EXHIBIT 99.1
PRESS RELEASE Source: Matria Healthcare, Inc.
MATRIA HEALTHCARE EXCEEDS SECOND QUARTER EARNINGS
ESTIMATES ON 17% REVENUE GROWTH
Thursday July 22, 7:54 pm ET
MARIETTA, Ga.--(BUSINESS WIRE)--July 22, 2004--Matria Healthcare, Inc.
(NASDAQ/NM: MATR - News) today announced financial results for the second
quarter ended June 30, 2004.
On June 30, 2004, the Company completed the sale of the assets of its Pharmacy
and Supplies business and recorded a gain on the sale of $56.1 million, or $32.8
million, net of taxes. This gain is included in earnings from discontinued
operations. Also, during the quarter, Matria retired $120 million in aggregate
principal amount of its 11% Senior Notes, which resulted in a loss of $22.9
million, or $14.1 million, net of taxes. This loss is included in earnings from
continuing operations. The Company incurred $600,000, or $371,000, net of taxes,
in additional interest expense during the quarter due to the timing of the use
of the funds raised from the sale of the Company's 4.875% Convertible Senior
Subordinated Notes due 2024 to retire the 11% Senior Notes, which is included in
earnings from continuing operations. Also included in earnings from continuing
operations is a restructuring charge of $265,000, or $165,000, net of taxes,
incurred by the Company early in the second quarter of 2004.
Revenues from continuing operations for the second quarter of 2004 increased 17%
to $71.9 million compared with $61.6 million in the second quarter of 2003.
Excluding the unusual items described above, second quarter of 2004 net earnings
were $3.2 million, or $0.29 per diluted common share, compared with second
quarter of 2003 net earnings of $1.7 million, or $0.17 per diluted common share.
Excluding these unusual items, earnings from continuing operations for the
second quarter of 2004 were $2.8 million, or $0.26 per diluted common share,
compared with $973,000, or $0.09 per diluted common share, in the 2003 second
quarter. Excluding these unusual items, 2004 second quarter earnings from
discontinued operations were $333,000, or $0.03 per diluted common share,
compared with $771,000, or $0.08 per diluted common share, in the prior year's
second quarter.
Including the unusual items described above, net earnings for the three month
period ended June 30, 2004, were $21.3 million, or $2.06 per diluted common
share, loss from continuing operations was $11.9 million, or $1.15 per diluted
common share, and earnings from discontinued operations were $33.1 million, or
$3.21 per diluted common share.
The effects of the unusual items on 2004 second quarter earnings per diluted
common share are summarized as follows:
EPS before EPS from EPS as
Unusual Items Unusual Items Reported
Continuing Operations $ 0.26 $ (1.41)(1) $ (1.15)
Discontinued Operations $ 0.03 $ 3.18 (2) $ 3.21
------------- ----------- -----------
Combined Operations $ 0.29 $ 1.77 $ 2.06
============= =========== ===========
(1) Includes loss on retirement of 11% Senior Notes, additional interest
expense and restructuring charge.
(2) Gain on sale of business.
Second quarter of 2004 revenues for the Company's Health Enhancement segment
increased by 30% to $49.1 million compared with $37.9 million in the second
quarter of 2003. The Health Enhancement segment is comprised of the Company's
disease management business, its foreign diabetes service operation and Facet
Technologies, the Company's diabetes product design, development and assembly
operation. In the disease management component of the Health Enhancement
segment, second quarter of 2004 revenues increased by 121% to $13.5 million
compared with $6.1 million in the
second quarter of 2003. In the other business components of the Health
Enhancement segment, second quarter 2004 revenues for the Company's foreign
diabetes business increased 16% to $14.7 million compared with $12.8 million in
second quarter 2003 and Facet Technologies revenues increased 10% to $20.9
million compared with $19.1 million in the prior year's second quarter.
Second quarter of 2004 revenues for the Women's and Children's Health segment
were $22.8 million compared with revenues of $23.7 million in the second quarter
of 2003. The Women's and Children's Health segment is comprised of the Company's
obstetrical home care clinical services and maternity disease management
services.
