Alliance HealthCare Services, Inc. (NYSE:AIQ) (the “Company” or
“Alliance”), a leading national provider of outpatient diagnostic
imaging and radiation therapy services, announced results for the second
quarter and six months ended June 30, 2009.
Second Quarter and First Six Months 2009 Financial Results
Revenue for the second quarter of 2009 increased 5.9% to $130.0 million
from $122.8 million in the second quarter of 2008. For the first six
months of 2009, revenue was $261.8 million compared to $241.9 million in
the same period of 2008, an increase of 8.2%.
Alliance’s Adjusted EBITDA (as defined below) was $48.0 million in the
second quarter of 2009, a 3.0% increase, compared to $46.6 million in
the same quarter a year ago. For the first six months of 2009, Adjusted
EBITDA totaled $95.8 million compared to $90.2 million in the first six
months of 2008, an increase of 6.2%.
Alliance’s net income decreased 18.7% to $4.2 million in the second
quarter of 2009 compared to $5.1 million in the second quarter 2008. For
both the first six months of 2009 and 2008, Alliance’s net income was
$8.5 million.
Earnings per share on a diluted basis, computed in accordance with
generally accepted accounting principles, was $0.08 per share in the
second quarter of 2009 and $0.10 per share in the second quarter of
2008. Earnings per share on a diluted basis were $0.16 per share for
both the first six months of 2009 and 2008. Beginning January 1, 2009,
costs related to mergers and acquisitions must be expensed as incurred.
In the first six months of 2009, the Company recorded $0.8 million in
acquisition related costs (included in Transaction costs) which
negatively impacted diluted earnings per share by $0.01.
Cash flows provided by operating activities was $27.2 million in the
second quarter of 2009 compared to $24.3 million in the corresponding
quarter of 2008, and totaled $58.8 million and $52.6 million in the
first six months of 2009 and 2008, respectively. Capital expenditures in
the second quarter of 2009 were $19.0 million compared to $9.7 million
in the second quarter of 2008, and were $33.9 million and $26.6 million
for the first six months of 2009 and 2008, respectively. Alliance opened
nine new fixed-site imaging centers and opened one radiation oncology
center in the second quarter of 2009. Alliance opened 14 new fixed-site
imaging centers and opened two radiation oncology centers in the first
six months of 2009.
Alliance’s net debt, defined as total long-term debt (including current
maturities) less cash and cash equivalents, decreased $27.7 million to
$561.6 million at June 30, 2009 from $589.3 million at December 31,
2008. Cash and cash equivalents were $102.9 million at June 30, 2009 and
$73.3 million at December 31, 2008.
The Company’s total long-term debt (including current maturities)
increased to $664.5 million at June 30, 2009 from $662.6 million as of
December 31, 2008.
Paul S. Viviano, Chairman of the Board and Chief Executive Officer,
stated, “Alliance HealthCare Services continues to implement our core
strategic initiatives in the context of challenging economic
circumstances, which has placed significant volume pressure on our
business. Alliance’s second quarter 2009 results reflect a 6% increase
in revenue and a 3% increase in Adjusted EBITDA over the second quarter
of 2008. Our focus is on driving new annualized sales and developing de
novo projects for MRI, PET/CT, and radiation oncology, optimizing
operating efficiencies and implementing cost savings, and strengthening
our balance sheet while diligently evaluating selective acquisitions.
Alliance is committed to continuing the diversification of our clinical
service lines, emphasizing the development of fixed-site imaging centers
and de novo radiation therapy cancer centers.”
Full Year 2009 Guidance
Given the challenging economic circumstances that Alliance and many
healthcare services providers are facing, the Company is updating its
full year 2009 guidance ranges as follows:
|
|
|
Previous
|
|
Updated
|
|
|
|
Guidance Range
|
|
Guidance Range
|
|
|
|
(Dollars in millions)
|
|
|
|
|
|
|
|
Revenue
|
|
$536 - $551
|
|
$503 - $518
|
|
Adjusted EBITDA
|
|
$187 - $202
|
|
$177 - $192
|
|
Cash capital expenditures
|
|
$60 - $70
|
|
$60 - $70
|
|
Decrease in long-term debt, net of the change in cash
|
|
|
|
|
|
and cash equivalents (before acquisitions)
|
|
$52 - $67
|
|
$44 - $59
|
|
Fixed-site imaging center openings
|
|
20 - 25
|
|
20 - 25
|
|
Radiation therapy center openings
|
|
4 - 6
|
|
3 - 4
|
Second Quarter 2009 Earnings Conference Call
Investors and all others are invited to listen to a conference call
discussing second quarter 2009 results. The conference call is scheduled
for Thursday, July 30 at 8:30 a.m. Eastern Time. The call will be
broadcast live on the Internet and can be accessed by visiting the
Company’s website at www.alliancehealthcareservices-us.com.
