Service Fee Revenue Grew 9.1% From Second Quarter 2003; 9.6% From First
Half 2003
DALLAS, Aug. 5 /PRNewswire-FirstCall/ -- Radiologix, Inc. (Amex: RGX), a
leading national provider of diagnostic imaging services, today announced
financial results for its second quarter and six months ended June 30, 2004.
Second Quarter 2004 Results
For the second quarter 2004, Radiologix reported:
-- service fee revenue growth of 9.1% to $67.7 million versus
$62.0 million for the second quarter 2003;
-- a net loss of $2.1 million, or $0.10 per diluted share, compared to
net income of $276,000, or $0.02 per diluted share, for the second
quarter 2003; and
-- income from continuing operations excluding charges and a gain on
sale of operations of $1.0 million, or $0.05 per diluted share,
compared to $898,000, or $0.04 per diluted share, for the second
quarter 2003.
"Income from continuing operations excluding charges and a gain on sale of
operations" is discussed under "Charges and Gains on Sales of Operations" and
is reconciled to the most comparable Generally Accepted Accounting Principles
("GAAP") financial measure on page 12.
Adjusted EBITDA was $12.5 million for the second quarter 2004, compared to
$12.6 million for the second quarter 2003. Adjusted EBITDA as a percent of
service fee revenue was 18.4% for the second quarter 2004, compared to 20.3%
for the second quarter 2003. Adjusted EBITDA is defined and discussed under
"EBITDA" below and is reconciled to the most comparable GAAP financial measure
on page 11.
Cash flow from operating activities was $4.6 million for the second
quarter 2004, compared to $9.1 million for the second quarter 2003.
$4.0 million in cash was transferred to "Restricted cash" during the quarter.
Second Quarter 2004 and 2003 Summary Results
(In thousands, except per share data)
3 Months Ended
6/30/2004 6/30/2003
Service fee revenue $67,682 $62,041
Net income (loss) $(2,109) $276
Income (loss) from continuing operations $(1,379) $411
Income from continuing operations excluding
charges and gain $1,032 $898
Net income (loss) per share - diluted $(0.10) $0.02
Income (loss) from continuing operations
per share - diluted $(0.06) $0.02
Income from continuing operations excl.
charges and gain per share - diluted $0.05 $0.04
Adjusted EBITDA $12,450 $12,595
Adjusted EBITDA as a percent of service fee
revenue 18.4% 20.3%
Note: Non-GAAP financial measures are reconciled to the most comparable
GAAP financial measure on pages 11 and 12.
"We are pleased with our year-over-year service fee revenue growth for the
second quarter and first half of 2004, and we are quite encouraged that our
focus on operating efficiencies produced sequentially lower field
administrative costs as a percent of service fee revenue," said Stephen D.
Linehan, president and C.E.O. of Radiologix. "We remain optimistic that we
can meet or exceed our guidance for 2004 and expect to be able to provide
additional visibility for 2004 later in the second half of the year."
Six Months Ended June 30, 2004 Results
For the six months ended June 30, 2004, Radiologix reported:
-- service fee revenue growth of 9.6% to $135.3 million from
$123.5 million for the first half 2003;
-- a net loss of $4.8 million, or $0.22 per diluted share, compared to a
net loss of $4.3 million, or $0.20 per diluted share, for the first
half 2003; and
-- income from continuing operations excluding charges and a gain on
sale of operations of $1.6 million, or $0.07 per diluted share,
compared to $1.1 million, or $0.05 per diluted share, for the first
half 2003.
Adjusted EBITDA was $24.5 million for the six months ended June 30, 2004,
compared to $24.2 million for the six months ended June 30, 2003. Adjusted
EBITDA as a percent of service fee revenue was 18.1% for the six months ended
June 30, 2004, compared to 19.6% for the six months ended June 30, 2003.
Cash flow from operating activities was $17.0 million for the six months
ended June 30, 2004, compared to $10.1 million for the six months ended
June 30, 2003.
