HealthTronics, Inc. Announces Fourth Quarter and Annual Results

Share Name	Share Symbol	Market	Type
Htetf (MM)	NASDAQ:HTRN	NASDAQ	Common Stock

Htetf (MM) (NASDAQ:HTRN)
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HealthTronics, Inc. (NASDAQ:HTRN), a leading provider or Urology services and products, today announced its financial results for the quarter and year ended December 31, 2007. Fourth Quarter 2007 Revenue from continuing operations for the fourth quarter 2007 totaled $36.1 million, up from $33.4 million in the fourth quarter of 2006 and $36.0 million in the third quarter 2007. The Company's loss from continuing operations for the fourth quarter of 2007, in accordance with generally accepted accounting principles ("GAAP"), totaled $15.5 million or $0.44 per diluted share, which compares to a loss of $17.3 million or $0.49 cents per diluted share in the fourth quarter of 2006. Excluding a $20.8 million non-cash charge for goodwill impairment recorded in the fourth quarter of 2007, the Company recorded income from continuing operations of $1.1 million, or $0.03 per diluted share. The Company's adjusted EBITDA from continuing operations for the fourth quarter 2007 was $5.2 million, which compares to $2.7 million in the fourth quarter of 2006. The earnings growth was driven by revenue from both the Urology Services division and the Medical Products division. Urology Services division growth resulted from increased sales from existing partnerships and the acquisition of our interest in the Keystone partnership. Medical Products division growth resulted from revenue increases at both the ClariPath lab and the service and maintenance business. The 2007 adjusted EBITDA includes approximately $900,000 of income related to the Company�s former Swiss manufacturing subsidiary�s insolvency proceedings. Full Year 2007 Revenue from continuing operations for the year ended December 31, 2007 totaled $140.4 million as compared to $142.9 million for the year ended December 31, 2006. The Company�s loss from continuing operations in 2007, in accordance with generally accepted accounting principles (�GAAP�), totaled $14.5 million or $0.41 per share on a diluted basis compared to $16.4 million in 2006, or $0.47 per diluted share. These losses were due to goodwill impairment charges recorded in the fourth quarter of both years. The Company�s adjusted EBITDA for 2007 was $17.3 million compared to $17.9 million in 2006. The Company had cash and cash equivalents totaling $25.2 million and $27.9 million as of December 31, 2007 and December 31, 2006, respectively. The Company had cash flows from operations totaling $61.9 million, which compares to cash flow from operations of $48.9 million for fiscal year 2006. In addition, net working capital was approximately $56 million and there were no monies drawn on HealthTronics� $50 million revolving line of credit. Urology Services Urology Services division revenue for the fourth quarter of 2007 was $31.9 million, up 5 percent from the $30.3 million recorded in the fourth quarter of 2006. Divisional adjusted EBITDA was $4.7 million for Urology Services, or fifteen percent of revenue in the fourth quarter of 2007 which was up slightly from the fourth quarter of 2006. Same store partnership revenue was up 5% in the fourth quarter as volumes at these partnerships also increased 5% from the fourth quarter of 2006. Medical Products Medical Products division revenue for the fourth quarter of 2007 was $4.1 million compared to $3.0 million in the fourth quarter of 2006. Divisional adjusted EBITDA was $1.3 million in the fourth quarter 2007, which compares to a loss of $952,000 in the fourth quarter of 2006. Business Outlook James Whittenburg, President and Chief Executive Officer, commented, "The fourth quarter results exceeded our forecasts, absent the goodwill charge, and the year concluded a vigorous period of transformation for HealthTronics. Most importantly, we stabilized our core Urology Services business as indicated by the same store partnership metrics in the fourth quarter. During the year, we also implemented new growth initiatives, including the introduction of our TotalRad urology focused radiation therapy center concept, expanded the ClariPath laboratory business, and deployed additional units of the RevoLix BPH surgical laser. We also expanded our partnership network with the purchase of our interest in the KeyStone partnership.