INDIANAPOLIS, Aug. 17 /PRNewswire-FirstCall/ -- Standard Management
Corporation ("Standard Management" or the "Company")
(OTC:SMANOTC:SMANP), an Indianapolis-based provider of
pharmaceuticals to long-term care and infusion therapy patients,
today reported a net income from continuing operations for the
three months ended June 30, 2006 of $0.09 per diluted share, or $.9
million. (Logo:
http://www.newscom.com/cgi-bin/prnh/20010416/STANDARDLOGO )
Continuing Operations: Net revenues Sales for the second quarter of
2006 increased $10.1 million or 407% to $12.6 million compared to
the second quarter of 2005, primarily due to $10.7 million of net
revenues from our 2005 acquisitions partially offset by a decline
in revenue in our base of business existing prior to the 2005
acquisitions, primarily at our Apothecary Solutions operations.
Gross profit Gross profit for the second quarter of 2006 increased
by $3.2 million or 610% to $3.8 million compared to the second
quarter of 2005, primarily due to $3.3 million of gross profit from
our 2005 acquisitions. Depreciation and amortization Depreciation
and amortization was $.6 million and $.5 million in the second
quarter of 2006 and 2005, respectively, primarily due to expenses
from our 2005 acquisitions. Other income Other income for the
second quarter of 2006 of $7.1 million is due primarily to the
following: $.5 million of income from the sale of real estate, $9.2
million of income from the exchange offer for the Trust Preferred
Securities, $2.8 million of loss from the sale of the Series A
Preferred Stock and $.2 million of income due to the dividends
received from the Series A Preferred Stock, as well as rental
income from leasing space at the Company's corporate headquarters
to the purchaser of Standard Life. Interest expense Interest
expense for the second quarter of 2006 increased by $.2 million or
14% to $1.4 million compared to the second quarter of 2005,
primarily due to our senior note issued in the second quarter of
2006 and additional new debt in 2005, partially offset by the
repayment of our senior secured credit facility upon the June 2005
sale of Standard Life. Discontinued Operations: Net loss from
discontinued operations for the second quarter of 2006 was $.3
million compared to net loss of $.8 million for the second quarter
of 2005. The reported results from discontinued operations related
to our previous domestic financial services business which was sold
in June 2005. The 2006 loss consists of a $.3 million loss from
discontinued operations upon settlement of the purchase price
adjustment dispute with Capital Assurance. Subsequent Events On
August 11, 2006, the Company completed the sale of the assets of
Rainier Pharmacy to Omnicare, Inc. of Covington, KY. The deal
valued at approximately $14.0 million consisted of $12 million in
cash with the balance in assumed liabilities with an earn-out
provision. Although the cash-on-cash return was positive the
Company will report a GAAP loss of $3.4 million on the sale.
Earnings For the quarters ended June 30, 2006 and 2005, net income
from continuing operations was $.9 million or $0.09 per diluted
share and a loss of $4.6 million or $0.58 loss per diluted share,
respectively. To facilitate comparisons and enhance the
understanding of our operating performance, subsequent to the sale
of our financial services business, the discussion that follows
includes financial measures that are adjusted from the comparable
amounts under Generally Accepted Accounting Principles ("GAAP").
