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Sharps Compliance (SMED)
Q3 2013 Earnings Call
May 01, 2013 11:00 am ET
Deborah K. Pawlowski - Director
David P. Tusa - Chief Executive Officer, President and Director
Diana P. Diaz - Chief Financial Officer, Principal Accounting Officer, Vice President and Secretary
Joseph P. Munda - Sidoti & Company, LLC
Brian J. Butler - Wunderlich Securities Inc., Research Division
Kevin M. Steinke - Barrington Research Associates, Inc., Research Division
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Deborah K. Pawlowski
Thank you, Donna, and good morning, everyone. We appreciate your participation in our third quarter fiscal year 2013 financial results conference call. You should have a copy of the news detailing Sharps' results that was released earlier this morning. If you do not have the release, you may obtain it from the company's website at www.sharpsinc.com. On the call with me today are Dave Tusa, Sharps' President and CEO; and Diana Diaz, its Vice President and Chief Financial Officer. David and Diana will provide formal remarks, after which we will open it up for questions. If you are listening via webcast, note you do have the ability to submit questions through the Internet. If you are aware, we may make some forward-looking statements during the formal presentation and a question-and-answer portion of this teleconference. These statements apply to future events, which are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from where we are today. These factors are outlined in our earnings release, as well as in documents filed by the company with the Securities and Exchange Commission. These can be found at our website or at sec.gov. So with that, let me turn the call over to David to begin the review and discussion. David?
David P. Tusa
Thank you, Debbie, and welcome, everyone. I'll briefly review the third quarter and discuss our progress in key targeted markets as well as growth strategy, then I'll turn the call over to Diana, who will review the financials in a bit more detail.
We reported revenue of $5.4 million for the third quarter, up just 7% over the prior year period when you exclude the January 2012 CDC business. While we did book some advanced flu shot orders during the third quarter, which bolstered the Retail market billings, we didn't have any large program orders such as for our pharmaceutical manufacturer or Patient Support Programs. These orders are usually lumpy as pharmaceutical manufacturers order in bulk as part of our vendor management inventory offering.
Additionally, our third quarter distributor orders for the Professional and Home Health Care markets were lower than we expected due to timing of orders. Now comparing with the trailing second quarter of fiscal year 2013, revenue decreased $300,000 or about 5%. The second quarter of fiscal year 2013 included [indiscernible] the large pharmaceutical manufacturer orders related to Patient Support Programs totaling about $500,000. There were no comparable orders in the third quarter fiscal year 2013.
Our Retail market continues to grow where our billings increased 25% in the third quarter to $1.7 million. A significant portion of the Retail market billings is related to the flu shot season, a market where we believe we're the leader in providing retailers for the solutions designed to manage medical waste generated as part of flu and other immunizations.
The current quarter included carryover orders from the 2012 flu shot season, as well as advanced orders for the 2013 flu shot season for one large customer. Sales in the Retail market were also higher by $185,000 for our consumer-focused Complete Needle Collection & Disposal System and $85,000 for the TakeAway Environmental Return System.
Professional market billings, which represented about 17% of the total billings, grew over 7% to $875,000 in the third quarter fiscal year 2013, from about $815,000 in the prior year period. The driving force behind the Professional market billings is a telemarketing activities in our e-commerce-driven website. Billings through the inside and online sales channel increased about 22% year-over-year to nearly $800,000 in the third quarter. We're building stronger awareness of our cost-effective solutions per the inside and online sales channel and the Professional market, and believe we should continue to see substantial inroads in the coming quarters.
Offsetting the growth in the Professional market inside and online sales where lower sales through to distributor channel, which has adversely affected by the timing of orders. We continue to wait for decision-making on the Veterans Administration consumer medication return envelope program. And as we have discussed on prior occasions, we believe our TakeAway Environmental Return System envelope is uniquely qualified to meet all of the requirements of the contemplated program. But in saying this, we can make no assurances that the VA will launch a nationwide program nor select Sharps Compliance as its vendor.
We're building a solid pipeline of opportunities, including significant activity through our joint marketing alliance with Daniels. Excluding government, our pipeline targeted opportunities currently exceeds $30 million in annual recurring revenue opportunities, with over 60% of these opportunities that attributable to alliance type of opportunities where both the mail back and the pickup service are integrated into the service offering. We've been awarded annual recurring revenue opportunities associated with alliance of about $900,000 so far and expect to see -- begin to see the impact, the revenue impact of the success beginning in the June quarter -- June 2013 quarter.