Liberator Medical Holdings, Inc. Reports Record First Quarter Results

STUART, FL--(Marketwire - February 09, 2009) - Liberator Medical Holdings, Inc. (PINKSHEETS: LBMH) announces net revenues of $5.45 million for the first fiscal quarter ended December 31, 2008. This represents an annual run rate of $21.8 million. Quarter-over-quarter net revenue growth was up 281% for the quarter ended December 31, 2008 compared to net revenues of $1.43 million for the quarter ended December 31, 2007. This increase was due to a substantial advertising campaign to obtain new mail order customers.

First Quarter 2009 Highlights

-- Net revenues totaled $5.45 million, up 281% quarter-over-quarter -- Gross profit was $3.6 million, up $2.7 million or 297% from the quarter ending December 31, 2007 -- Operating expenses were up only 106% from quarter ending December 31, 2007 -- Net income was $376,766, or $0.01 per basic and fully diluted share 

Mark Libratore, Liberator Medical’s CEO, stated: “We believe that we have successfully put into place an infrastructure that is capable of supporting a substantially higher sales volume with lower associated incremental costs. Looking forward, we think that the outlook for the demand for Company’s products and services remains strong. Over the next twelve months, we will focus on increasing advertising, increasing our customer base, continuing to service our current customer base, thereby increasing our return on advertising dollars. In summary, we are confident that our proven advertising and marketing efforts will continue to drive strong sales growth and profitability.”

Bob Davis, Liberator Medical’s CFO, said, “Net income for the 1st quarter of FY 2009 rose to 6.9% of net sales compared to net income for the 4th quarter of FY 2008 being 3.1% of net sales. The increase in net income for the first quarter was $243,660 or 20% of the increase in net sales of $1,203,975. Thus, the incremental net income was approximately 20% of incremental sales demonstrating significant economies of scale and expansion of profit margins.”

Financial Condition

As of December 31, 2008, the Company had cash of $3,761,607, an increase of $2,588,589 from September 30, 2008. Working capital as of December 31, 2008 was $4,359,658 compared to working capital of $1,730,700 at September 30, 2008. This increase in cash was due to the Company’s closing a $2.5 million convertible debt placement in October 2008 plus positive cash flows generated from operating activities during the quarter. The Company incurred interest expense of $272,512 for the three months ended December 31, 2008 compared to interest of $51,258 for the three months ended December 31, 2007, an increase of $221,254, primarily due to the issuance of convertible debt.

Results of Operations

The Company’s gross profit for the three months ended December 31, 2008 was up $2,697,363, or 297%, to $3,605,203 from $907,840 for the three months ended December 31st, 2007. Operating expenses for the three months ended December 31, 2008 were $2,963,798, or 54% of revenue, compared to $1,435,757, or 100% of revenue for the three months ended December 31, 2007. The increase in operating expenses is primarily attributable to increased spending levels for employees, professional fees, advertising, and allowance for bad debts to support the increase in revenues.

The Company’s net income for the three months ended December 31, 2008 increased $955,941 to $376,766 compared to a net loss of $579,175 for the three months ended December 31, 2007 due to substantially higher sales volumes at substantially lower incremental operating expense.

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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