Click on Audio Presentations in the Investors section of the website to
access the link.
The conference call can be accessed at (888) 694-4676 (United States) or
(973) 582-2737 (International). Interested parties should call at least
5 minutes prior to the call to register. A telephone replay will be
available until October 30, 2009. The telephone replay can be accessed
by calling (800) 642-1687 (United States) or (706) 645-9291
(International). The conference call identification number is 21097192.
Definition of Adjusted EBITDA
Adjusted EBITDA as defined under the terms of Alliance’s Credit
Agreement, is earnings before interest expense and other, net; income
tax expense; depreciation expense; amortization expense; noncontrolling
interest in subsidiaries; share-based payment; a maximum of $750,000 of
severance and related costs in each fiscal year; transaction costs; and
other non-cash charges. Adjusted EBITDA is included because the
Company’s amended credit agreement uses a measure similar to this to
calculate the Company’s compliance with specified covenants. For a more
detailed discussion of Adjusted EBITDA and reconciliation to net income,
see the table entitled “Adjusted EBITDA” included in the tables
following this release.
About Alliance HealthCare Services
Alliance HealthCare Services is a leading national provider of
shared-service and fixed-site diagnostic imaging services, based upon
annual revenue and number of diagnostic imaging systems deployed, and a
provider of radiation therapy services. Alliance provides imaging and
therapeutic services primarily to hospitals and other healthcare
providers on a shared and full-time service basis, in addition to
operating a growing number of fixed-site imaging and radiation therapy
centers. The Company had 491 diagnostic imaging and radiation therapy
systems, including 291 MRI systems and 125 PET or PET/CT systems, and
served over 1,000 clients in 46 states at June 30, 2009. The Company
operated 109 fixed-site imaging centers (three in unconsolidated joint
ventures), which includes systems installed in hospitals or other
buildings on or near hospital campuses, medical groups’ offices, or
medical buildings and retail sites. The Company also operated 23
radiation therapy centers and stereotactic radiosurgery facilities (two
radiation therapy centers are in unconsolidated joint ventures) as of
June 30, 2009.
Forward-Looking Statements
This press release contains forward-looking statements relating to
future events, including statements related to investment, development
and acquisition activity, the integration of acquired businesses into
the Company and the Company’s full year 2009 guidance. In this context,
forward-looking statements often address the Company’s expected future
business and financial results and often contain words such as
“expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks” or
“will.” Forward-looking statements by their nature address matters that
are uncertain and subject to risks. Such uncertainties and risks
include: changes in the preliminary financial results and estimates due
to the restatement or review of the Company’s financial statements; the
nature, timing and amount of any restatement or other adjustments; the
Company’s ability to make timely filings of its required periodic
reports under the Securities Exchange Act of 1934; issues relating to
the Company’s ability to maintain effective internal control over
financial reporting and disclosure controls and procedures; the
Company’s high degree of leverage and its ability to service its debt;
factors affecting the Company’s leverage, including interest rates; the
risk that the counterparties to the Company’s interest rate swap
agreements fail to satisfy their obligations under these agreements; the
Company’s ability to obtain financing; the effect of operating and
financial restrictions in the Company’s debt instruments; the accuracy
of the Company’s estimates regarding its capital requirements; the
effect of intense levels of competition in the Company’s industry;
changes in the rates or methods of third party reimbursements for
diagnostic imaging and radiation oncology services; fluctuations or
unpredictability of the Company’s revenues, including as a result of
seasonality; changes in the rates or methods of third party
reimbursements for diagnostic imaging and radiation oncology services;
changes in the healthcare regulatory environment; the Company’s ability
to keep pace with technological developments within its industry; the
growth in the market for MRI and other services; the disruptive effect
of hurricanes and other natural disasters; adverse changes in general
domestic and worldwide economic conditions and instability and
disruption of credit markets; difficulties the Company may face in
connection with recent, pending or future acquisitions, including
unexpected costs or liabilities resulting from the acquisitions,
diversion of management’s attention from the operation of the Company’s
business, and risks associated with integration of the acquisitions; and
other risks and uncertainties identified in the Risk Factors section of
the Company’s Form 10-K for the year ended December 31, 2008, filed with
the Securities and Exchange Commission (the “SEC”) as may be modified or
supplemented by our subsequent filings with the SEC. These uncertainties
may cause actual future results or outcomes to differ materially from
those expressed in the Company’s forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company does not
undertake to update its forward-looking statements except as required
under the federal securities laws.
