SUNRISE, Fla., Aug. 7 /PRNewswire-FirstCall/ -- NationsHealth, Inc.
(Nasdaq: NHRX; NHRXW; NHRXU) today announced its financial results
for its quarter and six months ended June 30, 2006. Revenue for the
quarter ended June 30, 2006 was $19.6 million compared to $22.2
million for the corresponding period in 2005. Net loss for the
quarter ended June 30, 2006 was $5.0 million, or $0.18 per share,
compared to a net loss of $5.4 million, or $0.21 per share, for the
corresponding period in 2005. For the six months ended June 30,
2006, revenue was $44.6 million compared to $41.1 million for the
corresponding period in 2005. Net loss for the six months ended
June 30, 2006 was $18.5 million, or $0.67 per share, compared to a
net loss of $13.7 million, or $0.52 per share, for the
corresponding period in 2005. Revenue for the quarter and six
months ended June 30, 2005 included approximately $6.9 million and
$13.2 million, respectively, from the Company's respiratory
division, which was sold on September 2, 2005. The Company is also
reporting adjusted EBITDA* for the first two quarters of 2006,
being the two quarters which include the Company's present lines of
business and exclude the previously sold respiratory division.
Adjusted EBITDA loss, defined as net loss before interest, taxes,
depreciation and amortization, stock based compensation and
non-cash impairment charges, for the quarter ended June 30, 2006
was $1.3 million, compared to $10.9 million for the quarter ended
March 31, 2006. Adjusted EBITDA loss for the quarter ended June 30,
2006 included $1.2 million of severance expense related to the
Company's corporate restructuring. Results for the quarter also
reflect a $1.7 million gain on the settlement of a vendor
obligation. The Insurance Services segment, which consists of
NationsHealth's marketing, distribution and enrollee services
related to CIGNA's nationwide CIGNATURE Rx Medicare Part D
Prescription Drug Plan, contributed profit of $2.4 million for the
quarter ended June 30, 2006 and a loss of approximately $5.5
million for the six months ended June 30, 2006. The Pharmacy
Products segment, which consists of NationsHealth's medical
supplies and prescription card business, contributed profit of $1.6
million and $3.9 million for the quarter and six months ended June
30, 2006, respectively. "The second quarter financial results
reflect our ongoing efforts to achieve profitability and positive
cash flow," said Timothy Fairbanks, the Company's Chief Financial
Officer. "Both our Pharmacy Products and Insurance Services
businesses reported profit at the segment level this quarter and we
continue to work diligently to more appropriately size the
corporate infrastructure needed to support those business lines.
Our management restructuring, cost containment and efficiency
initiatives undertaken during the second quarter should account for
over $4.0 million of savings per year and are starting to be
reflected in our financial results. We expect the upcoming third
quarter to reflect the full effect of the initiatives we have
implemented." As previously announced, NationsHealth will host a
conference call at 11:00 a.m. ET today to review its financial
results for the quarter and six month ended June 30, 2006. Access
Information: Date: August 7, 2006 Time: 11:00 a.m. ET U.S./Canada
dial-in number: 866-558-6338 International dial-in number:
702-477-7800 Participant passcode: 3085 Live webcast:
http://www.nationshealth.com/ Replay Access Information: A
recording of the conference call will be available three hours
after completion until August 11, 2006 at midnight ET at
866-800-3850 (U.S.) and 808-237-2390 (International). The replay
passcode is 3085. The webcast will be archived for on demand
listening for 30 days on the NationsHealth's website,
http://www.nationshealth.com/. About NationsHealth, Inc.
NationsHealth improves the delivery of healthcare to Medicare and
managed care beneficiaries by providing medical products and
prescription related services. NationsHealth has a strategic
alliance with CIGNA to offer their Medicare Part D prescription
drug plans nationally. Prior to launching its Medicare Part D
business, NationsHealth offered free discount prescription cards,
accepted at over 57,000 pharmacies nationwide, to approximately 2.9
million cardholders. In addition, NationsHealth provides home
delivery of diabetes and ostomy medical products to over 103,000
patients. NationsHealth is also the provider of diabetes supplies
to over 12,000 Medicare beneficiaries at over 1,100 Kmart
pharmacies. For more information please visit
http://www.nationshealth.com/. * Use of Non-GAAP Financial Measures
In its earnings releases, conference calls, slide presentations or
webcasts, the Company may use or discuss adjusted EBITDA, which is
a non-GAAP financial measure as defined by SEC Regulation G.
