FORT MYERS, Fla., Nov. 14, 2016 (GLOBE NEWSWIRE) -- 21st Century Oncology Holdings, Inc. (“21C” or the “Company”), the leading global provider of integrated cancer care (ICC) services, announced today its financial results for the third quarter of 2016.
Third Quarter 2016 Results
Total revenues decreased by $16.6 million, or 6.3%, from $262.3 million for the three months ended September 30, 2015 to $245.7 million for the three months ended September 30, 2016.
Net patient service revenue in our total domestic freestanding line of business declined $7.3 million, or 4.8%, as compared to the same period in the prior year. This decline was driven by a 1.3% decline in total radiation oncology treatments per day and a 3.6% decline in net patient service revenue per radiation oncology treatment for the third quarter of 2016 as compared to the same period in the prior year.
Net patient service revenue in our ICC line of business declined $7.2 million, or 9.0%, as compared to the same period in the prior year. The conversion of our Jacksonville medical oncology group to a professional services agreement (PSA) with the University of Florida, whereby the Company will invoice for chemotherapy administration only, eliminating the drug portion, drove $4.6 million of the decline in ICC revenue.
International net patient service revenue declined $3.4 million, or 10.7%, as compared to the same period in the prior year due to the devaluation in the Argentine Peso. Excluding the impact of currency fluctuations, international revenue growth was approximately 37.8%, or $8.9 million, quarter over quarter.
Net loss for the third quarter of 2016 was $78.5 million as compared to a net loss of $55.2 million for the same period in the prior year. The increase in net loss was the result of a $16.6 million reduction in total revenue, an increase in other gains and losses of $6.2 million, an increase in interest expense of $3.4 million and a $3.0 million increase in provision for bad debt, partially offset by a $5.8 million decrease in salaries and benefits.
Pro-forma adjusted EBITDA in the third quarter of 2016 was $23.6 million, or 9.6% of total revenues, as compared to $31.4 million, or 12.0% of total pro-forma revenues, in the third quarter of 2015.
Total radiation oncology treatment plans decreased 0.2% in the third quarter of 2016 as compared to the same period in the prior year, and same market radiation oncology treatment plans increased 2.9% for the third quarter of 2016 as compared to the same period in the prior year.
Total radiation oncology treatments per day during the third quarter of 2016 declined 1.3% as compared to the same period in 2015 due to the closing of our Bronx-Lebanon, Riverhead, Upper Chesapeake and Holyoke centers as well as the transition of our Greenville, North Carolina radiation center to an unconsolidated health system joint venture. Same market radiation oncology treatments per day for the third quarter of 2016 increased 0.4% as compared to the same period in 2015.
Net patient service revenue per radiation oncology treatment decreased 3.6% in the third quarter of 2016 as compared to the same period in the prior year and same market net patient service revenue per radiation oncology treatment decreased 3.1% in the third quarter of 2016 as compared to the same period in the prior year.
The number of open cases in our international line of business for the third quarter of 2016 increased 3.8% as compared to the same period in the prior year. Due to devaluation in the Argentine Peso, revenue per radiation oncology case declined 14.0% for the third quarter of 2016 as compared to the same period in the prior year. Excluding the impact of currency fluctuations, international revenue per case increased by approximately 26.0%.
Year-to-Date September 2016 Results
Total revenues decreased by $41.7 million, or 5.1%, from $816.1 million for the nine months ended September 30, 2015 to $774.4 million for the nine months ended September 30, 2016.
Net patient service revenue in our domestic freestanding line of business declined $19.8 million, or 4.2%, as compared to the same period in the prior year. This decline was driven by a 3.0% decline in total radiation oncology treatments per day and a 1.8% decline in net patient service revenue per radiation oncology treatment for the first nine months of 2016 as compared to the same period in the prior year.
Net patient service revenue in our ICC line of business declined $15.1 million, or 5.9%, as compared to the same period in the prior year. The conversion of our Jacksonville medical oncology group to a professional services agreement (PSA) with the University of Florida, whereby the Company will invoice for chemotherapy administration only, eliminating the drug portion, drove $12.1 million of the decline in ICC revenue.
International net patient service revenue declined $8.1 million, or 9.2%, as compared to the same period in the prior year due to the devaluation in the Argentine Peso. Excluding the impact of currency fluctuations, international revenue growth was approximately 36.1%, or $24.3 million, year over year.
