BioSpace.com

Biotech and Pharmaceutical
News & Jobs
Search the Site
 
   
Biotechnology and Pharmaceutical Channel Medical Device and Diagnostics Channel Clinical Research Channel BioSpace Collaborative    Job Seekers:  Register | Login          Employers:  Register | Login  

NEWSLETTERS
Free Newsletters
Archive
My Subscriptions

NEWS
News by Subject
News by Disease
News by Date
PLoS
Search News
Post Your News
JoVE

CAREER NETWORK
Job Seeker Login
Most Recent Jobs
Browse Biotech Jobs
Search Jobs
Post Resume
Career Fairs
Career Resources
For Employers

HOTBEDS
Regional News
US & Canada
  Biotech Bay
  Biotech Beach
  Genetown
  Pharm Country
  BioCapital
  BioMidwest
  Bio NC
  BioForest
  Southern Pharm
  BioCanada East
  US Device
Europe
Asia

DIVERSITY

INVESTOR
Market Summary
News
IPOs

PROFILES
Company Profiles

START UPS
Companies
Events

INTELLIGENCE
Research Store

INDUSTRY EVENTS
Biotech Events
Post an Event
RESOURCES
Real Estate
Business Opportunities

 News | News By Subject | News by Disease News By Date | Search News
eNewsletter Signup
Miles
Km80.5

   

Radiologix, Inc. (RGX) Reports Second Quarter 2006 Results


8/8/2006 12:07:07 PM

DALLAS, Aug. 8 /PRNewswire-FirstCall/ -- Radiologix, Inc. , a leading national provider of diagnostic imaging services, today announced financial results for its second quarter ended June 30, 2006.

Select Financial Information (in thousands of dollars) For the Three Months For the Six Months Ended June 30, Ended June 30, 2006 2005 2006 2005 (As restated) (As restated) Service fee revenue $65,129 $64,311 $130,246 $127,062 Service fee revenue excluding terminated operations $65,129 $64,272 $130,246 $126,093 EBITDA from continuing operations (A) $11,008 $11,804 $23,744 $23,688 EBITDA from continuing operations excluding terminated operations (A) $11,016 $11,866 $23,737 $23,418 Net income $241 $1,206 $2,277 $2,159 Income from continuing operations $201 $1,176 $2,000 $2,563 Income from continuing operations excluding terminated operations (A) $209 $1,238 $1,993 $2,294 (A) As defined and reconciled below Second Quarter 2006 Results

For the second quarter ended June 30, 2006, service fee revenue was $65.1 million, compared to $64.3 million for the second quarter of 2005. Radiologix earned net income of $200,000, or $0.01 per diluted share, compared to net income of $1.2 million or $0.05 per diluted share for the second quarter of 2005.

* Service fee revenue excluding terminated operations was $65.1 million, compared to $64.3 million for the second quarter of 2005. * Income from continuing operations was $0.2 million, compared to $1.2 million for the second quarter of 2005. * Income from continuing operations excluding terminated operations was $0.2 million, compared to $1.2 million for the second quarter of 2005. * EBITDA was $11.0 million, compared to $11.8 million for the second quarter of 2005. * EBITDA excluding terminated operations was $11.0 million, compared to $11.9 million for the second quarter of 2005. Year to Date June 30, 2006 Results

For the six months ended June 30, 2006, service fee revenue was $130.2 million, compared to $127.1 million for the six months ended June 30, 2005. Radiologix earned net income of $2.3 million, or $0.10 per diluted share, compared to net income of $2.2 million or $0.10 per diluted share for the six months ended June 30, 2005.

