HemaCare Reports Profitable Fourth Quarter Results From Continuing Operations
LOS ANGELES, CA -- 03/03/2008 -- HemaCare Corporation (OTCBB: HEMA)
announced today fourth quarter and year ended December 31, 2007 results.
Including discontinued operations, the Company generated a loss in the
quarter of $1,431,000, or $.16 per basic and fully diluted share, and for
the year an overall loss of $7.8 million, or $0.90 per basic and fully
diluted share. In 2006, net income for the quarter and year was $957,000
and $1.9 million, respectively.
Discussion of 2007 Continuing Operations
Fourth quarter revenues were $9.0 million, a decrease of 6% from the
prior-year period. Income was $130,000 compared to $745,000 for the same
quarter of 2006, which included an income tax benefit of $622,000 from the
recognition of a deferred tax asset. Revenue for the year was $34.2
million, a 2% decrease from 2006, with a loss of $1.8 million compared to
prior year income of $1.5 million.
The blood products segment gross profit in the quarter decreased $95,000,
or 7%, when compared to 2006, principally due to a decline in whole blood
collections at the Company's California-based mobile operations and cost
increases for product testing, facilities and fuel. The blood services
segment reported an $87,000, or 21%, improvement in gross profit for the
fourth quarter of 2007 compared to the prior year period, driven mostly by
a decrease in staff costs at the Company's Mid-Atlantic operation. For the
year, gross profit decreased $1.2 million, or 18%, when compared to 2006.
General and administrative expenses for the year increased $946,000, or
18%, to $6.3 million from $5.4 million in 2006. This increase resulted
principally from an increase in outside service costs for accounting, legal
and
Sarbanes-Oxley compliance consulting and $326,000 in non-recurring
severance expense for the Company's former Chief Executive Officer. For
all of 2007, general and administrative expenses represented 19% of
revenue, an increase from 16% reported in 2006. General and administrative
expenses in the fourth quarter increased $15,000, or 1%, compared to the
prior year period, and represented 17% of sales.
Discussion of Discontinued Operations
The Company's Florida-based research blood products subsidiary was closed
on November 5, 2007. This subsidiary generated a fourth quarter loss of
$1,561,000 compared to a $212,000 profit in the same quarter of 2006. The
loss includes operating losses for the period, severance and write-downs of
assets to expected realizable value. Total losses incurred by this
subsidiary in 2007 were $6.0 million, including a third quarter recognition
of $4.3 million for goodwill impairment. The Company believes no further
negative impact on its financial performance is likely from the closure of
this operation.
Commenting on the 2007 results, Jay Steffenhagen, the Company's Interim
Chief Executive Officer, stated, "We are pleased to report progress toward
a return to profitable operations. Renewed focus on collections and cost
containment initiatives have produced some positive results in the fourth
quarter, strengthened by collections at schools, which re-opened after the
summer break. The company continues to seek better operating results, but
it is important to note that the first quarter of 2008 is expected to be
seasonally weak, with sequentially lower sales when compared to the fourth
quarter of 2007. Challenges remain, but everyone at HemaCare is striving
for sales growth and profitability. I look forward to reporting on our
progress in future quarters."
About HemaCare Corporation
Founded in 1978, HemaCare is a provider of blood products and services to
the healthcare industry. HemaCare is licensed by the FDA and accredited by
the AABB. The Company focuses on the customized delivery of human
blood-related products and services.
This press release contains "forward-looking statements" under the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995
(Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended). Statements herein that
are not historical facts are forward-looking statements pursuant to the
safe harbor provisions referenced above. You may also identify
forward-looking statements by use of the words "anticipates," "expects,"
"intends," "plans" and similar expressions. These forward-looking
statements include, but are not limited to, the ability of management to
improve the operations and profitability of the remaining business, the
success of management's initiatives to increase collection volumes and
reduce costs at the Company's California blood products operation, and the
absence of any further negative impact on the Company's financial
performance from the closure of its Florida-based research blood products
subsidiary.
