Priority Healthcare b (NASDAQ:PHCC)
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Priority Healthcare Announces Record Quarterly and Annual Sales
Results
LAKE MARY, Fla., Feb. 24 /PRNewswire-FirstCall/ -- Priority Healthcare
Corporation (NASDAQ:PHCC) reported results for the fourth quarter and fiscal
year ended January 1, 2005.
For the fourth quarter, sales increased 16% to a record $460 million, compared
to the fourth quarter of 2003. The sales increase was 25% over the fourth
quarter of the prior year, after adjusting for the extra week in 2003.
Excluding special charges, operating earnings were $19.8 million, net earnings
were $12.2 million and diluted earnings per share were $.28. Including special
charges, operating earnings were $16.8 million, net earnings were $7.6 million
and diluted earnings per share were $.17. As previously announced, the company
recorded a pre-tax charge of $4.4 million related to a settlement, and the
related costs of the settlement, with a payor. The company also recorded a
pre-tax charge to accounts receivable of $3.0 million, primarily related to
Sinus Pharmacy.
For the year, sales increased 19% to a record $1.74 billion, compared to 2003.
The sales increase was 21% over the prior year, after adjusting for the extra
week in 2003. Excluding the special charges, operating earnings were $81.1
million, net earnings were $50.0 million and diluted earnings per share were
$1.14. Including special charges, operating earnings were $76.8 million, net
earnings were $44.6 million and diluted earnings per share were $1.01.
"We are pleased with our record sales for the fourth quarter. The strong sales
performance continued to be led by ophthalmology, oncology, neurology and
several other specialty distribution markets, despite our inability to ship flu
vaccine in the quarter," stated Steve Cosler, President and Chief Executive
Officer. "We also made tremendous progress in our development of the Aetna
Specialty Pharmacy, which is on schedule for the planned March launch."
"The pipeline of new opportunities continues to be very strong. We are excited
about the expansion of our ophthalmology franchise with the addition of
Macugen, the recently approved treatment for age-related macular degeneration
from Pfizer and Eyetech. We were also selected as one of two distributors for
Vitrase, a product from Ista recently approved for eye surgery. In addition,
we announced this week our selection to be a specialty pharmacy provider for
Ventavis, the recently approved inhaled therapy from CoTherix for the treatment
of pulmonary hypertension."
In commenting on certain financial aspects of the quarter, Steve Saft, Chief
Financial Officer, stated, "Our 25% sales increase for the quarter, after the
one week adjustment, was driven by 18% organic growth. Our gross profit
decreased 40 basis points to 11.4%, sequentially from the third quarter, due to
a mix shift within our businesses and, as expected, tighter reimbursement from
payor contracts. SG&A expense, excluding special charges, as a percent of
sales, remained constant from the third quarter."
Mr. Saft continued, "Our balance sheet remains strong with $63 million in cash
and marketable securities, offset by $40 million drawn on our line of credit.
Our trade DSO's were 40 days, a decrease of three days, sequentially from the
third quarter, demonstrating our continued ability to maintain our industry low
DSO's. Our inventory turns were 15, an increase of three turns from the fourth
quarter of last year. Excluding special charges, return on committed capital
and invested capital for the quarter were strong at 40% and 24%, respectively,
which we believe is among the highest in the industry. The returns remain high
despite the significant investments we are making without a return in the
current period."
"We are maintaining our outlook for 2005 of $2.025 billion to $2.2 billion in
sales and earnings per share of $1.18 to $1.28. This year is expected to be
fueled by significant investments in the Aetna Specialty Pharmacy, as well as
other new potential projects in the first half of the year. The largest single
quarter of investment is anticipated to be the first quarter of 2005. These
investments should result in strong momentum in the second half of the year and
a very solid position as we enter 2006."
Mr. Cosler concluded, "Our investments in the fourth quarter of 2004 and the
first half of 2005 should provide strong returns on capital and are the right
actions to take to assure our continued success. We have made tremendous
progress with our COMPASS pharmacy implementation, which will be the foundation
of our clinical and data management capabilities. Initial productivity
increases as a result of COMPASS are exceeding expectations. We continue to
build our services capabilities and are very encouraged by the response from
manufacturers and payors to our offerings. We are optimistic about the launch
of several new programs throughout 2005 based on the initiatives we have
underway and look forward to our continued leadership position 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,
rhuematology, 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- Three-
month month
Year Year period period
ended ended ended ended
January January January January
1, 3, 1, 3,
2005 2004 2005 2004
Net sales $1,739,618 $1,461,811 $459,764 $396,920
Cost of products sold 1,546,727 1,299,948 407,580 352,498
Gross profit 192,891 161,863 52,184 44,422
Selling, general and
administrative expense 108,197 77,932 33,356 21,426
Restructuring charge 1,317 - - -
Depreciation and amortization 6,591 4,273 2,014 1,136
Earnings from operations 76,786 79,658 16,814 21,860
Third party payor settlement (4,401) - (4,401) -
Minority interest (212) - 43 -
Interest expense (1,060) - (425) -
Interest income 707 1,302 199 244
Earnings before income taxes 71,820 80,960 12,230 22,104
Provision for income taxes 27,194 30,360 4,648 8,289
Net earnings $44,626 $50,600 $7,582 $13,815
Earnings per share:
Basic $1.03 $1.17 $.17 $.32
Diluted $1.01 $1.15 $.17 $.32
Weighted average shares
outstanding:
Basic 43,438,475 43,362,614 43,611,206 43,258,876
Diluted 44,023,741 43,930,042 44,070,517 43,813,506
RECONCILIATION OF NET EARNINGS TO PRO FORMA NET EARNINGS
Three- Three-
month month
Year Year period period
ended ended ended ended
January January January January
1, 3, 1, 3,
2005 2004 2005 2004
Net earnings $44,626 $50,600 $7,582 $13,815
Write-off of certain pharmacy
receivables net of
applicable income taxes 1,846 - 1,846 -
Restructuring charge, net of
applicable
income taxes 817 - - -
Third party payor settlement,
net of applicable
income taxes 2,729 - 2,729 -
Pro forma net earnings $50,018 $50,600 $12,157 $13,815
Pro forma earnings per share:
Basic $1.15 $1.17 $.28 $.32
Diluted $1.14 $1.15 $.28 $.32
We believe referring to these non-GAAP totals facilitates a better
understanding of our results.
PRIORITY HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's omitted)
(unaudited)
January 1, January 3,
2005 2004
Cash and cash equivalents $45,465 $47,719
Marketable securities 17,289 15,317
Receivables, net 244,730 172,206
Finished goods inventory 112,616 117,218
Other current assets 35,707 20,642
Fixed assets, net 48,209 29,780
Other assets 164,627 111,127
Total assets $668,643 $514,009
Current liabilities $203,349 $164,663
Line of credit 40,290
Long-term debt - -
Other liabilities 6,490 6,437
Minority interest 23,212 -
Shareholders' equity 395,302 342,909
Total liabilities and shareholders' equity $668,643 $514,009
http://www.newscom.com/cgi-bin/prnh/20030417/PHCLOGODATASOURCE: Priority
Healthcare Corporation
CONTACT: Stephen Saft, Chief Financial Officer, Priority Healthcare
Corporation, +1-407-804-6700
Web site: http://www.priorityhealthcare.com/