American CareSource Holdings Reports Record Financial Results for 2008 Second Quarter

SOURCE:

American CareSource Holdings, Inc.

2008-08-14 06:05:00

American CareSource Holdings Reports Record Financial Results for 2008 Second Quarter

Company Reports Fourth Consecutive Quarterly Profit of $621 Thousand, or $0.04 per Diluted Share

DALLAS, TX–(EMWNews – August 14, 2008) – American CareSource Holdings, Inc. (AMEX: XSI)

today announced record financial and operational results for the second

quarter and six months ended June 30, 2008. Highlights include:


  --  Reported quarterly net income of $621 thousand, or $0.04 per diluted

      share, resulting in four consecutive quarters of profit growth.



  --  Achieved $13.0 million in revenue for the second quarter, a record

      225% increase in revenues compared to the same prior year period,

      representing five quarters of sequential revenue growth.



  --  Attained gross margins of approximately 15% compared to 13% in the

      three months ended June 30, 2007, reflecting continued leverage of

      the Company's fixed cost infrastructure.



  --  Generated EBITDA, as adjusted, of approximately $879 thousand for

      the quarter.



        --  EBITDA, as adjusted, (a non-GAAP measure) is defined as income

            (loss) from operations less depreciation and amortization,

            non-cash warrant and option compensation expense and executive

            severance. EBITDA, as adjusted, should be considered in

            addition to, but not in lieu of, income (loss) from operations

            reported under generally accepted accounting principles (GAAP).



  --  The Company finished the quarter with approximately $6.1 million in

      cash and cash equivalents on hand and generated approximately $500

      thousand in cash from operating activities in the second quarter and

      approximately $2.1 million during the first half of 2008.



  --  Claims volume increased to approximately 40 thousand for the second

      quarter of 2008, up 172% over the second quarter of 2007.



  --  Signed new client agreements with Viant Holdings, Inc., one of the

      nation's largest PPO networks, and Emerald Health Network, Ohio's

      premiere PPO network provider.



  --  Signed two new client agreements with Indiana-based union

      organizations allowing the Company to penetrate an important union

      market in the Midwest.



  --  Selected to join the Russell Microcap® Index.



Commenting on today’s announcement, David S. Boone, Chief Executive Officer

of American CareSource, stated, “Our second quarter results demonstrate a

continuation of the strong momentum we are building in the market place.

With these results, we have generated four consecutive quarters of greater

than 100% year-over-year revenue growth and delivered four consecutive

quarters of increasing profitability. We finished the quarter with over $6

million in cash and we continue to generate strong cash flow. Our

investments in technology and people are beginning to pay dividends. Most

importantly, our recent client wins are yet another confirmation of the

value we are adding to our clients and providers as we work to lower the

cost of ancillary healthcare.

“We are achieving the goals we have set for the organization including

delivering improved gross margins. The Company is demonstrating its

ability to scale effectively by absorbing the increasing claim volume

without a corresponding increase in cost. Demand for our comprehensive and

expanding national network of ancillary healthcare services has continued,

unabated and our reputation for being able to offer clients an

ever-increasing range of services with positive economics should fuel this

upward momentum going forward. As a result, we are raising our initial 2008

guidance of $50 million in annual revenues to a range of $50 – $55 million

for the year.

“Reflecting our growth, during the second quarter, we were pleased to

announce new client agreements with Viant Holdings, one of the largest PPO

networks in the United States, as well as Emerald Health Networks, Ohio’s

premier PPO network provider. Additionally, we gained a foothold into the

all-important Midwest union market with the signing of two new client

agreements with Iron Workers Local 295 Trust Fund and Operative Plasterers

and Cement Masons Local 692. We are honored to be working with these two,

key union organizations and, in addition to our more traditional clientele,

hope to sign similar agreements with other unions as time goes on.”

Revenues for the second quarter of 2008 rose 225% to $13.0 million compared

to $4.0 million in the second quarter of 2007. The Company’s second quarter

revenues also represent a 13% improvement over the first quarter of 2008

reported revenues of $11.5 million. For the six months ended June 30, 2008,

the Company reported revenues of $24.5 million, a 291% increase compared to

revenues of $6.3 million in the same period of 2007.

The Company reported net income of $621 thousand, or $0.04 per share, for

the three months ended June 30, 2008, compared to a net loss of $716

thousand, or ($0.05) per share, in the same period last year. For the six

months ended June 30, 2008, the Company reported net income of $1.1

million, or $0.07 per diluted share, compared to a net loss of $1.3

million, or ($0.09) per share, for the same period in 2007.

