Curative Health Services Reports Fourth Quarter 2003 Results; Fourth quarter Revenues of $65.4 Million; GAAP Net Income Per Share of $0.32.Business Editors/Health/Medical Writers HAUPPAUGE, N.Y.--(BUSINESS WIRE)--Feb. 25, 2004 Results Include Charges of $0.06 Per Share and One-Time Gain of $0.10 Per Share Curative curative /cur·a·tive/ (kur´ah-tiv) tending to overcome disease and promote recovery. cu·ra·tive adj. 1. Serving or tending to cure. 2. Health Services health services Managed care The benefits covered under a health contract , Inc., (Nasdaq:CURE), announced today fourth quarter and full-year financial results for the period ended December 31, 2003. Total revenues for the fourth quarter of 2003 were $65.4 million, compared with $47.7 million reported in the fourth quarter of 2002, an increase of 37.2%. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income was $4.4 million or $0.32 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 fourth quarter of 2003, compared with GAAP net income of $5.8 million, or $0.45 per diluted share, for the fourth quarter of 2002. Adjusted net income for the fourth quarter 2003 was $3.8 million or $0.28 per diluted share. The adjusted fourth quarter 2003 results add back to GAAP net income certain aggregate after tax charges of approximately $0.9 million ($1.4 million pre-tax) or $0.06 per diluted share. These adjusted results also exclude an after tax one-time gain of approximately $1.4 million ($2.3 million pre-tax) or $0.10 per diluted share, related to the Company's sale of its venture capital interest in Accordant Health Services, Inc. ("Accordant"), as part of the sale of Accordant to AdvancePCS in November 2002. A table reconciling GAAP net income and net income per diluted share to adjusted net income and net income per diluted share for the three months ended December 31, 2003 accompanies this press release. Management believes the adjusted net income and adjusted net income per diluted share information is necessary to better present the Company's underlying business operating results. For the year ended December 31, 2003, the Company reported total revenues of $214.7 million, compared with $139.2 million in 2002. GAAP net income was $13.1 million or $0.96 per diluted share. Adjusted net income for the year ended December 31, 2003 was $15.8 million or $1.15 per diluted share. These adjusted results add back to GAAP net income charges taken during the first, second and third quarters that have been previously disclosed, as well as the charges and one-time gains taken during the fourth quarter discussed above. A table reconciling GAAP net income and net income per diluted share to adjusted net income and net income per diluted share for the year ended December 31, 2003 accompanies this press release. "This past year saw the maturation maturation /mat·u·ra·tion/ (mach-u-ra´shun) 1. the process of becoming mature. 2. attainment of emotional and intellectual maturity. 3. of our 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 into a national enterprise and the first year of net center growth in our wound care business since 1999. While 2003 had many challenges, nonetheless we have made great progress and believe we have positioned ourselves well for the coming year," said Joseph Feshbach, Curative's Chairman and Chief Executive Officer. Highlights for the fourth quarter of 2003 included: -- Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. of over $8 million for the quarter. -- A decline in DSOs of 10 days from the third quarter to 78 days. -- Resumption RESUMPTION. To reassume; to promise again; as, the resumption of payment of specie by the banks is general. It also signifies to take things back; as the government has resumed the possession of all the lands which have not been paid for according to the requisitions of the law, and the of sequential growth in hemophilia hemophilia (hē'məfĭl`ēə,–fēl`yə), genetic disease in which the clotting ability of the blood is impaired and excessive bleeding results. , recording a 5% quarter over quarter gain. IVIG IVIG Intravenous immunoglobulin, see there and other injectables and infusables also recorded a sequential increase of 16%. -- 17% year over year growth in Synagis Synagis™ Immunology A humanized monoclonal antibody for preventing winter RSV in children. See RSV. (R) revenues, on a pro forma forma, adj/n minor elements between the members of a botanical species. basis for acquisitions. The Company also signed four new multi-year contracts to manage acute care hospital Wound Care Center(R) programs and had two contracts terminated. Additionally, the Company has signed two multi-year contracts thus far in the first quarter of 2004. More recently, Curative announced in a separate press release that it has entered into a definitive agreement to acquire the capital stock of Critical Care Systems, Inc. for a total consideration of approximately $150 million in cash. Critical Care Systems (CCS (1) (Common Channel Signaling) A communications system in which one channel is used for signaling and different channels are used for voice/data transmission. Signaling System 7 (SS7) is a CCS system, also known as CCS7. See SS7. ) is a leading national provider of specialty infusion pharmaceuticals and comprehensive clinical services. CCS focuses on delivering four principal therapies: hemophilia clotting factor clot·ting factor n. Any of various plasma components involved in the clotting of blood, including fibrinogen, prothrombin, thromboplastin, and calcium ion. Also called coagulation factor. , intravenous immune globulin intravenous immune globulin A formulation of concentrated antibodies–aka immune globulins, predominantly IgG, prepared by pooling plasma from ±1000 donors, with a broad spectrum of activity against CMV, HAV, HBV, measles, rubella, tetanus, varicella (IVIG), Total Parenteral Nutrition Total Parenteral Nutrition Definition Total parenteral nutrition (TPN) is a way of supplying all the nutritional needs of the body by bypassing the digestive system and dripping nutrient solution directly into a vein. (TPN TPN, in biochemistry, abbreviation for triphosphopyridine nucleotide, a coenzyme now usually called nicotinamide adenine dinucleotide phosphate, or NADP. ) and anti-infective an·ti-in·fec·tive adj. Capable of preventing or counteracting infection. n. An anti-infective agent or drug. anti-infective 1. counteracting infection. 