NEWPORT BEACH, Calif.--(BUSINESS WIRE)--Aug 6, 2012--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 ended June 30, 2012.
Second Quarter Highlights Adjusted EBITDA increased 4.4% sequentially to $39.4 million and 1.6% from the year ago period of $38.8 million Cost saving initiatives generated $33 million in annualized savings, versus goal of $20- $25 million Total debt (including current maturities) less cash and equivalents, decreased $24.3 million in the first six months of 2012 compared to $19.4 million in the same period last year, a 25% improvement Company updates 2012 guidance based upon increases in Adjusted EBITDA and cash flows Second Quarter 2012 Financial Results “The solid results we are reporting today reflect our continued progress against our strategic initiatives and drive towards stability and growth,” stated Larry C. Buckelew, Chairman of the Board and Chief Executive Officer. “Having been in my new role for two months, I am now more convinced than ever that we have the right team in place to enhance the long-term strategy and facilitate our vision of expanding our role with our customers.
“Our results this quarter are primarily attributable to the successful implementation of Project Phoenix, the cost savings plan that we introduced last summer. Our team was able to identify and generate annualized savings which significantly exceeded our goals. The success and discipline of this program has permanently changed our corporate culture to focus on continuously improving our operational efficiency. I am fully committed to building upon these achievements, and realizing our long-term vision to become a more vital and strategic partner to our customers.” Revenue for the second quarter of 2012 was sequentially stable at $120.7 million compared to $120.8 million in the first quarter of 2012. On a year-over-year basis, second quarter 2012 revenue decreased 5.6% from $127.8 million in the second quarter of 2011, in part due to trimming our portfolio of unprofitable Imaging Division business resulting in a revenue reduction, partially offset by an organic increase in radiation oncology revenue of $2.0 million, or 9.8%.
Alliance’s Adjusted EBITDA (as defined below) increased sequentially 4.4% to $39.4 million in the second quarter of 2012 compared to $37.8 million in the first quarter of 2012. On a year-over-year basis, Adjusted EBITDA increased 1.6% from $38.8 million in the second quarter of 2011. The sequential and year-over-year growth was organic given the Company made no additional acquisitions since the April 1, 2011 US Radiosurgery and 24|7 Radiology transactions.
Alliance’s net loss, computed in accordance with generally accepted accounting principles (“GAAP”), improved by $4.0 million to ($0.8) million in the second quarter of 2012, compared to ($4.8) million in the first quarter of 2012 and by $3.2 million compared to ($4.0) million in the second quarter of 2011.
Net loss per share on a diluted basis, computed in accordance with GAAP, was ($0.02) per share in the second quarter of 2012 versus ($0.08) per share in the second quarter of 2011. In the second quarter of 2012, net loss per share on a diluted basis was impacted by $0.01 in the aggregate due to restructuring charges, mergers and acquisitions transaction costs, fair value adjustments related to interest rate swaps and differences in the GAAP income tax rate from our historical income tax rate. In the second quarter of 2011, net loss per share on a diluted basis was impacted by ($0.03) in the aggregate due to fair value adjustments related to interest rate swaps, severance and related costs, mergers and acquisitions transaction costs, refinancing transaction costs and differences in the GAAP income tax rate from our historical income tax rate. Alliance’s historical income tax rate has been 42%, rather than the GAAP income tax benefit rate of 75.2% in the second quarter of 2012 and 35.8% in the second quarter of 2011.
Cash flows provided by operating activities were $18.4 million in the second quarter of 2012 compared to $27.2 million in the second quarter of 2011. The difference in operating cash flows is primarily attributable to the timing of working capital requirements and cash interest payments on the term loan facility. Capital expenditures in the second quarter of 2012 were $6.2 million compared to $11.2 million in the second quarter of 2011. Alliance opened one new fixed-site imaging center in the second quarter of 2012.
Alliance’s net debt, defined as total long-term debt (including current maturities) less cash and cash equivalents, decreased $24.3 million to $575.0 million at June 30, 2012 from $599.3 million at December 31, 2011. Cash and cash equivalents were $61.9 million at June 30, 2012 and $44.2 million at December 31, 2011. The Company’s net debt, as defined above, divided by the last twelve months Adjusted EBITDA, as defined in the Company’s credit agreement, was 4.00x for the twelve month period ended June 30, 2012.
The Company’s total long-term debt (including current maturities) decreased to $636.9 million at June 30, 2012 from $643.5 million at December 31, 2011. The Company’s total debt divided by the last twelve months Adjusted EBITDA, as defined in the credit agreement, was 4.43x for the twelve month period ended June 30, 2012. Adjusted EBITDA as defined in the Company’s credit agreement includes an adjustment to exclude income attributable to non-controlling interest in subsidiaries.
