DALLAS, Nov. 8 /PRNewswire-FirstCall/ -- Radiologix, Inc. (Amex: RGX),
a leading national provider of diagnostic imaging services, today announced
financial results for its third quarter ended September 30, 2006.
Select Financial Information
(in thousands of dollars)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2006 2005 2006 2005
(As restated) (As restated)
Service fee revenue $63,643 $62,259 $193,889 $189,320
Service fee revenue
excluding terminated
operations $63,643 $62,258 $193,889 $188,352
EBITDA from continuing
operations(A) $11,646 $11,166 $35,390 $34,854
EBITDA from continuing
operations excluding
terminated
operations(A) $11,630 $11,222 $35,367 $34,640
Net income (loss) $(714) $(365) $1,563 $1,794
Income (loss) from
continuing operations $(732) $217 $1,268 $2,780
Income (loss) from
continuing operations
excluding terminated
operations(A) $(748) $254 $1,245 $2,655
(A) As defined and reconciled below
Third Quarter 2006 Results
For the third quarter ended September 30, 2006, service fee revenue was
$63.6 million, compared to $62.3 million for the third quarter of 2005.
Radiologix incurred a net loss of $714,000, or $0.03 per diluted share,
compared to a net loss of $365,000 or $0.02 per diluted share for the third
quarter of 2005.
* Service fee revenue excluding terminated operations was $63.6 million,
compared to $62.3 million for the third quarter of 2005.
* Loss from continuing operations was $732,000, compared to income of
$217,000 for the third quarter of 2005.
* Loss from continuing operations excluding terminated operations was
$748,000, compared to income of $254,000 for the third quarter of
2005.
* EBITDA was $11.6 million, compared to $11.2 million for the third
quarter of 2005.
* EBITDA excluding terminated operations was $11.6 million, compared to
$11.2 million for the third quarter of 2005.
Year to Date September 30, 2006 Results
For the nine months ended September 30, 2006, service fee revenue was
$193.9 million, compared to $189.3 million for the nine months ended
September 30, 2005. Radiologix earned net income of $1.6 million, or $0.07
per diluted share, compared to net income of $1.8 million or $0.08 per
diluted share for the nine months ended September 30, 2005.
* Service fee revenue excluding terminated operations was $193.9
million, compared to $188.4 million for the nine months ended
September 30, 2005.
* Income from continuing operations was $1.3 million, compared to $2.8
million for the nine months ended September 30, 2005.
* Income from continuing operations excluding terminated operations was
$1.2 million, compared to $2.7 million for the nine months ended
September 30, 2005.
* EBITDA was $35.4 million, compared to $34.9 million for the nine
months ended September 30, 2005.
* EBITDA excluding terminated operations was $35.4 million, compared to
$34.6 million for the nine months ended September 30, 2005.
Restated 2005 Results
As we discussed in our 2005 Form 10-K, in addition to restating our
financial statements for the year ended December 31, 2004, the Company
restated its financial statements for each of the three quarters ended
March 31, June 30, and September 30, 2005 to correct the accounting
treatment of the PresGar equipment lease contract acquired on October 31,
2004, for $13.9 million. This restatement also resulted in a revision of
our tax expense for the three and nine months ended September 30, 2005. The
impact of the restatement in the three months ended September 30, 2005 is a
reduction in depreciation and amortization expense of $0.2 million, an
increase in income tax expense of $0.4 million, and a reduction in net
income of $0.2 million. The impact of the restatement in the nine months
ended September 30, 2005 is a reduction in depreciation and amortization
expense of $0.6 million, a reduction in income tax expense of $0.2 million,
and an increase in net income of $0.8 million. The financial information
contained in this press release reflects these restated amounts.
Charges and Gains
Radiologix recorded the following pre-tax charges and gains to
continuing operations, excluding terminated operations, during the third
quarter of 2006 and 2005:
* $1.0 million in the third quarter of 2006 and zero in the third
quarter of 2005 to record expenses related to the pending merger with
Primedex Health Systems, Inc. (See below);
* $388,000 in the third quarter of 2006 and $182,000 in the third
quarter of 2005 to record stock based compensation expense; and
* $105,000 gain in the third quarter of 2006 and zero gain in the third
quarter of 2005 to record net gains on sales of diagnostic imaging
equipment.
