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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Sharps Compliance Corp | NASDAQ:SMED | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 8.75 | 5.00 | 8.74 | 0 | 01:00:00 |
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
74-2657168
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
9220 Kirby Drive, Suite 500, Houston, Texas
|
77054
|
(Address of principal executive offices)
|
(Zip Code)
|
Large Accelerated Filer
☐
|
Accelerated Filer
☒
|
Non-accelerated Filer
☐
|
Smaller reporting company ☐
|
(Do not check if a smaller reporting company)
|
PART I
|
FINANCIAL INFORMATION
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
Three-Months
Ended March 31,
|
||||||||
2017
|
2016
|
|||||||
REVENUES
|
$
|
8,588
|
$
|
6,652
|
||||
Cost of revenues
|
6,236
|
4,959
|
||||||
GROSS PROFIT
|
2,352
|
1,693
|
||||||
Selling, general and administrative
|
2,790
|
2,709
|
||||||
Depreciation and amortization
|
200
|
88
|
||||||
OPERATING LOSS
|
(638
|
)
|
(1,104
|
)
|
||||
OTHER INCOME (EXPENSE)
|
||||||||
Interest income
|
4
|
8
|
||||||
Interest expense
|
(34
|
)
|
-
|
|||||
TOTAL OTHER (EXPENSE) INCOME
|
(30
|
)
|
8
|
|||||
LOSS BEFORE INCOME TAXES
|
(668
|
)
|
(1,096
|
)
|
||||
TOTAL INCOME TAX BENEFIT
|
-
|
(54
|
)
|
|||||
NET LOSS
|
$
|
(668
|
)
|
$
|
(1,042
|
)
|
||
NET LOSS PER COMMON SHARE - Basic and Diluted
|
$
|
(0.04
|
)
|
$
|
(0.07
|
)
|
||
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET LOSS PER COMMON SHARE - Basic and Diluted
|
15,994
|
15,462
|
Nine-Months
Ended March 31,
|
||||||||
2017
|
2016
|
|||||||
REVENUES
|
$
|
27,826
|
$
|
24,513
|
||||
Cost of revenues
|
19,620
|
16,622
|
||||||
GROSS PROFIT
|
8,206
|
7,891
|
||||||
Selling, general and administrative
|
9,388
|
7,890
|
||||||
Depreciation and amortization
|
600
|
210
|
||||||
OPERATING LOSS
|
(1,782
|
)
|
(209
|
)
|
||||
OTHER INCOME (EXPENSE)
|
||||||||
Interest income
|
12
|
26
|
||||||
Interest expense
|
(92
|
)
|
-
|
|||||
TOTAL OTHER (EXPENSE) INCOME
|
(80
|
)
|
26
|
|||||
LOSS BEFORE INCOME TAXES
|
(1,862
|
)
|
(183
|
)
|
||||
TOTAL INCOME TAX EXPENSE
|
-
|
24
|
||||||
NET LOSS
|
$
|
(1,862
|
)
|
$
|
(207
|
)
|
||
NET LOSS PER COMMON SHARE - Basic and Diluted
|
$
|
(0.12
|
)
|
$
|
(0.01
|
)
|
||
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET LOSS PER COMMON SHARE - Basic and Diluted
|
15,930
|
15,449
|
Common Stock
|
Treasury Stock
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
Stockholders'
Equity
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Balances, June 30, 2015
|
15,575,041
|
$
|
156
|
(191,250
|
)
|
$
|
(809
|
)
|
$
|
24,344
|
$
|
(105
|
)
|
$
|
23,586
|
|||||||||||||
Exercise of stock options
|
112,425
|
1
|
-
|
-
|
312
|
-
|
313
|
|||||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
676
|
-
|
676
|
|||||||||||||||||||||
Issuance of restricted stock
|
52,992
|
1
|
-
|
-
|
(1
|
)
|
-
|
-
|
||||||||||||||||||||
Shares repurchased
|
-
|
-
|
(104,365
|
)
|
(745
|
)
|
-
|
-
|
(745
|
)
|
||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
13
|
13
|
|||||||||||||||||||||
