SCOTTSDALE, Ariz., Nov. 5, 2009 (GLOBE NEWSWIRE) -- NightHawk Radiology Holdings, Inc. (Nasdaq:NHWK), the leading provider of radiology solutions to radiology groups across the United States, today announced its financial results for third quarter 2009.
Third Quarter 2009 Highlights
* Revenue was $43.5 million driven by record total scan volume of 865,000 scans. * Final read revenue increased 40% from the year-ago quarter as final scan volumes increased 56%. * Adjusted net income was $4.3 million, or $0.17 per diluted share at the high end of the company's guidance range of 16 to 17 cents and 1 cent better than consensus estimates. Adjusted net income excludes non-cash charges for stock compensation, amortization of intangible assets, losses on cancelled interest rate swap contracts, mark to market adjustments on interest rate hedge contracts, malpractice reserve adjustments, and restructuring charges. * GAAP net income was $1.7 million, or $0.07 per share. A reconciliation of adjusted net income to GAAP net income is included in the tables attached to this press release. * Cash flow from operations was $6.3 million and free cash flow generated during the quarter was $4.8 million. * Cash and investments at September 30, 2009 totaled $30.9 million
"We are pleased with our third quarter operating results, particularly our all-time record scan volumes and robust growth in our final reads business. These results reflect our improved execution as well as continued strong demand for teleradiology services," said David Engert, the company's president and chief executive officer.
Fourth Quarter 2009 Outlook
Consistent with both our historical experience and normal industry seasonality, the company expects scan volumes to decline sequentially in the fourth quarter from the third quarter. Revenue for the fourth quarter of 2009 is expected to be in the range of $38 to $40 million and fourth quarter 2009 adjusted earnings per diluted share is expected to be in the range of 8 to 10 cents.
Forward Looking Statements
This press release contains statements that are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. These include statements regarding the company's outlook on its scan volume, revenue and adjusted earnings per share for the fourth quarter of 2009. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made, including the risks associated with general economic conditions, competitive conditions in the radiology industry, and regulatory risks. Other factors that could cause operating and financial results to differ are described in the company's periodic reports filed with the Securities and Exchange Commission ("SEC"). Other risks may be detailed from time to time in reports to be filed with the SEC. NightHawk does not undertake any obligation to publicly update its forward- looking statements based on events or circumstances after the date hereof.
Earnings Conference Call
The third quarter conference call will be held today, November 5, 2009 at 4:30 p.m. eastern time. A live webcast of the conference call, as well as a replay, will be available online on the company's corporate website at http://www.nighthawkrad.net. Participants can also access the call by dialing (888)549-7880 or (480)629-9039 (for international callers). A replay of the call will be available approximately two hours after the conclusion of the call and will remain available until midnight eastern time on Thursday, November 26, 2009. To access the replay, dial (800)406-7325 or (303)590-3030 (for international callers) and enter the conference ID number: 4176845.
About NightHawk
NightHawk Radiology (Nasdaq:NHWK) is leading the transformation of the practice of radiology by providing high-quality, cost-effective solutions to radiology groups throughout the United States. NightHawk provides the most complete suite of solutions, including professional services, business services, and its advanced, proprietary clinical workflow technology, all designed to increase efficiencies and improve the quality of patient care and the lives of physicians who provide it. NightHawk's team of U.S. board-certified, state-licensed, and hospital-privileged physicians located in the United States, Australia, and Switzerland, provides services 24 hours a day, seven days a week, to approximately 1,580 sites, representing approximately 28% of all hospitals in the United States. For more information, visit http://www.nighthawkrad.net.
