SUNRISE, Fla., May 9 /PRNewswire-FirstCall/ -- NationsHealth, Inc.
(Nasdaq: NHRX; NHRXW; NHRXU) today announced its financial results
for the first quarter ended March 31, 2006. Revenue for the three
months ended March 31, 2006 increased 32% to $25.0 million from
$19.0 million for the corresponding period in 2005. Net loss for
the three months ended March 31, 2006 was $13.5 million, or $0.49
per share, compared to a net loss of $8.3 million, or $0.32 per
share, for the corresponding period in 2005. The Medicare Part D
segment, which consists of the Company's marketing, distribution
and enrollee services related to CIGNA's nationwide CIGNATURE Rx
Medicare Part D Prescription Drug Plan, contributed $12.2 million
to revenue in the first quarter of 2006, including approximately
$8.5 million of revenue related to initial marketing and enrollment
efforts. This service revenue was partially offset by lower net
product sales from the Company's medical products segment due to
the sale of the Company's respiratory division on September 2,
2005, which contributed approximately $6.2 million to revenue in
the first quarter of 2005. The net loss for the first quarter of
2006 reflected a loss of approximately $6.9 million, before
allocation of general and administrative expenses, attributable to
the CIGNATURE Rx Medicare Part D Prescription Drug Plan, including
approximately $17.2 million of initial marketing and enrollment
costs. As of April 30, 2006, the plan had approximately 170,000
enrollees. "Our first quarter results reflect our continued initial
enrollment efforts for CIGNATURE Rx," said Timothy Fairbanks, the
Company's Chief Financial Officer. "Looking forward, the amendment
we signed with CIGNA, which became effective February 20, 2006,
modified the compensation terms of our Strategic Agreement with
CIGNA for an interim period, and should enable us to demonstrate
improved operating cash flow commencing in the second quarter of
2006. In addition, with the conclusion of the initial open
enrollment period in mid-May, we expect our Part D operations to
become profitable starting in the third quarter." NationsHealth's
COO, Robert Tremain added, "Our recent management restructuring to
streamline our organization is one of several initiatives we have
undertaken to strengthen our ability to execute our business plan
and improve financial results." As previously announced,
NationsHealth will host a conference call at 11:00 a.m. ET today to
review its financial results for the first quarter ended March 31,
2006. Access Information: Date: May 9, 2006 Time: 11:00 a.m. ET
U.S./Canada dial-in number: 866-239-0753 International dial-in
number: 718-354-1157 Participant passcode: 3064683 Live webcast:
http://www.nationshealth.com/, listed under Investor Relations,
Conference Calls. Replay Access Information: A recording of the
conference call will be available three hours after completion
until May 16, 2006 at midnight ET at 888-203-1112 (U.S.) and 719-
457-0820 (International). The replay passcode is 3064683. The
webcast will be archived for on demand listening for 30 days on
NationsHealth's website, http://www.nationshealth.com/. About
NationsHealth, Inc. NationsHealth improves the delivery of
healthcare to Medicare and managed care beneficiaries by providing
medical products and prescription related services. NationsHealth
has a strategic alliance with CIGNA to offer their Medicare Part D
prescription drug plans nationally. Prior to launching its Medicare
Part D business, NationsHealth offered free discount prescription
cards, accepted at over 50,000 pharmacies nationwide, to
approximately 3.1 million cardholders. In addition, NationsHealth
provides home delivery of diabetes and ostomy medical products to
102,000 patients. NationsHealth is also the provider of diabetes
supplies to 12,000 Medicare beneficiaries at over 1,100 Kmart
pharmacies. For more information please visit
http://www.nationshealth.com/. This press release contains
forward-looking statements about NationsHealth, including
statements regarding management initiatives, efforts to streamline
operations, projections with respect to enrollment and market
opportunities for Part D and specialty pharmacy programs and future
financial results, none of which should be construed in any manner
as a guarantee that such results will in fact occur. In addition,
other written or oral statements that constitute forward-looking
