Accredo Health, Inc. Announces Record Second Quarter Results; Second Quarter Earnings Increase 73%.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)--Feb. 4, 2002 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 and six months ended December 31, 2001. Net earnings increased 73% to $7,217,000, or $.27 per diluted share, for the quarter ended December 31, 2001 compared to $4,167,000, or $.16 per diluted share, for the same period in fiscal 2001. For the six months, net earnings increased 74% to $13,094,000, or $0.49 per diluted share, compared to $7,531,000, or $0.30 per diluted share, for the same period in fiscal 2001. Revenues for the quarter increased 41% to $160,186,000, compared to $113,869,000 for the same period in fiscal 2001. For the six months, revenues increased 34% to $286,834,000 compared to $213,446,000 for the same period in fiscal 2001. 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 15.2% 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.
Other Significant Achievements -- We exceeded our earnings estimates for the twelfth consecutive quarter, each quarter since reporting as a public company. -- On January 2, we entered into an agreement to purchase the Specialty Pharmaceutical Services (SPS) division of Gentiva Health Services, Inc., a leading provider of pharmaceutical services throughout the U.S. -- On December 20, we acquired BioPartners in Care, Inc. (BPC), a leading provider of pharmaceutical care for certain chronic, long-term patient populations, including those requiring hemophilia clotting factor and intravenous immunoglobulin. -- On December 5, we announced that we had signed a distribution and patient support agreement with Actelion Pharmaceuticals US, Inc. for the distribution of Tracleer(TM) for the treatment of pulmonary arterial hypertension. This represents our first distribution and support services agreement for a non-injectable drug. -- We have signed an additional new distribution relationship with Rare Disease Therapeutics, Inc. for the distribution of Orfadin(R) for the treatment of Hereditary Tyrosinemia Type I. We will also provide patient support services pursuant to the agreement. "We are very pleased with the record revenues and earnings achieved in the second 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. . "We are also very excited about the two acquisitions and the additional product announced during the December quarter enhancing our ability to continue to provide superior services to our customers, including manufacturers, patients, payors and physicians. We believe that these acquisitions, the addition of the first non-injectable product and the potential new products that are in the biopharmaceutical pipeline will further enhance our ability to build upon our unique specialty pharmaceutical distribution model." "During the December quarter, we saw an increase in revenues from all of our core therapies as well as a significant increase in our SYNAGIS(R) revenues when compared to the same quarter last year," continued Mr. Stevens. "We now estimate that revenues from SYNAGIS(R), MedImmune's product for the treatment of respiratory syncytial virus respiratory syncytial virus (sĭnsĭsh`əl): see cold, common. (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, will be $60 to $65 million for fiscal 2002. In addition, we continue to see improvement in the availability of hemophilia hemophilia (hē'məfĭl`ēə,–fēl`yə), genetic disease in which the clotting ability of the blood is impaired and excessive bleeding results. factor and intravenous immunoglobulin Intravenous immunoglobulin (IVIG) is a blood product administered intravenously. It contains the pooled IgG immunoglobulins (antibodies extracted from the plasma of over a thousand blood donors). IVIG's effects last between 2 weeks and 3 months. (IVIG IVIG Intravenous immunoglobulin, see there ) products which resulted in an increase in revenues of approximately 12% from these products on a same store basis when compared to the September 2001 quarter." Joel Kimbrough, chief financial officer, commented, "On a same store basis, our revenues for the December quarter increased 33% and our earnings increased 48% when compared to the same quarter last year. In addition to reporting strong revenue and earnings growth, we also generated $4.5 million of 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 during the quarter." Mr. Kimbrough added, "We are pleased with the continued overall revenue growth in our core products and the successful growth in seasonal revenue from SYNAGIS(R). As a result of this growth and the acquisition of 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 during the quarter, we are again increasing our estimates that we announced last quarter. We estimate that for our fiscal year ending June 30, 2002, we will achieve revenues in the $610,000,000 to $620,000,000 range and earnings per share of $1.05 to $1.10. In addition, we estimate that for our fiscal year ending June 30, 2003, we will achieve revenues in the $760,000,000 to $780,000,000 range and earnings per share of $1.40 to $1.50. Assuming a continuing consistent supply of hemophilia and IVIG products, we are also increasing our estimate of gross profit margins from the historical range of 14% to 15% to a new range of 14.5% to 15.5%. These estimates assume no new indications for current product lines, new product launches or future acquisitions. In addition, these estimates do not include the acquisition of 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. which we plan to close in April 2002." 