Liberator Medical Holdings, Inc. Recaps Record Third Quarter Results

STUART, FL--(Marketwire - August 18, 2009) - Liberator Medical Holdings, Inc. (OTCBB: LBMH), announces final results for the third fiscal quarter ended June 30, 2009, including record net revenue of $6.9 million and net income of $794 thousand.

Third Quarter 2009 Highlights

-- Net revenue for the third quarter ended June 30, 2009, was $6.95 million, an increase of 184% from $2.44 million for the quarter ended June 30, 2008. -- Gross profit for the third quarter ended June 30, 2009, was $4.44 million, an increase of 186% from $1.55 million for the quarter ended June 30, 2008. -- The Company’s operating expenses for the three months ended June 30, 2009, were $3.37 million, or 49% of revenue, compared to $1.60 million, or 66% of revenue, for the three months ended June 30, 2008. -- Net income increased to $794 thousand, or $0.02 per share, from a net loss of ($218) thousand for the quarter ended June 30, 2008. -- The Company had $3.49 million in cash as of June 30, 2009, an increase of $2.32 million from September 30, 2008. 

Liquidity and Capital Resources

Historically, the Company’s principal use of cash has been to fund ongoing operations, which was financed primarily through the proceeds of sale of equity and debt securities. However, during the nine months ended June 30, 2009, the Company generated $698,742 of positive cash flow as a result of operating activities compared to a use of $1,506,116 of cash during the nine months ended June 30, 2008.

The Company had $3,488,557 in cash as of June 30, 2009, an increase of $2,315,539 from September 30, 2008. This increase in cash at June 30, 2009, was due to the Company’s closing on a $2,500,000 convertible debt obligation in October 2008 plus cash generated in operating activities, partially offset by the purchase of property and equipment of $369,390 during the nine months ended June 30, 2009.

Results of Operations

The Company’s revenue was $6,950,415, up $4,506,015 or 184%, for the three months ended June 30, 2009, compared to $2,444,400 for the three months ended June 30, 2008, due to a substantial advertising campaign to obtain new mail-order customers. For the nine months ended June 30, 2009, revenue was $18,119,489, up $12,820,330 or 242%, compared to $5,299,159 for the nine months ended June 30, 2008, as a result of the advertising campaign.

The Company’s gross profit was $4,444,546, up $2,889,829 or 186%, for the three months ended June 30, 2009, compared to $1,554,717 for the three months ended June 30, 2008, and $11,694,209, up $8,319,935 or 247%, for the nine months ended June 30, 2009, compared to $3,374,274 for the nine months ended June 30, 2008, as a result of the Company’s increased revenues.

The Company’s operating expenses for the three months ended June 30, 2009 were $3,372,069, or 49% of revenue, compared to $1,606,869, or 66% of revenue, for the three months ended June 30, 2008. The Company’s operating expenses for the nine months ended June 30, 2009, were $9,749,571, or 54% of revenue, compared to $4,537,208, or 86% of revenue, for the nine months ended June 30, 2008. Incremental expenses were less as compared to incremental revenues. The increases in operating expenses are primarily attributed to increased spending levels for employees, advertising, professional fees, rent, and allowance for bad debts to support the increase in revenues.

The Company’s interest expense for the three months ended June 30, 2009, was $267,232 compared to $167,049 for the three months ended June 30, 2008. The Company’s interest expense for the nine months ended June 30, 2009, was $812,407 compared to $280,438 for the nine months ended June 30, 2008. The increase in interest expense is primarily a result of two convertible debt offerings during the second and third quarters of fiscal year 2008 and a third convertible debt offering in October 2008.

The Company’s net income was $793,889 for the three months ended June 30, 2009, an increase of $1,011,724 compared to a net loss of ($217,835) for the three months ended June 30, 2008. The Company’s net income was $1,134,558 for the nine months ended June 30, 2009, an increase of $2,576,564 compared to a net loss of ($1,442,006) for the nine months ended June 30, 2008. The increases in net income are due to substantially higher sales volumes at substantially lower incremental operating expenses.

Stay up-to-date with current events by visiting our website www.liberatormedical.com or by joining Liberator Medical’s E-Mail Alert List. Join by clicking: www.LBMH-IR.com

About Liberator Medical Holdings, Inc.

