ALHC.ob. Bulk of the operating gains from last year were due to changes in the CVS contract and other provider networks.
Gross profit increased $857,048 to $2,595,130 for the year ended 2004 from $1,738,082 for the same prior year. The increase in gross profit was primarily attributable to a reduction of network expense due to a change in three of the Company’s provider networks. The change in provider networks resulted in a decrease of network expense of $694,175 for the year ended September 30, 2004 and simultaneously increased the number of providers available to card members. In addition to a change in networks, there was also a decrease of implementation expense of $309,243 for the State Farm and Ascent contracts. For total contract implementation costs in excess of $5,000, the Company records that expense over the first twelve-month term of the contract. The first twelve-month term of the State Farm contract ended on June 30, 2003. The remaining change of $(146,370) in gross profit is related to a decrease in revenue from the CVS contract and an increase of other direct expenses related to the Melaleuca and the new dental program contracts that started in 2004.
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They also stopped virtually all advertising:
Marketing and sales expenses decreased $1,042,533 to $336,378 for the year ending September 30, 2004 from $1,378,911 for the year ending September 30, 2003. The decrease is due to a reduction of royalty expense resulting from an amendment to the CVS Pharmacy, Inc. contract with an effective date of April 1, 2003.
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Usually BB stocks are quite promotional regarding growth in sales (and no earnings). Given that they didn't say anything about revs in Q1 05 leads me to believe that they have little growth in the top line. Difficult earnings comps coming up for the rest of the year, esp if rev growth is flat.
Earnings are untaxed as well....
AI
