(State or other jurisdiction of | (I.R.S. Employer Identification No.) | ||||
incorporation or organization) |
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||
The NASDAQ Capital Market |
Large accelerated filer ☐ | Accelerated filer ☐ | Smaller reporting company | |||||||||
Emerging growth company |
SHARPS COMPLIANCE CORP. AND SUBSIDIARIES | ||||||||
PAGE | ||||||||
March 31, | June 30, | |||||||||||||
2022 | 2021 | |||||||||||||
ASSETS | ||||||||||||||
CURRENT ASSETS | ||||||||||||||
Cash | $ | $ | ||||||||||||
Accounts receivable, net | ||||||||||||||
Inventory | ||||||||||||||
Contract asset | ||||||||||||||
Prepaid and other current assets | ||||||||||||||
TOTAL CURRENT ASSETS | ||||||||||||||
PROPERTY, PLANT AND EQUIPMENT, net | ||||||||||||||
OPERATING LEASE RIGHT OF USE ASSET | ||||||||||||||
FINANCING LEASE RIGHT OF USE ASSET, net | ||||||||||||||
INVENTORY, net of current portion | ||||||||||||||
OTHER ASSETS | ||||||||||||||
GOODWILL | ||||||||||||||
INTANGIBLE ASSETS, net | ||||||||||||||
DEFERRED TAX ASSET, net | ||||||||||||||
TOTAL ASSETS | $ | $ | ||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
CURRENT LIABILITIES | ||||||||||||||
Accounts payable | $ | $ | ||||||||||||
Accrued liabilities | ||||||||||||||
Operating lease liability | ||||||||||||||
Financing lease liability | ||||||||||||||
Current maturities of long-term debt | ||||||||||||||
Contract liability | ||||||||||||||
TOTAL CURRENT LIABILITIES | ||||||||||||||
CONTRACT LIABILITY, net of current portion | ||||||||||||||
OPERATING LEASE LIABILITY, net of current portion | ||||||||||||||
FINANCING LEASE LIABILITY, net of current portion | ||||||||||||||
OTHER LIABILITIES | ||||||||||||||
LONG-TERM DEBT, net of current portion | ||||||||||||||
TOTAL LIABILITIES | ||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||||
Common stock, $ | ||||||||||||||
Treasury stock, at cost, | ( | ( | ||||||||||||
Additional paid-in capital | ||||||||||||||
Retained earnings | ||||||||||||||
TOTAL STOCKHOLDERS' EQUITY | ||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ |
Three-Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
REVENUES | $ | $ | ||||||||||||
Cost of revenues | ||||||||||||||
GROSS PROFIT | ||||||||||||||
Selling, general and administrative | ||||||||||||||
Depreciation and amortization | ||||||||||||||
OPERATING INCOME (LOSS) | ( | |||||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||
Interest income | ||||||||||||||
Interest expense | ( | ( | ||||||||||||
Income associated with derivative instrument | ||||||||||||||
TOTAL OTHER INCOME (EXPENSE) | ( | |||||||||||||
INCOME BEFORE INCOME TAXES | ||||||||||||||
INCOME TAX EXPENSE | ||||||||||||||
Current | ||||||||||||||
Deferred | ||||||||||||||
TOTAL INCOME TAX EXPENSE | ||||||||||||||
NET INCOME (LOSS) | $ | ( | $ | |||||||||||
NET INCOME (LOSS) PER COMMON SHARE | ||||||||||||||
Basic | $ | ( | $ | |||||||||||
Diluted | $ | ( | $ | |||||||||||
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER COMMON SHARE: | ||||||||||||||
Basic | ||||||||||||||
Diluted | ||||||||||||||
Nine-Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
REVENUES | $ | $ | ||||||||||||
Cost of revenues | ||||||||||||||
GROSS PROFIT | ||||||||||||||
Selling, general and administrative | ||||||||||||||
Depreciation and amortization | ||||||||||||||
OPERATING INCOME (LOSS) | ( | |||||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||
Interest income | ||||||||||||||
Interest expense | ( | ( | ||||||||||||
Income associated with derivative instrument | ||||||||||||||
TOTAL OTHER EXPENSE | ( | ( | ||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | ( | |||||||||||||
INCOME TAX EXPENSE | ||||||||||||||
Current | ||||||||||||||
Deferred | ||||||||||||||
TOTAL INCOME TAX EXPENSE | ||||||||||||||
NET INCOME (LOSS) | $ | ( | $ | |||||||||||
NET INCOME (LOSS) PER COMMON SHARE | ||||||||||||||
Basic | $ | ( | $ | |||||||||||
Diluted | $ | ( | $ | |||||||||||
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER COMMON SHARE: | ||||||||||||||
Basic | ||||||||||||||
Diluted | ||||||||||||||
Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2021 | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Issuance of stock, acquisition | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
Balances, March 31, 2022 | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2020 | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Balances, March 31, 2021 | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2021 | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Issuance of common stock pursuant to secondary offering, net | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Issuance of stock, acquisition | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
Balances, March 31, 2022 | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2020 | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Balances, March 31, 2021 | $ | ( | $ | ( | $ | $ | $ |
Nine-Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||
Net income (loss) | $ | ( | $ | |||||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Bad debt expense | ||||||||||||||
Inventory write-off | ||||||||||||||
Loss on disposal of property, plant and equipment | ||||||||||||||
Stock-based compensation expense | ||||||||||||||
Income associated with derivative instrument | ( | ( | ||||||||||||
Deferred tax expense | ||||||||||||||
Changes in operating assets and liabilities, net of business combinations: | ||||||||||||||
Accounts receivable | ( | ( | ||||||||||||
Inventory | ( | |||||||||||||
Prepaid and other assets | ( | |||||||||||||
Accounts payable and accrued liabilities | ||||||||||||||
Contract asset and contract liability | ( | |||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | ( | |||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||
Purchase of property, plant and equipment | ( | ( | ||||||||||||