� Mr. Whittenburg continued, "We have exceeded our internal forecast for the fourth consecutive quarter. Our base business is now in a position to sustain growth as exhibited by our performance in the back half of 2007. Absent the proceeds from the bankruptcy court, the fourth quarter adjusted EBITDA is a good indicator of the type of quarterly financial results HealthTronics should deliver in 2008. Our base business EBITDA is on a $19 million annual run rate while we expect to invest approximately $2 million on our radiation therapy initiative during 2008. We will continue to look for opportunistic acquisitions and growth opportunities that will either expand our footprint in Urology Services or expand our product offerings in Medical Products.� Conference Call and Webcast: Management of HealthTronics will host a conference call today at 5:00 pm EDT. Interested parties may participate in the call by dialing 1-877-879-6184 (International callers dial 1-719-325-4812) and ask for the "HealthTronics Q4 2007 Earnings" call (confirmation code: 5820462). Please call in 10 minutes before the call is scheduled to begin. The conference call will also be web cast live via the Investors section of HealthTronics' web site at www.healthtronics.com. To listen to the live web cast, go to the web site at least 10 minutes early to register, download and install any necessary audio software. If you are unable to listen live, the conference call will be available on the HealthTronics web site for approximately two weeks. HealthTronics' Use of Non-GAAP Financial Measures: This press release includes financial measures for net income (loss), income (loss) from continuing operations, and related per share amounts that exclude certain charges and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP). These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding certain charges, these non-GAAP financial measures facilitate management's internal comparisons to the Company's historical operating results, to competitors' operating results, and to estimates made by securities analysts. Management uses these non-GAAP financial measures internally to evaluate its performance. The Company believes these non-GAAP financial measures are useful to decision-making. In addition, the Company has historically reported similar non-GAAP financial measures to its investors and believes that the inclusion of comparative numbers provides consistency in its financial reporting. Investors are encouraged to review the reconciliation of the non-GAAP financial measures used in this press release to their most directly comparable GAAP financial measure as provided in the financial statements attached to this press release. EBITDA and Adjusted EBITDA: HealthTronics has presented EBITDA and Adjusted EBITDA amounts, which are non-GAAP financial measures. In this press release, HealthTronics has reconciled such amounts to their most directly comparable financial measure calculated in accordance with GAAP, which is HealthTronics' net income. HealthTronics believes that its presentations of EBITDA and Adjusted EBITDA are important supplemental measures of operating performance to its investors. Earnings before interest, taxes, depreciation and amortization ("EBITDA") is a commonly used measure of performance which HealthTronics believes, when considered with measures calculated in accordance with GAAP, gives investors a more complete understanding of HealthTronics' operating results before the impact of investing and financing transactions and income taxes. HealthTronics does not subtract minority interest expense when calculating EBITDA; however, HealthTronics does adjust for minority interest expense and refers to this measure as "Adjusted EBITDA." Minority interest is a GAAP measure intended to reflect our partner's share of our consolidated net income and not our partner's share of our consolidated EBITDA. For example, calculation of minority interest expense does not include adjustments for depreciation, amortization, taxes or interest. As a result, our