Option Care Announces Record First Quarter Results
Revenues of $121 Million; Earnings Per Share of $0.16
BUFFALO GROVE, Ill., May 10 /PRNewswire-FirstCall/ -- Option Care, Inc. (NASDAQ:OPTN) today reported record results for the quarter ended March 31,
2005. Revenues were $121 million for the first quarter, a 17% increase
compared to revenues of $103 million for the first quarter of 2004. Home
infusion and specialty pharmacy services increased 23% and 15% respectively as
compared to the prior year period. Net income increased 23% for the first
quarter to $5.3 million compared to $4.3 million for the first quarter of 2004. Diluted earnings per share were $0.16 for the quarter ended March 31, 2005, as
compared to $0.13 for the comparable period last year.
The Board of Directors elected to increase the dividend rate 50% from the
previous level of $0.013 per share on a post-split basis. Accordingly, the
Board of Directors declared a dividend of $0.02 per share for the first quarter
of 2005. The dividend is payable on June 10, 2005 to shareholders of record as
of May 27, 2005.
Raj Rai, Option Care's chief executive officer commented, "Our strong first
quarter is a result of continued double digit growth in both our home infusion
and specialty pharmacy businesses. We are also making progress on our strategic
initiatives. As previously discussed, we intend to make acquisitions, form
hospital joint ventures, expand our ambulatory infusion services and expand
into new markets with startups. I am pleased to announce that we closed
another franchise acquisition with two pharmacy locations in Indiana.
Furthermore, our acquisition pipeline is robust consisting of both franchise
and independent businesses. We are on track to close two hospital joint
ventures early in the third quarter as well as start a new ambulatory treatment
center in Florida in affiliation with a large physician practice. We are also
expecting to launch three home infusion pharmacy start-ups throughout this
year. With over $97 million in cash on-hand and the additional management
infrastructure investments we have made, we have the resources to continue to
execute our strategic initiatives." Rai further added, "We saw some challenges with the acquisition cost of IVIG
due to supply issues that have impacted us with reduced margins. However,
considering the positive growth trends within our overall therapy portfolio, I
would like to affirm our earning guidance of $0.66 to $0.70 a share for 2005." Rick Smith, Option Care's president and chief operating officer commented, "In
order to successfully execute our strategic initiatives, we have invested in
additional management resources. These investments include a dedicated
acquisition and joint venture integration team, expanded field-based area
management personnel and additional corporate support staff. Our focus is on
ensuring that our base business continues to grow while we add new locations
and new managed care relationships." Commenting on the financial aspects of the quarter Paul Mastrapa, chief
financial officer, stated, "Our same store growth of 13% included growth of 12%
for specialty pharmacy services and 16% for home infusion and related
healthcare services. Our growth continues to be generated from a wide range of
therapies in our portfolio. In particular, we realized strong gains in
anti-infective, chemotherapy and cancer related therapies, nutrition,
inotropic, IVIG, arthritis, as well as asthma as a result of the sales of
Xolair(R) which was launched at the end of 2003. As we move into the second
quarter, we expect overall revenues to decline with the end of the Synagis
season which generated $15.5 million of sales in the first quarter, a 9%
increase from the prior year." Mr. Mastrapa continued, "Overall gross profit for the first quarter was 27.5%
as compared to 27.8% for the prior year quarter. Infusion and related gross
profit improved to 43.9% as compared to 43.0% for the prior year primarily due
to improved labor utilization. Specialty pharmacy gross profit declined to
15.4% for the first quarter as compared to 16.2% for the quarter ended March
31, 2004. Of this 80 basis point decline, 30 basis points relates to a shift in
mix resulting from increased sales of Xolair which has a lower gross margin
than our composite gross margin. The remaining 50 basis point decline
primarily related to lower gross margin for IVIG therapy due to increased
product cost. While we were pleased with our strong IVIG therapy growth, the
issues around tight product supply have significantly increased product costs.
