AUXILIO Top-Line Grows from Six New Client Accounts
Ken Nagy, CFA
On November 15, 2011, Auxilio, Inc. (AUXO - Analyst Report), a Managed Print Services (MPS) company for health care industry, reported financial results for its fiscal 2011 third quarter and nine months, ended September 30, 2011.
A solid quarter resulted in an over 68 percent year over year increase in sales, with revenue expanding $2.703 million to $6.674 million from $3.970 million for the three months ended September 30, 2010.
Auxilio’s strength in its third quarter revenues was primarily driven by traction gained from six new client accounts that were signed since the beginning of the fourth quarter of 2010, $1.2 million in equipment revenue and the Company’s recurring revenue base that reflects its 100 percent customer retention rate.
The Company has retained 100 percent of its hospital partnerships since its launch and currently has a national portfolio of 35 long-term contracts representing hospitals, health care systems and affiliated clinical and administrative support offices that consist of over 100 facilities.
Still, Auxilio reported a net loss of $47,327, improving $131,562 from a net loss of $178,889 during the third quarter of 2010.
The improvement in net loss was primarily a result of increased revenue offset by lower margins. Gross margin fell from 21 percent in the second quarter of 2010 to 19 percent for the three months ended June 30, 2011. Margins were negatively impacted by increased costs associated with absorbing new customer’s legacy contracts with third party vendors.
It is important to note that as Auxilio implements its programs, it attempts to improve upon these legacy contracts, therefore reducing costs over the term of the contract.
Still, the Company continues to show significant strength and improvement in milestones as evidenced by new MPS contract sales, increased resources through a marketing alliance and improved presence in its current markets.
During the quarter the Company signed a 3 year MPS contract with Holy Cross Hospital and renewed a comprehensive master service agreement for its MPS program through 2016 with Saint Alphonsus Health System that is worth approximately $12 million in revenue over the life of the contract.
Based on the weighted average number of basic and diluted common shares of 19.395 million shares, basic and diluted net loss per share resulted in a net loss of $0.00 per basic and diluted share during the third quarter of fiscal 2011. This compared to a basic and diluted net loss per share of $0.01 on a weighted average number of basic and diluted shares of 19.278 million shares during the three months ended September 30, 2010.
For the nine months ended September 30, 2011, year over year revenues improved by nearly 44 percent or $4.903 million to $16.160 million from $11.257 million for the comparable nine months of 2010.
Still, net loss for the nine months increased by $954,764 year over year to a net loss of $1.481 million for the nine months ended September 30, 2011. This compares to a net loss of $526,380 for the comparable nine months of 2010.
The increase in net loss was primarily due to lower margins.
Gross margin for the nine months decreased to 14.8 percent compared to gross margin of 23.7 percent for the nine months ended September 30, 2010.
Based on the weighted average number of basic and diluted common shares of 19.356 million shares, basic and diluted net loss per share resulted in a net loss of $0.08 per basic and diluted share during the nine months ended September 30, 2011. This compared to a basic and diluted net loss per share of $0.03 on a weighted average number of basic and diluted shares of 19.189 million shares during the nine months ended September 30, 2010.
As of September 30, 2011 Auxilio had $2.054 million in cash and equivalents and working capital of $1.397 million. This compares to $2.249 million in cash and equivalents and working capital of $820,548 as of December 31, 2010.
Along the same lines, the Company raised an additional 1.85 million from the private offering of secured convertible notes and warrants during the quarter.
It should be noted that in May 2011, Auxilio secured an expanded marketing alliance with Sodexo, a leading provider of comprehensive service solutions.
The Company expects the expanded relationship with Sodexo to further advance sales progress as well as expand the ability to attract and sign new customer contracts.
The strategic relationship with Sodexo promotes Auxilio’s managed print solutions and leverages Sodexo’s customer pipeline by providing crucial, C-suite access to over 1,300 U.S. hospitals in the $22 billion market in which Auxilio competes.
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