Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2015 | Feb. 01, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SHARPS COMPLIANCE CORP | |
Entity Central Index Key | 898,770 | |
Current Fiscal Year End Date | --06-30 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 15,479,286 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2015 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Dec. 31, 2015 | Jun. 30, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 14,459 | $ 15,157 |
Accounts receivable, net of allowance for doubtful accounts of $53 and $34, respectively | 6,306 | 6,647 |
Inventory | 3,787 | 2,738 |
Prepaid and other current assets | 612 | 733 |
TOTAL CURRENT ASSETS | 25,164 | 25,275 |
PROPERTY, PLANT AND EQUIPMENT, net | 4,266 | 3,810 |
GOODWILL | 1,039 | 0 |
INTANGIBLE ASSETS, net of accumulated amortization of $427 and $385, respectively | 1,204 | 666 |
TOTAL ASSETS | 31,673 | 29,751 |
CURRENT LIABILITIES | ||
Accounts payable | 1,723 | 1,770 |
Accrued liabilities | 2,407 | 1,917 |
Deferred revenue | 2,264 | 1,877 |
TOTAL CURRENT LIABILITIES | 6,394 | 5,564 |
LONG-TERM DEFERRED REVENUE, net of current portion | 511 | 483 |
OTHER LONG-TERM LIABILITIES | 216 | 118 |
TOTAL LIABILITIES | $ 7,121 | $ 6,165 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY | ||
Common stock, $0.01 par value per share; 20,000,000 shares authorized; 15,740,458 and 15,575,041 shares issued, respectively and 15,481,186 and 15,383,791 shares outstanding, respectively | $ 158 | $ 156 |
Treasury stock, at cost, 259,272 and 191,250 shares repurchased, respectively | (1,349) | (809) |
Additional paid-in capital | 25,013 | 24,344 |
Retained earnings (accumulated deficit) | 730 | (105) |
TOTAL STOCKHOLDERS' EQUITY | 24,552 | 23,586 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 31,673 | $ 29,751 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2015 | Jun. 30, 2015 |
CURRENT ASSETS | ||
Accounts receivable, allowance for doubtful accounts | $ 53 | $ 34 |
INTANGIBLE ASSETS, accumulated amortization | $ 427 | $ 385 |
STOCKHOLDERS' EQUITY | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 15,740,458 | 15,575,041 |
Common stock, shares outstanding (in shares) | 15,481,186 | 15,383,791 |
Treasury stock, shares repurchased (in shares) | 259,272 | 191,250 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) [Abstract] | ||||
REVENUES | $ 9,992 | $ 8,693 | $ 17,861 | $ 15,740 |
Cost of revenues | 6,673 | 5,465 | 11,663 | 10,178 |
GROSS PROFIT | 3,319 | 3,228 | 6,198 | 5,562 |
Selling, general and administrative | 2,585 | 2,415 | 5,181 | 4,738 |
Depreciation and amortization | 70 | 69 | 122 | 154 |
OPERATING INCOME | 664 | 744 | 895 | 670 |
INTEREST INCOME | 9 | 10 | 18 | 18 |
TOTAL INTEREST INCOME | 9 | 10 | 18 | 18 |
INCOME BEFORE INCOME TAXES | 673 | 754 | 913 | 688 |
INCOME TAX EXPENSE - Current | 58 | 5 | 78 | 13 |
TOTAL INCOME TAX EXPENSE | 58 | 5 | 78 | 13 |
NET INCOME | $ 615 | $ 749 | $ 835 | $ 675 |
NET INCOME PER COMMON SHARE | ||||
Basic (in dollars per share) | $ 0.04 | $ 0.05 | $ 0.05 | $ 0.04 |
Diluted (in dollars per share) | $ 0.04 | $ 0.05 | $ 0.05 | $ 0.04 |
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE: | ||||
Basic (in shares) | 15,467 | 15,281 | 15,443 | 15,285 |
Diluted (in shares) | 16,062 | 15,423 | 15,994 | 15,428 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings (Accumulated Deficit) [Member] | Total |
Balances at Jun. 30, 2014 | $ 155 | $ (681) | $ 23,695 | $ (1,265) | $ 21,904 |
Balances (in shares) at Jun. 30, 2014 | 15,460,940 | (161,801) | |||
Exercise of stock options | $ 0 | $ 0 | 139 | 0 | 139 |
Exercise of stock options (in shares) | 61,109 | 0 | |||
Stock-based compensation | $ 0 | $ 0 | 511 | 0 | 511 |
Issuance of restricted stock | $ 1 | $ 0 | (1) | 0 | 0 |
Issuance of restricted stock (in shares) | 52,992 | 0 | |||
Shares repurchased | $ 0 | $ (128) | 0 | 0 | (128) |
Shares repurchased (in shares) | 0 | (29,449) | |||
Net income | $ 0 | $ 0 | 0 | 1,160 | 1,160 |
Balances at Jun. 30, 2015 | $ 156 | $ (809) | 24,344 | (105) | $ 23,586 |
Balances (in shares) at Jun. 30, 2015 | 15,575,041 | (191,250) | 15,383,791 | ||
Exercise of stock options | $ 1 | $ 0 | 312 | 0 | $ 313 |
Exercise of stock options (in shares) | 112,425 | 0 | 112,425 | ||
Stock-based compensation | $ 0 | $ 0 | 358 | 0 | $ 358 |
Issuance of restricted stock | $ 1 | 0 | (1) | 0 | 0 |
Issuance of restricted stock (in shares) | 52,992 | ||||
Shares repurchased | $ 0 | $ (540) | 0 | 0 | $ (540) |
Shares repurchased (in shares) | 0 | (68,022) | (68,022) | ||
Net income | $ 0 | $ 0 | 0 | 835 | $ 835 |
Balances at Dec. 31, 2015 | $ 158 | $ (1,349) | $ 25,013 | $ 730 | $ 24,552 |
Balances (in shares) at Dec. 31, 2015 | 15,740,458 | (259,272) | 15,481,186 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 835 | $ 675 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 379 | 460 |
