The Center for Wound Healing, Inc. Announces Record Financial Results for Fiscal Year 2008
Company Qualifies to Trade in Over The Counter Market
TARRYTOWN, N.Y., Sep 25, 2008 (BUSINESS WIRE) -- The Center for Wound Healing, Inc. (OTCBB:CFWH) ("CFWH"), a leading manager of comprehensive wound care treatment centers that offer hyperbaric oxygen therapy ("HBOt") as well as traditional wound care treatment modalities, today announced financial results for its fourth quarter and fiscal year ended June 30, 2008. Financial highlights for fiscal year 2008 include the following (all comparisons are with the fiscal year 2007):
-- Record total revenue of $26.4 million, up 33 percent
-- HBOt treatments increased 26 percent
-- Operating income of $3.1 million compared with an operating loss of $7.0 million
-- Gross margin of 50.1 percent, up nearly 900 basis points
-- EBITDA increased to $8.6 million; FY 2007 EBITDA was $180,000
Other highlights include:
-- Completed $17.5 million investment by Bison Capital Asset Management, LLC, on March 31, 2008
-- Opened its 35th wound care center in August at Monmouth Medical Center in Monmouth County, N.J.
-- Construction started on three additional centers projected to be opened by January 1, 2009
-- Operational and organizational restructuring completed including realigned portfolio management; "go-live" with financial reporting application suite; rollout of new, proprietary state-of-the-art electronic medical records systems; recruitment of talented individuals to execute and support the company's planned growth strategies.
"We are especially proud of our employees, our most important asset, without whom we would not have delivered the outstanding, record performance for the quarter and fiscal year. We achieved records in revenue levels and year-over-year growth; gross margin dollars and percent of net revenue; and cash flow from operations. We have made significant progress improving treatment volumes which, in combination with implementing corporate and financial controls, have resulted in substantial operating leverage. The result is a 33% increase in sales, a 50% gross margin and an EBITDA that is 33% of net revenue," commented Andrew G. Barnett, The Center for Wound Healing's Chief Executive Officer.
"During fiscal 2008, we restructured our balance sheet and negotiated revised terms of our senior bank debt, completed the long-term financing with Bison Capital, retired extended commitments and eliminated otherwise onerous debt. Consequently, we now have in place substantial financing capacity and long-term capital to continue our expansion and to provide leading edge care to patients.
"Moving forward, we are very excited by the opportunities we have for growth and expansion. In addition to the considerable opportunity we have to further improve treatment levels in our existing portfolio, we believe we will continue to garner benefits from the operating leverage we have; we also have a strong pipeline of new hospital opportunities in varying stages of negotiation. We expect to open three new centers by January 2009, and to close contracts on and open an additional eight new centers in 2009. We now have the infrastructure in place to support this expansion while maintaining our overhead costs.
"We are confident of the growing potential for comprehensive wound care and HBOt therapy: Eighty percent of our patients are diabetic; today, in the United States, the diabetic population exceeds 24 million and is growing by one million new patients per year. HBOt delivered across the CFWH portfolio has served as a life altering treatment modality, reducing the need for amputation for 80% of those diabetic patients facing limb amputation as their only alternative," concluded Barnett.
Fiscal Year 2008 Financial Results
Total treatment revenue for the fiscal year ending June 30, 2008, was $26.4 million, a 33 percent increase compared with revenue of $19.8 million for fiscal 2007. The increase in revenue reflects improved performance throughout the portfolio -- average daily HBOt treatments at existing centers were up 16 percent year-over-year -- plus four new centers came on line during the fiscal year.
Operating income for fiscal 2008 was $3.1 million compared with a fiscal 2007 operating loss of $7.0 million. The gross margin for fiscal year 2008 increased nearly 900 basis points to 50.1 percent from 41.3 percent in the prior year as a result of increased revenue, an operational restructuring and the implementation of significant corporate and financial controls. The net loss for fiscal year 2008 narrowed to $4.3 million or $0.19 per common share from the prior year's net loss of $9.4 million or $0.41 per common share. The difference between operating income and the net loss is due to $10.5 million of charges including $4.0 million of fixed asset and equipment depreciation, $4.2 million of noncash interest expense and $2.3 million of amortization of deferred financing costs and warrants issued in connection with two private placements.
About The Center for Wound Healing
The Center for Wound Healing, Inc. is a leading manager of comprehensive wound care treatment centers that offer hyperbaric oxygen therapy ("HBOt") as well as traditional wound care treatment modalities. The Company manages 35 wound care centers in the eastern United States in partnership with local acute care hospitals. CFWH was founded by physicians in 1997 with a focus on establishing in-hospital centers of excellence to treat the growing incidence of severe grade diabetic wounds of the lower extremities and wounds that are unresponsive to general wound care treatments. The Company's centers have consistently achieved high treatment success rates, resulting in a dramatic increase in patient quality of life and significant cost savings to the healthcare system.
