FORT MYERS, Fla., Nov. 3 /PRNewswire-FirstCall/ -- Radiation Therapy Services, Inc. , a provider of radiation therapy services to cancer patients, today announced its financial results for the third quarter and nine months ended September 30, 2004.
Total revenues for the third quarter were $40.7 million, an increase of 27.0% from $32.0 million in the same quarter of 2003. Fee for service revenue, or revenue generated from services where the Company bills patients directly, principally at freestanding treatment centers, was $38.4 million. Other revenue, or revenue generated from services where Radiation Therapy bills the hospital for services provided, was $2.3 million.
Income before income taxes for the third quarter 2004 was $4.9 million, an increase of 41.8% from $3.4 million reported in the same period of 2003. Net income for the third quarter 2004 was $2.9 million, compared to third quarter 2003 net income of $3.4 million. Third quarter 2003 net income excludes income taxes as the Company maintained its Subchapter S Corporation status prior to the June 2004 initial public offering (IPO). On a pro forma basis factoring in the impact of income taxes, the third quarter 2003 net income was $2.1 million. Third quarter 2004 diluted earnings per share were $0.13.
Total revenues for the nine months ended September 30, 2004 were $125.8 million, an increase of 21.4% from the same period of 2003. Income before income taxes for the first nine months of 2004 was $24.0 million, an increase of 21.8% from $19.7 million reported in the same period of 2003.
Net income for the first nine months of 2004 was $3.8 million compared to $19.7 million for the same period of 2003. Net income for the first nine months of the year includes a $17.6 million non-cash income tax expense in the second quarter 2004, which was related to the conversion to a C Corporation in conjunction with the IPO. Excluding the same non-cash income tax expense, pro forma diluted net income per share for the nine months ended September 30, 2004 was $0.71. Excluding the interest expense in the second quarter from the Term B loan of $486,000 and deferred financing charges of $336,000 written off in the first quarter in conjunction with the Term B loan, pro forma diluted earnings per share would have been $0.73 for the first nine months of 2004.
“Our third quarter results exceeded the analyst consensus estimates and are particularly significant taking into consideration the hurricanes that hit the southeast during the quarter,” said Dr. Daniel Dosoretz, President and Chief Executive Officer. “During the quarter, we achieved 3.7% same practice growth for external beam treatments at freestanding centers and adjusted for the lost days at centers affected by the storms, same practice growth would have been 6.1%. Our growth attests to the acceptance of our centers among referring physicians and patients. By implementing the latest technology, we are better able to deliver radiation therapy services to our patients, which is resulting in higher revenue per patient and the attraction of a larger number of patients.
“We recently acquired three established centers in New Jersey to form our 18th regional network in our ninth state, and plan to add value by implementing advanced radiation technology and increasing the number of treatments,” continued Dr. Dosoretz. “The two new markets we entered within the last twelve months, Southeastern Alabama and Central Kentucky, are contributing strongly.”
Radiation Therapy generated $26.8 million in net cash from operations in the first nine months of 2004. Capital expenditures for the acquisition of equipment for the nine months ended September 30, 2004 were $16.0 million, compared to $9.4 million in the first nine months of 2003. The Company’s days sales outstanding (DSO) for the third quarter were 56 days.
Outstanding debt at the end of the third quarter totaled $58.6 million. In early October 2004, the Company paid off the $22.8 million remaining outstanding balance from the Term B loan by increasing the Term A loan and drawing on the revolver. By paying off the Term B loan, the Company reduced its interest rate spread by 175 basis points (1.75%). In conjunction with amending its credit facility, the interest rate spreads on the Term A loan and on the revolver were reduced overall by 25 basis points.
For the third quarter 2004, Radiation Therapy reported 982 external beam treatments per day at its 44 freestanding centers, a 20.6% increase from the same period of last year. During the third quarter Radiation Therapy acquired two radiation treatment centers in New Jersey and, subsequent to the end of the quarter closed on a third previously announced acquisition in New Jersey. At the end of the third quarter, the Company performed radiation therapy services at 10 hospital-based treatment centers.
The Company appointed James Charles Weeks to its board of directors in August 2004. Mr. Weeks’ appointment expands the board to seven and represents the addition of a third independent director. He serves on the Company’s audit and compensation committees, which are now composed solely of independent directors.
Based on the solid performance in both new markets and existing markets, the Company is increasing its 2004 annual revenue guidance to $167 million to $169 million from $160 million to $162 million.
Management will host a conference call tomorrow at 10:00 a.m. EDT. A live Web cast of the conference call will be available online on the Company’s corporate Web site at http://www.rtsx.com/. Web participants are encouraged to go to Radiation Therapy’s Web site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. Listening to the webcast requires speakers and RealPlayer(TM) software, downloadable free at http://www.real.com/. Those without Web access should access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are (800) 289-0528 for domestic callers, and (913) 981-5522 for international. The reservation number for both is 885920.
