Htetf (MM) (NASDAQ:HTRN)
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HealthTronics, Inc. (NASDAQ:HTRN), a leading provider of Urology
services and products, today announced its financial results for the
third quarter ended September 30, 2008.
Third Quarter 2008
Revenue from continuing operations for the third quarter 2008 totaled
$44.8 million, up from $36 million in the third quarter of 2007. The
Company's net income from continuing operations for the third quarter of
2008, in accordance with generally accepted accounting principles
("GAAP"), totaled $1.3 million or $0.04 per diluted share, which
compares to $610,000 or $0.02 per diluted share in the third quarter of
2007. The Company's non-GAAP net income, which excludes non-cash
stock-based compensation expense, for the third quarter 2008 totaled
$0.04 per diluted share as compared to $0.02 per diluted share for the
third quarter of 2007. Also during the quarter, the IRS completed their
examinations of certain legacy HealthTronics federal income tax returns
which we had amended. As a result of these examinations, we received
refunds which included approximately $700,000 of interest income.
Without this one time interest income, our earnings would have been
$0.03 per diluted share.
The Company's adjusted EBITDA from continuing operations for the third
quarter 2008 was $6.2 million, which compares to $4.4 million in the
third quarter of 2007, an increase of 43 percent. The increase was due
primarily to revenue growth from the Urology Services division,
generated by our Advanced Medical Partners, Inc., “AMPI”,
acquisition in April 2008, and cost reductions implemented during the
past year.
Urology Services
Urology Services division revenue for the third quarter of 2008 was
$39.1 million, up 24 percent from the $31.6 million recorded in the
third quarter of 2007. Urology Services division growth was driven in
part by the acquisition of AMPI. Same store partnership revenue in the
third quarter 2008 was consistent with the third quarter 2007.
Divisional adjusted EBITDA was $5.4 million compared to $5 million in
the third quarter of 2007.
Medical Products
Medical Products division revenue for the third quarter of 2008 was $5.6
million, up 35 percent from the $4.2 million recorded in the third
quarter of 2007. The ClariPath pathology laboratory's revenue increased
60 percent and service maintenance gross revenue, before intercompany
eliminations, grew 22 percent from the third quarter of 2007.
Manufacturing revenue decreased compared to the third quarter of 2007
due to a lower number of devices sold in the third quarter of 2008.
Divisional adjusted EBITDA was $1.6 million in the third quarter of
2008, which compared to $585,000 in the third quarter of 2007. Medical
Products division earnings growth resulted from revenue increases at our
ClariPath pathology laboratory, improved performance in our service and
maintenance business, and cost reductions implemented during the past 12
months.
Business Outlook
James Whittenburg, President and Chief Executive Officer, commented, “The
third quarter’s results were strong as
anticipated. We continue to experience solid growth, particularly in
pathology services, urology services, and medical products. These areas,
along with success in our acquisitions strategy, helped contribute to
our positive results.”
Board Restructuring
During the past month, the Board of Directors initiated a restructuring
of its composition to more competitively position the Board’s
size and related costs in relation to its peers. As a result, Kevin A.
Richardson II, Perry M. Waughtal and Mark G. Yudof have voluntarily
resigned as Directors. None of the resignations was the result of any
disagreement with the Company, Management or other Board members on any
matter.
Mr. Richardson commented, “I have enjoyed
serving on HealthTronics’ Board since March
2006. I joined the Board to help facilitate changes in management and
strategy that Prides Capital felt were important to shareholders. I am
pleased with HealthTronics’ progress and
achievements and firmly support the current management team and
direction of the Company. As a result, I do not believe my continued
participation as a director is needed and believe my resignation in
order to help facilitate a reduction in board size is helpful. Prides
Capital remains one of HealthTronics’ largest
shareholders and, in that capacity, will continue to share its thoughts
with and provide assistance to HealthTronics.”
Mr. Whittenburg commented, “Kevin, Perry and
Mark have each provided strong leadership as directors and will be
missed. This restructuring will reduce our number of directors from nine
to six, with four independent directors. The Company extends it
sincerest gratitude and best wishes to Kevin, Perry and Mark.”
Conference Call and Webcast:
Management of HealthTronics will host a conference call the afternoon of
Thursday, November 6, 2008 at 5:00 pm EST. Interested parties may
participate in the call by dialing 1-888-587-0613 (International callers
dial 1-719-325-2237) and ask for the "HealthTronics Q3 2008 Earnings
Call" (confirmation code: 4117466). Please call in 10 minutes before the
call is scheduled to begin. The conference call will also be webcast
live via the Investors section of HealthTronics' web site at www.healthtronics.com.
To listen to the live webcast, 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 archived on
the HealthTronics web site.
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 equipment, maintenance services
offerings, and anatomical pathology services. For more information,
visit www.healthtronics.com.
HealthTronics' use of Non-GAAP Financial Measures:
This press release includes financial measures for net income (loss),
net 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 the
SEC filings, 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.