Statements contained herein that are not historical facts may be forward-looking statements within the meaning of the Securities Act of 1933, as amended. Forward-looking statements include statements regarding the intent, belief or current expectations of the Company and its management. Such statements are estimates only, as the Company has not completed the preparation of its financial statements for those periods, nor has its auditor completed the audit of those results. Actual revenue may differ materially from those anticipated in this press release. Such statements reflect management's current views, are based on certain assumptions and involve risks and uncertainties. Actual results, events, or performance may differ materially from the above forward-looking statements due to a number of important factors, and will be dependent upon a variety of factors. The Center for Wound Healing undertakes no obligation to publicly update these forward-looking statements to reflect events or circumstances that occur after the date hereof or to reflect any change in The Center for Wound Healing's expectations with regard to these forward-looking statements or the occurrence of unanticipated events. Factors that may impact The Center for Wound Healing's success are more fully disclosed in The Center for Wound Healing's most recent public filings with the U.S. Securities and Exchange Commission.
THE CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30
Cash in bank $ 55,139 $ 216,458
Accounts receivable, net of allowance for doubtful accounts of 14,563,325 10,754,557
$2,941,917 and $2,202,510 respectively
Notes Receivable 460,872 367,484
Income tax refunds receivable 2,090 883,596
Prepaid expenses and other current assets 398,631 157,801
Total current assets 15,480,058 12,379,896
Notes Receivable 134,295 385,478
Property and equipment, net 8,886,005 7,970,325
Investment in unconsolidated affiliates - 75,702
Intangible assets 4,402,495 3,131,184
Goodwill 751,957 447,531
Other assets 2,822,687 1,959,717
TOTAL ASSETS $ 32,477,495 $ 26,349,833
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 3,844,541 $ 5,661,811
Current maturities of capital leases 526,107 1,530,862
Short-term borrowings 4,200,000 5,500,000
Notes payable 939,856 2,429,260
8% Secured convertible debentures - 6,485,601
Payable to former Majority Members 618,033 771,357
Due to affiliates 261,006 206,082
Total current liabilities 10,389,542 22,584,973
15% senior secured note payable 15,291,782 -
Notes payable, net of current maturities 782,133 65,254
Capital lease obligations, net of current maturities 131,774 498,688
Minority interest in consolidated subsidiaries 558,205 908,202
TOTAL LIABILITIES 27,153,437 24,057,117
COMMITMENTS AND CONTINGENCIES
Preferred stock, $0.001 par value; 10,000,000 shares authorized; - -
Common stock, $0.001 par value; 290,000,000 shares authorized; 23,373 22,656
23,373,281 and 22,655,781 issued and outstanding at June 30, 2008
and 2007, respectively
Additional paid-in capital 26,220,288 18,866,478
Accumulated deficit (20,919,603 ) (16,596,418 )
TOTAL STOCKHOLDERS' EQUITY 5,324,058 2,292,716
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 32,477,495 $ 26,349,833
THE CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended June 30,
Treatment fees $ 26,357,619 $ 19,842,064
Cost of Services 13,157,728 11,642,333
Sales and marketing 180,367 287,060
General and administration 8,466,779 11,785,313
Abandonment & Impairment Loss 189,992 2,076,266
Depreciation and amortization 443,581 59,917
Bad debt expense 796,027 965,553
TOTAL OPERATING EXPENSES 23,234,475 26,816,442
OPERATING INCOME (LOSS) 3,123,144 (6,974,378 )
Interest expense 7,245,961 3,595,044
Interest income (41,344 ) (25,281 )
Minority interest in net loss of consolidated subsidiaries 131,901 (172,390 )
Equity in net loss of unconsolidated affiliates - -
Loss on disposal of property and equipment 68,880 29,270
Other expenses 20,865 432,500
TOTAL OTHER EXPENSE 7,426,264 3,859,143
(LOSS) BEFORE INCOME TAXES (4,303,121 ) (10,833,521 )
PROVISION (BENEFITS) FOR INCOME TAXES
Current taxes 20,065 (356,511 )
Deferred taxes - (1,094,984 )
TOTAL PROVISION FOR INCOME TAXES (BENEFITS) 20,065 (1,451,495 )
NET (LOSS) $ (4,323,186 ) $ (9,382,026 )
NET (LOSS) PER COMMON SHARE BASIC AND DILUTED $ (0.19 ) $ (0.41 )
WEIGHTED AVERAGE NUMBER OF COMMON SHARES - BASIC AND DILUTED 22,997,476 22,655,781
SOURCE: The Center for Wound Healing, Inc.