Forward-looking statements are inherently subject to risks and
uncertainties some of which cannot be predicted or quantified. Such risks
and uncertainties include, without limitation, the following: the Company
has reported losses for three consecutive quarters and may not return to
profitability, the Company is in default under the Comerica credit
agreement and HemaBio notes which could result in acceleration of note
obligations which the Company has insufficient resources to satisfy; its
ability to continue to control general and administrative expenses as a
percent of sales; the need to successfully complete its operating plan to
improve profits; the potential loss of the Company's lines of credit; the
potential inability of the Company to meet future capital needs; changing
demand for blood products could affect profitability; market prices might
not rise as costs increase; competition may cause a loss of customers and
an increase in costs; operations depend on obtaining the services of
qualified medical professionals and competition for their services is
strong; declining blood donations; the Company's dependence on
reimbursement rates of third party payors; targeted partner blood drives
involve higher collection costs; reliance on relatively few vendors for
significant supplies and services could affect the Company's ability to
operate; limited access to insurance; the competitive advantage enjoyed by
not-for-profit companies; potential changes in the healthcare industry;
future technology for blood collection and blood replacement; the impact of
heavy regulation in the Company's industry; potential liability for
undetected blood pathogens and other product safety and liability concerns;
environmental risks associated with biohazardous substances; the threat of
business interruption due to terrorism and the security measures taken in
response to terrorism; the provisions of the Company's charter documents
that might delay or prevent an acquisition or sale of the Company; lack of
liquidity and market risk associated with OTC Bulletin Board stocks;
strategy to acquire companies may result in unsuitable acquisitions or
failure to successfully integrate acquired companies, which could lead to
reduced profitability; volatility in stock price; potential dilution that
could result from future sales of the Company's common stock; and the other
risks and uncertainties discussed from time to time in the documents
HemaCare files with the Securities and Exchange Commission. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations
will prove to be correct. Consequently, future events and actual results
could differ materially from those set forth in, contemplated by, or
underlined in the forward-looking statements contained herein. The Company
undertakes no obligation to update any of these forward-looking statements
to reflect actual results or events or circumstances after the date hereof.
HemaCare Corporation
Condensed Consolidated Data
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
------------ ----------- ------------ ------------
Statements of
Operations:
Revenues $ 8,961,000 $ 9,541,000 $ 34,166,000 $ 34,720,000
Gross Profit $ 1,684,000 $ 1,692,000 $ 5,158,000 $ 6,319,000
------------ ----------- ------------ ------------
General and
administrative
expenses $ 1,530,000 $ 1,515,000 $ 6,340,000 (1)$ 5,394,000
------------ ----------- ------------ ------------
Income (loss)
before income
taxes and
discontinued
operations $ 154,000 $ 177,000 $ (1,182,000) $ 925,000
Provision for
(benefit from)
income taxes $ 24,000 $ (568,000)(2)$ 646,000 (3)$ (546,000)
------------ ----------- ------------ ------------
Net income
(loss) before
discontinued
operations $ 130,000 $ 745,000 $ (1,828,000) $ 1,471,000
------------ ----------- ------------ ------------
Income (loss)
from
discontinued
operations, net
of tax impact $ (1,561,000) $ 212,000 $ (5,960,000) $ 380,000
------------ ----------- ------------ ------------
Net income
(loss) $ (1,431,000) $ 957,000 $ (7,788,000) $ 1,851,000
============ =========== ============ ============
Basic earnings
(loss) per
share $ (0.16) $ 0.11 $ (0.90) $ 0.22
============ =========== ============ ============
Diluted earnings
(loss) per
share $ (0.16) $ 0.10 $ (0.90) $ 0.20
============ =========== ============ ============
Weighted average
shares
outstanding -
basic 8,800,000 8,496,000 8,687,000 8,265,000
============ =========== ============ ============
Weighted average
shares
outstanding -
diluted 8,800,000 9,358,000 8,687,000 9,095,000
============ =========== ============ ============
(1) Includes $326,000 in non-recurring severance expenses to the Companys
former Chief Executive Officer.
(2) Includes $622,000 income tax benefit from the recognition of a deferred
tax asset.
(3) Includes $622,000 addition to provision for income taxes from the
elimination of the 2006 deferred tax asset.
December 31, December 31,
2007 2006
-------------- --------------
Balance Sheets:
Assets
Cash and cash equivalents $ 420,000 $ 623,000
Other current assets 7,135,000 13,643,000
Non-current assets 4,939,000 4,781,000
-------------- --------------
Total assets $ 12,494,000 $ 19,047,000
============== ==============
Liabilities and Shareholders' Equity
Current liabilities $ 8,790,000 $ 8,780,000
Long-term liabilities 631,000 414,000
Shareholders' equity 3,073,000 9,853,000
-------------- --------------
Total liabilities and shareholders' equity $ 12,494,000 $ 19,047,000
============== ==============