LAKE FOREST, Calif., Oct. 30, 2007 (PRIME NEWSWIRE) -- Apria Healthcare Group Inc. (NYSE:AHG), one of the nation's leading home healthcare companies, today announced its financial results for the quarter ended September 30, 2007.
Revenues were $396.1 million, which represents a 3.6% increase compared to revenues of $382.2 million in the third quarter of 2006. For the nine months ended September 30, 2007, revenue growth over the prior year was 4.7% to $1,179.5 million from $1,126.3 million in the nine months ended September 30, 2006, with solid revenue increases of 5.3% respiratory therapy and 5.7% for infusion therapy. Third quarter 2007 net income was $21.3 million, an increase of 10.2% from $19.3 million in the third quarter of 2006. For the nine months ended September 30, 2007, net income was $61.2 million, an increase of 13.7% from $53.9 million in the nine months ended September 30, 2007.
Current quarter net income per share on a diluted basis was $0.48, compared to $0.45 in the comparable prior year period. Third quarter 2007 net income per share on a diluted basis included a one-time positive impact of $0.02 resulting from the resolution of some 2004 and prior tax items, and a negative $0.01 related to one-time employee costs. For the nine months ended September 30, 2007, net income per share on a diluted basis was $1.39, compared with $1.26 in the nine months ended September 30, 2006.
Gross margins were 66.2% in the third quarter of 2007, compared to 65.7% reported in the third quarter of last year. Gross margins were 65.8% in the nine months ended September 30, 2007, compared to 65.6% in the nine months ended September 30, 2006.
Days sales outstanding (DSO) were 47 days at September 30, 2007, down from 52 days at September 30, 2006. This improvement is a direct result of initiatives to optimize the billing processes and to increase the collection of patient co-payments. The provision for doubtful accounts as a percentage of revenues was 3.2%, compared to 2.4% in the corresponding period last year. For the nine months ended September 30, 2007, the provision for doubtful accounts was 2.8%, which is in line with expectations.
Selling, distribution and administrative expenses were 53.3% of revenues, which is up slightly from the second quarter of 2007 and 0.3% higher compared to 53.0% in the third quarter of last year. For both the nine months ended September 30, 2007 and the nine months ended September 30, 2006, selling, distribution and administrative expenses were 53.2% of revenue.
"We are encouraged with the ongoing operating performance in our core businesses of home respiratory and infusion services," said Lawrence M. Higby, Chief Executive officer. "The operational disciplines we have implemented have increased productivity and reduced days sales outstanding as well as delivery and other operating expenses. While we still have work to do with respect to overall sales growth, certain key products have shown improvements reflecting our sales initiatives outlined earlier in the year."
Earnings before interest, taxes, depreciation and amortization (EBITDA) was $71.0 million in the third quarter of 2007, representing a 2.0% decrease over EBITDA of $72.5 million in the third quarter of 2006. EBITDA was $213.6 million in the nine months ended September 30, 2007, compared to $212.6 million in the nine months ended September 30, 2006. The decrease in the quarter was due to Medicare cuts and the investments in the Company's sales force. EBITDA is presented as a supplemental performance measure and is not intended as an alternative to net income or any other measure calculated in accordance with generally accepted accounting principles. Further, EBITDA may not be comparable to similarly titled measures used by other companies. A table reconciling EBITDA to net income is presented at the end of the condensed consolidated financial statements included in this release.
Liquidity and Capital
Free cash flow was $40.1 million in the third quarter of 2007, compared to $36.6 million in the third quarter of 2006. Free cash flow was $115.9 million for the nine months ended September 30, 2007, compared to $99.2 million in the nine months ended September 30, 2006. In the third quarter of 2007, total capital expenditures returned to normal levels at 7.0% of revenues versus 6.4% in the third quarter of 2006. For the nine months ended September 30, 2007, total capital expenditures were 7.1% of revenues, compared to 8.1% of revenues in the nine months ended September 30, 2006.
During the quarter, the Company reduced its $500 million revolving credit line balance by $50 million. As of September 30, 2007, the outstanding balance on the revolver was $105 million.
Free cash flow is defined as net cash provided by operating activities minus capital expenditures and does not include acquisitions or financing activities. It is presented as a supplemental performance measure and is not intended as an alternative to any other cash flow measure calculated in accordance with generally accepted accounting principles. Further, free cash flow may not be comparable to similarly titled measures used by other companies. A table reconciling free cash flow to net cash provided by operating activities is presented at the end of the condensed consolidated financial statements included in this release.
2007 Guidance
Management affirms its previous estimate of 2007 revenue growth in the 4% to 5% range. Based on results to date and expectations for the fourth quarter, the estimate of 2007 net income per share on a diluted basis is increased to a range of $1.86 to $1.90, exclusive of the impact of the previously announced acquisition of Coram, Inc. and any other one-time items. The Company's 2007 free cash flow estimate is increased to a range of $150 million to $160 million.
Apria provides home respiratory therapy, home infusion therapy and home medical equipment through approximately 500 locations serving patients in all 50 states. With over $1.5 billion in annual revenues, it is one of the nation's leading home healthcare companies.