The NightHawk Radiology Holdings, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5531
Presentation of Non-GAAP Financial Information
The presentation of adjusted net income and adjusted earnings per diluted share are not measures of financial performance under GAAP and should not be considered a substitute for or superior to GAAP. Management believes these non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of our core results and provide consistency in financial reporting. Specifically, the company's non-GAAP adjusted net income measure, and related adjusted earnings per diluted share, described in this release exclude (i) the non-cash charges related to our stock-based compensation, (ii) the non-cash expense associated with the amortization of intangibles associated with acquisitions, (iii) the non-cash expenses (or credits) associated with adjustments to our IBNR reserve (incurred but not reported medical liability reserves), (iv) the non-cash charges for goodwill impairment, (v) the non-cash charge for the amortization of losses incurred on cancelled interest rate swap contracts, (vi) the non-cash gain (or loss) resulting from mark to market adjustments of our interest rate hedge contracts, and (vii) non-cash charges and adjustments for restructuring activities. We exclude the non-cash charges related to our stock-based compensation due to the varying valuation methodologies, subjective assumptions and the variety of types of awards that companies can use when applying The Compensation Topic of the FASB Accounting Standards Codification (Topic 718) (formerly Stock Compensation, FAS 123R) along with the fact that a substantial portion of our outstanding options and restricted stock units are held by our independent contractor physicians and require accounting treatment that differs from the accounting treatment for options and restricted stock units held by employees.
The company provides non-GAAP adjusted net income and related adjusted earnings per diluted share as financial measures because management believes these measures provide greater transparency with respect to information used by management in its financial and operational decision making and to enhance investors' overall understanding of our current financial performance and our future prospects. For reconciliation of our non-GAAP financial measures to the most applicable GAAP financial measure, please refer to the information included in the attached tables of this press release and in the Investor Relations section of our corporate website.
"NHWKF"
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited)
Sept. 30, Dec. 31,
ASSETS 2009 2008
--------- ---------
(in thousands,
except share data)
Current assets:
Cash and cash equivalents $ 24,911 $ 47,160
Marketable securities 5,999 --
Trade accounts receivable, net 24,193 24,393
Deferred income taxes 883 855
Prepaid expenses and other current assets 5,311 6,231
--------- ---------
Total current assets 61,297 78,639
Property and equipment, net 13,088 10,528
Goodwill -- 68,718
Intangible assets, net 74,278 79,616
Deferred income taxes 16,908 4,082
Other assets, net 4,011 3,566
--------- ---------
Total $ 169,582 $ 245,149
========= =========
LIABILITIES
Current liabilities:
Accounts payable $ 7,078 $ 6,327
Accrued expenses and other liabilities 3,444 3,617
Accrued payroll and related benefits 4,090 3,783
Long-term debt, due within one year 833 955
--------- ---------
Total current liabilities 15,445 14,682
Insurance reserve 4,233 3,705
Long-term debt 80,581 93,145
Other liabilities 2,285 3,850
--------- ---------
Total liabilities 102,544 115,382
--------- ---------
STOCKHOLDERS' EQUITY
Common stock-150,000,000 shares authorized;
$.001 par value; 23,524,226 and
27,590,774 shares issued and outstanding 24 28
Additional paid-in capital 220,867 237,429
