SOURCE: American CareSource Holdings, Inc.

August 14, 2008 07:05 ET

American CareSource Holdings Reports Record Financial Results for 2008 Second Quarter

Company Reports Fourth Consecutive Quarterly Profit of $621 Thousand, or $0.04 per Diluted Share

DALLAS, TX--(Marketwire - August 14, 2008) - American CareSource Holdings, Inc. (AMEX: XSI) today announced record financial and operational results for the second quarter and six months ended June 30, 2008. Highlights include:

  --  Reported quarterly net income of $621 thousand, or $0.04 per diluted
      share, resulting in four consecutive quarters of profit growth.

  --  Achieved $13.0 million in revenue for the second quarter, a record
      225% increase in revenues compared to the same prior year period,
      representing five quarters of sequential revenue growth.

  --  Attained gross margins of approximately 15% compared to 13% in the
      three months ended June 30, 2007, reflecting continued leverage of
      the Company's fixed cost infrastructure.

  --  Generated EBITDA, as adjusted, of approximately $879 thousand for
      the quarter.

        --  EBITDA, as adjusted, (a non-GAAP measure) is defined as income
            (loss) from operations less depreciation and amortization,
            non-cash warrant and option compensation expense and executive
            severance. EBITDA, as adjusted, should be considered in
            addition to, but not in lieu of, income (loss) from operations
            reported under generally accepted accounting principles (GAAP).

  --  The Company finished the quarter with approximately $6.1 million in
      cash and cash equivalents on hand and generated approximately $500
      thousand in cash from operating activities in the second quarter and
      approximately $2.1 million during the first half of 2008.

  --  Claims volume increased to approximately 40 thousand for the second
      quarter of 2008, up 172% over the second quarter of 2007.

  --  Signed new client agreements with Viant Holdings, Inc., one of the
      nation's largest PPO networks, and Emerald Health Network, Ohio's
      premiere PPO network provider.

  --  Signed two new client agreements with Indiana-based union
      organizations allowing the Company to penetrate an important union
      market in the Midwest.

  --  Selected to join the Russell Microcap® Index.

Commenting on today's announcement, David S. Boone, Chief Executive Officer of American CareSource, stated, "Our second quarter results demonstrate a continuation of the strong momentum we are building in the market place. With these results, we have generated four consecutive quarters of greater than 100% year-over-year revenue growth and delivered four consecutive quarters of increasing profitability. We finished the quarter with over $6 million in cash and we continue to generate strong cash flow. Our investments in technology and people are beginning to pay dividends. Most importantly, our recent client wins are yet another confirmation of the value we are adding to our clients and providers as we work to lower the cost of ancillary healthcare.

"We are achieving the goals we have set for the organization including delivering improved gross margins. The Company is demonstrating its ability to scale effectively by absorbing the increasing claim volume without a corresponding increase in cost. Demand for our comprehensive and expanding national network of ancillary healthcare services has continued, unabated and our reputation for being able to offer clients an ever-increasing range of services with positive economics should fuel this upward momentum going forward. As a result, we are raising our initial 2008 guidance of $50 million in annual revenues to a range of $50 - $55 million for the year.

"Reflecting our growth, during the second quarter, we were pleased to announce new client agreements with Viant Holdings, one of the largest PPO networks in the United States, as well as Emerald Health Networks, Ohio's premier PPO network provider. Additionally, we gained a foothold into the all-important Midwest union market with the signing of two new client agreements with Iron Workers Local 295 Trust Fund and Operative Plasterers and Cement Masons Local 692. We are honored to be working with these two, key union organizations and, in addition to our more traditional clientele, hope to sign similar agreements with other unions as time goes on."

Revenues for the second quarter of 2008 rose 225% to $13.0 million compared to $4.0 million in the second quarter of 2007. The Company's second quarter revenues also represent a 13% improvement over the first quarter of 2008 reported revenues of $11.5 million. For the six months ended June 30, 2008, the Company reported revenues of $24.5 million, a 291% increase compared to revenues of $6.3 million in the same period of 2007.

The Company reported net income of $621 thousand, or $0.04 per share, for the three months ended June 30, 2008, compared to a net loss of $716 thousand, or ($0.05) per share, in the same period last year. For the six months ended June 30, 2008, the Company reported net income of $1.1 million, or $0.07 per diluted share, compared to a net loss of $1.3 million, or ($0.09) per share, for the same period in 2007.

Cash provided by operations was $2.1 million for the six months ended June 30, 2008 versus cash used in operations of ($1.1) million during the same period in 2008. Factors affecting the improvement in operating cash flows include earnings growth, accelerated client collections and overall effectiveness in working capital management. At June 30, 2008, the Company had approximately $6.1 million in cash and cash equivalents compared to $4.3 million at December 31, 2007.