Net loss for the nine month period ended September 30, 2016 was $92.9 million as compared to a net loss of $133.9 million for the same period in the prior year. The decrease in net loss resulted from a $22.4 million reduction in salaries and benefits, a decrease in general and administrative expense of $40.3 million and a $37.4 million reduction in the early extinguishment of debt, offset by a $41.7 million decline in revenue, a $3.6 million increase in provision for doubtful accounts, and a $13.8 million increase in fair value measurements.
Pro-forma adjusted EBITDA for the nine month period ended September 30, 2016 was $96.0 million, or 12.4% of total revenues, as compared to $120.3 million, or 14.7% of total pro-forma revenues, for the same period in the prior year.
Total radiation oncology treatment plans decreased 1.6% for the nine month period ended September 30, 2016 as compared to the same period in the prior year, and same market radiation oncology treatment plans increased 0.1% as compared to the same period in the prior year.
Total radiation oncology treatments per day during for the nine month period ended September 30, 2016 declined 3.0% as compared to the same period in 2015 due to the closing of our Bronx-Lebanon, Riverhead, Upper Chesapeake and Holyoke centers as well as the transition of our Greenville, North Carolina radiation center to an unconsolidated health system joint venture. Same market radiation oncology treatments per day for the nine month period ended September 30, 2016 declined 1.4% as compared to the same period in 2015.
Net patient service revenue per radiation oncology treatment decreased 1.8% for the nine month period ended September 30, 2016 as compared to the same period in the prior year and same market net patient service revenue per radiation oncology treatment decreased 2.2% for the nine month period ended September 30, 2016 as compared to the same period in the prior year.
The number of open cases in our international line of business for the nine month period ended September 30, 2016 increased 7.3% as compared to the same period in the prior year. Due to devaluation in the Argentine Peso, revenue per radiation oncology case declined 15.4% for the nine month period ended September 30, 2016 as compared to the same period in the prior year. Excluding the impact of currency fluctuations, international revenue per case increased by approximately 26.3%
Recent Developments
On November 1, 2016, the Company announced that it failed to make a semi-annual interest payment as required by the indenture governing its 11.00% Senior Notes due 2023. The failure to make such interest payment, if not cured within 30 days, will result in an event of default under the Indenture. The Company is using the available cure period to work with its lenders, bondholders and stakeholders to address the default.
William R. Spalding, President and Chief Executive Officer, said, “The Company’s business strategy is fundamentally sound, with a unique, integrated cancer care model that positions us well in the healthcare reform marketplace. I also believe that our size and scale, low cost, outpatient model with convenient locations contribute to our uniqueness and value in the cancer care market. I remain confident that investors and lenders, whether a part of the organization today or those who want to be a part of its future, have the same perspective and that a path forward exists which should allow us to address near term liquidity issues and better position our overall capital structure for the future.”
Earnings Conference Call
The Company will host a conference call on Friday, November 18, 2016 at 10 am Eastern Time, during which management will discuss the financial results in further detail. The conference call and replay of the conference call may be accessed as follows:
Dial-in numbers: 877-407-9039 (Domestic); 201-689-8470 (International)
Replay Dial-in Numbers (Available until December 2, 2016): 844-512-2921 (Domestic); 412-317-6671 (International); Replay Pin Number: 13650240
A live webcast and webcast replay of the call will also be available from the Events section of the corporate website at www.21co.com.
About 21st Century Oncology Holdings, Inc.
21st Century Oncology Holdings, Inc. is the largest global provider of integrated cancer care services. The Company offers a comprehensive range of cancer treatment services, focused on delivering academic quality, cost-effective coordinated patient care in personal and convenient community settings. As of September 30, 2016, the Company operated 180 radiation treatment centers, including 144 centers located in 17 U.S. states and 36 centers located in seven countries in Latin America.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. Statements preceded by, followed by or that otherwise include the words “believes”, “expects”, “anticipates”, “intends”, “projects”, “estimates”, “plans”, “may increase”, “forecast” and similar expressions or future or conditional verbs such as “will”, “should”, “would”, “may” and “could” are generally forward-looking in nature and not historical facts. Forward-looking statements are based on management’s current expectations or beliefs about the Company’s future plans, expectations and objectives. These forward-looking statements are not historical facts and are subject to risks and uncertainties that could cause the actual results to differ materially from those projected in these forward-looking statements including, but not limited to reductions in Medicare reimbursement, healthcare reform, state and federal investigations, claims and litigation matters, decreases in payments by managed care organizations and other commercial payers, liquidity, leverage ratios and compliance with other debt covenants and other risk factors that may be described from time to time in the Company’s filings with the Securities and Exchange Commission. Readers of this release are cautioned not to place undue reliance on forward-looking statements contained herein, which speak only as of the date stated, or if no date is stated, as of the date of this press release. 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, unless required by law.
