760,000, or $0.73 per diluted share, in fiscal 2002. Net income for the year ended June 30, 2003 includes a charge of $58.5 million ($35.7 million after tax) that was recorded in the third quarter to increase the allowance for doubtful accounts Allowance for Doubtful Accounts An estimation made by a company and documented on its balance sheet for receivables that might go uncollected. Notes: It is standard practice for a company to have funds set aside for money that cannot be collected. related to the 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 of the 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, which the Company acquired on June 13, 2002. This charge reduced net income for the year by $35.7 million and earnings per diluted share by $0.74. Excluding this charge, net earnings for the year were $65,235,000, or $1.35 per diluted share. The Company has decided to present non-GAAP net earnings and net earnings per diluted share to give investors a means of understanding the Company's operating performance for the year ended June 30, 2003 before giving effect to the impact of the charge related to the increase in the allowance for doubtful accounts. The attached financial statements include a reconciliation between this non-GAAP earnings information and the Company's net income and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of computed in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . For revenue recognition purposes, prior to April 1, 2003, management considered the delivery criteria of Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB SAB Spontaneous abortion. See Abortion. ) No. 101 to have been met when product was shipped to its patients and the Company had no further obligation related to such product. Management has now determined that the delivery criteria are met when the product has been delivered to the patient (which typically occurs one day after shipment), and the Company has no further obligation related to such product. The recognition of revenue upon delivery of the product is a timing issue and does not impact the amount of revenue to be recorded over time. Therefore, the Company will recognize approximately $9.8 million of net revenue for product shipped on June 30, 2003 as revenue on July July: see month. 1, 2003. The impact of recognizing the revenue when the product is delivered to the patient is reflected in the quarterly and annual results discussed above. The impact on the first three quarters of fiscal 2003 is more fully discussed in "Q1" of the questions and answers section below. The financial information contained herein is unaudited. The audit will not be complete until the Company files its 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. with the SEC, which is due September September: see month. 29, 2003. Accordingly, the financial information included in this press release is subject to change pending the completion of the audit by the Company's new auditor auditor n. an accountant who conducts an audit to verify the accuracy of the financial records and accounting practices of a business or government. A proper audit will point out deficiencies in accounting and other financial operations. , Deloitte & Touche LLP LLP - Lower Layer Protocol . David D. Stevens Stevens, family of U.S. inventors. John Stevens, 1749–1838, b. New York City, was graduated from King's College (now Columbia Univ.) in 1768. , Accredo's chairman and chief executive officer commented, "The quarter was very encouraging as we gained momentum from renewed sales growth while expanding our portfolio of major retail products. Our sales force's efforts showed improvement in the number of new patient referrals over the preceding quarter. In addition, we have added five new products since the March quarter, expanding our product portfolio from fourteen to nineteen. With these developments, we believe that Accredo is well positioned to restore its growth status as we move into a new fiscal year." Joel Kimbrough, Accredo's chief financial officer, added, "We are pleased with the continued improvement in our gross profit margin 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. , which increased to 22.2% in the fourth quarter of fiscal 2003 compared to 18.6% in the same quarter last year. We are also pleased to report that cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses improved to $72.3 million in fiscal 2003 compared to $34.1 million in fiscal 2002." Mr. Kimbrough continued, "We are pleased with the continued revenue growth and the addition of the new products to our product portfolio. Although we anticipate that our revenues and earnings will be impacted by a reduction in the hemophilia hemophilia (hē'məfĭl`ēə,–fēl`yə), genetic disease in which the clotting ability of the blood is impaired and excessive bleeding results. reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. rates by Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. and MediCal proposed to be effective January 1, 2004, we are increasing our previously announced fiscal year 2004 revenues and earnings estimates. We estimate that for our fiscal year ending June 30, 2004, we will achieve revenues in the $1.49 billion to $1.54 billion range and diluted earnings per share within a range of $1.54 to $1.59. We had previously provided estimates for fiscal 2004 of $1.475 billion to $1.525 billion in revenues and $1.53 to $1.58 in diluted earnings per share. These estimates assume no new indications for current product lines, potential new product lines or future acquisitions. Excluding the fiscal 2003 revenues from Bio-Technology General Corp.'s products Oxandrin(R) and Delatestryl(R), which we are now distributing 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, the fiscal 2004 revenues estimate represents a 13% to 17% increase." 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) What was the impact of the timing of recording revenues when product is delivered on the fiscal 2003 quarterly results? A1) The impact on the first and third quarters is a decrease in revenues and earnings and the impact on the second quarter is an increase in revenues and earnings. The following table details the previously reported and restated revenues, net income (loss) and earnings (loss) per share information (amounts in thousands, except share data).