|
ALLIANCE HEALTHCARE SERVICES, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
AND COMPREHENSIVE INCOME
|
|
(Unaudited)
|
|
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
122,781
|
|
|
$
|
130,016
|
|
|
$
|
241,902
|
|
|
$
|
261,804
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Cost of revenues, excluding depreciation
|
|
|
|
|
|
|
|
|
|
and amortization
|
|
|
63,487
|
|
|
|
67,666
|
|
|
|
126,269
|
|
|
|
136,545
|
|
|
Selling, general and administrative expenses
|
|
|
15,293
|
|
|
|
17,426
|
|
|
|
31,002
|
|
|
|
35,319
|
|
|
Transaction costs
|
|
|
-
|
|
|
|
370
|
|
|
|
-
|
|
|
|
801
|
|
|
Severance and related costs
|
|
|
179
|
|
|
|
106
|
|
|
|
326
|
|
|
|
288
|
|
|
Depreciation expense
|
|
|
21,665
|
|
|
|
23,544
|
|
|
|
43,078
|
|
|
|
47,194
|
|
|
Amortization expense
|
|
|
1,888
|
|
|
|
2,761
|
|
|
|
3,745
|
|
|
|
5,537
|
|
|
Interest expense and other, net
|
|
|
11,249
|
|
|
|
11,537
|
|
|
|
23,065
|
|
|
|
22,214
|
|
|
Loss on extinguishment of debt
|
|
|
61
|
|
|
|
-
|
|
|
|
61
|
|
|
|
-
|
|
|
Other (income) and expense, net
|
|
|
(271
|
)
|
|
|
(378
|
)
|
|
|
(333
|
)
|
|
|
(634
|
)
|
|
Total costs and expenses
|
|
|
113,551
|
|
|
|
123,032
|
|
|
|
227,213
|
|
|
|
247,264
|
|
|
Income before income taxes, earnings from unconsolidated
|
|
|
|
|
|
|
|
|
|
investees, and noncontrolling interest, net of taxes
|
|
|
9,230
|
|
|
|
6,984
|
|
|
|
14,689
|
|
|
|
14,540
|
|
|
Income tax expense
|
|
|
4,156
|
|
|
|
3,055
|
|
|
|
6,833
|
|
|
|
6,216
|
|
|
Earnings from unconsolidated investees
|
|
|
(1,090
|
)
|
|
|
(831
|
)
|
|
|
(2,314
|
)
|
|
|
(1,418
|
)
|
|
Net income
|
|
|
6,164
|
|
|
|
4,760
|
|
|
|
10,170
|
|
|
|
9,742
|
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
(1,042
|
)
|
|
|
(593
|
)
|
|
|
(1,636
|
)
|
|
|
(1,247
|
)
|
|
Net income attributable to Alliance HealthCare Services, Inc.
|
|
$
|
5,122
|
|
|
$
|
4,167
|
|
|
$
|
8,534
|
|
|
$
|
8,495
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income, net of taxes
|
|
|
|
|
|
|
|
|
|
Net income attributable to Alliance HealthCare Services, Inc.