Payments for business acquisitions, net of cash acquired | ( | |||||||||||||
Additions to intangible assets | ( | ( | ||||||||||||
NET CASH USED IN INVESTING ACTIVITIES | ( | ( | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||
Proceeds from exercise of stock options | ||||||||||||||
Proceeds from issuance of common stock, net | ||||||||||||||
Proceeds from long-term debt | ||||||||||||||
Repayments of long-term debt | ( | ( | ||||||||||||
Payments on financing lease liabilities | ( | ( | ||||||||||||
Payments of debt issuance costs | ( | |||||||||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||||||||
NET INCREASE (DECREASE) IN CASH | ( | |||||||||||||
CASH, beginning of period | ||||||||||||||
CASH, end of period | $ | $ | ||||||||||||
SUPPLEMENTAL CASH FLOW DISCLOSURES: | ||||||||||||||
Income taxes paid, net of refunds | $ | $ | ( | |||||||||||
Interest paid on long-term debt | $ | $ | ||||||||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||||
Issuance of common stock for acquisition | $ | $ | ||||||||||||
Property, plant and equipment financed through accounts payable | $ | $ | ( | |||||||||||
Purchase of previously leased property, plant and equipment financed with note payable | $ | $ | ||||||||||||
Three-Months Ended March 31, | ||||||||||||||||||||||||||
2022 | % Total | 2021 | % Total | |||||||||||||||||||||||
REVENUES BY SOLUTION: | ||||||||||||||||||||||||||
Mailbacks | $ | % | $ | % | ||||||||||||||||||||||
Route-based pickup services | % | % | ||||||||||||||||||||||||
Unused medications | % | % | ||||||||||||||||||||||||
Third party treatment services | % | % | ||||||||||||||||||||||||
Other (1) | % | % | ||||||||||||||||||||||||
Total revenues | $ | % | $ | % | ||||||||||||||||||||||
Nine-Months Ended March 31, | ||||||||||||||||||||||||||
2022 | % Total | 2021 | % Total | |||||||||||||||||||||||
REVENUES BY SOLUTION: | ||||||||||||||||||||||||||
Mailbacks | % | $ | % | |||||||||||||||||||||||
Route-based pickup services | % | % | ||||||||||||||||||||||||
Unused medications | % | % | ||||||||||||||||||||||||
Third party treatment services | % | % | ||||||||||||||||||||||||
Other (1) | % | % | ||||||||||||||||||||||||
Total revenues | $ | % | $ | % |
Three-Months Ended March 31, | Nine-Months Ended March 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Lease cost (1) - fixed rent expense: | |||||||||||||||||||||||
Operating lease cost included in: | |||||||||||||||||||||||
Cost of revenues | $ | $ | $ | $ | |||||||||||||||||||
Selling, general and administrative | |||||||||||||||||||||||
Financing lease cost included in: | |||||||||||||||||||||||
Cost of revenues (amortization expense) | |||||||||||||||||||||||
Interest expense | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Nine-Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
Operating cash outflow for operating leases | $ | $ | |||||||||
Non-cash changes to the Operating ROU Asset and Operating Lease Liability | |||||||||||
Additions and modifications to ROU asset obtained from new operating lease liabilities | $ | $ | |||||||||
Additions to ROU asset obtained from new financing lease liabilities | $ | $ | |||||||||
Future payments due in the twelve months ended March 31, | Operating lease | Financing lease | ||||||
2023 | $ | $ | ||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
Total undiscounted lease payments | ||||||||
Less effects of discounting | ( | ( | ||||||
Lease liability recognized | $ | $ | ||||||
March 31, 2022 | June 30, 2021 | ||||||||||
Acquisition loan, monthly payments of $ | $ | $ | |||||||||
Equipment loan, monthly payments of $ | |||||||||||
Real estate loans, monthly payments of $ | |||||||||||
Total long-term debt | |||||||||||
Less: current portion | |||||||||||
Long-term debt, net of current portion | $ | $ |
Twelve Months Ending March 31, | |||||
2023 | $ | ||||
2024 | $ | ||||
2025 | $ | ||||
2026 | $ | ||||
$ |
Three-Months Ended March 31, | Nine-Months Ended March 31, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Stock-based compensation expense included in: | ||||||||||||||||||||||||||
Cost of revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Selling, general and administrative | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three-Months Ended March 31, | Nine-Months Ended March 31, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Net income (loss) as reported | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||||||
Effect of dilutive stock options | ||||||||||||||||||||||||||
Weighted average diluted common shares outstanding | ||||||||||||||||||||||||||
Net income (loss) per common share | ||||||||||||||||||||||||||
Basic | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
Diluted | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
Employee stock options excluded from computation of dilutive income per share amounts because their effect would be anti-dilutive |
Three-Months Ended March 31, | Nine-Months Ended March 31, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Options exercised | ||||||||||||||||||||||||||
Proceeds (in thousands) | $ | $ | $ | $ | ||||||||||||||||||||||
Average exercise price per share | $ | $ | $ | $ |
March 31, 2022 | June 30, 2021 | |||||||||||||
Raw materials | $ | $ | ||||||||||||
Finished goods | ||||||||||||||
Total inventory | ||||||||||||||
Less: current portion | ||||||||||||||
Inventory, net of current portion | $ | $ |
Accounts receivable | $ | |||||||
Fixed assets | ||||||||
Intangibles | ||||||||
Goodwill | ||||||||
Accounts payable and accrued liabilities | ( | |||||||
Total purchase price, net of cash acquired | $ |
Accounts receivable | $ | |||||||
Other current assets | ||||||||
Fixed assets | ||||||||
Intangibles | ||||||||
Goodwill | ||||||||
Accounts payable and accrued liabilities | ( | |||||||
Total purchase price, net of cash acquired | $ |
