SOURCE: HearUSA, Inc.

November 13, 2007 16:05 ET

HearUSA Reports Record Third Quarter 2007 Results

Net Revenues Reach Fourth Consecutive Record Quarter High; Net Revenues at $26.9 Million, up 22% vs. Year Ago Quarter; Net Income at Record $488,000 or $0.01 per Share; Net Income From Operations at Record $2.5 Million or 9.3% of Revenues

WEST PALM BEACH, FL--(Marketwire - November 13, 2007) - HearUSA, Inc. (AMEX: EAR), a leading provider of hearing care through a fully integrated and professionally accredited system of hearing care centers, reported financial results for the third quarter ended September 29, 2007.

Net revenues totaled a record $26.9 million, an increase of 8% from $24.9 million in the previous quarter and an increase of 22% from $22.0 million in the comparable quarter of the previous year. This fourth consecutive quarter of record net revenues was attributable to a combination of hearing centers acquired within the last 12 months and organic growth of 7% for the quarter.

Income from operations was a record $2.5 million or 9.3% of revenues, as compared to $810,000 or 3.0% of revenues in the previous quarter and $405,000 or 1.8% of net revenues a year ago. These substantially improved results come very close to the company's stated long term objective for income from operations to be in the range of 10% to 12%. It should be noted that income from operations includes a one-time charge of $282,000 related to employee severance applicable to the third quarter.

The net income applicable to common stockholders for the third quarter was a record $488,000 or $0.01 per share, as compared to a net loss of $3.4 million or $0.09 per share in the previous quarter and net loss of $1.7 million or $0.05 per share in the comparable quarter of the previous year.

HearUSA acquired eight hearing care centers during the quarter, with combined estimated trailing twelve-month ("TTM") revenues of $2.8 million. This brings the total number of acquisitions for the first nine months of 2007 to 14, with combined estimated TTM revenues of $6.9 million. At the end of the quarter, the company had 12 letters of intent for the acquisition of an additional 17 centers with approximately $7.8 million TTM revenues.

"A combination of healthy organic growth and our continued aggressive acquisition program led to a record quarter for both revenues and income for HearUSA," said Stephen J. Hansbrough, president and CEO. "We are especially pleased with the strong organic growth we enjoyed in the quarter as it reflects both the success of the Don Shula marketing campaign and our continued position as the provider of choice for hearing care to the nation's top managed healthcare organizations."

"It's also important to note that this quarter, while a record in net income, still does not reflect the positive impact of our previously announced plan to reduce corporate expenses by more than $1 million by the end of the third quarter," added Hansbrough. "This quarter's performance keeps us on track to meet or exceed our stated goals for 2007, which include both improved profitability and an increase in net revenues of 15-20% over last year."

Conference Call

The company will hold a conference call later today to discuss its third quarter financial results. President and CEO Stephen J. Hansbrough and Executive Vice President and CFO Gino Chouinard will host the presentation, which will be followed by a question and answer period.

     Date: Tuesday, November 13, 2007
     Time: 4:30 pm Eastern (1:30 pm Pacific)
     Toll Free Dial-In Number: 1-877-407-9210
     International/Toll Dial-in Number: 1-201-689-8049
     Conference ID Number: 261662
     Internet Simulcast: http://www.vcall.com/IC/CEPage.asp?ID=123001

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization and ask you to wait until the call begins. If you have any difficulty connecting with the conference call, please contact the Liolios Group at (949) 574-3860.

A replay of the call will be available later that evening and accessible until November 27, 2007.

     Toll-free Replay Number: 1-877-660-6853
     International/Toll Replay Number: 1-201-612-7415
     Conference ID Number: 261662; Account Number: 286
     Internet Replay: http://www.vcall.com/IC/CEPage.asp?ID=123001

About HearUSA

HearUSA, Inc. provides hearing care to patients primarily through more than 175 company-owned hearing care centers, which offer a complete range of quality hearing aids with an emphasis on the latest digital technology. HearUSA Centers are located in California, Florida, New York, New Jersey, Massachusetts, Ohio, Michigan, Missouri and the province of Ontario, Canada. The company also derives revenues from its HearUSA Hearing Care Network, comprised of over 1,600 affiliated audiologists in 49 states, as well as its website that enables online purchases of hearing related products, such as batteries, hearing aid accessories and assistive listening devices. For further information, click on "investor information" at the HearUSA website: www.hearusa.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995, including those concerning the company being on track to meet or exceed the stated goals for 2007 including improved profitability and an increase in net revenues of 15-20% over 2006. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include such factors as successful implementation of the company's acquisition program; integration of the newly acquired centers and maintenance of revenue levels from those centers; the company's ability to maintain cost controls and limit expenses; the successful implementation of the Siemens agreements; the ability of the company to maintain unit sales of Siemens hearing aids; market demand for the company's goods and services; changes in the pricing environment; general economic conditions in those geographic regions where the company's centers are located; the impact of competitive products; and other risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including the company's Form 10-K for the fiscal year ended December 30, 2006.

