Ascendant Solutions, Inc. Reports Second Quarter 2015 Earnings

Aug 20, 2015, 18:51 ET from Ascendant Solutions, Inc.

DALLAS, Aug. 20, 2015 /PRNewswire/ -- Ascendant Solutions, Inc. (Pink Sheets: ASDS) ("Ascendant" or the "Company") today announced its results for the second quarter of fiscal 2015.  The Company reported a consolidated net loss of $80,000 or less than $0.01 per share, for the quarter ended June 30, 2015, compared to net income of $157,000, or $0.01 per share, for the same period of 2014. Consolidated net loss for the six months ended June 30, 2015 was $279,000 compared to net income of $222,000 for the first six months of 2014.   Common shares outstanding for the quarter ended June 30, 2015 and 2014 were 21,827,596 and 21,571,510, respectively.  The increase in shares outstanding for the 2015 period is the result of Ascendant's 1 percent stock dividend to shareholders on December 10, 2014.

For the second quarter ended June 30, 2015, the Company reported Consolidated Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") of $124,000 compared to consolidated EBITDA of $251,000 in 2014.  For the six months ended June 30, 2015, the Company reported Consolidated Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") of $138,000 compared to consolidated EBITDA of $414,000 in 2014.

At our Annual Shareholders' Meeting in 2014, we stated that our goal was to acquire independent pharmacies going forward and eliminate all other investments.  Since that time, we have acquired four pharmacies and have an additional one under a letter of intent.  The annual revenue of these four acquisitions approximates $20 million which pushes our estimated revenue for our Healthcare segment to $46 million on an annualized basis.

Healthcare

The Company's subsidiary, Dougherty's Holding, Inc. ("DHI"), which owns and operates multiple Dougherty's Pharmacies, reported EBITDA of $289,000 for the second quarter ended June 30, 2015, compared to $417,000 in 2014 and EBITDA of $474,000 for the six months ended June 30, 2015, compared to $724,000 in 2014.

Our initial stores reported sales growth for both the second quarter and first six months of 2015 when compared to 2014.  However, our margins declined slightly, which is consistent in the pharmacy industry due to pressures on reimbursements paid by insurance companies. The decline in margins caused our EBITDA to be slightly lower in 2015 when compared to 2014. 

Our two stores acquired in 2014 were behind expectations for EBITDA as their sales growth was slower than expected.  As a safety net for these 2014 acquisitions, our investment in these stores was very small. Our total investment of less than $75,000 allows us time to improve sales and EBITDA to bring our return on investment back in line with expectations.

Our two stores acquired in 2015 are meeting expectations for EBITDA but have been impacted by non-recurring acquisition expenses. These non-recurring acquisition expenses include legal fees, transaction costs, system infrastructure upgrades and retail store design updates and amounted to approximately $50,000 for the 2015 second quarter and $80,000 for the six months ended June 30, 2015. As these stores are integrated into our systems and these acquisition expenses have concluded, we are expecting EBITDA to improve in the upcoming quarters of 2015.

Overhead was impacted by non-recurring SG&A expenses of approximately $14,000 for the second quarter of 2015 and $25,000 for the six months ended June 30, 2015. SG&A additions incurred at the first of the year to handle the expected growth from acquisitions were approximately $75,000 for the second quarter of 2015 and $135,000 for the six months ended June 30, 2015.  After analyzing the impact of these additions on EBITDA, reductions were made in overhead at the end of the second quarter of 2015. It is estimated that SG&A will drop by approximately $33,000 per quarter or $66,000 for the remainder of 2015.

The information below summarizes our Healthcare Segment:



Q2 2015


Q2 2014


YTD 2015


YTD 2014

Initial Stores:









Revenue

$   6,950


$   6,704


$ 13,498


$ 13,149


Gross margin percentage

29.1%


30.4%


29.2%


29.9%


SG&A

1,465


1,440


2,970


2,831


EBITDA

561


600


972


1,100


Generic dispensing rate

77.2%


73.6%


76.7%


73.1%


Script count

51,870


49,298


101,542


96,538










Acquisitions:









Revenue

$   2,441


$           -


$   4,910


$           -


Gross margin percentage

23.3%


0.0%


23.1%


0.0%


SG&A

571


-


1,097


-


EBITDA

(2)


-


37


-


Generic dispensing rate

80.4%


0.0%


80.2%


0.0%


Script count

26,905


-


54,810


-










Overhead:









SG&A

270


183


535


376


EBITDA

(270)


(183)


(535)


(376)










Total Healthcare:








