Futuremed Healthcare Products Corporation
TSX : FMD

Futuremed Healthcare Products Corporation

November 11, 2011 16:45 ET

Futuremed Announces Financial and Operating Performance in Q3 2011

CONCORD, ONTARIO--(Marketwire - Nov. 11, 2011) - Futuremed Healthcare Products Corporation (TSX:FMD) ("Futuremed" or the "Company") announced today financial and operating results for the three and nine months ended September 30, 2011. On January 1, 2011 Futuremed Healthcare Income Fund completed its conversion to a corporation pursuant to a plan of arrangement under the Business Corporation Act (Ontario) and all related internal transactions. In addition, beginning on January 1, 2011 the Company adopted International Financial Reporting Standards ("IFRS") to report its operating results and financial position. For details on the effects of the transition to IFRS on the Company's financial statements, please refer to the unaudited financial statements and Management's Discussion and Analysis for the period available on the Company's web site or at www.sedar.com.

Q3 2011 HIGHLIGHTS:

  • Revenues up 4.2% on increased sales in most product lines and geographic regions
  • Furniture and equipment revenues rise 25.9% on strong organic growth
  • Sales of consumable nursing supplies up 2.4%
  • Proposed offer by Cardinal Health Canada Inc. to purchase all outstanding shares of Futuremed for $8.15 per share.

Sales in the third quarter of 2011 were $50.6 million, up 4.2% from sales of $48.5 million in the same quarter last year due to solid organic growth across both key product lines and in all geographic regions. For the first nine months of 2011 revenues rose 9.0% to $159.3 million.

Sales of consumable nursing supplies rose 2.4% in the third quarter and 3.2% for the first nine months of 2011 compared to the comparable prior year periods with increases in all geographic regions in which Futuremed operates. Consumable nursing supplies represented approximately 90.9% and 85.7% of total sales for the three and nine months ended September 30, 2011, respectively.

Sales of the Company's furniture and equipment increased 25.9% in the third quarter and 64.0% for the first nine months of 2011 compared to the same comparable periods last year. The increase for the first nine months of 2011 was due in part to extra funding announced in February 2011 by the Ontario Ministry of Health for long-term care facilities in the Province to update aging furniture and equipment. For the first nine months of 2011 furniture and equipment revenues have increased in the majority of regions in which Futuremed operates.

"We generated solid organic growth in both of our key revenue streams though the third quarter as we continued to consolidate our position as the leading provider of consumable nursing supplies and specialized furniture and equipment to the Canadian Long-Term Care sector," stated Raymond Stone, Futuremed's President and CEO.

For the three months ended September 30, 2011 gross profit was $10.6 million compared to $10.5 million in the same period last year. For the first nine months of 2011 gross profit was $34.8 million compared to $33.0 million in the prior year. While gross profit from the Company's furniture and equipment business increased due to the increase in sales, the contribution from the nursing supplies segment declined modestly in the third quarter due primarily to a change in sales mix.

Selling, general and administrative ("SG&A") expenses increased 10.2% in the third quarter and 8.4% through the first nine months of 2011 due primarily to an increase in extra delivery costs. Through the nine month period, delivery costs were proportionately higher due to the significant increase in deliveries of furniture and equipment related to the Ontario Ministry of Health funding. Delivery costs, the majority of which are not recoverable from customers, represented 4.2% and 4.0% of revenues for the three and nine month periods in 2011, up from 3.7% for the same periods last year.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") were $3.2 million in the third quarter of 2011 compared to $3.5 million in the prior-year period. For the first nine months of 2011 EBITDA were $11.9 million compared to $12.3 million for the same period last year. EBITDA is a non-GAAP measure. It does not have any standard meaning prescribed by GAAP or IFRS and is therefore unlikely to be comparable to similar measures presented by other entities.

The Company generated net income of approximately $26,000 or $0.01 per common share for the three months ended September 30, 2011 compared to net income of $2.1 million or $0.14 per common share last year. Net income in the quarter was impacted by the higher SG&A costs in the period and approximately $1.1 million in one-time costs related to the proposed take-over bid by Cardinal Health Canada Inc. outlined below. For the first nine months of 2011 net income was $9.5 million or $0.62 per common share compared to $6.1 million or $0.40 per share last year.

The Company generated cash flow from operations of $6.4 million and $11.5 million for the three and nine month periods ended September 30, 2011 compared to $4.7 million and $11.3 million in the same periods last year. Working capital was $20.0 million as at September 30, 2011 compared to $19.8 million as at December 31, 2011.

Transaction

On October 25, 2011, the Company announced that Cardinal Health Canada Inc. had agreed to offer to buy all the outstanding shares of Futuremed for $8.15 cash per share (the "Offer"). The Offer is subject to a minimum of 66 2/3% of the outstanding common shares of Futuremed being deposited to the Offer. The transaction is also subject to receipt of certain regulatory approvals and other customary conditions. Terms of the support agreement include the payment of a $4.6 million termination fee if the transaction does not proceed in certain circumstances.

