SysteMed Has Record Sales in 2nd Quarter

SysteMed Inc. reported record second-quarter sales Wednesday but only a slight profit increase after its acquisition of an Ohio-based manager of prescription drug programs.

The Laguna Hills mail-order drug distributor said its net income was $12,000, compared to $9,000 in the same period a year earlier. Because of the small profit, there is no dividend payment to shareholders.

Sales, however, climbed 34% to $30.8 million from $23 million.

“Historically, we have had strong revenue growth,” said Judith Woodward Archbold, vice president and general counsel of SysteMed. “It reflects the increasing acceptance of managed care in the prescription drug business.”

Last month, SysteMed completed its acquisition of INSURx, a privately held Cleveland company that designs and manages prescription drug programs for employers and insurers. The move cut into profit because the company wrote off $368,000 in accounting charges to pay INSURx debt, as well as $397,000 in legal fees and other expenses related to the acquisition.

“These are one-time-only charges,” Archbold said. “Notwithstanding those charges, our business is doing very well. We’re meeting our expectations.”

The early debt payment is expected to save the company about $3.5 million in interest and amortization expenses over the next three years, Archbold said.

For the first six months of the year, SysteMed reported a profit of $666,000, or 3 cents a share, contrasted with $83,000 in the same period last year. Sales climbed 34% to $60.9 million from $45.4 million.

SysteMed, which once concentrated on making a drug to treat viral infections, has boosted its revenue since shifting its attention to mail-order prescription services.

For the second quarter, sales at the company’s largest subsidiary, America’s Pharmacy Inc. in Des Moines, Iowa, were up 38% to $25.9 million. INSURx sales jumped as well, climbing 34% to $2.7 million. The two subsidiaries account for 93% of SysteMed’s sales.

The acquisition is expected to give SysteMed, which employs about 285 people, access to benefits plans designed by INSURx and allow the company to provide more comprehensive prescription drug programs, Archbold said.

Even so, Archbold said, “it is too early to try to quantify the synergistic growth we see by combining the two companies.”