Matria Healthcare Reports Second Quarter Results That Exceed Earnings Guidance.MARIETTA Marietta (mârēĕt`ə). 1 City (1990 pop. 44,129), seat of Cobb co., NW Ga.; inc. 1834. The principal manufactures of this suburb of Atlanta are related to aircraft production. At the foot of Kennesaw Mt. , Ga. -- -Matria Healthcare, Inc. (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 : MATR MATR Montana Associated Technology Roundtables Matr Matroos (Dutch) MATR Minimum Average Time Requirement ) today announced its financial results for the second quarter and six months ended June June: see month. 30, 2006. For all periods presented in this press release, Matria's continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the include the Company's disease management, wellness and productivity enhancement, and maternity MATERNITY. The state or condition of a mother. 2. It is either legitimate or natural. The former is the condition of the mother who has given birth to legitimate children, while the latter is the condition of her who has given birth to illegitimate children. management businesses that are reported in the Company's Health Enhancement segment. Included in discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. are Facet Technologies and Dia Real, which are classified as assets held for sale. Revenues for the second quarter of 2006 were $82.6 million, compared with $44.8 million in the second quarter of 2005. Before share-based compensation expense, operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. from continuing operations for the second quarter of 2006 were $16.3 million, or 20% of net revenue, compared to $1.9 million, or 4% of net revenue, reported in the second quarter of 2005. The Company began expensing share-based compensation January January: see month. 1, 2006. After share-based compensation expense of $1.8 million, operating profits from continuing operations for the second quarter of 2006 were $14.5 million, or 18% of net revenue. Earnings from continuing operations for the second quarter of 2006 were $6.1 million, or $0.28 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. common share, before share-based compensation expense of $0.06 per diluted common share, compared with $0.8 million, or $0.04 per diluted common share, in the 2005 second quarter. 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.
The Company's second quarter of 2006 disease management and wellness revenues were $55.7 million, compared to $18.5 million in the second quarter of 2005. Maternity management revenues for the second quarter of 2006 increased by 3% to $27 million, compared to $26.2 million in the 2005 second quarter. Parker H. Petit PETIT, sometimes corrupted into petty. A French word signifying little, small. It is frequently used, as petit larceny, petit jury, petit treason. PETIT, TREASON, English law. The killing of a master by his servant; a husband by his wife; a superior by a secular or religious man. , 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. , said, "It has been six months since we started our integration initiatives involving CorSolutions. We are pleased with our achievements to date. Our corporate functions, clinical operations and sales force have been fully integrated, and we are now realizing the very positive impact of our integration efforts on our profit margins. Our strategy was to complete our integration initiatives expeditiously ex·pe·di·tious adj. Acting or done with speed and efficiency. See Synonyms at fast1. ex so the anticipated profit improvements and synergies could be realized quickly. We have successfully achieved that goal. Now, with that milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. behind us, we should begin to show stronger growth in revenues." Revenues for the six months ended June 30, 2006, were $163.5 million, compared with $84.4 million for the first six months of 2005. Before share-based compensation expense, operating profits from continuing operations for the six months ended June 30, 2006, were $29.8 million, compared with $3.2 million for the same period in 2005. After share-based compensation expense of $3.2 million, operating profits for the first six months of 2006 were $26.5 million. Earnings from continuing operations for the first six months of 2006 were $10.5 million, or $0.49 per diluted common share, before share-based compensation expense of $0.11 per diluted common share, compared with $0.9 million, or $0.05 per diluted common share, for the 2005 same period. EBITDA for the six months ended June 30, 2006, was $39.2 million, excluding share-based compensation of $3.2 million. Disease management and wellness revenues for the first six months of 2006 were $111.2 million, compared with $34.0 million in 2005. Maternity management revenues for the first six months of 2006 increased by 4% to $52.4 million, compared with $50.4 million in 2005. DIVESTITURE The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). AND DEBT REDUCTION Earlier today, Matria announced that it had signed a definitive agreement to sell Facet Technologies to a new company formed by Water Street Capital Partners, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ., a Chicago-based private equity firm specializing in healthcare investments. "We have entertained en·ter·tain v. en·ter·tained, en·ter·tain·ing, en·ter·tains v.tr. 1. To hold the attention of with something amusing or diverting. See Synonyms at amuse. 