2. a substance that counteracts infection. therapies. These core therapies represent the essential components of Specialty Infusion as distinct from Home Infusion and account for approximately 75% of CCS' revenues. Curative expects to fund the purchase price, repayment of certain existing indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. of CCS and related fees and expenses with $165 million of senior unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. notes to be issued through a private placement. Curative has received a $165 million financing commitment from UBS UBS Union Bank of Switzerland UBS United Bible Societies UBS United Blood Services UBS United Buying Service UBS Used Bookstore UBS University Business Services UBS Universal Building Society (UK) UBS Ulaanbaatar Broadcasting System Loan Finance LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control which will be used in the event the notes are not issued. In addition, GE Healthcare GE Healthcare is a $18 billion (USD) unit of General Electric (GE). It employs more than 46,000 people worldwide and is headquartered in Chalfont St. Giles, Buckinghamshire, United Kingdom. GE Healthcare is the first GE business segment headquartered outside the United States. Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. has committed to a $60 million senior secured credit facility to support the acquisition and Curative's future working capital needs. The commitments are subject to customary conditions. The transaction will be subject to approval by applicable governmental regulatory agencies regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. . UBS Investment Bank acted as financial advisor to Curative for the transaction. Mr. Feshbach commented, "Today, we announced a landmark event in our drive to become a leading national company in specialty distribution with the signing of a definitive agreement to acquire Critical Care Systems. We are very excited about the prospects of this transaction, which we believe positions Curative as a major force in Specialty Infusion." The transaction is expected to deliver a number of strategic benefits to both companies including: -- Establishing a leader in specialty infusion pharmaceuticals to the home with core strengths in Hemophilia, IVIG, Synagis, Antibiotics Antibiotics Definition Antibiotics may be informally defined as the subgroup of anti-infectives that are derived from bacterial sources and are used to treat bacterial infections. and TPN. -- Creating an organization with a network of 38 pharmacies This article is a list of major pharmacies (also known as chemists and drugstores) by country. Australia Pharmacies in Australia are mostly independently-owned by pharmacists, often operated as franchises of retail brands offered by the three major in 23 states through which to drive growth in these core disease states that require a local clinical presence. -- Leveraging the approximately 450 payor contracts already serviced by the combined company. -- Creating a unique therapy offering that is mission critical as well as demonstrably de·mon·stra·ble adj. 1. Capable of being demonstrated or proved: demonstrable truths. 2. Obvious or apparent: demonstrable lies. cost-effective for payors creating a competitive advantage in contracting and pull-through. -- Adding exceptional clinical backbone and expertise highlighted by CCS' JCAHO JCAHO Joint Commission on Accreditation of Healthcare Organizations, see there accreditation accreditation, n a process of formal recognition of a school or institution attesting to the required ability and performance in an area of education, training, or practice. . -- Creating operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. by generating economies of scale through the elimination of certain redundant G&A categories. Fiscal 2004 Guidance For 2004, before factoring in the acquisition of Critical Care Systems, the Company expects revenues to be in the range of $230-$240 million and net income to be in the range of $1.05-$1.10 per diluted share. This net income per diluted share guidance reflects additional spending plans in early 2004 for IT investments, Sarbanes Oxley compliance as well as adjusted Prescription City expectations. Revenues for Specialty Pharmacy Services are expected to be in the $205-$215 million range and revenues for Specialty Healthcare Services are expected to be in the $28-$29 million range. Specialty Pharmacy Services revenue growth is expected from both organic growth as the result of the Company's expanded sales force, as well as the inclusion in 2004 of a full year of operations by specialty pharmacy businesses acquired during 2003. For the first quarter 2004, the Company expects revenues to be in the range of $63-$65 million and GAAP net income in the range of $0.23-$0.25 per diluted share. Curative