Stock-based compensation expense | 358 | 257 |
Changes in operating assets and liabilities, net of effects of business acquisition: | ||
Restricted cash | 0 | 111 |
Accounts receivable | 434 | 367 |
Legal settlement receivable | 0 | 1,538 |
Inventory | (943) | (888) |
Prepaid and other current assets | 121 | (445) |
Accounts payable and accrued liabilities | (105) | 804 |
Deferred revenue | 415 | 107 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 1,494 | 2,986 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property, plant and equipment | (761) | (237) |
Payments for acquisition, net of cash acquired | (1,204) | 0 |
NET CASH USED IN INVESTING ACTIVITIES | (1,965) | (237) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from exercise of stock options | 313 | 21 |
Shares repurchased | (540) | (128) |
NET CASH USED IN FINANCING ACTIVITIES | (227) | (107) |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (698) | 2,642 |
CASH AND CASH EQUIVALENTS, beginning of period | 15,157 | 13,717 |
CASH AND CASH EQUIVALENTS, end of period | 14,459 | 16,359 |
SUPPLEMENTAL CASH FLOW DISCLOSURES: | ||
Income taxes paid | 85 | 10 |
NON-CASH INVESTING ACTIVITIES: | ||
Unpaid consideration related to acquisition | 529 | 0 |
Transfer of equipment to inventory | $ 106 | $ 0 |
ORGANIZATION AND BACKGROUND
ORGANIZATION AND BACKGROUND | 6 Months Ended |
Dec. 31, 2015 | |
ORGANIZATION AND BACKGROUND [Abstract] | |
ORGANIZATION AND BACKGROUND | NOTE 1 - ORGANIZATION AND BACKGROUND The accompanying unaudited condensed consolidated financial statements include the financial transactions and accounts of Sharps Compliance Corp. and its wholly owned subsidiaries, Sharps Compliance, Inc. of Texas (dba Sharps Compliance, Inc.), Sharps e-Tools.com, Inc. (“Sharps e-Tools”), Sharps Manufacturing, Inc., Sharps Environmental Services, Inc. (dba Sharps Environmental Services of Texas, Inc.), Sharps Safety, Inc., Alpha Bio/Med Services LLC and Bio-Team Mobile LLC (collectively, “Sharps” or the “Company”). All significant intercompany accounts and transactions have been eliminated upon consolidation. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Dec. 31, 2015 | |
BASIS OF PRESENTATION [Abstract] | |
BASIS OF PRESENTATION | NOTE 2 - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information and with instructions to Form 10-Q and, accordingly, do not include all information and footnotes required under accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, these interim condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial position of the Company as of December 31, 2015, the results of its operations for the three and six months ended December 31, 2015 and 2014, cash flows for the six months ended December 31, 2015 and 2014 and stockholders’ equity for the six months ended December 31, 2015 and the year ended June 30, 2015. The results of operations for the three and six months ended December 31, 2015 are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 2016. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2015. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Dec. 31, 2015 | |
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition : The Company recognizes revenue from product sales and services when goods are shipped or delivered, services provided, and title and risk of loss pass to the customer except for those sales via multiple-deliverable revenue arrangements. Provisions for certain rebates, product returns and discounts to customers are accounted for as reductions in sales in the same period the related sales are recorded. Product discounts granted are based on the terms of arrangements with direct, indirect and other market participants, as well as market conditions, including prices charged by competitors. Rebates are estimated based on contractual terms, historical experience, trend analysis and projected market conditions in the various markets served. Service agreements which include a vendor managed inventory program include terms that meet the “bill and hold” criteria and as such are recognized when the order is completed at which point title has transferred, there are no acceptance provisions and amounts are segregated in the Company’s warehouse. During the three and six months ended December 31, 2015, the Company recorded revenue from inventory builds that are held in vendor managed inventory under these service agreements of $1.9 million and $2.5 million, respectively. During the three and six months ended December 31, 2014, the Company recorded revenue from inventory builds that are held in vendor managed inventory under these service agreements of $0.8 million and $1.6 million, respectively. As of December 31, 2015 and June 30, 2015, $2.9 million and $1.6 million, respectively, of solutions sold through that date were held in vendor