Arcadia Resources, Inc. (NYSE Amex: KAD), a leading provider of
innovative consumer health care services under the Arcadia
HealthCare℠ brand, today announced fiscal 2011 fourth quarter net
revenues of $25.4 million and a net loss of $5.1 million, or $0.03
per share, which compares to net revenue of $24.1 million and a net
loss of $19.2 million, or $0.12 per share, for the same period in
fiscal 2010. For the full fiscal year ended March 31, 2011, the
Company reported net revenues of $100.0 million and a net loss of
$14.4 million, or $0.08 per share, which compares to net revenues
of $98.1 million and a net loss of $31.1 million, or $0.19 per
share, for fiscal 2010.
Fourth-Quarter and Recent Highlights
- Fiscal fourth quarter Pharmacy revenues
increase 31% over the prior year period
- EBITDA loss from continuing operations
narrowed to $1.9 million in fourth quarter compared to $4.1 million
in the prior year period
- DailyMedTM agreement with WellPoint
extended to 2015
- Company plans to sell its Services
segment
For the fourth quarter of fiscal 2011, Arcadia reported net
revenues of $25.4 million, compared with net revenues of $24.1
million for the same period last year. Earnings before interest,
taxes, depreciation and amortization (EBITDA) from continuing
operations were a negative $1.9 million during the fourth quarter,
an improvement of 54% over the prior year quarter of negative $4.1
million.
Arcadia reported a net loss from continuing operations of $5.0
million, or $0.03 per share, in the fourth quarter of fiscal 2011,
compared to a net loss from continuing operations of $19.1 million,
or $0.12 per share, in the same period in fiscal 2010. The
consolidated fiscal 2011 fourth quarter net loss, including
discontinued operations, was $5.1 million, or $0.03, compared to a
net loss of $19.2 million, or $0.12 in the fiscal fourth quarter in
2010. These consolidated results include one-time impairment
charges of $2.5 million and $14.6 million taken in the fourth
quarters of fiscal 2011 and fiscal 2010, respectively.
The Company said that its agreement with WellPoint has been
extended for two additional years through 2015. “We are pleased to
extend our DailyMed program with the WellPoint State-Sponsored
Business as we work together to improve patient outcomes and reduce
total medical spend for high-risk patients,” said Marvin R.
Richardson, President & Chief Executive Officer.
The Company also said that as part of its on-going restructuring
initiatives its Board of Directors has initiated a plan to sell its
Services segment, which includes its Home Care and Medical Staffing
business. The Company said it is actively engaged in the sale
process which it expects to be completed during the second quarter
of this fiscal year, subject to shareholder approval. “The sale of
our Services segment is a further step in the financial
restructuring and strategic repositioning of Arcadia,” Richardson
commented. “This will allow the Company to focus its management and
financial resources on expanding our growing DailyMed
business.”
“As discussed in our third quarter earnings release and investor
conference call, we are keenly aware of the need to both address
our long-term debt maturing in April and provide the resources
needed to profitably grow our Pharmacy business. Our focus during
the fourth quarter has been on the restructuring actions needed to
provide a solid foundation for future growth. We have engaged
Lazard Middle Market LLC to advise the Board and assist us with
these actions. The Company has identified several key steps in this
restructuring plan, including the sale of its Services segment and
additional capital investment in the pharmacy segment, and we are
actively working to implement them,” said Richardson.
Fiscal 2011 Fourth Quarter Results
Arcadia reported $25.4 million in revenue from continuing
operations during the quarter, up from $24.1 million during the
same period a year ago. The Company’s gross margin from continuing
operations was 27.3% during the fourth quarter, which is consistent
with the same period a year ago.
Pharmacy:
Pharmacy segment revenues increased 31.0% to $4.5 million for the
fourth quarter of fiscal 2011, compared to $3.5 million in revenues
for the fourth quarter of fiscal 2010. This revenue reflects the
treatment of the Minnesota pharmacy, which was closed during the
quarter, as a discontinued operation. Pharmacy revenues were
largely driven by the Company’s DailyMed program and the continued
roll-out of the program to high-risk Medicaid members in Virginia,
California, Kansas and South Carolina.
Pharmacy gross margin increased to 16.3% in
the fourth quarter of fiscal 2011 from 11.0% in the fourth quarter
of fiscal 2010. The year-over-year gross margin improvement was a
result of several factors, including improved purchasing costs from
the Company’s wholesale drug vendor and a higher level of service
revenue compared with the prior year.
