Prism Medical Reports Third Quarter Results

TORONTO, Oct. 22, 2013 /CNW/ - Prism Medical Ltd., ("Prism Medical" or "the Company") (TSXV: PM), a leading provider of durable medical equipment and related services to the mobility challenged, today reported financial results for the third quarter (Q3) ended August 31st, 2013.

Financial Summary

  Three months ended
August 31
Nine months ended
August 31
  2013
$
2012
$
2013
$
2012
$
Revenues 18,384 17,188 55,400 57,757
Gross margin 7,589 6,690 21,845 22,758
  (as % of revenues) 41% 39% 39% 39%
         
Net income 1,228 71 2,690 2,417
  (as % of revenues) 7% 0% 5% 4%
         
Adjusted EBITDA 2,779 1,003 7,216 5,843
  (as % of revenues) 15% 6% 13% 10%
         
Earnings per share        
  Basic 0.15 0.01 0.32 0.29
  Diluted 0.15 0.01 0.32 0.29

The Company's Q3 highlights include:

  • EBITDA performance is well ahead of last year;
  • Gross margin rate at 41.3% continues to improve;
  • The results arising from the impact of the MedCare supply agreement is performing in line with expectations;
  • SG&A costs are in line with expectations; remaining well below prior year levels;
  • Despite continued pressure on health care budgets, the UK and North American businesses are performing well;
  • Three dividends of $0.08 per share have been paid this fiscal year.

Financial Review

Revenues for the three months and nine months ended August 31, 2013 increased by $1,196 or 7.0% and decreased $2,357 or 4.1% respectively. Details below:

United Kingdom (UK)

For the three and nine months ended August 31, 2013, UK revenues increased $88 or less than 1% and decreased $1,662 or 5.5% respectively compared to the same periods last year. The prior year included the positive impact of continued sales from the Leonard Cheshire contract. If we exclude the Leonard Cheshire impact in prior year's revenue, the UK's year-to-date fiscal 2013 revenues would be slightly ahead of the same period last year. Management believes that despite the continued impact of the austerity cuts, the healthcare market remains solid in the UK.

United States (US)

For the three and nine months ended August 31, 2013, US revenues increased $1,403 or 32.8% and $3,933 or 28.9% respectively compared to the same periods last year. The increase in revenues is primarily due to incremental sales generated through our exclusive supply agreement with MedCare Products Inc. ("MedCare").  In addition, we signed up more dealers in the home care sector as we continue to expand our geographic footprint.

Canada

For the three and nine months ended August 31, 2013, Canada revenues decreased $295 or 10.3% and $4,628 or 33.8% respectively compared to the same periods last year. Provincial budgetary spending continues to be tight with project spending delayed in many provinces, in particular, sales in B.C. are down $2,000 in the first nine months of fiscal 2013 versus the same period last year.

Gross Margin

For the three and nine months ended August 31, 2013, gross margin  increased $899 or 13.4% and decreased $913 or 4.0% compared to the same periods last year. In the quarter, gross margin was impacted by higher revenues as discussed above and a significantly improved gross margin rate whereas gross margin on a year-to-date basis was impacted by lower revenues and a constant gross margin rate. In the quarter, the gross margin rate increased from 38.9% to 41.3% as a result of improved US efficiencies and the impact of the MedCare distribution agreement offset by higher research and development spending.

Selling, general and administrative expenses (SG&A) 

Total selling, general and marketing expenses for the three and nine months ended August 31, 2013 decreased $713 or 10.9% and decreased $1,744 or 9.1% respectively. Included in SG&A is $200 and $600 respectively relating to the amortization of the MedCare supply agreement over a 10-year period. The decrease in SG&A was due to restructuring initiatives taken by the Company in the 4th quarter of 2012 which was anticipated to remove $2,500 of SG&A costs in 2013.   For the nine months ended August 31, 2012, the expenses declined by $2,344 if we exclude amortization of the MedCare supply agreement.

Adjusted EBITDA

For the three and nine months ended August 31, 2013, adjusted EBITDA increased $1,776 or 177.1% and $1,373 or 23.5% compared to the same periods last year. The adjusted EBITDA in the quarter resulted in an EBITDA to sales ratio of 15.1% for the quarter and 13.0% on a year-to-date basis compared to 5.8% and 10.1% for similar periods last year.

Net Income

Net Income for the three and nine months ended August 31, 2013 increased $1,157 and $273 or respectively compared to the same periods last year. The Quarter's earnings per share came in at $0.15, increasing on a year to date basis by $0.17 to $0.32.

Dividend Declaration

The Board of Directors has approved a dividend of $0.08 per common share payable on December 4, 2013 to shareholders of record on November 15, 2013.

While the Company has no formal policy on dividend payments and the Board of Directors determines the suitability of such payments on a quarterly basis, the Company views dividend payments an important part of its investor strategy and expects to continue its historical pattern of four dividend payments per fiscal year.

