MARIETTA, Ga., April 21 /PRNewswire-FirstCall/ -- Matria Healthcare, Inc.
(Nasdaq: MATR) today announced financial results for the first quarter ended
March 31, 2006.
Early in the first quarter of 2006, the Company announced its decision to
divest Facet Technologies and Dia Real, its foreign diabetes service
operations in Germany. In accordance with Generally Accepted Accounting
Principles (GAAP), because these operations are assets held for sale, their
results of operations have been reclassified from continuing operations to
discontinued operations for all periods presented, even though the businesses
continue to operate. For all periods presented in this press release,
Matria's continuing operations include the Company's Health Enhancement
segment comprised of its disease management, wellness, productivity
enhancement, maternity management and informatics operations.
Revenues for the first quarter of 2006 were $80.9 million, compared with
$39.6 million in the first quarter of 2005. Effective January 1, 2006, the
Company began expensing share-based compensation. For the first quarter of
2006, operating profits from continuing operations were $12.0 million after
share-based compensation expense of $1.5 million, compared with $1.3 million
in the 2005 first quarter. Earnings from continuing operations for the first
quarter of 2006 were $3.4 million, or $0.16 per diluted common share, after
the share-based compensation expense of $0.05 per diluted common share,
compared with $146,000, or $0.01 per diluted common share, in the 2005 first
quarter.
Excluding share-based compensation expense, first quarter of 2006
operating profits from continuing operations were $13.5 million, earnings from
continuing operations were $4.5 million, or $0.21 per diluted common share,
and earnings before interest, taxes, depreciation and amortization (EBITDA)
were $18.0 million.
The revenues contributed by CorSolutions for the quarter would have been
approximately $2.5 million higher, but for the application of the purchase
accounting rules. Like Matria, CorSolutions historically recorded its 'at
risk' revenues as deferred revenue until it was determined that the applicable
performance criteria had been met, at which time the associated deferred
revenue was reduced and a corresponding amount included in current revenue.
Under purchase accounting criteria, the $2.5 million reduction in deferred
revenue resulting from validation in the first quarter of performance
milestones related to prior periods had the effect of reducing goodwill,
rather than increasing current period income. For the full year of 2006, the
Company expects to validate a total of up to $5.0 million of performance
milestones earned by CorSolutions prior to the beginning of the year.
Parker H. Petit, Chairman and CEO, said, 'We are very pleased with the
results we achieved during the first quarter. We successfully completed the
acquisition of CorSolutions, made substantial progress in our integration
initiatives and achieved both our revenue and profit expectations for the
quarter. During the quarter, we began to see the impact of our integration
initiatives. In fact, with one quarter of combined operations behind us, we
now anticipate substantially greater operating synergies than originally
expected.'
Since the beginning of the year, the Company announced numerous new awards
of business. Included in the announced new business are 22 new employer and
health plan disease management accounts and numerous existing health plan
accounts collectively adding the Company's programs to approximately 120 of
their Administrative Services Only (ASO) self-insured employer clients.
'To respond to the requests for a metric to gauge the potential impact of
these new awards of business, we have developed a schedule that categorizes
these new accounts based on the anticipated annualized revenue impact of each
business award. For clarity of presentation, we will present each newly
awarded account in one of three market sectors: healthplans (including their
ASO clients), employers that are accessing our services directly, and
biopharma companies,' Petit added.
The following schedule reflects the awards of business that the Company
has announced since the start of 2006:
Health Plans Employers
Anticipated Number of Anticipated Number of
Annualized New or Annualized New or
Incremental Existing Incremental Existing
Revenues Per New Accounts Revenues Per New Accounts
or Existing or Existing
Account Account
Greater than or equal
to $10.0 million Great than or equal to
$3.0 million 1
$9.9 million to
$5.0 million $2.9 million to
$1.0 million 2
$4.9 million to
$2.5 million $999,000 to $500,000 3
$2.4 million to
$1.0 million 3 $499,000 to $250,000 4
$999,000 to
$500,000 3 <$250,000 6
<$500,000 10
As a result of the CorSolutions acquisition, Matria's federal net
operating loss carryforward (NOL) is expected to increase by over $70 million.
This increased NOL can be used, subject to certain limitations, to offset
potential tax liabilities associated with the anticipated sale of Facet
Technologies and Dia Real and other operating income. The Company estimates
the present value of the NOL to be in excess of $20 million.
