ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2018 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . |
Delaware | 74-2657168 |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) |
incorporation or organization) |
9220 Kirby Drive, Suite 500, Houston, Texas | 77054 |
(Address of principal executive offices) | (Zip Code) |
Large Accelerated Filer o | Accelerated Filer o | Non-accelerated Filer o (Do not check if a smaller reporting company) | Emerging growth company o | Smaller reporting company ý |
SHARPS COMPLIANCE CORP. AND SUBSIDIARIES | ||
PAGE | ||
December 31, | June 30, | |||||||
2018 | 2018 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 6,414 | $ | 5,155 | ||||
Accounts receivable, net of allowance for doubtful accounts of $117 and $102, respectively | 7,294 | 6,370 | ||||||
Inventory | 4,421 | 3,986 | ||||||
Contract asset | 250 | — | ||||||
Prepaid and other current assets | 717 | 739 | ||||||
TOTAL CURRENT ASSETS | 19,096 | 16,250 | ||||||
PROPERTY, PLANT AND EQUIPMENT, net | 6,185 | 6,572 | ||||||
CONTRACT ASSET, net of current portion | 37 | — | ||||||
OTHER ASSETS | 144 | 149 | ||||||
GOODWILL | 6,735 | 6,735 | ||||||
INTANGIBLE ASSETS, net | 3,423 | 3,525 | ||||||
TOTAL ASSETS | $ | 35,620 | $ | 33,231 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 2,554 | $ | 1,500 | ||||
Accrued liabilities | 2,052 | 2,061 | ||||||
Current maturities of long-term debt | 517 | 537 | ||||||
Contract liability | 2,132 | 1,894 | ||||||
TOTAL CURRENT LIABILITIES | 7,255 | 5,992 | ||||||
CONTRACT LIABILITY, net of current portion | 337 | 470 | ||||||
OTHER LIABILITIES | 98 | 130 | ||||||
DEFERRED TAX LIABILITY | 171 | — | ||||||
LONG-TERM DEBT, net of current portion | 1,207 | 1,465 | ||||||
TOTAL LIABILITIES | 9,068 | 8,057 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock, $0.01 par value per share; 40,000,000 and 20,000,000 shares authorized, respectively; 16,430,628 and 16,377,636 shares issued, respectively and 16,135,013 and 16,082,021 shares outstanding, respectively | 165 | 164 | ||||||
Treasury stock, at cost, 295,615 shares repurchased | (1,554 | ) | (1,554 | ) | ||||
Additional paid-in capital | 28,811 | 28,621 | ||||||
Accumulated deficit | (870 | ) | (2,057 | ) | ||||
TOTAL STOCKHOLDERS' EQUITY | 26,552 | 25,174 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 35,620 | $ | 33,231 |
Three-Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
REVENUES | $ | 12,394 | $ | 11,119 | ||||
Cost of revenues | 8,403 | 7,988 | ||||||
GROSS PROFIT | 3,991 | 3,131 | ||||||
Selling, general and administrative | 2,959 | 2,821 | ||||||
Depreciation and amortization | 205 | 203 | ||||||
OPERATING INCOME | 827 | 107 | ||||||
OTHER INCOME (EXPENSE) | ||||||||
Interest income | 8 | 5 | ||||||
Interest expense | (23 | ) | (23 | ) | ||||
TOTAL OTHER EXPENSE | (15 | ) | (18 | ) | ||||
INCOME BEFORE INCOME TAXES | 812 | 89 | ||||||
INCOME TAX EXPENSE (BENEFIT) | ||||||||
Current | (113 | ) | 7 | |||||
Deferred | 146 | (74 | ) | |||||
TOTAL INCOME TAX EXPENSE (BENEFIT) | 33 | (67 | ) | |||||
NET INCOME | $ | 779 | $ | 156 | ||||
NET INCOME PER COMMON SHARE - Basic and Diluted | $ | 0.05 | $ | 0.01 | ||||
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE: | ||||||||
Basic | 16,100 | 16,047 | ||||||
Diluted | 16,106 | 16,068 |
Six-Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
REVENUES | $ | 22,687 | $ | 20,802 | ||||
Cost of revenues | 15,344 | 14,643 | ||||||
GROSS PROFIT | 7,343 | 6,159 | ||||||
Selling, general and administrative | 5,985 | 5,546 | ||||||
Depreciation and amortization | 406 | 405 | ||||||
OPERATING INCOME | 952 | 208 | ||||||
OTHER INCOME (EXPENSE) | ||||||||
Interest income | 13 | 10 | ||||||
Interest expense | (46 | ) | (47 | ) | ||||
TOTAL OTHER EXPENSE | (33 | ) | (37 | ) | ||||
INCOME BEFORE INCOME TAXES | 919 | 171 | ||||||
INCOME TAX EXPENSE (BENEFIT) | ||||||||
Current | (109 | ) | 14 | |||||
Deferred | 179 | (74 | ) | |||||
TOTAL INCOME TAX EXPENSE (BENEFIT) | 70 | (60 | ) | |||||
NET INCOME | $ | 849 | $ | 231 | ||||
NET INCOME PER COMMON SHARE - Basic and Diluted | $ | 0.05 | $ | 0.01 | ||||
WEIGHTED AVERAGE SHARES USED IN COMPUTING LOSS PER COMMON SHARE: | ||||||||
Basic | 16,091 | 16,028 | ||||||
Diluted | 16,098 | 16,081 |
Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' Equity | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Balances, June 30, 2017 | 16,304,027 | $ | 163 | (295,615 | ) | $ | (1,554 | ) | $ | 28,063 | $ | (1,385 | ) | $ | 25,287 | |||||||||||
Stock-based compensation | — | — | — | — | 476 | — | 476 | |||||||||||||||||||
Issuance of common shares for lease | 20,617 | — | — | — | 83 | — | 83 | |||||||||||||||||||
Issuance of restricted stock | 52,992 | 1 | — | — | (1 | ) | — | — | ||||||||||||||||||
Net loss | — | — | — | — | — | (672 | ) | (672 | ) | |||||||||||||||||
Balances, June 30, 2018 | 16,377,636 | 164 | (295,615 | ) | (1,554 | ) | 28,621 | (2,057 | ) | 25,174 | ||||||||||||||||
Stock-based compensation | — | — | — | — | 191 | — | 191 | |||||||||||||||||||
Issuance of restricted stock | 52,992 | 1 | — | — | (1 | ) | — | — | ||||||||||||||||||
Cumulative effect of new accounting standard (Note 3) | — | — | — | — | — | 338 | 338 | |||||||||||||||||||
Net income | — | — | — | — | — | 849 | 849 | |||||||||||||||||||
Balances, December 31, 2018 | 16,430,628 | $ | 165 | (295,615 | ) | $ | (1,554 | ) | $ | 28,811 | $ | (870 | ) | $ | 26,552 |
Six-Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income | $ | 849 | $ | 231 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 807 | 784 | ||||||
Bad debt expense | 36 | 12 | ||||||
Non-cash lease expense | 24 | — | ||||||
Loss (gain) on disposal of property, plant and equipment | 18 | (2 | ) | |||||
Stock-based compensation expense | 191 | 261 | ||||||
Deferred tax expense | 179 | (74 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (960 | ) | 23 | |||||
Inventory | (230 | ) | (156 | ) | ||||
Prepaid and other assets | (5 | ) | 45 | |||||
Accounts payable and accrued liabilities | 956 | 934 | ||||||
Contract asset and contract liability | 156 | 11 | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 2,021 | 2,069 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of property, plant and equipment | (281 | ) | (643 | ) | ||||
Cash proceeds from sale of property, plant and equipment | — | 10 | ||||||
Additions to intangible assets | (203 | ) | (48 | ) | ||||
NET CASH USED IN INVESTING ACTIVITIES | (484 | ) | (681 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Repayments of long-term debt | (278 | ) | (300 | ) | ||||
NET CASH USED IN FINANCING ACTIVITIES | (278 | ) | (300 | ) | ||||
NET INCREASE IN CASH | 1,259 | 1,088 | ||||||
CASH, beginning of period | 5,155 | 4,675 | ||||||
CASH, end of period | $ | 6,414 | $ | 5,763 | ||||
SUPPLEMENTAL CASH FLOW DISCLOSURES: | ||||||||
Income taxes paid | $ | 14 | $ | 3 | ||||
Interest paid on long-term debt | $ | 46 | $ | 39 | ||||
NON-CASH INVESTING ACTIVITIES: | ||||||||
Issuance of common stock for lease | $ | — | $ | 83 | ||||
Transfer of equipment to inventory | $ | 205 | $ | 105 | ||||
Property, plant and equipment financed through accounts payable | $ | 57 | $ | 87 |
• | The transportation and treatment performance obligations related to the mail back and unused medication solutions, which were historically accounted for as separate performance obligations, will be accounted for as a single performance obligation under the new revenue recognition guidance. The impact of this was not material. |
• | Certain costs associated with obtaining long-term contracts with customers will be capitalized and amortized over the expected economic life of the contract in future periods. The impact of this was not material. |
• | The new guidance changed the timing of revenue recognition on certain of the Company’s vendor managed inventory contracts. This constituted a material portion of the cumulative effect noted above as under the new guidance, revenue recognition is no longer limited to the amounts that may be billed to the customer at the point in time in which performance obligations are satisfied. |
• | The Company made a number of practical expedient elections related to the new accounting guidance, including: (i) right to invoice practical expedient that allows revenue for route-based pickup services to be recognized in the |
Three-Months Ended December 31, | ||||||||||||||
2018 | % Total | 2017(2) | % Total | |||||||||||
REVENUES BY SOLUTION: | ||||||||||||||
Mailbacks | $ | 8,039 | 64.8 | % | $ | 6,796 | 61.2 | % | ||||||
Route-based pickup services | 2,078 | 16.8 | % | 1,830 | 16.5 | % | ||||||||
Unused medications | 1,350 | 10.9 | % | 1,317 | 11.8 | % | ||||||||
Third party treatment services | 78 | 0.6 | % | 337 | 3.0 | % | ||||||||
Other (1) | 849 | 6.9 | % | 839 | 7.5 | % | ||||||||
Total revenues | $ | 12,394 | 100.0 | % | $ | 11,119 | 100.0 | % | ||||||
Six-Months Ended December 31, | ||||||||||||||
2018 | % Total | 2017(2) | % Total | |||||||||||
REVENUES BY SOLUTION: | ||||||||||||||
Mailbacks | $ | 13,646 | 60.2 | % | $ | 12,261 | 58.9 | % | ||||||
Route-based pickup services | 4,206 | 18.5 | % | 3,591 | 17.3 | % | ||||||||
Unused medications | 2,989 | 13.2 | % | 2,489 | 12.0 | % | ||||||||
