Priority Healthcare Announces Record Quarterly and Annual Sales
Results LAKE MARY, Fla., Feb. 24 /PRNewswire-FirstCall/ -- Priority
Healthcare Corporation (NASDAQ:PHCC) reported results for the
fourth quarter and fiscal year ended January 1, 2005. For the
fourth quarter, sales increased 16% to a record $460 million,
compared to the fourth quarter of 2003. The sales increase was 25%
over the fourth quarter of the prior year, after adjusting for the
extra week in 2003. Excluding special charges, operating earnings
were $19.8 million, net earnings were $12.2 million and diluted
earnings per share were $.28. Including special charges, operating
earnings were $16.8 million, net earnings were $7.6 million and
diluted earnings per share were $.17. As previously announced, the
company recorded a pre-tax charge of $4.4 million related to a
settlement, and the related costs of the settlement, with a payor.
The company also recorded a pre-tax charge to accounts receivable
of $3.0 million, primarily related to Sinus Pharmacy. For the year,
sales increased 19% to a record $1.74 billion, compared to 2003.
The sales increase was 21% over the prior year, after adjusting for
the extra week in 2003. Excluding the special charges, operating
earnings were $81.1 million, net earnings were $50.0 million and
diluted earnings per share were $1.14. Including special charges,
operating earnings were $76.8 million, net earnings were $44.6
million and diluted earnings per share were $1.01. "We are pleased
with our record sales for the fourth quarter. The strong sales
performance continued to be led by ophthalmology, oncology,
neurology and several other specialty distribution markets, despite
our inability to ship flu vaccine in the quarter," stated Steve
Cosler, President and Chief Executive Officer. "We also made
tremendous progress in our development of the Aetna Specialty
Pharmacy, which is on schedule for the planned March launch." "The
pipeline of new opportunities continues to be very strong. We are
excited about the expansion of our ophthalmology franchise with the
addition of Macugen, the recently approved treatment for
age-related macular degeneration from Pfizer and Eyetech. We were
also selected as one of two distributors for Vitrase, a product
from Ista recently approved for eye surgery. In addition, we
announced this week our selection to be a specialty pharmacy
provider for Ventavis, the recently approved inhaled therapy from
CoTherix for the treatment of pulmonary hypertension." In
commenting on certain financial aspects of the quarter, Steve Saft,
Chief Financial Officer, stated, "Our 25% sales increase for the
quarter, after the one week adjustment, was driven by 18% organic
growth. Our gross profit decreased 40 basis points to 11.4%,
sequentially from the third quarter, due to a mix shift within our
businesses and, as expected, tighter reimbursement from payor
contracts. SG&A expense, excluding special charges, as a
percent of sales, remained constant from the third quarter." Mr.
Saft continued, "Our balance sheet remains strong with $63 million
in cash and marketable securities, offset by $40 million drawn on
our line of credit. Our trade DSO's were 40 days, a decrease of
three days, sequentially from the third quarter, demonstrating our
continued ability to maintain our industry low DSO's. Our inventory
turns were 15, an increase of three turns from the fourth quarter
of last year. Excluding special charges, return on committed
capital and invested capital for the quarter were strong at 40% and
24%, respectively, which we believe is among the highest in the
industry. The returns remain high despite the significant
investments we are making without a return in the current period."
"We are maintaining our outlook for 2005 of $2.025 billion to $2.2
billion in sales and earnings per share of $1.18 to $1.28. This
year is expected to be fueled by significant investments in the
Aetna Specialty Pharmacy, as well as other new potential projects
in the first half of the year. The largest single quarter of
investment is anticipated to be the first quarter of 2005. These
investments should result in strong momentum in the second half of
the year and a very solid position as we enter 2006." Mr. Cosler
concluded, "Our investments in the fourth quarter of 2004 and the
first half of 2005 should provide strong returns on capital and are
the right actions to take to assure our continued success. We have
made tremendous progress with our COMPASS pharmacy implementation,
which will be the foundation of our clinical and data management
capabilities. Initial productivity increases as a result of COMPASS
are exceeding expectations. We continue to build our services
capabilities and are very encouraged by the response from
manufacturers and payors to our offerings. We are optimistic about
the launch of several new programs throughout 2005 based on the
initiatives we have underway and look forward to our continued
leadership position in the industry." As previously announced, a
web cast of the company's conference call to review the financial
results is available on Priority Healthcare's website,
http://www.priorityhealthcare.com/, live at 9:00 AM Eastern today.
