Company Initiates Cost Reduction Measures
DALLAS, May 6 /PRNewswire-FirstCall/ -- Radiologix, Inc. (Amex: RGX), a
leading national provider of diagnostic imaging services, today announced
financial results for its first quarter ended March 31, 2003.
(Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/19991026/RLGXLOGO
http://www.newscom.com/cgi-bin/prnh/20030205/RGXLINEHAN )
Income Statement
For the first quarter 2003, Radiologix reported service fee revenue of
$64.4 million versus $71.0 million for the first quarter 2002, a 9.3 percent
decrease, resulting primarily from a reduction in volume related to an
increase in competition in key markets. Service fee revenue decreased only
1.1 percent from $65.1 million for the fourth quarter 2002, compared to the
first quarter 2003.
Radiologix incurred a net loss of $4.6 million for the first quarter 2003,
compared to net income of $4.4 million for the first quarter 2002 and a net
loss of $1.6 million for the fourth quarter 2002.
Radiologix reported a net loss per diluted share for the first quarter
2003 of $0.21, compared to diluted earnings per share (EPS) of $0.20 for the
first quarter 2002 and a net loss per diluted share of $0.08 for the fourth
quarter of 2002.
Radiologix incurred a $969,000 pre-tax charge in the quarter for severance
costs related to cost reduction measures in the first quarter 2003.
Radiologix also incurred a $6.9 million pre-tax impairment charge on goodwill
related to seven imaging centers held for sale or closure and reported in
discontinued operations in the Summary Income Statements below.
EBITDA (earnings from continuing operations before interest, taxes,
depreciation and amortization and including equity in earnings of investments
and minority interests) is a non-GAAP financial measure commonly used as an
analytical indicator within the healthcare industry, and also serves as a
measure of leverage capacity and debt service ability. EBITDA should not be
considered as a measure of financial performance under generally accepted
accounting principles, and the items excluded from EBITDA should not be
considered in isolation or as an alternative to net income, cash flows
generated by operating, investing, or financing activities or other financial
statement data presented in the consolidated financial statements as an
indicator of financial performance or liquidity. Because EBITDA is not a
measurement determined in accordance with generally accepted accounting
principles and is thus susceptible to varying calculations, EBITDA as
presented may not be comparable to other similarly titled measures of other
companies. EBITDA from continuing operations, excluding severance costs is
used to show adjustments to EBITDA for comparative purposes to previous
periods.
EBITDA, excluding severance costs, was $12.2 million for the first quarter
2003, compared to $18.6 million for the first quarter last year. EBITDA
margin was 18.9 percent for the first quarter 2003 compared to 26.2 percent
for the first quarter 2002.
"Though we still have work to do in improving our results, we believe the
trends show a leveling of our core business," said Stephen D. Linehan,
president and C.E.O. of Radiologix. "During the first quarter, we began
implementing a number of measures to stabilize our core business and put it on
more solid footing. We began adjusting our cost structure to better match our
revenue stream. We began a thorough review of our vendor relationships. We
began reviewing our sales and marketing effort for effectiveness and quality
to reverse volume reduction. And, we are continually working on improving
relations with our contracted radiologists. The impact of these efforts
should be improved financial results over the next 12 months."
Balance Sheet
Days sales outstanding (DSOs) was 75 days at March 31, 2003, compared to
73 days at December 31, 2002.
Cash and cash equivalents were $13.0 million at March 31, 2003, compared
to $19.2 million at December 31, 2002. Radiologix's liquidity stood at
$48.0 million at March 31, 2003, including its $35.0 million line of credit.
Total debt at March 31, 2003, was $177.1 million, or 3.0x trailing
12-months EBITDA, excluding impairment charges on long-lived assets of
$2.7 million, compared to total debt of $178.2 million, or 2.7x at December
31, 2002.
Net debt (total debt less cash and cash equivalents) at March 31, 2003,
was $164.1 million, or 2.8x trailing 12-months EBITDA, excluding impairment
charges on long-lived assets of $2.7 million, compared to net debt
$159.1 million, or 2.4x at December 31, 2002.
For these calculations, Radiologix uses trailing 12-months EBITDA,
excluding impairment charges on long-lived assets, in accordance with our debt
agreements. Radiologix remains in compliance with all covenants related to
its debt instruments.
First Quarter Events
During the first quarter 2003, Radiologix initiated cost reduction
programs at its corporate offices in Dallas and at its regional operations.
