Targeted Medical Pharma Reports Fourth Quarter and Fiscal Year 2013 Financial Results

Year-Over-Year Revenue Increase of 31% and Gross Profit Increase of 60% for the year ended December 31, 2013

LOS ANGELES--()--Targeted Medical Pharma, Inc. (OTCQB: TRGM), today announced financial results for its fourth quarter and fiscal year ended December 31, 2013. The Company posted increased revenues, gross profit and a reduction in net loss before interest, taxes, depreciation and amortization, stock based compensation (Adjusted EBITDA*) on both a year-over-year and a quarterly basis.

Financial Overview

Year-over-Year Comparison:

Improved financial results for the year ended December 31, 2013 compared to the year ended December 31, 2012

  • Total revenue of $9.6 million, a 31% improvement from $7.3 million during the year ended December 31, 2012.
  • Total gross profit of $6.6 million, a 60% improvement from $4.1 million during the year ended December 31, 2012.
  • Adjusted EBITDA of $(2.7) million, a 41% improvement from ($4.5) million during the year ended December 31, 2012.

Sequential Comparison:

Improved financial results for the quarter ended December 31, 2013 compared to the quarter ended September 30, 2013

  • Total revenue of $2.6 million, a 20% improvement from $2.2 million during the quarter ended September 30, 2013.
  • Total gross profit of $1.9 million, a 22% improvement from $1.6 million during the quarter ended September 30, 2013.
  • Adjusted EBITDA of $0.1 million, a 112% improvement from ($1.1) million during the quarter ended September 30, 2013.

Net loss for the year ended December 31, 2013, was $9.3 million compared to a net loss of $9.6 million for the year ended December 31, 2012. During the years ended December 31, 2013 and 2012, the Company’s net loss consisted of a significant amount of non-cash charges. For instance, the net loss for the year ended December 31, 2013 was negatively affected by the Company’s decision to provide a valuation allowance of $7.4 million for its deferred tax assets. If the Company had not recorded a full valuation allowance, then the Company’s net loss would have been $1.9 million.

Due to the impact of these non-cash charges on the Company’s reported net loss, the Company places greater emphasis on improvements in Adjusted EBITDA. A reconciliation of net loss to Adjusted EBITDA is reflected in the following table:

        Year Ended       Three Months Ended
Dec. 31, 2013       Dec. 31, 2012 Dec. 31, 2013       Sept. 30, 2013
 
 
NET INCOME (LOSS) $ (9,337,618 ) $ (9,586,182 ) $ 497,288   $ (1,722,665 )
 
Depreciation of property and equipment 142,500 187,260 34,742 37,733
Amortization of intangibles 269,400 248,510 68,001 66,440
Income tax benefit 5,666,902 (3,185,938 ) 1,278
Interest, net (170,230 ) 6,632,311 (507,285 ) 216,758
Stock based compensation   745,454     1,154,212     37,233     302,508  
Net loss before interest, taxes, depreciation and amortization, and stock based compensation $ (2,683,592 ) $ (4,549,827 ) $ 129,979   $ (1,097,948 )
 

Management Comments

"The fourth quarter and year ended December 31, 2013, were decisive periods for our Company. The implementation and growth of new business verticals coupled with improvements in operations efficiency, resulted in accelerated reimbursement rates for our products and reduced operating costs,” said William Shell, M.D., Chief Executive Officer and Chief Science Officer of Targeted Medical Pharma. “I firmly believe that executing our strategic initiatives in both sales and operations continues to add value for our shareholders. The fourth quarter was our eighth consecutive quarter of revenue growth, on a year-over-year basis. I believe that our focus on revenue growth, through accelerated payment terms, and cost containment is beginning to be reflected in our financial results, as evidenced by our overall profitability during the quarter ended December 31, 2013, of $0.5 million. Since our revenues are, in part, dependent upon the timing of our cash receipts we are at risk of significant fluctuations in our reported results. Despite these quarterly fluctuations, I remain confident in our ability to continue to grow our business.”

