Nyer Medical Group, Inc. Reports Revenues of $17.7 Million

Nyer Medical Group, Inc. reports results for the second quarter of fiscal year 2007. Revenues for the three months ended December 31, 2006 increased $2,050,397 or 13.1% to $17,737,081 from $15,686,684 as reported for the same period last year. Net income for the three months ended December 31, 2006 was $108,059 or $.03 basic income per share as compared to $98,596 or $.03 basic income per share for the same period ended December 31, 2005.    

The pharmacies segment’s revenues increased $2,478,293 to $16,229,946 or 18.0% for the three months ended December 31, 2006 as compared to $13,751,653 for the three months ended December 31, 2005. The pharmacies’ revenues (excluding dispensing fees) increased $2,342,880 to $15,695,754 or 17.5% for the three months ended December 31, 2006 as compared to $13,352,874 for the three months ended December 31, 2005. The pharmacy segment acquired a new location in April 2006, which accounts for approximately $1,158,900 or 49.5% of the increase for the three months ended December 31, 2006. The remainder of the increase is due to growth of the federal Medicare Part D drug benefit and the aging of the American population resulting in increased drug utilization. Dispensing fees revenue increased $135,413 to $534,192 or 34.0% for the three months ended December 31, 2006 as compared to $398,779 for the three months ended December 31, 2005. The pharmacies commenced dispensing prescriptions under two new contracts (December 2005 and June 2006) with federally qualified health centers (FQHC), which accounted for approximately $28,800 of the increase. The remainder of the increase was due to increased volume in the existing locations.

The pharmacies’ S,G&A expenses increased $479,321 to $3,252,965 or 17.3% for the three months ended December 31, 2006 as compared to $2,773,644 for the three months ended December 31, 2005, mainly due to increased labor costs of approximately $397,300. The increased labor costs consisted of approximately $241,600 due to the short supply of pharmacists and pharmacy technicians and additional personnel due to growth in revenues and approximately $125,000 of the increase was due to a pharmacy opened in April 2006. The balance of the increase was composed of rent expense of $44,420, store supplies of $43,100, equipment rental of $33,618, legal expense of $22,250, advertising expense of $20,172, insurance expense of $19,688 and a reduction in LIFO expense of $151,635. The remaining increase of $50,408 was a combination of miscellaneous operating expenses.

The medical segment’s sales decreased $427,896 to $1,507,135 or 22.1% for the three months ended December 31, 2006 as compared to $1,935,031 for the three months ended December 31, 2005. Internet sales decreased by approximately $242,270 due to lower equipment sales as the medical segment has increased prices for equipment eliminating unprofitable sales. Also, Internet sales have decreased due to switching to a new website platform which does not contain all of the medical segment’s products. The remaining decrease of approximately $185,626 was due to the medical segment continuing to be pressured by regional and national buying groups able to command larger discounts from manufacturers who are able to offer on-line purchasing, inventory controls as well as larger competitors who offer lower prices.

The medical segment’s S,G&A expenses decreased $49,952 or 9.8% to $457,382 for the three months ended December 31, 2006 as compared to $507,334 for the three months ended December 31, 2005. The decrease was due to the following: a decrease in the allowance for bad debt expense of $12,000, a reduction in sales related expenses of $19,160, decrease in shipping charges of $7,675 and reduced bulk inventory storage costs of $10,900.

The corporate segment’s overhead increased by $27,431 or 15.9% to $199,677 for the three months ended December 31, 2006 as compared to $172,246 for the three months ended December 31, 2005 due to a combination of the following: an increase in fees paid to the minority shareholders of $58,330, a decrease in legal and accounting costs of $25,600, and a reduction in personnel costs of approximately $12,500.