At its corporate offices, Radiologix eliminated approximately 25 percent of
headcount and salaries, which will result in approximately $2.0 million in
annual savings. At the regional level, Radiologix began reducing costs
primarily associated with administrative positions. This should result in
annual cost savings of about $4.0 million and have minimal impact on patient
care and marketing. In addition to cost reduction measures, Radiologix has a
moratorium on hiring except for positions related to patient care and mission
critical operations.
Radiologix has recently been holding discussions with several equipment
and supplies vendors to discuss not just price, but terms of sales and service
and how the vendors will work with Radiologix on upgrades, new equipment and,
in the future, new locations.
Radiologix has identified seven imaging centers that have been designated
for sale or closure over the next 12 months. These imaging centers do not
represent centers around which we can build a market concentration. In
accordance with FASB Statement 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets," the financial results from these seven imaging centers
are reported in "discontinued operations" in the Summary Income Statements
below and include a $6.9 million pre-tax impairment charge to goodwill.
"The Radiologix business model remains viable and our growth prospects are
within reach. We maintain a leading or significant market share in each of
our core markets and once this platform is fully stabilized and operating
well, we will use it to become the dominant player in our regions," added Mr.
Linehan. "To accomplish this, we must continue to improve service to
referring physicians and patients, update our fleet of equipment, advance our
marketing effort and build strong relationships with our contracted
radiologists. Radiologix has the capital, the market position and the people
to achieve these goals."
GAAP and Non-GAAP Financial Information
This release contains certain financial information not derived in
accordance with generally accepted accounting principles (GAAP), including
EBITDA. Radiologix believes this information is useful to investors and other
interested parties. Such information should not be considered as a substitute
for any measures derived in accordance with GAAP, and may not be comparable to
other similarly titled measures of other companies. Reconciliation of this
information to the most comparable GAAP measures is included later in this
release.
Conference Call
In connection with this earnings press release, you are invited to listen
to our conference call with Stephen D. Linehan, president and C.E.O., and Sami
S. Abbasi, executive vice president and C.F.O., that will be broadcast live
over the Internet on Tuesday, May 6, 2003, at 8:00 a.m., Central Time /
9:00 a.m. Eastern Time. You may listen to the call and view the accompanying
presentation via the Internet by navigating to Radiologix's Web site
(http://www.radiologix.com) and clicking on "Stock" from the home page top
navigation and then clicking on "Conference Call" on the left navigation.
If you are unable to participate during the live Webcast, the first
quarter earnings conference call will be archived on Radiologix's Web site,
http://www.radiologix.com. To access the replay, click on "Stock" from the
home page top navigation and then click on "Conference Call" on the left
navigation.
About Radiologix
Radiologix (http://www.radiologix.com) is a leading national provider of
diagnostic imaging services through (i) its ownership and operation of
technologically advanced, multi-modality diagnostic imaging centers, and (ii)
its provision of administrative, management and other information services to
certain radiology business partners. Radiologix derives the majority of its
revenues from the production and management of diagnostic imaging procedures
utilizing technologies such as x-ray, magnetic resonance imaging ("MRI"),
computed tomography ("CT"), mammography, ultrasound, nuclear medicine,
positron emission tomography ("PET"), as well as general radiography and
fluoroscopy. These images, and the radiology reports that are based on these
images, permit ordering physicians to diagnose and manage diseases and
injuries more accurately and effectively than would be possible without this
clinical information. Radiologix owns or operates 117 imaging centers located
in 17 states, with concentrated geographic coverage in markets located in
California, Florida, Kansas, Maryland, New York, Texas and Virginia.
Safe Harbor Statement
This press release contains forward-looking statements that relate to
future financial results or business expectations and are made pursuant to the
safe harbor provisions of the Securities Litigation Reform Act of 1995. Such
statements give our current expectations or forecasts of future events; they
do not relate strictly to historical or current facts. Any forward-looking
statement speaks only as of the date on which such statement is made. The
information in this press release is as of May 6, 2003. Radiologix undertakes
no obligation to update any forward-looking statement or statements to reflect
new events or circumstances or future developments.
We have tried, whenever possible, to identify such statements by using
words such as "anticipated," "estimates," "expect," "project," "intend,"
"plan," "believe," "will" and similar expressions in connection with any
discussion of future operations or financial performances. These statements
are subject to risks and uncertainties that exist in the Company's operations
and business environment. Business plans may change as circumstances warrant
and actual results may differ materially from any forward-looking statements,
which reflect the management's opinion only as of the date hereof. Such risks
and uncertainties include, but are not limited to, those associated with the
Company's acquisition and expansion strategy; integration of the Company's
affiliated physician practices and newly-acquired imaging centers; the
Company's ability to achieve operating efficiencies and engage in successful
new development efforts; regulatory changes; reimbursement trends;
governmental policies; and general economic and business conditions. Such
risks and uncertainties, as well as additional risk factors which could affect
the forward-looking statements made in this press release, are included in the
Company's filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K for the year ended December 31, 2002, and its
periodic reports on Forms 10-Q and 8-K (if any).
