FOR IMMEDIATE RELEASE
Company Contact:
Investor Relations
Paul A. Brown, M.D, Founder & Chairman
Scott Liolios or Ron Both
Stephen J. Hansbrough, President & CEO Liolios Group, Inc.
HearUSA, Inc. ron@liolios.com
(561) 478-8770
(949) 574-3860
HEARUSA REPORTS
SECOND QUARTER 2007 RESULTS
Quarterly Net Revenues Reach Third Consecutive
Record High
West Palm Beach, Fla. -- August 13, 2007 -- HearUSA,
Inc. (AMEX: EAR), a leading provider of hearing care through a fully integrated and
professionally accredited system of hearing care centers, reported financial results for
the second quarter ended June 30, 2007.
Q2 2007 Financial Results
· Net revenues totaled a record $24.9 million, an increase of
5.7% from $23.6 million in the previous quarter and an increase of 12.0% from $22.3
million a year ago. This third consecutive quarter of record net revenues is primarily
attributable to the contribution of hearing centers acquired within the last 12 months.
· Income from operations was $810,000 or 3.3% of revenues, as
compared to $1.6 million or 7.0% of revenues in the previous quarter and $1.6 million or
7.3% of net revenues a year ago. The decrease was mostly attributable to the additional
marketing expense of approximately $700,000 related to the Coach Shula TV campaign and
$200,000 from the 2006 restatement costs. The long-term objective for income from
operations remains in the range of 10% to 12%.
· The net loss applicable to common stockholders for the second
quarter was $3.4 million or $0.09 per share, as compared to a net loss of $595,000 or
$0.02 per share in the previous quarter and net loss of $100,000 or $0.00 per share a year
ago. The increase in net loss is principally due to a non-cash charge related to the
conversion of the 2003 convertible notes and exercise of related warrants totaling $2.6
million or $0.07 per share, and the restatement costs and Coach Shula TV campaign
investment costs totaling $900,000 or $0.02 per share.
Our
highly successful acquisition program drove our top line growth to another record this
quarter, said Stephen J. Hansbrough, president and CEO of HearUSA, and we
expect this to continue with the abundance of acquisition opportunities before us .It is
also important to note that while we took on the major cost of the new Coach Shula TV
campaign in the second quarter, we are looking forward to realizing the full benefit of
this program in the third and fourth quarters. In fact, July revenues were up 23% to $7.3
million as compared to $5.9 million in July of last year. This strong performance keeps us
on track for our 2007 net revenues to increase 15-20% over last year and range between
$102 and $107 million.
Second Quarter 2007 Highlights
In May,
HearUSA launched the "Just Find Out" campaign featuring renowned NFL football
coach and Pro Football Hall of Fame inductee, Don Shula. The initial campaign used
television, print, and direct mail to target adults 45 and older in three major Florida
markets of Miami-Ft. Lauderdale, Palm Beach and Tampa. The campaign informs consumers
about the importance of hearing and directs them to a local HEARx center for a free
demonstration of the latest technology from Siemens.
HearUSA acquired three hearing care centers during the second
quarter, with combined estimated trailing twelve-month (TTM) revenues of $1.7
million. This brings the total acquisitions for the first half of 2007 to six hearing
centers, with combined estimated TTM revenues of $4.1 million.
Notes
Ken Schofield, HearUSAs chief operating officer, In addition to the $4.1
million in TTM revenue we acquired in the first half of the year, we have since closed on
two additional transactions representing four hearing care centers and $1.7 million in
estimated TTM revenues. Additionally we have Letters of Intent representing $5.0 million
in estimated TTM revenues. We continue to receive strong interest by independent private
hearing care providers looking to join our organization and are confident we will meet our
acquisition goal of $10 to $15 million in estimated TTM revenues for 2007. Since we
initiated our strategic acquisition program over two years ago, we have been able to
retain over 90% of the annual estimated revenues of the acquired hearing care centers
during the first year of their acquisition and achieve a growth of over 5% above annual
estimated revenues for those acquired hearing care centers we purchased more than a year
ago.