"We believe this proposed transaction provides attractive value for our shareholders and positions the Company for further growth as part of Cardinal Health, a global leader in the healthcare industry," Mr. Stone concluded.

Financial Highlights
($,000 except per share amounts
unaudited)
Three months ended Sept 30, Nine months ended Sept 30,
2011 2010 2011 2010
Revenues:
Nursing supplies $ 45,953 $ 44,873 $ 136,461 $ 132,262
Furniture & Equipment 4,613 3,665 22,848 13,929
Total revenue 50,566 48,538 159,309 146,191
Gross profit 10,640 10,459 34,826 32,995
Selling, general & administrative expenses
7,539

6,842

22,992

21,210
Conversion costs - 27 - 870
Interest 424 567 1,597 1,755
Depreciation and amortization 1,589 1,563 4,735 4,664
Net income 26 2,099 9,496 6,148
Net income per share $ 0.01 $ 0.14 $ 0.62 $ 0.40
Cash flow from operations 6,366 4,701 11,477 11,259
EBITDA 3,152 3,522 11,941 12,348
Calculation of EBITDA
($, 000 except per share amounts unaudited) Three months ended Sept 30, Nine months ended Sept 30,
2011 2010 2011 2010
Income before income taxes $ 39 $ 1,436 $ 4,509 $ 5,154
Non cash depreciation and amortization
1,589

1,563

4,735

4,664
Adjustment to carrying value of Class B Units
-

(71
)
-

(95
)
Interest expense 424 567 1,597 1,755
Transaction expense 1,100 - 1,100 -
Conversion expense 0 27 0 870
EBITDA 3,152 3,522 11,941 12,348

About Futuremed

Futuremed is Canada's leading value-added distributor of consumable nursing home supplies and specialized furniture and equipment to the growing long-term care facilities sector. Futuremed's common shares trade on the Toronto Stock Exchange under the symbol FMD.

Investor Conference Call

A conference call hosted by Raymond Stone, President and Chief Executive Officer and Daniel Sacks, Chief Financial Officer, will be held Monday, November 14, 2011 at 11.00 am ET. The telephone numbers for the conference call are: Local: (416) 915-8110, North American Toll Free: (866) 838-1265. The telephone numbers to listen to the call after it is completed (Instant Replay) are local (416) 915-1035 or toll free (866) 245-6755. The Passcode for the Instant Replay is 765508#. The call will also be archived on the Futuremed website at www.futuremed.ca.

Readers are cautioned that certain terms used in this press release are not International Financial Reporting Standards ("IFRS") measures and should not be construed as an alternative to net earnings and earnings per share determined in accordance with IFRS as an indicator of the Company's performance. Futuremeds' methods of calculating these measures may differ from other issuers' methods and accordingly, they may not be comparable to measures used by other issuers.

Certain statements in this press release may be considered "forward-looking statements" as defined under applicable Canadian securities laws. These statements include, but are not limited to, statements regarding the ability to grow by expanding in current and new geographic markets, as well as through the introduction of new product lines and entering new synergistic markets that utilize the same products and services, the ability to grow through strategic and accretive acquisitions, future government funding levels, the impact on Futuremed's business of current and anticipated economic conditions, Futuremed's ability to pay dividends to shareholders and expected improvements in Futuremed's infrastructure. When used in this press release, such statements use words, including but not limited to, "should", "may", "will", "expect", "believe", "plan", "intend", "anticipate", "future" and other similar terminology. These forward-looking statements reflect the current expectations of management regarding future events and operating performance, but involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Futuremed to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual events could differ materially from those projected herein and depend on a number of factors. These factors include, but are not limited to, future market conditions being different than anticipated by management and the risks described in Futuremed and the Company's other public filings on SEDAR at www.sedar.com. Material factors or assumptions that were applied to drawing a conclusion or making an estimate set out in the forward-looking information include the views of management regarding current and anticipated market condition and the successful attainment of certain goals. Although forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release. Except as required by applicable securities laws, Futuremed does not undertake, and specifically disclaims, any obligation to update or revise any forward looking information, whether as a result of new information, future developments or otherwise, except as required by applicable law.

To view the Consolidated Balance Sheets, Consolidated Statements of Operations and Comprehensive Income, and Consolidated Statements of Cash Flows, please visit the following link: http://media3.marketwire.com/docs/fmd1111.pdf.

Contact Information

  • Futuremed Healthcare Products Corporation
    Daniel Sacks
    Chief Financial Officer
    (905) 761-0068, ext. 2222
    Toll-free investor relations: 1-800-387-7025
    www.futuremed.ca