* Service fee revenue excluding terminated operations was $130.2 million, compared to $126.1 million for the six months ended June 30, 2005. * Income from continuing operations was $2.0 million, compared to $2.6 million for the six months ended June 30, 2005. * Income from continuing operations excluding terminated operations was $2.0 million, compared to $2.3 million for the six months ended June 30, 2005. * EBITDA was $23.7 million, compared to $23.7 million for the six months ended June 30, 2005. * EBITDA excluding terminated operations was $23.7 million, compared to $23.4 million for the six months ended June 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 six months ended June 30, 2005. The impact of the restatement in the three months ended June 30, 2005 is a reduction in depreciation and amortization expense of $0.2 million, a reduction in income tax expense of $0.4 million, and an increase in net income of $0.6 million. The impact of the restatement in the six months ended June 30, 2005 is a reduction in depreciation and amortization expense of $0.4 million, a reduction in income tax expense of $0.6 million, and an increase in net income of $1.0 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/losses to continuing operations, excluding terminated operations, during the second quarter of 2006 and 2005:

* $245,000 in the second quarter of 2006 and $0 in the second quarter of 2005 to record litigation expenses; * $360,000 in the second quarter of 2006 and $112,000 in the second quarter of 2005 to record compensation expense for restricted stock awards and stock options outstanding; and * $55,000 loss in the second quarter of 2006 and $125,000 gain in the second quarter of 2005 to record gains/losses on sales of diagnostic imaging equipment.

For the six months ended June 30, 2006 and 2005, Radiologix recorded the following pre-tax charges and gains to continuing operations, excluding terminated operations:

* $245,000 for the six months ended June 30, 2006 and $0 for the six months ended June 30, 2005 to record litigation expenses; * $747,000 for the six months ended June 30, 2006 and $213,000 for the six months ended June 30, 2005 to record compensation expense for restricted stock awards and stock options outstanding; and * $752,000 for the six months ended June 30, 2006 and $450,000 for the six months ended June 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 $0.1 million and $0.2 million for the three and six months ended June 30, 2006, respectively, is for state income taxes and federal alternative minimum tax.

Balance Sheet

Cash and cash equivalents were $43.7 million at June 30, 2006, compared to $36.0 million at December 31, 2005, primarily reflecting continued strong cash collections during the six months ended June 30, 2006.

Net debt (total debt less cash and cash equivalents and restricted cash) was $120.9 million at June 30, 2006, compared to net debt of $128.7 million at December 31, 2005. Total debt was $170.3 million at June 30, 2006 and December 31, 2005.

Days sales outstanding (DSO) was 44 days for June 30, 2006 compared to 48 days for December 31, 2005.

"We are pleased with our second quarter financial and operational results, as they are in line with our internal expectations and targets. While EBITDA for the quarter is lower than last year's results, this was expected as we concluded the implementation of our REWARD Program at our largest subsidiary, incurred start-up costs associated with the opening of two new imaging centers in California, and recorded $245,000 for litigation expenses," said Sami S. Abbasi, president and chief executive officer of Radiologix. "In addition to our operating progress, we continue to make positive strides towards completing our merger with Primedex Health Systems, and expect to complete the merger during the fourth quarter of this year."

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 on the July 6 closing price of Primedex common stock of $1.75, each Radiologix shareholder would receive $1.84 in cash for each Radiologix share, plus one share of Primedex common stock for total consideration valued at $3.59. Based upon the July 6 closing price of Primedex common stock of $1.75, Radiologix shareholders will collectively own approximately 33% of the Primedex shares on a fully diluted basis.

