EXHIBIT 99.1
Sharps Compliance Reports Positive Net Income on 34.7% Increase in Revenue in the Second Quarter of Fiscal 2012
- Second quarter revenue reached $6.2 million compared with $4.6 million in the prior-year period
- Billings grew 43.4% on solid growth in key Retail, Professional and Pharmaceutical targeted markets (excludes government maintenance contract)
- Achieved slightly positive net income with 34.6% gross margin and EBITDA of
$0.3 million - Solid balance sheet with a cash balance of $18.3 million, working capital of $20.3 million and no debt as of December 31, 2011
HOUSTON, Jan. 24, 2012 (GLOBE NEWSWIRE) -- Sharps Compliance Corp. (Nasdaq:SMED) ("Sharps" or the "Company"), a leading full-service provider of cost-effective solutions designed for the proper management of medical waste, used healthcare materials and unused dispensed medications, today reported $6.2 million in revenue for the second quarter of fiscal year 2012 ended December 31, 2011, up $1.6 million, or 34.7%, over revenue in the fiscal 2011 second quarter of $4.6 million. Customer billings, which the Company believes to be an appropriate measure of performance and progress of the business, increased 47.8%, or $1.9 million, to $6.0 million in the second quarter of fiscal 2012 from $4.1 million in the corresponding period of the prior fiscal year. Excluding the government maintenance contract, billings for the quarter were up 43.4% primarily as a result of strong growth in Sharps' key targeted markets. (See Reconciliation of Customer Billings to Revenue in the supplemental table included at the end of this release.) The Company announced on January 17, 2012 that it had received notice that the third option year (beginning February 1, 2012) for the maintenance of its Medical Waste Management System™ supporting the Division of Strategic National Stockpile was not being exercised.
Net income for the fiscal 2012 second quarter was $28 thousand, or basically breakeven, when compared with a net loss of $0.8 million, or $0.05 per diluted share, in the prior-year period.
David P. Tusa, President and CEO of Sharps Compliance, commented, "Our 43.4% growth in core billings this quarter demonstrates the success we are achieving in our targeted Retail, Pharmaceutical Manufacturer and Professional markets. We believe wins in these markets are a result of our comprehensive recognition of our customers' needs and our ability to address those needs with innovative solutions. For example, we have shown measurable success in the Retail pharmacy market as that industry drives toward providing more healthcare services to its customers and improved patient interaction. We serve the majority of the leading retail pharmacies throughout the U.S. and believe our innovative solutions not only help them to succeed, but also address the growing needs of their customers while reducing costs. We are gaining greater traction as well in the Pharmaceutical Manufacturer market with our Patient Support Programs while developing a broader following in the Professional market with our convenient and low-cost alternative to the traditional medical waste pick-up service."
Retail, Pharmaceutical and Professional market penetration progresses well
Sales to the Pharmaceutical Manufacturer market were up $662 thousand in the second quarter of fiscal 2012 to $0.7 million. The drivers of the increase were a combination of resupply orders for existing Patient Support Programs and the launch during the quarter of one of three new programs. The Patient Support Programs are designed to improve patient interaction and drug compliance as well as to protect the patient, their family and community from the dangers of accidental needle sticks. Sales to the Pharmaceutical Manufacturer market can fluctuate measurably from quarter to quarter due to the variability in timing of orders associated with Patient Support Programs. Trailing twelve month billings as of December 31, 2011 were $1.1 million compared to $0.6 million in the similar prior period.
Retail market billings for the second quarter of fiscal 2012 increased 69.0%, or $0.5 million, to $1.3 million in the quarter driven by a strong flu season for the retail pharmacies. The percentage of flu and other injections administered in the retail pharmacy setting continues to grow as retailers are moving aggressively to provide more health care services to their customers.
