NationsHealth, Inc. (Nasdaq: NHRX; NHRXW; NHRXU) today announced
its financial results for its quarter and nine months ended
September 30, 2006. Revenue for the quarter ended September 30,
2006 was $19.8 million compared to $21.3 million for the
corresponding period in 2005. Net income for the quarter ended
September 30, 2006 was $6.0 million, or $0.22 per diluted share,
compared to net income of $11.8 million, or $0.40 per diluted
share, for the corresponding period in 2005. For the nine months
ended September 30, 2006, revenue was $64.4 million compared to
$62.4 million for the corresponding period in 2005. Net loss for
the nine months ended September 30, 2006 was $12.5 million, or
$0.45 per share, compared to a net loss of $1.9 million, or $0.07
per share, for the corresponding period in 2005. Revenue for the
quarter and nine months ended September 30, 2005 included
approximately $5.7 million and $18.8 million, respectively, from
the Company�s respiratory division, which was sold on September 2,
2005. Net income (loss) for the quarter and nine months ended
September 30, 2005 also included a gain of $15.5 million from the
sale of the respiratory division. Net income (loss) for the quarter
and nine months ended September 30, 2006 include a gain of $5.0
million from the sale of the Company�s discount prescription drug
card business, which was sold on September 5, 2006. Adjusted EBITDA
(EBITDA loss)*, defined as net earnings (loss) before interest,
taxes, depreciation and amortization, stock based compensation,
non-cash impairment charges and gains on the sale of business
lines, for the quarter ended September 30, 2006 was $4.4 million,
compared to an adjusted EBITDA loss of $1.3 million for the quarter
ended June 30, 2006. Adjusted EBITDA (EBITDA loss) for the quarters
ended September 30, 2006 and June 30, 2006 included gains on the
settlement of vendor obligations of approximately $1.0 million and
$1.7 million, respectively. Adjusted EBITDA loss for the quarter
ended June 30, 2006 also included $1.2 million of severance expense
related to the Company�s corporate restructuring. The Company�s
Insurance Services segment contributed profit of $3.7 million for
the quarter ended September 30, 2006, compared to profit of $2.4
million for the quarter ended June 30, 2006. The Pharmacy Products
segment contributed profit of $3.4 million for the quarter ended
September 30, 2006, compared to profit of $1.6 million for the
quarter ended June 30, 2006. For the nine months ended September
30, 2006, the Insurance Services segment had a loss of
approximately $1.8 million and the Pharmacy Products segment
contributed profit of approximately $7.3 million. During the third
quarter of 2006 NationsHealth took a number of steps to better
align the Company's focus on its core business segments, improve
operating results and cash flow, strengthen its balance sheet and
improve liquidity, including the following: On September 5, 2006,
the Company sold its discount prescription drug card business for
$6.0 million in cash. With the widespread adoption of the Medicare
Part D program, the discount prescription card business was a
declining revenue stream that was no longer core or complementary
to the Company�s Pharmacy Products and Insurance Services segments;
On September 13, 2006, the Company terminated a distribution
agreement with a vendor, pursuant to which the Company paid the
vendor approximately $4.4 million in full satisfaction of
approximately $5.4 million due under the agreement and relieved
itself of remaining purchase obligations under the agreement
through December 31, 2006 totaling approximately $27 million; On
September 27, 2006, the Company entered into an agreement to
dissolve NationsHealth Specialty Rx, a joint venture with US
Bioservices Corporation (US Bio) which was formed for purposes of
developing and operating a specialty oncology pharmacy business.
The Company and US Bio determined that the terms of the Competitive
Acquisition Program established by CMS were not economically viable
and, consequently, Specialty Rx never commenced operations. In
connection with the dissolution, its $1.5 million capital
contribution to Specialty Rx was returned to the Company on October
5, 2006; and During the third quarter of 2006, the Company�s
ongoing efforts to improve operational efficiencies and contain
costs continued, resulting in, among other things, improvements in
operating margins for the Pharmacy Products and Insurance Services
segments. �Excluding the $5.0 million gain on the sale of the
discount prescription drug card business, the $1.0 million gain on
the settlement of a vendor obligation, and the $0.6 million
non-cash impairment charge from reported net income of $6.0
million, the third quarter of 2006 yielded $0.6 million of pre-tax
earnings*,� said Timothy Fairbanks, the Company�s Chief Financial
Officer. �Our third quarter financial results reflected the
positive impact of our management restructuring, cost containment
and efficiency initiatives implemented in the first half of 2006.
