GlobeNewswire Inc | Aug 18, 2021 06:55AM EDT

August 18, 2021

-- Fourth Quarter Revenue of $18.7 million and full year 2021 Revenue of $76.4 million, each increased 49% from the prior year -- Fourth Quarter Customer Billings1 of $18.7 million, increased 38% over the prior year -- Retail market billings increased 68% for the quarter and 153% for the year -- Professional market billings grew 44% for the quarter and 15% for the year -- Route-Based Pickup billings increased 31% for the quarter and 32% for the year -- Mailback billings grew 68% to $12.0 million for the quarter, driven by strong immunization related orders, and grew 93% for the year -- Fourth Quarter Net Income of $5.1 million, or $0.29 per diluted share and full year Net Income of $12.9 million, or $0.76 per diluted share -- Operating margin of 11%; Adjusted EBITDA of $2.5 million and Adjusted EBITDA margin2 of 14% for the fourth quarter -- Operating margin of 16%; Adjusted EBITDA of $14.3 million and Adjusted EBITDA margin of 19% for the full year -- Forgiveness on $2.2 million PPP Loan completed; gain recorded in fourth quarter; excluding this gain, Adjusted EPS would have been $0.17 per diluted share for the fourth quarter and $0.63 per diluted share for the full year -- Cash balance of $27.8 million at June 30, 2021

HOUSTON, Aug. 18, 2021 (GLOBE NEWSWIRE) -- Sharps Compliance Corp. (NASDAQ: SMED) (Sharps or the Company), a leading full-service national provider of comprehensive waste management solutions including medical, pharmaceutical and hazardous, today reported financial results for the fourth quarter and year ended June 30, 2021.

Revenue in the fourth quarter of fiscal 2021 grew 49% to a $18.7 million, compared to $12.6 million in the same prior year quarter. Customer billings increased $5.1 million, or 38%, to $18.7 million for the fourth quarter compared to $13.5 million for the same prior year quarter. Fourth quarter customer billings benefitted from increased immunization business of $4.2 million and increased route-based pickup services of $0.8 million. Fourth quarter revenue benefited from increased immunization business of $4.7 million (net of deferrals) and increased route-based pickup services of $0.8 million.

Fourth quarter 2021 gross margin was 33%, consistent with gross margin in the fourth quarter of fiscal 2020. The fourth quarter 2021 gross margin of 33% reflects a year-over-year increase in the fixed portion cost of goods sold of $0.5 million, or 240 basis points, as a result of investments in treatment plants, autoclaves, route-based infrastructure and other expenditures designed to address the increased immunization business and to facilitate growth.

SG&A increased by about $0.7 million or 21% to $4.0 million in the fourth quarter of fiscal 2021, compared to the same prior year quarter. The increase in SG&A is related primarily to a $0.2 million increase in management incentive compensation, including both stock and cash, a $0.1 million increase in board member compensation and continued investments in sales and marketing.

The Company reported operating income of $2.0 million in the fourth quarter of 2021, compared to operating income of $0.7 million in the fourth quarter of 2020. The Company recorded a gain on forgiveness of its Paycheck Protection Program (PPP) Loan of $2.2 million in the fourth quarter of fiscal 2021. Sharps recorded net income of $5.1 million, or $0.30 per basic and $0.29 per diluted share, in the fourth quarter of fiscal 2021, as compared to net income of $2.2 million, or $0.13 per basic and diluted share in the fourth quarter of fiscal 2020. Sharps recorded EBITDA of $4.7 million, or 25% of revenue in the fourth quarter of fiscal 2021 compared to EBITDA of $1.0 million, or 8% of revenue, in the fourth quarter of fiscal 2020. (See Reconciliation of Net Income to EBITDA in the supplemental table included at the end of this release).

1 Customer billings information, EBITDA, Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures. See financial tables below for additional details.2 Calculated as Adjusted EBITDA divided by revenue.

David P. Tusa, President and Chief Executive Officer of Sharps, stated, We closed out fiscal 2021 with strong fourth quarter growth including significantly increased revenue, enhanced profitability, increased infrastructure and a very strong balance sheet. This has been a tremendous and record year for the Company. What I am most proud of is our ability to efficiently and effectively ramp up the business to meet the needs of our customers and provide uninterrupted service during the COVID-19 healthcare crisis which is ongoing.