Third party treatment services | 180 | 0.8 | % | 771 | 3.7 | % | ||||||||
Other (1) | 1,666 | 7.3 | % | 1,690 | 8.1 | % | ||||||||
Total revenues | $ | 22,687 | 100.0 | % | $ | 20,802 | 100.0 | % |
(1) | The Company’s other products include IV poles, accessories, containers, asset return boxes and other miscellaneous items with single performance obligations. |
(2) | Certain prior year amounts have been reclassified to conform to current year presentation. |
December 31, 2018 | |||||||||
As Reported | Adjustments | Balance Without Adoption | |||||||
Current contract asset | $ | 250 | $ | (250 | ) | $ | — | ||
Prepaid and other current assets | 717 | (22 | ) | 695 | |||||
Total current assets | 19,096 | (272 | ) | 18,824 | |||||
Contract asset, net of current portion | 37 | (37 | ) | — | |||||
Total assets | 35,620 | (309 | ) | 35,311 | |||||
Current contract liability(1) | 2,132 | 11 | 2,143 | ||||||
Total current liabilities | 7,255 | 11 | 7,266 | ||||||
Contract liability, net of current portion(1) | 337 | — | 337 | ||||||
Total liabilities | 9,068 | 11 | 9,079 | ||||||
Accumulated deficit | (870 | ) | (320 | ) | (1,190 | ) | |||
Total stockholders' equity | 26,552 | (320 | ) | 26,232 | |||||
Total liabilities and stockholders' equity | $ | 35,620 | $ | (309 | ) | $ | 35,311 |
Three Months Ended December 31, 2018 | Six-Months Ended December 31, 2018 | ||||||||||||||||||
As Reported | Adjustments | Balance Without Adoption | As Reported | Adjustments | Balance Without Adoption | ||||||||||||||
Revenues | $ | 12,394 | $ | 69 | $ | 12,463 | $ | 22,687 | $ | 104 | $ | 22,791 | |||||||
Cost of revenues | 8,403 | 27 | 8,430 | 15,344 | 64 | 15,408 | |||||||||||||
Gross profits | 3,991 | 42 | 4,033 | 7,343 | 40 | 7,383 | |||||||||||||
Selling, general and administrative | 2,959 | 9 | 2,968 | 5,985 | 22 | 6,007 | |||||||||||||
Operating income | 827 | 33 | 860 | 952 | 18 | 970 | |||||||||||||
Net income | $ | 779 | $ | 33 | $ | 812 | $ | 849 | $ | 18 | $ | 867 |
Term loan, bearing interest at 5.00%, monthly payments of $43; maturing March 2022. | $ | 1,724 | |
Less: current portion | 517 | ||
Long-term debt, net of current portion | $ | 1,207 |
Twelve Months Ending December 31, | |||
2019 | $ | 517 | |
2020 | 517 | ||
2021 | 517 | ||
2022 | 173 | ||
$ | 1,724 |
Three-Months Ended December 31, | Six-Months Ended December 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Stock-based compensation expense included in: | ||||||||||||||||
Cost of revenues | $ | 3 | $ | 13 | $ | 2 | $ | 27 | ||||||||
Selling, general and administrative | 87 | 127 | 189 | 234 | ||||||||||||
Total | $ | 90 | $ | 140 | $ | 191 | $ | 261 |
Three-Months Ended December 31, | Six-Months Ended December 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income, as reported | $ | 779 | $ | 156 | $ | 849 | $ | 231 | ||||||||
Weighted average common shares outstanding | 16,100 | 16,047 | 16,091 | 16,028 | ||||||||||||
Effect of dilutive stock options | 6 | 21 | 7 | 53 | ||||||||||||
Weighted average diluted common shares outstanding | 16,106 | 16,068 | 16,098 | 16,081 | ||||||||||||
Net income per common share | ||||||||||||||||
Basic and diluted | $ | 0.05 | $ | 0.01 | $ | 0.05 | $ | 0.01 | ||||||||
Employee stock options excluded from computation of dilutive income per share amounts because their effect would be anti-dilutive | 684 | 778 | 684 | 401 |
December 31, 2018 | June 30, 2018 | |||||||||||||||||||||||||
Estimated Useful Lives | Original Amount | Accumulated Amortization | Net Amount | Original Amount | Accumulated Amortization | Net Amount | ||||||||||||||||||||
Customer relationships | 7 years | $ | 3,007 | $ | (1,135 | ) | $ | 1,872 | $ | 3,007 | $ | (919 | ) | $ | 2,088 | |||||||||||
Permits | 6 - 15 years | 1,650 | (438 | ) | 1,212 | 1,459 | (390 | ) | 1,069 | |||||||||||||||||
Patents | 5 - 17 years | 395 | (288 | ) | 107 | 383 | (278 | ) | 105 | |||||||||||||||||
Trade name | 7 years | 270 | (96 | ) | 174 | 270 | (77 | ) | 193 | |||||||||||||||||
Non-compete | 5 years | 117 | (59 | ) | 58 | 117 | (47 | ) | 70 | |||||||||||||||||
Total intangible assets, net | $ | 5,439 | $ | (2,016 | ) | $ | 3,423 | $ | 5,236 | $ | (1,711 | ) | $ | 3,525 |
Twelve Months Ending December 31, | |||
2019 | $ | 610 | |
2020 | 610 | ||
2021 | 597 | ||
2022 | 565 | ||
2023 | 308 | ||
Thereafter | 733 | ||
$ | 3,423 |
December 31, 2018 | June 30, 2018 | |||||||
Raw materials | $ | 1,481 | $ | 1,323 | ||||
Finished goods | 2,940 | 2,663 | ||||||
Total | $ | 4,421 | $ | 3,986 |
Three-Months Ended December 31, | Six-Months Ended December 31, | |||||||||||||||||||||||||||
2018 | % | 2017 | % | 2018 | % | 2017 | % | |||||||||||||||||||||
Revenues | $ | 12,394 | 100.0 | % | $ | 11,119 | 100.0 | % | $ | 22,687 | 100.0 | % | $ | 20,802 | 100.0 | % | ||||||||||||
Cost of revenues | 8,403 | 67.8 | % | 7,988 | 71.8 | % | 15,344 | 67.6 | % | 14,643 | 70.4 | % | ||||||||||||||||
Gross profit | 3,991 | 32.2 | % | 3,131 | 28.2 | % | 7,343 | 32.4 | % | 6,159 | 29.6 | % | ||||||||||||||||
SG&A expense | 2,959 | 23.9 | % | 2,821 | 25.4 | % | 5,985 | 26.4 | % | 5,546 | 26.7 | % | ||||||||||||||||
Depreciation and amortization | 205 | 1.7 | % | 203 | 1.8 | % | 406 | 1.8 | % | 405 | 1.9 | % | ||||||||||||||||
Operating income | 827 | 6.7 | % | 107 | 1.0 | % | 952 | 4.2 | % | 208 | 1.0 | % | ||||||||||||||||
Total other expense | (15 | ) | (0.1 | )% | (18 | ) | (0.2 | )% | (33 | ) | (0.1 | )% | (37 | ) | (0.2 | )% | ||||||||||||
Income before income taxes | 812 | 6.6 | % | 89 | 0.8 | % | 919 | 4.1 | % | 171 | 0.8 | % | ||||||||||||||||
Income tax expense (benefit) | 33 | 0.3 | % | (67 | ) | (0.6 | )% | 70 | 0.3 | % | (60 | ) | (0.3 | )% | ||||||||||||||
Net Income | $ | 779 | 6.3 | % | $ | 156 | 1.4 | % | $ | 849 | 3.7 | % | $ | 231 | 1.1 | % |
Three-Months Ended December 31, | ||||||||||||
2018 | 2017 | Variance | ||||||||||
BILLINGS BY MARKET: | ||||||||||||
Professional | $ | 3,828 | $ | 3,355 | $ | 473 | ||||||
Retail | 4,152 | 2,581 | 1,571 | |||||||||
Home Health Care | 2,161 | 2,114 | 47 | |||||||||
Pharmaceutical Manufacturer | 842 | 1,467 | (625 | ) | ||||||||
Assisted Living | 620 | 621 | (1 | ) | ||||||||
Government | 543 | 410 | 133 | |||||||||
Environmental | 78 | 337 | (259 | ) | ||||||||
Other | 249 | 186 | 63 | |||||||||
Subtotal | 12,473 | 11,071 | 1,402 | |||||||||
GAAP Adjustment * | (79 | ) | 48 | (127 | ) | |||||||
Revenue Reported | $ | 12,394 | $ | 11,119 | $ | 1,275 |
Three-Months Ended December 31, | ||||||||||||||
2018 | % Total | 2017(3) | % Total | |||||||||||
BILLINGS BY SOLUTION: | ||||||||||||||
Mailbacks | $ | 8,118 | 65.1 | % | $ | 6,748 | 61.0 | % | ||||||
Route-based pickup services | 2,078 | 16.7 | % | 1,830 | 16.5 | % | ||||||||
Unused medications | 1,350 | 10.8 | % | 1,317 | 11.9 | % | ||||||||
Third party treatment services | 78 | 0.6 | % | 337 | 3.0 | % | ||||||||
Other (1) | 849 | 6.8 | % | 839 | 7.6 | % | ||||||||
Total billings | 12,473 | 100.0 | % | 11,071 | 100.0 | % | ||||||||
GAAP adjustment (2) | (79 | ) | 48 | |||||||||||
Revenue reported | $ | 12,394 | $ | 11,119 |
(1) | The Company’s other products include IV poles, accessories, containers, asset return boxes and other miscellaneous items. |
(2) | Represents the net impact of the revenue recognition adjustment required to arrive at reported generally accepted accounting principles (“GAAP”) revenue. Customer billings include all invoiced amounts associated with products shipped or services rendered during the period reported. GAAP revenue includes customer billings as well as numerous adjustments necessary to reflect, (i) the deferral of a portion of current period sales, (ii) recognition of certain revenue associated with products returned for treatment and destruction and (iii) provisions for certain product returns and discounts to customers which are accounted for as reductions in sales in the same period to related sales are recorded. The difference between customer billings and GAAP revenue is reflected in the Company’s balance sheet as Contract Liability. |
(3) | Certain prior year amounts have been reclassified to conform to current year presentation. |
Six-Months Ended December 31, | ||||||||||||
(Unaudited) | ||||||||||||
2018 | 2017 | Variance | ||||||||||
BILLINGS BY MARKET: | ||||||||||||
Professional | $ | 7,502 | $ | 6,456 | $ | 1,046 | ||||||
Retail | 6,412 | 3,981 | 2,431 | |||||||||
Home Health Care | 4,088 | 4,115 | (27 | ) | ||||||||
Pharmaceutical Manufacturer | 1,650 | 2,999 | (1,349 | ) | ||||||||
Assisted Living | 1,265 | 1,225 | 40 | |||||||||
Government | 1,140 | 964 | 176 | |||||||||
Environmental | 181 | 771 | (590 | ) | ||||||||
Other | 539 | 404 | 135 | |||||||||
Subtotal | 22,777 | 20,915 | 1,862 | |||||||||
GAAP Adjustment * | (90 | ) | (113 | ) | 23 | |||||||
Revenue Reported | $ | 22,687 | $ | 20,802 | $ | 1,885 |
Six-Months Ended December 31, | ||||||||||||||
2018 | % Total | 2017(3) | % Total | |||||||||||
BILLINGS BY SOLUTION: | ||||||||||||||
Mailbacks | $ | 13,736 | 60.3 | % | $ | 12,374 | 59.1 | % | ||||||
Route-based pickup services | 4,206 | 18.5 | % | 3,591 | 17.2 | % | ||||||||
Unused medications | 2,989 | 13.1 | % | 2,489 | 11.9 | % | ||||||||
Third party treatment services | 180 | 0.8 | % | 771 | 3.7 | % | ||||||||
Other (1) | 1,666 | 7.3 | % | 1,690 | 8.1 | % | ||||||||