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 are the revenue expectations for Tracleer(TM)? A1) We began shipment of this product in late December. We expect that the impact on fiscal 2002 results will be minimal as the product enters the market. For fiscal 2003, we estimate revenues to be $10 to $15 million. Q2) What guidance can you give us related to the SPS acquisition to be completed in the June quarter? A2) As we announced on January 2, the SPS division will record revenues of approximately $715 to $735 million in calendar year 2001. We intend on retaining approximately 75% of those revenues, and the acquisition will be immediately accretive to earnings. We will give more specific revenue and earnings guidance for the June quarter and fiscal 2003 with our third quarter earnings release planned for April 29, 2002. Q3) What is the status of Recombinant Factor VIII factor VIII n. A factor in the clotting of blood, a deficiency of which is associated with hemophilia A. Also called antihemophilic factor, antihemophilic globulin, antihemophilic globulin A, product availability? A3) The amount of recombinant hemophilia factor VIII product that we received from Baxter International Baxter International Inc. (NYSE: BAX), is a global healthcare company with 48,000 employees and 2006 sales of US$10.4 billion. Its headquarters is in Deerfield, Illinois. , Inc. and Genetics Institute, Inc. during the December quarter was greater than the amount received in any period in the last twelve months. This allowed us to not only continue to serve our patients, but also to accept new hemophilia recombinant referrals throughout the quarter. While Bayer Corporation is still not releasing a material amount of recombinant product, we anticipate that product availability from all manufacturers will continue to improve in future quarters. Q4) Why did bad debts decrease to .6% of net revenues in the quarter versus .8% in the previous quarter? A4) The cause of the decrease in bad debts as a percentage of revenue is primarily due to the increased percentage of the Company's revenue that was reimbursed by prescription card benefit plans as opposed to major medical benefit plans. The majority of the reimbursement provided by prescription card benefit plans are subject to much lower co-payment and deductible amounts (typically $10-$15 per prescription) resulting in lower bad debt. More specifically, revenues from SYNAGIS(R) represented a larger percentage of total revenues during the December quarter compared to the previous quarter. Q5) What additional information can you give us related to the new product Orfadin(R)? A5) On January 22, 2002, the Food and Drug Administration (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. ) notified Swedish Orphan International AB (SOI (Silicon On Insulator) A chip architecture that increases transistor switching speed by reducing capacitance (build-up of electrical charges in the transistor's elements), and thus reducing the discharge time. The power requirement is also reduced in some designs. ), a Stockholm, Sweden based enterprise, that it had granted marketing approval for Orfadin(R) Capsules for the treatment of Hereditary Tyrosinemia Type I tyrosinemia type I Metabolic disease A rare AR condition due to fumarylacetoacetate hydrolase Clinical Progressive liver dysfunction, cirrhosis, and hepatocellular carcinoma of childhood onset, renal tubular damage, acute porphyria-like neurologic crises Diagnosis (HT-I) as an adjunct to dietary restrictions. In the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Canada, Rare Disease Therapeutics, Inc. (RDT RDT 1. Renal dialysis treatment 2. Retinal damage threshold ) of Nashville, Tennessee “Nashville” redirects here. For other uses, see Nashville (disambiguation). Nashville is the capital and the second most populous city of the U.S. state of Tennessee, after Memphis. , an affiliate of SOI, will be marketing and promoting Orfadin(R). RDT has contracted with Nova Factor for the exclusive distribution rights in the U.S. and Canada. HT-I is a rare genetic metabolic disorder Noun 1. metabolic disorder - a disorder or defect of metabolism disorder, upset - a physical condition in which there is a disturbance of normal functioning; "the doctor prescribed some medicine for the disorder"; "everyone gets stomach upsets from time to time" characterized by the lack of an enzyme needed to break down the amino acid amino acid (əmē`nō), any one of a class of simple organic compounds containing carbon, hydrogen, oxygen, nitrogen, and in certain cases sulfur. These compounds are the building blocks of proteins. tyrosine tyrosine (tī`rəsēn), organic compound, one of the 20 amino acids commonly found in animal proteins. Only the l-stereoisomer appears in mammalian protein. . Present at birth, the disorder causes progressive liver failure liver failure Clinical medicine Liver insufficiency that results in death, requires a liver transplant, or is characterized by recovery after encephalopathy, or while awaiting a transplant; also defined as a condition with ≥ 3 of following: albumin < 3. and liver cancer Liver Cancer Definition Liver cancer is a relatively rare form of cancer but has a high mortality rate. Liver cancers can be classified into two types. in young children. The most common form of the disease is Acute Tyrosinemia Type I, which if untreated, is fatal in the first year of life. There also exists a chronic and a sub-chronic form of the disease, with a more protracted pro·tract tr.v. pro·tract·ed, pro·tract·ing, pro·tracts 1. To draw out or lengthen in time; prolong: disputants who needlessly protracted the negotiations. 