Conference Call

As previously announced, American CareSource will hold a conference call to discuss financial results of the second quarter ended June 30, 2008 as follows:

Date:  Thursday, August 14, 2008
Time:  10:00 a.m. (CT)/11:00 a.m. (ET)
Dial-in numbers:  877-397-0286 (U.S. & Canada) or 719-325-4874
Live webcast:  www.anci-care.com, under "New & Events"

The teleconference replay will be available two hours after completion through Thursday, August 21, 2008 at 888-203-1112 (U.S. & Canada) or 719-457-0820. The replay pass code is 3692642. The archived webcast will be available for one year on the Company's investor website, www.anci-care.com, under "News and Events."

About Ancillary Healthcare Services

American CareSource provides ancillary healthcare services through its network that offers cost effective alternatives to physician and hospital-based services. This market is estimated at $574 billion, and has grown to 30% of total national health expenditures. These providers offer services in over 30 categories, including laboratories, dialysis centers, free-standing diagnostic imaging centers, non-hospital surgery centers, as well as durable medical equipment such as orthotics and prosthetics, and others.

About American CareSource Holdings, Inc.

American CareSource Holdings, the first national, publicly traded ancillary care network services company, offers a comprehensive national network of approximately 2,500 ancillary service providers at over 25,000 sites. The Company's ancillary network and management provides a complete outsourced solution for a wide variety of healthcare payors and plan sponsors including self-insured employers, indemnity insurers, PPOs, HMOs, third party administrators and both federal and local governments. For additional information, please visit www.anci-care.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:

Any statements that are not historical facts contained in this release, including with respect to future engagements by clients, revenue growth, earnings, and guidance are forward-looking statements. It is possible that the assumptions made by American CareSource Holdings, Inc. for purposes of such statements may prove to be inaccurate or may not materialize. Actual results may differ materially from those projected or implied in any forward-looking statements. Such statements may involve further risks and uncertainties, including but not limited to those relating to demand for our services, pricing, market acceptance, our ability to integrate with our clients, our ability to attract and maintain providers, our ability to manage growth, the effect of economic conditions, and the affect of competitive services, risks in product development, the ability to complete transactions, and other risks identified in this release, and the Securities and Exchange Commission filings of American CareSource Holdings, Inc.

(Tables to Follow)

                    AMERICAN CARESOURCE HOLDINGS, INC.
                   CONSOLIDATED STATEMENT OF OPERATIONS
                                (unaudited)


                        Three months ended           Six months ended
                             June 30,                    June 30,
                    --------------------------  --------------------------
                        2008          2007          2008          2007
                    ------------  ------------  ------------  ------------

Net Revenues        $ 13,012,528  $  4,008,288  $ 24,518,203  $  6,274,857

Cost of revenues      11,110,593     3,478,292    20,911,715     5,579,935
                    ------------  ------------  ------------  ------------

  Contribution
   margin              1,901,935       529,996     3,606,488       694,922

Selling, general
 and administrative
 expenses              1,194,504     1,209,740     2,307,358     1,911,272
Depreciation and
 amortization             96,606        83,642       188,672       161,715
                    ------------  ------------  ------------  ------------
  Total operating
   expenses            1,291,110     1,293,382     2,496,030     2,072,987
                    ------------  ------------  ------------  ------------

  Operating income
   (loss)                610,825      (763,386)    1,110,458    (1,378,065)
                    ------------  ------------  ------------  ------------

Interest income          (31,240)      (49,758)      (71,908)     (103,632)
Interest expense           1,606         2,488         3,444         6,449
Debt issuance costs            -             -             -        46,300
                    ------------  ------------  ------------  ------------

Total interest
 (income) expense,
 net                     (29,634)      (47,270)      (68,464)      (50,883)

Income (loss)
 before income
 taxes                   640,459      (716,116)    1,178,922    (1,327,182)
Income tax
 provision                19,019             -        36,064             -
                    ------------  ------------  ------------  ------------
Net Income (Loss)   $    621,440  $   (716,116) $  1,142,858  $ (1,327,182)
                    ============  ============  ============  ============

Earnings (loss)
 per common share:
  Basic             $       0.04  $      (0.05) $       0.08  $      (0.09)
                    ============  ============  ============  ============
  Diluted           $       0.04  $      (0.05) $       0.07  $      (0.09)
                    ============  ============  ============  ============

