Arcadia Resources, Inc. (NYSE Amex: KAD), a leading provider of innovative consumer health care services under the Arcadia HealthCare? brand, today announced fiscal 2012 first quarter net revenues of $24.8 million and a net loss from continuing operations of $3.0 million, or $0.02 per share, which compares to net revenue of $24.4 million and a net loss from continuing operations of $4.7 million, or $0.03 per share, for the same period in fiscal 2011.
Fiscal 2012 First Quarter and Recent Highlights
- Fiscal first quarter Pharmacy revenues increase 7.0% over the prior year period
- 4.6% increase in year-over-year Services home care sales offset by significant decline in travel nurse staffing revenue
- Fiscal first quarter EBITDA loss and net loss from continuing operations reduced by 39% and 37%, respectively, compared to prior year period
- Company continues to pursue sale of Services segment
- Board considering strategic alternatives to address near-term liquidity needs
- Company intends to voluntarily delist common stock from NYSE Amex and move to over-the-counter market
"The Company's focus during the quarter has been on implementing our previously-announced restructuring actions. We continue to be in discussions to sell the Services segment, but we do not yet have a definitive agreement to sell that business," said Marvin Richardson, President & CEO of Arcadia. "Our immediate focus is on managing the near-term liquidity needs of the Company. Management is aggressively managing our cash availability while the Company considers broader strategic alternatives to address our near-term and longer-term liquidity needs."
Fiscal 2012 First Quarter Results
Arcadia reported $24.8 million in revenue from continuing operations during the quarter, up from $24.4 million during the same period a year ago. The Company's gross margin from continuing operations was 27.3% during the first quarter, up from 27.0% for the same period a year ago. EBITDA from continuing operations was a negative $1.8 million in the first quarter of fiscal 2012, compared with a negative $2.9 million in the same period a year ago. The net loss from continuing operations was $3.0 million in the quarter, compared with a net loss of $4.7 million in the prior year period.
Pharmacy: Pharmacy segment revenues increased 7.0% to $4.3 million for the first quarter of fiscal 2012, compared to $4.0 million in revenues for the first quarter of fiscal 2011. Pharmacy gross margin increased to 15.9% in the first quarter of fiscal 2012 from 12.2% in the first quarter of fiscal 2011. The year-over-year gross margin improvement was a result of several factors, including improved purchasing costs from the Company's wholesale drug vendor, operational improvements and a higher level of service revenue compared with the prior year.
Services: The Company's Services segment, which includes Arcadia's home healthcare and medical staffing business, reported net revenues of $20.4 million for the 2012 fiscal first quarter, essentially level with the same period one year ago. Within the Services segment, home health care revenues increased by $0.8 million, or 4.6%, to $17.2 million from $16.4 million in the same period last year. Per diem medical staffing revenue also increased during the quarter from $2.6 million in the first quarter of fiscal 2011 to $2.8 million in the current year quarter. These increases were offset by a 67% decline in travel nurse staffing revenue to $0.4 million in the current quarter, compared with $1.3 million during the first quarter of fiscal 2011 due to the loss of a large correctional facility customer. Gross margin within the Services segment was 29.7% compared with 30.0% in the first quarter a year ago.
"While we have seen improvements in our operating results, the rate of our progress is slower than we planned," Richardson said. "In our Pharmacy segment, we continue to work with potential new payors. We have made improvements in our Pharmacy operating results without significant increases in volume as we gradually improve gross margins and carefully manage our expenses. In our Services segment, while our performance has been steady we have yet to see sustained growth across all service lines. We are encouraged by the increase in our home care revenue of 4.6% over the prior year period and 1.5% sequentially from the prior quarter, despite challenging market conditions. However, this improvement was offset by a significant year-over-year reduction in our travel nurse staffing revenue due to the loss of a significant correctional institution customer. We remain cautiously optimistic for growth in Services revenues despite budget pressures for state Medicaid programs and management's focus on the Services sale process," Richardson continued.
