Attached files
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| 8-K - CURRENT REPORT ON FORM 8K - RadNet, Inc. | radnet_8k-051111.htm |
| EX-99.2 - TRANSCRIPT - RadNet, Inc. | radnet_8kex9902.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
RadNet Reports First Quarter Financial Results and Reaffirms 2011 Full-Year Guidance
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·
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Revenue was $146.2 million, an increase of 17.7% from $124.2 million in the first quarter of 2010
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·
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Adjusted EBITDA(1) was $25.7 million, an increase of 25.2% from $20.5 million in the prior year’s first quarter; RadNet’s trailing twelve month Adjusted EBITDA(1) rises to $111.4 million
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·
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RadNet substantially narrowed loss in the quarter; reports a per share net loss of $(0.02) compared to a per share loss of $(0.11 )in the prior year’s first quarter
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Same Center procedural volumes increased 5.8% as compared with the first quarter of 2010
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RadNet reaffirms 2011 guidance levels
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LOS ANGELES, California, May 10, 2011 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 206 owned and/or operated outpatient imaging centers (inclusive of 19 facilities held in Joint Ventures), today reported financial results for its first quarter of 2011.
Financial Results
For the first quarter of 2011, RadNet reported Revenue, Adjusted EBITDA(1) and Net Loss of $146.2 million, $25.7 million and $(876,000), respectively. Revenue increased $22.0 million (or 17.7%), Adjusted EBITDA(1) increased $5.2 million (or 25.2%) and Net Loss decreased $3.2 million, respectively, over the first quarter of 2010. Net Loss for the first quarter was $(0.02) per share, compared to a Net Loss of $(0.11) per share in the first quarter of 2010 (based upon a weighted average number of diluted shares outstanding of 37.3 million and 36.4 million for these periods in 2011 and 2010, respectively). Affecting operating results in the first quarter of 2011 were certain non-cash expenses and non-recurring items including: $1.0 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants; $145,000 of severance paid in connection with headcount reductions related to cost savings initiatives from previously announced acquisitions; $259,000 loss on the sale of certain capital equipment; $748,000 of non-cash Deferred Financing Expense related to the amortization of financing fees paid as part of our existing credit facilities; $500,000 gain based upon property and casualty insurance settlement proceeds; and $1.1 million fair value gain from our interest rate swaps, net of the amortization of an Accumulated Comprehensive Loss existing prior to April 6, 2010.
For the first quarter of 2011, as compared to the prior year’s first quarter, MRI volume increased 22.1%, CT volume increased 14.1% and PET/CT volume decreased 0.7%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 17.0% over the prior year’s first quarter. On a same-center basis, including only those centers which were part of RadNet for both the first quarters of 2011 and 2010, MRI volume increased 5.8%, CT volume increased 2.0% and PET/CT volume decreased 5.0%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 5.8% over the prior year’s same quarter.
1
Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented “We are pleased with our first quarter results. Typically, our first quarter is our most challenging quarter due to seasonality from the effects of adverse weather in the northeastern U.S. and from increasing patient participation in higher deductible health plans, which shifts procedural volumes into subsequent quarters. Despite these factors, our results this quarter showed marked improvement from last year’s first quarter, as evidenced by double digit improvement in our Revenue and Adjusted EBITDA(1). ”
“What is also very encouraging is that we were able to increase same center revenue and procedural growth, which may be indicative of the start of a general recovery from the depressed utilization levels from which all healthcare providers suffered last year,” added Dr. Berger.
Dr. Berger continued, “During the first quarter, we completed the acquisition of Imaging On Call, a leading teleradiology provider to hospitals, radiology practices and imaging centers. Along with our eRAD software subsidiary, acquired in the fourth quarter of last year, we have assembled the tools we believe are necessary to be a full-service outsourced radiology partner to hospitals, health systems and ultimately, as they take shape, Accountable Care Organizations. Along with our continued focus on expanding our core business of fixed site imaging center operations, we will continue to identify and pursue related radiology service businesses to broaden our revenue base and substantially increase our opportunity set.”
2011 Guidance
RadNet reaffirms its previously announced 2011 fiscal year guidance ranges as follows:
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Revenue
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$575 million - $605 million
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Adjusted EBITDA(1)
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$110 million - $120 million
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Capital Expenditures (a)
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$35 million - $40 million
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Cash Interest Expense
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$45 million - $49 million
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Free Cash Flow Generation (b)
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$25 million - $35 million
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(a)
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Net of proceeds from the sale of equipment.
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(b)
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Defined by the Company as Adjusted EBITDA(1) less total capital expenditures and cash paid for interest.
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Conference Call for Today
Dr. Howard Berger, President and Chief Executive Officer, and Mark Stolper, Executive Vice President and Chief Financial Officer, will host a conference call to discuss its first quarter 2011 results on Tuesday, May 10th, 2011 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Daylight Time).