Cautionary Language: Statements by the Company's management made in this
press release that are not strictly historical, including statements
regarding plans, objective 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' 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 September 30,
Nine Months Ended September 30,
2008
2007
2008
2007
Revenue:
Urology Services
$
39,135
$
31,625
$
106,550
$
90,846
Medical Products
5,636
4,176
14,467
13,002
Other
-
154
288
421
Total revenue
44,771
35,955
121,305
104,269
Cost of services and general and administrative expenses:
Urology Services
16,899
13,160
47,289
40,126
Medical Products
3,055
2,834
6,968
8,077
Selling, general & administrative
4,600
4,052
14,186
12,959
Depreciation and amortization
3,073
2,747
8,770
8,339
27,627
22,793
77,213
69,501
Operating income
17,144
13,162
44,092
34,768
Other income (expenses):
Interest and dividends
806
247
1,098
835
Interest expense
(182
)
(196
)
(591
)
(644
)
624
51
507
191
Income from continuing operations before provision
for income taxes and minority interest
17,768
13,213
44,599
34,959
Minority interest in consolidated income
15,552
12,214
40,380
32,998
Provision for income taxes
889
389
1,730
956
Income from continuing operations
1,327
610
2,489
1,005
Gain (loss) from discontinued operations, net of tax
-
135
-
(111
)
Net income
$
1,327
$
745
$
2,489
$
894
Basic earnings per share:
Income from continuing operations
$
0.04
$
0.02
$
0.07
$
0.03
Gain (loss) from discontinued operations
-
-
-
-
Net income
$
0.04
$
0.02
$
0.07
$
0.03
Weighted average shares outstanding
37,503
35,425
36,666
35,419
Diluted earnings per share:
Income from continuing operations
$
0.04
$
0.02
$
0.07
$
0.03
Gain (loss) from discontinued operations
-
-
-
-
Net income
$
0.04
$
0.02
$
0.07
$
0.03
Weighted average shares outstanding
37,604
35,425
36,734
35,423
HealthTronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
September 30,
December 31,
($ in thousands)
2008
2007
ASSETS
Total current assets
$
77,078
$
74,214
Property and equipment, net
31,232
33,019
Goodwill
234,796
217,505
Other assets
10,614
11,318
$
353,720
$
336,056
LIABILITIES
Total current liabilities
$
16,295
$
17,692
Long-term debt, net of current portion
9,308
4,194
Other long-term liabilities
29,964
30,099
Total liabilities
55,567
51,985
Minority interest
44,249
41,653
Total stockholders' equity
253,904
242,418
$
353,720
$
336,056
For the Periods Ended September 30, 2008 and 2007
Unaudited
In thousands, except per share data
Three Months Ended September 30,
Nine Months Ended September 30,
2008
2007
2008
2007
Summary of Results from Operations
Revenues
$
44,771
$
35,955
$
121,305
$
104,269
EBITDA(a)
$
21,782
$
16,583
$
56,590
$
45,120
Adjusted EBITDA(a)
$
6,230
$
4,369
$
16,210
$
12,122
Net Income from Continuing Operations
$
1,327
$
610
$
2,489
$
1,005
Net Income
$
1,327
$
745
$
2,489
$
894
EPS from Continuing Operations
$
0.04
$
0.02
$
0.07
$
0.03
EPS
$
0.04
$
0.02
$
0.07
$
0.03
Number of Shares
37,604
35,425
36,734
35,423
Segment Information
Revenues:
Urology Services
$
39,135
$
31,625
$
106,550
$
90,846
Medical Products
$
5,636
$
4,176
$
14,467
$
13,002
Adjusted EBITDA(a):
Urology Services
$
5,428
$
4,980
$
15,039
$
13,944
Medical Products
$
1,588
$
585
$
5,088
$
1,722
Other Information:
Cashflow from Operations
$
17,191
$
18,466
$
51,305
$
45,564
Net Draws (Payments) on Senior Credit Facility
$
6,000
$
-
$
6,000
$
-
Net Debt
$
(6,322
)
$
(13,589
)
$
(6,322
)
$
(13,589
)
(a) See accompanying reconciliation of EBITDA and Adjusted EBITDA
HealthTronics, Inc. and Subsidiaries
Non-GAAP Financial Measures
Reconciliation of EBITDA and Adjusted EBITDA
Continuing Operations
For the Periods Ended September 30, 2008 and 2007
Unaudited
In thousands
Three Months Ended September 30,
Nine Months Ended September 30,
Consolidated
2008
2007
2008
2007
Income from Continuing Operations
$
1,327
$
610
$
2,489
$
1,005
Add Back(deduct):
Provision for income taxes
889
389
1,730
956
Interest expense
182
196
591
644
Depreciation and amortization
3,073
2,747
8,770
8,339
Restructuring costs
198
400
160
400
Stockbased compensation costs
561
27
2,470
778
Adjusted EBITDA
6,230
4,369
16,210
12,122
Add Back:
Minority interest expense
15,552
12,214
40,380
32,998
EBITDA
$
21,782
$
16,583
$
56,590
$
45,120
Urology Services Segment
Revenues
$
39,135
$
31,625
$
106,550
$
90,846
Expenses:
Cost of Services
(18,191
)
(14,536
)
(51,322
)
(44,214
)
Other Income (Expenses)
55
118
239
352
EBITDA
20,999
17,207
55,467
46,984
Minority interest expense
(15,571
)
(12,227
)
(40,428
)
(33,040
)
Adjusted EBITDA
$
5,428
$
4,980
$
15,039
$
13,944
Medical Products Segment
Revenues
$
5,636
$
4,176
$
14,467
$
13,002
Expenses:
Cost of Services
(4,076
)
(3,612
)
(9,460
)
(11,349
)
Other Income (Expenses)
10
7
34
27
EBITDA
1,570
571
5,041
1,680
Minority interest expense
18
14
47
42
Adjusted EBITDA
$
1,588
$
585
$
5,088
$
1,722