SUNRISE, Fla., Aug. 15 /PRNewswire-FirstCall/ -- NationsHealth, Inc. today announced unaudited financial results for its second quarter and six months ended June 30, 2005.
Revenue for the quarter increased 19% to $22.2 million versus $18.6 million for the same quarter in 2004. Net loss for the quarter was $5.4 million, or $0.21 per basic and diluted share, compared to $4.2 million, or $0.16 per basic and diluted share, for the same quarter in 2004. For the six months ended June 30, 2005, revenue increased 29% to $41.1 million versus $31.9 million for the same period in 2004. Net loss for the six months was $13.7 million, or $0.52 per basic and diluted share, compared to $7.3 million, or $0.28 per basic and diluted share, for the same period in 2004. As expected, the financial results reflect the cost of NationsHealth's efforts to launch a national Prescription Drug Plan under Medicare Part D and the continuing impact of reductions in Medicare reimbursement for respiratory medications and certain items of durable medical equipment that took effect on January 1, 2005.
Earlier this month NationsHealth formed a joint venture with US Bioservices Corporation, an affiliate of AmerisourceBergen Corporation, to offer specialty pharmaceutical and oncology products and services to NationsHealth's expanding patient base. The joint venture, named NationsHealth Specialty Rx, will provide these products by utilizing the experience of US Bioservices in specialty pharmacy products and medications while leveraging NationsHealth's existing relationship with over 2 million Medicare patients.
Significantly, during the second quarter 2005, NationsHealth continued to broaden its Medicare patient base and its prescription discount cardholder base increasing its Part B patient base 10% and its cardholder base 7%. At the end of the quarter, NationsHealth had over 146,000 Part B patients and over 3 million cardholders. The Company believes that these patients and cardholders are the platform for a successful launch of its new Medicare Prescription Drug Plan (Part D), which is scheduled to enroll its first members on November 15, 2005 with coverage commencing on January 1, 2006.
As previously announced, NationsHealth has also entered into an agreement with CIGNA HealthCare to provide the new Part D benefit. Glenn M. Parker, MD, NationsHealth's Chief Executive Officer commented, "Together with CIGNA HealthCare, we have been actively planning and making the necessary preparations to successfully launch our Part D business. We believe that the market opportunity for Medicare Part D prescription drug plans over the next five years could reach an estimated 20 million seniors. Our relationship with CIGNA, together with our proprietary patient and cardholder base, uniquely positions us to be a leader in Medicare Part D offerings."
About NationsHealth, Inc.
NationsHealth was founded in 2002 to improve the delivery of healthcare to Medicare and managed care beneficiaries by providing medical products and prescription discount services. The Company offers discount prescription cards, accepted at over 50,000 pharmacies nationwide. The Company currently has over 3 million cardholders. In addition, NationsHealth provides home delivery of diabetes, respiratory and ostomy medical products to over 146,000 patients. NationsHealth is also the provider of diabetes supplies for Medicare beneficiaries at over 1,000 Kmart pharmacies. For more information please visit http://www.nationshealth.com.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, about NationsHealth, including statements regarding anticipated enrollment and private sector market opportunities in Medicare Part D and specialty pharmaceutical programs and the potential success of our strategic partnerships and joint ventures; none of which should be construed in any manner as a guarantee that such results will in fact occur. Forward-looking statements are statements that are not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of NationsHealth's management, are subject to risks and uncertainties, which could cause actual results to differ from the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the inability of our strategic partner to be awarded a Part D contract; our capacity to obtain funding to support the Part D strategic partnership; projections with respect to enrollment and market opportunities for Part D and specialty pharmacy programs; ability to maintain our existing customer base and our customers' desire to take advantage of our Part D and specialty pharmacy services; uncertainty in our costs incurred in administering the Part D program; changes in Medicare, Medicaid, Tricare, Champus and any other state or national-based reimbursement program; changing interpretations