- Awarded second top ten pharmaceutical manufacturer program
HOUSTON, May 15 /PRNewswire-FirstCall/ -- Sharps Compliance Corp.
(OTC:SCOM) (BULLETIN BOARD: SCOM) ("Sharps" or the "Company"), a
leading provider of cost-effective disposal solutions for small
quantity generators of medical waste, today provided an update on
its new contract awards and reported its financial results for the
fiscal 2008 third quarter which ended March 31, 2008. Revenue was
$2.9 million in the third quarter of fiscal 2008 which was
essentially flat compared with the same period of the prior fiscal
year. Customer billings of $3.0 million for the fiscal 2008 third
quarter were also flat compared with the prior fiscal year's third
quarter billings. Year-over-year, growth in billings from the
healthcare, professional and commercial markets were offset by
decreased billings primarily in the hospitality and pharmaceutical
sectors, as the first year of the Company's contract with its first
pharmaceutical manufacturer was completed. Dr. Burton J. Kunik,
Chairman, Chief Executive Officer and President of Sharps
Compliance, commented, "Although billings and sales were relatively
flat in the third quarter, which is historically our slowest
quarter, we made significant progress on a number of other fronts.
Many of the opportunities we have been pursuing are now coming to
fruition. We gained traction from the successful execution of our
first Patient Support Program for a top ten pharmaceutical customer
by providing our Sharps Disposal by Mail System(R) direct to its
patients. We are very pleased to announce that we were awarded a
Patient Support Program by a second top ten pharmaceutical
manufacturer similar to our existing program. We expect the program
to be launched by the end of the calendar year 2008. We have also
entered into an exclusive agreement with a nationwide pharmacy
chain to provide a wide range of our products and services. Our
pipeline is full, and we expect the activity to enhance our growth
in fiscal year 2009." Increasing Market Penetration Recently
Awarded Second Pharmaceutical Manufacturer Patient Support Program
The Company was recently awarded its second major program with a
globally-recognized, industry-leading pharmaceutical manufacturer.
The details of the contract are expected to be finalized by June
30, 2008 with an anticipated initial launch of the program in the
second half of calendar year 2008. The Patient Support Program is
expected to include the direct fulfillment of the Sharps Disposal
By Mail System(R) to the pharmaceutical manufacturers' patients,
who will use the product to provide a convenient means of disposal
for their self-injecting patients. Sharp's proprietary
SharpsTracer(TM) system is used to track the return of the Sharps
Disposal By Mail System(R) by the patient to the treatment
facility, where the package is scanned and weighed prior to
destruction. This data, managed in Sharps' proprietary
SharpsTracer(TM) system, is electronically transmitted to the
pharmaceutical manufacturer which assists them in monitoring drug
usage and provides a touch point for individual patient follow-up.
The Company believes its successful experience fulfilling products
and services for its first contract with a top ten pharmaceutical
manufacturer, as well as its fully-integrated capabilities, were
differentiating factors leading to the award of this second
program. Additional Pharmaceutical Manufacturer Opportunities In
addition to the award of the second Patient Support Program, the
Company is in discussions with several other nationally-recognized
pharmaceutical manufacturers regarding the implementation of
similar Patient Support Programs. The Company is also currently in
discussions with its existing top ten pharmaceutical manufacturing
customer regarding the renewal and expansion of its current Patient
Support Program. National Pharmacy Chain and Home Healthcare
Company Contract Sharps recently entered into an exclusive contract
with one of the leading national pharmacy chains with over 6,000
locations, to sell its Sharps Disposal By Mail Systems(R),
Biohazard Spill Clean-Up Kits, Asset Return System and Pitch-it(TM)
IV poles. The products are expected to be utilized not only by the
customer's in-store immunizing pharmacists, but also its home
healthcare, specialty and mail order pharmacy divisions. The
Company expects to see orders from the customer beginning in the
fourth fiscal quarter ending June 30, 2008. The two-year contract
includes provisions for automatic annual renewals. Canadian
Expansion Sharps recently expanded into Canada with the initial
sales of its Sharps Disposal By Mail System(R) and Sharps Secure(R)
Needle Disposal System to a retail and restaurant chain with
nationwide locations. In order to facilitate the disposal of
returned products and in accordance with Canadian regulations, the
Company entered into an agreement with a Canadian treatment
facility permitted to dispose of medical waste in-country.
