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8-K - 8-K - 21st Century Oncology Holdings, Inc.a14-6250_18k.htm

Exhibit 99.1

 

 

21ST CENTURY ONCOLOGY HOLDINGS, INC.

 

Contact:

Bryan J. Carey

President and CFO

239-931-7285

BCarey@rtsx.com

 

Investors:

Nick Laudico

The Ruth Group

646-536-7030

nlaudico@theruthgroup.com

 

21ST CENTURY ONCOLOGY REPORTS FOURTH QUARTER AND FULL YEAR 2013 FINANCIAL RESULTS

 

Fourth Quarter 2013 Highlights:

 

·                  Total company pro forma revenues of $209.2 million, up 23.9% year-over-year, including $5.8 million in pro forma contribution from acquisitions; excluding acquisitions, revenues grew 20.5% year-over-year

·                  Total domestic Radiation Oncology cases completed increased 12.3%

·                  Domestic same market treatments per day increased 7.9%

·                  International cases increased 7.0%

·                  Pro Forma Adjusted EBITDA of $27.2 million

·                  Completed acquisition of OnCure Holdings, Inc. (“Oncure”) on October 25, adding significant scale and opportunity for long term revenue growth and operating synergies

·                  Transitioned corporate identity to 21st Century Oncology brand, recognized globally for high quality integrated cancer care (“ICC”) services

·                  Acquired strategically located radiation therapy facility with certificate of need (“CON”) in Roanoke Rapids, NC; upgrading with advanced technologies and clinical pathways

·                  Entered strategic partnership with ProHealth Care Associates, LLP, the largest physician group practice in the metropolitan New York area, to operate an ICC  practice in Riverhead, NY as well as jointly pursue additional strategic opportunities

 

Full Year 2013 Highlights:

 

·                  Total company pro forma revenues of $845.3 million, up 20.7% year-over-year, including $108.8 million in pro forma contribution from acquisitions; excluding acquisitions, revenues grew 6.1% year-over-year

·                  Total domestic Radiation Oncology cases completed increased 13.1%

·                  Domestic same market treatments per day increased 4.3%

·                  International cases increased 5.7%

·                  Pro Forma Adjusted EBITDA of $118.6 million

 

FORT MYERS, FL, February, 19, 2014 — 21st Century Oncology Holdings, Inc. (“21st Century Oncology”, “21C” or the “Company”), the leading global, physician-led provider of

 



 

 

integrated cancer care (“ICC”) services, announced today its financial results for the fourth quarter and full year ended December 31, 2013.

 

Dr. Daniel Dosoretz, Founder and Chief Executive Officer, commented, “We made significant progress on all of our major strategic initiatives in 2013, closing a milestone year for 21st Century Oncology. We reported strong organic growth, closed the largest and most transformational acquisition in our history, continued to expand census and saw strong contributions to growth from our ICC and physician liaison initiatives. We also consolidated our corporate identity under our established brand: 21st Century Oncology, which is recognized globally for high quality patient care and a broad range of integrated oncology services in cost-effective settings.”

 

“From a volume perspective, we saw strong growth in fourth quarter and full year total Radiation Oncology cases completed, up 12.3% and 13.1% respectively. Fourth quarter domestic same-market treatments per day, which include same market acquisitions, grew by 7.9% year-over-year. Additionally, our international business performed well in the quarter, producing an 11.9% year-over-year revenue growth driven by case growth combined with use of more sophisticated treatment protocols. Our international business continues to position itself for significant future growth, through strategic acquisitions, a de-novo with a premier hospital partner, and further expansion of its business development pipeline.”

 

“Through many years of hard work and dedication, we have evolved into the largest provider of integrated cancer care services, providing academic quality care in low-cost settings on a scale that is unmatched in our industry. Our commitment to patients, physicians and payers has led to highly coordinated cancer care solutions in today’s complicated healthcare delivery system. Our model provides us multiple sources of self-sustaining growth, including organic opportunities and market share growth due to our ICC programs, strategic acquisitions, health system partnerships and strategic payer relationships. Armed with some of the highest quality physicians in a diverse set of specialties, we have an organization that is poised for long term value creation. The acquisition of Oncure has added revenue, exciting new markets with leading physicians and substantial operating synergy opportunities, expanding the platform upon which we can create value on a significantly larger scale,” he concluded.