The merger is expected to be completed in the second half of 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 six months ended June 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 69 diagnostic imaging centers located in 7 states as of June 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 August 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) June 30, December 31, 2006 2005 ASSETS (Unaudited) CURRENT ASSETS: Cash and cash equivalents $43,671 $36,004 Restricted cash 5,750 5,662 Accounts receivable, net of allowances 41,237 40,815 Due from affiliates 704 1,737 Federal and state income tax receivable 6,101 6,189 Other current assets 4,643 5,491 Total current assets $102,106 $95,898 Property and equipment, net 68,610 67,965 Investments in joint ventures 9,113 10,597 Intangible assets, net 52,384 54,050 Deferred financing costs, net 4,117 4,942 Other assets 824 1,076 Total assets $237,154 $234,528 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and other accrued expenses $8,777 $10,157 Accrued physician retention 8,115 7,051 Accrued salaries and benefits 7,767 6,987 Accrued interest 683 685 Current maturities of capital lease obligations 33 32 Other current liabilities 682 477 Total current liabilities $26,057 $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 45 62 Deferred revenue 6,290 6,494 Other liabilities 1,372 1,488 Total liabilities $204,014 $203,683 Commitments and contingencies Minority interests in consolidated subsidiaries 1,145 1,874 STOCKHOLDERS' EQUITY: Common stock 2 2 Treasury stock (180) (180) Additional paid-in capital 16,362 15,615 Retained earnings 15,811 13,534 Total stockholders' equity $31,995 $28,971 Total liabilities and stockholders' equity $237,154 $234,528 Radiologix, Inc. Consolidated Statements of Operations (In thousands, except per share data) For the Three Months For the Six Months Ended June 30, Ended June 30, 2006 2005 2006 2005 (As restated) (As restated) Service fee revenue $65,129 $64,311 $130,246 $127,062 Costs of operations: Cost of services 41,332 40,629 81,248 80,449 Equipment lease 3,886 3,231 7,642 6,037 Provision for doubtful accounts 5,608 4,659 10,887 9,126 Depreciation and amortization 6,054 5,858 12,024 11,502 Gross profit $8,249 $9,934 $ 18,445 $19,948 Corporate general and administrative 4,448 4,985 9,164 9,333 Interest expense, net, including amortization of deferred financing costs 4,326 4,565 8,803 9,241 Income (loss) before equity in earnings of unconsolidated affiliates, minority interests in consolidated subsidiaries, income taxes and discontinued operations $ (525) $ 384 $ 478 $1,374 Equity in earnings of investments 1,025 1,039 2,070 1,661 Minority interests in income of consolidated subsidiaries (232) (154) (378) (303) INCOME BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS $ 268 $ 1,269 $ 2,170 $2,732 Income tax expense 67 93 170 169 INCOME FROM CONTINUING OPERATIONS $ 201 $ 1,176 $ 2,000 $2,563 Discontinued Operations: Income (loss) from discontinued operations before income taxes 40 30 277 (404) Income tax expense (benefit) --- --- --- --- Income (loss) from discontinued operations $ 40 $ 30 $ 277 $ (404) NET INCOME $ 241 $1,206 $ 2,277 $2,159 INCOME PER COMMON SHARE Income from continuing operations-basic $ 0.01 $ 0.05 $ 0.09 $ 0.12 Income (loss) from discontinued operations-basic $ 0.00 $ 0.00 $ 0.01 $(0.02) Net income-basic $ 0.01 $ 0.05 $ 0.10 $ 0.10 Income from continuing operations-diluted $ 0.01 $ 0.05 $ 0.09 $ 0.12 Income (loss) from discontinued operations-diluted $ 0.00 $ 0.00 $ 0.01 $(0.02) Net income-diluted $ 0.01 $ 0.05 $ 0.10 $ 0.10 WEIGHTED AVERAGE SHARES OUTSTANDING Basic 22,242,417 22,339,815 22,242,417 22,128,425 Diluted 22,309,365 22,572,909 22,316,713 22,625,931 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 Six Months Ended June 30, Ended June 30, 2006 2005 2006 2005 (As restated) (As restated) GAAP: Income from continuing operations $ 201 $ 1,176 $ 2,000 $ 2,563 Add: Income tax expense 67 93 170 169 Add: Interest expense, net 4,326 4,565 8,803 9,241 Add: Depreciation and amortization 