Sharps Compliance Corp. Announces Results for
Third Quarter of Fiscal Year 2008
- Awarded second top ten pharmaceutical manufacturer program
- Wins exclusive contract with national pharmacy chain and home healthcare
company
- Expands into Canada with retail and restaurant business
HOUSTON, May 15 /PRNewswire-FirstCall/ -- Sharps Compliance Corp. (OTC
Bulletin Board: SCOM) ("Sharps" or the "Company"), a leading provider of
cost-effective disposal solutions for small quantity generators of medical
waste, today provided an update on its new contract awards and reported its
financial results for the fiscal 2008 third quarter which ended March 31, 2008.
Revenue was $2.9 million in the third quarter of fiscal 2008 which was
essentially flat compared with the same period of the prior fiscal year.
Customer billings of $3.0 million for the fiscal 2008 third quarter were
also flat compared with the prior fiscal year's third quarter billings.
Year-over-year, growth in billings from the healthcare, professional and
commercial markets were offset by decreased billings primarily in the
hospitality and pharmaceutical sectors, as the first year of the Company's
contract with its first pharmaceutical manufacturer was completed.
Dr. Burton J. Kunik, Chairman, Chief Executive Officer and President of
Sharps Compliance, commented, "Although billings and sales were relatively flat
in the third quarter, which is historically our slowest quarter, we made
significant progress on a number of other fronts. Many of the opportunities we
have been pursuing are now coming to fruition. We gained traction from the
successful execution of our first Patient Support Program for a top ten
pharmaceutical customer by providing our Sharps Disposal by Mail System(R)
direct to its patients. We are very pleased to announce that we were awarded a
Patient Support Program by a second top ten pharmaceutical manufacturer similar
to our existing program. We expect the program to be launched by the end of the
calendar year 2008. We have also entered into an exclusive agreement with a
nationwide pharmacy chain to provide a wide range of our products and services.
Our pipeline is full, and we expect the activity to enhance our growth in fiscal
year 2009."
Increasing Market Penetration
Recently Awarded Second Pharmaceutical Manufacturer Patient Support
Program The Company was recently awarded its second major program with a
globally-recognized, industry-leading pharmaceutical manufacturer. The
details of the contract are expected to be finalized by June 30, 2008 with
an anticipated initial launch of the program in the second half of
calendar year 2008.
The Patient Support Program is expected to include the direct fulfillment
of the Sharps Disposal By Mail System(R) to the pharmaceutical
manufacturers' patients, who will use the product to provide a convenient
means of disposal for their self-injecting patients. Sharp's proprietary
SharpsTracer(TM) system is used to track the return of the Sharps Disposal
By Mail System(R) by the patient to the treatment facility, where the
package is scanned and weighed prior to destruction. This data, managed in
Sharps' proprietary SharpsTracer(TM) system, is electronically transmitted
to the pharmaceutical manufacturer which assists them in monitoring drug
usage and provides a touch point for individual patient follow-up.
The Company believes its successful experience fulfilling products and
services for its first contract with a top ten pharmaceutical
manufacturer, as well as its fully-integrated capabilities, were
differentiating factors leading to the award of this second program.
Additional Pharmaceutical Manufacturer Opportunities In addition to the
award of the second Patient Support Program, the Company is in discussions
with several other nationally-recognized pharmaceutical manufacturers
regarding the implementation of similar Patient Support Programs. The
Company is also currently in discussions with its existing top ten
pharmaceutical manufacturing customer regarding the renewal and expansion
of its current Patient Support Program.
National Pharmacy Chain and Home Healthcare Company Contract Sharps
recently entered into an exclusive contract with one of the leading
national pharmacy chains with over 6,000 locations, to sell its Sharps
Disposal By Mail Systems(R), Biohazard Spill Clean-Up Kits, Asset Return
System and Pitch-it(TM) IV poles. The products are expected to be utilized
not only by the customer's in-store immunizing pharmacists, but also its
home healthcare, specialty and mail order pharmacy divisions. The Company
expects to see orders from the customer beginning in the fourth fiscal
quarter ending June 30, 2008. The two-year contract includes provisions
for automatic annual renewals.
Canadian Expansion
Sharps recently expanded into Canada with the initial sales of its Sharps
Disposal By Mail System(R) and Sharps Secure(R) Needle Disposal System to
a retail and restaurant chain with nationwide locations. In order to
facilitate the disposal of returned products and in accordance with
Canadian regulations, the Company entered into an agreement with a
Canadian treatment facility permitted to dispose of medical waste
in-country. Strategically, this opportunity affords the Company the
opportunity to expand its North American presence without losing the focus
of its resources on the many prospects in its U.S. pipeline.