 

Fourth Quarter 2013 Results

 

Total pro forma revenues for the fourth quarter of 2013 were $209.2 million, compared to $168.8 million in revenues in the same quarter of 2012. Fourth quarter pro forma revenues include $5.8 million in revenue contribution from acquisitions, as if the acquisitions had closed on October 1, 2013. The Oncure acquisition closed on October 25, 2013.  The increase in revenue was principally due to increased census, accretive joint ventures and acquisitions and international revenue growth, offset by lower reimbursement rates.

 

Total domestic Radiation Oncology cases completed increased 12.3% and domestic same market treatments per day increased 7.9% in the fourth quarter of 2013, which includes treatment volumes from our same market acquisition of Premiere Radiation Oncology/Specialist in Urology (“SIU”). This was driven by expansion of our ICC model and increased referrals

 



 

 

through the Company’s physician liaison program. Domestic same market therapy revenue per treatment decreased 7.3% from the fourth quarter of 2012, due to reductions in the reimbursement rates in the Centers for Medicare and Medicaid Services (“CMS”) 2013 Physician Fee Schedule, partially offset by continued improvements in managed care pricing.

 

Total Relative Value Units (RVUs) per day at same market domestic freestanding centers slightly increased by 0.3% in the fourth quarter versus the same period of the prior year as census growth was partially offset by reductions in the reimbursement rates included in the CMS 2013 Physician Fee Schedule.

 

Adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation and other non-cash and pro forma items (“Pro Forma Adjusted EBITDA”) in the fourth quarter of 2013 was $27.2 million, or 13% of total pro forma revenues, compared to $24.2 million, or 14.3% of total pro forma revenues, in the fourth quarter of 2012. Pro Forma Adjusted EBITDA margins declined in the current quarter versus the prior year period primarily due to reductions in the Medicare reimbursement rate, the growth and expanded development activity in establishing integrated cancer care practices, and investments made in key personnel. Reconciliation of net loss attributable to 21st Century Oncology, determined in accordance with generally accepted accounting principles to Pro Forma Adjusted EBITDA and total revenues, determined in accordance with generally accepted accounting principles, to total pro forma revenues for the quarters ended December 31, 2013 and 2012 is included in the attached supplemental financial information.

 

Income tax expense in the fourth quarter of 2013 was an income tax benefit of $25.3 million, compared to an income tax expense of $1.3 million in the fourth quarter of 2012. The income tax benefit in the fourth quarter of 2013 was due to the effect of the Oncure purchase price adjustments on the valuation allowance recorded against the Company’s net tax assets.   The net loss for the fourth quarter of 2013 was $9.6 million, compared to a net loss of $33.2 million in the fourth quarter of 2012.  The net loss in the fourth quarter of 2012 included impairment charges of $11.1 million, attributable to revisions of the Company’s financial forecasts largely as a result of reductions in reimbursement that resulted in a write down of goodwill, trade name and an investment in a joint venture to their implied fair values as well as lagging economic conditions that existed in 2012 in the U.S.

 

Full Year 2013 Results

 

Total pro forma revenues for the full year ended December 31, 2013 were $845.3 million, an increase of 20.7% compared to $700.4 million in revenues for the full year 2012. Full year 2013 pro forma revenues include $108.8 million in revenue contribution from the acquisitions, as if the acquisitions had closed on January 1, 2013. The increase in revenue was principally due to increased domestic census, accretive joint ventures and acquisitions and international revenue growth, offset by lower reimbursement rates.

 

Total radiation oncology cases increased 9.7% and domestic same market treatments per day increased 4.3% for the full year 2013. This was driven by expansion of our ICC model and increased referrals through the Company’s physician liaison program.  Domestic same market

 



 

 

therapy revenue per treatment decreased 6.2% compared to 2012, due to reductions in the reimbursement rate announced in the CMS 2013 Physician Fee Schedule which were partially offset by improved managed care pricing.

 

Total RVUs per day at same market domestic freestanding centers decreased 3.5% for the full year 2013 due to reductions in the reimbursement rate included in the CMS 2013 Physician Fee Schedule.

 

Pro Forma Adjusted EBITDA for the full year 2013 was $118.6 million, or 14.0% of total pro forma revenues, compared to $104.7 million, or 14.9% of total pro forma revenues for the full year 2012.  Pro Forma Adjusted EBITDA margins declined slightly in the current quarter versus the prior year period primarily due to reductions in the Medicare reimbursement rate, the growth and expanded development activity in establishing ICC practices, and investments made in key personnel. A reconciliation of net loss attributable to 21st Century Oncology, determined in accordance with generally accepted accounting principles to Pro Forma Adjusted EBITDA and total revenues, determined in accordance with generally accepted accounting principles, to total pro forma revenues for the full years ended December 31, 2013 and 2012 is included in the attached supplemental financial information.

