AUXILIO Inc. Reports Full Year 2013 Financial Results

  AUXILIO Inc. Reports Full Year 2013 Financial Results

Business Wire

MISSION VIEJO, Calif. -- March 31, 2014

AUXILIO, Inc. (AUXO) (“AUXILIO” or “the Company”), the nation’s pioneer and
leading Managed Print Services (MPS) company for health care, today reported
financial results for the year ended December 31, 2013.


  *Increased 2013 revenues 21% to $43.0 million; service revenues increased
    22% to $37.1 million
  *Achieved operating income margins of 4% in FY 2013 vs. (5%) in FY 2012
  *Generated $2.6 million of cash flows from operations in 2013, up from
    -$30,000 in 2012
  *Added three new recurring revenue contracts during 2013 and three more
    since December 31, 2013

“I am pleased with the progress we made in 2013,” stated Joseph J. Flynn,
president and CEO of AUXILIO, Inc. “We continue to deliver value to our
clients by streamlining their business processes and helping them become more
efficient across their entire print services functions. Our pipeline of
potential new clients remains strong as we see tremendous opportunities to
provide value added services to existing and new clients.”

Financial Results

For the twelve months ended December 31, 2013

For the twelve months ended December 31, 2013, the company reported revenues
of $43.0 million, an increase of 21% when compared to $35.6 million in the
same period in 2012. Recurring service revenues increased 22% from nine new
contracts implemented in 2012 and 2013 and expansion of services with existing

Cost of revenue was $35.3 million, an increase of 14% compared to $31.0
million 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 twelve months of 2013 was $7.7
million, or 18% of revenues, compared to $4.6 million or 13% for the same
period of 2012. The gross margin improvement was a result of more contracts
moving beyond the initial implementation phase, which require more upfront

Operating expenses for 2013 were $5.9 million, a decrease of 6% from $6.3
million in 2012. Sales and marketing expenses fell by 19% due to the
termination of a joint marketing agreement with a channel partner in 2013.
General and administrative expenses increased 4% to $3.8 million due to
additional staffing to handle the increase in transaction volume. The Company
generated $1.8 million of operating income in 2013 compared to an operating
loss of $1.6 million in 2012.

Net income for the twelve months ended December 31, 2013 was $1.3 million, or
$0.06 fully diluted earnings per share, compared to a net loss of $2.4 million
or $0.12 fully diluted loss per share, in the same period of 2012. The
weighted average diluted shares outstanding increased to 22.8 million shares.

After excluding charges of $576,000 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 twelve months
ended December 31, 2013 was $2.5 million or 6% of revenue compared to a loss
of $759,000 or (2%) of revenue after excluding charges of $391,000 related to
stock-based compensation and $480,000 in charges related to stock granted for
marketing and consulting activities in the same period of 2012.

At December 31, 2013, the Company had $4.7 million of cash and cash
equivalents, up $2.5 million from the same period a year ago. Cash provided by
operating activities amounted to $2.6 million compared to $30,000 of cash used
for operating activities during the same period in 2012. Working capital
improved to $254,000 at December 31, 2013 compared to -$661,000 at December
31, 2012.

Paul Anthony, CFO of AUXILIO, stated: “We are pleased with the steady
improvements in our cash flows and margins over the past five quarters. This
reflects additions of recurring revenues from new and existing contracts and
excellent cost controls. While we expect to incur higher costs at the start of
our engagements with new customers as well as making additional investments in
our business, we are confident in reaching our long term margin objectives.”

Business Updates

On January 13, 2014, AUXILIO announced a five-year MPS contract with the
University of San Diego Health System with over 850 physicians and 565 beds.
AUXILIO won this competitive bid as a result of their exceptional customer
service reputation and guaranteed cost savings.

The Company secured a three-year service agreement with New Hanover Regional
Medical Center (“New Hanover”), the largest health care provider in
Wilmington, North Carolina in February 2014. The agreement covers New
Hanover’s 729 beds and numerous specialty treatment centers located in the
Wilmington region.

Beth Israel Deaconess Medical Center (“Beth Israel Deaconess”), a leading
hospital in Boston, Massachusetts with 649 beds and 1,250 full time
physicians, awarded a Managed Print Consulting services contract to AUXILIO in
February 2014.

AUXILIO announced the hiring of Mark Dressel for the newly created position of
Executive Vice President, Consulting and Managed IT Services Group on March
27, 2014. Mark’s role is to drive new sources of revenue from current and
prospective customers through healthcare consulting, IT sourcing/outsourcing
and other high demand offerings that enhance our position as a strategic
healthcare IT service partner.