For the March and June 2021 quarters, the immunization business, led by COVID-19 related immunization orders, generated $24.6 million in related mailback revenue. These quarters represent, to date, the height of the COVID-19 related mailback business. However, after a very strong start, immunization activity has slowed down consistent with the widely reported reduction in COVID-19 vaccines administered in the country during the current quarter. Going forward, we believe significant order activity depends on the country experiencing an increase in initial COVID-19 immunizations for adults and adolescents, the approval and administration of a childrens vaccine, the administration of additional COVID-19 shots for at risk adults and booster shots for remaining Americans. At such time, we believe we will be more than ready to meet the demands of the business with increased mailback inventory and treatment capacity.

While the COVID-19 related orders have been a boon to our business, generating more than $20 million in cash to our balance sheet, Sharps is much more than an immunization related mailback company. We have effectively positioned the company as a comprehensive service provider of medical, pharmaceutical and hazardous waste services, with the infrastructure and footprint to increasingly capture market share in the small to medium quantity generator market. Our route-based business now provides direct service to 37 states representing 80% of the countrys population. This business continues to see strong growth, with revenue growing by approximately 32% for fiscal year 2021 as compared to the prior fiscal year, and we continue to be bullish regarding our ability to continue to further penetrate the market. While our MedSafe liner returns continue to be strong, we expect to see increased sales of the MedSafe units beginning with the September 2021 quarter.

Fourth Quarter Review

Retail market billings grew 68% to $9.0 million in the fourth quarter of fiscal 2021 as compared to $5.4 million in the same prior year period. The increase in retail billings is primarily due to immunization related orders of $7.8 million which were higher than the prior year at $3.6 million.

Professional market billings increased 44% to $4.7 million in the fourth quarter of fiscal 2021 as compared to $3.3 million in the fourth quarter of 2020.

Billings for the inside and online sales channel increased 45% to $3.4 million in the fourth 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 market.

Full Year Fiscal 2021 Results

Sharps recorded revenue of $76.4 million for fiscal 2021, an increase of 49% compared to revenue of $51.1 million in fiscal 2020. Customer billings increased 54% to $81.6 million in fiscal 2021. Retail market billings increased 153% to $40.5 million as compared to $16.0 million for the prior year, due primarily to an increase in billings for immunization related orders of $21.9 million (net of deferrals), partially offset by a decrease in unused medications billings in the retail market of $0.7 million. Professional market billings increased 15% to $18.0 million in fiscal 2021 compared to $15.6 million in the prior year. Long-Term Care market billings increased 25% to $4.2 million as compared to $3.3 million in the prior year, related primarily to an increased volume of COVID-19 related waste management and ancillary supplies. For fiscal 2021, Pharmaceutical Manufacturer market billings increased 12% to $5.2 million as compared to $4.7 million in fiscal 2020.

Gross margin increased to 38% for full year fiscal 2021 as compared to 31% in for full year fiscal 2020 due primarily to the leverage from higher revenue partially offset by a year-over-year increase in the fixed portion cost of goods sold of $1.7 million, or 225 basis points, as a result of investments in treatment plants, autoclaves, route-based infrastructure and other expenditures designed to address the increased immunization business and to facilitate growth. SG&A expense increased 12% to $15.8 million, for fiscal 2021 from $14.0 million, in fiscal 2020, related to a $0.6 million increase in management incentive compensation, including both stock and cash, a $0.4 million increase in board member compensation and $0.7 million due to the Companys continued investments in sales and marketing. The Company recorded operating income of $12.3 million in fiscal 2021 as compared to operating income of $0.9 million in fiscal 2020. The Company recorded a gain on forgiveness of its PPP Loan of $2.2 million in the fourth quarter of fiscal 2021. The effective tax rate of 10.2% for the year reflects $1.1 million tax benefit associated with stock compensation and a $0.5 million benefit associated with the permanent exclusion of the gain on forgiveness of the PPP Loan from taxable income.

Net income for full year fiscal 2021 was $12.9 million, or $0.78 per basic and $0.76 per diluted share compared to net income of $2.3 million or $0.14 per basic and diluted share for full year fiscal 2020.