Three-Months Ended March 31, | Nine-Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||
2022 | % | 2021 | % | 2022 | % | 2021 | % | |||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | 17,579 | 100.0 | % | $ | 27,528 | 100.0 | % | $ | 50,372 | 100.0 | % | $ | 57,690 | 100.0 | % | ||||||||||||||||||||||||||||||||||
Cost of revenues | 12,601 | 71.7 | % | 14,129 | 51.3 | % | 37,266 | 74.0 | % | 35,031 | 60.7 | % | ||||||||||||||||||||||||||||||||||||||
Gross profit | 4,978 | 28.3 | % | 13,399 | 48.7 | % | 13,106 | 26.0 | % | 22,659 | 39.3 | % | ||||||||||||||||||||||||||||||||||||||
SG&A expense | 4,713 | 26.8 | % | 4,181 | 15.2 | % | 13,301 | 26.4 | % | 11,725 | 20.3 | % | ||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 272 | 1.5 | % | 216 | 0.8 | % | 726 | 1.4 | % | 625 | 1.1 | % | ||||||||||||||||||||||||||||||||||||||
Operating Income (Loss) | (7) | — | % | 9,002 | 32.7 | % | (921) | (1.8) | % | 10,309 | 17.9 | % | ||||||||||||||||||||||||||||||||||||||
Total other income (expense) | 7 | — | % | (29) | (0.1) | % | (59) | (0.1) | % | (93) | (0.2) | % | ||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | — | — | % | 8,973 | 32.6 | % | (980) | (1.9) | % | 10,216 | 17.7 | % | ||||||||||||||||||||||||||||||||||||||
Income tax expense | 287 | 1.6 | % | 2,123 | 7.7 | % | 66 | 0.1 | % | 2,431 | 4.2 | % | ||||||||||||||||||||||||||||||||||||||
Net Income (Loss) | $ | (287) | (1.6) | % | $ | 6,850 | 24.9 | % | $ | (1,046) | (2.1) | % | $ | 7,785 | 13.5 | % |
Three-Months Ended March 31, | ||||||||||||||||||||
2022 | 2021 | Variance | ||||||||||||||||||
BILLINGS BY MARKET: | ||||||||||||||||||||
Professional | $ | 5,492 | $ | 4,606 | $ | 886 | ||||||||||||||
Retail | 4,575 | 21,714 | (17,139) | |||||||||||||||||
Home Health Care | 2,786 | 2,299 | 487 | |||||||||||||||||
Pharmaceutical Manufacturer | 2,503 | 567 | 1,936 | |||||||||||||||||
Long-Term Care | 876 | 973 | (97) | |||||||||||||||||
Government | 517 | 642 | (125) | |||||||||||||||||
Environmental | 180 | 76 | 104 | |||||||||||||||||
Other | 166 | 131 | 35 | |||||||||||||||||
Subtotal | 17,095 | 31,008 | (13,913) | |||||||||||||||||
GAAP Adjustment * | 484 | (3,480) | 3,964 | |||||||||||||||||
Revenue Reported | $ | 17,579 | $ | 27,528 | $ | (9,949) |
Three-Months Ended March 31, | ||||||||||||||||||||||||||
2022 | % Total | 2021 | % Total | |||||||||||||||||||||||
BILLINGS BY SOLUTION: | ||||||||||||||||||||||||||
Mailbacks | $ | 8,992 | 52.5 | % | $ | 24,373 | 78.5 | % | ||||||||||||||||||
Route-based pickup services | 4,044 | 23.7 | % | 3,597 | 11.6 | % | ||||||||||||||||||||
Unused medications | 2,098 | 12.3 | % | 2,078 | 6.7 | % | ||||||||||||||||||||
Third party treatment services | 180 | 1.1 | % | 76 | 0.2 | % | ||||||||||||||||||||
Other (1) | 1,781 | 10.4 | % | 884 | 3.0 | % | ||||||||||||||||||||
Total billings | 17,095 | 100.0 | % | 31,008 | 100.0 | % | ||||||||||||||||||||
GAAP adjustment (2) | 484 | (3,480) | ||||||||||||||||||||||||
Revenue reported | $ | 17,579 | $ | 27,528 |
Nine-Months Ended March 31, | ||||||||||||||||||||
2022 | 2021 | Variance | ||||||||||||||||||
BILLINGS BY MARKET: | ||||||||||||||||||||
Professional | $ | 15,208 | $ | 13,277 | $ | 1,931 | ||||||||||||||
Retail | 14,807 | 31,500 | (16,693) | |||||||||||||||||
Home Health Care | 6,753 | 7,479 | (726) | |||||||||||||||||
Pharmaceutical Manufacturer | 4,900 | 4,808 | 92 | |||||||||||||||||
Long-Term Care | 2,406 | 3,342 | (936) | |||||||||||||||||
Government | 1,788 | 1,654 | 134 | |||||||||||||||||
Environmental | 265 | 390 | (125) | |||||||||||||||||
Other | 692 | 452 | 240 | |||||||||||||||||
Subtotal | 46,819 | 62,902 | (16,083) | |||||||||||||||||
GAAP Adjustment * | 3,553 | (5,212) | 8,765 | |||||||||||||||||
Revenue Reported | $ | 50,372 | $ | 57,690 | $ | (7,318) |
Nine-Months Ended March 31, | ||||||||||||||||||||||||||
2022 | % Total | 2021 | % Total | |||||||||||||||||||||||
BILLINGS BY SOLUTION: | ||||||||||||||||||||||||||
Mailbacks | $ | 24,741 | 52.7 | % | $ | 42,719 | 67.9 | % | ||||||||||||||||||
Route-based pickup services | 10,794 | 23.1 | % | 10,244 | 16.3 | % | ||||||||||||||||||||
Unused medications | 6,592 | 14.1 | % | 6,152 | 9.8 | % | ||||||||||||||||||||
Third party treatment services | 265 | 0.6 | % | 390 | 0.6 | % | ||||||||||||||||||||
Other (1) | 4,427 | 9.5 | % | 3,397 | 5.4 | % | ||||||||||||||||||||
Total billings | 46,819 | 100.0 | % | 62,902 | 100.0 | % | ||||||||||||||||||||
GAAP adjustment (2) | 3,553 | (5,212) | ||||||||||||||||||||||||
Revenue reported | $ | 50,372 | $ | 57,690 |
(a) | Exhibits: | ||||
101.INS | XBRL Instance Document (filed herewith) | ||||
101.SCH | XBRL Taxonomy Extension Schema Document (filed herewith) | ||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith) | ||||
101.DEF | XBRL Taxonomy Extension Linkbase Document (filed herewith) | ||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document (filed herewith) | ||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith) |
REGISTRANT: | |||||
SHARPS COMPLIANCE CORP. | |||||
Dated: May 12, 2022 | By: /s/ PAT MULLOY | ||||
Pat Mulloy | |||||
Chief Executive Officer and President | |||||
(Principal Executive Officer) | |||||
Dated: May 12, 2022 | By: /s/ ERIC T. BAUER | ||||
Eric T. Bauer | |||||
Executive Vice President and Chief Financial Officer | |||||
(Principal Financial Officer) |
Dated: May 12, 2022 | By: /s/ DIANA P. DIAZ | ||||
Diana P. Diaz | |||||
Senior Vice President and Chief Accounting Officer | |||||
(Principal Accounting Officer) |
Date: May 12, 2022 | /s/Pat Mulloy | ||||
Chief Executive Officer and President | |||||
(Principal Executive Officer) |
Date: May 12, 2022 | /s/Eric T. Bauer | ||||
Executive Vice President and Chief Financial Officer | |||||
(Principal Financial Officer) |
Date: May 12, 2022 | /s/Diana P. Diaz | ||||
Senior Vice President and Chief Accounting Officer | |||||
