Ascendant Solutions, Inc. Reports Third Quarter 2015 Earnings
DALLAS, Nov. 11, 2015 /PRNewswire/ -- Ascendant Solutions, Inc. (Pink Sheets: ASDS) ("Ascendant" or the "Company") today announced its results for the third quarter of fiscal 2015. The Company reported Consolidated Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") of $326,000 compared to consolidated EBITDA of $235,000 in 2014. For the nine months ended September 30, 2015, the Company reported consolidated EBITDA of $464,000 compared to consolidated EBITDA of $649,000 in 2014.
For the third quarter ended September 30, 2015, the Company reported a consolidated net loss of $27,000 or less than $0.01 per share, for the quarter ended September 30, 2015, compared to net income of $125,000, or $0.01 per share, for the same period of 2014. Consolidated net loss for the nine months ended September 30, 2015 was $306,000 compared to net income of $347,000 for the first nine months of 2014. The decline in net income for the third quarter and nine months ended 2015 compared to 2014 is due mainly to increases in depreciation and interest related to our recent acquisitions.
Common shares outstanding for the quarter ended September 30, 2015 and 2014 were 21,847,896 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.
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 five pharmacies. The annual revenue of these five acquisitions approximates $24 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 $464,000 for the third quarter ended September 30, 2015, compared to $394,000 in 2014 and EBITDA of $938,000 for the nine months ended September 30, 2015, compared to $1,118,000 in 2014. EBITDA for the third quarter ended September 30, 2015 was the highest reported in last seven quarters.
Our initial stores reported sales growth of 2 percent for the nine months ended 2015 when compared to 2014. Gross margins were relatively flat with a slight increase in SG&A.
Our acquisition stores have contributed $8,900,000 in revenue at 24.3% margins in 2015. Margins should continue to increase as acquired inventory is sold through, and these stores benefit from higher volume discounts on Dougherty's purchasing contract. Total Healthcare gross margins will continue to be impacted positively as acquisition store gross margins increase.
Acquisition store EBITDA for the third quarter 2015 was $188,000 and $225,000 for the nine months ended 2015. Year to date EBITDA was impacted by non-recurring acquisition expenses of $110,000. These non-recurring acquisition expenses include legal fees, transaction costs, system infrastructure upgrades and retail store design updates. As these stores are integrated into our systems and these acquisition expenses have concluded, we are expecting EBITDA to continue to improve in the fourth quarter of 2015.
Overhead was impacted by non-recurring SG&A expenses of approximately $9,000 for the third quarter of 2015 and $34,000 for the nine months ended September 30, 2015. SG&A additions incurred to handle the expected growth from acquisitions were approximately $59,000 for the third quarter of 2015 and $192,000 for the nine months ended September 30, 2015. After analyzing the impact of these additions on EBITDA, changes have been made reducing overhead from $75,000 to $59,000 or 21 percent from the second to third quarter ended 2015. It is estimated that quarterly SG&A will continue to remain constant for the remainder of 2015.
