FORT MYERS, Fla., Aug. 4 /PRNewswire-FirstCall/ -- Radiation Therapy Services, Inc. , a provider of radiation therapy services to cancer patients, today announced its financial results for the second quarter and six months ended June 30, 2004. On June 18, 2004, Radiation Therapy began trading as a public company on the Nasdaq National Market upon the completion of its initial public offering of common stock.
Total net revenues for the second quarter were $42.1 million, an increase of 13.7% from $37.1 million in the same quarter of 2003. Fee for service revenue, or revenue generated from freestanding treatment centers where the Company bills directly for patient treatments, was $39.6 million. Other revenue, or revenue generated from the Company’s hospital-based treatment centers where Radiation Therapy bills the hospital for services provided, was $2.5 million.
On a GAAP basis, income before income taxes for the second quarter 2004 was $8.8 million, an increase of 15.0% from the same period 2003. On March 31, 2004, the Company borrowed $40 million as an add-on term loan (Term B) borrowing under its senior secured credit facility to fund a special distribution to shareholders. The Term B loan was paid down in the second quarter with proceeds from the Company’s IPO. Excluding interest expense of $486,000 associated with the Term B borrowing, income before income taxes for the second quarter grew 21.3% over the same period of last year.
Net income for the second quarter 2004 was impacted by a non-cash income tax expense of $17.6 million related to the Company’s conversion from a Subchapter S Corporation to a C Corporation in conjunction with the IPO. Consequently, the Company reported a net loss of $9.4 million, compared to net income of $7.7 million for the same period 2003. Pro forma diluted net income per share for the second quarter, excluding the non-cash income tax expense related to the conversion to a C Corporation, was $0.27. Excluding the interest expense from the Term B borrowing, diluted earnings per share were $0.29 for the second quarter 2004.
The weighted average number of shares outstanding for the quarter ended June 30, 2004 was 19.4 million; this includes the impact of 4.0 million shares issued in the IPO. At June 30, 2004, total shares outstanding were 22.4 million.
Net revenues for the six months ended June 30, 2004 were $85.1 million, an increase of 18.9% from the same period 2003. On a GAAP basis, income before income taxes for the first six months of 2004 was $19.1 million, an increase of 17.6% from $16.3 million reported in the same period 2003.
Net income for the first six months of 2004 was $885,000 compared to $16.3 million for the same period of 2003, as a result of the $17.6 million non-cash income tax expense related to the conversion to a C Corporation. Excluding the same non-cash income tax expense, pro forma diluted net income per share for the six months ended June 30, 2004 was $0.60. 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 $0.63 for the first six months of 2004.
“We are pleased to report our strong second quarter financial performance,” said Dr. Daniel Dosoretz, President and Chief Executive Officer. “Our revenue growth demonstrates the success of our business model of acquiring and building radiation therapy centers in underserved markets. We were especially gratified to see the steady growth generated in the two new markets we entered within the last nine months, Southeastern Alabama and Central Kentucky. Growth in both markets was driven by the introduction of advanced technologies for improved patient care.
“Our goal is to bring to local markets the newest and most advanced radiation technology and treatments that were traditionally available only in academic centers and major cities,” continued Dr. Dosoretz. “The 5.2% same market growth this quarter attests to the acceptance of our centers among referring physicians and patients who can now receive their treatments closer to home.”
Radiation Therapy generated $20.2 million in net cash from operations in the first six months of 2004. Capital expenditures for the acquisition of equipment for the six months ended June 30, 2004 were $10.7 million, compared to $5.2 million in the first six months of 2003. The Company’s days sales outstanding (DSO) for the second quarter were 54 days.
For the second quarter 2004, Radiation Therapy reported 1,054 external beam treatments per day at its 42 freestanding centers, a 15.8% increase from the same period of last year. During the second quarter, Radiation Therapy added a new freestanding treatment center in Crestview, Florida to its Northwest Florida regional network. Upon opening its new facility, the Company ceased providing services at a local hospital where it had previously provided services under an open staff arrangement. At the end of the second quarter, the Company performed radiation therapy services at 10 hospital-based treatment centers.
