HemaCare Reports Profitable Second Quarter
Sales Growth and Income From Discontinued Operations Produce $841,000 Improvement in Net Income
LOS ANGELES, CA -- 08/13/2008 -- HemaCare Corporation (OTCBB: HEMA)
announced today a substantial improvement in the second quarter of 2008
when compared to the same period of 2007. Net income in the quarter was
$428,000, which included $263,000 from discontinued operations. In the
second quarter of 2007, the Company reported a loss of $413,000, which
included $201,000 in income from discontinued operations.
Sales from continuing operations were $9.6 million, 14% greater than the
same period of 2007. Net income from continuing operations was $165,000,
compared to a second quarter 2007 loss of $614,000. In addition, the
second quarter of 2008 included a $65,000 charge to recognize a billing
adjustment from prior years. Without this one-time charge, the Company's
continuing operations generated $230,000 in net income.
Revenue from the Company's blood products segment grew 9% in the quarter to
$7.4 million, principally from increasing sales of red blood cell products
from the Company's California and Maine operations. Sales growth, combined
with cost containment initiatives, resulted in segment gross profits of
$1,114,000, a 26% improvement from the prior year period. The gross profit
percentage for this business segment improved to 15% in the second quarter
from 13% for the prior year quarter.
Blood services revenue grew 31% to $2.2 million, primarily from a 27%
increase in the number of therapeutic apheresis procedures performed in the
quarter. Sales growth, together with improved operating efficiencies,
resulted in a $433,000, or 182%, increase in gross profit in the quarter to
$671,000. This business segment's gross profit percentage improved to 31%,
compared to only 14% for the same quarter of 2007.
General and administrative expenses declined 13%, or $221,000, in the
quarter, mostly from a decline in officer compensation as a result of the
2007 recognition of $326,000 in severance expenses for the Company's former
Chief Executive Officer which were not present in 2008. In addition,
declining utilization of outside consultants and temporary personnel in the
second quarter of 2008 resulted in a $108,000 decrease in these costs
compared to the second quarter of 2007. Increased matching expenses
related to the Company's 401(k) and increased management bonus accrual,
both outcomes from the overall improvement in profitability in 2008
compared to 2007, partially offset the decreases in officer compensation,
outside consultants and temporary personnel. For the second quarter of
2008, general and administrative expenses represented 16% of revenue, a
decrease from 21% reported from continuing operations in the same period of
2007.
For the first six months of 2008, the Company generated $18.2 million in
revenue from continuing operations, representing a $1.4 million, or 8%,
increase compared to the same period of 2007. Gross profit from continuing
operations for the first six months of 2008 increased $1.0 million, or 44%,
comprised of a 28% increase in gross profit from the Company's blood
products business segment, and an 83% increase from the Company's blood
services segment. The Company generated $515,000 in net income in the
first six months, compared to a $760,000 loss for the same period of 2007,
representing a $1,275,000 improvement year over year.
Commenting on the results, Jay Steffenhagen, the Company's Chairman and
Interim Chief Executive Officer, stated, "The HemaCare staff has done a
terrific job in returning the Company to profitability. This is the third
consecutive quarter of profits from continuing operations. In addition,
the Company continues to identify initiatives that will benefit future
results."
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, statements regarding the
progress in returning HemaCare to growth and profitability and the
management team's continued identification of initiatives that will benefit
future results.
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
reported losses for all of 2007 and may not return to profitability, the
Company is in default under the 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.
(Financial Table Follows)
HemaCare Corporation
Condensed Consolidated Data
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
---------- ---------- ----------- -----------
Statements of Income
(Operations):
Revenues $9,562,000 $8,418,000 $18,168,000 $16,772,000
Gross Profit $1,785,000 $1,122,000 $ 3,287,000 $ 2,276,000
---------- ---------- ----------- -----------
General and
administrative
expenses $1,515,000 $1,736,000(1) $ 2,925,000 $ 3,208,000(1)
Other expense $ 65,000 $ - $ 65,000 $ -
---------- ---------- ----------- -----------
Income (loss) before
income taxes and
discontinued
operations $ 205,000 $ (614,000) $ 297,000 $ (932,000)
Provision for income
taxes $ 40,000 $ - $ 45,000 $ -
---------- ---------- ----------- -----------
Net income (loss) before
discontinued
operations $ 165,000 $ (614,000) $ 252,000 $ (932,000)
---------- ---------- ----------- -----------
Income from discontinued
operations, net of tax
impact $ 263,000 $ 201,000 $ 263,000 $ 172,000
---------- ---------- ----------- -----------
Net income (loss) $ 428,000 $ (413,000) $ 515,000 $ (760,000)
========== ========== =========== ===========
Basic earnings (loss)
per share $ 0.04 $ (0.05) $ 0.06 $ (0.09)
========== ========== =========== ===========
Diluted earnings (loss)
per share $ 0.04 $ (0.05) $ 0.06 $ (0.09)
========== ========== =========== ===========
Weighted average shares
outstanding - basic 9,635,000 8,673,000 9,272,000 8,354,000
========== ========== =========== ===========
Weighted average shares
outstanding - diluted 9,654,000 8,673,000 9,283,000 8,354,000
========== ========== =========== ===========
(1) Includes $326,000 in non-recurring severance expenses to the Company's
former Chief Executive Officer.
June 30, December 31,
2008 2007
------------ ------------
Balance Sheets:
Assets
Cash and cash equivalents $ 289,000 $ 420,000
Other current assets 7,922,000 7,135,000
Non-current assets 4,636,000 4,939,000
------------ ------------
Total assets $ 12,847,000 $ 12,494,000
============ ============
Liabilities and Shareholders' Equity
Current liabilities $ 8,292,000 $ 8,791,000
Long-term liabilities 668,000 631,000
Shareholders' equity 3,887,000 3,072,000
------------ ------------
Total liabilities and shareholders' equity $ 12,847,000 $ 12,494,000
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