Published: March 01, 2005
Curative Health Services Reports Fourth Quarter 2004 Results
Fourth Quarter Revenues of $83.6 Million, GAAP Net Loss Per Share of $10.76 Results Include Goodwill Impairment of $10.40 Per Share
Curative Health Services, Inc.
announced today fourth quarter and full-year financial results for the
period ended December 31, 2004. Total revenues for the fourth quarter of
2004 were $83.6 million, compared with $65.4 million reported in the fourth
quarter of 2003. Under U.S. generally accepted accounting principles
(GAAP) net loss was $139.3 million or $10.76 per share for the fourth
quarter of 2004, compared with GAAP net income of $4.4 million, or $.32 per
diluted share, for the fourth quarter of 2003.
In the fourth quarter of 2004, the Company recorded charges of $138.4
million, or $10.68 per share. In accordance with Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets," the
Company conducted its annual impairment test related to the carrying value
of its goodwill and other intangible assets. The impairment test resulted
in a non-cash charge of $134.8 million or $10.40 per share to reduce the
Specialty Infusion segment goodwill and intangibles to their estimated fair
value as of December 31, 2004. This charge resulted primarily from changes
in the economics of the Specialty Infusion business, including the
much-publicized changes in reimbursement methodology that occurred in the
second half of 2004. The Company also recorded charges and adjustments of
$4.7 million or $.36 per share, $.22 per share after tax, in the quarter.
Additionally, the Company invested approximately $.9 million in new branch
start up costs in the quarter.
For the quarter ended December 31, 2004, the Company recorded earnings
before interest, other (expense) income and taxes (EBIT), of $(135.9)
million and earnings before interest, other (expense) income and taxes
excluding charges and adjustments (Adjusted EBIT), of $2.5 million.
Earnings before interest expense, other (expense) income, taxes and
depreciation and amortization (EBITDA) for the fourth quarter, was $(134.1)
million and earnings before interest expense, other (expense) income, taxes
and depreciation and amortization, excluding charges and adjustments
(Adjusted EBITDA), for the fourth quarter was $4.3 million. A
reconciliation of GAAP net (loss) income and other GAAP measures to
non-GAAP measures is included in the tables accompanying this press
release. Management believes EBIT, Adjusted EBIT, EBITDA and Adjusted
EBITDA information is necessary to present the Company's underlying
business operating results and are key indicators of the Company's ability
to generate working capital and service its debt. Additionally, management
believes costs incurred such as those relating to acquisition integration,
litigation, amortization of intangibles and long-term compensation, changes
in the fair value of the Company's interest rate swap and impairment
charges are viewed as distinct expense categories. Further, management
believes the change in the fair value of its interest rate swap is
comparable to interest and so is included in the calculation of EBIT and
EBITDA. While EBIT, EBITDA, Adjusted EBIT and Adjusted EBITDA are not
measures of financial performance nor liquidity under GAAP, they are
provided as information for investors for analysis purposes. They are not
meant to be considered a substitute or replacement for net income as
prepared in accordance with GAAP.
Highlights for the fourth quarter of 2004 included:
-- Opened four new full-service, JCAHO accredited pharmacies.
-- Settled lawsuit with the California Department of Health Services.
-- A decline in overall DSOs of 12 days from the third quarter to 88 days
at December 31.
"This past year was one in which the Company was faced with many
challenges," said Paul F. McConnell, President and Chief Executive Officer.
"Reimbursement for clotting factor was drastically cut by certain Medicaid
programs in the second half of 2004."
"While 2004 was a year of change, we view 2005 as an opportunity to
continue the expansion of our national footprint of local, full-service
pharmacies," said Mr. McConnell. "With a focused and strategic plan in
place, we believe we are positioned to increase our same-store and
expansion branch growth and drive sales in higher margin therapies such as
TPN, IV antibiotics, pain management and chemotherapy."
The Company also signed two new multi-year contracts to manage acute care
hospital Wound Care Center® programs. Additionally, the Company has
signed three multi-year contracts thus far in the first quarter of 2005.
Fiscal 2005 Guidance
The Company's strategic focuses in 2005 will be on opening new full-service
pharmacies in strategic markets and carefully managing its cash flow.
Currently the Company has plans to open six to eight branch pharmacies in
2005. The Company believes it has adequate working capital, including
refundable taxes of $3.4 million, supplemented by existing credit
facilities to service its debt and to implement its expansion plans.
Opening additional branches beyond current plans may also be considered.
Given the ongoing consolidation and reorganization of the Company, the
evolving branch expansion and investment plans and the continued market
uncertainties, the Company is continuing to review its full year 2005
outlook. As a result the Company now expects to provide full year guidance
later in the year.