Conference Call Details:
Date: Tuesday, May 10, 2011
Time: 10:30 a.m. EDT
Dial In-Number: 1-888-724-9505
International Dial-In Number: 1-913-312-1264
It is recommended that participants dial in approximately 5 to 10 minutes prior to the start of the 10:30 a.m. call. A telephonic replay of the conference call may be accessed approximately two hours after the call by dialing 1-877-870-5176 or 1-858-384-5517 for international callers and entering the replay access code 6261326.
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There will also be a simultaneous live webcast of the conference call which can be accessed under "News" in the RadNet Investor Relations section of the company website at http://www.radnet.com/ or you may use the link audio feed and archived recording of the conference call available at http://viavid.net/dce.aspx?sid=00008561.
Regulation G: GAAP and Non-GAAP Financial Information
This release contains certain financial information not reported in accordance with GAAP. The Company uses both GAAP and non-GAAP metrics to measure its financial results. The Company believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash-based performance. The Company 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. 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 which follow.
About RadNet, Inc.
RadNet, Inc. is a national market leader providing high-quality, cost-effective diagnostic imaging services through a network of 206 owned and/or operated outpatient imaging centers (inclusive of 19 facilities held in Joint Ventures). RadNet's core markets include California, Maryland, Delaware, New Jersey and New York. Together with affiliated radiologists, and inclusive of full-time and per diem employees and technicians, RadNet has a total of approximately 4,500 employees. For more information, visit http://www.radnet.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning successfully integrating acquired operations, successfully achieving 2011 financial guidance, achieving cost savings, successfully developing and integrating new lines of business, continuing to grow its business by generating patient referrals and contracts with radiology practices, and receiving third-party reimbursement for diagnostic imaging services, are forward-looking statements within the meaning of the Safe Harbor. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause the Company's actual results to differ materially from the statements contained herein. Further information on potential risk factors that could affect RadNet's business and its financial results are detailed in its most recent Annual Report on Form 10-K, as filed with the Securities and Exchange Commission. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date they are made. RadNet undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.
CONTACTS:
RadNet, Inc.
Mark Stolper, 310-445-2800
Executive Vice President and Chief Financial Officer
3
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RADNET, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
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(IN THOUSANDS EXCEPT SHARE DATA)
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March 31,
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December 31,
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2011
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2010
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(unaudited)
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ASSETS
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CURRENT ASSETS
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Cash and cash equivalents
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$ | 259 | $ | 627 | ||||
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Accounts receivable, net
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104,666 | 96,094 | ||||||
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Prepaid expenses and other current assets
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16,300 | 14,304 | ||||||
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Total current assets
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121,225 | 111,025 | ||||||
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PROPERTY AND EQUIPMENT, NET
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195,633 | 194,230 | ||||||
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OTHER ASSETS
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Goodwill
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147,752 | 143,353 | ||||||
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Other intangible assets
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57,165 | 57,348 | ||||||
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Deferred financing costs, net
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14,956 | 15,486 | ||||||
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Investment in joint ventures
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17,274 | 15,444 | ||||||
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Deposits and other
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2,577 | 2,628 | ||||||
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Total assets
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$ | 556,582 | $ | 539,514 | ||||
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LIABILITIES AND EQUITY DEFICIT
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CURRENT LIABILITIES
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Accounts payable and accrued expenses
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$ | 91,206 | $ | 82,619 | ||||
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Due to affiliates
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3,051 | 2,975 | ||||||
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Deferred revenue
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1,382 | 1,568 | ||||||
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Current portion of notes payable
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5,966 | 8,218 | ||||||
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Current portion of deferred rent
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863 | 745 | ||||||
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Current portion of obligations under capital leases
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7,787 | 9,139 | ||||||
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Total current liabilities
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110,255 | 105,264 | ||||||
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LONG-TERM LIABILITIES
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Deferred rent, net of current portion
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10,366 | 10,379 | ||||||
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Deferred taxes
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277 | 277 | ||||||
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Line of credit
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15,900 | - | ||||||
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Notes payable, net of current portion
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480,131 | 481,578 | ||||||
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Obligations under capital lease, net of current portion
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4,276 | 5,639 | ||||||
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Other non-current liabilities
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17,208 | 18,850 | ||||||
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Total liabilities
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638,413 | 621,987 | ||||||
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COMMITMENTS AND CONTINGENCIES
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EQUITY DEFICIT
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Common stock - $.0001 par value, 200,000,000 shares authorized; 37,307,225 and 37,223,475 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively
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4 | 4 | ||||||
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Paid-in-capital
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163,591 | 162,444 | ||||||
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Accumulated other comprehensive loss
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(1,801 | ) | (2,137 | ) | ||||
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Accumulated deficit
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(243,717 | ) | (242,841 | ) | ||||
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Total Radnet, Inc.'s equity deficit
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(81,923 | ) | (82,530 | ) | ||||
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Noncontrolling interests
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92 | 57 | ||||||
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Total equity deficit
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(81,831 | ) | (82,473 | ) | ||||
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Total liabilities and equity deficit
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$ | 556,582 | $ | 539,514 | ||||
4
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RADNET, INC. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(IN THOUSANDS EXCEPT SHARE DATA)
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(unaudited)
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Three Months Ended
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March 31,
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2011
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2010
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NET REVENUE
