Nwh (NASDAQ:NWIR)
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NWH Announces Second Quarter Results and Plans for Substantial
Growth from ENS in Fiscal 2004
NEW YORK, June 10 /PRNewswire-FirstCall/ -- NWH, Inc. (NASDAQ:NWIR), the
parent company of Electronic Network Systems, Inc. ("ENS"), today reported
financial results for its fiscal second quarter and six months ended April 30,
2004. NWH owns and operates ENS (http://www.enshealth.com/ ), a payer services
organization that connects healthcare payers and providers using state of the
art proprietary software and telecommunications services for most healthcare
payment and insurance validation transactions. The Company focuses its efforts
on the development of ENS' business and continues its business of acquiring and
disposing of interests in healthcare and other business areas.
NWH's net revenues for the second quarter of fiscal 2004 were $4.4 million,
compared to $2.9 million in the second quarter of the prior fiscal year. NWH's
reported net income for the second quarter was $529,560 (including $851,568 of
Other Income), or $0.18 per share basic and diluted, as compared to net (loss)
of ($679,072) (including ($667,890) of Other Income) or ($0.23) basic and
diluted per share, in the second quarter of the prior fiscal year. Shares used
for computing basic earnings per share were 2,924,631 and 2,919,979, and fully
diluted earnings per share were 2,924,657 and 2,932,299, for the second fiscal
quarter ended April 30, 2004 and 2003, respectively.
Net revenue for the six months ended April 30, 2004 was $8.6 million, as
compared to net revenue of $5.9 million for the six months ended April 30,
2003. NWH's net income for the six months ended April 30, 2004 was $413,074
(including $793,950 of Other Income), or $0.14 per share basic and diluted,
compared to a net income of $805,121 (including $1,513,253 of Other Income), or
$0.28 per share basic and diluted, in fiscal 2003. Shares used for computing
basic earnings per share were 2,924,631 and 2,921,020, and fully diluted
earnings per share were 2,964,657 and 2,924,495, for the six month period ended
April 30, 2004 and 2003, respectively. Other Income consists primarily of gain
or loss on securities transactions, reflecting the net results of option and
short sale position and settlements and sale of BellSouth Common Stock.
Further, unrealized gains and losses on BellSouth common stock are recorded
through Other Comprehensive Income (Loss) and are only recorded in the
Statement of Operations when realized upon ultimate sale. The realized loss on
derivative transactions decreased from ($837,998) for the three months ended
April 30, 2003 to a gain of $738,015 for the three months ended April 30, 2004.
The unrealized gain on BellSouth common stock, reflected in Other Comprehensive
Loss, net of income taxes, for the three months ended April 30, 2003 was
$956,180 as compared to a loss of ($505,566) for the three months ended April
30, 2004.
"NWH posted a strong second quarter of fiscal 2004, reflecting ENS revenues
that surpassed our expectations, as well as better than anticipated expense
management. After giving effect to dividends paid, NWH had a cash and
short-term investments position of $31.8 million at the end of April," said
Terrence S. Cassidy, NWH's President and CEO. "ENS' improving results are
expected to help propel NWH to significant year-over-year revenue growth in
fiscal 2004."
About NWH and ENS
ENS is a payer services organization that connects payers (i.e., insurance
companies and third party administrators) and providers (i.e., doctors, group
practices and other healthcare providers) using state of the art proprietary
software and telecommunications services for most healthcare payment and
insurance validation transactions. ENS provides a state of the art technology
platform for web based graphical user interfaces on a national basis, which
enables its clients, both payers and providers, to comply fully with applicable
regulatory requirements such as those imposed by HIPAA (as discussed in
Industry below). ENS' service offerings address the full array of evolving
industry needs in this focused area with a complete cycle of services from a
single point of entry (a personal computer in the client's office) for both
providers and payers, compatible with multiple system and database operating
environments. These services include an Internet transactions portal, payer
transactions hosting, electronic data interchange, Pre- adjudication software
services (PASS(TM)), scanning, optical character recognition and data entry of
paper claims and correspondence and mailroom services. ENS generates revenue
through recurring subscriptions, flat or per transaction fees and revenue
sharing.
Safe Harbor Statement
Certain statements contained in this press release, including, without
limitation, statements containing the words "believes," "anticipates,"
"expects" and words of similar import, constitute "forward-looking statements"
as defined in the Private Securities Litigation Reform Act of 1995 or by the
Securities and Exchange Commission in its rules, regulations and releases,
regarding the Company's financial and business prospects and capital
requirements. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: the limited nature of the Company's operations and the risk of the
Company's failure to acquire additional businesses; the uncertain acceptance of
Health-e Network(R); competition; existing government regulations and changes
in, or the failure to comply with, government regulations; the ability of the
Company to sustain, manage or forecast its growth; dependence on significant
customers and the potential loss thereof; the ability to attract and retain
qualified personnel; risk of technological obsolescence, and other factors
referenced in this Quarterly Report on Form 10-Q including, without limitation,
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations." Certain of these factors are discussed in more detail in the
Company's Annual Report on Form 10-K for the year ended October 31, 2003,
including, without limitation, under the caption "Business" and Exhibit 99.1
thereto. Given these uncertainties, undue reliance should not be placed on such
forward-looking statements. The Company disclaims any obligation to update any
such factors or to publicly announce the result of any revisions to any of the
forward-looking statements contained or incorporated by reference herein to
reflect future events or developments.