Balances, June 30, 2016
|
15,740,458
|
158
|
(295,615
|
)
|
(1,554
|
)
|
25,331
|
(92
|
)
|
23,843
|
||||||||||||||||||
Exercise of stock options
|
95,050
|
-
|
-
|
-
|
342
|
-
|
342
|
|||||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
389
|
-
|
389
|
|||||||||||||||||||||
Issuance of restricted stock
|
52,992
|
1
|
-
|
-
|
(1
|
)
|
-
|
-
|
||||||||||||||||||||
Issuance of common stock for acquisition
|
413,272
|
4
|
-
|
-
|
1,885
|
-
|
1,889
|
|||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(1,862
|
)
|
(1,862
|
)
|
|||||||||||||||||||
Balances, March 31, 2017
|
16,301,772
|
$
|
163
|
(295,615
|
)
|
$
|
(1,554
|
)
|
$
|
27,946
|
$
|
(1,954
|
)
|
$
|
24,601
|
Nine-Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net loss
|
$
|
(1,862
|
)
|
$
|
(207
|
)
|
||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
1,100
|
601
|
||||||
Loss on disposal of property, plant and equipment
|
10
|
-
|
||||||
Stock-based compensation expense
|
389
|
510
|
||||||
Changes in operating assets and liabilities, net of effects of business acqusitions:
|
||||||||
Accounts receivable
|
1,118
|
2,764
|
||||||
Inventory
|
(477
|
)
|
(1,285
|
)
|
||||
Prepaid and other assets
|
(192
|
)
|
(79
|
)
|
||||
Accounts payable and accrued liabilities
|
335
|
(1,122
|
)
|
|||||
Deferred revenue
|
(239
|
)
|
308
|
|||||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
182
|
1,490
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchase of property, plant and equipment
|
(2,439
|
)
|
(1,217
|
)
|
||||
Cash proceeds from sale of property, plant and equipment
|
23
|
-
|
||||||
Additions to intangible assets
|
(128
|
)
|
-
|
|||||
Payments for business acquisitions, net of cash acquired
|
(7,261
|
)
|
(1,552
|
)
|
||||
NET CASH USED IN INVESTING ACTIVITIES
|
(9,805
|
)
|
(2,769
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Proceeds from exercise of stock options
|
342
|
313
|
||||||
Shares repurchased
|
-
|
(745
|
)
|
|||||
Proceeds from long-term debt
|
5,600
|
-
|
||||||
Repayments of long-term debt
|
(3,062
|
)
|
-
|
|||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
2,880
|
(432
|
)
|
|||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(6,743
|
)
|
(1,711
|
)
|
||||
CASH AND CASH EQUIVALENTS, beginning of period
|
12,435
|
15,157
|
||||||
CASH AND CASH EQUIVALENTS, end of period
|
$
|
5,692
|
$
|
13,446
|
||||
SUPPLEMENTAL CASH FLOW DISCLOSURES:
|
||||||||
Income taxes paid
|
$
|
-
|
$
|
143
|
||||
Interest paid on long-term debt
|
$
|
91
|
$
|
-
|
||||
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Issuance of common stock for acquisition
|
$
|
1,889
|
$
|
-
|
||||
Unpaid consideration related to acquistions
|
$
|
52
|
$
|
181
|
||||
Transfer of equipment to inventory
|
$
|
130
|
$
|
114
|
||||
Property, plant and equipment financed through accounts payable
|
$
|
66
|
$
|
-
|
· |
Level 1 – Quoted prices in active markets for identical assets or liabilities.
|
· |
Level 2 – Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities).
|
· |
Level 3 – Significant unobservable inputs (including our own assumptions in determining fair value).
