MediSystem Technologies Inc., (the "Corporation"), a provider of pharmaceutical services and products to long-term care facilities, today released its unaudited third quarter results for the nine months ended May 31, 2006. The third quarter saw continued significant growth in top-line revenues, EBITDA, and net earnings of the Corporation.
Gary Chin, President and CEO of the Corporation stated that "our Ontario operation continues to meet expectations in both growth and controlling our selling, general and administrative expenses. Our pen technology is proving to be scalable and reliable. The technology is receiving praise throughout the industry. Currently, more than half of our Ontario clients have been switched to our pen technology. While our Alberta operations had disappointing results in the first six months, the Corporation managed to stop losses of this division in the third quarter and the market is still attractive and still meets the criteria for our long term goals."
Third Quarter Results
Compared to the third quarter of the prior year ended May 31, 2005:
Third quarter revenue was $15,702,513, up 64.7%. This revenue growth was comprised of organic growth increases of 46% and 54% contributed by the newly acquired Tristar and Alberta's operations.
Gross profit increased by 61% to $6,504,393. Gross margin (gross profit as a percentage of total sales) decreased to 41.4% in the quarter as compared to 42.5% in the third quarter of the prior year, primarily a result of the lower gross margins of the newly acquired Alberta operations and the number of prescriptions per bed.
The Corporation generated an after-tax profit of $722,446 or 3.1 cents per share (diluted) in the third quarter, an increase of 30% from $557,420 or 2.8 cents per share (diluted) on a quarter-to-quarter basis. Selling, general and administrative expenses increased to $4,758,850 in the third quarter, an increase of 61%. As a percentage of revenue, SG&A slightly decreased to 30.3% from 31.1%.
EBITDA (earnings before interest, taxes, depreciation and amortization) was $1,745,543, up 60% from $1,088,429.
Nine Month Results
Compared to the period of nine months of the prior year ended May 31, 2005:
The Corporation generated revenue of $42,724,367 during the nine months ended May 31, 2006, an increase of 63.2%. Of this increase, $5,868,437 was attributable to organic sales growth and $10,676,139 was contributed by the acquired Tristar and Alberta operations.
Gross profit increased by 57.7% to $17,625,114 for the nine month period, up from $11,178,211 in the prior year period.
The acquisition of Tristar Pharmacies and Central Care Medical Pharmacy has contributed significantly to the increase in SG&A expenses, depreciation and amortization charges which increased by 63% and 95% respectively. Management has implemented a variety of strategies to limit further general and administrative expense increases during fiscal 2006 and 2007.
With respect to earnings, the Corporation generated an after-tax profit of $1,883,783 in the nine month period ended May 31, 2006 as compared to $1,557,600 in the nine months ending May 31, 2005, an increase of 21%. The Alberta operations incurred a net loss of $193,470 during the first nine months of fiscal 2006.
Revenues of the Corporation correlate to the number of long term care beds under contract. At May 31, 2006 the Corporation had 16,023 beds under contract, up from 12,431 beds under contract at the year end on August 31, 2005, and 12,150 beds as of May 31, 2005, a 32% growth of which approximately 2,049 beds is attributable to the newly acquired Alberta's operations and 1,824 beds attributable to organic growth.
A detailed discussion of the factors affecting the comparability of the quarterly after-tax earnings performance between fiscal 2005 and fiscal 2006 is contained in the Management Discussion and Analysis filed by the Corporation and available online at www.sedar.com.
Financial Position, Liquidity and Capital Resources
As at May 31, 2006, the Corporation had cash of $335,791 and current assets of $8,653,651. Current liabilities as at the same date totaled $6,982,339, creating a working capital surplus of $1,671,312.
About MediSystem Technologies Inc.
The Corporation has three operating subsidiaries, all of which are accredited pharmacies. The MediSystem Pharmacy unit of the company is principally engaged in the distribution of pharmaceutical products to long-term care facilities in Ontario through its automated multi-dose drug delivery system. MediSystem's proprietary software meets the specific billing requirements of the Ontario Ministry of Health; dispenses prescriptions on specific days of the week, even in partial doses; and allows changes to drug regiments within a seven-day dispensing cycle to save drug wastage. The Corporation's Tristar subsidiary operates as an accredited pharmacy in Ontario providing pharmaceutical products to long term care facilities through a traditional blistercard system. MediSystem also now operates in Alberta under MediSystem Pharmacy (Alberta) providing pharmaceutical products to long-term care facilities in the province utilizing an automated multi-dose drug delivery system.
MediSystem is a public company listed under the symbol "MDY" on the TSX Exchange. Visit the company's website at www.imedisystem.com.
Certain statements contained herein constitute forward-looking statements. Although the company believes the statements are reasonable, it can give no assurance that such expectations will prove to be correct. The company cautions investors that any forward-looking statements made by the company are not guarantees of the future performance, and that the actual results may differ materially from those in the forward-looking statements as a result of various factors.
The TSX Exchange has not reviewed and does not accept responsibility for
the adequacy or accuracy of this press release.
For further information: Gary Chin, President of MediSystem, at (416) 441-2293 (phone), (416) 441-9234 (fax)