Sharps Compliance Reports Fiscal 2022 Second Quarter Results
- Second quarter revenue of
$18.9 million increased 11% from the prior year and 36% sequentially - Route-based customer locations increased 17% to 17,400 from 14,900 in the prior year
- Professional market billings grew 15% compared to prior year second quarter
- Unused medication revenue increased 9% driven by increased Inner Liner sales
- Immunization-related mailback billings increased by
$2.8 million sequentially as compared to 1Q22, from$1.8 million to$4.6 million , reflecting COVID-19 vaccines and booster shots administered in theRetail Pharmacy market - Closed on Affordable Medical Waste acquisition on
October 22, 2021 - Partnership with
PharMerica recently announced to address the cost-effective and compliant management of unused medications in the long-term care market - Cash balance of
$36.0 million atDecember 31, 2021
Revenue in the second quarter of fiscal 2022 grew 11% to
The Company reported operating income of
Tusa added, “We pride ourselves on our ability to solve complex problems for our customers. The latest problem we are solving is the industry challenge regarding the proper, cost-effective, and compliant management of unused medications, including controlled substances and hazardous wastes, such as blood thinners, in the long-term care and assisted living markets. In fact, the Secure and Responsible Drug Disposal Act approved by the DEA in 2014 was written primarily to address proper and compliant unused medication management practices in long-term care communities which have been very inconsistent. To help customers meet the new requirements set forth in the new DEA rules, we designed the MedSafe to address the proper and cost-effective collection and destruction of unused medications, including controlled substances. MedSafe has seen solid demand from retail pharmacy and other settings, such as government, and we believe Sharps is the leader in the retail pharmacy and government markets for the cost-effective and compliant disposal of unused medications. We are now taking our vast knowledge, experience and success gained from introducing MedSafe in the retail pharmacy and government settings and bringing this solution to the long-term care and assisted living markets, where we believe the MedSafe has the opportunity to become the industry standard. We are excited about our recently announced partnership with
Second Quarter Review
Professional market billings increased 15% to
Retail market billings grew 4% to
Pharmaceutical Manufacturer market billings decreased by
Long-Term Care billings decreased by
Home Health Care market billings decreased
Billings for Unused Medications grew 9% to
First Six Months Fiscal 2022 Results
Sharps recorded revenue of
Gross margin was essentially flat at 30.6% for the first half of fiscal 2022 as compared to 30.7% in first half of fiscal 2021 despite being negatively impacted by a
Net income for the first half of fiscal 2022 was
Sharps recorded EBITDA of
Financial Flexibility and a Strong Balance Sheet
Cash was
“Regarding immunizations, we’ve seen that the ongoing emergence of new variants causes the COVID-19 related business landscape to remain fluid. As we move through the balance of fiscal year 2022, future immunization-related orders should be driven by the timing and volume of the continued roll out of COVID-19 shots and boosters. As a point of reference, only approximately 40% of fully vaccinated Americans have received a booster to-date. Additionally, there are new vaccines being developed to address specific variants, such as Omicron, which could be available by March of 2022. We remain confident that we are well positioned to continue to support our immunization customers, with mailback inventory and increased treatment capacity to meet the continuing demands of this business."