For the six month period ended June 30, 2004, revenues from continuing
operations increased 14% to $139.2 million compared with $122.1 million in the
same period of 2003. Excluding the unusual items described above, net earnings
for the first six months of 2004 were $4.1 million, or $0.38 per diluted common
share, compared with $2.9 million, or $0.28 per diluted common share, for the
same 2003 period. Excluding these unusual items, earnings from continuing
operations for the six month period of 2004 were $3.1 million, or $0.29 per
diluted common share, compared with $2.1 million, or $0.20 per diluted common
share, in the 2003 period. Excluding these unusual items, earnings from
discontinued operations for the six month period ended June 30, 2004, were
$987,000, or $0.09 per diluted common share, compared with $793,000, or $0.08
per diluted common share, in the prior year's period.
Including these unusual items, for the six month period ended June 30, 2004, net
earnings were $22.2 million, or $2.16 per diluted common share, loss from
continuing operations was $11.6 million, or $1.13 per diluted common share, and
earnings from discontinued operations, were $33.8 million, or $3.29 per diluted
common share.
The effects of the unusual items on earnings per diluted common share for the
six months ended June 30, 2004 are summarized as follows:
EPS before EPS from EPS as
Unusual Items Unusual Items Reported
Continuing Operations $ 0.29 $ (1.42)(1) $ (1.13)
Discontinued Operations $ 0.09 $ 3.20 (2) $ 3.29
------------- ----------- -----------
Combined Operations $ 0.38 $ 1.78 $ 2.16
============= =========== ===========
(1) Includes loss on retirement of 11% Senior Notes, additional interest
expense and restructuring charge.
(2) Gain on sale of business.
Parker H. Petit, Chairman and Chief Executive Officer, stated, "We had an
extremely productive quarter in which we significantly improved the financial
strength of the Company. Through the successful completion of the purchase of
our 11% Senior Notes, the raising of new capital in the form of convertible debt
with a 4.875% coupon at a conversion price of $29.49, and divesting our Pharmacy
and Supplies business, we significantly deleveraged our balance sheet, improved
our cash position and increased our financial flexibility. These transactions
resulted in the Company having over $20 million in cash and virtually no debt,
other than our convertible debt, at the end of the quarter. We also had strong
operating performance for the quarter with our disease management operations now
beginning to show good growth in operating earnings. This should give Matria
more predictable earnings growth in the future. We will continue to aggressively
focus on the strategic opportunities available in the disease management and
related services market, particularly those programs and services that employers
are seeking."
The Company's second quarter of 2004 operating earnings from continuing
operations showed a 60% increase over the second quarter of last year and its
revenues from continuing operations grew by 17% over the 2003 second quarter.
"The growth of our disease management businesses is much greater than the growth
of our Pharmacy and Supplies business that was divested," Petit added. "With
the sale of our Pharmacy and Supplies business, we have lost future operating
earnings; however, we believe these losses will be largely offset by the savings
in our interest expense and reduction of corporate expenses. More importantly,
we have significantly reduced our financial leverage and risk and improved the
predictability of our earnings."
The Company expects third quarter revenues to be between $74 million and $76
million and earnings per diluted share from continuing operations to be in the
range of $0.33 to $0.38. In light of the divestiture of the Company's Pharmacy
and Supplies business, full year 2004 earnings per share, excluding unusual
items, are now estimated to be in the range of $1.00 to $1.10 and revenues are
estimated to range from $287 million to $293 million. "Our outlook reflects our
disease management operations growing rapidly and producing incrementally
improved profitability, and the significant reduction in interest expense
resulting from the retirement of our bonds," commented Petit.
The Company reported that the current covered lives included in its disease
management programs are 24.3 million at June 30, 2004. At the end of 2003, the
Company reported 14.2 million covered lives, and at the end of 2002, the Company
had 7.2 million covered lives in its disease management programs.
A listen-only simulcast and replay of Matria Healthcare's second quarter
conference call will be available on-line at the Company's website at
www.matria.com or at www.fulldisclosure.com on July 23, 2004, beginning at 10:30
a.m. Eastern time.
Matria Healthcare is a leading provider of comprehensive disease management
programs to health plans and employers. Matria manages the following major
chronic diseases and episodic conditions - diabetes, cardiovascular diseases,
respiratory diseases, high-risk obstetrics, cancer, chronic pain and depression.
