American CareSource Reports Record Third Quarter Revenues of $18.2 Million
Third Quarter Highlights
| · | Revenues increased 13% to $18.2 million |
| · | Diluted earnings per share were $0.02 excluding a non-recurring restructuring charge of $223 thousand |
| · | Adjusted EBITDA was $0.9 million |
| · | Processed claims up 34% to 117,000 |
DALLAS, TX – November 9, 2009 – American CareSource Holdings Inc. (NASDAQ: ANCI) today announced third quarter net income of $147 thousand, or $0.01 per diluted share, compared to net income of $1.0 million, or $0.06 per diluted share reported during the third quarter of 2008. Third quarter 2009 results include a pre-tax, non-recurring, restructuring charge of $223 thousand, or $0.01 per diluted share. Excluding this charge, diluted earnings per share were $0.02.
“Despite a challenging economic environment, our business continues to demonstrate resilience by delivering continued top-line growth and solid operating performance,” said David Boone, Chief Executive Officer of American CareSource. “Our focus on improving the cost of Ancillary healthcare remains a compelling value proposition for our clients. We have an extensive service provider network that gives us a breadth of services that remain unmatched in the industry. This is why I remain confident in the sustained growth of the Company.”
Client and Provider Additions Improve Revenues
Revenues for the third quarter of 2009 increased 13% to $18.2 million compared to $16.1 million reported the same period last year. The higher revenues were attributed to increased revenues from new and existing clients. In particular, the business realized strong revenue contributions from three clients implemented in 2009; HealthMarkets, IAC and HealthScope.
Sequentially, third quarter revenues increased $1.1 million, or 6.4%, from $17.1 million reported during the second quarter of 2009. The improved results were attributed to increased claims volumes from HealthSmart and the addition of new client relationships such as HealthMarkets.
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During the third quarter, the company added approximately 300 net new providers, which represent approximately 4,300 additional sites. As of the end of the third quarter, the Company had over 4,100 providers and over 32,000 provider sites.
Stronger Claims Volume
The Company processed 117,000 claims during the third quarter of 2009, which represents a 34% increase over the 87,000 claims processed during the same period in 2008. The increase in claims processed was driven by the expansion of the Company’s existing clients, provider relationships, and the implementation of new clients. Revenues per processed claim decreased to $156 reflecting a shift in business mix toward lower cost specialties, such as laboratory services.
The Company billed 101,000 claims during the third quarter of 2009, which represents a 29% increase over the 78,000 claims billed during the same period in 2008. Revenue per billed claim for the period decreased to $181 compared to $207 per billed claim reported during the third quarter of 2008. This decrease was attributed to a shift in business mix toward lower cost specialties, such as laboratory services.
Compared to the second quarter of 2009, processed claims declined 4%, while billed claims volume remained unchanged. Revenue per processed claim increased 10% while revenue per billed claim increased by 7% due to a shift in business mix toward higher cost specialties, such as diagnostic imaging services and surgery centers.
| (Claim amounts in 000’s) | 3Q 2009 | 2Q 2009 | 3Q 2008 | |||||||||
| Claims processed | 117 | 121 | 87 | |||||||||
| Claims billed | 101 | 101 | 78 | |||||||||
| Revenue per processed claim | $ | 156 | $ | 142 | $ | 185 | ||||||
| Revenue per billed claim | 181 | 169 | 207 | |||||||||
Margin Review
The contribution margin for the third quarter of 2009 softened to $2.4 million from $2.6 million reported during the third quarter of 2008. As a percentage of revenues, the contribution margin was 12.9%, compared to 15.9% reported during the third quarter of 2008. Higher payments to providers and increased claims administration and provider development costs, which as a percentage of revenues, were 75.7% and 6.5%, respectively, contributed to the lower contribution margin.
On a quarterly sequential basis, the contribution margin, as a percentage of revenues, decreased by 0.8% due to marginally higher provider payments and administrative fees.
