ACGI Amacore Group Inc (CE)

The Amacore Group, Inc., (OTC BB: ACGI), a leader in providing membership benefit programs, insurance programs, program administration services, and other innovative and high-quality benefit solutions to individuals, families and employer groups nationwide, reports financial results for the three and nine months ended September 30, 2009.

During the third quarter Amacore continued its cost reduction efforts, highlights of which are summarized below:

Third Quarter Financial Highlights:

• Gross profit margins improved to 35% for the third quarter 2009 compared with 30% in the same quarter last year;
• Cost of sales decreased 23% to $4.6 million from $6.0 million in the same quarter last year;
• Operating expenses decreased by $14.4 million, or 59%, for the quarter, to $10.2 million, down from $24.6 in the same quarter last year;
• Total revenue was $7.1 million compared with $8.6 million in the year-ago quarter. Included in the year-ago quarter revenue was revenue generated from a marketer with whom Amacore has discontinued its relationship because of the high cost of sales and lower than anticipated billing and retention performance;
• Loss from operations was reduced to $7.7 million from $22.1 million in the same quarter last year, a decrease of $14.4 million or 65%. Excluding the effects of non-cash impairment losses taken on goodwill and other intangible assets as well as related amortization, loss from operations was $3.3 million as compared to $5.8 million in the same quarter last year.
• Net loss available to common stockholders was reduced to $9.9 million or $0.01 per share, compared to $11.7 million or $0.08 per share in the same quarter last year;
• Net cash used to fund operating activities improved to $2.6 million (after excluding the impact of a $1.15 million cash settlement) in the current quarter from $5.3 million in the same quarter last year, reflecting the company’s steady focus on reducing customer acquisition costs, improving efficiency, and streamlining contractual agreements.

Highlights for the First Nine Months of 2009:

• Gross profit margins improved to 36% as compared with 28% in the comparable year-ago period;
• Cost of sales decreased to $14.2 million, compared with $15.3 million in the in the comparable year-ago period;
• Operating expenses improved $12.3 million, or 32.8%, for the first nine months of 2009, to $25.2 million, compared with $37.5 million in the comparable year-ago period;
• Total revenue for the first nine months of 2009 was $22 million, a 3.4% increase, or $726 thousand improvement over the comparable year-ago period;
• Loss from operations was reduced to $17.4 million from $31.5 million, a decrease of $14.1 million or 45%, as compared to the comparable year-ago period. Excluding the recognition of non-cash impairment losses taken on goodwill and other intangible assets, related amortization and reversal of a prior year non-cash litigation accrual, loss from operations was $12.4 million as compared to $13.2 million in the same quarter last year.
• Net loss available to common shareholders was reduced by $21 million to $9.9 million, or $0.01 per share, compared with $31.0 million, or $0.21 per share in the comparable year-ago period;
• Net cash used to fund operating activities decreased to $12.1 million from $17.3 million in the year-ago nine-month period.

Jay Shafer, Chairman and Chief Executive Officer of Amacore Group said, “The quarterly and year-over-year improvements across so many of our key financial performance metrics reflect the aggressive efforts we have made throughout the year to improve the efficiency and effectiveness of our operations. Included in these improvements, we dramatically decreased our operating costs, opened new sales channels, and renegotiated and signed more favorable marketing and vendor agreements. The decline in quarterly revenue compared with last year reflects the fact that we discontinued a significant contract with a third party direct response marketer whose customer acquisition costs and residual business metrics were unfavorable. I am pleased to note, however, that we have replaced this marketer with others who are producing superior results.”

Mr. Shafer continued, “Among other significant highlights this quarter, Amacore signed several new marketer agreements, including one with Acquisition Technologies, an inbound order confirmation call center that provides Amacore with the ability to cross- sell additional products all while dramatically improving our sales closing rates. We are also in development with two new online marketers, each of which, we believe, will help improve and extend exposure for Amacore’s quality programs as well as top-line growth in upcoming quarters. Our recently signed agreement with InternetSafety.com™, a leading provider of web filtering solutions for consumers and businesses, and its flagship software, Safe Eyes®, a leading parental control solution, gives Amacore another quality product with which we can deepen our customer base. Further, the spin-off of Zurvita in July helped reduced our cash burn and has also contributed revenue through its marketing agreements with Amacore partner OmniReliant Holdings. Another exciting development is our recent launch of a new merchant billing service for which we have already added several clients. This ancillary administrative service provides Amacore a revenue stream with minimal associated costs, thus helping to further bolster our bottom line. Each of these steps, we believe, continues Amacore on in the direction of improved performance and shareholder value.”

Guy Norberg, President of Amacore Group commented, “It has been a demanding and exciting year for our entire team, as we continue to deliver on our strategy of managing our growth while creating more cost efficient operations. In the midst of a challenging economy, Amacore is persevering and excelling by keenly managing financial performance and by keeping a steady focus on new initiatives, new sales channels, and new product development. As a result, we believe we have reached a point where we are better positioned to increase our revenue base and improve our cash flow. As those efforts continue, we look forward to continued adherance to our strategy with the goal of further improving our results in upcoming quarters.”

About The Amacore Group, Inc. (www.amacoregroup.com)

The Amacore Group, Inc. is primarily a provider and marketer of healthcare related products, including healthcare benefits, vision and dental networks, and administrative services such as billing, fulfillment, patient advocacy, claims administration and servicing. The Company primarily markets healthcare-related membership programs such as limited and major medical programs, supplemental medical and discount dental programs to individuals and families. It distributes these products and services through various distribution methods such as its agent network, direct response marketing companies, DRTV (Direct Response TV), inbound call centers, in-house sales representatives, network marketing and affinity marketing partners. The Company’s secondary line of business is to place membership programs through these same marketing channels. These membership programs utilize the same back office and systems creating marketing efficiencies to provide low cost ancillary products such as pet insurance, home warranty, involuntary unemployment insurance, and accident insurance.