Gino
Chouinard, HearUSAs executive vice president and CFO, added, Excluding the
charges associated with the 2003 transaction and 2006 restatement, the only significant
increase in our cost structure in the second quarter was the $700,000 associated with the Don Shula marketing
campaign. This will not repeat in the third quarter, as the investment we made in this
campaign has entered a maintenance phase at a fraction of the cost spent during the
branding phase. Additionally, in order to help drive profitability, the company intends to
reduce corporate expenses by the end of the third quarter by more than $1 million per
annum.
The
company noted that about 17% of the hearing aids it sold during the quarter were purchased
by patients under the age of 60. It believes this is an indication of environmental
factors, like loud music, causing damage to the hearing of Americans younger
generations. In addition to the aging population, this appears to be an emerging
demographic factor that is increasing the demand for state-of-the-art hearing care like
that provided by HearUSA.
Conference Call
The
company will hold a conference call Wednesday August 15, 2007 to discuss its second
quarter financial results. President and CEO Stephen J. Hansbrough, COO Ken Schofield, and
Executive Vice President and CFO Gino Chouinard will host the presentation, which will be
followed by a question and answer period.
Date:
Wednesday, August 15, 2007
Time:
4:30 pm Eastern (1:30 pm Pacific)
Toll
Free Dial-in Number: 1-877-407-9210
International/Toll Dial-in Number: 1-201-689-8049
Conference ID Number: 250109
Internet Simulcast: http://www.vcall.com/IC/CEPage.asp?ID=119220
(Windows
Media Player needed for simulcast)
Please
call the conference telephone number 5-10 minutes prior to the start time. An operator
will register your name and organization and ask you to wait until the call begins. If you
have any difficulty connecting with the conference call, please contact the Liolios Group
at (949) 574-3860.
A replay
of the call will be available later that evening and accessible until August 29, 2007.
Toll-free
Replay Number: 1-877-660-6853
International/Toll
Replay Number: 1-201-612-7415
Conference
ID Number: 250109; and Account Number: 286
Internet
Replay: http://www.vcall.com/IC/CEPage.asp?ID=119220
About HearUSA
HearUSA, Inc. provides hearing care to patients primarily
through more than 173 company-owned hearing care centers, which offer a complete range of
quality hearing aids with an emphasis on the latest digital technology. HearUSA Centers
are located in California, Florida, New York, New Jersey, Massachusetts, Ohio, Michigan,
Missouri and the province of Ontario, Canada. The company also derives revenues from its
HearUSA Hearing Care Network, comprised of 1,600 affiliated audiologists in 49 states, as
well as its website that enables online purchases of hearing related products, such as
batteries, hearing aid accessories and assistive listening devices. For further
information, click on "investor information" at the HearUSA website: http://www.hearusa.com/.
Forward Looking
Statements
This press release
contains forward-looking statements within the meaning of the Securities Litigation Reform
Act of 1995, including those concerning the Companys expectation of continued
revenue growth due to acquisitions; the expectation that 2007 net revenues will increase
15-20% over 2006 and range between $102 and $107 million; our acquisition goal of $10 to $15 million in estimated TTM
revenues for 2007; and our intention to reduce corporate expenses by the end of the third
quarter by more than $1 million per annum. These
statements involve certain risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements. Potential risks and
uncertainties include such factors as successful implementation of the companys
acquisition program; integration of the newly acquired centers and maintenance of revenue
levels from those centers; the companys
ability to maintain cost controls and limit expenses; the successful implementation of the
Siemens agreements; the ability of the company to maintain unit sales of Siemens hearing
aids; market demand for the companys goods and services; changes in the pricing
environment; general economic conditions in those geographic regions where the
companys centers are located; the impact of competitive products; and other risks
and uncertainties described in the companys filings with the Securities and Exchange
Commission, including the companys Form 10-K for the fiscal year ended December 30,
2006.
