Priority Healthcare Announces Record Quarterly Sales Results LAKE
MARY, Fla., Oct. 28 /PRNewswire-FirstCall/ -- Priority Healthcare
Corporation (NASDAQ:PHCC) reported results for the third quarter
and nine months ended October 2, 2004. For the third quarter, sales
increased 21% to $440 million, compared to the third quarter of
2003. Operating earnings increased 8% to $20.8 million, net
earnings grew 4% to $12.6 million and diluted earnings per share
increased 4% to $.29. For the nine month period, sales increased
20% to $1.28 billion, compared to the same period last year.
Excluding the second quarter restructuring charge, operating
earnings increased 6% to $61.3 million, net earnings grew 3% to
$37.9 million and diluted earnings per share increased 2% to $.86.
Including the second quarter charge, operating earnings increased
4% to $60.0 million, net earnings increased 1% to $37.0 million and
diluted earnings per share stayed the same at $.84. "We are pleased
that we met our revised sales forecast and earnings guidance for
the third quarter. The strong sales performance was led by
ophthalmology, oncology, neurology and our recent acquisitions of
Integrity Healthcare Services and HealthBridge. Our integration of
these acquisitions is on track and they are meeting our
expectations," stated Steve Cosler, President and Chief Executive
Officer. "Our performance was achieved despite the challenging
hurricane season in Florida, which impacted our approximately 550
employees in the state, as well as the public health challenges
surrounding the lack of Fluvirin(R) for the 2004 flu season." "This
quarter we also announced our new pharmacy partnership with Aetna.
This agreement, which is the largest specialty pharmacy contract in
the industry, further validates our leadership position. The
development of the new operation is underway in Orlando and will be
partially funded with $1.2 million in tax incentives provided by
the State of Florida and Orange County. This initiative will
accelerate our clinical management development that will benefit
all of our current and future customers, moving us closer to
disease management capabilities in all of our key disease states."
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 16% organic growth. Our gross profit
increased 130 basis points to 11.8% sequentially, from the second
quarter. SG&A expense increased 130 basis points sequentially,
from the second quarter, driven by our recent acquisitions and
investments we have made in current projects and future
opportunities." Mr. Saft continued, "Our balance sheet remains
strong with $79 million in cash and marketable securities, offset
by $45 million drawn on our line of credit. Cash flow from
operations was $6 million for the third quarter. Our trade DSO's
were 43 days, an increase of 4 days from the second quarter,
primarily driven by our Integrity acquisition. Our inventory turns
were 14, an increase of two turns from the third quarter of last
year. Return on committed capital and invested capital for the
quarter were strong at 44% and 27%, respectively, which we believe
is among the highest in the industry." Mr. Cosler concluded,
"Strategically, our results for the quarter were significant, with
the integration of our two acquisitions and the completion of our
new Aetna agreement. We remain committed to capitalizing on the
momentum of the specialty industry by continued investment in new
projects, completion of our Compass system implementation, adding
new product and service offerings and making selective acquisitions
to build out our hub and spoke operating platform. 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://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, Parkinson's disease, and macular
degeneration. 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) Nine-month Nine-month Three-month Three-month period
ended period ended period ended period ended October 2, September
27, October 2, September 27, 2004 2003 2004 2003 Net sales
$1,279,854 $1,064,891 $ 440,159 $ 362,855 Cost of products sold
1,139,147 947,450 388,332 323,483 Gross profit 140,707 117,441
51,827 39,372 Selling, general and administrative expense 74,841
56,506 29,269 18,981 Restructuring charge 1,317 -- -- --
Depreciation and amortization 4,577 3,137 1,778 1,127 Earnings from
operations 59,972 57,798 20,780 19,264 Interest income 508 1,058
139 246 Interest expense (635) -- (439) -- Minority interest (255)
-- (92) -- Earnings before income taxes 59,590 58,856 20,388 19,510
Provision for income taxes 22,546 22,071 7,747 7,316 Net earnings
$37,044 $36,785 $12,641 $12,194 Earnings per share: Basic $.85 $.85
$.29 $.28 Diluted $.84 $.84 $.29 $.28 Weighted average shares
outstanding: Basic 43,380,899 43,452,856 43,531,489 43,259,781
Diluted 44,008,150 44,024,550 44,160,814 43,773,728 RECONCILIATION
OF NET EARNINGS TO NET EARNINGS, EXCLUDING RESTRUCTURING CHARGE
Nine-month Nine-month Three-month Three-month period ended period
ended period ended period ended October 2, September 27, October 2,
September 27, 2004 2003 2004 2003 Net earnings $37,044 $36,785
$12,641 $12,194 Restructuring charge, net of applicable income
taxes 817 -- -- -- Net earnings, excluding restructuring charge
$37,861 $36,785 $12,641 $12,194 Earnings per share, excluding
restructuring charge: Basic $.87 $.85 $.29 $.28 Diluted $.86 $.84
$.29 $.28 PRIORITY HEALTHCARE CORPORATION CONDENSED CONSOLIDATED
BALANCE SHEETS (000's omitted) (unaudited) October 2, January 3,
2004 2004 Cash and cash equivalents $70,641 $47,719 Marketable
securities 8,624 15,317 Receivables, net 236,795 172,206 Finished
goods inventory 107,898 117,218 Other current assets 36,552 20,642
Fixed assets, net 37,691 29,780 Other assets 162,430 111,127 Total
assets $ 660,631 $ 514,009 Current liabilities $ 199,425 $ 164,663
Line of credit 45,274 -- Long-term debt -- -- Other liabilities
6,490 6,437 Minority interest 23,255 -- Shareholders' equity
386,187 342,909 Total liabilities and shareholders' equity $
660,631 $ 514,009
http://www.newscom.com/cgi-bin/prnh/20030417/PHCLOGO
http://photoarchive.ap.org/ DATASOURCE: Priority Healthcare
Corporation CONTACT: Stephen Saft, Chief Financial Officer of
Priority Healthcare Corporation, +1-407-804-6700 Web site:
http://www.priorityhealthcare.com/
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