Management regularly reviews adjusted EBITDA (EBITDA loss) as an
analytical indicator of the Company's financial performance and
believes that it is useful to investors in evaluating operating
performance. In addition, the Company uses adjusted EBITDA (EBITDA
loss) as a measure of performance for its business segments and for
incentive compensation purposes. The Company does not intend for
adjusted EBITDA to be considered in isolation or as a substitute
for any GAAP measure. Adjusted EBITDA (EBITDA loss), as presented,
may not be comparable to similarly titled measures of other
companies. Net income (loss) is the GAAP financial measure most
directly comparable to adjusted EBITDA (EBITDA loss). A
reconciliation of adjusted EBITDA loss to net loss is as follows
(in thousands): Three Months Ended June 30, 2006 March 31, 2006 Net
Loss ($4,997) ($13,530) Interest, net 727 643 Depreciation and
amortization 455 458 Amortization of equity issued to CIGNA 970 969
Stock-based compensation 830 543 Non-cash impairment charge 733 --
Adjusted EBITDA Loss ($1,282) ($10,917) This press release contains
forward-looking statements about NationsHealth, including
statements regarding management initiatives, efforts to streamline
operations, projections with respect to enrollment and market
opportunities for Part D and specialty pharmacy programs and future
financial results, none of which should be construed in any manner
as a guarantee that such results will in fact occur. In addition,
other written or oral statements that constitute forward-looking
statements may be made by us or on our behalf. Forward-looking
statements are statements that are not historical facts, and in
some cases may be identified by the words "anticipate," "project,"
"expect," "plan," "intend," "may," "should," "will," and similar
words or phrases. Such forward-looking statements, based upon the
current beliefs and expectations of NationsHealth's management, are
subject to risks and uncertainties, which could cause actual
results to differ from the forward-looking statements. The
following factors, among others, could cause actual results to
differ from those set forth in the forward-looking statements: our
ability to maintain our existing customer base; our customers'
desire to take advantage of our Part D and specialty pharmacy
services; uncertainty in our costs incurred in administering the
Part D program; changes in Medicare, Medicaid, Tricare, Champus and
any other state or national-based reimbursement program; changing
interpretations of generally accepted accounting principles;
outcomes of government reviews of NationsHealth's business
practices; inquiries and investigations and related litigation;
continued compliance with government regulations; legislation or
regulatory requirements or changes adversely affecting the
businesses in which NationsHealth is engaged; fluctuations in
customer demand; management of rapid growth; our ability to compete
effectively; timing and market acceptance of new products sold by
NationsHealth; general economic conditions; and geopolitical
events, regulatory changes and other risks and uncertainties
described in NationsHealth's Annual Report on Form 10-K for the
year ended December 31, 2005 and NationsHealth's other reports
filed with the Securities and Exchange Commission. The information
set forth herein should be read in light of such risks.
NationsHealth cautions investors not to place undue reliance on the
forward-looking statements contained herein. These statements speak
only as of the date of this press release and, except as required
by applicable law, NationsHealth assumes no obligation to update
the information contained herein. (financial tables to follow)
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in
thousands, except per share data) Three Months Ended June 30, 2006
2005 Revenue: Net product sales $10,890 $19,995 Prescription card
revenue 1,339 2,156 Service revenue 7,387 -- 19,616 22,151 Cost of
product sales 4,907 8,485 Cost of services 4,173 -- Gross Profit
10,536 13,666 Operating Expenses: Patient acquisition and related
costs 1,563 5,566 Patient service and fulfillment 2,099 3,933
General and administrative 8,129 5,313 Provision for doubtful
accounts 990 2,924 Depreciation and amortization 322 213
Amortization of equity issued to CIGNA 970 -- Impairment of
investment in joint venture 733 -- 14,806 17,949 Loss from
Operations (4,270) (4,283) Other Expense, net (727) (1,117) Net
Loss $(4,997) $(5,400) Loss per share - basic and diluted $(0.18)
$(0.21) Weighted average shares outstanding - basic and diluted
27,888 26,175 SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in thousands, except per share data) Six Months Ended
June 30, 2006 2005 Revenue: Net product sales $21,744 $37,132
Prescription card revenue 3,312 4,011 Service revenue 19,575 --
44,631 41,143 Cost of product sales 10,191 15,411 Cost of services
23,255 -- Gross Profit 11,185 25,732 Operating Expenses: Patient
acquisition and related costs 2,644 14,720 Patient service and
fulfillment 4,543 7,825 General and administrative 15,971 9,617
Provision for doubtful accounts 1,846 5,245 Depreciation and
amortization 666 429 Amortization of equity issued to CIGNA 1,939
-- Impairment of investment in joint venture 733 -- 28,342 37,836
Loss from Operations (17,157) (12,104) Other Expense, net (1,370)
(1,570) Net Loss $(18,527) $(13,674) Loss per share - basic and
diluted $(0.67) $(0.52) Weighted average shares outstanding - basic
and diluted 27,848 26,175 SUMMARY CONSOLIDATED BALANCE SHEETS (in
thousands) June 30, December 31, 2006 2005 (unaudited) ASSETS
Current Assets: Cash and short-term investments $4,306 $14,894
Accounts receivable, net 5,278 7,908 Inventory 1,161 1,285 Costs
related to billings in process, net 1,247 874 Other receivables 909
1,877 Prepaid expenses and other current assets 524 750 Total
current assets 13,425 27,588 Property and equipment, net 3,604
3,747 Investment in joint venture 797 1,488 Deferred CIGNA equity
compensation, net 13,571 15,510 Other assets, net 1,743 1,526 Total
assets $33,140 $49,859 LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY) Current Liabilities: Accounts payable $10,697 $13,387
Accrued expenses 9,940 12,030 Deferred revenue, current portion
3,314 235 Line of credit 3,181 2,500 Total current liabilities
27,132 28,152 Long-Term Liabilities: Deferred revenue -- 1,100
Convertible notes, related party, net 5,717 5,176 Other long-term
liabilities 1,016 1,414 Total long-term liabilities 6,733 7,690
Stockholders' Equity (Deficiency) (725) 14,017 Total liabilities
and stockholders' equity (deficiency) $33,140 $49,859 At
NationsHealth: Timothy Fairbanks, CFO 954-903-5018 At Rx
Communications Group: Melody A. Carey (investors) 917-322-2571
DATASOURCE: NationsHealth, Inc. CONTACT: Timothy Fairbanks, CFO of
NationsHealth, +1-954-903-5018; or Melody A. Carey, investors, of
Rx Communications Group, +1-917-322-2571 Web site:
http://www.nationshealth.com/
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