AUXILIO Reports Second Quarter 2013 Financial Results

  AUXILIO Reports Second Quarter 2013 Financial Results

   Recent Growth in Revenue and Improved Margins Marks Profitable Earnings

Business Wire

MISSION VIEJO, Calif. -- August 13, 2013

AUXILIO, Inc. (OTCBB: AUXO), the nation’s pioneer and leading Managed Print
Services (MPS) company for health care, today reported financial results for
its quarter ended June 30, 2013.

“Our growth strategy has helped us effectively improve margins and earn new
recurring revenue as a result of the record-breaking number of new hospitals
we implemented over the last two years,” stated Joseph J. Flynn, president and
CEO of AUXILIO, Inc. “This anticipated positive impact from new business has
now started to materialize, and we are seeing improvement in our margins as
these accounts mature. At the same time, we are delivering over $70 million
dollars in savings to our hospital customers over the term of their
contracts.”

Financial Results

For the Three Months Ended June 30, 2013

For the three months ended June 30, 2013, AUXILIO reported that recurring
service revenues increased by $1.4 million from new contracts closed between
May 2012 and April 2013; however revenues were $9.8 million, a decrease of 8%
when compared to revenues of $10.7 million in the same period of 2012, due to
a drop in equipment revenue. Equipment sales were $800,000 as compared to $3.1
million for the same period in 2012. Cost of revenues were $8.2 million for
the three months ended June 30, 2013, as compared to $9.3 million for the same
period in 2012. This drop was due to the drop in equipment sales offset by
additional staffing and service costs from the higher recurring service
revenue. Gross profit for the second quarter of 2013 was $1.6 million, or 17%
of sales, compared to $1.4 million, or 13% of sales, for the same period of
2012. This improvement is a direct result of the large growth in new
facilities that we added in 2012 coupled with the reduction in costs as
AUXILIO’s program matures within these new accounts.

Operating expenses for the second quarter of 2013 were $1.4 million, compared
to $1.5 million in the same period of 2012. Net income for the second quarter
of 2013 was $97,493, or $0.00 per share, compared to a net loss of $26,818, or
$0.00 per share, in the same period of 2012. AUXILIO continues to show
improvement in the non-GAAP measure of adjusted income from operations.
Excluding $119,000 in charges related to stock based compensation, we achieved
positive adjusted income from operations of $324,000 in the second quarter of
2013, compared to income of $75,000, after excluding charges of $121,000
related to stock-based compensation and $69,000 in charges related to stock
granted for marketing activities, for the second quarter of 2012. We had a
cash balance of $2.0 million and $500,000 borrowing on our line of credit
compared to $2.2 million and $528,000 borrowed against our line of credit at
December 31, 2012.

For the Six Months Ended June 30, 2013

For the six months ended June 30, 2012, the company reported revenues of $19.9
million, an increase of 16% when compared to $17.3 million in the same period
of 2012. Recurring service revenues increased 33% from new contracts closed
between May 2012 and April 2013; however this increase was partially offset by
a decrease of 48% in equipment revenue. Gross profit for the first six months
of 2013 was $3.2 million, or 16% of sales, compared to $1.7 million, or 10% of
sales, for the first six months of 2012. Operating expenses for the first six
months of 2013 were $3.1 million, compared to $3.1 million in the prior year
period. Net loss for the first six months of 2013 was $133,000, or $0.01 per
share, compared to $1.6 million, or $0.08 per share, in the first six months
of 2012.

Excluding $316,000 in charges related to stock-based compensation and $190,000
in charges related to stock granted for marketing activities, we achieved
adjusted income from operations of $612,000 for the first six months of 2013,
compared to an adjusted loss from operations of $928,000 after excluding
charges of $213,000 related to stock-based compensation and $204,000 in
charges related to stock granted for marketing activities for the same period
of 2012.

Paul Anthony, CFO of AUXILIO, stated: “Our financial performance as a result
of margin improvements across our accounts, and better leverage of our
overhead costs over a larger customer base of more than 80 hospitals, has
resulted in three consecutive quarters of positive adjusted income from
operations.”

Conference Call Information
The company will host its second quarter 2013 financial results conference
call today at 2 p.m. PT / 5 p.m. ET, the details for which follow. To access
the call in the U.S. please dial 1-877-941-2068 and for international calls,
dial 1-480-629-9712 approximately 10 minutes prior to the start of the
conference. The conference ID is 4631879. The conference call will also be
broadcast live over the Internet and available for replay for 15 days at
www.auxilioinc.com. In addition, a replay of the call will be available via
telephone for two business days, beginning two hours after the call. To listen
to the replay, in the U.S., please dial 1-877-870-5176 and internationally,
1-858-384-5517. Enter access code 4631879.

About AUXILIO, Inc.
AUXILIO, Inc. is the pioneer of Managed Print Services for the health care
industry, working exclusively with hospitals and hospital systems throughout
the United States. We are vendor independent and provide intelligent
solutions, a risk free program and guaranteed savings. AUXILIO assumes all
costs related to print business environments through customized, streamlined
and seamless integration of services at predictable fixed rates that are
unmatched in the industry. We work collaboratively to assist our health
care-partners in the delivery of quality patient care. The service and
solutions provided by our on-site Centers of Excellence professional print
strategy consultants deliver unparalleled customer service across the
industry. For more information about AUXILIO, visit www.auxilioinc.com.

