United States (US)
Sales generated through Prism's U.S. investment in MedCare Products Inc. led to US revenue growth $666 or 13.7% for the three months ended February 28, 2013, compared to the previous year's first quarter. Offsetting this gain was decreased sales in our hospital group business. Although continued uncertainty exists within the US hospital groups, Prism's pipeline related to hospital capital expenditure projects has stabilized and is beginning to grow. Incremental revenues from the MedCare transaction met our expectations. Additionally, our US homecare business is progressing as more and more homecare dealers are being signed up.
Canadian revenues for the three months ended February 28, 2013 decreased $1,580 or 34.6% compared to the same period last year. Last year's first quarter was favourably impacted by a large B.C. order for replacement ceiling track lifts.
Gross margin for the three months ended February 28, 2013 decreased $959 or 13.1% compared to the same period last year due to lower Canadian and UK revenues offset by incremental margins from sales to MedCare. The gross margin rates decreased from 39.1% to 36.7% and were impacted by various adjustments mainly related to the MedCare acquisition. The Company purchased approximately $2 million of inventory in the MedCare transaction and this inventory was fair-valued at a higher value than manufactured inventory thereby reducing normal anticipated margin rates; we eliminated share of profits on MedCare's unsold inventory; and, we had a favourable onetime accounting adjustment in the first quarter of last year. Taken together, these adjustments negatively impacted our year over year gross margin comparison by about $0.5 million with the margin rate being impacted by 2.9%.
Selling, General and Administrative
Selling, general and administrative expenses for the three months ended February 28, 2013 were $5,625 compared to $6,043 for the same period last year, a decrease of $418 or 6.9%. However, included in the SG&A was a 10 year $200 amortization charge related to the MedCare supply agreement. Without this charge, the actual decrease in SG&A was $618 or 10.2%. This decrease results primarily from the Company's the 4th quarter of 2012 restructuring initiatives. The Company estimates that in excess of $2,500 of 2012 SG&A costs are not expected to re-occur in fiscal 2013.
The first quarter adjusted EBITDA performance was below last year's first quarter; however, this was largely caused by the adjustments made relating to the MedCare acquisition and it does represent a significant improvement over the third and fourth quarter performance of last year.
Net Income for 2013's first quarter declined by $604 or 74.7% to $205 compared to $809 in the previous year's first quarter. Earnings per share from the first quarter of 2012 to the first quarter of 2013 declined from $0.10 per share to $0.02 per share. In summary, the significant improvement in our cost structure and the favourable impact of the MedCare transaction were offset by lower revenues, primarily in Canada, due to favourable circumstances in Canada's previous year's first quarter. Net Income was further impacted by lower margin rates due to valuation adjustments related to the MedCare transactions, higher interest costs and foreign exchange losses.
As at February 28, 2013, the Company had $1,516 cash and bank indebtedness of $12,009 compared to $1,381 and $10,127 respectively, as at November 30, 2012.
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