NMHC Reports Fourth Quarter and Fiscal Year 2007 Financial Results
Three months ended June 30, 2007
Revenue for the 2007 fiscal fourth quarter was $146.0 million, as comparedto revenue of $211.5 million for the same period last year, a 31.0 percentdecrease. This decrease is primarily attributable to a decrease in coveredlives as compared to last year resulting from the loss of various customers.
For the 2007 fiscal fourth quarter, gross profit was $21.1 million, ascompared to $21.7 million for the same period last year, reflecting a decreaseof 2.8 percent. The decrease in gross profit is primarily attributable to a$1.0 million reduction from the PBM segment, offset by a $424,000 increase inthe Specialty Pharmacy segment. Primarily related to a change in customer mix,gross profit as a percentage of revenue, or gross margin, increased to 14.5percent for the 2007 fiscal fourth quarter, as compared to 10.3 percent forthe same period last year. Adjusted prescriptions for the 2007 fiscal fourthquarter were 5.3 million, as compared to 7.5 million for the same period lastyear. Gross profit per adjusted prescriptions increased to $3.98 from $2.89for the same period last year. Adjusted prescription volume equals our MailService prescriptions multiplied by three, plus our retail prescriptions.These Mail Service prescriptions are multiplied by three to adjust for thefact that they typically include approximately three times the amount ofproduct days supplied compared with retail prescriptions.
Selling, general and administrative ("SG&A") expenses increased $7.0million, or 36.8 percent, from $19.0 million for the 2006 fiscal fourthquarter to $26.0 million for the 2007 fiscal fourth quarter. This increase isprimarily related to (i) $3.0 million net increase in compensation relatedcosts, including a $2.0 million increase in one-time termination benefitsincurred in connection with our senior management changes, (ii) $1.5 millionincrease in bad debts, (iii) $1.0 million increase in professional fees andlegal settlement costs related to settlements of various legal issues andincreases in other professional fees, (iv) $1.0 million increase ininformation-technology ("IT") costs which includes a $657,000 impairment lossrelated to the cancellation of various capitalized projects, and (v) $400,000increase in other costs.
Our operating loss for the 2007 fiscal fourth quarter was $4.9 million ascompared to operating income of $2.8 million for the 2006 fiscal fourthquarter.
Our effective tax rate was 25.9% for the 2007 fiscal fourth quarter, ascompared to 39.7% for the 2006 fiscal fourth quarter. The 25.9% effective taxrate provides us with a tax benefit for the 2007 fiscal fourth quarter whereasthe 39.7% effective tax rate resulted in tax expense for the 2006 fiscalfourth quarter. The decrease in the effective tax rate is primarily fromemployee stock options in accordance with SFAS No. 123( R ).
Earnings (loss) before interest, taxes, depreciation and amortization(EBITDA) for the 2007 fiscal fourth quarter was $(2.2) million, as compared to$4.9 million for the 2006 fiscal fourth quarter. EBITDA before stock-basedcompensation expense for the 2007 fiscal fourth quarter was $(1.5) million, ascompared to $6.2 million for the same period last year. EBITDA per adjustedprescription decreased to $(0.42) during the 2007 fiscal fourth quarter from$0.65 during the same period last year. During both the fiscal fourthquarters of 2006 and 2007, NMHC paid $1.4 million of dividends on the series Apreferred stock.
Net loss available to common stockholders for the 2007 fiscal fourthquarter was $4.8 million, or ($0.87) per basic and diluted share, as comparedto net
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