Second Quarter Fiscal Year 2022 Webcast and Conference Call
The Company will host a teleconference today beginning at
The
A telephonic replay will be available through
About
Headquartered in
Forward-Looking Statements
The information made available in this news release contains certain forward-looking statements relating to the Company that are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to the Company’s management. When used in this document, the words "may," “position,” "plan," “potential,” “designed,” “continue,” "anticipate," "believe," "expect," "estimate," “project,” and “intend” and words or phrases of similar import, as they relate to the Company or its subsidiaries or Company management, are intended to identify forward-looking statements. Such statements reflect the known and unknown risks, uncertainties and assumptions related to certain factors including, without limitation, competitive factors, general economic conditions, customer relations, relationships with vendors, governmental regulation and supervision, seasonality, distribution networks, product introductions and acceptance, technological change, changes in industry practices, onetime events and other factors described herein including the impact of the coronavirus COVID-19 (“COVID-19”) pandemic on our operations and financial results. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in the Company’s Quarterly Reports on Form 10-Q, our Annual Report on Form 10-K, and our other filings with the
Non-GAAP Measures
This release contains certain financial information not derived in accordance with generally accepted accounting principles (“GAAP”), including customer billings information and EBITDA. The Company believes this information is useful to investors and other interested parties. EBITDA is a significant performance metric used by management and by external users of our financial statements such as investors, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis; the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness; and our operating performance and return on capital as compared to those of other companies in our industry. Such information should not be considered as a substitute for any measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities or measure of our liquidity and may not be comparable to other similarly titled measures of other companies. Reconciliation of this information to the most comparable GAAP measures is included as an attachment to this release.
For more information contact:
Executive Vice President and Chief Financial Officer Phone: (713) 660-3547 Email: ddiaz@sharpsinc.com |
IMS Investor Relations Phone: (203) 972-9200 Email: jnesbett@institutionalms.com |
FINANCIAL TABLES FOLLOW
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
| Three-Months Ended | Six-Months Ended | ||||||||||||||||||
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||||
| Revenue | $ | 18,878 | $ | 17,011 | 11.0 | % | $ | 32,793 | $ | 30,162 | 8.7 | % | |||||||
| Cost of revenue | 12,271 | 11,374 | 7.9 | % | 22,765 | 20,902 | 8.9 | % | |||||||||||
| Gross profit | 6,607 | 5,637 | 17.2 | % | 10,028 | 9,260 | 8.3 | % | |||||||||||
| Gross margin | 35.0 | % | 33.1 | % | 30.6 | % | 30.7 | % | |||||||||||
| SG&A expense | 4,388 | 3,756 | 16.8 | % | 8,588 | 7,544 | 13.8 | % | |||||||||||
| Depreciation and amortization | 236 | 205 | 454 | 409 | |||||||||||||||
| Operating Income | 1,983 | 1,676 | 986 | 1,307 | |||||||||||||||
| Operating margin | 10.5 | % | 9.9 | % | 3.0 | % | 4.3 | % | |||||||||||
| Interest income | 14 | — | 14 | — | |||||||||||||||
| Interest expense | (58 | ) | (47 | ) | (114 | ) | (79 | ) | |||||||||||