(Principal Accounting Officer) |
Date: May 12, 2022 | /s/Pat Mulloy | ||||
Chief Executive Officer and President | |||||
(Principal Executive Officer) |
Date: May 12, 2022 | /s/Eric T. Bauer | ||||
Executive Vice President and Chief Financial Officer | |||||
(Principal Financial Officer) |
Date: May 12, 2022 | /s/Diana P. Diaz | ||||
Senior Vice President and Chief Accounting Officer | |||||
(Principal Accounting Officer) |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Mar. 31, 2022 |
Jun. 30, 2021 |
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Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 40,000,000 | 40,000,000 |
Common stock, shares issued (in shares) | 19,725,678 | 17,454,859 |
Common stock, shares outstanding (in shares) | 19,430,063 | 17,159,244 |
Treasury stock, shares repurchased (in shares) | 295,615 | 295,615 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Mar. 31, 2022 |
Mar. 31, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
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Income Statement [Abstract] | ||||
REVENUES | $ 17,579 | $ 27,528 | $ 50,372 | $ 57,690 |
Cost of revenues | 12,601 | 14,129 | 37,266 | 35,031 |
GROSS PROFIT | 4,978 | 13,399 | 13,106 | 22,659 |
Selling, general and administrative | 4,713 | 4,181 | 13,301 | 11,725 |
Depreciation and amortization | 272 | 216 | 726 | 625 |
OPERATING INCOME (LOSS) | (7) | 9,002 | (921) | 10,309 |
OTHER INCOME (EXPENSE) | ||||
Interest income | 16 | 0 | 30 | 0 |
Interest expense | (53) | (55) | (167) | (134) |
Income associated with derivative instrument | 44 | 26 | 78 | 41 |
TOTAL OTHER INCOME (EXPENSE) | 7 | (29) | (59) | (93) |
INCOME (LOSS) BEFORE INCOME TAXES | 0 | 8,973 | (980) | 10,216 |
INCOME TAX EXPENSE | ||||
Current | 34 | 1,083 | 59 | 1,147 |
Deferred | 253 | 1,040 | 7 | 1,284 |
TOTAL INCOME TAX EXPENSE | 287 | 2,123 | 66 | 2,431 |
NET INCOME (LOSS) | $ (287) | $ 6,850 | $ (1,046) | $ 7,785 |
NET INCOME (LOSS) PER COMMON SHARE | ||||
Basic (in dollars per share) | $ (0.01) | $ 0.41 | $ (0.06) | $ 0.47 |
Diluted (in dollars per share) | $ (0.01) | $ 0.40 | $ (0.06) | $ 0.46 |
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER COMMON SHARE: | ||||
Basic (in shares) | 19,412 | 16,556 | 18,842 | 16,481 |
Diluted (in shares) | 19,412 | 17,187 | 18,842 | 16,978 |
ORGANIZATION AND BACKGROUND |
9 Months Ended |
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Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BACKGROUND | ORGANIZATION AND BACKGROUND Organization: The accompanying unaudited condensed consolidated financial statements include the financial transactions and accounts of Sharps Compliance Corp. and its wholly owned subsidiaries, Sharps Compliance, Inc. of Texas (dba Sharps Compliance, Inc.), Sharps e-Tools.com Inc. (“Sharps e-Tools”), Sharps Manufacturing, Inc., Sharps Environmental Services, Inc. (dba Sharps Environmental Services of Texas, Inc.), Sharps Safety, Inc., Alpha Bio/Med Services LLC, Bio-Team Mobile LLC, Citiwaste, LLC, Sharps Properties, LLC, Affordable Medical Waste LLC and Midwest Medical Waste, Inc. (collectively, “Sharps” or the “Company”). All significant intercompany accounts and transactions have been eliminated upon consolidation. Business: Sharps is a full-service national provider of comprehensive waste management services including medical, pharmaceutical and hazardous for small and medium quantity generators. The Company’s solutions include Sharps Recovery System™ (formerly Sharps Disposal by Mail System®), TakeAway Recovery System, TakeAway Medication Recovery System™, MedSafe®, TakeAway Recycle System™, ComplianceTRACSM, SharpsTracer®, Sharps Secure® Needle Disposal System, Complete Needle™ Collection & Disposal System, TakeAway Environmental Return System™, Pitch-It IV™ Poles, Asset Return System and Spill Kit Recovery System. The Company also offers its route-based pick-up services in a thirty-seven (37) state region of the South, Southeast, Southwest, Midwest and Northeast portions of the United States.
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BASIS OF PRESENTATION |
9 Months Ended |
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Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information and with instructions to Form 10-Q and, accordingly, do not include all information and footnotes required under generally accepted accounting principles in the United States of America ("GAAP") for complete financial statements. Additionally, the preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts. In the opinion of management, these interim condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial position of the Company as of March 31, 2022, the results of its operations for the three and nine months ended March 31, 2022 and 2021, cash flows for the nine months ended March 31, 2022 and 2021, and stockholders’ equity for the three and nine months ended March 31, 2022 and 2021. The results of operations for the three and nine months ended March 31, 2022 are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2021. Effects of COVID-19 A novel strain of coronavirus ("COVID-19") was first identified in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, many companies have experienced disruptions in their operations and in servicing customers. The Company has implemented some and may take additional precautionary measures intended to help ensure the well-being of its employees, facilitate continued uninterrupted servicing of customers and minimize business disruptions. The full extent of the future impacts of COVID-19 on the Company's operations is uncertain. A prolonged outbreak could have a material adverse impact on the financial results and business operations of the Company. To date, the Company has not identified any material adverse impact of COVID-19 on its financial position and results of operations.
