NationsHealth, Inc. (Nasdaq: NHRX; NHRXW; NHRXU) today announced
its financial results for the quarter and six months ended June 30,
2007. Revenue for the quarter ended June 30, 2007 was $17.0
million, compared to $19.6 million for the corresponding period in
2006. Net loss for the quarter ended June 30, 2007 was $0.5
million, or $0.02 per share, compared to a net loss of $5.0
million, or $0.18 per share, for the corresponding period in 2006.
Revenue for the 2006 second quarter included approximately $1.4
million related to the initial marketing and enrollment efforts for
CIGNA�s Medicare Part D Prescription Drug Plan, and approximately
$1.3 million from the Company�s discount prescription drug card
business, which was sold on September 5, 2006. Revenue for the six
months ended June 30, 2007 was $35.8 million, compared to $44.6
million for the corresponding period in 2006. Net loss for the six
months ended June 30, 2007 was $1.7 million, or $0.06 per share,
compared to a net loss of $18.5 million, or $0.67 per share, for
the corresponding period in 2006. The first six months of 2006
included approximately $9.9 million of revenue related to the
initial marketing and enrollment efforts for CIGNA�s Medicare Part
D Prescription Drug Plan and approximately $3.3 million of revenue
from the divested discount prescription drug card business.
Adjusted EBITDA*, defined as earnings before interest, taxes,
depreciation and amortization, and stock based compensation, was
$2.5 million for the quarter ended June 30, 2007, compared to an
adjusted EBITDA loss of $1.3 million for the quarter ended June 30,
2006. For the first six months of 2007 adjusted EBITDA was $4.0
million, compared to an adjusted EBITDA loss of $12.2 million for
the first six months of 2006. The Company�s Insurance Services
segment contributed profit of $3.7 million for the quarter ended
June 30, 2007, compared to $2.4 million for the quarter ended June
30, 2006. For the first six months of 2007, the Insurance Services
segment contributed profit of $6.7 million, compared to a loss of
$5.5 million for the first six months of 2006. The Medical Products
segment contributed profit of $1.5 million for the quarter ended
June 30, 2007, compared to $1.6 million, including approximately
$1.3 million of profit from the divested discount prescription drug
card business, for the quarter ended June 30, 2006. For the six
months ended June 30, 2007, the Medical Products segment
contributed profit of $3.1 million. This compares to $3.9 million
of profit for the first six months of 2006, which included
approximately $3.3 million of profit from the divested discount
prescription drug card business. �Our cost savings initiatives,
acquisition of smaller providers of diabetic supplies, new medical
product offerings and expanded relationships with managed care
providers have improved our financial results for the quarter,�
said Timothy Fairbanks, the Company�s Chief Financial Officer. Mr.
Fairbanks continued, �The closing of our term loan facility on
April 11, 2007 enabled us to continue our strategy of acquiring
patients from smaller diabetes suppliers during the quarter. In
addition, we are pleased with the financial results of our
Insurance Services segment as we continue to increase operating
efficiencies within NationsHealth. Furthermore, in July we were
awarded accredited status by the Accreditation Commission for
Health Care, Inc. (ACHC). We are excited about achieving
accreditation from ACHC as this is one of the pre-requisites for
being awarded a contract under the new CMS Competitive Bidding
Program for diabetic supplies.� As previously announced,
NationsHealth will host a conference call at 11:00 a.m. ET today to
review its financial results for the quarter ended June 30, 2007.
