AUXILIO Reports Third Quarter 2013 Financial Results

  AUXILIO Reports Third Quarter 2013 Financial Results

  The Company Delivers Significant Year-Over-Year Revenue and Margin Growth

Business Wire

MISSION VIEJO, Calif. -- November 14, 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 September 30, 2013.

“Our strong financial performance year-over-year and sequential revenue growth
is due to significant increases in our recurring revenue base and margin
improvement after successfully implementing 54 new MPS programs in 2012 and
2013,” stated Joseph J. Flynn, president and CEO of AUXILIO, Inc. “In
addition, we are continuing to expand business with our current customers,
which is indicative of the confidence we have earned and the effectiveness of
our MPS program to drive out costs for hospitals and hospital systems. The
traction we have gained in the market should position us well to capitalize on
new business opportunities in our pipeline.”

Financial Results

For the Three Months Ended September 30, 2013

For the three months ended September 30, 2013, AUXILIO reported recurring
service revenues increased by $1.3 million from existing and expanded
contracts. Total revenues increased by approximately $2 million to $10.8
million, as compared to the same period in 2012. Equipment revenues were $1
million as compared to approximately $200,000 for the same period in 2012 due
to copier fleet refresh activities at two customer accounts. Cost of revenues
was $8.6 million for the three months ended September 30, 2013, as compared to
$7.4 million for the same period in 2012. The increase is attributed to the
service costs to support new and expanded recurring service contracts and the
increase in new equipment placed. Gross profit for the third quarter of 2013
was $2.2 million or 21% of revenues, compared to $1.4 million or 15% of
revenue for the same period of 2012. This improvement is a result of the
increase in recurring service revenue and margin improvements from existing
accounts.

Operating expenses for the third quarter of 2013 were $1.4 million, compared
to $1.7 million in the same period of 2012. Net income for the third quarter
of 2013 was $811,000 or $0.04 per share, compared to a net loss of $660,000 or
$0.03 per share, in the same period of 2012. AUXILIO improved its non-GAAP
measure of adjusted income from operations in the third quarter of 2013.
Excluding $93,000 in charges related to stock based compensation, we achieved
$950,000 or 9% of revenue compared to a loss of $180,000 or 2% of revenue
after excluding charges of $92,000 related to stock-based compensation and
$68,000 in charges related to stock granted for marketing activities, in the
same period last year. We do not expect the non-GAAP measure of adjusted
income from operations as a percent of revenue to stay this high over the next
couple of quarters due to anticipated new account implementations.

For the Nine Months Ended September 30, 2013

For the nine months ended September 30, 2013, the company reported revenues of
$31 million, an increase of 19% when compared to $26 million in the same
period in 2012. Recurring service revenues increased 27% from new contracts
and expanded contracts; however offsetting this increase were lower revenues
from some accounts related to rate reductions from renewals. Cost of revenues
was $25 million, as compared to $23 million for the same period in 2012. The
increase in the cost of revenues is attributed primarily to staffing and
service costs to support the new and expanded recurring service contracts.
Gross profit for the first nine months of 2013 was $5.4 million, or 18% of
revenues, compared to $3.1 million or 12% for the same period of 2012.
Operating expenses for the first nine months of 2013 were $4.5 million,
compared to $4.8 million in the same period of 2012. Net income for the first
nine months of 2013 was $679,000, or $0.03 per share, compared to a net loss
of $2.3 million or $0.12 per share, in the same period of 2012. After
excluding charges of $409,000 related to stock-based compensation and $190,000
in charges related to stock granted for marketing activities, non-GAAP measure
of adjusted income from operations for the nine months ended September 30,
2013 was $1.6 million or 5% of revenue compared to a loss of $1.1 million or
4% of revenue after excluding charges of $304,000 related to stock-based
compensation and $272,000 in charges related to stock granted for marketing
activities in the same period of 2012.

At September 30, 2013, our cash and cash equivalents were $3.1 million. During
the nine months ended September 30, 2013, our cash provided by operating
activities amounted to $1.1 million, as compared to $1.0 million used for
operating activities for the same period in 2012. The improvement in cash
provided by operating activities in 2013 is primarily a result of improved
margins being generated from our recurring service revenue contracts. The cash
used for operating activities for 2012 was primarily due to the costs incurred
to implement new recurring service revenue contracts.