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$ | 146,217 | $ | 124,178 | ||||
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OPERATING EXPENSES
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Cost of operations
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115,828 | 98,639 | ||||||
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Depreciation and amortization
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13,921 | 13,275 | ||||||
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Provision for bad debts
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7,905 | 7,677 | ||||||
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Loss on sale of equipment
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259 | 104 | ||||||
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Severance costs
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145 | 132 | ||||||
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Total operating expenses
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138,058 | 119,827 | ||||||
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INCOME FROM OPERATIONS
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8,159 | 4,351 | ||||||
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OTHER EXPENSES
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Interest expense
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12,915 | 9,967 | ||||||
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Other income
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(1,871 | ) | - | |||||
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Total other expenses
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11,044 | 9,967 | ||||||
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LOSS BEFORE INCOME TAXES AND EQUITY
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IN EARNINGS OF JOINT VENTURES
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(2,885 | ) | (5,616 | ) | ||||
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Provision for income taxes
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(147 | ) | (334 | ) | ||||
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Equity in earnings of joint ventures
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2,224 | 1,861 | ||||||
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NET LOSS
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(808 | ) | (4,089 | ) | ||||
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Net income attributable to noncontrolling interests
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68 | 22 | ||||||
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NET LOSS ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS
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$ | (876 | ) | $ | (4,111 | ) | ||
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BASIC AND DILUTED NET LOSS PER SHARE
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ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS
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$ | (0.02 | ) | $ | (0.11 | ) | ||
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WEIGHTED AVERAGE SHARES OUTSTANDING
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Basic and diluted
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37,257,683 | 36,363,946 | ||||||
5
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RADNET, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
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(Unaudited)
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Three months ended
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March 31,
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2011
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2010
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net loss
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$ | (808 | ) | $ | (4,089 | ) | ||
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Adjustments to reconcile net loss to net cash provided by operating activities:
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Depreciation and amortization
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13,921 | 13,275 | ||||||
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Provision for bad debts
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7,905 | 7,677 | ||||||
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Equity in earnings of joint ventures
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(2,224 | ) | (1,861 | ) | ||||
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Distributions from joint ventures
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2,504 | 3,095 | ||||||
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Deferred rent amortization
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105 | 359 | ||||||
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Amortization of deferred financing cost
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748 | 670 | ||||||
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Amortization of bond discount
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58 | - | ||||||
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Loss on sale of equipment
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259 | 104 | ||||||
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Amortization of cash flow hedge
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306 | - | ||||||
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Stock-based compensation
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1,048 | 819 | ||||||
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Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:
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Accounts receivable
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(15,481 | ) | (8,071 | ) | ||||
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Other current assets
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(2,345 | ) | (1,426 | ) | ||||
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Other assets
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51 | (1,287 | ) | |||||
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Deferred revenue
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(186 | ) | - | |||||
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Accounts payable and accrued expenses
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9,335 | 7,337 | ||||||
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Net cash provided by operating activities
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15,196 | 16,602 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES
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Purchase of imaging facilities
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(6,343 | ) | (6,708 | ) | ||||
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Purchase of property and equipment
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(15,616 | ) | (12,900 | ) | ||||
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Proceeds from sale of equipment
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235 | - | ||||||
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Purchase of equity interest in joint ventures
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(1,500 | ) | - | |||||
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Net cash used in investing activities
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(23,224 | ) | (19,608 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES
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Principal payments on notes and leases payable
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(6,490 | ) | (5,538 | ) | ||||
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Deferred financing costs
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(218 | ) | - | |||||
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Proceeds from, net of payments on, line of credit
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15,900 | - | ||||||
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Payments to counterparties of interest rate swaps, net of amounts received
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(1,611 | ) | (1,581 | ) | ||||
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Distributions to noncontrolling interests
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(33 | ) | (18 | ) | ||||
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Proceeds from issuance of common stock upon exercise of options/warrants
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99 | 49 | ||||||
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Net cash provided by (used in) financing activities
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7,647 | (7,088 | ) | |||||
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EFFECT OF EXCHANGE RATE CHANGES ON CASH
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13 | - | ||||||
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NET DECREASE IN CASH AND CASH EQUIVALENTS
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(368 | ) | (10,094 | ) | ||||
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CASH AND CASH EQUIVALENTS, beginning of period
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627 | 10,094 | ||||||
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CASH AND CASH EQUIVALENTS, end of period
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$ | 259 | $ | - | ||||
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
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Cash paid during the period for interest
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$ | 6,330 | $ | 9,340 | ||||
6
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RADNET, INC.