For a detailed presentation of reconciling items please refer to
the attached schedules. Income before interest, income taxes,
depreciation and amortization ("EBITDA") for the second quarter of
2006, was $2.8 million or $0.23 per diluted share, compared to a
loss of $2.9 million or $0.37 per diluted share for the second
quarter of 2005. Effecting the second quarter of 2006 were $.9
million or $0.07 per diluted share of settlement costs associated
with a former officer, $1.1 million or $0.09 per diluted share
related to potential financing and acquisition costs not
capitalized and $2.8 million or $.22 per diluted share net loss on
sale of preferred stock related to the sale of Standard Life
Insurance Company of Indiana. Chairman's Comments Ronald D. Hunter,
Chairman, President and Chief Executive Officer stated, "After
twelve months of strategic application and relief from legacy
impediments, the new healthcare Standard Management is positioned
for the future." Mr. Hunter commented, "With an acceptable balance
sheet and the realignment of corporate overhead expense, combined
with a robust pipeline of future acquisitions, the financial
markets for equity and debt financing are becoming more receptive
to assisting the completion of our current acquisitions under
consideration." This press release contains "forward-looking
statements" within the meaning of section 27 A of the Securities
Act of 1933. The use of the words "believe," "expect,"
"anticipate," "intend," "may," "estimate," "could," "plans," and
other similar expressions, or the negations thereof, generally
identify forward-looking statements. Forward-looking statements in
this press release include, without limitation, the ability of the
Company to address the factors sighted by our independent auditors
as a basis for their qualified audit opinion, the performance and
growth of our business, potential future acquisitions, and their
impact on the Company's performance. These forward- looking
statements are subject to known and unknown risks, uncertainties
and other factors, which could cause actual results to be
materially different from those contemplated by the forward-looking
statements. Such factors include, but are not limited to the
ability of our management team to successfully operate a health
services business with limited experience in that industry; our
ability to expand our health services business both organically and
through acquisitions, including our ability to identify suitable
acquisition candidates, acquire them at favorable prices and
successfully integrate them into our business; general economic
conditions and other factors, including prevailing interest rate
levels and stock market performance, which may affect our ability
to obtain the proposed capital and additional capital when needed
and on favorable terms; customer response to new products,
distribution channels and marketing initiatives; and increasing
competition in the sale of our products. We caution you that, while
forward-looking statements reflect our good faith beliefs, these
statements are not guarantees of future performance. In addition,
we disclaim any obligation to publicly update or revise any
forward- looking statement, whether as a result of new information,
future events or otherwise, except as required by law. Standard
Management is a holding company headquartered in Indianapolis, IN.
Information about the Company can be obtained by calling the
Investor Relations Department at 317-574-5221 or via the Internet
at http://www.sman.com/ . STANDARD MANAGEMENT CORPORATION AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited, dollars in
thousands) June 30 December 31 2006 2005 ---------- ----------
ASSETS Current assets: Cash and cash equivalents $ 977 $ 2,232
Accounts receivable, net 6,475 6,543 Inventories 3,495 3,880
Prepaid and other current assets 722 828 ---------- ----------
Total current assets 11,668 13,483 Property and equipment, net
10,414 10,950 Assets held for sale 942 1,506 Deferred financing
fees, net 1,073 2,009 Officer and other notes receivable, less
current portion 826 842 Investments in unconsolidated subsidiaries
160 5,160 Intangible assets, net 3,825 4,305 Goodwill 12,457 11,366
Other noncurrent assets 1,332 1,388 ---------- ---------- Total
assets $ 42,697 $ 51,009 ========== ========== LIABILITIES AND
SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,905
$ 2,201 Accrued expenses 4,226 2,392 Current portion of long-term
debt 6,273 2,533 Liabilities of discontinued operations - 1,069
---------- ---------- Total current liabilities 15,404 8,195
Long-term debt, less current portion 22,722 36,776 Other long-term
liabilities 1,152 1,095 ---------- ---------- Total liabilities
