COEUR D'ALENE, Idaho, Oct. 29, 2008 (GLOBE NEWSWIRE) -- NightHawk Radiology Holdings, Inc. (Nasdaq:NHWK), the leading provider of radiology solutions to radiology groups and hospitals throughout the United States, today announced financial results for its third quarter ended September 30, 2008.
Third Quarter 2008 Highlights
* Revenue was $43.4 million compared with $45.2 million in the year- ago quarter. Scan volume grew 1% to 792,000 scans while pricing declined 3%. * Revenue from new service offerings, including final reads and business services, was $8.9 million, or 20% of total revenue. Final reads revenue increased 34% to $4.9 million, or 11% of total revenue. * Adjusted net income was $6.2 million, or $0.21 per diluted share, compared with $8.0 million, or $0.26 per diluted share, in the year-ago quarter. Adjusted net income excludes non-cash charges for stock compensation, amortization of intangible assets and malpractice reserve adjustments. In addition, adjusted net income in the third quarter of 2008 also excludes a pre-tax restructuring charge of $0.7 million ($0.4 million after-tax) related to the closure of redundant facilities. * GAAP net income was $3.3 million, or $0.11 per diluted share, compared to $3.8 million, or $0.12 per diluted share, in the third quarter of 2007. A reconciliation of adjusted net income to GAAP net income is included in the tables attached to this press release. * Cash flow from operations increased 100% to a record $9.6 million, up from $4.8 million in the third quarter of 2007. Free cash flow was also a record $8.8 million during the quarter, up 144% from $3.6 million in the third quarter of 2007. * Cash and cash equivalents on-hand at September 30, 2008 totaled $55.2 million.
"Considering the modest sequential increase in scan volume and revenue, we were able to increase adjusted earnings sequentially by 13% through improved productivity and prudently focusing on our costs. Importantly, our overall financial position remains very strong with $55.2 million in cash on hand and record cash flow from operations of $9.6 million during the third quarter and $22.9 million for the first nine months of 2008. We also saw encouraging results from our initiatives focused on improving our customer service and sales execution," said Dr. Paul Berger, Chairman and Chief Executive Officer.
2008 Outlook
Dr. Berger continued, "In light of the lower than expected volumes we are seeing and the highly uncertain economic outlook, we are revising our full-year outlook and now expect full-year revenues to be in the range of $165 to $168 million and adjusted earnings per share of $0.64 to $0.67. However, I am confident that the solutions and value we provide to our customers remain a solid proposition and position us well for future growth."
Earnings Conference Call
The third quarter 2008 conference call will be held today, October 29, 2008 at 4:15 p.m. (ET). 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 800-257-2182 (or 303-262-2175 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 (EDT) on Thursday November 20, 2008. To access the replay, dial 800-405-2236 or 303-590-3000 (for international callers) and enter the conference ID number: 11121223.
About NightHawk
NightHawk Radiology (Nasdaq:NHWK), headquartered in Coeur d'Alene, Idaho, is leading the transformation of the practice of radiology by providing high-quality, cost-effective solutions to radiology groups and hospitals 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 1,500 sites, representing approximately 26% 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
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 full-year revenue and adjusted earnings per share and its outlook for future growth opportunities. 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 prospectus and 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.
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, and (iii) the non-cash expense associated with changes to our IBNR reserve (incurred but not reported medical liability reserves), and (iv) restructuring charges related to facilities closures. 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 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 Room Section of our corporate website.