| Income associated with derivative instrument | 27 | 10 | 34 | 15 | |||||||||||||||
| Total other expense | (17 | ) | (37 | ) | (66 | ) | (64 | ) | |||||||||||
| Income before income taxes | 1,966 | 1,639 | 920 | 1,243 | |||||||||||||||
| Income tax expense | 529 | 411 | 273 | 308 | |||||||||||||||
| Net Income | $ | 1,437 | $ | 1,228 | $ | 647 | $ | 935 | |||||||||||
| Net Income Per Share | |||||||||||||||||||
| Basic and Diluted | $ | 0.07 | $ | 0.07 | $ | 0.03 | $ | 0.06 | |||||||||||
| Weighted Average Shares Outstanding | |||||||||||||||||||
| Basic | 19,245 | 16,497 | 18,562 | 16,444 | |||||||||||||||
| Diluted | 19,400 | 16,929 | 18,656 | 16,875 | |||||||||||||||
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
| 2021 | 2021 | ||||
| ASSETS: | |||||
| Current assets: | |||||
| Cash | $ | 36,001 | $ | 27,767 | |
| Accounts receivable, net | 13,047 | 9,738 | |||
| Inventory | 6,821 | 6,114 | |||
| Contract asset | 18 | 20 | |||
| Prepaid and other current assets | 1,857 | 1,459 | |||
| Total current assets | 57,744 | 45,098 | |||
| Property, plant and equipment, net | 11,155 | 10,843 | |||
| Operating lease right of use asset | 9,073 | 8,353 | |||
| Financing lease right of use asset, net | 980 | 907 | |||
| Inventory, net of current portion | 957 | 989 | |||
| Other assets | 154 | 110 | |||
| 7,996 | 6,735 | ||||
| Intangible assets, net | 2,772 | 2,239 | |||
| Deferred tax asset, net | — | 157 | |||
| Total assets | $ | 90,831 | $ | 75,431 | |
| Current liabilities | |||||
| Accounts payable | $ | 3,592 | $ | 2,922 | |
| Accrued liabilities | 3,208 | 3,940 | |||
| Operating lease liability | 2,457 | 2,368 | |||
| Financing lease liability | 189 | 160 | |||
| Current maturities of long-term debt | 480 | 735 | |||
| Contract liability | 5,062 | 7,028 | |||
| Total current liabilities | 14,988 | 17,153 | |||
| Contract liability, net of current portion | 408 | 1,461 | |||
| Operating lease liability, net of current portion | 6,752 | 6,118 | |||
| Financing lease liability, net of current portion | 804 | 741 | |||
| Other liabilities | 23 | 45 | |||
| Deferred tax liability, net | 53 | — | |||
| Long-term debt, net of current portion | 3,172 | 3,329 | |||
| Total liabilities | 26,200 | 28,847 | |||
| Stockholders' equity | 64,631 | 46,584 | |||
| Total liabilities and stockholders' equity | $ | 90,831 | $ | 75,431 | |
Supplemental Customer Billing and Revenue Information
(in thousands)
(Unaudited)
| Three-Months Ended |
|||||||||||||||||
| 2021 | % Total | 2020 | $ Change | % | |||||||||||||
| BILLINGS BY MARKET: | |||||||||||||||||
| Retail | $ | 6,365 | 37.5 | % | $ | 6,139 | $ | 226 | 3.7 | % | |||||||
| Professional | 5,199 | 30.6 | % | 4,538 | 661 | 14.6 | % | ||||||||||
| Home Health Care | 2,028 | 11.9 | % | 2,832 | (804 | ) | (28.4 | )% | |||||||||
| Pharmaceutical Manufacturer | 1,901 | 11.2 | % | 3,062 | (1,161 | ) | (37.9 | )% | |||||||||
| Long-Term Care | 752 | 4.4 | % | 1,060 | (308 | ) | (29.1 | )% | |||||||||
| Government | 564 | 3.3 | % | 497 | 67 | 13.5 | % | ||||||||||
| Environmental | 54 | 0.3 | % | 179 | (125 | ) | (69.8 | )% | |||||||||
| Other | 137 | 0.8 | % | 159 | (22 | ) | (13.8 | )% | |||||||||
| Subtotal | 17,000 | 100.0 | % | 18,466 | (1,466 | ) | (7.9 | )% | |||||||||
| GAAP Adjustment * | 1,878 | (1,455 | ) | 3,333 | |||||||||||||
| Revenue Reported | $ | 18,878 | $ | 17,011 | $ | 1,867 | 11.0 | % | |||||||||
| Six-Months Ended |
|||||||||||||||||
| 2021 | % Total | 2020 | $ Change | % | |||||||||||||
| BILLINGS BY MARKET: | |||||||||||||||||
| Retail | $ | 10,232 | 34.4 | % | $ | 9,786 | $ | 446 | 4.6 | % | |||||||
| Professional | 9,716 | 32.7 | % | 8,671 | 1,045 | 12.1 | % | ||||||||||