39,278 46,066 Shareholders' equity: Common stock, no par value, and
additional paid in capital, 60,000,000 shares and 40,000,000 shares
authorized, in 2006 and 2005, respectively and 10,712,859 shares
issued 70,790 68,537 Retained deficit (59,460) (55,793) Treasury
stock, at cost, 1,617,651 shares (8,018) (7,901) Accumulated other
comprehensive income 108 100 ---------- ---------- Total
shareholders' equity 3,420 4,943 ---------- ---------- Total
liabilities and shareholders' equity $ 42,698 $ 51,009 ==========
========== STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited dollars in
thousands, except per share amounts) Three Months Ended Six Months
Ended June 30 June 30 -------------------- --------------------
2006 2005 2006 2005 -------- -------- -------- -------- Net
revenues $12,622 $2,489 $26,606 $4,691 Cost of sales 8,845 1,957
18,868 3,738 -------- -------- -------- -------- Gross profit 3,777
532 7,738 953 Selling, general and administrative expenses 8,008
3,451 14,858 7,423 Depreciation and amortization 604 486 1,203
1,014 -------- -------- -------- -------- Operating loss (4,835)
(3,405) (8,323) (7,484) Other income, net 7,078 - 7,298 - Interest
expense (1,351) (1,186) (2,342) (2,310) -------- -------- --------
-------- Income (loss) before income taxes 892 (4,591) (3,367)
(9,794) Income tax expense (benefit) - - - - -------- --------
-------- -------- Net income (loss) from continuing operations 892
(4,591) (3,367) (9,794) Loss from discontinued operations, net of
income tax expense (benefit) of $0, $233, $0, and $212,
respectively (300) (772) (300) (34,029) -------- -------- --------
-------- Net income (loss) $ 592 $(5,363) $(3,667) $(43,823)
======== ======== ======== ======== Income (loss) per share: Basic:
Income (loss) from continuing operations $ 0.09 $ (0.58) $ (0.36) $
(1.23) Income (loss) from discontinued operations $ (0.03) $ (0.10)
$ (0.03) $ (4.29) -------- -------- -------- -------- Net income
(loss) $ 0.06 $ (0.68) $ (0.39) $ (5.52) ======== ======== ========
======== Weighted average shares outstanding 9,508,135 7,954,446
9,302,812 7,937,780 ========== ========== ========== ==========
Diluted: Income (loss) from continuing operations $ 0.09 $ (0.58) $
(0.36) $ (1.23) Income (loss) from discontinued operations $ (0.03)
$ (0.10) $ (0.03) $ (4.29) -------- -------- -------- -------- Net
income (loss) $ 0.06 $ (0.68) $ (0.39) $ (5.52) ======== ========
======== ======== Weighted average shares outstanding 12,296,464
7,954,446 9,302,812 7,937,780 =========== ========== ==========
========== STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES
RECONCILIATION STATEMENT AND DEFINITIONS Non-GAAP Basis (unaudited,
dollars in thousands) Three Months Ended Six Months Ended June 30
June 30 ------------------ ------------------ 2006 2005 2006 2005
-------- -------- -------- -------- Earnings before interest,
income taxes, depreciation and amortization ("EBITDA"): Operating
income (loss) $(4,835) $(3,405) $(8,323) $(7,484) Other income, net
7,078 - 7,298 - Depreciation and amortization 604 486 1,203 1,014
-------- -------- -------- -------- EBITDA $2,847 $(2,919) $178
$(6,470) Footnotes to Financial Information: Definitions: GAAP:
Amounts that conform with U.S. Generally Accepted Accounting
Principles. Non-GAAP: Amounts that do not conform with U.S. GAAP.
Note 1: Standard Management believes that the readers'
understanding of our performance is enhanced by the Company's
disclosure of certain Non-GAAP financial measures as presented in
this document. The Company's management believes that the adjusted
results provide some additional focus on the ongoing operations of
the Company. Standard Management's method and calculation of these
measures may be different than those used by other companies and,
therefore, they may not be comparable. Note 2: EBITDA shown in
these financial presentations is earnings before interest expense,
other income, income taxes, depreciation and amortization. Standard
Management believes that certain readers find EBITDA to be a method
for measuring a company's ability to service its debt, which is the
primary reason that Standard Management uses this financial
measure. EBITDA does not represent cash flows from operating
activities as defined by GAAP and should not be used as a measure
of liquidity. Standard Management's calculation of EBITDA may be
different from other companies.
http://www.newscom.com/cgi-bin/prnh/20010416/STANDARDLOGO
http://photoarchive.ap.org/ DATASOURCE: Standard Management
Corporation CONTACT: Standard Management Corporation Investor
Relations, +1-317-574-5221 Web site: http://www.sman.com/
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