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NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS (unaudited)
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Sept. 30, Dec. 31,
ASSETS 2008 2007
---- ----
(in thousands, except
per share amts)
Current assets:
Cash and cash equivalents $ 55,239 $ 31,956
Marketable securities -- 30,625
Trade accounts receivable, net 26,399 25,665
Deferred income taxes 615 655
Prepaids and other current assets 2,826 2,812
--------- ---------
Total current assets 85,079 91,713
Property and equipment, net 11,018 10,555
Goodwill 68,839 68,601
Intangible assets, net 81,485 87,133
Deferred income taxes 2,022 1,251
Other assets, net 3,724 4,213
--------- ---------
Total $ 252,167 $ 263,466
========= =========
LIABILITIES
Current liabilities:
Accounts payable $ 6,063 $ 6,071
Accrued expenses and other liabilities 4,245 12,881
Accrued payroll and related benefits 2,830 4,570
Long-term debt, due within one year 1,000 1,000
--------- ---------
Total current liabilities 14,138 24,522
Insurance reserve 4,037 3,038
Long-term debt 97,750 98,500
Other liabilities 3,007 2,717
--------- ---------
Total liabilities 118,932 128,777
--------- ---------
STOCKHOLDERS' EQUITY
Common stock-150,000,000 shares authorized;
$.001 par value; 28,605,767 and 30,312,322
shares issued and outstanding at September
30, 2008 and December 31, 2007,
respectively 29 30
Additional paid-in capital 241,007 249,274
Retained earnings (deficit) (106,173) (112,957)
Accumulated other comprehensive income
(deficit) (1,628) (1,658)
--------- ---------
Total stockholders' equity 133,235 134,689
--------- ---------
Total $ 252,167 $ 263,466
========= =========
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NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
--------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
2008 2007 2008 2007
---- ---- ---- ----
(in thousands, except (in thousands, except
per share amts) per share amts)
Service revenue $ 43,441 $ 45,151 $ 127,887 $ 108,956
Operating costs and
expenses:
Professional
services (includes
non-cash
compensation
expense of $537,
$1,536, $1,513 and
$3,567) 18,340 19,069 53,243 46,844
Sales, general, and
administrative
(includes non-cash
compensation
expense of $1,361,
$3,160, $5,549 and
$5,843) 15,367 15,754 50,002 36,861
Depreciation and
amortization 2,829 2,608 8,585 5,251
----------- ----------- ----------- -----------
Total operating
costs and
expenses 36,536 37,431 111,830 88,956
----------- ----------- ----------- -----------
Operating income 6,905 7,720 16,057 20,000
Other income
(expense):
Interest expense (2,090) (2,389) (6,466) (3,665)
Interest income 307 746 1,210 2,468
Other, net 114 (27) 102 (59)
----------- ----------- ----------- -----------
Total other income
(expense) (1,669) (1,670) (5,154) (1,256)
----------- ----------- ----------- -----------
Income before
income taxes 5,236 6,050 10,903 18,744
Income tax expense 1,953 2,262 4,119 7,111
----------- ----------- ----------- -----------
Net income $ 3,283 $ 3,788 $ 6,784 $ 11,633
=========== =========== =========== ===========
Earnings per common
share:
Basic $ 0.11 $ 0.13 $ 0.23 $ 0.39
Diluted $ 0.11 $ 0.12 $ 0.22 $ 0.38
Weighted averages of
common shares
outstanding:
Basic 28,573,349 30,111,156 29,810,161 30,023,122
Diluted 29,733,210 31,170,449 30,852,398 31,012,036
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NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
--------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30,
2008 2007 2008 2007
---- ---- ---- ----
(in thousands, except (in thousands, except
per share amts) per share amts)
Cash flows from operating
activities:
Net income $ 3,283 $ 3,788 $ 6,784 $ 11,633
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 2,829 2,608 8,585 5,251
Accretion of discounts
(premiums) on
marketable securities -- (69) (21) (285)
Amortization of debt
issuance costs 162 163 486 234
Loss (gain) on
disposal of fixed
assets and other, net 238 -- 582 (23)
Deferred income taxes (563) (2,767) (574) (4,795)
Non-cash stock
compensation expense 1,898 4,696 7,062 9,410
Excess tax benefit
from exercise of
stock options 4 (985) (234) (1,325)
Provision for doubtful
accounts 270 211 469 347
Changes in operating
assets and
liabilities
(excluding effects of
acquisitions):
Trade accounts
receivable, net (117) (4,167) (1,272) (7,573)
Prepaid expenses and