Also, since the end of the open enrollment period for the Medicare
Part D Prescription Drug Program during the second quarter of 2006,
we are no longer incurring, and under our amended agreement with
CIGNA will no longer incur, the high costs of marketing and
enrollment.� As previously announced, NationsHealth will host a
conference call at 10:00 a.m. ET today to review its financial
results for the quarter and nine months ended September 30, 2006.
Access Information: Date: October 31, 2006 Time: 10:00 a.m. ET
U.S./Canada dial-in number: 800-665-0430 International dial-in
number: 913-312-1300 Participant passcode: 8144626 Live webcast:
www.nationshealth.com Replay Access Information: A recording of the
conference call will be available three hours after completion
until November 6, 2006 at midnight ET at 888-203-1112 (U.S.) and
719-457-0820 (International). The replay passcode is 8144626. The
webcast will be archived for on demand listening for 30 days on the
NationsHealth�s website, 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
provides home delivery of diabetes, ostomy and pharmacy products to
approximately 102,000 patients across the nation. NationsHealth is
also the provider of diabetes supplies to more than 13,000 Medicare
beneficiaries at over 1,100 Kmart pharmacies. In addition to its
medical products business, NationsHealth also provides education,
marketing, enrollment and customer service to insurance plans, with
a focus on Medicare Part D plans. NationsHealth has an agreement
with CIGNA to service its Medicare Part D prescription drug plans
nationally. 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 (EBITDA loss) to net income
(loss) is as follows (in thousands): Three Months Ended September
30, 2006 June 30, 2006 Net Income (Loss) $ 6,020� ($4,997)
Interest, net 778� 727� Depreciation and amortization 488� 457�
Amortization of equity issued to CIGNA 969� 969� Stock-based
compensation 585� 830� Non-cash impairment charge 559� 733� Gain on
sale of business line � (5,000) --� Adjusted EBITDA (EBITDA Loss) $
4,399� ($1,281) In addition, management believes that the
presentation of pre-tax earnings for the quarter ended September
30, 2006, excluding certain items from net income, is meaningful as
the items excluded are not considered to be indicative of the
Company's ongoing operations and financial results. This press
release contains forward-looking statements about NationsHealth,
including statements regarding management initiatives, efforts to
streamline operations, and future marketing and enrollment costs,
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, Quarterly Report
on Form 10-Q for the quarter ended March 31, 2006 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.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in
thousands, except per share data) � Three Months Ended September
30, � 2006� � 2005� Revenue: Net product sales $ 11,811� $ 18,167�
Prescription card revenue 671� 2,316� Service revenue � 7,314� �
780� 19,796� 21,263� � Cost of product sales 4,233� 8,037� Cost of
services � 2,430� � 1,311� � Gross Profit � 13,133� � 11,915� �
Operating Expenses: Patient acquisition and related costs 149�
3,256� Patient service and fulfillment 1,839� 3,593� General and
administrative 6,457� 5,576� Provision for doubtful accounts 998�
2,330� Depreciation and amortization 364� 224� Amortization of
equity issued to CIGNA 969� --� Impairment of investment in joint
venture 559� --� Gain on sale of business line � (5,000) � (15,508)
� 6,335� � (529) � Income from Operations 6,798� 12,444� � Other
Expense, net � (778) � (652) � Net Income $ 6,020� $ 11,792� �
Earnings per share: Basic $ 0.22� $ 0.45� Diluted $ 0.22� $ 0.40� �
Weighted average shares outstanding: Basic � 27,919� � 26,283�
Diluted � 27,921� � 30,105� SUMMARY CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited) (in thousands, except per share data) � Nine
Months Ended September 30, � 2006� � 2005� Revenue: Net product
sales $ 33,555� $ 55,299� Prescription card revenue 3,983� 6,327�
Service revenue � 26,889� � 780� 64,427� 62,406� � Cost of product
sales 14,424� 23,448� Cost of services � 25,685� � 1,311� � Gross
Profit � 24,318� � 37,647� � Operating Expenses: Patient
acquisition and related costs 2,793� 17,976� Patient service and
fulfillment 6,382� 11,418� General and administrative 22,428�
15,193� Provision for doubtful accounts 2,844� 7,575� Depreciation
and amortization 1,030� 653� Amortization of equity issued to CIGNA
2,908� --� Impairment of investment in joint venture 1,292� --�
Gain on sale of business line � (5,000) � (15,508) � 34,677� �
37,307� � (Loss) Income from Operations (10,359) 340� � Other
