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American CareSource Reports Second Quarter 2011 Results

^{Published on 2011-08-11 19:41:17 - Market Wire}
 

DALLAS--([ BUSINESS WIRE ])--American CareSource Holdings Inc. (NASDAQ: ANCI) today reported second quarter 2011 net revenue of $11.3 million compared to $16.0 million for the second quarter of 2010. In addition, the Company reported a loss of $645,000, or $0.04 per diluted share, compared to net income of $299,000, or $0.02 per diluted share reported in 2010.

"During the first half of 2011, revenues continued to be negatively impacted by competitive factors that have significantly extended the sales cycle. In addition, we have seen accelerated attrition in our key legacy accounts"

aDuring the first half of 2011, revenues continued to be negatively impacted by competitive factors that have significantly extended the sales cycle. In addition, we have seen accelerated attrition in our key legacy accounts,a said Kenn S. George, Chairman and Chief Executive Officer of American CareSource Holdings. aThe goal of new management is to identify ways to overcome the revenue challenges we face, develop new revenue sources, make selective investments and manage costs during the remainder of the year. We will analyze our alternatives and seek profitable revenue enhancements with a sense of urgency that is required under the circumstances.a

Net Revenue

Net revenue for the second quarter of 2011 was $11.3 million compared to $16.0 million reported during the second quarter of 2010. Revenue from the Companya™s two key legacy accounts declined $7.4 million, or 57%. Claims volume from the two accounts decreased 28,000 claims, or 47% during the quarter compared to the corresponding prior year period. The loss of a significant employer group by one of the Company's two key clients accounted for approximately $3.0 million of the decline, while the remainder of the decline was the result of various competitive factors and the transition status of one of the accounts related to a business combination. The decline was partially offset by $1.7 million of incremental revenue generated in the second quarter from 13 new clients implemented in 2010 and $300,000 of incremental revenue from two new clients added in 2011.

Second quarter 2011 revenues decreased 14% sequentially from $13.1 million reported during the first quarter of 2011.

Claims Volumes

The Company billed 67,000 claims during the second quarter of 2011, a decrease from the 85,000 claims it billed during the same period last year. The lower claims volume was primarily the result of decreased claims flow from the Companya™s two largest client accounts.

Following are claims volumes for the periods presented:

Contribution Margin

Contribution margin for the second quarter of 2011 decreased to 7.5%, compared to 13.2% reported during the second quarter of 2010. The decline in contribution margin was primarily the result of a shift in mix away from clients that generate higher margins, relative to other clients, primarily as a result of the loss of a significant employer group by one of our key legacy clients. In addition, during the second quarter the Company experienced a shift in mix from higher margin service categories, such as laboratory and infusion services, to lower margin categories, such as dialysis compared to the second quarter of 2010.

Following is a comparison of statement of operations components as a percent of net revenue:

Selling, General and Administrative Expenses (SG&A)

SG&A for the second quarter of 2011 increased approximately $147,000, to $1.6 million, compared the same period last year, primarily due to the reclassification of personnel expenses associated with an internal strategic realignment. SG&A as a percentage of total net revenues is a reflection of lower net revenues for the period.

Adjusted EBITDA

Adjusted EBITDA for the second quarter of 2011 was a loss of $551,000, which compares to $998,000 million reported in the corresponding prior year period.

Adjusted EBITDA is defined as operating income or loss before depreciation and amortization and excludes non-cash stock-based compensation expense and warrant amortization. Adjusted EBITDA should be considered in addition to, but not in lieu of, income or loss from operations reported under generally accepted accounting principles (GAAP).

A reconciliation of adjusted EBITDA to operating income (loss) is provided in the tables accompanying this release.

Financial Liquidity

Total cash and cash equivalents at June 30, 2011 was $11.4 million, compared to $14.5 million reported at December 31, 2010. The Company had no outstanding debt as of December 31, 2010.

About American CareSource Holdings, Inc.

American CareSource Holdings is the first national, publicly traded ancillary care network services company. The Company offers a comprehensive national network of over 4,900 ancillary service providers at more than 36,000 sites through its subsidiary, Ancillary Care Services. Ancillary Care Services provides ancillary health care services through its network that offers cost effective alternatives to physician and hospital-based services. This market is estimated at $574 billion and has grown to 30% of total national health expenditures (as derived from 2006 data published by the Center for Medicare and Medicaid Services, National Health Statistics Group, U.S. Department of Commerce and Bureau of Economic Analysis and Census). These providers offer services in 30 categories including laboratories, dialysis centers, free-standing diagnostic imaging centers, non-hospital surgery centers, as well as durable medical equipment such as orthotics and prosthetics and others. The Company's ancillary network and management provides a complete outsourced solution for a wide variety of health care payors and plan sponsors including self-insured employers, indemnity insurers, PPOs, HMOs, third party administrators and both federal and local governments. For additional information, please visit [ www.anci-care.com ].

ANCI-F

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:

Any statements that are not historical facts contained in this release, including with respect to the Companya™s plans, objectives and expectations for future operations, projections of the Companya™s future operating results or financial condition, and expectations regarding the health care 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, the Companya™s inability to attract or maintain providers or clients or achieve its financial results, changes in national health care policy, federal or state regulation, and/or rates of reimbursement including without limitation the impact of the newly-enacted Patient Protection and Affordable Care Act, Health Care and Educational Affordability Reconciliation Act and medical loss ratio regulations, general economic conditions (including the recent economic downturns and increases in unemployment), lower than anticipated demand for ancillary services, pricing, market acceptance/preference, the Companya™s ability to integrate with its clients, consolidation in the industry that may affect the Companya™s key clients, the loss of additional employer groups or payors by our two key clients, changes in the business decisions by significant clients, increased competition, the Companya™s inability to manage growth, implementation and performance difficulties, and other risk factors detailed from time to time in the Companya™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.