Professional market billings grew $201 thousand, or 38.7%, to $720 thousand in the quarter. The growth in the Professional market was a direct result of the Company's targeted telemarketing and web-based promotional activities to educate doctors, dentists and veterinarians on the significant cost advantage and convenience of its solutions over the traditional and costly pick-up service. The Company's inside and online sales initiative contributed $559 thousand in Professional market billings in the fiscal 2012 second quarter compared with $237 thousand for the prior year quarter.
Second quarter Home Health Care billings were $1.7 million, up 6.0% over the prior year period primarily due to improved sales by home health care related distributors addressing the growing trend of patient volumes in the home health care industry.
Core government billings for the second quarter of fiscal 2012, which excludes the government maintenance contract, increased $21 thousand to $90 thousand. U.S. Government Contract billings for the second quarter of fiscal 2012 increased $342 thousand to $722 thousand. The Company announced on January 17, 2012, that the U.S. Government's maintenance contract will not be renewed for the third option year, beginning February 1, 2012. The U.S. Government's maintenance contract was associated with our Medical Waste Management System™ for the Division of Strategic National Stockpile, a rapid deployment system designed to collect, store, transport and treat medical waste generated in an emergency setting. The Company has been providing the maintenance services at a rate of about $0.7 million per quarter.
Mr. Tusa noted, "While we are disappointed with the non-renewal of the U. S. Government maintenance contract for our Medical Waste Management System™, we expect the growth we are realizing in our targeted Retail, Professional and Pharmaceutical markets will be able to replace the lost revenue. Although timing of government opportunities is always difficult to predict, we continue to be encouraged that the Veterans' Administration program, which concluded its pilot stage around the end of fiscal year 2011, remains a viable opportunity that may be rolled out across the country."
Reallocated resources drive results
By channel, higher direct sales of $1.1 million primarily reflect the sales to Pharmaceutical manufacturers, while the inside and online sales effort grew 135.9% compared with the prior year period to $0.6 million as the Company focuses on marketing through trade shows, innovative promotional campaigns, its website and continuous follow-through from the inside sales group.
Gross margin was 34.6% in the second quarter of fiscal 2012 compared with 26.6% in the prior-year period. Gross margin expansion of 800 basis points was primarily due to the leverage inherent in the business with increased sales volume. Selling, general and administrative (SG&A) expense was $2.0 million for the second quarter of fiscal 2012, a decrease of $0.3 million, or 14.6%, from the $2.3 million reported in the second quarter of fiscal 2011 as the Company tightened SG&A spending and realigned and refocused its sales and marketing activities driving greater success with fewer resources.
Operating income for the second quarter of fiscal 2012 was $34 thousand compared with an operating loss of $1.2 million for the second quarter of fiscal 2011.
Earnings before interest, taxes, depreciation, and amortization, or EBITDA, improved measurably to $0.3 million in the second quarter of fiscal 2012 from an EBITDA loss of $1.0 million in the same period of the prior fiscal year. Sharps believes that when used in conjunction with GAAP measures, EBITDA, which is a non-GAAP measure, provides additional information related to its operating performance. (See Reconciliation of Net Income (Loss) to EBITDA in the supplemental table included at the end of this release.)
Liquidity and balance sheet strength
Cash and cash equivalents of $18.3 million was relatively unchanged at December 31, 2011 compared with June 30, 2011, as was working capital of $20.3 million at December 31, 2011 compared with the fiscal 2011 year-end level of $20.2 million. At December 31, 2011, stockholders' equity and total assets were $26.0 million and $30.8 million, respectively, compared with $25.9 million and $30.6 million, respectively, at June 30, 2011.
Innovative products and services and new approaches to marketing drive future growth potential
Mr. Tusa noted, "We are extremely encouraged with the strong results we reported for the quarter. Excluding the government contract, we generated $5.5 million in revenue which was up about 30% over the prior year period. Our new website that was launched last summer continues to draw new sales and the consistent follow through from our inside sales group increases our success rate. The strength of our penetration into the retail pharmacy market coupled with the receptivity of our new solution offerings provides continued growth opportunities for us. We are realizing very strong interest in sponsor-subsidized programs for our Complete Needle™ system which provides safe, convenient means of disposal of used needles and syringes for those that require self-injectable medications for their health and well-being and the TakeAway Environmental Return System™ for properly disposing of dispensed, unused non-controlled medications. Successful sponsorship programs could significantly increase the sales of these two solution offerings over the next twelve months."