 

Income tax expense for the full year 2013 was an income tax benefit of $20.4 million, compared to an income tax expense of $4.5 million in 2012. The income tax benefit in the fourth quarter of 2013 was due to the effect of the Oncure purchase price adjustments on the valuation allowance recorded against the Company’s net tax assets.  The net loss for the full year 2013 was $73.5 million, compared to a net loss of $151.1 million for the full year 2012. The net loss for the full year 2012 included impairment charges of $81.0 million, attributable to revisions of the Company’s financial forecasts largely as a result of reductions in reimbursement that resulted in a write down of goodwill, trade name and an investment in a joint venture to their implied fair values as well as lagging economic conditions that existed in 2012 in the U.S.

 

Recent Developments

 

In October, the Company completed the acquisition of Oncure for approximately $125.0 million (excluding capital leases, working capital and other adjustments). The purchase price included $42.5 million in cash and up to $82.5 million in assumed debt ($7.5 million of this assumed debt is subject to escrow conditions and will be released if certain Oncure centers achieve a minimum level of EBITDA). This transformative investment is the largest acquisition in the Company’s history and increased the number of radiation therapy centers by over 25% and is expected to add over 694 average treatments per day. The strategic addition is expected to provide operating synergies, broaden the Company’s ability to provide ICC services across a larger spectrum and offer significant revenue growth for several years to come.

 

In October, the Company acquired a single radiation therapy center in Roanoke Rapids, NC. The center is the only treatment center in a 30 mile radius and 21C was approved for the transfer of the CON for the facility. The Company is currently upgrading the center and its equipment to improve treatment planning and imaging sophistication and believes these upgrades will improve patient care and increase patient census.

 



 

 

In January 2014, the Company entered a strategic partnership with ProHealth Care Associates, LLP and opened a new de novo state-of-the-art radiation therapy center in Riverhead, New York. ProHealth is the largest physician group practice in the metropolitan New York area with over 500 physicians in over 150 offices treating over 750,000 covered lives.

 

In February 2014, the Company closed on an equity investment in South Florida Radiation Oncology Holdings, LLC (“SFRO”), which includes a 65% equity interest in SFRO for approximately $60 million. The investment was funded with the proceeds of a new $60 million term loan borrowed by a new direct subsidiary of the Company.  SFRO is expected to generate an annual run rate of approximately $25 million in adjusted EBITDA. This strategic transaction increased the number of centers by approximately 10% and is expected to add over 591 average treatments per day.  Our partnership with SFRO provides further opportunities to leverage the 21C infrastructure, footprint and technology to achieve significant operating synergies and leverage best practices across a clinically strong base of combined physician and management talent.  Furthermore, the enhanced market density should provide for increased opportunity for innovation with health systems and payers.

 

Conference Call

 

Management will host a conference call on February 20, 2014 at 10:00 a.m. ET, during which management will discuss its financial results in further detail. The dial-in numbers are (877) 407-9039 for domestic callers and (201) 689-8470 for international callers.  In addition, a telephonic replay of the call will be available until March 6, 2014.  The replay dial-in numbers are (877) 870-5176 for domestic callers and (858) 384-5517 for international callers.  Please use the conference ID number 13575217 to access the replay.

 

A live webcast and webcast replay of the call will also be available from the Investor Relations section on the corporate web site at www.rtsx.com.

 

About 21st Century Oncology Holdings, Inc.

 

21st Century Oncology Holdings, Inc. is the largest global, physician led provider of Integrated Cancer Care Services. The Company offers a comprehensive range of cancer treatment services, focused on delivering academic quality, cost-effective patient care in personal and convenient settings. The Company operates 179 treatment centers, including 145 centers located in 16 U.S. states. The Company also operates 34 centers located in six countries in Latin America. The Company holds market leading positions in most of its domestic local markets and abroad.

