SOURCE: Liberator Medical Holdings, Inc.

Liberator Medical Holdings, Inc. Logo

August 10, 2015 18:02 ET

Liberator Medical Reports Revenue of $20.4 Million and Net Income of $1.7 Million, or $0.03 per Share, for the Three Months Ended June 30, 2015

The Company Reports Revenue Growth of 9.7% for the Three Months Ended June 30, 2015, Compared to the Same Period in 2014

STUART, FL--(Marketwired - August 10, 2015) - Liberator Medical Holdings, Inc. (NYSE MKT: LBMH) today announced the financial results for its fiscal third quarter ended June 30, 2015.

Net sales for the three months ended June 30, 2015, increased by $1,798,000, or 9.7%, to $20,376,000, compared with net sales of $18,578,000 for the three months ended June 30, 2014. Net sales for the nine months ended June 30, 2015, increased by $5,432,000, or 9.9%, to $60,266,000, compared with net sales of $54,834,000 for the nine months ended June 30, 2014. The increase in net sales was primarily due to our continued emphasis on our direct response advertising campaign to acquire new customers and our emphasis on customer service to maximize the reorder rates for our recurring customer base.

     
   Three Months Ended June 30  Nine Months Ended June 30
Dollars in Thousands  FY2015  FY2014  %  FY2015  FY2014  %
Net Sales  $20,376  $18,578  9.7  $60,266  $54,834  9.9
Gross Profit  $12,460  $11,751  6.0  $37,299  $34,514  8.1
*Net Income  $1,669  $1,983  -15.8  $5,785  $5,716  1.2
                 

*Litigation settlement expenses for the three months ended June 30, 2015 include a $600,000 accrual associated with the agreement in principal to settle the civil qui tam litigation (see Note 7 to the Consolidated Financial Statements (unaudited) contained in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2015)

Gross profit for the three months ended June 30, 2015, increased by $709,000, or 6.0%, to $12,460,000, compared with gross profit of $11,751,000 for the three months ended June 30, 2014. For the nine months ended June 30, 2015, gross profit increased by $2,785,000, or 8.1%, to $37,299,000, compared with gross profit of $34,514,000. The increase was attributed to our increased sales volume for the three and nine months ended June 30, 2015, compared with the three and nine months ended June 30, 2014.

Income from operations for the three months ended June 30, 2015, decreased by $759,000, or 24.4%, to $2,357,000, compared with the three months ended June 30, 2014. The decrease in operating income is primarily attributed to increases in litigation settlement costs, advertising, and bad debt expense, partially offset by increased gross profit driven by our increased sales volume and a reduction, as a percentage of sales, in payroll expenses and other general and administration expenses.

The Company received subpoenas from the United States Department of Justice and is a defendant, among other defendants, in a civil qui tam litigation alleging, inter alia, violations of the federal False Claims Act, 31 U.S.C. §3729. United States ex rel. Herman, et al. v. Coloplast A/S, et al., Docket No. 11-cv-12131-RWZ (D. Mass). With the concurrence of all of the other parties to the litigation, the litigation is stayed until September 21, 2015. The Company has fully cooperated with the government's investigation. The Company has recently reached an agreement in principle to fully settle and resolve all claims asserted the litigation. The settlement is subject to final approvals, as well as negotiation and execution of settlement documents. Based upon the agreement in principle, the Company has accrued the expected expenses for the settlement, and a reasonable estimate of these expenses is $600,000, which amount includes the amount payable to the government, as well as the Company's share of the relators' counsel fees and expenses. If the agreement in principle is not consummated, the additional cost, if any, to the Company cannot be reasonably estimated at this time given that the litigation has not proceeded beyond its preliminary stages and that the litigation is currently stayed, and the $600,000 accrual may not be sufficient.

