Consolidated gross margin as a percent of revenue was 30.0 percent compared to 30.9 percent for the second quarter of 2011. The decrease reflects decreased volume in legacy sales, somewhat offset by savings from ongoing restructuring activities and other cost-saving initiatives. Selling, general and administrative (SG&A) expenses declined 13 percent in the quarter.
In the second quarter, Standard Registered announced that it had received notice from the New York Stock Exchange (NYSE) that it was not in compliance with listing requirements related to market capitalization and stock price averages. The Company delivered a plan for returning to compliance regarding market capitalization within 18 months. On June 25, 2012, the Company announced that it had received notice from the NYSE that its plan had been accepted. The plan is currently being implemented.
First Half of Year Results
Total revenues declined 5 percent to $312.7 million compared to $329.2 million for the first half of 2011. Legacy product unit volume continued to decline faster than growth in core solutions. Core solutions grew 3.1 percent in the first half of 2012 while legacy solutions declined 10.4 percent.Healthcare revenues declined 7 percent to $111.8 million from $119.7 million in the first half of 2011. Operating income for the first half of 2012 was $6.3 million compared to $8.5 million for the prior year. Technology-oriented core solutions grew 14 percent in the first half of 2012 driven by growth in patient information, primarily from Dialog Medical (which was acquired in July 2011) and new customer implementations in marketing and communications solutions. Revenues from legacy products continued to decline as more hospitals adopt EMR. Business Solutions revenues declined 4 percent to $200.9 million from $209.5 million in the first half of the prior year. Operating Income increased by 18 percent to $3.3 million from $2.8 million driven by increases in core solutions and savings initiatives. The growth was somewhat offset by declines in legacy product sales. As previously announced, the loss of a portion of business from a large financial services customer due to the customer’s restructuring is expected to total $18 to $20 million in 2012. The transition of the customer is proceeding slower than anticipated with a decrease in sales in the first half of 2012 of $5.7 million.