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TMCNet:  American CareSource Announces Fourth Quarter and Year-End Financial Results for 2013

[February 28, 2014]

American CareSource Announces Fourth Quarter and Year-End Financial Results for 2013

DALLAS --(Business Wire)--

American CareSource Holdings (NASDAQ: ANCI), a leading national network of ancillary healthcare providers, today reported net revenue of $6.2 million for the fourth quarter of 2013, as compared with $9.1 million for the fourth quarter of 2012. For 2013, net revenue was $26.8 million, as compared with $34.9 million for 2012.

Net loss for the three months ended Dec. 31, 2013 was $267,000, as compared with a loss of $629,000 during the same period a year earlier. The improvement was realized largely because of a positive shift in provider margins and company efforts to reduce non-variable costs in areas such as professional and consulting fees. Net loss for 2013 was $3.8 million, as compared with $3.1 million in 2012.

Operating expenses were $1.3 million and $7 million for the fourth quarter and full year of 2013, respectively, which were down from $2 million and $7.7 million in the same periods of 2012. Operating expenses in the last half of 2013 declined 27.5 percent compared to the first half of the year.

Net Revenue

Net revenue for fourth quarter of 2013 was $6.2 million, as compared with $9.1 million reported during fourth quarter 2012. For the quarter ended Dec. 31, 2013, revenue from ACS' (News - Alert) two historically significant legacy accounts declined by a combined $1.6 million, or 57.5 percent, as compared with the same period in 2012, due to factors described previously by the company. Fourth quarter 2013 net revenue was $6.2 million as compared with $6.5 million in third quarter 2013.

Excluding the impact of our two historically significant legacy clients, fourth quarter revenue from all other accounts decreased 22 percent, to $5 million from $6.4 million in the same period of 2012. The decline in those accounts was the result of some attrition within their own client base, competition from national carriers and increased pricing competition. The aforementioned declines were partially offset by improvement in collections, the addition of employer groups that were not previously accessing our network of ancillary providers and the revenue contribution of approximately $300,000 in the fourth quarter from two new clients added in 2013. Collections on claims in the fourth quarter of 2012 were stronger as compared with fourth quarter 2013.

Excluding the impact of our two historically significant legacy clients, revenue from all other accounts generated $5.4 million in the third quarter of 2013.

Claims Volumes

ACS billed 29,000 claims during fourth quarter 2013, a decrease from 37,000 claims billed during the same period last year. The lower claims volume was primarily the result of declines in claims volume from the company's two historically significant legacy clients.

Following are claims volumes for the periods presented:




(Claim amounts in 000s)     Q4 2013   Q3 2013   Q4 2012
Claims:        
Processed 35 36 47
Billed 29 30 37
 

Contribution Margin

Contribution margin for fourth quarter 2013 increased to 17.2 percent, as compared with 14.7 percent during fourth quarter 2012. The increase in contribution margin was primarily the result of the decline in provider payments as a percentage of revenue, from 73.3 percent in fourth quarter 2012 to 68 percent in the same period this year. The increase in margin on provider payments was the result of revenue generated from specific ancillary service categories and providers, which create significant savings for our clients, and continued to shift the mix of service categories and providers to categories and providers which result in higher margins in our business, as compared to the mix of those categories and providers used in the fourth quarter 2012.

Contribution margin was negatively affected by the cost of claims administration and provider development. Those costs, as a percentage of revenue, increased to 11.1 percent in fourth quarter 2013, from 7.8 percent in the fourth quarter a year ago. The increase was the result of the decline in quarterly revenue as compared with the same period last year. In absolute dollars, claims administration and provider development costs decreased 4.1 percent, to $686,000, compared with fourth quarter 2012.

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

      Q4 2013   Q3 2013   Q4 2012
Provider payments     68.0 %   74.1 %   73.3 %
Administrative fees 3.7 % 4.1 % 4.2 %
Claims administration and provider development     11.1 %   10.0 %   7.9 %
Total cost of revenues     82.8 %   88.2 %   85.3 %
 

Selling, General and Administrative Expenses (SG&A)

SG&A for fourth quarter 2013 decreased to $1.2 million, from $1.7 million in the same period last year. The decrease was primarily the result of an adjustment in the overall cost structure of the Company at the beginning of the third quarter. The adjustment included a reduction in sales and strategic consulting services costs and legal and audit fees. In addition, natural attrition and minor adjustments to headcount contributed to the decrease in SG&A as compared with fourth quarter 2012.

SG&A was 18.5 percent of revenues in the fourth quarter of 2013, as compared with 19.2 percent in fourth quarter 2012. The change was the result of the adjustments to the cost structure offset by the decline in revenue in the current quarter as compared with the same period last year.

Adjusted EBITDA

Adjusted EBITDA for the quarter was $39,000, compared with a loss of $247,000 in the prior-year period.

Adjusted EBITDA is defined as operating income or loss before interest, income taxes, depreciation and amortization and excludes the impact of non-cash stock-based compensation expense, severance charges, amortization of long-term client agreements, strategic transaction-related costs and other non-cash charges. 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 or loss is provided in the tables accompanying this release.

Financial Liquidity

Total cash and cash equivalents as of Dec. 31, 2013, amounted to $6.2 million, as compared with $6.4 million on Sept. 30, 2013 and $10.7 million on Dec. 31, 2012.