Strategically, this opportunity affords the Company the opportunity
to expand its North American presence without losing the focus of
its resources on the many prospects in its U.S. pipeline. Biohazard
Spill Clean-Up Kits The Company recently received two orders for
its Biohazard Spill Clean-Up Kits that will be used by a national
fast food chain, with over 13,000 locations in the country, as well
as a major auto parts chain. The combined value of the initial
orders is approximately $250,000 with shipment expected to be
completed in the quarter ending June 30, 2008. The Company believes
that re-order of the Biohazard Spill Clean-Up Kits for the national
fast food chain could generate over $500,000 in annual billings.
Sharps' Biohazard Spill Clean-Up Kit and Disposal System is a
leading solution for easily and safely removing and disposing of
blood and other bodily fluids. The spill-kits are currently sold
through multiple channels including a major distributor to the
hospitality market. Update on California Senate Bill 1305 and Other
Municipal Programs California Senate Bill 1305 requires the proper
disposal of home-generated sharps waste (syringes, needles,
lancets, etc.) beginning September 1, 2008, and acknowledges
mail-back programs as one of the most convenient alternatives for
the collection and destruction of home-generated sharps. The law is
designed to protect the general public and workers from potential
exposure to contagious diseases as well as health and safety risks
when improperly disposed biohazard waste enters the public waste
stream. The Company's Sharps Disposal By Mail System(R) has been
implemented as an integral part of the municipal waste programs of
nineteen (19) cities and municipalities, sixteen (16) of which are
in California, with eight (8) more municipal programs expected to
be rolled out by June 30, 2008, and several others in the
discussion and planning stages. Patients in participating
municipalities receive a Sharps Disposal By Mail System(R) at local
participating pharmacies by showing proof of residency. In
additional to the municipal programs, the California legislation is
having a positive impact on sales opportunities in virtually all
markets, particularly pharmaceutical manufacturing and hospitality
where the value proposition of the Sharps Disposal By Mail
Systems(R) is viewed as an integral component to compliance with
the state law. Third Quarter Operating Performance For the
three-month period ended March 31, 2008, gross margin was 39.0%,
down from 41.9% in the third quarter of fiscal 2007. The reduction
in gross margin was a result of increased costs, product and
customer mix. Gross margin is expected to be about 42% for fiscal
year 2008, ending June 30, 2008. Selling, general and
administrative (SG&A) expenses were $1.2 million in the third
quarter of fiscal 2008 compared with $953 thousand in the same
period of the prior year and $1.2 million in the second quarter of
fiscal 2008. The year-over-year increase in SG&A expense was a
result of higher sales and marketing expenses, facilities rent
expense, as well as expenses related to investor relations
activities. SG&A is expected to be approximately $4.6 million
for fiscal year 2008, exclusive of any non-cash stock-based
compensation expense (SFAS 123R). For the three months ended March
31, 2008, net loss was $84 thousand, or $0.01 per diluted share,
compared with net income of $82 thousand, or $0.01 per diluted
share, in the third quarter of fiscal 2007. Nine-Month Review For
the nine-month period ended March 31, 2008, revenue was $10.1
million, an 11% increase compared with revenue of $9.1 million in
the first nine months of fiscal 2007. Customer billings for the
same period were $10.4 million in fiscal 2008 and $9.3 million in
fiscal 2007, an increase of 12%. The Company expects customer
billing of approximately $14 million for fiscal year 2008, an
increase of 14% over the prior fiscal year. Gross margin for the
first nine months of fiscal 2008 was 41.5% compared with 42.7% for
the same period of the prior year due to product mix. SG&A for
the first nine months of fiscal 2008 was $3.5 million compared with
$2.8 million in the same period of the prior fiscal year. Higher
sales and marketing expenses, non-cash stock-based compensation
expense, recruiting fees, facilities rent expenses and expenses
related to investor relations activities contributed to the
increase. For the nine month period ended March 31, 2008, net
income was $538 thousand, or $0.04 per share, a decrease compared
with net income of $795 thousand, or $0.07 per diluted share, in
the first nine months of fiscal 2007. Diluted earnings per share
were adversely affected by a significant increase in the diluted
shares outstanding as a result of stock options exercised.