Retained earnings (deficit) (152,316) (103,516)
Accumulated other comprehensive loss (1,537) (4,174)
--------- ---------
Total stockholders' equity 67,038 129,767
--------- ---------
Total $ 169,582 $ 245,149
========= =========
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
---------- ---------- ---------- ----------
(in thousands, except per share data)
Service revenue $ 43,453 $ 43,441 $ 124,592 $ 127,887
Operating costs and
expenses:
Professional
services (includes
non-cash
compensation
expense of
$233, $537, $529
and $1,513) 20,216 18,340 55,178 53,243
Sales, general, and
administrative
(includes non-cash
compensation
expense of $967,
$1,361, $3,265 and
$5,549) 15,289 15,367 46,007 50,002
Depreciation and
amortization 2,708 2,829 8,220 8,585
Goodwill impairment -- -- 68,718 --
---------- ---------- ---------- ----------
Total operating
costs and
expenses 38,213 36,536 178,123 111,830
---------- ---------- ---------- ----------
Operating income
(loss) 5,240 6,905 (53,531) 16,057
Other income
(expense):
Interest expense (2,476) (2,090) (6,703) (6,466)
Interest income 30 307 136 1,210
Other, net (5) 114 (13) 102
---------- ---------- ---------- ----------
Total other
income (expense) (2,451) (1,669) (6,580) (5,154)
---------- ---------- ---------- ----------
Income (loss)
before income
taxes 2,789 5,236 (60,111) 10,903
Income tax expense
(benefit) 1,070 1,953 (11,311) 4,119
---------- ---------- ---------- ----------
Net income (loss) $ 1,719 $ 3,283 $ (48,800) $ 6,784
========== ========== ========== ==========
Earnings (loss) per
common share:
Basic $ 0.07 $ 0.11 $ (1.87) $ 0.23
Diluted $ 0.07 $ 0.11 $ (1.87) $ 0.22
Weighted averages of
common shares
outstanding:
Basic 25,118,166 28,573,349 26,080,456 29,810,161
Diluted 26,003,632 29,733,210 26,080,456 30,852,398
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
---------- ---------- ---------- ----------
(in thousands) (in thousands)
Cash flows from
operating
activities:
Net income (loss) $ 1,719 $ 3,283 $ (48,800) $ 6,784
Adjustments to
reconcile net
income (loss) to
net cash provided
by operating
activities:
Depreciation and
amortization 2,707 2,829 8,220 8,585
Goodwill
impairment -- -- 68,718 --
Amortization of
debt issuance
costs and effect
of interest rate
swaps 1,067 162 3,181 486
Deferred income
taxes (302) (563) (14,497) (574)
Non-cash stock
compensation
expense 1,200 1,898 3,794 7,062
Other, net 332 512 577 796
Changes in
operating assets
and liabilities
(excluding
effects of
acquisitions):
Trade accounts
receivable, net (1,130) (117) (286) (1,272)
Prepaid
expenses and
other assets 928 1,495 776 (11)
Accounts payable (811) (516) (422) 99
Accrued expenses
and other
liabilities 667 1,353 99 756
Accrued payroll
and related
benefits (122) (725) 172 219
---------- ---------- ---------- ----------
Net cash
provided by
operating
activities 6,255 9,611 21,532 22,930
Cash flows from
investing activities:
Purchase of
marketable
securities (5,999) -- (10,989) (26,390)
Proceeds from
maturities of
marketable
securities 5,000 -- 5,000 33,755
Proceeds from sale
of marketable
securities -- 10,000 -- 23,302
Purchase of
property and
equipment (1,458) (817) (4,414) (4,112)
Cash paid for
acquisitions -- (1,150) -- (7,650)
---------- ---------- ---------- ----------
Net cash
provided by
(used in)
investing
activities (2,457) 8,033 (10,403) 18,905
Cash flows from
financing activities:
Repayment of debt (12,208) (250) (12,686) (750)
Proceeds from
exercise of
stock options 41 156 91 556
Excess tax benefit
from exercise of
stock options 38 (4) 46 234
Purchase and
retirement of
common stock (13,890) (552) (20,342) (18,592)
Debt amendment
costs -- -- (434) --
Cash exchange for
stock options -- -- (53) --
---------- ---------- ---------- ----------
Net cash used
in financing
activities (26,019) (650) (33,378) (18,552)
