INDIANAPOLIS, Aug. 13 /PRNewswire-FirstCall/ -- Arcadia Resources, Inc. (NYSE Amex: KAD), a leading provider of home care, medical staffing, and pharmacy services under the Arcadia HealthCare(SM) brand, today announced results for its fiscal first quarter ended June 30, 2009.
For the first quarter of fiscal 2010, Arcadia reported net revenues of $26.4 million compared with $26.8 million for the same period last year. Arcadia reported a net loss from continuing operations of $3.6 million, or $0.02 per share, in the current quarter compared to a net loss from continuing operations of $4.0 million, or $0.03 per share, for the fiscal 2009 first quarter. The consolidated net loss, including discontinued operations, was $4.6 million in the current quarter, or $0.03 per share, compared to a net loss of $3.3 million, or $0.03 per share, for the same period a year ago.
In its Pharmacy segment, Arcadia reported a $2.1 million increase in sales for its DailyMed(TM) medication management system in the quarter compared to the same period a year ago, and a $1.0 million, or 48.2% increase, over the fourth quarter of fiscal 2009. In its Services segment, the Company reported an increase in home care sales of 4.7% over the same period a year ago and a 1.6% increase over the prior quarter.
"This quarter marked our first under our new business structure focused on two core businesses," said Marvin R. Richardson, President and Chief Executive Officer of Arcadia. "During the past six months, our management team efforts have centered around the sale of non-core assets and restructuring our long-term debt, and we have emerged as a much more streamlined and focused company with an improved balance sheet and stronger growth prospects. Now woodwill 17,053 17,053 Acquired intangible assets, net 8,146 8,305 Other assets 629 590 Restricted cash 500 - Assets of discontinued operations 34 5,850 -- ----- Total assets $47,037 $59,392 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Lines of credit, current portion $- $437 Accounts payable 2,579 2,765 Accrued expenses: Compensation and related taxes 2,662 2,986 Interest 41 89 Health insurance 524 545 Other 1,046 917 Payable to affiliated agencies 809 1,284 Long-term obligations, current portion 1,235 596 Capital lease obligations, current portion 73 59 Current liabilities of discontinued operations 1,064 2,037 ----- ----- Total current liabilities 10,033 11,715 Lines of credit, less current portion 7,749 10,889 Long-term obligations, less current portion 23,646 26,918 Capital lease obligations, less current portion 64 37 -- -- Total liabilities 41,492 49,559 ------ ------ Commitments and contingencies STOCKHOLDERS' EQUITY Preferred stock, $.001 par value, 5,000,000 shares authorized, none outstanding - - Common stock, $.001 par value, 200,000,000 shares authorized; 161,291,415 shares and 161,249,529 shares issued, respectively 161 161 Additional paid-in capital 136,205 135,920 Accumulated deficit (130,821) (126,248) -------- -------- Total stockholders' equity 5,545 9,833 ----- ----- Total liabilities and stockholders' equity $47,037 $59,392 ======= ======= ARCADIA RESOURCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Three Month Period Ended June 30, ------------------------- (Unaudited) 2009 2008 ---- ---- Revenues, net $26,409 $26,778 Cost of revenues 18,961 18,668 ------ ------ Gross profit 7,448 8,110 Selling, general and administrative 9,666 10,244 Depreciation and amortization 411 459 --- --- Total operating expenses 10,077 10,703 Operating loss (2,629) (2,593) Other expenses: Interest expense, net 838 956 Loss on extinguishment of debt - 248 Other 36 10 -- -- Total other expenses 874 1,214 --- ----- Loss from continuing operations before income taxes (3,503) (3,807) Income tax expense 93 196 -- --- Loss from continuing operations (3,596) (4,003) Discontinued operations: Income / (loss) from discontinued operations (1,193) 717 Net gain on disposal 216 - --- - (977) 717 ---- --- NET LOSS $(4,573) $(3,286) ======= ======= Weighted average number of common shares outstanding 160,552 131,688 Basic and diluted net loss per share: Loss from continuing operations $(0.02) $(0.03) Loss from discontinued operations (0.01) - ----- - Net loss per share $(0.03) $(0.03) ====== ====== ARCADIA RESOURCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) Three-Month Period Ended June 30, -------- (Unaudited) 2009 2008 ---- ---- Operating activities Net loss for the period $(4,573) $(3,286) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Provision for doubtful accounts 873 811 Depreciation of property and equipment 531 1,012 Amortization of intangible assets 246 456 Gain on business disposals (216) - Non-cash interest expense 584 Loss on sale of property and equipment - 10 Amortization of deferred financing costs and debt discounts 52 246 Stock-based compensation expense 285 401 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable 1,750 (792) Inventories 639 (228) Other assets 233 1,176 Accounts payable (547) (63) Accrued expenses (1,146) 625 Due to affiliated agencies (327) 16 Deferred revenue - (9) - -- Net cash provided by (used in) operating activities (1,616) 375 ------ --- Investing activities Business acquisitions, net of cash acquired (190) (363) Proceeds from business disposal 9,157 - Increase in restricted cash (500) - Proceeds from disposals of property and equipment - 19 Purchases of property and equipment (75) (264) --- ---- Net cash provided by (used in) investing activities 8,392 (608) ----- ---- Financing activities Net payments on lines of credit (3,577) (3,299) Payments on notes payable and capital lease obligations (4,204) (438) ------ ---- Net cash used in financing activities (7,781) (3,737) ------ ------ Net change in cash and cash equivalents (1,005) (3,970) Cash and cash equivalents, beginning of period 1,522 6,351 ----- ----- Cash and cash equivalents, end of period $517 $2,381 ==== ======e are concentrating on operational improvements in our Pharmacy and Home Care/Medical Staffing businesses to ensure our sales growth translates to solid margins and profitability."