Six Months Ended June 30, 2004 and 2003 Summary Results
(In thousands, except per share data)
6 Months Ended
6/30/2004 6/30/2003
Service fee revenue $135,297 $123,467
Net loss $(4,816) $(4,334)
Income (loss) from continuing operations $(2,730) $68
Income from continuing operations excluding
charges and gain $1,618 $1,136
Net loss per share - diluted $(0.22) $(0.20)
Income (loss) from continuing operations
per share - diluted $(0.13) $0.00
Income from continuing ops. excluding charges
and gain per share - diluted $0.07 $0.05
Adjusted EBITDA $24,524 $24,211
Adjusted EBITDA as a percent of service fee
revenue 18.1% 19.6%
Note: Non-GAAP financial measures are reconciled to the most comparable
GAAP financial measure on pages 11 and 12.
Balance Sheet
Cash and cash equivalents were $47.1 million (not including $4.0 million
in cash transferred to "Restricted cash" in June 2004) at June 30, 2004,
compared to $36.8 million at December 31, 2003. Radiologix's access to cash
stood at approximately $81.3 million at June 30, 2004, including $34.3 million
available under our credit facility.
Total debt at June 30, 2004, was $171.0 million compared to total debt of
$174.1 million at December 31, 2003. Net debt (total debt less cash and cash
equivalents) at June 30, 2004, was $123.9 million compared to net debt of
$137.3 million at December 31, 2003.
Days sales outstanding (DSOs) was 61 days at June 30, 2004 compared to
60 days at March 31, 2004, and 63 days at December 31, 2003.
Discontinued Operations
During the second quarter 2004, we concluded that five Questar centers
would be designated as discontinued operations and two other Questar centers
would be closed. We sold one Questar center during the second quarter for
$3.1 million in cash, resulting in a gain on sale of $682,000 ($0.03 per
diluted share), which is included in discontinued operations.
Charges and Gains on Sales of Operations
During the second quarter 2004, after performing an extensive assessment
of our Questar imaging centers, we concluded that certain centers were not
strategic to our future plans and would be unable to meet and sustain our
profitability requirements for the future. The assessment considered:
location, contracting leverage, expected capital requirements, the single
modality nature of most of these sites, and current operating trends. Plans
for disposition were enacted before June 30, 2004, with five Questar centers
reclassified to discontinued operations and two other Questar centers
scheduled for closure.
The following table summarizes these charges:
Summary of Charges
(In thousands, except per share data)
3 Months Ended 6 Months Ended
6/30/2004 6/30/2003 6/30/2004 6/30/2003
Continuing Operations:
Impairment of goodwill $8,700 --- $14,200 ---
Reclassification of
goodwill impairment --- --- (2,271) ---
Subtotal $8,700 --- $11,929 ---
Impairment of
long-lived assets 454 --- 454 ---
Severance and other
related costs --- $311 --- $1,280
Reserve for
self-reported matter --- 500 --- 500
Total $9,154 $811 $12,383 $1,780
Discontinued Operations:
Impairment of goodwill $1,719 --- $1,759 $6,900
Reclassification of
goodwill impairment --- --- 2,271 ---
Subtotal $1,719 --- $4,030 $6,900
Impairment of
long-lived assets 163 --- 163 ---
Total $1,882 --- $4,193 $6,900
Effective April 30, 2004, we completed the sale of our operations in San
Antonio, Texas. The purchase price was $10.5 million, resulting in a gain on
sale of approximately $4.7 million, or $3.1 million net of taxes ($0.14 per
diluted share). Net cash received was $9.7 million after purchase price
adjustments. As noted above, we sold one Questar center during the second
quarter for $3.1 million in cash, resulting in a gain on sale of $682,000
($0.03 per diluted share), which is included in discontinued operations.
Guidance
Radiologix has assessed the radiology sector of the healthcare industry,
the competitive landscape for radiology services, its operations, and its
opportunities for growth.
Radiologix believes that it can achieve diluted earnings per share from
continuing operations excluding charges and a gain on sale of operations of
$0.08 to $0.10 for 2004. This guidance does not reflect any impact of
acquisitions or material expansion projects.
Radiologix believes that we may see our DSOs trend upward over the next
several months as a result of implementation of Medicare's electronic data
interchange ("EDI") by certain payors, which could impact our ability to
collect for our services in a timely manner.
Radiologix currently anticipates capital expenditures for 2004 to range
between $40 million and $50 million, and that approximately one-third of this
amount would be funded by cash and two-thirds would be funded through our
lease lines.
As these financial measures are for an extended period of time, and
because several assumptions have been made in determining this guidance, a
change in the factors that affect Radiologix's business could impact actual
results.