|
|
$
|
5,122
|
|
|
$
|
4,167
|
|
|
$
|
8,534
|
|
|
$
|
8,495
|
|
|
Unrealized gain (loss) on hedging transactions, net of taxes
|
|
|
2,963
|
|
|
|
702
|
|
|
|
1,225
|
|
|
|
(160
|
)
|
|
Comprehensive income, net of taxes:
|
|
$
|
8,085
|
|
|
$
|
4,869
|
|
|
$
|
9,759
|
|
|
$
|
8,335
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share attributable to Alliance HealthCare
Services, Inc.:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.10
|
|
|
$
|
0.08
|
|
|
$
|
0.17
|
|
|
$
|
0.16
|
|
|
Diluted
|
|
$
|
0.10
|
|
|
$
|
0.08
|
|
|
$
|
0.16
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares of
|
|
|
|
|
|
|
|
|
|
common stock and common stock equivalents:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
51,033
|
|
|
|
51,655
|
|
|
|
51,030
|
|
|
|
51,653
|
|
|
Diluted
|
|
|
51,831
|
|
|
|
52,158
|
|
|
|
51,904
|
|
|
|
52,222
|
|
|
ALLIANCE HEALTHCARE SERVICES, INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
2008
|
|
|
|
2009
|
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
73,305
|
|
|
|
$
|
102,912
|
|
|
Accounts receivable, net of allowance for doubtful accounts
|
|
67,147
|
|
|
|
|
70,098
|
|
|
Deferred income taxes
|
|
17,719
|
|
|
|
|
17,719
|
|
|
Prepaid expenses and other current assets
|
|
10,272
|
|
|
|
|
6,842
|
|
|
Other receivables
|
|
7,902
|
|
|
|
|
7,884
|
|
|
Total current assets
|
|
176,345
|
|
|
|
|
205,455
|
|
|
|
|
|
|
|
|
Equipment, at cost
|
|
836,842
|
|
|
|
|
837,520
|
|
|
Less accumulated depreciation
|
|
(479,609
|
)
|
|
|
|
(495,919
|
)
|
|
Equipment, net
|
|
357,233
|
|
|
|
|
341,601
|
|
|
|
|
|
|
|
|
Goodwill
|
|
193,430
|
|
|
|
|
194,199
|
|
|
Other intangible assets, net
|
|
110,720
|
|
|
|
|
105,233
|
|
|
Deferred financing costs, net
|
|
7,173
|
|
|
|
|
6,219
|
|
|
Other assets
|
|
38,822
|
|
|
|
|
33,076
|
|
|
Total assets
|
$
|
883,723
|
|
|
|
$
|
885,783
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
$
|
21,468
|
|
|
|
$
|
14,303
|
|
|
Accrued compensation and related expenses
|
|
18,575
|
|
|
|
|
15,559
|
|
|
Accrued interest payable
|
|
3,642
|
|
|
|
|
3,379
|
|
|
Other accrued liabilities
|
|
38,446
|
|
|
|
|
34,937
|
|
|
Current portion of long-term debt
|
|
7,743
|
|
|
|
|
6,875
|
|
|
Total current liabilities
|
|
89,874
|
|
|
|
|
75,053
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
365,323
|
|
|
|
|
366,999
|
|
|
Senior subordinated notes
|
|
289,496
|
|
|
|
|
290,619
|
|
|
Other liabilities
|
|
7,901
|
|
|
|
|
7,662
|
|
|
Deferred income taxes
|
|
102,136
|
|
|
|
|
106,457
|
|
|
Total liabilities
|
|
854,730
|
|
|
|
|
846,790
|
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
Common stock
|
|
514
|
|
|
|
|
515
|
|
|
Treasury stock
|
|
(430
|
)
|
|
|
|
(430
|
)
|
|
Additional paid-in capital
|
|
4,606
|
|
|
|
|
7,528
|
|
|
Accumulated comprehensive loss
|
|
(2,159
|
)
|
|
|
|
(2,319
|
)
|
|
Retained earnings
|
|
20,996
|
|
|
|
|
29,491
|
|
|
Total Alliance HealthCare Services, Inc. stockholders' equity
|
|
23,527
|
|
|
|
|
34,785
|
|
|
Noncontrolling interest
|
|
5,466
|
|
|
|
|
4,208
|
|
|
Total stockholders’ equity
|
|
28,993
|
|
|
|
|
38,993
|
|
|
Total liabilities and stockholders’ equity
|
$
|
883,723
|
|
|
|
$
|
885,783
|
|
|
|
|
|
ALLIANCE HEALTHCARE SERVICES, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
(in thousands)
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2008
|
|
|
2009
|
|
|
Operating activities:
|
|
|
|
|
Net income attributable to Alliance HealthCare Services, Inc.