In the June 2004 IPO, a total of 6,325,000 common shares, including the underwriters exercise of the over-allotment option, were sold at $13 per share. Radiation Therapy sold 4,000,000 newly issued shares and selling stockholders sold an additional 2,325,000 shares. The net proceeds to the Company from the IPO of $47.1 million were used to pay down term loans, a revolving credit facility and notes payable to shareholders and related parties. Outstanding debt, at the end of the quarter, totaled $50.0 million.
For the full year 2004, the Company expects revenues to be in the range of $160 million to $162 million. The Company’s business is seasonal. The first quarter of the year is the strongest due to the influx of seasonal residents seeking treatment at the Company’s centers in warmer geographic regional networks, and the third quarter is traditionally the slowest due to vacations and patients postponing radiation treatments during the summer months.
Management will host a conference call today 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) 473-6123 for domestic callers, and (973) 582-2706 for international. The reservation number for both is 4964893.
After the live Web cast, the call will remain available on Radiation Therapy’s Web site through September 3, 2004. In addition, a telephonic replay of the call will be available until August 19, 2004. The replay dial-in numbers are (877) 519-4471 for domestic callers and (973) 341-3080 for international callers. Please use reservation code 4964893.
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 52 treatment centers are clustered into 17 regional networks in eight states, including Alabama, Delaware, Florida, Kentucky, Maryland, Nevada, 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; 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.
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. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (in thousands, except per share amounts) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Net patient service revenue $39,610 $34,560 $80,073 $66,546 Other revenue 2,523 2,509 5,009 5,031 Total revenues 42,133 37,069 85,082 71,577 Salaries and benefits 20,699 18,338 41,797 34,833 Medical supplies 869 627 1,752 1,140 Facility rent expense 1,381 1,098 2,677 2,142 Other operating expenses 2,145 2,163 3,785 4,511 General and administrative expenses 3,919 4,622 8,216 7,604 Depreciation and amortization 1,615 1,211 3,122 2,409 Provision for doubtful accounts 1,391 836 2,753 1,663 Interest expense, net 1,259 496 1,855 1,042 Total expenses 33,278 29,391 65,957 55,344 Income before minority interests 8,855 7,678 19,125 16,233 Minority interest in net losses (earnings) of consolidated entities (24) 1 (15) 23 Income before income taxes 8,831 7,679 19,110 16,256 Income tax expense 18,225 -- 18,225 -- Net (loss) income $(9,394) $7,679 $885 $16,256 Other comprehensive income: Unrealized gain (loss) on derivative interest rate swap agreement 47 (75) 36 (75) Comprehensive (loss) income $(9,347) $7,604 $921 $16,181 Net (loss) income per common share outstanding - basic $(0.50) $0.45 $0.05 $0.96 Net (loss) income per common share outstanding - diluted $(0.50) $0.41 $0.05 $0.88 Weighted average shares outstanding: Basic 18,762 17,027 18,103 16,997 Diluted 18,762 18,522 19,028 18,518 Pro forma diluted 19,422 18,522 19,028 18,518 Pro forma income data: Income before income taxes, as reported $8,831 $7,679 $19,110 $16,256 Pro forma income taxes 3,533 3,071 7,644 6,502 Pro forma net income $5,298 $4,608 $11,466 $9,754 Pro forma net income per common share - basic $0.28 $0.27 $0.63 $0.57 Pro forma net income per common share - diluted $0.27 $0.25 $0.60 $0.53 RADIATION THERAPY SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) June 30, December 31, 2004 2003 (Unaudited) ASSETS Current assets: Cash and cash equivalents $4,999 $2,606 Accounts receivable, net 23,144 22,816 Prepaid expenses 2,488 2,921 Current portion of notes receivable from related parties -- 122 Current portion of lease receivable 625 597 Inventories 1,020 802 Deferred income taxes 4,097 -- Other 937 1,136 Total current assets 37,310 31,000 Notes receivable from related parties, less current