MINNEAPOLIS, Jan. 26, 2009 (GLOBE NEWSWIRE) -- Virtual Radiologic Corp. (Nasdaq:VRAD), a leading global provider of teleradiology services, today reported financial results for its fourth quarter and full year ended December 31, 2008.
Fourth Quarter Highlights
-- Revenue up 23% to $28.3 million
-- Read volume up 30% to 591,000
-- Adjusted EBITDA(1) up 24% to $5.0 million and 18% of revenue
-- Adjusted net income(2) of $2.0 million; Adjusted diluted
earnings per share(3) (EPS) of $0.12
-- GAAP net income of $890,000; GAAP diluted EPS of $0.05
-- Cash and investments totaled $29.3 million; the Company has no
debt
-- Shares repurchased totaled $6.1 million to complete the $8.0
million share repurchase program
Full Year Highlights
-- Revenue up 24% to $106.6 million
-- Read volume up 30% to 2.2 million
-- Adjusted EBITDA up 28% to $20.5 million and 19% of revenue
-- Adjusted net income of $9.7 million; Adjusted diluted EPS
of $0.57
-- GAAP net income of $8.5 million; GAAP diluted EPS of $0.50
-- Company repurchased a total of 944,760 shares to complete the
$8.0 million share repurchase program
"We are very pleased to end the year with strong fourth quarter results," said Rob Kill, Virtual Radiologic's chief executive officer. "2008 was filled with significant milestones in our first year as a public company. We successfully integrated our first acquisition, launched our software as a service technology offering, closed our first three international deals, and deepened our penetration of the final read market. Our outlook for 2009 reflects the confidence we have in our ability to continue profitable growth and create shareholder value, balanced by a cautious approach as we acknowledge the uncertainties that face us and our customers as we enter the year."
Fourth Quarter and Full Year Results
Total revenue increased 23% to $28.3 million and 24% to $106.6 million for the three and twelve months ended December 31, 2008, respectively, compared to $22.9 million and $86.2 million for the three and twelve months ended December 31, 2007, respectively. The increase in revenue over the fourth quarter and full year of 2007 resulted primarily from a 28% increase in the number of hospitals and medical facilities served to 1,026 as of December 31, 2008, which represents approximately 17% of all hospitals in the United States.
Adjusted EBITDA increased 24% to $5.0 million and 28% to $20.5 million for the three and twelve months ended December 31, 2008, respectively, compared to $4.0 million and $16.1 million for the three and twelve months ended December 31, 2007, respectively. This increase resulted primarily from the growth in total revenue along with a decrease in professional services expense as a percentage of revenue, and was partially offset by a corresponding increase in sales, general and administrative expenses.
Adjusted net income was $2.0 million and $9.7 million for the three and twelve months ended December 31, 2008, respectively, compared to $1.6 million and $7.9 million for the three and twelve months ended December 31, 2007, respectively. This resulted in Adjusted diluted EPS of $0.12 and $0.57 for the three and twelve months ended December 31, 2008, respectively, and $0.09 and $0.46 for the three and twelve months ended December 31, 2007, respectively.
GAAP net income available to common stockholders was $890,000 and $8.5 million for the three and twelve months ended December 31, 2008, respectively. This resulted in diluted EPS of $0.05 and $0.50, respectively. Included in the fourth quarter and full year 2008 GAAP net income available to common stockholders is a $587,000 charge, net of tax, for medical malpractice loss reserves related to the previously announced formation of the Company's captive insurance subsidiary. This compares to $16.2 and $(20.3) million in GAAP net income (loss) available to common stockholders for the three and twelve months ended December 31, 2007, respectively. This resulted in $0.08 and $(2.31) in diluted earnings (loss) per share for the three and twelve months ended December 31, 2007, respectively. For purposes of calculating diluted earnings per share for the three months ended December 31, 2007, preferred stock decretion of $14.9 million is excluded from GAAP net income available to common stockholders as the preferred stock is assumed to be converted.
2009 Guidance
The Company is providing the following guidance for the full year of 2009:
-- Revenue ranging from $113.0 million to $117.0 million -- Adjusted EBITDA ranging from $22.0 million to $23.0 million -- Adjusted net income ranging from $9.4 million to $10.0 million -- Adjusted diluted earnings per share ranging from $0.58 to $0.61
Conference Call Information
The Company will be hosting a conference call January 26, 2008 at 4:30 p.m. Eastern Time to discuss these results and provide a general business update. Participants can access the call by dialing (888) 500-6951 (within the United States and Canada), or (719) 325-2492 (outside the United States and Canada). A live webcast of the conference call will be available on the Company's corporate web site at http://ir.virtualrad.com under "Events and Presentations." A replay of the call will be available from 7:30 p.m. Eastern Time on Monday, January 26, through midnight on Thursday, February 26, 2008. To access the replay, dial (888) 203-1112, or (719) 457-0820 and use passcode 6122004.