Forward-looking statements concerning fiscal year 2004 guidance relate to
future financial results or business expectations and, therefore, may prove to
be inaccurate due to changing or unexpected circumstances. Fiscal year 2004
guidance is made pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995. Please read the "Forward-Looking Statements"
section below.
GAAP and Non-GAAP Financial Information
This release contains certain financial information not derived in
accordance with GAAP, including EBITDA, EBITDA from continuing operations, and
Adjusted 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 calculated 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 in this release.
EBITDA
EBITDA (earnings before interest, taxes, depreciation and amortization,
including equity in earnings of investments and minority interests) is a non-
GAAP financial measure used as an analytical indicator by Radiologix
management and the healthcare industry to assess business performance. It
also serves as a measure of leverage capacity and ability to service debt.
EBITDA from continuing operations (presented in the Reconciliation of Non-
GAAP Financial Information table on page 11) is a measure of leverage capacity
and ability to service debt from our ongoing business.
Adjusted EBITDA is EBITDA from continuing operations excluding charges and
a gain on sale of operations. A reconciliation of Adjusted EBITDA to the most
comparable GAAP financial measure may be found on page 11. EBITDA from
continuing operations and Adjusted EBITDA are presented for comparative
purposes to previous periods.
EBITDA, EBITDA from continuing operations, and Adjusted EBITDA should not
be considered as a measure of financial performance under GAAP, and the items
excluded from EBITDA, EBITDA from continuing operations, and Adjusted 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.
As EBITDA, EBITDA from continuing operations, and Adjusted EBITDA are not
measurements determined in accordance with GAAP and are therefore susceptible
to varying methods of calculation, these metrics as presented may not be
comparable to other similarly titled measures of other companies.
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., Sami S.
Abbasi, executive vice president and C.O.O., and Richard J. Sabolik, senior
vice president and C.F.O., that will be broadcast live over the Internet on
Thursday, August 5, 2004, at 8:00 a.m., Central Time / 9:00 a.m. Eastern Time.
You may listen to the call via the Internet by navigating to Radiologix's
Web site (http://www.radiologix.com ) and from the "Investor Relations" drop-
down menu, click on "Conference Calls & Presentations."
If you are unable to participate during the live Webcast, the Second
Quarter 2004 Results Conference Call will be archived on Radiologix's Web site
(http://www.radiologix.com ). To access the replay, from the "Investor
Relations" drop-down menu, click on "Conference Calls & Presentations."
About Radiologix
Radiologix (http://www.radiologix.com ) is a leading national provider of
diagnostic imaging services, owning and operating multi-modality diagnostic
imaging centers that use advanced imaging technologies such as positron
emission tomography ("PET"), magnetic resonance imaging ("MRI"), computed
tomography ("CT") and nuclear medicine, as well as x-ray, general radiography,
mammography, ultrasound and fluoroscopy. The diagnostic images created, and
the radiology reports based on these images, enable more accurate diagnosis
and more efficient management of illness for ordering physicians. Radiologix
owned or operated 94 diagnostic imaging centers located in 13 states as of
June 30, 2004.
Forward-Looking Statements
This press release contains forward-looking statements that relate to
future financial results or business expectations and are made pursuant to
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended. Such statements give our current
expectations or forecasts of future events; they do not relate strictly to
historical or current facts.
Forward-looking statements include words such as "may," "will," "would,"
"could," "likely," "estimate," "intend," "plan," "continue," "believe,"
"expect" or "anticipate" and other similar words, and include all discussions
about our acquisition and development plans. We do not guarantee that the
transactions and events described in this press release will happen as
described or that any positive trends noted in this press release will
continue. These forward-looking statements generally relate to our plans,
objectives and expectations for future operations and are based upon
management's reasonable estimates of future results or trends.
Although we believe that our plans and objectives reflected in, or
suggested by, such forward-looking statements are reasonable, we may not
achieve such plans or objectives. You are cautioned not to unduly rely on
such forward-looking statements when evaluating the information presented in
this press release.
You should read this press release completely with the understanding that
actual future results may be materially different from what we expect. We
will not update forward-looking statements even though our situation may
change in the future.