Total billings | $ | 22,777 | 100.0 | % | $ | 20,915 | 100.0 | % | ||||||
GAAP adjustment (2) | (90 | ) | (113 | ) | ||||||||||
Revenue reported | $ | 22,687 | $ | 20,802 |
(1) | The Company’s other products include IV poles, accessories, containers, asset return boxes and other miscellaneous items. |
(2) | Represents the net impact of the revenue recognition adjustment required to arrive at reported generally accepted accounting principles (“GAAP”) revenue. Customer billings include all invoiced amounts associated with products shipped or services rendered during the period reported. GAAP revenue includes customer billings as well as numerous adjustments necessary to reflect, (i) the deferral of a portion of current period sales, (ii) recognition of certain revenue associated with products returned for treatment and destruction and (iii) provisions for certain product returns and discounts to customers which are accounted for as reductions in sales in the same period to related sales are recorded. The difference between customer billings and GAAP revenue is reflected in the Company’s balance sheet as Contract Liability. |
(3) | Certain prior year amounts have been reclassified to conform to current year presentation. |
• | A large professional market that consists of dentists, veterinarians, clinics, private practice physicians, urgent care facilities, ambulatory surgical centers and other healthcare facilities. This regulated market consists of small to medium quantity generators of medical, pharmaceutical and hazardous waste where we can offer a lower cost to service with solutions to match individual facility needs. The Company addresses this market from two directions: (i) field sales which focus on larger-dollar and nationwide opportunities where we can integrate the route-based pickup service along with our mailback solutions to create a comprehensive medical waste management offering and (ii) inside and online sales which focus on the individual or small group professional offices, government agencies, smaller retail pharmacies and clinics and assisted living/long-term care facilities. The Company is able to compete more aggressively in the medium quantity generator market with the addition of route-based services where the mailback may not be as cost effective. The Company’s route-based business provides direct service to areas encompassing over 50% of the U.S. population. |
• | In July 2015 and December 2015, the Company augmented its network of medical and hazardous waste service providers with acquisitions of route-based pickup services in the Northeast serving Pennsylvania, Maryland, Ohio and other neighboring states. In July 2016, the Company acquired another route-based pickup service which expanded service to New York and New Jersey and strengthened the Company’s position in the Northeast. Through a combination of acquisition and organic growth, the Company now offers route-based pickup services in a twenty-four (24) state region of the South, Southeast and Northeast portions of the United States. The Company directly serves more than 11,700 customer locations with route-based pickup services. With the addition of these route-based pickup regions and the network of medical and hazardous waste service providers servicing the entire U.S., the Company offers customers a blended product portfolio to effectively manage multi-site and multi-sized locations, including those that generate larger quantities of waste. The network has had a significant positive impact on our pipeline of sales opportunities - over 60% of this pipeline is attributable to opportunities providing comprehensive waste management service offerings where both the mailback and pickup service are integrated into the offering. |
• | The changing demographics of the U.S. population – according to the U.S. Census Bureau, 2012 Population Estimates and National Projections, one out of five Americans will be 65 years or older by 2030, which will increase the need for cost-effective medical waste management solutions, especially in the long-term care and home healthcare markets. With multiple solutions for managing regulated healthcare-related waste, the Company delivers value as a single-source provider with blended mailback and route-based pickup services matched to the waste volumes of each facility. |
• | The shift of healthcare from traditional settings to the retail pharmacy and clinic markets, where the Company focuses on driving increased promotion of the Sharps Recovery System. According to the Centers for Disease Control ("CDC"), 38.5% of adults received a flu shot and 28.2% of flu shots for adults were administered in a retail clinic. Over the flu seasons from 2011 to 2018, the Company saw growth in five years off 10% to 36% and declines in three years of 13% to 17%. Despite the volatility, Sharps believes the Retail market should continue to contribute to long-term growth for the Company as consumers increasingly use alternative sites, such as retail pharmacies, to obtain flu and other immunizations. |
• | The passage of regulations for ultimate user medication disposal allows the Company to offer new solutions (MedSafe and TakeAway Medication Recovery System envelopes) that meet the regulations for ultimate user controlled substances disposal (Schedules II-V) to retail pharmacies. Additionally, with the new regulations, the Company is able to provide the MedSafe and TakeAway Medication Recovery Systems to assisted living and hospice to address a long standing issue within long-term care. |
• | Local, state and federal agencies have growing needs for solutions to manage medical and pharmaceutical waste — the Company's Sharps Recovery System is ideal for as-needed disposal of sharps and other small quantities of medical waste generated within government buildings, schools and communities. The Company also provides TakeAway Medication Recovery System envelopes and MedSafe solutions to government agencies in need of proper and regulatory compliant medication disposal. The federal government, state agencies and non-profits are recognizing the need to fund programs that address prevention as it pertains to the opioid crisis. MedSafe and mailback envelopes for proper medication disposal are being funded for prevention programs. |
• | With an increased number of self-injectable medication treatments and local regulations, the Company believes its flagship product, the Sharps Recovery System, continues to offer the best option for proper sharps disposal at an affordable price. The Company delivers comprehensive services to pharmaceutical manufacturers that sell high-dollar, self-injectable medications, which include data management, compliance reporting, fulfillment, proper containment with disposal, branding and conformity with applicable regulations. In addition, the Company provides self-injectors with online and retail purchase options of sharps mailback systems, such as the Sharp Recovery System and Complete Needle Collection & Disposal System, respectively. |
• | A heightened interest by many commercial companies who are looking to improve workplace safety with proper sharps disposal and unused medication disposal solutions — the Company offers a variety of services to meet these needs, including the Sharps Secure Needle Disposal System, Sharps Recovery System, Spill Kits and TakeAway Medication Recovery System envelopes. |
• | The Company continually develops new solution offerings such as ultimate user medication disposal (MedSafe and TakeAway Medication Recovery System), mailback services for DEA registrant expired inventory of controlled substances (TakeAway Medication Recovery System DEA Reverse Distribution for Registrants) and shipback services for collection and recycling of single-use medical devices from surgical centers and other healthcare facilities (TakeAway Recycle System). |
• | The Company’s strong financial position with a cash balance of $6.4 million, debt of $1.7 million and additional availability under the Credit Agreement. |
• | Cash Flows from Operating Activities - Working capital increased by $1.5 million to $11.8 million at December 31, 2018 from $10.3 million at June 30, 2018. The increase in working capital is attributed primarily to the increase in cash, and also impacted by: |
• | an increase in accounts receivable of $1.0 million to $7.3 million at December 31, 2018 from $6.4 million at June 30, 2018 due to timing of billings and collections. |
• | an increase in accounts payable and accrued liabilities of $1.0 million due to the timing of purchases and payments to vendors. |
• | Cash Flows used in Investing Activities - Investing activities include permitting and capital expenditures of $0.5 million for normal permitting, plant and equipment additions. |
• | Cash Flows used in Financing Activities - Financing activities include repayments of debt of $0.3 million. |
(a) | Exhibits: |
101.INS | XBRL Instance Document (filed herewith) |
101.SCH | XBRL Taxonomy Extension Schema Document (filed herewith) |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith) |
101.DEF | XBRL Taxonomy Extension Linkbase Document (filed herewith) |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document (filed herewith) |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith) |