Capital Resources and Liquidity
At June 30, 2011, the Company had total cash plus line-of-credit availability of $2.2 million, compared to $5.5 million the same period a year ago and $4.2 million as of March 31, 2011.
Arcadia reported negative cash flow from total operations of $1.6 million during the fiscal 2012 first quarter, compared to negative $4.9 million for the same period a year ago.
NYSE Amex Non-Compliance with Minimum Listing Standards
On April 4, 2011, NYSE Amex notified the Company that it was not in compliance with Amex continued listing standards due to its low stock price and advised the Company that it should effect a reverse stock split on or before October 4, 2011. On July 15, 2011, the Company was notified by Amex that the Company was not in compliance with the Exchange's minimum financial standards. The Company was given until August 14, 2011, to submit a plan of compliance to Amex.
In light of the significant restructuring actions being pursued by the Company, and in light of current operating performance and stockholders' deficit, the Company's Board of Directors determined it would be difficult for the Company to submit a plan that achieved compliance with the Exchange's continued listing standards in the 18-month period provided for regaining compliance. Based upon the Company's determination not to submit a plan of compliance, the Company has today notified the staff of the NYSE Amex of its intent to voluntarily delist its common stock from NYSE Amex and have its shares quoted in the over-the-counter market. The Company intends to continue to file periodic reports with the SEC pursuant to the requirements of the Securities Exchange Act of 1934, as amended.
Director Resignation
Daniel Eisenstadt resigned from the Company's Board of Directors effective August 11, 2011, to focus on other business interests. His resignation was not the result of any disagreement with the Company. Mr. Eisenstadt has been a member of the Audit, Compensation and Nominating and Corporate Governance Committees of the Board.
Company's Quarterly Report on Form 10-Q
The Company has today filed its quarterly report on Form 10-Q with the Securities and Exchange Commission. The statements in this release should be read in conjunction with the Company's disclosures in its Form 10-Q.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Arcadia reports non-GAAP financial results. Arcadia's management believes these non-GAAP measures are useful to investors because they provide supplemental information that facilitates comparisons to prior periods. Management uses these non-GAAP measures to evaluate its financial results, develop budgets and manage expenditures. The method Arcadia uses to produce non-GAAP results is likely to differ from the methods used by other companies and should not be regarded as a replacement for corresponding GAAP measures. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which are attached to this release.
About Arcadia HealthCare
Arcadia HealthCare is a service mark of Arcadia Resources, Inc. (NYSE Amex: KAD), and is a leading provider of home care, medical staffing and pharmacy services under its proprietary DailyMed program. The Company, headquartered in Indianapolis, Indiana, has 65 locations in 18 states. Arcadia HealthCare's comprehensive solutions and business strategies support the Company's vision of "Keeping People at Home and Healthier Longer."
DailyMed? Pharmacy dispenses a monthly cycle of a patient's prescriptions, over-the-counter medications and vitamins, and organizes them into pre-sorted packets clearly marked with the date and time the medications should be taken. In the dispensing process, a DailyMed pharmacist reviews each patient's medication profile and utilizes state-of-the-art medication therapy management tools in order to improve the safety and efficacy of the medications being dispensed. A DailyMed pharmacist provides routine communication with the patient, the primary care physician, caregivers and payers in order to maximize the pharmaceutical care administered. The DailyMed program improves patient care and drug utilization while reducing drug and hospitalization costs for private and government payers.