Specific factors that might cause actual results to differ from our
expectations include, but are not limited to:
-- a decline in patient referrals;
-- shifts in modality mix or the volume of procedures performed;
-- the availability of technologists and other personnel;
-- severe or adverse weather condition in our markets;
-- changes in the rates or methods of third-party reimbursement for
diagnostic imaging services;
-- the loss of a high percentage of radiologists operating in our
contracted radiology practices;
-- the termination of our contracts with radiology practices;
-- reduced operating margins due to our managed care contracts and
capitated fee arrangements;
-- the availability of additional capital to fund capital expenditure
requirements;
-- burdensome lawsuits against our contracted radiology practices and
us;
-- any failure by us to comply with state and federal anti-kickback and
anti-self referral laws or any other applicable healthcare
regulations;
-- changes in business strategy and development plans;
-- changes in federal, state or local regulations affecting the
healthcare industry;
-- our substantial indebtedness, debt service requirements and liquidity
constraints;
-- economic, demographic, business and other conditions in our markets;
-- the highly competitive nature of the healthcare business; and
-- risks related to our senior notes and healthcare securities
generally.
A more comprehensive list of such factors is set forth in the Company's
Annual Report on Form 10-K, as amended, for the year ended December 31, 2003,
and our other filings with the Securities and Exchange Commission.
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.
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
August 5, 2004. Radiologix undertakes no obligation to update any forward-
looking statement or statements to reflect new events or circumstances or
future developments.
Radiologix, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
For the Three Months, For the Six Months
Ended June 30 Ended June 30,
2004 2003 2004 2003
Service fee revenue $67,682 $62,041 $135,297 $123,467
Salaries and benefits 21,798 19,836 45,158 40,261
Field supplies 4,261 4,376 8,440 8,331
Field rent and lease
expense 8,444 7,610 16,553 15,165
Other field expenses 11,461 10,420 22,387 20,392
Bad debt expense 5,553 5,312 11,249 10,573
Severance and other
related costs --- 311 --- 1,280
Corporate general and
administrative 4,284 3,375 7,896 7,016
Impairment of goodwill
and long-lived assets 9,154 --- 12,383 ---
Depreciation and
amortization 6,424 6,606 13,136 13,184
Gain on sale of
operations (4,669) --- (4,669) ---
Interest expense, net 4,307 4,494 8,691 9,134
Total costs and
expenses $71,017 $62,340 $141,224 $125,336
Equity in earnings of
investments 758 1,314 1,354 2,512
Minority interests in
income of consolidated
subsidiaries (189) (331) (444) (530)
Income (loss) before
income taxes and
discontinued
operations $(2,766) $684 $(5,017) $113
Income tax expense
(benefit) (1,387) 273 (2,287) 45
Income (loss) from
continuing
operations $(1,379) $411 $(2,730) $68
Discontinued Operations
Loss before income
taxes from
discontinued
Operations $(1,216) $(225) $(3,477) $(7,337)
Income tax benefit (486) (90) (1,391) (2,935)
Loss from
discontinued
operations $(730) $(135) $(2,086) $(4,402)
Net income (loss) $(2,109) $276 $(4,816) $(4,334)
Income (loss) per
common share
Income (loss) from
continuing ops. -
basic $(0.06) $0.02 $(0.13) $0.00
Income (loss) from
discontinued ops. -
basic (0.04) (0.01) (0.09) (0.20)
Net income (loss) -
basic $(0.10) $0.01 $(0.22) $(0.20)
Income (loss) from
continuing ops. -
diluted $(0.06) $0.02 $(0.13) $0.00
Income (loss) from
discontinued ops. -
diluted (0.04) 0.00 (0.09) (0.20)
Net income (loss) -
diluted $(0.10) $0.02 $(0.22) $(0.20)
Weighted average shares
outstanding
Basic 21,769,804 21,695,140 21,767,894 21,695,140
Diluted 21,769,804 23,416,435 21,767,894 21,768,428
Radiologix, Inc.
Reconciliation of Non-GAAP Financial Information
(In thousands, except per share data)
For the Three Months For the Three Months
Ended June 30, Ended June 30,
Percent of Percent of
2004 Revenue 2003 Revenue
Service fee revenue $67,682 100.0 $62,041 100.0
Income (loss) from
continuing operations $(1,379) (2.0) $411 0.7
Less: Income tax exp.
