Alliance Imaging Reports Results for the Third Quarter and First Nine Months Ended September 30, 2005.ANAHEIM Anaheim (ăn`əhīm), city (1990 pop. 266,406), Orange co., S Calif., SE of Los Angeles; inc. 1870. Anaheim was founded by Germans in 1857 as an experiment in communal living. , Calif. -- Alliance Imaging, Inc. (NYSE NYSE See: New York Stock Exchange :AIQ AIQ Analytical Instrument Qualification AIQ Available in Quarters AIQ Action Internet Québec AIQ Allowance Item Quantity AIQ Analyst Interest Queue AIQ Algebraic Integer Quantization ), a leading national provider of diagnostic imaging services, announced results for the third quarter and first nine months ended September September: see month. 30, 2005. Revenue was $106.2 million for the third quarter of 2005, in line with the Company's preannounced third quarter revenue range of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $106 million. The third quarter 2005 revenue of $106.2 million represents a decrease of $3.6 million, or 3.2%, compared to $109.8 million reported in the third quarter of 2004. For the first nine months of 2005, revenue was $320.6 million compared to $324.9 million in the same period of 2004, a decrease of 1.3%. Alliance's Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (earnings before interest expense, net of interest income; income taxes; depreciation expense; amortization expense; minority interest expense and non-cash stock-based compensation), was $39.6 million in the third quarter of 2005, in line with the Company's preannounced third quarter Adjusted EBITDA range of approximately $39.0 million to $39.5 million. The third quarter 2005 Adjusted EBITDA of $39.6 million represents a decrease of $4.6 million, or 10.4%, compared to $44.2 million reported in the third quarter of 2004. For a more detailed discussion of Adjusted EBITDA and reconciliation to net income, see the table entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Adjusted EBITDA" included in the tables following this release. Third quarter 2005 results were negatively impacted primarily by softer than anticipated MRI 1. (application) MRI - Magnetic Resonance Imaging. 2. MRI - Measurement Requirements and Interface. scan volumes, as well as the effect of Hurricanes Katrina KATRINA Keeping All the Resources in New Orleans Alive KATRINA Krewe Aiding Trash Removal In the New Orleans Area and Rita, and rising fuel and transportation costs. The Company estimated that the hurricanes had the impact of reducing revenue by approximately $0.5 million in the third quarter and is expected to impact full year 2005 results by approximately $1.4 million. Alliance's business was also impacted by increasing diesel fuel costs and mileage MILEAGE. A compensation allowed by law to officers, for their trouble and expenses in travelling on public business. 2. The mileage allowed to members of congress, is eight dollars for every twenty miles of estimated distance, by the most usual roads, from his reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. rates in the third quarter. These increases, which affect the cost of moving mobile systems to client locations and transportation costs of Alliance's technologists, reduced Adjusted EBITDA by approximately $0.4 million in the third quarter and are expected to reduce full year Adjusted EBITDA by approximately $1.2 million. Adjusted EBITDA also declined by approximately $0.7 million due to the Company recording a $0.6 million provision for doubtful accounts in the third quarter of 2005 compared to a credit of $0.1 million in the corresponding period of 2004, due to the collection of higher than normal aged accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying in the third quarter of 2004. The provision for doubtful accounts was 0.5% of revenue in the third quarter of 2005, in line with Alliance's historical experience. For the first nine months of 2005, Adjusted EBITDA totaled $122.5 million compared to $128.4 million in the first nine months of 2004, a decrease of $5.9 million, or 4.6%. Of this decrease, $1.7 million was due to the Company recording $2.0 million in the provision for doubtful accounts in the first nine months of 2005, or 0.6% of revenue, compared to $0.3 million, or 0.1% of revenue, in the first nine months of 2004 due to the collection of higher than normal amounts of aged accounts receivable in the first nine months of 2004. Earnings per share on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , was $0.10 per share for the third quarter of 2005, compared to $0.14 per share in the comparable period of 2004. Earnings per share on a diluted basis were $0.34 and $0.48 per share for the first nine months of 2005 and 2004, respectively. In the first nine months of 2004, the Company increased net income by recording the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of income tax reserves totaling $5.1 million, or approximately $0.11 per diluted share, primarily related to the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. outcome of examinations of the Company's 1998 and 1999 federal