Services: The
Company’s Services segment, which includes Arcadia’s home
healthcare and medical staffing business, reported net revenues of
$20.9 million for the 2011 fiscal fourth quarter compared to net
revenues of $20.7 million for the fourth quarter a year ago. Within
the Services segment, home health care revenues increased by $0.4
million, or 2.8%, to $16.9 million from $16.5 million in the same
period last year. Per diem medical staffing revenue also increased
during the quarter from $2.7 million in the fourth quarter of
fiscal 2010 to $2.9 million in the current year quarter. These
increases were partially offset by a 29.7% decline in travel nurse
staffing revenue to $1.1 million in the current quarter, compared
with $1.6 million during the fourth quarter of fiscal 2010 due to
the loss of a large correctional facility customer. Gross margin
within the Services segment was 29.7% compared with 30.0% in the
fourth quarter a year ago.
Fiscal 2011 Annual Results
For the year ended March 31, 2011, net revenues from continuing
operations increased to $100.0 million from $98.1 million in the
prior year. Pharmacy segment net revenue of $16.7 million
represented a 46.0% increase over the prior year. This increase in
Pharmacy segment revenue was partially offset by a $3.3 million, or
3.8%, decline in Services revenue from $86.6 million in fiscal 2010
to $83.3 million in fiscal 2011.
Gross profit decreased by $0.4 million to $27.4 million, or
27.4% of net revenue, for fiscal year 2011, from $27.8 million, or
28.4% of net revenue, for the fiscal year 2010. Gross margin in the
Home Care and Medical Staffing business was 30.0% for fiscal 2011
compared with 30.5% for fiscal 2010. Gross profit in the Company’s
Pharmacy segment increased to $2.4 million for fiscal year 2011,
compared to $1.4 million in fiscal year 2010. Pharmacy gross
margins increased to 14.5% in fiscal 2011 compared to 12.4% in
fiscal 2010.
EBITDA from continuing operations was a negative $9.0 million
for fiscal 2011, compared with a negative $10.7 million in fiscal
2010.
The consolidated net loss from continuing operations decreased
to $15.3 million, or $0.08 per share, in fiscal 2011 from $29.0
million, or $0.17 per share in fiscal 2010. The decrease in the
loss was primarily due to improved operating results and lower
corporate selling, general and administrative expense, as well as
higher impairment charges taken in fiscal 2010 compared with fiscal
2011. The consolidated net loss, including discontinued operations,
decreased to $14.4 million, or $0.08 per share, in fiscal 2011,
from $31.1 million, or $0.19 per share, in fiscal 2010.
Capital Resources and Liquidity
At March 31, 2011, the Company had total cash plus
line-of-credit availability of $4.2 million.
Arcadia reported negative cash flow from total operations of
$11.2 million during fiscal 2011, compared to negative $5.9 million
for fiscal 2010. The increase in negative operating cash flow
during fiscal 2011 was primarily related to increases in working
capital. The $6.9 million increase in working capital was the
result of collections of receivables from previously discontinued
operations during the prior year as well as a decrease in payables
compared to the prior year.
The Company also announced that its audited financial statements
for the fiscal year ending March 31, 2011, included in the
Company’s Annual Report on Form 10-K filed June 28, 2011, contained
a going concern qualification from BDO USA, LLC, the Company’s
independent auditors. In its audit report, BDO stated that the
Company’s recurring losses and net capital deficiency raise
substantial doubt about the Company’s ability to continue as a
going concern.
“We continue to manage our cash and liquidity very closely,”
said Matthew Middendorf, Chief Financial Officer. “As part of our
restructuring initiatives, we are exploring options that will
provide additional short-term funding to support our Pharmacy
business growth while at the same time address the long-term
capital structure for the business,” Middendorf said.
Conference Call Information
Arcadia will conduct a conference call and simultaneous Internet
webcast to review these financial results on Wednesday, June 29,
2011, at 11:00 a.m. Eastern Time.
To access the webcast, visit the Company’s website at
www.arcadiahealthcare.com, 5-10 minutes prior to the start time and
click on the webcast link. The Company’s press release, which
contains financial information to be discussed in the presentation,
will also be available on Arcadia’s website.
To participate in the live conference call, please dial
1-877-407-8031 (for U.S.-based callers) or 1-201-689-8031 (for
international callers). The call can also be accessed (listen-only
mode) via the Company’s web site at www.arcadiahealthcare.com
through the “Investors” page.