Quarter Ended Quarter Ended Quarter Ended
September 30, 2002 December 31, 2002 March 31, 2003
As As As
Previously As Previously As Previously As
Reported Restated Reported Restated Reported Restated
------------------------------------------------------------
Revenues $321,765 $316,661 $364,402 $369,506 $366,569 $358,113
Net income
(loss) $13,970 $13,463 $17,049 $17,556 $(17,769)$(18,723)
Earnings (loss) per share:
Basic $0.30 $0.29 $0.36 $0.37 $(0.37) $(0.39)
Diluted $0.29 $0.28 $0.35 $0.36 $(0.37) $(0.39)
The quarterly data included in the annual report on form 10-K for fiscal 2003 and the future quarterly reports on form 10-Q Form 10-Q See 10-Q. will include the restated amounts. The fiscal 2001 and 2002 results are not materially affected. Q2) Why did gross profit margins improve to 22.2% in the June 2003 quarter compared to 18.6% achieved in the same quarter last year and to the 20.8% generated in the March 2003 quarter? A2) For the June 2003 quarter, gross profit margins improved to 22.2% compared to 18.6% in the same quarter last year. The improvement is primarily the result of product mix changes. We derived a larger percentage of our revenues from higher margin products in the June quarter when compared to the same quarter last year. We also experienced a 140 basis point improvement in gross profit margin from 20.8% in the March quarter to 22.2% in the June quarter. The improvement in gross profit margin is also primarily attributable to product mix changes including the reduction in revenue from the seasonal drug Synagis Synagis™ Immunology A humanized monoclonal antibody for preventing winter RSV in children. See RSV. (R). Q3) Why were general and administrative expenses 9.9% of revenue in the June 2003 quarter compared to 7.7% in the same quarter last year? Why did it increase from the 9.2% reported in the March 2003 quarter? What is the outlook in future quarters? A3) The general and administrative expenses increased to 9.9% in the June 2003 quarter from 7.7% in the same quarter last year primarily as a result of product mix changes. Our higher margin products, which were a larger percentage of our total revenues in the June 2003 quarter, have higher general and administrative expenses than many of the other product lines we distribute. The increase in G&A expenses from 9.2% in the March 2003 quarter to 9.9% in the June 2003 quarter is due to the decrease in revenues from the seasonal drug Synagis(R), which are primarily generated in our December and March quarters. The first and second quarters of fiscal 2004 will be impacted by additional start-up Start-up The earliest stage of a new business venture. general and administrative expenses related to the launch of Xolair Xo·lair A trademark for the drug omalizumab. omalizumab Xolair Pharmacologic class: Recombinant DNA-derived immunoglobulin G subclass 1 (IgG1) monoclonal antibody Therapeutic class: (R) and the 2004 Synagis(R) season. Q4) Why was bad debt expense 2.1% of revenue compared to 1.1% in the same quarter last year? A4) The increase in bad debts as a percentage of revenues is primarily due to an increase in the percentage of our revenues that were reimbursed by major medical benefit plans versus prescription card benefits. The change in revenue mix is due to the SPS acquisition. The majority of the reimbursement provided by major medical benefit plans are subject to much higher co-payment co-payment Managed Care That portion of a claim or medical expense that a health plan member must pay out-of-pocket for specific medical services–eg, hospital care, drugs, office visits, etc; the insurer pays the remaining portion 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. As previously announced, the Company's conference call to discuss the fourth quarter results is scheduled for Thursday, September 4, 2003, at 9:00 a.m. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT . 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. CDT on September 4, 2003. A replay of the call will be available, and there will also be a playback Playback could mean:
Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the beginning approximately one hour after the end of the conference call. The replay of the call be available until September Until September is a 1984 romantic drama set in France. It stars Karen Allen as an American tourist in Paris who falls in love with a married Frenchman (Thierry Lhermitte). External links 28, 2003 at 5:00 p.m. CDT. To access the replay call, dial 402-220-2491 and enter the code 18217515. The Internet playback option will be available until September 3, 2004. To access the Internet playback, go to www.accredohealth.com. 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 acquisitions, 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 Quarterly Report on Form 10-Q for its quarter ended March 31, 2003.