|
$
|
8,534
|
|
|
$
|
8,495
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Provision for doubtful accounts
|
|
2,262
|
|
|
|
1,712
|
|
|
Share-based payment
|
|
2,759
|
|
|
|
3,030
|
|
|
Depreciation and amortization
|
|
46,823
|
|
|
|
52,731
|
|
|
Amortization of deferred financing costs
|
|
1,147
|
|
|
|
1,161
|
|
|
Accretion of discount on senior subordinated notes
|
|
979
|
|
|
|
1,123
|
|
|
Adjustment of derivatives to fair value
|
|
(12
|
)
|
|
|
(553
|
)
|
|
Distributions greater than (less than) undistributed earnings from
investees
|
|
436
|
|
|
|
(92
|
)
|
|
Noncontrolling interest in subsidiaries
|
|
2,933
|
|
|
|
(1,258
|
)
|
|
Deferred income taxes
|
|
2,784
|
|
|
|
4,426
|
|
|
Excess tax benefit from share-based payment arrangements
|
|
(21
|
)
|
|
|
(8
|
)
|
|
Gain on sale of assets
|
|
(333
|
)
|
|
|
(753
|
)
|
|
Loss on extinguishment of debt
|
|
61
|
|
|
|
-
|
|
|
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
Accounts receivable
|
|
(3,556
|
)
|
|
|
(4,586
|
)
|
|
Prepaid expenses and other current assets
|
|
(1,237
|
)
|
|
|
3,452
|
|
|
Other receivables
|
|
613
|
|
|
|
214
|
|
|
Other assets
|
|
(2,483
|
)
|
|
|
(6,274
|
)
|
|
Accounts payable
|
|
(8,468
|
)
|
|
|
(1,403
|
)
|
|
Accrued compensation and related expenses
|
|
(1,488
|
)
|
|
|
(3,016
|
)
|
|
Accrued interest payable
|
|
(1,065
|
)
|
|
|
(263
|
)
|
|
Income taxes payable
|
|
-
|
|
|
|
81
|
|
|
Other accrued liabilities
|
|
1,669
|
|
|
|
754
|
|
|
Other liabilities
|
|
308
|
|
|
|
(162
|
)
|
|
Net cash provided by operating activities
|
|
52,645
|
|
|
|
58,811
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
Equipment purchases
|
|
(26,629
|
)
|
|
|
(33,864
|
)
|
|
(Increase) decrease in deposits on equipment
|
|
(323
|
)
|
|
|
3,069
|
|
|
Acquisitions, net of cash received
|
|
(10,688
|
)
|
|
|
(1,343
|
)
|
|
Decrease in cash in escrow
|
|
-
|
|
|
|
2,780
|
|
|
Investment in unconsolidated joint ventures
|
|
-
|
|
|
|
(240
|
)
|
|
Proceeds from sale of assets
|
|
2,272
|
|
|
|
4,336
|
|
|
Net cash used in investing activities
|
|
(35,368
|
)
|
|
|
(25,262
|
)
|
|
|
|
ALLIANCE HEALTHCARE SERVICES, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
|
|
(Unaudited)
|
|
(in thousands)
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
Principal payments on equipment debt
|
|
(2,010
|
)
|
|
|
(4,207
|
)
|
|
Proceeds from equipment debt
|
|
-
|
|
|
|
415
|
|
|
Principal payments on term loan facility
|
|
(15,000
|
)
|
|
|
-
|
|
|
Principal payments on senior subordinated notes
|
|
(3,541
|
)
|
|
|
-
|
|
|
Payments of debt issuance costs
|
|
(870
|
)
|
|
|
(207
|
)
|
|
Payments of debt retirement costs
|
|
(61
|
)
|
|
|
-
|
|
|
Proceeds from shared-based payment arrangements
|
|
83
|
|
|
|
49
|
|
|
Excess tax benefit from share-based payment arrangements
|
|
21
|
|
|
|
8
|
|
|
Net cash used in financing activities
|
|
(21,378
|
)
|
|
|
(3,942
|
)
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
(4,101
|
)
|
|
|
29,607
|
|
|
Cash and cash equivalents, beginning of period
|
|
120,892
|
|
|
|
73,305
|
|
|
Cash and cash equivalents, end of period
|
$
|
116,791
|
|
|
$
|
102,912
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
Interest paid
|
$
|
23,584
|
|
|
$
|
20,843
|
|
|
Income taxes paid, net of refunds
|
|
4,617
|
|
|
|
(1,249
|
)
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing
activities:
|
|
|
|
|
Net book value of assets exchanged
|
$
|
27
|
|
|
$
|
429
|
|
|
Capital lease obligations related to the purchase of equipment
|
|
1,645
|
|
|
|
5,307
|
|
|
Capital lease obligations transferred
|
|
-
|
|
|
|
(707
|
)
|
|
Comprehensive income (loss) from hedging transactions, net of taxes
|
|
1,225
|
|
|
|
(160
|
)
|
|
Equipment purchases in accounts payable
|
|
323
|
|
|
|
118
|
|
|
ALLIANCE HEALTHCARE SERVICES, INC.
