- Awarded second top ten pharmaceutical manufacturer program - Wins exclusive contract with national pharmacy chain and home healthcare
- Expands into Canada with retail and restaurant business
HOUSTON, May 15 /PRNewswire-FirstCall/ -- Sharps Compliance Corp. (OTC 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 cale> (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%
revenue 1,786,892 1,681,437 6.3% 5,890,095 5,194,825 13.4%
profit 1,140,808 1,212,214 (5.9%) 4,179,519 3,871,487 8.0%
margin 39.0% 41.9% (7.0%) 41.5% 42.7% (2.8%)
expense 1,174,449 952,608 23.3% 3,514,876 2,831,152 24.2%
charge - 138,000 (100.0%) - 138,000 (100.0%)
ation 69,684 52,313 33.2% 193,301 142,002 36.1%
(loss) (103,325) 69,293 (249.1%) 471,342 760,333 (38.0%)
margin (3.5%) 2.4% (247.4%) 4.7% 8.4% (44.2%)
income 21,065 15,811 73,461 55,601
taxes (82,260) $85,104 (196.7%) $544,803 $815,934 (33.2%)
taxes (1,329) (3,134) (6,884) (21,180)
(loss) (83,589) $81,970 (202.0%) $537,919 $794,754 (32.3%)
Basic (0.01) $0.01 $0.04 $0.07
Diluted (0.01) $0.01 $0.04 $0.07
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
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:
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
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
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.ndar 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
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
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.
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
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.
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.
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 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
Phone: (713) 660-3514 Phone: (716) 843-3853
FINANCIAL TABLES FOLLOW.
SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Loss)'/>"/>
|SOURCE Sharps Compliance Corp.|
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