Summary of Quarterly Results

In Canada, periodic funding initiatives by different governments have historically caused spikes in quarterly and/or annual demand based on the timing of funding releases and project initiatives. In the US, the market is still under developed and the timing of funding releases by hospitals could continue to impact quarter to quarter results. Conversely, the UK market is more mature with historically stable funding levels resulting in lower quarter to quarter fluctuations in earnings.  In the first half of fiscal 2012, the UK and Canada experienced a spike in sales due to the Leonard Cheshire and B.C. contracts.  Historically, from a revenue perspective, the fourth quarter is the strongest quarter, followed by the second, third and first quarters. At 15.1%, the adjusted EBITDA to revenue ratio for the current quarter is the highest since the fourth quarter of fiscal 2011.

OUTLOOK

Prism intends to grow sales, profitability and return on shareholders' equity. The Company believes that performance will be positively affected by continued North American institutional demand for our products, improved manufacturing efficiencies, greater geographic coverage, revenues and profits from new product introductions and more aggressive working capital management. Through the addition of additional distribution, both through independent dealers and Company-owned platforms, Prism hopes to achieve gradual growth in UK and North American profitability even with the ongoing restricted spending environment.

The demand for our core products and services, in management's estimation, continues to experience growth at different rates in the geographic markets in which we participate. Government funding for our products, particularly in Canada and the UK is a key driver of sales. Although government policies related to healthcare in the markets we operate continues to change, we believe that the long term trend continues to be favorable.

We estimate that for Prism, the US market holds the greatest long-term potential to provide above-average revenue growth. Institutional penetration for safe patient moving and handling equipment is well below what may be witnessed in mature markets such as the UK and the homecare market is similarly underdeveloped. While budget constraints and the cyclicality of the institutional order pipeline can cause variability in US revenue, our efforts to build a larger footprint in this market have already translated into strong revenue growth. Prism is actively growing its sales footprint in the US and designing affordable products for the private-pay homecare market.

While the Company has no formal policy on dividend payments and the Board of Directors determines the suitability of such payments on a quarterly basis, the Company views dividend payments an important part of its investor strategy and expects to continue its historical pattern of four dividend payments per fiscal year.

Notice of Conference Call
Prism Medical will host a conference call on Wednesday October 23, 2013 at 9:00 a.m. EST to discuss its financial results. Stuart Meldrum, CEO, will Chair and George Chiarucci, CFO, will co‐chair the call. All interested parties can join the call by referring to the information below:

CONFERENCE CALL DETAILS:
Dial-In Number: (647) 427-7450 or (888) 231-8191
Taped Replay: (416) 849-0833 or (855) 859-2056
Reference Number: 88196391

Please dial in 15 minutes prior to the call to secure a line. A live audio webcast of the conference call will also be available at www.prismmedicalltd.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.

About Prism Medical Ltd.
Prism Medical Ltd. is one of the largest providers and manufacturers of durable medical equipment and related services to the mobility challenged in Canada, the US and the UK, with more than 100,000 installations and 200,000 product solutions sold. The Prism Medical brands include Waverley Glen and ErgoSafe, North America's leading supplier of lifting, handling and repositioning aid products and services across Canada and the US Freeway and Prism Service & Repair are leading suppliers of moving and handling products and services in the UK. For further information visit Prism Medical's website at www.prismmedicalltd.com or www.sedar.com.

1Non-GAAP Financial Measures

Prism Medical's consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP). The Company also uses non‐GAAP measures such as Adjusted EBITDA to measure its financial performance. Adjusted EBITDA consists of earnings before interest, income taxes, depreciation, amortization, stock‐based compensation expense and equity gains or losses from investments in associates accounted on an equity basis. Adjusted EBITDA is a financial metric used by many investors to compare companies on the basis of operating results, asset value and the ability to incur and service debt. Management believes that Adjusted EBITDA is a useful measure for evaluating the performance of the Company. Adjusted EBITDA is not a recognized measure under GAAP and does not have a standardized meaning prescribed by GAAP and may not be comparable to similarly titled financial metrics reported by other companies.

Forward-Looking Information
This document contains forward-looking statements relating to our operations and to the environment in which we operate and our strategy, action plans and investments, which may involve estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict and/or are beyond our control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include those set forth in this report and our other public filings. Consequently, readers should not place any undue reliance on such forward-looking statements. These forward-looking statements are made as of the date of this report. Prism Medical is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or other factors. All forward-looking statements attributable to Prism Medical are expressly qualified by these cautionary statements.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

SOURCE: Prism Medical Ltd.

For further information:

George Chiarucci
Chief Financial Officer
gchiarucci@prismmedicalltd.com
416-260-2145 ext. 229

Profil de l'entreprise

Prism Medical Ltd.

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