A replay of this conference call will be available on the company's
website approximately two hours after the event for a two week
period. About Priority Healthcare Corporation Priority Healthcare
is the premier healthcare services company providing innovative,
high quality and cost-effective solutions that enhance quality of
life. As a national specialty pharmacy and distributor, Priority
Healthcare provides biopharmaceuticals, complex therapies, related
disease treatment programs and a portfolio of other service
offerings for patients, payors, physicians and pharmaceutical
manufacturers. The growing number of specialty areas serviced by
Priority Healthcare include oncology, gastroenterology,
reproductive endocrinology, neurology, hematology, pulmonology,
ophthalmology, rhuematology, endocrinology, infectious disease and
nephrology, as well as ambulatory surgery centers. Additional
information regarding Priority Healthcare is available online at
http://www.priorityhealthcare.com/. Certain statements included in
this press release, which are not historical facts, are
forward-looking statements. Such forward-looking statements are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements represent our expectations or beliefs and involve
certain risks and uncertainties, including those described in our
public filings with the United States Securities and Exchange
Commission; also including, but not limited to, changes in interest
rates, competitive pressures, changes in customer mix, changes in
third party reimbursement rates, financial stability of major
customers, changes in government regulations or the interpretation
of these regulations, changes in supplier relationships, growth
opportunities, cost savings, revenue enhancements, synergies and
other benefits anticipated from acquisition transactions,
difficulties relative to integrating acquired businesses, the
accounting and tax treatment of acquisitions, and asserted and
unasserted claims, which could cause actual results to differ from
those in the forward-looking statements. The forward-looking
statements by their nature involve substantial risks and
uncertainties, certain of which are beyond our control, and actual
results may differ materially depending on a variety of important
factors. You are cautioned not to place undue reliance on these
forward-looking statements that speak only as of the date herein.
PRIORITY HEALTHCARE CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS
(000's omitted, except share data) (unaudited) Three- Three- month
month Year Year period period ended ended ended ended January
January January January 1, 3, 1, 3, 2005 2004 2005 2004 Net sales
$1,739,618 $1,461,811 $459,764 $396,920 Cost of products sold
1,546,727 1,299,948 407,580 352,498 Gross profit 192,891 161,863
52,184 44,422 Selling, general and administrative expense 108,197
77,932 33,356 21,426 Restructuring charge 1,317 - - - Depreciation
and amortization 6,591 4,273 2,014 1,136 Earnings from operations
76,786 79,658 16,814 21,860 Third party payor settlement (4,401) -
(4,401) - Minority interest (212) - 43 - Interest expense (1,060) -
(425) - Interest income 707 1,302 199 244 Earnings before income
taxes 71,820 80,960 12,230 22,104 Provision for income taxes 27,194
30,360 4,648 8,289 Net earnings $44,626 $50,600 $7,582 $13,815
Earnings per share: Basic $1.03 $1.17 $.17 $.32 Diluted $1.01 $1.15
$.17 $.32 Weighted average shares outstanding: Basic 43,438,475
43,362,614 43,611,206 43,258,876 Diluted 44,023,741 43,930,042
44,070,517 43,813,506 RECONCILIATION OF NET EARNINGS TO PRO FORMA
NET EARNINGS Three- Three- month month Year Year period period
ended ended ended ended January January January January 1, 3, 1, 3,
2005 2004 2005 2004 Net earnings $44,626 $50,600 $7,582 $13,815
Write-off of certain pharmacy receivables net of applicable income
taxes 1,846 - 1,846 - Restructuring charge, net of applicable
income taxes 817 - - - Third party payor settlement, net of
applicable income taxes 2,729 - 2,729 - Pro forma net earnings
$50,018 $50,600 $12,157 $13,815 Pro forma earnings per share: Basic
$1.15 $1.17 $.28 $.32 Diluted $1.14 $1.15 $.28 $.32 We believe
referring to these non-GAAP totals facilitates a better
understanding of our results. PRIORITY HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (000's omitted) (unaudited)
January 1, January 3, 2005 2004 Cash and cash equivalents $45,465
$47,719 Marketable securities 17,289 15,317 Receivables, net
244,730 172,206 Finished goods inventory 112,616 117,218 Other
current assets 35,707 20,642 Fixed assets, net 48,209 29,780 Other
assets 164,627 111,127 Total assets $668,643 $514,009 Current
liabilities $203,349 $164,663 Line of credit 40,290 Long-term debt
- - Other liabilities 6,490 6,437 Minority interest 23,212 -
Shareholders' equity 395,302 342,909 Total liabilities and
shareholders' equity $668,643 $514,009
http://www.newscom.com/cgi-bin/prnh/20030417/PHCLOGODATASOURCE:
Priority Healthcare Corporation CONTACT: Stephen Saft, Chief
Financial Officer, Priority Healthcare Corporation, +1-407-804-6700
Web site: http://www.priorityhealthcare.com/
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