First half fiscal 2012 review
For the six months ended December 31, 2011, revenue was up 21% to $12.0 million compared with $9.8 million during the prior-year period. Year-to-date customer billings were $11.9 million in fiscal 2012 and $9.8 million in fiscal 2011, an increase of 21.2%. In the first half of fiscal 2012, Professional billings increased 43.5% to $1.4 million over the first half of fiscal 2011, as a result of the inside and online sales initiative described previously. Pharmaceutical billings increased $0.8 million to $1.0 million over the first half of fiscal 2011, as a result of renewals from standing Patient Support Programs and new programs that were initiated with new customers. For the fiscal 2012 year-to-date period, Retail billings were $3.0 million compared with $2.7 million for the prior-year period reflecting the impact of the Complete Needle program initiated with the nation's leading retail pharmacy and a strong flu shot season. Billings for the Home Health Care market decreased $148 thousand, or 4.0%, to $3.5 million in the first six months of fiscal 2012 compared with the prior year period, mostly due to timing of distributor orders. For the first six months of fiscal 2012, core Government billings decreased $74 thousand to $215 thousand.
For the fiscal 2012 year-to-date period, gross margin expanded to 33.2% compared with 30.9% in the same period of the prior fiscal year from leverage gained on higher volume. For the six months ended December 31, 2011, SG&A expense was $4.2 million compared with $4.7 million for the corresponding period of the prior year, a decrease of $0.5 million, or 10.8%. The Company has successfully tightened SG&A expenditures, reallocated resources over the last year and refined its targeted sales and marketing initiatives. Operating loss for the six months ended December 31, 2011 improved to $0.5 million compared with operating loss of $2.4 million in the same period the prior fiscal year.
EBITDA for the first six months of fiscal 2012 was $70 thousand compared with an EBITDA loss of $1.9 million in the prior year period.
Net loss was $297 thousand, or $0.02 per diluted share, for the six months ended December 31, 2011, a measurable improvement from the net loss of $1.6 million, or $0.11 per diluted share, in the corresponding period of the prior fiscal year. Included in the fiscal 2011 year-to-date period was a $0.6 million, or $0.02 per diluted share, special charge related to the retirement of the Company's former CEO.
Second Quarter Fiscal Year 2012 Webcast and Conference Call
The Company will host a teleconference today beginning at 11:00 a.m. Eastern Time, during which management will review the financial and operating results for the period and discuss Sharps' corporate strategy and outlook. A question-and-answer session will follow.
The Sharps conference call can be accessed by dialling (201) 689-8560. The webcast can be monitored at www.sharpsinc.com. Webcast listeners will have the opportunity to submit questions to the speakers. Select questions will be summarized and addressed during the question-and-answer portion of the call.
A telephonic replay will be available from 2:00 p.m. ET the day of the teleconference until 11:59 p.m. ET Tuesday, January 31, 2012. To listen to the archived call, dial (858) 384-5517, and enter conference ID number 386658. A transcript will also be posted to Sharps' website, once available.
About Sharps Compliance Corp.
Headquartered in Houston, Texas, Sharps is a leading full-service provider of cost-effective management solutions for medical waste and unused dispensed medications. Its strategy is to capture a large part of the estimated $3.8 billion untapped market for unused medications, used syringes and medical waste generated outside of hospital and large health care settings by targeting the major agencies that are interrelated with this medical waste stream; including the U.S. government, pharmaceutical manufacturers, home healthcare providers, retail pharmacies and clinics, and the professional market which is comprised of physicians, dentists and veterinary practices. As a fully integrated medical waste management company providing customer solutions and services, the Company's solid business model, which provides strong margins and significant operating leverage, combined with its early penetration into emerging markets, uniquely positions it for strong future growth.