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SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition: The components of revenues by solution which reflect a disaggregation of revenue by contract type are as follows (in thousands):
(1)The Company’s other products include IV poles, accessories, containers, asset return boxes and other miscellaneous items with single performance obligations. Vendor Managed Inventory ("VMI") - The VMI program includes terms that meet the “bill and hold” criteria and as such are recognized when the order is placed, title has transferred, there are no acceptance provisions and amounts are segregated in the Company’s warehouse for the customer. During the three and nine months ended March 31, 2022, the Company recorded billings from inventory builds that are held in VMI under these service agreements of $1.1 million and $2.9 million, respectively. During the three and nine months ended March 31, 2021, the Company recorded billings from inventory builds that are held in VMI under these service agreements of $0.3 million and $3.8 million, respectively. As of March 31, 2022 and June 30, 2021, $4.4 million and $3.7 million, respectively, of solutions sold through that date were held in VMI pending fulfillment or shipment to patients of pharmaceutical manufacturers who offer these solutions to patients in an ongoing patient support program. The contract asset is related to VMI service agreements within the maibacks contract type category when the revenue recognition exceeds the amount of consideration the Company was entitled to at the point in time of satisfying the performance obligation associated with the sale of the compliance and container system. The contract liability is related to the mailbacks and unused medications contract type categories in which cash consideration exceeds the transaction price allocated to completed performance obligations. The amount recognized during the nine months ended March 31, 2022 and 2021 related to contract liabilities recorded as of June 30, 2021 and 2020 were $6.4 million and $2.4 million, respectively. Income Taxes: Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of valuation allowances requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. No such allowance was deemed necessary based on the Company's assessment of the recoverability of its deferred tax assets. Accounts Receivable: Accounts receivable consist primarily of amounts due to the Company from normal business activities. Accounts receivable balances are determined to be delinquent when the amount is past due based on the contractual terms with the customer. The Company maintains an allowance for doubtful accounts to reflect the likelihood of not collecting certain accounts receivable based on past collection history and specific risks identified among uncollected accounts. Accounts receivable are charged to the allowance for doubtful accounts when the Company determines that the receivable will not be collected and/or when the account has been referred to a third party collection agency. The Company has a history of minimal uncollectible accounts.
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RECENTLY ISSUED ACCOUNTING STANDARDS |
9 Months Ended |
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Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
RECENTLY ISSUED ACCOUNTING STANDARDS | RECENTLY ISSUED ACCOUNTING STANDARDSIn June 2016, guidance for credit losses of financial instruments was issued, which requires entities to measure credit losses for financial assets measured at amortized cost and certain other instruments based on expected losses rather than incurred losses. The provisions of the new guidance are effective for annual periods beginning after December 15, 2022 (effective July 1, 2023 for the Company), including interim periods within the reporting period, and early application is permitted. The Company is in the initial stages of evaluating the impact of the new guidance on its consolidated financial statements and related disclosures as well as evaluating the available transition methods. The Company will continue to evaluate the standard as well as additional changes, modifications or interpretations which may impact the Company. |
INCOME TAXES |
9 Months Ended |
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Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXESThe Company’s effective tax rate for the nine months ended March 31, 2022 and 2021 was (6.7)% and 23.8%, respectively. During the nine months ended March 31, 2022, the estimated annual effective tax rate was 4.4%, and the primary components of the rate were federal tax at the statutory rate of 21%, the tax effect of non-deductible expenses and the impact of state income taxes. Tax expense for the current year to date period also includes $0.1 million of discrete items such as return to provision adjustments and the tax effects of stock-based compensation and as such have been excluded from the Company’s estimated annual effective tax rate. During the nine months ended March 31, 2021, the effective tax rate was based on the statutory federal tax rate of 21% as well as an approximated state income tax rate net of the federal benefit. |
LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES The Company has operating leases for real estate, field equipment, office equipment and vehicles and financing leases for vehicles and office equipment. Operating leases are included in Operating Lease Right of Use ("ROU") Asset and Operating Lease Liability on our Condensed Consolidated Balance Sheets. Financing leases are included in Financing Lease ROU Asset and Financing Lease Liability on the Condensed Consolidated Balance Sheets. During the three and nine months ended March 31, 2022 and 2021, lease cost amounts, which reflect the fixed rent expense associated with operating and financing leases, are as follows (in thousands):
(1) Short-term lease cost and variable lease cost were not significant during the period. During the nine months ended March 31, 2022 and 2021, the Company had the following cash and non-cash activities associated with leases (in thousands):
As of March 31, 2022, the weighted average remaining lease term for all operating and financing leases is 5.40 years and 4.83 years, respectively. The weighted average discount rate associated with operating and financing leases as of March 31, 2022 is 3% for each. The future payments due under operating leases as of March 31, 2022 is as follows (in thousands):
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NOTES PAYABLE AND LONG-TERM DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTES PAYABLE AND LONG-TERM DEBT | NOTES PAYABLE AND LONG-TERM DEBT On March 18, 2022, certain wholly owned subsidiaries of the Company amended and restated its existing Credit and Loan Agreements with its existing commercial bank ("Credit Agreement"). The Credit Agreement expands the facility available to the Company, extends the maturity date of the Credit Agreement from December 28, 2023 to March 18, 2027 and increases the maximum Cash Flow Leverage Ratio from 3.00 to 3.50. The Credit Agreement provides for a $36.0 million committed credit facility. The proceeds of the credit facility may be utilized as follows: (i) $6.0 million for working capital, letters of credit (up to $1.0 million) and general corporate purposes that can be increased to $10.0 million upon the Company’s request, and (ii) $30.0 million for acquisitions. The Company paid a facility fee of $0.1 million upon execution of the Credit Agreement. Indebtedness under the Credit Agreement is secured by substantially all of the Company’s assets with advances outstanding under the working capital portion of the credit facility at any time limited to a Borrowing Base (as defined in the Credit Agreement) equal to 80% of eligible accounts receivable plus the lesser of (i) 50% of eligible inventory and (ii) $3.0 million. Advances under the acquisition portion of the credit facility are limited to 75% of the purchase price of an acquired company and convert to a five-year term note at the end of a three-year advancing period. Borrowings bear interest at the greater of (a) zero percent or (b) the SOFR AVG 30 Day in Advance ("SOFR30A") plus a credit spread adjustment of 0.10% and a margin of 2.5%. The interest rate as of March 31, 2022 was approximately 2.85%. The Company pays a fee of 0.25% per annum on the unused amount of the committed credit facility. The Credit Agreement also aggregated certain debt agreements previously executed by the Company with its existing commercial agreement, changing the interest rate but retaining the original maturity and monthly payment requirements as shown below including: •Equipment loan which is secured by equipment at the Texas Treatment Facility. •Real estate loan which is secured by the Company’s real estate investment at the Texas Treatment Facility. •Real estate loan which is secured by property in Pennsylvania which had previously been leased by the Company for its operations. Each of these agreements bears interest at rates consistent with the Credit Agreement. At March 31, 2022 and June 30, 2021, long-term debt consisted of the following (in thousands):
