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Liberator Medical Reports Record Annual Net Revenues of $60.9 Million for Fiscal Year Ended September 30, 2012

The Company Reports Net Income of $2.5 Million for the Year

STUART, FL--(Marketwire - December 24, 2012) -  Liberator Medical Holdings, Inc. (OTCBB: LBMH) announced net revenues for fiscal year 2012 of $60,943,000, an increase of $8,245,000, or 15.6%, compared with sales of $52,698,000 for fiscal year 2011. The increase in sales was primarily due to the Company's continued direct response advertising campaign to acquire new customers and its emphasis on customer service to maximize the reorder rates for its recurring customer base. Liberator's direct response advertising expenditure for fiscal year 2012 was $13,113,000, compared to $15,245,000 for fiscal year 2011. For the fourth quarter of fiscal 2012, the Company reported net revenues of $16,516,000, representing a 10.4% increase over third quarter 2012 net revenues of $14,961,000.

Net income for fiscal year 2012 increased by $2,242,000, or 866%, to $2,501,000, compared with fiscal year 2011 net income of $259,000. Net income for fiscal year 2011 included a $902,000 non-cash expense for the change in fair value of an embedded derivative, which was eliminated upon conversion of a convertible note during the first quarter of fiscal year 2011. The balance of the increase in net income was driven by increased sales volumes and improved operating margins during fiscal year 2012.

Financial Condition

The Company had cash of $3,326,000 at September 30, 2012, compared with $3,016,000 at September 30, 2011, an increase of $310,000. This increase in cash during fiscal year 2012 was primarily due to $1,000,000 of borrowings from its credit line facility, partially offset by $546,000 in net cash used in operating activities and $151,000 for purchases of property and equipment.

Cash used in operating activities in fiscal 2012 was $546,000, which represents an improvement of $3,947,000 compared with cash used in operating activities of $4,493,000 during fiscal year 2011. The improvement in operating cash flows during fiscal year 2012 was primarily driven by additional net income of $2,242,000, a reduction in direct response advertising spend of $2,132,000, partially offset by a decrease in changes in operating assets and liabilities of $449,000.

Mark Libratore, President and Chief Executive Officer, stated: "We are very proud of our financial performance during fiscal year 2012. We increased our sales by 15% over last year, reduced our customer acquisition costs, increased our operating margins, and improved our operating cash flows for 2012. We will continue to invest in new technology and implement process improvements during fiscal year 2013 that we believe will improve overall productivity and contribute to increased profitability, while providing excellent service to our growing customer base.

We expect to manage the levels of our direct response advertising spend to maximize profitability and cash flows for fiscal year 2013, which may result in slower top-line sales growth. Based on our financial results from fiscal year 2012, we expect to continue to improve operating margins and cash flows for fiscal year 2013."

Stay up-to-date with current events by visiting Liberator Medical's website at www.liberatormedical.com or by joining the Company's E-Mail Alert List. Join by clicking the following link www.LBMH-IR.com.

About Liberator Medical Holdings, Inc.

Liberator Medical Holdings, Inc.'s subsidiary, Liberator Medical Supply, Inc., established the Liberator brand as a leading national direct-to-consumer provider of quality medical supplies to Medicare-eligible seniors. Accredited by The Joint Commission, its unique combination of marketing, industry expertise and customer service has demonstrated success over a broad spectrum of chronic conditions. Liberator is recognized for offering a simple, reliable way to purchase medical supplies needed on a regular, ongoing, repeat-order basis, with the convenience of direct billing to Medicare and private insurance. Liberator's revenue primarily comes from supplying products to meet the rapidly growing requirements of general medical supplies, personal mobility aids, diabetes, urological, ostomy and mastectomy patients. Liberator communicates with patients and their doctors on a regular basis regarding prescriptions and supplies. Customers may purchase by phone, mail or internet, with repeat orders confirmed with the customer and shipped when needed.