managed inventory pending fulfillment or shipment to patients of pharmaceutical manufacturers who offer these solutions to patients in an ongoing patient support program. Certain products offered by the Company have revenue producing components that are recognized over multiple delivery points (Sharps Recovery System™ and various other solutions like the TakeAway Environmental Return Systems™ referred to as “Mailbacks” and Sharps® Pump and Asset Return Boxes, referred to as “Pump Returns”) and can consist of up to three separate elements, or units of measure, as follows: (1) the sale of the compliance and container system, (2) return transportation and (3) treatment service. In accordance with the relative selling price methodology, an estimated selling price is determined for all deliverables that qualify for separate units of accounting. The actual consideration received in a multiple-deliverable arrangement is then allocated to the units based on their relative sales price. The selling price for the transportation revenue and the treatment revenue utilizes third party evidence. The Company estimates the selling price of the compliance and container system based on the product and services provided including compliance with local, state and Federal laws, adherence to stringent manufacturing and testing requirements, safety to the patient and the community as well as storage and containment capabilities. Revenue for the sale of the compliance and container is recognized upon delivery to the customer, at which time the customer takes title and assumes risk of ownership. Transportation revenue is recognized when the customer returns the compliance and container system and the container has been received at the Company’s owned or contracted facilities. The compliance and container system is mailed or delivered by an alternative logistics provider to the Company’s owned or contracted facilities. Treatment revenue is recognized upon the destruction or conversion and proof of receipt and treatment having been performed on the container. Since the transportation element and the treatment elements are undelivered services at the point of initial sale of the compliance and container, transportation and treatment revenue is deferred until the services are performed. The current and long-term portions of deferred revenues are determined through regression analysis and historical trends. Furthermore, through regression analysis of historical data, the Company has determined that a certain percentage of all compliance and container systems sold may not be returned. Accordingly, a portion of the transportation and treatment elements are recognized at the point of sale. Income Taxes Accounts Receivable Stock-Based Compensation |
RECENTLY ISSUED ACCOUNTING STAN
RECENTLY ISSUED ACCOUNTING STANDARDS | 6 Months Ended |
Dec. 31, 2015 | |
RECENTLY ISSUED ACCOUNTING STANDARDS [Abstract] | |
RECENTLY ISSUED ACCOUNTING STANDARDS | NOTE 4 – RECENTLY ISSUED ACCOUNTING STANDARDS In May 2014, guidance for revenue recognition was issued which supersedes the revenue recognition requirements currently followed by the Company. The new guidance provides for a single five-step model to be applied in determining the amount and timing of the recognition of revenue related to contracts with customers. The new standard also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. The guidance is effective for annual reporting periods beginning after December 15, 2017 (effective July 1, 2018 for the Company). The Company is evaluating the impact that the new accounting guidance will have on its consolidated financial statements and related disclosures and has not yet determined the method by which it will adopt the standard. In July 2015, guidance for inventory measurement was issued, which supersedes the policy currently followed by the Company. The new guidance requires the Company to measure inventory at the lower of cost or net realizable value. The provisions of the new guidance are effective for annual reporting periods beginning after December 15, 2016 (effective July 1, 2017 for the Company) including interim periods within the reporting period. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. In September 2015, guidance for business combinations was issued, which simplifies the accounting for measurement-period adjustments. The new guidance eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination and requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The provisions of the new guidance are effective for annual reporting periods beginning after December 15, 2015 (effective July 1, 2016 for the Company) including interim periods within the reporting period. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | NOTE 5 - INCOME TAXES The establishment of valuation allowances and development of projected annual effective tax rates requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. Under generally accepted accounting principles, the valuation allowance has been recorded to reduce the Company’s net deferred tax asset to an amount that is more likely than not to be realized and is based upon the uncertainty of the realization of certain federal and state deferred tax assets related to net operating loss carryforwards and other tax attributes. The Company’s net deferred tax assets have been fully reserved by a tax valuation allowance. The Company’s effective tax rate for the six months ended December 31, 2015 and 2014 was 8.5% and 1.9%, respectively, reflecting estimated state income taxes. The Company’s federal tax expense associated with taxable income during the six months ended December 31, 2015 and 2014 was offset by the utilization of net operating loss carryforwards. |
NOTES PAYABLE AND LONG-TERM DEB
NOTES PAYABLE AND LONG-TERM DEBT | 6 Months Ended |
Dec. 31, 2015 | |
NOTES PAYABLE AND LONG-TERM DEBT [Abstract] | |
NOTES PAYABLE AND LONG-TERM DEBT | NOTE 6 - NOTES PAYABLE AND LONG-TERM DEBT On April 9, 2015, the Company entered into a credit agreement with a commercial bank (“Credit Agreement”). The Credit Agreement, which replaces, in its entirety, the Company’s prior credit agreement, which was executed effective January 28, 2014 with the same commercial bank, provides for a two-year, $9.0 million line of credit facility, the proceeds of which may be utilized as follows: (i) $4.0 million for working capital, letters of credit (up to $500,000) and general corporate purposes and (ii) $5.0 million for acquisitions. Indebtedness under the Credit Agreement is secured by the Company’s accounts receivable and inventory with advances outstanding under the working capital portion of the credit facility at any time limited to a Borrowing Base (as defined in the Credit Agreement) equal to 80% of eligible accounts receivable plus 50% of eligible inventory. Advances under the acquisition portion of the credit facility are limited to 75% of the purchase price of an acquired company and convert to a five-year term note. Borrowings bear interest at WSJ Prime (for the working capital line) and WSJ Prime plus 0.25% (for the acquisition line), which was approximately 3.50% and 3.75%, respectively, as of December 31, 2015. The Company pays a fee of 0.25% per annum on the unused amount of the line of credit. As of December 31, 2015, the Company had no outstanding borrowings other than $0.3 million in letters of credit, which left $8.7 million of credit available under the Credit Agreement. The Credit Agreement contains affirmative and negative covenants that, among other things, require the Company to maintain a minimum level of tangible net worth of $12.5 million, minimum liquidity of $7.0 million and a minimum debt service coverage ratio of not less than 1.15 to 1.00. The Credit Agreement, which expires on April 9, 2017, also contains customary events of default which, if uncured, may terminate the Credit Agreement and require immediate repayment of all indebtedness to the lenders. The Company was in compliance with all the financial covenants under the Credit Agreement as of December 31, 2015. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Dec. 31, 2015 | |
STOCK-BASED COMPENSATION [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 7 – STOCK-BASED COMPENSATION Stock-based compensation cost for options and restricted stock awarded to employees and directors is measured at the grant date, based on the calculated fair value of the award and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant). Stock-based compensation costs from performance-based stock option awards are estimated at the date when key terms and conditions of the performance-based stock award are known (the “service inception date”), and in subsequent reporting periods, trued up at the grant date and recognized as expense over the employee’s requisite period (from the service inception date through the end of the vesting period). During the three and six months ended December 31, 2015 and 2014, stock-based compensation amounts are as follows (in thousands): Three-Months Ended Six-Months Ended December 31, December 31, 2015 2014 2015 2014 (Unaudited) (Unaudited) Stock-based compensation expense included in: Cost of revenues $ 10 $ 6 $ 18 $ 10 Selling, general and administrative 207 135 340 247 Total $ 217 $ 141 $ 358 $ 257 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Dec. 31, 2015 | |
EARNINGS PER SHARE [Abstract] | |