A replay of the webcast will be available approximately one hour
after the completion of the call and will be accessible at
www.arcadiahealthcare.com until July 13, 2011. A telephone replay
will be available by dialing 1-877-660-6853 (for US-based callers)
or 1-201-678-7415 (for international callers). For telephone
replay, callers must use Account number 286 and Conference ID
number 374699.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with
generally accepted accounting principles, or GAAP, Arcadia reports
non-GAAP financial results. Arcadia’s management believes these
non-GAAP measures are useful to investors because they provide
supplemental information that facilitates comparisons to prior
periods. Management uses these non-GAAP measures to evaluate its
financial results, develop budgets and manage expenditures. The
method Arcadia uses to produce non-GAAP results is likely to differ
from the methods used by other companies and should not be regarded
as a replacement for corresponding GAAP measures. Investors are
encouraged to review the reconciliation of these non-GAAP financial
measures to the comparable GAAP results, which are attached to this
release.
About Arcadia HealthCare
Arcadia HealthCare is a service mark of Arcadia Resources, Inc.
(NYSE Amex: KAD), and is a leading provider of home care, medical
staffing and pharmacy services under its proprietary DailyMed
program. The Company, headquartered in Indianapolis, Indiana, has
65 locations in 18 states. Arcadia HealthCare's comprehensive
solutions and business strategies support the Company's vision of
"Keeping People at Home and Healthier Longer."
DailyMed™ Pharmacy dispenses a monthly cycle of a patient’s
prescriptions, over-the-counter medications and vitamins, and
organizes them into pre-sorted packets clearly marked with the date
and time the medications should be taken. In the dispensing
process, a DailyMed pharmacist reviews each patient’s medication
profile and utilizes state-of-the-art medication therapy management
tools in order to improve the safety and efficacy of the
medications being dispensed. A DailyMed pharmacist provides routine
communication with the patient, the primary care physician,
caregivers and payers in order to maximize the pharmaceutical care
administered. The DailyMed program improves patient care and drug
utilization while reducing drug and hospitalization costs for
private and government payers.
Forward Looking Statements
Any statements contained in this release that are not historical
facts are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21A of
the Securities Exchange Act of 1934, as amended and otherwise
within the meaning of court opinions construing such
forward-looking statements. The Company claims all safe harbor and
other legal protections provided to it by law for all of its
forward-looking statements. Forward-looking statements are not
guarantees of future performance and involve known and unknown
risks, estimates, uncertainties and other factors, which could
cause actual financial or operating results, performances or
achievements expressed or implied by such forward-looking
statements not to occur or be realized, including our estimates of
consumer demand for our services and products, required capital
investment, competition, and other factors. Actual events and
results may differ materially from those expressed, implied or
forecasted in forward-looking statements due to a number of
factors. Important factors that could cause actual results,
developments and business decisions to differ materially from
forward-looking statements are described in the Company's filings
with the Securities and Exchange Commission from time to time,
including the section entitled "Risk Factors" and elsewhere in the
Company's most recent Annual Report on Form 10-K and subsequent
periodic reports. Among the factors that could cause future results
to differ materially from those provided in our press release are:
(i) we cannot be certain or our ability to generate sufficient cash
flow to meet our obligations on a timely basis; (ii) we may be
required to make significant business investments that do not
produce offsetting increases in revenue; (iii) we may be unable to
execute and implement our growth strategy; (iv) we may be unable to
achieve our targeted performance goals for our business segments;
and (v) other unforeseen events may impact our business. The
forward-looking statements speak only as of the date hereof. The
Company disclaims any obligation to update or alter its
forward-looking statements, except as may be required by law.
