Sharps Compliance Corp (SMED)

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Sharps Compliance Corp. (SMED)

F4Q 2013 Earnings Conference Call

August 14, 2013 11:00 AM ET


David P. Tusa - President and CEO

Diana P. Diaz - VP and CFO

Deborah K. Pawlowski - Investor Relations


Brian Butler - Wunderlich Securities Inc.

Kevin Steinke - Barrington Research Associates, Inc., Research Division

Joseph Munda - Sidoti & Company, LLC

Craig Hoagland - Anderson Hoagland & Co.

George Walsh - Gilford Securities



Greetings and welcome to the Sharps Compliance Corporation's Fourth Quarter and Fiscal Year 2013 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Deborah Pawlowski, Investor Relations for Sharps Compliance Corporation. Thank you. Ms. Pawlowski, you may begin.

Deborah K. Pawlowski

Thank you, Doug, and good morning, everyone. We appreciate your participation in our fourth 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 at

On the call with me today are David P. 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.

As you’re aware, we may make some forward-looking statements during the formal presentation and in the 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

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 to our fourth quarter call. I'll briefly review the fourth quarter results as well as discuss how we’re executing on our growth strategy, and the progress we’re making in our targeted markets. I’ll then turn the call over to Diana, who will review the financials in a bit more detail.

As you can see we reported revenue of $5.3 million for the fourth quarter, up nearly 16% or $710,000 over the prior-year period. Solid growth in sales and in our Professional and Pharmaceutical manufacturer market drove the increase, which was partially offset by lower billings in the retail market, which were softer due to the timing of flu shot related orders.

Professional market billings grew almost $260,000 or 33% in the fourth quarter, driven significantly by alliance related business of about $150,000 for the quarter. Now, when I refer to alliance related business, this is the new business that we’ve lined that includes both our mailback as well as the Daniels pickup service making for a comprehensive offering.

The Professional market results have positively impacted by the targeted telemarketing activities and our ecommerce driven website. Billings for our inside and online sales channel increased by 47% year-over-year or about $300,000 to nearly $925,000 in the fourth quarter. We are building stronger awareness of our cost effective solutions for the inside and online sales channel in the professional market and we believe we still continue to see substantial market inroads in the coming quarters.

We recently hired a new Director of inside sales who has over 20 years of experience with call center management and we expect great things from him as he manages the team, expands the customer base and attacks the over 800,000 Professional market prospects. He is working very closely with our marketing teams and launch of number of new and innovative initiatives over the next few weeks.

The Pharmaceutical manufacturer market also posted strong revenue growth this quarter, up $322,000 or 115% compared to the year-ago quarter. This quarter included re-supply orders from two Patient Support Programs as well as the increases in fulfillment activity for our Patient Support Programs in general.

Our customers have been very pleased with the positive results of the Patient Support Programs and we’re leveraging this to drive more opportunities with existing and new programs. Sales for this market again fluctuated measurably from quarter-to-quarter, due to the variability and the timing of re-supply orders associated with the programs. And yes, we’re beginning to see new Patient Support Program opportunities for new drug launches, that has the potential to positively impact calendar years 2014 and 2015 and to give you an idea for the annual revenue opportunity, we’re looking at as many as five potential new programs and watchfully roll that to generate up to $5 million in annual revenue.

Following a couple a very strong quarters of sales in the retail market driven by seasonal flu shot orders, our sales were down 136,000 or 16%. However, we’re positive about the anticipated growth in the sector looking forward. In this market, this retail market, it should be positively impacted in the future as shown with recently published reports that talk about our projected increases in clinics, doubling over the next four years.

So we see increasing demand in the retail clinic sector not only because of the newly insured patients under healthcare reform, but also patients looking for more convenient care. The two leading retail pharmacies in the country are emphasizing their efforts to grow their capability as a low cost provider of healthcare services for non-chronic conditions. So given our market share, we believe we’re very well positioned and capitalize on this trend, which would in turn drop demand for cost effective regulatory compliant solutions for medical waste management.

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