PHCC Priority Healthcare b (MM)

Priority Healthcare Announces Record Second Quarter Results LAKE MARY, Fla., July 22 /PRNewswire-FirstCall/ -- ? Priority Healthcare Corporation (NASDAQ:PHCC) reported results for the second quarter and six months ended July 3, 2004. For the second quarter, sales increased 25% to $438 million. Excluding a restructuring charge, operating earnings increased 17% to $21 million, net earnings grew 14% to $13 million and diluted earnings per share increased 15% to $.30. Including the restructuring charge, operating earnings increased 10% to $19.7 million, net earnings grew 7% to $12.2 million and diluted earnings per share increased 8% to $.28. The company recorded a pre-tax charge of $1.3 million or $.02 per diluted share related to facility consolidation and certain employee and lease termination costs. For the six month period, sales increased 20% to $840 million. Excluding the restructuring charge, operating earnings increased 5% to $41 million, net earnings grew 3% to $25.2 million and diluted earnings per share increased 2% to $.57. Including the restructuring charge, operating earnings increased 2% to $39 million, net earnings decreased 1% to $24.4 million and diluted earnings per share were flat at $.56. "We are pleased that we exceeded our sales forecast and our earnings guidance for the second quarter after excluding the restructuring charge. The strong sales performance was led by ophthalmology, oncology, neurology and certain components of other specialty markets. The performance in these areas more than offset the continued challenging national unit trends in infertility, idiopathic pulmonary fibrosis and hepatitis, as well as the sales compression related to the generic version of ribavirin." stated Steve Cosler, President and Chief Executive Officer. "We are looking forward to continued growth from many of our specialty markets, along with the strong pipeline of new product and payor opportunities we are pursuing. "In addition to our solid financial performance, we had a very active quarter, strategically. We expanded and enhanced our product and service offerings through the recent acquisitions of HealthBridge and Integrity Healthcare Services. HealthBridge strengthens our product reimbursement and support capabilities for manufacturers, as well as our consultative capabilities for our payor customers. Integrity Healthcare Services expands our product and service offering to our entire customer base, as well as expanding our geographic presence. "We also began the expansion of our corporate headquarters at Technology Park in Lake Mary, Florida. This expansion will be partially funded with $1.8 million in tax incentives provided by the State of Florida, Seminole County and the City of Lake Mary. In addition, we consolidated our Carpinteria, California operation into our Monrovia, California facility. This location will serve as the hub of our west coast operations as we expand our national geographic presence." In commenting on certain financial aspects of the quarter, Steve Saft, Chief Financial Officer, stated, "Our 25% sales increase for the quarter was driven by 24% organic growth. Our gross profit decreased 20 basis points to 10.5% sequentially, from the first quarter. We are pleased SG&A expense decreased 20 basis points sequentially, from the first quarter." Mr. Saft continued, "Our balance sheet remains strong with $51 million in cash and marketable securities, offset by $5 million drawn on our line of credit. Cash flow from operations was $7 million for the second quarter. Our trade DSO's were 39 days, a decrease of one day from the second quarter of 2003. Our inventory turns were 13, an increase of one turn from the second quarter of last year. Return on committed capital and invested capital for the quarter were strong at 48% and 29%, respectively, which we believe is among the highest in the industry." Mr. Cosler concluded, "The momentum continues to build in our industry. We remain focused on capitalizing on this momentum by generating solid financial results, expanding and improving our operating platform, adding new product and service offerings to better serve our customers, and adding new leadership and talent to the Priority Healthcare team to manage our growth opportunities. We will continue to take a very disciplined approach across all aspects of our business to assure we maximize our returns." As previously announced, a web cast of the company's conference call to review the financial results is available on Priority Healthcare's website, http:/// http://www.priorityhealthcare.com/, live at 