                              HearUSA, Inc.
                        Consolidated Balance Sheets
                                (unaudited)

                                               September 29,  December 30,
ASSETS                                              2007          2006
                                                ------------  ------------
                                                  (Dollars in thousands)
Current assets
Cash and cash equivalents                       $      3,526  $      2,326
Accounts and notes receivable, less allowance
 for doubtful accounts of $505,497 and $434,098        8,851         7,591
Inventories                                            2,209         2,371
Prepaid expenses and other                               986         1,400
Deferred tax asset                                        78            67
                                                ------------  ------------
Total current assets                                  15,650        13,755
Property and equipment, net                            4,176         3,878
Goodwill                                              57,465        50,970
Intangible assets, net                                15,766        13,592
Deposits and other                                       705           876
Restricted cash and cash equivalents                     209           205
                                                ------------  ------------
Total Assets                                    $     93,971  $     83,276
                                                ============  ============


LIABILITIES AND STOCKHOLDERS'  EQUITY

Current liabilities
Accounts payable                                $     11,016  $     10,463
Accrued expenses                                       2,929         2,509
Accrued compensation                                   3,069         2,826
Current maturities of long-term debt                   6,471         8,391
Current maturities of convertible subordinated
 notes, net of debt discount of $1,263,003 in
 2006                                                      -         2,487
Current maturities of subordinated notes, net
 of debt discount of $134,169 and $452,228             1,845         1,308
Dividends payable                                         34            34
Minority interest in net income of consolidated
 joint venture, currently payable                        820           633
                                                ------------  ------------
Total current liabilities                             26,184        28,651
                                                ------------  ------------
Long-term debt                                        37,252        28,599
Deferred income taxes                                  5,948         5,234
Convertible subordinated notes, net of debt
 discount of $217,923 in 2006                              -         2,282
Subordinated notes, net of debt discount of
 $60,123 in 2006                                           -         1,480
Warrant liability                                          -           110
                                                ------------  ------------
Total long-term liabilities                           43,200        37,705
                                                ------------  ------------
Commitments and contingencies                              -             -
                                                ------------  ------------

Stockholders' equity
Preferred stock (aggregate liquidation
 preference $2,330,000, $1 par, 7,500,000
 shares authorized)
Series H Junior Participating (none
 outstanding)                                              -             -
Series J (233 shares outstanding)                          -             -
                                                ------------  ------------
Total preferred stock                                      -             -

Common stock: $.10 par; 75,000,000 shares
 authorized 37,870,451 and 32,029,750 shares
 issued                                                3,787         3,203
Stock subscription                                      (412)         (412)
Additional paid-in capital                           132,499       123,972
Accumulated deficit                                 (112,977)     (109,521)
Accumulated other comprehensive income                 4,175         2,163
Treasury stock, at cost: 523,662 common shares        (2,485)       (2,485)
                                                ------------  ------------
Total Stockholders' Equity                            24,587        16,920
                                                ------------  ------------
Total Liabilities and Stockholders' Equity      $     93,971  $     83,276
                                                ============  ============




                              HearUSA, Inc.
                  Consolidated Statements of Operations
       Three Months Ended September 29, 2007 and September 30, 2006
                                (unaudited)

                                                September 29, September 30,
                                                    2007          2006
                                                ------------  ------------
                                                  (Dollars in thousands,
                                                except per share amounts)

Net revenues
Hearing aids and other products                 $     25,050  $     20,519
Services                                               1,812         1,523
                                                ------------  ------------
Total net revenues                                    26,862        22,042
                                                ------------  ------------

Operating costs and expenses
Hearing aids and other products                        6,807         6,491
Services                                                 499           511
                                                ------------  ------------
Total cost of products sold and services               7,306         7,002
Center operating expenses                             12,585        10,598
General and administrative expenses                    3,890         3,540
Depreciation and amortization                            572           497
                                                ------------  ------------
Total operating costs and expenses                    24,353        21,637
                                                ------------  ------------

Income from operations                                 2,509           405

Non-operating income (expenses):

Gain from insurance proceeds                               -           146

Interest income                                           21            19

Interest expense                                      (1,330)       (1,638)
                                                ------------  ------------
Income (loss) before income tax expense and
 minority interest in income of consolidated
 joint venture                                         1,200        (1,068)
Income tax expense                                      (284)         (257)
Minority interest in income of consolidated
 joint venture                                          (394)         (322)
                                                ------------  ------------
Net income (loss)                                        522        (1,647)
Dividends on preferred stock                             (34)          (34)
                                                ------------  ------------

Net income (loss) applicable to common
 stockholders                                   $        488  $     (1,681)
                                                ============  ============



Net income (loss) applicable to common
 stockholders per common share - basic          $       0.01  $      (0.05)
                                                ============  ============

Net income (loss) applicable to common
 stockholders per common share - diluted        $       0.01  $      (0.05)
                                                ============  ============


Weighted average number of shares of common
 stock outstanding - basic                            37,950        32,260
                                                ============  ============

Weighted average number of shares of common
 stock outstanding - diluted                          46,415        32,260
                                                ============  ============

Contact Information

  • Company Contact:
    Paul A. Brown, M.D
    Founder & Chairman

    Stephen J. Hansbrough
    President & CEO

    HearUSA, Inc.
    (561) 478-8770

    Investor Relations:
    Scott Liolios or Ron Both
    Email Contact
    Liolios Group, Inc.
    (949) 574-3860