EARNINGS PER SHARE | NOTE 8 - EARNINGS PER SHARE Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted per share is computed by dividing net income by the weighted average number of common shares after considering the additional dilution related to common stock options, restricted stock and performance-based stock option awards. In computing diluted earnings per share, the outstanding common stock options and performance-based stock option awards are considered dilutive using the treasury stock method. The Company’s restricted stock awards are treated as outstanding for earnings per share calculations since these shares have full voting rights and are entitled to participate in dividends declared on common shares, if any, and undistributed earnings. As participating securities, the shares of restricted stock are included in the calculation of basic EPS using the two-class method. For the periods presented, the amount of earnings allocated to the participating securities was not material. The following information is necessary to calculate earnings per share for the periods presented (in thousands, except per-share data): Three-Months Ended Six-Months Ended December 31, December 31, 2015 2014 2015 2014 (Unaudited) (Unaudited) Net income, as reported $ 615 $ 749 $ 835 $ 675 Weighted average common shares outstanding 15,467 15,281 15,443 15,285 Effect of dilutive stock options 595 142 551 143 Weighted average diluted common shares outstanding 16,062 15,423 15,994 15,428 Net income per common share Basic $ 0.04 $ 0.05 $ 0.05 $ 0.04 Diluted $ 0.04 $ 0.05 $ 0.05 $ 0.04 Employee stock options excluded from computation of dilutive income per share amounts because their effect would be anti-dilutive 120 392 216 237 |
EQUITY TRANSACTIONS
EQUITY TRANSACTIONS | 6 Months Ended |
Dec. 31, 2015 | |
EQUITY TRANSACTIONS [Abstract] | |
EQUITY TRANSACTIONS | NOTE 9 - EQUITY TRANSACTIONS During the three and six months ended December 31, 2015 and 2014, stock options to purchase shares of the Company’s common stock were exercised as follows: Three-Months Ended December 31, Six-Months Ended December 31, 2015 2014 2015 2014 (Unaudited) (Unaudited) Options exercised 11,000 10,250 112,425 10,250 Proceeds (in thousands) $ 45 $ 21 $ 313 $ 21 Average exercise price per share $ 3.98 $ 2.12 $ 2.77 $ 2.12 As of December 31, 2015, there was $0.5 million of stock option and restricted stock compensation expense related to non-vested awards which is expected to be recognized over a weighted average period of 2.6 years. On January 7, 2013, the Company announced that its Board of Directors approved a stock repurchase program effective January 3, 2013, authorizing the Company to repurchase in the aggregate up to $3.0 million of its outstanding common stock over a two-year period. On March 5, 2015, the Board approved a two-year extension on the stock repurchase program through January 1, 2017. During the three and six months ended December 31, 2015 and 2014, shares were repurchased as follows: Three-Months Ended Six-Months Ended December 31, December 31, 2015 2014 2015 2014 (Unaudited) (Unaudited) Shares repurchased 68,022 - 68,022 29,449 Cash paid for shares repurchased (in thousands) $ 540 $ - $ 540 $ 128 Average price paid per share $ 7.94 $ - $ 7.94 $ 4.35 Total shares repurchased under the program are 259,272 shares at a cost of $1.3 million. As of December 31, 2015, approximately $1.7 million remained of the Company’s $3.0 million repurchase program. Sharps purchased all shares with cash resources. |
INVENTORY
INVENTORY | 6 Months Ended |
Dec. 31, 2015 | |
INVENTORY [Abstract] | |
INVENTORY | NOTE 10 – INVENTORY The components of inventory are as follows (in thousands): December 31, 2015 June 30, 2015 (Unaudited) Raw materials $ 1,236 $ 1,393 Finished goods 2,551 1,345 Total $ 3,787 $ 2,738 |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 6 Months Ended |
Dec. 31, 2015 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 11 – FAIR VALUE OF FINANCIAL INSTRUMENTS The Company considers the fair value of all financial instruments, including cash and cash equivalents, accounts receivable and accounts payable to approximate their carrying values at December 31, 2015 due to their short-term nature. |
ACQUISITION
ACQUISITION | 6 Months Ended |
Dec. 31, 2015 | |
ACQUISITION [Abstract] | |
ACQUISITION | NOTE 12 – ACQUISITIONS Effective on July 17, 2015, the Company acquired Alpha Bio/Med Services LLC, a route-based pickup service located in Pennsylvania for total cash consideration of $0.7 million of which $0.1 million has been withheld for possible settlement amounts through July 2016. The following amounts represent the fair value of the assets acquired and liabilities assumed: Accounts receivable $ 51 Fixed assets 70 Intangibles 267 Goodwill 413 Accounts payable and accrued liabilities (101 ) Total purchase price $ 700 Effective on December 14, 2015, the Company acquired Bio-Team Mobile LLC, a route-based pickup service located in Pennsylvania for total cash consideration of $1.0 million of which $0.1 million has been withheld for possible settlement amounts through December 2016 and $0.3 million of cash