SECOND QUARTER AND FULL YEAR GUIDANCE
Matria announced its second quarter 2006 guidance of revenue expectations
to be between $82 million and $84 million, and excluding share-based
compensation expense, operating profit from continuing operations to range
from $14.5 million to $15.5 million, EBITDA from continuing operations to be
between $19 million and $20 million, and earnings per diluted common share
from continuing operations to be in the range of $0.23 to $0.26.
The Company also updated its full year 2006 guidance of revenue
expectations to be between $360 million and $370 million, and excluding share-
based compensation expense, operating profit from continuing operations to
range from $75 million to $80 million, EBITDA from continuing operations to be
between $93 million and $98 million, and earnings per diluted common share
from continuing operations to be in the range of $1.35 to $1.50.
The Company expects share-based compensation expense to be $0.07 per
diluted common share for the second quarter of 2006 and $0.25 to $0.30 for the
full year 2006.
The financial tables included in this release provide supplemental
information on the allocation of interest expense between continuing
operations and discontinued operations, as well as 2005 earnings by quarter.
The Company previously announced its intention to divest Facet
Technologies and Dia Real. Despite the fact that a definitive agreement has
not been reached with purchasers for either business, significant progress has
been made to date. Discussions with multiple buyers for both businesses are
ongoing. These businesses have traditionally performed very well, and they
continue to do so with their first quarter performance meeting the Company's
expectations.
A listen-only simulcast and replay of Matria Healthcare's first quarter
conference call will be available on-line at the Company's website at
http://www.matria.com or at http://www.fulldisclosure.com on April 21, 2006,
beginning at 9:30 a.m. Eastern time.
ABOUT MATRIA HEALTHCARE
Matria Healthcare is a leading provider of comprehensive health
enhancement programs to health plans and employers. Matria manages major
chronic diseases and episodic conditions including diabetes, congestive heart
failure, coronary artery disease, asthma, chronic obstructive pulmonary
disease, high-risk obstetrics, cancer, chronic pain, depression, end-stage
renal disease, and obesity; delivers programs that address wellness, healthy
living, productivity improvement, and patient advocacy; and provides case
management of acute and catastrophic conditions. Headquartered in Marietta,
Georgia, Matria has more than 40 offices in the United States and
internationally. More information about Matria can be found on line at
http://www.matria.com.
SAFE HARBOR STATEMENT
This press release contains forward-looking statements. Such statements
include, but are not limited to, the Company's financial expectations for the
second quarter and full year 2006, the impact of the Company's integration
efforts on revenue growth and operating margins in the rest of the year, the
annualized revenue impact of new awards of business, the value of the
Company's tax loss carry forward, the prospects for, and expected proceeds
from, the sale of the Company's business units held for sale, and the fact
that those businesses continue to perform well, and the Company's expected
interest expense in 2006. These statements are based on current information
and belief and are not guarantees of future performance. Among the important
factors that could cause actual results to differ materially from those
indicated by such forward-looking statements include the Company's inability
to achieve its financial expectations for the second quarter and full year of
2006 or any future period, the possibility that continued demand for the
Company's disease management and wellness services will diminish or not
continue to grow, failure to convert awards of business into executed
contracts, delays or problems in implementation or management of new disease
management contracts, failure to expand relationships with pharmaceutical
companies or to generate revenues from any such alliances, difficulties in the
integration of CorSolutions, lower than expected proceeds from the sale of the
Company's businesses held for sale, interest rate fluctuations, changes in tax
laws, developments in the healthcare industry, third-party actions over which
Matria does not have control, regulatory requirements applicable to Matria's
business, the Company's inability to grow profitably through acquisitions and
the risk factors detailed from time to time in Matria's periodic reports and
registration statements filed with the Securities and Exchange Commission,
including Matria's Annual Report on Form 10-K for the year ended December 31,
2005. By making these forward-looking statements, Matria does not undertake
to update them in any manner except as may be required by Matria's disclosure
obligations in filings it makes with the Securities and Exchange Commission
under the federal securities laws.
Matria Healthcare, Inc.