Arcadia said it has commenced the DailyMed enrollment of high risk patients under its new agreement with WellPoint, which was announced during the first quarter. "Our rollout of the five-state program with WellPoint has started in the State of Virginia, and we are reaching out to more than 12,000 high-risk members that WellPoint has identified will most benefit from our DailyMed medication management program," Richardson said. "We are excited to introduce DailyMed to WellPoint's Medicaid members and believe the result will help improve member care and lower healthcare costs by more effectively managing chronic medication utilization and reducing unnecessary hospitalizations for their Medicaid members."
Fiscal 2010 First Quarter Results
Arcadia reported $26.4 million in revenue from continuing operations during the quarter, down slightly from $26.8 million during the same period a year ago. The Company's gross margin was 28.2% during the first quarter, a 2.1% decline from the same period a year ago. The reduction in gross margin occurred principally in the Pharmacy segment.
"Our management team is focused on improving our operational performance in four key areas," said Steven Zeller, Arcadia's Chief Operating Officer. "These are growth in our Services revenue despite difficult medical staffing market conditions; enrolling and servicing our increasing population of DailyMed customers; improving our Pharmacy segment gross margins; and aligning our selling, general and administrative (SG&A) expenses with our current business focus and lower revenue base. While our first quarter results were mixed in these areas, we are making measurable progress and are confident we have the right plans in place to achieve our objectives during the course of the year."
In its Services segment, Arcadia is projecting that its fiscal 2010 revenue will range from $90 to $100 million, depending significantly on market conditions for medical staffing.
"We continue to see growth in our home care business despite overall economic conditions," Zeller said. "At the same time, we do see challenges in this segment, particularly in state-funded Medicaid programs, which are under severe budget pressures. Like others in the medical staffing industry, we experienced further declines in our medical staffing business during the first quarter, particularly in our travel nursing division. We expect to see some stabilization in this market over the next few quarters, although we do not expect any significant improvement in demand."
Commenting on the Pharmacy segment, Richardson said: "We continue to bring new payers and partners into the DailyMed program, and are also expanding the program organically with existing payers and partners. However, the fact that DailyMed represents a new and unique approach to managing medication compliance and health care costs makes it more difficult to project our sales in the Pharmacy segment versus our more traditional markets."
Arcadia said there are several key variables that will influence the timing of DailyMed revenue growth. These include the timing of new program roll-outs, the number of high-risk patients targeted and the rate of converting that targeted population into DailyMed enrollees.
"We currently expect that our second quarter DailyMed sales will grow in the range of 20% over the first quarter. Our revenue will accelerate starting later in the second quarter and into the third quarter as we ramp up our programs with WellPoint and others. Based on our current experience, we are projecting that our fiscal 2010 DailyMed sales will range between $25 and $35 million," Richardson said. "We should have better visibility after the second quarter as we expand our patient population and resulting data, and we look forward to updating our expectations at that time."
Arcadia said Pharmacy gross margins are a key operational focus area and it has already identified operational and purchasing improvements that are expected to result in sequential improvement in Pharmacy gross margin throughout the year.
Richardson continued: "We have invested significantly in the infrastructure and headcount to meet the increasing DailyMed demand over the past several quarters. We are now focused on driving the operational improvements and efficiency gains we know we can achieve. As a result, while we will add modestly to our Pharmacy SG&A expense as demand increases, we believe we will see SG&A as a percentage of sales decline significantly during the course of FY 2010.
"Likewise, in our corporate SG&A we continue to make progress on our cost reduction initiatives. After restructuring our business during the last six months, we have identified an additional $750,000 to $1 million in further cost reduction opportunities that we will implement over the course of the year."
Capital Resources and Liquidity
At June 30, 2009, the Company had $0.5 million in cash and cash equivalents on its balance sheet and had access to $2.5 million in additional line of credit availability, resulting in total cash and availability of $2.95 million, compared to total cash and availability of $4.5 million at March 31, 2009.
Arcadia reported negative cash flow from total operations of $1.6 million for the quarter, compared with cash generated from operations of $740,000 and $375,000 in the fourth quarter of fiscal 2009 and the same period a year ago, respectively.