Cash provided by operations was $2.1 million for the six months ended June

30, 2008 versus cash used in operations of ($1.1) million during the same

period in 2008. Factors affecting the improvement in operating cash flows

include earnings growth, accelerated client collections and overall

effectiveness in working capital management. At June 30, 2008, the Company

had approximately $6.1 million in cash and cash equivalents compared to

$4.3 million at December 31, 2007.

Conference Call

As previously announced, American CareSource will hold a conference call to

discuss financial results of the second quarter ended June 30, 2008 as

follows:


Date:  Thursday, August 14, 2008

Time:  10:00 a.m. (CT)/11:00 a.m. (ET)

Dial-in numbers:  877-397-0286 (U.S. & Canada) or 719-325-4874

Live webcast:  www.anci-care.com, under "New & Events"



The teleconference replay will be available two hours after completion

through Thursday, August 21, 2008 at 888-203-1112 (U.S. & Canada) or

719-457-0820. The replay pass code is 3692642. The archived webcast will be

available for one year on the Company’s investor website,

www.anci-care.com, under “News and Events.”

About Ancillary Healthcare Services

American CareSource provides ancillary healthcare services through its

network that offers cost effective alternatives to physician and

hospital-based services. This market is estimated at $574 billion, and has

grown to 30% of total national health expenditures. These providers offer

services in over 30 categories, including laboratories, dialysis centers,

free-standing diagnostic imaging centers, non-hospital surgery centers, as

well as durable medical equipment such as orthotics and prosthetics, and

others.

About American CareSource Holdings, Inc.

American CareSource Holdings, the first national, publicly traded ancillary

care network services company, offers a comprehensive national network of

approximately 2,500 ancillary service providers at over 25,000 sites. The

Company’s ancillary network and management provides a complete outsourced

solution for a wide variety of healthcare payors and plan sponsors

including self-insured employers, indemnity insurers, PPOs, HMOs, third

party administrators and both federal and local governments. For additional

information, please visit www.anci-care.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of

1995:

Any statements that are not historical facts contained in this release,

including with respect to future engagements by clients, revenue growth,

earnings, and guidance are forward-looking statements. It is possible that

the assumptions made by American CareSource Holdings, Inc. for purposes of

such statements may prove to be inaccurate or may not materialize. Actual

results may differ materially from those projected or implied in any

forward-looking statements. Such statements may involve further risks and

uncertainties, including but not limited to those relating to demand for

our services, pricing, market acceptance, our ability to integrate with our

clients, our ability to attract and maintain providers, our ability to

manage growth, the effect of economic conditions, and the affect of

competitive services, risks in product development, the ability to complete

transactions, and other risks identified in this release, and the

Securities and Exchange Commission filings of American CareSource Holdings,

Inc.

(Tables to Follow)


                    AMERICAN CARESOURCE HOLDINGS, INC.

                   CONSOLIDATED STATEMENT OF OPERATIONS

                                (unaudited)





                        Three months ended           Six months ended

                             June 30,                    June 30,

                    --------------------------  --------------------------

                        2008          2007          2008          2007

                    ------------  ------------  ------------  ------------



Net Revenues        $ 13,012,528  $  4,008,288  $ 24,518,203  $  6,274,857



Cost of revenues      11,110,593     3,478,292    20,911,715     5,579,935

                    ------------  ------------  ------------  ------------



  Contribution

   margin              1,901,935       529,996     3,606,488       694,922



Selling, general

 and administrative

 expenses              1,194,504     1,209,740     2,307,358     1,911,272

Depreciation and

 amortization             96,606        83,642       188,672       161,715

                    ------------  ------------  ------------  ------------

  Total operating

   expenses            1,291,110     1,293,382     2,496,030     2,072,987

                    ------------  ------------  ------------  ------------



  Operating income

   (loss)                610,825      (763,386)    1,110,458    (1,378,065)

                    ------------  ------------  ------------  ------------



Interest income          (31,240)      (49,758)      (71,908)     (103,632)

Interest expense           1,606         2,488         3,444         6,449

Debt issuance costs            -             -             -        46,300

                    ------------  ------------  ------------  ------------



Total interest

 (income) expense,

 net                     (29,634)      (47,270)      (68,464)      (50,883)



Income (loss)

 before income

 taxes                   640,459      (716,116)    1,178,922    (1,327,182)

Income tax

 provision                19,019             -        36,064             -

                    ------------  ------------  ------------  ------------

Net Income (Loss)   $    621,440  $   (716,116) $  1,142,858  $ (1,327,182)

                    ============  ============  ============  ============



Earnings (loss)

 per common share:

  Basic             $       0.04  $      (0.05) $       0.08  $      (0.09)

                    ============  ============  ============  ============

  Diluted           $       0.04  $      (0.05) $       0.07  $      (0.09)