Unaudited Consolidated Condensed Statements of Operations
(Amounts in thousands, except per share amounts)
Three Months Ended
March 31,
2006 2005
Revenues $80,906 $39,623
Cost of revenues 26,271 15,771
Selling and administrative expenses 39,961 21,723
Provision for doubtful accounts 852 831
Amortization of intangible assets 1,786 -
Operating earnings from continuing operations 12,036 1,298
Interest expense, net (6,193) (1,007)
Other income, net 105 (46)
Earnings from continuing operations before
income taxes 5,948 245
Income tax expense (2,532) (99)
Earnings from continuing operations 3,416 146
Earnings from discontinued operations,
net of tax 1,507 3,660
Net earnings $4,923 $3,806
Net earnings per common share:
Basic
Continuing Operations $ 0.16 $0.01
Discontinued Operations 0.08 0.23
$ 0.24 $0.24
Diluted
Continuing Operations $ 0.16 $0.01
Discontinued Operations 0.07 0.21
$ 0.23 $0.22
Weighted average shares outstanding:
Basic 20,869 15,943
Diluted 21,661 17,021
Matria Healthcare, Inc.
Unaudited Consolidated Condensed Balance Sheets
(Amounts in thousands)
March 31, December 31,
2006 2005
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $21,325 $23,308
Trade accounts receivable, net 52,013 33,996
Assets held for sale 136,148 132,455
Prepaid expenses and other current assets 8,933 6,588
Deferred income taxes 13,030 8,629
Total current assets 231,449 204,976
Property and equipment, net 37,348 26,430
Intangible assets, net 517,257 76,183
Deferred income taxes 17,406 10,666
Other assets 15,517 4,952
$818,977 $323,207
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt
and obligations under capital leases $175,437 $1,021
Accounts payable, principally trade 9,706 10,702
Liabilities related to assets held for sale
and other discontinued operations 34,170 31,042
Unearned revenue 13,950 7,205
Other accrued liabilities 30,676 13,412
Total current liabilities 263,939 63,382
Long-term debt and obligations under capital
leases, excluding current installments 281,257 2,099
Other long-term liabilities 13,959 5,788
Total liabilities 559,155 71,269
Shareholders' equity 259,822 251,938
$818,977 323,207
Matria Healthcare, Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures
(Amounts in thousands, except per share amounts)
Three Months Ended
March 31,
2006 2005
Reconciliation of Operating Earnings from Continuing
Operations As Reported to Operating Earnings from
Continuing Operations As Adjusted
Operating earnings from continuing operations
as reported $12,036 $1,298
Add share-based compensation 1,451 -
Operating earnings from continuing operations
as adjusted $13,487 $1,298
Reconciliation of Earnings from Continuing Operations As
Reported to Earnings from Continuing Operations As Adjusted
Earnings from continuing operations as reported $3,416 $146
Add share-based compensation, net of tax 1,041 -
Earnings from continuing operations as adjusted $4,457 $146
Reconciliation of Earnings from Continuing Operations
to EBITDA from Continuing Operations Excluding
Share-Based Compensation
Earnings from continuing operations $3,416 $146
Interest expense, net 6,193 1,007
Income tax expense 2,532 99
Depreciation and amortization 4,373 1,369
Share-based compensation 1,451 -
EBITDA excluding share-based compensation expense $17,965 $2,621
Reconciliation of Diluted Earnings Per Common Share from
Continuing Operations As Reported to Diluted Earnings Per
Common Share from Continuing Operations As Adjusted
Diluted earnings per common share as reported $0.16 $0.01
Add Share-based compensation, net of tax 0.05 -
Diluted earnings per common share as adjusted $0.21 $0.01
Matria Healthcare, Inc.
Reconciliation of Non-GAAP Financial Measures for Second Quarter 2006
Outlook
(Amounts in thousands except per share amounts)
Reconciliation of Earnings from Continuing Operations
to EBITDA from Continuing Operations Excluding
Share-Based Compensation
Low High
Earnings from continuing operations $3,550 $4,180
Share-based compensation 2,150 2,150
Income tax expense 2,700 3,070
Interest expense, net 6,100 6,100
Depreciation and amortization 4,500 4,500
EBITDA excluding share-based compensation
expense $19,000 $20,000
Reconciliation of Operating Profit from Continuing
Operations to Operating Profit from Continuing Operations
Excluding Share-Based Compensation
Low High
Operating profit from continuing operations $12,350 $13,350
Share-based compensation 2,150 2,150
Operating profit from continuing operations
excluding share-based compensation $14,500 $15,500
Reconciliation of Earnings Per Diluted Share from Continuing
Operations to Earnings Per Diluted Share from Continuing
Operations Excluding Share-Based Compensation
Low High
Earnings per diluted share from continuing
operations $0.16 $0.19
Share based compensation 0.07 0.07
Earnings per diluted share from continuing
operations excluding share-based compensation $0.23 $0.26
Matria Healthcare, Inc.