Sharps recorded full year fiscal 2021 EBITDA of $16.5 million, or 22% of revenue, as compared to EBITDA of $2.4 million in full year 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 $27.8 million at June 30, 2021, compared to cash of $5.4 million at June 30, 2020. The Company had working capital of $27.9 million at June 30, 2021 compared to working capital of $11.1 million at June 30, 2020.

Mr. Tusa concluded, We believe the Company is extremely well positioned for further growth with our increased infrastructure and treatment capacity as well as a much stronger balance sheet. The Companys performance in fiscal year 2021 would not have been possible without the strength and commitment of our dedicated employees which is very much appreciated. I also believe that our success over this past year has not only made us a stronger company, but also significantly strengthened our customer relationships.

Fourth Quarter Fiscal Year 2021 Webcast and Conference Call

The Company will host a teleconference today beginning at 11:00 a.m. Eastern Time, during which management will review the financial and operating results for the period and discuss Sharps corporate strategy and outlook. A question-and-answer session will follow.

The Sharps conference call can be accessed by domestic callers by dialing (877) 407-0782. International callers may access the call by dialing (201) 689-8567. The webcast can be monitored at www.sharpsinc.com.

A telephonic replay will be available through September 17, 2021. To listen to the replay, domestic callers should dial (877) 481-4010 and international callers should dial (919) 882-2331 and enter replay ID number 42199. Transcript will also be posted to the Sharps website, once available.

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.

Forward-Looking Statements

The information made available in this news release contains certain forward-looking statements relating to the Company that are based on the beliefs of the Companys management as well as assumptions made by and information currently available to the Companys management. When used in this document, the words "may," position, "plan," potential, designed, continue, "anticipate," "believe," "expect," "estimate," project, and intend and words or phrases of similar import, as they relate to the Company or its subsidiaries or Company management, are intended to identify forward-looking statements. Such statements reflect the known and unknown risks, uncertainties and assumptions related to certain factors including, without limitation, competitive factors, general economic conditions, customer relations, relationships with vendors, governmental regulation and supervision, seasonality, distribution networks, product introductions and acceptance, technological change, changes in industry practices, onetime events and other factors described herein including the impact of the coronavirus COVID-19 (COVID-19) pandemic on our operations and financial results. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in the Companys Quarterly Reports on Form 10-Q, our Annual Report on Form 10-K, and our other filings with the Securities and Exchange Commission. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and as such should not consider the preceding list or the risk factors to be a complete list of all potential risks and uncertainties. The Company does not intend to update these forward-looking statements.

Non-GAAP Measures

This release contains certain financial information not derived in accordance with generally accepted accounting principles (GAAP), including customer billings information, EBITDA, Adjusted EBITDA and Adjusted EPS. The Company believes this information is useful to investors and other interested parties. EBITDA and Adjusted EBITDA are significant performance metrics used by management and by external users of our financial statements such as investors, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis; the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness; and our operating performance and return on capital as compared to those of other companies in our industry. Such information should not be considered as a substitute for any measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities or measure of our liquidity, and may not be comparable to other similarly titled measures of other companies. Reconciliation of this information to the most comparable GAAP measures is included as an attachment to this release.

For more information contact:

Diana P. DiazSharps Compliance Corp. John Nesbett/Jennifer BelodeauExecutive Vice President and Chief IMS Investor RelationsFinancial Officer Phone: (203) 972-9200Phone: (713) 660-3547 Email:jnesbett@institutionalms.comEmail:ddiaz@sharpsinc.com

FINANCIAL TABLES FOLLOW

Sharps Compliance Corp. and SubsidiariesCondensed Consolidated Statements of Operations(in thousands, except per share data)(Unaudited)