This release may contain statements regarding anticipated future developments that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Results may differ materially as a result of the risk factors included in the Company's filings with the Securities and Exchange Commission and other factors over which the Company has no control.
APRIA HEALTHCARE GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30, December 31,
(dollars in thousands) 2007 2006
---------------------------------------------------------------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 19,606 $ 14,657
Accounts receivable, net of allowance for
doubtful accounts 205,604 211,097
Inventories, net 38,535 40,681
Other current assets 85,152 78,502
---------- ----------
TOTAL CURRENT ASSETS 348,897 344,937
PATIENT SERVICE EQUIPMENT, NET 193,831 212,068
PROPERTY, EQUIPMENT & IMPROVEMENTS, NET 68,965 52,975
OTHER ASSETS, NET 555,355 558,516
---------- ----------
TOTAL ASSETS $1,167,048 $1,168,496
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 204,398 $ 201,378
Current portion of long-term debt 1,122 2,145
---------- ----------
TOTAL CURRENT LIABILITIES 205,520 203,523
LONG-TERM DEBT, net of current portion 359,717 485,000
OTHER NON-CURRENT LIABILITIES 107,002 69,542
---------- ----------
TOTAL LIABILITIES 672,239 758,065
STOCKHOLDERS' EQUITY 494,809 410,431
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,167,048 $1,168,496
========== ==========
APRIA HEALTHCARE GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(dollars in thousands, ---------------------- ----------------------
except per share data) 2007 2006 2007 2006
---------------------------------------------------------------------
Respiratory therapy $ 270,231 $ 258,134 $ 807,942 $ 767,571
Infusion therapy 73,201 69,980 214,468 202,983
Home medical equipment/
other 52,684 54,100 157,041 155,795
---------- ---------- ---------- ----------
NET REVENUES 396,116 382,214 1,179,451 1,126,349
GROSS PROFIT 262,316 251,120 776,371 739,311
Provision for doubtful
accounts 12,760 9,168 33,551 29,073
Selling, distribution
and administrative
expenses 210,985 202,661 626,971 598,706
Amortization of
intangible assets 630 1,082 2,328 4,024
---------- ---------- ---------- ----------
OPERATING INCOME 37,941 38,209 113,521 107,508
Interest expense, net 4,230 7,862 15,057 23,165
---------- ---------- ---------- ----------
INCOME BEFORE TAXES 33,711 30,347 98,464 84,343
Income tax expense 12,442 11,041 37,221 30,456
---------- ---------- ---------- ----------
NET INCOME $ 21,269 $ 19,306 $ 61,243 $ 53,887
========== ========== ========== ==========
Income per common
share - assuming
dilution $ 0.48 $ 0.45 $ 1.39 $ 1.26
========== ========== ========== ==========
Weighted average number
of common shares
outstanding 44,163 42,787 44,128 42,843
APRIA HEALTHCARE GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended
September 30,
------------------------
(dollars in thousands) 2007 2006
---------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 61,243 $ 53,887
Items included in net income not requiring
cash:
Provision for doubtful accounts 33,551 29,073
Depreciation and amortization 100,113 105,077
Deferred income taxes, share-based
compensation and other 9,039 27,277
Changes in operating assets and liabilities (4,660) (25,377)
---------- ----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 199,286 189,937
---------- ----------
INVESTING ACTIVITIES
Purchases of patient service equipment and
property, equipment and improvements (83,432) (90,717)
Proceeds from disposition of assets 76 722
Cash received (paid) for acquisitions,
including payments of deferred consideration 220 (7,794)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (83,136) (97,789)
---------- ----------
FINANCING ACTIVITIES
Net payment on debt (132,145) (100,228)
Issuances of common stock 16,892 3,213
Other 4,052 (4,380)
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES (111,201) (101,395)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 4,949 (9,247)
Cash and cash equivalents at beginning of
period 14,657 23,304
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 19,606 $ 14,057
========== ==========
APRIA HEALTHCARE GROUP INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
RECONCILIATIONS
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
(dollars in thousands) 2007 2006 2007 2006
---------------------------------------------------------------------
Reconciliation -
EBITDA:
Reported net income $ 21,269 $ 19,306 $ 61,243 $ 53,887
Add back: Interest
expense, net 4,230 7,862 15,057 23,165
Add back: Income tax
expense 12,442 11,041 37,221 30,456
Add back: Depreciation 32,433 33,163 97,785 101,053
Add back: Amortization
of intangible assets 630 1,082 2,328 4,024
---------- ---------- ---------- ----------
EBITDA $ 71,004 $ 72,454 $ 213,634 $ 212,585
========== ========== ========== ==========
Reconciliation - Free
Cash Flow:
Net cash provided by
operating
activities $ 67,675 $ 61,038 $ 199,286 $ 189,937
Less: Purchases of
patient service
equipment and
property, equipment
and improvements (27,621) (24,453) (83,432) (90,717)
---------- ---------- ---------- ----------
Free cash flow $ 40,054 $ 36,585 $ 115,854 $ 99,220
========== ========== ========== ==========