UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 31, 2003
CURATIVE HEALTH SERVICES, INC.
(Exact name of registrant as specified in its charter)
Minnesota 000-19370 41-1503914
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
150 Motor Parkway
Hauppauge, New York 11788-5145
(Address of principal executive offices)
(631) 232-7000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)
Item 12. Results of Operations and Financial Condition
The following information is being furnished under Item 12, Results
of Operations and Financial Condition. Such information shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or otherwise subject to
the liabilities of that section, nor shall it be deemed to be
incorporated by reference in any filing under the Securities Act of
1933, as amended, or the Exchange Act, except as expressly set forth
by specific reference in such filing. On July 31, 2003, Curative
Health Services, Inc. issued a press release, attached hereto as
Exhibit 99.1, to report its results of operations and financial
condition for the completed fiscal quarter ended June 30, 2003.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
CURATIVE HEALTH SERVICES, INC.
Date: July 31, 2003 By: /s/ Thomas Axmacher
-----------------------
Thomas Axmacher
Chief Financial Officer
Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact:
Scott Eckstein
Investor Relations
Curative Health Services
631-232-7044
seckstein@curativehealth.com
CURATIVE HEALTH SERVICES REPORTS SECOND QUARTER 2003 RESULTS
Second Quarter Revenues of $44.7 Million,
GAAP Net Income Per Share of $0.26,
Results Include charges of $0.04 Per Share Related to
Refinancing of Credit Facility and a Corporate Structure Reorganization
Hauppauge, New York - July 31, 2003 - Curative Health Services, Inc., (Nasdaq:
CURE), announced today second quarter financial results for the period ended
June 30, 2003. Total revenues for the second quarter were $44.7 million,
compared with $31.9 million reported in the second quarter of 2002, an increase
of 40.0%. GAAP net income was $3.5 million or $0.26 per diluted share, compared
with GAAP net income of $2.8 million, or $0.23 per diluted share, for the second
quarter of 2002. Adjusted net income for the second quarter was $4.0 million or
$0.30 per diluted share. The adjusted second quarter 2003 results add back to
GAAP net income after tax charges of $0.4 million ($0.6 million pre-tax), or
$0.03 per diluted share after tax, associated with terminating the Company's
previous credit facility upon entering into a new $40 million senior secured
credit facility with GE Healthcare Financial Services during the second quarter
and after tax costs incurred by the Company of approximately $0.1 million ($0.2
million pre-tax), or $0.01 per diluted share related to a proposed corporate
structure reorganization. Management believes these adjustments are necessary to
better present the underlying business operating results.
Total revenues for the six months ended June 30, 2003 were $102.7 million. GAAP
net income was $6.9 million or $0.51 per diluted share. Adjusted net income for
the six months ended June 30, 2003 was $9.1 million or $0.66 per diluted share.
The adjusted six month results add back to net income the charges taken during
the second quarter relating to termination of the prior credit facility and to
the proposed corporate structure reorganization, as well as after tax charges of
$1.0 million ($1.6 million pre-tax), or $0.07 per diluted share after tax,
associated with the consolidation of the Company's Specialty Pharmacy Services
operations and $0.7 million after tax ($1.1 million pre-tax), or $0.05 per
diluted share after tax of charges associated with settlements, including
severance agreements, with former executives terminated in March 2002, that were
recorded in the first quarter of 2003.
(more)
"Our strategy is to combine thoughtful acquisitions with organic growth
initiatives to build a highly profitable specialty pharmacy over the next
several years. This quarter we saw several key accomplishments," said Joseph
Feshbach, Curative's Chairman and Chief Executive Officer. "We are particularly
pleased with our new status as a preferred distributor for Synagis(R) by
MedImmune. This is an important distinction that we believe demonstrates the
high level of value our services provide to our customers in the distribution of
Synagis(R) and our other therapy lines. Moreover, we believe it validates our
strategy of making important commitments to specific therapies and building on
this capital commitment with internal marketing resources to achieve organic
growth in our acquired businesses."
Highlights for the second quarter of 2003 included:
o The acquisition of the specialty pharmacy business of Prescription City,
Inc. for a total consideration of approximately $17.5 million. Also during
the quarter, the Company acquired the assets and specialty pharmacy
business of All Care Inc., a Louisiana-based Synagis(R) pharmacy for $2.0
million.
o Curative completed a new $40 million senior secured credit facility with GE
Healthcare Financial Services. This new credit facility, which replaced the
Company's previously existing line of credit, matures on July 15, 2007.
o The Company was chosen by MedImmune, Inc. as one of a select group of
national home health care providers of Synagis(R). Curative has also been
selected by MedImmune as a preferred regional specialty pharmaceutical
distributor for Synagis(R).
o In the Wound Care business, the Company signed four new multi-year
contracts to manage acute care hospital Wound Care Center(R) programs and
had one contract terminated. Additionally, the Company has signed one
multi-year contract thus far in the third quarter.