Conference Call Information

CEO Joe Flynn and CFO Paul Anthony will host a conference call with investors
to discuss its full year 2013 earnings results.

Date:              Monday, March 31, 2014
Time:                  5:00 pm ET
US:                    877-941-1427
International:         480-629-9664
Conference ID:         4674877

A replay of the call will be available from 8:00 pm ET on March 31, 2014 to
11:59 pm ET on April 14, 2014. To access the replay, please dial 877-870-5176
from the U.S. and 858-384-5517 from outside the U.S. The PIN is 4674877.

About AUXILIO, Inc.

AUXILIO is the pioneer of Managed Print Services for the healthcare industry,
working exclusively with hospitals and hospital systems throughout the United
States. A true Management Services company, AUXILIO streamlines systems and
aligns processes and infrastructure for onsite print operations that reduce
cost, increase productivity and meet and exceed customers’ patient care
standards. AUXILIO also provides a wide range of healthcare consulting and
managed IT services using the same focused approach on cost savings and
operational efficiencies as their core managed print services business.

Founded in 2004, AUXILIO serves a national portfolio of over 100 hospital
campuses and manages over 1.3 billion documents produced annually from more
than 50,000 devices supporting over 250,000 caregivers. AUXILIO’s is
independent, works with all print vendors, and provides full-time, on-site
customer service and technical representatives.

For more information about AUXILIO, visit

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 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.

                                               As of December 31,
                                                2013          2012        
Current assets:
Cash and cash equivalents                      $ 4,668,624     $ 2,190,972
Accounts receivable, net                         3,856,791       4,693,660
Prepaid and other current assets                 332,759         52,113
Supplies                                        967,354       1,059,730   
Total current assets                             9,825,528       7,996,475
Property and equipment, net                      160,709         227,004
Deposits                                         34,413          36,288
Loan acquisition costs                           51,162          159,036
Goodwill                                        1,517,017     1,517,017   
Total assets                                   $ 11,588,829   $ 9,935,820   
Current liabilities:
Accounts payable and accrued expenses          $ 5,057,339     $ 5,579,720
Accrued compensation and benefits                1,556,513       1,558,539
Line of credit                                   400,000         528,486
Deferred revenue                                 868,186         902,542
Convertible notes payable, net of discount of    1,617,750       -
$82,250 at December 31, 2013
Current portion of capital lease obligations    71,933        88,645      
Total current liabilities                       9,571,721     8,657,932   
Long-term liabilities:
Convertible notes payable, net of discount of    -               1,576,750
$223,250 at December 31, 2012
Capital lease obligations, less current         46,558        79,358      
Total long-term liabilities                     46,558        1,656,108   
Commitments and contingencies
Stockholders’ equity (deficit):
Common stock, par value at $0.001, 33,333,333
shares authorized, 20,643,966 shares issued
and outstanding at December 31, 2013 and         20,645          19,820
19,818,642 shares issued and outstanding at
December 31, 2012
Additional paid-in capital                       23,491,490      22,491,361
Accumulated deficit                             (21,541,585 )  (22,889,401 )
Total stockholders’ equity (deficit)            1,970,550     (378,220    )
Total liabilities and stockholders’ equity     $ 11,588,829   $ 9,935,820   

                                               Year Ended December 31,
                                                2013          2012       
Net revenues                                   $ 42,974,978     $ 35,647,021
Cost of revenues                                35,294,204     31,018,117 
Gross profit                                    7,680,774      4,628,904  
Operating expenses:
Sales and marketing                              2,112,285        2,604,783
General and administrative expenses             3,785,778      3,654,716  
Total operating expenses                        5,898,063      6,259,499  
Income (loss) from operations                   1,782,711      (1,630,595 )
Other income (expense):
Interest expense                                 (436,476   )     (465,131   )
Interest income                                  -                300
Other income                                     80,000           -
Change in fair value of derivative liabilities  -              (279,000   )
Total other income (expense)                    (356,476   )    (743,831   )
Income (loss) before provision for income        1,426,235        (2,374,426 )
Income tax expense                              78,419         7,440      
Net income (loss)                              $ 1,347,816     $ (2,381,866 )
Net income (loss) per share:
Basic                                          $ 0.07          $ (0.12      )
Diluted                                        $ 0.06          $ (0.12      )
Number of weighted average shares outstanding:
Basic                                           20,259,776     19,589,978 
Diluted                                         22,843,480     19,589,978 


MZ North America
Dustin Salem, SVP
Phone: 949-259-4998
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