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| 3Q 2009 | 2Q 2009 | 3Q 2008 | ||||||||||
| Provider payments | 75.7 | % | 75.2 | % | 72.9 | % | ||||||
| Administrative fees | 4.9 | % | 4.5 | % | 5.8 | % | ||||||
| Claims administration and provider development | 6.5 | % | 6.6 | % | 5.5 | % | ||||||
| Total cost of revenues | 87.1 | % | 86.3 | % | 84.2 | % | ||||||
Selling, General and Administrative Expenses (SG&A)
SG&A for the third quarter of 2009, excluding the restructuring charge of $223 thousand, was $1.8 million and increased 22%, or $331 thousand over the third quarter of 2008. The results were primarily driven by increased headcount in sales and marketing and increased non-cash compensation costs related to the Company’s stock-based compensation plan. The restructuring charge reflects severance costs associated with the Company’s reorganization plan.
Adjusted EBITDA
Adjusted EBITDA for the period was $936 thousand, which compares to approximately $1.3 million reported during the same period last year. Adjusted EBITDA reported for the third quarter of 2009 represents a 25% sequential increase over the second quarter of 2009.
Adjusted EBITDA, (a non-GAAP measure) is defined as income from operations less depreciation and amortization, non-cash warrant and option compensation expense and restructuring charges. EBITDA, as adjusted, should be considered in addition to, but not in lieu of, income from operations reported under generally accepted accounting principles (GAAP).
Operating Income
Operating income during the period was $159 thousand, which compares to $962 thousand reported during the same period last year. The decline reflects higher SG&A and the non-recurring, restructuring charge of $223 thousand.
Financial Liquidity
Total cash-on-hand at September 30, 2009 was $10.3 million, which compares to $10.6 million reported at December 31, 2008. Cash generated from operating activities for the nine months ended September 20, 2009 was $812 thousand and includes a $1.0 million payment associated with the extension of a key client contract. Excluding that payment, cash generated from operating activities was $1.8 million for the period. The Company has no long-term debt outstanding.
Revenue Guidance
For the full year of 2009, the Company expects to generate revenues of approximately $70 million, which is at the lower-end of its anticipated range of $70 to 85 million.
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Earnings Release Conference Call
As previously announced, American CareSource management will review its audited third quarter 2009 financials during a conference call scheduled for November 10, 2009 at 8:30 AM Eastern Time. The dial-in numbers are as follows:
Domestic dial-in: International dial-in: Webcast: | (888) 279–0822 (706) 902-0355 http://ir.anci-care.com/events.cfm |
About American CareSource Holdings, Inc.
American CareSource Holdings is the first national, publicly traded ancillary care network services company. The Company offers a comprehensive national network of over 4,100 ancillary service providers at more than 32,000 sites through its subsidiary, Ancillary Care Services. Ancillary Care Services provides ancillary health care services through its network that offers cost effective alternatives to physician and hospital-based services. This market is estimated at $574 billion and has grown to 30% of total national health expenditures. These providers offer services in 31 categories including laboratories, dialysis centers, free-standing diagnostic imaging centers, non-hospital surgery centers, as well as durable medical equipment such as orthotics and prosthetics and others. The Company's ancillary network and management provides a complete outsourced solution for a wide variety of health care payors and plan sponsors including self-insured employers, indemnity insurers, PPOs, HMOs, third party administrators and both federal and local governments. For additional information, please visit www.anci-care.com.
ANCI-G
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:
Any statements that are not historical facts contained in this release, including with respect to the Company’s plans, objectives and expectations for future operations, projections of the Company’s future operating results or financial condition, and expectations regarding the health care industry and economic conditions, are forward-looking statements. Substantial risks and uncertainties could cause actual results to differ materially from those indicated by forward-looking statements, including, but not limited to, changes in national health care policy, regulation, general economic conditions, demand for ancillary services, pricing, competition, market acceptance/preference, the Company’s ability to integrate with its clients, changes in the business decisions by key clients or consolidation in the industry affecting them, the Company’s inability to attract or maintain providers or clients or to manage growth, implementation and performance difficulties, and other risk factors detailed from time to time in the Company’s periodic filings with the Securities and Exchange Commission. Except as otherwise required by law, the Company undertakes no obligation to update or revise these forward-looking statements.