|
Twelve Months Ending March 31,
|
||||
2018
|
$
|
604
|
||
2019
|
561
|
|||
2020
|
520
|
|||
2021
|
520
|
|||
2022
|
520
|
|||
$
|
2,725
|
Three-Months Ended
March 31,
|
Nine-Months Ended
March 31,
|
|||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Stock-based compensation expense included in:
|
||||||||||||||||
Cost of revenues
|
$
|
8
|
$
|
7
|
$
|
33
|
$
|
25
|
||||||||
Selling, general and administrative
|
108
|
145
|
356
|
485
|
||||||||||||
Total
|
$
|
116
|
$
|
152
|
$
|
389
|
$
|
510
|
Three-Months Ended
March 31,
|
Nine-Months Ended
March 31,
|
|||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Net loss, as reported
|
$
|
(668
|
)
|
$
|
(1,042
|
)
|
$
|
(1,862
|
)
|
$
|
(207
|
)
|
||||
Weighted average common shares outstanding
|
15,994
|
15,462
|
15,930
|
15,449
|
||||||||||||
Net loss per common share
|
||||||||||||||||
Basic and diluted
|
$
|
(0.04
|
)
|
$
|
(0.07
|
)
|
$
|
(0.12
|
)
|
$
|
(0.01
|
)
|
||||
Employee stock options excluded from computation of dilutive income per share amounts because their effect would be anti-dilutive
|
269
|
137
|
304
|
96
|
Three-Months Ended
March 31,
|
Nine-Months Ended
March 31,
|
|||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Options Exercised
|
19,300
|
-
|
95,050
|
112,425
|
||||||||||||
Proceeds (in thousands)
|
$
|
84
|
$
|
-
|
$
|
342
|
$
|
313
|
||||||||
Average exercise price per share
|
$
|
4.34
|
$
|
-
|
$
|
3.60
|
$
|
2.77
|
Three-Months Ended
March 31,
|
Nine-Months Ended
March 31,
|
|||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Shares repurchased
|
-
|
36,343
|
-
|
104,365
|
||||||||||||
Cash paid for shares repurchased (in thousands)
|
$
|
-
|
$
|
205
|
$
|
-
|
$
|
745
|
||||||||
Average price paid per share
|
$
|
-
|
$
|
5.64
|
$
|
-
|
$
|
7.14
|
March 31, 2017
|
June 30, 2016
|
||||||||||||||||||||||||
Estimated
Useful Lives
|
Original
Amount
|
Accumulated
Amortization
|
Net
Amount
|
Original
Amount
|
Accumulated
Amortization
|
Net
Amount
|
|||||||||||||||||||
Customer relationships
|
7 years
|
$
|
3,007
|
$
|
(382
|
)
|
$
|
2,625
|
$
|
580
|
$
|
(60
|
)
|
$
|
520
|
||||||||||
Permits
|
6 - 15 years
|
1,339
|
(264
|
)
|
1,075
|
668
|
(191
|
)
|
477
|
||||||||||||||||
Patents
|
5 - 17 years
|
383
|
(261
|
)
|
122
|
383
|
(251
|
)
|
132
|
||||||||||||||||
Tradename
|
7 years
|
270
|
(29
|
)
|
241
|
-
|
-
|
-
|
|||||||||||||||||
Non-compete
|
5 years
|
117
|
(18
|
)
|
99
|
-
|
-
|
-
|
|||||||||||||||||
Total intangible assets, net
|
$
|
5,116
|
$
|
(954
|
)
|
$
|
4,162
|
$
|
1,631
|
$
|
(502
|
)
|
$
|
1,129
|
Balance at June 30, 2016
|
$
|
1,039
|
||
Goodwill acquired during the nine months ended March 31, 2017
|
5,685
|
|||
Balance at March 31, 2017
|
$
|
6,724
|
Twelve Months Ending March 31,
|
||||
2018
|
611
|
|||
2019
|
611
|
|||
2020
|
611
|
|||
2021
|
611