For the nine months ended September 30, 2006 and 2005, Radiologix
recorded the following pre-tax charges and gains to continuing operations,
excluding terminated operations:
* $1.0 million for the nine months ended September 30, 2006 and zero for
the nine months ended September 30, 2005 to record expenses related to
the pending merger with Primedex Health Systems, Inc. (See below);
* $1.1 million for the nine months ended September 30, 2006 and $395,000
for the nine months ended September 30, 2005 to record stock based
compensation expense; and
* $857,000 gain for the nine months ended September 30, 2006 and
$651,000 gain for the nine months ended September 30, 2005 to record
net gains on sales of diagnostic imaging equipment.
Income Taxes
Due to losses for the last three years, it is uncertain if our deferred
tax assets will be realized. Valuation allowances for net deferred tax
assets were recorded in 2004 and 2005. The tax provision of $0.2 million
and $0.4 million for the three and nine months ended September 30, 2006,
respectively, is for state income taxes and federal alternative minimum
tax.
Balance Sheet
Cash and cash equivalents were $49.8 million at September 30, 2006,
compared to $36.0 million at December 31, 2005, primarily reflecting
continued strong cash collections during the nine months ended September
30, 2006.
Net debt (total debt less cash and cash equivalents and restricted
cash) was $114.8 million at September 30, 2006, compared to net debt of
$128.7 million at December 31, 2005. Total debt was $170.3 million at
September 30, 2006 and December 31, 2005.
Days sales outstanding (DSO) was 48 days for September 30, 2006
compared to 48 days for December 31, 2005.
Plan of Merger With Primedex Health Systems, Inc.
On July 6, 2006, the Company entered into a Merger Agreement with
Primedex Health Systems, Inc. in which a wholly owned subsidiary of
Primedex will merge with and into Radiologix. The transaction will create
the largest owner and operator of fixed-site diagnostic imaging centers in
the United States, with 131 locations.
Under the terms of the Merger Agreement, which has been approved by
each company's Board of Directors, Radiologix shareholders will receive an
aggregate consideration of 22,621,922 shares of Primedex common stock and
$42.95 million in cash. Based upon the closing price of $2.69 for Primedex
common stock as of October 6, 2006, the record date for the stockholder
meetings, each Radiologix stockholder would receive $1.78 in cash for each
Radiologix share, plus one share of Primedex common stock for total
consideration valued at $4.47 per share. Upon completion of the merger, we
estimate that, subject to adjustment as described above, Radiologix's
former stockholders will own approximately 33.9% of the outstanding shares
of Primedex common stock, based on the number of shares of Radiologix and
Primedex common stock outstanding on the record date.
The merger is expected to be completed on November 15, 2006, subject to
regulatory approvals, the approvals of Primedex's and Radiologix's
stockholders, as well as other customary closing conditions.
Sarbanes-Oxley Section 404
As noted in our 2005 Form 10-K, subsequent to December 31, 2005, but
prior to the finalization of our 2005 consolidated financial statements,
Radiologix placed into operation new controls to address the material
weakness we identified in our accounting for lease terminations. These new
controls include a more thorough and detailed review of material unusual
transactions by senior financial officers, and outside accounting experts
if deemed necessary.
We believe these new controls have remediated the material weakness
that existed as of December 31, 2005, and that these controls operated
effectively during the nine months ended September 30, 2006.
Regulation G: GAAP and Non-GAAP Financial Information
This release contains certain financial information not derived in
accordance with GAAP. Radiologix uses both GAAP and non-GAAP metrics to
measure its financial results. We believe that, in addition to GAAP
metrics, these non-GAAP metrics assist Radiologix in measuring its
cash-based performance.
Radiologix believes this information is useful to investors and other
interested parties because it removes unusual and nonrecurring charges that
occur in the affected period and provides a basis for measuring the
Company's financial condition against other quarters.
As Radiologix has historically reported non-GAAP results to the
investment community, management also believes the inclusion of non-GAAP
measures provides consistency in its financial reporting.
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. Non-GAAP financial
measures should not be considered in isolation from, or as a substitute
for, financial information prepared in accordance with GAAP. Reconciliation
of this information to the most comparable GAAP measures is included in
this release in the tables below.
Income from continuing operations is defined as income from continuing
operations calculated in accordance with GAAP.
Income from continuing operations excluding terminated operations is
defined as income from continuing operations excluding terminated San
Antonio and certain Mid-Atlantic operations.