Liquidity and Balance Sheet Strength Cash and cash equivalents were
$2.2 million at March 31, 2008, down from $2.7 million at December
31, 2007 and up from $2.1 million at June 30, 2007. The reduction
in cash from year end was due primarily to the purchase of the
disposal facility in Carthage, Texas during the quarter ended March
31, 2008. At March 31, 2008, stockholders' equity and total assets
were $3.3 million and $5.6 million, respectively, up from $2.2
million and $4.7 million at June 30, 2007, respectively. Although,
Sharps maintains a $2.5 million line of credit with JPMorgan Chase,
no amounts were outstanding at March 31, 2008. The line of credit
is available to finance working capital, expansion and/or potential
acquisition opportunities. Outlook Dr. Kunik concluded, "We expect
a number of our recent sales wins to contribute to billings growth
in fiscal year 2009. Our top-line should also grow appreciably as
we implement programs and opportunities in the sales pipeline. We
have continued to upgrade our sales and marketing team with the
addition of key personnel who bring expertise in the facilitation
and negotiation of the larger, nationwide deals that we have been
pursuing. And, we have been measurably expanding our operational
management and infrastructure to effectively respond to the
anticipated increase in demand for our products and services. "From
a longer term perspective, we are actively supporting legislation
efforts on the local, state and national levels mandating the safe
disposal of sharps waste. We are engaged in discussion with several
national insurance companies regarding the potential reimbursement
of our mail-back product. This would be another significant step in
the recognition and education of the public in the importance of
the proper disposal of used syringes." Third Quarter 2008 Webcast
and Conference Call The Company will host a teleconference today
beginning at 3:00 p.m. Eastern Time. During the teleconference, Dr.
Burton J. Kunik, Chairman, Chief Executive Officer and President,
and David P. Tusa, Executive Vice President and Chief Financial
Officer, will review the financial and operating results for the
period and discuss Sharps' corporate strategy and outlook. A
question-and-answer session will follow. The Sharps conference call
may be accessed the following ways: -- The live webcast may be
found at http://www.sharpsinc.com/. Participants should go to the
website 10 - 15 minutes prior to the scheduled conference in order
to register and download any necessary audio software. Webcast
listeners will have the opportunity to submit questions to the
speakers (verbal or via e-mail). Select questions will be
summarized and addressed during the question-and-answer portion of
the call. -- The teleconference may also be accessed by dialing
(201) 689-8560 and requesting conference ID number 284628
approximately 5 - 10 minutes prior to the call. To listen to the
archived call: -- The archived webcast will be at
http://www.sharpsinc.com/. A transcript will also be posted once
available. -- A replay may also be heard by calling (201) 612-7415,
and entering account number 3055 and conference ID number 284628.
The telephonic replay will be available from 6:00 p.m. Eastern Time
the day of the teleconference until 11:59 p.m. Eastern Time on May
22, 2008. About Sharps Compliance Corp. Headquartered in Houston,
Texas, Sharps Compliance is a leading provider of cost-effective
disposal solutions for small quantity generators of medical waste.
The Company's flagship product, the Sharps Disposal by Mail
System(R), is a cost-effective and easy-to-use solution to dispose
of medical waste such as hypodermic needles, lancets and any other
medical device or objects used to puncture or lacerate the skin
(referred to as "sharps"). The Company also offers a number of
products specifically designed for the home healthcare market.