This press release contains forward-looking statements that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, including anticipated growth and geographic expansion, new products and services, new business development and opportunities, anticipated revenues, possible reduction or elimination of material weaknesses, anticipated revenue growth, expenses, profitability, losses and profit margins. In some cases, you may identify forward-looking statements by words such as "may," "should," "plan," "intend," "potential," "continue," "believe," "expect," "predict," "anticipate" and "estimate," the negative of these words or other comparable words. These statements are only predictions. One should not place undue reliance on these forward-looking statements. The forward-looking statements are qualified by their terms and/or important factors, many of which are outside the Company's control, involve a number of risks, uncertainties and other factors that could cause actual results and events to differ materially from the statements made. The forward-looking statements are based on the Company's beliefs, assumptions and expectations of the Company’s future performance, taking into account information currently available to the Company. These beliefs, assumptions and expectations can change as a result of many possible events or factors, including those events and factors described in "Risk Factors" in the Company’s Annual Report on Form 10-KSB for 2008 filed with the Securities and Exchange Commission, not all of which are known to the Company. The Company will update the information in this press release only to the extent required under applicable securities laws. If a change occurs, the Company's business, financial condition, liquidity and results of operations may vary materially from those expressed in the aforementioned forward-looking statements.

THE AMACORE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)           For the Three Months Ended For the Nine Months Ended September 30, September 30, 2009 2008 2009 2008 REVENUES Commissions $ 374,115 $ 404,953 $ 1,125,656 $ 1,083,734 Marketing fees and materials 991,366 1,051,399 2,567,682 1,788,796 Membership fees   5,722,601     7,096,301     18,272,660     18,367,063   Total revenues 7,088,082 8,552,653 21,965,998 21,239,593   COST OF SALES Benefit and service cost 1,166,071 1,393,609 3,350,693 4,303,312 Sales commissions   3,439,759     4,577,399     10,801,652     10,949,551   Total cost of sales   4,605,830     5,971,008     14,152,345     15,252,863     GROSS PROFIT 2,482,252 2,581,645 7,813,653 5,986,730   OPERATING EXPENSES Amortization 213,253 1,001,142 811,984 2,725,834 Depreciation 113,733 100,036 337,958 225,939 Impairment loss on goodwill and other intangible assets 4,201,699 15,308,944 4,201,699 15,308,944 Office related expenses 613,916 602,271 1,866,190 1,427,706 Payroll and employee benefits 2,090,188 2,299,556 6,802,486 6,500,665 Professional fees and legal settlement 1,172,136 1,583,485 5,806,404 2,141,098 Selling and marketing 1,637,228 3,351,142 5,019,518 8,115,736 Travel   120,595     401,935     339,952     1,024,041   Total operating expenses   10,162,748     24,648,511     25,186,191     37,469,963     Loss from operations before other income and expense (7,680,496 ) (22,066,866 ) (17,372,538 ) (31,483,233 )   OTHER INCOME (EXPENSE) Gain on change in fair value of warrants 405,434 11,448,822 11,184,590 2,538,644 Gain on extinguishment of debt 38,700 - 38,700 - Interest expense (103,934 ) (562,456 ) (258,569 ) (691,618 ) Interest income 770 3,564 5,030 20,678 Loss on conversion of note payable - - - (242,653 ) Other   75,207       1,280     89,614     8,993   Total other income   416,177     10,891,210     11,059,365     1,634,044     Net loss before income taxes (7,264,319 ) (11,175,656 ) (6,313,173 ) (29,849,189 )   Income taxes   5,086     -     5,086     -     Net loss (7,269,405 ) (11,175,656 ) (6,318,259 ) (29,849,189 )

Less: Net loss attributed to non-controlling interest in ZurvitaHoldings, Inc.

 

  1,610,555     -     1,610,555     -   Net loss attributed to The Amacore Group, Inc. (5,658,850 ) (11,175,656 ) (4,707,704 ) (29,849,189 )   Preferred stock dividend and accretion   (4,224,426 )   (489,524 )   (5,194,871 )   (1,153,599 )  

Net loss attributed to The Amacore Group, Inc. available to commonstockholders

$ (9,883,276 ) $ (11,665,180 ) $ (9,902,575 ) $ (31,002,788 ) Basic and diluted loss per share $ (0.01 ) $ (0.08 ) $ (0.01 ) $ (0.21 )  

Basic and diluted weighted average number of common sharesoutstanding

  1,030,774,307     149,297,612     1,022,343,362     145,866,798   THE AMACORE GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS      

September 30, 2009

December 31, 2008

ASSETS Current assets $ 10,089,087 $ 4,006,054 Property, plant and equipment 1,054,516 863,537 Other assets   6,487,459     12,324,509     Total assets $ 17,631,062   $ 17,194,100     LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities $ 9,223,068 $ 11,219,123 Non-current liabilities 13,805,169 15,211,602   Amacore Group, Inc. Stockholders' Deficit (3,481,224 ) (9,236,625 ) Noncontrolling Interest in Zurvita Holdings, Inc. Stockholders' Deficit   (1,915,951 )   -     Total liabilities and stockholders' deficit $ 17,631,062   $ 17,194,100