2014 Highlights:
- During 2014, the Company signed MPS contracts with Top US
Health Systems totaling approximately $20 million to be generated
over the next five years
Fiscal 2014 revenue increased 2.5% to $44.0 million, despite a $2.3
million YOY decrease in equipment revenues
Gross margins increased to 18.7% from 17.9% in 2013
2014 net income of $1.3 million with earnings per share of $0.06,
basic and diluted
Generated $1.5 million of cash flows from operations during
2014
Converted $1.7 million in convertible promissory notes to common
stock strengthening balance sheet and simplifying the capital
structure
Acquired Delphiis in July to create "The Security Solutions Group"
and drive incremental revenue growth by providing Healthcare
Information Security Services
- Ability to cross-market higher margin recurring services in a
sector experiencing rapid growth
Contributed approximately $1.2 million in consulting revenues and
subscriptions during six months of 2014
Renewed and expanded Information Security Services and Risk
Assessment Managed Services with 2 major academic medical
institutions
Launched new printer fleet security offering
Introduced novel Five-Step Security Program Development
Framework
Added 2 new sales representatives to focus on MPS growth in the
Midwest and to drive revenue through the Security Solutions
Group.
2015 Year-To-Date Highlights:
- In March, the Company signed a 5-year MPS agreement that could
be worth up to $50 million, with one of the Nation's largest health
systems. Implementation begins next month and will take
approximately 12-15 months. This is the largest contract in the
Company's history and creates a nationwide MPS footprint, which
will support incremental growth opportunities
With enhanced visibility and a growing base of recurring revenues,
management anticipates year-over-year revenue growth of at least
20% for 2015.
Management Commentary
"It brings me great pleasure to share our team's accomplishments
as we worked diligently during the past year to position Auxilio
for sustained growth by leveraging key assets, customer
relationships and integrating the Security Solutions Group, thus
providing a conduit to one of the fastest growth segments within
the healthcare industry," said Joseph J. Flynn, President and CEO
of Auxilio. "We were able to secure significant MPS contracts with
two of the nation's largest health systems covering a majority of
the United States. These contracts affirm our ability to guarantee
cost efficiencies and process improvement methodologies to major
health systems and firmly positions us as a leader in the MPS
space. Our current book of business has improved visibility and
paves the way for sustained double digit top-line growth during the
next two years," continued Mr. Flynn.
"We will utilize our position as a valued provider to healthcare
systems to further advance our risk and information security
offerings. We believe this area of our business can grow
significantly due to the HIPAA compliance requirement to maintain,
safe keep, transfer and secure all aspects of data, and further
bolstered by high profile breaches and resulting large fines. We
plan to further expand our capabilities in this important vertical
by introducing new services like printer fleet security
management. In addition to driving organic growth across
existing and new healthcare customers, we are evaluating targeted
acquisitions which will further expand the breadth and depth of our
offering in this vertical," Mr. Flynn further commented.
Financial Results for the Full Year ended December 31,
2014
For the twelve months ended December 31, 2014, the Company
reported revenues of $44.0 million, an increase of 2.5% when
compared to $43.0 million in 2013. Net service revenues increased
$1.1 million, which included $3.3 million in new service contracts
and $1.2 million from the addition of Delphiis, partially offset by
$1.1 million from a non-renewing contract, lower volume with some
existing customers due to the consolidation of operations and the
impact from the severe storms that hit the east coast at the
beginning of 2014. Equipment sales decreased $2.3 million
year-over-year to $3.6 million in 2014 with fluctuations occurring
periodically due to customer equipment fleet refresh cycles that
occur, on average, every five years.
Gross profit for fiscal 2014 was $8.2 million, or 18.7% of
sales, compared to $7.7 million, or 17.9% of sales, for fiscal
2013. Operating expenses for fiscal 2014 were $6.6 million,
compared to $5.9 million in the prior year period. Income from
continuing operations was $1.7 million for fiscal 2014, compared to
income from continuing operations of $1.8 million in fiscal
2013.
Net income for fiscal 2014 was $1.3 million, or $0.06 per share
basic and diluted, compared to $1.3 million or $0.07 per share
basic and $0.06 per diluted share, in the same period in
2013.
After excluding charges of $311,000 related to stock-based
compensation and $105,000 for amortization of intangibles, non-GAAP
measure of adjusted income from operations for the twelve months
ended December 31, 2014 was $2.1 million compared to $2.5 million
after excluding charges of $576,000 related to stock-based
compensation and $190,000 in charges related to stock granted for
marketing and consulting activities in the same period of 2013.