|
|||
2022
|
593
|
|||
Thereafter
|
1,125
|
|||
$
|
4,162
|
March 31,
2017
|
June 30,
2016
|
|||||||
Raw materials
|
$
|
1,458
|
1,388
|
|||||
Finished goods
|
3,068
|
2,531
|
||||||
Total
|
$
|
4,526
|
3,919
|
Three-Months Ended March 31,
|
||||||||||||||||
2017
|
% Total
|
2016
|
% Total
|
|||||||||||||
REVENUES BY SOLUTION:
|
||||||||||||||||
Mailbacks
|
$
|
4,997
|
58.2
|
%
|
$
|
4,308
|
64.8
|
%
|
||||||||
Route-based pickup services
|
1,641
|
19.1
|
%
|
628
|
9.4
|
%
|
||||||||||
Unused medications
|
867
|
10.1
|
%
|
707
|
10.6
|
%
|
||||||||||
Third party treatment services
|
149
|
1.7
|
%
|
70
|
1.1
|
%
|
||||||||||
Other
(1)
|
934
|
10.9
|
%
|
939
|
14.1
|
%
|
||||||||||
Total revenues
|
$
|
8,588
|
100.0
|
%
|
$
|
6,652
|
100.0
|
%
|
Nine-Months Ended March 31,
|
||||||||||||||||
2017
|
% Total
|
2016
|
% Total
|
|||||||||||||
REVENUES BY SOLUTION:
|
||||||||||||||||
Mailbacks
|
$
|
17,661
|
63.5
|
%
|
$
|
17,246
|
70.4
|
%
|
||||||||
Route-based pickup services
|
4,686
|
16.8
|
%
|
1,469
|
6.0
|
%
|
||||||||||
Unused medications
|
2,400
|
8.6
|
%
|
2,743
|
11.2
|
%
|
||||||||||
Third party treatment services
|
291
|
1.0
|
%
|
224
|
0.9
|
%
|
||||||||||
Other
(1)
|
2,788
|
10.1
|
%
|
2,831
|
11.5
|
%
|
||||||||||
Total revenues
|
$
|
27,826
|
100.0
|
%
|
$
|
24,513
|
100.0
|
%
|
(1)
|
The Company’s other products include non-mailback products such as IV poles, accessories, containers, asset return boxes and other miscellaneous items.
|
Accounts receivable
|
$
|
51
|
||
Fixed assets
|
70
|
|||
Intangibles
|
267
|
|||
Goodwill
|
413
|
|||
Accounts payable and accrued liabilities
|
(101
|
)
|
||
Total purchase price
|
$
|
700
|
Accounts receivable
|
$
|
42
|
||
Fixed assets
|
68
|
|||
Intangibles
|
313
|
|||
Goodwill
|
626
|
|||
Accounts payable and accrued liabilities
|
(16
|
)
|
||
Total purchase price
|
$
|
1,033
|
Cash
|
$
|
5
|
||
Accounts receivable
|
495
|
|||
Fixed assets
|
30
|
|||
Intangibles
|
3,357
|
|||
Goodwill
|
5,685
|
|||
Accounts payable and accrued liabilities
|
(356
|
)
|
||
Debt assumed
|
(187
|
)
|
||
Total purchase price
|
$
|
9,029
|
Three-Months Ended
March 31,
|
Nine-Months Ended
March 31,
|
|||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Acquisition-related expenses
|
$
|
-
|
$
|
-
|
$
|
702
|
$
|
151
|
Three-Months Ended
March 31,
|
Nine-Months Ended
March 31,
|
|||||||
2016
|
2016
|
|||||||
Revenues
|
$
|
7,383
|
$
|
26,705
|
||||
Net loss
|
$
|
(1,085
|
)
|
$
|
(336
|
)
|
||
Weighted average common shares outstanding
|
15,875
|
15,862
|
||||||
Net loss per common share basic and diluted
|
$
|
(0.07
|
)
|
$
|
(0.02
|
)
|
Three-Months Ended March 31,
|
Nine-Months Ended March 31,
|
|||||||||||||||||||||||||||||||
2017
|
%
|
2016
|
%
|
2017
|
%
|
2016
|
%
|
|||||||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||||||||||||||