We cannot guarantee that any forward-looking statements will be realized,
although we believe we have been prudent in our plans and assumptions.
Achievement of future results is subject to risks, uncertainties and
potentially inaccurate assumptions. Should known or unknown risks or
uncertainties materialize, or should underlying assumptions prove inaccurate,
actual results could vary materially from past results and those anticipated,
estimated or projected. Investors should bear this in mind as they consider
forward-looking statements.
Radiologix, Inc.
Summary Income Statements
(In thousands, except per share data)
3 Months Ended 3 Months Ended
Mar. 31, Mar. 31,
2002 2003
Service fee revenue $70,991 $64,396
Salaries and benefits 20,119 21,308
Field supplies 4,167 4,128
Field rent and lease expense 7,455 8,092
Other field expenses 11,626 10,491
Bad debt expense 5,912 5,550
Corporate general and administrative 3,905 3,641
Severance and other related costs -- 969
Total costs and expenses $53,184 $54,179
Equity in earnings of investments 1,121 1,198
Minority interests in consolidated subsidiaries (361) (199)
Depreciation and amortization 6,098 6,870
Interest expense, net 4,861 4,676
Income (loss) from continuing operations,
before income taxes $7,608 $(330)
Income tax expense (benefit) 3,043 (132)
Income (loss) from continuing operations $4,565 $(198)
Discontinued Operations
Loss from discontinued operations $(226) $(7,353)
Income tax benefit (90) (2,941)
Loss from discontinued operations $(136) $(4,412)
Net income (loss) $4,429 $(4,610)
Basic EPS $0.22 $(0.21)
Weighted average shares - basic 20,023 21,695
Diluted EPS from continuing operations $0.20 $(0.01)
Diluted EPS $0.20 $(0.21)
Weighted average shares - diluted 23,967 21,751
Radiologix, Inc.
Reconciliation of Non-GAAP Financial Information
(In thousands, except per share data)
3 Months Ended 3 Months Ended
Mar. 31, Mar. 31,
2002 2003
Income (loss) from continuing operations $4,565 $(198)
Add: Income tax expense (benefit) 3,043 (132)
Add: Interest expense, net 4,861 4,676
Add: Depreciation and amortization 6,098 6,870
EBITDA $18,567 $11,216
Add: Severance costs -- 969
EBITDA, excluding severance costs $18,567 $12,185
EBITDA margin, excluding severance costs 26.2% 18.9%
Radiologix, Inc.
Summary Balance Sheets
(In thousands)
Audited Unaudited
December 31, March 31,
2002 2003
CURRENT ASSETS
Cash and cash equivalents $19,153 $13,003
Accounts receivable, net of allowances 69,377 70,593
Due from affiliates 5,100 7,495
Other current assets 7,225 7,605
Total current assets $100,855 $98,696
Property and equipment, net 62,103 64,593
Investment in joint ventures 10,149 11,113
Goodwill 28,510 21,610
Intangible assets, net 72,151 71,198
Deferred financing cost, net 9,719 9,316
Other assets 12,604 9,513
Total assets $296,091 $286,039
CURRENT LIABILITIES
Accounts payable and accrued expenses $19,145 $17,548
Accrued physician retention 8,216 8,987
Accrued salaries and benefits 8,268 7,687
Current portion of long-term debt 266 266
Current portion of capital lease obligation 4,052 3,798
Other current liabilities 458 456
Total current liabilities $40,405 $38,742
Deferred income taxes 4,200 1,440
Long-term debt, net of current portion 160,412 160,345
Convertible debt 11,980 11,980
Capital lease obligations, net of current portion 1,519 680
Deferred revenue 7,721 7,619
Other liabilities 147 134
Total liabilities $226,384 $220,940
Minority interests in consolidated subsidiaries 1,340 1,338
Total stockholders' equity 68,367 63,761
Total liabilities and stockholders' equity $296,091 $286,039
SOURCE Radiologix, Inc.
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Related links:
http://www.radiologix.com
Photo Notes:
NewsCom:
http://www.newscom.com/cgi-bin/prnh/19991026/RLGXLOGO
http://www.newscom.com/cgi-bin/prnh/20030205/RGXLINEHAN
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, +1-888-776-6555 or +1-212-782-2840
CONTACT:
Paul R. Streiber, Investor Relations of
Radiologix, Inc., +1-214-303-2702, or
paul.streiber@radiologix.com
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