---------- ---------- ---------- ----------
Net increase
(decrease) in cash
and cash equivalents (22,221) 16,994 (22,249) 23,283
Cash and cash
equivalents -
beginning of period 47,132 38,245 47,160 31,956
---------- ---------- ---------- ----------
Cash and cash
equivalents - end of
period $ 24,911 $ 55,239 $ 24,911 $ 55,239
========== ========== ========== ==========
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME
Three months ended
September 30, 2009
(in thousands, except share data)
GAAP Adjustments As Adjusted
----------- ----------- -----------
Service revenue $ 43,453 $ 43,453
Operating costs and expenses:
Professional services (1) 20,216 (369) 19,847
Sales, general, and
administrative (2) 15,289 (1,015) 14,274
Depreciation and
amortization (3) 2,708 (1,732) 976
Goodwill impairment -- -- --
----------- ----------- -----------
Total operating costs
and expenses 38,213 (3,116) 35,097
----------- ----------- -----------
Operating income 5,240 3,116 8,356
Other income (expense):
Interest expense (4) (2,476) 1,115 (1,361)
Interest income 30 -- 30
Other, net (5) -- (5)
----------- ----------- -----------
Total other income
(expense) (2,451) 1,115 (1,336)
----------- ----------- -----------
Income before income taxes 2,789 4,231 7,020
Income tax expense (5) 1,070 1,647 2,717
----------- ----------- -----------
Net income $ 1,719 $ 2,584 $ 4,303
=========== =========== ===========
Earnings per share:
Basic $ 0.07 $ 0.17
Diluted $ 0.07 $ 0.17
Weighted average of shares
outstanding:
Basic 25,118,166 25,118,166
Diluted 26,003,632 26,003,632
Three months ended
September 30, 2008
(in thousands, except share data)
GAAP Adjustments As Adjusted
----------- ----------- -----------
Service revenue $ 43,441 $ 43,441
Operating costs and expenses:
Professional services (1) $ 18,340 (839) 17,501
Sales, general, and
administrative (2) 15,367 (2,064) 13,303
Depreciation and
amortization (3) 2,829 (1,883) 946
Goodwill impairment -- -- --
----------- ----------- -----------
Total operating costs
and expenses 36,536 (4,786) 31,750
----------- ----------- -----------
Operating income 6,905 4,786 11,691
Other income (expense):
Interest expense (4) (2,090) -- (2,090)
Interest income 307 -- 307
Other, net 114 -- 114
----------- ----------- -----------
Total other income
(expense) (1,669) -- (1,669)
----------- ----------- -----------
Income before income taxes 5,236 4,786 10,022
Income tax expense (5) 1,953 1,855 3,808
----------- ----------- -----------
Net income $ 3,283 $ 2,931 $ 6,214
=========== =========== ===========
Earnings per share:
Basic $ 0.11 $ 0.22
Diluted $ 0.11 $ 0.21
Weighted average of shares
outstanding:
Basic 28,573,349 28,573,349
Diluted 29,733,210 29,733,210
(1) Adjustments to the 2009 GAAP amounts represent $233 of non-cash
stock compensation expense and $136 of non-cash expense
associated with adjustments to our incurred but not reported
medical liability reserves ("IBNR"). The 2008 adjustments to GAAP
amounts represent $537 of non-cash stock compensation expense and
$302 of non-cash expense associated with adjustments to our IBNR
reserves.
(2) Adjustments to the 2009 GAAP amounts represent $967 of non-cash
stock compensation expense and $48 of restructuring charges and
adjustments. The 2008 adjustments to GAAP amounts represent
$1,361 of non-cash stock compensation expense and $703 of
restructuring charges
(3) Adjustment to 2009 and 2008 GAAP amounts represent non-cash
expense associated with the amortization of intangibles
associated with acquisitions.
(4) Adjustments to the 2009 GAAP amounts represent $884 of
amortization of losses incurred on interest rate swap contracts
canceled in 2008 and $231 loss resulting from mark to market
adjustments of our interest rate hedge contracts.
(5) Represents the tax effect on the adjustments to GAAP.