21ST CENTURY ONCOLOGY HOLDINGS, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(in thousands, except share and per-share amounts) | |||||||||
September 30, | December 31, | ||||||||
2016 | 2015 | ||||||||
(unaudited) | (a) | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 49,696 | $ | 65,211 | |||||
Restricted cash | 300 | 195 | |||||||
Marketable securities | 1,756 | 1,078 | |||||||
Accounts receivable, net | 126,629 | 122,355 | |||||||
Prepaid expenses | 10,494 | 7,822 | |||||||
Inventories | 3,731 | 3,918 | |||||||
Income tax receivable | 5,153 | 4,966 | |||||||
Other current assets | 17,875 | 15,732 | |||||||
Total current assets | 215,634 | 221,277 | |||||||
Equity investments in joint ventures | 15,209 | 1,214 | |||||||
Property and equipment, net | 214,695 | 238,585 | |||||||
Real estate subject to finance obligation | 14,970 | 12,631 | |||||||
Goodwill | 491,742 | 498,680 | |||||||
Intangible assets, net | 59,481 | 70,115 | |||||||
Embedded derivative & other financial instrument features of | |||||||||
Series A convertible redeemable preferred stock | 499 | 17,883 | |||||||
Other long-term assets | 40,487 | 41,588 | |||||||
Deferred income taxes | 2,243 | 1,888 | |||||||
Total assets | $ | 1,054,960 | $ | 1,103,861 | |||||
LIABILITIES AND DEFICIT | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 57,666 | $ | 59,888 | |||||
Accrued expenses | 82,879 | 111,653 | |||||||
Income taxes payable | 3,697 | 2,501 | |||||||
Current portion of long-term debt | 1,106,662 | 1,023,877 | |||||||
Current portion of finance obligation | 230 | 283 | |||||||
Other current liabilities | 11,620 | 14,265 | |||||||
Total current liabilities | 1,262,754 | 1,212,467 | |||||||
Long-term debt, less current portion | 17,731 | 49,233 | |||||||
Finance obligation, less current portion | 15,641 | 13,318 | |||||||
Embedded derivative & other financial instrument features of | |||||||||
Series A convertible redeemable preferred stock | 24,843 | 19,911 | |||||||
Other long-term liabilities | 71,298 | 70,928 | |||||||
Deferred income taxes | 4,989 | 3,887 | |||||||
Total liabilities | 1,397,256 | 1,369,744 | |||||||
Series A convertible redeemable preferred stock, $0.001 par value, $1,000 stated | |||||||||
value, 3,500,000 authorized, 410,000 and 385,000 issued and outstanding | |||||||||
at September 30, 2016 and December 31, 2015, respectively | 472,349 | 389,514 | |||||||
Noncontrolling interests - redeemable | 19,247 | 19,233 | |||||||
Commitments and Contingencies | |||||||||
Equity: | |||||||||
Common stock, $0.01 par value, 1,000,000 shares authorized | |||||||||
1,059 shares issued and outstanding at September 30, 2016 | |||||||||
and December 31, 2015 | - | - | |||||||
Additional paid-in capital | 521,350 | 579,920 | |||||||
Retained deficit | (1,323,777 | ) | (1,226,298 | ) | |||||
Accumulated other comprehensive loss, net of tax | (58,966 | ) | (54,574 | ) | |||||
Total 21st Century Oncology Holdings, Inc. shareholder's deficit | (861,393 | ) | (700,952 | ) | |||||
Noncontrolling interests - nonredeemable | 27,501 | 26,322 | |||||||
Total deficit | (833,892 | ) | (674,630 | ) | |||||
Total liabilities and deficit | $ | 1,054,960 | $ | 1,103,861 | |||||
(a) Derived from audited financial statements | |||||||||
21ST CENTURY ONCOLOGY HOLDINGS, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | |||||||||||||||
(in thousands) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues: | |||||||||||||||
Net patient service revenue | $ | 226,505 | $ | 243,768 | $ | 715,974 | $ | 755,877 | |||||||
Management fees | 14,240 | 14,180 | 43,514 | 45,261 | |||||||||||
Other revenue | 4,934 | 4,309 | 14,872 | 14,965 | |||||||||||
Total revenues | 245,679 | 262,257 | 774,360 | 816,103 | |||||||||||
Expenses: | |||||||||||||||
