WASHINGTON, Oct. 26 /PRNewswire-FirstCall/ -- The Advisory Board Company today announced financial results for the second quarter of its fiscal year ending March 31, 2006. For the quarter, revenues increased 17% to $40.5 million, from $34.7 million for the second quarter of fiscal 2005. Net income was $7.0 million, or $0.35 per diluted share, compared to $5.9 million, or $0.31 per diluted share, for the same period a year ago.
Revenues for the six months ended September 30, 2005, increased 17% to $79.2 million, from $67.7 million in the six months ended September 30, 2004. Net income for the period was $13.7 million, or $0.68 per diluted share, compared to $11.5 million, or $0.60 per diluted share, for the same period a year ago. Contract value grew 17% to $159.8 million as of September 30, 2005, up from $136.9 million as of September 30, 2004.
Frank Williams, Chairman and Chief Executive Officer of The Advisory Board Company, commented, “We are very pleased with our financial results as we delivered revenue and contract value growth of 17% and net income growth of 19%. Our performance was driven by cutting-edge research agendas and continued program innovation, which led to strong renewal performance and continued growth across our program portfolio. Most importantly, we continue to see strong attachment to our model of providing proven best practices to address healthcare’s complex array of strategic and operational issues.”
He added, “I am also pleased to announce our latest launch, the Clinical Technology Assessment Program. This new best practice research program offers senior marketing and planning executives from hospitals and medical device companies the tools to bring rigorous business discipline to the evaluation of emerging clinical technologies, as well as a broader assessment of the market landscape across the major clinical lines of business. By offering a deep understanding of specific technologies, physician adoption patterns and reimbursement trends, we are able to provide our members with insight across an expansive landscape ranging from neurology and orthopedics to gastroenterology and general surgery. The program’s cutting-edge research agenda is enriched by leveraging a robust forecasting database to tailor the research to each specific business situation, ensuring that the information is actionable and relevant for each member institution. As always, we are pleased to have worked with a stellar group of charter advisors, including Yale New Haven Health System, UNC Health Care, University of Michigan Health System, Alexian Brothers Hospital Network, Medtronic, Riverain Medical Group, Aspect Medical Systems and Boston Scientific Corporation. The program is off to a strong start, and we are very excited about its potential.”
Share Repurchase
During the three months ended September 30, 2005, the Company repurchased 175,143 shares of its common stock at a total cost of approximately $8.8 million. To date, the Company has repurchased 1,988,534 shares at a total cost of approximately $72.9 million and has $27.1 million available under the program for future share repurchases.
Outlook for Remainder of Calendar Year 2005
The Company reiterated its previously announced guidance for the next calendar quarter of $41.3 million of revenue, and adjusted earnings per diluted share of $0.37. Combined with the results from the first three quarters of calendar year 2005, the Company’s full calendar year revenue and adjusted earnings per diluted share guidance is $158.3 million and $1.41, respectively. Adjusted earnings per diluted share excludes stock option related expense.
The Company will hold an investor conference call to discuss its second quarter performance this evening, October 26, 2005, at 6:00 p.m. Eastern Daylight Time. The conference call will also be available via live web cast on the Company’s web site at http://www.advisoryboardcompany.com in the section entitled “Investor Information” found under the tab “About Us.” To participate by telephone, the dial-in number is 800-299-6183 and the access code is 31186052. Investors are advised to dial in at least five minutes prior to the call to register. The web cast will be archived for seven days: from 8:00 p.m. Wednesday, October 26, until 8:00 p.m. Wednesday, November 2, 2005.
About The Advisory Board Company
The Advisory Board Company provides best practices research and analysis to the health care industry, focusing on business strategy, operations and general management issues. The Company provides best practices and research through discrete annual programs to a membership of more than 2,500 hospitals, health systems, pharmaceutical and biotech companies, health care insurers, and medical device companies in the United States. Each program typically charges a fixed annual fee and provides members with best practices, research reports, executive education and other supporting research services.
