Fourth Q numbers.....
Friday March 6, 8:28 am Eastern Time
Company Press Release
SOURCE: Integrated Medical Resources, Inc.
Integrated Medical Resources Announces Fourth Quarter
1997, Year-End Results
Net loss includes fourth quarter restructuring charge related to previously
announced administrative cost reductions and closing of five Centers in
underperforming markets
LENEXA, Kansas, March 6 /PRNewswire/ -- Integrated Medical Resources, Inc. (Nasdaq: IMRI
- news) today announced revenues increased 91% to $21.0 million for the year ended December
31, 1997, compared to $11.0 million in 1996. Revenues for the fourth quarter of 1997 were $5.6
million, a 91% increase over the fourth quarter of 1996.
On December 11, 1997, the Company announced the implementation of administrative staff and
executive salary reductions and other general and administrative cost reductions designed to reduce
monthly G&A expenses by approximately 20%. In addition, five Diagnostic Centers for Men were
closed in selected markets, after which the Company had under management 26 Diagnostic Centers
for Men operating in 16 states. The non-recurring charges associated with these administrative cost
reductions and Center closings totaled $920,000 and were accounted for as a restructuring charge
in the fourth quarter.
For the full year 1997, the Company's net loss was $8.4 million or ($1.26 per share), versus a net
loss of $6.5 million or ($1.35 per share) in 1996. Had the restructuring charge noted above not
been incurred, the net loss for the full year would have been $7.5 million or ($1.12 per share). The
narrowed net loss per share reflects the increase in the number of basic and diluted weighted
average common shares outstanding, which rose to 6,719,706 from 3,573,910, following the
Company's initial public offering in November, 1996.
For the fourth quarter of 1997, the net loss was $4.4 million or ($0.65 per share) compared to a net
loss of $3.6 million or ($0.69 per share) for the fourth quarter of 1996. Had the restructuring charge
not been incurred in the fourth quarter, the net loss would have been $3.4 million. In addition, the
Company recorded an increase in its allowance for doubtful accounts of $1.2 million, bringing the
allowance to $2.1 million. Had the restructuring charge and the increase in the allowance not been
incurred in the fourth quarter, the net loss would have been $2.3 million.
Dr. Troy Burns, Chairman and Chief Executive Officer, commented: ''The corrective actions taken
by the Company during the fourth quarter resulted in a restructuring charge. Management believes
the actions taken, along with continued operational process improvements, will propel the Company
to positive cash flow and profitability during 1998. Aside from these non-recurring costs, it is
notable that Center and Operating expenses, particularly cost of services, physician salaries, and
advertising, improved significantly as a percentage of revenue. We believe this reflects the
effectiveness of our ongoing efforts to better leverage our infrastructure as we continue to ramp up
revenues at our newer Centers, build new patient volumes at our mature Centers and generate
additional revenue streams across the entire network of managed clinics by providing new or
enhanced services related to the treatment of impotence.''
Scott Jenkins, President and Chief Operating Officer, observed: ''With regard to the closed
Centers, we maintain a high market performance threshold for all our Centers and monitor their
financial progress very closely. The Centers located in each of the five markets which were closed
demonstrated an unsatisfactory response to marketing efforts, resulting in disappointing new patient
volumes and associated revenues. All 26 of our remaining Centers continue to generate a
satisfactory level of revenue and have a positive contribution margin. The Company is committed to
investment of its capital resources in markets which are efficient and produce optimal return on
marketing expenditures. We believe these remaining markets meet this criteria.''
Burns added: ''At this point, the Company is tracking for positive earnings before interest, taxes,
depreciation and amortization (EBITDA) in the first quarter of 1998 based on preliminary internal
reporting. We believe we will also meet analysts' earnings estimates.''
On a same-clinic basis in the mature Centers which have been open at least 15 months, the
Company experienced a decline of 6% in fourth quarter revenue over the third quarter of 1997 and
revenue growth of 69% over the same quarter in 1996. As of December 31, 1997, the Company
managed 26 Centers operating in 16 states, compared to 30 Centers operating at the end of the
fourth quarter of last year. Since year-end, two more Centers have opened.
Fourth quarter revenues were affected by an 8% decrease in new patient volume over the third
quarter of 1997 on a smaller number of business days. Revenues from established patients were
11% of total patient charges during the fourth quarter.
Despite better conversion of callers from 9.4% in the third quarter to 10.1%, the number of new
patients seen decreased 8%, totaling 5,548 during the fourth quarter compared with 6,037 in the
third quarter. This decrease was partially due to the closing of the five Centers in four separate
regional markets. The Company's patient base (patients treated on an ongoing basis) expanded
11% to 52,802 at the end of the fourth quarter compared to 47,254 at the end of the third quarter.
Jenkins added: ''We are pleased with the continued growth in new patient volume and related
impotence treatment revenues. In the last four quarters alone we have grown our new patient
volume by over 8,300, or about 64%. We anticipate a lessening of some of the cash flow pressures
we have experienced due, in part, to delayed Medicare reimbursements to several of our managed
clinics. Our recently announced financing agreement, together with the cost reduction measures and
internally generated cash flows, should allow us to meet our working capital needs while we
implement practices to further improve our receivables collections.'' Nevertheless, while the 1997
audit is not fully complete, the Company has been advised that due to losses incurred, its auditors
intend to include a going concern paragraph in their accountant's report.
