Assured Pharmacy, Inc. ("Assured Pharmacy" or the "Company") (OTCQB: APHY), a growing provider of pharmacy services to patients and physicians primarily in the treatment of chronic pain, today released the following letter to its shareholders:
These past several months have given us a chance to review our business and make some changes, which we believe will make Assured Pharmacy a stronger company and award shareholders for the long-term. Management would like to provide an update on our significant progress across a number of areas and our vision for the future. The management team and I are more excited than ever about what lies ahead.
We have strengthened our financial position considerably by bringing in new capital and restructuring our balance sheet. A lead investor provided us with $1.44 million of new capital to date, which enabled us to design and implement a plan to streamline our operations and target near-term profitability. The new capital has been disbursed throughout our operations to meet increasing demand from physicians who wish to have greater precision in the management of their chronic patients. We have successfully restructured a significant amount of our outstanding debt. The holders of the Company's long-term debt, totaling approximately $5.5 million, have agreed to extend the maturity of their debt until 2016. In addition, the holders of the Company's long-term debt, totaling approximately $1.5 million, have converted their debt into common equity at a price of $0.60 per share. As part of the debt extensions and conversions, an aggregate total of approximately $800,000 in accrued interest has been converted into common equity at a price of $0.60 per share. All of these balance sheet adjustments allow us to focus the new capital on meeting the increasing demand for our services resulting in revenue growth.
As described in our most recent annual report filed on Form 10-K, management has decided to concentrate our working capital on the Company's operations and support our two remaining pharmacies with optimal prospects. After analyzing historical financial performance, regulatory costs, current sales prospects, geographic and physical location and strength of existing physician relationships, management elected to close the Gresham and Riverside pharmacies on August 5, 2013 and August 8, 2013, respectively.
Following the closures of the Gresham and Riverside pharmacies, customer demand at both our Kansas City and Seattle pharmacies has consistently increased and is accelerating. Since the restructure of our operations, our revenue per business day from our Kansas City and Seattle pharmacies has increased approximately 130% from approximately $12,500 in revenue per day in July 2013 to approximately $28,700 in revenue per day in March 2014. The key driver behind the revenue growth has been the increase in the number of prescriptions. Since the restructure of our operations, our prescriptions per business day from our Kansas City and Seattle pharmacies has increased approximately 31% from approximately 153 prescriptions per day in July 2013 to approximately 202 prescriptions per day in March 2014. Our prescriptions volume is a lead indicator of revenue growth.
We are focused on reaching profitability in 2014 and believe that concentrating our working capital in our Kansas City and Seattle pharmacies will help us reach that goal. Over the past year, management believes it has proven the success of our business model at our newest location in Kansas City and successfully replicated the model in our Seattle location. We are looking to continue that success and replicate the model in select expansion locations, including Denver and Boston.
The foundation for our plan to increase sales at our existing two pharmacies is based on expanding our outreach program to physicians, including more effectively communicating to them the risk management and service benefits that our business model provides compared to a general pharmacy and increasing our customer retention rate. We believe that increasing our inventory levels and expanding our purchasing capacity with existing and new drug suppliers can strengthen our customer retention rates. Since the majority of our pharmacies' operating expenses are fixed expenses, we expect any increase in revenue to have a positive impact on our consolidated operating results. Management believes that the infrastructure of our existing pharmacies can support an increased prescription production volume by as much as an additional 75% to 100% without incurring any significant additional operating expenses, but there can be no assurances in this regard.
Our longer-term plan remains focused on developing a national footprint as a premier provider of pharmacy services to physicians and patients primarily in the treatment of chronic pain and other chronic medical conditions that require treatment utilizing controlled medications. Prescription drug abuse and diversion have resulted in ever increasing regulations. Our business model provides pharmacy services, which are typically utilized by physicians for the risk management benefits. We have developed and refined what we believe is a unique pharmacy service model for the dispensing of controlled medications that is capable of being scaled into a national chain.
We believe that our current corporate infrastructure can efficiently support up to total of twelve operating pharmacies. Corporate infrastructure includes executive management, centralized support services, accounting, finance, information systems, human resources, payroll and compliance to support each pharmacy's operations. In order to align the costs of our current corporate infrastructure with our scaled back operations, management has implemented cost reduction initiatives including staffing reductions, deferral of senior management compensation and reduced operating costs at our two remaining pharmacies. As a result, we believe that the implementation of our plan to open up to ten additional pharmacies will not require material additional corporate infrastructure. Further, management believes that opening each new pharmacy will have a positive impact on our consolidated operating results within six months from opening of the new pharmacy, but there can be no assurance that such positive results will occur.
The past several months have posed some challenges for the Company that have largely been overcome. With our corporate repositioning predominantly behind us, an experienced management team in place, and significant opportunities on the horizon for our business, we are eager to execute our plans over the next few months.
Please stay tuned for future announcements from Assured Pharmacy. In the meantime, thank you for your ongoing support.
Chief Executive Officer
About Assured Pharmacy, Inc.
Assured Pharmacy, Inc. is a provider of pharmacy services to patients and physicians, primarily in the treatment of chronic pain. Through its network of pharmacies, the Company predominantly dispenses prescription medications to sufferers of chronic pain, while stringently adhering to federal and state reporting requirements for both patients and physicians. The majority of the Company's business is derived from repeat visits from its customer base of physician-referred chronic patients. The Company currently has two operating pharmacies which are wholly owned. Learn more about Assured Pharmacy, Inc. atwww.AssuredRxServices.com
Forward-Looking Statements. This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words "believe," "anticipate," "estimate," "expect," "intend," "plan," "project," "prospects," "outlook," and similar words or expressions, or future or conditional verbs such as "will," "should," "would," "may," and "could" are generally forward-looking in nature and not historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any anticipated results, performance or achievements. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company's forward-looking statements, please see the Company's Annual Report on Form 10-K for the year ended December 31, 2013, including but not limited to the discussion under "Risk Factors" therein, which the Company has filed with the SEC and which may be viewed at http://www.sec.gov.
SOURCE: Assured Pharmacy Inc.