Expense, net � (2,148) � (2,222) � Net Loss $ (12,507) $ (1,882) �
Loss per share � basic and diluted $ (0.45) $ (0.07) � Weighted
average shares outstanding � basic and diluted � 27,871� � 26,211�
SUMMARY CONSOLIDATED BALANCE SHEETS (in thousands) � September 30,
December 31, � 2006� � 2005� (unaudited) ASSETS Current Assets:
Cash and short-term investments $ 2,763� $ 14,894� Accounts
receivable, net 5,834� 7,908� Inventory 1,233� 1,285� Costs related
to billings in process, net 879� 874� Other receivables 1,640�
1,877� Prepaid expenses and other current assets � 442� � 750�
Total current assets 12,791� 27,588� Property and equipment, net
3,556� 3,747� Investment in joint venture --� 1,488� Deferred CIGNA
equity compensation, net 12,602� 15,510� Other assets, net � 1,657�
� 1,526� Total assets $ 30,606� $ 49,859� � LIABILITIES AND
STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 2,359�
$ 13,387� Accrued expenses 9,004� 12,030� Deferred revenue, current
portion 1,774� 235� Line of credit � 2,500� � 2,500� Total current
liabilities � 15,637� � 28,152� � Long-Term Liabilities: Deferred
revenue --� 1,100� Convertible notes, related party, net 6,009�
5,176� Other long-term liabilities � 3,080� � 1,414� Total
long-term liabilities � 9,089� � 7,690� � Stockholders' Equity �
5,880� � 14,017� Total liabilities and stockholders' equity $
30,606� $ 49,859� NationsHealth, Inc. (Nasdaq: NHRX; NHRXW; NHRXU)
today announced its financial results for its quarter and nine
months ended September 30, 2006. Revenue for the quarter ended
September 30, 2006 was $19.8 million compared to $21.3 million for
the corresponding period in 2005. Net income for the quarter ended
September 30, 2006 was $6.0 million, or $0.22 per diluted share,
compared to net income of $11.8 million, or $0.40 per diluted
share, for the corresponding period in 2005. For the nine months
ended September 30, 2006, revenue was $64.4 million compared to
$62.4 million for the corresponding period in 2005. Net loss for
the nine months ended September 30, 2006 was $12.5 million, or
$0.45 per share, compared to a net loss of $1.9 million, or $0.07
per share, for the corresponding period in 2005. Revenue for the
quarter and nine months ended September 30, 2005 included
approximately $5.7 million and $18.8 million, respectively, from
the Company's respiratory division, which was sold on September 2,
2005. Net income (loss) for the quarter and nine months ended
September 30, 2005 also included a gain of $15.5 million from the
sale of the respiratory division. Net income (loss) for the quarter
and nine months ended September 30, 2006 include a gain of $5.0
million from the sale of the Company's discount prescription drug
card business, which was sold on September 5, 2006. Adjusted EBITDA
(EBITDA loss)*, defined as net earnings (loss) before interest,
taxes, depreciation and amortization, stock based compensation,
non-cash impairment charges and gains on the sale of business
lines, for the quarter ended September 30, 2006 was $4.4 million,
compared to an adjusted EBITDA loss of $1.3 million for the quarter
ended June 30, 2006. Adjusted EBITDA (EBITDA loss) for the quarters
ended September 30, 2006 and June 30, 2006 included gains on the
settlement of vendor obligations of approximately $1.0 million and
$1.7 million, respectively. Adjusted EBITDA loss for the quarter
ended June 30, 2006 also included $1.2 million of severance expense
related to the Company's corporate restructuring. The Company's
Insurance Services segment contributed profit of $3.7 million for
the quarter ended September 30, 2006, compared to profit of $2.4
million for the quarter ended June 30, 2006. The Pharmacy Products
segment contributed profit of $3.4 million for the quarter ended
September 30, 2006, compared to profit of $1.6 million for the
quarter ended June 30, 2006. For the nine months ended September
30, 2006, the Insurance Services segment had a loss of
approximately $1.8 million and the Pharmacy Products segment
contributed profit of approximately $7.3 million. During the third
quarter of 2006 NationsHealth took a number of steps to better
align the Company's focus on its core business segments, improve
operating results and cash flow, strengthen its balance sheet and
improve liquidity, including the following: -- On September 5,
2006, the Company sold its discount prescription drug card business
for $6.0 million in cash. With the widespread adoption of the
Medicare Part D program, the discount prescription card business
was a declining revenue stream that was no longer core or
complementary to the Company's Pharmacy Products and Insurance