|
|
ADJUSTED EBITDA
|
|
(in thousands)
|
|
|
|
Adjusted EBITDA represents net income before interest expense and
other, net; income tax expense; depreciation expense; amortization
expense; noncontrolling interest in subsidiaries; share-based
payment; a maximum of $750,000 of severance and related costs in
each fiscal year; transaction costs and other non-cash charges.
Adjusted EBITDA is not a presentation made in accordance with
accounting principles generally accepted in the United States of
America. Adjusted EBITDA should not be considered in isolation or
as a substitute for net income, cash flows from operating
activities and other income or cash flow statement data prepared
in accordance with generally accepted accounting principles or as
a measure of profitability or liquidity. Adjusted EBITDA is
included because the Company’s amended credit agreement uses a
measure similar to this to calculate the Company’s compliance with
covenants such as interest coverage ratio (as defined in Section
7.6A of the Company’s amended credit agreement), consolidated
leverage ratio (as defined in Section 7.6B of the Company’s
amended credit agreement) and consolidated senior leverage ratio
(as defined in Section 7.6J of the Company’s amended credit
agreement). The Company’s failure to comply with these covenants
could result in the amounts borrowed under these instruments,
together with accrued interest and fees, becoming immediately due
and payable. If the Company is not able to refinance this debt
when it becomes due, the Company could become subject to
bankruptcy proceedings. Per the credit agreement, the Company was
required to maintain a maximum consolidated leverage ratio not to
exceed 4.00 to 1.00 as of both June 30, 2008 and 2009, a maximum
consolidated senior leverage ratio not to exceed 3.00 to 1.00 as
of June 30, 2008 and 2009, and a minimum interest coverage ratio
in excess of 2.75 to 1.00 for the years ended June 30, 2008 and
2009. When an acquisition has been consummated in the prior 12
month period, the Company is required to calculate these ratios
using an adjustment as if the acquisition had been consummated on
the first day of the 12 month period. The Company was in
compliance with these covenants for the quarters ended June 30,
2008 and 2009. While Adjusted EBITDA is used to measure the
Company’s compliance with its debt covenants, it is not
necessarily comparable to other similarly titled captions of other
companies due to differences in methods of calculation. The
calculation of Adjusted EBITDA in accordance with the Company’s
amended credit agreement is shown below:
|
|
|
|
|
|
|
|
|
|
Second Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2008
|
|
2009
|
|
2008
|
|
2009
|
|
Net income applicable to Alliance HealthCare Services, Inc.
|
|
$
|
5,122
|
|
$
|
4,167
|
|
$
|
8,534
|
|
$
|
8,495
|
|
Income tax expense
|
|
|
4,156
|
|
|
3,055
|
|
|
6,833
|
|
|
6,216
|
|
Interest expense and other, net
|
|
|
11,249
|
|
|
11,537
|
|
|
23,065
|
|
|
22,214
|
|
Amortization expense
|
|
|
1,888
|
|
|
2,761
|
|
|
3,745
|
|
|
5,537
|
|
Depreciation expense
|
|
|
21,665
|
|
|
23,544
|
|
|
43,078
|
|
|
47,194
|
|
Share-based payment (included in
|
|
|
|
|
|
|
|
|
|
selling, general and administrative expenses)
|
|
|
1,233
|
|
|
1,351
|
|
|
2,759
|
|
|
2,998
|
|
Noncontrolling interest in subsidiaries
|
|
|
1,042
|
|
|
593
|
|
|
1,636
|
|
|
1,247
|
|
Severance and related costs
|
|
|
179
|
|
|
106
|
|
|
326
|
|
|
288
|
|
Transaction costs
|
|
|
-
|
|
|
370
|
|
|
-
|
|
|
801
|
|
Loss on extinguishment of debt
|
|
|
61
|
|
|
-
|
|
|
61
|
|
|
-
|
|
Other non-cash charges (included in other income and expenses, net)
|
|
|
33
|
|
|
522
|
|
|
197
|
|
|
849
|
|
Adjusted EBITDA
|
|
$
|
46,628
|
|
$
|
48,006
|
|
$
|
90,234
|
|
$
|
95,839
|
|
ALLIANCE HEALTHCARE SERVICES, INC.