anticipates the acquisition of Critical Care Systems to be modestly accretive to earnings in the second half of 2004 after a period of integration. In 2005, Curative believes CCS will contribute between $0.13-$0.18 per share in earnings accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the . The guidance above relates to periods which have not yet ended or for which the Company has not yet closed its books or completed its review of its operating results and financial position. Accordingly, this guidance is preliminary and subject to change based on completion of that review. In addition, the guidance above does not reflect the impact, if any, of the pending government investigation of the Company's Prescription City pharmacy which was announced on November 5, 2003. It also does not reflect the completion of the previously announced agreement to acquire the capital stock of Critical Care Systems, Inc. and any acquisition-related charges associated with that transaction. After completion of this transaction, the Company will provide updated guidance to reflect these results. The Company will host a conference call to discuss the Company's fourth quarter 2003 financial results, recent developments, business strategy and outlook on Wednesday, February 25, 2004, at 8:30 a.m. Eastern Time. To participate in the conference call, dial 1-800-915-4836 approximately 10 minutes prior to the scheduled start time. If you are unable to participate, a digital replay of the call will be available from Wednesday, February 25, 2004 at 11:00 a.m. Eastern Time until 11:59 p.m. Eastern Time on March 3, 2004 by dialing 1-800-428-6051 with passcode # 339648. The live broadcast of Curative's quarterly conference call will be available online by going to www.curative.com and selecting the Investor Relations Investor relations The process by which the corporation communicates with its investors. link, on www.streetevents.com, and on www.companyboardroom.com. An online replay will be available shortly after the call through March 3, 2004 at those sites. About Curative Health Services Curative Health Services, Inc., through its two business units, Specialty Pharmacy Services and Specialty Healthcare Services, seeks to deliver high-quality results and exceptional patient satisfaction for patients experiencing serious or chronic medical conditions See carpal tunnel syndrome, computer vision syndrome, dry eyes and deep vein thrombosis. . Curative's Specialty Pharmacy Services business unit provides services to help patients manage the health care process, and offers related pharmacy products to patients for chronic and critical disease states including Hemophilia, Immune System immune system Cells, cell products, organs, and structures of the body involved in the detection and destruction of foreign invaders, such as bacteria, viruses, and cancer cells. Immunity is based on the system's ability to launch a defense against such invaders. Disorders, 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 ), Multiple Sclerosis multiple sclerosis (MS), chronic, slowly progressive autoimmune disease in which the body's immune system attacks the protective myelin sheaths that surround the nerve cells of the brain and spinal cord (a process called demyelination), resulting in damaged areas , Rheumatoid Arthritis rheumatoid arthritis Chronic, progressive autoimmune disease causing connective-tissue inflammation, mostly in synovial joints. It can occur at any age, is more common in women, and has an unpredictable course. and Cancer. Curative's Specialty Healthcare Services ("SHS SHS Shares (stock) SHS SAW (Surface Acoustic Wave) Humidity Sensor SHS Sciences Humaines et Sociales (French: Social Sciences) SHS Student Health Service SHS Second Hand Smoke ") business unit is an industry leader in chronic wound care management. SHS provides a broad continuum Continuum (pl. -tinua or -tinuums) can refer to:
For more information, visit www.curative.com. This press release contains 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 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 forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Factors that might cause such differences include, but are not limited to, risks associated with our pending acquisition of Critical Care Systems including, but not limited to, receipt of regulatory approvals required for the transaction, completion of financing and other associated conditions, uncertain market conditions that the proposed bond offering and expansion of the Company's credit facility are subject to, integration risks and costs, risks of client retention, risks associated with the operations of the acquired business, as well as risks in our current businesses such as the termination or non-renewal of a material number of contracts, an inability to obtain new contracts, changes in the government regulations relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's Specialty Pharmacy Services or Specialty Healthcare Services business units, changes in the regulations governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. third party reimbursements for the Company's services, manufacturing shortages of products sold by Curative's Specialty Pharmacy Services business unit, and the other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission. Readers of this release are referred to the Company's 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. for the year ended December 31, 2002 and Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended September 30, 2003, for further discussion of these and other factors that could affect future results.