Services segments; -- On September 13, 2006, the Company terminated
a distribution agreement with a vendor, pursuant to which the
Company paid the vendor approximately $4.4 million in full
satisfaction of approximately $5.4 million due under the agreement
and relieved itself of remaining purchase obligations under the
agreement through December 31, 2006 totaling approximately $27
million; -- On September 27, 2006, the Company entered into an
agreement to dissolve NationsHealth Specialty Rx, a joint venture
with US Bioservices Corporation (US Bio) which was formed for
purposes of developing and operating a specialty oncology pharmacy
business. The Company and US Bio determined that the terms of the
Competitive Acquisition Program established by CMS were not
economically viable and, consequently, Specialty Rx never commenced
operations. In connection with the dissolution, its $1.5 million
capital contribution to Specialty Rx was returned to the Company on
October 5, 2006; and -- During the third quarter of 2006, the
Company's ongoing efforts to improve operational efficiencies and
contain costs continued, resulting in, among other things,
improvements in operating margins for the Pharmacy Products and
Insurance Services segments. "Excluding the $5.0 million gain on
the sale of the discount prescription drug card business, the $1.0
million gain on the settlement of a vendor obligation, and the $0.6
million non-cash impairment charge from reported net income of $6.0
million, the third quarter of 2006 yielded $0.6 million of pre-tax
earnings*," said Timothy Fairbanks, the Company's Chief Financial
Officer. "Our third quarter financial results reflected the
positive impact of our management restructuring, cost containment
and efficiency initiatives implemented in the first half of 2006.
Also, since the end of the open enrollment period for the Medicare
Part D Prescription Drug Program during the second quarter of 2006,
we are no longer incurring, and under our amended agreement with
CIGNA will no longer incur, the high costs of marketing and
enrollment." As previously announced, NationsHealth will host a
conference call at 10:00 a.m. ET today to review its financial
results for the quarter and nine months ended September 30, 2006.
-0- *T Access Information: Date: October 31, 2006 Time: 10:00 a.m.
ET U.S./Canada dial-in number: 800-665-0430 International dial-in
number: 913-312-1300 Participant passcode: 8144626 Live webcast:
www.nationshealth.com *T Replay Access Information: A recording of
the conference call will be available three hours after completion
until November 6, 2006 at midnight ET at 888-203-1112 (U.S.) and
719-457-0820 (International). The replay passcode is 8144626. The
webcast will be archived for on demand listening for 30 days on the
NationsHealth's website, 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
provides home delivery of diabetes, ostomy and pharmacy products to
approximately 102,000 patients across the nation. NationsHealth is
also the provider of diabetes supplies to more than 13,000 Medicare
beneficiaries at over 1,100 Kmart pharmacies. In addition to its
medical products business, NationsHealth also provides education,
marketing, enrollment and customer service to insurance plans, with
a focus on Medicare Part D plans. NationsHealth has an agreement
with CIGNA to service its Medicare Part D prescription drug plans
nationally. 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 (EBITDA loss) to net income
(loss) is as follows (in thousands): -0- *T Three Months Ended
-------------------------- September 30, June 30, 2006 2006
------------- ----------- Net Income (Loss) $ 6,020 ($4,997)
Interest, net 778 727 Depreciation and amortization 488 457
Amortization of equity issued to CIGNA 969 969 Stock-based
compensation 585 830 Non-cash impairment charge 559 733 Gain on
sale of business line (5,000) -- ------------- ----------- Adjusted
EBITDA (EBITDA Loss) $ 4,399 ($1,281) ============= =========== *T
In addition, management believes that the presentation of pre-tax
earnings for the quarter ended September 30, 2006, excluding
certain items from net income, is meaningful as the items excluded
are not considered to be indicative of the Company's ongoing
operations and financial results. This press release contains
forward-looking statements about NationsHealth, including
statements regarding management initiatives, efforts to streamline
operations, and future marketing and enrollment costs, 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, Quarterly Report
on Form 10-Q for the quarter ended March 31, 2006 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.