partners' share of consolidated EBITDA may not, in a given reporting period, equal the deduction for minority interest expense used in arriving at Adjusted EBITDA. HealthTronics has historically reported Adjusted EBITDA to its investors and believes that the continued inclusion of Adjusted EBITDA provides consistency in its financial reporting. Adjusted EBITDA is among the more significant factors in management's internal evaluation of total company performance. Adjusted EBITDA is also widely used by HealthTronics management in the annual budgeting process. HealthTronics believes these measures continue to be used by investors and creditors in their assessment of HealthTronics' operational performance and the valuation of the company. EBITDA and Adjusted EBITDA are used in addition to and in conjunction with results presented in accordance with GAAP. EBITDA and Adjusted EBITDA should not be considered as an alternative to net income, operating income, a liquidity measure, or any other operating performance measure prescribed by GAAP, nor should these measures be relied upon to the exclusion of GAAP financial measures. EBITDA and Adjusted EBITDA reflect additional ways of viewing HealthTronics' operations that HealthTronics believes, when viewed with its GAAP results and the reconciliations to the corresponding GAAP financial measures provide a more complete understanding of factors and trends affecting HealthTronics' business than could be obtained absent this disclosure. About HealthTronics, Inc. HealthTronics is a premier urology company providing an exclusive suite of healthcare services and technology including urologist partnership opportunities, surgical and capital-imaging equipment, maintenance services offerings, and anatomical pathology services. For more information, visit www.healthtronics.com. Statements by the Company's management in this press release or during the conference call announced in this press release that are not strictly historical, including statements regarding plans, objectives and future financial performance, are "forward-looking" statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although HealthTronics believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that the expectations will prove to be correct. Factors that could cause actual results to differ materially from HealthTronics' expectations include, among others, the existence of demand for and acceptance of HealthTronics' products and services, regulatory approvals, economic conditions, the impact of competition and pricing, financing efforts and other factors described from time to time in HealthTronics' periodic filings with the Securities and Exchange Commission. HEALTHTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) � � � � ($ in thousands, except per share data) Three Months Ended Year Ended December 31, December 31, 2007 2006 2007 2006 Revenue: Urology Services $ 31,890 $ 30,290 $ 122,736 $ 123,265 Medical Products 4,100 3,030 17,101 19,080 Other 159 � 128 � 581 � 546 � Total revenue 36,149 � 33,448 � 140,418 � 142,891 � � Cost of services and general and administrative expenses: Urology Services 13,364 14,014 53,490 51,262 Medical Products 3,148 3,801 11,225 16,797 Selling, general and administrative 2,925 4,971 15,884 20,298 Impairment charges 20,800 20,600 20,800 20,600 Depreciation and amortization 2,768 � 2,943 � 11,107 � 11,275 � 43,005 � 46,329 � 112,506 � 120,232 � � Operating income (6,856 ) (12,881 ) 27,912 22,659 � Other income (expenses): Interest and dividends 312 259 1,146 755 Interest expense (185 ) (251 ) (829 ) (1,146 ) 127 � 8 � 317 � (391 ) Income from continuing operations before provision for income taxes and minority interest (6,729 ) (12,873 ) 28,229 22,268 � Minority interest in consolidated income 12,570 10,247 45,568 43,277 � Provision (benefit) for income taxes (3,809 ) (5,825 ) (2,854 ) (4,563 ) � Income (loss) from continuing operations (15,490 ) (17,295 ) (14,485 ) (16,446 ) � Income (loss) from discontinued operations, net of tax (36 ) (7,840 ) (147 ) 25,129 � � Net income $ (15,526 ) $ (25,135 ) $ (14,632 ) $ 8,683 � � Basic earnings per share: Income (loss) from continuing operations $ (0.44 ) $ (0.49 ) $ (0.41 ) $ (0.47 ) Income (loss) from