Access Information: Date: August 9, 2007 Time: 11:00 a.m. ET
U.S./Canada dial-in number: 800-562-8369 International dial-in
number: 913-312-1299 Participant passcode: 4291053 Live webcast:
www.nationshealth.com Replay Access Information: A recording of the
conference call will be available three hours after completion
until August 16, 2007 at midnight ET at 888-203-1112 (U.S.) and
719-457-0820 (International). The replay passcode is 4291053. The
webcast will be archived for on demand listening for 30 days on the
NationsHealth�s website, www.nationshealth.com. About
NationsHealth, Inc. NationsHealth seeks to improve the delivery of
healthcare to Medicare and managed care beneficiaries by providing
medical products and prescription related services. NationsHealth
provides home delivery of diabetes supplies, medications and other
medical products to patients across the nation. In addition to its
medical products business, NationsHealth also provides education,
marketing, enrollment and patient service to insurers offering
Medicare Part D prescription drug plans and other Medicare
insurance coverage. NationsHealth has an agreement with CIGNA to
service its Medicare Part D prescription drug plans nationally. For
more information, please visit http://www.nationshealth.com. * Use
of Non-GAAP Financial Measures In its earnings releases, conference
calls, slide presentations or webcasts, the Company may use or
discuss adjusted EBITDA (or adjusted EBITDA loss, as applicable),
which is a non-GAAP financial measure as defined by SEC Regulation
G. Management regularly reviews adjusted EBITDA as an analytical
indicator of the Company�s financial performance and believes that
it is useful to investors in evaluating operating performance. In
addition, the Company uses adjusted EBITDA as a measure of
performance for its business segments and for incentive
compensation purposes. The Company does not intend for adjusted
EBITDA to be considered in isolation or as a substitute for any
GAAP measure. Adjusted EBITDA, as presented, may not be comparable
to similarly titled measures of other companies. Net income (loss)
is the GAAP financial measure most directly comparable to adjusted
EBITDA (EBITDA loss). A reconciliation of net loss to adjusted
EBITDA (EBITDA loss) is as follows (in thousands): Three Months
Ended June 30, � Six Months Ended June 30, � 2007 2006 2007 2006 �
Net Loss ($524 ) ($4,997 ) ($1,712 ) ($18,527 ) Interest, net 1,010
727 1,873 1,370 Depreciation and amortization 674 455 1,246 913
Amortization of customer contract intangible 969 970 1,939 1,939
Stock-based compensation 346 830 698 1,373 Non-cash impairment
charge � -- � 733 � � -- � 733 � Adjusted EBITDA (EBITDA Loss) $
2,475 � ($1,282 ) $ 4,044 � ($12,199 ) This press release contains
forward-looking statements about NationsHealth, including
statements regarding management initiatives and new product and
market opportunities, none of which should be construed in any
manner as a guarantee that such results will in fact occur. In
addition, other written or oral statements that constitute
forward-looking statements may be made by us or on our behalf.
Forward-looking statements are statements that are not historical
facts, and in some cases may be identified by the words
�anticipate,� �project,� �expect,� �plan,� �intend,� �may,�
�should,� �will,� and similar words or phrases. Such
forward-looking statements, based upon the current beliefs and
expectations of NationsHealth�s management, are subject to risks
and uncertainties, which could cause actual results to differ from
the forward-looking statements. The following factors, among
others, could cause actual results to differ from those set forth
in the forward-looking statements: our ability to maintain our
existing customer base; our ability to successfully maintain our
Insurance Services segment; our dependence on Medicare
reimbursement; changes in Medicare and Medicaid and any other state
or national-based reimbursement programs, including the results of
competitive bidding for durable medical equipment and supplies; our
customers� desire to take advantage of our Part D and specialty
pharmacy services; uncertainty in our costs incurred in
administering the Part D program; changing interpretations of
generally accepted accounting principles; outcomes of government
reviews of NationsHealth�s business practices; inquiries and
investigations and related litigation; our exposure to product
liability in excess of our insurance coverage; continued compliance
with government regulations; legislation or regulatory requirements
or changes adversely affecting the businesses in which
NationsHealth is engaged; fluctuations in customer demand;
management of growth; our ability to compete effectively; timing
and market acceptance of new products sold by NationsHealth; our
ability to raise the capital we will need to sustain our
operations; general economic conditions; and geopolitical events,
regulatory changes and other risks and uncertainties described in
NationsHealth�s Annual Report on Form 10-K for the year ended
December 31, 2006, Quarterly Report on Form 10-Q for the quarter
ended March 31, 2007, and NationsHealth�s other reports it has
filed with the Securities and Exchange Commission. The information
set forth herein should be read in light of such risks.