The Company's flagship product, the Sharps® Recovery System™ is a comprehensive solution for the containment, transportation, treatment and tracking of medical waste generated outside the hospital and large health care facility setting. Its TakeAway System™ is designed for individual consumers, retail or mail-order pharmacies, communities and facilities including assisted living, long-term care and correction operations to facilitate the proper disposal of unused dispensed medications. The Complete Needle™ Collection & Disposal System is a safe, easy-to-use and cost-effective solution designed for self-injecting consumers and includes the Company's containment, packaging, return shipping via the U.S. Postal Service, tracking and treatment.
More information on the Company and its products can be found on its website at: www.sharpsinc.com
Safe Harbor Statement
The information made available in this press release contains certain forward-looking statements which reflect Sharps Compliance Corp.'s current view of future events and financial performance. Wherever used, the words "estimate", "expect", "plan", "anticipate", "believe", "may" and similar expressions identify forward-looking statements. Any such forward-looking statements are subject to risks and uncertainties and the company's future results of operations could differ materially from historical results or current expectations. Some of these risks include, without limitation, the company's ability to educate its customers, development of public awareness programs to educate the identified consumer, customer preferences, the Company's ability to scale the business and manage its growth, the degree of success the Company has at gaining more large customer contracts, managing regulatory compliance and/or other factors that may be described in the company's annual report on Form 10-K, quarterly reports on Form 10-Q and/or other filings with the Securities and Exchange Commission. Future economic and industry trends that could potentially impact revenues and profitability are difficult to predict. The Company assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results express or implied therein will not be realized.
This release contains certain financial information not derived in accordance with generally accepted accounting principles ("GAAP"), including customer billings and EBITDA information. The Company believes this information is useful to investors and other interested parties. Such information should not be considered as a substitute for any measure derived in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Reconciliation of this information to the most comparable GAAP measures is included as an attachment to this release.
| SHARPS COMPLIANCE CORP. AND SUBSIDIARIES |
| Condensed Consolidated Statements of Operations |
| (unaudited) |
| (in thousands, except per share data) |
| |
| | Three-Months Ended | | Six-Months Ended | |
| | December 31, | | December 31, | |
| | (Unaudited) | | (Unaudited) | |
| | 2011 | 2010 | % Change | 2011 | 2010 | % Change |
| | | | | | | |
| Revenue | $ 6,212 | $ 4,611 | 34.7% | $ 11,955 | $ 9,844 | 21.4% |
| | | | | | | |
| Cost of revenue | 4,065 | 3,385 | 20.1% | 7,989 | 6,806 | 17.4% |
| Gross profit | 2,147 | 1,226 | 75.1% | 3,966 | 3,038 | 30.5% |
| Gross margin | 34.6% | 26.6% | | 33.2% | 30.9% | |
| SG&A expense | 1,997 | 2,339 | (14.6%) | 4,207 | 4,714 | (10.8%) |