                    ============  ============  ============  ============



Basic weighted

 average common

 shares outstanding   15,069,007    14,492,863    14,973,213    14,489,806

                    ============  ============  ============  ============

Diluted weighted

 average common

 shares outstanding   17,435,365    14,492,863    17,343,860    14,489,806

                    ============  ============  ============  ============





Reconciliation of non-GAAP financial measures to reported GAAP financial

measures:



Reconciliation of EBITDA and EBITDA, as adjusted





                        Three months ended           Six months ended

                             June 30,                    June 30,

                    --------------------------  --------------------------

                        2008          2007          2008          2007

                    ------------  ------------  ------------  ------------

Operating income

 (loss)             $    610,825  $   (763,386) $  1,110,458  $ (1,378,065)

Depreciation and

 amortization             96,606        83,642       188,672       161,715

                    ------------  ------------  ------------  ------------

  EBITDA                 707,431      (679,744)    1,299,130    (1,216,350)

Executive severance            -       338,010        21,844       338,010

Non-cash

 stock-based

 compensation

 expense                 171,848       165,308       342,601       214,844

                    ------------  ------------  ------------  ------------

  EBITDA, as

   adjusted         $    879,279  $   (176,426) $  1,663,575  $   (663,496)

                    ============  ============  ============  ============









                    AMERICAN CARESOURCE HOLDINGS, INC.

                        CONSOLIDATED BALANCE SHEET





                                                  June 30,

                                                    2008      December 31,

                                                (unaudited)       2007

                                                ------------  ------------

ASSETS



Current assets:

Cash and cash equivalents                       $  6,077,395  $  4,272,498

Accounts receivable, net                           4,421,223     3,651,203

Prepaid expenses and other current assets            566,952       409,445

                                                ------------  ------------

  Total current assets                            11,065,570     8,333,146



Property and equipment, net                          640,115       332,450



Other assets:

Certificate of Deposit, restricted                   145,000       145,000

Other non-current assets                             456,470       492,977

Intangible assets, net                             1,387,447     1,494,238

Goodwill                                           4,361,299     4,361,299

                                                ------------  ------------

Total assets                                    $ 18,055,901  $ 15,159,110

                                                ============  ============



LIABILITIES and STOCKHOLDERS' EQUITY



Current Liabilities:

Due to service providers                        $  4,225,359  $  3,344,278

Accounts payable and accrued liabilities           1,605,439     1,320,036

Current maturities of long-term debt                  57,718        55,697

                                                ------------  ------------

  Total current liabilities                        5,888,516     4,720,011



Long-term debt                                        20,967        50,348

Stockholders' equity                              12,146,418    10,388,751

                                                ------------  ------------

Total liabilities and stockholders' equity      $ 18,055,901  $ 15,159,110

                                                ============  ============









                    AMERICAN CARESOURCE HOLDINGS, INC.

                  CONSOLIDATED STATEMENTS OF CASH FLOWS

                                (unaudited)





                                                     Six months ended

                                                         June 30,

                                                --------------------------

                                                    2008          2007

                                                ------------  ------------

Cash flows from operating activities:

  Net income (loss)                             $  1,142,858  $ (1,327,182)

  Adjustments to reconcile net income (loss)

   to net cash provided by (used in)

   operations:

     Stock-based compensation expense                316,147       206,032

     Depreciation and amortization                   188,672       161,715

     Amortization of debt issuance costs                   -        46,300

     Client management fee expense related

      to warrants                                     26,455         8,812

     Changes in operating assets and

      liabilities:

        Accounts receivable                         (770,020)     (325,268)

        Prepaid expenses and other assets             13,876      (366,038)

        Accounts payable and accrued

         liabilities                                 285,403       370,967

        Due to service providers                     881,081       112,983

                                                ------------  ------------

           Net cash provided by (used in)

            operating activities                   2,084,472    (1,111,679)

                                                ------------  ------------



Cash flows from investing activities:

  Investment in software development costs          (284,085)            -

  Additions to property and equipment               (105,461)      (69,606)

                                                ------------  ------------

           Net cash used in investing

            activities                              (389,546)      (69,606)

                                                ------------  ------------



Cash flows from financing activities:

  Payments on long-term debt                         (27,360)     (322,572)

  Proceeds from exercise of stock options            137,331         2,391

                                                ------------  ------------

           Net cash provided by (used in)

            financing activities                     109,971      (320,181)

                                                ------------  ------------



Net increase (decrease) in cash and cash

 equivalents                                       1,804,897    (1,501,466)

Cash and cash equivalents at beginning of

 period                                            4,272,498     5,025,380

                                                ------------  ------------

Cash and cash equivalents at end of period      $  6,077,395  $  3,523,914

                                                ============  ============



Contact:
Steven J. Armond
Chief Financial Officer
American CareSource Holdings, Inc.
Tel: 972-308-6847

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