Third Quarter, Fiscal 2003 and Fiscal 2004 Guidance
For the full year 2003, the Company now expects revenues to be in the range of
$232-$241 million and GAAP net income per diluted share to be in the $1.31-$1.37
range. For the full year 2003, the Company expects adjusted net income per
diluted share to be in the $1.46-$1.52 range. This adjusted net income per
diluted share guidance excludes costs of $0.12 per diluted share the Company
recorded in the first quarter 2003 relating to the consolidation of the
Company's Specialty Pharmacy Services operations and charges associated with the
settlements, including severance agreements, with former executives terminated
in March, 2002 as well as costs of $0.04 per diluted share recorded in the
second quarter 2003 related to terminating our existing credit facility and a
proposed corporate structure reorganization. For the third quarter of 2003,
Curative anticipates revenues in the range of approximately $48-$50 million and
GAAP net income per diluted share in the range of $0.29-$0.31. For the fourth
quarter 2003, the Company expects revenues of approximately $82-$88 million and
GAAP net income of approximately $0.50-$0.54 per diluted share.
(more)
For 2004, the Company anticipates revenues of approximately $300-$320 million
and earnings per diluted share to be in the range of $1.75-$1.85. Revenues for
Specialty Pharmacy are expected to be in the $270-$290 million range and
revenues for Specialty Healthcare Services are expected to be approximately $30
million. Specialty Pharmacy Services revenue growth is expected from both
organic growth as the result of the Company's expanded sales force, as well as
having acquisitions completed during the first six months of 2003 included for a
full year in 2004.
The Company will host a conference call to discuss the Company's second quarter
2003 financial results, recent developments, business strategy and outlook on
Thursday, July 31, 2003, at 11:00 a.m. Eastern Time. To participate in the
conference call, dial 1-800-915-4836 approximately 10 minutes prior to the
scheduled start time.
If you are unable to participate, a digital replay of the call will be available
from Thursday, July 31, 2003 at 1:00 p.m. Eastern Time until 12:00 a.m. Eastern
Time on August 7, 2003 by dialing 1-800-428-6051 with passcode # 300459. The
live broadcast of Curative's quarterly conference call will be available online
by going to www.curative.com and selecting the Investor Relations link, on
www.streetevents.com, and on www.companyboardroom.com. An online replay will be
available shortly after the call at those sites.
About Curative Health Services
Curative Health Services, Inc., through its two business units, Specialty
Pharmacy Services and Specialty Healthcare Services, seeks to deliver
high-quality results and exceptional patient satisfaction for patients
experiencing serious or chronic medical conditions.
Curative's Specialty Pharmacy Services business unit provides services to help
patients manage the health care process, and offers related pharmacy products to
patients for chronic and critical disease states including Hemophilia, Immune
System Disorders, Respiratory Syncytial Virus (RSV), Multiple Sclerosis,
Rheumatoid Arthritis and Cancer.
Curative's Specialty Healthcare Services ("SHS") business unit is an industry
leader in chronic wound care management. SHS provides a broad continuum of
services to health care providers through a nationwide network. This national
network of hospital-based Wound Care Center(R) programs has offered
comprehensive treatment to over 375,000 patients.
For more information, visit www.curative.com.
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors, which may cause the actual results, performance or achievements
of the Company, or industry results, to be materially different from any future
results, performance, or achievements expressed or implied by such
forward-looking statements. Factors that might cause such differences include,
but are not limited to, the termination or non-renewal of a material number of
contracts, an inability to obtain new contracts, changes in the government
regulations relating to the Company's Specialty Healthcare Services or Specialty
Pharmacy Services business units, changes in the regulations governing third
party reimbursements for the Company's services, manufacturing shortages of
products sold by Curative's Specialty Pharmacy Services business unit, and the
other risks and uncertainties detailed in the Company's filings with the
Securities and Exchange Commission. Readers of this release are referred to the
Company's Annual Report on Form 10-K for the year ended December 31, 2002 and
Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, for further
discussion of these and other factors that could affect future results.