Headquartered in Marietta, Georgia, Matria has more than 40 offices in the
United States and internationally. More information about Matria can be found
on-line at www.matria.com.
This press release contains forward-looking statements. Such statements include,
but are not limited to, the Company's financial expectations for the third
quarter and full year of 2004, the continued growth in revenues and
profitability of the Company's disease management business and its impact on
providing the Company more predictable earnings growth, the ability of the
Company to capitalize on strategic opportunities in the disease management
market, and the impact of the Company's interest expense savings and corporate
expense reductions in offsetting the operating earnings of the Company's
divested business. These statements are based on current information and beliefs
and are not guarantees of future performance. Among the important factors that
could cause actual results to differ materially from those indicated by such
forward-looking statements include the Company's inability to achieve its
financial expectations for the third quarter and full year 2004, the possibility
that continued demand for the Company's disease management-related programs will
diminish or not continue to grow, failure of the Company's disease management
business to generate growth in revenues and earnings and generate more
predictable earnings growth for the Company, failure to capitalize on strategic
opportunities in the disease management market, failure of interest expense
savings and corporate expense reductions to offset the loss of operating
earnings from the divested business, failure to achieve the revenue expectations
for the Company's newly awarded business, delays or problems in implementation
or management of new disease management contracts, failure to expand
relationships with pharmaceutical companies or to generate revenues from any
such alliances, failure of the expansion strategy in the Women's and Children's
Health business to generate growth for that business, developments in the
healthcare industry, third-party actions over which Matria does not have
control, regulatory requirements applicable to Matria's business, inability to
grow profitably through acquisitions and the risk factors detailed from time to
time in Matria's periodic reports and registration statements filed with the
Securities and Exchange Commission, including Matria's Annual Report on Form
10-K for the year ended December 31, 2003. By making these forward-looking
statements, Matria does not undertake to update them in any manner except as may
be required by Matria's disclosure obligations in filings it makes with the
Securities and Exchange Commission under the federal securities laws.
MATRIA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -------------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Revenues $ 71,946 $ 61,602 $ 139,176 $ 122,079
Cost of revenues 40,712 36,268 81,182 72,106
Selling and
administrative expenses 22,633 19,095 45,618 37,161
Provision for doubtful accounts 796 1,321 778 2,546
Amortization of intangible assets 50 75 100 150
---------- ---------- ---------- ----------
Operating earnings from
continuing operations 7,755 4,843 11,498 10,116
Interest expense, net (4,164) (3,511) (7,432) (7,102)
Other income, net 114 319 114 465
Loss on retirement of senior notes (22,886) -- (22,886) --
---------- ---------- ---------- ----------
Earnings (loss) from continuing
operations before income taxes (19,181) 1,651 (18,706) 3,479
Income tax benefit (expense) 7,326 (678) 7,127 (1,408)
---------- ---------- ---------- ----------
Earnings (loss) from
continuing operations (11,855) 973 (11,579) 2,071
Discontinued Operations:
Earnings from discontinued
operations, net of tax 333 771 987 793
Gain on disposal of discontinued
operations, net of tax 32,799 -- 32,799 --
---------- ---------- ---------- ----------
Earnings from
discontinued operations 33,132 771 33,786 793
---------- ---------- ---------- ----------
Net earnings $ 21,277 $ 1,744 $ 22,207 $ 2,864
========== ========== ========== ==========
Net earnings (loss) per common share:
Basic:
Continuing operations $ (1.15) $ 0.10 $ (1.13) $ 0.21
Discontinued operations 3.21 0.07 3.29 0.07
---------- ---------- ---------- ----------
$ 2.06 $ 0.17 $ 2.16 $ 0.28
========== ========== ========== ==========
Diluted:
Continuing operations $ (1.15) $ 0.09 $ (1.13) $ 0.20
Discontinued operations 3.21 0.08 3.29 0.08
---------- ---------- ---------- ----------
$ 2.06 $ 0.17 $ 2.16 $ 0.28
========== ========== ========== ==========
Weighted average shares outstanding:
Basic 10,310 10,116 10,267 10,098
Diluted 10,310 10,302 10,267 10,198
MATRIA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
June 30, Dec. 31,
2004 2003
-------- --------
ASSETS
Current assets:
Cash, cash equivalents and short-term investments $ 20,632 $ 9,008
Trade accounts receivable, net 44,293 37,274
Inventories 23,770 22,261
Other receivables 24,622 28,888
Net assets of discontinued operations sold -- 37,559
Prepaid expenses and other current assets 10,276 10,290
-------- --------
Total current assets 123,593 145,280
Property and equipment, net 20,545 19,228
Intangible assets, net 134,269 134,315
Deferred income taxes 15,248 26,524
Other assets 5,708 8,135
-------- --------
$299,363 $333,482
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt
and obligations under capital leases $ 2,121 $ 803
Accounts payable, principally trade 32,060 40,977
Other accrued liabilities 24,869 41,339
-------- --------
Total current liabilities 59,050 83,119
Long-term debt and obligations under capital
leases, excluding current installments 85,697 121,005
Other long-term liabilities 6,295 5,811
-------- --------
Total liabilities 151,042 209,935
Shareholders' equity 148,321 123,547
-------- --------
$299,363 $333,482
======== ========
MATRIA HEALTHCARE, INC.
