“Underlying operating performance and our financial stability continue to improve despite a revenue decline in the quarter primarily related to the expected decreases in our Legacy products and in business from one large customer,” said Joseph P. Morgan, Jr., president and chief executive officer. “On a year-to-date basis, revenue from Core growth solutions increased.”
Morgan continued, “Our transformation and the new solutions we’re bringing to market resulted in another quarter of sales momentum. In Healthcare, we signed more new contracts than in any prior quarter since the business unit was established, and we are seeing more subscriptions for our technology-oriented solutions, with longer terms and better product mix. In Business Solutions, customer communications and on-demand digital publishing are growing, in part due to the investments in digital equipment we made in 2011. Our challenges are the uncertainty of the economic environment, our pension contribution expense and pricing pressures that impact our margins. We are implementing our restructuring plan ahead of schedule, making aggressive improvements in our sales, delivery channel and customer service organizations, and managing costs throughout the business. We are confident in our strategy and can reaffirm that we expect to end 2012 with at least $5 million in positive cash flow.”
Third Quarter Results
Total revenue declined 7 percent to $145.7 million in the third quarter compared to $157.5 million in the third quarter of 2011. Nearly all of the decline was attributable to the loss of business from the large financial services customer. Core solutions, the Company’s priority growth products and services, declined less than 1 percent; excluding the loss from the large financial services customer, Core solutions grew 5 percent. Legacy products, generally transactional documents and print materials, declined 12 percent.Healthcare revenue declined 11 percent for the quarter, to $51.5 million compared to $57.7 million in the prior year quarter. The decline was driven primarily by net unit decreases, with growth in technology-related Core solutions offset by declines in Legacy products. Operating income for the third quarter was $2.3 million compared to $3.9 million for the same period in 2011. Excluding the third quarter 2011 postretirement plan allocation of $1.9 million, operating income improved over the prior year quarter. Dialog Medical, a component of patient information solutions, was acquired in July 2011 and incorporated into the Company’s reporting in the third quarter of 2011.