Nov 24 2009
The Amacore Group, Inc., (OTC BB: ACGI), a leader in providing membership benefit programs, insurance programs, program administration services, and other innovative and high-quality benefit solutions to individuals, families and employer groups nationwide, reports financial results for the three and nine months ended September 30, 2009.
During the third quarter Amacore continued its cost reduction efforts, highlights of which are summarized below:
Third Quarter Financial Highlights:
- Gross profit margins improved to 35% for the third quarter 2009 compared with 30% in the same quarter last year;
- Cost of sales decreased 23% to $4.6 million from $6.0 million in the same quarter last year;
- Operating expenses decreased by $14.4 million, or 59%, for the quarter, to $10.2 million, down from $24.6 in the same quarter last year;
- Total revenue was $7.1 million compared with $8.6 million in the year-ago quarter. Included in the year-ago quarter revenue was revenue generated from a marketer with whom Amacore has discontinued its relationship because of the high cost of sales and lower than anticipated billing and retention performance;
- Loss from operations was reduced to $7.7 million from $22.1 million in the same quarter last year, a decrease of $14.4 million or 65%. Excluding the effects of non-cash impairment losses taken on goodwill and other intangible assets as well as related amortization, loss from operations was $3.3 million as compared to $5.8 million in the same quarter last year.
- Net loss available to common stockholders was reduced to $9.9 million or $0.01 per share, compared to $11.7 million or $0.08 per share in the same quarter last year;
- Net cash used to fund operating activities improved to $2.6 million (after excluding the impact of a $1.15 million cash settlement) in the current quarter from $5.3 million in the same quarter last year, reflecting the company’s steady focus on reducing customer acquisition costs, improving efficiency, and streamlining contractual agreements.
Highlights for the First Nine Months of 2009:
- Gross profit margins improved to 36% as compared with 28% in the comparable year-ago period;
- Cost of sales decreased to $14.2 million, compared with $15.3 million in the in the comparable year-ago period;
- Operating expenses improved $12.3 million, or 32.8%, for the first nine months of 2009, to $25.2 million, compared with $37.5 million in the comparable year-ago period;
- Total revenue for the first nine months of 2009 was $22 million, a 3.4% increase, or $726 thousand improvement over the comparable year-ago period;
- Loss from operations was reduced to $17.4 million from $31.5 million, a decrease of $14.1 million or 45%, as compared to the comparable year-ago period. Excluding the recognition of non-cash impairment losses taken on goodwill and other intangible assets, related amortization and reversal of a prior year non-cash litigation accrual, loss from operations was $12.4 million as compared to $13.2 million in the same quarter last year.
- Net loss available to common shareholders was reduced by $21 million to $9.9 million, or $0.01 per share, compared with $31.0 million, or $0.21 per share in the comparable year-ago period;
- Net cash used to fund operating activities decreased to $12.1 million from $17.3 million in the year-ago nine-month period.
Jay Shafer, Chairman and Chief Executive Officer of Amacore Group said, “The quarterly and year-over-year improvements across so many of our key financial performance metrics reflect the aggressive efforts we have made throughout the year to improve the efficiency and effectiveness of our operations. Included in these improvements, we dramatically decreased our operating costs, opened new sales channels, and renegotiated and signed more favorable marketing and vendor agreements. The decline in quarterly revenue compared with last year reflects the fact that we discontinued a significant contract with a third party direct response marketer whose customer acquisition costs and residual business metrics were unfavorable. I am pleased to note, however, that we have replaced this marketer with others who are producing superior results.”
Mr. Shafer continued, “Among other significant highlights this quarter, Amacore signed several new marketer agreements, including one with Acquisition Technologies, an inbound order confirmation call center that provides Amacore with the ability to cross- sell additional products all while dramatically improving our sales closing rates. We are also in development with two new online marketers, each of which, we believe, will help improve and extend exposure for Amacore’s quality programs as well as top-line growth in upcoming quarters. Our recently signed agreement with InternetSafety.com™, a leading provider of web filtering solutions for consumers and businesses, and its flagship software, Safe Eyes®, a leading parental control solution, gives Amacore another quality product with which we can deepen our customer base. Further, the spin-off of Zurvita in July helped reduced our cash burn and has also contributed revenue through its marketing agreements with Amacore partner OmniReliant Holdings. Another exciting development is our recent launch of a new merchant billing service for which we have already added several clients. This ancillary administrative service provides Amacore a revenue stream with minimal associated costs, thus helping to further bolster our bottom line. Each of these steps, we believe, continues Amacore on in the direction of improved performance and shareholder value.”
Guy Norberg, President of Amacore Group commented, “It has been a demanding and exciting year for our entire team, as we continue to deliver on our strategy of managing our growth while creating more cost efficient operations. In the midst of a challenging economy, Amacore is persevering and excelling by keenly managing financial performance and by keeping a steady focus on new initiatives, new sales channels, and new product development. As a result, we believe we have reached a point where we are better positioned to increase our revenue base and improve our cash flow. As those efforts continue, we look forward to continued adherance to our strategy with the goal of further improving our results in upcoming quarters.”