The information below summarizes our Healthcare Segment (000's omitted, except script count, unaudited):
| Q3 2015 |
Q3 2014 |
YTD 2015 |
YTD 2014 |
|||||
| Initial Stores: |
||||||||
| Revenue |
$ 6,769 |
$ 6,804 |
$ 20,267 |
$ 19,954 |
||||
| Gross margin percentage |
28.9% |
29.5% |
29.1% |
29.7% |
||||
| SG&A |
1,437 |
1,431 |
4,408 |
4,262 |
||||
| EBITDA |
521 |
573 |
1,493 |
1,674 |
||||
| Generic dispensing rate |
77.2% |
73.6% |
76.9% |
73.4% |
||||
| Script count |
50,914 |
49,826 |
152,456 |
146,364 |
||||
| Acquisitions: |
||||||||
| Revenue |
$ 4,016 |
$ 507 |
$ 8,927 |
$ 507 |
||||
| Gross margin percentage |
25.7% |
20.1% |
24.3% |
20.1% |
||||
| SG&A |
845 |
105 |
1,941 |
105 |
||||
| EBITDA |
188 |
(2) |
225 |
(2) |
||||
| Generic dispensing rate |
84.1% |
83.8% |
82.2% |
83.8% |
||||
| Script count |
53,150 |
7,665 |
107,960 |
7,665 |
||||
| Overhead: |
||||||||
| SG&A |
245 |
177 |
780 |
554 |
||||
| EBITDA |
(245) |
(177) |
(780) |
(554) |
||||
| Total Healthcare: |
||||||||
| Revenue |
$ 10,785 |
$ 7,311 |
$ 29,194 |
$ 20,461 |
||||
| Gross margin percentage |
27.7% |
28.8% |
27.6% |
29.5% |
||||
| SG&A |
2,527 |
1,713 |
7,129 |
4,921 |
||||
| EBITDA |
464 |
394 |
938 |
1,118 |
||||
| Generic dispensing rate |
81.0% |
73.6% |
79.2% |
73.9% |
||||
| Script count |
104,064 |
57,491 |
260,416 |
154,029 |
||||
Other
Our remaining two investments in real estate reported EBITDA of $32,000 for the third quarter ended September 30, 2015, compared to $25,000 in 2014 and EBITDA of $56,000 for the nine months ended September 30, 2015, compared to $47,000 in 2014. The Company's corporate overhead division reported negative EBITDA of ($170,000) for the third quarter of 2015 compared to ($184,000) in 2014 and negative EBITDA of ($530,000) for the nine months ended September 30, 2015 compared to ($516,000) 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 42 percent improvement in revenues over 2014 results. As stated previously, our goal is to add annual revenues of $10 million from pharmacy acquisitions for this year which will enhance our EBITDA and net income."
Mark Heil, President and CFO, added, "Sales from our first five 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 2016."
| Select Balance Sheet Items and Book Value per Share |
|||
| Sept 30, |
December 31, |
||
| 2015 |
2014 |
||
| Total Current Assets |
$ 6,473 |
$ 4,353 |
|
| Property and Equipment, net |
1,411 |
1,015 |
|
| Intangible Assets, net |
4,551 |
529 |
|
| Equity Method Investments |
5,107 |
5,107 |
|
| Deferred Tax Asset |
3,000 |
3,000 |
|
| Total Assets |
$ 20,542 |
$ 14,004 |
|
| Total Current Liabilities |
$ 3,612 |
$ 2,327 |
|
| Notes Payable, Long-Term |
8,305 |
2,760 |
|
| Total Liabilities |
11,917 |
5,087 |
|
| Stockholders' Equity |
8,625 |
8,917 |
|
| Total Liabilities and Equity |
$ 20,542 |
$ 14,004 |
|
| Common Shares Outstanding |
21,847,896 |
21,817,596 |
|
| Book Value per Share |
$ 0.39 |
$ 0.41 |
|
| Select Income Statement Items |
||||||||
| Three Months Ended |
Nine Months Ended |
|||||||
| Sept 30, |
Sept 30, |
|||||||
| 2015 |
2014 |
2015 |
2014 |
|||||
| Revenue |
$ 10,786 |
$ 7,312 |
$ 29,194 |
$ 20,461 |
||||
| Cost of Sales |
7,796 |
5,206 |
21,131 |
14,427 |
||||
| Gross Profit |
2,990 |
2,106 |
8,063 |
6,034 |
||||
| SG&A |
2,664 |
1,871 |
7,599 |
5,385 |
||||
| EBITDA |
326 |
235 |
464 |
649 |
||||
| Depr & Amort |
(234) |
(61) |
(506) |
(176) |
||||
| Interest |
(104) |
(33) |
(224) |
(87) |
||||
| Taxes |
(15) |
(16) |
(40) |
(39) |
||||
| Net Income |
$ (27) |
$ 125 |
$ (306) |
$ 347 |
||||
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.
SOURCE Ascendant Solutions, Inc.
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