HOUSTON, Jan. 28, 2021 (GLOBE NEWSWIRE) -- Sharps Compliance Corp. (NASDAQ: SMED), a leading full-service national provider of comprehensive waste management solutions including medical, pharmaceutical and hazardous, today reported financial results for the second quarter ended December 31, 2020.

Revenue in the second quarter of fiscal 2021 was $17.0 million, an increase of 17% compared to $14.6 million in the same prior year quarter, and a sequential increase of 29% compared to the first quarter of fiscal 2021. Customer billings increased $3.5 million, or 24%, to $18.5 million for the second quarter compared to $14.9 million for the same prior year quarter. Second quarter customer billings benefitted from increased volumes for flu related orders of $0.3 million, COVID-19 related mailback orders of $2.2 million, increases in route-based pickup services of $1.0 million, as well as increased inventory builds for patient support programs in the Pharmaceutical Manufacturer market of $0.8 million.

Second quarter 2021 gross margin was 33% compared to 34% in the second quarter of fiscal 2020. The second quarter gross margin reflects additional infrastructure and related costs necessary for expected increased volume related to COVID-19 and other business activity. SG&A increased 4% to $3.8 million, or 22% of revenue, in the second quarter of fiscal 2021, as compared to SG&A of $3.6 million, or 25% of revenue, in the same prior year quarter. The increase in SG&A, which is consistent with the Company’s internal expectations, is related to continued investments in sales and marketing.

The Company reported operating income of $1.7 million in the second quarter of 2021, compared to operating income of $1.1 million in the second quarter of 2020. Sharps recorded net income of $1.2 million, or $0.07 per basic and diluted share, in the second quarter of fiscal 2021, as compared to net income of $1.0 million, or $0.06 per basic and diluted share in the second quarter of fiscal 2020. Sharps recorded EBITDA of $2.2 million, or 13% of revenue, in the second quarter of fiscal 2021, compared to EBITDA of $1.5 million, or 10% of revenue, in the second quarter of fiscal 2020. (See Reconciliation of Net Income to EBITDA in the supplemental table included at the end of this release).

David P. Tusa, President and Chief Executive Officer of Sharps, stated, “Our second quarter results reflect growth across all markets, as well as significantly increased customer billings in our mailback and route-based solution offerings. We anticipated this growth, and in March 2020 we launched several substantial infrastructure projects to support this growth. In September 2020, we completed projects including: (i) new autoclaves (one each) at the Company’s Texas and Pennsylvania treatment facilities, essentially tripling capacity, (ii) the addition of mailback related warehouse and distribution space of 52,000 square feet in Pennsylvania and (iii) mailback inventory on January 1, 2021 of 300,000 units with an ongoing plan to manufacture as many as an additional 1 million units by the end of the fiscal year 2021. These projects have proven to be critical to the business, allowing us to facilitate uninterrupted service to our customers throughout the COVID-19 pandemic; treat the increased volume of medical waste from all of our markets; and to continue the fulfillment of COVID-19 related mailback orders which began in December 2020 and should continue as the country immunizes Americans with the COVID-19 vaccines.

“In addition to significant growth in our mailback business, we are very pleased with the 41% increase in the route-based business billings for the second quarter. Contributing to this growth was an increase in customers and new business of about $700,000 as well as increased volumes from our Long-Term Care customers of about $300,000. We continue to be bullish on the growth prospects for our route-based offering, which we believe has the strong potential to provide long term, recurring revenue in a market we believe is greatly underserved.

“Earlier this month, we announced $10 million in advance mailback orders to be filled primarily in the March 2021 quarter, for the expected support of COVID-19 related immunization activity in the long-term care and retail markets. Today, those advance mailback orders total approximately $15 million and include our mailback solutions for both COVID-19 vaccine and COVID-19 testing waste management. While these orders are expected to be shipped during the March 2021 quarter, the unprecedented economic and public health situation in the U.S. could affect the timing and status of these orders.

“We believe the mailback orders received to date related to COVID-19 medical waste management are just the beginning of the COVID-19 immunization activity and could likely be followed by additional orders as the country works to immunize all Americans with the COVID-19 vaccine. As we have all come to understand, the current COVID-19 vaccines involve 2 shots – the initial immunization followed by a booster a few weeks later. Given what is being reported in the news, and what we are hearing from healthcare professionals, we believe there is also the potential for additional booster shots to address variants of the virus plus the eventual vaccines for children which are currently in clinical trials.”

Second Quarter Review

Retail market billings grew 46% to $6.1 million in the second quarter of fiscal 2021 as compared to $4.2 million in the same prior year period. The increase in retail billings is primarily due to increased flu shot related orders of $0.3 million and COVID-19 related orders of $2.2 million, partially offset by a decrease in unused medication billings of $0.6 million.

