SOURCE: Auxilio, Inc.

Auxilio, Inc.

August 08, 2016 17:13 ET

Auxilio Inc. Reports Second Quarter 2016 Results

Company Achieves Net Income of $0.03 per Basic and Diluted Share -- Gross Margin Improves to 20%

MISSION VIEJO, CA--(Marketwired - Aug 8, 2016) -  Auxilio, Inc. (OTCQB: AUXO), a leading provider of complete Document Workflow Solutions and IT Security for the healthcare industry, today announced financial results for the second quarter ended June 30, 2016.

Financial and operational highlights for the second quarter of 2016 include:

  • Net Income for the quarter was $0.6 million or $0.03 per basic and diluted share compared to a net loss of $0.6 million or $0.03 per basic and diluted share in the second quarter of 2015.
  • Adjusted Income from Operations for the quarter was $0.9 million or $0.04 per basic and diluted share.
    • Gross Margin was 20% for the second quarter compared to 14% in the second quarter of 2015 and 16% in the first quarter of 2016.
    • Revenues for the quarter were $15.2 million, a decrease of 3% from $15.6 million in the second quarter of 2015 - excluding equipment sales, revenues grew 11%
    • At June 30, 2016 the Company had $4.4 million in cash and $3.8 million in working capital.
    • Entered into a partnership agreement with HealthWare Systems - expanding service offerings to include additional solutions for document workflow, patient registration, electronic signature and electronic forms.
    • Added new and diverse skill sets to the Board of Directors with recent nominations - additional expertise to support growth and product expansion initiatives.
    • Redspin Security Group received numerous contract wins from healthcare institutions for threat assessment services.

Joseph J. Flynn, President and CEO commented, "We were very pleased with both the fundamental performance and the progress made with our core strategic initiatives. We continue to provide leading technology and service solutions which drive inefficiencies out of our clients' operations, streamlining and securing their document workflow processes while guaranteeing cost savings." Flynn continued, "The partnership we entered with HealthWare Systems during the quarter was an excellent example of how we can further leverage the Auxilio platform, providing clients with additional cutting edge solutions across the entire document workflow lifecycle. We are a trusted partner on the front lines within some of the largest health systems in the country and we will continue to seek opportunities of this nature to expand and extend those customer relationships going forward."

CFO Paul Anthony added, "During the quarter we delivered solid services revenue growth and margins improved substantially. We are nearing completion of the implementation phase on the large contracts announced late last year and the costs associated with that process are abating, which should continue to support margins through the balance of the year."

Financial Results for the Three Months and Six Months Ended June 30, 2016

For the three months ended June 30, 2016, we reported revenues of $15.2 million, a decrease of 3% when compared to $15.6 million reported in the second quarter of 2015. The addition of $3.1 million of new recurring service revenue contracts was offset by reductions of approximately $1.8 million due to volume reductions and terminated services. Equipment revenues in the second quarter were $0.9 million compared to approximately $2.7 million in the second quarter of 2015.

Cost of revenue was $12.1 million, compared to $13.5 million in 2015. The Company incurred approximately $0.1 million in additional staffing costs, including contract labor, and approximately $0.1 million in additional service and supply costs, primarily as a result of new customers. Equipment costs decreased by approximately $1.6 million, largely as a result of the decrease in equipment revenues. Gross profit for the second quarter of 2016 was $3.1 million, or 20% of revenues, compared to $2.1 million or 14% of revenues, for the same period in 2015. The increase in gross margin is due to the maturation of previously announced large contracts.

Operating expenses for the second quarter were $2.4 million, a decrease of $0.4 million compared to the second quarter of 2015. Sales and marketing expenses decreased by 10% due to decreased marketing spend when compared to the same period in 2015. General and administrative expenses decreased 14% to $1.6 million. The decrease in general and administrative expenses is attributed to approximately $0.3 million of fees associated with the two acquisitions made in 2014 and 2015.

Net income for the three months ended June 30, 2016, was $0.6 million, or $0.03 per basic and diluted share, compared to a net loss of $0.6 million, or $0.03 per basic and diluted share, in the same period of 2015. The Company achieved an adjusted income from operations of $0.9 million or $0.04 per basic and diluted share in the second quarter of 2016, compared to an operating loss of $0.3 million or $0.01 per basic and diluted share in the second quarter of 2015, after excluding charges in both periods of $0.2 million related to stock-based compensation and amortization of intangibles.

For the six months ended June 30, 2016, the Company reported revenues of $29.7 million, a marginal increase when compared to $29.5 million reported in the same period of 2015. The Company added approximately $5.9 million of new recurring service revenue contracts, offset by a decrease of $3.2 million in equipment revenue, compared to the same period in 2015.

Cost of revenue was $24.3 million compared to $25.2 million in 2015 representing a decrease of 4% or $0.9 million. Gross profit for the six months ended June 30, 2016, was $5.4 million, or 18% of revenues, compared to $4.2 million, or 14% of revenues, for the same period in 2015.