Revenues
|
$
|
8,588
|
100.0
|
%
|
$
|
6,652
|
100.0
|
%
|
$
|
27,826
|
100.0
|
%
|
$
|
24,513
|
100.0
|
%
|
||||||||||||||||
Cost of revenues
|
6,236
|
72.6
|
%
|
4,959
|
74.5
|
%
|
19,620
|
70.5
|
%
|
16,622
|
67.8
|
%
|
||||||||||||||||||||
Gross profit
|
2,352
|
27.4
|
%
|
1,693
|
25.5
|
%
|
8,206
|
29.5
|
%
|
7,891
|
32.2
|
%
|
||||||||||||||||||||
SG&A expense
|
2,790
|
32.5
|
%
|
2,709
|
40.7
|
%
|
9,388
|
33.7
|
%
|
7,890
|
32.2
|
%
|
||||||||||||||||||||
Depreciation and amortization
|
200
|
2.3
|
%
|
88
|
1.3
|
%
|
600
|
2.2
|
%
|
210
|
0.9
|
%
|
||||||||||||||||||||
Operating loss
|
(638
|
)
|
(7.4
|
%)
|
(1,104
|
)
|
(16.6
|
%)
|
(1,782
|
)
|
(6.4
|
%)
|
(209
|
)
|
(0.9
|
%)
|
||||||||||||||||
Interest income
|
4
|
8
|
12
|
26
|
||||||||||||||||||||||||||||
Interest expense
|
(34
|
)
|
-
|
(92
|
)
|
-
|
||||||||||||||||||||||||||
Total other (expense) income
|
(30
|
)
|
(0.3
|
%)
|
8
|
0.1
|
%
|
(80
|
)
|
(0.3
|
%)
|
26
|
0.1
|
%
|
||||||||||||||||||
Loss before income taxes
|
(668
|
)
|
(7.8
|
%)
|
(1,096
|
)
|
(16.5
|
%)
|
(1,862
|
)
|
(6.7
|
%)
|
(183
|
)
|
(0.7
|
%)
|
||||||||||||||||
Income tax (benefit) expense
|
-
|
0.0
|
%
|
(54
|
)
|
(0.8
|
%)
|
-
|
0.0
|
%
|
24
|
0.1
|
%
|
|||||||||||||||||||
Net Loss
|
$
|
(668
|
)
|
(7.8
|
%)
|
$
|
(1,042
|
)
|
(15.7
|
%)
|
$
|
(1,862
|
)
|
(6.7
|
%)
|
$
|
(207
|
)
|
(0.8
|
%)
|
Three-Months Ended March 31,
|
||||||||||||
(Unaudited)
|
||||||||||||
2017
|
2016
|
Variance
|
||||||||||
BILLINGS BY MARKET:
|
||||||||||||
Professional
|
$
|
2,982
|
$
|
2,001
|
$
|
981
|
||||||
Home Health Care
|
1,873
|
1,595
|
278
|
|||||||||
Pharmaceutical Manufacturer
|
1,377
|
1,023
|
354
|
|||||||||
Retail
|
806
|
726
|
80
|
|||||||||
Assisted Living
|
625
|
579
|
46
|
|||||||||
Government
|
424
|
423
|
1
|
|||||||||
Environmental
|
149
|
70
|
79
|
|||||||||
Other
|
195
|
201
|
(6
|
)
|
||||||||
Subtotal
|
8,431
|
6,618
|
1,813
|
|||||||||
GAAP Adjustment *
|
157
|
34
|
123
|
|||||||||
Revenue Reported
|
$
|
8,588
|
$
|
6,652
|
$
|
1,936
|
Three-Months Ended March 31,
|
||||||||||||||||
2017
|
% Total
|
2016
|
% Total
|
|||||||||||||
BILLINGS BY SOLUTION:
|
||||||||||||||||
Mailbacks
|
$
|
4,840
|
57.4
|
%
|
$
|
4,274
|
64.5
|
%
|
||||||||
Route-based pickup services
|
1,641
|
19.5
|
%
|
628
|
9.5
|
%
|
||||||||||
Unused medications
|
867
|
10.3
|
%
|
707
|
10.7
|
%
|
||||||||||
Third party treatment services
|
149
|
1.8
|
%
|
70
|
1.1
|
%
|
||||||||||
Other
(1)
|
934
|
11.0
|
%
|
939
|
14.2
|
%
|
||||||||||
Total billings
|
$
|
8,431
|
100.0
|
%
|
$
|
6,618
|
100.0
|
%
|
||||||||
GAAP adjustment
(2)
|
157
|
34
|
||||||||||||||
Revenue reported
|
$
|
8,588
|
$
|
6,652
|
(1)
|
The Company’s other products include IV poles, accessories, containers, asset return boxes and other miscellaneous items.