2. bids from a number of suitors and have selected an excellent successor to lead Facet. The definitive agreement for the sale of Facet marks a significant accomplishment in our strategy to become a pure play in the disease management sector of healthcare. The transaction is expected to significantly reduce our outstanding 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. ," commented Petit. Based on the expected proceeds from the Facet and Dia Real divestitures and expected operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , the Company anticipates reducing outstanding indebtedness by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $175 million this year. Subsequent to the end of the second quarter, the Company used its operating cash flow to make its first debt pre-payment in the amount of $10 million. Interest expense, net of interest income for the second half of the year, is expected to be approximately $13 million to $14 million. This projection projection, in psychology: see defense mechanism. See rear-projection TV, front-projection TV and LCD panel. (theory) projection - In domain theory, a function, f, which is (a) idempotent, i.e. for the second half of the year reflects the Company's current expectations of net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from Facet and Dia Real, an increase in interest rates for the portion of debt not fixed by swap agreements and anticipated future debt pre-payments from operating cash flow. THIRD QUARTER AND FULL YEAR GUIDANCE Matria announced its third quarter 2006 revenue guidance to be between $83 million and $85 million. The Company expects third quarter operating profits from continuing operations to range from $16 million to $17 million, EBITDA from continuing operations to be between $21 million and $22 million, and earnings per diluted common share from continuing operations to be in the range of $0.26 to $0.28, in all cases excluding share-based compensation expense of $0.06 to $0.07 per diluted common share. The Company also reaffirmed its full year 2006 guidance of revenue expectations to be between $337 million and $341 million. The Company expects full year 2006 operating profits from continuing operations to range from $65 million to $68 million, EBITDA from continuing operations to be between $82 million and $86 million, and earnings per diluted common share from continuing operations to be in the range of $1.10 to $1.17, in all cases excluding share-based compensation expense of $0.23 to $0.27 per diluted common share. As of today, new business awards that are expected to begin producing revenue in 2007 represents $5.8 million of annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. revenue, with most of the awards commencing in January. Consistent with past practice, Matria will provide its 2007 guidance in December December: see month. 2006. A listen-only simulcast Simulcast is a portmanteau of "simultaneous broadcast", and refers to programs or events broadcast across more than one medium, or more than one service on the same medium, at the same time. and replay of Matria Healthcare's second quarter conference call will be available on-line at the Company's website at www.matria.com or at www.fulldisclosure.com on July July: see month. 27, 2006, beginning at 9:00 a.m. Eastern time. ABOUT MATRIA HEALTHCARE Matria Healthcare is a leading provider of comprehensive health enhancement programs to health plans, employers and government agencies. Matria manages major chronic diseases and episodic episodic sporadic; occurring in episodes. e. falling a paroxymal disorder described in Cavalier King Charles spaniels in which affected dogs, starting at an early age, experience episodes of extensor rigidity, possibly brought on by stress. e. conditions including diabetes diabetes or diabetes mellitus (məlī`təs), chronic disorder of glucose (sugar) metabolism caused by inadequate production or use of insulin, a hormone produced in specialized cells (beta cells in the islets of , congestive heart failure congestive heart failure, inability of the heart to expel sufficient blood to keep pace with the metabolic demands of the body. In the healthy individual the heart can tolerate large increases of workload for a considerable length of time. , coronary artery disease coronary artery disease, condition that results when the coronary arteries are narrowed or occluded, most commonly by atherosclerotic deposits of fibrous and fatty tissue. , asthma asthma (ăz`mə, ăs`–), chronic inflammatory respiratory disease characterized by periodic attacks of wheezing, shortness of breath, and a tight feeling in the chest. A cough producing sticky mucus is symptomatic. , chronic obstructive pulmonary disease chronic obstructive pulmonary disease n. Abbr. COPD A chronic lung disease, such as asthma or emphysema, in which breathing becomes slowed or forced. , high-risk high-risk adjective Referring to an ↑ risk of suffering from a particular condition Infectious disease Referring to an ↑ risk for exposure to blood-borne pathogens, which occurs with blood bank technicians, dental professionals, dialysis unit obstetrics obstetrics (ŏbstĕ`trĭks), branch of medicine concerned with the treatment of women during pregnancy, labor, childbirth (see birth), and the time after childbirth. , cancer, chronic pain, depression, end-stage renal disease