Exhibit 99.1
Company Contact: | The Investor Relations | |
Company: | ||
| Paul A. Brown, M.D., Chairman | Karl Plath or Brien Gately | |
| (561) 478-8770, Ext. 123 | (847) 296-4200 |
HearUSA REPORTS THIRD-QUARTER RESULTS
| • | Revenues Exceed $18.4 Million, Increase 6.7% From Year-Ago Third Quarter | |||
| • | Marks Third Consecutive Quarter Of Sequential Revenue Improvements | |||
| • | Operating Income Increases to $1.1 million. | |||
WEST PALM BEACH, Fla., November 9, 2004—HearUSA, Inc. (AMEX: EAR) today reported third quarter revenues increased 6.7 percent to $18.4 million from $17.3 million for the year-ago period. It was the third consecutive quarter of revenue improvement and reduced net losses. Operating income for the quarter ended September 25, 2004 was $1.1 million, well over four times the $245,000 operating income reported for the quarter ended September 27, 2003. The net loss for the third quarter was $233,000, or $0.01 per diluted share. That compared with a loss of $389,000, or $0.01 per diluted share, for the year-earlier third quarter. The 2004 third quarter net loss includes a non-cash interest charge of $532,000 relating to the December 2003 financing. There were no similar non-cash charges in the 2003 third quarter.
For the nine months ended September 25, 2004 revenues were $53.5 million, compared with $53.7 million for the prior year period. Operating income for the nine-month period was $1.2 million, compared with $2.5 million for the prior year period. The net loss was $2.8 million, or $0.09 per diluted share for the 2004 nine-month period. Net income for the 2003 nine-month period was $302,000, or $0.01 per diluted share. The 2004 results include a $1.6 million non-cash interest charge relating to the December 2003 financing. There were no similar charges in the year-ago period.
“Third quarter results benefited from a shift toward higher technology hearing aid purchases and the effects of a partial quarter of benefits from our recently implemented cost reduction program,” said Stephen J. Hansbrough, President and Chief Executive Officer. “The breakeven point for the company in the third quarter was approximately $18.8 million, in line with previously issued guidance,” stated Gino Chouinard, Executive Vice President and Chief Financial Officer. “We expect the breakeven point will be further reduced in the fourth quarter to approximately $18.6 million as a result of the full effect of the cost reduction program implemented in the third quarter. Once we achieve our breakeven point, we estimate that approximately 50% of all additional revenue generated in the existing company owned centers will become net income,” Mr. Chouinard concluded.
Further Gain In FY05
Chairman Paul A. Brown, M.D. stated, “Despite a fourth quarter that will be affected by off-days during the Thanksgiving and year-end holidays, we expect results to be similar to the third-quarter based on our expectation of continuing growth as a result of our enhanced marketing efforts directed at both private-pay and managed-care patients.” The Company previously announced new contracts with several healthcare providers that will add a hearing aid benefit beginning in January 2005, as well as currently contracted healthcare providers who are increasing their hearing aid benefits. Based on patient demographics, the Company expects the new and expanded contracts to result in more than $5 million of new business in 2005.
About HearUSA
HearUSA provides hearing care to patients whose health insurance and managed care organizations have contracted with the company for such care and to retail “self-pay” patients. The 156 company owned centers are located in California, Florida, New York, New Jersey, Massachusetts, Ohio, Michigan, Wisconsin, Minnesota, Missouri and Washington and the province of Ontario Canada. In addition, the company has a network of 1,400 affiliated audiologists in 49 states. For further information, click on “investor information” at HearUSA’s website www.hearusa.com.
This press release contains forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995, including those concerning the Company’s expectation that the breakeven point for the Company will be further reduced in the fourth quarter of 2004; that the fourth quarter 2004 results will be similar to third quarter 2004 results; and that new and expanded contracts will result in more than $5 million of new business in 2005. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include such factors as market demand for the Company’s goods and services; successful implementation of the Company’s cost reduction program; changes in the pricing environment; general economic conditions in those geographic regions where the Company’s centers are located; the impact of competitive products; and other risks and uncertainties described in the Company’s filings with the Securities and Exchange Commission, including the Company’s annual report on Form 10-K for the 2003 fiscal year.
