American CareSource Announces Fourth Quarter and Year-End Financial Results for 2014
01 April 2015 - 1:30PM
American CareSource Holdings, Inc. (Nasdaq:ANCI), owner of urgent
and primary care centers and a leading national network of
ancillary healthcare providers, today reported net revenue of $9.3
million for the fourth quarter of 2014, as compared with $6.2
million for the fourth quarter of 2013. For the full year 2014, net
revenue was $27.1 million compared to $26.8 million for 2013. The
Company was not engaged in the urgent and primary care business in
2013.
The net loss for the fourth quarter ended December 31, 2014, was
$2.5 million, as compared with a net loss of $267,000 for the
fourth quarter of 2013. The net loss for 2014 was $6.8 million, as
compared with a net loss of $3.8 million for 2013. The
increase in the net loss for the quarter and full year is primarily
attributable to costs related to acquisitions, relocation of our
corporate office, professional fees relating to the transition of
the accounting function, marketing investments for the urgent and
primary care business, and various other strategic initiatives such
as the finalization of our agreement with HealthSmart Preferred
Care II, L.P., or HealthSmart, to manage our ancillary network
business.
Urgent and Primary Care Center
Highlights
- We ended the year with ten urgent and primary care centers,
three of which were acquired in the fourth quarter. Our
geographic distribution at year-end was as follows: Georgia – 3,
Alabama – 3, Florida – 2 and Virginia – 2. We acquired the
Virginia centers on December 31, 2014, and as a result, these
centers did not contribute to the results for either the fourth
quarter or 2014.
- The eight centers operating in 2014 reported 19,700 patient
encounters in the fourth quarter and an aggregate 33,000 patient
encounters from the dates of our acquisition in 2014. One
center opened for business in October of 2014, and the results from
this location reflect typical start-up expenses we expect to incur
with any de novo project. Our average net revenue per patient
encounter for 2014 was approximately $120.
- Our urgent and primary care center revenues were $2.3 million
for the fourth quarter and $3.9 million for 2014 from the dates we
acquired each center. There is no comparable data for 2013 as
we entered this business in May 2014.
- This newly created urgent and primary care center business
incurred an operating loss of $302,000 for the year. The
operating loss before depreciation and amortization for the centers
was $80,000 for the year.
- We closed a $6 million line of credit in the fourth quarter
with a top-tier United States bank providing us with funding to
support our acquisition program and working capital needs. The
interest rate is LIBOR plus 1.75% per annum, which as of the date
of this release, is 1.92%
Ancillary Network Highlights
- Revenue from our ancillary network business in the fourth
quarter was $7.0 million, as compared to $6.2 million for the same
quarter in 2013. For the year, revenues were $23.1 million, as
compared to $26.8 million for 2013. Continued volume declines
from legacy customers were partially offset by third party
administrators acquired by HealthSmart, our largest customer and
ancillary network manager.
- Effective October 1, 2014, we entered into a management
services agreement with HealthSmart, under which HealthSmart
manages the operation of our ancillary network business subject to
the supervision of an oversight committee a majority of the members
of which are appointed by us. HealthSmart hired substantially
all of our ancillary network employees. We compensate
HealthSmart with a fee equal the sum of 120% of all expenses
incurred in managing the business and 35% of the profits.
- The operating income for 2014 for the ancillary network
business was $587,000, as compared to 2013 (reclassified) operating
income of $155,000. For the year, operating income before
depreciation and amortization was $1.2 million, as compared to $1.0
million for 2013 (reclassified).
Shared Services
- With our entry into the urgent and primary care center
business, we created a Shared Services segment to track and record
the costs of managing both the urgent and primary care center
segment and the ancillary network segment. These costs include
finance and accounting, human resources, legal, marketing and
information technology.
- Shared services incurred total costs of $6.4 million for 2014
compared to $3.9 million for 2013. The increase in costs
relates to acquisitions, relocation of our corporate office,
professional fees relating to the transition of the accounting
function, marketing investments for the urgent and primary care
business, and various other strategic initiatives such as the
finalization of the agreement with HealthSmart to manage the
ancillary network business.
Financial Liquidity
- Total cash and cash equivalents at December 31, 2014, amounted
to $1.0 million, as compared to $2.5 million as of September 30,
2014, and $6.2 million as of December 31, 2013. The decrease
from the end of the third quarter is attributable to acquisitions
and operating losses. We have used $7.0 million of our bank
lines of credit through March 31, 2015, and have an additional $4.0
million available.