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RECONCILIATION OF GAAP INCOME FROM OPERATIONS TO ADJUSTED EBITDA(1)
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(IN THOUSANDS)
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Three Months Ended
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March 31,
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2011
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2010
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Income from Operations
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$ | 8,159 | $ | 4,351 | ||||
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Plus Depreciation and Amortization
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13,921 | 13,275 | ||||||
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Plus Earnings from Joint Ventures
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2,224 | 1,861 | ||||||
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Plus Non Cash Employee Stock Compensation
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1,048 | 819 | ||||||
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Plus Loss on Sale of Equipment
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259 | 104 | ||||||
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Less Net Income Attributable to Noncontrolling Interests
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(68 | ) | (22 | ) | ||||
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Plus Severance Costs: Elimination of Corporate Personnel
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145 | 132 | ||||||
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Adjusted EBITDA(1)
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$ | 25,688 | $ | 20,520 | ||||
7
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RADNET PAYMENTS BY PAYORS *
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First Quarter
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Full Year
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Full Year
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2011
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2010
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2009
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Commercial Insurance
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55.1 | % | 55.7 | % | 55.8 | % | ||||||
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Medicare
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19.7 | % | 19.3 | % | 20.0 | % | ||||||
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Capitation
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15.0 | % | 15.3 | % | 15.4 | % | ||||||
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Workers Compensation/Personal Injury
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4.5 | % | 4.1 | % | 3.5 | % | ||||||
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Medicaid
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3.4 | % | 3.2 | % | 3.2 | % | ||||||
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Other
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2.2 | % | 2.4 | % | 2.1 | % | ||||||
| 100.0 | % | 100.0 | % | 100.0 | % | |||||||
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RADNET PAYMENTS BY MODALITY *
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First Quarter
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Full Year
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Full Year
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2011
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2010
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2009
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MRI
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35.2 | % | 34.3 | % | 34.1 | % | ||||||
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CT
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15.9 | % | 17.5 | % | 19.1 | % | ||||||
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PET/CT
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6.3 | % | 6.1 | % | 6.0 | % | ||||||
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X-ray
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10.2 | % | 10.1 | % | 9.8 | % | ||||||
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Ultrasound
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10.8 | % | 11.0 | % | 10.3 | % | ||||||
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Mammography
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15.7 | % | 16.0 | % | 16.0 | % | ||||||
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Nuclear Medicine
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1.6 | % | 1.7 | % | 1.7 | % | ||||||
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Other
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4.1 | % | 3.2 | % | 3.0 | % | ||||||
| 100.0 | % | 100.0 | % | 100.0 | % | |||||||
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RADNET AVERAGE PAYMENTS BY MODALITY *
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First Quarter
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Full Year
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Full Year
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2011
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2010
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2009
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MRI
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$ | 498 | $ | 501 | $ | 503 | ||||||
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CT
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302 | 306 | 308 | |||||||||
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PET/CT
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1,487 | 1,494 | 1,493 | |||||||||
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X-ray
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41 | 40 | 38 | |||||||||
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Ultrasound
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108 | 107 | 108 | |||||||||
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Mammography
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133 | 135 | 135 | |||||||||
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Nuclear Medicine
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320 | 322 | 323 | |||||||||
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Other
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124 | 126 | 127 | |||||||||
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Note
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* Based upon global payments received from consolidated Imaging Centers from that year's dates of service.
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Excludes payments from hospital contracts, Breastlink, Center Management Fees and other miscellaneous
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operating activities.
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8
Footnotes
(1) The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and adjusted for losses or gains on the sale of equipment, other income or loss, debt extinguishments and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries, and is adjusted for non-cash or extraordinary and one-time events taken place during the period.
Adjusted EBITDA is reconciled to its nearest comparable GAAP financial measure. Adjusted EBITDA is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance, and is a measure of leverage capacity and ability to service debt. Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives 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 Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies.
(2) As noted above, the Company defines Free Cash Flow as Adjusted EBITDA less total Capital Expenditures (whether completed with cash or financed) and Cash Interest paid. Free Cash Flow is a non-GAAP financial measure. The Company uses Free Cash Flow because the Company believes it provides useful information for investors and management because it measures our capacity to generate cash from our operating activities. Free Cash Flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of Free Cash Flow may differ from definitions used by other companies.
Free Cash Flow should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives 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 Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies.