Arcadia Resources Announces Fiscal 2011 First Quarter Results

INDIANAPOLIS, Aug. 9 /PRNewswire-FirstCall/ -- Arcadia Resources, Inc. (NYSE Amex: KAD), a leading provider of innovative consumer health care services under the Arcadia HealthCare(SM) brand, today announced fiscal 2011 first quarter net revenues of $25.8 million and a net loss of $4.0 million, or $0.02 per share, which compares to net revenue of $26.4 million and a net loss of $4.6 million, or $0.03 per share for the same period in the fiscal 2010.

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"During our first quarter we continued to make substantial progress across both of our businesses," said Marvin R. Richardson, President and Chief Executive Officer of Arcadia.  "DailyMed generated solid top line growth, improved gross margins, due in part to our new prime vendor agreement with H.D. Smith and improved overall operations.  Most recently, we moved our corporate headquarters and DailyMed central fill pharmacy operations in Indianapolis which sets the stage for future growth and improved efficiency.  Our new agreement with WellPoint is further validation of the value proposition DailyMed offers our partners and patients. Our Services segment showed continued signs of stabilization, steady gross margins and strong positive operating contribution cash flow."

First-Quarter and Recent Highlights

• Extended DailyMed agreement with WellPoint State Sponsored Business for three years
• Pharmacy revenues increased 57.1% over prior year quarter and 14.3% sequentially
• Pharmacy gross margins increased to 13.1% from 11.0% in the first quarter of fiscal 2010
• Services revenues of $20.4 million, gross margins of 30.0% and segment operating contribution of $1.1 million
• Opened new corporate headquarters and DailyMed Pharmacy operations in Indianapolis
• CK Cooper & Company initiated research coverage
• Awarded accreditation status by the ACHC for homecare services Arcadia provides across its 11 Michigan locations

For the first quarter of fiscal 2011, Arcadia reported net revenues of $25.8 million, compared with net revenues of $26.4 million for the same period last year.  In its Pharmacy segment, Arcadia reported net revenues of $5.1 million, or a 57.1% increase for its DailyMed medication management system for the fiscal 2011 first quarter, compared with the same period a year ago.  Net revenue in the Services segment was $20.4 million, a decrease of $2.3 million, or 10.2%, compared to the same quarter last year.

Arcadia reported a net loss from continuing operations of $4.8 million, or $0.03 per share, in the first quarter of fiscal 2011, compared to a net loss from continuing operations of $3.6 million, or $0.02 per share, in the same period in fiscal 2010.  The consolidated net loss, including discontinued operations, was $4.0 million, or $0.02, in the fiscal first quarter in 2011 compared to a net loss of $4.6 million, or $0.03 in the fiscal first quarter in 2010.  

Fiscal 2011 First Quarter Results

Arcadia reported $25.8 million in revenue from continuing operations during the quarter, down slightly from $26.4 million during the same period a year ago.  The Company's gross margin from continuing operations was 26.8% during the first quarter, a decline of 1.4% from the same period a year ago.  The reduction in gross margin was driven by a shift in mix towards Pharmacy revenue, which has lower margins than the Company's Services segment.    

Pharmacy: Pharmacy segment revenues increased to $5.1 million for the first quarter of fiscal 2011, compared to $3.2 million in revenues for the first quarter of fiscal 2010, an increase of 57.1%.  This growth was driven by the Company's DailyMed program and the continued roll-out of the program to high-risk Medicaid members in California, South Carolina and Virginia. The program was launched in Virginia in August, and the Company began recognizing revenue from these patients in September.  The program was rolled out to California patients during fiscal fourth quarter 2010, and in South Carolina in April 2010 and this roll-out continues in both States.  Pharmacy gross margin increased to 13.1% in the first quarter of fiscal 2011 from 11.0% in the first quarter of fiscal 2010.  The Company said margins would continue to improve in future quarters under its new prime vendor agreement with H.D. Smith and other purchasing and operational improvement being implemented.

Services: The Company's Services segment, which includes Arcadia's home care and medical staffing business, reported net revenues of $20.4 million in the first quarter of fiscal 2011 compared to net revenues of $22.7 million for the first quarter a year ago.  Within the Services segment, home care revenues decreased by $1.3 million, or 7.1%, to $16.4 million from $17.7 million in the same period last year.  Medical staffing and travel staffing declined $1.1 million to $3.9 million in the first quarter of fiscal 2011 compared to $5.0 million in the same period last year.  Gross margin within the Services segment was 30.0% in the first quarter of fiscal 2011 compared to 30.5% in the same period last year.

Capital Resources and Liquidity

At June 30, 2010, the Company had total cash plus line-of-credit available of $5.3 million.