Additional information on these and other factors are contained in NWH's
reports filed with the Securities and Exchange Commission (SEC), including the
Company's Quarterly Report on Form 10-Q as filed with the SEC on June 10, 2004,
copies of which are available at the website maintained by the SEC at
http://www.sec.gov/ . NWH assumes no obligation to update the forward-looking
statements included in this press release.
NWH, INC.
Condensed Consolidated Balance Sheets
April 30, October 31,
2004 2003
(Unaudited)
Assets
Current assets
Cash and cash equivalents $26,043,838 $29,309,192
Marketable securities 5,785,105 9,777,901
Trade and other receivables 2,840,630 2,419,797
Prepaid expenses and other current assets 487,591 456,794
Refundable income taxes 45,053
Total current assets 35,202,217 41,963,684
Property and equipment, net of accumulated
depreciation and amortization of
$3,119,173 and $2,865,039, respectively 829,590 703,739
Internally developed software, net of
accumulated amortization of $1,701,637
and $1,238,812, respectively 2,447,539 2,489,215
Goodwill 3,762,187 3,762,187
Investments and other assets 1,006,466 957,748
Total assets $43,247,999 $49,876,573
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued expenses $2,086,719 $2,116,881
Call options written at fair value 242,000 2,148,928
Current portion of long-term debt 80,259 71,078
Current income taxes 970,426
Deferred income taxes 2,690,792 3,598,792
Dividends payable 1,462,316 1,462,316
Total current liabilities 6,562,086 10,368,421
Note payable 140,000 140,000
Long-term debt 112,319 15,022
Total liabilities 6,814,405 10,523,443
Stockholders' equity
Preferred stock, $.01 par value;
1,000,000 shares authorized;
no shares issued or outstanding
Common stock, $.01 par value:
20,000,000 shares authorized;
3,342,231 shares issued 33,422 33,422
Additional paid-in capital 23,195,991 23,195,991
Retained earnings 17,864,161 20,375,719
Accumulated other comprehensive income 431,654 839,632
Treasury stock 417,600 shares at cost (5,091,634) (5,091,634)
Total stockholders' equity 36,433,594 39,353,130
Total liabilities and stockholders'
equity $43,247,999 $49,876,573
NWH, INC.
Condensed Consolidated Statement of Operations (Unaudited)
For the Three Months For the Six Months
Ended April 30, Ended April 30,
2004 2003 2004 2003
Services revenue $4,373,436 $2,890,901 $8,559,746 $5,936,991
Cost of services 2,350,858 1,494,353 4,536,508 2,985,293
Professional fees 179,002 125,116 397,530 309,476
General and
administrative 1,768,232 1,605,902 3,614,018 3,038,324
Depreciation and
amortization 76,352 82,712 142,566 168,022
Total expenses 4,374,444 3,308,083 8,690,622 6,501,115
Loss from operations (1,008) (417,182) (130,876) (564,124)
Other income (expense)
Gain (loss) on securities
transactions, net 738,015 (837,998) 558,458 739,113
Dividend income 56,035 98,975 124,571 192,613
Interest income 65,105 87,091 134,920 191,640
Interest expense (7,587) (15,958) (23,999) (31,366)
Other income -- -- -- 421,253
851,568 (667,890) 793,950 1,513,253
Income (loss) before
provision for (benefit
from) income taxes 850,560 (1,085,072) 663,074 949,129
Provision for (benefit
from) income taxes 321,000 (406,000) 250,000 144,000
Net income (loss) $529,560 $(679,072) $413,074 $805,129
Net income (loss) per
common share
Basic $.18 (.23) $.14 .28
Diluted $.18 $(.23) $.14 $.28
Weighted average number
of common shares
outstanding
Basic 2,924,631 2,919,979 2,924,631 2,921,023
Diluted 2,924,657 2,932,299 2,964,657 2,924,495
NWH, Inc.