Net income for the third quarter of fiscal year 2015 was $1,669,000, or $0.03 per diluted share, compared with net income of $1,983,000, or $0.03 per diluted share, for the third quarter of fiscal year 2014, a decrease of $314,000 or 15.8%. The decrease in net income is primarily attributed to increases in litigation settlement costs, advertising, and bad debt expense, partially offset by increased gross profit driven by our increased sales volumes and a reduction, as a percentage of sales, in payroll expenses and other general and administration expenses.

The Company had cash of $9,095,000 at June 30, 2015, compared with cash of $12,261,000 at September 30, 2014, a decrease of $3,166,000. The decrease in cash for the nine months ended June 30, 2015, was due to $4,659,000 of cash used in financing activities, $90,000 of cash used in investing activities, partially offset by $1,583,000 of cash provided by operating activities.

Mark Libratore, President and CEO, commented, "I am pleased to report 9.9% year-over-year revenue growth for the nine months ended June 30, 2015. Our efforts to improve the customer experience have delivered just under 15% revenue retention for the three months, and 13% for the nine months ended June 30th. Creating value for our customers is an essential step in continuing to grow the value of Liberator. I am not pleased with the drop in net income year-over-year. In the absence of one-time expenses our net income would have grown. We are very focused on reducing extraordinary expenses and protecting shareholder value. We will continue creating efficiencies, improving profitability and strengthening our quality and compliance systems as we head into our fiscal fourth quarter."

Stay up-to-date with current events by visiting Liberator Medical's website at www.liberatormedical.com or by joining the Company's E-Mail Alert List. Join by clicking the following link www.LBMH-IR.com.

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, our Company's 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, diabetes supplies, catheters, ostomy supplies and mastectomy fashions . 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.

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.

Liberator Medical Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of June 30, 2015 (unaudited) and September 30, 2014
(In thousands, except dollar per share amounts)

       
    June 30,     September 30,  
    2015     2014  
Assets                
Current Assets:                
 Cash   $ 9,095      $ 12,261   
 Accounts receivable, net of allowances of $5,279 and $4,569, respectively     10,081        8,866   
 Inventory, net of allowance for obsolete inventory of $213 and $181, respectively     3,282        1,954   
 Deferred tax assets     2,199        2,005   
 Prepaid and other current assets     591        449   
  Total Current Assets     25,248        25,535   
Property and equipment, net of accumulated depreciation of $4,323 and $4,016, respectively     1,070        1,260   
Deferred advertising, net     30,476        26,936   
Intangible assets, net of accumulated amortization of $368 and $281, respectively     333        420   
Other assets     159        178   
Total Assets   $ 57,286      $ 54,329   
                   
Liabilities and Stockholders' Equity                  
Current Liabilities:                  
 Accounts payable   $ 5,467      $ 6,085   
 Accrued liabilities     2,624        1,758   
 Dividends payable     1,737        1,728   
 Credit line facility     1,500        -   
 Other current liabilities     534        339   
  Total Current Liabilities     11,862        9,910   
Deferred tax liabilities     11,295        10,031   
Credit line facility     -        1,500   
Other long-term liabilities     449        453   
Total Liabilities     23,606        21,894   
                   
                   
Stockholders' Equity:                  
Common stock, $0.001 par value, 200,000 shares authorized, 53,809 and 53,520 shares issued, respectively; 53,455 and 53,166 shares outstanding at June 30, 2015, and September 30, 2014, respectively     54        54   
Additional paid-in capital     37,047        36,385   
Accumulated deficit     (2,941 )      (3,524 ) 
Treasury stock, at cost; 354 shares at June 30, 2015, and September 30, 2014     (480 )      (480 ) 
Total Stockholders' Equity     33,680        32,435   
Total Liabilities and Stockholders' Equity   $ 57,286      $ 54,329   
                   

See accompanying notes to unaudited condensed consolidated financial statements.

