Arcadia Resources, Inc. (NYSE Amex: KAD), a leading provider of
innovative consumer health care services under the Arcadia
HealthCare℠ brand, today announced fiscal 2012 first quarter net
revenues of $24.8 million and a net loss from continuing operations
of $3.0 million, or $0.02 per share, which compares to net revenue
of $24.4 million and a net loss from continuing operations of $4.7
million, or $0.03 per share, for the same period in fiscal
2011.
Fiscal 2012 First Quarter and Recent Highlights
- Fiscal first quarter Pharmacy revenues
increase 7.0% over the prior year period
- 4.6% increase in year-over-year
Services home care sales offset by significant decline in travel
nurse staffing revenue
- Fiscal first quarter EBITDA loss and
net loss from continuing operations reduced by 39% and 37%,
respectively, compared to prior year period
- Company continues to pursue sale of
Services segment
- Board considering strategic
alternatives to address near-term liquidity needs
- Company intends to voluntarily delist
common stock from NYSE Amex and move to over-the-counter
market
“The Company’s focus during the quarter has been on implementing
our previously-announced restructuring actions. We continue to be
in discussions to sell the Services segment, but we do not yet have
a definitive agreement to sell that business,” said Marvin
Richardson, President & CEO of Arcadia. “Our immediate focus is
on managing the near-term liquidity needs of the Company.
Management is aggressively managing our cash availability while the
Company considers broader strategic alternatives to address our
near-term and longer-term liquidity needs.”
Fiscal 2012 First Quarter Results
Arcadia reported $24.8 million in revenue from continuing
operations during the quarter, up from $24.4 million during the
same period a year ago. The Company’s gross margin from continuing
operations was 27.3% during the first quarter, up from 27.0% for
the same period a year ago. EBITDA from continuing operations was a
negative $1.8 million in the first quarter of fiscal 2012, compared
with a negative $2.9 million in the same period a year ago. The net
loss from continuing operations was $3.0 million in the quarter,
compared with a net loss of $4.7 million in the prior year
period.
Pharmacy:
Pharmacy segment revenues increased 7.0% to $4.3 million for the
first quarter of fiscal 2012, compared to $4.0 million in revenues
for the first quarter of fiscal 2011. Pharmacy gross margin
increased to 15.9% in the first quarter of fiscal 2012 from 12.2%
in the first quarter of fiscal 2011. The year-over-year gross
margin improvement was a result of several factors, including
improved purchasing costs from the Company’s wholesale drug vendor,
operational improvements and a higher level of service revenue
compared with the prior year.
Services: The
Company’s Services segment, which includes Arcadia’s home
healthcare and medical staffing business, reported net revenues of
$20.4 million for the 2012 fiscal first quarter, essentially level
with the same period one year ago. Within the Services segment,
home health care revenues increased by $0.8 million, or 4.6%, to
$17.2 million from $16.4 million in the same period last year. Per
diem medical staffing revenue also increased during the quarter
from $2.6 million in the first quarter of fiscal 2011 to $2.8
million in the current year quarter. These increases were offset by
a 67% decline in travel nurse staffing revenue to $0.4 million in
the current quarter, compared with $1.3 million during the first
quarter of fiscal 2011 due to the loss of a large correctional
facility customer. Gross margin within the Services segment was
29.7% compared with 30.0% in the first quarter a year ago.
“While we have seen improvements in our operating results, the
rate of our progress is slower than we planned,” Richardson said.
“In our Pharmacy segment, we continue to work with potential new
payors. We have made improvements in our Pharmacy operating results
without significant increases in volume as we gradually improve
gross margins and carefully manage our expenses. In our Services
segment, while our performance has been steady we have yet to see
sustained growth across all service lines. We are encouraged by the
increase in our home care revenue of 4.6% over the prior year
period and 1.5% sequentially from the prior quarter, despite
challenging market conditions. However, this improvement was offset
by a significant year-over-year reduction in our travel nurse
staffing revenue due to the loss of a significant correctional
institution customer. We remain cautiously optimistic for growth in
Services revenues despite budget pressures for state Medicaid
programs and management’s focus on the Services sale process,”
Richardson continued.
Capital Resources and Liquidity
At June 30, 2011, the Company had total cash plus line-of-credit
availability of $2.2 million, compared to $5.5 million the same
period a year ago and $4.2 million as of March 31, 2011.
Arcadia reported negative cash flow from total operations of
$1.6 million during the fiscal 2012 first quarter, compared to
negative $4.9 million for the same period a year ago.
NYSE Amex Non-Compliance with Minimum Listing
Standards
On April 4, 2011, NYSE Amex notified the Company that it was not
in compliance with Amex continued listing standards due to its low
stock price and advised the Company that it should effect a reverse
stock split on or before October 4, 2011. On July 15, 2011, the
Company was notified by Amex that the Company was not in compliance
with the Exchange’s minimum financial standards. The Company was
given until August 14, 2011, to submit a plan of compliance to
Amex.
In light of the significant restructuring actions being pursued
by the Company, and in light of current operating performance and
stockholders’ deficit, the Company’s Board of Directors determined
it would be difficult for the Company to submit a plan that
achieved compliance with the Exchange’s continued listing standards
in the 18-month period provided for regaining compliance. Based
upon the Company’s determination not to submit a plan of
compliance, the Company has today notified the staff of the NYSE
Amex of its intent to voluntarily delist its common stock from NYSE
Amex and have its shares quoted in the over-the-counter market. The
Company intends to continue to file periodic reports with the SEC
pursuant to the requirements of the Securities Exchange Act of
1934, as amended.