EBITDA is defined as earnings before interest, taxes, depreciation and
amortization, each from continuing operations, plus restricted stock
compensation expense, and is reconciled to its nearest comparable GAAP
financial measure.
EBITDA from continuing operations excluding terminated operations is
defined as EBITDA excluding terminated San Antonio and certain Mid-Atlantic
operations.
EBITDA and EBITDA from continuing operations excluding terminated
operations are non-GAAP financial measures used as analytical indicators by
Radiologix management and the healthcare industry to assess business
performance. They also serve as measures of leverage capacity and ability
to service debt.
EBITDA and EBITDA from continuing operations excluding terminated
operations should not be considered measures of financial performance under
GAAP, and the items excluded from EBITDA and EBITDA from continuing
operations excluding terminated operations 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 and EBITDA from continuing operations excluding terminated
operations 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.
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 68 diagnostic imaging centers
located in 7 states as of September 30, 2006.
Forward-Looking Statements
This press release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
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 events described in this press release will occur 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 and 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:
* economic, demographic, business and other conditions in our markets;
* the highly competitive nature of the healthcare business;
* changes in patient referral patterns;
* changes in the rates or methods of third-party reimbursement for
diagnostic imaging services;
* changes in our contracts with radiology practice groups;
* changes in the number of radiologists operating in our contracted
radiology practice groups;
* the ability to recruit and retain technologists;
* the availability of additional capital to fund capital expenditure
requirements;
* lawsuits against Radiologix and our contracted radiology practice
groups;
* changes in operating margins, particularly changes due to our managed
care contracts and capitated fee arrangements;
* failure by Radiologix 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 indebtedness, debt service requirements and liquidity constraints;
* risks related to our Senior Notes and healthcare securities generally;
* interruption of operations due to severe weather or other
extraordinary events;
* charges for unusual or infrequent (non-recurring) matters; and
* risks related to certain closing provisions of the merger with
Primedex that, if not satisfied or waived, will result in the merger
not being completed.
A more comprehensive list of such factors is set forth in the Company's
Annual Report on Form 10-K for the year ended December 31, 2005, and our
other filings with the Securities and Exchange Commission.
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 November 8,
2006. Radiologix undertakes no obligation to update any forward-looking
statement or statements to reflect new events or circumstances or future
developments.
Radiologix, Inc.
Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2006 2005
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $49,753 $36,004
Restricted cash 5,800 5,662
Accounts receivable, net of allowances 42,500 40,815
Due from affiliates 705 1,737
Federal and state income tax receivable 6,064 6,189
Other current assets 4,993 5,491
Total current assets $109,815 $95,898
Property and equipment, net 64,893 67,965
Investments in joint ventures 9,757 10,597
Intangible assets, net 51,551 54,050
Deferred financing costs, net 3,704 4,942
Other assets 586 1,076
Total assets $240,306 $234,528
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and other accrued expenses $7,931 $10,157
Accrued physician retention 7,536 7,051
Accrued salaries and benefits 8,335 6,987
Accrued interest 4,836 685
Current maturities of capital lease
obligations 34 32
Other current liabilities 409 477
Total current liabilities $29,081 $25,389
Long-term debt, net of current portion 158,270 158,270
Convertible debt 11,980 11,980
Capital lease obligations, net of current portion 36 62
Deferred revenue 6,187 6,494
Other liabilities 1,915 1,488
Total liabilities $207,469 $203,683
Commitments and contingencies
Minority interests in consolidated subsidiaries 1,168 1,874
STOCKHOLDERS' EQUITY:
Common stock 2 2
Treasury stock (180) (180)
Additional paid-in capital 16,750 15,615
Retained earnings 15,097 13,534