 

Forward-Looking Statements

 

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended.  Statements preceded by, followed by or that otherwise include the words “believes”, “expects”, “anticipates”, “intends”, “projects”, “estimates”, “plans”, “may increase”, “forecast” and

 



 

 

similar expressions or future or conditional verbs such as “will”, “should”, “would”, “may” and “could” are generally forward-looking in nature and not historical facts. Forward-looking statements are based on management’s current expectations or beliefs about the Company’s future plans, expectations and objectives, including, but not limited to, the Company’s expected financial results and estimates for 2014 and the effects of the CMS’s Final Rule for the 2014 Physician Fee Schedule on its results.  These forward-looking statements are not historical facts and are subject to risks and uncertainties that could cause the actual results to differ materially from those projected in these forward-looking statements including, but not limited to reductions in Medicare reimbursement, healthcare reform, decreases in payments by managed care organizations and other commercial payers  and other risk factors that may be described from time to time in the Company’s filings with the Securities and Exchange Commission.  Readers of this release are cautioned not to place undue reliance on forward-looking statements contained herein, which speak only as of the date stated, or if no date is stated, as of the date of this press release. The Company undertakes no obligation to publicly update or revise the forward-looking statements contained herein to reflect changed events or circumstances after the date of this release, unless required by law.

 



 

 

21ST CENTURY ONCOLOGY HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

 

 

December 31,

 

December 31,

 

 

 

2013

 

2012

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

17,462

 

$

15,410

 

Restricted cash

 

3,768

 

 

Accounts receivable, net

 

117,044

 

86,869

 

Prepaid expenses

 

7,577

 

6,043

 

Inventories

 

4,393

 

3,897

 

Deferred income taxes

 

375

 

540

 

Other

 

12,534

 

7,429

 

Total current assets

 

163,153

 

120,188

 

 

 

 

 

 

 

Equity investments in joint ventures

 

2,555

 

575

 

Property and equipment, net

 

240,371

 

221,050

 

Real estate subject to finance obligation

 

19,239

 

16,204

 

Goodwill

 

578,013

 

485,859

 

Intangible assets, net

 

85,025

 

35,044

 

Other assets

 

39,835

 

43,381

 

Total assets

 

$

1,128,191

 

$

922,301

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

57,613

 

$

27,538

 

Accrued expenses

 

59,321

 

46,401

 

Income taxes payable

 

2,372

 

2,951

 

Current portion of long-term debt

 

17,536

 

11,065

 

Current portion of finance obligation

 

317

 

287

 

Other current liabilities

 

12,237

 

7,684

 

Total current liabilities

 

149,396

 

95,926

 

Long-term debt, less current portion

 

974,130

 

751,303

 

Finance obligation, less current portion

 

20,333

 

16,905

 

Other long-term liabilities

 

38,453

 

22,130

 

Deferred income taxes

 

4,498

 

6,202

 

Total liabilities

 

1,186,810

 

892,466

 

 

 

 

 

 

 

Noncontrolling interests - redeemable

 

15,899

 

11,368

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

Common stock, $0.01 par value, 1,028 shares authorized, 1,028 and 1,025 issued and outstanding at December 31, 2013 and 2012

 

 

 

Additional paid-in capital

 

650,879

 

651,907

 

Retained deficit

 

(713,537

)

(638,023

)

Accumulated other comprehensive loss, net of tax

 

(26,393

)

(11,464

)

Total 21st Century Oncology Holdings, Inc. shareholder’s (deficit) equity

 

(89,051

)

2,420

 

Noncontrolling interests - nonredeemable

 

14,533

 

16,047

 

Total (deficit) equity

 

(74,518

)

18,467

 

Total liabilities and equity

 

$

1,128,191

 

$

922,301

 

 


 


 

 

21ST CENTURY ONCOLOGY HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

Years Ended

 

 

 

December 31,

 

December 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Net patient service revenue

 

$

189,524

 

$

166,784

 

$

715,999

 

$

686,216

 

Management fees

 

11,139

 

 

11,139

 

 

Other revenue

 

2,727

 

1,952

 

9,378

 

7,735

 

Total revenues

 

203,390

 

168,736

 

736,516

 

693,951

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

115,380

 

96,457

 

409,352

 

372,656

 

Medical supplies

 

18,474

 

13,804

 

64,640

 

61,589

 

Facility rent expenses

 

13,280

 

10,168

 

45,565

 

39,802

 

Other operating expenses

 

12,474

 

10,325

 

45,629

 

38,988

 

General and administrative expenses

 

33,355

 

22,177

 

102,187

 

82,236

 

Depreciation and amortization

 

18,645

 

16,753

 

65,195

 

64,893

 

Provision for doubtful accounts

 

3,289

 

1,630

 

12,146

 

16,916

 

Interest expense, net

 

24,378

 

20,312

 

86,747

 

77,494

 

Electronic health records incentive income

 