| Special charge | -- | -- | 100.0% | -- | 570 | (100.0%) |
| Depreciation and amortization | 116 | 87 | 33.3% | 223 | 176 | 26.7% |
| | | | | | | |
| Operating income (loss) | 34 | (1,200) | | (464) | (2,422) | |
| Operating margin | 0.5% | (26.0%) | | (3.9%) | (24.6%) | |
| Other income | 9 | 15 | | 6 | 28 | |
| | | | | | | |
| Income (loss) before income taxes | $ 43 | $ (1,185) | | $ (458) | $ (2,394) | |
| Income tax expense (benefit) | 15 | (378) | | (161) | (790) | |
| Net income (loss) | $ 28 | $ (807) | | $ (297) | $ (1,604) | |
| | | | | | | |
| Net income (loss) per share | | | | | | |
| Basic | $ 0.00 | $ (0.05) | | $ (0.02) | $ (0.11) | |
| Diluted | $ 0.00 | $ (0.05) | | $ (0.02) | $ (0.11) | |
| | | | | | | |
Weighted Average
Shares Outstanding | | | | | | |
| Basic | 15,077 | 14,920 | | 15,071 | 14,914 | |
| Diluted | 15,404 | 14,920 | | 15,071 | 14,914 | |
| |
| |
| SHARPS COMPLIANCE CORP. AND SUBSIDIARIES |
| Condensed Consolidated Balance Sheets |
| (in thousands) |
| |
| | December 31, 2011 | June 30, 2011 |
| | (Unaudited) | |
| ASSETS: | | |
| Current assets: | | |
| Cash and cash equivalents | $ 18,343 | $ 18,280 |
| Accounts receivable, net | 2,600 | 3,065 |
| Inventory | 2,483 | 1,770 |
| Prepaid and other current assets | 917 | 857 |
| Deferred income taxes | 233 | 203 |
| Total current assets | 24,576 | 24,175 |
| Property, plant and equipment, net | 4,993 | 5,350 |
| Deferred income taxes, non-current | 890 | 748 |
| Intangible assets, net | 376 | 325 |
| Total assets | $ 30,835 | $ 30,598 |
| | | |
| | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY: | | |
| Current liabilities: | | |
| Accounts payable | $ 1,193 | $ 965 |
| Accrued liabilities | 1,331 | 1,260 |
| Deferred revenue | 1,773 | 1,724 |
| Total current liabilities | 4,297 | 3,949 |
| Long-term deferred revenue | 329 | 401 |
| Other liabilities | 240 | 383 |
| Total liabilities | 4,866 | 4,733 |
| Stockholders' equity: | | |
| Total stockholders' equity | 25,969 | 25,865 |
| Total liabilities and stockholders' equity | $ 30,835 | $ 30,598 |
| |
| |
| SHARPS COMPLIANCE CORP. AND SUBSIDIARIES |
| Supplemental Customer Billing and Revenue Information |
| (unaudited) |
| (in thousands) |
| |
| | Three-Months Ended December 31, | | | | |
| | 2011 | % Total | 2010 | $ Change | % Change |
| BILLINGS BY MARKET: | | | | | |
| Home Health Care | $ 1,740 | 29.1% | $ 1,642 | $ 98 | 6.0% |
| Retail | 1,303 | 21.8% | 771 | 532 | 69.0% |
| U.S. Government Contract | 722 | 12.1% | 380 | 342 | 90.0% |
| Core Government | 90 | 1.5% | 69 | 21 | 30.4% |
| Professional | 720 | 12.0% | 519 | 201 | 38.7% |
| Pharmaceutical | 709 | 11.8% | 47 | 662 | 1408.5% |
| Assisted Living/ Hospitality | 269 | 4.5% | 293 | (24) | (8.2%) |
| Other | 434 | 7.2% | 331 | 103 | 31.1% |
| Subtotal | 5,987 | 100.0% | 4,052 | 1,935 | 47.8% |
| GAAP Adjustment * | 225 | | 559 | (334) | (59.7%) |
| Revenue Reported | 6,212 | | 4,611 | 1,601 | 34.7% |
| | | | | | |
| | Six-Months Ended December 31, |
| | 2011 | % Total | 2010 | $ Change | % Change |
| BILLINGS BY MARKET: | | | | | |
| Home Health Care | $ 3,507 | 29.6% | $ 3,655 | $ (148) | (4.0%) |
| Retail | 3,026 | 25.5% | 2,663 | 363 | 13.6% |
| U.S. Government Contract | 1,444 | 12.2% | 760 | 684 | 90.0% |
| Core Government | 215 | 1.8% | 289 | (74) | (25.6%) |
| Professional | 1,422 | 12.0% | 991 | 431 | 43.5% |
| Pharmaceutical | 979 | 8.2% | 177 | 802 | 453.1% |
| Assisted Living/ Hospitality | 569 | 4.8% | 573 | (4) | (0.7%) |
