Response Oncology Reports First Quarter Financial Results.MEMPHIS Memphis, city, ancient Egypt Memphis (mĕm`fĭs), ancient city of Egypt, capital of the Old Kingdom (c.3100–c.2258 B.C.), at the apex of the Nile delta and 12 mi (18 km) from Cairo. , Tenn.--(BW HealthWire)--May 7, 1999-- Response Oncology oncology /on·col·o·gy/ (ong-kol´ah-je) the sum of knowledge regarding tumors; the study of tumors. on·col·o·gy n. , Inc. (Nasdaq/NMS:ROIX) today reported its financial results for the first quarter ended March 31, 1999. For the first quarter 1999, net revenues were $36,309,000, a 23% increase over net revenues of $29,595,000 reported for the first quarter 1998. This $6.7 million increase is equally attributable to growth in net revenues from the physician practice management business and sales of pharmaceutical agents to IMPACT(R) center-affiliated physicians. On a same location basis net revenues from the physician practice management business increased by 39%, from $12.7 million in first quarter 1998 to $17.6 million in 1999, after eliminating the terminated practice's first quarter 1998 net revenues. Net income for the quarter was $1,155,000, or $0.10 per share, as compared with $1,292,000, or $0.11 per share in the first quarter 1998. Had the amortization period for intangibles been the same in both quarters, EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. for the first quarter of 1998 would have been $0.09 per share, reflecting an 11% increase in EPS quarter over quarter. Amortization of intangibles was reduced from 40 years in the first quarter of 1998 to 25 years in the first quarter of 1999 based upon guidance from the Securities and Exchange Commission. 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 from the practice management business increased 17% to $2.7 million, from $2.3 million in the first quarter 1998. The EBITDA margin for the practice management business expanded to 15% for the quarter compared to 10% for the fourth quarter of 1998 which reflects improvements from eliminating underperforming assets underperforming asset An asset that earns a lower rate of return than it would be capable of earning if it were properly used. A firm with underperforming assets is a prime target for takeover. Compare nonperforming asset. . Total EBITDA for the quarter decreased 3% to $3.8 million, from $3.9 million in the first quarter 1998 largely due to lower volume in the stem cell stem cell In living organisms, an undifferentiated cell that can produce other cells that eventually make up specialized tissues and organs. There are two major types of stem cells, embryonic and adult. business. While the Company typically sees a reduction in stem cell referrals in the fourth quarter due to seasonality, the reduction in the fourth quarter of 1998 was greater than that historically experienced. The reduction in referrals results in lower patient volume in the subsequent quarter. The balance sheet as of March 31, 1999, showed improved strength, with cash of $3.0 million, as compared to $1.1 million as of December December: see month. 31, 1998. The improvement in cash and liquidity is attributable to heightened 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 management, which produced a 10% reduction in days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). , from 98 days on December 31, 1998 to 89 days on March 31, 1999. The Company is currently in negotiations regarding the Credit Facility which expires June June: see month. 30, 1999. The Company expects to have the new facility in place by May 30, 1999. Effective April 1, 1999, Response Oncology terminated the practice management agreement of Southeast Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and Hematology hematology Branch of medicine concerned with the nature, function, and diseases of the blood. It covers the cellular and serum composition of blood, the coagulation process, blood-cell formation, hemoglobin synthesis, and disorders of all these. Oncology Group, P.A., whose underperforming assets were written off along with two others in the fourth quarter 1998. This is the second of three underperforming physician practice management agreements to be terminated in connection with the fourth quarter 1998 write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. . On April 8, 1999, the Company announced a national contract with Intracorp IntraCorp was a Miami, Florida-based game publisher. They went bankrupt in 1996 and shut down along with their subsidiary, Capstone Software. IntraCorp developed and published games for a wide range of genres. IntraCorp's last game, Fate, was never released. , the largest case management company in the 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. . This contract covers the 24 million+ Intracorp plan participants Plan participants Employees or other beneficiaries who are eligible to receive benefits from a company's employee benefit plan. throughout the country for high-dose chemotherapy high-dose chemotherapy Oncology The administration of chemotherapeutics in excess of BM toxicity; given the risk of aplastic anemia, HDC requires autologous BMT and use of 'rescue' factors such as G-CSF, GM-CSF, and erythropoietin. See Bone marrow transplantation. . Under the terms of the agreement, Response Oncology will provide to referred, qualifying beneficiaries of Intracorp clients, high dose chemotherapy chemotherapy (kē'mōthĕr`əpē), treatment of disease with chemicals or drugs. One chemotherapeutic approach is the development of selectively toxic substances, i.e. with peripheral stem cell support transplantation transplantation /trans·plan·ta·tion/ (trans?plan-ta´shun) the grafting of tissues taken from the patient's own body or from another. at an agreed upon Adj. 1. agreed upon - constituted or contracted by stipulation or agreement; "stipulatory obligations" stipulatory noncontroversial, uncontroversial - not likely to arouse controversy global case rate. This agreement brings the total number of covered lives under Response Oncology contracts to 62 million. In commenting on these results, Dr. William West For other persons named William West, see William West (disambiguation). William West (c. 1733 – 1816) was an American militia general in the American Revolutionary War, Justice of the Rhode Island Supreme Court, Deputy Governor of Rhode Island and an anti-federalist , Chairman, said, "We are certainly pleased with our continued growth and the early results of our 1998-1999 value expansion program. The objective of that program is to increase the return on our assets, which has involved the weeding weed 1 n. 1. a. A plant considered undesirable, unattractive, or troublesome, especially one growing where it is not wanted, as in a garden. b. Rank growth of such plants. 