Basic weighted
 average common
 shares outstanding   15,069,007    14,492,863    14,973,213    14,489,806
                    ============  ============  ============  ============
Diluted weighted
 average common
 shares outstanding   17,435,365    14,492,863    17,343,860    14,489,806
                    ============  ============  ============  ============


Reconciliation of non-GAAP financial measures to reported GAAP financial
measures:

Reconciliation of EBITDA and EBITDA, as adjusted


                        Three months ended           Six months ended
                             June 30,                    June 30,
                    --------------------------  --------------------------
                        2008          2007          2008          2007
                    ------------  ------------  ------------  ------------
Operating income
 (loss)             $    610,825  $   (763,386) $  1,110,458  $ (1,378,065)
Depreciation and
 amortization             96,606        83,642       188,672       161,715
                    ------------  ------------  ------------  ------------
  EBITDA                 707,431      (679,744)    1,299,130    (1,216,350)
Executive severance            -       338,010        21,844       338,010
Non-cash
 stock-based
 compensation
 expense                 171,848       165,308       342,601       214,844
                    ------------  ------------  ------------  ------------
  EBITDA, as
   adjusted         $    879,279  $   (176,426) $  1,663,575  $   (663,496)
                    ============  ============  ============  ============




                    AMERICAN CARESOURCE HOLDINGS, INC.
                        CONSOLIDATED BALANCE SHEET


                                                  June 30,
                                                    2008      December 31,
                                                (unaudited)       2007
                                                ------------  ------------
ASSETS

Current assets:
Cash and cash equivalents                       $  6,077,395  $  4,272,498
Accounts receivable, net                           4,421,223     3,651,203
Prepaid expenses and other current assets            566,952       409,445
                                                ------------  ------------
  Total current assets                            11,065,570     8,333,146

Property and equipment, net                          640,115       332,450

Other assets:
Certificate of Deposit, restricted                   145,000       145,000
Other non-current assets                             456,470       492,977
Intangible assets, net                             1,387,447     1,494,238
Goodwill                                           4,361,299     4,361,299
                                                ------------  ------------
Total assets                                    $ 18,055,901  $ 15,159,110
                                                ============  ============

LIABILITIES and STOCKHOLDERS' EQUITY

Current Liabilities:
Due to service providers                        $  4,225,359  $  3,344,278
Accounts payable and accrued liabilities           1,605,439     1,320,036
Current maturities of long-term debt                  57,718        55,697
                                                ------------  ------------
  Total current liabilities                        5,888,516     4,720,011

Long-term debt                                        20,967        50,348
Stockholders' equity                              12,146,418    10,388,751
                                                ------------  ------------
Total liabilities and stockholders' equity      $ 18,055,901  $ 15,159,110
                                                ============  ============




                    AMERICAN CARESOURCE HOLDINGS, INC.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (unaudited)


                                                     Six months ended
                                                         June 30,
                                                --------------------------
                                                    2008          2007
                                                ------------  ------------
Cash flows from operating activities:
  Net income (loss)                             $  1,142,858  $ (1,327,182)
  Adjustments to reconcile net income (loss)
   to net cash provided by (used in)
   operations:
     Stock-based compensation expense                316,147       206,032
     Depreciation and amortization                   188,672       161,715
     Amortization of debt issuance costs                   -        46,300
     Client management fee expense related
      to warrants                                     26,455         8,812
     Changes in operating assets and
      liabilities:
        Accounts receivable                         (770,020)     (325,268)
        Prepaid expenses and other assets             13,876      (366,038)
        Accounts payable and accrued
         liabilities                                 285,403       370,967
        Due to service providers                     881,081       112,983
                                                ------------  ------------
           Net cash provided by (used in)
            operating activities                   2,084,472    (1,111,679)
                                                ------------  ------------

Cash flows from investing activities:
  Investment in software development costs          (284,085)            -
  Additions to property and equipment               (105,461)      (69,606)
                                                ------------  ------------
           Net cash used in investing
            activities                              (389,546)      (69,606)
                                                ------------  ------------

Cash flows from financing activities:
  Payments on long-term debt                         (27,360)     (322,572)
  Proceeds from exercise of stock options            137,331         2,391
                                                ------------  ------------
           Net cash provided by (used in)
            financing activities                     109,971      (320,181)
                                                ------------  ------------

Net increase (decrease) in cash and cash
 equivalents                                       1,804,897    (1,501,466)
Cash and cash equivalents at beginning of
 period                                            4,272,498     5,025,380
                                                ------------  ------------
Cash and cash equivalents at end of period      $  6,077,395  $  3,523,914
                                                ============  ============

Contact Information

  • Contact:
    Steven J. Armond
    Chief Financial Officer
    American CareSource Holdings, Inc.
    Tel: 972-308-6847