After the live Web cast, the call will remain available on Radiation Therapy’s Web site through December 2, 2004. In addition, a telephonic replay of the call will be available until November 18, 2004. The replay dial-in numbers are (888) 203-1112 for domestic callers and (719) 457-0820 for international callers. Please use reservation code 885920.
About Radiation Therapy Services
Radiation Therapy Services, Inc., which operates treatment centers primarily under the name 21st Century Oncology, is a provider of radiation therapy services to cancer patients. The Company’s 55 treatment centers are clustered into 18 regional networks in nine states, including Alabama, Delaware, Florida, Kentucky, Maryland, Nevada, New Jersey, New York and North Carolina. The Company is headquartered in Fort Myers, Florida. More information about the Company can be found at its Web site http://www.rtsx.com/.
This release contains forward-looking statements based on management’s current expectations and projections about the Company’s future financial results and future trends and events that they believe may affect the Company’s business and financial condition. These forward-looking statements are not historical facts but rather are based on current plans, expectations and beliefs. Words such as “may,” “will,” “expect,” “intend,” “plan,” “believe,” “seek” “could” and “estimate” and variations of these words and similar expressions are intended to identify forward-looking statements. The Company’s actual results may differ materially from those projected in these forward-looking statements as a result of a number of factors, including, but not limited to, risks related to: changes in government Medicare and Medicaid programs which limit or reduce payments to the Company; decreases in payments by managed care organizations and other commercial payors; changes in, or terminations of, the Company’s administrative services agreements by the professional corporations; any changes to the preliminary Medicare fee schedule for 2005; the Company’s ability to acquire, develop and integrate treatment centers; changes in and compliance with federal, state and local healthcare and other applicable laws and regulations; technological and therapeutic changes in treatment methods; dependence on recruiting and retaining radiation oncologists and other qualified healthcare professionals; dependence on senior management; the geographic concentration of the Company’s operations in certain states, particularly Florida; and those risk factors set forth in the “Risk Factors” section of the Form S-1 Registration Statement, as amended, relating to the Company’s initial public offering as well as the risks described from time to time in the Company’s subsequent filings with the Securities and Exchange Commission which are available on the SEC’s Website at http://www.sec.gov/. Readers of this release are cautioned not to place undue reliance on these forward-looking statements. 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.
RADIATION THERAPY SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (in thousands, except per share amounts) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Net patient service revenue $38,378 $29,914 $118,451 $96,460 Other revenue 2,296 2,110 7,305 7,142 Total revenues 40,674 32,024 125,756 103,602 Salaries and benefits 21,749 18,709 63,546 53,542 Medical supplies 808 488 2,560 1,628 Facility rent expense 1,273 1,080 3,950 3,222 Other operating expenses 1,816 2,009 5,601 6,520 General and administrative expenses 6,296 3,785 14,513 11,389 Depreciation and amortization 1,675 1,243 4,797 3,652 Provision for doubtful accounts 1,427 811 4,180 2,474 Interest expense, net 787 467 2,641 1,509 Total expenses 35,831 28,592 101,788 83,936 Income before minority interests 4,843 3,432 23,968 19,666 Minority interests in net losses (earnings) of consolidated entities 20 (2) 5 20 Income before income taxes 4,863 3,430 23,973 19,686 Income tax expense 1,945 - 20,171 - Net income 2,918 3,430 3,802 19,686 Other comprehensive income: Unrealized gain (loss) on derivative interest rate swap agreement 1 15 37 (60) Comprehensive income $2,919 $3,445 $3,839 $19,626 Net income per common share outstanding - basic $0.13 $0.20 $0.19 $1.16 Net income per common share outstanding - diluted $0.13 $0.19 $0.19 $1.06 Weighted average shares outstanding: Basic 22,448 16,943 19,562 16,979 Diluted 23,044 18,438 20,360 18,491 Pro forma income data: Income before income taxes, as reported $3,430 $23,973 $19,686 Pro forma income taxes 1,372 9,589 7,874 Pro forma net income $2,058 $14,384 $11,812 Pro forma net income per common share outstanding - basic $0.12 $0.74 $0.70 Pro forma net income per common share outstanding - diluted $0.11 $0.71 $0.64 RADIATION THERAPY SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) September 30, December 31, 2004 2003 (Unaudited) ASSETS Current assets: Cash and cash equivalents $6,453 $2,606 Accounts receivable, net 24,893 22,816 Prepaid expenses 1,893 2,921 Current portion of notes receivable from related parties - 122 Current portion of lease receivable 728 597 Inventories 1,041 802 Deferred income taxes 4,097 - Other 518 1,136 Total current assets 