- Interest expense amounted to $658,000 during the year ended
December 31, 2014, of which $534,000 resulted from amortization of
deferred loan fees and unrealized losses related to our derivative
warrants.
- Subsequent to year-end, we filed a Form S-1 Registration with
the Securities and Exchange Commission to sell additional shares of
our common stock. If the offering is fully subscribed, we will
raise an additional $15.0 million (less applicable fees and
expenses), plus any proceeds we receive on an account of a 15%
over-allotment option we have granted to the underwriters. We
anticipate the offering closing in the second quarter of 2015.
Rule 134 Disclosure
A registration statement on Form S-1 relating to these
securities has been filed with the Securities and Exchange
Commission but has not yet become effective. These securities may
not be sold nor may offers to buy be accepted prior to the time
that the registration statement becomes effective.
A copy of the preliminary prospectus related to the offering may
be obtained, when available, by written request to American
CareSource Holdings, Inc., attn.: Anthony R Levinson, 1170
Peachtree Street NE, Suite 2350 Atlanta, Georgia 30309 or by email
to alevinson@americancaresource.com.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy, nor shall there be any sale of
these securities in any state or jurisdiction in which such an
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state or
jurisdiction.
About American CareSource Holdings, Inc.
American CareSource Holdings, Inc. is the owner of a growing
chain of ten urgent and primary care centers and an ancillary
services network that provides ancillary healthcare services
through its nationwide provider network.
Safe Harbor Statement Under the Private Securities
Litigation Reform Act of 1995:
Any statements contained in this release that are not historical
facts, including with respect to the Company's plans, objectives
and expectations for future operations, projections of the
Company's future operating results or financial condition, and
expectations regarding the healthcare industry and economic
conditions, are forward-looking statements. Substantial risks and
uncertainties could cause actual results to differ materially from
those indicated by such forward-looking statements, including, but
not limited to, our ability to attract or maintain patients,
clients or providers or achieve our financial results, changes in
national healthcare policy, federal or state regulation, and/or
rates of reimbursement, including without limitation to the impact
of the Patient Protection and Affordable Care Act, Health Care and
Educational Affordability Reconciliation Act and medical loss ratio
regulations, general economic conditions (including economic
downturns and increases in unemployment), the Company's ability to
successfully implement our growth strategy for the urgent and
primary care business, the Company's ability to identify and
acquire target centers, increased competition in the urgent care
and primary care market, the Company's ability to recruit and
retain qualified physicians and other healthcare professionals,
reduction in reimbursement rates from governmental payors, lower
than anticipated demand for services, pricing, market acceptance or
preference, the Company's ability to integrate with its clients,
consolidation in the industry that affect the Company's key
clients, changes in the business decisions by significant clients,
term expirations of contracts with significant clients, possible
termination of relationships with significant clients, increased
competition, decisions by service providers in the Company's
network to terminate their agreements with the Company, the
Company's ability to maintain a network of ancillary service
providers that is adequate to generate significant claims volume,
increased competition in the ancillary network business from major
carriers, increased competition from cost containment vendors and
solutions, the Company's inability to manage growth, implementation
and performance difficulties, and other risk factors detailed from
time to time in the Company's periodic filings with the Securities
and Exchange Commission. Except as otherwise required by law, the
Company undertakes no obligation to update or revise these
forward-looking statements.