REGISTRANT: | |
SHARPS COMPLIANCE CORP. | |
Dated: January 30, 2019 | By: /s/ DAVID P. TUSA |
David P. Tusa | |
Chief Executive Officer and President | |
(Principal Executive Officer) |
Dated: January 30, 2019 | By: /s/ DIANA P. DIAZ |
Diana P. Diaz | |
Vice President and Chief Financial Officer | |
(Principal Financial and Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Sharps Compliance Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
Date: January 30, 2019 | /s/David P. Tusa |
Chief Executive Officer and President | |
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Sharps Compliance Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
Date: January 30, 2019 | /s/Diana P. Diaz |
Vice President and Chief Financial Officer | |
(Principal Financial and Accounting Officer) |
(1) | The Form 10-Q report for the period ended December 31, 2018, filed with the Securities and Exchange Commission on January 30, 2019 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Form 10-Q report for the period ended December 31, 2018 fairly presents, in all material respects, the financial condition and results of operations of Sharps Compliance Corp. |
Date: January 30, 2019 | /s/David P. Tusa |
Chief Executive Officer and President | |
(1) | The Form 10-Q report for the period ended December 31, 2018, filed with the Securities and Exchange Commission on January 30, 2019 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Form 10-Q report for the period ended December 31, 2018 fairly presents, in all material respects, the financial condition and results of operations of Sharps Compliance Corp. |
Date: January 30, 2019 | /s/Diana P. Diaz |
Vice President and Chief Financial Officer | |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Jan. 28, 2019 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SHARPS COMPLIANCE CORP | |
Entity Central Index Key | 0000898770 | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 16,135,013 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2018 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Jun. 30, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 117 | $ 102 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 40,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 16,430,628 | 16,377,636 |
Common stock, shares outstanding (in shares) | 16,135,013 | 16,082,021 |
Treasury stock, shares repurchased (in shares) | 295,615 | 295,615 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Statement [Abstract] | ||||
REVENUES | $ 12,394 | $ 11,119 | $ 22,687 | $ 20,802 |
Cost of revenues | 8,403 | 7,988 | 15,344 | 14,643 |
GROSS PROFIT | 3,991 | 3,131 | 7,343 | 6,159 |
Selling, general and administrative | 2,959 | 2,821 | 5,985 | 5,546 |
Depreciation and amortization | 205 | 203 | 406 | 405 |
OPERATING INCOME | 827 | 107 | 952 | 208 |
OTHER INCOME (EXPENSE) | ||||
Interest income | 8 | 5 | 13 | 10 |
Interest expense | (23) | (23) | (46) | (47) |
TOTAL OTHER EXPENSE | (15) | (18) | (33) | (37) |
INCOME BEFORE INCOME TAXES | 812 | 89 | 919 | 171 |
INCOME TAX EXPENSE (BENEFIT) | ||||
Current | (113) | 7 | (109) | 14 |
Deferred | 146 | (74) | 179 | (74) |
TOTAL INCOME TAX EXPENSE (BENEFIT) | 33 | (67) | 70 | (60) |
NET INCOME | $ 779 | $ 156 | $ 849 | $ 231 |
NET INCOME PER COMMON SHARE - Basic and Diluted (in dollars per share) | $ 0.05 | $ 0.01 | $ 0.05 | $ 0.01 |
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE: | ||||
Basic (in shares) | 16,100 | 16,047 | 16,091 | 16,028 |
Diluted (in shares) | 16,106 | 16,068 | 16,098 | 16,081 |
ORGANIZATION AND BACKGROUND |
6 Months Ended |
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Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BACKGROUND | ORGANIZATION AND BACKGROUND Organization: The accompanying unaudited condensed consolidated financial statements include the financial transactions and accounts of Sharps Compliance Corp. and its wholly owned subsidiaries, Sharps Compliance, Inc. of Texas (dba Sharps Compliance, Inc.), Sharps e-Tools.com Inc. (“Sharps e-Tools”), Sharps Manufacturing, Inc., Sharps Environmental Services, Inc. (dba Sharps Environmental Services of Texas, Inc.), Sharps Safety, Inc., Alpha Bio/Med Services LLC, Bio-Team Mobile LLC and Citiwaste, LLC (collectively, “Sharps” or the “Company”). All significant intercompany accounts and transactions have been eliminated upon consolidation. Business: Sharps is a leading full-service national provider of comprehensive waste management services including medical, pharmaceutical and hazardous for small and medium quantity generators. The Company’s solutions include Sharps Recovery System™ (formerly Sharps Disposal by Mail System®), TakeAway Medication Recovery System™, MedSafe®, TakeAway Recycle System™, ComplianceTRACSM, SharpsTracer®, Sharps Secure® Needle Disposal System, Complete Needle™ Collection & Disposal System, TakeAway Environmental Return System™, Pitch-It IV™ Poles, Asset Return System and Spill Kit and Recovery System. The Company also offers its route-based pick-up services in a twenty-four (24) state region of the South, Southeast and Northeast portions of the United States. |
BASIS OF PRESENTATION |
6 Months Ended |
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Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information and with instructions to Form 10-Q and, accordingly, do not include all information and footnotes required under generally accepted accounting principles in the United States of America ("GAAP") for complete financial statements. Additionally, the preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts. In the opinion of management, these interim condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial position of the Company as of December 31, 2018, the results of its operations for the three and six months ended December 31, 2018 and 2017, cash flows for the six months ended December 31, 2018 and 2017 and stockholders’ equity for the six months ended December 31, 2018. The results of operations for the three and six months ended December 31, 2018 are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 2019. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2018. |
SIGNIFICANT ACCOUNTING POLICIES |
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SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition: In May 2014 and as subsequently amended, guidance for revenue recognition was issued which supersedes the revenue recognition requirements previously followed by the Company. The new guidance provides for a single five-step model to be applied in determining the amount and timing of the recognition of revenue related to contracts with customers. The new standard also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a full retrospective approach or a modified retrospective approach to implement the standard. The Company adopted the standard on July 1, 2018 using the modified retrospective approach, which involves retrospectively adopting the standard by recording a cumulative effect adjustment for all uncompleted contracts at July 1, 2018. This cumulative effect was $0.3 million which decreased accumulated deficit (and increased stockholders' equity) and increased contract assets by $0.3 million. The impact that the new accounting guidance had on its consolidated financial statements and related disclosures included the following:
The components of revenues by solution which reflect a disaggregation of revenue by contract type are as follows (in thousands):
The Company recognizes revenue, net of applicable sales tax, when performance obligations are satisfied through the transfer of control of promised goods or services to the Company’s customers. Control transfers once a customer has the ability to direct the use of, and obtain substantially all of the benefits from, the promised goods or services. Outbound shipping and handling activities to customers are considered fulfillment activities with the exception of mailbacks sold as part of the vendor managed inventory ("VMI") program. Shipping and handling are considered separate performance obligations for mailbacks sold under the VMI program. For performance obligations satisfied at a point in time, which applies to all contract categories except for route-based pickup services, revenue recognition occurs when there is a transfer of control or completion of service. For performance obligations satisfied over time, which applies to the route-based pickup services contract category, revenue is recognized in the amount to which the Company has a right to invoice pursuant to the right to invoice practical expedient. Provisions for certain rebates, product returns and discounts to customers are estimated at the inception of the contract, updated as needed throughout the contract term, and accounted for as reductions in sales in the same period the related sales are recorded. Product discounts granted are based on the terms of arrangements with direct, indirect and other market participants, as well as market conditions, including prices charged by competitors. Rebates are estimated based on contractual terms, historical experience, trend analysis and projected market conditions in the various markets served. Other than the Company’s