Forward Looking Statements
Any statements contained in this release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21A of the Securities Exchange Act of 1934, as amended and otherwise within the meaning of court opinions construing such forward-looking statements. The Company claims all safe harbor and other legal protections provided to it by law for all of its forward-looking statements. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, estimates, uncertainties and other factors, which could cause actual financial or operating results, performances or achievements expressed or implied by such forward-looking statements not to occur or be realized, including our estimates of consumer demand for our services and products, required capital investment, competition, and other factors. Actual events and results may differ materially from those expressed, implied or forecasted in forward-looking statements due to a number of factors. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in the Company's filings with the Securities and Exchange Commission from time to time, including the section entitled "Risk Factors" and elsewhere in the Company's most recent Annual Report on Form 10-K and subsequent periodic reports. Among the factors that could cause future results to differ materially from those provided in our press release are: (i) we cannot be certain or our ability to generate sufficient cash flow to meet our obligations on a timely basis; (ii) we may be required to make significant business investments that do not produce offsetting increases in revenue; (iii) we may be unable to execute and implement our growth strategy; (iv) we may be unable to achieve our targeted performance goals for our business segments; and (v) other unforeseen events may impact our business. The forward-looking statements speak only as of the date hereof. The Company disclaims any obligation to update or alter its forward-looking statements, except as may be required by law.
FINANCIAL TABLES FOLLOW
ARCADIA RESOURCES, INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
June 30, | March 31, | |||||||
2011 | 2011 | |||||||
ASSETS | (unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,627 | $ | 2,136 | ||||
Accounts receivable, net of allowance of $2,143 and $1,897, respectively | 11,720 | 12,049 | ||||||
Inventories, net | 813 | 795 | ||||||
Prepaid expenses and other current assets | 1,350 | 1,455 | ||||||
Restricted cash | 1,000 | - | ||||||
Total current assets | 16,510 | 16,435 | ||||||
Property and equipment, net | 1,148 | 1,253 | ||||||
Goodwill | 1,070 | - | ||||||
Acquired intangible assets, net | 6,969 | 7,098 | ||||||
Other assets | 153 | 345 | ||||||
Restricted cash | - | 1,000 | ||||||
Total assets | $ | 25,850 | $ | 26,131 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,433 | $ | 1,226 | ||||
Line of credit | 8,478 | - | ||||||
Accrued expenses: | ||||||||
Compensation and related taxes | 2,564 | 2,792 | ||||||
Interest | 69 | 35 | ||||||
Health insurance | 736 | 756 | ||||||
Other | 786 | 952 | ||||||
Fair value of warrant liability | 135 | 285 | ||||||
Payable to affiliated agencies | 653 | 616 | ||||||
Long-term obligations, current portion | 29,282 | 189 | ||||||
Capital lease obligations, current portion | 18 | 25 | ||||||
Total current liabilities | 44,154 | 6,876 | ||||||
Lines of credit | 4,423 | 11,504 | ||||||
Long-term obligations, less current portion | - | 27,807 | ||||||
Total liabilities | 48,577 | 46,187 | ||||||
Commitments and contingencies | ||||||||
STOCKHOLDERS' DEFICIT | ||||||||
Preferred stock, $.001 par value, 5,000,000 shares authorized, none outstanding | - | - | ||||||
Common stock, $.001 par value, 300,000,000 shares authorized; 193,331,294 and 193,162,544 shares issued and outstanding, respectively | 193 | 193 | ||||||
Additional paid-in capital | 151,557 | 151,436 | ||||||
Accumulated deficit | (174,477 | ) | (171,685 | ) | ||||
Total stockholders' deficit | (22,727 | ) | (20,056 | ) | ||||
Total liabilities and stockholders' deficit | $ | 25,850 | $ | 26,131 | ||||