AMERICAN CARESOURCE
HOLDINGS, INC. |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
December 31, 2014 and 2013 |
(amounts in thousands, except
per share data) |
|
|
|
|
2014 |
2013 |
Net revenues: |
|
|
Ancillary network |
$ 23,146 |
$ 26,751 |
Urgent and primary care |
3,906 |
-- |
Total net revenues |
27,052 |
26,751 |
Operating expenses: |
|
|
Ancillary network provider
payments |
16,241 |
19,762 |
Ancillary network
administrative fees |
1,127 |
1,083 |
Ancillary network operating
costs under Management Services Agreement |
903 |
-- |
Salaries, wages, benefits and
taxes |
8,157 |
5,250 |
Professional fees |
1,866 |
1,262 |
Other operating expenses |
4,044 |
2,381 |
Depreciation and
amortization |
866 |
795 |
Total operating expenses |
33,204 |
30,533 |
Operating loss |
(6,152) |
(3,782) |
|
|
|
Other (income) expense: |
|
|
Interest expense |
658 |
-- |
(Gain)/loss on disposal of
assets |
(108) |
5 |
Interest income |
(9) |
(27) |
Total other (income)
expense |
541 |
(22) |
Loss before income taxes |
(6,693) |
(3,760) |
Income tax expense |
70 |
25 |
Net loss |
$ (6,763) |
$ (3,785) |
Basic and diluted net loss per share |
$ (1.05) |
$ (0.66) |
Basic and diluted weighted-average shares
outstanding |
6,407 |
5,715 |
|
AMERICAN CARESOURCE
HOLDINGS, INC. |
CONSOLIDATED STATEMENT
OF OPERATIONS BY BUSINESS SEGMENT |
December 31, 2014 and
2013 |
(amounts in thousands, except
per share data) |
|
|
|
|
|
2014 |
2013 |
Change |
|
Urgent and Primary Care |
Ancillary Network |
Shared Services |
Total |
Urgent and Primary Care |
Ancillary Network |
Shared Services |
Total |
$ |
% |
Net revenues |
$ 3,906 |
$ 23,146 |
|
$ 27,052 |
$ -- |
$ 26,751 |
|
$ 26,751 |
$ 301 |
1% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
Ancillary network provider
payments |
-- |
16,241 |
-- |
16,241 |
-- |
19,762 |
-- |
19,762 |
(3,521) |
-18% |
Ancillary network
administrative fees |
-- |
1,127 |
-- |
1,127 |
|
1,083 |
|
1,083 |
44 |
4% |
Ancillary network operating
costs under Management Services Agreement |
-- |
903 |
-- |
903 |
-- |
-- |
-- |
-- |
903 |
|
Salaries, wages, benefits and
taxes |
2,601 |
2,878 |
2,678 |
8,157 |
-- |
3,272 |
1,978 |
5,250 |
2,907 |
55% |
Professional fees |
54 |
88 |
1,724 |
1,866 |
-- |
463 |
799 |
1,262 |
604 |
48% |
Other operating expenses |
1,331 |
678 |
2,035 |
4,044 |
-- |
1,221 |
1,160 |
2,381 |
1,663 |
70% |
Depreciation and
amortization |
222 |
644 |
-- |
866 |
-- |
795 |
|
795 |
71 |
9% |
Total operating expenses |
$ 4,208 |
$ 22,559 |
$ 6,437 |
$ 33,204 |
$ -- |
$ 26,596 |
$ 3,937 |
$ 30,533 |
$ 2,671 |
9% |
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
$ (302) |
$ 587 |
$ (6,437) |
$ (6,152) |
$ -- |
$ 155 |
$ (3,937) |
$ (3,782) |
$ (2,370) |
-63% |
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense: |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
658 |
|
|
|
-- |
658 |
|
(Gain)/loss on disposal of
assets |
|
|
|
(108) |
|
|
|
5 |
(113) |
-2260% |
Interest income |
|
|
|
(9) |
|
|
|
(27) |
18 |
-67% |
Total other (income)
expense |
|
|
|
541 |
|
|
|
(22) |
563 |
|
Loss before income taxes |
|
|
|
(6,693) |
|
|
|
(3,760) |
(2,933) |
78% |
|
AMERICAN CARESOURCE
HOLDINGS, INC. |
CONSOLIDATED BALANCE
SHEETS |
December 31, 2014 and 2013 |
(amounts in thousands, except
per share data) |
|
|
2014 |
2013 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 1,020 |
$ 6,207 |
Accounts receivable |
4,135 |
1,977 |
Prepaid expenses and other
current assets |
612 |
357 |
Deferred income taxes |
6 |
6 |
Total current assets |
5,773 |
8,547 |
|
|
|
Property and equipment, net |
4,322 |
1,236 |
|
|
|
Other assets: |
|
|
Deferred income taxes |
12 |
215 |
Deferred loan fees, net |
2,666 |
-- |
Deferred offering costs |
225 |
-- |
Other non-current assets |
488 |
391 |
Intangible assets, net |
1,437 |
640 |
Goodwill |
6,182 |
-- |
Total other assets |
11,010 |
1,246 |
Total assets |
$ 21,105 |
$ 11,029 |
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
Current liabilities: |