Salaries and benefits | 136,859 | 142,640 | 414,610 | 436,996 | |||||||||||
Medical supplies | 22,211 | 22,498 | 74,215 | 73,563 | |||||||||||
Facility rent expenses | 17,440 | 16,983 | 52,304 | 50,821 | |||||||||||
Other operating expenses | 16,007 | 15,951 | 47,678 | 46,994 | |||||||||||
General and administrative expenses | 35,344 | 68,306 | 101,070 | 141,341 | |||||||||||
Depreciation and amortization | 21,319 | 22,439 | 63,412 | 66,775 | |||||||||||
Provision for doubtful accounts | 8,610 | 5,617 | 17,270 | 13,683 | |||||||||||
Interest expense, net | 27,151 | 23,771 | 77,353 | 73,836 | |||||||||||
Other gains and losses | 481 | (5,696 | ) | (12,699 | ) | (7,363 | ) | ||||||||
Impairment loss | 770 | - | 2,595 | - | |||||||||||
Early extinguishment of debt | - | - | - | 37,390 | |||||||||||
Fair value measurements | 34,976 | 1,799 | 22,187 | 8,404 | |||||||||||
Gain (loss) on foreign currency transactions | (5 | ) | 333 | 300 | 537 | ||||||||||
Total expenses | 321,163 | 314,641 | 860,295 | 942,977 | |||||||||||
Loss before income taxes and equity interest in net | |||||||||||||||
income of joint ventures | (75,484 | ) | (52,384 | ) | (85,935 | ) | (126,874 | ) | |||||||
Income tax expense | 3,166 | 2,851 | 7,967 | 7,198 | |||||||||||
Net loss before equity interest in net income (loss) | |||||||||||||||
of joint ventures | (78,650 | ) | (55,235 | ) | (93,902 | ) | (134,072 | ) | |||||||
Equity interest in net income (loss) of joint ventures, net of tax | 150 | (10 | ) | 957 | 202 | ||||||||||
Net loss | (78,500 | ) | (55,245 | ) | (92,945 | ) | (133,870 | ) | |||||||
Net income attributable to noncontrolling | |||||||||||||||
interests- redeemable and non-redeemable | (1,422 | ) | (2,530 | ) | (4,534 | ) | (6,610 | ) | |||||||
Net loss attributable to 21st Century | |||||||||||||||
Oncology Holdings, Inc. shareholder | (79,922 | ) | (57,775 | ) | (97,479 | ) | (140,480 | ) | |||||||
Other comprehensive loss, net of tax: | |||||||||||||||
Unrealized loss on foreign currency translation | (1,150 | ) | (2,415 | ) | (5,146 | ) | (6,414 | ) | |||||||
Other comprehensive loss | (1,150 | ) | (2,415 | ) | (5,146 | ) | (6,414 | ) | |||||||
Comprehensive loss | (79,650 | ) | (57,660 | ) | (98,091 | ) | (140,284 | ) | |||||||
Comprehensive income attributable to noncontrolling | |||||||||||||||
interests- redeemable and non-redeemable | (1,429 | ) | (2,067 | ) | (3,780 | ) | (5,599 | ) | |||||||
Comprehensive loss attributable to 21st Century | |||||||||||||||
Oncology Holdings, Inc. shareholder | $ | (81,079 | ) | $ | (59,727 | ) | $ | (101,871 | ) | $ | (145,883 | ) | |||
21ST CENTURY ONCOLOGY HOLDINGS, INC. | |||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
(in thousands) | |||||||||||||
(unaudited) | |||||||||||||
Nine Months Ended | |||||||||||||
September 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Cash flows from operating activities | |||||||||||||
Net loss | $ | (92,945 | ) | $ | (133,870 | ) | |||||||
Adjustments to reconcile net loss to net cash (used in) provided by | |||||||||||||
operating activities: | |||||||||||||
Depreciation and amortization | 63,412 | 66,775 | |||||||||||
Deferred rent expense | 200 | 356 | |||||||||||
Deferred income taxes | 739 | (912 | ) | ||||||||||
Stock-based compensation | - | 6 | |||||||||||
Provision for doubtful accounts | 17,270 | 13,683 | |||||||||||
Gain on the sale/disposal of property and equipment | (480 | ) | (203 | ) | |||||||||
Gain on the contribution of a radiation facility to a joint venture | (12,629 | ) | - | ||||||||||
Gain on the sale of marketable securities | - | (2 | ) | ||||||||||
Impairment loss | 2,595 | - | |||||||||||
Early extinguishment of debt | - | 37,390 | |||||||||||
Debt modification costs | 5,910 | - | |||||||||||