Arcadia reported negative cash flow from total operations of $4.9 million during the first quarter of fiscal 2011, compared to negative cash flow of $1.6 million during the same period of fiscal 2010.  The increase in negative cash flow was primarily due to working capital changes.  Specifically, during the current year quarter, the Pharmacy segment transitioned to a new prime vendor for its drug purchases.  As part of this conversion, the payment terms changed from semi-monthly with the former vendor to one-week prepayment with the new vendor.  This transition and the increase in the California pharmacy's volume resulted in additional cash used for inventory.  Additionally, during the prior year quarter, the Company collected more cash from receivables than during the current year quarter due to two factors: 1.) significant Home Care and Medical Staffing collections compared to new billings during a period of declining revenue; and 2.) the collection of retained receivables subsequent to certain business divestures.    

Conference Call Information

Arcadia will conduct a conference call and simultaneous Internet webcast to review these financial results on Monday, August 9, at 11:00 a.m. Eastern Time.  

To access the webcast, visit the Company's website at www.arcadiahealthcare.com, 5-10 minutes prior to the start time and click on the webcast link.  The Company's press release, which contains financial information to be discussed in the presentation, will also be available on Arcadia's website.  

To participate in the live conference call, please dial 1-877-407-8031 (for U.S.-based callers) or 1-201-689-8031 (for international callers).  The call can also be accessed (listen-only mode) via the Company's web site at www.arcadiahealthcare.com through the "Investors" page.

A replay of the webcast will be available approximately one hour after the completion of the call and will be accessible at www.arcadiahealthcare.com until August 27, 2010.  A telephone replay will be available by dialing 1-877-660-6853 (for US-based callers) or 1-201-612-7415 (for international callers).  For telephone replay, callers must use Account number 286 and Conference ID number 354675.

Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Arcadia reports non-GAAP financial results. Arcadia's management believes these non-GAAP measures are useful to investors because they provide supplemental information that facilitates comparisons to prior periods. Management uses these non-GAAP measures to evaluate its financial results, develop budgets and manage expenditures. The method Arcadia uses to produce non-GAAP results is likely to differ from the methods used by other companies and should not be regarded as a replacement for corresponding GAAP measures. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which are attached to this release.

About Arcadia HealthCare

Arcadia HealthCare is a service mark of Arcadia Resources, Inc. (NYSE Amex: KAD), and is a leading provider of home care, medical staffing and pharmacy services under its proprietary DailyMed program.  The Company, headquartered in Indianapolis, Indiana, has 70 locations in 18 states.  Arcadia HealthCare's comprehensive solutions and business strategies support the Company's vision of "Keeping People at Home and Healthier Longer."

DailyMed™ Pharmacy dispenses a monthly cycle of a patient's prescriptions, over-the-counter medications and vitamins, and organizes them into pre-sorted packets clearly marked with the date and time the medications should be taken.  In the dispensing process, a DailyMed pharmacist reviews each patient's medication profile and utilizes state-of-the-art medication therapy management tools in order to improve the safety and efficacy of the medications being dispensed.  A DailyMed pharmacist provides routine communication with the patient, the primary care physician, caregivers and payers in order to maximize the pharmaceutical care administered.  The DailyMed program improves patient care and drug utilization while reducing drug and hospitalization costs for private and government payers.

Forward Looking Statements

Any statements contained in this release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21A of the Securities Exchange Act of 1934, as amended and otherwise within the meaning of court opinions construing such forward-looking statements. The Company claims all safe harbor and other legal protections provided to it by law for all of its forward-looking statements. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, estimates, uncertainties and other factors, which could cause actual financial or operating results, performances or achievements expressed or implied by such forward-looking statements not to occur or be realized, including our estimates of consumer demand for our services and products, required capital investment, competition, and other factors. Actual events and results may differ materially from those expressed, implied or forecasted in forward-looking statements due to a number of factors. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in the Company's filings with the Securities and Exchange Commission from time to time, including the section entitled "Risk Factors" and elsewhere in the Company's most recent Annual Report on Form 10-K and subsequent periodic reports. Among the factors that could cause future results to differ materially from those provided in our press release are: (i) we cannot be certain or our ability to generate sufficient cash flow to meet our obligations on a timely basis; (ii) we may be required to make significant business investments that do not produce offsetting increases in revenue; (iii) we may be unable to execute and implement our growth strategy; (iv) we may be unable to achieve our targeted performance goals for our business segments; and (v) other unforeseen events may impact our business. The forward-looking statements speak only as of the date hereof. The Company disclaims any obligation to update or alter its forward-looking statements, except as may be required by law.

SOURCE Arcadia Resources, Inc.