Company Contact Steven J. Armond Chief Financial Officer American CareSource Holdings, Inc. Tel: 972-308-6847 | Investor Contact Rich Cockrell The Cockrell Group Tel: 404.942.3369 rich.cockrell@thecockrellgroup.com |
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| AMERICAN CARESOURCE HOLDINGS, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Net Revenues | $ | 18,234,674 | $ | 16,110,795 | $ | 51,424,977 | $ | 40,628,998 | ||||||||
| Cost of revenues: | ||||||||||||||||
| Provider payments | 13,799,863 | 11,744,523 | 38,670,094 | 29,690,099 | ||||||||||||
| Administrative fees | 900,573 | 927,932 | 2,494,245 | 2,380,627 | ||||||||||||
| Claims administration and provider development costs | 1,177,813 | 881,897 | 3,258,654 | 2,395,341 | ||||||||||||
| Total cost of revenues | 15,878,249 | 13,554,352 | 44,422,993 | 34,466,067 | ||||||||||||
| Contribution margin | 2,356,425 | 2,556,443 | 7,001,984 | 6,162,931 | ||||||||||||
| Selling, general and administrative expenses | 2,041,884 | 1,488,455 | 5,923,449 | 3,795,813 | ||||||||||||
| Depreciation and amortization | 155,448 | 105,887 | 400,560 | 294,559 | ||||||||||||
| Total operating expenses | 2,197,332 | 1,594,342 | 6,324,009 | 4,090,372 | ||||||||||||
| Operating income | 159,093 | 962,101 | 677,975 | 2,072,559 | ||||||||||||
| Interest income | 30,729 | 65,531 | 107,397 | 137,439 | ||||||||||||
| Interest expense | (128 | ) | (1,067 | ) | (440 | ) | (4,511 | ) | ||||||||
| Unrealized gain (loss) on warrant derivative | (21,923 | ) | - | 232,186 | - | |||||||||||
| Total other income, net | 8,678 | 64,464 | 339,143 | 132,928 | ||||||||||||
| Income before income taxes | 167,771 | 1,026,565 | 1,017,118 | 2,205,487 | ||||||||||||
| Income tax provision | 20,555 | 25,559 | 57,067 | 61,623 | ||||||||||||
| Net Income | $ | 147,216 | $ | 1,001,006 | $ | 960,051 | $ | 2,143,864 | ||||||||
| Earnings per common share: | ||||||||||||||||
| Basic | $ | 0.01 | $ | 0.07 | $ | 0.06 | $ | 0.14 | ||||||||
| Diluted | $ | 0.01 | $ | 0.06 | $ | 0.05 | $ | 0.12 | ||||||||
| Basic weighted average common shares outstanding | 15,432,338 | 15,139,839 | 15,425,567 | 15,029,161 | ||||||||||||
| Diluted weighted average common shares outstanding | 17,572,875 | 18,044,602 | 17,971,805 | 17,577,846 | ||||||||||||
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| Reconciliation of non-GAAP financial measures to reported GAAP financial measures | ||||||||||||||||
| Reconciliation of EBITDA and EBITDA, as adjusted: | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Operating income | $ | 159,093 | $ | 962,101 | $ | 677,975 | $ | 2,072,559 | ||||||||
| Depreciation and amortization | 155,448 | 105,887 | 400,560 | 294,559 | ||||||||||||
| EBITDA | 314,541 | 1,067,988 | 1,078,535 | 2,367,118 | ||||||||||||
| Non-cash stock-based compensation expense | 347,534 | 169,421 | 964,503 | 485,566 | ||||||||||||
| Other non-cash charges | 50,083 | 28,011 | 106,105 | 54,467 | ||||||||||||
Restructuring charge1 | 223,357 | - | 223,357 | 21,844 | ||||||||||||
| EBITDA, as adjusted | $ | 935,515 | $ | 1,265,420 | $ | 2,372,500 | $ | 2,928,995 | ||||||||