Loss on foreign currency transactions | 158 | 298 | |||||||||||
Fair value adjustment of earn-out liabilities | 1 | (518 | ) | ||||||||||
Fair value adjustment of embedded derivatives and other financial instruments | 22,186 | 8,922 | |||||||||||
Amortization of debt discount | 1,415 | 1,228 | |||||||||||
Amortization of loan costs | 3,229 | 3,675 | |||||||||||
Paid in kind interest on notes payable | 1,888 | 370 | |||||||||||
Equity interest in net income of joint ventures, net of tax | (957 | ) | (202 | ) | |||||||||
Distribution received from unconsolidated joint ventures | 269 | 106 | |||||||||||
Pension plan contributions | (927 | ) | (1,756 | ) | |||||||||
Changes in operating assets and liabilities: | |||||||||||||
Accounts receivable and other current assets | (26,974 | ) | (34,277 | ) | |||||||||
Prepaid expenses and other assets | 597 | 2,192 | |||||||||||
Inventories | 231 | (624 | ) | ||||||||||
Accounts payable | (2,214 | ) | 4,500 | ||||||||||
Accrued deferred compensation | 1,198 | 1,057 | |||||||||||
Income taxes payable | 843 | 435 | |||||||||||
Accrued expenses / other liabilities | (27,849 | ) | 64,692 | ||||||||||
Net cash (used in) provided by operating activities | (42,834 | ) | 33,321 | ||||||||||
Cash flows from investing activities | |||||||||||||
Purchase of property and equipment | (24,204 | ) | (33,595 | ) | |||||||||
Acquisition of medical practices | (129 | ) | (33,064 | ) | |||||||||
Change in restricted cash associated with medical practice acquisitions | (105 | ) | 7,009 | ||||||||||
Proceeds from the sale of equity interest in a joint venture | 6,170 | - | |||||||||||
Purchase of joint venture interests | (502 | ) | - | ||||||||||
Proceeds from the sale of property and equipment | 124 | 1,143 | |||||||||||
Purchase of marketable securities | (711 | ) | (4,633 | ) | |||||||||
Sale of marketable securities | - | 4,013 | |||||||||||
(Loans to) repayments from employees | (221 | ) | 353 | ||||||||||
Distribution received from joint venture entities | - | 496 | |||||||||||
Purchase of company owned life insurance policies | (1,105 | ) | (1,015 | ) | |||||||||
Change in other assets and other liabilities | 545 | 45 | |||||||||||
Net cash used in investing activities | (20,138 | ) | (59,248 | ) |
21ST CENTURY ONCOLOGY HOLDINGS, INC. | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
(in thousands) | ||||||||||||
(unaudited) | ||||||||||||
Nine Months Ended | ||||||||||||
September 30, | ||||||||||||
2016 | 2015 | |||||||||||
Cash flows from financing activities | ||||||||||||
Proceeds from issuance of debt | 62,748 | 972,851 | ||||||||||
Principal repayments of debt | (27,582 | ) | (921,871 | ) | ||||||||
Repayments of finance obligation | (200 | ) | (168 | ) | ||||||||
Proceeds from issuance of Series A convertible redeemable preferred stock | 25,000 | - | ||||||||||
Payments of issue costs related to the issuance of preferred stock | (30 | ) | - | |||||||||
Proceeds from issuance of noncontrolling interest | - | 743 | ||||||||||
Proceeds from noncontrolling interest holders - redeemable and non-redeemable | - | 3,230 | ||||||||||
Purchase of noncontrolling interest - non-redeemable | - | (16,233 | ) | |||||||||
Cash distributions to noncontrolling interest holders - redeemable | ||||||||||||
and non-redeemable | (3,208 | ) | (4,072 | ) | ||||||||
Payments for contingent considerations | (149 | ) | (8,537 | ) | ||||||||
Payment of call premium on long-term debt | - | (24,877 | ) | |||||||||
Payment of debt modification costs | (5,910 | ) | - | |||||||||
Payment of other financing costs | (552 | ) | - | |||||||||
Payments of loan costs | (2,638 | ) | (26,481 | ) | ||||||||
Net cash provided by (used in) financing activities | 47,479 | (25,415 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (22 | ) | (15 | ) | ||||||||