mailbacks and unused medication contract categories, the Company’s solutions have a single performance obligation. The Company's mailbacks and unused medication solutions have revenue producing components that are recognized over multiple delivery points (Sharps Recovery System and various other solutions like the MedSafe and TakeAway Medication Recovery Systems referred to as “mailbacks” or "unused medications") and can consist of up to two performance obligations, or units of measure, as follows: (1) the sale of the compliance and container system, and (2) return transportation and treatment service. For mailbacks that are part of the VMI program, there is an additional element, or unit of measure, for outbound transportation. For contracts with multiple performance obligations, an estimated stand-alone selling price is determined for all performance obligations. The consideration is then allocated to the performance obligations based on their relative stand-alone selling price. The selling price for performance obligations for transportation and treatment utilizes third party evidence. The Company estimates the selling price of the compliance and container system based on the product and services provided, including the expected cost plus a margin. The allocated transaction price for the sale of the compliance and container system is recognized upon delivery to the customer, at which time the customer has control. The allocated transaction price for the return transportation and treatment revenue is recognized when the customer returns the compliance and container system and the container has been received at the Company’s owned or contracted facilities. The compliance and container system is mailed or delivered by an alternative logistics provider to the Company’s owned or contracted facilities at which point the destruction or conversion and proof of receipt and treatment are performed on the container. Consideration received and allocated to the transportation and treatment performance obligation is recorded as a contract liability until the services are performed. Through regression analysis of historical data, the Company has determined that a certain percentage of all compliance and container systems sold may not be returned. Accordingly, a portion of the return transportation and treatment element is recognized at the point of sale. Furthermore, the current and long-term portions of amounts historically referred to deferred revenues (shown as Contract Liability on the condensed consolidated balance sheets) are determined through regression analysis and historical trends. The VMI program includes terms that meet the “bill and hold” criteria and as such are recognized when the order is placed, title has transferred, there are no acceptance provisions and amounts are segregated in the Company’s warehouse for the customer. During the three and six months ended December 31, 2018, the Company recorded revenue from inventory builds that are held in vendor managed inventory under these service agreements of $0.6 million and $1.0 million, respectively. During the three and six months ended December 31, 2017, the Company recorded revenue from inventory builds that are held in vendor managed inventory under these service agreements of $0.9 million and $1.9 million, respectively. As of December 31, 2018 and June 30, 2018, $1.7 million and $2.1 million, respectively, of solutions sold through that date were held in vendor managed inventory pending fulfillment or shipment to patients of pharmaceutical manufacturers who offer these solutions to patients in an ongoing patient support program. The impact of adopting the new accounting guidance on the Company's condensed consolidated balance sheet as of December 31, 2018 was as follows (in thousands):
(1): Prior period contract liabilities were referred to as deferred revenue. The impact of adopting the new accounting guidance on the Company's condensed consolidated statement of operations for the three and six months ended December 31, 2018 was as follows (in thousands):
The estimated timing of recognition of amounts included at December 31, 2018 are as follows: for the twelve months ended December 31, 2019 - contract asset of $0.3 million and contract liability of $2.1 million and for the twelve months ended December 31, 2020 - contract asset of $37 thousand and contract liability of $0.3 million. The contract asset is related to VMI service agreements within the mailbacks contract type category when the revenue recognition exceeds the amount of consideration the Company was entitled to at the point in time of satisfying the performance obligation associated with the sale of the compliance and container system. The contract liability is related to the mailbacks and unused medications contract type categories in which cash consideration exceeds the transaction price allocated to completed performance obligations. Incremental costs to obtain contracts that are deemed to be recoverable under the new accounting guidance, primarily related to the payment of sales incentives for contracts in the route-based pickup service category, are capitalized as contract costs and included in prepaids and other current assets in the amount of $11 thousand and $25 thousand for the three and six months ended December 31, 2018. The amortization of capitalized sales incentives, which is included in selling, general and administrative expense, totaled $2 thousand and $3 thousand for the three and six months ended December 31, 2018. Income Taxes: Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of a valuation allowance requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. A valuation allowance has been recorded to reduce the Company’s deferred tax assets to an amount that is more likely than not to be realized and is based upon the uncertainty of the realization of certain federal and state deferred tax assets related to net operating loss carryforwards and other tax attributes. The Company's deferred tax liability of $0.2 million includes $0.3 million of the accumulated tax expense related to the effect of indefinite lived assets, such as goodwill, which cannot be used as a source of future taxable income in evaluating the need for a valuation against deferred tax assets net of $0.1 million deferred tax asset for recoverable alternative minimum tax credits pursuant to the 2017 tax reform for which no valuation allowance is required. Prepaid and other current assets include realizable income taxes receivable associated with refundable alternative minimum tax credits of $0.1 million. Accounts Receivable: Accounts receivable consist primarily of amounts due to the Company from normal business activities. Accounts receivable balances are determined to be delinquent when the amount is past due based on the contractual terms with the customer. The Company maintains an allowance for doubtful accounts to reflect the likelihood of not collecting certain accounts receivable based on past collection history and specific risks identified among uncollected accounts. Accounts receivable are charged to the allowance for doubtful accounts when the Company determines that the receivable will not be collected and/or when the account has been referred to a third party collection agency. The Company has a history of minimal uncollectible accounts. Goodwill and Other Identifiable Intangible Assets: Finite-lived intangible assets are amortized over their respective estimated useful lives and evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable. Goodwill is assessed for impairment at least annually. The Company generally performs its annual goodwill impairment analysis using a quantitative approach. The quantitative goodwill impairment test identifies the existence of potential impairment by comparing the fair value of our single reporting unit with its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, the reporting unit's goodwill is considered not to be impaired. If the carrying value of a reporting unit exceeds its fair value, an impairment charge is recognized in an amount equal to that excess. The impairment charge recognized is limited to the amount of goodwill present in our single reporting unit. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the amount of any such charge. The Company performs its annual impairment assessment of goodwill during the fourth quarter of each fiscal year. The Company determined that there was no impairment during the prior year ended June 30, 2018 and there have been no triggering events since that date that would warrant further impairment testing. Stock-Based Compensation: Stock-based compensation cost for options and restricted stock awarded to employees and directors is measured at the grant date, based on the calculated fair value of the award and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant). Fair Value of Financial Instruments: The Company considers the fair value of all financial instruments, including cash, accounts receivable and accounts payable to approximate their carrying values at December 31, 2018 and June 30, 2018 due to their short-term nature. The carrying value of the Company’s debt approximates fair value due to the market rates of interest. Reclassification of Prior Year Presentation in the Consolidated Statements of Cash Flows: Certain prior year amounts have been reclassified for consistency with the current year presentation in the Consolidated Statements of Cash Flows. The change in classification does not affect previously reported cash flows from operating activities, investing activities or financing activities in the Consolidated Statements of Cash Flows. |
