AUXILIO reports financial results for third quarter 2013

AUXILIO, Inc. (OTCBB: AUXO), the nation's pioneer and leading Managed Print Services (MPS) company for health care, today reported financial results for its quarter ended September 30, 2013.

"Our strong financial performance year-over-year and sequential revenue growth is due to significant increases in our recurring revenue base and margin improvement after successfully implementing 54 new MPS programs in 2012 and 2013," stated Joseph J. Flynn, president and CEO of AUXILIO, Inc. "In addition, we are continuing to expand business with our current customers, which is indicative of the confidence we have earned and the effectiveness of our MPS program to drive out costs for hospitals and hospital systems. The traction we have gained in the market should position us well to capitalize on new business opportunities in our pipeline."

Financial Results

For the Three Months Ended September 30, 2013

For the three months ended September 30, 2013, AUXILIO reported recurring service revenues increased by $1.3 million from existing and expanded contracts. Total revenues increased by approximately $2 million to $10.8 million, as compared to the same period in 2012. Equipment revenues were $1 million as compared to approximately $200,000 for the same period in 2012 due to copier fleet refresh activities at two customer accounts. Cost of revenues was $8.6 million for the three months ended September 30, 2013, as compared to $7.4 million for the same period in 2012. The increase is attributed to the service costs to support new and expanded recurring service contracts and the increase in new equipment placed. Gross profit for the third quarter of 2013 was $2.2 million or 21% of revenues, compared to $1.4 million or 15% of revenue for the same period of 2012. This improvement is a result of the increase in recurring service revenue and margin improvements from existing accounts.

Operating expenses for the third quarter of 2013 were $1.4 million, compared to $1.7 million in the same period of 2012. Net income for the third quarter of 2013 was $811,000 or $0.04 per share, compared to a net loss of $660,000 or $0.03 per share, in the same period of 2012. AUXILIO improved its non-GAAP measure of adjusted income from operations in the third quarter of 2013. Excluding $93,000 in charges related to stock based compensation, we achieved $950,000 or 9% of revenue compared to a loss of $180,000 or 2% of revenue after excluding charges of $92,000 related to stock-based compensation and $68,000 in charges related to stock granted for marketing activities, in the same period last year. We do not expect the non-GAAP measure of adjusted income from operations as a percent of revenue to stay this high over the next couple of quarters due to anticipated new account implementations.

For the Nine Months Ended September 30, 2013

For the nine months ended September 30, 2013, the company reported revenues of $31 million, an increase of 19% when compared to $26 million in the same period in 2012. Recurring service revenues increased 27% from new contracts and expanded contracts; however offsetting this increase were lower revenues from some accounts related to rate reductions from renewals. Cost of revenues was $25 million, as compared to $23 million for the same period in 2012. The increase in the cost of revenues is attributed primarily to staffing and service costs to support the new and expanded recurring service contracts. Gross profit for the first nine months of 2013 was $5.4 million, or 18% of revenues, compared to $3.1 million or 12% for the same period of 2012. Operating expenses for the first nine months of 2013 were $4.5 million, compared to $4.8 million in the same period of 2012. Net income for the first nine months of 2013 was $679,000, or $0.03 per share, compared to a net loss of $2.3 million or $0.12 per share, in the same period of 2012. After excluding charges of $409,000 related to stock-based compensation and $190,000 in charges related to stock granted for marketing activities, non-GAAP measure of adjusted income from operations for the nine months ended September 30, 2013 was $1.6 million or 5% of revenue compared to a loss of $1.1 million or 4% of revenue after excluding charges of $304,000 related to stock-based compensation and $272,000 in charges related to stock granted for marketing activities in the same period of 2012.

At September 30, 2013, our cash and cash equivalents were $3.1 million. During the nine months ended September 30, 2013, our cash provided by operating activities amounted to $1.1 million, as compared to $1.0 million used for operating activities for the same period in 2012. The improvement in cash provided by operating activities in 2013 is primarily a result of improved margins being generated from our recurring service revenue contracts. The cash used for operating activities for 2012 was primarily due to the costs incurred to implement new recurring service revenue contracts.

Paul Anthony, CFO of AUXILIO, stated: "This quarter marks a full year of positive adjusted income from operations. We attribute our strong financial performance to the number of new contracts and implementations executed over the last two years, and our ability to improve margins over time. Although we don't expect earnings to increase at the current rate due to on-boarding costs we expect to incur with anticipated new business growth, we feel our company is in a good position to absorb new accounts without compromising our ability to turn a profit."

Source: AUXILIO, Inc.