Net decrease in cash and cash equivalents | (15,515 | ) | (51,357 | ) | ||||||||
Cash and cash equivalents, beginning of period | 65,211 | 99,082 | ||||||||||
Cash and cash equivalents, end of period | $ | 49,696 | $ | 47,725 |
21ST CENTURY ONCOLOGY HOLDINGS, INC. | |||||||||||||||
Supplemental Financial Information (Unaudited) | |||||||||||||||
Reconciliation of Total Pro-forma Revenue and Pro-forma Adjusted EBITDA to Net Loss Attributable | |||||||||||||||
to 21st Century Oncology Holdings, Inc. Shareholder | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in thousands): | |||||||||||||||
Total revenues | $ | 245,679 | $ | 262,257 | $ | 774,360 | $ | 816,103 | |||||||
Pro-forma full period effect of acquisitions (a) | - | 169 | - | 1,183 | |||||||||||
Total pro-forma revenues | $ | 245,679 | $ | 262,426 | $ | 774,360 | $ | 817,286 | |||||||
Net income (loss) attributable to 21st Century | |||||||||||||||
Oncology Holdings, Inc. shareholder | $ | (79,922 | ) | $ | (57,775 | ) | $ | (97,479 | ) | $ | (140,480 | ) | |||
Income tax expense | 3,166 | 2,851 | 7,967 | 7,198 | |||||||||||
Interest expense, net | 27,151 | 23,771 | 77,353 | 73,836 | |||||||||||
Depreciation and amortization | 21,319 | 22,439 | 63,412 | 66,775 | |||||||||||
Gain on the contribution of a radiation facility to a joint venture | - | - | (12,629 | ) | - | ||||||||||
Gain on BP settlement | - | (5,796 | ) | (517 | ) | (5,796 | ) | ||||||||
Impairment loss | 770 | - | 2,595 | - | |||||||||||
Early extinguishment of debt | - | - | - | 37,390 | |||||||||||
Fair value adjustment of earn-out liabilities | - | 12 | 1 | (518 | ) | ||||||||||
Fair value adjustment of embedded derivatives | |||||||||||||||
and other financial instruments | 34,976 | 1,787 | 22,186 | 8,922 | |||||||||||
Net income attributable to noncontrolling interests, | |||||||||||||||
net of cash distributions | (379 | ) | 480 | 1,326 | 2,538 | ||||||||||
Other expenses (a) | 6,226 | 2,200 | 9,961 | 6,145 | |||||||||||
Non-cash expenses (b) | 800 | 944 | 2,433 | 3,293 | |||||||||||
Sale-lease back adjustments (c) | (359 | ) | 4 | (940 | ) | (760 | ) | ||||||||
Acquisition-related costs (d) | 190 | 1,128 | 1,180 | 3,507 | |||||||||||
Litigation matters (e) | 636 | 39,256 | 1,888 | 57,775 | |||||||||||
Expenses associated with debt/waiver amendments and | |||||||||||||||
restatement of previously issued financial statements (f) | 9,049 | - | 17,230 | - | |||||||||||
Pro-Forma full period effect of acquisition EBITDA (a) | - | 117 | - | 467 | |||||||||||
Pro-Forma Adjusted EBITDA (1) | $ | 23,623 | $ | 31,418 | $ | 95,967 | $ | 120,292 | |||||||
Pro-Forma Adjusted EBITDA as a percentage of | |||||||||||||||
total revenues | 9.6 | % | 12.0 | % | 12.4 | % | 14.7 | % | |||||||
(1) Pro-forma Adjusted EBITDA, as defined in our Credit Agreement, dated as of April 30, 2015, is calculated as | |||||||||||||||
income (loss) before interest expense (net of interest income), income taxes, depreciation and amortization, net income attributable | |||||||||||||||
to noncontrolling interests, net of cash distributions, gain on the sale of an interest in a joint venture, loss on sale leaseback | |||||||||||||||
transaction, early extinguishment of debt, fair value adjustment of earn-out liability, fair value adjustment of embedded derivative, | |||||||||||||||
impairment loss, foreign currency derivative contract loss (gain), management fees accrued to our sponsor, non-cash expenses | |||||||||||||||
including costs relating to stock compensation, amortization of straight-line rent and amortization of capital expenditures relating | |||||||||||||||
to repairs and maintenance, non-cash equipment rent, sale-lease back adjustments, acquisition-related costs, other expenses | |||||||||||||||
including loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums on termed | |||||||||||||||
physicians, franchise taxes, costs relating to consulting services on Medicare reimbursement, litigation settlements with physicians, | |||||||||||||||
costs associated with tradename and rebranding initiatives, expenses associated with idle/closed radiation therapy treatment | |||||||||||||||
facilities. | |||||||||||||||
(a) Other expenses include management fees accrued to our sponsor, Vestar Capital Partners, loss on sale of assets, exit/disposal costs | |||||||||||||||
severance payments related to termination of employee staff reductions, tail premiums paid on terminated physicians, | |||||||||||||||
franchise taxes and costs relating to consulting services on Medicare reimbursement. Expenses related to the costs associated | |||||||||||||||
with the Company's tradename and rebranding initiatives and expenses associated with idle/closed radiation therapy facilities and | |||||||||||||||
costs associated with the CMS Medicare freeze. | |||||||||||||||
(b) Non-cash expenses including costs relating to stock compensation, amortization of straight-line rent, amortization of capital | |||||||||||||||
expenditures relating to warranty arrangements amortized to repairs and maintenance and non-cash equipment rent. | |||||||||||||||
(c) Sale-lease back adjustments relates to the adjustment of benefit derived from the classification of operating leases as finance | |||||||||||||||
obligations reflecting a reclassification of interest expense and depreciation and amortization expense as rent expense. | |||||||||||||||
(d) Acquisition related costs associated with ASC 805, "Business Combinations," including professional fees, corporate | |||||||||||||||
development, integration and due diligence costs relating to the acquisition of medical practices. | |||||||||||||||
(e) Litigation matters relate to loss contingency reserves related to the Medicare investigative matters and costs associated with the | |||||||||||||||
termination of physicians. | |||||||||||||||
(f) Expenses associated with debt/waiver amendments and accounting, legal and consulting fees associated with the restatement of | |||||||||||||||
previously issued financial statements. | |||||||||||||||
We believe the Pro-Forma Adjusted EBITDA provides useful information about our financial performance to investors, lenders, financial | |||||||||||||||
analysts and rating agencies as these groups have historically used EBITDA-related measures in the healthcare industry, along | |||||||||||||||
with other measures, to estimate the value of a company, to make informed investment decisions, to evaluate a company's leverage | |||||||||||||||
capacity and its ability to meet its debt service requirements. Pro-Forma Adjusted EBITDA eliminates the uneven effect of non-cash | |||||||||||||||
depreciation of tangibles assets and amortization of intangible assets, much of which results from acquisitions accounted for under | |||||||||||||||
the purchase method of accounting. Pro-Forma Adjusted EBITDA is also used by us to measure individual performance for incentive | |||||||||||||||
compensation purposes and as an analytical indicator for purposes of allocating resources to our operating business and assessing | |||||||||||||||
their performance, both internally and relative to our peers, as well as to evaluate the performance of our operating management teams, | |||||||||||||||
and for purposes in the calculation of debt covenants and related disclosures. | |||||||||||||||
Pro-Forma Adjusted EBITDA is not intended as a substitute for net income (loss) attributable to 21st Century Oncology Holdings, Inc. | |||||||||||||||
