MISSION VIEJO, CA / ACCESSWIRE / Aug 14, 2014 / AUXILIO, Inc. (AUXO) (“AUXILIO” or “the Company”), the nation’s pioneer and leading Managed Print Services (MPS) and IT Advisory company for healthcare, today reported financial results for the three and six months ended June 30, 2014.
-Q2 2014 revenues increased 6% to $10.4 million; service revenues increased by $0.7 million to $9.7 million
-Added $1 million in recurring service revenues from new contracts and $0.8 million from expansion of services with existing customers in 1H 2014
-Generated $0.5 million of cash flows from operations in 1H 2014
-Announced the acquisition of Delphiis(tm) to extend SaaS risk assessment and management solutions and IT security advisory service offerings to the healthcare industry
“We continue to build a strong foundation for growth,” stated Joseph J. Flynn, president and CEO of AUXILIO, Inc. “Adoption of our core MPS business continues with clients such as Saint Joseph’s Medical Center Yonkers signing multi-year contract renewals. Our sales pipeline is also robust, and while the time to close new business has increased, so has the size of these deals. We also see tremendous opportunities to provide value added services to current and prospective healthcare clients. This was the strategic rationale for our investments in consulting, managed IT services and acquiring Delphiis, thereby immediately extending our suite of services to include security, risk assessment and compliance.”
For the three months ended June 30, 2014
For the three months ended June 30, 2014, the company reported revenues of $10.4 million, an increase of 6% when compared to $9.8 million in the same period in 2013. Service revenues increased 8% from new contracts implemented since the fourth quarter of 2013 and expansion of services with existing customers. This was partially offset by decreases at our existing customers due to normal reductions in unit price and sales volume as an account matures or renews, a drop in sales volume due to the consolidation of operations at a couple of our accounts and the impact from the severe storms that hit the east coast at the beginning of this year. We still anticipate overall revenue growth as a result of the expansion of our customer base. Equipment revenues were approximately $0.6 million in the second quarter of 2014 compared to $0.8 million for the same period in 2013.
Cost of revenue increased to $8.7 million compared to $8.2 million in 2013, due to the increase in revenue. Gross profit for the second quarter of 2014 was $1.7 million, or 17% of revenues, compared to $1.6 million or 17% for the same period of 2013. Gross margins are impacted by the timing of contracts moving beyond the initial implementation phase, which requires more upfront investment, as well as by adjusted terms from contract renewals. We saw an improvement in our gross margin from newer accounts that came on board over the last couple years offset by the lower revenue from the drop in sales volume from some of our existing customers.
Operating expenses for Q2 2014 were $1.6 million, an increase of 13% from $1.4 million in the second quarter of 2013. Sales and marketing expenses increased by 16% due to higher staffing costs related to expanding our sales efforts. General and administrative expenses increased 12% to $1 million due primarily to the addition of an Executive Vice President of our newly-created Consulting and Managed IT Services Group in February 2014. The Company generated $92,000 of operating income in the second quarter of 2014 compared to an operating income of $0.2 million in the second quarter of 2013.
Net loss for the three months ended June 30, 2014 was $13,000, or $0.00 per share, compared to net income of $0.1 million or $0.00 per share, in the same period of 2013. Excluding $53,000 in charges related to stock based compensation, we achieved positive adjusted income from operations of $0.1 million in the second quarter of 2014, compared to $0.3 million, after excluding charges of $0.1 million related to stock-based compensation for the same period last year.
At June 30, 2014, the Company had $4.9 million of cash and cash equivalents, up from $4.7 million at December 31, 2013. Cash provided by operating activities for the first six months of 2014 was $0.5 million compared to a cash outflow of $70,000 during the same period in 2013. Working capital improved to $0.7 million at June 30, 2014 compared to $0.3 million at December 31, 2013.
For the six months ended June 30, 2014
For the six months ended June 30, 2014, the company reported revenues of $20.6 million, an increase of 4% when compared to $19.9 million in the same period of 2013. Recurring service revenues increased 9% from new contracts closed between December 2013 and May 2014; however this increase was partially offset by a reduction from a non-renewing contract, a decrease in revenue with existing customers due to the consolidation of operations and the impact from the severe storms that hit the east coast at the beginning of this year. We still anticipate overall revenue growth as a result of the expansion of our customer base. We also saw an additional drop in equipment sales of approximately $0.9 million compared to the same period in 2013. Equipment revenues in 2013 were primarily from copier fleet refresh activities at three customers which were not repeated in 2014 as these fleet refreshes are typically done every five years at any one customer facility.