39,623 31,000 Notes receivable from related parties, less current portion - 540 Lease receivable, less current portion 1,399 1,883 Equity investments in joint ventures 1,264 1,229 Property and equipment, net 76,457 65,569 Goodwill, net 34,392 24,915 Intangible assets, net 1,126 718 Other assets 5,274 2,431 Total assets $159,535 $128,285 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $2,556 $3,464 Accrued expenses 10,358 11,866 Income taxes payable 4,176 - Current portion of long-term debt 9,062 8,065 Total current liabilities 26,152 23,395 Long-term debt, less current portion 49,541 51,746 Other long-term liabilities 710 610 Deferred income taxes 20,096 - Minority interest in consolidated entities 1,556 1,561 Total liabilities 98,055 77,312 Shareholders’ equity Preferred stock, $0.0001 par value, 10,000 shares authorized, none issued or outstanding - - Common stock, $0.0001 par value, 75,000 shares authorized, 22,448 and 17,282 shares issued and outstanding at September 30, 2004 and December 31, 2003, respectively 2 2 Additional paid-in capital 69,179 16,616 Retained (deficit) earnings (5,602) 37,037 Notes receivable from shareholders (2,099) (2,645) Accumulated other comprehensive loss, net of tax - (37) Total shareholders’ equity 61,480 50,973 Total liabilities and shareholders’ equity $159,535 $128,285 RADIATION THERAPY SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine months ended September 30, 2004 2003 Cash flows from operating activities Net Income $3,802 $19,686 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 4,670 3,540 Amortization 127 112 Write down of machine parts inventory 1,223 - Deferred income tax provision 15,999 - Stock based compensation 104 - Provision for bad debts 4,180 2,474 Loss on the sale of property and equipment 40 17 Minority Interests in net losses of consolidated entities (5) (20) Write off of loan costs 336 - Equity interest in net income of joint ventures (35) (46) Changes in operating assets and liabilities: Accounts receivable (6,257) (4,164) Inventories (239) 108 Prepaid expenses 1,028 56 Accounts payable (908) 1,299 Accrued expenses (1,480) 4,228 Income taxes currently payable 4,176 - Net cash provided by operating activities 26,761 27,290 Cash flows from investing activities Purchase of property and equipment (12,268) (6,227) Acquisition of radiation centers (7,115) (8,737) Receipts of principal payments of notes receivable from shareholders 662 - Proceeds from the sale of property and equipment 951 1,317 Change in lease receivable 353 314 Change in other assets 53 (1) Net cash used in investing activities (17,364) (13,334) Cash flows from financing activities Proceeds from issuance of debt 51,400 6,500 Principal repayments of debt (58,353) (8,029) Proceeds from public offering of common stock, net of expenses 46,781 - Proceeds from issuance of common stock 38 50 Proceeds from exercise of stock options 2,112 101 Payments of notes receivable from shareholders 546 258 Distributions to shareholders (46,441) (9,130) Payments of loan costs (1,633) - Net cash used in financing activities (5,550) (10,250) Net increase in cash and cash equivalents 3,847 3,706 Cash and cash equivalents, at beginning of period 2,606 4,294 Cash and cash equivalents, at end of period $6,453 $8,000 Supplemental disclosure of non-cash transactions Recorded capital lease obligations related to the acquisition of equipment $3,711 $3,171 Issuance of common stock for the acquisition of Devoto Construction, Inc. $3,528 $- Issuance of promissory note plus accrued interest for purchase of shares $- $521 Cancellation of notes receivable from shareholder for purchase of treasury stock $- $710 Recorded lease receivable related to assets under capital lease $- $85 Recorded capital lease obligations related to the acquisition of radiation center assets $2,034 $- Recorded obligation related to the acquisition of radiation center assets $100 $- RADIATION THERAPY SERVICES, INC. AND SUBSIDIARIES KEY OPERATING STATISTICS (unaudited) Three Months Ended Nine Months Ended September September 30, 30, 2004 2003 % 2004 2003 % Change Change External beam treatments per day - 982 814 20.6% 1,043 895 16.5% freestanding centers Percentage change in external beam treat- 3.7% -4.6% 1.2% -0.4% ments per day - freestanding centers - same practice basis Percentage change in total revenues 13.8% 16.6% 11.5% 30.1% - same practice basis Regional networks at period end 18 15 20.0% Treatment centers - freestanding 44 36 22.2% Treatment centers - hospital 10 11 -9.1% 54 47 14.9% Days sales outstanding for the quarter 56 61 Contacts: Investors/Media: Dave Koeninger Stephanie Carrington/Greg Tiberend Chief Financial Officer The Ruth Group Radiation Therapy Services, Inc. 646-536-7017/7005 239-931-7282 scarrington@theruthgroup.comdkoeninger@rtsx.comgtiberend@theruthgroup.com
Radiation Therapy Services, Inc.
CONTACT: Dave Koeninger, Chief Financial Officer of Radiation TherapyServices, Inc., +1-239-931-7282, or dkoeninger@rtsx.com; or StephanieCarrington, +1-646-536-7017, or scarrington@theruthgroup.com, or GregTiberend, +1-646-536-7005, or gtiberend@theruthgroup.com, both of The RuthGroup for Radiation Therapy Services, Inc.
Web Site: http://www.rtsx.com/