Total stockholders' equity $31,669 $28,971
Total liabilities and stockholders'
equity $240,306 $234,528
Radiologix, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2006 2005 2006 2005
(As restated) (As restated)
Service fee revenue $63,643 $62,258 $193,889 $189,320
Costs of operations:
Cost of services 40,387 40,389 121,635 120,838
Equipment lease 4,111 3,545 11,753 9,582
Provision for
doubtful accounts 5,489 4,521 16,376 13,647
Depreciation and
amortization 6,432 5,931 18,456 17,433
Gross profit $7,224 $7,872 $25,669 $27,820
Merger costs 1,049 --- 1,049 ---
Corporate general and
administrative 3,174 3,862 12,338 13,195
Interest expense, net,
including amortization
of deferred financing
costs
4,325 4,561 13,128 13,802
Income (loss) before
equity in earnings of
unconsolidated
affiliates, minority
interests in
consolidated
subsidiaries,
income taxes and
discontinued
operations $(1,324) $(551) $(846) $823
Equity in earnings of
investments 939 1,227 3,009 2,888
Minority interests in
income of consolidated
subsidiaries (163) (184) (541) (487)
INCOME (LOSS) BEFORE
INCOME TAXES AND
DISCONTINUED OPERATION $(548) $492 $1,622 $3,224
Income tax expense 184 275 354 444
INCOME (LOSS) FROM
CONTINUING OPERATIONS $(732) $217 $1,268 $2,780
Discontinued Operations:
Income (loss) from
discontinued operations
before income taxes 18 (582) 295 (986)
Income tax expense --- --- --- ---
Income (loss) from
discontinued
operations $18 $(582) $295 $(986)
NET INCOME (LOSS) $(714) $(365) $1,563 $1,794
INCOME (LOSS) PER COMMON SHARE
Income (loss) from
continuing operations
-basic $(0.03) $0.01 $0.06 $0.13
Income (loss) from
discontinued operations
-basic $--- $(0.03) $0.01 $(0.05)
Net income (loss)
-basic $(0.03) $(0.02) $0.07 $0.08
Income (loss) from
continuing operations
-diluted $(0.03) $0.01 $0.06 $0.13
Income (loss) from
discontinued
operations-diluted $--- $(0.03) $0.01 $(0.05)
Net income (loss)
-diluted $(0.03) $(0.02) $0.07 $0.08
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 22,242,417 22,138,145 22,242,417 22,030,959
Diluted 22,242,417 22,411,042 22,279,253 22,342,653
Radiologix, Inc.
Reconciliation of Non-GAAP Financial Information
(In thousands)
Reconciliation of Income from Continuing
Operations to EBITDA from
Continuing Operations
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2006 2005 2006 2005
(As restated) (As restated)
GAAP: Income (loss)
from continuing
operations $(732) $217 $1,268 $2,780
Add: Income tax expense 184 275 354 444
Add: Interest expense,
net 4,325 4,561 13,128 13,802
Add: Depreciation and
amortization 6,432 5,931 18,456 17,433
Add: Restricted stock
compensation expense 388 182 1,135 395
Add: Merger costs 1,049 --- 1,049 ---
EBITDA from continuing
operations $11,646 $11,166 $35,390 $34,854
Radiologix, Inc.
Reconciliation of Non-GAAP Financial Information, Excluding Terminated
Operations
(In thousands)
Reconciliation of Income from Continuing
Operations to EBITDA
from Continuing Operations,
Excluding Terminated Operations
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2006 2005 2006 2005
(As restated) (As restated)
GAAP: Income (loss) from
continuing operations,
excluding terminated
operations $(748) $254 $1,245 $2,655
Add: Income tax expense 184 295 354 357
Add: Interest expense,
net 4,325 4,560 13,128 13,801
Add: Depreciation
and amortization 6,432 5,931 18,456 17,432
Add: Restricted stock
compensation expense 388 182 1,135 395
Add: Merger costs 1,049 --- 1,049 ---
EBITDA from continuing
operations excluding
terminated
operations $11,630 $11,222 $35,367 $34,640
Radiologix, Inc.
Reconciliation of Financial Information, Excluding Terminated Operations
(In thousands)
For the Three Months Ended September 30, 2006
Radiologix
Excluding
Terminated Terminated
Radiologix Operations Operations
Service fee revenue $63,643 $--- $63,643
Costs of operations:
Cost of services 40,387 1 40,386
Equipment lease 4,111 --- 4,111
Provision for doubtful accounts 5,489 (17) 5,506
Depreciation and amortization 6,432 --- 6,432
Gross profit $7,224 $16 $7,208
Merger costs 1,049 --- 1,049
Corporate general and
administrative 3,174 --- 3,174
Interest expense, net,
including amortization
of deferred financing costs 4,325 --- 4,325
Income (loss) before equity in
earnings of unconsolidated
affiliates, minority interests
in consolidated subsidiaries,
income taxes and discontinued
operations $(1,324) $16 $(1,340)
Equity in earnings of
unconsolidated affiliates 939 --- 939
Minority interests in income
of consolidated subsidiaries (163) --- (163)
INCOME (LOSS) BEFORE INCOME
TAXES AND DISCONTINUED OPERATIONS $(548) $16 $(564)
Income tax expense 184 --- 184
INCOME (LOSS) FROM CONTINUING
OPERATIONS $(732) $16 $(748)
Radiologix, Inc.