consideration that was paid in January 2016. The following amounts represent the fair value of the assets acquired and liabilities assumed: Accounts receivable $ 42 Fixed assets 68 Intangibles 313 Goodwill 626 Accounts payable and accrued liabilities (16 ) Total purchase price $ 1,033 During the three and six months ended December 31, 2015, the Company incurred $0.1 million and $0.2 million, respectively, of acquisition related expenses for investment banking, legal and accounting fees which are included within selling, general and administrative expenses on our condensed consolidated statements of income. The results of operations of the acquired business have been included in the condensed consolidated statements of income from the date of acquisition. The goodwill recorded as of December 31, 2015 will be deductible for income taxes. |
SIGNIFICANT ACCOUNTING POLICI19
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Dec. 31, 2015 | |
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Revenue Recognition | Revenue Recognition : The Company recognizes revenue from product sales and services when goods are shipped or delivered, services provided, and title and risk of loss pass to the customer except for those sales via multiple-deliverable revenue arrangements. Provisions for certain rebates, product returns and discounts to customers are accounted for as reductions in sales in the same period the related sales are recorded. Product discounts granted are based on the terms of arrangements with direct, indirect and other market participants, as well as market conditions, including prices charged by competitors. Rebates are estimated based on contractual terms, historical experience, trend analysis and projected market conditions in the various markets served. Service agreements which include a vendor managed inventory program include terms that meet the “bill and hold” criteria and as such are recognized when the order is completed at which point title has transferred, there are no acceptance provisions and amounts are segregated in the Company’s warehouse. During the three and six months ended December 31, 2015, the Company recorded revenue from inventory builds that are held in vendor managed inventory under these service agreements of $1.9 million and $2.5 million, respectively. During the three and six months ended December 31, 2014, the Company recorded revenue from inventory builds that are held in vendor managed inventory under these service agreements of $0.8 million and $1.6 million, respectively. As of December 31, 2015 and June 30, 2015, $2.9 million and $1.6 million, respectively, of solutions sold through that date were held in vendor managed inventory pending fulfillment or shipment to patients of pharmaceutical manufacturers who offer these solutions to patients in an ongoing patient support program. Certain products offered by the Company have revenue producing components that are recognized over multiple delivery points (Sharps Recovery System™ and various other solutions like the TakeAway Environmental Return Systems™ referred to as “Mailbacks” and Sharps® Pump and Asset Return Boxes, referred to as “Pump Returns”) and can consist of up to three separate elements, or units of measure, as follows: (1) the sale of the compliance and container system, (2) return transportation and (3) treatment service. In accordance with the relative selling price methodology, an estimated selling price is determined for all deliverables that qualify for separate units of accounting. The actual consideration received in a multiple-deliverable arrangement is then allocated to the units based on their relative sales price. The selling price for the transportation revenue and the treatment revenue utilizes third party evidence. The Company estimates the selling price of the compliance and container system based on the product and services provided including compliance with local, state and Federal laws, adherence to stringent manufacturing and testing requirements, safety to the patient and the community as well as storage and containment capabilities. Revenue for the sale of the compliance and container is recognized upon delivery to the customer, at which time the customer takes title and assumes risk of ownership. Transportation revenue is recognized when the customer returns the compliance and container system and the container has been received at the Company’s owned or contracted facilities. The compliance and container system is mailed or delivered by an alternative logistics provider to the Company’s owned or contracted facilities. Treatment revenue is recognized upon the destruction or conversion and proof of receipt and treatment having been performed on the container. Since the transportation element and the treatment elements are undelivered services at the point of initial sale of the compliance and container, transportation and treatment revenue is deferred until the services are performed. The current and long-term portions of deferred revenues are determined through regression analysis and historical trends. Furthermore, through regression analysis of historical data, the Company has determined that a certain percentage of all compliance and container systems sold may not be returned. Accordingly, a portion of the transportation and treatment elements are recognized at the point of sale. |