Reconciliation of Non-GAAP Financial Measures for 2006 Outlook
(Amounts in millions except per share amounts)
Reconciliation of Earnings from Continuing Operations
to EBITDA from Continuing Operations Excluding
Share-Based Compensation
Low High
Earnings from continuing operations $24 $27
Share-based compensation 10 8
Income tax expense 16 21
Interest expense, net 25 24
Depreciation and amortization 18 18
EBITDA excluding share-based compensation expense $93 $98
Reconciliation of Operating Profit from Continuing
Operations to Operating Profit from Continuing
Operations Excluding Share-Based Compensation
Low High
Operating profit from continuing operations $65 $72
Share-based compensation 10 8
Operating profit from continuing operations
excluding share-based compensation $75 $80
Reconciliation of Earnings Per Diluted Share from
Continuing Operations to Earnings Per Diluted Share
from Continuing Operations Excluding Share-Based Compensation
Low High
Earnings per diluted share from continuing
operations $1.05 $1.25
Share based compensation 0.30 0.25
Earnings per diluted share from continuing
operations excluding share-based compensation $1.35 $1.50
2006 Interest Expense - Supplemental Information
(Amounts in millions)
Principal Continuing Discontinued
Rate(2) Balance(3) Operations Operations(4) Total
First Lien Facility:
Swap-fixed 7.3% $100 $6.5 $0.0 $6.5
LIBOR Based(1) 7.3% 289 9.4 13.0 22.4
Second Lien Facility:
LIBOR Based(1) 11.8% 65 8.0 0.0 8.0
Total Cash Interest $454 23.9 13.0 36.9
Amortization of Financing
costs $11.0 1.6 0.9 2.5
Total Interest Expense $25.5 $13.9 $39.4
(1) LIBOR plus spread
(2) For LIBOR loans based on current applicable rate
(3) Average amounts outstanding prior to any dispositions
(4) Assumes proceeds of $175 for combined dispositions
Matria Healthcare, Inc.
Unaudited Consolidated Condensed Statements of Operations
(Amounts in thousands, except per share amounts)
2005
Q1 Q2 Q3 Q4 YR
Revenues $39,623 $44,762 $46,266 $48,580 $179,231
Cost of revenues 15,771 18,165 19,089 19,947 72,972
Selling and administrative
expenses 21,723 23,760 23,767 25,041 94,291
Provision for doubtful
accounts 831 912 878 872 3,493
Amortization of intangible
assets - 40 40 285 365
Operating earnings from
continuing operations 1,298 1,885 2,492 2,435 8,110
Interest income (expense),
net (1,007) (641) 45 14 (1,589)
Other income (expense),
net (46) 27 156 89 226
Earnings from continuing
operations before
income taxes 245 1,271 2,693 2,538 6,747
Income tax expense (99) (515) (1,091) (1,028) (2,733)
Earnings from continuing
operations 146 756 1,602 1,510 4,014
Earnings (loss) from
discontinued operations,
net of tax 3,660 4,318 4,835 (2,864) 9,949
Net earnings (loss) $3,806 $5,074 $6,437 $(1,354) $13,963
Net (loss) earnings per common share:
Basic
Continuing Operations $0.01 $0.04 $0.08 $ 0.07 $ 0.21
Discontinued Operations 0.23 0.25 0.23 (0.14) 0.53
$0.24 $0.29 $0.31 $(0.07) $ 0.74
Diluted
Continuing Operations $0.01 $0.04 $0.07 $ 0.07 $ 0.20
Discontinued Operations 0.21 0.23 0.23 (0.13) 0.50
$0.22 $0.27 $0.30 $(0.06) $ 0.70
Weighted average shares outstanding:
Basic 15,943 17,775 20,632 20,752 18,795
Diluted 17,021 18,776 21,728 21,769 19,874
Contact: Jeffrey L. Hinton
Chief Financial Officer
+1-770-767-4500
SOURCE Matria Healthcare, Inc.