income tax returns and a favorable outcome of the treatment of an income item in a federal income tax return of one of the Company's subsidiaries. Severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and related costs and employment agreement costs reduced diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of by approximately $0.01 in the third quarter of 2004 and $0.03 per share in the first nine months of 2004. Cash flow provided by operating activities was $42.3 million in the third quarter of 2005 compared to $46.1 million in the corresponding quarter of 2004, and was $93.0 million and $107.1 million for the first nine months of 2005 and 2004, respectively. Alliance made $27.4 million of payments, net of proceeds from borrowings and capital lease obligations assumed for the purchase of equipment, on its long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. in the first nine months of 2005. The Company's cash and cash equivalents balance increased by $12.6 million to $33.3 million at September 30, 2005 from $20.7 million at December December: see month. 31, 2004. Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. S. Viviano, Chairman of the Board and Chief Executive Officer, stated, "Alliance's third quarter results were impacted by several factors. Scan volumes were softer than expected, largely due to weak hospital volumes as reported by several investor-owned hospital companies, continued utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be pressures from insurers, and continued patient-related cost-sharing programs. Alliance's business was also impacted by overcapacity o·ver·ca·pac·i·ty n. Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. of imaging equipment in the marketplace, especially related to medical groups adding imaging capacity within their practice setting. The disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. of operations caused by Hurricanes Katrina and Rita and rising fuel and transportation costs also adversely impacted our business in the third quarter." As previously announced, effective September 1, 2005, Alliance purchased certain assets associated with six established multi-modality fixed-sites and three recently established fixed-sites for an aggregate purchase price of $7.7 million in cash, which was financed through internally generated funds of the company. This acquisition is expected to generate approximately $6 million in annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. revenue for Alliance. The Company's third quarter 2005 results include one month of operations from this acquisition. PET Scans PET scan (pĕt) or positron emission tomography (pŏz`ĭtrŏn' ĭmĭsh`ən təmŏg`rəfē) of America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. Corp. Acquisition - Fourth Quarter 2005 Alliance also previously announced that effective October October: see month. 1, 2005, the Company acquired 100% of the outstanding stock of PET Scans of America Corp. ("PSA (Professional Services Automation) An information system designed to organize, track and manage all opportunities, work, resources, costs, revenues and invoices to improve the productivity and efficiency of the workforce. "), a mobile provider of PET and PET/CT PET/CT Positron Emission Tomography and Computed Tomography services primarily to hospitals in 13 states. Alliance acquired or leased 12 PET and PET/CT systems in connection with this acquisition. The purchase price consisted of $36.6 million in cash and $4.0 million of assumed liabilities and transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). , which was financed through a combination of the Company's revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. , internally generated funds, and capital leases. The previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). purchase price of approximately $44 million was revised due to the receipt of a refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies from a lessor One who rents real property or Personal Property to another. A lessor of land is a landlord. Cross-references Landlord and Tenant. lessor n. the owner of real property who rents it to a lessee pursuant to a written lease. due to the Company's decision not to purchase certain assets that were under operating lease Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. obligations. Annualized revenue from the PSA acquisition is expected to contribute approximately $20 million. Relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc these acquisitions, Mr. Viviano commented, "Alliance's efforts continue to be focused on operating our core mobile MRI business. Our recently completed acquisition of PSA will further expand our PET and PET/CT business. We continue to grow our fixed-site business, accelerating our expansion by acquiring nine fixed-site centers with operations in certificate-of-need states. Both of these acquisitions complement the Company's strategy and are accretive." 