Three-Months Ended Year Ended June 30, June 30, 2021 2020 % 2021 2020 % Change Change Revenue $ 18,734 $ 12,568 49.1 % $ 76,424 $ 51,146 49.4 % Cost of 12,483 8,385 48.9 % 47,514 35,384 34.3 %revenueGross profit 6,251 4,183 49.4 % 28,910 15,762 83.4 %Gross margin 33.4 % 33.3 % 37.8 % 30.8 % SG&A expense 4,036 3,328 21.3 % 15,761 14,046 12.2 %Depreciationand 222 204 847 806 amortization Operating 1,993 651 12,302 910 IncomeOperating 10.6 % 5.2 % 16.1 % 1.8 % margin Interest ? 1 ? 14 incomeInterest (60 ) (46 ) (194 ) (127 ) expenseIncomeassociatedwith 6 (113 ) 47 (113 ) derivativeinstrumentGain onforgiveness 2,183 ? 2,183 ? of PPP loanTotal otherincome 2,129 (158 ) 2,036 (226 ) (expense) Incomebefore 4,122 493 14,338 684 income taxesIncome taxexpense (961 ) (1,673 ) 1,470 (1,582 ) (benefit)Net Income $ 5,083 $ 2,166 $ 12,868 $ 2,266 Net Income Per ShareBasic $ 0.30 $ 0.13 $ 0.78 $ 0.14 Diluted $ 0.29 $ 0.13 $ 0.76 $ 0.14 WeightedAverage SharesOutstandingBasic 16,935 16,365 16,593 16,249 Diluted 17,319 16,791 17,028 16,431

Sharps Compliance Corp. and SubsidiariesCondensed Consolidated Balance Sheets(in thousands)(Unaudited)

June 30, June 30, 2021 2020 ^(*)ASSETS: Current assets: Cash $ 27,767 $ 5,416 Accounts receivable, net 9,738 11,789 Inventory 6,114 5,638 Contract asset 20 156 Prepaid and other current assets 1,459 1,287 Total current assets 45,098 24,286 Property, plant and equipment, net 10,843 8,740 Operating lease right of use asset 8,353 8,747 Financing lease right of use asset, net 907 387 Inventory, net of current portion 989 1,064 Other assets 110 154 Goodwill 6,735 6,735 Intangible assets, net 2,239 2,771 Deferred tax asset 157 1,252 Total assets $ 75,431 $ 54,136 Current liabilities Account payable 2,922 3,291 Accrued liabilities 3,940 2,768 Operating lease liability 2,368 2,192 Financing lease liability 160 65 Current maturities of long-term debt 735 1,658 Contract liability 7,028 3,262 Total current liabilities 17,153 13,236 Contract liability, net of current portion 1,461 705 Operating lease liability, net of current portion 6,118 6,671 Financing lease liability, net of current portion 741 337 Other liabilities 45 104 Long-term debt, net of current portion 3,329 3,505 Total liabilities 28,847 24,558 Stockholders' equity 46,584 29,578 Total liabilities and stockholders' equity $ 75,431 $ 54,136 (*) Certain prior year amounts have been reclassified to conform to currentyear presentation.

Sharps Compliance Corp. and SubsidiariesSupplemental Customer Billing and Revenue Information(in thousands)(Unaudited)

Three-Months Ended June 30, 2021 % Total 2020 $ Change % BILLINGS BY MARKET: Retail $ 9,013 48.3 % $ 5,359 $ 3,654 68.2 % Professional 4,689 25.1 % 3,252 1,437 44.2 % Home Health Care 2,785 14.9 % 2,352 433 18.4 % Pharmaceutical 416 2.2 % 593 (177 ) (29.8 ) % ManufacturerLong-Term Care 817 4.4 % 1,261 (444 ) (35.2 ) % Government 620 3.3 % 468 152 32.5 % Environmental 180 1.0 % 124 56 45.2 % Other 140 0.8 % 124 16 12.9 % Subtotal 18,660 100.0 % 13,533 5,127 37.9 % GAAP Adjustment * 74 (965 ) 1,039 Revenue Reported $ 18,734 $ 12,568 $ 6,166 49.1 % Year Ended June 30, 2021 % Total 2020 $ Change % BILLINGS BY MARKET: Retail $ 40,513 49.7 % $ 16,033 $ 24,480 152.7 % Professional 17,966 22.0 % 15,637 2,329 14.9 % Home Health Care 10,264 12.6 % 9,938 326 3.3 % Pharmaceutical 5,224 6.4 % 4,661 563 12.1 % ManufacturerLong-Term Care 4,159 5.1 % 3,324 835 25.1 % Government 2,274 2.8 % 2,292 (18 ) (0.8 ) % Environmental 570 0.7 % 247 323 130.8 % Other 592 0.7 % 876 (284 ) (32.4 ) % Subtotal 81,562 100.0 % 53,008 28,554 53.9 % GAAP Adjustment * (5,138 ) (1,862 ) (3,276 ) Revenue Reported $ 76,424 $ 51,146 $ 25,278 49.4 % *Represents the net impact of the revenue recognition adjustments to arrive atreported GAAP revenue. Customer billings include all invoiced amounts forproducts shipped or services rendered during the period reported. GAAP revenueincludes customer billings as well as numerous adjustments necessary toreflect, (i) the deferral of a portion of current period sales, (ii)recognition of certain revenue associated with product returned for treatmentand destruction and (iii) provisions for certain product returns and discountsto customers which are accounted for as reductions in sales in the same periodthe related sales are recorded.

