OKLAHOMA CITY, Nov. 18, 2009 (GLOBE NEWSWIRE) -- Graymark Healthcare Inc. (Nasdaq:GRMH) today announced results for the third quarter ended September 30, 2009.
For the third quarter of 2009 consolidated net revenues were $27.3 million, a slight decrease from $27.4 million in the same quarter last year. After-tax net loss attributable to Graymark was approximately ($0.8 million) for the third quarter of 2009, or a loss of ($0.03) per diluted share, compared to net income of $0.5 million, or $0.02 per diluted share for the same period in 2008. Of the net loss in 2009, $0.3 million was due to one time expenses related to the acquisitions made during the quarter. Excluding these one time costs, the net loss was ($0.5 million) for the quarter or ($0.02) per diluted share.
Net revenue for the Company's ApothecaryRx segment, which owns and operates independent retail pharmacies, decreased slightly to $22.2 million for the third quarter of 2009, compared to $22.8 million in the same quarter last year. The decrease in revenues was primarily due to the continued shift towards generic drugs, which have a lower revenue per script compared to brand, and a decline in front-end sales, which could be attributed to the continued softness in the general economy. Gross margin for the Apothecary segment was 23.9% for the quarter, compared to 24.1% for the same quarter in 2008. As of September 30, 2009, Graymark Healthcare owned and operated 18 retail pharmacies in five states.
Net revenue for the Company's sleep diagnostic business, comprised of SDC Holdings and Nocturna Sleep Therapy (NST), increased to $5.1 million from $4.7 million in the same quarter last year. The increase is due primarily to a $1.1 million contribution from the Somni and Eastern acquisitions, and $0.1 million from a new sleep lab that has been opened since the third quarter of last year. These increases were offset by a decrease in same store revenues of $0.8 million, which is due primarily to a combination of lower volumes and lower average revenue per sleep study compared to the third quarter of 2008. Gross margin for the Company's SDC segment was 60.5%, compared to 64.4% in the same quarter of 2008. Although year-over-year performance was down for both volumes and revenue per sleep, the Company has seen sequential quarterly improvement in both volumes and overall revenue. Same store sleep study volume was up 9.0% and sleep study revenue was up 6.1%, compared to the second quarter of 2009.
During the quarter, Graymark Healthcare entered into a an agreement with AvastraUSA, Inc. and Avastra Sleep Centres Limited to acquire 100% of the ownership of somniTech and somniCare, and Avastra Eastern Sleep Centers for cash and stock consideration totaling $10.6 million. The Somni acquisition closed on August 24, 2009 and the Eastern acquisition closed on September 14, 2009. With these acquisitions, Graymark becomes the second-largest U.S. sleep diagnostic and treatment company, owning and/or operating 28 free-standing sleep care centers and contracting with 64 hospitals in 11 states.
"We are pleased with the progress the Company has made toward strengthening its position in the market, building its infrastructure and managing operating expenses," stated Stanton Nelson, Chief Executive Officer. "With the acquisitions of Somni and Eastern we feel that we have begun to build sufficient scale to be the national leader in defining high quality cost effective Sleep Medicine. These acquisitions more than double the size of the of our sleep diagnostic and treatment business and allow us an increased ability to successfully contract with third party payors, leverage suppliers for purchasing discounts and achieve increased operational efficiencies through national operating processes. Additionally, we feel that there is substantial opportunity to grow sales in these centers by deploying our durable medical equipment business and resupply program, and instituting a renewed marketing focus."
Mr. Nelson continued, "While we continue to operate in a challenging economic environment, we are encouraged by the increase in sleep study volumes and revenues that we saw sequentially over the previous quarter. We feel confident that we have initiatives in place that are helping to bolster the business overall and we expect to see this trend continue into the fourth quarter. Additionally, we have seen significant growth in our Durable Medical Equipment business, Nocturna Sleep Therapies, compared to both last year and the previous quarter. This is a result of increased new customer set-ups at several locations and continued growth in our PRSP or patient resupply program. Again, we expect the positive trends in Nocturna Sleep Therapies to continue as we grow our set-up volumes in multiple markets, and expand PRSP not only within our historic Nocturna Sleep Therapy facilities but also within somniCare. We have many new initiatives in place for our pharmacy business as well and plan to leverage our customer service model to shift from being the customers' pharmacy to becoming their healthcare store. Finally, I would like to reiterate that our plan is to grow the company aggressively both organically and through strategic acquisitions within the healthcare industry. Our acquisition pipeline remains robust and we are actively seeking out attractive opportunities to grow revenue and profitability for the Company and return value to our shareholders."
Graymark Healthcare, Inc. is a diversified medical holding company that owns and operates diagnostic sleep centers that treat a wide range of sleep disorders; independent pharmacies that serve the needs of local markets; and a medical equipment company that provides both disposable and durable medical equipment. Graymark plans to continue its growth both internally and through strategic acquisitions within the medical industry.
Conference Call
A conference call and webcast will be held Wednesday, November 18, 2009, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss Graymark Healthcare's consolidated financial results for the third quarter of 2009 and its outlook for the future.
To participate in the call, interested parties may dial 1-800-860-2442 and reference the Graymark Healthcare Earnings Conference Call. Alternatively, interested parties may access the call in listen-only mode via the investor relations section of the company's Web site, www.graymarkhealthcare.com.
This press release may contain forward-looking statements which are based on the Company's current expectations, forecasts and assumptions. Forward-looking statements involve risks and uncertainties which could cause actual outcomes and results to differ materially from the Company's expectations, forecasts and assumptions. These risks and uncertainties include risks and uncertainties not in the control of the Company, including, without limitation, the current economic climate and other risks and uncertainties, including those enumerated and described in the Company's filings with the Securities and Exchange Commission, which filings are available on the SEC's website at www.sec.gov. Unless otherwise required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Graymark Healthcare
Condensed Statements of Operations and Other Information
Including a Reconciliation of EBITDA to Net Income
For the Three Months Ended September 30, 2009
(Unaudited)
2009 2008
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Net Revenue $27,336,784 $27,457,116
Cost of Sales and Services $18,924,306 $18,936,956
Selling, General and Administrative
Expenses $ 8,047,116 $ 6,816,212
Noncontrolling Interests $ 25,819 $ (28,595)
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EBITDA $ 339,543 $ 1,732,543
Reconciliation of EBITDA to Net Income
EBITDA $ 339,543 $ 1,732,543
Depreciation and Amortization $ (557,243) $ (424,980)
Interest Expense, net $ (625,416) $ (576,244)
Provision for Income Taxes $ -- $ (277,901)
Discontinued Operations, net of taxes $ 624 $ 87,696
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Net Income Attributable to Graymark
Healthcare $ (842,492) $ 541,114