other assets 1,495 442 (11) (95)
Accounts payable (516) 672 99 2,983
Accrued expenses and
other liabilities 1,353 (365) 756 352
Accrued payroll and
related benefits (725) 571 219 1,343
--------- --------- --------- ---------
Net cash provided by
operating
activities 9,611 4,798 22,930 17,457
Cash flows from investing
activities:
Purchase of marketable
securities -- (10,621) (26,390) (26,491)
Proceeds from maturities
of marketable
securities -- 6,950 33,755 36,128
Proceeds from the sale
of marketable
securities 10,000 -- 23,302 --
Purchase of property and
equipment (817) (1,124) (4,112) (3,499)
Cash and cash
equivalents from
acquisitions, net -- 252 -- 339
Cash paid for
acquisitions (1,150) (63,242) (7,650) (125,736)
--------- --------- --------- ---------
Net cash provided by
(used in) investing
activities 8,033 (67,785) 18,905 (119,259)
Cash flows from financing
activities:
Repayment of debt (250) (250) (750) (11,116)
Proceeds from exercise
of stock options 156 629 556 962
Excess tax benefit from
exercise of stock
options (4) 985 234 1,325
Purchase of common stock
shares (552) -- (18,592) --
Proceeds from debt -- 47,000 -- 100,000
Payment on line of
credit -- -- -- (1,679)
Debt issuance costs paid -- (2,652) -- (4,479)
--------- --------- --------- ---------
Net cash (used in)
provided by
financing
activities (650) 45,712 (18,552) 85,013
--------- --------- --------- ---------
Net increase in cash and
cash equivalents 16,994 (17,275) 23,283 (16,789)
Cash and cash equivalents
--beginning of period 38,245 46,987 31,956 46,501
--------- --------- --------- ---------
Cash and cash
equivalents--end of
period $ 55,239 $ 29,712 $ 55,239 $ 29,712
--------- --------- --------- ---------
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NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
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RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME
-------------------------------------------------------------------
Three Months Ended
-------------------------------------
September 30, 2008
------------------
(in thousands, except per share amts)
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
----------- ----------- -----------
Total operating costs and
expenses 36,536 (4,786) 31,750
----------- ----------- -----------
Operating income 6,905 4,786 11,691
Other income (expense):
Interest expense (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 (4) 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 shares
outstanding:
Basic 28,573,349 28,573,349
Diluted 29,733,210 29,733,210
Three Months Ended
-------------------------------------
September 30, 2007
------------------
(in thousands, except per share amts)
GAAP Adjustments As Adjusted
---- ----------- -----------
Service revenue $ 45,151 $ 45,151
Operating costs and expenses:
Professional services (1) $ 19,069 (1,990) 17,079
Sales, general, and
administrative (2) 15,754 (3,160) 12,594
Depreciation and
amortization (3) 2,608 (1,740) 868
----------- ----------- -----------
Total operating costs and
expenses 37,431 (6,890) 30,541
----------- ----------- -----------
Operating income 7,720 6,890 14,610
Other income (expense):
Interest expense (2,389) (2,389)
Interest income 746 746
Other, net (27) (27)
----------- ----------- -----------
Total other income
(expense) (1,670) (1,670)
----------- ----------- -----------
Income before income taxes 6,050 6,890 12,940
Income tax expense (4) 2,262 2,687 4,949
----------- ----------- -----------
Net income $ 3,788 $ 4,203 $ 7,991
=========== =========== ===========
Earnings per share:
Basic $ 0.13 $ 0.27
Diluted $ 0.12 $ 0.26
Weighted average shares
outstanding:
Basic 30,111,156 30,111,156
Diluted 31,170,449 31,170,449
(1) Adjustments to the 2008 GAAP amounts represent $537 of non-cash
stock compensation expense and $302 of non-cash malpractice
reserve changes. The 2007 adjustments to GAAP amounts represent
$1,536 of non-cash stock compensation expense and $454 of
non-cash malpractice reserve changes.
(2) Adjustments to the 2008 GAAP amounts represent $1,361 of non-
cash stock compensation expense and $703 of restructuring
charges. The 2007 adjustments to GAAP amounts represent $3,160
of non-cash stock compensation expense.
(3) Adjustment to GAAP amounts represents non-cash amortization of
intangible assets.
(4) Represents the tax effect on the adjustments to GAAP.