Liberator Medical Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the three and nine months ended June 30, 2015 and 2014
(Unaudited)
(In thousands, except per share amounts)

     
   Three Months Ended June 30,  Nine Months Ended June 30,
                     
   2015  2014  2015  2014
                     
Net Sales  $ 20,376    $ 18,578    $ 60,266    $ 54,834  
                             
Cost of Sales    7,916      6,827      22,967      20,320  
                             
Gross Profit    12,460      11,751      37,299      34,514  
                             
Operating Expenses:                            
 Payroll, taxes and benefits    3,872      3,650      11,492      10,988  
 Advertising    2,860      2,553      8,250      7,250  
 Bad debts    1,126      845      3,151      2,487  
 Depreciation and amortization    137      166      394      505  
 General and administrative    1,508      1,421      4,336      4,071  
 Litigation Settlement (See Note 7)    600      0      600      0  
  Total Operating Expenses    10,103      8,635      28,223      25,301  
                             
Income from Operations    2,357      3,116      9,076      9,213  
                             
Other Expenses    (17 )    (12 )    (46 )    (38 )
                             
Income before Income Taxes    2,340      3,104      9,030      9,175  
                             
Provision for Income Taxes    671      1,121      3,245      3,459  
                             
Net Income  $ 1,669    $ 1,983    $ 5,785    $ 5,716  
                             
Basic earnings per share:                            
Weighted average shares outstanding    53,430      52,823      53,284      52,585  
Earnings per share  $ 0.03    $ 0.04    $ 0.11    $ 0.11  
                             
Diluted earnings per share:                            
Weighted average shares outstanding    53,780      53,619      53,689      53,513  
Earnings per share  $ 0.03    $ 0.04    $ 0.11    $ 0.11  
                             
Dividends declared per common share  $ 0.03    $ 0.03    $ 0.10    $ 0.09  
                 

See accompanying notes to unaudited condensed consolidated financial statements.

Liberator Medical Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the nine months ended June 30, 2015 and 2014
(Unaudited)
(In thousands)

    
    Nine Months Ended  
    June 30,  
    2015     2014  
Cash flow from operating activities:                
Net Income   $ 5,785      $ 5,716   
Adjustments to reconcile net income to net cash provided by operating activities:                  
 Depreciation and amortization     8,567        7,702   
 Stock based compensation     24        184   
 Provision for doubtful accounts and contractual adjustments     3,033        2,685   
 Deferred income taxes     1,070        843   
 Reserve for inventory obsolescence     32        31   
Changes in operating assets and liabilities:                  
 Accounts receivable     (4,249 )      (3,848 ) 
 Deferred advertising     (11,713 )      (10,213 ) 
 Inventory     (1,360 )      107   
 Other assets     (130 )      (692 ) 
 Income taxes prepaid and payable     261        (968 ) 
 Accounts payable     (617 )      165   
 Accrued liabilities     865        376   
 Other liabilities     15        (22 ) 
Net Cash Flow Provided by Operating Activities     1,583        2,066   
                   
Cash flow from investing activities:                  
Purchase of property and equipment     (90 )      (153 ) 
Proceeds from sale of property and equipment     -        4   
Acquisition of business     -        (161 ) 
Net Cash Flow Used in Investing Activities     (90 )      (310 ) 
                   
Cash flow from financing activities:                  
Proceeds from exercise of stock options and warrants     620        694   
Cash dividends paid     (5,192 )      (4,725 ) 
Costs associated with credit line facility     -        (21 ) 
Income tax benefit related to exercise of stock options     18        171   
Payments of capital lease obligations     (105 )      (64 ) 
Net Cash Flow Used in Financing Activities     (4,659 )      (3,945 ) 
                   
Net decrease in cash     (3,166 )      (2,189 ) 
                   
Cash at beginning of period     12,261        12,453   
Cash at end of period   $ 9,095      $ 10,264   
                   
Supplemental disclosure of cash flow information:                  
Cash paid for interest   $ 46      $ 39   
Cash paid for income taxes   $ 1,897      $ 3,412   
                   
Supplemental schedule of non-cash financing activities:                  
Capital expenditures funded by capital lease borrowings   $ 26      $ 123   
Cash dividends declared, but not yet paid   $ 1,737      $ 1,589   
           

See accompanying notes to unaudited condensed consolidated financial statements

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