|
(2)
|
Represents the net impact of the revenue recognition adjustment required to arrive at reported generally accepted accounting principles (“GAAP”) revenue. Customer billings include all invoiced amounts associated with products shipped or services rendered during the period reported. GAAP revenue includes customer billings as well as numerous adjustments necessary to reflect, (i) the deferral of a portion of current period sales and (ii) recognition of certain revenue associated with products returned for treatment and destruction. The difference between customer billings and GAAP revenue is reflected in the Company’s balance sheet as deferred revenue.
|
Nine-Months Ended March 31,
|
||||||||||||
(Unaudited)
|
||||||||||||
2017
|
2016
|
Variance
|
||||||||||
BILLINGS BY MARKET:
|
||||||||||||
Professional
|
$
|
8,817
|
$
|
5,573
|
$
|
3,244
|
||||||
Home Health Care
|
5,760
|
5,637
|
123
|
|||||||||
Pharmaceutical Manufacturer
|
4,568
|
4,777
|
(209
|
)
|
||||||||
Retail
|
4,507
|
5,512
|
(1,005
|
)
|
||||||||
Assisted Living
|
1,789
|
1,623
|
166
|
|||||||||
Government
|
1,245
|
1,129
|
116
|
|||||||||
Environmental
|
291
|
224
|
67
|
|||||||||
Other
|
567
|
651
|
(84
|
)
|
||||||||
Subtotal
|
27,544
|
25,126
|
2,418
|
|||||||||
GAAP Adjustment *
|
282
|
(613
|
)
|
895
|
||||||||
Revenue Reported
|
$
|
27,826
|
$
|
24,513
|
$
|
3,313
|
Nine-Months Ended March 31,
|
||||||||||||||||
2017
|
% Total
|
2016
|
% Total
|
|||||||||||||
BILLINGS BY SOLUTION:
|
||||||||||||||||
Mailbacks
|
$
|
17,379
|
63.1
|
%
|
$
|
17,859
|
71.1
|
%
|
||||||||
Route-based pickup services
|
4,686
|
17.0
|
%
|
1,469
|
5.8
|
%
|
||||||||||
Unused medications
|
2,400
|
8.7
|
%
|
2,743
|
10.9
|
%
|
||||||||||
Third party treatment services
|
291
|
1.1
|
%
|
224
|
0.9
|
%
|
||||||||||
Other
(1)
|
2,788
|
10.1
|
%
|
2,831
|
11.3
|
%
|
||||||||||
Total billings
|
$
|
27,544
|
100.0
|
%
|
$
|
25,126
|
100.0
|
%
|
||||||||
GAAP adjustment
(2)
|
282
|
(613
|
)
|
|||||||||||||
Revenue reported
|
$
|
27,826
|
$
|
24,513
|
(1)
|
The Company’s other products include IV poles, accessories, containers, asset return boxes and other miscellaneous items.