| Other | 703 | 5.9% | 680 | 23 | 3.4% |
| Subtotal | 11,865 | 100.0% | 9,788 | 2,077 | 21.2% |
| GAAP Adjustment * | 90 | | 56 | 34 | 60.7% |
| Revenue Reported | 11,955 | | 9,844 | 2,111 | 21.4% |
| | | | | | |
| * Represents the net impact of the revenue recognition adjustments to arrive at reported GAAP revenue. Customer billings include all invoiced amounts for products shipped during the period reported. GAAP revenue includes customer billings as well as numerous adjustments necessary to reflect, (i) the deferral of a portion of current period sales and (ii) recognition of certain revenue associated with product returned for treatment and destruction. The difference between customer billings and GAAP revenue is reflected in the Company's balance sheet as deferred revenue. |
| |
| |
| SHARPS COMPLIANCE CORP. AND SUBSIDIARIES |
| Supplemental Customer Billing by Channel Information |
| (unaudited) |
| (in thousands) |
| |
| | Three-Months Ended December 31, |
| | 2011 | % Total | 2010 | $ Change | % Change |
| BILLINGS BY CHANNEL: | | | | | |
| Direct Sales | $ 2,390 | 39.9% | $ 1,280 | $ 1,110 | 86.7% |
| Distributors | 2,316 | 38.7% | 2,155 | 161 | 7.5% |
| Inside and Online Sales | 559 | 9.3% | 237 | 322 | 135.9% |
| U.S. Government Contract | 722 | 12.1% | 380 | 342 | 90.0% |
| Total Billings By Channel | $ 5,987 | 100.0% | $ 4,052 | $ 1,935 | 47.8% |
| | | | | | |
| | | | | | |
| | Six-Months Ended December 31, |
| | 2011 | % Total | 2010 | $ Change | % Change |
| BILLINGS BY CHANNEL: | | | | | |
| Direct Sales | $ 4,478 | 37.7% | $ 3,319 | $ 1,159 | 34.9% |
| Distributors | 4,914 | 41.4% | 5,216 | (302) | (5.8%) |
| Inside and Online Sales | 1,029 | 8.7% | 493 | 536 | 108.7% |
| U.S. Government Contract | 1,444 | 12.2% | 760 | 684 | 90.0% |
| Total Billings By Channel | $ 11,865 | 100.0% | $ 9,788 | $ 2,077 | 21.2% |
| |
| |
| SHARPS COMPLIANCE CORP. AND SUBSIDIARIES |
| Supplemental Table to Reconcile Net Income (Loss) to EBITDA |
| (unaudited) |
| (in thousands) |
| | | | | |
| | Three-Months Ended | Six-Months Ended |
| | December 31, | December 31, |
| | 2011 | 2010 | 2011 | 2010 |
| | | | | |
| Net Income (loss) | $ 28 | $ (807) | $ (297) | $ (1,604) |
| Income tax (benefit) expense | 15 | (378) | (161) | (790) |
| Interest (income) expense | (10) | (15) | (20) | (28) |
| Depreciation and amortization | 278 | 249 | 548 | 499 |
| EBITDA | $ 311 | $ (951) | $ 70 | $ (1,923) |
| | | | | |
| | | | | |
| The Company defines earnings before interest, taxes, depreciation and amortization ("EBITDA") as net income (loss), plus income tax (benefit) expense, interest (income) expense, and depreciation and amortization. Other companies may define EBITDA differently. EBITDA is presented because it is a financial measure that is frequently requested by third parties. However, EBITDA is not considered under generally accepted accounting principles as a primary measure of an entity's financial results, and accordingly, EBITDA should not be considered an alternative to operating income (loss), net income (loss), or cash flows as determined under generally accepted accounting principles and as reported by the Company. |
CONTACT: Diana P. Diaz
Sharps Compliance Corp.
Vice President and Chief Financial Officer
Phone: (713) 660-3547
Email: ddiaz@sharpsinc.com
Deborah Pawlowski
Kei Advisors LLC
Investor Relations
Phone: (716) 843-3908
Email: dpawlowski@keiadvisors.com