|
|
Due to ancillary network
service providers |
$ 2,308 |
$ 1,865 |
Due to HealthSmart, ancillary
network |
903 |
-- |
Accounts payable |
762 |
258 |
Accrued liabilities |
1,875 |
798 |
Current portion of promissory
notes and notes payable |
989 |
-- |
Capital lease obligations,
current portion |
117 |
-- |
Total current liabilities |
6,954 |
2,921 |
|
|
|
Long-term liabilities: |
|
|
Lines of credit |
4,716 |
-- |
Promissory notes and notes
payable |
312 |
-- |
Capital lease obligations |
1,764 |
-- |
Warrant derivative
liability |
3,200 |
-- |
Other long-term
liabilities |
222 |
-- |
Total long-term
liabilities |
10,214 |
-- |
Total liabilities |
17,168 |
2,921 |
|
|
|
Commitments and contingencies |
|
|
|
|
|
Stockholders' equity: |
|
|
Preferred stock, $0.01 par
value; 10,000 shares authorized, none issued |
-- |
-- |
Common stock, $0.01 par value;
40,000 shares authorized; 6,713 and 5,713 shares issued and
outstanding in 2014 and 2013, respectively |
67 |
57 |
Additional paid-in capital |
25,731 |
23,149 |
Accumulated deficit |
(21,861) |
(15,098) |
Total stockholders' equity |
3,937 |
8,108 |
Total liabilities and stockholders'
equity |
$ 21,105 |
$ 11,029 |
|
AMERICAN CARESOURCE
HOLDINGS, INC. |
CONSOLIDATED STATEMENT
S OF CASH FLOWS |
December 31, 2014 and 2013 |
(amounts in thousands, except
per share data) |
|
|
2014 |
2013 |
Cash flows from operating activities: |
|
|
Net loss |
$ (6,763) |
$ (3,785) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
Non-cash stock-based
compensation expense |
592 |
299 |
Depreciation and
amortization |
866 |
795 |
Amortization of deferred loan
fees |
414 |
-- |
Unrealized loss on warrant
liability |
120 |
-- |
Gain on sale of property and
equipment |
(108) |
-- |
Change in deferred rent |
42 |
-- |
Deferred income taxes |
58 |
7 |
Loss on write-off of software
development costs |
-- |
5 |
Changes in operating assets and
liabilities, net of effects of acquisitions: |
|
|
Accounts receivable |
(1,528) |
455 |
Prepaid expenses and other
assets |
42 |
(442) |
Due to ancillary network
service providers |
443 |
(1,235) |
Due to HealthSmart, ancillary
network |
903 |
-- |
Accounts payable |
403 |
(287) |
Accrued liabilities |
482 |
-- |
Net cash used in operating
activities |
(4,034) |
(4,188) |
|
|
|
Cash flows from investing activities: |
|
|
Net change in other non-current
assets |
(97) |
|
Cost of acquisitions |
(6,921) |
-- |
Additions to property and
equipment |
(776) |
(315) |
Proceeds from sale of property
and equipment |
131 |
-- |
Net cash used in investing
activities |
(7,663) |
(315) |
|
|
|
Cash flows from financing activities: |
|
|
Proceeds from borrowings under
line of credit |
4,716 |
-- |
Principal payments on capital
lease obligations |
(46) |
-- |
Proceeds from issuance of
common stock |
2,000 |
-- |
Notes payable payments |
(36) |
-- |
Offering costs, paid and
deferred |
(124) |
-- |
Proceeds from exercise of
equity incentives |
-- |
5 |
Net cash provided by financing
activities |
6,510 |
5 |
|
|
|
Net decrease in cash and cash
equivalents |
(5,187) |
(4,498) |
Cash and cash equivalents at beginning of
period |
6,207 |
10,705 |
Cash and cash equivalents at end of
period |
$ 1,020 |
$ 6,207 |
|
|
|
Supplemental cash flow information: |
|
|
Cash paid for taxes, net of refunds |
$ 38 |
$ 117 |
Cash paid for interest |
84 |
-- |
|
|
|
Supplemental non-cash operating and financing
activity: |
|
|
Warrants issued as loan guarantee and
financing |
$ 3,080 |
$ -- |
Fair value of debt issued as consideration in
acquisitions |
$ 1,297 |
$ -- |
Purchase price due to seller, Stat
Medical |
$ 268 |
$ -- |
Offering costs, deferred and unpaid |
$ 101 |
$ -- |
Receivable for tenant improvement
allowance |
$ 180 |
$ -- |
Debt issued for property and equipment |
$ 40 |
$ -- |
CONTACT: Investor Relations Contact:
Anthony R. Levinson, CFO
alevinson@americancaresource.com
Phone (404) 465-1000 x 1019
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