Chronimed Announces Second Quarter Fiscal 1999 Results
Chronimed reported record revenue for the second quarter ended January 1, 1999 of $48.7 million, up 40 percent from $34.8 million in last year's second quarter. Income from operations was $3.1 million for the quarter compared to $3.3 million last year; however, included in last year's income from operations was a favorable one-time repayment from a supplier for $680,000. Adjusting for the one-time repayment, income from operations was up 20 percent, from $2.6 million last year to $3.1 million this year. Net income per diluted share for the second quarter was 18 cents, which includes a two cents per share non-operating gain from the sale of the Company's publishing business. Last year's net income per diluted share was 18 cents, which included the one-time supplier repayment that amounted to more than three cents per share. Eliminating the two non-recurring events, net income per diluted share was 16 cents for the second quarter compared to 15 cents last year.
Second quarter net income in this fiscal 1999 was impacted downward by approximately two cents per diluted share from the June 1998 acquisition of Clinical Partners. This dilution is expected to continue through the second half and then turn positive in fiscal year 2000.
For the six-month period, revenue grew 38 percent to $91.5 million, up from $66.4 million last year. Adjusted for the one-time items noted above, income from operations was up 15 percent, from $4.9 million last year to $5.6 million this year, and, as adjusted, net income per diluted share improved to 30 cents per share from 28 cents per share last year.
Commenting on the second quarter results, Chronimed's chairman and chief executive officer Maurice R. Taylor, II, said, "I am very excited about our 40 percent revenue growth rate in the second quarter. This is tangible evidence that our product and service programs are becoming increasingly more valued by our customers, and that our growth initiatives are taking hold. The Specialty Pharmacy Services business grew 30 percent over last year's second quarter on the strength of our Injectables program, with excellent patient acquisition rates. Our emerging Disease Management business, with its focus on HIV/AIDS, grew a remarkable 75 percent. In the Diagnostic Products segment, we delivered 28 percent revenue growth, with new products and strong selling efforts leading the way."
Henry F. Blissenbach, Chronimed's president and chief operating officer said, "As expected, we continue to face profit pressures as we pursue increased market share and as we strategically reposition our business for the future. These pressures are seen in managed care pricing in the Injectables program, challenges in building Clinical Partners into a world class Disease Management business, and in necessary infrastructure investments to fuel our growth for the next several years. We can already see the measures of success as Chronimed is on track for continued very strong growth in revenue. However, based on these profit pressures, we now expect third and fourth quarter earnings to exceed the prior year but at a level somewhat below current securities analyst expectations."
Chronimed Inc. is a leading integrated healthcare company specializing in diagnostic products, specialty pharmacy services, and disease management for people with chronic health conditions. The Company develops, manufactures, markets, and distributes pharmaceuticals, medical diagnostic products, and provides specialized patient management services nationwide for people with long-term chronic conditions such as HIV/AIDS, diabetes, organ transplants, and diseases treated with injectable medications. Chronimed works directly with patients, providers, and payors to improve clinical and cost-of-care outcomes. Chronimed's web site address is www.chronimed.com.
As a cautionary note to investors, certain matters discussed in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; pressures on product margins; the Company's ability to execute its sales and marketing plans; changes in the status of managed care contracts; and the risks described from time to time in the Company's public reports filed with the SEC.
(In thousands, except per share data)
| Second Quarter Ended | Six Months Ended | |||
| 1/1/99 | 12/26/97 | 1/1/99 | 12/26/97 | |
| Revenue | $48,680 | $34,772 | $91,476 | $66,445 |
| Percent increase | 40% | 38% | ||
| Income from operations | $ 3,134 | $ 3,290* | $ 5,596 | $ 5,555* |
| Percent of revenue | 6.4% | 9.5% | 6.1% | 8.4% |
| Net income | $ 2,255** | $ 2,220 | $ 3,949** | $ 3,815 |
| Percent of revenue | 4.6% | 6.4% | 4.3% | 5.7% |
| Net income per share - basic | $ .19 | $ .19 | $ .33 | $ .32 |
| Net Income per share - diluted | $ .18 | $ .18 | $ .32 | $ .31 |
| Proforma Net Income per share - diluted *** | $ .16 | $ .15 | $ .30 | $ .28 |
| Average shares outstanding - basic | 12,115 | 11,948 | 12,108 | 11,932 |
| Average shares outstanding - diluted | 12,316 | 12,327 | 12,319 | 12,244 |
* Includes $680,000 in a one-time payment from a supplier
** Includes $300,000 gain on sale of Chronimed's publishing business
*** Reflects the above two adjustments