NationsHealth, Inc. (Nasdaq: NHRX; NHRXW; NHRXU) today announced
its financial results for the quarter ended March 31, 2007. Revenue
for the quarter ended March 31, 2007 was $18.8 million, compared to
$25.0 million for the corresponding period in 2006. Net loss for
the quarter ended March 31, 2007 was $1.2 million, or $0.04 per
share, compared to a net loss of $13.5 million, or $0.49 per share,
for the corresponding period in 2006. The 2006 first quarter
included approximately $8.5 million of revenue related to the
initial marketing and enrollment efforts for CIGNA�s Medicare Part
D Prescription Drug Plan. Pursuant to our May 2006 amendment with
CIGNA, effective January 1, 2007, revenue from services to CIGNA is
earned under a new, more predictable service fee arrangement.
Revenue for the 2006 first quarter also included approximately $2.0
million from the Company�s discount prescription drug card
business, which was sold on September 5, 2006. Adjusted EBITDA*,
defined as earnings before interest, taxes, depreciation and
amortization, and stock based compensation, was $1.6 million for
the quarter ended March 31, 2007, compared to an adjusted EBITDA
loss of $10.9 million for the quarter ended March 31, 2006. The
Company�s Insurance Services segment contributed profit of $3.1
million for the quarter ended March 31, 2007, compared to a loss of
$8.0 million for the quarter ended March 31, 2006. The Medical
Products segment contributed profit of $1.6 million for the quarter
ended March 31, 2007, compared to profit of $2.3 million for the
quarter ended March 31, 2006. Medical Products segment profit for
the prior year quarter included approximately $2.0 million of
profit from the divested discount prescription drug card business.
�We are pleased with the results we are seeing with regard to our
new medical product offerings, expanded relationships with other
Medicare prescription drug and managed care providers and the
initial results from our acquisitions of small regional providers
of diabetes supplies,� said Timothy Fairbanks, the Company�s Chief
Financial Officer. �Furthermore, our new term loan facility, which
closed on April 11, 2007 and under which we currently have $5.5
million available to draw upon, will enable us to finance
additional patient acquisitions and accelerate the growth of our
core diabetes business.� As previously announced, NationsHealth
will host a conference call at 11:00 a.m. ET today to review its
financial results for the quarter ended March 31, 2007. Access
Information: Date: May 10, 2007 Time: 11:00 a.m. ET U.S./Canada
dial-in number: 866-316-1371 International dial-in number:
913-312-1231 Participant passcode: 6754843 Live webcast:
www.nationshealth.com Replay Access Information: A recording of the
conference call will be available three hours after completion
until May 17, 2007 at midnight ET at 888-203-1112 (U.S.) and
719-457-0820 (International). The replay passcode is 6754843. The
webcast will be archived for on demand listening for 30 days on the
NationsHealth�s website, www.nationshealth.com. About
NationsHealth, Inc. NationsHealth seeks to improve the delivery of
healthcare to Medicare and managed care beneficiaries by providing
medical products and prescription related services. NationsHealth
provides home delivery of diabetes supplies, medications and other
medical products to patients across the nation. In addition to its
medical products business, NationsHealth also provides education,
marketing, enrollment and patient service to insurers offering
Medicare Part D prescription drug plans and other Medicare
insurance coverage. 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 (or adjusted EBITDA loss, as applicable),
which is a non-GAAP financial measure as defined by SEC Regulation
G. Management regularly reviews adjusted EBITDA 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 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, 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 net loss to adjusted
EBITDA (EBITDA loss) is as follows (in thousands): Three Months
Ended March 31, 2007� 2006� Net loss $ (1,188) $ (13,530) Interest,
net 862� 643� Depreciation and amortization 572� 458� Amortization
of customer contract intangible 969� 969� Stock-based compensation
� 353� � 543� Adjusted EBITDA (EBITDA loss) $ 1,568� $ (10,917)
This press release contains forward-looking statements about
NationsHealth, including statements regarding management
initiatives and new product and market opportunities, 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 ability to successfully maintain our
Insurance Services segment; our dependence on Medicare
reimbursement; 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, including competitive bidding for durable
medical equipment and supplies; changing interpretations of
generally accepted accounting principles; outcomes of government
reviews of NationsHealth�s business practices; inquiries and
investigations and related litigation; our exposure to product
liability in excess of our insurance coverage; 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 growth; our ability to compete effectively; timing
and market acceptance of new products sold by NationsHealth; our
ability to raise the capital we will need to sustain our
operations; 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, 2006, and in 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 EndedMarch 31, 2007� 2006� Revenue: Net product sales
$ 11,074� $ 10,854� Prescription drug card revenue --� 1,973�
Service revenue � 7,678� � 12,188� 18,752� 25,015� � Cost of
product sales 4,398� 5,284� Cost of services � 3,735� � 19,082� �
Gross Profit � 10,619� � 649� � Operating Expenses: Patient
acquisition and related costs 736� 1,081� Patient service and
fulfillment 2,227� 2,444� General and administrative 5,871� 7,842�
Provision for doubtful accounts 735� 856� Depreciation and
amortization 407� 344� Amortization of customer contract intangible
� 969� � 969� � 10,945� � 13,536� � Loss from Operations (326)
(12,887) � Other Expense, net � (862) � (643) � Net Loss $ (1,188)
$ (13,530) � Loss per share � basic and diluted $ (0.04) $ (0.49) �
Weighted average shares outstanding � basic and diluted � 28,043� �
27,808� SUMMARY CONSOLIDATED BALANCE SHEETS (In thousands) � March
31, December 31, 2007� 2006� (Unaudited) ASSETS Current Assets:
Cash and short-term investments $ 2,393� $ 4,224� Accounts
receivable, net 8,044� 6,075� Inventory 1,384� 1,636� Costs related
to billings in process, net 533� 565� Prepaid expenses and other
current assets � 769� � 748� Total current assets 13,123� 13,248�
Property and equipment, net 4,123� 3,557� Customer contract
intangible, net 10,663� 11,632� Other assets, net � 2,021� � 1,951�
Total assets $ 29,930� $ 30,388� � LIABILITIES AND STOCKHOLDERS'
EQUITY Current Liabilities: Accounts payable $ 4,325� $ 3,026�
Accrued expenses 7,467� 9,069� Promissory note payable, net 1,364�
--� Line of credit � 2,500� � 2,500� Total current liabilities �
15,656� � 14,595� � Long-Term Liabilities: Convertible notes,
related party, net 6,639� 6,316� Promissory note payable, net --�
1,328� Other long-term liabilities � 1,103� � 782� Total long-term
liabilities � 7,742� � 8,426� � Stockholders' Equity � 6,532� �
7,367� Total liabilities and stockholders' equity $ 29,930� $
30,388�
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