| Home Health Care | 3,967 | 13.3 | % | 5,180 | (1,213 | ) | (23.4 | )% | |||||||||
| Pharmaceutical Manufacturer | 2,397 | 8.1 | % | 4,241 | (1,844 | ) | (43.5 | )% | |||||||||
| Long-Term Care | 1,530 | 5.1 | % | 2,369 | (839 | ) | (35.4 | )% | |||||||||
| Government | 1,271 | 4.3 | % | 1,012 | 259 | 25.6 | % | ||||||||||
| Environmental | 85 | 0.3 | % | 314 | (229 | ) | (72.9 | )% | |||||||||
| Other | 526 | 1.8 | % | 321 | 205 | 63.9 | % | ||||||||||
| Subtotal | 29,724 | 100.0 | % | 31,894 | (2,170 | ) | (6.8 | )% | |||||||||
| GAAP Adjustment * | 3,069 | (1,732 | ) | 4,801 | |||||||||||||
| Revenue Reported | $ | 32,793 | $ | 30,162 | $ | 2,631 | 8.7 | % | |||||||||
| *Represents the net impact of the revenue recognition adjustments to arrive at reported GAAP revenue. Customer billings include all invoiced amounts for 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, (ii) recognition of certain revenue associated with product returned for treatment and destruction and (iii) provisions for certain product returns and discounts to customers which are accounted for as reductions in sales in the same period the related sales are recorded. | |||||||||||||||||
Supplemental Customer Billing by Solution Information
(in thousands)
(Unaudited)
| Three-Months Ended |
|||||||||||||||
| 2021 | % Total | 2020 | $ Change | % | |||||||||||
| BILLINGS BY SOLUTION: | |||||||||||||||
| Mailbacks | $ | 10,192 | 60.0 | % | $ | 11,907 | $ | (1,715 | ) | (14.4 | )% | ||||
| Route-Based Pickup | 3,551 | 20.9 | % | 3,491 | 60 | 1.7 | % | ||||||||
| Unused Medications | 1,865 | 11.0 | % | 1,713 | 152 | 8.9 | % | ||||||||
| Third Party Treatment | 54 | 0.3 | % | 179 | (125 | ) | (69.8 | )% | |||||||
| Other | 1,338 | 7.8 | % | 1,176 | 162 | 13.8 | % | ||||||||
| Total Billings by Solution | $ | 17,000 | 100.0 | % | $ | 18,466 | $ | (1,466 | ) | (7.9 | )% | ||||
| Six-Months Ended |
|||||||||||||||
| 2021 | % Total | 2020 | $ Change | % | |||||||||||
| BILLINGS BY SOLUTION: | |||||||||||||||
| Mailbacks | $ | 15,749 | 53.0 | % | $ | 18,346 | $ | (2,597 | ) | (14.2 | )% | ||||
| Route-Based Pickup | 6,750 | 22.7 | % | 6,647 | 103 | 1.5 | % | ||||||||
| Unused Medications | 4,494 | 15.1 | % | 4,074 | 420 | 10.3 | % | ||||||||
| Third Party Treatment | 85 | 0.3 | % | 314 | (229 | ) | (72.9 | )% | |||||||
| Other | 2,646 | 8.9 | % | 2,513 | 133 | 5.3 | % | ||||||||
| Total Billings by Solution | $ | 29,724 | 100.0 | % | $ | 31,894 | $ | (2,170 | ) | (6.8 | )% | ||||
Supplemental Table to Reconcile Net Income to EBITDA*
(in thousands)
(Unaudited)
| Three-Months Ended | Six-Months Ended | ||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||
| Net Income | $ | 1,437 | $ | 1,228 | $ | 647 | $ | 935 | |||
| Income tax expense | 529 | 411 | 273 | 308 | |||||||
| Interest expense, net | 44 | 47 | 100 | 79 | |||||||
| Depreciation and amortization | 584 | 500 | 1,166 | 923 | |||||||
| EBITDA | $ | 2,594 | $ | 2,186 | $ | 2,186 | $ | 2,245 | |||
| *The Company defines earnings before interest, taxes, depreciation and amortization (“EBITDA”) as net income, plus income tax expense (benefit), net interest expense, and depreciation and amortization. Other companies may define EBITDA differently. EBITDA is presented because it is a financial measure that is frequently requested by third parties. However, EBITDA is not considered under generally accepted accounting principles as a primary measure of an entity’s financial results, and accordingly, EBITDA should not be considered an alternative to operating income, net income, or cash flows as determined under generally accepted accounting principles and as reported by the Company. | |||||||||||
Source: Sharps Compliance Corp.