Biohazard Spill Clean-Up Kits
The Company recently received two orders for its Biohazard Spill Clean-Up
Kits that will be used by a national fast food chain, with over 13,000
locations in the country, as well as a major auto parts chain. The
combined value of the initial orders is approximately $250,000 with
shipment expected to be completed in the quarter ending June 30, 2008. The
Company believes that re-order of the Biohazard Spill Clean-Up Kits for
the national fast food chain could generate over $500,000 in annual
billings.
Sharps' Biohazard Spill Clean-Up Kit and Disposal System is a leading
solution for easily and safely removing and disposing of blood and other
bodily fluids. The spill-kits are currently sold through multiple channels
including a major distributor to the hospitality market.
Update on California Senate Bill 1305 and Other Municipal Programs
California Senate Bill 1305 requires the proper disposal of home-generated
sharps waste (syringes, needles, lancets, etc.) beginning September 1,
2008, and acknowledges mail-back programs as one of the most convenient
alternatives for the collection and destruction of home-generated sharps.
The law is designed to protect the general public and workers from
potential exposure to contagious diseases as well as health and safety
risks when improperly disposed biohazard waste enters the public waste
stream.
The Company's Sharps Disposal By Mail System(R) has been implemented as an
integral part of the municipal waste programs of nineteen (19) cities and
municipalities, sixteen (16) of which are in California, with eight (8)
more municipal programs expected to be rolled out by June 30, 2008, and
several others in the discussion and planning stages. Patients in
participating municipalities receive a Sharps Disposal By Mail System(R)
at local participating pharmacies by showing proof of residency.
In additional to the municipal programs, the California legislation is
having a positive impact on sales opportunities in virtually all markets,
particularly pharmaceutical manufacturing and hospitality where the value
proposition of the Sharps Disposal By Mail Systems(R) is viewed as an
integral component to compliance with the state law.
Third Quarter Operating Performance
For the three-month period ended March 31, 2008, gross margin was 39.0%,
down from 41.9% in the third quarter of fiscal 2007. The reduction in gross
margin was a result of increased costs, product and customer mix. Gross margin
is expected to be about 42% for fiscal year 2008, ending June 30, 2008.
Selling, general and administrative (SG&A) expenses were $1.2 million in
the third quarter of fiscal 2008 compared with $953 thousand in the same period
of the prior year and $1.2 million in the second quarter of fiscal 2008. The
year-over-year increase in SG&A expense was a result of higher sales and
marketing expenses, facilities rent expense, as well as expenses related to
investor relations activities. SG&A is expected to be approximately $4.6 million
for fiscal year 2008, exclusive of any non-cash stock-based compensation expense
(SFAS 123R).
For the three months ended March 31, 2008, net loss was $84 thousand, or
$0.01 per diluted share, compared with net income of $82 thousand, or $0.01 per
diluted share, in the third quarter of fiscal 2007.
Nine-Month Review
For the nine-month period ended March 31, 2008, revenue was $10.1 million,
an 11% increase compared with revenue of $9.1 million in the first nine months
of fiscal 2007. Customer billings for the same period were $10.4 million in
fiscal 2008 and $9.3 million in fiscal 2007, an increase of 12%. The Company
expects customer billing of approximately $14 million for fiscal year 2008, an
increase of 14% over the prior fiscal year.
Gross margin for the first nine months of fiscal 2008 was 41.5% compared
with 42.7% for the same period of the prior year due to product mix. SG&A for
the first nine months of fiscal 2008 was $3.5 million compared with $2.8 million
in the same period of the prior fiscal year. Higher sales and marketing
expenses, non-cash stock-based compensation expense, recruiting fees, facilities
rent expenses and expenses related to investor relations activities contributed
to the increase.
For the nine month period ended March 31, 2008, net income was $538
thousand, or $0.04 per share, a decrease compared with net income of $795
thousand, or $0.07 per diluted share, in the first nine months of fiscal 2007.
Diluted earnings per share were adversely affected by a significant increase in
the diluted shares outstanding as a result of stock options exercised.
