SOURCE: Liberator Medical Holdings, Inc.

Liberator Medical Holdings, Inc. Logo

December 24, 2012 11:22 ET

Liberator Medical Reports Record Annual Net Revenues of $60.9 Million for Fiscal Year Ended September 30, 2012

The Company Reports Net Income of $2.5 Million for the Year

STUART, FL--(Marketwire - December 24, 2012) -  Liberator Medical Holdings, Inc. (OTCBB: LBMH) announced net revenues for fiscal year 2012 of $60,943,000, an increase of $8,245,000, or 15.6%, compared with sales of $52,698,000 for fiscal year 2011. The increase in sales was primarily due to the Company's continued direct response advertising campaign to acquire new customers and its emphasis on customer service to maximize the reorder rates for its recurring customer base. Liberator's direct response advertising expenditure for fiscal year 2012 was $13,113,000, compared to $15,245,000 for fiscal year 2011. For the fourth quarter of fiscal 2012, the Company reported net revenues of $16,516,000, representing a 10.4% increase over third quarter 2012 net revenues of $14,961,000.

Net income for fiscal year 2012 increased by $2,242,000, or 866%, to $2,501,000, compared with fiscal year 2011 net income of $259,000. Net income for fiscal year 2011 included a $902,000 non-cash expense for the change in fair value of an embedded derivative, which was eliminated upon conversion of a convertible note during the first quarter of fiscal year 2011. The balance of the increase in net income was driven by increased sales volumes and improved operating margins during fiscal year 2012.

Financial Condition

The Company had cash of $3,326,000 at September 30, 2012, compared with $3,016,000 at September 30, 2011, an increase of $310,000. This increase in cash during fiscal year 2012 was primarily due to $1,000,000 of borrowings from its credit line facility, partially offset by $546,000 in net cash used in operating activities and $151,000 for purchases of property and equipment.

Cash used in operating activities in fiscal 2012 was $546,000, which represents an improvement of $3,947,000 compared with cash used in operating activities of $4,493,000 during fiscal year 2011. The improvement in operating cash flows during fiscal year 2012 was primarily driven by additional net income of $2,242,000, a reduction in direct response advertising spend of $2,132,000, partially offset by a decrease in changes in operating assets and liabilities of $449,000.

Mark Libratore, President and Chief Executive Officer, stated: "We are very proud of our financial performance during fiscal year 2012. We increased our sales by 15% over last year, reduced our customer acquisition costs, increased our operating margins, and improved our operating cash flows for 2012. We will continue to invest in new technology and implement process improvements during fiscal year 2013 that we believe will improve overall productivity and contribute to increased profitability, while providing excellent service to our growing customer base.

We expect to manage the levels of our direct response advertising spend to maximize profitability and cash flows for fiscal year 2013, which may result in slower top-line sales growth. Based on our financial results from fiscal year 2012, we expect to continue to improve operating margins and cash flows for fiscal year 2013."

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About Liberator Medical Holdings, Inc.

Liberator Medical Holdings, Inc.'s subsidiary, Liberator Medical Supply, Inc., established the Liberator brand as a leading national direct-to-consumer provider of quality medical supplies to Medicare-eligible seniors. Accredited by The Joint Commission, its unique combination of marketing, industry expertise and customer service has demonstrated success over a broad spectrum of chronic conditions. Liberator is recognized for offering a simple, reliable way to purchase medical supplies needed on a regular, ongoing, repeat-order basis, with the convenience of direct billing to Medicare and private insurance. Liberator's revenue primarily comes from supplying products to meet the rapidly growing requirements of general medical supplies, personal mobility aids, diabetes, urological, ostomy and mastectomy patients. Liberator communicates with patients and their doctors on a regular basis regarding prescriptions and supplies. Customers may purchase by phone, mail or internet, with repeat orders confirmed with the customer and shipped when needed.


Liberator Medical Holdings, Inc. and Subsidiaries  
Consolidated Balance Sheets  
As of September 30, 2012 and 2011  
(In thousands, except dollar per share amounts)  
    2012     2011  
Current Assets:                
  Cash   $ 3,326     $ 3,016  
  Accounts receivable, net of allowances of $5,044 and $4,177, respectively     10,365       7,860  
  Inventory, net of allowance for obsolete inventory of $310 and $144, respectively     2,627       3,009  
  Deferred taxes, current portion     2,254       1,877  
   Prepaid and other current assets     287       333  
  Total Current Assets     18,859       16,095  
Property and equipment, net of accumulated depreciation of $2,888 and $2,186, respectively     1,250       1,626  
Deferred advertising     22,426       17,191  
Intangible assets, net of accumulated amortization of $91 and $25, respectively     239       305  
Other assets     88       163  
Total Assets   $ 42,862     $ 35,380  
Liabilities and Stockholders' Equity                
Current Liabilities:                
  Accounts payable   $ 6,537     $ 5,008  
  Accrued liabilities     1,221       1,119  
  Other current liabilities     92       103  
    Total Current Liabilities     7,850       6,230  
Deferred tax liability     5,421       3,347  
Credit line facility     2,500       1,500  
Other long-term liabilities     132       48  
Total Liabilities     15,903       11,125  
Commitments and contingencies (see Note 13)                
Stockholders' Equity:                
Common stock, $.001 par value, 200,000 shares authorized, 48,232 and 48,135 shares issued, respectively; 48,143 and 48,046 shares outstanding at September 30, 2012 and 2011, respectively     48       48  
Additional paid-in capital     34,707       34,504  
Accumulated deficit     (7,746 )     (10,247 )
Treasury stock, at cost; 89 shares at September 30, 2012 and 2011, respectively     (50 )     (50 )
Total Stockholders' Equity     26,959       24,255  
Total Liabilities and Stockholders' Equity   $ 42,862     $ 35,380  