 

                                                                            
                                                                            
             Liberator Medical Holdings, Inc. and Subsidiaries              
                        Consolidated Balance Sheets                         
                     As of September 30, 2012 and 2011                      
              (In thousands, except dollar per share amounts)               
                                                                            
                                                        2012        2011    
                                                     ----------  ---------- 
                                                                            
                       Assets                                               
Current Assets:                                                             
  Cash                                               $    3,326  $    3,016 
  Accounts receivable, net of allowances of $5,044                          
   and $4,177, respectively                              10,365       7,860 
  Inventory, net of allowance for obsolete inventory                        
   of $310 and $144, respectively                         2,627       3,009 
  Deferred taxes, current portion                         2,254       1,877 
   Prepaid and other current assets                         287         333 
                                                     ----------  ---------- 
    Total Current Assets                                 18,859      16,095 
Property and equipment, net of accumulated                                  
 depreciation of $2,888 and $2,186, respectively          1,250       1,626 
Deferred advertising                                     22,426      17,191 
Intangible assets, net of accumulated amortization                          
 of $91 and $25, respectively                               239         305 
Other assets                                                 88         163 
                                                     ----------  ---------- 
                                                                            
Total Assets                                         $   42,862  $   35,380 
                                                     ==========  ========== 
                                                                            
        Liabilities and Stockholders' Equity                                
Current Liabilities:                                                        
  Accounts payable                                   $    6,537  $    5,008 
  Accrued liabilities                                     1,221       1,119 
  Other current liabilities                                  92         103 
                                                     ----------  ---------- 
    Total Current Liabilities                             7,850       6,230 
Deferred tax liability                                    5,421       3,347 
Credit line facility                                      2,500       1,500 
Other long-term liabilities                                 132          48 
                                                     ----------  ---------- 
Total Liabilities                                        15,903      11,125 
                                                     ----------  ---------- 
                                                                            
Commitments and contingencies (see Note 13)                                 
                                                                            
Stockholders' Equity:                                                       
Common stock, $.001 par value, 200,000 shares                               
 authorized, 48,232 and 48,135 shares issued,                               
 respectively; 48,143 and 48,046 shares outstanding                         
 at September 30, 2012 and 2011, respectively                48          48 
Additional paid-in capital                               34,707      34,504 
Accumulated deficit                                      (7,746)    (10,247)
Treasury stock, at cost; 89 shares at September 30,                         
 2012 and 2011, respectively                                (50)        (50)
                                                     ----------  ---------- 
                                                                            
Total Stockholders' Equity                               26,959      24,255 
                                                     ----------  ---------- 
                                                                            
Total Liabilities and Stockholders' Equity           $   42,862  $   35,380 
                                                     ==========  ========== 
                                                                            

See accompanying notes to consolidated financial statements

  

                                                                            
             Liberator Medical Holdings, Inc. and Subsidiaries              
                   Consolidated Statements of Operations                    
           For the fiscal years ended September 30, 2012 and 2011           
              (In thousands, except dollar per share amounts)               
                                                                            
                                                        2012        2011    
                                                     ----------  ---------- 
                                                                            
Net Sales                                            $   60,943  $   52,698 
                                                                            
Cost of Sales                                            23,924      20,601 
                                                                            
                                                     ----------  ---------- 
Gross Profit                                             37,019      32,097 
                                                     ----------  ---------- 
                                                                            
Operating Expenses:                                                         
  Payroll, taxes and benefits                            14,136      12,174 
  Advertising                                             8,099       8,206 
  Bad debts                                               4,664       3,746 
  Depreciation and amortization                             794         730 
  General and administrative                              5,019       4,644 
                                                     ----------  ---------- 
    Total Operating Expenses                             32,712      29,500 
                                                     ----------  ---------- 
                                                                            
Income from Operations                                    4,307       2,597 
                                                     ----------  ---------- 
                                                                            
                                                                            
Other Income (Expense)                                                      
  Gain on sale of assets                                      -           2 
  Interest expense                                          (75)        (42)
  Interest income                                             -           5 
  Change in fair value of derivative liabilities              -        (902)
                                                     ----------  ---------- 
    Total Other Income (Expense)                            (75)       (937)
                                                     ----------  ---------- 
                                                                            
                                                                            
Income before Income Taxes                                4,232       1,660 
                                                                            
Provision for Income Taxes                                1,731       1,401 
                                                     ----------  ---------- 
                                                                            
Net Income                                           $    2,501  $      259 
                                                     ==========  ========== 
                                                                            