Consolidated Balance Sheets" -->
HearUSA, Inc.
Consolidated Balance Sheets
| September 25, | December 27, | |||||||
| 2004 | 2003 | |||||||
| ASSETS | (unaudited) | (audited) | ||||||
Current assets | ||||||||
| Cash and cash equivalents | $ | 2,498,247 | $ | 6,714,881 | ||||
| Restricted Cash | 285,000 | — | ||||||
| Investment securities | 150,000 | 435,000 | ||||||
| Accounts and notes receivable, less allowance for doubtful accounts of $386,544 and $490,881 | 6,791,231 | 6,539,149 | ||||||
| Inventories | 925,755 | 979,092 | ||||||
| Prepaid expenses and other | 611,982 | 1,115,393 | ||||||
Total current assets | 11,262,215 | 15,783,515 | ||||||
Property and equipment, net | 3,923,851 | 4,969,265 | ||||||
Goodwill | 33,410,903 | 33,222,779 | ||||||
Intangible assets, net | 11,276,580 | 11,577,097 | ||||||
Deposits and other | 375,733 | 630,694 | ||||||
| $ | 60,249,282 | $ | 66,183,350 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
| Accounts payable | $ | 7,160,003 | $ | 6,750,234 | ||||
| Accrued expenses | 2,062,064 | 2,492,094 | ||||||
| Accrued salaries and other compensation | 1,972,280 | 1,706,252 | ||||||
| Current maturities of long-term debt | 4,105,704 | 6,436,271 | ||||||
| Dividends payable | 253,970 | 728,699 | ||||||
Total current liabilities | 15,554,021 | 18,113,550 | ||||||
Long-term debt | 18,318,802 | 20,579,977 | ||||||
Commitments and contingencies | — | — | ||||||
Convertible subordinated notes, net of debt discount of $5,938,723 and $7,423,596 (Note 4) | 1,561,277 | 76,404 | ||||||
Mandatorily redeemable convertible preferred stock (Series E) | 4,682,468 | 4,600,107 | ||||||
Stockholders’ equity | ||||||||
| Preferred stock (Aggregate liquidation preference $2,330,000; $1 par, 7,500,000 shares authorized) | ||||||||
| Series H Junior Participating (none outstanding) | — | — | ||||||
| Series J (233 shares outstanding) | 233 | 233 | ||||||
| Total preferred stock | 233 | 233 | ||||||
| Common stock: $.10 par; 75,000,000 shares authorized 30,040,010 and 29,528,432 shares issued | 3,004,014 | 2,952,845 | ||||||
| Stock subscription | (412,500 | ) | (412,500 | ) | ||||
| Additional paid-in capital | 120,091,819 | 120,226,050 | ||||||
| Accumulated deficit | (101,283,036 | ) | (98,501,791 | ) | ||||
| Accumulated other comprehensive income | 1,217,325 | 1,033,616 | ||||||
| Treasury stock, at cost: 523,662 and 523,662 common shares | (2,485,141 | ) | (2,485,141 | ) | ||||
Total stockholders’ equity | 20,132,714 | 22,813,312 | ||||||
| $ | 60,249,282 | $ | 66,183,350 | |||||
Consolidated Statement of Operations
Three Months Ended September 25, 2004 and September 27, 2003" -->
HearUSA, Inc.