The Company believes its calculations of adjusted income from operations, net income and diluted earnings per share provide additional information about the Company’s ongoing operating performance as well as additional information to compare to prior periods. The Company is not able to reconcile its outlook for the remainder of calendar year 2005 to GAAP as stock option related expense is dependent upon a number of unknown factors, including the extent (if any) to which employee stock options are exercised and future stock price.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You are hereby cautioned that these statements may be affected by certain factors, among others, set forth below and in the Company’s filings with the Securities and Exchange Commission, and consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. Factors that could cause actual results to differ materially from those indicated by forward-looking statements include, among others, the dependence on renewal of membership based services, dependence on key personnel, the need to attract and retain qualified personnel, management of growth, new product development, competition, risks associated with anticipating market trends, industry consolidation, variability of quarterly operating results and various factors that could affect the estimated tax rate. These factors are discussed more fully in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
THE ADVISORY BOARD COMPANY UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING STATISTIC (In thousands, except per share data) Three Months Six Months Ending Selected Ending Selected September 30, Growth September 30, Growth 2005 2004 Rates 2005 2004 Rates Statements of Operations Revenues $40,487 $34,680 16.7% $79,234 $67,705 17.0% Cost of services 17,487 14,166 33,996 27,840 Member relations and marketing 8,229 6,773 16,294 13,289 General and administrative 4,035 4,216 7,859 8,143 Depreciation and loss on disposal of assets 451 600 884 992 Income from operations 10,285 8,925 20,201 17,441 Interest income 1,412 916 2,807 1,809 Income before provision for income taxes 11,697 9,841 23,008 19,250 Provision for income taxes (4,737) (3,986) (9,318) (7,797) Net income $6,960 $5,855 $13,690 $11,453 Earnings per share Basic $0.36 $0.34 $0.71 $0.65 Diluted $0.35 $0.31 12.9% $0.68 $0.60 13.3% Weighted average common shares outstanding Basic 19,093 17,409 19,158 17,604 Diluted 20,020 18,940 20,006 19,181 Percentages of Revenues Cost of services 43.2% 40.8% 42.9% 41.1% Member relations and marketing 20.3% 19.5% 20.6% 19.6% General and administrative 10.0% 12.2% 9.9% 12.0% Depreciation and loss on disposal of assets 1.1% 1.7% 1.1% 1.5% Income from operations 25.4% 25.7% 25.5% 25.8% Net income 17.2% 16.9% 17.3% 16.9% Contract Value (at end of period) (1) $159,810 $136,916 16.7%
(1) We define “Contract value” as the aggregate annualized revenue attributable to all agreements in effect at any given point in time, without regard to the initial term or remaining duration of any such agreements.
THE ADVISORY BOARD COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) September 30, March 31, 2005 2005 (unaudited) ASSETS Current assets: Cash and cash equivalents $10,949 $27,867 Marketable securities 3,947 3,003 Membership fees receivable, net 25,302 21,320 Prepaid expenses and other current assets 2,471 2,430 Deferred income taxes 21,623 19,774 Total current assets 64,292 74,394 Fixed assets, net 8,684 9,023 Intangible assets, net 6,236 - Deferred incentive compensation and other charges 6,490 6,189 Deferred income taxes, net of current portion 22,140 33,489 Marketable securities 130,391 122,044 Total assets $238,233 $245,139 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Deferred revenues $76,489 $82,262 Accounts payable and accrued liabilities 11,023 8,733 Accrued incentive compensation 6,241 7,820 Total current liabilities 93,753 98,815 Other long-term liabilities 873 1,010 Total liabilities 94,626 99,825 Stockholders’ equity: Common stock 199 199 Additional paid-in capital 142,760 142,040 Retained earnings 41,615 27,925 Accumulated elements of comprehensive income (1,193) (1,273) Treasury stock (39,774) (23,577) Total stockholders’ equity 143,607 145,314 Total liabilities and stockholders’ equity $238,233 $245,139 THE ADVISORY BOARD COMPANY UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Six Months Ended September 30, 2005 2004 Cash flows from operating activities: Net income $13,690 $11,453 Adjustments to reconcile net income to net cash provided by operating activities - Depreciation 884 876 Amortization of intangible assets acquired 43 - Loss on disposal of fixed assets - 116 Deferred income taxes 8,827 7,771 Amortization of marketable securities premiums 429 362 Changes in operating assets and liabilities: Member fees receivable (3,831) (5,440) Prepaid expenses and other current assets (24) 95 Deferred incentive compensation and other charges (411) (81) Deferred revenues (5,920) (4,838) Accounts payable and accrued liabilities 840 (311) Accrued incentive compensation (1,579) (1,885) Other liabilities (242) 1,264 Net cash flows provided by operating activities 12,706 9,382 Cash flows from investing activities: Purchases of property and equipment (460) (3,800) Purchase of marketable securities (15,933) (13,850) Redemption of marketable securities 6,400 10,713 Cash paid for acquisition, net of cash acquired (3,596) - Net cash flows used in investing activities (13,589) (6,937) Cash flows from financing activities: Proceeds on issuance of stock from exercise of stock options 344 551 Proceeds on issuance of stock under ESPP 189 148 Repayment of debt assumed in acquisition (371) - Purchases of treasury stock (16,197) (26,621) Net cash flows used in financing activities (16,035) (25,922) Net decrease in cash and cash equivalents (16,918) (23,477) Cash and cash equivalents, beginning of period 27,867 41,389 Cash and cash equivalents, end of period $10,949 $17,912
The Advisory Board Company
CONTACT: David Felsenthal, Chief Financial Officer of The Advisory BoardCompany, +1-202-266-5876, jacobsg@advisory.com
Web site: http://www.advisoryboardcompany.com/