Revenue

$   9,391


$   6,704


$ 18,408


$ 13,149


Gross margin percentage

27.6%


30.4%


27.6%


29.9%


SG&A

2,306


1,623


4,602


3,207


EBITDA

289


417


474


724


Generic dispensing rate

78.3%


73.6%


77.9%


73.1%


Script count

78,775


49,298


156,352


96,538

Other

Our remaining two investments in real estate reported EBITDA of $14,000 for the second quarter ended June 30, 2015, compared to $12,000 in 2014 and EBITDA of $24,000 for the six months ended June 30, 2015, compared to $22,000 in 2014.  The Company's corporate overhead division reported negative EBITDA of ($179,000) for the second quarter of 2015 compared to ($179,000) in 2014 and negative EBITDA of ($360,000) for the six months ended June 30, 2015 compared to ($332,000) in 2014. 

Management Comments

Jim Leslie, Chairman of Ascendant, commented, "We continue to build our healthcare division through the acquisition of well-run community pharmacies, and we are pleased to report a nearly 29 percent improvement in revenues over 2014 results.  As stated previously, our goal is to add annual revenues of $10 million from pharmacy acquisitions for the next several years which will enhance our EBITDA and net income."

Mark Heil, President and CFO, added, "Sales from our first four pharmacy acquisitions have increased our revenue run rate to $46 million on an annual basis.  These investments will ultimately bolster bottom line results, as well, although it will typically take several quarters to see the additive earnings impact of the acquisitions due to legal and closing costs and initial investments in these newly acquired pharmacies.  We are convinced our growth strategy will add to Dougherty's EBITDA and earnings, producing solid shareholder returns over time. We continue to pursue additional community pharmacy acquisitions and expect to acquire one to two additional pharmacies in 2015."  

Select Balance Sheet Items and Book Value per Share
(000's omitted, except per share amounts, unaudited)






June 30,


December 31,


2015


2014





Total Current Assets

$            5,567


$            4,353

Property and Equipment, net

1,366


1,015

Intangible Assets, net

3,849


529

Equity Method Investments

5,107


5,107

Deferred Tax Asset

3,000


3,000

Total Assets

$          18,889


$          14,004





Total Current Liabilities

$            3,329


$            2,327

Notes Payable, Long-Term

6,913


2,760

Total Liabilities

10,242


5,087

Stockholders' Equity

8,647


8,917

Total Liabilities and Equity

$          18,889


$          14,004





Common Shares Outstanding

21,827,596


21,817,596

Book Value per Share

$              0.40


$              0.41

 

Select Income Statement Items
(000's omitted, unaudited)






Three Months Ended


Six Months Ended


June 30,


June 30,


2015


2014


2015


2014

Revenue

$            9,391


$            6,704


$    18,408


$        13,149

Cost of Sales

6,797


4,665


13,335


9,221

Gross Profit

2,594


2,039


5,073


3,928

SG&A

2,470


1,788


4,935


3,514

EBITDA

124


251


138


414

Depr & Amort

(137)


(58)


(272)


(115)

Interest

(58)


(26)


(120)


(54)

Taxes

(9)


(10)


(25)


(23)

Net Income

$                (80)


$               157


$        (279)


$             222

EBITDA is calculated as net income (loss) before deducting interest, taxes, depreciation and amortization.  Although EBITDA is not a measure of actual cash flow because it does not consider changes in assets and liabilities that may impact cash balances, the Company's management reviews these non-GAAP financial measures internally to evaluate the Company's performance and manage the operations.  Additionally, the Company believes it is a useful metric to evaluate operating performance and has therefore included such measures in the reporting of operating results.

About Ascendant Solutions, Inc.

Ascendant Solutions, Inc. is a value-oriented investment firm focused on successfully acquiring, managing and growing community-based pharmacies in the Southwest Region. Ascendant currently has approximately $42 million in net operating loss carryforwards which can be used to shelter future income, thus enhancing free cash flow or debt service capabilities. Interested investors can access financials and stock trading information for Ascendant at OTCMarkets.com or at www.ascendantsolutions.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's current expectations, projections, estimates and assumptions. These forward-looking statements may be identified by words such as "expects," "believes," "anticipates" and similar expressions.  Forward-looking statements involve risks and uncertainties that may cause future results to differ materially from those suggested by the forward-looking statements.  The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.

Contacts:




Mark S. Heil

Geralyn DeBusk


President and CFO

Halliburton Investor Relations


972-250-0945

972-458-8000

 

SOURCE Ascendant Solutions, Inc.



RELATED LINKS

http://www.ascendantsolutions.com