2005 Guidance Primarily as a result of greater-than-historical softness in MRI scan volumes during the third quarter, as well as the continuing effects of the recent hurricanes, and rising fuel and transportation costs, the Company revised its guidance for full year 2005 in October 2005. Revenue is now expected to range from $424.5 million to $428.5 million. Adjusted EBITDA is expected to range from $156.5 million to $161.0 million; and earnings per share to range from $0.34 to $0.40 per share. Capital expenditures are now expected to range between $70 million and $75 million. The Company now expects to open approximately 10 to 12 new fixed-sites during 2005. Two fixed-site openings, which were scheduled for the fourth quarter 2005, have been delayed into the first half of 2006 due to the effects of Hurricanes Katrina and Rita. This revised 2005 full year guidance includes revenue and Adjusted EBITDA from the fixed-site center and PSA acquisitions noted above. Third Quarter 2005 Earnings Conference Call Investors and all others are invited to listen to a conference call discussing third quarter 2005 results. The conference call is scheduled for Thursday Thursday: see week. , November November: see month. 3, 2005 at 1:00 p.m. Eastern Time. The call will be broadcast live on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and can be accessed by visiting the Company's website at www.allianceimaging.com. Click on Audio Presentations in the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the website to access the link. The conference call can also be accessed at (888) 874-9713 (United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ) or (973) 582-2706 (International). Interested parties should call at least five minutes prior to the conference call to register. A replay of the call can be accessed until February February: see month. 3, 2006 by visiting the Company's website or by calling (877) 519-4471 (United States) or (973) 341-3080 (International). The conference call identification number is 6630894. About Alliance Imaging Alliance Imaging is a leading national provider of shared-service and fixed-site diagnostic imaging services, based upon annual revenue and number of systems deployed. Alliance provides imaging services primarily to hospitals and other healthcare providers on a shared and full-time full-time adj. Employed for or involving a standard number of hours of working time: a full-time administrative assistant. full service basis, in addition to operating a growing number of fixed-site imaging centers. The Company had 497 diagnostic imaging systems, including 350 MRI systems and 58 PET or PET/CT systems, and over 1,000 clients in 44 states at September 30, 2005. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . These statements involve risks and uncertainties that could cause actual results to differ materially from those projected. For a complete list of risks and uncertainties, please refer to the Risk Factor section of the Company's Form 10-K/A for the year ended December 31, 2004 filed with the Securities and Exchange Commission.
ALLIANCE IMAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
(in thousands, except per share amounts)
Third Quarter Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2004 2005 2004 2005
--------- --------- --------- ---------
Revenues $109,760 $106,198 $324,887 $320,596
Costs and expenses:
Cost of revenues, excluding
depreciation and amortization 54,832 55,901 162,640 163,729
Selling, general and
administrative expenses 11,549 11,747 35,469 37,110
Employment agreement costs 275 - 1,790 366
Severance and related costs 627 - 627 -
Depreciation expense 19,832 20,385 60,466 61,311
Amortization expense 885 937 2,640 2,719
Interest expense, net of
interest income 11,192 9,117 32,620 27,686
Other (income) and expense,
net (473) 56 (600) (331)
--------- --------- --------- ---------
Total costs and expenses 98,719 98,143 295,652 292,590
--------- --------- --------- ---------
Income before income taxes,
minority interest expense,
and earnings from
unconsolidated investees 11,041 8,055 29,235 28,006
Income tax expense 4,701 3,494 7,227 11,795
Minority interest expense 524 550 1,956 1,506
Earnings from unconsolidated
investees (1,150) (1,000) (3,177) (2,596)
--------- --------- --------- ---------
Net income $6,966 $5,011 $23,229 $17,301
========= ========= ========= =========
Comprehensive income, net of
taxes:
Net income $6,966 $5,011 $23,229 $17,301
Unrealized (loss) gain on
hedging transactions, net
of taxes (601) 1,450 (724) 3,051
--------- --------- --------- ---------
Comprehensive income, net of
taxes: $6,365 $6,461 $22,505 $20,352
========= ========= ========= =========
Earnings per common share:
Basic $0.14 $0.10 $0.48 $0.35
========= ========= ========= =========
Diluted $0.14 $0.10 $0.48 $0.34
========= ========= ========= =========
Weighted average number of
shares of common stock and
common stock equivalents:
Basic 48,344 49,517 48,169 49,313
Diluted 48,943 50,368 48,562 50,311
ALLIANCE IMAGING, INC.
ADJUSTED EBITDA (in thousands)
EBITDA represents earnings before interest expense, net of interest
income; income taxes; depreciation expense and amortization expense.