The Company will host a conference call to discuss the Company's fourth
quarter 2004 financial results, recent developments, business strategy and
outlook on Tuesday, March 1, 2005, at 11:00 a.m. Eastern Time. To
participate in the conference call, dial 1-800-374-0191 approximately 10
minutes prior to the scheduled start time.
If you are unable to participate, a digital replay of the call will be
available from Tuesday, March 1, 2005 at 2:00 p.m. Eastern Time until 11:59
p.m. Eastern Time on March 7, 2005 by dialing 1-800-642-1687 with
conference ID #3881260. The live broadcast of Curative Health Services
quarterly conference call will be available online by going to
www.curative.com and selecting the Investor Relations link, on
www.streetevents.com, and on www.companyboardroom.com. An online replay
will be available shortly after the call through March 7, 2005 at those
sites.
About Curative Health Services
Curative Health Services, Inc. seeks to deliver high-quality care and
clinical results for patients with serious or chronic medical conditions.
The Specialty Infusion business, through its national footprint of local
pharmacy branches, provides products, related clinical services and disease
management support to patients with chronic or severe conditions such as
hemophilia and other bleeding disorders, chronic or severe infections,
gastrointestinal illnesses that prohibit oral digestion and other severe
conditions requiring nutritional support, immune system disorders, cancer
and susceptibility to respiratory syncytial virus.
The Wound Care Management business is a leader in the area of disease
management specializing in chronic wound care management. The Wound Care
Management business manages, on behalf of hospital clients, a nationwide
network of Wound Care Center® programs that offer a comprehensive range
of services for treatment of chronic wounds.
For more information, visit www.curative.com.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties
and other factors, which may cause the actual results, performance or
achievements of the Company, or industry results, to be materially
different from any future results, performance, or achievements expressed
or implied by such forward-looking statements. Factors that might cause
such differences include, but are not limited to, risks associated with our
acquisition of Critical Care Systems including, but not limited to,
integration risks and costs, risks of client retention, and risks
associated with the operations of the acquired business, as well as risks
in our current businesses such as the substantial level of indebtedness
incurred in connection with the acquisition of Critical Care Systems, the
potential for termination or non-renewal of a material number of contracts,
an inability to obtain new contracts, changes in government regulations
relating to the Company's Specialty Infusion or Wound Care Management
businesses, changes in the regulations governing third party reimbursements
for the Company's services, manufacturing shortages of products sold by
Curative's Specialty Infusion business, the impact of competitive products
and pricing, the ability to maintain pricing arrangements with suppliers
that preserve margins, the seasonality and variability of operating
results, the Company's ability to implement its strategies and achieve its
objectives and the other risks and uncertainties detailed in the Company's
filings with the Securities and Exchange Commission. Readers of this
release are referred to the Company's Registration Statement on Form S-4
filed July 29, 2004, as amended, and its Quarterly Report on Form 10-Q for
the quarter ended September 30, 2004, for further discussion of these and
other risk factors that could affect future results.
CURATIVE HEALTH SERVICES, INC. AND SUBSIDIARIES
Selected Financial Information
Consolidated Statements of Operations
(In Thousands, except for per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
Unaudited Unaudited Unaudited Audited
----------------------- -----------------------
Revenues $ 83,628 $ 65,445 $ 282,368 $ 214,741
Costs and expenses:
Cost of product
sales and services 69,337 48,259 222,493 148,673
Selling, general &
administrative 11,798 10,277 43,606 37,792
Total charges
incurred (see
reconciliation
table following) 138,374 1,420 144,701 6,752
--------- --------- --------- ---------
Total costs and
operating expenses 219,509 59,956 410,800 193,217
--------- --------- --------- ---------
(Loss) income from
operations (135,881) 5,489 (128,432) 21,524
Other (expense) income (275) 2,340 (974) 2,347
Interest expense 5,655 626 15,833 2,300
--------- --------- --------- ---------
(Loss) income before
income taxes (141,811) 7,203 (145,239) 21,571
Income tax (benefit)
provision (2,471) 2,821 (3,834) 8,496
--------- --------- --------- ---------
Net (loss) income $(139,340) $ 4,382 $(141,405) $ 13,075
========= ========= ========= =========
Net (loss) income
per common share,
basic $ (10.76) $ 0.34 $ (10.92) $ 1.04
========= ========= ========= =========
Net (loss) income
per common share,
diluted $ (10.76)(1) $ 0.32(2) $ (10.92)(1) $ 0.96(2)
========= ========= ========= =========
Denominator for basic
earnings per share,
weighted average
common shares 12,951 12,845 12,949 12,546
========= ========= ========= =========
Denominator for diluted
earnings per share,
weighted average
common shares
assuming conversions 12,951 13,749 12,949 13,826
========= ========= ========= =========
(1) Basic shares were used to calculate net loss per common share, diluted,
for the three and twelve months ended December 31, 2004 as using the
effects of stock options and convertible notes would have an anti-dilutive
effect on earnings per share.
