Option Care Announces Fourth Quarter and Year-End 2003 Results
Q4 Revenue of $96 Million; Earnings Per Diluted Share of $0.19
BUFFALO GROVE, Ill., Feb. 17 /PRNewswire-FirstCall/ -- Option Care, Inc. today
reported results for the fourth quarter and year ended December 31, 2003.
Revenues were $96 million for the fourth quarter, a 5% increase compared to
revenues of $91 million for the fourth quarter of 2002. Net income for the
quarter was $4.0 million or $0.19 per diluted share as compared to net income of
$3.0 million or $0.14 per diluted share for the prior year period.
For year ended December 31, 2003, revenues increased 11% to $355 million from
$320 million for the prior year. Reported net income was $8.7 million or $0.41
per diluted sharefor the year ended December 31, 2003 as compared to $14.1
million or $0.67 per diluted share for 2002. As previously announced, the
company recorded a pretax charge during the third quarter of 2003 of $8.7
million or $0.24 per diluted share related to additional bad debt reserves,
restructuring costs and other miscellaneous expenses. In addition, during the
fourth quarter of 2002, the company recorded a $1.7 million charge or $0.05 per
diluted share related to the disposal of two operating locations.
Raj Rai, Option Care's chief executive officer commented, "We are pleased with
our fourth quarter results. From the third quarter we realized sequential growth
in revenues from both home infusion and specialty pharmacy services. We also
realized costsavings as a result of our efforts from the restructuring
announced in the third quarter. Additionally, during the fourth quarter,
specialty pharmacy revenues increased with the start of the Synagis(R) season
and our launch of Xolair(R). Finally, we are debt free with $4 million of cash
on hand and, as a result, we spent $1.1 million in January on our stock buy-back
program." Rai continued, "We are concentrating on building our pipeline of new managed
care and manufacturer relationships. In addition, during January we hired Rob
Monahan as our Vice President of Acquisitions and completed two small
transactions in markets we currently serve. Considering our investment in
internal resources and our strong cash flow and access to capital, I expect to
further increase our acquisition activities during the remainder of the year.
We are excited about our growth opportunities and look forward to a successful
2004." Rick Smith, Option Care's president and chief operating officer commented, "We
have seen the beginning of the desired effects of the reorganization implemented
during the third quarter. Specifically, we have seen an increase in focused
revenue generating activity and implementation of efficient operating practices
throughout the organization. In addition, overall cash flow continues to be
very strong however, further improvements in cash collections remains a top
priority. I am confident that our focused actions will continue our revenue
growth, strengthen the operating structure of the company and drive earnings
growth in 2004." Commenting on the financial aspects of the quarter, Paul Mastrapa, chief
financial officer commented, "Overall revenue growth on a same store basis for
our company owned locations for only our infusiontherapy and specialty pharmacy
services was 8% for the fourth quarter and 9% for the full year. Overall gross
profit for the fourth quarter declined to 29.7% as compared to 30.7% for the
prior year quarter due to a combination of the revenue mix between infusion and
specialty pharmacy services, as well as the therapy mix within our specialty
pharmacy services. In terms of revenue mix, infusion therapy comprised 36.6% of
revenues in the fourth quarter as compared to 38.0% for the prior year fourth
quarter. The infusion and related healthcare services gross profit was 43.5% as
compared to 43.6% for the prior year fourth quarter. Specialty pharmacy
services gross profit declined to 17.5% for the fourth quarter of this year as
compared to 19.4% for the prior year period due to therapy mix and the increase
in sales of Xolair(R) and Synagis(R) which have a lower gross margin than our
composite gross margin." Mastrapa continued, "During the fourth quarter, we realized a net gain of $0.8
million or $0.02 per diluted share related to the early termination of a
franchise agreement as well as residual reorganization related expenses of $0.4
million or $0.01 per diluted share. Combined, our net gain was $0.4 million or
$0.01 per diluted share. Finally, our balance sheet remains very strong with
positive cash flow from operations of $4.8 million during the fourth quarter and
$28 million for the year. I am pleased with our cash flow results considering
the sequential increase in revenues from the third quarter of $13 million. Our
strong cash flow is a reflection of our continued improvement in accounts
receivable. Days sales outstanding were 61 days at the end of the fourth
quarter, a decrease of 5 days from the previous quarter. Lastly, we ended the
fourth quarter debt free with $4.0 million of cash on- hand." 2004 Guidance The company affirms previously released earnings guidance. Earnings per diluted
share are estimated to range between $0.73 to $0.77 for 2004.
Fourth Quarter ConferenceCall The Company will be hosting a conference call today to review the financial
results for the fourth quarter. Investors and other interested parties may
access the call at 9:00 a.m. Central Time by dialing in at (800) 901-5231,
participant passcode56641985.
The call will be broadcast live as well as replayed through the Internet. The
webcast can be accessed through a link at http://www.optioncare.com/ . For those
who cannot listen to the live broadcast, a replay will be available two hours
after the call concludes at (888) 286-8010, passcode 32979107. The playback will
be available until midnight on February 20, 2004.
The webcast is also being distributed over CCBN's Investor Distribution Network
to both institutional and individual investors. Individual investors can listen
to the call through CCBN's individual investor center at
http://www.fulldisclosure.com/ or by visiting any of the investor sites in
CCBN's Individual Investor Network. Institutional investors can access the call
via CCBN's password-protected event management site, StreetEvents
http://www.streetevents.com/.