9:00 AM Eastern today. A replay of this conference call will be available on the company's website approximately two hours after the event for a two week period. About Priority Healthcare Corporation Priority Healthcare Corporation is a national specialty pharmacy and distributor that provides biopharmaceuticals, complex therapies, and related disease treatment services. Priority Healthcare provides comprehensive programs for patients, payors, physicians, and pharmaceutical manufacturers for a growing number of disease states including cancer, hepatitis C, respiratory and pulmonary conditions, infertility, rheumatoid arthritis, hemophilia, multiple sclerosis, and macular degeneration. Certain statements included in this press release, which are not historical facts, are forward-looking statements. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our expectations or beliefs and involve certain risks and uncertainties, including those described in our public filings with the United States Securities and Exchange Commission; also including, but not limited to, changes in interest rates, competitive pressures, changes in customer mix, changes in third party reimbursement rates, financial stability of major customers, changes in government regulations or the interpretation of these regulations, changes in supplier relationships, growth opportunities, cost savings, revenue enhancements, synergies and other benefits anticipated from acquisition transactions, difficulties relative to integrating acquired businesses, the accounting and tax treatment of acquisitions, and asserted and unasserted claims, which could cause actual results to differ from those in the forward-looking statements. The forward-looking statements by their nature involve substantial risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending on a variety of important factors. You are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date herein. For further information: Stephen Saft, Chief Financial Officer (407) 804-6700 PRIORITY HEALTHCARE CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS (000's omitted, except share data) (unaudited) Six-month Six-month Three-month Three-month period period period period ended ended ended ended July 3, June 28, July 3, June 28, 2004 2003 2004 2003 Net sales $ 839,695 $ 702,036 $ 438,452 $ 350,507 Cost of products sold 750,815 623,967 392,585 312,723 Gross profit 88,880 78,069 45,867 37,784 Selling, general and administrative expense 45,572 37,525 23,414 18,800 Restructuring charge 1,317 ? 1,317 ? Depreciation and 2,799 2,010 1,430 1,083 amortization Earnings from operations 39,192 38,534 19,706 17,901 Interest income 369 812 163 351 Interest expense (196) -- (164) -- Minority interest (163) -- (85) -- Earnings before income taxes 39,202 39,346 19,620 18,252 Provision for income taxes 14,799 14,755 7,456 6,845 Net earnings $ 24,403 $ 24,591 $ 12,164 $ 11,407 Earnings per share: Basic $.56 $.56 $.28 $.26 Diluted $.56 $.56 $.28 $.26 Weighted average shares outstanding: Basic 43,305,603 43,549,394 433,288,606 43,577,129 Diluted 43,926,991 44,149,962 43,797,690 44,289,419 RECONCILIATION OF NET EARNINGS TO NET EARNINGS, EXCLUDING RESTRUCTURING CHARGE Six-month Six-month Three-month Three-month period period period period ended ended ended ended July 3, June 28, July 3, June 28, 2004 2003 2004 2003 Net earnings $ 24,403 $ 24,591 $ 12,164 $ 11,407 Restructuring charge, net of applicable income taxes 817 -- 817 -- Net earnings, excluding restructuring charge $ 25,220 $ 24,591 $ 12,981 $ 11,407 Earnings per share, excluding restructuring charge: Basic $.58 $.56 $.30 $.26 Diluted $.57 $.56 $.30 $.26 PRIORITY HEALTHCARE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (000's omitted) (unaudited) July 3, January 3, 2004 2004 Cash and cash equivalents $ 43,101 $ 47,719 Marketable securities 7,721 15,317 Receivables, net 213,789 172,206 Finished goods inventory 104,759 117,218 Other current assets 35,686 20,642 Fixed assets, net 33,418 29,780 Other assets 125,146 111,127 Total assets $563,620 $514,009 Current liabilities $184,388 $164,663 Line of credit 5,006 -- Long-term debt -- -- Other liabilities 6,490 6,437 Shareholders' equity 367,736 342,909 Total liabilities and shareholders' equity $563,620 $514,009 http://www.newscom.com/cgi-bin/prnh/20030417/PHCLOGO http://photoarchive.ap.org/ http://www.priorityhealthcare.com/DATASOURCE: Priority Healthcare Corporation CONTACT: Stephen Saft, Chief Financial Officer, Priority Healthcare Corporation, +1-407-804-6700 Web site: http://www.priorityhealthcare.com/

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