Prism Medical Ltd.
TSX VENTURE : PM

Prism Medical Ltd.

July 28, 2014 18:16 ET

Prism Medical Reports Second Quarter Results

TORONTO, ONTARIO--(Marketwired - July 28, 2014) - Prism Medical Ltd., ("Prism Medical" or "the Company") (TSX VENTURE:PM), a leading provider of durable medical equipment and related services to the mobility challenged, today reported financial results for the second quarter (Q2) ended May 31, 2014.

Three months
ended May 31
Six months
ended May 31
(Expressed in thousands of Canadian dollars except for earnings per share and where otherwise noted) 2014 20131 2014 2013
$ $ $ $
Revenues 10,376 10,518 20,266 18,623
Gross margin 4,268 4,665 8,534 8,021
(as % of revenues) 41.1% 44.4% 42.1% 43 .1%
Restructuring charges 1,218 - 1,218 -
Net income from continuing operations 22,571 513 22,613 2 3
(as % of revenues) N m 4.9% N m 0 .1%
Net income (loss) from discontinued operations (1,182) 861 (556) 1,410
Net income 21,389 1,374 22,057 1,433
Adjusted EBITDA
Continuing operations 25,857 1,283 26,603 1,442
(as % of revenues) N m 12.2% N m 7 .7%
Basic earnings per share
From continuing operations 2 . 64 0.06 2 .67 0 . 00
From discontinued operations (0.14) 0.10 (0.07) 0 . 17
From net income (loss) 2 .51 0.16 2 .61 0 . 17
Diluted earnings per share
From continuing operations 2 .59 0.06 2 . 64 0 . 00
From discontinued operations (0.14) 0.10 (0.06) 0 . 17
From net income (loss) 2 .46 0.16 2 .58 0 . 17
As at As at
May 31 November 30
2014 2013
$ $
Total assets 77,483 74,024
Total liabilities 16,751 35,282
Cash and cash equivalents 40,456 2,069
Bank indebtedness - 8,789
Current portion of long-term debt 1,597 1,684
Long-term debt 6,538 9,265
Shareholders' equity 60,732 38,742
Common shares (in thousands) 8,862 8,421

Second Quarter Highlights

  • Sale of UK business for net proceeds of $53.8 million resulting in a net gain of $24.0 million included in net income of $21.4 million for the second quarter compared to net income of $1.4 million in the same quarter last year.
  • Revenue from continuing operations of $10.4 million in the second quarter and $20.3 million for the six months ended May 31, 2014 compared to $10.5 million and $18.6 million respectively last year. Revenues for the quarter were somewhat less than expected as a result of delayed spending in the US acute care market segment and delayed order fulfillment as a result of the US plant relocation.
  • During the quarter the US operations moved to a new location with greatly expanded capacity which will allow for more efficient receiving, shipping and production layout at an occupancy cost that is marginally higher than the previous location.
  • In the quarter we incurred restructuring and other non-recurring costs totalling $2.3 million which will significantly reduce future corporate overheads.
  • For a comprehensive discussion of the quarter please refer to the Company's Management Discussion and Analysis and Financial Statements for the six month period ended May 31, 2014. Both these documents can be found on SEDAR or the Company's website.

"We were very pleased to have unlocked a significant shareholder value through the sale of the UK operations. Equally important it will allow management to focus all its attention and resources on the high growth North American market. It continues to be our intention to return to our shareholders in the near future the majority of the proceeds from the UK sale in the form of a Substantial Issuer Bid," said Andy McIntyre, Executive Chairman and CEO of Prism Medical.

Outlook

The Company intends to grow sales and profitability and provide a reasonable return on shareholders' equity with a focus on the North American market. The Company believes that performance will be positively affected by a continued North American institutional and homecare demand for our products, improved manufacturing efficiencies, greater geographic coverage, and revenues and profits from new product introductions. During the past year the Company's North American operations have materially improved. Management believes that there are significant growth opportunities within the expanding North American health care industry both through organic growth and acquisitions that offer the potential to significantly increase shareholder value, while remaining consistent with Prism Medical's key growth strategies of vertical integration, product diversification and the application of relevant knowledge by its service oriented personnel.

The demand for our core products and services, in management's estimation, continues to experience growth at different rates in the geographic markets in which we participate. Government funding for our products in Canada is a key driver of sales. Although government policies related to healthcare in the markets we operate continues to change, we believe that the long term trend continues to be favorable.

Management believes that the US market holds the greatest long-term potential to provide above-average revenue growth both in the institutional and homecare markets. While budget constraints and the cyclicality of the institutional order pipeline can cause variability in US revenue, our efforts to build a larger footprint in this market have already translated into strong revenue growth.

Dividend Policy

While the Company has no formal policy on dividend payments and the Board of Directors determines the suitability of such payments on a quarterly basis, the Company views dividend payments an important part of its investor strategy and expects to continue its historical pattern of four dividend payments per fiscal year.

Dividend Declaration

On July 28, 2014, the Board of Directors approved the payment of $0.08 per common share to shareholders of record on August 16, 2014 to be paid on September 5, 2014.

About Prism Medical Ltd.

Prism Medical is a vertically integrated manufacturer and leading provider of equipment and services used to move and handle mobility challenged individuals in a safe and dignified manner. Prism Medical's products are marketed under the brand names of Prism Medical, ErgoSafe, Waverly Glen and Nightingale in the homecare, acute care and long-term care markets throughout North America. The Company offers solutions that encourage improved care, quality of life and mobility, while seeking to lower the overall cost of the caregiving function in a number of ways, including reducing the incidence of handling-related injuries among caregivers. In addition, the Company through its network of Nightingale dealers provides an integrated suite of products and services that make home care a viable option for many people. For further information visit Prism Medical's website at www.prismmedicalltd.com or www.sedar.com.

Non-IFRS Financial Measures

Prism Medical's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The Company also uses non-IFRS measures such as Adjusted EBITDA to measure its financial performance. Adjusted EBITDA from continuing operations consists of earnings before interest, income taxes, depreciation, amortization, stock-based compensation. Adjusted EBITDA from continuing operations is a financial metric used by many investors to compare companies on the basis of operating results, asset value and the ability to incur and service debt. Management believes that Adjusted EBITDA from continuing operations is a useful measure for evaluating the performance of the Company. Adjusted EBITDA from continuing operations is not a recognized measure under IFRS and does not have a standardized meaning prescribed by IFRS and may not be comparable to similarly titled financial metrics reported by other companies.

Forward-Looking Information

This document contains forward-looking statements relating to our operations and to the environment in which we operate and our strategy, action plans and investments, which may involve estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict and/or are beyond our control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include those set forth in this report and our other public filings. Consequently, readers should not place any undue reliance on such forward-looking statements. These forward-looking statements are made as of the date of this report. Prism Medical is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or other factors. All forward-looking statements attributable to Prism Medical are expressly qualified by these cautionary statements.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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