On March 5, 1998, the Company announced it had entered into a financing arrangement and
management consulting agreement with Kardatzke Management, Inc. (KMI). In addition to KMI
loaning the Company an initial sum of $1.6 million, founder and principal of KMI, Dr. E. Stanley
Kardatzke, has the option to become Chairman of the Board of Directors and Chief Executive
Officer upon providing additional equity financing to the Company and meeting certain other terms
under the agreement. KMI will also provide management consulting services to assist the Company
in the areas of receivables collection, third party reimbursement relationships and strategic planning.
Burns concluded: ''We are excited about Dr. Kardatzke's involvement with IMR and look forward
to him assuming a leadership role, based on his outstanding track record as chairman and CEO of a
large public company and his many years of experience in running physician-related businesses. In
the event that KMI chooses to provide an additional $1 million in capital to IMR and Dr. Kardatzke
assumes the roles of Chairman and Chief Executive Officer, I intend to remain as a senior officer of
the Company and focus more attention on my role as Medical Director. This will allow me to
actively communicate with other members of senior management while helping enhance IMR's
strong market position as the leading national provider of treatment for impotence.''
About the Company
Integrated Medical Resources, Inc. provides complete management services to physicians who
offer comprehensive diagnostic, educational and treatment services designed to address the medical
and emotional needs of its patients and their partners through the largest network of medical clinics
in the U.S. dedicated to the diagnosis and treatment of impotence. The Company believes that this
market is largely underserved due to misconceptions about the causes of impotence, a general lack
of specialized knowledge by primary care physicians regarding treatment alternatives, and the
limited focus on impotence by medical specialists.
The number of impotent men in the U.S. is estimated to exceed 24 million, and this total is projected
to increase by approximately 400,000 new cases each year as the baby boomer generation ages.
Although patients suffering from impotence can range in age from 18 to over 90, the Company's
target marketing focus is the estimated 14 million men ages 40 to 70 who suffer from moderate to
complete impotence.
Cautionary Statement
This press release contains forward-looking statements of management expectations and initiatives
(within the meaning of the Private Securities Litigation Reform Act of 1995) which should be viewed
in the context of various factors that could affect actual results. Forward-looking statements are
subject to certain risks and uncertainties which could cause actual results to differ materially from
those anticipated in the forward-looking statements. You should review the Company's prospectus
dated November 6, 1996 and its annual report on Form 10-KSB filed with the Securities and
Exchange Commission for the year ended December 31, 1996 for important factors that might
cause such a difference.
Visit the IMRI web site: www.for-men.com
INTEGRATED MEDICAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
For the three months ended For the year ended
December 31, December 31,
1997 1996 1997 1996
Unaudited Unaudited Audited
Net Center revenues: 5,632 2,944 21,004 11,007
Center expenses:
Physician salaries 947 946 3,647 2,394
Cost of services 2,671 1,318 6,332 3,132
3,618 2,264 9,979 5,526
Net management revenue 2,014 680 11,025 5,481
Operating expenses:
Center staff salaries 619 282 2,311 1,582
Center facilities rent 353 272 1,368 797
Advertising 1,528 1,652 5,655 4,309
Selling, general and
administrative 2,062 1,347 6,499 3,714
Restructuring charge 919 -- 919 --
5,481 3,553 16,752 10,402
Earnings before interest, taxes,
depreciation and amortization (3,467) (2,873) (5,727) (4,921)
Depreciation and amortization 711 626 2,328 1,322
Operating loss (4,178) (3,499) (8,055) (6,243)
Other income (expense):
Interest income 3 56 119 81
Interest expense (171) (147) (456) (357)
Other (18) -- (55) --
(186) (91) (392) (276)
Loss before income taxes (4,364) (3,590) (8,447) (6,519)
Income tax provision -- -- -- --
Net loss (4,364) (3,590) (8,447) (6,519)
Basic and diluted weighted
average common shares
outstanding 6,726,201 5,229,029 6,719,706 3,573,910
Net loss per common share -
basic and diluted $(0.65) $(0.69) $(1.26) $(1.82)
Pro forma:
Net loss per common and
common equivalent share
assuming conversion of
outstanding preferred
stock into common stock
at the beginning of the
period -- $(0.62) -- $(1.35)
Weighted average common
and common equivalent
shares -- 5,753,183 -- 4,814,129
INTEGRATED MEDICAL RESOURCES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
1997 1996
(Unaudited) Audited
Assets
Current assets:
Cash 765 6,740
Accounts receivable 8,411 2,367
Supplies 407 313
Prepaid expenses 102 268
Total current assets 9,685 9,688
Property and equipment:
Office equipment and software 1,879 1,624
Furniture, fixtures and equipment 7,398 4,296
Leasehold improvements 159 126
9,436 6,046
Accumulated depreciation 3,734 1,356
5,702 4,690
Intangible assets 133 551
Other assets 274 336
Total assets 15,794 14,512
Liabilities and stockholders' equity
Current liabilities:
Working capital line of credit 3,086 0
Accounts payable 3,294 929
Accrued expenses 3,163 857
Current portion of long-term debt 2,580 624
Current portion of capital lease obligations 287 321
Total current liabilities 12,410 2,731
Long-term debt, less current portion 1,185 1,008
Capital lease obligations, less current portion 99 473
Stockholders' equity:
Preferred stock 0 0
Common stock 7 7
Additional paid-in capital 18,219 17,960
Accumulated deficit (16,115) (7,667)
Treasury stock (11) 0
Total stockholders' equity 2,100 10,300
Total liabilities and stockholders' equity 15,794 14,512
SOURCE: Integrated Medical Resources, Inc. |