Adjusted EBITDA represents EBITDA adjusted for non-cash stock-based
compensation and minority interest expense. 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) and
leverage ratio (as defined in Section 7.6B 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 minimum interest coverage ratio in excess of
2.25 to 1.00 and 2.50 to 1.00 for the quarters ended September 30,
2004 and 2005, respectively, and was required to maintain a maximum
leverage ratio not to exceed 4.50 to 1.00 and 4.00 to 1.00 as of
September 30, 2004 and 2005, respectively. The Company was in
compliance with these covenants for the quarters ended September 30,
2004 and 2005. 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:
3rd Quarter Ended 9 Months Ended
September 30, September 30,
2004 2005 2004 2005
---------- --------- ---------- ---------
Net income $6,966 $5,011 $23,229 $17,301
Income tax expense 4,701 3,494 7,227 11,795
Interest expense, net of
interest income 11,192 9,117 32,620 27,686
Amortization expense 885 937 2,640 2,719
Depreciation expense 19,832 20,385 60,466 61,311
Non-cash stock-based
compensation (included in
selling, general &
administrative) 63 63 259 189
Minority interest expense 524 550 1,956 1,506
---------- --------- ---------- ---------
Adjusted EBITDA $44,163 $39,557 $128,397 $122,507
========== ========= ========== =========
Interest coverage ratio is defined under our 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. For the quarters ended September 30, 2004 and
2005, our interest coverage ratio was as follows:
3rd Quarter Ended
September 30,
2004 2005
-------- --------
Last 12 months consolidated Adjusted EBITDA $168,871 $161,991
Last 12 months consolidated cash interest expense 40,385 43,312
Interest coverage ratio 4.18x 3.74x
Consolidated leverage ratio, as of the last day of any fiscal quarter,
is defined under our 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. As of September 30, 2004 and
2005, our consolidated leverage ratio was as follows:
September 30, September 30,
2004 2005
------------- -------------
Consolidated total debt $554,411 $548,314
Last 12 months consolidated Adjusted
EBITDA 168,871 161,991
Leverage Ratio 3.28x 3.38x
ALLIANCE IMAGING, INC.
SELECTED CONDENSED
CONSOLIDATED BALANCE SHEET INFORMATION
(in thousands)
December 31, September 30,
2004 2005
------------ -------------
Cash and cash equivalents $20,721 $33,351
Accounts receivable, net 50,146 50,869
Total current assets 90,054 115,906
Equipment, net 353,511 339,690
Total assets 622,198 643,366
Total current liabilities 69,328 74,235
Long-term debt, including current maturities 575,664 548,314
Total stockholders' deficit (67,528) (43,334)
ALLIANCE IMAGING, INC.
SELECTED STATISTICAL INFORMATION
Third Quarter Ended
September 30,
2004 2005
--------- ---------
MRI
Average number of total systems 336.3 328.3
Average number of scan-based systems 291.7 280.6
Scans per system per day (scan-based systems) 9.73 9.53
Total number of scan-based MRI scans 204,318 188,731
Price per scan $360.26 $350.80
Scan-based MRI revenue (in millions) $73.6 $66.2
Non-scan based MRI revenue (in millions) 6.3 6.5
--------- ---------
Total MRI revenue (in millions) $79.9 $72.7
========= =========
PET and PET/CT
Average number of systems 49.9 52.2
Scans per system per day 4.87 5.45
Total number of PET and PET/CT scans 14,363 17,342
Price per scan $1,406 $1,320
Total PET and PET/CT revenue (in millions) $20.2 $23.0
========= =========
Revenue breakdown (in millions)
Total MRI revenue $79.9 $72.7
PET and PET/CT revenue 20.2 23.0
Other modalities and other revenue 9.7 10.5
--------- ---------
Total revenues $109.8 $106.2
========= =========
ALLIANCE IMAGING, 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 September 30, 2005 is as follows:
(a) (b)
Revenue New MRI
Lost Revenue Revenue Gap
------------- -------------- --------------
2003
----
Fourth Quarter ($15.6) $5.0 ($10.6)
2004
----
First Quarter (3.4) 10.0 6.6
Second Quarter (13.7) 10.1 (3.6)
Third Quarter (11.0) 6.5 (4.5)
Fourth Quarter (16.4) 5.9 (10.5)
2005
----
First Quarter (9.4) 5.9 (3.5)
Second Quarter (12.2) 8.8 (3.4)
Third Quarter (14.2) 4.4 (9.8)
Last Twelve Months Ended
September 30, 2005 ($52.2) $25.0 ($27.2)
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