2. course but still fatal if untreated. There are currently 54 known patients in the United States with an anticipated prevalence worldwide of approximately 300 patients. The only treatment alternative for HT-I patients is a liver transplant liver transplant Hepatic transplant Transplant surgery A procedure that replaces a cancer conquered, metabolically defeated, or substance subjugated liver with one no longer required by its owner, many of whom donate same after an MVA Diseases requiring transplant . The cost of Orfadin(R) depends upon the dose, which currently varies with the child's size, ranging from $12,000 per year for an infant up to $60,000 a year for an older child. While the revenue we will derive from this new relationship will not be material, the approval of Orfadin(R) provides significant hope for patients with this previously untreatable Un`treat´a`ble a. 1. Incapable of being treated; not practicable. , potentially fatal disease. Orfadin(R) clearly fits our niche strategy of providing care for the most complex and expensive therapies. Accredo Health, Incorporated and its two wholly-owned subsidiaries, Hemophilia Health Services health services Managed care The benefits covered under a health contract , Inc. and Nova Factor, Inc., provide specialized contract pharmacy and related services pursuant to agreements with biopharmaceutical drug manufacturers relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the treatment of patients with certain costly, chronic diseases. The Company's services include collection of timely drug utilization and patient compliance information, patient education and monitoring through the use of written materials and telephonic consultation, reimbursement expertise and overnight drug delivery. As previously announced, the Company's conference call to discuss the second quarter results is scheduled for Monday, February 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 February 4, 2002. A replay of the call will be available, and there will also be a playback of the conference call available over the Internet beginning approximately one hour after the end of the conference call. Both the replay of the call and the Internet playback option will be available until February 8, 2002 at 5:00 p.m. CST. To access the replay call, dial 402/220-2491 and enter the code 10834554. 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 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 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, the impact of pharmaceutical industry regulation, the difficulty of predicting FDA 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, including without limitation, cautionary statements made in Accredo's 2001 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. under the heading "Risk Factors."
Accredo Health, Incorporated
Condensed Consolidated Statements of Income
(amounts in thousands, except share data)
(Unaudited) (Unaudited)
Six Months Ended Three Months Ended
December 31, December 31,
2001 2000 2001 2000
Net patient service
revenues $277,845 $205,408 $155,550 $109,811
Other revenue 8,116 7,524 4,209 3,755
Equity in net income
of joint ventures 873 514 427 303
---------------------- ----------------------
Total revenues 286,834 213,446 160,186 113,869
Cost of services 242,771 182,458 135,759 97,450
---------------------- ----------------------
Gross profit 44,063 30,988 24,427 16,419
General &
administrative 19,303 14,211 10,822 7,575
Bad debts 2,056 3,194 1,001 1,642
Depreciation and
amortization 1,462 2,040 771 1,027
---------------------- ----------------------
Income from operations 21,242 11,543 11,833 6,175
Interest income, net 800 1,256 286 882
Minority interest in
consolidated
subsidiary (633) (306) (314) (157)
---------------------- ----------------------
Net income before
income taxes 21,409 12,493 11,805 6,900
Provision for
income taxes 8,315 4,962 4,588 2,733
---------------------- ----------------------
Net income $13,094 $7,531 $7,217 $4,167
====================== ======================
Earnings per share:
Basic $0.50 $0.31 $0.28 $0.16
Diluted $0.49 $0.30 $0.27 $0.16
Weighted average
shares outstanding:
Basic 26,026,013 24,230,211 26,055,208 25,442,693
Diluted 26,886,716 25,494,782 26,924,534 26,698,389
Condensed Consolidated Balance Sheets
(amounts in thousands)
(Unaudited)
December 31, June 30,
2001 2001
Cash & cash equivalents $ 15,365 $ 54,520
Marketable securities 3,500 2,000
Accounts receivable, net 106,240 76,952
Other current assets 76,310 51,666
Fixed assets, net 11,045 8,195
Other assets 130,155 95,911
------------------------------
Total assets $ 342,615 $ 289,244
==============================
Current liabilities $ 132,548 $ 96,850
Long-term debt - -
Other liabilities 4,317 3,224
Stockholders' equity 205,750 189,170
------------------------------
Total liabilities and
stockholders' equity $ 342,615 $ 289,244
==============================
Condensed Consolidated Statements of Cash Flow
(amounts in thousands)
(Unaudited) (Unaudited)
Six Months Ended Three Months Ended
December 31, December 31,
2001 2000 2001 2000
Net cash provided by
(used in) operating
activities $ 8,953 $ (4,484) $ 4,492 $ (1,575)
Net cash used in
investing activities (43,479) (12,681) (37,094) (12,019)
Net cash provided by
financing activities (4,629) 52,134 (5,357) 289
------------------- -------------------
Increase (decrease) in
cash and cash
equivalents $ (39,155) $ 34,969 $ (37,959) $ (13,305)
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