(1,698

)

(2,256

)

(1,698

)

(2,256

)

Gain on the sale of an interest in a joint venture

 

 

 

(1,460

)

 

Loss on sale leaseback transaction

 

313

 

 

313

 

 

Early extinguishment of debt

 

 

 

 

4,473

 

Fair value adjustment of earn-out liability

 

130

 

(42

)

130

 

1,219

 

Impairment loss

 

 

11,075

 

 

81,021

 

Loss on foreign currency transactions

 

117

 

105

 

1,283

 

339

 

Loss on foreign currency derivative contracts

 

158

 

159

 

467

 

1,165

 

Total expenses

 

238,295

 

200,667

 

830,496

 

840,535

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(34,905

)

(31,931

)

(93,980

)

(146,584

)

Income tax (benefit) expense

 

(25,281

)

1,291

 

(20,432

)

4,545

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

(9,624

)

(33,222

)

(73,548

)

(151,129

)

 

 

 

 

 

 

 

 

 

 

Net (income) loss attributable to noncontrolling interests- redeemable and non-redeemable

 

(601

)

152

 

(1,966

)

(3,079

)

 

 

 

 

 

 

 

 

 

 

Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder

 

(10,225

)

(33,070

)

(75,514

)

(154,208

)

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

Unrealized loss on derivative interest rate swap agreements

 

 

 

 

(333

)

Unrealized loss on foreign currency translation

 

(6,425

)

(2,753

)

(16,242

)

(7,882

)

Other comprehensive loss

 

(6,425

)

(2,753

)

(16,242

)

(8,215

)

 

 

 

 

 

 

 

 

 

 

Comprehensive loss:

 

(16,049

)

(35,975

)

(89,790

)

(159,344

)

Comprehensive (income) loss attributable to noncontrolling interests- redeemable and non-redeemable

 

(137

)

401

 

(653

)

(2,396

)

Comprehensive loss attributable to 21st Century Oncology Holdings, Inc. shareholder

 

$

(16,186

)

$

(35,574

)

$

(90,443

)

$

(161,740

)

 



 

 

21ST CENTURY ONCOLOGY HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Years Ended

 

 

 

December 31,

 

 

 

2013

 

2012

 

Cash flows from operating activities

 

 

 

 

 

Net loss

 

$

(73,548

)

$

(151,129

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

Depreciation

 

55,430

 

53,052

 

Amortization

 

9,765

 

11,841

 

Deferred rent expense

 

973

 

1,234

 

Deferred income taxes

 

(27,908

)

(2,023

)

Stock-based compensation

 

597

 

3,257

 

Provision for doubtful accounts

 

12,146

 

16,916

 

Loss on the sale/disposal of property and equipment

 

336

 

748

 

Loss on sale leaseback transaction

 

313

 

 

Gain on the sale of an interest in a joint venture

 

(1,460

)

 

Amortization of termination of interest rate swap

 

 

958

 

Write-off of loan costs

 

 

525

 

Early extinguishment of debt

 

 

4,473

 

Termination of derivative interest rate swap agreements

 

 

(972

)

Loss on fair value adjustment of noncontrolling interests-redeemable

 

 

175

 

Impairment loss

 

 

81,021

 

Loss on foreign currency transactions

 

143

 

33

 

Loss on foreign currency derivative contracts

 

467

 

1,165

 

Amortization of debt discount

 

1,191

 

798

 

Amortization of loan costs

 

5,595

 

5,434

 

Equity interest in net loss of joint ventures

 

454

 

817

 

Distribution received from unconsolidated joint ventures

 

21

 

9

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable and other current assets

 

(42,570

)

(21,578

)

Income taxes payable

 

20

 

(2,121

)

Inventories

 

(102

)

639

 

Prepaid expenses

 

3,544

 

3,262

 

Accounts payable and other current liabilities

 

30,326

 

(1

)

Accrued deferred compensation

 

1,344

 

1,339

 

Accrued expenses / other current liabilities

 

12,299

 

6,258

 

 

 

 

 

 

 

Net cash (used in) provided by operating activities

 

(10,624

)

16,130

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchase of property and equipment

 

(40,744

)

(30,676

)

Acquisition of medical practices

 

(68,659

)

(25,862

)

Purchase of noncontrolling interest - non-redeemable

 

(1,509

)

 

Restricted cash associated with medical practice acquisitions

 

(3,768

)

 

Purchase of joint venture interests

 

 

(1,364

)

Proceeds from the sale of property and equipment

 