2014 Strategic Initiatives:

  • Expansion of sales and marketing efforts to increase utilization, awareness and acceptance by physicians, patients and payers with an emphasis on expansion into markets that provide near-term revenue growth opportunities;
  • Conduct additional clinical trials for current and pipeline products including a new medical food indicated for the dietary management of Autism and Autism Spectrum Disorders, as well as a post market study with the military joint command examining the efficacy of Theramine for the reduction of back pain within the active duty military;
  • Development of the Company’s direct to consumer business that includes dietary and nutritional supplements.

A copy of Targeted Medical Pharma’s annual report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission on March 31, 2014, is accessible on the Company’s website at www.tmedpharma.com and at the SEC’s website at www.sec.gov.

About Targeted Medical Pharma, Inc.

Targeted Medical Pharma, Inc. is a Los Angeles-based biotechnology company that develops medical foods for the treatment of chronic disease, including pain syndromes, peripheral neuropathy, hypertension, obesity, sleep and cognitive disorders. The company also develops a line of dietary supplements designed to support health and wellness. The company manufactures 10 proprietary medical foods, and recently launched its first dietary supplement, Clearwayz™. The products are sold directly to physicians and pharmacies in the U.S. The company also is developing nutrient-based systems for oral stimulation of progenitor stem cells that differentiate into neurons, red blood cells, pituitary hormones including IGF-I.

Forward Looking Statement

This press release may contain forward-looking statements related to the company’s business strategy, outlook, objectives, plans, intentions or goals. The words "may," "will," "should," "plans," "explores," "expects," "anticipates," "continue," "estimate," "project," "intend," and similar expressions, identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, but their absence does not mean that the statement is not forward-looking. Forward-looking statements also include any other passages that relate to expected future events or trends that can only be evaluated by events or trends that will occur in the future. The forward-looking statements are based on the opinions and estimates of management at the time the statements were made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. These risks and uncertainties include, among others, the risk of unforeseen changes in customer budgets, unanticipated loss of customers or delays in anticipated orders, the potential failure to attract new customers due to the company's inability to competitively market its products and services, the risk of fluctuating demand for the company's product, the potential failure to maintain desired customer relationships, costs and risks related to development of technologies. More information about factors that could cause actual results to differ materially from those predicted in Targeted Medical Pharma’s forward-looking statements is set out in its annual report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance upon these forward-looking statements, which speak only as to the date of this release. Except as required by law, Targeted Medical Pharma, undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.

*Adjusted EBITDA refers to a financial measure that is more fully defined as net loss before net interest and other income, interest expense, income taxes, depreciation and amortization, and stock based compensation. Adjusted EBITDA is a non-GAAP financial measure which management believes reflects the Company’s ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in the Company’s business, as they exclude certain income or other expenses that are not reflective of ongoing operating results. Adjusted EBITDA is commonly used to analyze companies on the basis of leverage and liquidity. However, Adjusted EBITDA is not a measure determined under GAAP in the United States of America and may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA should not be construed as a substitute for net loss or as a better measure of liquidity than cash flow from operating activities, which are determined in accordance with GAAP. Management believes that Adjusted EBITDA is a useful measure for analyzing operating results, and uses this non-GAAP financial measure to review past results and forecast future results.

Contacts

Company Contact:
Targeted Medical Pharma
William B. Horne, 310-474-9809
whorne@tmedpharma.com
or
Investor Contact:
ProActive Capital Group
Jeff Ramson, 646-863-6893
ramson@proactivecapital.com

Release Summary

Targeted Medical Pharma (OTCQB:TRGM) reports a 31% revenue increase for fiscal year 2013, and a 60% gross profit increase for the fourth quarter of 2013.

Sharing

Contacts

Company Contact:
Targeted Medical Pharma
William B. Horne, 310-474-9809
whorne@tmedpharma.com
or
Investor Contact:
ProActive Capital Group
Jeff Ramson, 646-863-6893
ramson@proactivecapital.com