SCOTTSDALE, Ariz., Feb. 17, 2010 (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 fourth quarter 2009.
Fourth Quarter 2009 Highlights
- Revenue was $37.9 million driven by total scan volume of 770,000 scans.
- Total scan volume increased 7% from the year ago quarter.
- Final scan volumes increased 43% from the year ago quarter.
- Adjusted net income was $2.3 million, or $0.09 per diluted share. 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 true-up of deferred taxes on a previous goodwill impairment charge.
- GAAP net income was $0.7 million, or $0.03 per diluted 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 $6.8 million and free cash flow generated during the quarter was $4.5 million.
- Cash and investments at December 31, 2009 totaled $32.3 million.
"We are pleased to report adjusted EPS of 9 cents, in the middle of our guidance range in our seasonally slowest quarter of the year. We also reported solid year over year growth in our total scan volumes and particularly our finals volumes. While the growth in our scan volumes is encouraging, we continue to focus on improving the efficiency and effectiveness of our company as we position ourselves to compete in our evolving marketplace," said David Engert, the company's president and chief executive officer.
First Quarter 2010 Outlook
The company expects to see typical seasonality in the first quarter of 2010. Volumes are expected to be essentially flat sequentially from the fourth quarter of 2009, but revenue and earnings are expected to be sequentially lower as a result of the impact of price declines. Specifically, revenue for the first quarter of 2010 is expected to be in the range of $35.5 to $37.5 million and adjusted EPS is expected to be in the range of 4 to 6 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 future periods. 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 fourth quarter conference call will be held today, February 17, 2010 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 (877)941-8609 or (480)629-9818 (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 Friday, March 12, 2010. To access the replay, dial (800)406-7325 or (303)590-3030 (for international callers) and enter the conference ID number: 4207698.
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 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
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 and related tax benefit, (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 ineffective interest rate hedge contracts, and (vii) the non-cash charges and adjustments for restructuring activities, including severance. 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) 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) | ||
| December 31, | December 31, | |
| ASSETS | 2009 | 2008 |
| (in thousands, except share data) | ||
| Current assets: | ||
| Cash and cash equivalents | $ 26,293 | $ 47,160 |
| Marketable securities | 6,000 | -- |
| Trade accounts receivable, net | 21,359 | 24,393 |
| Deferred income taxes | 910 | 855 |
| Prepaid expenses and other current assets | 4,702 | 6,231 |
| Total current assets | 59,264 | 78,639 |
| Property and equipment, net | 13,507 | 10,528 |
| Goodwill | -- | 68,718 |
| Intangible assets, net | 72,550 | 79,616 |
| Deferred income taxes | 15,707 | 4,082 |
| Other assets, net | 4,646 | 3,566 |
| Total | $ 165,674 | $ 245,149 |
| LIABILITIES | ||
| Current liabilities: | ||
| Accounts payable | $ 6,130 | $ 6,327 |
| Accrued expenses and other liabilities | 3,473 | 3,617 |
| Accrued payroll and related benefits | 3,769 | 3,783 |
| Long-term debt, due within one year | 802 | 955 |
| Total current liabilities | 14,174 | 14,682 |
| Insurance reserve | 4,018 | 3,705 |