78

 

2,987

 

Loans to employees

 

(212

)

(68

)

Contribution of capital to joint venture entities

 

(992

)

(714

)

Proceeds from the sale of equity interest in a joint venture

 

1,460

 

 

Payment of foreign currency derivative contracts

 

(171

)

(670

)

Premiums on life insurance policies

 

(1,234

)

(1,313

)

Change in other assets and other liabilities

 

(2,212

)

370

 

 

 

 

 

 

 

Net cash used in investing activities

 

(117,963

)

(57,310

)

 



 

 

21ST CENTURY ONCOLOGY HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Years Ended

 

 

 

December 31,

 

 

 

2013

 

2012

 

Cash flows from financing activities

 

 

 

 

 

Proceeds from issuance of debt

 

302,563

 

448,163

 

Principal repayments of debt

 

(167,932

)

(383,344

)

Repayments of finance obligation

 

(182

)

(109

)

Payments of notes receivable from shareholder

 

 

72

 

Proceeds from noncontrolling interest holders - redeemable and non-redeemable

 

765

 

 

Cash distributions to noncontrolling interest holders - redeemable and non-redeemable

 

(2,211

)

(3,920

)

Payments of costs for equity securities

 

(953

)

 

Payments of loan costs

 

(1,359

)

(14,437

)

 

 

 

 

 

 

Net cash provided by financing activities

 

130,691

 

46,425

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(52

)

(12

)

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

2,052

 

5,233

 

Cash and cash equivalents, beginning of period

 

15,410

 

10,177

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

17,462

 

$

15,410

 

Supplemental disclosure of cash flow information

 

 

 

 

 

Interest paid

 

$

78,750

 

$

63,632

 

Income taxes paid

 

$

9,364

 

$

9,120

 

Supplemental disclosure of noncash transactions

 

 

 

 

 

Finance obligation related to real estate projects

 

$

7,580

 

$

3,035

 

Derecognition of finance obligation related to real estate projects

 

$

3,940

 

$

 

Deconsolidation of noncontrolling interest

 

$

9

 

$

 

Capital lease obligations related to the purchase of equipment

 

$

3,054

 

$

7,281

 

Earn-out accrual related to the acquisition of medical practices

 

$

7,950

 

$

400

 

Noncash dividend declared to noncontrolling interest

 

$

77

 

$

167

 

Property and equipment related to the North Broward Hospital District license agreement

 

$

 

$

4,260

 

Capital lease obligations related to the acquisition of medical practices

 

$

10,903

 

$

5,746

 

Noncash redemption of Parent equity units

 

$

 

$

53

 

Seller financing promissory note related to the acquisition of medical practices

 

$

2,097

 

$

 

Noncash contribution of capital by noncontrolling interest holders

 

$

4,235

 

$

 

Termination of prepaid services by noncontrolling interest holder

 

$

2,551

 

$

 

Issuance of notes payable relating to the earn-out liability in the acquisition of Medical Developers

 

$

2,679

 

$

 

Issuance of equity LLC units relating to the earn-out liability in the acquisition of Medical Developers

 

$

705

 

$

 

Issuance of senior secured notes related to the acquisition of medical practices

 

$

75,000

 

$

 

Reserve claim liability related to the acquisition of medical practices

 

$

3,682

 

$

 

Noncash dividend declared from unconsolidated joint venture

 

$

150

 

$

 

Step up basis in joint venture interest

 

$

83

 

$

 

 



 

 

21ST CENTURY ONCOLOGY HOLDINGS, INC.

Supplemental Financial Information (Unaudited)

Reconciliation of Total Pro-forma Revenue and Pro-forma Adjusted EBITDA to Net Loss Attributable

to 21st Century Oncology Holdings, Inc. Shareholder

 

 

 

Three Months Ended

 

Years Ended

 

 

 

December 31,

 

December 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

(in thousands): 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

203,390

 

$

168,736

 

$

736,516

 

$

693,951

 

Pro-forma full period effect of acquisitions (a) 

 

5,820

 

90

 

108,767

 

6,434

 

Total pro-forma revenues

 

$

209,210

 

$

168,826

 

$

845,283

 

$

700,385

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder

 

$

(10,225

)

$

(33,070

)

$

(75,514

)

$

(154,208

)

Income tax (benefit) expense

 

(25,281

)

1,291

 

(20,432

)

4,545

 

Interest expense, net

 

24,378

 

20,312

 

86,747

 

77,494

 