Paul Anthony, CFO of AUXILIO, stated: “This quarter marks a full year of
positive adjusted income from operations. We attribute our strong financial
performance to the number of new contracts and implementations executed over
the last two years, and our ability to improve margins over time. Although we
don’t expect earnings to increase at the current rate due to on-boarding costs
we expect to incur with anticipated new business growth, we feel our company
is in a good position to absorb new accounts without compromising our ability
to turn a profit.”

Conference Call Information

The company will host its third 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 4646558. 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 4646558.

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
                                                         
                                           SEPTEMBER 30,       DECEMBER 31,
                                           2013                2012
                                           (unaudited)
ASSETS
Current assets:
Cash and cash equivalents                  $ 3,101,018         $ 2,190,972
Accounts receivable, net                     4,402,035           4,693,660
Supplies                                     1,113,459           1,059,730
Prepaid and other current assets            316,825           52,113      
Total current assets                        8,933,337         7,996,475   
                                                               
Property and equipment, net                  172,765             227,004
Deposits                                     34,413              36,288
Loan acquisition costs                       73,089              159,036
Goodwill                                    1,517,017         1,517,017   
Total assets                               $ 10,730,621       $ 9,935,820   
                                                               
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
                                                               
Current liabilities:
Accounts payable and accrued               $ 5,491,560         $ 5,579,720
expenses
Accrued compensation and benefits            1,244,469           1,558,539
Line of credit                               400,000             528,486
Deferred revenue                             884,737             902,542
Convertible notes payable, net of
discount of $117,500 at                      1,682,500           -

September 30, 2013
Current portion of capital lease            71,274            88,645      
obligations
Total current liabilities                   9,774,540         8,657,932   
                                                               
Long-term liabilities:
Convertible notes payable, net of
discount of $223,250 at December 31,         -                   1,576,750
2012.
Capital lease obligations less              54,900            79,358      
current portion
Total long-term liabilities                 54,900            1,656,108   
                                                               
Commitments and contingencies
                                                               
Stockholders’ equity (deficit):
Common stock, par value at $0.001,
33,333,333 shares authorized,
20,219,954 and 19,818,643 shares             20,221              19,820
issued and outstanding at September
30, 2013 and December 31, 2012,
respectively
Additional paid-in capital                   23,091,704          22,491,361
Accumulated deficit                         (22,210,744 )      (22,889,401 )
Total stockholders’ equity (deficit)        901,181           (378,220    )
Total liabilities and stockholders’        $ 10,730,621       $ 9,935,820   
equity (deficit)
                                                                             
                                                                             

AUXILIO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
                                                      
                     Three Months                            Nine Months
                     Ended September 30,                     Ended September 30,
                     2013             2012                 2013             2012
Revenues             $ 10,806,614       $ 8,782,198          $ 30,699,794       $ 25,894,518
Cost of               8,577,029        7,430,296          25,250,930       22,793,565 
revenues
                                                                                
Gross profit          2,229,585        1,351,902          5,448,864        3,100,953  
                                                                                
Operating
expenses:
Sales and              469,632            791,712              1,655,988          2,043,465
marketing
General and
administrative        903,600          899,318            2,830,329        2,742,056  
expenses
                                                                                
Total
operating             1,373,232        1,691,030          4,486,317        4,785,521  
expenses
                                                                                
Income (loss)
from                  856,353          (339,128   )        962,547          (1,684,568 )
operations
                                                                                
Other income
(expense):
Interest               (102,987   )       (126,880   )         (336,490   )       (341,261   )
expense
Interest               -                  -                    -                  299
income
Other income           80,000             -                    80,000             -
Change in fair
value of              -                (194,000   )        -                (279,000   )
derivative
liabilities
                                                                                
Total other
income                (22,987    )      (320,880   )        (256,490   )      (619,962   )
(expense)
                                                                                
Income (loss)
before                 833,366            (660,008   )         706,057            (2,304,530 )
provision for
income taxes
                                                                                
Income tax            (21,900    )      -                  (27,400    )      (1,600     )
expense
                                                                                
Net income           $ 811,466         $ (660,008   )       $ 678,657         $ (2,306,130 )
(loss)
                                                                                
Net income
(loss) per
share:
Basic                $ .04             $ (.03       )       $ .03             $ (.12       )
Diluted              $ .04             $ (.03       )       $ .03             $ (.12       )
                                                                                
Number of
weighted
average
shares:
Basic                 20,197,222       19,595,309         20,163,444       19,537,823 
Diluted               21,073,171       19,595,309         21,039,393       19,537,823 

Contact:

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