Sharps Compliance focuses on targeted growth markets such as the
pharmaceutical, retail, healthcare, commercial, professional and
hospitality markets, as well as serving a variety of additional
markets. Sharps is a leading proponent and participant in the
development of public awareness and solutions for the safe disposal
of needles, syringes and other sharps in the community setting. As
a fully integrated manufacturer providing customer solutions and
services, Sharps Compliance's solid business model, with strong
margins and significant operating leverage, and early penetration
into emerging markets, uniquely positions the company for strong
future growth. More information on Sharps Compliance can be found
on its website at: http://www.sharpsinc.com/. Safe Harbor Statement
The information made available in this press release contains
certain forward-looking statements which reflect Sharps Compliance
Corp.'s current view of future events and financial performance.
Wherever used, the words "estimate", "expect", "plan",
"anticipate", "believe", "may" and similar expressions identify
forward-looking statements. Any such forward-looking statements are
subject to risks and uncertainties and the company's future results
of operations could differ materially from historical results or
current expectations. Some of these risks include, without
limitation, the company's ability to educate its customers,
development of public awareness programs to educate the identified
consumer, customer preferences, the Company's ability to scale the
business and manage its growth, the degree of success the Company
has at gaining more large customer contracts, managing regulatory
compliance and/or other factors that may be described in the
company's annual report on Form 10-KSB, quarterly reports on Form
10-QSB and/or other filings with the Securities and Exchange
Commission. Future economic and industry trends that could
potentially impact revenues and profitability are difficult to
predict. The company assumes no obligation to publicly update or
revise its forward-looking statements even if experience or future
changes make it clear that any projected results express or implied
therein will not be realized. For more information contact: - OR -
David P. Tusa Tammy Poblete Executive Vice President, Kei Advisors
LLC Chief Financial Officer & Investor Relations Business
Development Phone: (713) 660-3514 Phone: (716) 843-3853 Email:
Email: FINANCIAL TABLES FOLLOW. SHARPS COMPLIANCE CORP. AND
SUBSIDIARIES Condensed Consolidated Statements of Income (Loss)
(unaudited) Three-Months Ended Nine-Months Ended March 31, March
31, % % 2008 2007 Change 2008 2007 Change (Unaudited) (Unaudited)
(Unaudited) (Unaudited) Revenue $2,927,700 $2,893,651 1.2%
$10,069,614 $9,066,312 11.1% Cost of revenue 1,786,892 1,681,437
6.3% 5,890,095 5,194,825 13.4% Gross profit 1,140,808 1,212,214
(5.9%) 4,179,519 3,871,487 8.0% Gross margin 39.0% 41.9% (7.0%)
41.5% 42.7% (2.8%) SG&A expense 1,174,449 952,608 23.3%
3,514,876 2,831,152 24.2% Special charge - 138,000 (100.0%) -
138,000 (100.0%) Depreciation and amortiz- ation 69,684 52,313
33.2% 193,301 142,002 36.1% Operating income (loss) (103,325)
69,293 (249.1%) 471,342 760,333 (38.0%) Operating margin (3.5%)
2.4% (247.4%) 4.7% 8.4% (44.2%) Other income 21,065 15,811 73,461
55,601 Net income (loss) before income taxes (82,260) $85,104
(196.7%) $544,803 $815,934 (33.2%) Income taxes (1,329) (3,134)
(6,884) (21,180) Net income (loss) (83,589) $81,970 (202.0%)