|
(2)
|
Represents the net impact of the revenue recognition adjustment required to arrive at reported generally accepted accounting principles (“GAAP”) revenue. Customer billings include all invoiced amounts associated with products shipped or services rendered during the period reported. GAAP revenue includes customer billings as well as numerous adjustments necessary to reflect, (i) the deferral of a portion of current period sales and (ii) recognition of certain revenue associated with products returned for treatment and destruction. The difference between customer billings and GAAP revenue is reflected in the Company’s balance sheet as deferred revenue.
|
· |
A large professional market that consists of dentists, veterinarians, clinics, private practice physicians, urgent care facilities, ambulatory surgical centers and other healthcare facilities. This regulated market consists of small to medium quantity generators of medical, pharmaceutical and hazardous waste where we can offer a lower cost to service with solutions to match individual facility needs. The Company addresses this market from two directions: (i) field sales which focus on larger-dollar and nationwide opportunities where we can integrate the route-based pickup service along with our mailback solutions to create a comprehensive medical waste management offering and (ii) inside and online sales which focus on the individual or small group professional offices, government agencies, smaller retail pharmacies and clinics and assisted living/long-term care facilities. The Company is able to compete more aggressively in the medium quantity generator market with the addition of route-based services where the mailback may not be as cost effective. The Company’s route-based business provides direct service to areas encompassing about 100 million people or 31% of the U.S. population.
|
· |
In July 2015 and December 2015, the Company augmented its network of medical and hazardous waste service providers with acquisitions of route-based pickup services in the Northeast serving Pennsylvania, Maryland, Ohio and other neighboring states. In July 2016, the Company acquired another route-based pickup service which expanded service to New York and New Jersey. Additionally, the Company now services parts of Texas and Louisiana with route-based pickup services. As of March 31, 2017, the Company directly serves more than 8,800 customer locations with route-based pickup services. With the addition of these route-based pickup regions and the network of medical and hazardous waste service providers servicing the entire U.S., the Company offers customers a blended product portfolio to effectively manage multi-site and multi-sized locations, including those that generate larger quantities of waste. The network has had a significant positive impact on our pipeline of sales opportunities - over 60% of this pipeline is attributable to opportunities providing comprehensive waste management service offerings where both the mailback and pickup service are integrated into the offering.
|
· |
The changing demographics of the U.S. population – according to the U.S. Census Bureau, 2012 Population Estimates and National Projections, one out of five Americans will be 65 years or older by 2030, which will increase the need for cost-effective medical waste management solutions, especially in the long-term care and home healthcare markets. With multiple solutions for managing regulated healthcare-related waste, the Company delivers value as a single-source provider with blended mailback and route-based pickup services matched to the waste volumes of each facility.
|
· |
The shift of healthcare from traditional settings to the retail pharmacy and clinic markets, where the Company focuses on driving increased promotion of the Sharps Recovery System. A recently published report by Accenture states that the number of U.S. retail clinics is projected to increase, as much as 12%-17% per year, driven by patients looking for more convenient care and retail pharmacies increasing the variety and volume of healthcare services they provide. According to the Centers for Disease Control ("CDC"), 25% of flu shots for adults were administered in a retail clinic with the trend expected to increase. Over the flu seasons from 2011 to 2014, the growth in the Retail flu business for Sharps was between 24% and 36%. Despite the decrease in Retail flu business for fiscal 2016 (the 2015 flu season) of 13% due to a mild flu season, Sharps believes the Retail market should continue to drive long-term growth for the Company as consumers increasingly use alternative sites, such as retail pharmacies, to obtain flu and other immunizations.
|
· |
The passage of regulations for ultimate user medication disposal allows the Company to offer new solutions (MedSafe and TakeAway Medication Recovery System envelopes) that meet the regulations for ultimate user controlled substances disposal (Schedules II-V) to retail pharmacies. Additionally, with the new regulations, the Company is able to provide the MedSafe and TakeAway Medication Recovery Systems to assisted living and hospice to address a long standing issue within long-term care.