About Virtual Radiologic
Virtual Radiologic Corporation (http://www.virtualrad.com) provides teleradiology solutions to radiology practices and medical centers throughout the United States and internationally. Utilizing market-leading, proprietary workflow technology, Virtual Radiologic's predominantly U.S.-based physicians perform preliminary and final read interpretations for emergent and non-emergent needs -- day or night, 365 days a year. Virtual Radiologic's American Board of Radiology-certified radiologists are collectively licensed in all 50 states. Virtual Radiologic is Joint Commission-certified and serves over 620 clients supporting more than 1,025 medical facilities.
Safe Harbor for Forward-Looking and Cautionary Statements
Certain statements in this press release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, in particular, statements about our plans, objectives, strategies and prospects regarding, among other things, our business and results of operations. These statements involve a number of risks, uncertainties and other factors that could cause actual results, performance or achievements of Virtual Radiologic Corporation to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. For examples of such risks and uncertainties, please see our Annual Report on form 10-K, as well as our other filings with the Securities and Exchange Commission. Statements that are not historical facts in this press release are forward-looking statements that involve certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. Except as required by applicable law, Virtual Radiologic Corporation undertakes no duty to update these forward-looking statements due to new information or as a result of future events.
Notes Regarding the Use of Non-GAAP Financial Measures
The Company records its results of operations in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In addition, the Company is providing certain supplemental non-GAAP information which the Company believes to be an important indicator of its financial performance. These financial measures are not financial measures under GAAP and the Company's calculation of these non-GAAP financial measures may not be comparable to the calculation of similarly titled measures reported by other companies. The Company uses the following non-GAAP financial measures:
-- Adjusted EBITDA - operating income excluding the effects of
depreciation and amortization, non-cash stock-based
compensation expense and medical malpractice loss reserves
(other than specific case reserves);
-- Adjusted net income - net income available to common
stockholders excluding the effects of non-controlling interest,
non-cash stock-based compensation, net of tax, medical
malpractice loss reserves (other than specific case reserves),
net of tax, non-recurring financing charges, preferred cash
dividends paid and Series A Cumulative Redeemable Convertible
Preferred Stock accretion;
-- Adjusted diluted earnings per share - Adjusted net income
divided by Pro-forma diluted shares outstanding; and
-- Pro-forma diluted shares outstanding - weighted average
diluted shares outstanding plus weighted average Series A
Preferred Stock outstanding, common share equivalents and the
additional weighted average common shares that would have been
outstanding had the Company's initial public offering been
completed as of the beginning of the applicable reporting
period.
The Company presents these non-GAAP financial measures because it believes that they are a useful indicator of its performance and on-going operations. The Company's management also uses these non-GAAP financial measures in order to review and assess its operating performance and its management team in connection with certain incentive programs and the preparation of its financial projections. In addition, the Company believes that these non-GAAP financial measures are useful to investors because such measures are frequently used by securities analysts to measure a company's operating performance without regard to certain items, such as income tax expense, interest expense and depreciation and amortization, which can vary substantially from company to company.
Adjusted EBITDA, Adjusted net income, Adjusted diluted earnings per share and Pro-forma diluted shares outstanding are not measurements of the Company's financial performance under GAAP and should not be considered as an alternative to operating income, net income, earnings per share or any other performance measures derived in accordance with GAAP.
(1) Adjusted EBITDA consists of operating income excluding the
effects of depreciation and amortization, non-cash stock-based
compensation expense and medical malpractice loss reserves (other
than specific case reserves). See "Notes Regarding the Use of
Non-GAAP Financial Measures" and "Supplemental Information and
Non-GAAP Reconciliations" for more information related to
Adjusted EBITDA.
(2) Adjusted net income consists of net income available to common
stockholders excluding the effects of non-controlling interest,
non-cash stock-based compensation, net of tax, medical
malpractice loss reserves (other than specific case reserves),
net of tax, non-recurring financing charges, preferred cash
dividends paid and Series A Cumulative Redeemable Convertible
Preferred Stock accretion. See "Notes Regarding the Use of
Non-GAAP Financial Measures" and "Supplemental Information and
Non-GAAP Reconciliations" for more information related to
Adjusted net income.
(3) Adjusted diluted earnings per share consists of Adjusted net
income divided by Pro-forma diluted shares outstanding. See
"Notes Regarding the Use of Non-GAAP Financial Measures" and
"Supplemental Information and Non-GAAP Reconciliations" for more
information related to Adjusted diluted earnings per share.