NationsHealth cautions investors not to place undue reliance on the
forward-looking statements contained herein. These statements speak
only as of the date of this press release and, except as required
by applicable law, NationsHealth assumes no obligation to update
the information contained herein. SUMMARY CONSOLIDATED STATEMENTS
OF OPERATIONS (Unaudited) (In thousands, except per share data) �
Three Months EndedJune 30, 2007 2006 Revenue: Net product sales $
10,201 $ 10,890 Prescription drug card revenue -- 1,339 Service
revenue � 6,824 � � 7,387 � 17,025 19,616 � Cost of product sales
3,990 4,907 Cost of services � 2,395 � � 4,173 � � Gross Profit �
10,640 � � 10,536 � � Operating Expenses: Patient acquisition and
related costs 683 1,563 Patient service and fulfillment 2,141 2,099
General and administrative 5,325 8,129 Provision for doubtful
accounts 528 990 Depreciation and amortization 508 322 Amortization
of customer contract intangible 969 970 Impairment of investment in
joint venture � -- � � 733 � � 10,154 � � 14,806 � � Income (Loss)
from Operations 486 (4,270 ) � Other Expense, net � (1,010 ) � (727
) � Net Loss $ (524 ) $ (4,997 ) � Loss per share � basic and
diluted $ (0.02 ) $ (0.18 ) � Weighted average shares outstanding -
basic and diluted � 28,080 � � 27,888 � SUMMARY CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per
share data) � Six Months EndedJune 30, 2007 2006 Revenue: Net
product sales $ 21,276 $ 21,744 Prescription drug card revenue --
3,312 Service revenue � 14,502 � � 19,575 � 35,778 44,631 � Cost of
product sales 8,388 10,191 Cost of services � 6,131 � � 23,255 � �
Gross Profit � 21,259 � � 11,185 � � Operating Expenses: Patient
acquisition and related costs 1,418 2,644 Patient service and
fulfillment 4,364 4,543 General and administrative 11,199 15,971
Provision for doubtful accounts 1,263 1,846 Depreciation and
amortization 915 666 Amortization of customer contract intangible
1,939 1,939 Impairment of investment in joint venture � -- � � 733
� � 21,098 � � 28,342 � � Income (Loss) from Operations 161 (17,157
) � Other Expense, net � (1,873 ) � (1,370 ) � Net Loss $ (1,712 )
$ (18,527 ) � Loss per share � basic and diluted $ (0.06 ) $ (0.67
) � Weighted average shares outstanding - basic and diluted �
28,062 � � 27,848 � SUMMARY CONSOLIDATED BALANCE SHEETS (In
thousands) � June 30, December 31, 2007 2006 (Unaudited) ASSETS
Current Assets: Cash and cash equivalents $ 1,136 $ 4,224 Accounts
receivable, net 7,616 6,075 Inventory 1,612 1,636 Costs related to
billings in process, net 628 565 Prepaid expenses and other current
assets � 1,040 � 748 Total current assets 12,032 13,248 � Property
and equipment, net 5,119 3,557 Customer contract intangible, net
9,693 11,632 Acquired customer lists, net 2,715 363 Other assets,
net � 3,286 � 1,588 Total assets $ 32,845 $ 30,388 � LIABILITIES
AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $
2,945 $ 3,026 Accrued expenses 5,334 9,069 Promissory note payable,
net 1,406 -- Current portion of long-term debt 1,470 -- Line of
credit � 2,500 � 2,500 Total current liabilities � 13,655 � 14,595
� Long-Term Liabilities: Convertible notes, related party, net
6,979 6,316 Long-term debt 4,772 1,328 Other long-term liabilities
� 1,102 � 782 Total long-term liabilities � 12,853 � 8,426 �
Stockholders' Equity � 6,337 � 7,367 Total liabilities and
stockholders' equity $ 32,845 $ 30,388
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