Counsel Corporation's US Institutional Pharmacy Operation Announces Second Quarter And Six Month Results - Company Reports First Profitable Quarter In Three Years

Business Wire,  Oct 16, 1995  

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TORONTO, Ontario--(BUSINESS WIRE)--Oct. 16, 1995--COUNSEL CORPORATION (TSE:CXS) (NASDAQ:CXSNF) Allan Silber, Chairman and CEO of Counsel Corporation, and Chairman of Capstone Pharmacy Services, Inc., formerly Choice Drug Systems Inc., (NASDAQ:DOSE(common stock) DOSEW (warrants), a US-based institutional pharmacy services operation, today announced results for the second quarter and six month periods ended August 31, 1995. (See attached table).

Net sales for the three months ended August 31, 1995 increased 47 percent to US $16,251,000 from US $11,053,000 in the prior year period. Net income for the period increased to US $272,000, or US $.03 per share, from a net loss of US $3,554,426, or US $ .58 per share, for the same period in 1994.

Net sales for the six months ended August 31, 1995 increased 21 percent to US $26,969,000 from US $22,276,000 in the same period last year. The net loss for the first half of the 1996 fiscal year was US $146,000, or US $.02 per share, compared to a net loss of US $3,724,000, or US $.61 per share, in the same period last year.

Net losses for the 1994 three and six month periods include costs in connection with litigation totalling US $3,575,000 and US $3,665,000, respectively. Net income for the three month period ended August 31, 1995, includes a US $478,000 gain on the sale of subsidiary assets in conjunction with the Company's previously announced corporate restructuring plan and US $341,000 in other income. The net loss for the six month period ended August 31, 1995 includes the US $478,000 gain on the sale of subsidiary assets, US $371,000 in other income and a US $283,000 gain from an extraordinary item.

Dirk Allison, President and Chief Executive Officer, commented, "We are very pleased to announce Capstone's first profitable quarter in three years. The sales increases for the three and six month periods are due primarily to the continued growth of our core business segments of providing institutional pharmacy services to the long-term care and correctional markets. It should be noted that the fiscal 1996 second quarter is the first quarter to include revenues from the operations of PremierPharmacy. Capstone's long-term care business continued to grow in the second quarter, primarily through the ongoing integration of our previously announced agreement with Excelsior Health Management. We are currently servicing 2,000 of Excelsior's 4,000 patient beds, and expect to begin servicing an additional 400 beds by December 1st with 200-400 new beds to be added each successive month."

"Capstone became the leading national provider of institutional pharmacy services to the correctional market during the second quarter as we commenced services to an additional 15,000 inmates in 10 states. This includes our previously announced contracts in the states of Delaware, Texas, Ohio, and Illinois. While second quarter operating results reflect revenues from these contracts, the current third quarter will be the first quarter in which each of these new agreements will have been on-line for a full three month period. At the end of the second quarter, Capstone served approximately 100,000 inmates in 23 states, compared to 70,00 inmates in 18 states in January of this year. This strong growth has continued into the third quarter due to an increasing inmate population, as well as a trend towards privatization of the corrections industry."

Allan Silber said, "Beginning fiscal 1996, we initiated an action program to restructure the Company's operations: focus on its core competencies; revitalize these operations through expanding our geographic presence and customer base; and establish Capstone's position in the US $4 billion institutional pharmacy industry. Towards this end, we have achieved a number of significant corporate milestones during the first six months of this fiscal year and are very pleased with our progress to date.

"The May 1995 acquisition of PremierPharmacy added US $30 million in annual revenues and solidified Capstone's position as the leading provider of institutional pharmacy services to the New York metropolitan area's long-term care market. This transaction also provided us with a strong senior management team. Under their leadership, we completed a corporate restructuring plan and have sold or closed unprofitable, non-core business segments which accounted for approximately US $1 million in combined annual operating losses. The successful completion of this plan then allowed us to concentrate on growing the Company both internally and through acquisitions. Internally, we have signed a significant number of new institutional contracts, In fact, we signed more new correction contracts in the first six months of fiscal 1996 than during any full year in the Company's history. Our increased customer base and solid financial position have brought benefits heretofore unrealized. We have been able to renegotiate certain drug purchasing contracts which have produced substantial savings; realized operating efficiencies from our previously announced plan to consolidate our various corporate offices; and achieve economies of scale. The positive impact of these and additional cost saving measures will continue throughout the remainder of the current fiscal year."