Operating expenses for the six months ended June 30, 2016, were $4.8 million, a decrease of 1% from $4.9 million in the same period of 2015. Sales and marketing expenses decreased by 10% due to lower compensation expense and reduced marketing spend. General and administrative expenses increased 3% to $3.4 million due to amortization expenses from the acquisition of Redspin.

Net income for the six months ended June 30, 2016 was $0.5 million, or $0.02 per basic and diluted share, compared to a net loss of $0.7 million, or $0.03 per basic and diluted share, in the same period of 2015. The Company achieved an adjusted income from operations of $1.0 million or $0.04 per basic and diluted share for the six months ended June 30, 2016, compared to an adjusted loss from operations of $0.2 million or $0.01 per basic and diluted share, after excluding charges in both periods of $0.4 million related to stock-based compensation and amortization of intangibles.

At June 30, 2016, the Company had $4.4 million of cash and cash equivalents and working capital of $3.8 million.

Conference Call Information
Date: Tuesday, August 9, 2016
Time: 1:30pm PT, 4:30 pm ET
US: 1-888-221-9554
International: 1-913-312-1480
Conference ID: 3402154
Webcast:
http://public.viavid.com/index.php?id=120629 

A replay of the call will be available from 7:30pm ET on August 9, 2016 to 11:59 pm ET on August 24, 2016. To access the replay, please dial 1-877-870-5176 from the U.S. and 1-858-384-5517 from outside the U.S. The PIN is 3402154.

About Auxilio, Inc.
Since 2004, Auxilio provides solutions and services that address three critical areas hospitals are facing today. These areas include mitigating risk, reducing costs and providing operational efficiency. Auxilio's Managed Print Service and iPLATFORM, an intelligent workflow automation suite offers an innovative and customer driven approach for healthcare organizations to secure PHI, reduce waste and drive additional savings opportunities. Hospitals and health systems benefit from streamlined and aligned processes and infrastructure that results in a print avoidance program that reduces cost, increases employee productivity, and meet and exceed patient care standards.

Auxilio serves a national portfolio of nearly 220 hospital campuses and manages over 1.5 billion documents annually from over 90,000 devices supporting over 280,000 caregivers. Auxilio's Managed Print Services' business model is vendor neutral, provides full-time, on-site customer service and technical experts and is exclusive to the healthcare industry.

Auxilio's cybersecurity arm, Redspin, helps hospitals, health systems and Business Associates find and fix network and application security issues. Their fully comprehensive portfolio of services and technology include HIPAA security risk assessments, penetration testing, risk and compliance consulting and a SaaS technology solution, Delphiis ™ IT Risk Manager. 

For more information about Auxilio, visit http://www.auxilioinc.com.

Forward Looking Statements
This release contains certain forward-looking statements relating to the business of Auxilio, Inc. that can be identified by the use of forward-looking terminology such as "believes," "expects," "anticipates," "may" or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties, including uncertainties relating to product/services development, long and uncertain sales cycles, the ability to obtain or maintain patent or other proprietary intellectual property protection, market acceptance, future capital requirements, competition from other providers, the ability of our vendors to continue supplying the company with equipment, parts, supplies and services at comparable terms and prices, expectations relating to momentum of the business, expectations of increased demand for Auxilio's services, growth of Auxilio's vertical framework, anticipated results from cross-selling efforts, growing demand for Auxilio's MPS programs, and other factors that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Certain of these risks and uncertainties are or will be described in greater detail in our Form 10-K and Form 10-Q filings with the Securities and Exchange Commission, which are available at http://www.sec.gov. Auxilio, Inc. is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

   
AUXILIO, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
   
    JUNE 30, 2016     DECEMBER 31, 2015  
    (unaudited)        
ASSETS                
Current assets:                
Cash and cash equivalents   $ 4,449,013     $ 6,436,732  
Accounts receivable, net     8,712,220       7,397,957  
Supplies     1,326,764       1,458,609  
Prepaid and other current assets     490,432       625,806  
Total current assets     14,978,429       15,919,104  
                 
Property and equipment, net     543,824       495,324  
Deposits     41,522       58,118  
Intangible assets, net     2,460,417       2,731,250  
Goodwill     3,665,656       3,665,656  
Total assets   $ 21,689,848     $ 22,869,452  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Current liabilities:                
Accounts payable and accrued expenses   $ 7,756,823     $ 8,306,860  
Accrued compensation and benefits     2,166,952       2,856,165  
Deferred revenue     599,346       913,677  
Current portion of long-term liabilities     609,125       598,750  
Total current liabilities     11,132,246       12,675,452  
                 
Long-term liabilities:                
Term loan, less current portion     1,000,000       1,250,000  
Capital lease obligations less current portion     82,313       125,496  
Total long-term liabilities     1,082,313       1,375,496  
                 
Commitments and contingencies                
                 
Stockholders' equity:                
Common stock, par value at $0.001, 33,333,333 shares authorized, 24,557,224 and 24,452,085 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively     24,559       24,453  
Additional paid-in capital     27,844,298       27,682,061  
Accumulated deficit     (18,393,568 )     (18,888,010 )
Total stockholders' equity     9,475,289       8,818,504  
Total liabilities and stockholders' equity   $ 21,689,848     $ 22,869,452  
                 
                 
   
AUXILIO, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(UNAUDITED)  
   
    Three Months     Six Months  
    Ended June 30,     Ended June 30,  
    2016     2015     2016     2015  
Revenues   $ 15,162,070     $ 15,616,530     $ 29,677,709     $ 29,464,445  
Cost of revenues     12,070,163       13,500,076       24,276,490       25,215,670  
                                 
Gross profit     3,091,907       2,116,454       5,401,219       4,248,775  
                                 
Operating expenses:                                
  Sales and marketing     730,149       808,816       1,401,496       1,550,888  
  General and administrative expenses     1,649,006       1,923,027       3,412,027       3,309,369  
                                 
    Total operating expenses     2,379,155       2,731,843       4,813,523       4,860,257  
                                 
    Income (loss) from operations     712,752       (615,389 )     587,696       (611,482 )
                                 
Other income (expense):                                
  Interest expense     (23,554 )     (34,347 )     (49,254 )     (68,397 )
                                 
    Total other income (expense)     (23,554 )     (34,347 )     (49,254 )     (68,397 )
                                 
Income (loss) before provision for income taxes     689,198       (649,736 )     538,442       (679,879 )
                                 
Income tax expense     (41,600 )     -       (44,000 )     (2,400 )
                                 
Net income (loss)   $ 647,598     $ (649,736 )   $ 494,442     $ (682,279 )
                                 
Net income (loss) per share:                                
  Basic   $ .03     $ (.03 )   $ .02     $ (.03 )
  Diluted   $ .03     $ (.03 )   $ .02     $ (.03 )
                                 
Number of weighted average shares:                                
  Basic     24,510,984       24,191,316       24,481,372       23,936,832  
  Diluted     24,812,743       24,191,316       24,907,470       23,936,832  
 
 
 
AUXILIO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2016
(UNAUDITED)
 
            Additional         Total
    Common Stock   Paid-in   Accumulated     Stockholders'
    Shares   Amount   Capital   Deficit     Equity
Balance at December 31, 2015   24,452,085   $ 24,453   $ 27,682,061   $ (18,888,010 )   $ 8,818,504
Stock compensation expense for options and warrants granted to employees and directors   -     -     102,192     -       102,192
Stock options and warrants exercised   105,139     106     60,045     -       60,151
Net income   -     -     -     494,442       494,442
Balance at June 30, 2016   24,557,224   $ 24,559   $ 27,844,298   $ (18,393,568 )   $ 9,475,289
                               
                               
                               
AUXILIO, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(UNAUDITED)  
   
    Six Months Ended June 30,  
    2016     2015  
Cash flows from operating activities:                
  Net income (loss)   $ 494,442     $ (682,279 )
Adjustments to reconcile net income (loss) to net cash (used for) provided by operating activities:                
  Depreciation     101,854       71,830  
  Amortization of intangible assets     270,833       196,250  
  Stock compensation expense for warrants and options issued to employees and directors     102,192       184,000  
  Stock compensation expense for restricted stock issued to key employee     -       40,613  
  Interest expense related to accretion of debt discount costs     -       27,182  
Changes in operating assets and liabilities:                
  Accounts receivable, net     (1,314,263 )     (1,159,186 )
  Supplies     131,845       (69,402 )
  Prepaid and other current assets     135,374       (624,637 )
  Deposits     16,596       (71,420 )
  Accounts payable and accrued expenses     (550,036 )     2,010,470  
  Accrued compensation and benefits     (689,213 )     609,283  
  Deferred revenue     (314,332 )     4,279  
    Net cash (used for) provided by operating activities     (1,614,708 )     536,983  
Cash flows from investing activities:                
  Purchases of property and equipment     (128,184 )     (12,010 )
  Payment for purchase of Redspin     -       (1,876,966 )
    Net cash used for investing activities     (128,184 )     (1,888,976 )
Cash flows from financing activities:                
  Net repayments on line of credit agreement     -       (200,000 )
  Proceeds from term loan     -       2,000,000  
  Payments on term loan     (250,000 )     -  
  Proceeds from issuance of common stock through warrants     60,151       -  
  Payments on notes payable to related party     -       (52,944 )
  Payments on capital leases     (54,978 )     (49,835 )
    Net cash (used for) provided by financing activities     (244,827 )     1,697,221  
Net (decrease) increase in cash and cash equivalents     (1,987,719 )     345,228  
Cash and cash equivalents, beginning of period     6,436,732       4,743,395  
Cash and cash equivalents, end of period   $ 4,449,013     $ 5,088,623  
 
 
 
AUXILIO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
 
    Six Months Ended June 30,
    2016   2015
Supplemental disclosure of cash flow information:            
Interest paid   $ 49,254   $ 41,215
Income taxes paid   $ 71,703   $ 135,480
Non-cash investing and financing activities:            
Property and equipment acquired through capital leases   $ 22,170   $ 128,935
Conversion of note payable to related party   $ -   $ 257,835
Common stock issued in connection with the acquisition of Redspin   $ -   $ 593,000
             

 

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