The Center for Wound Healing, Inc. Announces Financial Results for First Quarter Fiscal Year 2009
The Center for Wound Healing, Inc. (OTCBB:CFWH) (“CFWH”), a leading manager of comprehensive wound care treatment centers that offer hyperbaric oxygen therapy (“HBOt”) as well as traditional wound care treatment modalities, today announced financial results for its first quarter fiscal 2009 ended September 30, 2008. Financial highlights for the first quarter of fiscal 2009 include the following (all comparisons are with the first quarter fiscal 2008):
— Total revenue of $7.03 million, up 18 percent
— HBOt treatments per center/per day increased 15.3 percent
— Calendar YTD, total HBOt treatments increased to 37,602, up 24% from last year
— Operating income of $361 thousand compared with $664 thousand due primarily to a $458 thousand increase in depreciation and the reversal in the prior period of a $260 thousand accrued expense
— Net loss of $1.2 million or ($0.05) flat to a net loss of $1.1 million or ($0.05)
— EBITDA increased to $2.2 million, up 10% to prior period
Other highlights include:
— Migrated from the Pink Sheets to the Bulletin Board trading under the symbol: CFWH.OB
— Construction started on three additional centers projected to be opened by February 1, 2009
— Initiated the rollout of new, proprietary web-based, HIIPA-compliant state-of-the-art electronic medical records systems which will improve patient record management and reporting and financial reporting
“We are pleased with our progress this quarter as we have improved nearly every metric important to our growing business. We have demonstrated significant growth in revenues, increased the number of HBOt treatments per center/per day across the entire portfolio, and expanded our hospital base with the opening of a center in August and the anticipated opening of three additional centers in the next 90 days. We are beginning to reap the benefits of our financial applications suite and with the rollout of the EMR application; we now have the systems platforms that will support the significant growth we expect to realize during the foreseeable future. We continue our focus on the key drivers to maximize shareholder value: expansion of our hospital partnerships; prudent investment in people, particularly those focused on revenue generation; maximizing gross margin dollars and closely managing our investment in working capital,” commented Andrew G. Barnett, The Center for Wound Healing’s Chief Executive Officer.
“In addition to the considerable operating leverage we have generated through the increase in revenue and the management of labor costs, we have a solid queue of hospitals with which we are discussing partnership opportunities. We are targeting to open a total of eight centers in 2009.”
“We remain confident in the large hospital community into which the Company expects to expand its footprint. These hospitals have medical practices that treat the growing incidence of severe grade diabetic wounds of the lower extremities and wounds that are unresponsive to general wound care treatments. Diabetics comprise 80 percent of our patient population; across the country diabetes is growing at the rate of seven percent per year. There are approximately 4,000 hospitals in the U.S. that can support HBOt with over 700 of these hospitals located in our target markets east of the Mississippi,” concluded Mr. Barnett.
First Quarter Fiscal 2009 Financial Results
Total treatment revenue for the quarter ended September 30, 2008 was $7.03 million, an 18 percent increase compared with revenue of $5.9 million for fiscal 2007. The improved revenue is the result of increased HBOt treatments at existing centers, plus the inclusion of revenue from centers not open in the prior period.
Operating income for the first quarter fiscal 2009 was $361 thousand compared with operating income of $665 thousand in the prior year’s quarter. The $304 thousand reduction is due to a $460 thousand increase in depreciation and amortization and a modest increase in payroll. In addition, the prior period included a $260 thousand credit in general and administrative expenses, the result of a reversal of a compensation expense accrual.
Reported gross margin for the quarter ending September 30, 2008 was 49.0% compared with gross margin of 51.9% for the same period a year ago. But for the reclassification of two G&A costs to Cost of Services, gross margin for the quarter would have been 51.2% compared to 51.9% in the prior period.
For the three months ended September 30, 2008, the Company had a net loss of $1.2 million or ($.05) cents per share, compared to a net loss of $1.1 million or ($0.05) cents per share for the 2007 three month period. EBITDA increased 10% to $2.2 million versus $2.0 million for the prior period.
Management will host a conference call to review the Company’s financial results, provide an update on its corporate development programs and answer questions on Thursday, November 13, 2008 at 11:00 a.m. Eastern time. To access the live call, please dial 888-563-6275 at least five minutes prior to the start of the call. The participant pass code is 72523753. For one week following the conclusion of the call, an audio replay can be accessed by dialing 800-642-1687 and using the pass code 72523753.
A live audio webcast of the call and Power Point presentation will be available on the Company’s website at www.centerwh.com. An archived audio webcast will be available on the site for 90 days.
About The Center for Wound Healing
The Center for Wound Healing, Inc. is a leading manager of comprehensive wound care treatment centers that offer hyperbaric oxygen therapy (“HBOt”) as well as traditional wound care treatment modalities. The Company manages 35 wound care centers in the eastern United States in partnership with local acute care hospitals. CFWH was founded by physicians in 1997 with a focus on establishing in-hospital centers of excellence to treat the growing incidence of severe grade diabetic wounds of the lower extremities and wounds that are unresponsive to general wound care treatments. The Company’s centers have consistently achieved high treatment success rates, resulting in a dramatic increase in patient quality of life and significant cost savings to the healthcare system.
