SOURCE: HearUSA

May 13, 2008 16:05 ET

HearUSA Reports Record First Quarter 2008 Results

Sixth Consecutive Record Revenues Quarter, Up 21.6% to $28.7 Million

WEST PALM BEACH, FL--(Marketwire - May 13, 2008) - HearUSA, Inc. (AMEX: EAR), the recognized leader in hearing care for the nation's top managed care providers through more than 190 company-owned hearing care centers and a network of over 1,900 affiliated providers, reported financial results for the first quarter ended March 29, 2008.

Highlights

--  Sixth consecutive quarter of record net revenues totaling $28.7
    million, up 21.6% vs. Q1 2007
--  Acquired six centers with aggregate annual estimated revenues of $1.5
    million.
    

Financial Results for First Quarter 2008

In the first quarter 2008, net revenues totaled a record $28.7 million, an increase of 21.6% from the $23.6 million reported in the first quarter of 2007. Approximately 12.2% of the increase is attributable to hearing care center acquisitions made during the last 12 months, with 9.4% due to organic growth. First quarter 2008 net revenues represented an increase of 4.2% from $27.6 million in the previous quarter. This was the company's sixth consecutive quarter of record net revenues.

Income from operations was $1.1 million or 3.9% of net revenues, which includes a onetime charge related to the retirement of Dr. Paul A. Brown as chairman of the board totaling $811,000, or 2.8% of net revenues. This compares to income from operations of $1.6 million, or 7.0% of net revenues, in the first quarter of 2007. Operating income for the quarter was also affected by other additional expenses consisting of additional professional fees associated with year end tax consulting and the Sarbanes Oxley compliance review, additional regional management costs and operating losses incurred by the new North Carolina region.

Net loss applicable to common stockholders totaled $685,000 or ($0.02) per basic and diluted share, which includes the onetime charge associated with Dr. Brown's retirement of $811,000 ($0.02 per basic and diluted share). This compares to a net loss of $595,000 or ($0.02) per basic and diluted share incurred in the first quarter of 2007.

Interest expense decreased $439,000 from $1.7 million in the first quarter of 2007 to $1.2 million in the first quarter of 2008 primarily as a result of the conversion of the 2003 convertible subordinated notes to common stock during the second quarter of 2007.

Q1 2008 Operational Highlights

HearUSA completed three transactions involving six centers with estimated annualized trailing twelve month revenues of $1.5 million during the first quarter of 2008. Subsequent to the end of the quarter, the company completed two more transactions for two centers with aggregate estimated annualized trailing twelve month revenues of $1.0 million.

"In this first quarter of 2008 we again raised the bar in terms of revenues," said Stephen J. Hansbrough, president and CEO. "Despite an increasingly aggressive price-focused market, we were able to once again post strong organic growth. Concurrently, our acquisition program remains on track with more than $2.5 million in estimated annualized trailing twelve month revenues already added and another $8.2 million in LOIs currently pending. Given these positive factors as well as ongoing strong organic growth so far in Q2, we continue to expect fiscal 2008 revenues to increase at least 16% and exceed $120 million, with net earnings per basic share estimated between $0.08 and $0.11."

Conference Call

The company will hold a conference call later today at 4:30 p.m. ET to discuss its first quarter 2008 financial results. Chairman, President, 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.

To participate in the call, dial the appropriate number 5-10 minutes prior to the start time, request the HearUSA conference call and provide the conference ID:

Domestic callers: 1-800-895-1085
International callers: 1-785-424-1055
Conference ID#: 7HEARUSA
Internet Simulcast: http://viavid.net/dce.aspx?sid=00005054

If you have any difficulty connecting with the conference call or webcast, please contact the Liolios Group at 1-949-574-3860.

A replay of the call will be available later that evening and will be accessible until May 27, 2008. The replay call-in number is 1-800-839-1162 for domestic callers and 1-402-220-0398 for international.

About HearUSA

HearUSA, Inc. provides hearing care to patients primarily through more than 190 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, North Carolina, and the province of Ontario, Canada. The company also derives revenues from its HearUSA Hearing Care Network, comprised of 1,900 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 the statements that the company expects 2008 net revenue to increase at least 16% and exceed $120 million; and that the company expects 2008 net earnings per basic share in the range of $0.08 to $0.11. 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 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 29, 2007 and quarter ended March 31, 2008.

                             HearUSA, Inc.
                Consolidated Statements of Operations
                              (unaudited)


                                                      March 29,  March 31,
                                                      =========  =========
                                                        2008       2007
                                                      =========  =========
                                                          (Dollars in
                                                        thousands, except
                                                       per share amounts)

Net revenues
Hearing aids and other products                       $  26,680  $  21,972
Services                                                  2,008      1,614
                                                      ---------  ---------
Total net revenues                                       28,688     23,586
                                                      ---------  ---------

Operating costs and expenses
Hearing aids and other products                           7,588      5,738
Services                                                    545        476
                                                      ---------  ---------
Total cost of products sold and services                  8,133      6,214
Center operating expenses                                14,023     11,609
General and administrative expenses                       4,759      3,632
Depreciation and amortization                               662        489
                                                      ---------  ---------
Total operating costs and expenses                       27,577     21,944
                                                      ---------  ---------

Income from operations                                    1,111      1,642

Non-operating income (expenses):

Interest income                                              16         47

Interest expense                                         (1,241)    (1,680)
                                                      ---------  ---------

Loss from continuing operations before income tax
 expense, loss from discontinued operations and
 minority interest in income of consolidated Joint
 Venture                                                   (114)         9
Income tax expense                                         (200)      (147)
Minority interest in income of consolidated joint
 venture                                                   (336)      (424)
                                                      ---------  ---------
Net income (loss)                                          (650)      (562)
Dividends on preferred stock                                (35)       (33)
                                                      ---------  ---------

Net income (loss) applicable to common stockholders   $    (685) $    (595)
                                                      =========  =========

Net income (loss) applicable to common stockholders
 per common share - basic and diluted                 $   (0.02) $   (0.02)
                                                      =========  =========

Weighted average number of shares of common stock
 outstanding - basic and diluted                         38,588     32,272
                                                      =========  =========



                             HearUSA, Inc.
                     Consolidated Balance Sheets
                              (unaudited)


                                                   March  29,  December 29,
ASSETS                                                2008         2007
                                                   ----------  -----------
                                                   (Dollars in thousands)
Current assets
Cash and cash equivalents                          $    3,597  $     3,369
Accounts and notes receivable, less allowance for
 doubtful accounts of $525,000 and $498,000             9,491        8,825
Inventories                                             2,536        2,441
Prepaid expenses and other                              1,468        1,283
Deferred tax asset                                         62           62
                                                   ----------  -----------
Total current assets                                   17,154       15,980
Property and equipment, net                             4,251        4,356
Goodwill                                               63,912       63,134
Intangible assets, net                                 15,952       16,165
Deposits and other                                        701          691
Restricted cash and cash equivalents                      216          216
                                                   ----------  -----------
Total Assets                                       $  102,186  $   100,542
                                                   ==========  ===========





LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable                                   $   13,375  $    12,467
Accrued expenses                                        3,220        2,523
Accrued salaries and other compensation                 3,968        3,521
Current maturities of long-term debt                   11,611       10,746
Current maturities of subordinated notes, net of
 debt discount of $12,000 and $60,000                   1,088        1,480
Dividends payable                                          34           34
Minority interest in net income of consolidated
 joint venture, currently payable                         966        1,221
                                                   ----------  -----------
Total current liabilities                              34,262       31,922
                                                   ----------  -----------
Long-term debt                                         36,008       36,499
Deferred income taxes                                   6,662        6,462
                                                   ----------  -----------
Total long-term liabilities                            42,670       42,961
                                                   ----------  -----------
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 38,571,810 and 38,325,414 shares
 issued                                                 3,857        3,833
Stock subscription                                       (412)        (412)
Additional paid-in capital                            133,598      133,261
Accumulated deficit                                  (113,761)    (113,076)
Accumulated other comprehensive income                  4,457        4,468
Treasury stock, at cost: 523,662 common shares         (2,485)      (2,485)
                                                   ----------  -----------
Total Stockholders' Equity                             25,254       25,589
                                                   ----------  -----------
Total Liabilities and Stockholders' Equity         $  102,186  $   100,542
                                                   ==========  ===========

Contact Information

  • Company Contact:
    Stephen J. Hansbrough
    Chairman, President & CEO
    HearUSA, Inc
    (561) 478-8770

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