I expect the IVIG market will remain difficult for the remainder of 2005." Mastrapa concluded, "Our balance sheet remains very strong with positive cash
flow from operations of $7.2 million. I am pleased with our cash flow results
considering the working capital requirements relating to the sequential
increase in revenues from the fourth quarter of $8.0 million. This reflects our
continued improvement in accounts receivable. Days sales outstanding were 54
days at the end of the first quarter, a decrease of 1 day from the previous
quarter ended December 31, 2004. Our cash balance and short-term investments
were $97 million, an increase of $2.0 million from the end of 2004. Our
primary use of cash for the remainder of 2005 will be to fund acquisition
activity." First Quarter Conference Call The Company will be hosting a conference call today, Tuesday, May 10, 2005, to
review the financial results for the first quarter. Investors and other
interested parties may access the call at 9:00 a.m. Central Time by dialing in
at (800) 435-1398, participant passcode 11957708.
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 53929717. The
playback will be available until midnight on May 13, 2005.
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 injectible
pharmaceuticals 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 local and regional pharmacies.
Forward-Looking Statements This press release contains certain forward-looking statements within the
meaning of Section 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 of terms 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/
http://www.optionmed.com/
http://www.mbimbi.com/
Option Care, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
(in thousands) Three Months Ended
March 31, 2005 2004
Revenue:
Specialty pharmacy services $74,897 $64,932
Infusion and related healthcare services 42,848 34,946
Other 3,010 3,271
Total revenue 120,755 103,149 Cost of revenue:
Cost of goods sold 75,692 63,808
Cost of services provided 11,800 10,644
Total cost of revenue 87,492 74,452 Gross profit 33,263 28,697 Selling, general and administrative expenses 21,541 19,249
Provision for doubtful accounts 2,326 1,559
Depreciation and amortization 904 681
Total operating expenses 24,771 21,489
Operating income 8,492 7,208 Interest income (expense), net (44) 1
Other expense, net (47) (67) Income before income taxes 8,401 7,142
Income tax provision 3,116 2,857 Net income $5,285 $4,285 Net income per share:
Basic $0.16 $0.14
Diluted $0.16 $0.13 Shares used in computing net income per
Common share:
Basic 32,103 31,637
Diluted 33,265 32,334 Cash dividends per share $0.013 $ -
Option Care, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands) (Unaudited)
March 31, December 31,
2005 2004
Assets
Current assets:
Cash and cash equivalents $11,604 $ 19,816
Short-term investments 85,814 75,370
Accounts receivable, net 74,081 69,930
Inventory 9,973 13,191
Other current assets 8,408 8,557
Total current assets 189,880 186,864 Equipment and other fixed assets, net 13,901 13,709
Goodwill, net 71,999 65,356
Other assets 3,897 3,918
Total assets $279,677 $269,847 Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $20,382 $21,819
Current portion of long-term debt 12 19
Other current liabilities 6,867 6,573
Total current liabilities 27,261 28,411 Long-term debt, less current portion 86,303 86,306
Other liabilities 8,844 8,567
Total liabilities 122,408 123,284 Total stockholders' equity 157,269 146,563 Total liabilities and stockholders' equity $279,677 $269,847
Option Care, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands) Three Months Ended
March 31,
2005 2004
Cash flows from operating activities:
Net Income $5,285 $4,285 Non-cash expenses 3,692 2,763
Changes in assets and liabilities:
Accounts receivable (5,197) (4,709)
Other assets and liabilities 3,522 2,887 Net cash provided by operating activities 7,178 5,226 Cash flows from investing activities:
Purchases of short-term investments,
net of sales (10,444) -
Payments for acquisitions (7,082) (1,090)
Net purchases of equipment and other (989) (975) Net cash used in investing activities (18,515) (2,065) Cash flows from financing activities:
Proceeds from issuance of stock 3,697 835
Payment of cash dividends (428) -
Other financing activities (144) (1,308)
Net cash provided by (used in) financing
activities 3,125 (473) Net increase (decrease) in cash and cash
equivalents (8,212) 2,688 Cash and cash equivalents, beginning of period 19,816 3,961 Cash and cash equivalents, end of period $11,604 $6,649
DATASOURCE: Option Care, Inc.
CONTACT: Paul Mastrapa, Chief Financial Officer of Option Care, Inc., +1-847-229-7773 Web site: http://www.optioncare.com/ http://www.optionmed.com/ http://www.mbimbi.com/
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