                                                                            
Basic earnings per share:                                                   
Weighted average shares outstanding                      48,097      47,869 
Earnings per share                                   $     0.05  $     0.01 
                                                                            
Diluted earnings per share:                                                 
Weighted average shares outstanding                      52,266      53,613 
Earnings per share                                   $     0.05  $     0.00 

See accompanying notes to consolidated financial statements

 

             Liberator Medical Holdings, Inc. and Subsidiaries              
                   Consolidated Statements of Cash Flows                    
           For the fiscal years ended September 30, 2012 and 2011           
                               (In thousands)                               
                                                        2012        2011    
                                                     ----------  ---------- 
                                                                            
Cash flow from operating activities:                                        
  Net income                                         $    2,501  $      259 
                                                                            
  Adjustments to reconcile net income to net cash                           
   used in operating activities:                                            
    Depreciation and amortization                         8,672       8,790 
    Equity based compensation                               122         385 
    Provision for doubtful accounts and contractual                         
     adjustments                                          4,787       3,950 
    Non-cash interest related to convertible notes                          
     payable                                                  -          21 
    Change in fair value of derivative liabilities            -         902 
    Deferred income taxes                                 1,697       1,340 
    Reserve for inventory obsolescence                      166          35 
    Gain on disposal of assets                                -          (2)
  Changes in operating assets and liabilities:                              
    Accounts receivable                                  (7,293)     (5,065)
    Deferred advertising                                (13,113)    (15,245)
    Inventory                                               216      (1,025)
    Other assets                                            143          49 
    Accounts payable                                      1,529       1,182 
    Accrued expenses                                        116          13 
    Other liabilities                                       (89)        (83)
                                                     ----------  ---------- 
Net Cash Flows Used in Operating Activities                (546)     (4,494)
                                                     ----------  ---------- 
                                                                            
Cash flows from investing activities                                        
  Purchase of property and equipment and other             (151)       (369)
  Acquisition of SGV Medical Supplies (see Note 10)           -        (466)
  Proceeds from the sale of assets                            -           3 
                                                     ----------  ---------- 
Net Cash Flows Used in Investing Activities                (151)       (832)
                                                     ----------  ---------- 
                                                                            
Cash flows from financing activities                                        
  Proceeds from credit line facility                      1,000       1,500 
  Costs associated with credit line facility                (21)        (51)
  Proceeds from employee stock purchase plan                 67          86 
  Payments of debt and capital lease obligations            (39)       (621)
                                                     ----------  ---------- 
                                                                            
Net Cash Flows Provided by Financing Activities           1,007         914 
                                                     ----------  ---------- 
                                                                            
Net increase (decrease) in cash                             310      (4,412)
                                                                            
Cash at beginning of period                               3,016       7,428 
                                                     ----------  ---------- 
Cash at end of period                                $    3,326  $    3,016 
                                                     ==========  ========== 
                                                                            
Supplemental disclosure of cash flow information:                           
Cash paid for interest                               $       73  $       56 
Cash refunded for income taxes                                -          (8)
                                                                            
Supplemental schedule of non-cash investing and                             
 financing activities:                                                      
Capital expenditures funded by capital lease                                
 borrowings                                                 202           - 
Common stock issued for conversion of debt                    -       5,100 

See accompanying notes to consolidated financial statements

Safe Harbor Statement

In this press release and in related comments by our management, our use of the words "expect," "anticipate," "possible," "potential," "target," "believe," "commit," "intend," "continue," "may," "would," "could," "should," "project," "projected," "positioned" or similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results, and our actual results may differ materially due to a variety of important factors. Such risks and uncertainties may include, but are not limited to, regulatory limitations on the medical industry in general, working capital constraints, fluctuations in customer demand and commitments, fluctuation in quarterly results, introduction of new services and products, commercial acceptance and viability of new services and products, pricing and competition, reliance upon subcontractors and vendors, the timing of new technology and product introductions, and the risk of early obsolescence of our products. Liberator's most recent annual report on Form 10-K and quarterly reports on Form 10-Q provide information about these and other factors, which we may revise or supplement in future reports filed with the Securities and Exchange Commission.

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