RECENTLY ISSUED ACCOUNTING STANDARDS |
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Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
RECENTLY ISSUED ACCOUNTING STANDARDS | RECENTLY ISSUED ACCOUNTING STANDARDS In February 2016, guidance for leases was issued, which requires balance sheet recognition for rights and obligations of all leases with terms in excess of twelve months. The new guidance also requires additional disclosures about the amount, timing and uncertainty of cash flows arising from leases. The provisions of the new guidance are effective for annual periods beginning after December 15, 2018 (effective July 1, 2019 for the Company), including interim periods within the reporting period, and early application is permitted. The Company is in the initial stages of evaluating the impact of the new guidance on its consolidated financial statements and related disclosures as well as evaluating the available transition methods. The Company will continue to evaluate the standard as well as additional changes, modifications or interpretations which may impact the Company. |
INCOME TAXES |
6 Months Ended |
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Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s effective tax rate for the three and six months ended December 31, 2018 was 4.1% and 7.6%, respectively, reflecting primarily deferred tax expense related to the effect of indefinite lived assets, such as goodwill, which cannot be used as a source of future taxable income in evaluating the need for a valuation allowance against deferred tax assets as well as estimated state income tax. For the three and six months ended December 31, 2018, the Company recorded total income tax expense of $33 thousand and $70 thousand, respectively. Total income tax expense for the three and six months ended December 31, 2018 consisted of estimated federal income tax expense of $23 thousand and $56 thousand, respectively and estimated state income tax expense of $10 thousand and $14 thousand, respectively. For the three and six months ended December 31, 2017, the Company recorded a total income tax benefit of $67 thousand and $60 thousand, respectively, consisting of a federal tax benefit of $74 thousand for both periods offset by state income taxes of $7 thousand and $14 thousand, respectively. The Tax Cuts and Jobs Act of 2017, enacted on December 22, 2017, contains significant changes to U.S. Tax law, including lowering the U.S. corporate tax rate to 21% and repeal of the corporate alternative minimum tax for tax years beginning on or after January 1, 2018. Other provisions in the 2017 tax reform such as interest deductibility, changes to executive compensation plans, full expensing provisions for business assets, other new minimum taxes and international taxation modifications are not expected to have material implications to the Company's financial statements. |
NOTES PAYABLE AND LONG-TERM DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTES PAYABLE AND LONG-TERM DEBT | NOTES PAYABLE AND LONG-TERM DEBT On March 29, 2017, the Company entered into to a credit agreement with a commercial bank which was subsequently amended on June 29, 2018 to extend the maturity date by two years (“Credit Agreement”). The Credit Agreement, which replaced the Company’s prior credit agreement, provides for a $14.0 million credit facility, the proceeds of which may be utilized as follows: (i) $6.0 million for working capital, letters of credit (up to $2.0 million) and general corporate purposes and (ii) $8.0 million for acquisitions. Indebtedness under the Credit Agreement is secured by substantially all of the Company’s assets with advances outstanding under the working capital portion of the credit facility at any time limited to a Borrowing Base (as defined in the Credit Agreement) equal to 80% of eligible accounts receivable plus the lesser of (i) 50% of eligible inventory and (ii) $3.0 million. Advances under the acquisition portion of the credit facility are limited to 75% of the purchase price of an acquired company and convert to a five-year term note at the time of the borrowing. Borrowings bear interest at the greater of (a) zero percent or (b) the One Month ICE LIBOR plus a LIBOR Margin of 2.5%. The LIBOR Margin may increase to as high as 3.0% depending on the Company’s cash flow leverage ratio. The interest rate as of December 31, 2018 was approximately 5.00%. The Company pays a fee of 0.25% per annum on the unused amount of the credit facility. At December 31, 2018, long-term debt consisted of the following (in thousands):
The Company has availability under the Credit Agreement of $12.3 million ($6.0 million for the working capital and $6.3 million for the acquisitions) as of December 31, 2018. The Company also has $40,000 in letters of credit outstanding as of December 31, 2018. The Credit Agreement contains affirmative and negative covenants that, among other things, require the Company to maintain a maximum cash flow leverage ratio of no more than 3.0 to 1.0 and a minimum debt service coverage ratio of not less than 1.15 to 1.00. The Credit Agreement, which expires on March 29, 2021 for the working capital portion of the Credit Agreement, also contains customary events of default which, if uncured, may terminate the Credit Agreement and require immediate repayment of all indebtedness to the lenders. The leverage ratio covenant may limit the amount available under the Credit Agreement. Payments due on long-term debt subsequent to December 31, 2018 are as follows (in thousands):
The Company utilizes performance bonds to support operations based on certain state requirements. At December 31, 2018, the Company had performance bonds outstanding covering financial assurance up to $1.2 million. |
STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based compensation cost for options and restricted stock awarded to employees and directors is measured at the grant date, based on the calculated fair value of the award and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant) net of applicable unvested shares forfeited. During the three and six months ended December 31, 2018 and 2017, stock-based compensation amounts are as follows (in thousands):
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EARNINGS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares after considering the additional dilution related to common stock options and restricted stock. In computing diluted earnings per share, the outstanding common stock options are considered dilutive using the treasury stock method. The Company’s restricted stock awards are treated as outstanding for earnings per share calculations since these shares have full voting rights and are entitled to participate in dividends declared on common shares, if any, and undistributed earnings. As participating securities, the shares of restricted stock are included in the calculation of basic EPS using the two-class method. For the periods presented, the amount of earnings allocated to the participating securities was not material. The following information is necessary to calculate earnings per share for the periods presented (in thousands, except per-share data):
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EQUITY TRANSACTIONS |
6 Months Ended |
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Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
EQUITY TRANSACTIONS | EQUITY TRANSACTIONS During the three and six months ended December 31, 2018 and 2017, there were no exercises of stock options to purchase shares of the Company's common stock. As of December 31, 2018, there was $0.3 million of stock compensation expense related to non-vested awards which is expected to be recognized over a weighted average period of 2.5 years. During the twelve months ended June 30, 2018, the Company issued 20,617 shares of common stock as a portion of consideration for a third-party lease agreement. The shares were issued at $4.00 per share based on the closing price on the date of grant. This issuance was exempt from registration pursuant to Section 4(a)(2) of the Securities Act. Non-cash expense recorded during the six months ended December 31, 2018 was $24 thousand. The remaining cost will be amortized over the life of the lease and is included in Prepaid and Other Current Assets or Other Assets on the balance sheet. On November 15, 2018, the Company's stockholders approved an amendment to the Company's certificate of incorporation to increase the authorized shares of common stock from 20,000,000 to 40,000,000 shares. |
GOODWILL AND INTANGIBLE ASSETS |
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GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS At December 31, 2018 and June 30, 2018, intangible assets consisted of the following (in thousands):