of generally accepted accounting principles; outcomes of government reviews of NationsHealth's business practices; inquiries and investigations and related litigation; continued compliance with government regulations; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which NationsHealth is engaged; fluctuations in customer demand; management of rapid growth; intensity of competition from other providers of medical products and pharmacy benefits; timing and market acceptance of new products sold by NationsHealth; general economic conditions; and geopolitical events and regulatory changes. The information set forth herein should be read in light of such risks. NationsHealth cautions investors not to place undue reliance on the forward- looking statements contained herein. These statements speak only as of the date of this press release and NationsHealth assumes no obligation to update or revise the information contained herein.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS DATA (unaudited) (in thousands, except per share data) Quarter Quarter Ended Ended June 30, Change March 31, Change 2005 2004 $ % 2005 $ % Revenue: Net sales $19,995 $17,859 $2,136 12% $17,137 $2,858 17% Prescription card revenue 2,156 721 1,435 199% 1,855 301 16% 22,151 18,580 3,571 19% 18,992 3,159 17% Cost of sales 8,485 5,953 2,532 43% 6,926 1,559 23% Gross Profit 13,666 12,627 1,039 8% 12,066 1,600 13% Operating Expenses: Patient acquisition and related costs 5,566 7,157 (1,591) (22%) 9,154 (3,588) (39%) Patient service and fulfillment 3,933 3,718 215 6% 3,892 41 1% General and administrative 5,313 2,430 2,883 119% 4,304 1,009 23% Provision for doubtful accounts 2,924 3,256 (332) (10%) 2,321 603 26% Depreciation and amortization 213 114 99 87% 216 (3) (1%) 17,949 16,675 1,274 8% 19,887 (1,938) (10%) Loss from Operations (4,283) (4,048) (235) 6% (7,821) 3,538 (45%) Other Income (Expenses): Interest income 20 -- 20 N/M -- 20 N/M Interest expense (1,137) (187) (950) 508% (453) (684) 151% (1,117) (187) (930) 497% (453) (664) 147% Net Loss $(5,400) $(4,235) $(1,165) 28% $(8,274) $2,874 (35%) Weighted average common shares outstanding (basic and diluted) 26,175 26,150 26,175 Loss per share (basic and diluted) $(0.21) $(0.16) $(0.32) SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS DATA (unaudited) (in thousands, except for per share data) Six Months Ended June 30, Change 2005 2004 $ % Revenue: Net sales $37,132 $30,695 $6,437 21% Prescription card revenue 4,011 1,190 2,821 237% 41,143 31,885 9,258 29% Cost of Sales 15,411 10,009 5,402 54% Gross Profit 25,732 21,876 3,856 18% Operating Expenses: Patient acquisition and related costs 14,720 12,381 2,339 19% Patient service and fulfillment 7,825 6,410 1,415 22% General and administrative 9,617 4,281 5,336 125% Provision for doubtful accounts 5,245 5,596 (351) (6%) Depreciation and amortization 429 194 235 121% 37,836 28,862 8,974 31% Loss from Operations (12,104) (6,986) (5,118) 73% Other Income (Expenses): Interest income 20 2 18 N/M Interest expense (1,590) (322) (1,268) 394% (1,570) (320) (1,250) 391% Net Loss $(13,674) $(7,306) $(6,368) 87% Weighted average common shares outstanding (basic and diluted) 26,175 26,150 Loss per share (basic and diluted) $(0.52) $(0.28) SUMMARY CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands) June 30, December 31, 2005 2004 ASSETS Current Assets: Cash and cash equivalents $3,165 $2,904 Restricted certificate of deposit -- 100 Accounts receivable, net 10,506 8,708 Inventory 1,950 1,719 Costs related to billings in process, net 1,779 1,437 Investment held in trust 2,000 2,000 Prepaid expenses and other current assets 549 392 Total current assets 19,949 17,260 Property and equipment 2,225 1,770 Other assets 1,524 346 Total assets $23,698 $19,376 LIABILITIES AND STOCKHOLDERS' DEFICIENCY Current Liabilities: Accounts payable $7,438 $4,595 Accounts payable, related party 4,782 5,004 Accrued expenses 5,087 7,195 Line of credit 4,458 2,619 Total current liabilities 21,765 19,413 Long-Term Debt: Obligations under capital leases 86 -- Convertible notes, net 5,137 -- Total long-term debt 5,223 -- Stockholders' Deficiency Common stock, at par value 3 3 Additional paid-in capital 42,736 32,315 Accumulated deficit (46,029) (32,355) Total stockholders' deficiency (3,290) (37) Total liabilities and stockholders' deficiency $23,698 $19,376 At NationsHealth: Glenn Parker, MD, CEO, 954-903-5000 Tim Fairbanks, CFO, 954-903-5000 At Rx Communications Group: Melody A. Carey (investors) 917-322-2571
NationsHealth, Inc.CONTACT: Glenn Parker, MD, CEO, +1-954-903-5000, or Tim Fairbanks, CFO,+1-954-903-5000, both of NationsHealth; or Investors: Melody A. Carey of RxCommunications Group, +1-917-322-2571, for NationsHealth
Web site: http://www.nationshealth.com/