| Long-term debt | 77,404 | 93,145 |
| Other liabilities | 1,348 | 3,850 |
| Total liabilities | 96,944 | 115,382 |
| STOCKHOLDERS' EQUITY | ||
| Common stock-150,000,000 shares authorized; $.001 par value; 23,558,890 and 27,590,774 shares issued and outstanding | 24 | 28 |
| Additional paid-in capital | 221,105 | 237,429 |
| Retained earnings (deficit) | (151,659) | (103,516) |
| Accumulated other comprehensive loss | (740) | (4,174) |
| Total stockholders' equity | 68,730 | 129,767 |
| Total | $ 165,674 | $ 245,149 |
| NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||
|
Three months ended December 31, |
Twelve months ended December 31, | |||
| 2009 | 2008 | 2009 | 2008 | |
| (in thousands, except per share data) | (in thousands, except per share data) | |||
| Service revenue | $ 37,944 | $ 39,720 | $ 162,536 | $ 167,607 |
| Operating costs and expenses: | ||||
| Professional services (includes non-cash compensation expense of $171, $162, $700 and $1,676) | 17,190 | 15,662 | 72,368 | 68,932 |
| Sales, general, and administrative (includes non-cash compensation expense of $26, $1,107, $3,290 and $6,654) | 14,838 | 15,709 | 60,845 | 65,683 |
| Depreciation and amortization | 2,789 | 2,776 | 11,009 | 11,362 |
| Goodwill impairment | -- | -- | 68,718 | -- |
| Total operating costs and expenses | 34,817 | 34,147 | 212,940 | 145,977 |
| Operating income (loss) | 3,127 | 5,573 | (50,404) | 21,630 |
| Other income (expense): | ||||
| Interest expense | (1,763) | (2,042) | (8,466) | (8,508) |
| Interest income | 29 | 170 | 164 | 1,380 |
| Other, net | (3) | 95 | (16) | 197 |
| Total other income (expense) | (1,737) | (1,777) | (8,318) | (6,931) |
| Income (loss) before income taxes | 1,390 | 3,796 | (58,722) | 14,699 |
| Income tax expense (benefit) | 734 | 1,139 | (10,578) | 5,257 |
| Net income (loss) | $ 656 | $ 2,657 | $ (48,144) | $ 9,442 |
| Earnings (loss) per common share: | ||||
| Basic | $ 0.03 | $ 0.09 | $ (1.89) | $ 0.32 |
| Diluted | $ 0.03 | $ 0.09 | $ (1.89) | $ 0.31 |
| Weighted averages of common shares outstanding: | ||||
| Basic | 23,553,373 | 28,506,783 | 25,443,493 | 29,482,536 |
| Diluted | 24,574,278 | 29,516,571 | 25,443,493 | 30,561,942 |
| NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) | ||
| Twelve months ended December 31, | ||
| 2009 | 2008 | |
| (in thousands) | ||
| Cash flows from operating activities: | ||
| Net income (loss) | $ (48,144) | $ 9,442 |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
| Depreciation and amortization | 11,009 | 11,362 |
| Goodwill Impairment | 68,718 | -- |
| Accretion of premiums on marketable securities | (11) | (21) |
| Amortization of debt issuance costs and effect of interest rate swaps | 3,830 | 648 |
| Loss on disposal of fixed assets and other, net | 103 | 646 |
| Deferred income taxes | (13,804) | (1,210) |
| Non-cash stock compensation expense | 3,990 | 8,330 |
| Excess Tax benefit from exercise of stock options | (32) | (234) |
| Provision for doubtful accounts | 583 | 1,127 |
| Other, net | -- | -- |
| Changes in operating assets and liabilities (excluding effects of acquisitions): | ||
| Trade accounts receivable, net | 2,545 | 371 |
| Prepaid expenses and other assets | 1,389 | (3,420) |
| Accounts payable | (454) | 527 |
| Accrued expenses and other liabilities | (1,205) | 346 |
| Accrued payroll and related benefits | (140) | 1,173 |
| Net cash provided by operating activities | 28,377 | 29,087 |
| Cash flows from investing activities: | ||
| Purchase of marketable securities | (13,988) | (26,390) |
| Proceeds from maturities of marketable securities | 8,000 | 33,755 |
| Proceeds from sale of marketable securities | -- | 23,303 |