The Company has availability under the Credit Agreement of $35.3 million ($5.3 million for the working capital and $30.0 million for acquisitions) as of March 31, 2022 with the option to extend the availability up to $40.0 million. The Company has $0.7 million in letters of credit outstanding as of March 31, 2022. The Credit Agreement contains affirmative and negative covenants that, among other things, require the Company to maintain a maximum cash flow leverage ratio of no more than 3.5 to 1.0 and a minimum debt service coverage ratio of not less than 1.15 to 1.00. The Credit Agreement also contains customary events of default which, if incurred, may terminate the agreement and require immediate repayment of all indebtedness to the lenders. The leverage ratio covenant may limit the amount available under the agreement. The Company was in compliance with all the financial covenants under the Credit Agreement as of March 31, 2022. Payments due on long-term debt subsequent to March 31, 2022 are as follows (in thousands):
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STOCK-BASED COMPENSATION |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based compensation cost for options and restricted stock awarded to employees and directors is measured at the grant date based on the calculated fair value of the award and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant). Contingently issued awards with a requisite service period that precedes the grant date are measured and recognized at the start of the requisite service period and remeasured each reporting period until the grant date. Total stock-based compensation expense for the three and nine months ended March 31, 2022 and 2021 is as follows (in thousands):
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EARNINGS PER SHARE |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares after considering the additional dilution related to common stock options and restricted stock. In computing diluted earnings per share, the outstanding common stock options are considered dilutive using the treasury stock method. The Company’s restricted stock awards are considered participating securities as the shares have full voting rights and are entitled to participate in dividends declared on common shares, if any, and undistributed earnings. The two-class method presentation of the basic and diluted EPS is not presented as the amount of earnings allocated to the participating securities was not material for the periods presented. Instead, the unvested awards are included in the diluted EPS. The following information is necessary to calculate earnings per share for the periods presented (in thousands, except per-share amounts):
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EQUITY TRANSACTIONS |
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY TRANSACTIONS | EQUITY TRANSACTIONS During the three and nine months ended March 31, 2022 and 2021, respectively, stock options to purchase shares of the Company's common stock were exercised as follows:
As of March 31, 2022, there was $1.1 million and $0.8 million of stock compensation expense related to non-vested options and non-vested restricted stock awards, respectively, which is expected to be recognized over weighted average periods of 2.49 years for each. On August 30, 2021, the Company closed its previously announced underwritten secondary offering of a total of 2,070,000 shares of its common stock at a public offering price of $8.65 per share, including the exercise in full by the underwriter of its option to purchase an additional 270,000 shares to cover over-allotments in connection with the offering. After the underwriting discount and offering expenses payable by the Company of $1.1 million, the Company received net proceeds of approximately $16.8 million.
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INVENTORY |
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INVENTORY | INVENTORY The components of inventory are as follows (in thousands):
The current portion of inventory includes amounts which the Company expects to sell in the next twelve month period based on historical sales.
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ACQUISITIONS |
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Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS | ACQUISITIONS Affordable Medical Waste LLC On October 22, 2021, the Company acquired Affordable Medical Waste LLC, a route-based provider of medical waste solutions with about 500 route-based customer locations in the Midwest, primarily in Indiana, for $2.2 million, net of cash acquired of $0.1 million, paid in cash from funds on hand. This tuck-in acquisition enhances the Company's presence in the Midwest and improves route density in the service area. The following amounts represent the fair value of the assets acquired and liabilities assumed (in thousands):
Intangibles is primarily comprised of amounts allocated to customer relationships in the amount of $0.8 million. The fair value of the fixed assets were determined using the market approach (level 2 inputs) whereas the fair value of the customer relationships was determined using the income approach (level 3 inputs). Midwest Medical Waste, Inc. On February 4, 2022, the Company acquired Midwest Medical Waste, Inc., a route-based provider of medical waste management solutions with about 600 locations in Kansas for a total purchase price of $4.4 million, net of cash acquired of $0.3 million. The purchase price consisted of 25% in Company stock (164,821 shares of the Company's stock valued at $1.1 million (the "Common Stock Consideration")) and 75% in cash, paid from funds on hand. The issuance of the Common Stock Consideration was not registered under the Securities Act of 1933, as amended, and was issued pursuant to an exemption from the registration requirements thereunder. The following amounts represent the fair value of the assets acquired and liabilities assumed (in thousands):
Intangibles is primarily comprised of amounts allocated to customer relationships in the amount of $1.9 million. The fair value of the fixed assets were determined using the market approach (level 2 inputs) whereas the fair value of the customer relationships was determined using the income approach (level 3 inputs). Acquisitions in General During the three and nine months ended March 31, 2022, the Company incurred $0.2 million and $0.4 million, respectively, of acquisition related expenses for investment banking, legal and accounting fees which are included within selling, general and administrative expenses on our condensed consolidated statements of operations. The results of operations of the acquired business have been included in the condensed consolidated statements of operations from the date of acquisition. Pro forma results of operations for Affordable Medical Waste LLC and Midwest Medical Waste, Inc., are not presented because the pro forma effects were not material to the Company's consolidated results of operations, either individually or in the aggregate. The goodwill recorded for the acquisition will be deductible for income taxes. The goodwill recognized for the acquisitions is attributable to expected revenue synergies generated by the integration of our products and services with those acquisitions and cost synergies resulting from the consolidation or elimination of certain functions.