Sharps Compliance Corp. and SubsidiariesSupplemental Customer Billing by Solution Information(in thousands)(Unaudited)

Three-Months Ended June 30, 2021 % Total 2020 $ Change %BILLINGS BY SOLUTION:Mailbacks $ 12,036 64.4 % $ 7,160 $ 4,876 68.1 %Route-Based Pickup 3,433 18.4 % 2,628 805 30.6 %Unused Medications 2,007 10.8 % 2,348 (341 ) (14.5 ) %Third Party 180 1.0 % 124 56 45.2 %TreatmentOther 1,004 5.4 % 1,273 (269 ) (21.1 ) %Total Billings by $ 18,660 100.0 % $ 13,533 $ 5,127 37.9 %Solution Year Ended June 30, 2021 % Total 2020 $ Change %BILLINGS BY SOLUTION:Mailbacks $ 54,755 67.1 % $ 28,440 $ 26,315 92.5 %Route-Based Pickup 13,677 16.8 % 10,390 3,287 31.6 %Unused Medications 8,159 10.0 % 9,163 (1,004 ) (11.0 ) %Third Party 570 0.7 % 247 323 130.8 %TreatmentOther 4,401 5.4 % 4,768 (367 ) (7.7 ) %Total Billings by $ 81,562 100.0 % $ 53,008 $ 28,554 53.9 %Solution

Sharps Compliance Corp. and SubsidiariesSupplemental Customer Billing by Channel Information(in thousands)(Unaudited)

Three-Months Ended June 30, 2021 % Total 2020 $ Change % ChangeBILLINGS BY CHANNEL:Direct Sales $ 9,694 52.0 % $ 7,658 $ 2,036 26.6 %Distributors 5,592 30.0 % 3,552 2,040 57.4 %Inside and 3,374 18.0 % 2,323 1,051 45.2 %Online SalesTotalBilling by $ 18,660 100.0 % $ 13,533 $ 5,127 37.9 %Channel Year Ended June 30, 2021 % Total 2020 $ Change % ChangeBILLINGS BY CHANNEL:Direct Sales $ 50,758 62.2 % $ 29,163 $ 21,595 74.0 %Distributors 18,276 22.4 % 14,165 4,111 29.0 %Inside and 12,528 15.4 % 9,680 2,848 29.4 %Online SalesTotalBilling by $ 81,562 100.0 % $ 53,008 $ 28,554 53.9 %Channel

Sharps Compliance Corp. and SubsidiariesSupplemental Table to Reconcile Net Income to EBITDA*(in thousands)(Unaudited)

Three-Months Ended Year Ended June 30, June 30, 2021 2020 2021 2020 Net Income $ 5,083 $ 2,166 $ 12,868 $ 2,266 Income tax expense (benefit) (961) (1,673) 1,470 (1,582) Interest expense, net 60 45 194 113 Depreciation and amortization 544 415 1,989 1,606 EBITDA $ 4,726 $ 953 $ 16,521 $ 2,403 Gain on forgiveness of PPP loan (2,183) ? (2,183) ? Adjusted EBITDA $ 2,543 $ 953 $ 14,338 $ 2,403



*The Company defines earnings before interest, taxes, depreciation andamortization (?EBITDA?) as net income, plus income tax expense (benefit),net interest expense, and depreciation and amortization. Other companiesmay define EBITDA differently. EBITDA is presented because it is afinancial measure that is frequently requested by third parties.However,EBITDA is not considered under generally accepted accounting principles asa primary measure of an entity?s financial results, and accordingly, EBITDAshould not be considered an alternative to operating income, net income, orcash flows as determined under generally accepted accounting principles andas reported by the Company.