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
For the Three Months For the Six Months
Ended April 30, Ended April 30,
2004 2003 2004 2003
Net income (loss) $529,560 $(679,072) 413,074 805,129
Other comprehensive
(loss) income
Net unrealized holding
(loss) gain on
marketable securities
arising during the
period, net of income
tax of ($261,000),
$489,990, $52,457
and ($130,010),
respectively (505,566) 956,180 99,237 (222,193)
Reclassification
adjustment for gains
recognized in net
income, net of income
taxes of $0, $0,
($261,293) and $0,
respectively (507,215)
Other comprehensive
(loss) income (505,566) 956,180 (407,978) (222,193)
Comprehensive income $23,994 $277,108 $5,096 $582,936
NWH, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Six Months
Ended April 30,
2004 2003
Cash flows from operating activities
Net income $413,074 $805,129
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities
Depreciation and amortization 770,624 691,224
Gain on securities transactions, net (558,458) (739,113)
Gain on sale of investment -- (421,253)
Deferred income taxes (700,000) (402,625)
Bad debt expense 24,641 21,040
Changes in assets and liabilities
Trade and other receivables (445,474) 158,354
Prepaid expenses and other current assets (82,788) (310,156)
Refundable income taxes (45,053) --
Other assets (48,718) 22,990
Accounts payable and accrued expenses (30,162) 40,382
Current income taxes payable (970,426) (583,620)
Net cash used in operating activities (1,672,740) (717,648)
Cash flows from investing activities
Acquisition of property and equipment (202,251) (232,170)
Cash paid for internally developed software (405,479) (294,859)
Proceeds from sale of marketable securities 4,144,783 --
Proceeds from sale of marketable
equity securities-short sale -- 1,309,805
Acquisition of marketable securities-short sale -- (1,301,382)
Acquisition of written call options (3,585,825) (7,373,090)
Proceeds from sale of written call options 1,469,400 6,155,611
Proceeds from sale of investment -- 1,421,253
Net cash provided by (used in)
investing activities 1,420,628 (314,832)
Cash flows from financing activities
Acquisition of treasury stock -- (323,106)
Proceeds of short-term debt 100,000 --
Dividends paid (2,924,632) --
Principal payments of short and long-term debt (117,664) (136,667)
Principal payments of capital leases (70,946) --
Net cash used in financing activities (3,013,242) (459,773)
Net decrease in cash and cash equivalents (3,265,354) (1,492,253)
Cash and cash equivalents
Beginning of period 29,309,192 31,498,217
End of period $26,043,838 $30,005,964
Capital lease assets acquired
and obligations incurred $195,087 $ --
NWH, Inc.
Marketable Securities
Unrealized
Holding Fair
Cost Gain Value
BellSouth Common Stock $5,131,451 $653,654 $5,785,105
NWH, Inc.
Stock Options
Three Months Ended Six Months Ended
April 30, April 30,
2004 2003 2004 2003
Net income (loss)
As reported $529,560 $(679,072) $413,074 $805,129
Deduct: total stock
based employee
Compensation expense
determined under
fair value based
method for all awards,
net of related tax
effects (6,500) (19,770) (13,180) (39,539)
Pro forma 523,060 (698,842) 399,894 765,590
Net income (loss) per share
Basic - as reported $ .18 $ (.23) $ .14 $ .28
Basic - pro forma .18 (.24) .13 .26
Diluted - as reported .18 (.23) .14 .28
Diluted - pro forma .18 (.24) .13 .26
NWH, Inc.
Earnings Per Share
Three Months Ended Six Months Ended
April 30, April 30,
2004 2003 2004 2003
Basic EPS shares
outstanding
(weighted average) 2,924,631 2,919,979 2,924,631 2,921,023
Effect of dilutive
securities 26 12,320 40,026 3,472
Diluted EPS shares
outstanding 2,924,657 2,932,299 2,964,657 2,924,495
NWH, Inc.
Marketable Securities
NWH and
Other ENS Total
Three months ended April 30, 2004
Revenues
Service $-- $4,373,436 $4,373,436
Expenses
Cost of services,
professional fees, and
general and administrative 485,137 3,812,955 4,298,092
Depreciation and amortization -- 76,352 76,352
(Loss) income from operations $(485,137) $ 484,129 $(1,008)
Capital expenditure for
property and equipment and
internally developed software $-- $ 326,767 $326,767
Three months ended April 30, 2003
Revenues
Service $-- $2,890,901 $2,890,901
Expenses
Cost of services,
professional fees, and
general and administrative 487,966 2,737,405 3,225,371
Depreciation and amortization 465 82,247 82,712
(Loss) income from operations $(488,431) $71,249 $(417,182)
Capital expenditure for
property and equipment and
internally developed software $-- $ 312,767 $312,767
Six months ended April 30, 2004
Revenues
Service $-- $8,559,746 $8,559,746
Expenses
Cost of services,
professional fees, and
general and administrative 987,900 7,560,156 8,548,056
Depreciation and amortization 500 142,066 142,566
(Loss) income from operations $(988,400) $857,524 $(130,876)
Total assets $32,499,354 $10,748,645 $43,247,999
Capital expenditure for
property and equipment and
internally developed software $-- $802,817 $802,817
Six months ended April 30, 2003
Revenues
Service $-- $5,936,991 $5,936,991
Expenses
Cost of services,
professional fees, and
general and administrative 869,287 5,463,806 6,333,093
Depreciation and amortization 930 167,092 168,022
(Loss) income from operations $(870,217) $306,093 $(564,124)
Total assets $44,311,549 $9,053,941 $53,365,490
Capital expenditure for
property and equipment and
internally developed software $-- $ 527,029 $527,029
DATASOURCE: NWH, Inc.
CONTACT: Carl Nicola of NWH, Inc., +1-212-582-1212
Web site: http://www.enshealth.com/