FINANCIAL TABLES
FOLLOW
ARCADIA RESOURCES, INC. CONSOLIDATED BALANCE
SHEETS (in thousands)
March 31,
2011
2010 ASSETS Current assets: Cash and cash equivalents $
2,136 $ 5,444 Accounts receivable, net of allowance of $1,897 and
$2,614, respectively 12,049 11,960 Inventories, net 795 703 Prepaid
expenses and other current assets 1,455 1,468 Current assets of
discontinued operations - 801
Total current assets 16,435 20,376 Property and equipment, net
1,253 1,476 Goodwill - 2,500 Acquired intangible assets, net 7,098
7,670 Other assets 345 412 Restricted cash 1,000 500 Assets of
discontinued operations - 262
Total assets $ 26,131 $ 33,196
LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts
payable $ 1,226 $ 2,826 Accrued expenses: Compensation and related
taxes 2,792 3,145 Interest 35 82 Health insurance 756 463 Other 952
1,507 Fair value of warrant liability 285 1,499 Payable to
affiliated agencies 616 1,076 Long-term obligations, current
portion 189 939 Capital lease obligations, current portion 25 34
Current liabilities of discontinued operations -
409 Total current liabilities 6,876 11,980
Lines of credit 11,504 7,774 Long-term obligations, less current
portion 27,807 25,192 Capital lease obligations, less current
portion - 25 Total liabilities
46,187 44,971 Commitments
and contingencies STOCKHOLDERS’ DEFICIT Preferred stock,
$.001 par value, 5,000,000 shares authorized, none outstanding - -
Common stock, $.001 par value, 300,000,000 shares authorized;
193,162,544 and 177,918,044 shares issued and outstanding,
respectively 193 178 Additional paid-in capital 151,436 145,381
Accumulated deficit (171,685 ) (157,334 )
Total stockholders’ deficit (20,056 ) (11,775
) Total liabilities and stockholders’ deficit $ 26,131
$ 33,196 ARCADIA RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS FISCAL 2011 (in thousands,
except for per share amounts)
Three Months Ended Year Ended June
30, 2010 September 30, 2010 December
31, 2010 March 31, 2011 March 31, 2011
Services $ 20,365 $ 20,930 $ 21,139 $ 20,894 $ 83,328
Pharmacy 4,041 3,918
4,220 4,534 16,713
Revenues, net 24,406 24,848 25,359 25,428 100,041 Cost of revenues
17,814 18,004
18,328 18,490 72,636
Gross profit 6,592 6,844 7,031 6,938 27,405
Selling, general and administrative
9,519 9,370 8,683 8,831 36,403 Depreciation and amortization 286
304 310 480 1,380 Goodwill impairment -
- - 2,500
2,500 Total operating expenses 9,805 9,674 8,993 11,811
40,283 Operating loss (3,213 ) (2,830 ) (1,962 ) (4,873 )
(12,878 ) Other expenses (income): Interest expense, net 844
978 1,003 974 3,799 Change in fair value of warrant liability
642 (779 ) (541 )
(745 ) (1,423 ) Total other expenses 1,486
199 462
229 2,376 Loss from continuing
operations before income taxes (4,699 ) (3,029 ) (2,424 ) (5,102 )
(15,254 ) Current income tax expense (benefit) 32
41 30
(70 ) 33 Loss from continuing operations
(4,731 ) (3,070 ) (2,454 ) (5,032 ) (15,287 ) Discontinued
operations: Loss from discontinued operations (96 ) (83 ) (93 )
(192 ) (464 ) Net gain on disposal 787
259 228 126
1,400 691 176
135 (66 ) 936 NET
LOSS (4,040 ) $ (2,894 ) $ (2,319 ) $
(5,098 ) $ (14,351 ) Basic and diluted net income (loss) per
share: Loss from continuing operations $ (0.03 ) $ (0.02 ) $ (0.01
) $ (0.03 ) $ (0.08 ) Income from discontinued operations
0.01 - -
- - Net loss per share $ (0.02 )
$ (0.02 ) $ (0.01 ) $ (0.03 ) $ (0.08 )
Reconciliation of Net Loss from Continuing Operations to
EBITDA from Continuing Operations: Net Loss from Continuing
Operations $ (4,731 ) $ (3,070 ) $ (2,454 ) $ (5,032 )
$ (15,287 ) Current income tax expense (benefit) 32 41 30 (70 )
33 Interest expense, net 844 978 1,003 974
3,799 Change in fair value of warrant liability 642 (779 ) (541 )
(745 )
(1,423 ) Goodwill impairment - - - 2,500
2,500 Depreciation and amortization 286
304 310 480
1,380 EBITDA from Continuing Operations $ (2,927 )
$ (2,526 ) $ (1,652 ) $ (1,893 ) $ (8,998 )
ARCADIA RESOURCES,
INC. CONSOLIDATED STATEMENTS OF OPERATIONS FISCAL 2010 (in
thousands, except for per share amounts)