See accompanying notes to consolidated financial statements


Liberator Medical Holdings, Inc. and Subsidiaries  
Consolidated Statements of Operations  
For the fiscal years ended September 30, 2012 and 2011  
(In thousands, except dollar per share amounts)  
    2012     2011  
Net Sales   $ 60,943     $ 52,698  
Cost of Sales     23,924       20,601  
Gross Profit     37,019       32,097  
Operating Expenses:                
  Payroll, taxes and benefits     14,136       12,174  
  Advertising     8,099       8,206  
  Bad debts     4,664       3,746  
  Depreciation and amortization     794       730  
  General and administrative     5,019       4,644  
    Total Operating Expenses     32,712       29,500  
Income from Operations     4,307       2,597  
Other Income (Expense)                
  Gain on sale of assets     -       2  
  Interest expense     (75 )     (42 )
  Interest income     -       5  
  Change in fair value of derivative liabilities     -       (902 )
    Total Other Income (Expense)     (75 )     (937 )
Income before Income Taxes     4,232       1,660  
Provision for Income Taxes     1,731       1,401  
Net Income   $ 2,501     $ 259  
Basic earnings per share:                
Weighted average shares outstanding     48,097       47,869  
Earnings per share   $ 0.05     $ 0.01  
Diluted earnings per share:                
Weighted average shares outstanding     52,266       53,613  
Earnings per share   $ 0.05     $ 0.00  

See accompanying notes to consolidated financial statements


Liberator Medical Holdings, Inc. and Subsidiaries  
Consolidated Statements of Cash Flows  
For the fiscal years ended September 30, 2012 and 2011  
(In thousands)  
    2012     2011  
Cash flow from operating activities:                
  Net income   $ 2,501     $ 259  
  Adjustments to reconcile net income to net cash used in operating activities:                
    Depreciation and amortization     8,672       8,790  
    Equity based compensation     122       385  
    Provision for doubtful accounts and contractual adjustments     4,787       3,950  
    Non-cash interest related to convertible notes payable     -       21  
    Change in fair value of derivative liabilities     -       902  
    Deferred income taxes     1,697       1,340  
    Reserve for inventory obsolescence     166       35  
    Gain on disposal of assets     -       (2 )
  Changes in operating assets and liabilities:                
    Accounts receivable     (7,293 )     (5,065 )
    Deferred advertising     (13,113 )     (15,245 )
    Inventory     216       (1,025 )
    Other assets     143       49  
    Accounts payable     1,529       1,182  
    Accrued expenses     116       13  
    Other liabilities     (89 )     (83 )
Net Cash Flows Used in Operating Activities     (546 )     (4,494 )
Cash flows from investing activities                
  Purchase of property and equipment and other     (151 )     (369 )
  Acquisition of SGV Medical Supplies (see Note 10)     -       (466 )
  Proceeds from the sale of assets     -       3  
Net Cash Flows Used in Investing Activities     (151 )     (832 )
Cash flows from financing activities                
  Proceeds from credit line facility     1,000       1,500  
  Costs associated with credit line facility     (21 )     (51 )
  Proceeds from employee stock purchase plan     67       86  
  Payments of debt and capital lease obligations     (39 )     (621 )
Net Cash Flows Provided by Financing Activities     1,007       914  
Net increase (decrease) in cash     310       (4,412 )
Cash at beginning of period     3,016       7,428  
Cash at end of period   $ 3,326     $ 3,016  
Supplemental disclosure of cash flow information:                
Cash paid for interest   $ 73     $ 56  
Cash refunded for income taxes     -       (8 )
Supplemental schedule of non-cash investing and financing activities:                
Capital expenditures funded by capital lease borrowings     202       -  
Common stock issued for conversion of debt     -       5,100  

See accompanying notes to consolidated financial statements

Safe Harbor Statement

In this press release and in related comments by our management, our use of the words "expect," "anticipate," "possible," "potential," "target," "believe," "commit," "intend," "continue," "may," "would," "could," "should," "project," "projected," "positioned" or similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results, and our actual results may differ materially due to a variety of important factors. Such risks and uncertainties may include, but are not limited to, regulatory limitations on the medical industry in general, working capital constraints, fluctuations in customer demand and commitments, fluctuation in quarterly results, introduction of new services and products, commercial acceptance and viability of new services and products, pricing and competition, reliance upon subcontractors and vendors, the timing of new technology and product introductions, and the risk of early obsolescence of our products. Liberator's most recent annual report on Form 10-K and quarterly reports on Form 10-Q provide information about these and other factors, which we may revise or supplement in future reports filed with the Securities and Exchange Commission.

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