Consolidated Statement of Operations
Three Months Ended September 25, 2004 and September 27, 2003
| September 25, | September 27, | |||||||
| 2004 | 2003 | |||||||
| (unaudited) | (unaudited) | |||||||
Net revenues | $ | 53,515,329 | $ | 53,664,664 | ||||
Operating costs and expenses | ||||||||
| Cost of products sold | 15,064,687 | 15,202,201 | ||||||
| Center operating expenses | 27,971,230 | 26,062,405 | ||||||
| General and administrative expenses | 7,534,233 | 7,529,998 | ||||||
| Depreciation and amortization | 1,755,384 | 2,334,585 | ||||||
| Total operating costs and expenses | 52,325,534 | 51,129,189 | ||||||
Income from operations | 1,189,795 | 2,535,475 | ||||||
Non-operating income (expense): | ||||||||
| Interest income | 11,045 | 16,701 | ||||||
| Interest expense (including approximately $1,595,000 of non-cash debt discount amortization in 2004) | (3,467,304 | ) | (1,608,717 | ) | ||||
Income (loss) from continuing operations | (2,266,464 | ) | 943,459 | |||||
Discontinued operations | ||||||||
| Loss from discontinued operations | — | (201,536 | ) | |||||
Net income (loss) before dividends on preferred stock | (2,266,464 | ) | 741,923 | |||||
| Dividends on preferred stock | (530,828 | ) | (439,972 | ) | ||||
Net income (loss) applicable to common stockholders | $ | (2,797,292 | ) | $ | 301,951 | |||
Net income (loss) from continuing operations, including dividends on preferred stock, per common share — basic | $ | (0.09 | ) | $ | 0.02 | |||
Net income (loss) from continuing operations, including dividends on preferred stock, per common share — diluted | $ | (0.09 | ) | $ | 0.01 | |||
Net income (loss) applicable to common stockholders per common share — basic | $ | (0.09 | ) | $ | 0.01 | |||
Net income (loss) applicable to common stockholders per common share — diluted | $ | (0.09 | ) | $ | 0.01 | |||
Weighted average number of shares of common stock outstanding — basic | 30,425,804 | 30,424,466 | ||||||
Weighted average number of shares of common stock outstanding — diluted | 30,425,804 | 48,191,168 | ||||||
Consolidated Statement of Operations
Three Months Ended September 25, 2004 and September 27, 2003" -->
HearUSA, Inc.
Consolidated Statement of Operations
Three Months Ended September 25, 2004 and September 27, 2003
| September 25, | September 27, | |||||||
| 2004 | 2003 | |||||||
| (unaudited) | (unaudited) | |||||||
Net revenues | $ | 18,430,846 | $ | 17,276,558 | ||||
Operating costs and expenses | ||||||||
| Cost of products sold | 5,084,418 | 4,745,705 | ||||||
| Center operating expenses | 9,118,614 | 8,927,598 | ||||||
| General and administrative expenses | 2,585,408 | 2,657,870 | ||||||
| Depreciation and amortization | 563,816 | 700,011 | ||||||
| Total operating costs and expenses | 17,352,256 | 17,031,184 | ||||||
Income from operations | 1,078,590 | 245,374 | ||||||
Non-operating income (expense): | ||||||||
| Interest income | 3,601 | 4,740 | ||||||
| Interest expense (including approximately $532,000 of non-cash debt discount amortization in 2004) | (1,138,273 | ) | (493,179 | ) | ||||
Loss from continuing operations | (56,082 | ) | (243,065 | ) | ||||
Discontinued operations | ||||||||
| Loss from discontinued operations | — | (3,830 | ) | |||||
Net loss before dividends on preferred stock | (56,082 | ) | (246,895 | ) | ||||
| Dividends on preferred stock | (177,331 | ) | (142,547 | ) | ||||
Net loss applicable to common stockholders | $ | (233,413 | ) | $ | (389,442 | ) | ||
Net loss from continuing operations, including dividends on preferred stock, per common share — basic | $ | (0.01 | ) | $ | (0.01 | ) | ||
Net loss from continuing operations, including dividends on preferred stock, per common share — diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||
Net loss applicable to common stockholders per common share — basic | $ | (0.01 | ) | $ | (0.01 | ) | ||
Net loss applicable to common stockholders per common share — diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||
Weighted average number of shares of common stock outstanding — basic | 30,429,902 | 30,423,652 | ||||||
Weighted average number of shares of common stock outstanding — diluted | 30,429,902 | 30,423,652 | ||||||