Priority Healthcare b (NASDAQ:PHCC)
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Priority Healthcare Announces First Quarter Results -- Record
Quarterly Sales
LAKE MARY, Fla., April 28 /PRNewswire-FirstCall/ -- Priority Healthcare
Corporation (NASDAQ:PHCC) reported results for the first quarter ended April 2,
2005.
For the first quarter, sales increased 21% to $487 million, compared to the
first quarter of 2004. Operating earnings were $14.5 million, net earnings
were $9.6 million and diluted earnings per share were $.22.
"We are pleased with our record sales for the first quarter and the significant
progress we have made with many of our key investments. The strong sales
performance was led by ophthalmology, nephrology, oncology, ambulatory surgery
and primary care," stated Steve Cosler, President and Chief Executive Officer.
"Our performance was achieved despite the sudden withdrawal of Tysabri from the
market, which was off to a strong start, and continued sluggish performance
from several of our key pharmacy markets."
"The progress we have made with several of our strategic initiatives is
critical to the success of the expansion, continued diversification, and
transformation of Priority Healthcare. On March 1, the Aetna Specialty
Pharmacy commenced operations in our 43,000 square foot, state-of-the-art
facility in Orlando, driven by our Oracle-based Compass technology platform. In
addition to our recently opened Houston, TX specialty infusion branch, we will
open two more specialty infusion branches in the next 30 days and plan to
continue to develop and expand our national platform throughout the remainder
of 2005 and beyond. During the quarter, we also significantly expanded our
presence in customized distribution logistics with a new agreement to provide
logistical services for the entire product line of a specialty pharmaceutical
company. To service this contract, we have leased and built-out a new 84,000
square foot logistics services facility in Columbus, Ohio. These projects, and
several other initiatives that are underway, are key components of our
strategic plan."
In commenting on certain financial aspects of the quarter, Steve Saft, Chief
Financial Officer, stated, "Our 21% sales increase for the quarter was driven
by 15% organic sales growth. Our gross profit decreased 40 basis points to
11.0%, sequentially, from the fourth quarter. This was driven by the stronger
than expected performance in specialty distribution. SG&A expense increased 80
basis points to 7.4%, sequentially, from the fourth quarter, primarily driven
by the planned investments we have made in new projects. This trend begins to
reverse itself in the second quarter with revenues generated at the Aetna
Specialty Pharmacy and other initiatives in which we have invested."
Mr. Saft continued, "Our balance sheet remains strong with $45 million in cash
and marketable securities, offset by $45 million drawn on our line of credit.
Cash flow from operations was a use of cash of $2 million for the first quarter
driven by the working capital used in the start up of the Aetna Specialty
Pharmacy and the increase in trade DSO's. Our trade DSO's were 46 days, an
increase of 6 days from the fourth quarter, primarily driven by the strong
performance of products that carry a higher DSO than the company average. Our
inventory turns were 15, in line with the fourth quarter. Return on committed
capital and invested capital for the quarter were strong at 34% and 21%,
respectively, which we believe is among the highest in the industry."
"Based on our first quarter results, we are increasing our sales outlook for
2005 by $75 million to a range of $2.1 billion to $2.275 billion and
maintaining our earnings per share outlook of $1.18 to $1.28. The sales
increase is driven primarily by growth in specialty distribution."
Mr. Cosler concluded, "We are beginning to see the results of our capital
investments in new facilities and our Compass technology platform, as well as
the operating investments in our new projects. Significant progress has been
achieved in creating additional service offerings and developing our planned
national hub and spoke operating platform. We have already added five new
limited distribution network products during 2005. Based on the current
pipeline of anticipated new product agreements, this should be a record year in
this area of the business, which adds to the momentum for 2006 and beyond. We
continue to be encouraged by the new opportunities we are generating, driven by
our leadership position and success in the industry."
As previously announced, a web cast of the company's conference call to review
the financial results is available on Priority Healthcare's website,
http://www.priorityhealthcare.com/ , live at 9:00 AM Eastern today. A replay
of this conference call will be available on the company's website
approximately two hours after the event for a two week period.
About Priority Healthcare Corporation
Priority Healthcare is the premier healthcare services company providing
innovative, high quality and cost-effective solutions that enhance quality of
life. As a national specialty pharmacy and distributor, Priority Healthcare
provides biopharmaceuticals, complex therapies, related disease treatment
programs and a portfolio of other service offerings for patients, payors,
physicians and pharmaceutical manufacturers. The growing number of specialty
areas serviced by Priority Healthcare include: oncology, gastroenterology,
reproductive endocrinology, neurology, hematology, pulmonology, ophthalmology,
rheumatology, endocrinology, infectious disease and nephrology, as well as
ambulatory surgery centers. Additional information regarding Priority
Healthcare is available online at http://www.priorityhealthcare.com/ .
Certain statements included in this press release, which are not historical
facts, are forward-looking statements. Such forward-looking statements are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements represent our
expectations or beliefs and involve certain risks and uncertainties, including
those described in our public filings with the United States Securities and
Exchange Commission; also including, but not limited to, changes in interest
rates, competitive pressures, changes in customer mix, changes in third party
reimbursement rates, financial stability of major customers, changes in
government regulations or the interpretation of these regulations, changes in
supplier relationships, growth opportunities, cost savings, revenue
enhancements, synergies and other benefits anticipated from acquisition
transactions, difficulties relative to integrating acquired businesses, the
accounting and tax treatment of acquisitions, and asserted and unasserted
claims, which could cause actual results to differ from those in the
forward-looking statements. The forward-looking statements by their nature
involve substantial risks and uncertainties, certain of which are beyond our
control, and actual results may differ materially depending on a variety of
important factors. You are cautioned not to place undue reliance on these
forward-looking statements that speak only as of the date herein.
PRIORITY HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(000's omitted, except share data)
(unaudited)
Three-month Three-month
period ended period ended
April 2, April 3,
2005 2004
Net sales $486,741 $401,243
Cost of products sold 433,394 358,230
Gross profit 53,347 43,013
Selling, general and administrative expense 36,196 22,158
Depreciation and amortization 2,615 1,369
Earnings from operations 14,536 19,486
Interest income 122 206
Interest expense (637) (32)
Minority interest 1,500 (78)
Earnings before income taxes 15,521 19,582
Provision for income taxes 5,898 7,343
Net earnings $9,623 $12,239
Earnings per share:
Basic $.22 $.28
Diluted $.22 $.28
Weighted average shares outstanding:
Basic 43,780,334 43,322,604
Diluted 44,443,342 44,056,295
PRIORITY HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's omitted)
(unaudited)
April 2, January 1,
2005 2005
Cash and cash equivalents $33,592 $45,465
Marketable securities 11,739 17,289
Receivables, net 287,855 244,730
Finished goods inventory 117,440 112,616
Other current assets 37,399 36,457
Fixed assets, net 60,650 48,209
Other assets 165,263 164,627
Total assets $713,938 $669,393
Current liabilities $229,402 $200,875
Line of credit 45,369 40,290
Long-term debt -- --
Other liabilities 9,714 9,714
Minority interest 21,712 23,212
Shareholders' equity 407,741 395,302
Total liabilities and shareholders' equity $713,938 $669,393
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DATASOURCE: Priority Healthcare Corporation
CONTACT: Stephen Saft, Chief Financial Officer, Priority Healthcare
Corporation, +1-407-804-6700
Web site: http://www.priorityhealthcare.com/