|
|
ADJUSTED EBITDA (continued)
|
|
(in thousands)
|
|
|
|
Consolidated leverage ratio, as of the last day of any fiscal
quarter, is defined under the Company’s credit agreement as the
ratio of the consolidated total debt as of that date to the
consolidated Adjusted EBITDA for the four fiscal quarters ending
on that date. The Company is required under its amended credit
agreement to maintain a maximum consolidated leverage ratio not to
exceed 4.00 to 1.00. As of June 30, 2008 and 2009, our
consolidated leverage ratio was as follows:
|
|
|
|
|
|
June 30,
|
|
|
|
2008
|
|
|
2009
|
|
Consolidated total debt
|
$
|
652,869
|
|
$
|
664,493
|
|
Last 12 months consolidated Adjusted EBITDA
|
|
170,285
|
|
|
188,182
|
|
Last 12 months consolidated Adjusted EBITDA, as adjusted
|
|
177,509
|
|
|
191,947
|
|
Consolidated leverage ratio
|
3.68x
|
|
3.46x
|
|
Consolidated senior leverage ratio, as of the last day of any
fiscal quarter, is defined under the Company’s credit agreement as
the ratio of the consolidated senior debt as of that date to the
consolidated Adjusted EBITDA for the four fiscal quarters ending
on that date. The Company is required under its amended credit
agreement to maintain a maximum consolidated senior leverage ratio
not to exceed 3.00 to 1.00. As of June 30, 2008 and 2009, the
Company’s consolidated senior leverage ratio was as follows:
|
|
|
|
|
|
June 30,
|
|
|
|
2008
|
|
|
2009
|
|
Consolidated senior debt
|
$
|
364,446
|
|
$
|
373,874
|
|
Last 12 months consolidated Adjusted EBITDA
|
|
170,285
|
|
|
188,182
|
|
Last 12 months consolidated Adjusted EBITDA, as adjusted
|
|
177,509
|
|
|
191,947
|
|
Consolidated senior leverage ratio
|
2.05x
|
|
1.95x
|
|
Interest coverage ratio is defined under the Company’s credit
agreement as the ratio of consolidated Adjusted EBITDA to
consolidated cash interest expense for the four fiscal quarter
period ending on the last day of any fiscal quarter. The Company
is required under its amended credit agreement to maintain a
minimum consolidated interest coverage ratio of 2.75 to 1.00. As
of June 30, 2008 and 2009, the Company’s interest coverage ratio
was as follows:
|
|
|
|
|
|
June 30,
|
|
|
|
2008
|
|
|
2009
|
|
Last 12 months consolidated Adjusted EBITDA
|
$
|
170,285
|
|
$
|
188,182
|
|
Last 12 months consolidated Adjusted EBITDA, as adjusted
|
|
177,509
|
|
|
191,947
|
|
Last 12 months consolidated cash interest expense
|
|
42,419
|
|
|
41,707
|
|
Interest coverage ratio
|
4.18x
|
|
4.60x
|
|
The reconciliation from net income to Adjusted EBITDA for the 2009
guidance range is shown below:
|
|
|
|
|
|
|
|
2009 Full Year
|
|
|
|
Guidance Range
|
|
|
|
(Dollars in millions)
|
|
Net income applicable to Alliance HealthCare Services, Inc.
|
|
$
|
9
|
|
$
|
17
|
|
Income tax expense
|
|
|
7
|
|
|
12
|
|
Depreciation expense; amortization expense;
|
|
|
|
|
|
interest expense and other, net; noncontrolling interest;
|
|
|
|
|
|
share-based payment; and other expenses
|
|
|
161
|
|
|
163
|
|
Adjusted EBITDA
|
|
$
|
177
|
|
$
|
192
|
|
ALLIANCE HEALTHCARE SERVICES, INC.