Gross profit for the first six months of 2014 was $3.5 million, or 17% of sales, compared to $3.2 million, or 16% of sales, for the first six months of 2013. Operating expenses for the first six months of 2014 were $3.3 million, compared to $3.1 million in the prior year period. Net loss for the first six months of 2014 was $84,000, or $0.00 per share, compared to $0.1 million or $0.01 per share, in the first six months of 2013.
Excluding $0.3 million in charges related to stock-based compensation, we achieved adjusted income from operations of $0.4 million for the first six months of 2014, compared to an adjusted income from operations of $0.6 million after excluding charges of $0.3 million related to stock-based compensation and $0.2 million in charges related to stock granted for marketing activities for the same period of 2013.
Paul Anthony, CFO of AUXILIO, explained: “Our continued positive adjusted income from operations and improvement in our balance sheet and liquidity, aided by the conversion of our $1.85 million convertible note, has provided us with the ability to invest in the business to support future growth. As our new businesses gain traction and after we integrate Delphiis™, we expect our sustainable margins and cash flows to further improve.”
On July 8, 2014, the Company announced the acquisition of Delphiis, an information security company focused on healthcare security breaches and HIPAA compliance for hospitals. AUXILIO paid $2.7 million in cash and stock plus additional commitments from and incentives to retain the existing management team. Delphiis’ team of information security professionals broadens AUXILIO’s service offering in a fast-growing segment of need for hospitals.
Mark Dressel joined Auxilio in March 2014 to head up the Company’s new Consulting and Managed IT Services Group. The Company is expanding services beyond core MPS to meet the needs of existing and new customers in the healthcare market.
The holders of the remaining $1.55 million of convertible promissory notes issued in July 2011, which includes several members of the Board at the time of the initial offering, elected to convert all of the unpaid principal into 1,550,000 shares of common stock during the term of the agreement with the bulk being converted in July, 2014. The warrants remain outstanding until their exercise or expiration on April 29, 2016.
The company is confident and optimistic about the performance outlook for the balance of 2014 from our continuing operations, pipeline of MPS opportunities and additional information security service offerings.
Conference Call Information
CEO Joe Flynn and CFO Paul Anthony will host a conference call with investors to discuss its second quarter 2014 earnings results.
Date: Thursday, August 14, 2014
Time: 12:00 pm ET
Conference ID: 6962093
Webcast: http://public.viavid.com/index.php?id=110497 A replay of the call will be available from 3:00 pm ET on August 14, 2014 to 11:59 pm ET on August 28, 2014. To access the replay, please dial 877-870-5176 from the U.S. and 858-384-5517 from outside the U.S. The PIN is 6962093.
About AUXILIO, Inc.
AUXILIO is the leading provider of Managed Print Services for the healthcare industry. A true Management Services company, AUXILIO takes full responsibility for healthcare customers’ onsite print environment. Hospitals and health systems benefit from infrastructure and process improvements that immediately reduce the cost of print/digital systems, provide sustainable increases in employee productivity and enable hospital staff to better focus on providing patient care. AUXILIO also provides healthcare IT advisory and professional services, including information security, risk management and compliance, using the same focused approach on cost savings and operational efficiencies as their core managed print services business.
Founded in 2004, AUXILIO serves a national portfolio of over 100 hospital and manages in excess of 1.3 billion documents annually from over 59,000 devices supporting more than 250,000 caregivers. AUXILIO’s business model is vendor neutral, provides full-time, on-site customer service and technical experts and is exclusive to the healthcare industry.
For more information about AUXILIO, visit http://www.AUXILIOinc.com/.
Forward Looking Statements
This release contains certain forward-looking statements relating to the business of AUXILIO, Inc. that can be identified by the use of forward-looking terminology such as ``believes,'' ``expects,'' “anticipates,” “may” or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties, including uncertainties relating to product/services development, long and uncertain sales cycles, the ability to obtain or maintain patent or other proprietary intellectual property protection, market acceptance, future capital requirements, competition from other providers, the ability of our vendors to continue supplying the company with equipment, parts, supplies and services at comparable terms and prices and other factors that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Certain of these risks and uncertainties are or will be described in greater detail in our Form 10-K and Form 10-Q filings with the Securities and Exchange Commission, which are available at http://www.sec.gov/. AUXILIO, Inc. is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
MZ North America
Dustin Salem, SVP
SOURCE: AUXILIO, Inc.
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