This release contains “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including those related to the earnings and cash flow, leased space and number of employees. Forward-looking statements 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 detailed 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 December 31, September 30, 2008 2008 ------------- ------------- (Unaudited) Assets Current Assets Cash $ 3,761,607 $ 1,173,018 Accounts receivable, net of allowance for doubtful accounts of $1,512,786 and $1,055,606, respectively 3,029,627 2,405,102 Prepaid expenses 209,545 321,182 Inventory, net of allowance for obsolete inventory of $50,000 and $50,000, respectively 1,030,507 785,884 Deferred advertising, current portion 977,740 769,851 Other 4,463 1,848 ------------- ------------- Total Current Assets 9,013,489 5,456,885 ------------- ------------- Property and Equipment Property and Equipment, net of accumulated depreciation of $780,952 and $714,641, respectively 796,111 815,833 Other Assets Deferred advertising, net of current portion 841,586 660,524 Deferred loan costs 699,302 492,821 Deposits 129,759 100,089 Total Other Assets 1,670,647 1,253,434 ------------- ------------- Total Assets $ 11,480,247 $ 7,526,152 ============= ============= Liabilities and Stockholders’ Equity Current Liabilities Accounts payable $ 1,828,484 $ 900,448 Accrued liabilities 229,945 289,848 Stockholder loan 1,664,649 1,664,649 Convertible notes payable, net of unamortized discount of $26,786 and $56,833, respectively 825,708 772,163 Capital lease obligations, current portion 54,125 50,816 Deferred rent liability, current portion 50,920 48,261 ------------- ------------- Total Current Liabilities 4,653,831 3,726,185 ------------- ------------- Long-Term Liabilities Convertible notes payable, net of unamortized discount of $789,709 and $748,921, respectively 5,242,603 2,788,704 Capital lease obligations, net of current portion 80,594 82,155 Deferred rent liability, net of current portion 199,449 214,215 ------------- ------------- Total Long-Term Liabilities 5,522,646 3,085,074 ------------- ------------- Total Liabilities 10,176,477 6,811,259 ------------- ------------- Stockholders’ Equity Common stock, $.001 par value, 200,000,000 shares authorized, 32,050,366 shares issued, 32,043,766 and 32,050,366 shares outstanding at December 31, 2008 and September 30, 2008, respectively 32,050 32,050 Additional paid-in capital 11,392,700 11,177,266 Accumulated deficit (10,117,657) (10,494,423) ------------- ------------- 1,307,093 714,893 Less: Treasury stock, at cost (6,600 shares) (3,323) -- ------------- ------------- Total Stockholders’ Equity 1,303,770 714,893 ------------- ------------- Total Liabilities and Stockholders’ Equity $ 11,480,247 $ 7,526,152 ============= ============= See accompanying notes to unaudited condensed consolidated financial statements. Liberator Medical Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Operations For the three months ended December 31, 2008 and 2007 (Unaudited) Three Months Ended December 31, ------------------------- 2008 2007 ------------ ------------ Sales $ 5,454,923 $ 1,429,465 Cost of Sales 1,849,720 521,625 ------------ ------------ Gross Profit 3,605,203 907,840 ------------ ------------ Operating Expenses Payroll, taxes and benefits 1,049,589 567,485 Advertising 297,794 67,666 Bad debts 678,982 154,917 Depreciation 66,309 45,900 General and administrative 871,124 599,789 ------------ ------------ Total Operating Expenses 2,963,798 1,435,757 ------------ ------------ Income (Loss) from Operations 641,405 (527,917) ------------ ------------ Other Income (Expense) Interest expense (272,512) (51,258) Interest income 7,873 -- ------------ ------------ Total Other Income (Expense) (264,639) (51,258) ------------ ------------ Income (Loss) before Income Taxes 376,766 (579,175) Provision for Income Taxes -- -- ------------ ------------ Net Income (Loss) $ 376,766 $ (579,175) ============ ============ Basic earnings (loss) per share: Weighted average shares outstanding 32,049,381 31,305,895 Earnings (loss) per share $ 0.01 $ (0.02) Diluted earnings (loss) per share: Weighted average shares outstanding 35,969,716 31,305,895 Earnings (loss) per share $ 0.01 $ (0.02) See accompanying notes to unaudited condensed consolidated financial statements. Liberator Medical Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows For the three months ended December 31, 2008 and 2007 (Unaudited) 2008 2007 ------------ ----------- Cash flow from operating activities: Net Income (Loss) $ 376,766 $ (579,175) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 357,144 113,566 Equity based compensation 136,025 264,252 Bad debt expense 678,982 154,917 Non-cash interest related to convertible note payable 161,788 -- Amortization of loan issuance costs 9,968 -- Changes in operating assets and liabilities: Accounts receivable (1,303,507) (465,949) Prepaid expenses and other current assets (3,815) (94,562) Deposits (29,670) (2,135) Inventory (244,623) 528 Accounts payable 928,036 157,165 Accrued expenses (41,719) (8,674) Deferred rent (12,107) (10,495) Deferred loan costs 113,729 -- Deferred advertising (679,786) (157,031) ------------ ----------- Net Cash Flow Provided by (Used in) Operating Activities 447,211 (627,593) ------------ ----------- Cash flow from investing activities: Purchase of property and equipment (29,177) (96,122) ------------ ----------- Net Cash Flow Used in Investing Activities (29,177) (96,122) ------------ ----------- Cash flow from financing activities: Proceeds from sale of stock -- 672,700 Proceeds from issuance of convertible notes 2,500,000 -- Broker commissions (203,056) -- Legal and other fees paid (107,404) -- Purchase of treasury stock (3,323) -- Payments of long-term debt and capital lease obligations (15,662) (66,605) ------------ ----------- Net Cash Flow Provided by Financing Activities 2,170,555 606,095 ------------ ----------- Net (decrease) increase in cash 2,588,589 (117,620) Cash at beginning of period 1,173,018 176,819 ------------ ----------- Cash at end of period $ 3,761,607 $ 59,199 ------------ ----------- Supplemental disclosure of cash flow information: Cash paid for interest $ 92,540 $ 51,258 Supplemental schedule of non-cash investing and financing activities: Capital expenditures funded by capital lease borrowings $ 17,410 $ -- See accompanying notes to unaudited condensed consolidated financial statements.