(Tables Follow)
CURATIVE HEALTH SERVICES, INC. AND SUBSIDIARIES
Selected Financial Information
Condensed Consolidated Statements of Operations
-----------------------------------------------
(In thousands, except for per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
-------------------- ---------------------
Revenues $65,445 $47,694 $214,741 $139,229
Costs and expenses:
Cost of product sales and
services 48,259 31,724 148,673 89,297
Selling, general &
administrative 10,277 7,782 37,792 26,401
Total charges incurred
(see reconciliation table
following) 1,420 - 6,752 -
------- ------- -------- --------
Total costs and expenses 59,956 39,506 193,217 115,698
------- ------- -------- --------
Income from operations 5,489 8,188 21,524 23,531
Interest income 13 13 20 70
Interest expense 626 506 2,300 1,181
Other income (see
reconciliation table
following) 2,327 1,907 2,327 1,907
------- ------- -------- --------
Income before income taxes 7,203 9,602 21,571 24,327
Income taxes 2,821 3,772 8,496 9,682
------- ------- -------- --------
Net income $ 4,382 $ 5,830 $ 13,075 $ 14,645
======= ======= ======== ========
Net income per common share,
basic $ 0.34 $ 0.48 $ 1.04 $ 1.30
======= ======= ======== ========
Net income per common share,
diluted $ 0.32 (1)$ 0.45 $ 0.96 (1)$ 1.20
======= ======= ======== ========
Denominator for basic
earnings per share,
weighted average common
shares 12,845 12,088 12,546 11,280
======= ======= ======== ========
Denominator for diluted
earnings per share,
weighted average common
shares assuming
conversions 13,749 12,897 13,826 12,207
======= ======= ======== ========
(1) Calculated under the "as if converted" method, which
requires adding shares related to convertible notes that
have no contingencies to the denominator for diluted
earnings per share and adding to net income, the
numerator, tax effected interest expense relating to those
convertible notes.
CURATIVE HEALTH SERVICES, INC. AND SUBSIDIARIES
Selected Financial Information
Reconciliation of GAAP Net income to
Adjusted net income
-------------------
(In thousands, except for per share data)
Three Twelve
Months Months
Ended Ended
Dec. 31, Dec. 31,
2003 2003
-------- --------
GAAP Net income $ 4,382 $13,075
Adjustments:
Costs of credit facility termination and
corporate structure reorganization - 1,100
Costs of pharmacy consolidation and executive
terminations (51) 3,170
Costs of convertible note offering not completed
due to market conditions - 682
Costs of acquisitions not completed 1,154 1,483
Costs of writing off obsolete equipment 317 317
Income from sale of equity interest (Accordant) (2,327) (2,327)
------- -------
Subtotal of adjustments (907) 4,425
Tax benefit 358 (1,748)
------- -------
Adjusted net income $ 3,833 $15,752
======= =======
Reconciliation of GAAP Net income per common
share, diluted to Adjusted net income per
common share, diluted
-----------------------------------------------
GAAP net income per common share, diluted $ 0.32 (1) $ 0.96 (1)
Adjustments:
Costs of credit facility termination and
corporate structure reorganization - 0.08
Costs of pharmacy consolidation and executive
terminations - 0.23
Costs of convertible note offering not completed
due to market conditions - 0.05
Costs of acquisitions not completed 0.08 0.11
Costs of writing off obsolete equipment 0.02 0.02
Income from sale of equity interest (Accordant) (0.17) (0.17)
------- -------
Subtotal of adjustments (0.07) 0.32
Tax benefit 0.03 (0.13)
------- -------
Adjusted net income per common share, diluted $ 0.28 (1) $ 1.15 (1)
======= =======
Denominator for diluted earnings per share,
weighted average common shares assuming
conversions 13,749 13,826
======= =======
(1) Calculated under the "as if converted" method, which
requires adding shares related to convertible notes that
have no contingencies to the denominator for diluted
earnings per share and adding to net income, the
numerator, tax effected interest expense relating to those
convertible notes.
CURATIVE HEALTH SERVICES, INC. AND SUBSIDIARIES
Selected Financial Information
Condensed Consolidated Balance Sheets
-------------------------------------
(Dollars in thousands)
Dec. 31, Dec. 31,
Assets 2003 2002
---------- ---------
Current assets:
Cash and cash equivalents $ 1,072 $ 2,643
Accounts receivable, net 55,217 36,438
Deferred tax assets 1,977 2,957
Inventories 11,237 12,766
Prepaids and other current assets 4,270 2,212
-------- --------
Total current assets 73,773 57,016
Property and equipment, net 7,890 3,284
Goodwill and intangibles 150,040 125,165
Other long-term assets 1,118 979
-------- --------
Total assets $232,821 $186,444
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 28,892 $ 21,786
Accrued expenses 11,502 11,579
Current portion long term liabilities 7,911 6,102
-------- --------
Total current liabilities 48,305 39,467
Long-term liabilities 39,599 26,076
Deferred tax liability 1,197 -
-------- --------
Total long-term liabilities 40,796 26,076
Stockholders' equity 143,720 120,901
-------- --------
Total liabilities and stockholders' equity $232,821 $186,444
======== ========
Editors Note: This release is also available on the Internet over the
World Wide Web at: http://www.curative.com
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