(2) Calculated under the "as if converted" method, which requires adding
shares related to convertible notes that have no contingencies to the
denominator for diluted earnings per share and adding to net income, the
numerator, tax effected interest relating to those convertible notes.
CURATIVE HEALTH SERVICES, INC. AND SUBSIDIARIES
Selected Financial Information
Reconciliation of GAAP Net (loss) income to
Adjusted net (loss) income
(In thousands, except for per share data)
Unaudited Unaudited
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
----------------------- -----------------------
GAAP net (loss)
income $(139,340) $ 4,382 $(141,405) $ 13,075
Adjustments:
Amortization of
intangibles and
long-term incentive
compensation 777 - 1,955 -
Income from sale of
equity interest - (2,327) - (2,327)
Change in fair value
of interest rate swap 322 - 1,081 -
--------- --------- --------- ---------
Subtotal of adjustments 1,099 (2,327) 3,036 (2,327)
Charges:
Goodwill and intangible
impairment charge 134,755 - 134,755 -
Costs related to
Critical Care
Systems integration 1,021 - 6,844 -
Litigation expense 1,279 - 1,783 -
Hemophilia reimbursement
allowance - - 1,033 -
Costs of convertible note
offering not completed
due to market conditions - - - 682
Corporate reorganization 1,319 - 1,319 -
Costs of acquisitions
not completed - 1,154 - 1,483
Costs of credit facility
termination and corporate
structure reorganization - - - 1,100
Costs of writing off
obsolete equipment - 317 - 317
Costs of pharmacy
consolidation and
executive terminations - (51) - 3,170
--------- --------- --------- ---------
Subtotal of charges 138,374 1,420 145,734 6,752
--------- --------- --------- ---------
Total charges &
adjustments 139,473 (907) 148,770 4,425
Taxes (1,868)(1) 358 (5,550)(1) (1,748)
--------- --------- --------- ---------
Adjusted net (loss)
income $ (1,735) $ 3,833 $ 1,815 $ 15,752
========= ========= ========= =========
(1) Assumes a tax rate of 39.6% and is calculated on adjustments and
charges, excluding goodwill impairment.
CURATIVE HEALTH SERVICES, INC. AND SUBSIDIARIES
Selected Financial Information
Reconciliation of GAAP Net (loss) income per common share,
diluted to Adjusted Net (loss) income per common share, diluted
(In thousands, except for per share data)
Unaudited Unaudited
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
----------------------- -----------------------
GAAP net (loss)
income per common
share, diluted $ (10.76)(1) $ 0.32(2) $ (10.92)(1) $ 0.96(2)
Adjustments:
Amortization of
intangibles and
long-term incentive
compensation 0.06 - 0.15 -
Income from sale of
equity interest - (0.17) - (0.17)
Change in fair value
of interest rate swap 0.02 - 0.08 -
--------- --------- --------- ---------
Subtotal of adjustments 0.08 (0.17) 0.23 (0.17)
Charges:
Goodwill and intangible
impairment charge 10.40 - 10.41 -
Costs related to
Critical Care
Systems integration 0.08 - 0.53 -
Litigation expense 0.10 - 0.14 -
Hemophilia reimbursement
allowance - - 0.08 -
Costs of convertible note
offering not completed
due to market conditions - - - 0.05
Corporate reorganization 0.10 - 0.10 -
Costs of acquisitions
not completed - 0.08 - 0.08
Costs of credit facility
termination and corporate
structure organization - - - 0.08
Costs of writing off
obsolete equipment - 0.02 - 0.02
Costs of pharmacy
consolidation and
executive terminations - - - 0.23
--------- --------- --------- ---------
Subtotal of charges 10.68 0.10 11.25 0.46
Total charges &
adjustments 10.76 (0.07) 11.49 0.29
Tax benefit (0.14) 0.03 (0.43) (0.15)
--------- --------- --------- ---------
Adjusted net (loss)
income per common
share, diluted $ (0.14)(1) $ 0.28(2) $ 0.14(1) $ 1.10(2)
========= ========= ========= =========
Denominator for
diluted earnings per
share, weighted
average common shares
assuming conversions 12,951 13,749 12,949 13,826
========= ========= ========= =========
(1) Basic shares were used to calculate net loss per common share, diluted,
for the three months ended December 31, 2004 as using the effects of stock
options and convertible notes would have an anti-dilutive effect on
earnings per share.
(2) Calculated under the "as if converted" method, which requires adding
shares related to convertible notes that have no contingencies to the
denominator for diluted earnings per share and adding to net income, the
numerator, tax effected interest expense relating to those convertible
notes.