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SUBSEQUENT EVENTS |
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Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTSOn April 4, 2022, the Company announced that it appointed W. Patrick Mulloy as President and Chief Executive Officer. Mr. Mulloy, a director of the Company since February 2021, succeeded David P. Tusa, who resigned from the role effective April 1, 2022 to pursue other endeavors. In connection with his appointment, Mr. Mulloy was granted: a Sign-On Bonus of $100,000, a Restricted Stock Award of 20,000 shares of the Company’s common stock and an option to purchase 20,000 shares of the Company’s common stock. The Restricted Stock Award and option vest over a period of four years. Under a Separation and Release Agreement executed on April 1, 2022, Mr. Tusa received: (i) a cash payment of $600,000 in exchange for cancellation of his employment agreement dated July 14, 2003, (ii) acceleration of the vesting of all unvested stock options (202,400 shares with value of approximately $0.4 million) held by Mr. Tusa and (iii) continuation certain benefits for up to 18 months including medical and dental insurance, automobile lease and automobile insurance with value of less than $0.1 million. |
SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Income Taxes | Income Taxes: Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of valuation allowances requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. No such allowance was deemed necessary based on the Company's assessment of the recoverability of its deferred tax assets. |
Accounts Receivable | Accounts Receivable: Accounts receivable consist primarily of amounts due to the Company from normal business activities. Accounts receivable balances are determined to be delinquent when the amount is past due based on the contractual terms with the customer. The Company maintains an allowance for doubtful accounts to reflect the likelihood of not collecting certain accounts receivable based on past collection history and specific risks identified among uncollected accounts. Accounts receivable are charged to the allowance for doubtful accounts when the Company determines that the receivable will not be collected and/or when the account has been referred to a third party collection agency. The Company has a history of minimal uncollectible accounts. |
Recently Issued Accounting Standards | In June 2016, guidance for credit losses of financial instruments was issued, which requires entities to measure credit losses for financial assets measured at amortized cost and certain other instruments based on expected losses rather than incurred losses. The provisions of the new guidance are effective for annual periods beginning after December 15, 2022 (effective July 1, 2023 for the Company), including interim periods within the reporting period, and early application is permitted. The Company is in the initial stages of evaluating the impact of the new guidance on its consolidated financial statements and related disclosures as well as evaluating the available transition methods. The Company will continue to evaluate the standard as well as additional changes, modifications or interpretations which may impact the Company. |
SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of revenue by solution | The components of revenues by solution which reflect a disaggregation of revenue by contract type are as follows (in thousands):
(1)The Company’s other products include IV poles, accessories, containers, asset return boxes and other miscellaneous items with single performance obligations.
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LEASES (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of lease components and other information | During the three and nine months ended March 31, 2022 and 2021, lease cost amounts, which reflect the fixed rent expense associated with operating and financing leases, are as follows (in thousands):
(1) Short-term lease cost and variable lease cost were not significant during the period. During the nine months ended March 31, 2022 and 2021, the Company had the following cash and non-cash activities associated with leases (in thousands):
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Schedule of maturities of operating lease liabilities | The future payments due under operating leases as of March 31, 2022 is as follows (in thousands):
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NOTES PAYABLE AND LONG-TERM DEBT (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | At March 31, 2022 and June 30, 2021, long-term debt consisted of the following (in thousands):
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Schedule of payments due on long-term debt | Payments due on long-term debt subsequent to March 31, 2022 are as follows (in thousands):
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STOCK-BASED COMPENSATION (Tables) |
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Schedule of stock-based compensation | Total stock-based compensation expense for the three and nine months ended March 31, 2022 and 2021 is as follows (in thousands):
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EARNINGS PER SHARE (Tables) |
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share | The following information is necessary to calculate earnings per share for the periods presented (in thousands, except per-share amounts):
|
EQUITY TRANSACTIONS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock option activity | During the three and nine months ended March 31, 2022 and 2021, respectively, stock options to purchase shares of the Company's common stock were exercised as follows:
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INVENTORY (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventory | The components of inventory are as follows (in thousands):
|
ACQUISITIONS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets acquired and liabilities assumed | The following amounts represent the fair value of the assets acquired and liabilities assumed (in thousands):
The following amounts represent the fair value of the assets acquired and liabilities assumed (in thousands):
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ORGANIZATION AND BACKGROUND (Details) |
9 Months Ended |
---|---|
Mar. 31, 2022
stateRegion
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of route-based pick-up services in state region | 37 |
SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
Jun. 30, 2021 |
|
Accounting Policies [Abstract] | |||||
Billings recorded from inventory builds | $ 1.1 | $ 0.3 | $ 2.9 | $ 3.8 | |
