Graymark Healthcare Inc, the nation's second largest provider of diagnostic sleep services and an innovator in comprehensive care for obstructive sleep apnea (OSA), reported financial results for the third quarter ended September 30, 2012.
"Today, Graymark Healthcare announced that it entered into a definitive agreement for an equity investment from a newly formed entity, Oklahoma Health Partners (OHP). OHP intends to purchase 1,444,445 shares of Graymark's common stock for $650,000. The Graymark team greatly appreciates this vote of confidence from OHP," said Stanton Nelson, CEO of Graymark Healthcare. The funds will be used for general purposes as the Graymark management team executes its plan to right-size the company.
"We recently initiated a cost reduction plan that is expected to save the company approximately $2.0 million in 2013," Nelson said. "In addition to the cost reductions, which include reductions in our labor force, corporate expenses, and bad debt expense, we are developing a plan to identify and close underperforming lab locations."
Third Quarter 2012 Financial Results
Net revenues in the third quarter of 2012 were $4.3 million, decreasing 4.3% from $4.5 million in the third quarter of 2011. The decrease in revenue was primarily attributable to a decrease in the average reimbursement per sleep study and lower product sales due to a reduced number of CPAP setups and reduced reimbursement levels for both CPAP setups and resupply shipments due to patient mix fluctuations.
During the third quarter of 2012, the company continued to focus on increasing patient sleep study volumes by increasing referral levels and referral conversion rates, maximizing the use of available capacity, and compressing the elapsed time between referral receipt and rendering of service. As a result, sleep study volume increased 1.9% to 4,247 studies from 4,185 in the second quarter of 2012. Net services revenues in the third quarter of 2012 were $3.2 million, decreasing 3.7% from $3.3 million in the third quarter of 2011, primarily due to the continued shift of patients to hospital/outreach facilities, which have lower average revenue per sleep study, but higher net earnings due to lower facility and other fixed overhead costs.
Net revenues from Graymark's sleep therapy business were $1.1 million, decreasing 6.0% from $1.2 million in the year-ago quarter. The decrease was due to a reduction in CPAP setups along with a decline in reimbursement levels for both CPAP setups and resupply shipments due to patient mix fluctuations.
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