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 approximately 5,000 ancillary service providers and approximately 33,500 sites through its subsidiary, Ancillary Care Services. ACS provides ancillary healthcare services through its network that offers cost-effective alternatives to physician and hospital-based services. These providers offer services in 31 categories including laboratories, dialysis centers, free-standing diagnostic imaging centers, infusion centers, long-term acute care centers, home-health services and non-hospital surgery centers, as well as durable medical equipment. The company's ancillary network and management provide a complete outsourced solution for a wide variety of healthcare 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 company's plans, objectives and expectations for future operations, projections of the company's future operating results or financial condition, and expectations regarding the healthcare 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 company's dependence upon its two largest clients and recent declines in their business, the company's inability to attract or maintain providers or clients or achieve its financial results, changes in national healthcare policy, federal or state regulation, and/or rates of reimbursement including without limitation the impact of the 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 company's ability to integrate with its clients, consolidation in the industry that affect the company's key clients, changes in the business decisions by significant clients, term expirations of contracts with significant clients, possible termination of relationship with significant clients, increased competition, decisions by service providers in the company's network to terminate their agreements with ACS, the company's inability to manage growth, implementation and performance difficulties, and other risk factors detailed from time to time in the company'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.

 
 
AMERICAN CARESOURCE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except per share data)
         
Three months ended Twelve months ended
December 31, December 31,
2013 2012 2013 2012
 
Net revenues $ 6,210 $ 9,100 $ 26,751 $ 34,902
 
Cost of revenues:
Provider payments 4,223 6,668 19,762 25,660
Administrative fees 230 383 1,083 1,551
Claims administration and provider development   686     715     2,705     3,032  
Total cost of revenues   5,139     7,766     23,550     30,243  
 
Contribution margin   1,071     1,334     3,201     4,659  
 
Selling, general and administrative expenses 1,150 1,744 6,166 6,841
Depreciation and amortization   180     216     795     878  
Total operating expenses   1,330     1,960     6,961     7,719  
 
Loss before income taxes (259 ) (626 ) (3,760 ) (3,060 )
Income tax provision   8     3     25     31  
Net loss $ (267 ) $ (629 ) $ (3,785 ) $ (3,091 )
 
Loss per basic and diluted common share $ (0.05 ) $ (0.11 ) $ (0.66 ) $ (0.54 )
 
Basic and diluted weighted average common shares outstanding   5,722     5,711     5,715     5,707  
 

Reconciliation of non-GAAP financial measures to reported GAAP financial measures:

 
Three months ended Twelve months ended
December 31, December 31,
2013 2012 2013 2012
 
Net loss $ (267 ) $ (629 ) $ (3,785 ) $ (3,091 )
Income tax provision 8 3 25 31
Depreciation and amortization 180 216 795 878
Other   -     7     (22 )   (8 )
EBITDA (79 ) (403 ) (2,987 ) (2,190 )
Non-cash stock-based compensation expense 78 75 299 408
Amortization of long-term client agreement - 63 - 250
Severance charges (included in selling, general and administrative expenses) - 18 216 95
Strategic transaction-related costs 57 - 107 -
Other   (17 )   -     (17 )   -  
EBITDA, as adjusted $ 39   $ (247 ) $ (2,382 ) $ (1,437 )
 
 
AMERICAN CARESOURCE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
 
   

December 31,
2013

 

December 31,
2012

 
ASSETS
Current assets:
Cash and cash equivalents $ 6,207 $ 10,705
Accounts receivable, net 1,977 2,432
Prepaid expenses and other current assets   363     296  
Total current assets 8,547 13,433
 
Property and equipment, net 1,236 1,593
 
Other assets:
Other non-current assets 606 238
Intangible assets, net   640     768  
TOTAL ASSETS $ 11,029   $ 16,032  
 
LIABILITIES and STOCKHOLDERS' EQUITY
 
Current liabilities:
Due to service providers $ 1,865 $ 3,100
Accounts payable and accrued liabilities   1,056     1,343  
Total current liabilities 2,921 4,443
 
STOCKHOLDERS' EQUITY
Common stock 57 57
Additional paid-in capital 23,149 22,845
Accumulated deficit   (15,098 )   (11,313 )
Total stockholders' equity   8,108     11,589  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,029   $ 16,032  
 
 
AMERICAN CARESOURCE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
   
Year ended
December 31,
2013   2012
Cash flows from operating activities:
Net loss $ (3,785 ) $ (3,091 )
Adjustments to reconcile net loss to net cash used in operations:
Non-cash stock-based compensation expense 299 408
Depreciation and amortization 795 878
Amortization of long-term client agreement - 250
Deferred income taxes 7 4
Loss on write-off of software development costs 5 14
Changes in operating assets and liabilities:
Accounts receivable 455 1,885
Prepaid expenses and other assets (442 ) 27
Accounts payable and accrued liabilities (287 ) 129
Due to service providers   (1,235 )   (578 )
Net cash used in operating activities   (4,188 )   (74 )
 
Cash flows from investing activities:
Investments in software development costs (303 ) (419 )
Additions to property and equipment   (12 )   (109 )
Net cash used in investing activities   (315 )   (528 )
 
Cash flows from financing activities:
Proceeds from exercise of equity incentives 5 -
Payment of income tax withholdings on net exercise of equity incentives   -     (8 )
Net cash provided by (used in) financing activities   5     (8 )
 
Net decrease in cash and cash equivalents (4,498 ) (610 )
Cash and cash equivalents at beginning of period   10,705     11,315  
 
Cash and cash equivalents at end of period $ 6,207   $ 10,705  
 
Supplemental cash flow information:
Cash paid for taxes $ 117   $ 49  
 
Supplemental non-cash operating and financing activity:
Accrued bonus paid with equity incentives $ -   $ 23  


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