During both the six months ended December 31, 2018 and 2017, amortization expense was $0.3 million. There have been no changes in the carrying amount of goodwill since June 30, 2018. As of December 31, 2018, future amortization of intangible assets is as follows (in thousands):
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INVENTORY |
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INVENTORY | INVENTORY The components of inventory are as follows (in thousands):
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SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||
Revenue Recognition | Revenue Recognition: In May 2014 and as subsequently amended, guidance for revenue recognition was issued which supersedes the revenue recognition requirements previously followed by the Company. The new guidance provides for a single five-step model to be applied in determining the amount and timing of the recognition of revenue related to contracts with customers. The new standard also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a full retrospective approach or a modified retrospective approach to implement the standard. The Company adopted the standard on July 1, 2018 using the modified retrospective approach, which involves retrospectively adopting the standard by recording a cumulative effect adjustment for all uncompleted contracts at July 1, 2018. This cumulative effect was $0.3 million which decreased accumulated deficit (and increased stockholders' equity) and increased contract assets by $0.3 million. The impact that the new accounting guidance had on its consolidated financial statements and related disclosures included the following:
The Company recognizes revenue, net of applicable sales tax, when performance obligations are satisfied through the transfer of control of promised goods or services to the Company’s customers. Control transfers once a customer has the ability to direct the use of, and obtain substantially all of the benefits from, the promised goods or services. Outbound shipping and handling activities to customers are considered fulfillment activities with the exception of mailbacks sold as part of the vendor managed inventory ("VMI") program. Shipping and handling are considered separate performance obligations for mailbacks sold under the VMI program. For performance obligations satisfied at a point in time, which applies to all contract categories except for route-based pickup services, revenue recognition occurs when there is a transfer of control or completion of service. For performance obligations satisfied over time, which applies to the route-based pickup services contract category, revenue is recognized in the amount to which the Company has a right to invoice pursuant to the right to invoice practical expedient. Provisions for certain rebates, product returns and discounts to customers are estimated at the inception of the contract, updated as needed throughout the contract term, and accounted for as reductions in sales in the same period the related sales are recorded. Product discounts granted are based on the terms of arrangements with direct, indirect and other market participants, as well as market conditions, including prices charged by competitors. Rebates are estimated based on contractual terms, historical experience, trend analysis and projected market conditions in the various markets served. Other than the Company’s mailbacks and unused medication contract categories, the Company’s solutions have a single performance obligation. The Company's mailbacks and unused medication solutions have revenue producing components that are recognized over multiple delivery points (Sharps Recovery System and various other solutions like the MedSafe and TakeAway Medication Recovery Systems referred to as “mailbacks” or "unused medications") and can consist of up to two performance obligations, or units of measure, as follows: (1) the sale of the compliance and container system, and (2) return transportation and treatment service. For mailbacks that are part of the VMI program, there is an additional element, or unit of measure, for outbound transportation. For contracts with multiple performance obligations, an estimated stand-alone selling price is determined for all performance obligations. The consideration is then allocated to the performance obligations based on their relative stand-alone selling price. The selling price for performance obligations for transportation and treatment utilizes third party evidence. The Company estimates the selling price of the compliance and container system based on the product and services provided, including the expected cost plus a margin. The allocated transaction price for the sale of the compliance and container system is recognized upon delivery to the customer, at which time the customer has control. The allocated transaction price for the return transportation and treatment revenue is recognized when the customer returns the compliance and container system and the container has been received at the Company’s owned or contracted facilities. The compliance and container system is mailed or delivered by an alternative logistics provider to the Company’s owned or contracted facilities at which point the destruction or conversion and proof of receipt and treatment are performed on the container. Consideration received and allocated to the transportation and treatment performance obligation is recorded as a contract liability until the services are performed. Through regression analysis of historical data, the Company has determined that a certain percentage of all compliance and container systems sold may not be returned. Accordingly, a portion of the return transportation and treatment element is recognized at the point of sale. Furthermore, the current and long-term portions of amounts historically referred to deferred revenues (shown as Contract Liability on the condensed consolidated balance sheets) are determined through regression analysis and historical trends. The VMI program includes terms that meet the “bill and hold” criteria and as such are recognized when the order is placed, title has transferred, there are no acceptance provisions and amounts are segregated in the Company’s warehouse for the customer. |
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Income Taxes | Income Taxes: Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of a valuation allowance requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. A valuation allowance has been recorded to reduce the Company’s deferred tax assets to an amount that is more likely than not to be realized and is based upon the uncertainty of the realization of certain federal and state deferred tax assets related to net operating loss carryforwards and other tax attributes. The Company's deferred tax liability of $0.2 million includes $0.3 million of the accumulated tax expense related to the effect of indefinite lived assets, such as goodwill, which cannot be used as a source of future taxable income in evaluating the need for a valuation against deferred tax assets net of $0.1 million deferred tax asset for recoverable alternative minimum tax credits pursuant to the 2017 tax reform for which no valuation allowance is required. Prepaid and other current assets include realizable income taxes receivable associated with refundable alternative minimum tax credits of $0.1 million. |
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Accounts Receivable | Accounts Receivable: Accounts receivable consist primarily of amounts due to the Company from normal business activities. Accounts receivable balances are determined to be delinquent when the amount is past due based on the contractual terms with the customer. The Company maintains an allowance for doubtful accounts to reflect the likelihood of not collecting certain accounts receivable based on past collection history and specific risks identified among uncollected accounts. Accounts receivable are charged to the allowance for doubtful accounts when the Company determines that the receivable will not be collected and/or when the account has been referred to a third party collection agency. The Company has a history of minimal uncollectible accounts. |
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Goodwill and Other Identifiable Intangible Assets | Goodwill and Other Identifiable Intangible Assets: Finite-lived intangible assets are amortized over their respective estimated useful lives and evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable. Goodwill is assessed for impairment at least annually. The Company generally performs its annual goodwill impairment analysis using a quantitative approach. The quantitative goodwill impairment test identifies the existence of potential impairment by comparing the fair value of our single reporting unit with its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, the reporting unit's goodwill is considered not to be impaired. If the carrying value of a reporting unit exceeds its fair value, an impairment charge is recognized in an amount equal to that excess. The impairment charge recognized is limited to the amount of goodwill present in our single reporting unit. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the amount of any such charge. The Company performs its annual impairment assessment of goodwill during the fourth quarter of each fiscal year. |