|
· |
Local, state and federal agencies have growing needs for solutions to manage medical and pharmaceutical waste — the Company's Sharps Recovery System is ideal for as-needed disposal of sharps and other small quantities of medical waste generated within government buildings, schools and communities. The Company also provides TakeAway Medication Recovery System envelopes and MedSafe solutions to government agencies in need of proper and regulatory compliant medication disposal.
|
· |
With an increased number of self-injectable medication treatments and local regulations, the Company believes its flagship product, the Sharps Recovery System, continues to offer the best option for proper sharps disposal at an affordable price. The Company delivers comprehensive services to pharmaceutical manufacturers that sell high-dollar, self-injectable medications, which include data management, compliance reporting, fulfillment, proper containment with disposal, branding and conformity with applicable regulations. In addition, the Company provides self-injectors with online and retail purchase options of sharps mailback systems, such as the Sharp Recovery System and Complete Needle Collection & Disposal System, respectively.
|
· |
A heightened interest by many commercial companies who are looking to improve workplace safety with proper sharps disposal and unused medication disposal solutions — the Company offers a variety of services to meet these needs, including the Sharps Secure Needle Disposal System, Sharps Recovery System, Spill Kits and TakeAway Medication Recovery System envelopes.
|
· |
The Company continually develops new solution offerings such as ultimate user medication disposal (MedSafe and TakeAway Medication Recovery System), mailback services for DEA registrant expired inventory of controlled substances (TakeAway Medication Recovery System DEA Reverse Distribution for Registrants) and shipback services for collection and recycling of single-use medical devices from surgical centers and other healthcare facilities (TakeAway Recycle System).
|
· |
The Company’s strong financial position with a cash balance of $5.7 million and debt of $2.7 million as of March 31, 2017.
|
· |
Cash Flows from Operating Activities
- Working capital decreased by $7.6 million to $9.6 million at
March 31, 2017
from $17.2 million at June 30, 2016. The decrease in working capital is primarily attributed to a decrease in cash and cash equivalents and:
|
· |
Accounts receivable decreased by $1.1 million, net of assets acquired, to $5.2 million at March 31, 2017 from $5.8 million at June 30, 2016.
|
· |
Inventory increased by $0.5 million to $4.5 million at March 31, 2017 from $3.9 million at June 30, 2016. The increase in inventory is due to timing of sales and adjustment of inventory levels to facilitate customer orders.
|
· |
Accounts payable and accrued liabilities increased
by $0.3 million
, net of assets acquired and unpaid consideration, to $3.8 million at March 31, 2017 from $3.2 million at June 30, 2016. The increase is the result of the timing of payments.
|
· |
Cash Flows used in Investing Activities
- Investing activities include capital expenditures and business acquisitions as follows:
|
· |
Capital expenditures of $2.4 million are attributable primarily to investments in treatment facility improvements purchased.
|
· |
The Company acquired Citiwaste for $9.0 million during the nine months ended
March 31, 2017
of which $1.9 million was for 413,272 shares of common stock of the Company and $0.1 million was unpaid consideration as of
March 31, 2017
.
|
· |
Cash Flows used in Financing Activities
– Financing activities include $5.6 million of proceeds from long-term debt in connection with the Citiwaste acquisition and the new debt agreement
(see Note 6 “Notes Payable and Long-Term Debt”), proceeds from the exercise of stock options of $0.3 million offset in part by repayments of debt of $3.1 million.
|
· |
Level 1 – Quoted prices in active markets for identical assets or liabilities.
|
· |
Level 2 – Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities).
|
· |
Level 3 – Significant unobservable inputs (including our own assumptions in determining fair value).
|
REGISTRANT:
|
||
SHARPS COMPLIANCE CORP.
|
||
Dated: May 4, 2017
|
By: /s/ DAVID P. TUSA
|
|
David P. Tusa
|
||
Chief Executive Officer and President
|
||
(Principal Executive Officer)
|
Dated: May 4, 2017
|
By: /s/ DIANA P. DIAZ
|
|
Diana P. Diaz
|
||
Vice President and Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
1 Year Sharps Compliance Chart |
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