$537,919 $794,754 (32.3%) Net income (loss) per share Basic (0.01)
$0.01 $0.04 $0.07 Diluted (0.01) $0.01 $0.04 $0.07 Weighted Average
Shares Outstanding Basic 12,478,315 11,552,360 12,231,333
10,918,402 Diluted 12,478,315 13,395,644 13,515,878 11,971,720
SHARPS COMPLIANCE CORP. AND SUBSIDIARIES Condensed Consolidated
Balance Sheet 3/31/2008 6/30/2007 (Unaudited) ASSETS: Current
assets: Cash and cash equivalents $2,212,359 $2,134,152 Restricted
cash 10,010 10,010 Accounts receivable, net 1,261,729 1,330,731
Inventory 529,995 364,005 Prepaid and other assets 206,947 186,101
Total current assets 4,221,040 4,024,999 Property and equipment,
net 1,206,300 590,567 Intangible assets, net 125,570 75,002 Total
assets $5,552,910 $4,690,568 LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities: Accounts payable $490,449 $557,302 Accrued
liabilities 222,451 613,851 Current portion of deferred revenue
1,040,338 883,678 Current maturities of capital lease obligations -
1,809 Total current liabilities 1,753,238 2,056,640 Long-term
deferred revenue 524,462 392,803 Other - 72,000 Total liabilities
2,277,700 2,521,443 Stockholders' Equity: Total stockholders'
equity 3,275,210 2,169,125 Total liabilities and stockholders'
equity $5,552,910 $4,690,568 SHARPS COMPLIANCE CORP. AND
SUBSIDIARIES Supplemental Customer Billing and Revenue Information
(unaudited) Three-Months Ended March 31, 2008 %Total 2007 %Change
BILLINGS BY MARKET: Health Care $1,734,401 57.7% $1,650,912 5.1%
Pharmaceutical 413,296 13.7% 450,678 (8.3%) Hospitality 244,377
8.1% 330,403 (26.0%) Professional 190,433 6.3% 157,706 20.8%
Commercial 136,796 4.5% 100,882 35.6% ProTec 106,920 3.6% 93,424
14.4% Agriculture 96,848 3.2% 98,073 (1.2%) Retail 43,951 1.5%
49,413 (11.1%) Other 22,863 0.8% 23,056 (0.8%) Government 17,759
0.6% 43,158 (58.9%) Subtotal 3,007,644 100.0% 2,997,705 0.3% GAAP
Adjustment * (79,944) (104,054) (23.2%) Revenue Reported 2,927,700
2,893,651 1.2% Nine-Months Ended March 31, 2008 %Total 2007 %Change
BILLINGS BY MARKET: Health Care $5,629,418 54.2% $5,367,774 4.9%
Pharmaceutical 869,579 8.4% 507,611 71.3% Hospitality 914,391 8.8%
638,320 43.2% Professional 529,934 5.1% 432,758 22.5% Commercial
413,044 4.0% 417,736 (1.1%) ProTec 348,443 3.4% 311,497 11.9%
Agriculture 363,846 3.5% 439,978 (17.3%) Retail 1,044,502 10.1%
921,265 13.4% Other 107,136 1.0% 103,888 3.1% Government 158,910
1.5% 148,324 7.1% Subtotal 10,379,203 100.0% 9,289,151 11.7% GAAP
Adjustment * (309,589) (222,839) 38.9% Revenue Reported 10,069,614
9,066,312 11.1% * Represents the net impact of the revenue
recognition adjustments to arrive at reported GAAP revenue.
Customer billings include all invoiced amounts for products shipped
during the period reported. GAAP revenue includes customer billings
as well as numerous adjustments necessary to reflect, (i) the
deferral of a portion of current period sales and (ii) recognition
of certain revenue associated with product returned for treatment
and destruction. The difference between customer billings and GAAP
revenue is reflected in the Company's balance sheet as deferred
revenue. DATASOURCE: Sharps Compliance Corp. CONTACT: David P.
Tusa, Executive Vice President, Chief Financial Officer &
Business Development of Sharps Compliance Corp., +1-713-660-3514, ;
or Tammy Poblete of Kei Advisors LLC, Investor Relations,
+1-716-843-3853, , for Sharps Compliance Corp. Web site:
http://www.sharpsinc.com/
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