shareholder, operating cash flows or other cash flow data determined in accordance with accounting principles generally accepted in the | |||||||||||||||
United States. Due to varying methods of calculation, Pro-Forma Adjusted EBITDA as presented may not be comparable to similarly | |||||||||||||||
titled measures of other companies. |
21ST CENTURY ONCOLOGY HOLDINGS, INC. | |||||||||||||||||||||||||
KEY OPERATING STATISTICS | |||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, | % | September 30, | % | ||||||||||||||||||||||
Operating Metrics | 2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||||||||||
Number of operating days | 64 | 64 | 0.0 | % | 192 | 191 | 0.5 | % | |||||||||||||||||
Domestic | |||||||||||||||||||||||||
Radiation oncology treatment plans (total) (1) | 8,816 | 8,832 | -0.2 | % | 27,039 | 27,481 | -1.6 | % | |||||||||||||||||
Radiation oncology treatments per day (total) | 3,083 | 3,124 | -1.3 | % | 3,167 | 3,265 | -3.0 | % | |||||||||||||||||
Net patient service revenue per radiation oncology | $ | 727 | $ | 754 | -3.6 | % | $ | 737 | $ | 750 | -1.8 | % | |||||||||||||
treatment (total) | |||||||||||||||||||||||||
Radiation oncology treatment plans (same market) (1,2) | 8,814 | 8,569 | 2.9 | % | 26,879 | 26,860 | 0.1 | % | |||||||||||||||||
Radiation oncology treatments per day (same market) (2) | 3,079 | 3,066 | 0.4 | % | 3,159 | 3,205 | -1.4 | % | |||||||||||||||||
Net patient service revenue per radiation oncology | |||||||||||||||||||||||||
treatment (same market) (2) | $ | 728 | $ | 751 | -3.1 | % | $ | 735 | $ | 752 | -2.2 | % | |||||||||||||
International | |||||||||||||||||||||||||
Total number of open cases | 5,094 | 4,907 | 3.8 | % | 15,055 | 14,034 | 7.3 | % | |||||||||||||||||
Revenue per radiation oncology case | $ | 5,525 | $ | 6,421 | -14.0 | % | $ | 5,273 | $ | 6,230 | -15.4 | % | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, | % | September 30, | % | ||||||||||||||||||||||
Revenue Details | 2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||||||||||
Net patient service revenue per Consolidated Statements | |||||||||||||||||||||||||
of Operations and Comprehensive Loss | $ | 226,505 | $ | 243,768 | $ | 715,974 | $ | 755,877 | |||||||||||||||||
Less net patient service revenue ICC | (72,125 | ) | (79,292 | ) | (240,586 | ) | (255,654 | ) | |||||||||||||||||
Less net patient service revenue professional services | (1,898 | ) | (1,820 | ) | (5,730 | ) | (6,180 | ) | |||||||||||||||||
Plus net patient service revenue unconsolidated MSAs (3) | 19,169 | 19,653 | 57,975 | 61,450 | |||||||||||||||||||||
Less international net patient service revenue | (28,142 | ) | (31,508 | ) | (79,384 | ) | (87,434 | ) | |||||||||||||||||
Domestic freestanding net patient service revenue | $ | 143,509 | $ | 150,801 | -4.8 | % | $ | 448,249 | $ | 468,059 | -4.2 | % | |||||||||||||
September 30, | |||||||||||||||||||||||||
Center Details | 2016 | 2015 | |||||||||||||||||||||||
Radiation therapy centers - freestanding (domestic) | 132 | 134 | |||||||||||||||||||||||
Radiation therapy centers - freestanding (international) | 36 | 36 | |||||||||||||||||||||||
Radiation therapy centers - professional / other | 12 | 12 | |||||||||||||||||||||||
Total radiation therapy centers | 180 | 182 | |||||||||||||||||||||||
(1) Total radiation oncology treatment plans represent the number | |||||||||||||||||||||||||
of prescriptions issued by the physicians to start the treatment process. | |||||||||||||||||||||||||
(2) Same market is defined as markets that have been open in excess of 12 months. | |||||||||||||||||||||||||
This includes in-market acquisitions and conversion of existing professional only relationships to freestanding. | |||||||||||||||||||||||||
(3) Medical services agreement | |||||||||||||||||||||||||