Forward Looking Statements
This release contains certain forward-looking statements relating to the
business of AUXILIO, Inc. that can be identified by the use of forward-looking
terminology such as ``believes,'' ``expects,'' “anticipates,” “may” or similar
expressions. Such forward-looking statements involve known and unknown risks
and uncertainties, including uncertainties relating to product/services
development, long and uncertain sales cycles, the ability to obtain or
maintain patent or other proprietary intellectual property protection, market
acceptance, future capital requirements, competition from other providers, the
ability of our vendors to continue supplying the company with equipment,
parts, supplies and services at comparable terms and prices and other factors
that may cause actual results to be materially different from those described
herein as anticipated, believed, estimated or expected. Certain of these risks
and uncertainties are or will be described in greater detail in our Form 10-K
and Form 10-Q filings with the Securities and Exchange Commission, which are
available at http://www.sec.gov. AUXILIO, Inc. is under no obligation (and
expressly disclaims any such obligation) to update or alter its
forward-looking statements whether as a result of new information, future
events or otherwise.

AUXILIO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
                                   JUNE 30, 2013      DECEMBER 31, 2012
                                       (unaudited)
ASSETS
Current assets:
Cash and cash equivalents              $ 2,030,126           $  2,190,972
Accounts receivable, net                 4,914,343              4,693,660
Supplies                                 1,217,339              1,059,730
Prepaid and other current               262,551              52,113       
assets
Total current assets                    8,424,359            7,996,475    
                                                             
Property and equipment, net              202,359                227,004
Deposits                                 35,038                 36,288
Loan acquisition costs                   95,016                 159,036
Goodwill                                1,517,017            1,517,017    
Total assets                           $ 10,273,789         $  9,935,820    
                                                             
LIABILITIES AND STOCKHOLDERS’
EQUITY
                                                             
Current liabilities:
Accounts payable and accrued           $ 5,706,120           $  5,579,720
expenses
Accrued compensation and                 1,352,764              1,558,539
benefits
Line of credit                           500,000                528,486
Deferred revenue                         922,873                902,542
Current portion of capital              78,008               88,645       
lease obligations
Total current liabilities               8,559,765            8,657,932    
                                                             
Long-term liabilities:
Convertible notes payable, net
of discount of $152,750 and
$223,250 at June 30, 2013 and            1,647,250              1,576,750
December 31, 2012,
respectively
Capital lease obligations less          70,480               79,358       
current portion
Total long-term liabilities             1,717,730            1,656,108    
                                                             
Commitments and contingencies
                                                             
Stockholders’ (deficit)
equity:
Common stock, par value at
$0.001, 33,333,333 shares
authorized, 20,180,923 and
19,818,643 shares issued and             20,182                 19,820
outstanding at June 30, 2013
and December 31, 2012,
respectively
Additional paid-in capital               22,998,320             22,491,361
Accumulated deficit                     (23,022,208 )         (22,889,401  )
Total stockholders’ (deficit)           (3,706      )         (378,220     )
equity
Total liabilities and                  $ 10,273,789         $  9,935,820    
stockholders’ equity
                                                                             
                                                                             

AUXILIO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

                   Three Months                         Six Months
                       Ended June 30,                          Ended June 30,
                       2013             2012                 2013             2012
Revenues               $ 9,801,029        $ 10,722,165         $ 19,893,182       $ 17,260,144
Cost of                 8,157,963        9,323,015          16,673,902       15,511,094 
revenues
                                                                                  
Gross profit            1,643,066        1,399,150          3,219,280        1,749,050  
                                                                                  
Operating
expenses:
Sales and                504,168            559,543              1,174,063          1,251,753
marketing
General and
administrative          934,251          954,502            1,939,021        1,842,738  
expenses
                                                                                  
Total
operating               1,438,419        1,514,045          3,113,084        3,094,491  
expenses
                                                                                  
Income (loss)
from                    204,647          (114,895   )        106,196          (1,345,441 )
operations
                                                                                  
Other income
(expense):
Interest                 (107,154   )       (116,939   )         (233,503   )       (214,381   )
expense
Interest                 -                  16                   -                  300
income
Change in fair
value of                -                205,000            -                (85,000    )
derivative
liabilities
                                                                                  
Total other
income                  (107,154   )      88,077             (233,503   )      (299,081   )
(expense)
                                                                                  
Income (loss)
before                   97,493             (26,818    )         (127,307   )       (1,644,522 )
provision for
income taxes
                                                                                  
Income tax              -                -                  (5,500     )      (1,600     )
expense
                                                                                  
Net income             $ 97,493          $ (26,818    )       $ (132,807   )     $ (1,646,122 )
(loss)
                                                                                  
Net income
(loss) per
share:
Basic                  $ .00             $ (.00       )       $ (.01       )     $ (.08       )
Diluted                $ .00             $ (.00       )       $ (.01       )     $ (.08       )
                                                                                  
Number of
weighted
average
shares:
Basic                   20,176,242       19,568,513         20,146,271       19,509,148 
Diluted                 20,987,647       19,568,513         20,146,271       19,509,148 

Contact:

AUXILIO, Inc.
Clare Eckert, 401-855-2601
ceckert@auxilioinc.com
 
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