Priority Healthcare b (NASDAQ:PHCC)
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Priority Healthcare Announces Record Second Quarter Results
LAKE MARY, Fla., July 22 /PRNewswire-FirstCall/ -- ? Priority Healthcare
Corporation (NASDAQ:PHCC) reported results for the second quarter and six
months ended July 3, 2004.
For the second quarter, sales increased 25% to $438 million. Excluding a
restructuring charge, operating earnings increased 17% to $21 million, net
earnings grew 14% to $13 million and diluted earnings per share increased 15%
to $.30. Including the restructuring charge, operating earnings increased 10%
to $19.7 million, net earnings grew 7% to $12.2 million and diluted earnings
per share increased 8% to $.28. The company recorded a pre-tax charge of $1.3
million or $.02 per diluted share related to facility consolidation and certain
employee and lease termination costs.
For the six month period, sales increased 20% to $840 million. Excluding the
restructuring charge, operating earnings increased 5% to $41 million, net
earnings grew 3% to $25.2 million and diluted earnings per share increased 2%
to $.57. Including the restructuring charge, operating earnings increased 2% to
$39 million, net earnings decreased 1% to $24.4 million and diluted earnings
per share were flat at $.56.
"We are pleased that we exceeded our sales forecast and our earnings guidance
for the second quarter after excluding the restructuring charge. The strong
sales performance was led by ophthalmology, oncology, neurology and certain
components of other specialty markets. The performance in these areas more
than offset the continued challenging national unit trends in infertility,
idiopathic pulmonary fibrosis and hepatitis, as well as the sales compression
related to the generic version of ribavirin." stated Steve Cosler, President
and Chief Executive Officer. "We are looking forward to continued growth from
many of our specialty markets, along with the strong pipeline of new product
and payor opportunities we are pursuing.
"In addition to our solid financial performance, we had a very active quarter,
strategically. We expanded and enhanced our product and service offerings
through the recent acquisitions of HealthBridge and Integrity Healthcare
Services. HealthBridge strengthens our product reimbursement and support
capabilities for manufacturers, as well as our consultative capabilities for
our payor customers. Integrity Healthcare Services expands our product and
service offering to our entire customer base, as well as expanding our
geographic presence.
"We also began the expansion of our corporate headquarters at Technology Park
in Lake Mary, Florida. This expansion will be partially funded with $1.8
million in tax incentives provided by the State of Florida, Seminole County and
the City of Lake Mary. In addition, we consolidated our Carpinteria,
California operation into our Monrovia, California facility. This location will
serve as the hub of our west coast operations as we expand our national
geographic presence."
In commenting on certain financial aspects of the quarter, Steve Saft, Chief
Financial Officer, stated, "Our 25% sales increase for the quarter was driven
by 24% organic growth. Our gross profit decreased 20 basis points to 10.5%
sequentially, from the first quarter. We are pleased SG&A expense decreased 20
basis points sequentially, from the first quarter."
Mr. Saft continued, "Our balance sheet remains strong with $51 million in cash
and marketable securities, offset by $5 million drawn on our line of credit.
Cash flow from operations was $7 million for the second quarter. Our trade
DSO's were 39 days, a decrease of one day from the second quarter of 2003. Our
inventory turns were 13, an increase of one turn from the second quarter of
last year. Return on committed capital and invested capital for the quarter
were strong at 48% and 29%, respectively, which we believe is among the highest
in the industry."
Mr. Cosler concluded, "The momentum continues to build in our industry. We
remain focused on capitalizing on this momentum by generating solid financial
results, expanding and improving our operating platform, adding new product and
service offerings to better serve our customers, and adding new leadership and
talent to the Priority Healthcare team to manage our growth opportunities. We
will continue to take a very disciplined approach across all aspects of our
business to assure we maximize our returns."
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:///
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 Corporation is a national specialty pharmacy and
distributor that provides biopharmaceuticals, complex therapies, and related
disease treatment services. Priority Healthcare provides comprehensive
programs for patients, payors, physicians, and pharmaceutical manufacturers for
a growing number of disease states including cancer, hepatitis C, respiratory
and pulmonary conditions, infertility, rheumatoid arthritis, hemophilia,
multiple sclerosis, and macular degeneration.
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.
For further information:
Stephen Saft, Chief Financial Officer
(407) 804-6700
PRIORITY HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(000's omitted, except share data)
(unaudited)
Six-month Six-month Three-month Three-month
period period period period
ended ended ended ended
July 3, June 28, July 3, June 28,
2004 2003 2004 2003
Net sales $ 839,695 $ 702,036 $ 438,452 $ 350,507
Cost of products sold 750,815 623,967 392,585 312,723
Gross profit 88,880 78,069 45,867 37,784
Selling, general and
administrative expense 45,572 37,525 23,414 18,800
Restructuring charge 1,317 ? 1,317 ?
Depreciation and 2,799 2,010 1,430 1,083
amortization
Earnings from operations 39,192 38,534 19,706 17,901
Interest income 369 812 163 351
Interest expense (196) -- (164) --
Minority interest (163) -- (85) --
Earnings before income taxes 39,202 39,346 19,620 18,252
Provision for income taxes 14,799 14,755 7,456 6,845
Net earnings $ 24,403 $ 24,591 $ 12,164 $ 11,407
Earnings per share:
Basic $.56 $.56 $.28 $.26
Diluted $.56 $.56 $.28 $.26
Weighted average shares
outstanding:
Basic 43,305,603 43,549,394 433,288,606 43,577,129
Diluted 43,926,991 44,149,962 43,797,690 44,289,419
RECONCILIATION OF NET EARNINGS TO NET EARNINGS, EXCLUDING
RESTRUCTURING CHARGE
Six-month Six-month Three-month Three-month
period period period period
ended ended ended ended
July 3, June 28, July 3, June 28,
2004 2003 2004 2003
Net earnings $ 24,403 $ 24,591 $ 12,164 $ 11,407
Restructuring charge,
net of applicable
income taxes 817 -- 817 --
Net earnings, excluding
restructuring charge $ 25,220 $ 24,591 $ 12,981 $ 11,407
Earnings per share, excluding
restructuring charge:
Basic $.58 $.56 $.30 $.26
Diluted $.57 $.56 $.30 $.26
PRIORITY HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's omitted)
(unaudited)
July 3, January 3,
2004 2004
Cash and cash equivalents $ 43,101 $ 47,719
Marketable securities 7,721 15,317
Receivables, net 213,789 172,206
Finished goods inventory 104,759 117,218
Other current assets 35,686 20,642
Fixed assets, net 33,418 29,780
Other assets 125,146 111,127
Total assets $563,620 $514,009
Current liabilities $184,388 $164,663
Line of credit 5,006 --
Long-term debt -- --
Other liabilities 6,490 6,437
Shareholders' equity 367,736 342,909
Total liabilities and shareholders' equity $563,620 $514,009
http://www.newscom.com/cgi-bin/prnh/20030417/PHCLOGO
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http://www.priorityhealthcare.com/DATASOURCE: Priority Healthcare Corporation
CONTACT: Stephen Saft, Chief Financial Officer, Priority Healthcare
Corporation, +1-407-804-6700
Web site: http://www.priorityhealthcare.com/