Reconciliation of Financial Information, Excluding Terminated Operations
(In thousands)
For the Three Months Ended September 30, 2005
(As restated)
Radiologix
Excluding
Terminated Terminated
Radiologix Operations Operations
Service fee revenue $62,258 $(1) $62,259
Costs of operations:
Cost of services 40,389 48 40,341
Equipment lease 3,545 8 3,537
Provision for doubtful accounts 4,521 (1) 4,522
Depreciation and amortization 5,931 --- 5,931
Gross profit $7,872 $(56) $7,928
Merger costs --- --- ---
Corporate general and
administrative 3,862 --- 3,862
Interest expense, net, including
amortization of deferred
financing costs 4,561 1 4,560
Loss before equity in earnings
of unconsolidated
affiliates, minority interests
in consolidated subsidiaries,
Income taxes and discontinued
operations $(551) $(57) $(494)
Equity in earnings of
unconsolidated affiliates 1,227 --- 1,227
Minority interests in income of
consolidated subsidiaries (184) --- (184)
INCOME (LOSS) BEFORE INCOME
TAXES AND DISCONTINUED
OPERATIONS $492 $(57) $549
Income tax expense (benefit) 275 (20) 295
INCOME (LOSS) FROM CONTINUING
OPERATIONS $217 $(37) $254
Radiologix, Inc.
Reconciliation of Financial Information, Excluding Terminated Operations
(In thousands)
For the Nine Months Ended September 30, 2006
Radiologix
Excluding
Terminated Terminated
Radiologix Operations Operations
Service fee revenue $193,889 $--- $193,889
Costs of operations:
Cost of services 121,635 16 121,619
Equipment lease 11,753 8 11,745
Provision for doubtful
accounts 16,376 (47) 16,423
Depreciation and amortization 18,456 --- 18,456
Gross profit $25,669 $23 $25,646
Merger costs 1,049 --- 1,049
Corporate general and
administrative 12,338 --- 12,338
Interest expense, net,
including amortization of
deferred financing costs 13,128 --- 13,128
Income (loss) before equity
in earnings of unconsolidated
affiliates, minority interests
in consolidated subsidiaries,
Income taxes and
discontinued operations $(846) $23 $(869)
Equity in earnings of
unconsolidated affiliates 3,009 --- 3,009
Minority interests in income
of consolidated subsidiaries (541) --- (541)
INCOME BEFORE INCOME TAXES AND
DISCONTINUED OPERATIONS $1,622 $23 $1,599
Income tax expense 354 --- 354
INCOME FROM CONTINUING
OPERATIONS $1,268 $23 $1,245
Radiologix, Inc.
Reconciliation of Financial Information, Excluding Terminated Operations
(In thousands)
Radiologix
Excluding
Terminated Terminated
Radiologix Operations Operations
Service fee revenue $189,320 $968 $188,352
Costs of operations:
Cost of services 120,838 486 120,352
Equipment lease 9,582 26 9,556
Provision for doubtful accounts 13,647 242 13,405
Depreciation and amortization 17,433 1 17,432
Gross profit $27,820 $213 $27,607
Merger costs --- --- ---
Corporate general and
administrative 13,195 --- 13,195
Interest expense, net,
including amortization
of deferred financing costs 13,802 1 13,801
Income before equity in earnings
of unconsolidated
affiliates, minority interests
in consolidated subsidiaries,
Income taxes and
discontinued operations $823 $212 $611
Equity in earnings of
unconsolidated affiliates 2,888 --- 2,888
Minority interests in income of
consolidated subsidiaries (487) --- (487)
INCOME BEFORE INCOME TAXES
AND DISCONTINUED OPERATIONS $3,224 $212 $3,012
Income tax expense 444 87 357
INCOME FROM CONTINUING OPERATIONS $2,780 $125 $2,655
SOURCE Radiologix, Inc.
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Related links:
http://www.radiologix.com
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CONTACT:
Michael N. Murdock, Chief Financial Officer
of Radiologix, Inc., +1-214-303-2717, or
michael.murdock@radiologix.com
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