Statements contained herein that are not historical facts may be forward-looking statements within the meaning of the Securities Act of 1933, as amended. Forward-looking statements include statements regarding the intent, belief or current expectations of the Company and its management. Such statements are estimates only, as the Company has not completed the preparation of its financial statements for those periods, nor has its auditor completed the audit of those results. Actual revenue may differ materially from those anticipated in this press release. Such statements reflect management’s current views, are based on certain assumptions and involve risks and uncertainties. Actual results, events, or performance may differ materially from the above forward-looking statements due to a number of important factors, and will be dependent upon a variety of factors. The Center for Wound Healing undertakes no obligation to publicly update these forward-looking statements to reflect events or circumstances that occur after the date hereof or to reflect any change in The Center for Wound Healing’s expectations with regard to these forward-looking statements or the occurrence of unanticipated events. Factors that may impact The Center for Wound Healing’s success are more fully disclosed in The Center for Wound Healing’s most recent public filings with the U.S. Securities and Exchange Commission.
THE CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS AT ASSETS —————————————— September 30, June 30, ————- ————- 2008 2008 ————- ————- (Unaudited) ————- CURRENT ASSETS —————————————— Cash in bank $ 293,957 $ 55,139 Accounts receivable, net of allowance for doubtful accounts of $3,061,917 and $2,941,917 respectively 15,537,997 14,563,325 Notes Receivable 476,995 460,872 Income tax refunds receivable 2,090 2,090 Prepaid expenses and other current assets 341,956 398,631 ————- ————- Total current assets 16,652,995 15,480,058 Notes Receivable 67,900 134,295 Property and equipment, net 8,653,068 8,886,005 Intangible assets 3,941,002 4,402,495 Goodwill 751,957 751,957 Other assets 2,672,563 2,822,687 ————- ————- TOTAL ASSETS $ 32,739,486 $ 32,477,495 ============= ============= LIABILITIES AND STOCKHOLDERS’ EQUITY —————————————— CURRENT LIABILITIES —————————————— Accounts payable and accrued expenses $ 3,555,694 $ 3,844,541 Current maturities of capital leases 398,730 526,107 Short-term borrowings 4,310,001 4,200,000 Notes payable 929,267 939,856 Payable to former Majority Members 568,033 618,033 Due to affiliates 405,450 261,006 ————- ————- Total current liabilities 10,167,174 10,389,542 15% senior secured note payable 16,572,438 15,291,782 Notes payable, net of current maturities 548,995 782,133 Capital lease obligations, net of current maturities 86,554 131,774 Minority interest in consolidated subsidiaries 529,867 558,205 ————- ————- TOTAL LIABILITIES 27,905,028 27,153,437 ————- ————- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY —————————————— Preferred stock, $0.001 par value; – – 10,000,000 shares authorized; none outstanding Common stock, $0.001 par value; 290,000,000 shares authorized; 23,373,281 issued and outstanding 23,373 23,373 Additional paid-in capital 26,889,558 26,220,288 Accumulated deficit (22,078,473) (20,919,603) ————- ————- TOTAL STOCKHOLDERS’ EQUITY 4,834,458 5,324,058 ————- ————- TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 32,739,486 $ 32,477,495 ============= =============
THE CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended September 30, 2008 2007 ————————- (Unaudited) REVENUES ——————————————– Treatment fees $ 7,026,147 $ 5,941,240 ———— ———— OPERATING EXPENSES ——————————————– Cost of Services 3,581,894 2,856,285 Sales and marketing 40,949 21,900 General and administration 2,689,051 2,110,994 Depreciation and amortization 232,556 84,909 Bad debt expense 120,000 202,281 ———— ———— TOTAL OPERATING EXPENSES 6,664,450 5,276,369 ———— ———— OPERATING INCOME (LOSS) 361,698 664,871 ———— ———— OTHER EXPENSE (INCOME) ——————————————– Interest expense 1,529,720 1,736,763 Interest income (7,236) – Minority interest in net loss (income) of consolidated subsidiaries (27,637) (64,085) Loss on disposal of property and equipment – 69,622 ———— ———— TOTAL OTHER EXPENSE 1,494,847 1,742,300 ———— ———— (LOSS) BEFORE INCOME TAXES (1,133,149) (1,077,429) PROVISION (BENEFIT) FOR INCOME TAXES Current taxes 25,722 16,463 Deferred taxes – – ———— ———— TOTAL PROVISION (BENEFIT) FOR INCOME TAXES 25,722 16,463 ———— ———— NET (LOSS) $(1,158,870) $(1,093,892) ============ ============ NET (LOSS) PER COMMON SHARE – BASIC AND DILUTED $ (0.05) $ (0.05) ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND DILUTED 23,373,281 22,825,346 ============ ============