portion -- 540 Lease receivable, less current portion 1,564 1,883 Equity investments in joint ventures 1,330 1,229 Property and equipment, net 72,337 65,569 Goodwill, net 28,404 24,915 Intangible assets, net 669 718 Other assets 4,359 2,431 Total assets $145,973 $128,285 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $3,223 $3,464 Accrued expenses 9,853 11,866 Income taxes payable 2,231 -- Current portion of long-term debt 8,739 8,065 Total current liabilities 24,046 23,395 Long-term debt, less current portion 41,250 51,746 Other long-term liabilities 610 610 Deferred income taxes 20,095 -- Minority interest in consolidated entities 1,576 1,561 Total liabilities 87,577 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 June 30, 2004 and December 31, 2003, respectively 2 2 Additional paid-in capital 69,372 16,616 Retained (deficit) earnings (8,519) 37,037 Notes receivable from shareholders (2,458) (2,645) Accumulated other comprehensive loss (1) (37) Total shareholders’ equity 58,396 50,973 Total liabilities and shareholders’ equity $145,973 $128,285 RADIATION THERAPY SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six months ended June 30, 2004 2003 Cash flows from operating activities Net Income $885 $16,256 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,038 2,339 Amortization 84 70 Deferred income tax provision 15,998 -- Consulting fee expense 19 -- Provision for bad debts 2,753 1,663 (Gain) loss on the sale of property and equipment (15) 6 Minority Interests in net (losses) earnings of consolidated entities 15 (23) Write off of loan costs 336 -- Equity interest in net income of joint ventures (101) (35) Changes in operating assets and liabilities Accounts receivable (3,081) (5,226) Inventories (218) (31) Prepaid expenses 433 334 Accounts payable (241) 837 Accrued expenses (1,986) 4,084 Income taxes currently payable 2,231 -- Net cash provided by operating activities 20,150 20,274 Cash flows from investing activities Purchase of property and equipment (7,027) (5,229) Acquisition of radiation centers -- (1,000) Receipts of principal payments of notes receivable from shareholders 662 -- Proceeds from the sale of property and equipment 944 1,218 Change in lease receivable 291 263 Change in other assets (449) 128 Net cash used in investing activities (5,579) (4,620) Cash flows from financing activities Proceeds from issuance of debt 41,000 500 Principal repayments of debt (54,533) (5,783) Proceeds from public offering of common stock, net of expenses 47,059 -- Proceeds from issuance of common stock 38 20 Proceeds from exercise of stock options 2,112 101 Payments of notes receivable from shareholders 187 123 Distributions to shareholders (46,441) (5,330) Payments of loan costs (1,600) -- Net cash used in financing activities (12,178) (10,369) Net increase in cash and cash equivalents 2,393 5,285 Cash and cash equivalents, at beginning of period 2,606 4,294 Cash and cash equivalents, at end of period $4,999 $9,579 Supplemental disclosure of non-cash transactions Recorded capital lease obligations related to the acquisition of equipment $3,711 $ -- Issuance of common stock for the acquisition of Devoto Construction, Inc. $3,528 $ -- RADIATION THERAPY SERVICES, INC. AND SUBSIDIARIES KEY OPERATING STATISTICS (unaudited) Three Months Ended Six Months Ended June 30, % June 30, % 2004 2003 Change 2004 2003 Change External beam treatments per day - freestanding centers 1,054 910 15.8% 1,073 936 14.7% Percentage change in external beam treat-ments per day - freestanding centers - same market basis 0.6% 0.2% 0.4% 1.6% Percentage change in total revenues - same market basis 5.2% 37.0% 10.4% 37.2% Regional networks at period end 17 14 21.4% Treatment centers - freestanding 42 34 23.5% Treatment centers - hospital 10 10 -- 52 44 18.2% Days sales outstanding 54 53 51 50
Radiation Therapy Services, Inc.
CONTACT: Dave Koeninger, Chief Financial Officer of Radiation TherapyServices, +1-239-931-7282, dkoeninger@rtsx.com; or Investors/Media: StephanieCarrington, +1-646-536-7017, scarrington@theruthgroup.com, or Greg Tiberend,+1-646-536-7005, gtiberend@theruthgroup.com, both of The Ruth Groupfor Radiation Therapy Services
Web site: http://www.rtsx.com/