discontinued operations $ - � $ (0.22 ) $ - � $ 0.72 � Net income $ (0.44 ) $ (0.71 ) $ (0.41 ) $ 0.25 � Weighted average shares outstanding 35,425 � 35,373 � 35,421 � 35,157 � � Diluted earnings per share: Income (loss) from continuing operations $ (0.44 ) $ (0.49 ) $ (0.41 ) $ (0.47 ) Income (loss) from discontinued operations $ - � $ (0.22 ) $ - � $ 0.72 � Net income $ (0.44 ) $ (0.71 ) $ (0.41 ) $ 0.25 � Weighted average shares outstanding 35,425 � 35,373 � 35,424 � 35,347 � HealthTronics, Inc. Consolidated Balance Sheets (Unaudited) � � December 31, December 31, ($ in thousands) 2007 2006 � ASSETS � Total current assets $ 74,214 $ 71,825 � Property and equipment, net 33,019 34,270 � Assets held for sale - 1,258 � Goodwill 217,505 229,261 � Other assets 11,318 10,119 � $ 336,056 $ 346,733 � LIABILITIES � Total current liabilities $ 17,692 $ 30,123 � Long-term debt, net of current portion 4,194 5,673 � Liabilities held for sale - 258 � Other long-term liabilities 30,099 25,058 � Total liabilities 51,985 61,112 � Minority interest 41,653 30,104 � Total stockholders' equity 242,418 255,517 � $ 336,056 $ 346,733 HealthTronics, Inc. Supplemental Financial Information Continuing Operations For the Periods Ended December 31, 2007 and 2006 Unaudited In thousands, except per share data � � � � � 4th Quarter Year to Date 2007 2006 2007 2006 � Summary of Results from Operations Revenues $ 36,149 $ 33,448 $ 140,418 $ 142,891 � EBITDA(a) $ 17,757 $ 12,899 $ 62,878 $ 61,145 � Adjusted EBITDA(a) $ 5,187 $ 2,652 $ 17,310 $ 17,868 � Net Income (loss) from Continuing Operations $ (15,490 ) $ (17,295 ) $ (14,485 ) $ (16,446 ) � Net Income $ (15,526 ) $ (25,135 ) $ (14,632 ) $ 8,683 � EPS from Continuing Operations $ (0.44 ) $ (0.49 ) $ (0.41 ) $ (0.47 ) � EPS $ (0.44 ) $ (0.71 ) $ (0.41 ) $ 0.25 � Number of Shares 35,425 35,373 35,424 35,347 � Segment Information � Revenues: Urology Services $ 31,890 $ 30,290 $ 122,736 $ 123,265 � Medical Products $ 4,100 $ 3,030 $ 17,101 $ 19,080 � Adjusted EBITDA(a): Urology Services $ 4,746 $ 4,712 $ 18,691 $ 23,567 � Medical Products $ 1,336 $ (952 ) $ 3,057 $ (597 ) � Other Information: � Cashflow from Operations $ 16,313 $ 12,046 $ 61,877 $ 48,892 � Net Draws (Payments) on Senior Credit Facility $ - $ - $ - $ (124,063 ) � Net Debt $ (16,672 ) $ (16,520 ) $ (16,672 ) $ (16,520 ) � (a) See accompanying reconciliation of EBITDA and Adjusted EBITDA Continuing Operations Non-GAAP Financial Measures Reconciliation of EBITDA and Adjusted EBITDA Continuing Operations For the Periods Ended December 31, 2007 and 2006 Unaudited In thousands � � � � � 4th Qtr Year to Date Consolidated 2007 2006 2007 2006 � Income (loss) from Continuing Operations $ (15,490 ) $ (17,295 ) $ (14,485 ) $ (16,446 ) � Add Back(deduct): Provision for income taxes (3,809 ) (5,825 ) (2,854 ) (4,563 ) Interest expense 185 251 829 1,146 Depreciation and amortization 2,768 2,943 11,107 11,275 Restructuring costs 403 1,039 803 4,234 Impairment of goodwill 20,800 20,600 20,800 20,600 Stockbased compensation costs 330 � 939 � 1,110 � 1,622 � � Adjusted EBITDA 5,187 2,652 17,310 17,868 � Add Back: Minority interest expense 12,570 � 10,247 � 45,568 � 43,277 � � EBITDA $ 17,757 � $ 12,899 � $ 62,878 � $ 61,145 � � � Urology Services Segment � Revenues $ 31,890 $ 30,290 $ 122,736 $ 123,265 � Expenses: Cost of Services (14,728 ) (15,602 ) (58,941 ) (57,247 ) Other Income (Expenses) 171 � 90 � 523 � 294 � � EBITDA 17,333 14,778 64,318 66,312 � Minority interest expense (12,587 ) (10,279 ) (45,627 ) (43,358 ) � Adjusted EBITDA before add backs: $ 4,746 � $ 4,499 � $ 18,691 � $ 22,954 � � Add Backs: Restructuring costs - � 213 � - � 613 � � Adjusted EBITDA $ 4,746 � $ 4,712 � $ 18,691 � $ 23,567 � � � Medical Products Segment � Revenues $ 4,100 $ 3,030 $ 17,101 $ 19,080 � Expenses: Cost of Services (2,791 ) (4,644 ) (14,140 ) (20,430 ) Other Income (Expenses) 11 � 12 � 38 � 55 � � EBITDA 1,320 (1,602 ) 2,999 (1,295 ) � Minority interest expense 16 � 33 � 58 � 81 � � Adjusted EBITDA before add backs: $ 1,336 � $ (1,569 ) $ 3,057 � $ (1,214 ) � Add Backs: Restructuring costs - � 617 � - � 617 � � Adjusted EBITDA $ 1,336 � $ (952 ) $ 3,057 � $ (597 )

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HTRN Htetf (MM)