|
June
30, |
July
1, |
|
2007 |
2006 |
|
(Dollars
in thousands, except per share amounts) |
|
|
|
Net
revenues |
|
|
Hearing aids and other products |
$
23,166 |
$
20,838 |
Services |
1,754 |
1,419 |
Total net revenues |
24,920 |
22,257 |
|
|
|
Operating
costs and expenses |
|
|
Hearing aids and other products |
6,062 |
6,076 |
Services |
556 |
414 |
Total cost of products sold and services |
6,618 |
6,490 |
Center operating expenses |
13,143 |
10,301 |
General and administrative expenses |
3,813 |
3,349 |
Depreciation and amortization |
536 |
488 |
Total operating costs and expenses |
24,110 |
20,628 |
Income
from operations |
810 |
1,629 |
Non-operating income (expenses): |
|
|
Gain from insurance proceeds |
- |
- |
Interest income |
37 |
52 |
Interest expense |
(3,697) |
(1,371) |
Income before income tax expense and minority
interest in income of consolidated joint venture |
(2,850) |
310 |
Income tax expense |
(206) |
(313) |
Minority interest
in income of consolidated joint venture |
(259) |
(62) |
Net loss |
(3,315) |
(65) |
Dividends on preferred stock |
(36) |
(35) |
Net loss applicable to common
stockholders |
$
(3,351) |
$
(100) |
|
|
|
Net loss applicable to common
stockholders per common share basic and diluted |
$
(0.09) |
$
(0.00) |
|
|
|
Weighted average number of shares of
common stock outstanding basic and diluted |
37,358 |
32,216 |
|
June
30, |
December
30, |
ASSETS |
2007 |
2006 |
|
(Dollars
in thousands) |
Current
assets |
|
|
|
$
3,210 |
$
2,326 |
Accounts and notes receivable, less allowance
for |
|
|
doubtful
accounts of $426,469 and $434,098 |
7,551 |
7,591 |
Inventories |
2,460 |
2,371 |
Prepaid expenses and other |
1,822 |
1,400 |
Deferred tax asset |
73 |
67 |
Total
current assets |
15,116 |
13,755 |
Property
and equipment, net |
4,096 |
3,878 |
Goodwill
|
|
|
Intangible
assets, net |
|
|
Deposits
and other |
710 |
876 |
Restricted
cash and cash equivalents |
209 |
205 |
Total
Assets |
$
89,776 |
$
83,276 |
|
|
Current
liabilities |
|
|
|
$
8,874 |
$
10,463 |
Accrued expenses |
3,480 |
2,509 |
Accrued compensation |
2,926 |
2,826 |
Current maturities of long-term debt |
|
|
Current maturities of convertible subordinated
notes, net of debt discount of $1,263,003 in 2006 |
|
|
Current maturities of subordinated notes, net
of debt discount of $234,223 and $452,228 |
|
|
Dividends payable |
|
|
Minority interest in net income of consolidated
joint venture, currently payable |
|
|
Total current liabilities |
|
|
Long-term
debt |
31,157 |
28,599 |
Deferred
income taxes |
5,624 |
5,234 |
Convertible
subordinated notes, net of debt discount of $217,923 in 2006 |
- |
2,282 |
Subordinated
notes, net of debt discount of $60,123 in 2006 |
660 |
1,480 |
Warrant
liability |
- |
110 |
Total
long-term liabilities |
37,441 |
37,705 |
Commitments
and contingencies |
- |
- |
|
|
|
Stockholders equity |
|
|
Preferred stock (aggregate liquidation
preference $2,330,000, $1 par, 7,500,000 shares authorized) |
|
|
Series H Junior Participating (none
outstanding) |
- |
- |
Series J (233 shares outstanding) |
- |
- |
Total preferred stock |
- |
- |
|
|
|
Common stock: $.10 par; 75,000,000 shares
authorized
37,710,000 and 32,029,750 shares issued |
3,771 |
3,203 |
Stock subscription |
(412) |
(412) |
Additional paid-in capital |
132,394 |
123,972 |
Accumulated deficit |
(113,458) |
(109,521) |
Accumulated other comprehensive income |
|
|
Treasury stock, at cost:523,662 common shares |
(2,485) |
(2,485) |
Total Stockholders Equity |
23,070 |
16,920 |
Total
Liabilities and Stockholders Equity |
$
89,776 |
$
83,276 |