At December 31, 2014, the Company had $4.7 million of cash and
cash equivalents. Cash provided by operating activities for the
twelve months ended December 31, 2014 was $1.5 million compared to
$2.6 million during the same period in 2013. The Company maintains
a $2.0 million accounts receivable line of credit with a commercial
bank.
Paul Anthony, CFO of Auxilio, explained, "The Company's value
proposition of saving customers money continues to prove itself and
has contributed to recent wins from existing and new
customers. We significantly lower print volumes over time and
eliminate waste, delivering much needed cost savings to our
customers. As we have previously explained in our business
model, the margins of these multi-year contracts improve as we move
from the implementation phase into ongoing maintenance. We will
need to invest dollars and resources to get these large MPS
projects implemented during the coming year and have the necessary
resources to accomplish this goal."
"The Delphiis acquisition has been accretive and with several
recent wins creates a book of business ahead of our projections.
Given the positive margin profile of this Security Solutions Group
business we will actively invest to accelerate growth during the
coming year and capitalize on the many opportunities we see across
the industry," concluded Mr. Anthony.
2015 Outlook and Events
"Momentum in our MPS business has been robust and our pipeline
for new contracts is still very active. While the Company will take
the necessary time to digest recent wins and move through
implementation, we anticipate signing additional MPS business
during 2015. We anticipate contracts to come from both existing and
new customers, as a result of multiple RFP's and referrals.
Industry consolidation and large scale system-wide decisions will
continue to offer the largest opportunities with the longest sales
cycles," concluded Mr. Flynn.
"The US healthcare market offers a vast opportunity for
Auxilio's Security Solutions Group. The most recent Anthem breach
is just another in the growing number of breaches, with an increase
of 600% in 2014. An average breach costs organizations $5.6M and
healthcare is trailing behind the financial industry to spend the
money necessary to address security. With this increasingly
dangerous security landscape in healthcare, Auxilio is primed for
growth with accelerated interest in our suite of security offerings
from new and existing MPS customers. Our security offering is built
around the most pressing needs in security, some with higher
margins; Regulatory and Penetration Assessments, including Security
Program Benchmarks; Delphiis™ IT Risk Manager SaaS solution,
Process and Program Development, and Incident and Breach
Response, including forensics. We are focusing on industry
conference participation, proactive sales efforts, Auxilio hosted
educational events, and introducing differentiated initiatives like
our five-step security program development framework to drive new
business. Our reputation as a world class MPS provider and
established presence in over 200 hospitals in the US, offers ample
opportunity for growth and market penetration," commented Mike
Gentile, Executive VP of Innovation and Security.
Conference Call Information
CEO Joe Flynn and CFO Paul Anthony will host a conference call
with investors to discuss its full-year 2014 earnings
results.
Date: Tuesday, March 31, 2015
Time: 4:30 pm ET
US: 888-417-8533
International: 719-325-2464
Conference ID: 7853822
Webcast: http://public.viavid.com/index.php?id=113652
A replay of the call will be available from 7:30 pm ET on March
31, 2015 to 11:59 pm ET on April 14, 2015. To access the replay,
please dial 1-877-870-5176 from the U.S. and 1-858-384-5517 from
outside the U.S. The PIN is 7853822.