6,054 5,858 12,024 11,502 Add: Restricted stock compensation expense 360 112 747 213 EBITDA from continuing operations $ 11,008 $ 11,804 $ 23,744 $ 23,688 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 Six Months Ended June 30, Ended June 30, 2006 2005 2006 2005 (As restated) (As restated) GAAP: Income from continuing operations, excluding terminated operations $ 209 $ 1,238 $ 1,993 $ 2,294 Add: Income tax expense 67 93 170 169 Add: Interest expense, net 4,326 4,565 8,803 9,241 Add: Depreciation and amortization 6,054 5,858 12,024 11,501 Add: Restricted stock compensation expense 360 112 747 213 EBITDA from continuing operations excluding terminated operations $ 11,016 $ 11,866 $ 23,737 $ 23,418 Radiologix, Inc. Reconciliation of Financial Information, Excluding Terminated Operations (In thousands) For the Three Months Ended June 30, 2006 Terminated Radiologix Excluding Radiologix Operations Terminated Operations Service fee revenue $ 65,129 $ --- $ 65,129 Costs of operations: Cost of services 41,332 13 41,319 Equipment lease 3,886 2 3,884 Provision for doubtful accounts 5,608 (7) 5,615 Depreciation and amortization 6,054 --- 6,054 Gross profit $ 8,249 $ (8) $ 8,257 Corporate general and administrative 4,448 --- 4,448 Interest expense, net, including amortization of deferred financing costs 4,326 --- 4,326 Income (loss) before equity in earnings of unconsolidated affiliates, minority interests in consolidated subsidiaries, income taxes and discontinued operations $ (525) $ (8) $ (517) Equity in earnings of unconsolidated affiliates 1,025 --- 1,025 Minority interests in income of consolidated subsidiaries (232) --- (232) INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS $ 268 $ (8) $ 276 Income tax expense 67 --- 67 INCOME (LOSS) FROM CONTINUING OPERATIONS $ 201 $ (8) $ 209 Radiologix, Inc. Reconciliation of Financial Information, Excluding Terminated Operations (In thousands) For the Three Months Ended June 30, 2005 (As restated) Radiologix Terminated Radiologix Excluding Operations Terminated Operations Service fee revenue $ 64,311 $ 39 $ 64,272 Costs of operations: Cost of services 40,629 84 40,545 Equipment lease 3,231 18 3,213 Provision for doubtful accounts 4,659 (1) 4,660 Depreciation and amortization 5,858 --- 5,858 Gross profit $ 9,934 $ (62) $ 9,996 Corporate general and administrative 4,985 --- 4,985 Interest expense, net, including amortization of deferred financing costs 4,565 --- 4,565 Income (loss) before equity in earnings of unconsolidated affiliates, minority interests in consolidated subsidiaries, Income taxes and discontinued operations $ 384 $ (62) $ 446 Equity in earnings of unconsolidated affiliates 1,039 --- 1,039 Minority interests in income of consolidated subsidiaries (154) --- (154) INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS $ 1,269 $ (62) $ 1,331 Income tax expense 93 --- 93 INCOME (LOSS) FROM CONTINUING OPERATIONS $ 1,176 $ (62) $ 1,238 Radiologix, Inc. Reconciliation of Financial Information, Excluding Terminated Operations (In thousands) For the Six Months Ended June 30, 2006 Radiologix Terminated Radiologix Excluding Operations Terminated Operations Service fee revenue $ 130,246 $ --- $ 130,246 Costs of operations: Cost of services 81,248 15 81,233 Equipment lease 7,642 8 7,634 Provision for doubtful accounts 10,887 (30) 10,917 Depreciation and amortization 12,024 --- 12,024 Gross profit $ 18,445 $ 7 $ 18,438 Corporate general and administrative 9,164 --- 9,164 Interest expense, net, including amortization of deferred financing costs 8,803 --- 8,803 Income before equity in earnings of unconsolidated affiliates, minority interests n consolidated subsidiaries, Income taxes and discontinued operations $ 478 $ 7 $ 471 Equity in earnings of unconsolidated affiliates 2,070 --- 2,070 Minority interests in income of consolidated subsidiaries (378) --- (378) INCOME BEFORE INCOME TAXES AND DISCONTINUED OPERATION $ 2,170 $ 7 $ 2,163 Income t

Read at BioSpace.com

   

ADD TO DEL.ICIO.US    ADD TO DIGG    ADD TO FURL    ADD TO STUMBLEUPON    ADD TO TECHNORATI FAVORITES