Liberator Medical Holdings, Inc.'s subsidiary, Liberator Medical Supply, Inc., established the Liberator brand as a leading national direct-to-consumer provider of quality medical supplies to Medicare-eligible seniors. An Exemplary Provider™ accredited by The Compliance Team, its unique combination of marketing, industry expertise and customer service has demonstrated success over a broad spectrum of chronic conditions. Liberator is recognized for offering a simple, reliable way to purchase medical supplies needed on a regular, ongoing, repeat-order basis, with the convenience of direct billing to Medicare and private insurance. Approximately 85% of its revenue comes from supplying products to meet the rapidly growing requirements of general medical supplies, personal mobility aids, diabetes, urological, ostomy and mastectomy patients. Liberator communicates with patients and their doctors on a regular basis regarding prescriptions and supplies. Customers may purchase by phone, mail or internet, with repeat orders confirmed with the customer and shipped when needed.

Safe Harbor Statement

Certain statements in this press release that are not historical, but are forward-looking, and are subject to known and unknown risks and uncertainties which may cause the Company’s actual results in future periods to be materially different from any future performance that may be suggested in this press release. Such risks and uncertainties may include, but are not limited to, the Company’s need to raise equity capital and its ability to obtain equity financing on acceptable terms, if at all, regulatory limitations on the medical industry in general, working capital constraints, fluctuations in customer demand and commitments, fluctuation in quarterly results, introduction of new services and products, commercial acceptance and viability of new services and products, pricing and competition, reliance upon subcontractors and vendors, the timing of new technology and product introductions, the risk of early obsolescence of our products and the other factors listed under “Risk and Uncertainties” in our annual report on Form 10-KSB for the fiscal year ended September 30, 2008 and our other filings with the Securities and Exchange Commission. We assume no obligation to update the information contained in this news release.