"The reduction in operating cash flow quarter-over-quarter was primarily due to two factors. First, the ramp up of our Pharmacy operations and the higher operating loss in that segment resulted in negative operating cash flow," said Matthew Middendorf, Chief Financial Officer. "In addition, we include discontinued operations in our operating cash flow statement and our operating loss from discontinued operations was $1.2 million in the quarter, as compared with earnings of $0.7 million in the prior year quarter.
"During the quarter, we reached agreement with Comerica Bank to renew our existing senior credit facility, which was completed in July," added Middendorf. "We also significantly reduced our long-term indebtedness by more than $7 million during the quarter. We are actively working on a line of credit to support the growth of our Pharmacy segment and hope to complete that during the second quarter."
Conference Call Information
Arcadia will conduct a conference call and simultaneous Internet webcast to review these financial results on Thursday, August 13, 2009 at 11 a.m. Eastern Time.
To access the webcast, visit the Company's Web site at www.arcadiahealthcare.com approximately 5-10 minutes prior to the start time and click on the webcast link. The webcast can also be accessed on www.investorcalendar.com.
The conference call also may be accessed by telephone by dialing 1-877-407-0778 (for U.S.-based callers) or 1-201-689-8565 (for international callers).
A replay of the webcast will be available approximately one hour after the completion of the call and will be accessible on www.investorcalendar.com until November 14, 2009. A telephone replay will be available by dialing 1-877-660-6853 (for U.S.-based callers) or 1-201-612-7415 (for international callers). For the replay, callers must use both Passcode Account number 286 and Conference ID number 329853. The telephone replay will be available until August 27, 2009.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Arcadia reports non-GAAP financial results. Arcadia's management believes these non-GAAP measures are useful to investors because they provide supplemental information that facilitates comparisons to prior periods. Management uses these non-GAAP measures to evaluate its financial results, develop budgets and manage expenditures. The method Arcadia uses to produce non-GAAP results is likely to differ from the methods used by other companies and should not be regarded as a replacement for corresponding GAAP measures. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which is attached to this release.
About Arcadia HealthCare
Arcadia HealthCare is a service mark of Arcadia Resources, Inc. (NYSE Amex: KAD), and is a leading provider of home care, medical staffing and pharmacy services under its proprietary DailyMed program. The Company, headquartered in Indianapolis, Indiana, has 72 locations in 21 states. Arcadia HealthCare's comprehensive solutions and business strategies support the Company's vision of "Keeping People at Home and Healthier Longer."
DailyMed(TM) Pharmacy dispenses a monthly cycle of a patient's prescriptions, over-the-counter medications and vitamins, and organizes them into pre-sorted packets clearly marked with the date and time the medications should be taken. In the dispensing process, a DailyMed pharmacist reviews each patient's medication profile and utilizes state-of-the-art medication therapy management tools in order to improve the safety and efficacy of the medications being dispensed. A DailyMed pharmacist provides routine communication with the patient, the primary care physician, caregivers and payers in order to maximize the pharmaceutical care administered. The DailyMed program improves patient care and drug utilization while reducing drug and hospitalization costs for private and government payers.
Forward Looking Statements
Any statements contained in this release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21A of the Securities Exchange Act of 1934, as amended and otherwise within the meaning of court opinions construing such forward-looking statements. The Company claims all safe harbor and other legal protections provided to it by law for all of its forward-looking statements. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, estimates, uncertainties and other factors, which could cause actual financial or operating results, performances or achievements expressed or implied by such forward-looking statements not to occur or be realized, including our estimates of consumer demand for our services and products, required capital investment, competition, and other factors. Actual events and results may differ materially from those expressed, implied or forecasted in forward-looking statements due to a number of factors. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in the Company's filings with the Securities and Exchange Commission from time to time, including the section entitled "Risk Factors" and elsewhere in the Company's most recent Annual Report on Form 10-K and subsequent periodic reports. Among the factors that could cause future results to differ materially from those provided in our press release are: (i) we cannot be certain or our ability to generate sufficient cash flow to meet our obligations on a timely basis; (ii) we may be required to make significant business investments that do not produce offsetting increases in revenue; (iii) we may be unable to execute and implement our growth strategy; (iv) we may be unable to achieve our targeted performance goals for our business segments; and (v) other unforeseen events may impact our business. The forward-looking statements speak only as of the date hereof. The Company disclaims any obligation to update or alter its forward-looking statements, except as may be required by law.
ARCADIA RESOURCES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AMOUNTS) June 30, March 31, 2009 2009 ---- ---- ASSETS (unaudited) Current assets: Cash and cash equivalents $517 $1,522 Accounts receivable, net of allowance of $3,571 and $3,386, respectively 14,803 15,679 Inventories, net 841 863 Prepaid expenses and other current assets 1,577 1,764 Current assets of discontinued operations 757 5,458 --- ----- Total current assets 18,495 25,286 Property and equipment, net 2,180 2,308 G
|SOURCE Arcadia Resources, Inc.|
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