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NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
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RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME
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Nine Months Ended
-------------------------------------
September 30, 2008
------------------
(in thousands, except per share amts)
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
----------- ----------- -----------
Total operating costs and
expenses 111,830 (14,888) 96,942
----------- ----------- -----------
Operating income 16,057 14,888 30,945
Other income (expense):
Interest expense (6,466) (6,466)
Interest income 1,210 1,210
Other, net 102 102
----------- ----------- -----------
Total other income
(expense) (5,154) (5,154)
----------- ----------- -----------
Income before income taxes 10,903 14,888 25,791
Income tax expense (4) 4,119 5,697 9,816
----------- ----------- -----------
Net income $ 6,784 $ 9,191 $ 15,975
=========== =========== ===========
Earnings per share:
Basic $ 0.23 $ 0.54
Diluted $ 0.22 $ 0.52
Weighted average shares
outstanding:
Basic 29,810,161 29,810,161
Diluted 30,852,398 30,852,398
Nine Months Ended
-------------------------------------
September 30, 2007
------------------
(in thousands, except per share amts)
GAAP Adjustments As Adjusted
---- ----------- -----------
Service revenue $ 108,956 $ 108,956
Operating costs and expenses:
Professional services (1) $ 46,844 (5,016) 41,828
Sales, general, and
administrative (2) 36,861 (5,843) 31,018
Depreciation and
amortization (3) 5,251 (3,219) 2,032
----------- ----------- -----------
Total operating costs and
expenses 88,956 (14,078) 74,878
----------- ----------- -----------
Operating income 20,000 14,078 34,078
Other income (expense):
Interest expense (3,665) (3,665)
Interest income 2,468 2,468
Other, net (59) (59)
----------- ----------- -----------
Total other income
(expense) (1,256) (1,256)
----------- ----------- -----------
Income before income taxes 18,744 14,078 32,822
Income tax expense (4) 7,111 5,490 12,601
----------- ----------- -----------
Net income $ 11,633 $ 8,588 $ 20,221
=========== =========== ===========
Earnings per share:
Basic $ 0.39 $ 0.67
Diluted $ 0.38 $ 0.65
Weighted average shares
outstanding:
Basic 30,023,122 30,023,122
Diluted 31,012,036 31,012,036
-------------------------------------
(1) Adjustments to the 2008 GAAP amounts represent $1,513 of non-
cash stock compensation expense and $999 of non-cash malpractice
reserve changes. The 2007 adjustments to GAAP amounts represent
$3,567 of non-cash stock compensation expense and $1,449 of
non-cash malpractice reserve changes.
(2) Adjustments to the 2008 GAAP amounts represent $5,549 of non-
cash stock compensation expense, $703 of restructuring charges,
$164 of employee severance expenses and $315 of non-cash fixed
asset charges. The 2007 adjustments to GAAP amounts represent
$5,843 of non-cash stock compensation expense.
(3) Adjustment to GAAP amounts represents non-cash amortization of
intangible assets.
(4) Represents the tax effect on the adjustments to GAAP.
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NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
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HISTORICAL VOLUMES
--------------------------------------------------------------
---------------- ------------- ---------------------------
Growth Rates
Quarter Year Total Volumes Sequential Year over Year
---------------- ------------- ---------------------------
Q1 2004 120,554 36% 210%
Q2 2004 152,640 27% 178%
Q3 2004 182,737 20% 133%
Q4 2004 193,883 6% 119%
------------- ---- ----
FY 2004 649,814 149% 149%
Q1 2005 222,341 15% 84%
Q2 2005 266,023 20% 74%
Q3 2005 298,759 12% 63%
Q4 2005 328,815 10% 70%
------------- ---- ----
FY 2005 1,115,938 72% 72%
Q1 2006 364,155 11% 64%
Q2 2006 417,269 15% 57%
Q3 2006 463,028 11% 55%
Q4 2006 448,084 (3%) 36%
------------- ---- ----
FY 2006 1,692,536 52% 52%
Q1 2007 484,477 8% 33%
Q2 2007 731,418 51% 75%
Q3 2007 787,673 8% 70%
Q4 2007 730,992 (7%) 63%
------------- ---- ----
FY 2007 2,734,560 62% 62%
Q1 2008 745,075 2% 54%
Q2 2008 780,108 5% 7%
Q3 2008 791,613 1% 1%
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---------------- -----------------------------------------------
Acquisition Contribution - First 12 months
Quarter Year DayHawk ATN TDS Radlinx ERS
---------------- ----------------------------------------------
Q1 2004 -- -- -- -- --
Q2 2004 -- -- -- -- --
Q3 2004 -- -- -- -- --
Q4 2004 8,316 -- -- -- --
FY 2004
Q1 2005 15,850 -- -- -- --
Q2 2005 17,355 -- -- -- --
Q3 2005 18,905 -- -- -- --
Q4 2005 8,480 29,640 -- -- --
FY 2005
Q1 2006 -- 32,130 -- -- --
Q2 2006 -- 32,622 -- -- --
Q3 2006 -- 32,086 -- -- --
Q4 2006 -- -- -- -- --
FY 2006
Q1 2007 -- -- 27,089 -- --
Q2 2007 -- -- 51,095 137,611 --
Q3 2007 -- -- 52,708 143,339 --
Q4 2007 -- -- 51,644 124,394 --
FY 2007
Q1 2008 -- -- 23,147 117,693 17,457
Q2 2008 -- -- -- 4,817 26,010
Q3 2008 -- -- -- -- 23,655
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"NHWKF"