Liquidity and Balance Sheet Strength
Cash and cash equivalents were $2.2 million at March 31, 2008, down from
$2.7 million at December 31, 2007 and up from $2.1 million at June 30, 2007. The
reduction in cash from year end was due primarily to the purchase of the
disposal facility in Carthage, Texas during the quarter ended March 31, 2008. At
March 31, 2008, stockholders' equity and total assets were $3.3 million and $5.6
million, respectively, up from $2.2 million and $4.7 million at June 30, 2007,
respectively. Although, Sharps maintains a $2.5 million line of credit with
JPMorgan Chase, no amounts were outstanding at March 31, 2008. The line of
credit is available to finance working capital, expansion and/or potential
acquisition opportunities.
Outlook
Dr. Kunik concluded, "We expect a number of our recent sales wins to
contribute to billings growth in fiscal year 2009. Our top-line should also grow
appreciably as we implement programs and opportunities in the sales pipeline. We
have continued to upgrade our sales and marketing team with the addition of key
personnel who bring expertise in the facilitation and negotiation of the larger,
nationwide deals that we have been pursuing. And, we have been measurably
expanding our operational management and infrastructure to effectively respond
to the anticipated increase in demand for our products and services.
"From a longer term perspective, we are actively supporting legislation
efforts on the local, state and national levels mandating the safe disposal of
sharps waste. We are engaged in discussion with several national insurance
companies regarding the potential reimbursement of our mail-back product. This
would be another significant step in the recognition and education of the public
in the importance of the proper disposal of used syringes."
Third Quarter 2008 Webcast and Conference Call
The Company will host a teleconference today beginning at 3:00 p.m.
Eastern Time. During the teleconference, Dr. Burton J. Kunik, Chairman, Chief
Executive Officer and President, and David P. Tusa, Executive Vice President and
Chief Financial Officer, 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 may be accessed the following ways:
-- The live webcast may be found at http://www.sharpsinc.com.
Participants should go to the website 10 - 15 minutes prior to the
scheduled conference in order to register and download any necessary
audio software. Webcast listeners will have the opportunity to
submit questions to the speakers (verbal or via e-mail). Select
questions will be summarized and addressed during the
question-and-answer portion of the call.
-- The teleconference may also be accessed by dialing (201) 689-8560
and requesting conference ID number 284628 approximately 5 - 10
minutes prior to the call.
To listen to the archived call:
-- The archived webcast will be at http://www.sharpsinc.com. A
transcript will also be posted once available.
-- A replay may also be heard by calling (201) 612-7415, and entering
account number 3055 and conference ID number 284628.
The telephonic replay will be available from 6:00 p.m. Eastern Time the
day of the teleconference until 11:59 p.m. Eastern Time on May 22, 2008.
About Sharps Compliance Corp.
Headquartered in Houston, Texas, Sharps Compliance is a leading provider
of cost-effective disposal solutions for small quantity generators of medical
waste. The Company's flagship product, the Sharps Disposal by Mail System(R), is
a cost-effective and easy-to-use solution to dispose of medical waste such as
hypodermic needles, lancets and any other medical device or objects used to
puncture or lacerate the skin (referred to as "sharps"). The Company also offers
a number of products specifically designed for the home healthcare market.
Sharps Compliance focuses on targeted growth markets such as the pharmaceutical,
retail, healthcare, commercial, professional and hospitality markets, as well as
serving a variety of additional markets. Sharps is a leading proponent and
participant in the development of public awareness and solutions for the safe
disposal of needles, syringes and other sharps in the community setting.
As a fully integrated manufacturer providing customer solutions and
services, Sharps Compliance's solid business model, with strong margins and
significant operating leverage, and early penetration into emerging markets,
uniquely positions the company for strong future growth.
More information on Sharps Compliance can be found on its website at:
http://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-KSB, quarterly reports on Form 10-QSB 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.
For more information contact: - OR -
David P. Tusa Tammy Poblete
Executive Vice President, Kei Advisors LLC
Chief Financial Officer & Investor Relations
Business Development
Phone: (713) 660-3514 Phone: (716) 843-3853
Email: dtusa@sharpsinc.com Email: tpoblete@keiadvisors.com
FINANCIAL TABLES FOLLOW.
SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Loss)
(unaudited)
Three-Months Ended Nine-Months Ended
March 31, March 31,
% %
2008 2007 Change 2008 2007 Change
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue $2,927,700 $2,893,651 1.2% $10,069,614 $9,066,312 11.1%
Cost of
revenue 1,786,892 1,681,437 6.3% 5,890,095 5,194,825 13.4%
Gross
profit 1,140,808 1,212,214 (5.9%) 4,179,519 3,871,487 8.0%
Gross
margin 39.0% 41.9% (7.0%) 41.5% 42.7% (2.8%)
SG&A
expense 1,174,449 952,608 23.3% 3,514,876 2,831,152 24.2%
Special
charge - 138,000 (100.0%) - 138,000 (100.0%)
Depreciation
and
amortiz-
ation 69,684 52,313 33.2% 193,301 142,002 36.1%
Operating
income
(loss) (103,325) 69,293 (249.1%) 471,342 760,333 (38.0%)
Operating
margin (3.5%) 2.4% (247.4%) 4.7% 8.4% (44.2%)
Other
income 21,065 15,811 73,461 55,601
Net income
(loss)
before
income
taxes (82,260) $85,104 (196.7%) $544,803 $815,934 (33.2%)
Income
taxes (1,329) (3,134) (6,884) (21,180)
Net income
(loss) (83,589) $81,970 (202.0%) $537,919 $794,754 (32.3%)
Net income
(loss)
per share
Basic (0.01) $0.01 $0.04 $0.07
Diluted (0.01) $0.01 $0.04 $0.07
Weighted
Average
Shares
Outstanding
Basic 12,478,315 11,552,360 12,231,333 10,918,402
Diluted 12,478,315 13,395,644 13,515,878 11,971,720
SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
3/31/2008 6/30/2007
(Unaudited)
ASSETS:
Current assets:
Cash and cash equivalents $2,212,359 $2,134,152
Restricted cash 10,010 10,010
Accounts receivable, net 1,261,729 1,330,731
Inventory 529,995 364,005
Prepaid and other assets 206,947 186,101
Total current assets 4,221,040 4,024,999
Property and equipment, net 1,206,300 590,567
Intangible assets, net 125,570 75,002
Total assets $5,552,910 $4,690,568
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $490,449 $557,302
Accrued liabilities 222,451 613,851
Current portion of deferred revenue 1,040,338 883,678
Current maturities of capital lease
obligations - 1,809
Total current liabilities 1,753,238 2,056,640
Long-term deferred revenue 524,462 392,803
Other - 72,000
Total liabilities 2,277,700 2,521,443
Stockholders' Equity:
Total stockholders' equity 3,275,210 2,169,125
Total liabilities and stockholders'
equity $5,552,910 $4,690,568
SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
Supplemental Customer Billing and Revenue Information
(unaudited)
Three-Months Ended March 31,
2008 %Total 2007 %Change
BILLINGS BY MARKET:
Health Care $1,734,401 57.7% $1,650,912 5.1%
Pharmaceutical 413,296 13.7% 450,678 (8.3%)
Hospitality 244,377 8.1% 330,403 (26.0%)
Professional 190,433 6.3% 157,706 20.8%
Commercial 136,796 4.5% 100,882 35.6%
ProTec 106,920 3.6% 93,424 14.4%
Agriculture 96,848 3.2% 98,073 (1.2%)
Retail 43,951 1.5% 49,413 (11.1%)
Other 22,863 0.8% 23,056 (0.8%)
Government 17,759 0.6% 43,158 (58.9%)
Subtotal 3,007,644 100.0% 2,997,705 0.3%
GAAP Adjustment * (79,944) (104,054) (23.2%)
Revenue Reported 2,927,700 2,893,651 1.2%
Nine-Months Ended March 31,
2008 %Total 2007 %Change
BILLINGS BY MARKET:
Health Care $5,629,418 54.2% $5,367,774 4.9%
Pharmaceutical 869,579 8.4% 507,611 71.3%
Hospitality 914,391 8.8% 638,320 43.2%
Professional 529,934 5.1% 432,758 22.5%
Commercial 413,044 4.0% 417,736 (1.1%)
ProTec 348,443 3.4% 311,497 11.9%
Agriculture 363,846 3.5% 439,978 (17.3%)
Retail 1,044,502 10.1% 921,265 13.4%
Other 107,136 1.0% 103,888 3.1%
Government 158,910 1.5% 148,324 7.1%
Subtotal 10,379,203 100.0% 9,289,151 11.7%
GAAP Adjustment * (309,589) (222,839) 38.9%
Revenue Reported 10,069,614 9,066,312 11.1%
* 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.
SOURCE Sharps Compliance Corp.