Income Taxes | Income Taxes |
Accounts Receivable | Accounts Receivable |
Stock-Based Compensation | Stock-Based Compensation |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
STOCK-BASED COMPENSATION [Abstract] | |
Allocated cost of share based compensation | During the three and six months ended December 31, 2015 and 2014, stock-based compensation amounts are as follows (in thousands): Three-Months Ended Six-Months Ended December 31, December 31, 2015 2014 2015 2014 (Unaudited) (Unaudited) Stock-based compensation expense included in: Cost of revenues $ 10 $ 6 $ 18 $ 10 Selling, general and administrative 207 135 340 247 Total $ 217 $ 141 $ 358 $ 257 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
EARNINGS PER SHARE [Abstract] | |
Earnings per share | The following information is necessary to calculate earnings per share for the periods presented (in thousands, except per-share data): Three-Months Ended Six-Months Ended December 31, December 31, 2015 2014 2015 2014 (Unaudited) (Unaudited) Net income, as reported $ 615 $ 749 $ 835 $ 675 Weighted average common shares outstanding 15,467 15,281 15,443 15,285 Effect of dilutive stock options 595 142 551 143 Weighted average diluted common shares outstanding 16,062 15,423 15,994 15,428 Net income per common share Basic $ 0.04 $ 0.05 $ 0.05 $ 0.04 Diluted $ 0.04 $ 0.05 $ 0.05 $ 0.04 Employee stock options excluded from computation of dilutive income per share amounts because their effect would be anti-dilutive 120 392 216 237 |
EQUITY TRANSACTIONS (Tables)
EQUITY TRANSACTIONS (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
EQUITY TRANSACTIONS [Abstract] | |
Stock options exercised to purchase common stock | During the three and six months ended December 31, 2015 and 2014, stock options to purchase shares of the Company’s common stock were exercised as follows: Three-Months Ended December 31, Six-Months Ended December 31, 2015 2014 2015 2014 (Unaudited) (Unaudited) Options exercised 11,000 10,250 112,425 10,250 Proceeds (in thousands) $ 45 $ 21 $ 313 $ 21 Average exercise price per share $ 3.98 $ 2.12 $ 2.77 $ 2.12 |
Schedule of share repurchases | During the three and six months ended December 31, 2015 and 2014, shares were repurchased as follows: Three-Months Ended Six-Months Ended December 31, December 31, 2015 2014 2015 2014 (Unaudited) (Unaudited) Shares repurchased 68,022 - 68,022 29,449 Cash paid for shares repurchased (in thousands) $ 540 $ - $ 540 $ 128 Average price paid per share $ 7.94 $ - $ 7.94 $ 4.35 |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
INVENTORY [Abstract] | |
Components of inventory | The components of inventory are as follows (in thousands): December 31, 2015 June 30, 2015 (Unaudited) Raw materials $ 1,236 $ 1,393 Finished goods 2,551 1,345 Total $ 3,787 $ 2,738 |
ACQUISITION (Tables)
ACQUISITION (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Alpha Bio Med Services LLC [Member] | |
Business Acquisition [Line Items] | |
Preliminary purchase price allocation | The following amounts represent the fair value of the assets acquired and liabilities assumed: Accounts receivable $ 51 Fixed assets 70 Intangibles 267 Goodwill 413 Accounts payable and accrued liabilities (101 ) Total purchase price $ 700 |
Bio-Team Mobile LLC [Member] | |
Business Acquisition [Line Items] | |
Preliminary purchase price allocation | The following amounts represent the fair value of the assets acquired and liabilities assumed: Accounts receivable $ 42 Fixed assets 68 Intangibles 313 Goodwill 626 Accounts payable and accrued liabilities (16 ) Total purchase price $ 1,033 |
SIGNIFICANT ACCOUNTING POLICI25
SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2015 | |
Revenue Recognition [Abstract] | |||||
Revenue recorded from bill and hold inventory | $ 1.9 | $ 0.8 | $ 2.5 | $ 1.6 | |
Bill and hold inventory | $ 2.9 | $ 2.9 | $ 1.6 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 6 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Effective income tax rate reconciliation [Abstract] | ||
Effective income tax rate | 8.50% | 1.90% |
NOTES PAYABLE AND LONG-TERM D27
NOTES PAYABLE AND LONG-TERM DEBT (Details) - Credit Agreement [Member] | 6 Months Ended |
Dec. 31, 2015USD ($) | |
Line of Credit Facility [Line Items] | |
Period of line of credit | 2 years |
Maximum borrowing capacity | $ 9,000,000 |