NYSE Listing Update As previously disclosed, on September 28, 2011 the New York Stock Exchange (“NYSE”) notified the Company that it no longer satisfied the minimum $75 million market capitalization requirement. The NYSE accepted the Company’s plan to regain compliance with this standard, and granted the Company an 18-month grace period through March 23, 2013, to demonstrate compliance with that standard. In addition and also as previously disclosed, the Company announced that it had received notification from the NYSE that it no longer complied with the audit committee composition rule as a result of the appointment of Mr. Buckelew as interim Chief Executive Officer, and separately the minimum $1.00 stock price requirement as a result of the stock demonstrating an average closing price of less than $1.00 per share for a 30-day period. The Company is currently operating under grace periods granted by the NYSE through December 1, 2012 to remedy the audit committee composition issue and through January 3, 2013 to remedy the minimum stock price requirement.
Full Year 2012 Guidance Alliance is updating certain of its full year 2012 guidance ranges as follows: Previous Updated Guidance Guidance Ranges Ranges Difference (dollars in millions) (dollars in millions) (dollars in millions) Revenue $ 470 - $500 $ 465 - $485 ($5) - ($15 ) Adjusted EBITDA $ 140 - $160 $ 148 - $160 $ 8 - $0 Capital expenditures $ 55 - $65 $ 40 - $50 $ 15 - $15 Decrease in long-term debt, net of the change in cash and cash equivalents (before investments in acquisitions) $ 15 - $25 $ 35 - $40 $ 20 - $15 The guidance ranges for 10-15 fixed-site imaging center openings and 3-5 radiation oncology center openings remains unchanged.
Buckelew commented, “Our updated guidance ranges reflect the success of Project Phoenix, particularly the strategic operational discipline to forego certain revenue streams and grow more profitable business. Our Adjusted EBITDA growth, cash on hand, and capital expenditure plans will enable us to pay down debt in a disciplined manner. Going forward, reducing our debt obligation remains a top priority.
“We believe in the underlying fundamentals of our business and that Alliance’s stock price is undervalued by the market. At its current trading price, we expect certain members of our Board of Directors and management team to be buyers of Alliance common stock in coming months,” added Buckelew.
Second Quarter 2012 Earnings Conference Call Investors and all others are invited to listen to a conference call discussing second quarter 2012 results. The conference call is scheduled for Tuesday, August 7, 2012 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 (877) 638-4550. Interested parties should call at least five minutes prior to the call to register. A telephone replay will be available until September 7, 2012. The telephone replay can be accessed by calling (855) 859-2056 or (404) 537-3406. The conference call identification number is 11821097.
Definition of Adjusted EBITDA Adjusted EBITDA, as defined by the Company’s management, represents net income (loss) before: interest expense, net of interest income; income taxes; depreciation expense; amortization expense; net income (loss) attributable to noncontrolling interests; non-cash share-based compensation; severance and related costs; restructuring charges; fees and expenses related to acquisitions; costs related to debt financing; non-cash impairment charges; and other non-cash charges included in other (income) expense, net, which includes non-cash losses on sales of equipment. The components used to reconcile net income (loss) to Adjusted EBITDA are consistent with our historical presentation of Adjusted EBITDA. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles in the United States, or “GAAP.” For a more detailed discussion of Adjusted EBITDA and reconciliation to net income (loss), see the section entitled “Adjusted EBITDA” included in the tables following this release.
About Alliance HealthCare Services Alliance HealthCare Services is a leading national provider of advanced outpatient diagnostic imaging and radiation therapy services based upon annual revenue and number of systems deployed. Alliance focuses on MRI, PET/CT and CT through its Imaging division and radiation therapy through its Oncology division. With more than 1,900 team members committed to providing exceptional patient care and exceeding customer expectations, Alliance provides quality clinical services for over 1,000 hospitals and other healthcare partners in 46 states. Alliance operates 501 diagnostic imaging and radiation therapy systems. The Company is the nation’s largest provider of advanced diagnostic mobile imaging services and one of the leading operators of fixed-site imaging centers, with 126 locations across the country. Alliance also operates 32 radiation therapy centers, including 16 dedicated stereotactic radiosurgery facilities, many of which are operated in conjunction with local community hospital partners, providing treatment and care for cancer patients. With 16 stereotactic radiosurgery facilities in operation, Alliance is among the leading providers of stereotactic radiosurgery nationwide.
Forward-Looking Statements This press release contains forward-looking statements relating to future events, including statements related to the Company’s improvement plan, including its efforts to stabilize and grow the Imaging Division, expand the Radiation Oncology Division, and increase organizational efficiency and cost savings through the Journey to Excellence and Project Phoenix initiatives; and to its Full Year 2012 Guidance, including its forecasts of revenue, Adjusted EBITDA, cash capital expenditures, decrease in long-term debt and the opening of new fixed-site imaging and radiation therapy centers; statements related to potential purchases of Alliance stock by directors and executive officers; and estimates of revenues lost and revenues gained from new client contracts in the Company’s revenue gap disclosures on the last page of the tables following this release. 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 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 healthcare regulatory environment; the Company’s ability to keep pace with technological developments within its industry; the growth or lack thereof in the market for imaging, radiation oncology 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, 2011, 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.This article has been truncated. You can see the rest of this article by visiting http://www.businesswire.com/news/home/20120806006231/en.