ARCADIA RESOURCES, INC. | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(in thousands, except for per share amounts) | ||||||||
Three-Month Period | ||||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
Services | $ | 20,434 | $ | 20,365 | ||||
Pharmacy | 4,325 | 4,041 | ||||||
Revenues, net | 24,759 | 24,406 | ||||||
Cost of revenues | 18,005 | 17,813 | ||||||
Gross profit | 6,754 | 6,593 | ||||||
Selling, general and administrative | 8,546 | 9,516 | ||||||
Depreciation and amortization | 297 | 286 | ||||||
Total operating expenses | 8,843 | 9,802 | ||||||
Operating loss | (2,089 | ) | (3,209 | ) | ||||
Other expenses (income): | ||||||||
Interest expense, net | 1,025 | 844 | ||||||
Change in fair value of warrant liability | (150 | ) | 642 | |||||
Total other expenses | 875 | 1,486 | ||||||
Loss from continuing operations before income taxes | (2,964 | ) | (4,695 | ) | ||||
Income tax expense | 15 | 33 | ||||||
Loss from continuing operations | (2,979 | ) | (4,728 | ) | ||||
Discontinued operations: | ||||||||
Loss from discontinued operations | - | (101 | ) | |||||
Net gain on disposal | 187 | 787 | ||||||
187 | 686 | |||||||
NET LOSS | (2,792 | ) | $ | (4,042 | ) | |||
Basic and diluted net income (loss) per share: | ||||||||
Loss from continuing operations | $ | (0.02 | ) | $ | (0.03 | ) | ||
Income from discontinued operations | - | 0.01 | ||||||
Net loss per share | $ | (0.02 | ) | $ | (0.02 | ) | ||
Reconciliation of Net Loss from Continuing Operations to EBITDA from Continuing Operations: | ||||||||
Net Loss from Continuing Operations | $ | (2,979 | ) | $ | (4,728 | ) | ||
Income tax expense | 15 | 33 | ||||||
Interest expense, net | 1,025 | 844 | ||||||
Change in fair value of warrant liability | (150 | ) | 642 | |||||
Depreciation and amortization | 297 | 286 | ||||||
EBITDA from Continuing Operations | $ | (1,792 | ) | $ | (2,923 | ) | ||
ARCADIA RESOURCES, INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOW | ||||||||
(in thousands) | ||||||||
Three-Month Period Ended | ||||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
Operating activities | ||||||||
Net loss for the period | $ | (2,792 | ) | $ | (4,042 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Provision for doubtful accounts | 209 | 310 | ||||||
Depreciation and amortization of property and equipment | 167 | 165 | ||||||
Amortization of intangible assets | 130 | 143 | ||||||
Non-cash interest expense | 693 | 661 | ||||||
Gain on business disposals | (187 | ) | (787 | ) | ||||
Amortization of debt discount and deferred financing costs | 100 | 69 | ||||||
Change in fair value of warrant liability | (150 | ) | 642 | |||||
Stock-based compensation expense | 121 | 364 | ||||||
Changes in operating assets and liabilities, net of business acquisitions: | ||||||||
Accounts receivable | 120 | 81 | ||||||
Inventories | (18 | ) | (561 | ) | ||||
Other assets | 104 | (281 | ) | |||||
Accounts payable | 201 | (535 | ) | |||||
Accrued expenses | (376 | ) | (723 | ) | ||||
Due to affiliated agencies | 51 | (388 | ) | |||||
Net cash used in operating activities | (1,627 | ) | (4,882 | ) | ||||
Investing activities | ||||||||
Business acquisitions, net of cash acquired | (347 | ) | (21 | ) | ||||
Proceeds from business disposals | 187 | 787 | ||||||
Purchases of property and equipment | (63 | ) | (235 | ) | ||||
Net cash provided by (used in) investing activities | (223 | ) | 531 | |||||
Financing activities | ||||||||
Net borrowings on lines of credit | 1,348 | 4,409 | ||||||
Payments on notes payable and capital lease obligations | (7 | ) | (766 | ) | ||||
Proceeds from exercise of stock options | - | 1 | ||||||
Net cash provided by financing activities | 1,341 | 3,644 | ||||||
Net change in cash and cash equivalents | (509 | ) | (707 | ) | ||||
Cash and cash equivalents, beginning of period | 2,136 | 5,444 | ||||||
Cash and cash equivalents, end of period | $ | 1,627 | $ | 4,737 | ||||
Arcadia HealthCare
Matthew Middendorf, Chief Financial Officer,
317-569-8234 x 1022
mmiddendorf@arcadiahealthcare.com