LAKE FOREST, Calif., July 31, 2007 (PRIME NEWSWIRE) -- Apria Healthcare Group Inc. (NYSE:AHG), one of the nation's leading home healthcare companies, today announced its financial results for the quarter ended June 30, 2007.
Revenues were $394.0 million, which represents a 4.8% increase compared to revenues of $376.1 million in the second quarter of 2006. Second quarter 2007 net income was $20.8 million, an increase of 12.8% from $18.5 million in the second quarter of 2006. Current quarter diluted earnings per share were $0.47, which includes a one-time positive impact of $0.01 per share resulting from the settlement of a 2005 tax issue. This compares to $0.43 diluted earnings per share for the comparable prior year period.
Gross margins were 65.9% in the second quarter of 2007, compared to 65.7% reported in the second quarter of last year.
Days sales outstanding (DSO) were 48 days at June 30, 2007, down from 52 days at June 30, 2006. This improvement is a direct result of increased cash collections resulting from initiatives to optimize billing processes and to increase patient co-payments. The provision for doubtful accounts as a percentage of revenues was 2.8%, compared to 2.6% in the corresponding period last year.
Selling, distribution and administrative expenses were 53.1% of revenues, which is flat with the first quarter of 2007 and 0.4% higher compared to 52.7% in the second quarter of last year.
"We are pleased with our continued strong performance in the second quarter," said Lawrence M. Higby, Chief Executive Officer. "Growth over the prior year, and sequentially with the first quarter, is encouraging, and our sales force segmentation strategy is gaining traction. The planned expansion of our sales force was primarily responsible for the slight increase in SD&A expenses and, as previously announced, we believe the larger and more focused sales force will contribute to accelerating revenue growth. Operationally, the initiatives we put in place in 2006 and early 2007 in the areas of asset utilization and revenue management continue to show improved results."
Earnings before interest, taxes, depreciation and amortization (EBITDA) was $71.4 million in the second quarter of 2007, representing a 2.1% decrease over EBITDA of $72.9 million in the second quarter of 2006. The decrease was due to Medicare cuts and the investments in the Company's sales force. EBITDA is presented as a supplemental performance measure and is not intended as an alternative to net income or any other measure calculated in accordance with generally accepted accounting principles. Further, EBITDA may not be comparable to similarly titled measures used by other companies. A table reconciling EBITDA to net income is presented at the end of the condensed consolidated financial statements included in this release.
Liquidity and Capital
Free cash flow was $63.6 million in the second quarter of 2007, compared to $63.3 million in the second quarter of 2006. Contributing to the strong free cash flow was a reduction in capital expenditures and strong cash collections of receivables. Total capital expenditures in the second quarter of 2007 were 5.9% of revenues versus 7.3% in the second quarter of 2006. The reduction in capital expenditures is primarily attributable to initiatives to improve asset utilization.
During the quarter, the Company reduced its $500 million revolving credit line balance by $55 million. As of June 30, 2007, the outstanding balance on the revolver was $155 million.
Free cash flow is defined as operating cash flow minus capital expenditures and does not include acquisitions or financing activities. It is presented as a supplemental performance measure and is not intended as an alternative to any other cash flow measure calculated in accordance with generally accepted accounting principles. Further, free cash flow may not be comparable to similarly titled measures used by other companies. A table reconciling free cash flow to cash provided by operating activities is presented at the end of the condensed consolidated financial statements included in this release.
2007 Guidance
Management affirms its previous estimate of 2007 revenue growth in the 4% to 5% range and net income per share (diluted) of $1.78 to $1.82. The Company's free cash flow estimate also remains unchanged.
Apria provides home respiratory therapy, home infusion therapy and home medical equipment through approximately 500 branches serving patients in all 50 states. With over $1.5 billion in annual revenues, it is one of the nation's leading home healthcare companies.
This release may contain statements regarding anticipated future developments that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Results may differ materially as a result of the risk factors included in the Company's filings with the Securities and Exchange Commission and other factors over which the Company has no control.