Director Resignation
Daniel Eisenstadt resigned from the Company’s Board of Directors
effective August 11, 2011, to focus on other business interests.
His resignation was not the result of any disagreement with the
Company. Mr. Eisenstadt has been a member of the Audit,
Compensation and Nominating and Corporate Governance Committees of
the Board.
Company’s Quarterly Report on Form 10-Q
The Company has today filed its quarterly report on Form 10-Q
with the Securities and Exchange Commission. The statements in this
release should be read in conjunction with the Company’s
disclosures in its Form 10-Q.
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 are 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
65 locations in 18 states. Arcadia HealthCare's comprehensive
solutions and business strategies support the Company's vision of
"Keeping People at Home and Healthier Longer."
DailyMed™ 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.
FINANCIAL TABLES
FOLLOW
ARCADIA RESOURCES, INC. CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, March 31, 2011
2011 ASSETS (unaudited) Current assets: Cash and cash
equivalents $ 1,627 $ 2,136 Accounts receivable, net of allowance
of $2,143 and $1,897, respectively 11,720 12,049 Inventories, net
813 795 Prepaid expenses and other current assets 1,350 1,455
Restricted cash 1,000 - Total
current assets 16,510 16,435 Property and equipment, net 1,148
1,253 Goodwill 1,070 - Acquired intangible assets, net 6,969 7,098
Other assets 153 345 Restricted cash -
1,000 Total assets $ 25,850 $ 26,131
LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities:
Accounts payable $ 1,433 $ 1,226 Line of credit 8,478 - Accrued
expenses: Compensation and related taxes 2,564 2,792 Interest 69 35
Health insurance 736 756 Other 786 952 Fair value of warrant
liability 135 285 Payable to affiliated agencies 653 616 Long-term
obligations, current portion 29,282 189 Capital lease obligations,
current portion 18 25 Total
current liabilities 44,154 6,876 Lines of credit 4,423 11,504
Long-term obligations, less current portion -
27,807 Total liabilities 48,577
46,187 Commitments and contingencies
STOCKHOLDERS’ DEFICIT Preferred stock, $.001 par value, 5,000,000
shares authorized, none outstanding - - Common stock, $.001 par
value, 300,000,000 shares authorized; 193,331,294 and 193,162,544
shares issued and outstanding, respectively 193 193 Additional
paid-in capital 151,557 151,436 Accumulated deficit (174,477
) (171,685 ) Total stockholders’ deficit
(22,727 ) (20,056 ) Total liabilities and
stockholders’ deficit $ 25,850 $ 26,131
ARCADIA RESOURCES, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except for per share amounts)
Three-Month PeriodEnded June
30,
2011 2010 (Unaudited) Services $ 20,434
$ 20,365 Pharmacy 4,325 4,041
Revenues, net 24,759 24,406 Cost of revenues 18,005
17,813 Gross profit 6,754 6,593
Selling, general and administrative 8,546 9,516 Depreciation and
amortization 297 286 Total
operating expenses 8,843 9,802 Operating loss (2,089 )
(3,209 ) Other expenses (income): Interest expense, net
1,025 844 Change in fair value of warrant liability (150 )
642 Total other expenses 875
1,486 Loss from continuing operations
before income taxes (2,964 ) (4,695 ) Income tax expense
15 33 Loss from continuing
operations (2,979 ) (4,728 ) Discontinued operations: Loss
from discontinued operations - (101 ) Net gain on disposal
187 787 187
686 NET LOSS (2,792 ) $ (4,042 )
Basic and diluted net income (loss) per share: Loss from continuing
operations $ (0.02 ) $ (0.03 ) Income from discontinued operations
- 0.01 Net loss per share $
(0.02 ) $ (0.02 )
Reconciliation of Net Loss from
Continuing Operations to EBITDA from Continuing Operations: Net
Loss from Continuing Operations $ (2,979 ) $ (4,728 ) Income tax
expense 15 33 Interest expense, net 1,025 844 Change in fair value
of warrant liability (150 ) 642 Depreciation and amortization
297 286 EBITDA from Continuing
Operations $ (1,792 ) $ (2,923 )
ARCADIA RESOURCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOW (in
thousands)
Three-Month Period EndedJune
30,
2011 2010 (Unaudited)
Operating activities
Net loss for the period $ (2,792 ) $ (4,042 ) Adjustments to
reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts 209 310 Depreciation and
amortization of property and equipment 167 165 Amortization of
intangible assets 130 143 Non-cash interest expense 693 661 Gain on
business disposals (187 ) (787 ) Amortization of debt discount and
deferred financing costs 100 69 Change in fair value of warrant
liability (150 ) 642 Stock-based compensation expense 121 364
Changes in operating assets and liabilities, net of business
acquisitions: Accounts receivable 120 81 Inventories (18 ) (561 )
Other assets 104 (281 ) Accounts payable 201 (535 ) Accrued
expenses (376 ) (723 ) Due to affiliated agencies 51
(388 ) Net cash used in operating activities
(1,627 ) (4,882 )
Investing activities
Business acquisitions, net of cash acquired (347 ) (21 ) Proceeds
from business disposals 187 787 Purchases of property and equipment
(63 ) (235 ) Net cash provided by (used in)
investing activities (223 ) 531
Financing activities Net borrowings on lines of credit 1,348
4,409 Payments on notes payable and capital lease obligations (7 )
(766 ) Proceeds from exercise of stock options -
1 Net cash provided by financing activities
1,341 3,644 Net change in
cash and cash equivalents (509 ) (707 ) Cash and cash equivalents,
beginning of period 2,136 5,444
Cash and cash equivalents, end of period $ 1,627 $
4,737
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