Depreciation and amortization

 

18,645

 

16,753

 

65,195

 

64,893

 

Gain on the sale of an interest in a joint venture

 

 

 

(1,460

)

 

Loss on sale leaseback transaction

 

313

 

 

313

 

 

Early extinguishment of debt

 

 

 

 

4,473

 

Fair value adjustment of earn-out liability

 

130

 

(42

)

130

 

1,219

 

Impairment loss

 

 

11,075

 

 

81,021

 

Loss on foreign currency derivative contracts

 

158

 

159

 

467

 

1,165

 

Management fees (b) 

 

546

 

433

 

1,252

 

1,218

 

Non-cash expenses (c) 

 

1,093

 

1,110

 

4,282

 

5,750

 

Sale-lease back adjustments (d) 

 

(322

)

(248

)

(1,339

)

(985

)

Acquisition-related costs (e) 

 

11,346

 

1,724

 

18,648

 

4,040

 

Other expenses (f) 

 

2,256

 

2,272

 

6,554

 

3,810

 

Litigation settlement (g) 

 

265

 

1,098

 

2,122

 

3,151

 

Costs associated with the provision for income taxes (h) 

 

 

205

 

 

736

 

Tradename / rebranding initiative (i) 

 

333

 

257

 

1,044

 

780

 

Expenses associated with idle / closed treatment facilities (j) 

 

1,771

 

651

 

3,901

 

2,623

 

Pro-forma full period effect of acquisition EBITDA (a) 

 

1,830

 

184

 

26,681

 

2,966

 

 

 

 

 

 

 

 

 

 

 

Pro-forma Adjusted EBITDA (1) 

 

$

27,236

 

$

24,164

 

$

118,591

 

$

104,691

 

 

 

 

 

 

 

 

 

 

 

Pro-forma Adjusted EBITDA as a percentage of total pro-forma revenues

 

13.0

%

14.3

%

14.0

%

14.9

%

 


(1) Pro-forma Adjusted EBITDA is defined as income (loss) before interest expense (net of interest income), income taxes, depreciation and amortization, gain on the sale of an interest in a joint venture, loss on sale leaseback transaction, early extinguishment of debt, fair value adjustment of earn-out liability, impairment loss, foreign currency derivative contract loss (gain), management fees accrued to our sponsor, non-cash expenses including costs relating to stock compensation, amortization of straight-line rent and amortization of capital expenditures relating to repairs and maintenance, non-cash equipment rent, sale-lease back adjustments, acquisition-related costs, other expenses including loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums on termed physicians, franchise taxes, costs relating to consulting services on Medicare reimbursement, litigation settlements with physicians, expenses associated with the provision for income taxes, costs associated with tradename and rebranding initiatives, expenses associated with idle / closed radiation therapy treatment facilities and pro-forma full period effect of acquisition EBITDA.

 

(a) Pro-forma amounts related to adjustments to total revenues and Pro-forma Adjusted EBITDA to reflect the full period effect of our acquisitions and Value Added Services contracts completed during 2013 and 2012.  The adjustments reflect the impact to our total revenues and Pro-forma Adjusted EBITDA as if the acquisitions and Value Added Services contracts had occurred at the

beginning of the year.

 

(b) Management fees are fees accrued to our sponsor, Vestar Capital Partners.

 

(c) Non-cash expenses including costs relating to stock compensation, amortization of straight-line rent, amortization of capital expenditures relating to warranty arrangements amortized to repairs and maintenance and non-cash equipment rent.

 

(d) Sale-lease back adjustments relates to the adjustment of benefit derived from the classification of operating leases as finance obligations reflecting a reclassification of interest expense and depreciation and amortization expense as rent expense.

 

(e) Acquisition related costs associated with ASC 805, “Business Combinations”, including professional fees, corporate development, integration and due diligence costs relating to the acquisition of medical practices.

 

(f) Other expenses include loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums paid on terminated physicians, franchise taxes and costs relating to consulting services on Medicare reimbursement.

 



 

 

(g) Litigation settlement relates to costs associated with the termination of physicians during 2012 and 2013.

 

(h) Expenses related to the costs associated with process improvements in the provision for income taxes.

 

(i) Expenses related to the costs associated with the Company’s tradename and rebranding initiatives.

 

(j) Expenses associated with idle / closed radiation therapy treatment facilities.

