- Revenue for nine-month period improved 10.7 percent year over year
- Nine-month EBITDA increased 8.4 percent year over year
- Third quarter results impacted by lower reimbursement rates
- Board declared 1 percent stock dividend payable in December
DALLAS, Nov. 10, 2016 (GLOBE NEWSWIRE) -- Ascendant Solutions, Inc. (Pink Sheets:ASDS) (“Ascendant” or the “Company”) today announced its results for the third quarter of fiscal 2016. The Company reported third quarter Consolidated Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) of $162,000 compared to consolidated EBITDA of $326,000 in 2015. For the nine months ended September 30, 2016, the Company reported Consolidated Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) of $503,000 compared to consolidated EBITDA of $464,000 in 2015.
For the third quarter ended September 30, 2016, the Company reported a consolidated net loss of $221,000, or $0.01 per share, compared to a net loss of $27,000, or less than $0.01 per share, for the same period of 2015. Consolidated net loss for the nine months ended September 30, 2016 was $760,000 compared to net loss of $306,000 for the nine months ended 2015.
“Revenues and gross margins for the third quarter have declined in 2016 due to the impact of lower reimbursements from Medicare and insurers, which is also affecting the broader pharmaceutical industry,” said Mark Heil, President and CFO. “In addition, unexpected direct and indirect remuneration fees (DIR) associated with Medicare Part D also impacted our gross margins for the quarter. We have been working diligently to address this situation and believe we will see positive impact from these initiatives and improved margins for our fourth quarter.”
Healthcare
The Company’s subsidiary, Dougherty’s Holding, Inc. (“DHI”), which owns and operates multiple Dougherty’s Pharmacies, reported EBITDA of $280,000 for the third quarter ended September 30, 2016, compared to $464,000 in 2015, a decrease of 39.7%. EBITDA for the nine months ended September 30, 2016, was $906,000 compared to $938,000 in 2015, a decrease of 3.4%.
Dougherty’s initial stores reported EBITDA of $434,000 for the third quarter ended September 30, 2016, compared to $521,000 in 2015, a decrease of 16.7%. For the nine months ended September 30, 2016, EBITDA for the initial stores was $1,545,000 compared to $1,493,000 in 2015, an increase of 3.5%.
Third quarter revenue from acquisition stores increased $36,000 year over year at 20.7 percent margins. Revenue from acquisition stores for the nine months ended September 30, 2016 increased $3,603,000 at 21.4 percent margins. Acquisition store EBITDA for the third quarter of 2016 was $94,000 and $154,000 for the nine months ended September 30, 2016.
The following chart summaries Dougherty’s Healthcare segment comparing the Company’s two initial pharmacies and the five pharmacies acquired since 2014, along with Dougherty’s corporate overhead.
| Healthcare Segment Financial Summary | ||||||||||||||||
| (000’s omitted, except script count, unaudited) | ||||||||||||||||
| Q3 2016 | Q3 2015 | YTD 2016 | YTD 2015 | |||||||||||||
| Initial Stores: | ||||||||||||||||
| Revenue | $ | 6,441 | $ | 6,769 | $ | 19,778 | $ | 20,267 | ||||||||
| Gross margin percentage | 27.3 | % | 28.9 | % | 28.7 | % | 29.1 | % | ||||||||
| SG&A | 1,323 | 1,437 | 4,122 | 4,407 | ||||||||||||
| EBITDA | 434 | 521 | 1,545 | 1,493 | ||||||||||||
| Generic dispensing rate | 80.2 | % | 77.4 | % | 78.9 | % | 76.9 | % | ||||||||
| Script count | 56,293 | 50,914 | 162,098 | 152,456 | ||||||||||||
| Acquisitions: | ||||||||||||||||
| Revenue | $ | 4,053 | $ | 4,017 | $ | 12,530 | $ | 8,927 | ||||||||
| Gross margin percentage | 20.7 | % | 25.7 | % | 21.4 | % | 24.3 | % | ||||||||
| SG&A | 743 | 844 | 2,530 | 1,941 | ||||||||||||
| EBITDA | 94 | 187 | 154 | 225 | ||||||||||||
| Generic dispensing rate | 86.2 | % | 84.1 | % | 85.9 | % | 82.0 | % | ||||||||
| Script count | 55,613 | 53,150 | 171,333 | 107,960 | ||||||||||||
| Overhead related to Healthcare: | ||||||||||||||||
| SG&A | 248 | 244 | 793 | 780 | ||||||||||||
| Total Healthcare: | ||||||||||||||||
| Revenue | $ | 10,494 | $ | 10,786 | $ | 32,308 | $ | 29,194 | ||||||||
| Gross margin percentage | 24.7 | % | 27.7 | % | 25.8 | % | 27.6 | % | ||||||||
| SG&A | 2,314 | 2,525 | 7,445 | 7,128 | ||||||||||||
| EBITDA | 280 | 464 | 906 | 938 | ||||||||||||
| Generic dispensing rate | 83.3 | % | 81.0 | % | 82.7 | % | 79.2 | % | ||||||||
| Script count | 111,906 | 104,064 | 333,431 | 260,416 | ||||||||||||
Other
The Company’s Other division includes corporate overhead expenses and dividend income from its remaining real estate investments. This division reported negative EBITDA of ($118,000) for the third quarter of 2016 compared to ($138,000) in 2015 and negative EBITDA of ($403,000) for the nine months ended September 30, 2016 compared to ($474,000) in 2015.