2. out of underperforming investments and the bolstering of our most profitable business segments and sites. While we continue to be challenged with the escalating cost of new cancer drugs, we are looking to increased market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" and total case rates to drive our returns. To that end, we were very pleased to have added Intracorp's 24 million members to our covered lives under managed care contract. Going forward, we are well positioned for same location growth, as we add ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. services, additional managed care contracts and physicians to our markets." "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement Under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 - With the exception of historical information, the matters discussed in this press release are forward looking statements that involve a number of risks and uncertainties. The actual future results of the Company could differ significantly from those statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed in other filings made by the Company with the Securities and Exchange Commission. Response Oncology is a leading comprehensive cancer management company that establishes and manages local cancer care networks. The Company (1) owns and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. operates a national network of advanced cancer treatment centers, or IMPACT(R) centers, providing stem cell supported high dose chemotherapy under the direction of practicing oncologists; (2) owns the assets of and manages the business aspects of oncology practices and manages certain business aspects of oncology IPA's; and (3) conducts clinical trials for major pharmaceutical companies. The Company has over 450 affiliating oncologists. -0-
RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(Dollar amounts in thousands except for share data)
Three Months Ended
----------------------------------
March 31, March 31,
1999 1998
---------------- --------------
NET REVENUE $ 36,309 $ 29,595
COSTS AND EXPENSES
Salaries and benefits 6,566 5,871
Pharmaceuticals and supplies 20,487 15,030
Other operating costs 3,429 2,958
General and administrative 1,681 1,469
Depreciation and amortization 1,117 1,090
Interest 863 704
Provision for doubtful accounts 191 219
-------------- --------------
34,334 27,341
-------------- --------------
---------------------------
-----------------------------
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 1,975 2,254
Minority owners' share of
net earnings 112 170
-------------- --------------
EARNINGS BEFORE INCOME TAXES 1,863 2,084
Provision for income taxes 708 792
-------------- --------------
---------------------------
-----------------------------
NET EARNINGS TO COMMON STOCKHOLDERS $ 1,155 $ 1,292
============== ==============
===========================
=============================
EARNINGS PER COMMON SHARE:
Basic $ 0.10 $ 0.11
============== ==============
Diluted $ 0.10 $ 0.11
============== ==============
Weighted average number of common
shares:
Basic 12,049,331 12,008,254
============== ==============
Diluted 12,087,248 12,217,188
============== ==============
RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollar amounts in thousands except for share data)
March 31, 1999 December 31, 1998
(Unaudited)
-------------- -----------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,024 $ 1,083
Accounts receivable, less
allowance for doubtful accounts
of $2,775 and $2,772 21,792 22,844
Supplies and pharmaceuticals 3,169 3,406
Prepaid expenses and other current
assets 5,581 6,276
Due from affiliated physician groups 17,829 18,630
------------- -------------
TOTAL CURRENT ASSETS 51,395 52,239
Property and equipment, less
accumulated depreciation and
amortization of $11,244 and
$11,150 5,118 5,273
Deferred charges, less accumulated
amortization of $0 and $496 --- 50
Management service agreements, less
accumulated amortization of
$6,534 and $5,160 67,278 68,087
Other assets 1,093 1,104
============= =============
TOTAL ASSETS $ 124,884 $ 126,753
==================================
===============================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 14,850 $ 16,528
Accrued expenses and other
liabilities 6,178 7,350
Current portion of notes payable 10,989 11,107
Current portion of capital lease
obligations 333 357
Deferred income taxes 473 473
------------- -------------
TOTAL CURRENT LIABILITIES 32,823 35,815
Capital lease obligations, less
current portion 955 962
Notes payable, less current portion 32,210 32,290
Deferred income taxes 7,236 7,295
Minority interest 1,093 981
STOCKHOLDERS' EQUITY
Series A convertible preferred
stock, $1.00 par value (aggregate
involuntary liquidation preference
$266) authorized 3,000,000 shares;
issued and
Outstanding 26,631 and 26,631,
respectfully 27 27
Common Stock, $.01 par value,
authorized 30,000,000 shares;
issued and outstanding 12,049,331
and 12,049,038 shares 120 120
Paid-in capital 101,913 101,912
Accumulated deficit (51,493) (52,649)
------------- -------------
50,567 49,410
------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 124,884 $ 126,753
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