VIRTUAL RADIOLOGIC CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2008 2007 2008 2007
-------- -------- -------- ---------
Revenue $ 28,301 $ 22,945 $106,567 $ 86,243
-------- -------- -------- ---------
Operating costs
and expenses
Professional services 14,187 11,173 49,363 43,607
Sales, general
and administrative 11,050 8,781 38,717 30,918
Depreciation
and amortization 1,343 787 4,700 2,488
-------- -------- -------- ---------
Total operating costs
and expenses 26,580 20,741 92,780 77,013
-------- -------- -------- ---------
Operating income 1,721 2,204 13,787 9,230
Other income (expense)
Interest income 149 199 599 451
Interest expense -- (1,938) -- (2,380)
-------- -------- -------- ---------
Total other income
(expense) 149 (1,739) 599 (1,929)
-------- -------- -------- ---------
Income before
non-controlling
interest and
income tax 1,870 465 14,386 7,301
Non-controlling interest
expense (income) 4 (2,108) 14 (17)
-------- -------- -------- ---------
Income before income
tax expense 1,866 2,573 14,372 7,318
Income tax expense 976 1,288 5,918 3,867
-------- -------- -------- ---------
Net income 890 1,285 8,454 3,451
Cash dividends paid
Preferred -- -- -- (13,596)
Series A Cumulative
Redeemable Convertible
Preferred Stock
decretion (accretion) -- 14,941 -- (10,127)
-------- -------- -------- ---------
Net income (loss)
available to
common stockholders $ 890 $ 16,226 $ 8,454 $(20,272)
======== ======== ======== =========
Earnings (loss) per
common share
Basic $ 0.06 $ 1.28 $ 0.51 $ (2.31)
Diluted(1) $ 0.05 $ 0.08 $ 0.50 $ (2.31)
Weighted average common
shares outstanding
Basic 15,938 12,695 16,500 8,762
Diluted 16,256 15,396 16,976 8,762
(1) Diluted earnings per share for the three months ended December
31, 2007 excludes the impact of Series A Cumulative Redeemable
Convertible Preferred Stock decretion because the Series A
Cumulative Redeemable Convertible Preferred Stock is assumed
converted.
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(Unaudited)
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
-----------------------------------------
2008 2007 2008 2007
-------- -------- -------- ---------
Adjusted
EBITDA(1) $ 4,983 $ 4,028 $ 20,549 $ 16,091
Adjusted net income(1) $ 2,023 $ 1,601 $ 9,681 $ 7,861
Adjusted diluted
earnings per share(1) $ 0.12 $ 0.09 $ 0.57 $ 0.46
Pro-forma diluted
shares outstanding(1) 16,256 17,396 16,976 17,180
(1) See "Notes Regarding the Use of Non-GAAP Financial Measures" and
"Supplemental Information and Non-GAAP Reconciliations" for more
information related to the non-GAAP financial measures presented
in this table.
VIRTUAL RADIOLOGIC CORPORATION
SUPPLEMENTAL INFORMATION AND NON-GAAP RECONCILIATIONS
(Unaudited)
(in thousands, except per share data)
The following table reconciles the GAAP financial measure of
Operating income to the non-GAAP supplemental financial measure of
Adjusted EBITDA which excludes the effects of depreciation and
amortization, non-cash stock-based compensation expense and medical
malpractice loss reserves (other than specific case reserves).
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2008 2007 2008 2007
-------- -------- -------- --------
Reconciliation of
Operating income
to Adjusted EBITDA:
Operating income 1,721 2,204 13,787 9,230
-------- -------- -------- --------
Depreciation
and amortization 1,343 787 4,700 2,488
Physician non-cash
stock-based
compensation 499 759 (479) 3,687
Employee non-cash
stock-based
compensation 423 278 1,544 686
Medical malpractice
loss reserves(1) 997 -- 997 --
-------- -------- -------- --------
Adjusted EBITDA $ 4,983 $ 4,028 $ 20,549 $ 16,091
======== ======== ======== ========
(1) Medical malpractice loss reserves exclude specific case reserves.
The following table reconciles the GAAP financial measure of Net income (loss) available to common stockholders to the non-GAAP supplemental financial measure of Adjusted net income which excludes the effects of non-controlling interest, non-cash stock-based compensation expense, net of tax, medical malpractice loss reserves (other than specific case reserves), net of tax, non-recurring financing charges, preferred cash dividends paid, and Series A Cumulative Redeemable Convertible Preferred Stock accretion, and presents the related Adjusted diluted earnings per share.