(benefit) from cont. ops. (1,387) (2.0) 273 0.4
Add: Interest expense,
net 4,307 6.4 4,494 7.2
Add: Depreciation and
amortization 6,424 9.5 6,606 10.6
EBITDA from continuing
operations $7,965 11.8 $11,784 19.0
Add: Severance and
other related costs --- --- 311 0.5
Add: Imp. of goodwill
and long-lived assets 9,154 13.5 --- ---
Add: Reserve for
self-reported matter --- --- 500 0.8
Add: Gain on sale of
operations (4,669) (6.9) --- ---
EBITDA from continuing
operations excluding
charges and gain $12,450 18.4 $12,595 20.3
For the Six Months For the Six Months
Ended June 30, Ended June 30,
Percent of Percent of
2004 Revenue 2003 Revenue
Service fee revenue $135,297 100.0 $123,467 100.0
Income (loss) from
continuing operations $(2,730) (2.0) $68 0.1
Less: Income tax expense
(benefit) from cont. ops. (2,287) (1.7) 45 0.0
Add: Interest expense, net 8,691 6.4 9,134 7.4
Add: Depreciation and
amortization 13,136 9.7 13,184 10.7
EBITDA from continuing
operations $16,810 12.4 $22,431 18.2
Add: Severance and other
related costs --- --- 1,280 1.0
Add: Imp. of goodwill and
long-lived assets 12,383 9.2 --- ---
Add: Reserve for
self-reported matter --- --- 500 0.4
Add: Gain on sale of
operations (4,669) (3.5) --- ---
EBITDA from continuing
operations excluding
charges and gain $24,524 18.1 $24,211 19.6
Radiologix, Inc.
Reconciliation of Non-GAAP Financial Information
(In thousands, except per share data)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2004 2003 2004 2003
Net Income (loss) $(2,109) $276 $(4,816) $(4,334)
Less: Income tax
benefit from
discontinued ops. 486 90 1,391 2,935
Add: Loss from
discontinued
operations 1,216 225 3,477 7,337
Income (loss) from
continuing
operations $(1,379) $411 $(2,730) $68
Add: Severance and
other related costs,
net --- 187 --- 768
Add: Imp. of goodwill
and long-lived assets,
net 5,493 --- 7,430 ---
Add: Reserve for
self-reported matter --- 300 --- 300
Add: Gain on sale of
operations, net (3,082) --- (3,082) ---
Income from continuing
operations excluding
charges and gain $1,032 $898 $1,618 $1,136
Fully diluted shares
outstanding 21,769,804 23,416,435 21,767,894 21,768,428
Income from continuing
operations excluding
charges and gain per
share - diluted $0.05 $0.04 $0.07 $0.05
Radiologix, Inc.
Balance Sheets
(In thousands)
Audited
June 30, 2004 June 30, 2003
CURRENT ASSETS
Cash and cash equivalents $47,079 $36,766
Restricted cash 4,000 ---
Accounts receivable, net of allowances 60,785 58,746
Due from affiliates 2,241 4,104
Assets held for sale 1,094 251
Other current assets 7,733 7,571
Total current assets $122,932 $107,438
Property and equipment, net 58,683 62,655
Investment in joint ventures 7,920 10,665
Goodwill 3,651 20,110
Intangible assets, net 65,685 67,917
Deferred financing cost, net 7,341 8,151
Other assets 1,663 2,200
Total assets $267,875 $279,136
CURRENT LIABILITIES
Accounts payable and accrued expenses $13,771 $14,598
Accrued physician retention 9,442 8,821
Accrued salaries and benefits 8,767 7,788
Current portion of long-term debt 243 261
Current portion of capital lease obligations 401 1,438
Other current liabilities 420 482
Total current liabilities $33,044 $33,388
Deferred income taxes 328 4,260
Long-term debt, net of current portion 158,270 160,000
Convertible debt 11,980 11,980
Capital lease obligations, net of current portion 132 376
Deferred revenue 7,107 7,312
Other liabilities 266 319
Total liabilities $211,127 $217,635
Minority interests in consolidated subsidiaries 784 817
Total stockholders' equity 55,964 60,684
Total liabilities and stockholders' equity $267,875 $279,136
SOURCE Radiologix, Inc.
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http://www.radiologix.com
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CONTACT:
Paul R. Streiber, Investor Relations of
Radiologix, Inc., +1-214-303-2702, or
paul.streiber@radiologix.com
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