About Option Care Option Care provides various home infusion therapies and specialty pharmacy
services to patients at home and other alternate sites such as infusion suites
and physician's offices. The company's services and pharmaceuticals are
provided nationally through its network of pharmacies.
Forward Looking Statements This press release contains certain forward-looking statements within the
meaning ofSection 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which are intended to be
covered by the safe harbors created thereby. Forward looking statements can be
identified by the use ofterms such as "anticipates," "expects," "believes" and
other words having a similar meaning. Investors are cautioned that all
forward-looking statements involve risks and uncertainty. Such forward-looking
information involves important risks and uncertainties that could significantly
affect anticipated results in the future and, accordingly, such results may
differ from those expressed in any forward-looking statements made by us, or on
our behalf. These risks and uncertainties include, but are not limited to,
uncertainties affecting our businesses and our franchisees relating to
acquisitions and divestitures (including continuing obligations with respect to
completed transactions), sales and renewals of franchises, government and
regulatory policies (including federal, state and local efforts to reform the
delivery of and payment for healthcare services), general economic conditions
(including economic conditions affecting the healthcare industry in particular),
the pricing and availability of equipment and services, technological
developments and changes in the competitive environment in which we operate.
These statements are based upon assumptions and, although the Company believes
that the assumptions underlying the forward-looking statements contained herein
are reasonable, there can be no assurance that the forward-looking statements
included in this press release will prove to be accurate.
Further Information on Option Care can be found at: http://www.optioncare.com/
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OPTION CARE, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data) Three Months Ended Year Ended
December 31, December 31,
2003 2002 2003 2002
Revenue:
Specialty pharmacy
services $57,304 $54,349 $208,557 $181,049
Infusion and related
healthcare services 35,023 34,706 136,192 129,146
Other 3,379 2,336 10,691 10,301
Total revenue 95,706 91,391 355,440 320,496 Cost of revenue:
Cost of goods sold 56,843 53,178 205,916 183,329
Cost of services provided 10,422 10,202 41,438 37,550
Total cost of revenue 67,265 63,380 247,354 220,879 Gross profit 28,441 28,011 108,086 99,617 Selling, general and
administrative expenses 18,960 18,617 75,601 65,386
Provision for doubtful
accounts 1,969 3,320 14,274 7,747
Depreciation and amortization 672 1,039 3,155 2,944
Total operating expenses 21,601 22,976 93,030 76,077 Operating income 6,840 5,035 15,056 23,540 Interest income (expense),
net 21 (86) (261) (166)
Other expense, net (243) (70) (350) (171) Income before income taxes 6,618 4,879 14,445 23,203
Income tax provision 2,648 1,929 5,727 9,124 Net income $3,970 $2,950 $8,718 $14,079 Net income per share:
Basic $0.19 $0.14 $0.42 $0.68
Diluted $0.19 $0.14 $0.41 $0.67 Shares used in computing
net income per common
share:
Basic 21,031 20,747 20,888 20,656
Diluted 21,404 21,075 21,292 21,136
OPTION CARE, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) December 31, December 31,
2003 2002
Assets
Current assets:
Cash and cash equivalents $3,961 $488
Accounts receivable, net 62,190 74,694
Inventory 11,522 7,538
Other current assets 9,721 6,445
Total current assets 87,394 89,165 Equipment and other fixed assets, net 12,145 11,898
Goodwill, net 64,970 55,412
Other assets 2,025 2,375
Total assets $166,534 $158,850 Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $19,940 $14,559
Current portion of long-term debt 424 261
Other current liabilities 10,253 12,635
Total current liabilities 30,617 27,455 Long-term debt, excluding current portion 82 7,314
Other liabilities 6,815 5,480
Total liabilities 37,514 40,249 Total stockholders' equity 129,020 118,601 Total liabilities and stockholders' equity $166,534 $158,850
OPTION CARE, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands) Three Months Ended Year Ended
December 31, December 31,
2003 2002 2003 2002 Cash flows from operating
activities:
Net income $3,970 $2,950 $8,718 $14,079 Non-cash expenses 2,605 5,358 20,272 13,618
Changes in assets and
liabilities:
Accounts receivable (8,174) (8,672) (1,820) (19,297)
Other assets and
liabilities 6,377 4,414 801 3,592 Net cash provided by operating
activities 4,778 4,05027,971 11,992 Cash flows from investing
activities:
Payments for acquisitions (224) (596) (14,560) (20,938)
Net purchases of equipment (1,007) (1,861) (4,656) (7,286)
Other investing activities - 4 229 (63) Net cash used in investing
activities (1,231) (2,453) (18,987) (28,287) Cash flows from financing
activities:
Net borrowing (repayments)
on credit agreements (3,593) (1,354) (7,093) 7,093
Proceeds from issuance of
stock 363 22 1,719 2,112
Other financing activities 77 (80) (137) (933) Net cash provided by (used
in) financing activities (3,153) (1,412) (5,511) 8,272 Net increase (decrease) in
cash and cash equivalents 394 185 3,473 (8,023) Cash and cash equivalents,
beginning of period 3,567 303 488 8,511 Cash and cash equivalents,
end of period $3,961 488 $3,961 $488
DATASOURCE: Option Care, Inc.
CONTACT: Paul Mastrapa, Chief Financial Officer, of Option Care, +1-847-229-7773 Web site: http://www.optioncare.com/
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