-0- *T SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data) Three Months Ended September
30, --------------------- 2006 2005 ---------- ---------- Revenue:
Net product sales $ 11,811 $ 18,167 Prescription card revenue 671
2,316 Service revenue 7,314 780 ---------- ---------- 19,796 21,263
Cost of product sales 4,233 8,037 Cost of services 2,430 1,311
---------- ---------- Gross Profit 13,133 11,915 ----------
---------- Operating Expenses: Patient acquisition and related
costs 149 3,256 Patient service and fulfillment 1,839 3,593 General
and administrative 6,457 5,576 Provision for doubtful accounts 998
2,330 Depreciation and amortization 364 224 Amortization of equity
issued to CIGNA 969 -- Impairment of investment in joint venture
559 -- Gain on sale of business line (5,000) (15,508) ----------
---------- 6,335 (529) ---------- ---------- Income from Operations
6,798 12,444 Other Expense, net (778) (652) ---------- ----------
Net Income $ 6,020 $ 11,792 ========== ========== Earnings per
share: Basic $ 0.22 $ 0.45 ========== ========== Diluted $ 0.22 $
0.40 ========== ========== Weighted average shares outstanding:
Basic 27,919 26,283 ========== ========== Diluted 27,921 30,105
========== ========== *T -0- *T SUMMARY CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited) (in thousands, except per share data) Nine
Months Ended September 30, --------------------- 2006 2005
---------- ---------- Revenue: Net product sales $ 33,555 $ 55,299
Prescription card revenue 3,983 6,327 Service revenue 26,889 780
---------- ---------- 64,427 62,406 Cost of product sales 14,424
23,448 Cost of services 25,685 1,311 ---------- ---------- Gross
Profit 24,318 37,647 ---------- ---------- Operating Expenses:
Patient acquisition and related costs 2,793 17,976 Patient service
and fulfillment 6,382 11,418 General and administrative 22,428
15,193 Provision for doubtful accounts 2,844 7,575 Depreciation and
amortization 1,030 653 Amortization of equity issued to CIGNA 2,908
-- Impairment of investment in joint venture 1,292 -- Gain on sale
of business line (5,000) (15,508) ---------- ---------- 34,677
37,307 ---------- ---------- (Loss) Income from Operations (10,359)
340 Other Expense, net (2,148) (2,222) ---------- ---------- Net
Loss $(12,507) $ (1,882) ========== ========== Loss per share -
basic and diluted $ (0.45) $ (0.07) ========== ========== Weighted
average shares outstanding - basic and diluted 27,871 26,211
========== ========== *T -0- *T SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands) September December 30, 31, 2006 2005 ----------
---------- (unaudited) ASSETS Current Assets: Cash and short-term
investments $ 2,763 $ 14,894 Accounts receivable, net 5,834 7,908
Inventory 1,233 1,285 Costs related to billings in process, net 879
874 Other receivables 1,640 1,877 Prepaid expenses and other
current assets 442 750 ---------- ---------- Total current assets
12,791 27,588 Property and equipment, net 3,556 3,747 Investment in
joint venture -- 1,488 Deferred CIGNA equity compensation, net
12,602 15,510 Other assets, net 1,657 1,526 ---------- ----------
Total assets $ 30,606 $ 49,859 ========== ========== LIABILITIES
AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $
2,359 $ 13,387 Accrued expenses 9,004 12,030 Deferred revenue,
current portion 1,774 235 Line of credit 2,500 2,500 ----------
---------- Total current liabilities 15,637 28,152 ----------
---------- Long-Term Liabilities: Deferred revenue -- 1,100
Convertible notes, related party, net 6,009 5,176 Other long-term
liabilities 3,080 1,414 ---------- ---------- Total long-term
liabilities 9,089 7,690 ---------- ---------- Stockholders' Equity
5,880 14,017 ---------- ---------- Total liabilities and
stockholders' equity $ 30,606 $ 49,859 ========== ========== *T
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