CURATIVE HEALTH SERVICES, INC. AND SUBSIDIARIES
Selected Financial Information
Reconciliation of GAAP Net (loss) income to
EBIT and Adjusted EBIT
Unaudited Unaudited
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
----------------------- -----------------------
GAAP net (loss)
income $(139,340) $ 4,382 $(141,405) $ 13,075
Adjustments:
Income tax (benefit)
provision (2,471) 2,821 (3,834) 8,496
Interest expense 5,655 626 15,833 2,300
Change in fair
value of interest
rate swap 322 - 1,081 -
Interest and other
(income) expense (47) (2,340) (107) 2,347
--------- --------- --------- ---------
EBIT (135,881) 5,489 (128,432) 26,218
Adjustments:
Goodwill and intangible
impairment charge 134,755 - 134,755 -
Costs related to
Critical Care
Systems integration 1,021 - 6,844 -
Litigation expense 1,279 - 1,783 -
Hemophilia reimbursement
allowance - - 1,033 -
Corporate reorganization 1,319 1,319
Cost of convertible note
offering not completed
due to market conditions - - - 682
Costs of acquisitions
not completed - 1,154 - 1,483
Costs of credit
facility termination
and corporate
structure reorganization - - - 1,100
Costs of writing off
obsolete equipment - 317 - 317
Costs of pharmacy
consolidation and
executive terminations - (51) - 3,170
--------- --------- --------- ---------
Subtotal of
adjustments 138,374 1,420 145,734 6,752
--------- --------- --------- ---------
Adjusted EBIT $ 2,493 $ 6,909 $ 17,302 $ 32,970
========= ========= ========= =========
CURATIVE HEALTH SERVICES, INC. AND SUBSIDIARIES
Selected Financial Information
Reconciliation of GAAP Net (loss) income to
EBITDA and Adjusted EBITDA
Unaudited Unaudited
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
----------------------- -----------------------
GAAP net (loss)
income $(139,340) $ 4,382 $(141,405) $ 13,075
Adjustments:
Income tax (benefit)
provision (2,471) 2,821 (3,834) 8,496
Interest expense 5,655 626 15,833 2,300
Change in fair
value of interest
rate swap 322 - 1,081 -
Other (income)
expense (47) (2,340) (107) 2,347
Depreciation and
amortization 1,819 848 5,713 2,797
--------- --------- --------- ---------
EBITDA (134,062) 6,337 (122,719) 29,015
Adjustments:
Goodwill and intangible
impairment charge 134,755 - 134,755 -
Costs related to
Critical Care
Systems integration 1,021 - 6,844 -
Litigation expense 1,279 - 1,783 -
Hemophilia reimbursement
allowance - - 1,033 -
Corporate reorganization 1,319 - 1,319 -
Cost of convertible note
offering not completed
due to market conditions - - - 682
Costs of acquisitions
not completed - 1,154 - 1,483
Costs of credit facility
termination and corporate
structure reorganization - - - 1,100
Costs of writing off
obsolete equipment - 317 - 317
Costs of pharmacy
consolidation and
executive terminations - (51) - 3,170
--------- --------- --------- ---------
Subtotal of
adjustments 138,374 1,420 145,734 6,752
--------- --------- --------- ---------
Adjusted EBITDA $ 4,312 $ 7,757 $ 23,015 $ 35,767
========= ========= ========= =========
CURATIVE HEALTH SERVICES, INC. AND SUBSIDIARIES
Selected Financial Information
Consolidated Balance Sheet
(Dollars in thousands)
Unaudited
Dec. 31, Dec. 31,
2004 2003
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 1,176 $ 1,072
Accounts receivable, net 81,766 55,217
Deferred tax assets 3,362 2,984
Inventories 18,398 11,237
Tax refund receivable 3,431 -
Prepaids and other current assets 5,660 4,270
--------- ---------
Total current assets 113,793 74,780
Property and equipment, net 11,104 7,890
Goodwill and intangibles 145,293 150,040
Other long-term assets 12,909 1,228
--------- ---------
Total assets $ 283,099 $ 233,938
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 56,961 $ 41,401
Current portion of long-term
liabilities 6,871 7,911
--------- ---------
Total current liabilities 63,832 49,312
Other long-term liabilities 4,198 1,307
Long-term debt 210,616 39,599
--------- ---------
Total long-term liabilities 214,814 40,906
Stockholders' equity 4,453 143,720
--------- ---------
Total liabilities and
stockholders' equity $ 283,099 $ 233,938
========= =========
Editor's Note: This release is also available
on the Internet over the World Wide Web at
http://www.curative.com
Distributed by Market Wire
Copyright © 2012, MarketWire
Copyright © 2012, NewsBlaze,
Daily News
Search News
Daily News