| Purchase of property and equipment | (6,699) | (4,757) |
| Cash paid for acquisitions | -- | (7,650) |
| Net cash provided by (used in) investing activities | (12,687) | 18,261 |
| Cash flows from financing activities: | ||
| Repayment of debt | (15,894) | (5,400) |
| Settlement of interest rate swaps | -- | (5,331) |
| Proceeds from exercise of stock options | 134 | 559 |
| Excess tax benefit from exercise of stock options | 32 | 234 |
| Purchase and retirement of common stock | (20,342) | (22,206) |
| Debt amendment costs | (434) | -- |
| Cash exchange for stock options | (53) | -- |
| Net cash used in financing activities | (36,557) | (32,144) |
| Net increase (decrease) in cash and cash equivalents | (20,867) | 15,204 |
| Cash and cash equivalents—beginning of period | 47,160 | 31,956 |
| Cash and cash equivalents—end of period | $ 26,293 | $ 47,160 |
| NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES | ||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||||
| RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME | ||||||
| Three months ended | ||||||
| December 31, 2009 | December 31, 2008 | |||||
| (in thousands, except share data) | (in thousands, except share data) | |||||
| GAAP | Adjustments | As Adjusted | GAAP | Adjustments | As Adjusted | |
| Service revenue | $ 37,944 | -- | $ 37,944 | $ 39,720 | -- | $ 39,720 |
| Operating costs and expenses: | ||||||
| Professional services (1) | 17,190 | 44 | 17,234 | 15,662 | 170 | 15,832 |
| Sales, general, and administrative (2) | 14,838 | (26) | 14,812 | 15,709 | (1,107) | 14,602 |
| Depreciation and amortization (3) | 2,789 | (1,728) | 1,061 | 2,776 | (1,869) | 907 |
| Goodwill impairment | -- | -- | -- | -- | -- | -- |
| Total operating costs and expenses | 34,817 | (1,710) | 33,107 | 34,147 | (2,806) | 31,341 |
| Operating income | 3,127 | 1,710 | 4,837 | 5,573 | 2,806 | 8,379 |
| Other income (expense): | ||||||
| Interest expense (4) | (1,763) | 471 | (1,292) | (2,042) | -- | (2,042) |
| Interest income | 29 | -- | 29 | 170 | -- | 170 |
| Other, net | (3) | -- | (3) | 95 | -- | 95 |
| Total other income (expense) | (1,737) | 471 | (1,266) | (1,777) | -- | (1,777) |
| Income before income taxes | 1,390 | 2,181 | 3,571 | 3,796 | 2,806 | 6,602 |
| Income tax expense (5) | 734 | 560 | 1,294 | 1,139 | 1,397 | 2,536 |
| Net income | $ 656 | $ 1,621 | $ 2,277 | $ 2,657 | $ 1,409 | $ 4,066 |
| Earnings per share: | ||||||
| Basic | $ 0.03 | $ 0.10 | $ 0.09 | $ 0.14 | ||
| Diluted | $ 0.03 | $ 0.09 | $ 0.09 | $ 0.14 | ||
| Weighted average of shares outstanding: | ||||||
| Basic | 23,553,373 | 23,553,373 | 28,506,783 | 28,506,783 | ||
| Diluted | 24,574,278 | 24,574,278 | 29,516,571 | 29,516,571 | ||
| (1) Adjustments to the 2009 GAAP amounts represent $171 of non-cash stock compensation expense and a credit to expense of $215 associated with adjustments to our incurred but not reported medical liability reserves ("IBNR"). The 2008 adjustments to GAAP amounts represent $162 of non-cash stock compensation expense and a credit to expense of $332 associated with adjustments to our IBNR reserves. | ||||||
| (2) Adjustments to the 2009 GAAP amounts represent $26 of non-cash stock compensation expense. The 2008 adjustments to GAAP amounts represent $1,107 of non-cash stock compensation expense. | ||||||
| (3) Adjustments 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 $670 of amortization of losses incurred on interest rate swap contracts canceled in 2008 and $199 gain resulting from mark to market adjustments of two ineffective interest rate hedge contracts. | ||||||