Pharmaceutical Manufacturer market billings increased 35% to $3.1 million in the second quarter of fiscal 2021 compared to $2.3 million in the second quarter of fiscal 2020, related to the timing of inventory builds for patient support programs.

Long-Term Care market billings increased 56% to $1.1 million in the second quarter of fiscal 2021 compared to $0.7 million in the prior year period, related primarily to an increased volume of COVID-19 related waste management and ancillary supplies.

Home Health Care market billings increased 9% to $2.8 million in the second quarter of fiscal 2021 compared to $2.6 million in the second quarter of fiscal 2020 due to the timing of distributor orders.

Professional market billings increased 4% to $4.5 million in the second quarter of fiscal 2021 as compared to $4.4 million in the second quarter of 2020 and a sequential increase of 10% compared to the first quarter of fiscal 2021. This market, which is comprised of physicians, clinics, dentists, surgery centers, labs, veterinarians and other healthcare providers, has shown continued recovery compared to the March 2020 pre-pandemic time period as most of the Company’s customer locations have reopened.

Billings for the inside and online sales channel increased 24% to $2.8 million in the second quarter of fiscal 2021 as compared to $2.3 million in the same prior year period primarily due to increases in route-based pickup services to the Professional and Long-Term Care markets.

First Six Months Fiscal 2021 Results

Sharps recorded revenue of $30.2 million in the first half of fiscal 2021, an increase of 7% compared to revenue of $28.2 million in the first half of fiscal 2020. Customer billings increased 9% to $31.9 million for the first half of fiscal 2021. Retail market billings increased 17% to $9.8 million as compared to $8.4 million in the first half of fiscal 2020, due primarily to an increase in billings for flu shot / COVID-19 related orders of $1.6 million, partially offset by a decrease in unused medications billings of $0.2 million. Long-Term Care market billings increased 82% to $2.4 million as compared to $1.3 million in the prior year period related primarily to an increased volume of COVID-19 related waste management and ancillary supplies. During the first half of fiscal 2021, Pharmaceutical Manufacturer market billings increased 32% to $4.2 million as compared to $3.2 million in the first half of fiscal 2020. Home Health Care market billings decreased 13% to $5.2 million for the first half of fiscal 2021 compared to $5.9 million in the first half of 2020. First quarter 2020 included a large stocking order of $0.9 million from a major Home Health Care distributor. Professional market billings increased 2% to $8.7 million in the first half of fiscal 2021 as compared to $8.5 million in the same prior year period.

Gross margin decreased to 31% for the first half of fiscal 2021 as compared to 33% in first half of fiscal 2020. SG&A expense increased 6% to $7.5 million in the first half of fiscal 2021 compared to $7.1 million in the first half of fiscal 2020, related to the Company’s continued investments in sales and marketing. The Company recorded operating income of $1.3 million in the first half of fiscal 2021 as compared to operating income of $1.8 million in the first half of fiscal 2020.

Net income for the first half of fiscal 2021 was $0.9 million, or $0.06 per basic and diluted share compared to net income of $1.7 million or $0.10 per basic and diluted share for the first half of fiscal 2020.

Sharps recorded EBITDA of $2.2 million in the first half of fiscal 2021, as compared to EBITDA of $2.6 million in the first half of fiscal 2020. (See Reconciliation of Net Income to EBITDA in the supplemental table included at the end of this release).

Financial Flexibility and a Strong Balance Sheet

Cash was $7.2 million at December 31, 2020, compared to cash of $5.4 million at June 30, 2020. The Company had working capital of $12.0 million at December 31, 2020 compared to working capital of $11.1 million at June 30, 2020. Additionally, the Company recently extended the maturity of its $14 million Credit Agreement and secured additional $4 million capacity for working capital, which is available upon the Company's request, to support its growth.

Mr. Tusa concluded, “As we move through the balance of 2021 and beyond, we expect to play a key role as the COVID-19 vaccine is more widely distributed and the nationwide immunization program continues to ramp. With our visibility today, we believe we have a significant opportunity to deliver an exceptionally strong March 2021 quarter and believe we will see continued strength for the June 2021 quarter as well. Like the experts, we believe the retail pharmacy venue will play a significant role in the COVID-19 immunization process as its seen as safe, efficient, and convenient. Based on published information, the retail pharmacy chains are near completion with immunizations at long-term care facilities and are scheduled to begin vaccinations in the retail pharmacies in February. While health officials originally stated that all Americans should be vaccinated by June 2021, it looks like this will most likely extend until late summer or early fall.”

About Sharps Compliance Corp.

Headquartered in Houston, Texas, Sharps Compliance (NASDAQ: SMED) is a leading business-to-business services provider to the healthcare, long-term care and retail pharmacy markets. Sharps Compliance offers comprehensive solutions for the management of regulated medical waste, hazardous waste and unused medications. For more information, visit: www.sharpsinc.com.