RECONCILIATION OF NET EARNINGS TO EARNINGS
FROM CONTINUING OPERATIONS EXCLUDING UNUSUAL ITEMS
(Amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Net earnings $ 21,277 $ 1,744 $ 22,207 $ 2,864
Less gain on disposal of
discontinued operations,
net of tax (32,799) -- (32,799) --
Add loss on retirement of
senior notes, net of tax 14,144 -- 14,144 --
Add additional interest due
to timing of retirement of
senior notes, net of tax 371 -- 371 --
Add restructuring charges,
net of tax 165 -- 165 --
---------- ---------- ---------- ----------
Net earnings, excluding
unusual items 3,158 1,744 4,088 2,864
Less earnings from
discontinued operations (333) (771) (987) (793)
---------- ---------- ---------- ----------
Earnings from continuing
operations, excluding
unusual items $ 2,825 $ 973 $ 3,101 $ 2,071
========== ========== ========== ==========
Net earnings (loss) per
common share, as reported:
Basic:
Continuing Operations $ (1.15) $ 0.10 $ (1.13) $ 0.21
Discontinued Operations 3.21 0.07 3.29 0.07
---------- ---------- ---------- ----------
$ 2.06 $ 0.17 $ 2.16 $ 0.28
========== ========== ========== ==========
Diluted:
Continuing Operations $ (1.15) $ 0.09 $ (1.13) $ 0.20
Discontinued Operations 3.21 0.08 3.29 0.08
---------- ---------- ---------- ----------
$ 2.06 $ 0.17 $ 2.16 $ 0.28
========== ========== ========== ==========
Net earnings per common share,
excluding unusual items:
Basic:
Continuing Operations $ 0.27 $ 0.10 $ 0.30 $ 0.21
Discontinued Operations 0.04 0.07 0.10 0.07
---------- ---------- ---------- ----------
$ 0.31 $ 0.17 $ 0.40 $ 0.28
========== ========== ========== ==========
Diluted:
Continuing Operations $ 0.26 $ 0.09 $ 0.29 $ 0.20
Discontinued Operations 0.03 0.08 0.09 0.08
---------- ---------- ---------- ----------
$ 0.29 $ 0.17 $ 0.38 $ 0.28
========== ========== ========== ==========
Shares used in calculating
net earnings per share,
excluding unusual items:
Weighted average shares
outstanding, basic 10,310 10,116 10,267 10,098
Shares issuable from assumed
exercise of options 466 186 547 100
---------- ---------- ---------- ----------
Weighted average shares
outstanding, diluted 10,776 10,302 10,814 10,198
========== ========== ========== ==========
MATRIA HEALTHCARE, INC.
RECONCILIATION OF 2004 ESTIMATED EARNINGS PER SHARE
(Amounts in thousands, except per share amounts)
Low High
-------- --------
Estimated 2004 Earnings Per Share $ 2.78 $ 2.88
Earnings Per Share related to unusual items (1.78) (1.78)
-------- --------
Estimated 2004 Earnings Per Share,
excluding unusual items $ 1.00 $ 1.10
======== ========
- ---------
Contact:
Matria Healthcare, Inc., Marietta
Stephen M. Mengert, 770-767-4500
www.matria.com