End-stage renal disease (ESRD) Total kidney failure; chronic kidney failure is diagnosed as ESRD when kidney function falls to 5-10% of capacity. Mentioned in: Chronic Kidney Failure end-stage renal disease , and obesity obesity, condition resulting from excessive storage of fat in the body. Obesity has been defined as a weight more than 20% above what is considered normal according to standard age, height, and weight tables, or by a complex formula known as the body mass index. ; delivers programs that address wellness, healthy living, productivity improvement, and patient advocacy Patient advocacy refers to speaking on behalf of a patient in order to protect their rights and help them obtain needed information and services. The role of patient advocate is frequently assumed by nurses, social workers, and other healthcare providers. ; and provides case management of acute and catastrophic conditions. Headquartered in Marietta, Georgia Marietta is a city located in central Cobb County, Georgia GR6, and is its county seat. As of the 2000 census, the city had a total population of 58,748, making it one of metro Atlanta's largest suburbs. , Matria operates through more than 50 offices around 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. . More information about Matria can be found on line at www.matria.com. 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. STATEMENT 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. . Such statements include but are not limited to the Company's financial expectations for the third quarter and full year 2006, annualized revenues from awards expected to begin producing revenue in 2007, the success of the integration of CorSolutions, the synergies resulting from the integration of CorSolutions and the impact on the Company's profit margins, the Company's expectations for stronger revenue growth, the consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. of the sale of Facet Technologies and potential sale of Dia Real, the timing thereof, the validity of the Company's interest rate assumptions, and the amount of the Company's expected debt repayments. These statements are based on current information and belief, and are not guarantees of future performance. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include the Company's inability to achieve its financial expectations, failure to realize anticipated revenues from backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. , additional integration issues, failure to achieve anticipated synergies, lower than anticipated profit margins, failure to achieve expected revenue growth, failure to consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. the sale of Facet Technologies, failure to consummate a sale of Dia Real, delays in sales of either of these businesses or sales on terms less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. than currently anticipated, reduced cash flows from operations, unanticipated uses of cash, higher than expected interest rates, developments in the healthcare industry, third-party actions over which Matria does not have control, regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. applicable to Matria's business and the risk factors detailed from time to time in Matria's periodic reports and registration statements filed with the Securities and Exchange Commission, including Matria'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, 2005. By making these forward-looking statements, Matria does not undertake to update them in any manner except as may be required by Matria's disclosure obligations in filings it makes with the Securities and Exchange Commission under the federal securities laws.
Matria Healthcare, Inc.
Unaudited Consolidated Condensed Statements of Operations
(Amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ------------------
2006 2005 2006 2005
----------- -------- --------- --------
Revenues $82,627 $44,762 $163,533 $84,385
Cost of revenues 26,590 18,165 52,861 33,936
Selling and administrative
expenses 39,769 24,672 80,582 47,226
Amortization of intangible
assets 1,786 40 3,572 40
----------- -------- --------- --------
Operating earnings from
continuing Operations 14,482 1,885 26,518 3,183
Interest expense, net (6,639) (641) (12,832) (1,648)
Other income (expense), net 464 27 569 (19)
----------- -------- --------- --------
Earnings from continuing
operations before income
taxes 8,307 1,271 14,255 1,516
Income tax expense (3,473) (515) (6,005) (614)
----------- -------- --------- --------
Earnings from continuing
operations 4,834 756 8,250 902
Earnings from discontinued
operations, net of tax 2,391 4,318 3,898 7,978
----------- -------- --------- --------
Net earnings $7,225 $5,074 $12,148 $8,880
=========== ======== ========= ========
Net earnings per common share:
Basic
Continuing Operations $0.23 $0.04 $0.39 $0.05
Discontinued Operations 0.11 0.25 0.19 0.48
----------- -------- --------- --------
$0.34 $0.29 $0.58 $0.53
=========== ======== ========= ========
Diluted
Continuing Operations $0.22 $0.04 $0.38 $0.05
Discontinued Operations 0.11 0.23 0.18 0.45
=========== ======== ========= ========
$0.33 $0.27 $0.56 $0.50
=========== ======== ========= ========
Weighted average shares
outstanding:
Basic 20,970 17,775 20,916 16,867
=========== ======== ========= ========
Diluted 21,574 18,776 21,660 17,907
=========== ======== ========= ========
Matria Healthcare, Inc.