 Liberator Medical Holdings, Inc. and Subsidiaries Condensed Consolidated Balance Sheets June 30, September 30, 2009 2008 ------------- ------------- (Unaudited) Assets Current Assets Cash $ 3,488,557 $ 1,173,018 Accounts receivable, net of allowance for doubtful accounts of $2,097,825 and $1,055,606, respectively 3,493,813 2,405,102 Prepaid expenses 46,590 321,182 Inventory, net of allowance for obsolete inventory of $50,000 and $50,000, respectively 1,235,058 785,884 Deferred advertising, current portion 1,658,265 769,851 Other 2,953 1,848 ------------- ------------- Total Current Assets 9,925,236 5,456,885 ------------- ------------- Property and Equipment Property and Equipment, net of accumulated depreciation of $928,717 and $714,641, respectively 1,062,112 815,833 Other Assets Deferred advertising, net of current portion 1,435,418 660,524 Deferred loan costs 466,337 492,821 Deposits 114,690 100,089 ------------- ------------- Total Other Assets 2,016,445 1,253,434 ------------- ------------- Total Assets $ 13,003,793 $ 7,526,152 ============= ============= Liabilities and Stockholders’ Equity Current Liabilities Accounts payable $ 2,120,278 $ 900,448 Accrued liabilities 431,377 289,848 Stockholder loan 1,664,649 1,664,649 Convertible notes payable, net of unamortized discount of $406,570 and $56,833, respectively 3,734,356 772,163 Capital lease obligations, current portion 78,093 50,816 Deferred rent liability, current portion 56,244 48,261 ------------- ------------- Total Current Liabilities 8,084,997 3,726,185 ------------- ------------- Long-Term Liabilities Convertible notes payable, net of unamortized discount of $111,773 and $748,921, respectively 2,406,926 2,788,704 Capital lease obligations, net of current portion 90,772 82,155 Deferred rent liability, net of current portion 172,045 214,215 ------------- ------------- Total Long-Term Liabilities 2,669,743 3,085,074 ------------- ------------- Total Liabilities 10,754,740 6,811,259 ------------- ------------- Stockholders’ Equity Common stock, $.001 par value, 200,000,000 shares authorized, 32,392,311 and 32,050,366 shares issued at June 30, 2009 and September 30, 2008, respectively 32,392 32,050 Additional paid-in capital 11,617,104 11,177,266 Accumulated deficit (9,359,865) (10,494,423) ------------- ------------- 2,289,631 714,893 Less: Treasury stock, at cost (85,600 shares) (40,578) -- ------------- ------------- Total Stockholders’ Equity 2,249,053 714,893 ------------- ------------- Total Liabilities and Stockholders’ Equity $ 13,003,793 $ 7,526,152 ============= ============= See accompanying notes to unaudited condensed consolidated financial statements included in 10Q filed with the SEC on 8/12/09 Liberator Medical Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Operations For the three and nine months ended June 30, 2009 and 2008 (Unaudited) Three Months Ended Nine Months Ended June 30, June 30, -------------------------- -------------------------- 2009 2008 2009 2008 ------------ ------------ ------------ ------------ Sales $ 6,950,415 $ 2,444,400 $ 18,119,489 $ 5,299,159 Cost of Sales 2,505,869 889,683 6,425,280 1,924,885 ------------ ------------ ------------ ------------ Gross Profit 4,444,546 1,554,717 11,694,209 3,374,274 ------------ ------------ ------------ ------------ Operating Expenses Payroll, taxes and benefits 1,517,704 650,715 3,857,069 1,808,261 Advertising 615,512 107,674 1,371,890 256,521 Bad debts 373,182 271,751 1,861,162 577,686 Depreciation 80,346 45,900 214,075 137,700 General and administrative 785,325 530,829 2,445,375 1,757,040 ------------ ------------ ------------ ------------ Total Operating Expenses 3,372,069 1,606,869 9,749,571 4,537,208 ------------ ------------ ------------ ------------ Income (Loss) from Operations 1,072,477 (52,152) 1,944,638 (1,162,934) ------------ ------------ ------------ ------------ Other Income (Expense) Interest Expense (267,232) (167,049) (812,407) (280,438) Interest Income 3,084 1,366 16,767 1,366 ------------ ------------ ------------ ------------ Total Other Income (Expense) (264,148) (165,683) (795,640) (279,072) ------------ ------------ ------------ ------------ Income (Loss) before Income Taxes 808,329 (217,835) 1,148,998 (1,442,006) Provision for Income Taxes 14,440 -- 14,440 -- ------------ ------------ ------------ ------------ Net Income (Loss) $ 793,889 $ (217,835) $ 1,134,558 $ (1,442,006) ============ ============ ============ ============ Basic earnings (loss) per share: Weighted average shares outstanding 32,132,943 32,050,366 32,067,847 31,683,081 Earnings (loss) per share $ 0.02 $ (0.01) $ 0.04 $ (0.05) Diluted earnings (loss) per share: Weighted average shares outstanding 37,334,188 32,050,366 35,990,375 31,683,081 Earnings (loss) per share $ 0.02 $ (0.01) $ 0.03 $ (0.05) See accompanying notes to unaudited condensed consolidated financial statements included in 10Q filed with the SEC on 8/12/09 Liberator Medical Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows For the nine months ended June 30, 2009 and 2008 (Unaudited) 2009 2008 ------------- ------------- Cash flow from operating activities: Net Income (Loss) $ 1,134,558 $ (1,442,006) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 1,457,997 385,962 Equity based compensation 365,333 601,991 Bad debt expense 1,861,162 577,686 Non-cash interest related to convertible notes payable 564,923 93,255 Amortization of non-cash loan issuance costs 28,931 4,491 Changes in operating assets and liabilities: Accounts receivable (2,949,873) (1,505,831) Prepaid expenses and other current assets (33,895) (8,254) Deposits (14,601) (2,498) Inventory (449,174) (206,232) Accounts payable 1,219,830 600,008 Accrued expenses 112,033 11,743 Deferred rent (34,187) (31,486) Deferred loan costs 342,935 98,289 Deferred advertising (2,907,230) (683,234) ------------- ------------- Net Cash Flow Provided by (Used in) Operating Activities 698,742 (1,506,116) ------------- ------------- Cash flow from investing activities: Purchase of property and equipment (369,390) (137,559) ------------- ------------- Net Cash Flow Used in Investing Activities (369,390) (137,559) ------------- ------------- Cash flow from financing activities: Proceeds from sale of stock -- 686,200 Proceeds from issuance of convertible notes 2,500,000 4,304,000 Proceeds from notes payable -- 53,000 Broker commissions (203,056) (356,500) Legal and other fees paid (122,609) (199,370) Purchase of treasury stock (40,578) -- Payments of long-term debt and capital lease obligations (147,570) (328,840) ------------- ------------- Net Cash Flow Provided by Financing Activities 1,986,187 4,158,490 ------------- ------------- Net increase in cash 2,315,539 2,514,815 Cash at beginning of period 1,173,018 176,820 ------------- ------------- Cash at end of period $ 3,488,557 $ 2,691,635 ------------- ------------- Supplemental disclosure of cash flow information: Cash paid for interest $ 289,739 $ 154,799 Cash paid for income taxes $ 21,260 $ -- Supplemental schedule of non-cash investing and financing activities: Capital expenditures funded by capital lease borrowings $ 90,965 $ 54,083 Common stock issued for interest expense $ 104,983 $ -- Common stock issued for conversion of debt $ 85,000 $ 25,000 See accompanying notes to unaudited condensed consolidated financial statements included in 10Q filed with the SEC on 8/12/09