Prism Medical Ltd.
TSX VENTURE : PM

Prism Medical Ltd.

October 27, 2015 17:36 ET

Prism Medical Reports Third Quarter Results and Declares Dividend

TORONTO, ONTARIO--(Marketwired - Oct. 27, 2015) - 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 third quarter (Q3) ended August 31, 2015.

Three months ended
August 31
Nine months ended
August 31
(Expressed in thousands of Canadian dollars except for earnings per share and where otherwise noted) 2015
$
2014
(1) $
2015
$
2014
(1) $
Revenues 13,724 11,196 40,053 31,462
Gross margin 5,536 4,542 16,445 13,076
(as % of revenues) 40.3 % 40.6 % 41.1 % 41.6 %
Restructuring charges - 18 121 1,236
Net income (loss) from operations (469 ) 754 363 23,152
(as % of revenues) -3.4 % 6.7 % 0.9 % Nm
Net loss from discontinued operations - - - (341 )
Net income (469 ) 754 363 22,811
Adjusted EBITDA
Continuing operations 753 1,211 3,641 27,599
(as % of revenues) 5.5 % 10.8 % 9.1 % Nm
Pro-forma Adjusted EBITDA 1,171 1,386 4,532 3,345
8.5 % 12.4 % 11.3 % 10.6 %
Basic earnings per share
From continuing operations (0.09 ) 0.08 0.07 (0.11 )
From discontinued operations - - - 2.76
From net income (loss) (0.09 ) 0.08 0.07 2.65
Diluted earnings per share
From continuing operations (0.09 ) 0.08 0.07 (0.11 )
From discontinued operations - - - 2.72
From net income (loss) (0.09 ) 0.08 0.07 2.61
As at
August 31
2015
$
As at
November 30
2014
$
Total assets 48,986 46,491
Total liabilities 24,815 20,009
Cash and cash equivalents 1,390 6,497
Bank indebtedness 2,991 1,160
Current portion of long-term debt 2,409 1,976
Long-term debt 10,262 8,040
Shareholders' equity 24,171 26,482
Common shares (in thousands) 4,939 4,742
(1) Restated to reflect continuing operations.

Third Quarter Highlights

  • Strong year-over-year growth in revenue for the quarter, with consolidated revenues increasing by 22% from $11.2 million in Q3 2014 to $13.7M in Q3 2015. US sales increased 9.2% to $10M excluding the impact of increase in the US dollar. Canadian sales increased 6.7% overall.
  • Q3 2015 Adjusted EBITDA from continuing operation of $0.8 million, down from $1.2M in Q3 2014. Stock option expense of $0.6 million relating to the first tranche of a new option grant that vested in the third quarter was a contributing factor for the decrease along with non-recurring expenses of $0.4 million relating to transaction, strategic initiatives and integration costs.
  • Q3 2015 Pro-forma Adjusted EBITDA of $1.2 million, down slightly from $1.4 million in Q3 2014 reflecting some margin pressure on the Canadian business primarily due to the higher cost of US dollar denominated products.
  • Year to date Pro-forma Adjusted EBITDA $4.5 million or 11.2% of revenues compared to $3.3 million or 10.5% of revenues on a year to date Q3 2014.
  • Third quarter 2015 net loss from continuing operations of $0.5 million or 9 cents loss per common share compared to income of $0.8 million from continuing operations in the third quarter of 2014 income of 8 cents per common share.
  • Despite the net loss in the quarter, we are anticipating a strong finish in Q4 with committed sales orders and a robust sales pipeline contributing to year over year growth in Adjusted EBITDA and Pro-forma Adjusted EBITDA for Fiscal 2015.
  • For a comprehensive discussion of the quarter please refer to the Company's Management Discussion and Analysis and Financial Statements for the three and nine months ended August 31, 2015. Both these documents can be found on SEDAR or the Company's website.

John C. Charles, Interim CEO and Vice Chairman stated, "We are pleased with the sales growth in our recent dealer acquisition in B.C., Angel Accessibility Inc. and continuing increase in sales in our US business as the US market gradually accepts safe patient handling as best practice. Angel's sales were offset by lower Canadian institutional sales in Q3 2015 versus last year as large projects ongoing in the prior year did not repeat in the current year. While revenues are subject to fluctuations as demand from institutions is lumpy, the North American business prospects are strong. For the nine months ended August 31, 2015, US revenue increased 20% on a US dollar basis over the prior year.

"Overall, we expect a positive trend for the balance of the year. The Company is committed to growing both the Canadian and US businesses organically and from acquisitions. We are pleased to report that your Board of Directors has declared a dividend of $0.125 per common share to shareholders of record on December 1, 2015, to be paid on December 8, 2015."

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 for our product solutions 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 October 27, 2015, the Board of Directors approved the payment of $0.125 per common share to shareholders of record on December 1, 2015 to be paid on December 8, 2015. This is an eligible dividend within the Income Tax Act.

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 uses certain financial measures to assess its financial performance which do not have any standardized meaning prescribed by IFRS, and are not necessarily comparable to similar measures presented by other companies using IFRS. Our Non-IFRS measures include Adjusted EBITDA from operations, which consists of earnings before interest, income taxes, depreciation, amortization and stock-based compensation expense. Our Non-IFRS measures also include Pro-forma Adjusted EBITDA which excludes the impact of non-recurring costs such as restructuring costs, strategic initiatives, transaction costs, integration costs and post divestiture or acquisition adjustments, and gain on sale of the UK business. Adjusted EBITDA from 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 operations and Pro-forma Adjusted EBITDA are useful measures in evaluating the performance of the Company to generate operating cash flow to fund future working capital needs and service debt. Adjusted EBITDA from operations and Pro-forma Adjusted EBITDA do 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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