Unaudited Consolidated Condensed Balance Sheets
(Amounts in thousands)
June 30, December 31,
2006 2005
----------- ---------------
ASSETS
------
Current assets:
Cash and cash equivalents $23,259 $22,758
Restricted cash 1,594 550
Trade accounts receivable, net 52,587 33,996
Assets held for sale 135,649 132,455
Prepaid expenses and other current
assets 11,233 6,588
Deferred income taxes 13,720 8,629
----------- ---------------
Total current assets 238,042 204,976
Property and equipment, net 37,508 26,430
Goodwill, net 456,450 69,248
Other intangibles, net 59,463 6,935
Deferred income taxes 12,787 10,666
Other assets 14,631 4,952
----------- ---------------
$818,881 $323,207
=========== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current installments of long-term
debt and obligations under capital
leases $177,342 $1,021
Accounts payable, principally trade 9,501 10,702
Liabilities related to assets held
for sale and other discontinued
operations 22,202 31,042
Unearned revenue 16,307 7,205
Other accrued liabilities 32,133 13,412
----------- ---------------
Total current liabilities 257,485 63,382
Long-term debt and obligations under
capital leases, excluding current
installments 279,709 2,099
Other long-term liabilities 10,382 5,788
----------- ---------------
Total liabilities 547,576 71,269
Shareholders' equity 271,305 251,938
----------- ---------------
$818,881 $323,207
=========== ===============
Matria Healthcare, Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures
(Amounts in thousands, except per share amounts)
Three Months Six Months
Ended Ended
June 30, June 30,
--------------- ------------
2006 2005 2006 2005
------- ------ ------- ------
Reconciliation of Operating Earnings
from Continuing Operations As
Reported to Operating Earnings from
Continuing Operations Excluding
Share-Based Compensation
------------------------------------
Operating earnings from continuing
operations as reported $14,482 $1,885 $26,518 $3,183
Add share-based compensation 1,797 - 3,248 -
------- ------- ------- -------
Operating earnings from
continuing operations excluding
share-based compensation $16,279 $1,885 $29,766 $3,183
------- ------ ------- ------
Reconciliation of Earnings from
Continuing Operations As Reported
to Earnings from Continuing
Operations Excluding Share-Based
Compensation
------------------------------------
Earnings from continuing operations
as reported $ 4,834 $ 756 $ 8,250 $ 902
-- -
Add share-based compensation, net of
tax 1,254 - 2,295 -
------- ------- ------- -------
Earnings from continuing
operations excluding share-
based compensation $ 6,088 $ 756 $10,545 $ 902
------- ------ ------- ------
Reconciliation of Earnings from
Continuing Operations to EBITDA
from Continuing Operations
Excluding Share-Based Compensation
------------------------------------
Earnings from continuing operations $ 4,834 $ 756 $ 8,250 $ 902
Interest expense, net 6,639 641 12,832 1,648
Income tax expense 3,473 515 6,005 614
Depreciation and amortization 4,513 1,529 8,886 2,898
Share-based compensation 1,797 - 3,248 -
------- ------- ------- -------
EBITDA excluding share-based
compensation $21,256 $3,441 $39,221 $6,062
------- ------ ------- ------
Reconciliation of Diluted Earnings
Per Common Share from Continuing
Operations As Reported to Diluted
Earnings Per Common Share from
Continuing Operations Excluding
Share-Based Compensation
------------------------------------
Diluted earnings per common share as
reported $ 0.22 $ 0.04 $ 0.38 $ 0.05
Add share-based compensation, net of
tax 0.06 - 0.11 -
------- ------- ------- -------
Diluted earnings per common share
excluding share-based
compensation $ 0.28 $ 0.04 $ 0.49 $ 0.05
======= ====== ======= ======
Matria Healthcare, Inc.
Reconciliation of Non-GAAP Financial Measures for 2006 Guidance
(Amounts in millions, except per share amounts)
Q3 2006 YR 2006
---------------- ---------------
Reconciliation of Operating Profit
from Continuing Operations to
Operating Profit from Continuing
Operations Excluding Share-Based
Compensation Low High Low High
--------------------------------- ---------- ------ -------- ------
Operating profit from continuing
operations $14 $15 $57 $61
Share-based compensation 2 2 8 7
--------- ------ -------- ------
Operating profit from continuing
operations excluding share-based
compensation $16 $17 $65 $68
========= ====== ======== ======
Reconciliation of Earnings from
Continuing Operations to EBITDA
from Continuing Operations
Excluding Share-Based Compensation Low High Low High
----------------------------------- -------- ------ -------- ------
Earnings from continuing operations $4 $5 $18 $20
Share-based compensation 2 2 8 7
Income tax expense 3 3 12 15
Interest expense, net 7 7 26 26
Depreciation and amortization 5 5 18 18
--------- ------ -------- ------
EBITDA excluding share-based
compensation $21 $22 $82 $86
========= ====== ======== ======
Reconciliation of Earnings Per
Diluted Share from Continuing
Operations to Earnings Per Diluted
Share from Continuing Operations
Excluding Share-Based Compensation Low High Low High
----------------------------------- --------- ------ -------- ------
Earnings per diluted share from
continuing operations $0.19 $0.22 $0.83 $0.94
Share-based compensation 0.07 0.06 0.27 0.23
--------- ------ -------- ------
Earnings per diluted share from
continuing operations excluding
share-based compensation $0.26 $0.28 $1.10 $1.17
========= ====== ======== ======
Acquisition Debt Summary
June 30, 2006 ($ Thousands)
Balance Rate Basis Rate
First Lien:
Tranche B
Fixed (SWAP) $100,000 LIBOR + 225 7.32%
Fixed (SWAP) $100,000 LIBOR + 225 7.60%
Floating $63,700 LIBOR + 225 7.75%
Tranche C $125,000 LIBOR + 225 7.75%
Second Lien $65,000 LIBOR + 675 12.25%
---------------
Total Loan outstanding $453,700
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