SELECTED STATISTICAL INFORMATION
|
|
|
|
|
|
|
|
|
Second Quarter Ended
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
2008
|
|
2009
|
|
MRI
|
|
|
|
|
|
|
|
Average number of total systems
|
|
|
|
305.1
|
|
285.0
|
|
Average number of scan-based systems
|
|
|
256.2
|
|
246.5
|
|
Scans per system per day (scan-based systems)
|
|
|
9.33
|
|
9.15
|
|
Total number of scan-based MRI scans
|
|
|
163,235
|
|
152,839
|
|
Price per scan
|
|
|
|
$
|
378.64
|
$
|
375.38
|
|
|
|
|
|
|
|
|
|
Scan-based MRI revenue (in millions)
|
|
$
|
61.8
|
$
|
57.4
|
|
Non-scan based MRI revenue (in millions)
|
|
|
6.9
|
|
5.2
|
|
Total MRI revenue (in millions)
|
|
|
$
|
68.7
|
$
|
62.6
|
|
|
|
|
|
|
|
|
|
PET and PET/CT
|
|
|
|
|
|
|
Average number of systems
|
|
|
|
79.4
|
|
115.9
|
|
Scans per system per day
|
|
|
|
6.25
|
|
6.03
|
|
Total number of PET and PET/CT scans
|
|
|
33,248
|
|
45,557
|
|
Price per scan
|
|
|
|
$
|
1,166
|
$
|
1,108
|
|
|
|
|
|
|
|
|
|
Total PET and PET/CT revenue (in millions)
|
|
$
|
39.1
|
$
|
51.7
|
|
|
|
|
|
|
|
|
|
Revenue breakdown (in millions)
|
|
|
|
|
|
Total MRI revenue
|
|
|
|
$
|
68.7
|
$
|
62.6
|
|
PET and PET/CT revenue
|
|
|
|
39.1
|
|
51.7
|
|
Radiation oncology, other modalities and other revenue
|
|
15.0
|
|
15.7
|
|
Total revenues
|
|
|
|
$
|
122.8
|
$
|
130.0
|
|
|
|
|
|
|
|
|
|
Total fixed-site revenue (in millions)
|
|
|
|
2008
|
|
2009
|
|
Second quarter ended June 30
|
|
|
$
|
24.9
|
$
|
29.8
|
|
ALLIANCE HEALTHCARE SERVICES, INC.
|
|
SELECTED STATISTICAL INFORMATION
|
|
MRI REVENUE GAP
|
|
(in millions)
|
|
|
|
The Company utilizes the MRI revenue gap as a statistical measure
of its MRI client losses and new client contracts. The MRI revenue
gap is calculated by measuring the difference between (a) the
quarterly MRI revenue run rate lost as a result of clients
choosing to terminate contracts with the Company, excluding
clients for which Alliance provides interim service and clients
that the Company elects to terminate, and (b) projected quarterly
new MRI revenue from new client contracts commencing service in
the quarter.
|
|
|
|
The MRI revenue gap for the last eight calendar quarters and the
last twelve month period ended June 30, 2009 is as follows:
|
|
|
|
|
(a)
|
|
(b)
|
|
|
|
|
Revenue
|
|
New
|
|
MRI
|
|
|
Lost
|
|
Revenue
|
|
Revenue Gap
|
|
2007
|
|
|
|
|
|
|
Third Quarter
|
($9.7
|
)
|
|
$4.1
|
|
($5.6
|
)
|
|
Fourth Quarter
|
(10.1
|
)
|
|
6.5
|
|
(3.6
|
)
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
First Quarter
|
($8.4
|
)
|
|
$3.3
|
|
($5.1
|
)
|
|
Second Quarter
|
(9.1
|
)
|
|
4.7
|
|
(4.4
|
)
|
|
Third Quarter
|
(7.0
|
)
|
|
2.2
|
|
(4.8
|
)
|
|
Fourth Quarter
|
(7.7
|
)
|
|
4.0
|
|
(3.7
|
)
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
First Quarter
|
($5.7
|
)
|
|
$2.3
|
|
($3.4
|
)
|
|
Second Quarter
|
(9.0
|
)
|
|
6.8
|
|
(2.2
|
)
|
|
|
|
|
|
|
|
|
Last Twelve Months Ended
|
|
|
|
|
|
|
June 30, 2009
|
($29.4
|
)
|
|
$15.3
|
|
($14.1
|
)
|
Alliance HealthCare Services
Howard Aihara
Executive Vice
President
Chief Financial Officer
(949) 242-5300