| (5) Represents the tax effect on the adjustments to GAAP. Additionally, in 2009, $284 of expense represents a true up of the tax benefit associated with the goodwill impairment to reflect a change in our effective annual tax rate, and in 2008 we adjusted out a tax credit of $358 from a change in tax methodology for prior periods. | ||||||
| NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES | ||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||||
| RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME | ||||||
| Twelve months ended | ||||||
| December 31, 2009 | December 31, 2008 | |||||
| (in thousands, except share data) | (in thousands, except share data) | |||||
| GAAP | Adjustments | As Adjusted | GAAP | Adjustments | As Adjusted | |
| Service revenue | $ 162,536 | -- | $ 162,536 | $ 167,607 | -- | $ 167,607 |
| Operating costs and expenses: | ||||||
| Professional services (1) | 72,368 | (1,013) | 71,355 | 68,932 | (2,345) | 66,587 |
| Sales, general, and administrative (2) | 60,845 | (3,342) | 57,503 | 65,683 | (7,832) | 57,851 |
| Depreciation and amortization (3) | 11,009 | (7,066) | 3,943 | 11,362 | (7,516) | 3,846 |
| Goodwill impairment | 68,718 | (68,718) | -- | -- | -- | -- |
| Total operating costs and expenses | 212,940 | (80,139) | 132,801 | 145,977 | (17,693) | 128,284 |
| Operating income (loss) | (50,404) | 80,139 | 29,735 | 21,630 | 17,693 | 39,323 |
| Other income (expense): | ||||||
| Interest expense (4) | (8,466) | 3,022 | (5,444) | (8,508) | -- | (8,508) |
| Interest income | 164 | -- | 164 | 1,380 | -- | 1,380 |
| Other, net | (16) | -- | (16) | 197 | -- | 197 |
| Total other income (expense) | (8,318) | 3,022 | (5,296) | (6,931) | -- | (6,931) |
| Income (loss) before income taxes | (58,722) | 83,161 | 24,439 | 14,699 | 17,693 | 32,392 |
| Income tax expense (benefit) (5) | (10,578) | 20,003 | 9,425 | 5,257 | 7,094 | 12,351 |
| Net income (loss) | $ (48,144) | $ 63,158 | $ 15,014 | $ 9,442 | $ 10,599 | $ 20,041 |
| Earnings (loss) per share: | ||||||
| Basic | $ (1.89) | $ 0.59 | $ 0.32 | $ 0.68 | ||
| Diluted | $ (1.89) | $ 0.58 | $ 0.31 | $ 0.66 | ||
| Weighted average of shares outstanding: | ||||||
| Basic | 25,443,493 | 25,443,493 | 29,482,536 | 29,482,536 | ||
| Diluted | 25,443,493 | 26,066,784 | 30,561,942 | 30,561,942 | ||
| (1) Adjustments to the 2009 GAAP amounts represent $700 of non-cash stock compensation expense and $313 of non-cash expense associated with adjustments to our incurred but not reported medical liability reserves ("IBNR"). The 2008 adjustments to GAAP amounts represent $1,676 of non-cash stock compensation expense and $669 of non-cash expense associated with adjustments to our IBNR reserves. | ||||||
| (2) Adjustments to the 2009 GAAP amounts represent $3,290 of non-cash stock compensation expense and $52 of restructuring charges and adjustments. The 2008 adjustments to GAAP amounts represent $6,654 of non-cash stock compensation expense, $703 of restructuring charges, $164 of employee severance expense and $311 of non-cash fixed asset charges associated with a restructuring event. | ||||||
| (3) Adjustments 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 $3,322 of amortization of losses incurred on interest rate swap contracts canceled in 2008 and $300 gain resulting from mark to market adjustments of two ineffective interest rate hedge contracts. | ||||||
| (5) Represents the tax effect on the adjustments to GAAP. Additionally, in 2008 we adjusted out a tax credit of $358 from a change in tax methodology for prior periods. | ||||||
| NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES | ||||
| HISTORICAL VOLUMES | ||||
| Growth Rates | ||||
| Quarter | Year | Total Volumes | Sequential | Year 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% |
| Q4 | 2009 | 769,789 | (11%) | 7% |
| FY | 2009 | 3,174,323 | 5% | 5% |