FRISCO, Texas, June 28 /PRNewswire-FirstCall/ -- Assured Pharmacy, Inc. (Pink Sheets: APHY), Assured Pharmacy's Chief Executive Officer, Robert DelVecchio provides shareholder update.
June 25, 2010
The past eighteen months were clearly an extraordinary time for businesses around the world, a year of incredible challenge and change. Virtually every company and industry was affected, and some have been altered forever. Who could have predicted Lehman Brothers would topple or the FDIC would classify more than 775 banks as problem banks which may fall into failure. While our business was not immune to the effects of the global economic downturn, our disciplined management of the business and the fundamental strength of our business model enabled us to deliver significant improvements in our financial results for fiscal 2009, as compared to 2008.
In fiscal 2009, we took steps to position Assured Pharmacy in important ways for the future by enhancing our core business and expanding our sales efforts. In the end, Assured Pharmacy has undertaken a major refinement of every aspect of our business and we are excited about closing out 2010, in what we anticipate will be a superior operational position when compared to 2008 and 2009. Set forth below are just some of the highlights from the previous 18 months. The financial information below is provided for information purposes only. The information provided below does not match the Company's Financial Statements because it was compiled on a same store basis only, excludes non-cash items and other non-recurring items such as stock-based compensation and nets out in consolidation all inter-company charges.
- Same store sales grew approximately 12% and our EBITDA loss was reduced by approximately 49% in 2009 vs. 2008;
- Converted approximately $7.7 million in unsecured debt into shares of Series [B] preferred stock with an effective common stock conversion price of $0.01 per share;
- Expanded the breadth and depth of management with the addition of key personnel: Mike Schneidereit, Chief Operating Officer; Brett Cormier, Chief Financial Officer; Michael Mapes, Chief Compliance Officer; and Jim Brown, Vice President of Sales and Marketing;
- Closed 2 underperforming locations in Las Vegas and Portland for an estimated savings of approximately $40k per month;
- Relocated corporate headquarters - streamlined and lowered monthly administrative expenses by approximately $25k while implementing a highly scalable infrastructure;
- Improved Gross Profit Margins through new Group purchasing organization contracts and increased purchasing controls;
- Expanded and enhanced our sales organization by hiring a veteran sales professional with related industry experience to lead and expand the group by doubling the number of sales representatives in each store; and,
- Implemented what we believe is an industry leading compliance program through the leadership of Michael Mapes, CCO, who brings 30+ years experience in the regulation of the pharmaceutical industry.
As a result of these and other changes, and despite several uncontrollable negative events, our 2009 financial results were significantly improved over 2008 as we reduced our EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) loss by over 49% and our Net Loss by over 60% on a Consolidated Same Store Basis excluding stock based compensation and other non-recurring financing related expenses.
Despite the exit of a significant referral source from the pain business and several other non-controllable market events, our same store sales (defined as stores open for the entire comparative period) increased over 12% from 2008 to 2009 due to a substantial increase in the number of new patients attained. New patient growth was due to the expansion of our sales organization and has continued into 2010. Our gross profit margins remained relatively stable, resulting in an increase in gross profit of over 11%, primarily as a result of improved group purchase organization ("GPO") contracts and purchasing controls.
We significantly lowered annual operating expenses (excluding stock based compensation and non-recurring financing related expenses) by approximately $600k on a same store basis and over $1.5 million when factoring in closed store operations - while expanding and enhancing the sales organization and implementing an industry leading compliance model. We were able to decrease our interest expense incurred on an annual basis, net of the gain on extinguishment of debt, by $1.5 million as a result of the conversion of approximately $8.5 million of debt into equity.
As a result of our focused business model refinement efforts we have developed a pharmacy service operating and sales model that we believe can be replicated in major metro areas throughout the United States with minimal changes to our corporate infrastructure. We are looking forward to transitioning to the growth stage of our business cycle energized and with a strong sense of urgency. Our immediate action plan is to seek to accelerate the growth of our existing stores while pursuing new store development opportunities.
In the coming weeks we anticipate sharing a number of exciting developments with you, beginning with the launch of our new website at http://assuredrxservices.com/. In addition to being an information source for our customers, we have designed this site to be dedicated to providing detailed current financial and operating information to our investors. It is our intention to continue to provide the highest level of transparency for our customers and shareholders. Moving forward, we plan to provide quarterly and annual financial reports. We are currently in the process of having our financial statements audited for the years 2008 and 2009 which will be made available upon completion. As a first step, we have already posted a new PowerPoint presentation to the investor section of the site.
In speaking directly to our shareholders, we first and foremost want to thank you for your continued commitment and support of our efforts during these challenging times. While we cannot predict what the rest of 2010 will bring, or when the financial markets will improve, we are not waiting around to find out. Instead, we are taking the steps we believe are necessary to ensure achievement of sustainable growth and profitability in the face of these headwinds, thereby positioning us for what we hope will be even further growth when economic conditions improve. We anticipate many of the operational improvements implemented during 2009 will begin providing valuable fundamental results. With a number of significant accomplishments behind us, a strong strategy in hand, a capable and a properly aligned management team in place, I am confident that we are on the right path to increasing shareholder value.
We hope that you share in our excitement about Assured's future, I look forward to updating you further as we continue to make progress towards our goal of becoming a profitable and growing specialty pharmacy service company. As always, if you have any questions, please do not hesitate to contact the company.
CEO, Assured Pharmacy
About Assured Pharmacy, Inc.
Assured Pharmacy, Inc. is engaged in the business of operating specialty pharmacies that primarily dispense highly regulated pain medication. The Company derives its revenue primarily from the sale of prescription drugs and does not keep in inventory non-prescription drugs or health and beauty related products inventoried at traditional pharmacies. The Company offers physicians the ability to electronically transmit prescriptions to its pharmacies. The majority of the Company's business is derived from repeat business from its customers. "Walk-in" prescriptions from physicians are limited. The Company currently has four operating pharmacies. Three of those pharmacies are wholly owned and the Company has a 94.8% ownership interest in the other pharmacy.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. These forward-looking statements are based largely on the expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond the control of management. Therefore, actual results could differ materially from the forward-looking statements contained in this press release. A wide variety of factors that may cause actual results to differ from the forward-looking statements include, but are not limited to, the following: the Company's ability to increase revenue and profits in the current economic climate; the effect of changing economic conditions; lack of sufficient financing for opening new pharmacies; inability to manage growth; and changes in government regulations, controls and similar matters. These cautionary statements should not be construed as exhaustive or as any admission as to the adequacy of the Company's disclosures. The Company cannot predict or determine after the fact what factors would cause actual results to differ materially from those indicated by the forward-looking statements or other statements. The reader should consider statements that include the words "believes", "expects", "anticipates", "intends", "estimates", "plans", "projects", "should", or other expressions that are predictions of or indicate future events or trends, to be uncertain and forward-looking. The Company does not undertake to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE Assured Pharmacy, Inc.