Solutions sold that were held in vendor managed inventory | $ 4.4 | 4.4 | $ 3.7 | ||
Contract with customer, liability, revenue recognized | $ 6.4 | $ 2.4 |
INCOME TAXES (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2022 |
Mar. 31, 2021 |
Jun. 30, 2022 |
|
Income Tax Contingency [Line Items] | ||||
Effective income tax rate | (6.70%) | 23.80% | ||
Discrete tax expense | $ 0.1 | |||
Forecast | ||||
Income Tax Contingency [Line Items] | ||||
Effective income tax rate | 4.40% |
LEASES - Maturities of Leases (Details) $ in Thousands |
Mar. 31, 2022
USD ($)
|
---|---|
Operating lease | |
2023 | $ 3,239 |
2024 | 2,970 |
2025 | 2,653 |
2026 | 1,733 |
2027 | 849 |
Thereafter | 2,233 |
Total undiscounted lease payments | 13,677 |
Less effects of discounting | (1,104) |
Lease liability recognized | 12,573 |
Financing lease | |
2023 | 216 |
2024 | 215 |
2025 | 215 |
2026 | 202 |
2027 | 159 |
Thereafter | 28 |
Total undiscounted lease payments | 1,035 |
Less effects of discounting | (90) |
Lease liability recognized | $ 945 |
NOTES PAYABLE AND LONG-TERM DEBT - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Jun. 30, 2021 |
|
Debt Instrument [Line Items] | ||
Total long-term debt | $ 3,402 | $ 4,064 |
Less: current portion | 307 | 735 |
Long-term debt, net of current portion | 3,095 | 3,329 |
Acquisition loan | Term Loan | ||
Debt Instrument [Line Items] | ||
Monthly payments | 43 | |
Total long-term debt | 0 | 431 |
Equipment loan | Term Loan | ||
Debt Instrument [Line Items] | ||
Monthly payments | 17 | |
Debt issuance costs, net | 31 | |
Total long-term debt | 682 | 830 |
Real estate loan | Term Loan | ||
Debt Instrument [Line Items] | ||
Monthly payments | 9 | |
Total long-term debt | $ 2,720 | $ 2,803 |
NOTES PAYABLE AND LONG-TERM DEBT - Schedule of Payments Due on Long-term Debt (Details) - Term Loan $ in Thousands |
Mar. 31, 2022
USD ($)
|
---|---|
Long-term Debt, Fiscal Year Maturity [Abstract] | |
2023 | $ 307 |
2024 | 320 |
2025 | 2,111 |
2026 | 695 |
Total long-term debt | $ 3,433 |
STOCK-BASED COMPENSATION (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | $ 388 | $ 530 | $ 1,017 | $ 832 |
Cost of revenues | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | 19 | 0 | 33 | 0 |
Selling, general and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | $ 369 | $ 530 | $ 984 | $ 832 |
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Earnings Per Share [Abstract] | ||||
Net income (loss) as reported | $ (287) | $ 6,850 | $ (1,046) | $ 7,785 |
Net income (loss) as reported | $ (287) | $ 6,850 | $ (1,046) | $ 7,785 |
Weighted average common shares outstanding (in shares) | 19,412 | 16,556 | 18,842 | 16,481 |
Effect of dilutive stock options (in shares) | 0 | 631 | 0 | 497 |
Weighted average diluted common shares outstanding (in shares) | 19,412 | 17,187 | 18,842 | 16,978 |
Net income (loss) per common share | ||||
Basic (in dollars per share) | $ (0.01) | $ 0.41 | $ (0.06) | $ 0.47 |
Diluted (in dollars per share) | $ (0.01) | $ 0.40 | $ (0.06) | $ 0.46 |
Employee stock options excluded from computation of dilutive income per share amounts because their effect would be anti-dilutive (in shares) | 924 | 0 | 924 | 0 |
EQUITY TRANSACTIONS - Exercised (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Stockholders' Equity Note [Abstract] | ||||
Options exercised (in shares) | 0 | 72,750 | 0 | 141,281 |
Proceeds | $ 0 | $ 314 | $ 0 | $ 625 |
Average exercise price per share (in dollars per share) | $ 0 | $ 4.32 | $ 0 | $ 4.42 |
EQUITY TRANSACTIONS - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Aug. 30, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Class of Stock [Line Items] | |||
Issuance of common stock (in shares) | 2,070,000 | ||
Shares price (in dollars per share) | $ 8.65 | ||
Underwriting discount and offering expenses | $ 1,100 | ||
Proceeds from issuance of common stock, net | $ 16,800 | $ 16,771 | $ 0 |
Over-Allotment Option | |||
Class of Stock [Line Items] | |||
Issuance of common stock (in shares) | 270,000 | ||
Non-vested options | |||
Class of Stock [Line Items] | |||
Compensation expense related to non-vested awards | $ 1,100 | ||
Weighted average period | 2 years 5 months 26 days | ||
Non-vested restricted stock awards | |||
Class of Stock [Line Items] | |||
Compensation expense related to non-vested awards | $ 800 | ||
Weighted average period | 2 years 5 months 26 days |
INVENTORY (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Jun. 30, 2021 |
---|---|---|
Components of inventory [Abstract] | ||
Raw materials | $ 2,530 | $ 2,040 |
Finished goods | 5,436 | 5,063 |
Total inventory | 7,966 | 7,103 |
Less: current portion | 6,979 | 6,114 |
Inventory, net of current portion | $ 987 | $ 989 |
ACQUISITIONS - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Feb. 04, 2022 |
Oct. 22, 2021 |
Jun. 30, 2021 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 10,216 | $ 6,735 | ||
Affordable Medical Waste LLC | ||||
Business Acquisition [Line Items] | ||||
Accounts receivable | $ 65 | |||
Fixed assets | 145 | |||
Intangibles | 771 | |||
Goodwill | 1,261 | |||
Accounts payable and accrued liabilities | (61) | |||
Total purchase price, net of cash acquired | $ 2,181 | |||
Midwest Medical Waste, Inc. | ||||
Business Acquisition [Line Items] | ||||
Accounts receivable | $ 152 | |||
Other current assets | 75 | |||
Fixed assets | 140 | |||
Intangibles | 1,940 | |||
Goodwill | 2,220 | |||
Accounts payable and accrued liabilities | (87) | |||
Total purchase price, net of cash acquired | $ 4,440 |
SUBSEQUENT EVENTS (Details) - Subsequent Event - USD ($) $ in Thousands |
Apr. 04, 2022 |
Apr. 01, 2022 |
---|---|---|
Current Chief Executive Officer | ||
Subsequent Event [Line Items] | ||
Sign-on bonus | $ 100 | |
Options granted (in shares) | 20,000 | |
Current Chief Executive Officer | Restricted stock | ||
Subsequent Event [Line Items] | ||
Equity instruments other than options granted (in shares) | 20,000 | |
Award vesting period | 4 years | |
Current Chief Executive Officer | Options | ||
Subsequent Event [Line Items] | ||
Award vesting period | 4 years | |
Former Chief Executive Officer | ||
Subsequent Event [Line Items] | ||
Payments for cancellation of employee agreement | $ 600 | |
Share-based compensation arrangement by share-based payment award, accelerated vesting, number (in shares) | 202,400 | |
Share-based compensation arrangement by share-based payment award, accelerated vesting, value | $ 400 | |
Postemployment benefit liability, benefit coverage period | 18 months | |
Postemployment benefits liability (less then) | $ 100 |
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