Management Comments
Mark Heil, President and CFO, added, “We are actively working to counter the headwinds from lower reimbursement rates and are focused on enhancing our performance for the fourth quarter and beyond. Our strategic internal directives include negotiating better rates from our vendors and pharmaceutical distributors, reducing costs to improve SG&A, and enhancing performance from our pharmacy locations. We expect these initiatives to lead to improved results going forward.”
Jim Leslie, Chairman of Ascendant, commented, “As we focus on improving our operational and financial results, the board has taken an important step to continue building additional value and trust with our shareholders. On November 9, the board of directors of Ascendant approved a 1 percent stock dividend for our shareholders. The stock dividend will be payable on December 12, 2016, to holders of record as of December 5, 2016. This represents the third consecutive annual stock dividend paid to shareholders of Ascendant.
“As stated in previous quarters, our long-term focus continues to be on growing our healthcare business through the opportunistic acquisition of well-run community pharmacies. Consequently, we expect to resume our acquisition of additional well-run independent pharmacies in 2017. We remain committed to growing our pharmacy business and producing solid shareholder returns over time.”
| Select Balance Sheet Items and Book Value per Share | ||||||||
| (000's omitted, except per share amounts, unaudited) | ||||||||
| September 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| Total Current Assets | $ | 6,128 | $ | 6,416 | ||||
| Property and Equipment, net | 1,423 | 1,406 | ||||||
| Intangible Assets, net | 3,855 | 4,377 | ||||||
| Equity Method Investments | 5,107 | 5,107 | ||||||
| Deferred Tax Asset | 3,000 | 3,000 | ||||||
| Total Assets | $ | 19,513 | $ | 20,306 | ||||
| Total Current Liabilities | $ | 3,909 | $ | 3,347 | ||||
| Notes Payable, Long-Term | 7,808 | 8,418 | ||||||
| Total Liabilities | 11,717 | 11,765 | ||||||
| Stockholders' Equity | 7,796 | 8,541 | ||||||
| Total Liabilities and Equity | $ | 19,513 | $ | 20,306 | ||||
| Common Shares Outstanding | 22,165,131 | 22,096,756 | ||||||
| Book Value per Share | $ | 0.35 | $ | 0.39 | ||||
| Select Income Statement Items | |||||||||||||||
| (000's omitted, unaudited) | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Revenue | $ | 10,494 | $ | 10,786 | $ | 32,308 | $ | 29,194 | |||||||
| Cost of Sales | 7,900 | 7,796 | 23,957 | 21,131 | |||||||||||
| Gross Profit | 2,594 | 2,990 | 8,351 | 8,063 | |||||||||||
| SG&A | 2,432 | 2,664 | 7,848 | 7,599 | |||||||||||
| EBITDA | 162 | 326 | 503 | 464 | |||||||||||
| Depr, Amort & Impairment Loss | (261 | ) | (234 | ) | (903 | ) | (506 | ) | |||||||
| Interest | (112 | ) | (104 | ) | (330 | ) | (224 | ) | |||||||
| Taxes | (10 | ) | (15 | ) | (30 | ) | (40 | ) | |||||||
| Net Income | $ | (221 | ) | $ | (27 | ) | $ | (760 | ) | $ | (306 | ) | |||
EBITDA is calculated as net income (loss) before deducting interest, taxes, depreciation and amortization. Although EBITDA is not a measure of actual cash flow because it does not consider changes in assets and liabilities that may impact cash balances, the Company’s management reviews these non-GAAP financial measures internally to evaluate the Company’s performance and manage the operations. Additionally, the Company believes it is a useful metric to evaluate operating performance and has therefore included such measures in the reporting of operating results.
About Ascendant Solutions, Inc.
Ascendant Solutions, Inc. is a value-oriented investment firm focused on successfully acquiring, managing and growing community-based pharmacies in the Southwest Region. Ascendant currently has approximately $43 million in net operating loss carryforwards which can be used to shelter future income, thus enhancing free cash flow or debt service capabilities. Interested investors can access financials and stock trading information for Ascendant at OTCMarkets.com or at www.ascendantsolutions.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's current expectations, projections, estimates and assumptions. These forward-looking statements may be identified by words such as "expects," "believes," "anticipates" and similar expressions. Forward-looking statements involve risks and uncertainties that may cause future results to differ materially from those suggested by the forward-looking statements. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.