|
|
|
|
AUXILIO, INC. AND SUBSIDIARIES |
|
CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
As
of December 31, |
|
|
|
2014 |
|
|
2013 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
4,743,395 |
|
|
$ |
4,668,624 |
|
|
Accounts
receivable, net |
|
|
6,808,183 |
|
|
|
3,856,791 |
|
|
Prepaid and
other current assets |
|
|
214,105 |
|
|
|
332,759 |
|
|
Supplies |
|
|
1,066,132 |
|
|
|
967,354 |
|
|
|
Total current
assets |
|
|
12,831,815 |
|
|
|
9,825,528 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
215,747 |
|
|
|
160,709 |
|
Deposits |
|
|
34,413 |
|
|
|
34,413 |
|
Loan acquisition costs |
|
|
- |
|
|
|
51,162 |
|
Intangible assets, net |
|
|
1,265,000 |
|
|
|
- |
|
Goodwill |
|
|
2,473,656 |
|
|
|
1,517,017 |
|
|
|
Total
assets |
|
$ |
16,820,631 |
|
|
$ |
11,588,829 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
$ |
7,417,361 |
|
|
$ |
5,057,339 |
|
|
Accrued
compensation and benefits |
|
|
1,447,132 |
|
|
|
1,556,513 |
|
|
Line of
credit |
|
|
200,000 |
|
|
|
400,000 |
|
|
Deferred
revenue |
|
|
921,771 |
|
|
|
868,186 |
|
|
Convertible
notes payable, net of discount of $82,250 at December 31, 2013 |
|
|
- |
|
|
|
1,617,750 |
|
|
Current
portion of capital lease obligations |
|
|
55,546 |
|
|
|
71,933 |
|
|
|
Total current
liabilities |
|
|
10,041,810 |
|
|
|
9,571,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
|
Notes
payable to related parties, net of discount of $30,189 at December
31, 2014 |
|
|
333,534 |
|
|
|
- |
|
|
Capital
lease obligations, less current portion |
|
|
49,822 |
|
|
|
46,558 |
|
|
|
Total long-term
liabilities |
|
|
383,356 |
|
|
|
46,558 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity (deficit): |
|
|
|
|
|
|
|
|
|
Common
stock, par value at $0.001, 33,333,333 shares authorized,
23,623,619 shares issued and outstanding at December 31, 2014 and
20,643,966 shares issued and outstanding at December 31, 2013 |
|
|
23,625 |
|
|
|
20,645 |
|
|
Additional
paid-in capital |
|
|
26,576,506 |
|
|
|
23,491,490 |
|
|
Accumulated
deficit |
|
|
(20,204,666 |
) |
|
|
(21,541,585 |
) |
|
|
Total
stockholders' equity (deficit) |
|
|
6,395,465 |
|
|
|
1,970,550 |
|
|
|
Total
liabilities and stockholders' equity (deficit) |
|
$ |
16,820,631 |
|
|
$ |
11,588,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUXILIO, INC. AND SUBSIDIARIES |
|
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
|
|
|
Year Ended December 31, |
|
|
|
2014 |
|
|
2013 |
|
Net
revenues |
|
$ |
44,032,076 |
|
|
$ |
42,974,978 |
|
Cost of revenues |
|
|
35,799,726 |
|
|
|
35,294,204 |
|
|
Gross
profit |
|
|
8,232,350 |
|
|
|
7,680,774 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Sales and
marketing |
|
|
2,125,085 |
|
|
|
2,112,285 |
|
|
General
and administrative expenses |
|
|
4,432,374 |
|
|
|
3,785,778 |
|
|
|
Total operating
expenses |
|
|
6,557,459 |
|
|
|
5,898,063 |
|
Income from operations |
|
|
1,674,891 |
|
|
|
1,782,711 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(259,112 |
) |
|
|
(436,476 |
) |
|
Other
income |
|
|
- |
|
|
|
80,000 |
|
|
|
Total other income
(expense) |
|
|
(259,112 |
) |
|
|
(356,476 |
) |
|
|
|
|
|
|
|
|
|
Income before provision for income taxes |
|
|
1,415,779 |
|
|
|
1,426,235 |
|
Income tax expense |
|
|
78,860 |
|
|
|
78,419 |
|
Net
income |
|
$ |
1,336,919 |
|
|
$ |
1,347,816 |
|
|
|
|
|
|
|
|
|
|
Net
income per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.06 |
|
|
$ |
0.07 |
|
|
Diluted |
|
$ |
0.06 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
Number of weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
22,062,789 |
|
|
|
20,259,776 |
|
|
Diluted |
|
|
23,437,628 |
|
|
|
22,843,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About Auxilio, Inc.
Since 2004, Auxilio has led the Managed Print Services industry
by offering an innovative and customer driven approach for
healthcare organizations. Auxilio takes full responsibility for
healthcare customers' on-site print environment through situation
assessment, process analysis, strategy development and program
implementation. Hospitals and health systems benefit from
streamlined and aligned processes and infrastructure that result in
print management programs that reduce cost, increase employee
productivity and meet and exceed patient care standards.
Auxilio serves a national portfolio of nearly 200 hospital
campuses and manages over 1.5 billion documents annually from over
90,000 devices supporting over 280,000 caregivers. Auxilio's
Managed Print Services' business model is vendor neutral, provides
full-time, on-site customer service and technical experts and is
exclusive to the healthcare industry.
Through its Security Solutions Group, Auxilio provides IT
security consulting and a SaaS technology solution, Delphiis ™ IT
Risk Manager, bringing a unique offering to the marketplace to
ensure enterprise-wide security and improve patient experience
through its ability to mitigate risk and improve efficiency across
the hospital or health system.
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.