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2008 2007 2008 2007
-------- -------- -------- ---------
Reconciliation of Net
income (loss) available
to common stockholders
to Adjusted net income:
Net income (loss)
available to
common stockholders $ 890 $ 16,226 $ 8,454 $(20,272)
-------- -------- -------- ---------
Non-controlling
interest expense
(income) 4 (2,108) 14 (17)
Physician non-cash
stock-based
compensation, net
of tax(1) 293 358 (282) 1,739
Employee non-cash
stock-based
compensation, net
of tax(1) 249 130 908 323
Medical malpractice
loss reserves, net
of tax(2) 587 -- 587 --
Non-recurring
financing charges -- 1,936 -- 2,365
Preferred cash
dividends paid -- -- -- 13,596
Series A Cumulative
Redeemable Convertible
Preferred Stock
(decretion) accretion -- (14,941) -- 10,127
-------- -------- -------- ---------
Adjusted net income $ 2,023 $ 1,601 $ 9,681 $ 7,861
======== ======== ======== =========
Adjusted diluted earnings
per share $ 0.12 $ 0.09 $ 0.57 $ 0.46
Reconciliation of Weighted
average diluted shares
outstanding to Pro-forma
diluted shares outstanding:
Weighted average diluted
shares outstanding 16,256 15,396 16,976 8,762
Weighted average Series
A Preferred Stock
outstanding -- -- -- 3,150
Common share equivalents -- -- -- 1,783
Assumed issuance of
weighted average common
shares from initial
public offering(3) -- 2,000 -- 3,485
-------- -------- -------- ---------
Pro-forma diluted
shares outstanding 16,256 17,396 16,976 17,180
======== ======== ======== ========
(1) Assumes that the effective tax rate for the three months ended
December 31, 2008 and 2007 was equal to the effective tax rate
for the year ended December 31, 2008 and 2007, respectively.
(2) Medical malpractice loss reserves exclude specific case reserves.
(3) Assumes that the issuance of 4.0 million shares of common stock,
which occurred in conjunction with the completion of the
Company's initial public offering on November 14, 2007, occurred
on January 1, 2007.
VIRTUAL RADIOLOGIC CORPORATION
SUPPLEMENTAL INFORMATION AND
NON-GAAP RECONCILIATIONS - CONTINUED
(Unaudited)
(in millions, except per share data)
Year Ended
-------------
December 31,
2009
-------------
Net income available to common stockholders $4.9 - $5.1
-------------
Income tax expense 3.3 - 3.4
Interest income, net (0.4) - (0.6)
Depreciation and amortization 6.6 - 7.0
-------------
EBITDA 14.4 - 14.9
-------------
Physician non-cash stock-based compensation 0.7 - 0.8
Employee non-cash stock-based compensation 1.8 - 2.0
Medical malpractice loss reserves 5.1 - 5.3
-------------
Adjusted EBITDA $22.0 - $23.0
=============
Net income available to common stockholders $4.9 - $5.1
-------------
Physician non-cash stock-based
compensation, net of tax 0.4 - 0.5
Employee non-cash stock-based
compensation, net of tax 1.1 - 1.2
Medical malpractice loss reserves,
net of tax 3.0 - 3.2
-------------
Adjusted net income $9.4 - $10.0
=============
Net income available to common stockholders $0.30 - $0.31
-------------
Physician non-cash stock-based
compensation, net of tax 0.02 - 0.03
Employee non-cash stock-based
compensation, net of tax 0.07 - 0.07
Medical malpractice loss reserves,
net of tax 0.19 - 0.20
-------------
Adjusted diluted earnings per share $0.58 - $0.61
=============
Diluted weighted average shares outstanding(1) 16.4
(1) Diluted weighted average shares outstanding for the full year
2009 are calculated using the treasury stock method in accordance
with GAAP based on forecast assumptions made by the Company.
VIRTUAL RADIOLOGIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AND SELECTED OPERATING DATA
(Unaudited)
As of
December 31,
-----------------
2008 2007
------- -------
(in thousands)
Cash and cash equivalents $19,180 $33,487
Short-term investment 10,136 --
Accounts receivable, net 17,383 12,486
Other current assets 5,244 5,104
Non-current assets 19,476 8,359
------- -------
Total assets $71,419 $59,436
======= =======
Current liabilities $12,924 $ 8,870
Non-current liabilities 1,978 228
------- -------
Total liabilities 14,902 9,098
Non-controlling interest 22 8
Total stockholders' equity 56,495 50,330
------- -------
Total liabilities and stockholders' equity $71,419 $59,436
======= =======
As of
December 31,
-----------------
2008 2007
------- -------
Affiliated radiologists providing services 134 112
Affiliated radiologists under contract 144 132
Customers 621 469
Hospitals and other medical facilities served 1,026 804
Three Months Ended Year Ended
December 31, December 31,
------------------- --------------------
2008 2007 2008 2007
-------- -------- --------- ---------
Total reads 591,091 453,280 2,200,365 1,691,859
Percentage growth over
prior year period 30% 47% 30% 64%
Same site volume
growth(1)a 2% 21% 6% 18%
Percentage of read
revenue from final reads 27% 23% 24% 24%
(1) Same-site volume growth is calculated as the percentage increase
in the number of reads over the comparable prior year period
generated by a facility that has been under contract for at least
three months at the beginning of the measurement period and
remains a customer throughout that period.