The Female Health Company Reports: Third Quarter Results Revenues Increase 45%
CHICAGO, August 12, 1999 - The Female Health Company
(OTC BB: FHCO) today reported that revenues for the third quarter ending June 30, 1999, increased 45% to $1,611,975 from $1,114,919 in the same period in 1998.The net loss for the third quarter ending June 30, 1999 totaled $1,048,325 ($0.09 per diluted share) vs. $949,012 ($0.09 per diluted share) for the same 1998 period. The increase in the Net Loss is attributable to an adjustment to the inventory obsolescence reserve which favorably impacted cost of goods in the 1998 quarter which was not repeated in the 1999 quarter and increased interest expense associated with the issuance of convertible debentures in 1999. Operating expenses for the 1999 quarter decreased to $922,218 from $1,000,532 in the same 1998 period.
The results for the quarter were consistent with expectations. The increase in revenues was attributable to repeat orders from countries currently marketing the Female Condom and new country launches associated with the United Nations Joint Programme on HIV/AIDS (UNAIDS).
UNAIDS recently announced that based on results to date, the second phase of its partnership with The Female Health Company would start this year. UNAIDS stated "we plan to dramatically increase the number of women who have access to the product." This program is now underway. UNAIDS plans to distribute trial quantities of Female Condoms to be used to "jump start" broad distribution in 14 countries where the Female Condom currently isn’t marketed. The importance of this program is highlighted by a May 11, 1999, UNAIDS press release stating AIDS is now the leading cause of death in Africa and fourth worldwide.
On May 13, 1999, the Center for Disease Control HIV/STD/TB Prevention News Update noted that "Female Condoms gain ground in Francophone Africa." The article went on to state, "the Female Condom appears to be growing in popularity…" One doctor who specializes in reproductive health noted, "Our objective is to protect the woman. So if they like (the Female Condom) because it does not crack like the male condom, this is very encouraging."
The Company reported that it is beginning to see this reflected in increasing country specific use and acceptance. For example, South Africa ordered 95,000 units to market test early in 1997. Based on results this was followed by orders for 1.5 million units in 1998 and more than 2.0 million units to date in 1999.
The increasing contribution of the Female Condom as a weapon in controlling the HIV/AIDS epidemic in Africa was highlighted in an article appearing on the front page of the New York Times on July 24, 1999.
The Company shipped 1.9 million units in the third quarter and has a current backlog of 1.5 million units. While there will be variations quarter to quarter as the program develops, the Company believes substantial volume will develop based on recent studies indicating that when available Female Condom usage could account for 24-35% of total condom usage.
For the nine months ended June 30, 1999, net revenues totaled $3,409,695 while the net loss was $3,143,280 compared to net revenues of $4,040,672 and a net loss of $3,621,365 for the same 1998 period. Exclusive of a one-time charge in 1998 for Preferred Series 2 Dividend Accretion, the net loss would have increased. This was attributable to the favorable adjustment to the inventory obsolescence reserve in 1998 which did not occur in 1999 and increased interest expense. Operating expenses decreased year to date in 1999 vs. the same 1998 period.
The decrease in sales volume between years resulted due to the timing, receipt and shipment of large orders during the first half of 1998 vs. the same 1999 period. The Company expects fluctuations to continue until reorders account for a substantial portion of the Company’s business.
The Female Health Company, based in Chicago, owns certain worldwide rights to the Female Condom including patents which have been issued in the United States, United Kingdom, Japan, France, Italy, Germany, Spain, The People's Republic of China, Canada, New Zealand, South Korea and Australia. The Female Condom is the only available product controlled by a woman that protects against sexually transmitted diseases including HIV/AIDS and unintended pregnancy.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements in this release which are not historical fact are forward-looking statements based upon the Company's current plans and strategies, and reflect the Company's current assessment of the risks and uncertainties related to its business, including such things as product demand and market acceptance; the economic and business environment and the impact of governmental regulations, both in the United States and abroad; the effects of competitive products and pricing pressures; currency risks; capacity; efficiency and supply constraints; and other risks detailed in the Company's press releases, shareholder communications and Securities and Exchange Commission filings. Actual events effecting the Company and the impact of such events on the Company's operations may vary from those currently anticipated.
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