(Tables Follow)
CURATIVE HEALTH SERVICES, INC. AND SUBSIDIARIES
Selected Financial Information
Condensed Consolidated Statements of Operations
-----------------------------------------------
(In thousands, except for per share data)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
---------------------- ------------------------------
Revenues $ 44,689 $ 31,920 $ 102,709 $ 54,684
Costs and expenses:
Cost of product sales and services 28,550 20,444 69,415 34,701
Selling, general & administrative 8,950 6,610 17,295 11,533
Costs of credit facility termination and
corporate structure reorganization 826 - 826 -
Costs of pharmacy consolidation and executive
terminations - - 2,713 -
------ ------ ------- ------
Total costs and expenses 38,326 27,054 90,249 46,234
------ ------ ------- ------
Income from operations 6,363 4,866 12,460 8,450
Interest income 2 17 4 53
Interest expense 525 145 1,012 282
------ ------ ------- ------
Income before income taxes 5,840 4,738 11,452 8,221
Income taxes 2,307 1,907 4,524 3,340
------ ------ ------- ------
Net income $ 3,533 $ 2,831 $ 6,928 $ 4,881
====== ====== ======= ======
Net income per common share, basic $ 0.29 (1) $ 0.25 $ 0.57 (1) $ 0.46
====== ====== ======= ======
Net income per common share, diluted $ 0.26 (1) $ 0.23 $ 0.51 (1) $ 0.42
====== ====== ======= ======
Denominator for basic earnings per share,
weighted average common shares 12,378 11,536 12,299 10,582
====== ====== ======= ======
Denominator for diluted earnings per share,
weighted average common shares assuming
conversions 13,797 12,349 13,864 11,608
====== ====== ======= ======
(1) Calculated under the "as if converted" method, which requires adding
shares related to convertible notes that have no contingencies to the
denominator for diluted earnings per share and adding to net income,
the numerator, tax effected interest expense relating to those
convertible notes.
CURATIVE HEALTH SERVICES, INC. AND SUBSIDIARIES
Selected Financial Information
Reconciliation of GAAP Net income to
Adjusted net income
-------------------
(In thousands, except for per share data)
(Unaudited) (Unaudited)
Three Months Six Months
Ended Ended
June 30, 2003 June 30, 2003
------------- -------------
GAAP Net income $ 3,533 $ 6,928
Adjustments:
Costs of credit facility termination and corporate
structure reorganization 826 826
Costs of pharmacy consolidation and executive
terminations - 2,713
------ ------
Subtotal 826 3,539
Tax benefit (326) (1,398)
------ ------
Adjusted net income $ 4,033 $ 9,069
====== ======
Reconciliation of GAAP Net income per common share,
diluted to Adjusted net income per common share, diluted
--------------------------------------------------------
GAAP net income per common share, diluted $ 0.26 (1) $ 0.51 (1)
Adjustments:
Costs of credit facility termination and corporate
structure reorganization 0.06 0.06
Costs of pharmacy consolidation and executive
terminations - 0.19
------ ------
Subtotal 0.06 0.25
Tax benefit (0.02) (0.10)
------ ------
Adjusted net income per common share, diluted $ 0.30 (1) $ 0.66 (1)
====== ======
Denominator for diluted earnings per share,
weighted average common shares assuming
conversions 13,797 13,864
====== ======
(1) Calculated under the "as if converted" method, which requires adding
shares related to convertible notes that have no contingencies to the
denominator for diluted earnings per share and adding to net income,
the numerator, tax effected interest expense relating to those
convertible notes.
CURATIVE HEALTH SERVICES, INC. AND SUBSIDIARIES
Selected Financial Information
Condensed Consolidated Balance Sheets
-------------------------------------
(Dollars in thousands)
(Unaudited)
Assets June 30, 2003 December 31, 2002
------------- ------------------
Current assets:
Cash and cash equivalents $ 998 $ 2,643
Accounts receivable, net 40,640 36,438
Deferred tax assets 3,088 2,957
Inventories 10,307 12,766
Prepaids and other current assets 2,483 2,212
------- -------
Total current assets 57,516 57,016
Property and equipment, net 5,259 3,284
Goodwill and intangibles 148,456 125,165
Other long-term assets 1,732 979
------- -------
Total assets $ 212,963 $ 186,444
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 21,583 $ 21,786
Accrued expenses 10,540 11,579
Current portion long term liabilities 7,138 6,102
------- -------
Total current liabilities 39,261 39,467
Long-term liabilities 44,115 26,076
Stockholders' equity 129,587 120,901
------- -------
Total liabilities and stockholders' equity $ 212,963 $ 186,444
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Editors Note: This release is also available on the Internet over the
World Wide Web at: http://www.curative.com
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