APRIA HEALTHCARE GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
(dollars in thousands) 2007 2006
---------------------------------------------------------------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 28,483 $ 14,657
Accounts receivable, net of allowance
for doubtful accounts 211,307 211,097
Inventories, net 38,624 40,681
Other current assets 77,557 78,502
---------- ----------
TOTAL CURRENT ASSETS 355,971 344,937
PATIENT SERVICE EQUIPMENT, NET 195,502 212,068
PROPERTY, EQUIPMENT & IMPROVEMENTS, NET 59,807 52,975
OTHER ASSETS, NET 556,075 558,516
---------- ----------
TOTAL ASSETS $1,167,355 $1,168,496
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued
liabilities $ 192,986 $ 201,378
Current portion of long-term debt -- 2,145
---------- ----------
TOTAL CURRENT LIABILITIES 192,986 203,523
LONG-TERM DEBT, net of current portion 405,000 485,000
OTHER NON-CURRENT LIABILITIES 99,448 69,542
---------- ----------
TOTAL LIABILITIES 697,434 758,065
STOCKHOLDERS' EQUITY 469,921 410,431
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,167,355 $1,168,496
========== ==========
APRIA HEALTHCARE GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
(dollars in thousands, -------------------- --------------------
except per share data) 2007 2006 2007 2006
---------------------------------------------------------------------
Respiratory therapy $269,440 $256,289 $537,712 $509,437
Infusion therapy 72,297 68,231 141,265 133,003
Home medical
equipment/other 52,307 51,559 104,357 101,695
-------- -------- -------- --------
NET REVENUES 394,044 376,079 783,334 744,135
GROSS PROFIT 259,559 247,109 514,053 488,191
Provision for doubtful
accounts 11,093 9,737 20,791 19,905
Selling, distribution
and administrative
expenses 209,406 198,352 415,985 396,045
Amortization of
intangible assets 706 1,665 1,698 2,942
-------- -------- -------- --------
OPERATING INCOME 38,354 37,355 75,579 69,299
Interest expense, net 5,000 8,016 10,826 15,303
-------- -------- -------- --------
INCOME BEFORE TAXES 33,354 29,339 64,753 53,996
Income tax expense 12,525 10,881 24,780 19,415
-------- -------- -------- --------
NET INCOME $ 20,829 $ 18,458 $ 39,973 $ 34,581
======== ======== ======== ========
Income per common
share - assuming
dilution $ 0.47 $ 0.43 $ 0.91 $ 0.81
======== ======== ======== ========
Weighted average
number of common
shares outstanding 44,232 42,789 44,110 42,871
APRIA HEALTHCARE GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
June 30,
-------------------------
(dollars in thousands) 2007 2006
---------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 39,973 $ 34,581
Items included in net income not
requiring cash:
Provision for doubtful accounts 20,791 19,905
Depreciation and amortization 67,049 70,832
Deferred income taxes, share-based
compensation and other 11,350 16,828
Changes in operating assets and
liabilities, exclusive of effects of
acquisitions (7,553) (13,246)
---------- ----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 131,610 128,900
---------- ----------
INVESTING ACTIVITIES
Purchases of patient service equipment
and property, equipment and
improvements, exclusive of effects of
acquisitions (55,811) (66,264)
Proceeds from disposition of assets 52 648
Cash paid for acquisitions, including
payments of deferred consideration -- (5,040)
---------- ----------
NET CASH USED IN INVESTING
ACTIVITIES (55,759) (70,656)
---------- ----------
FINANCING ACTIVITIES
Net payment on debt (82,145) (58,720)
Issuances of common stock 16,554 2,873
Other 3,566 6,119
---------- ----------
NET CASH USED IN FINANCING
ACTIVITIES (62,025) (49,728)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 13,826 8,516
Cash and cash equivalents at beginning
of period 14,657 23,304
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 28,483 $ 31,820
========== ==========
APRIA HEALTHCARE GROUP INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
RECONCILIATIONS
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
(dollars in thousands) 2007 2006 2007 2006
---------------------------------------------------------------------
Reconciliation - EBITDA:
Reported net income $ 20,829 $ 18,458 $ 39,973 $ 34,581
Add back: Interest
expense, net 5,000 8,016 10,826 15,303
Add back: Income
tax expense 12,525 10,881 24,780 19,415
Add back:
Depreciation 32,388 33,926 65,351 67,890
Add back:
Amortization of
intangible assets 706 1,665 1,698 2,942
-------- -------- -------- --------
Adjusted EBITDA $ 71,448 $ 72,946 $142,628 $140,131
======== ======== ======== ========
Reconciliation - Free
Cash Flow:
Net cash provided
by operating
activities $ 86,721 $ 90,737 $131,610 $128,900
Less: Purchases of
patient service
equipment and
property, equipment
and improvements,
exclusive of
effects of
acquisitions (23,139) (27,430) (55,811) (66,264)
-------- -------- -------- --------
Free cash flow $ 63,582 $ 63,307 $ 75,799 $ 62,636
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