1 The Restructuring Charge includes non-cash stock-based compensation expense of $61,835.
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| AMERICAN CARESOURCE HOLDINGS, INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (unaudited) | ||||||||
| September 30, | December 31, | |||||||
| 2009 | 2008 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 10,341,501 | $ | 10,577,829 | ||||
| Accounts receivable, net | 7,208,922 | 5,788,457 | ||||||
| Prepaid expenses and other current assets | 722,507 | 495,814 | ||||||
| Total current assets | 18,272,930 | 16,862,100 | ||||||
| Property and equipment, net | 1,691,376 | 915,224 | ||||||
| Other assets: | ||||||||
| Other non-current assets | 1,019,119 | 1,127,114 | ||||||
| Intangible assets, net | 1,184,607 | 1,280,656 | ||||||
| Goodwill | 4,361,299 | 4,361,299 | ||||||
| Total assets | $ | 26,529,331 | $ | 24,546,393 | ||||
| LIABILITIES and SHAREHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Due to service providers | $ | 6,866,804 | $ | 5,964,392 | ||||
| Accounts payable and accrued liabilities | 2,081,439 | 3,111,862 | ||||||
| Total current liabilities | 8,948,243 | 9,076,254 | ||||||
| Warrant derivative liability | 109,616 | - | ||||||
| Long-term debt | - | 3,053 | ||||||
| Shareholders' equity | 17,471,472 | 15,467,086 | ||||||
| Total liabilities and shareholders' equity | $ | 26,529,331 | $ | 24,546,393 | ||||
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| AMERICAN CARESOURCE HOLDINGS, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (unaudited) | ||||||||
| Nine months ended | ||||||||
| September 30, | ||||||||
| 2009 | 2008 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 960,051 | $ | 2,143,864 | ||||
| Adjustments to reconcile net income to net cash | ||||||||
| provided by operations: | ||||||||
| Stock-based compensation expense | 1,026,338 | 485,568 | ||||||
| Depreciation and amortization | 400,560 | 294,559 | ||||||
| Unrealized gain on warrant derivative | (232,186 | ) | - | |||||
| Amortization of long-term client agreement | 187,500 | - | ||||||
| Client administration fee expense related to warrants | 106,105 | 54,467 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,420,465 | ) | (1,309,032 | ) | ||||
| Prepaid expenses and other assets | (124,655 | ) | 205,510 | |||||
| Accounts payable and accrued liabilities | (993,256 | ) | 599,448 | |||||
| Due to service providers | 902,413 | 1,733,044 | ||||||
| Net cash provided by operating activities | 812,405 | 4,207,428 | ||||||
| Cash flows from investing activities: | ||||||||
| Redemption of certificate of deposit | - | 145,000 | ||||||
| Investment in software development costs | (464,194 | ) | (351,605 | ) | ||||
| Additions to property and equipment | (592,544 | ) | (258,065 | ) | ||||
| Net cash used in investing activities | (1,056,738 | ) | (464,670 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payments on long-term debt | (7,355 | ) | (89,369 | ) | ||||
| Proceeds from exercise of stock warrants | 12,650 | 127,428 | ||||||
| Proceeds from exercise of stock options | 2,710 | 168,033 | ||||||
| Net cash provided by financing activities | 8,005 | 206,092 | ||||||
| Net increase (decrease) in cash and cash equivalents | (236,328 | ) | 3,948,850 | |||||
| Cash and cash equivalents at beginning of period | 10,577,829 | 4,272,498 | ||||||
| Cash and cash equivalents at end of period | $ | 10,341,501 | $ | 8,221,348 | ||||
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