Three Months Ended
Year Ended June 30, 2009 September 30,
2009 December 31, 2009 March 31,
2010 March 31, 2010 Services $ 22,680 $ 21,709 $
21,564 $ 20,682 $ 86,635 Pharmacy 2,250
2,518 3,220 3,461
11,449 Revenues, net 24,930 24,227 24,784 24,143
98,084 Cost of revenues 17,778 17,239
17,702 17,555
70,274 Gross profit 7,152 6,988 7,082 6,588 27,810
Selling, general and administrative 9,177 9,559 9,036 10,728
38,500 Depreciation and amortization 348 351 304 297 1,300 Goodwill
impairment - - -
14,599 14,599 Total
operating expenses 9,525 9,910 9,340 25,624 54,399 Operating
loss (2,373 ) (2,922 ) (2,258 ) (19,036 ) (26,589 ) Other
expenses (income): Interest expense, net 838 846 934 753 3,371
Change in fair value of warrant liability - - (368 ) (611 ) (979 )
Other - - -
30 30 Total other expenses
838 846 566
172 2,422 Loss from
continuing operations before income taxes (3,211 ) (3,768 ) (2,824
) (19,208 ) (29,011 ) Current income tax expense (benefit)
93 7 16
(87 ) 29 Loss from continuing
operations (3,304 ) (3,775 ) (2,840 ) (19,121 ) (29,040 )
Discontinued operations: Loss from discontinued operations (1,449 )
(540 ) (328 ) (286 ) (2,603 ) Net gain on disposal 180
169 15
193 557 (1,269 )
(371 ) (313 ) (93 ) (2,046 )
NET LOSS $ (4,573 ) $ (4,146 ) $ (3,153 )
$ (19,214 ) $ (31,086 ) Basic and diluted net income
(loss) per share: Loss from continuing operations $ (0.02 ) $ (0.02
) $ (0.02 ) $ (0.12 ) $ (0.17 ) Income (loss) from discontinued
operations (0.01 ) (0.01 ) -
- (0.02 ) Net loss per share $
(0.03 ) $ (0.03 ) $ (0.02 ) $ (0.12 ) $ (0.19
)
Reconciliation of Net Loss from
Continuing Operations to EBITDA from Continuing Operations: Net
Loss from Continuing Operations $ (3,304 ) $ (3,775 ) $ (2,840 ) $
(19,121 )
$ (29,040 ) Current income tax expense (benefit) 93 7 16 (87 )
29 Interest expense, net and other 838 846 934 783
3,401 Change in fair value of warrant liability - - (368 ) (611 )
(979 ) Goodwill impairment - - - 14,599
14,599 Depreciation and amortization 348
351 304 297
1,300 EBITDA from Continuing Operations $ (2,025 )
$ (2,571 ) $ (1,954 ) $ (4,140 ) $ (10,690 )
ARCADIA RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW (in thousands)
Year
Ended March 31, 2011 2010
Operating activities Net loss for the year $ (14,351
) $ (31,086 ) Adjustments to reconcile net loss to net cash (used
in) provided by operating activities: Provision for doubtful
accounts 676 1,736 Depreciation and amortization of property and
equipment 894 1,507 Amortization of intangible assets 571 722
Goodwill and intangible asset impairment 2,500 14,599 Non-cash
interest expense 2,892 2,397 Gain on business disposals (1,400 )
(557 ) Amortization of debt discount and deferred financing costs
391 332 Change in fair value of warrant liability (1,423 ) (979 )
Stock-based compensation expense 1,315 1,758 Changes in operating
assets and liabilities, net of business acquisitions: Accounts
receivable (360 ) 3,895 Inventories 124 546 Other assets 125 558
Accounts payable (1,997 ) (596 ) Accrued expenses (733 ) (694 ) Due
to affiliated agencies (416 ) (19 ) Net
cash used in operating activities (11,192 )
(5,881 )
Investing activities Business
acquisitions, net of cash acquired (164 ) (281 ) Proceeds from
business disposals 1,532 9,498 Increase in restricted cash (500 )
(500 ) Purchases of property and equipment (471 )
(574 ) Net cash provided by investing activities
397 8,143
Financing activities Proceeds from note payable, net of fees
- 2,142 Proceeds from exercise of stock options 2 - Net borrowings
(payments) on lines of credit 3,868 (3,550 ) Payments on notes
payable and capital lease obligations (813 ) (7,175 ) Proceeds from
equity financing, net of cash fees paid of $564 and $857,
respectively 4,430 10,243
Net cash provided by financing activities 7,487
1,660 Net change in cash and
cash equivalents (3,308 ) 3,922 Cash and cash equivalents,
beginning of year 5,444 1,522
Cash and cash equivalents, end of year $ 2,136
$ 5,444
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