statements may be made by us or on our behalf. Forward-looking
statements are statements that are not historical facts, and in
some cases may be identified by the words "anticipate," "project,"
"expect," "plan," "intend," "may," "should," "will," and similar
words or phrases. Such forward-looking statements, based upon the
current beliefs and expectations of NationsHealth's management, are
subject to risks and uncertainties, which could cause actual
results to differ from the forward-looking statements. The
following factors, among others, could cause actual results to
differ from those set forth in the forward-looking statements: our
ability to maintain our existing customer base; our customers'
desire to take advantage of our Part D and specialty pharmacy
services; uncertainty in our costs incurred in administering the
Part D program; changes in Medicare, Medicaid, Tricare, Champus and
any other state or national-based reimbursement program; changing
interpretations of generally accepted accounting principles;
outcomes of government reviews of NationsHealth's business
practices; inquiries and investigations and related litigation;
continued compliance with government regulations; legislation or
regulatory requirements or changes adversely affecting the
businesses in which NationsHealth is engaged; fluctuations in
customer demand; management of rapid growth; our ability to compete
effectively; timing and market acceptance of new products sold by
NationsHealth; general economic conditions; and geopolitical
events, regulatory changes and other risks and uncertainties
described in NationsHealth's Annual Report on Form 10-K for the
year ended December 31, 2005 and NationsHealth's other reports
filed with the Securities and Exchange Commission. The information
set forth herein should be read in light of such risks.
NationsHealth cautions investors not to place undue reliance on the
forward-looking statements contained herein. These statements speak
only as of the date of this press release and, except as required
by applicable law, NationsHealth assumes no obligation to update
the information contained herein. Contacts: At NationsHealth:
Timothy Fairbanks, CFO +1-954-903-5018 At Rx Communications Group:
Melody A. Carey (investors) +1-917-322-2571 SUMMARY CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per
share data) Three Months Ended March 31, 2006 2005 Revenue: Net
product sales $10,854 $17,137 Prescription card revenue 1,973 1,855
Service revenue 12,188 -- 25,015 18,992 Cost of product sales 5,284
6,926 Cost of services 19,082 -- Gross Profit 649 12,066 Operating
Expenses: Patient acquisition and related costs 1,081 9,154 Patient
service and fulfillment 2,444 3,892 General and administrative
7,842 4,304 Provision for doubtful accounts 856 2,321 Depreciation
and amortization 344 216 Amortization of equity issued to CIGNA 969
-- 13,536 19,887 Loss from Operations (12,887) (7,821) Other
Expense, net (643) (453) Net Loss $(13,530) $(8,274) Loss per share
- basic and diluted $(0.49) $(0.32) Weighted average shares
outstanding - basic and diluted 27,808 26,175 SUMMARY CONSOLIDATED
BALANCE SHEETS (in thousands) March 31, December 31, 2006 2005
(unaudited) ASSETS Current Assets: Cash and short-term investments
$5,854 $14,894 Accounts receivable, net 9,015 7,908 Inventory 1,167
1,285 Costs related to billings in process, net 843 874 Other
receivables 996 1,877 Prepaid expenses and other current assets
1,003 750 Total current assets 18,878 27,588 Property and
equipment, net 3,829 3,747 Investment in joint venture 1,530 1,488
Deferred CIGNA equity compensation 14,540 15,510 Other assets, net
1,813 1,526 Total assets $40,590 $49,859 LIABILITIES AND
STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $13,767
$13,387 Accrued expenses 11,499 12,030 Deferred revenue, current
portion 619 235 Line of credit 2,500 2,500 Total current
liabilities 28,385 28,152 Long-Term Liabilities: Deferred revenue
1,374 1,100 Convertible notes, net 5,440 5,176 Other long-term
liabilities 1,950 1,414 Total long-term liabilities 8,764 7,690
Stockholders' Equity 3,441 14,017 Total liabilities and
stockholders' equity $40,590 $49,859 DATASOURCE: NationsHealth,
Inc. CONTACT: Timothy Fairbanks, CFO At NationsHealth,
+1-954-903-5018; or Melody A. Carey At Rx Communications Group
(investors), +1-917-322-2571 Web site:
http://www.nationshealth.com/
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