Percentage of eligible accounts receivable considered for borrowing base | 80.00% |
Percentage of eligible inventory considered for borrowing base | 50.00% |
Percentage of portion allocated to acquisition purchase price | 75.00% |
Maturity period | 5 years |
Unused capacity, commitment fee percentage | 0.25% |
Amount outstanding | $ 0 |
Remaining borrowing capacity | 8,700,000 |
Minimum amount of tangible net worth to be maintained under financial covenants | 12,500,000 |
Minimum amount of liquidity to be maintained under financial covenants | $ 7,000,000 |
Minimum debt service coverage ratio | 1.15 |
Maturity date | Apr. 9, 2017 |
Working Capital [Member] | |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity | $ 4,000,000 |
Description of variable rate basis | WSJ Prime |
Interest rate | 3.50% |
Letters of Credit [Member] | |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity | $ 500,000 |
Amount outstanding | 300,000 |
Acquisitions [Member] | |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity | $ 5,000,000 |
Description of variable rate basis | WSJ Prime |
Interest rate | 3.75% |
Basis spread of variable rate | 0.25% |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation expense | $ 217 | $ 141 | $ 358 | $ 257 |
Cost of Revenues [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation expense | 10 | 6 | 18 | 10 |
Selling, General and Administrative [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation expense | $ 207 | $ 135 | $ 340 | $ 247 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2015 | |
EARNINGS PER SHARE [Abstract] | |||||
Net income, as reported | $ 615 | $ 749 | $ 835 | $ 675 | $ 1,160 |
Weighted average common shares outstanding (in shares) | 15,467 | 15,281 | 15,443 | 15,285 | |
Effect of dilutive stock options (in shares) | 595 | 142 | 551 | 143 | |
Weighted average diluted common shares outstanding (in shares) | 16,062 | 15,423 | 15,994 | 15,428 | |
Net income per common share | |||||
Basic (in dollars per share) | $ 0.04 | $ 0.05 | $ 0.05 | $ 0.04 | |
Diluted (in dollars per share) | $ 0.04 | $ 0.05 | $ 0.05 | $ 0.04 | |
Employee stock options excluded from computation of dilutive income per share amounts because their effect would be anti-dilutive (in shares) | 120 | 392 | 216 | 237 |
EQUITY TRANSACTIONS (Details)
EQUITY TRANSACTIONS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2015 | |
Stock options exercised [Abstract] | |||||
Options Exercised (in shares) | 11,000 | 10,250 | 112,425 | 10,250 | |
Proceeds | $ 45 | $ 21 | $ 313 | $ 21 | |
Average exercise price per share (in dollars per share) | $ 3.98 | $ 2.12 | $ 2.77 | $ 2.12 | |
Compensation expense related to non-vested awards | $ 500 | $ 500 | |||
Weighted average period | 2 years 7 months 6 days | ||||
Stock repurchase program, authorized amount | $ 3,000 | $ 3,000 | |||
Stock repurchase program, period | 2 years | ||||
Stock repurchase program term extension | 2 years | ||||
Shares repurchased [Abstract] | |||||
Shares repurchased (in shares) | 68,022 | 0 | 68,022 | 29,449 | |
Cash paid for shares repurchased | $ 540 | $ 0 | $ 540 | $ 128 | |
Average price paid per share (in dollars per share) | $ 7.94 | $ 0 | $ 7.94 | $ 4.35 | |
Total shares repurchased under the program (in shares) | 259,272 | 259,272 | 191,250 | ||
Total shares repurchased under the program, at cost | $ 1,349 | $ 1,349 | $ 809 | ||
Amount remaining under repurchase program | $ 1,700 | $ 1,700 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Jun. 30, 2015 |
Components of inventory [Abstract] | ||
Raw materials | $ 1,236 | $ 1,393 |
Finished goods | 2,551 | 1,345 |
Total | $ 3,787 | $ 2,738 |
ACQUISITION (Details)
ACQUISITION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2015 | Jan. 31, 2016 | Dec. 14, 2015 | Jul. 17, 2015 | Jun. 30, 2015 | |
Purchase Price Allocation | ||||||
Goodwill | $ 1,039 | $ 1,039 | $ 0 | |||
Acquisition related expenses | $ 100 | $ 200 | ||||
Alpha Bio Med Services LLC [Member] | ||||||
Purchase Price Allocation | ||||||
Accounts receivable | $ 51 | |||||
Fixed assets | 70 | |||||
Intangibles | 267 | |||||
Goodwill | 413 | |||||
Accounts payable and accrued liabilities | (101) | |||||
Total purchase price | 700 | |||||
Cash consideration withheld for possible settlement amounts through 2016 | $ 100 | |||||
Bio-Team Mobile LLC [Member] | ||||||
Purchase Price Allocation | ||||||
Accounts receivable | $ 42 | |||||
Fixed assets | 68 | |||||
Intangibles | 313 | |||||
Goodwill | 626 | |||||
Accounts payable and accrued liabilities | (16) | |||||
Total purchase price | 1,033 | |||||
Cash consideration withheld for possible settlement amounts through 2016 | $ 100 | |||||
Bio-Team Mobile LLC [Member] | Subsequent Event [Member] | ||||||
Purchase Price Allocation | ||||||
Cash consideration withheld for possible settlement amounts through 2016 | $ 300 |