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME
Nine months ended
September 30, 2009
(in thousands, except share data)
GAAP Adjustments As Adjusted
----------- ----------- -----------
Service revenue $ 124,592 $ 124,592
Operating costs and expenses:
Professional services (1) 55,178 (1,056) 54,122
Sales, general, and
administrative (2) 46,007 (3,313) 42,694
Depreciation and
amortization (3) 8,220 (5,339) 2,881
Goodwill impairment 68,718 (68,718) --
----------- ----------- -----------
Total operating costs
and expenses 178,123 (78,426) 99,697
----------- ----------- -----------
Operating income (loss) (53,531) 78,426 24,895
Other income (expense):
Interest expense (4) (6,703) 2,551 (4,152)
Interest income 136 136
Other, net (13) (13)
----------- ----------- -----------
Total other income
(expense) (6,580) 2,551 (4,029)
----------- ----------- -----------
Income (loss) before
income taxes (60,111) 80,977 20,866
Income tax expense
(benefit) (5) (11,311) 19,439 8,128
----------- ----------- -----------
Net income (loss) $ (48,800) $ 61,538 $ 12,738
=========== =========== ===========
Earnings (loss) per share:
Basic $ (1.87) $ 0.49
Diluted $ (1.87) $ 0.48
Weighted average of shares
outstanding:
Basic 26,080,456 26,080,456
Diluted 26,080,456 26,536,908
Nine months ended
September 30, 2008
(in thousands, except share data)
GAAP Adjustments As Adjusted
----------- ----------- -----------
Service revenue $ 127,887 $ 127,887
Operating costs and expenses:
Professional services (1) $ 53,243 (2,512) 50,731
Sales, general, and
administrative (2) 50,002 (6,731) 43,271
Depreciation and
amortization (3) 8,585 (5,645) 2,940
Goodwill impairment -- --
----------- ----------- -----------
Total operating costs
and expenses 111,830 (14,888) 96,942
----------- ----------- -----------
Operating income (loss) 16,057 14,888 30,945
Other income (expense):
Interest expense (4) (6,466) (6,466)
Interest income 1,210 1,210
Other, net 102 102
----------- ----------- -----------
Total other income
(expense) (5,154) (5,154)
----------- ----------- -----------
Income (loss) before
income taxes 10,903 14,888 25,791
Income tax expense
(benefit) (5) 4,119 5,697 9,816
----------- ----------- -----------
Net income (loss) $ 6,784 $ 9,191 $ 15,975
=========== =========== ===========
Earnings (loss) per share:
Basic $ 0.23 $ 0.54
Diluted $ 0.22 $ 0.52
Weighted average of shares
outstanding:
Basic 29,810,161 29,810,161
Diluted 30,852,398 30,852,398
(1) Adjustments to the 2009 GAAP amounts represent $529 of non-cash
stock compensation expense and $527 of non-cash expense
associated with adjustments to our incurred but not reported
medical liability reserves ("IBNR"). The 2008 adjustments to GAAP
amounts represent $1,513 of non-cash stock compensation expense
and $999 of non-cash expense associated with adjustments to our
IBNR reserves.
(2) Adjustments to the 2009 GAAP amounts represent $3,265 of non-cash
stock compensation expense and $48 of restructuring charges and
adjustments. The 2008 adjustments to GAAP amounts represent
$5,549 of non-cash stock compensation expense, $703 of
restructuring charges, $164 of employee severance expense and
$315 of non-cash fixed asset charges associated with a
restructuring event.
(3) Adjustment to the 2009 and 2008 GAAP amounts represent non-cash
expense associated with the amortization of intangibles
associated with acquisitions.
(4) Adjustments to the 2009 GAAP amounts represent $2,652 of
amortization of losses incurred on interest rate swap contracts
canceled in 2008 and $101 gain resulting from mark to market
adjustments of our interest rate hedge contracts.
(5) Represents the tax effect on the adjustments to GAAP. In
addition, in 2009 we adjusted our tax expense amount to properly
reflect the impact of the non-deductible portions of our goodwill
impairment.
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
HISTORICAL VOLUMES
Growth Rates
Total Year
Quarter Year Volumes Sequential over Year
------------- --------- ---------------------
Q1 2008 745,075 2% 54%
Q2 2008 780,108 5% 7%
Q3 2008 791,613 1% 1%
Q4 2008 718,299 (9%) (2%)
--------- ---------- ---------
FY 2008 3,035,095 11% 11%
Q1 2009 722,321 1% (3%)
Q2 2009 817,315 13% 5%
Q3 2009 864,898 6% 9%