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Stock-Based Compensation | Stock-Based Compensation: Stock-based compensation cost for options and restricted stock awarded to employees and directors is measured at the grant date, based on the calculated fair value of the award and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant). |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments: The Company considers the fair value of all financial instruments, including cash, accounts receivable and accounts payable to approximate their carrying values at December 31, 2018 and June 30, 2018 due to their short-term nature. The carrying value of the Company’s debt approximates fair value due to the market rates of interest. |
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Reclassifications of Prior Year Presentation in the Consolidated Statements of Cash Flows | Reclassification of Prior Year Presentation in the Consolidated Statements of Cash Flows: Certain prior year amounts have been reclassified for consistency with the current year presentation in the Consolidated Statements of Cash Flows. The change in classification does not affect previously reported cash flows from operating activities, investing activities or financing activities in the Consolidated Statements of Cash Flows. |
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Recently Issued Accounting Standards | In February 2016, guidance for leases was issued, which requires balance sheet recognition for rights and obligations of all leases with terms in excess of twelve months. The new guidance also requires additional disclosures about the amount, timing and uncertainty of cash flows arising from leases. The provisions of the new guidance are effective for annual periods beginning after December 15, 2018 (effective July 1, 2019 for the Company), including interim periods within the reporting period, and early application is permitted. The Company is in the initial stages of evaluating the impact of the new guidance on its consolidated financial statements and related disclosures as well as evaluating the available transition methods. The Company will continue to evaluate the standard as well as additional changes, modifications or interpretations which may impact the Company. |
SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Revenue by Solution | The components of revenues by solution which reflect a disaggregation of revenue by contract type are as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Impact of New Accounting Guidance | The impact of adopting the new accounting guidance on the Company's condensed consolidated balance sheet as of December 31, 2018 was as follows (in thousands):
(1): Prior period contract liabilities were referred to as deferred revenue. The impact of adopting the new accounting guidance on the Company's condensed consolidated statement of operations for the three and six months ended December 31, 2018 was as follows (in thousands):
|
NOTES PAYABLE AND LONG-TERM DEBT (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
Schedule of long-term debt | At December 31, 2018, long-term debt consisted of the following (in thousands):
|
||||||||||||||||||||||||||||||||
Schedule of payments due on long-term debt | Payments due on long-term debt subsequent to December 31, 2018 are as follows (in thousands):
|
STOCK-BASED COMPENSATION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-Based Compensation | During the three and six months ended December 31, 2018 and 2017, stock-based compensation amounts are as follows (in thousands):
|
EARNINGS PER SHARE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share | The following information is necessary to calculate earnings per share for the periods presented (in thousands, except per-share data):
|
GOODWILL AND INTANGIBLE ASSETS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of intangible assets | At December 31, 2018 and June 30, 2018, intangible assets consisted of the following (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future amortization of intangible assets | As of December 31, 2018, future amortization of intangible assets is as follows (in thousands):
|
INVENTORY (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | The components of inventory are as follows (in thousands):
|
ORGANIZATION AND BACKGROUND (Details) |
6 Months Ended |
---|---|
Dec. 31, 2018
state_region
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of route-based pick-up services in state region | 24 |
SIGNIFICANT ACCOUNTING POLICIES - Summary of Revenue by Solution (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 12,394 | $ 11,119 | $ 22,687 | $ 20,802 |
Revenue percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Mailbacks | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 8,039 | $ 6,796 | $ 13,646 | $ 12,261 |
Revenue percentage | 64.80% | 61.20% | 60.20% | 58.90% |
Route-based pickup services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 2,078 | $ 1,830 | $ 4,206 | $ 3,591 |
Revenue percentage | 16.80% | 16.50% | 18.50% | 17.30% |
Unused medications | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 1,350 | $ 1,317 | $ 2,989 | $ 2,489 |
Revenue percentage | 10.90% | 11.80% | 13.20% | 12.00% |
Third party treatment services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 78 | $ 337 | $ 180 | $ 771 |
Revenue percentage | 0.60% | 3.00% | 0.80% | 3.70% |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 849 | $ 839 | $ 1,666 | $ 1,690 |
Revenue percentage | 6.90% | 7.50% | 7.30% | 8.10% |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 4.10% | 7.60% | ||
Income tax expense (benefit) | $ 33 | $ (67) | $ 70 | $ (60) |
Federal income tax expense (benefit) | 23 | (74) | 56 | (74) |
State income tax expense | $ 10 | $ 7 | $ 14 | $ 14 |
NOTES PAYABLE AND LONG-TERM DEBT - Schedule of long-debt (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Jun. 30, 2018 |
|
Debt Instrument [Line Items] | ||
Less: current portion | $ 517 | $ 537 |
Long-term debt, net of current portion | $ 1,207 | $ 1,465 |
Credit Agreement | Term Loan | ||
Debt Instrument [Line Items] | ||
Interest rate | 5.00% | |
Monthly payments | $ 43 | |
Total debt | 1,724 | |
Less: current portion | 517 | |
Long-term debt, net of current portion | $ 1,207 |
NOTES PAYABLE AND LONG-TERM DEBT - Schedule of payments due on long-term debt (Details) - Term Loan - Credit Agreement $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Long-term Debt, Fiscal Year Maturity [Abstract] | |
2019 | $ 517 |
2020 | 517 |
2021 | 517 |
2022 | 173 |
Total debt | $ 1,724 |
STOCK-BASED COMPENSATION (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation | $ 90 | $ 140 | $ 191 | $ 261 |
Cost of revenues | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation | 3 | 13 | 2 | 27 |
Selling, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation | $ 87 | $ 127 | $ 189 | $ 234 |
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Jun. 30, 2018 |
|
Earnings Per Share [Abstract] | |||||
Net income, as reported | $ 779 | $ 156 | $ 849 | $ 231 | $ (672) |
Weighted average common shares outstanding (in shares) | 16,100 | 16,047 | 16,091 | 16,028 | |
Effect of dilutive stock options (in shares) | 6 | 21 | 7 | 53 | |
Weighted average diluted common shares outstanding (in shares) | 16,106 | 16,068 | 16,098 | 16,081 | |
Net income per common share | |||||
Basic and diluted (in dollars per share) | $ 0.05 | $ 0.01 | $ 0.05 | $ 0.01 | |
Employee stock options excluded from computation of dilutive income per share amounts because their effect would be anti-dilutive (in shares) | 684 | 778 | 684 | 401 |
EQUITY TRANSACTIONS (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Nov. 15, 2018 |
Nov. 14, 2018 |
Jun. 30, 2018 |
|
Stockholders' Equity Note [Abstract] | |||||||
Exercises of stock options (in shares) | 0 | 0 | 0 | 0 | |||
Compensation expense related to non-vested awards | $ 300 | $ 300 | |||||
Weighted average period | 2 years 6 months | ||||||
Shares of common stock issued for third-party lease agreement (in shares) | 20,617 | ||||||
Price per share (in dollars per share) | $ 4 | $ 4 | |||||
Non-cash lease expense | $ 24 | $ 0 | |||||
Common stock, shares authorized (in shares) | 40,000,000 | 40,000,000 | 40,000,000 | 20,000,000 | 20,000,000 |
GOODWILL AND INTANGIBLE ASSETS -Narrative (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible assets, amortization expense | $ 300,000 | $ 300,000 |
Changes in goodwill | $ 0 |
GOODWILL AND INTANGIBLE ASSETS - Schedule of future amortization of intangible assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Jun. 30, 2018 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 | $ 610 | |
2020 | 610 | |
2021 | 597 | |
2022 | 565 | |
2023 | 308 | |
Thereafter | 733 | |
Total | $ 3,423 | $ 3,525 |
INVENTORY (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Jun. 30, 2018 |
---|---|---|
Components of inventory [Abstract] | ||
Raw materials | $ 1,481 | $ 1,323 |
Finished goods | 2,940 | 2,663 |
Total | $ 4,421 | $ 3,986 |
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