 

We believe the Pro-forma Adjusted EBITDA provides useful information about our financial performance to investors, lenders, financial analysts and rating agencies since these groups have historically used EBITDA-related measures in the healthcare industry, along with other measures, to estimate the value of a company, to make informed investment decisions, to evaluate a company’s leverage capacity and its ability to meet its debt service requirements.  Pro-forma Adjusted EBITDA eliminates the uneven effect of non-cash depreciation of tangibles assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting.  Pro-forma Adjusted EBITDA is also used by us to measure individual performance for incentive compensation purposes and as an analytical indicator for purposes of allocating resources to our operating business and assessing their performance, both internally and relative to our peers, as well as to evaluate the performance of our operating management teams, and for purposes in the calculation of debt covenants and related disclosures.

 

Pro-forma Adjusted EBITDA is not intended as a substitute for net income (loss) attributable to 21st Century Oncology Holdings, Inc.shareholder, operating cash flows or other cash flow data determined in accordance with accounting principles generally accepted in the United States. Due to varying methods of calculation, Pro-forma Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

 



 

21ST CENTURY ONCOLOGY HOLDINGS, INC.

KEY OPERATING STATISTICS

(unaudited)

 

 

 

Three Months Ended

 

 

 

Years Ended

 

 

 

 

 

December 31,

 

%

 

December 31,

 

%

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

 

United States

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of treatment days

 

64

 

64

 

 

 

255

 

255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total RVU’s - freestanding centers

 

3,301,276

 

2,805,743

 

17.7

%

11,615,189

 

11,483,600

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RVU’s per day - freestanding centers

 

51,582

 

43,840

 

17.7

%

45,550

 

45,034

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage change in RVU’s per day - freestanding centers - same market basis

 

0.3

%

-10.1

%

 

 

-3.5

%

-6.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total treatments - freestanding centers

 

160,377

 

120,842

 

32.7

%

546,951

 

493,330

 

10.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treatments per day - freestanding centers

 

2,506

 

1,888

 

32.7

%

2,145

 

1,935

 

10.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage change in revenue per treatment - freestanding centers - same market basis

 

-7.3

%

-6.4

%

 

 

-6.2

%

-3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage change in treatments per day - freestanding centers - same market basis

 

7.9

%

-1.9

%

 

 

4.3

%

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage change in freestanding revenues - same market basis

 

0.0

%

-6.8

%

 

 

-2.2

%

-2.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Radiation oncology cases completed:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3-D cases

 

1,908

 

1,739

 

 

 

7,442

 

6,174

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IMRT cases

 

3,111

 

2,732

 

 

 

11,955

 

10,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other cases

 

594

 

528

 

 

 

2,223

 

2,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total radiation oncology cases completed

 

5,613

 

4,999

 

12.3

%

21,620

 

19,108

 

13.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treatments per radiation oncology case completed

 

23.5

 

23.7

 

 

 

23.6

 

24.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue per radiation oncology case

 

$

18,699

 

$

19,406

 

 

 

$

18,703

 

$

19,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of employed, contracted and affiliated physicians:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Radiation oncologists

 

156

 

111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Urologists

 

124

 

106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Surgeons

 

35

 

34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical oncologists

 

25

 

24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gynecologic oncologists

 

7

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other physicians

 

13

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliated physicians

 

311

 

281

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total physicians

 

671

 

571

 

17.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treatment centers - freestanding (global)

 

155

 

121

 

28.1

%

 

 

 

 

 

 

Treatment centers - professional / other (global)

 

8

 

5

 

60.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total treatment centers

 

163

 

126

 

29.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Days sales outstanding at quarter end

 

31

 

34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net patient service revenue - professional services only (in thousands)

 

$

59,904

 

$

49,031

 

 

 

$

219,721

 

$

199,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net patient service revenue - excluding physician practice expense (in thousands)

 

$

204,696

 

$

166,784

 

 

 

$

731,171

 

$

686,216

 

 

 

 

 

 

Three Months Ended

 

 

 

Years Ended

 

 

 

 

 

December 31,

 

%

 

December 31,

 

%

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

 

International

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of new cases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2-D cases

 

848

 

1,254

 

 

 

3,716

 

4,857

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3-D cases

 

2,779

 

2,312

 

 

 

10,418

 

8,901

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IMRT / IGRT cases

 

560

 

346

 

 

 

1,956

 

1,471

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

4,187

 

3,912

 

7.0

%

16,090

 

15,229

 

5.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue per radiation oncology case

 

$

5,550

 

$

5,314

 

 

 

$

5,659

 

$

5,382

 

 

 

 

###