DS Healthcare Announces Second Quarter 2015 Reporting Fourth Consecutive Quarter of EBITDAS Profitability

POMPANO BEACH, Fla., Aug. 13, 2015 (GLOBE NEWSWIRE) -- DS Healthcare Group, Inc. (DSKX), "DS Healthcare" or "the Company" engaged in the development and discovery of drug therapies for specialty pharmaceuticals and innovative personal care products for its consumer brand has released financial results for the second quarter 2015.

Q2 2015 Highlights:

  • Net revenues were $3,659,548 down 2.3% over Q2 2014
  • Gross margins increase to 56% from 52% in Q2 2014
  • Gross profits increase to $2,064,367 up 6.3% over Q2 2014
  • Company reports GAAP loss of $9,551 compared to a loss of $635,172 in Q2 2015
  • Adjusted EBITDAS, a non-GAAP financial measure resulted in a net gain of $116,313 from a loss of $781,096 in Q2 2014 a 114.9% increase over Q2 2014

"Today’s announcement marks our fourth consecutive EBITDAS profitable quarter. We continue to demonstrate our ability to improve our gross margins while reducing our SG&A expenses and generating an operating profit. During the second quarter of 2014, we continued a series of efforts to improve the efficiency of our business. The second quarter results reflect the discipline that DS Healthcare has successfully executed in managing the variables within our control as well as the continued strength we've experienced in our domestic and international markets," stated Daniel Khesin, Chief Executive Officer of DS Healthcare. "Our focus has been, and continues to be, the consistent execution of our strategy and to be a valued partner to our key customers, relentless pursuit of operational excellence and value-added growth. We are optimistic that we will continue to be profitable with our management philosophy and drive shareholder value while continuously operating at the top of our industry.

"We are pleased about the level of engagement from our team members as we move into the second half of 2015. Through our budgeting process for next year we have further identified operational improvement opportunities that will continue to lead towards our mission of being the best managed and most respected company in the industry.“ Khesin concluded.

Gross sales for the three months ending June 30, 2015 were $4,037,097. Various one time credits and allowances to customers resulted in net revenues of $3,659,548, a decrease of 2.3% over revenues of $3,744,434 in the year-earlier period. Revenue in the second quarter was affected by an unfavorable exchange rate of the Mexican Peso to the US Dollar which was 15.65 Pesos to the Dollar at the end of the second quarter and 12.95 Pesos to the Dollar during the same period 2014.

Gross margin increased to 56% in the second quarter of 2015 from 52% in the same quarter of the prior year. This increase was a result of several factors including production efficiencies, strategic cost cutting efforts, increased sales of higher margin products and lower returns due to improved product quality. Gross profits were up 6% to $2,064,367 in the second quarter of 2015, as compared to $1,941,536 in the year-earlier period. Selling and marketing costs decreased by 25% to $890,766 in the recent quarter from $1,194,238 in the same period last year. General and administrative costs decreased by 14% to $1,147,325 as compared to
$1,338,536 in the same period of 2014. DS Healthcare reported GAAP net loss narrowed by 98.4% to a net loss of $9,551 in the second quarter of 2015 compared to a net loss $635,172 in the same period of 2014.

On an adjusted EBITDAS basis, a non-GAAP financial measure, the second quarter of 2015 resulted in a gain of $116,313 compared to a loss of $781,096 in the year-earlier period.

For the six months ended June 30, 2015 net revenues were $6,463,468, a 0.5% increase from revenues of $6,429,397 for the six months ended June 30, 2014. Net revenue was driven in part by the Company's Mexican subsidiary, as well increased sell-through in foreign markets but was offset by a stronger dollar compared to foreign currencies.

Gross margin increased to 57.7% in the first half of 2015 from 53.3% in the first half of the prior year, as a result of improved production efficiencies, improved cost from suppliers, and cost cutting efforts including payroll. Gross profits were up 8.9% to $3,729,527 in the first half of 2015, as compared to $3,423,981 in the first half of 2014. Selling and marketing costs decreased by 23% to $1,667,544 in the six months ended June 30, 2015 from $2,164,240 in the same period last year. General and administrative costs decreased by 16.7% to $2,225,465 from $2,672,480 in the first two quarters of 2015. DS Healthcare's net loss decreased by 93.5% to $94,690 in the first half of 2014 from $1,453,324 in the same period of 2014.

On June 30, 2014 the Company had cash of $979,111 and working capital of approximately $5,million. Total shareholders' equity on June 30, 2015 was approximately $6 million.

Adjusted EBITDAS

We believe Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization and Stock-Based Compensation ("Adjusted EBITDAS"), a non-GAAP financial measure, is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance. We believe that:

Adjusted EBITDAS provides investors and other users of our financial information consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and

Adjusted EBITDAS is useful because it excludes non-cash charges, such as depreciation and amortization, stock-based compensation and one-time charges, which the amount of such expense in any specific period may not directly correlate to the underlying performance of our business operations and these expenses can vary significantly between periods

We use Adjusted EBITDAS in conjunction with traditional GAAP measures as part of our overall assessment of our performance, to evaluate the effectiveness of our business strategies and to communicate with our lenders, stockholders and board of directors concerning our financial performance.

Adjusted EBITDAS should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP. There are limitations to using non-GAAP financial measures, including that other companies may calculate these measures differently than we do. We compensate for the inherent limitations associated with using Adjusted EBITDAS through disclosure of these limitations, presentation of our financial statements in accordance with GAAP and reconciliation of Adjusted EBITDAS to the most directly comparable GAAP measure, specifically net loss.

The following provides a reconciliation of net loss to Adjusted EBITDAS

Three Months Ended
June 30,
2014 2015
GAAP Net Loss (85,138) (9,552)
Depreciation and amortization 32,307 69,797
Interest Expense 13,855 26,957
(Recovery) provision for bad debts (16,504) 9,848
(Recovery) provision for obsolete inventory 1,087 (16,997)
Stock issued for services 100,500 36,260
Adjusted EBITDAS$ 46,107 $ 116,313

About DS Healthcare Group

DS Healthcare Group Inc. (NASDAQ:DSKX) leads in the development of biotechnology for topical therapies. It markets through online and specialty retailers, distributors, cosmetics wholesalers, salons and pharmacies. Its research has led to a highly innovative portfolio of personal care products and additional innovations in pharmaceutical projects. For more information on DS Health Group's flagship brand, visit www.dslaboratories.com

Forward-looking statements

Except for statements of historical fact, the matters discussed in this press release are forward-looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies, and are generally preceded by words such as "future," "plan" or "planned," "expects," or "projected." These forward-looking statements reflect numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond the company's control that may cause actual results to differ materially from stated expectations. These risk factors include, among others, limited operating history, difficulty in developing and marketing products, intense competition, and additional risks factors as discussed in reports filed by the company with the Securities and Exchange Commission, which are available at http://www.sec.gov.

Contact: DS Healthcare Group, Inc. Abner Silva 407.342.4112 Abner@DSHealthgroup.com

Source:DS Healthcare Group, Inc.