Spine Pain Management Reports Third Quarter and Nine Month 2012 Financial Results

HOUSTON, Nov. 13, 2012 (GLOBE NEWSWIRE) -- Spine Pain Management, Inc. (the "Company") (OTCQB:SPIN), a medical services and technology company, today announced its financial results for its third quarter and nine month period ended September 30, 2012. During the third quarter the Company raised $1.0 million in debt financing, conducted a comprehensive assessment of the Company business model and strategy direction, and completed the integration of the Quad Video Halo Technology™ acquired May 2012.

"Over the past quarter we have been able to fine tune our market strategy and expand our business model with the addition of our patented Quad Video Halo Technology™. In addition we have documented increase collections from the maturation of medical procedures we have funded over the past several years. Consequently, we believe we have renewed our path towards profitable growth with greater opportunity than ever before," commented Dr. William Donovan, Chairman, President and CEO of Spine Pain Management.

The Company reported gross revenue net of allowance for discounts ("net revenue") of $947,000 for third quarter 2012. This compares to net revenue of $1.8 million for the comparable three month period of 2011 and $919,000 for the second quarter of 2012. The year over year decrease in revenue reflects a decrease in patient referrals from several affiliate centers, most particularly during the second quarter 2012. Management believes its overall business momentum was regained during the third quarter as the maturation of the Company's Florida locations materialized. The Company anticipates that with its flexible pricing model and competitive edge provided by its patent-pending Halo system, it will renew its revenue growth and accelerate its expansion plans into other regions of Texas and beyond.

Spine Pain Management generated net income of $104,000 or $0.01 per diluted share in the third quarter, which included a non-operating gain of $96,000 related to an extinguishment of debt resulting from the renegotiations of a legacy legal services debt. This compares to net income of $723,000 or $0.04 per diluted share during the third quarter of 2011 and a net loss of $(386,000) or $(0.02) per basic share the second quarter of 2012.

For the three months ended September 30, 2012, Spine Pain Management's gross profit on revenue totaled $577,000, yielding a gross margin of 61 percent, compared to a gross margin of 58 percent for both the prior year third quarter and the second quarter of 2012. The improvement in gross margin was the result of a favorable treatment mix. The Company anticipates gross margins of approximately of 58 to 60 percent range for the foreseeable future.

Operating expenses during the third quarter of 2012 totaled $484,000, an increase of approximately $134,000 over the prior year third quarter due to an increase in staff as well as the recognition of bad debt expense of $60,000 (no bad debt expense during third quarter 2011). In contrast, operating expenses decreased $65,000 over the second quarter of 2012, which included a non-cash option expense for Company directors. Spine Pain Management anticipates a continued increase in operating expenses going forward, such increases will be closely managed and timed to revenue growth. Interest expense for the three months ended September 30, 2012 totaled $92,000 compared to $24,000 during the third quarter of 2011. This compares to interest expense of $53,000 in the second quarter of 2012. The increase in interest expense is attributable to two financings that occurred during the year totaling $1.5 million, each bearing interest of 12%.

During the first nine months of 2012, the Company generated net revenue of $3.1 million and net profits of $200,000 or $0.01 per diluted share, which includes non-operating charges of $327,000 related to the settlement of a lawsuit, partly offset by a gain of $96,000 for the extinguishment of debt. Net revenue and net profit for the comparable period in 2011 was $3.9 million and $1.3 million or $0.08 per diluted share, respectively, which included a gain of $151,000 from the extinguishment of debt. Operating costs for the first nine months of 2012 were $1.3 million, which included non-cash charges of $342,000 for stock based compensation for directors, officers' and consultants. This compares to $1.1 million for the same period in 2011, which included $134,000 in similar non-cash charges. Excluding non-cash charges, year-over-year operating costs for the 9 month period were essentially flat.

Cash received for case settlements for the nine month period ended September 30, 2012 totaled $1.8 million ($559,000 was received during third quarter 2012), of which $1.4 million was attributed to the Company's Texas locations and $460,000 attributed to the Florida locations. This compares to cash received from case settlements for the comparable period in 2011 of $1.2 million ($398,000 was received during third quarter 2011), of which settlements in Florida contributed $32,500.

At September 30, 2012, the Company reported a cash and cash equivalents balance of $1.2 million, short term accounts receivable of $3.4 million and long term accounts receivable of $3.5 million. The Company's collections experience which has been consistent over the past several years, but subject to an annual review, indicates that 49 percent of cases are settled or judgment rendered within one year of a medical procedure. At quarter end, the Company recorded a write-off for doubtful accounts of $198,000 to reflect its reserve for certain cases for which legal representation was lost and settlement was unlikely. Total assets during the first nine months of 2012 increased approximately $2.5 million to $8.8 million. On September 30, 2012, the Company's long term debt totaled approximately $1.3 million with total stockholders' equity increasing during the year by $2.6 million to $6.4 million.

As of today, November 13, 2012, Spine Pain Management has approximately 18.4 million shares of common stock outstanding, an increase of 1.3 million shares from year end 2011. This increase was predominately due to the shares issued to account for the February 2012 conversion of $1.0 million debt owed to NSO (owned in its entirety by Dr. Donovan), which converted into the Company's common stock at $1.83 per share and the shares issued to a business development consultant in August 2012. As of September 30, 2012, the Company has approximately $5.1 million in net operating loss carry forwards due to expire between 2018 and 2031.

The Company has scheduled a conference call for tomorrow, the details of which follow:

It is recommended that participants phone-in at least 10 minutes before the call is scheduled to begin. Participants may pre-register for the call at:

https://www.theconferencingservice.com/prereg/key.process?key=PRRQKCPGN

Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection. A replay of the conference call in its entirety will be available approximately one hour after its completion for 48 hours by dialing 888-286-8010 (U.S.), 617-801-6888 (International) and entering the pass code 95176054 and on the Internet at www.earnings.com.

About Spine Pain Management, Inc:

We are a medical services and technology company facilitating diagnostic services for patients who have sustained spine injuries resulting from traumatic accidents. We deliver turnkey solutions to spine surgeons, orthopedic surgeons and other healthcare providers that provide necessary and appropriate treatment of musculo-skeletal spine injuries resulting from automobile and work-related accidents. Our care management services help reduce the financial burden on healthcare providers that provide patients with early-stage diagnostic testing and non-invasive surgical care, preventing many patients from being unnecessarily delayed or inhibited from obtaining needed treatment. We believe that our services and technology brings strong transparency and impartiality to all parties involved in the settlement of patient cases.

Additional information about the company, along with a video can be found at its website at www.spinepaininc.com. 

Forward-Looking Statements: This press release includes forward-looking statements as determined by the U.S. Securities and Exchange Commission (the "SEC"). All statements, other than statements of historical facts, included in this press release that address activities, events, or developments that the company believes or anticipates will or may occur in the future are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general economic and business conditions, the ability to acquire and develop specific projects, the ability to fund operations, healthcare services demands, changes in healthcare practices, government regulation, and other factors over which the company has little or no control. The company does not intend (and is not obligated) to update publicly any forward-looking statements. The contents of this press release should be considered in conjunction with the warnings and cautionary statements contained in the company's recent filings with the SEC.  

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