Accredo Health, Incorporated
Condensed Consolidated Statements of Income
(amounts in thousands, except share data)
(Unaudited) (Unaudited)
Year Ended Three Months Ended
June 30, June 30,
2003 2002 2003 2002
Net patient revenues $1,337,414 $633,249 $321,738 $181,841
Other revenue 33,982 18,257 6,723 5,779
Equity in net income of
joint ventures 1,940 2,067 595 622
---------------------- ----------------------
Total revenues 1,373,336 653,573 329,056 188,242
Cost of sales 1,086,334 544,902 256,132 153,136
---------------------- ----------------------
Gross profit 287,002 108,671 72,924 35,106
General & administrative 129,803 45,571 32,629 14,417
Bad debts (1) 87,418 5,833 7,073 2,007
Restructuring charge - 3,893 - 3,893
Depreciation and
amortization 11,906 3,675 3,248 1,306
---------------------- ----------------------
Income from operations 57,875 49,699 29,974 13,483
Interest income
(expense), net (8,044) 359 (1,960) (479)
Minority interest in
consolidated subsidiary (2,044) (1,273) (571) (307)
---------------------- ----------------------
Net income before income
taxes 47,787 48,785 27,443 12,697
Provision for income
taxes 18,252 19,025 10,204 5,019
---------------------- ----------------------
Net income $29,535 $29,760 $17,239 $7,678
====================== ======================
Earnings per share:
Basic $0.62 $0.75 $0.36 $0.19
Diluted $0.61 $0.73 $0.36 $0.18
Weighted average shares outstanding:
Basic 47,509,682 39,547,712 47,780,753 40,850,471
Diluted 48,442,723 40,919,625 48,304,903 42,299,919
(1) The company recorded a charge of $58.5 million in the March 2003
quarter to increase the allowance for doubtful accounts related to
the accounts receivable of the SPS division.
The following table summarizes the impact of the charge on net income
and diluted earnings per share computed in accordance with generally
accepted accounting principles (GAAP).
(Unaudited) (Unaudited)
Year Ended Three Months Ended
June 30, June 30,
2003 2002 2003 2002
Net income computed in
accordance with GAAP $29,535 $29,760 $17,239 $7,678
Add back SPS receivable
charge, net of income tax
benefit 35,700 - - -
--------------------- -------------------
Adjusted net income $65,235 $29,760 $17,239 $7,678
===================== ===================
Diluted earnings per share
(GAAP) $0.61 $0.73 $0.36 $0.18
Add back SPS receivable
charge, net of income tax
benefit 0.74 - - -
--------------------- -------------------
Adjusted diluted earnings
per share $1.35 $0.73 $0.36 $0.18
===================== ===================
Condensed Consolidated Balance Sheets
(amounts in thousands)
(Unaudited)
June 30, June 30,
2003 2002
Cash & cash equivalents $48,006 $42,913
Accounts receivable, net 301,764 335,253
Other current assets 145,894 155,043
Fixed assets, net 31,681 23,796
Other assets 381,220 367,824
------------- --------------
Total assets $908,565 $924,829
============= ==============
Current liabilities $199,790 $223,429
Long-term debt 178,437 224,688
Other liabilities 17,630 5,658
Stockholders' equity 512,708 471,054
------------- --------------
Total liabilities and stockholders' equity $908,565 $924,829
============= ==============
Condensed Consolidated Statements of Cash Flow
(amounts in thousands)
(Unaudited) (Unaudited)
Year Ended Three Months Ended
June 30, June 30,
2003 2002 2003 2002
Net cash provided by operating
activities $72,340 $34,104 $23,690 $30,633
Net cash (used in) investing
activities (39,745) (265,957) (4,612) (213,219)
Net cash provided by (used in)
financing activities (27,502) 220,246 (3,134) 224,396
-------- --------- -------- ---------
Increase (decrease) in cash and
cash equivalents $5,093 $(11,607) $15,944 $41,810
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