Response Oncology Reports Third Quarter Financial Results and Key Events Conference Call Information Included.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.--(BUSINESS WIRE)--Nov. 15, 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 third quarter and nine months ended September September: see month. 30, 1999. For the third quarter 1999, net revenues were $32,589,000, a 2.3% increase over the $31,858,000 reported for the third quarter 1998. As consistent with the preceeding two quarters, the physician practice management revenues, on a same-practice basis, increased over 30%, to $16,679,000 in the third quarter 1999. (The Company terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: two physician practice management contracts in the intervening in·ter·vene intr.v. in·ter·vened, in·ter·ven·ing, in·ter·venes 1. To come, appear, or lie between two things: You can't see the lake from there because the house intervenes. 2. period). Revenues from the Company's 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. IMPACT center division decreased 26.5% to $6,778,000, continuing to reflect the controversy and confusion created among oncologists and patients by the high dose chemotherapy/breast cancer study results reported by the American Society of Clinical Oncology American Society of Clinical Oncology, or ASCO, is an organization that represents all clinical oncologists. Every year, ASCO holds a large symposium where physicians and researchers meet to convey and discuss research and ideas. in the spring. As previously reported by the Company, the results of these studies created a decline in demand for high dose chemotherapy, as evidenced by the decrease in number of procedures performed during the second quarter of 1999 and the 37.8% decrease in number of procedures performed in the third quarter, as compared with the third quarter 1998. This trend has not been consistent throughout the country, in fact, the Company entered into two new IMPACT center opportunities: a new center in Pensacola, Florida
New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . The sale of pharmaceuticals to the affiliating physicians in the IMPACT center network increased 30.6% to $8,926,000 and was not adversely effected by the slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in high dose chemotherapy centers. Revenues from the Company's clinical trials division remained limited in the third quarter, with the completion of several major studies and a transition in the management of that business segment. For the nine months ended September 30, 1999, revenues increased 9.4% to $102,951,000, as compared with $94,080,000 for the first nine months of 1998. Between the seasonally-low third quarter revenues and the decline in IMPACT center and clinical trials revenues, the Company posted a net loss of $164,000, or $0.01 per share, as compared with net income of $1,156,000, or $0.10 per 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. share for the third quarter 1998. In response to the declining high dose chemotherapy business and the pause in the clinical trials program, 12 underutilized IMPACT Centers were closed in 1999 and associated operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. eliminated in all or part of the third quarter. This is reflected in the 18.6% decrease in other operating expenses for the quarter. Net income for the nine months ended September 30, 1999 was $1,448,000, or $0.12 per diluted share, as compared with $3,876,000, or $0.32 per diluted share for the first nine months of 1998. Cash flow provided by operating activities for the nine months ended September 30, 1999 increased 437% to $9,800,000, as compared with the $1,826,000 reported for the first nine months of 1998. This sizeable improvement was realized despite the decrease in net income, and reflected a substantial improvement in account receivable account receivable Any amount owed to a business as the result of a purchase of goods or services from it on a credit basis. Although the firm making the sale receives no written promise of payment, it enters the amount due as a current asset in its books. collections. Days in 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 as of September 30, 1999 dropped to 91, as compared with 106 as of September 30, 1998. Cash as of September 30, 1999 was $7,076,000 as compared with $1,135,000 on September 30, 1998. The Company has a $41 million Credit Facility which matures in 2002; as of September 30, 1999, $37 million was outstanding. At September 30, 1999, the Company had a current ratio of 1.7:1 and book value per share of $4.23. On October October: see month. 28, 1999, the Board of Directors announced the appointment of Anthony M. LaMacchia as Response Oncology's president and chief executive officer. Mr. LaMacchia comes to Response Oncology with over 20 years of health industry business experience, the last 15 of which were in progressively responsible senior management positions at Salick Health Care, Inc. Salick was among the first and most successful publicly-traded cancer services companies 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. . It was acquired by Zeneca PLC for $450 million, or $40 per share, in 1995. Prior to joining Response Oncology, Mr. LaMacchia was the executive vice president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. of Salick Health Care, Inc. During his tenure tenure, in education tenure, in education, a guarantee of the permanence of a college or university teacher's position, awarded upon successful completion of a probationary period, usually seven years. at Salick, Mr. LaMacchia helped build and ultimately managed a $250 million national health services health services Managed care The benefits covered under a health contract operation out of a $10 million dialysis dialysis (dīăl`ĭsĭs), in chemistry, transfer of solute (dissolved solids) across a semipermeable membrane. Strictly speaking, dialysis refers only to the transfer of the solute; transfer of the solvent is called osmosis. company. Mr. LaMacchia began his career at Salick as director of strategic planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. , and is credited during his tenure with expanding the Company's revenues, improving its profitability, turning around fundamentally sound, unprofitable business segments and divesting others. Contemporaneous con·tem·po·ra·ne·ous adj. Originating, existing, or happening during the same period of time: the contemporaneous reigns of two monarchs. See Synonyms at contemporary. with his starting date, Mr. LaMacchia purchased from the Company 300,000 shares of the Company's common stock at $1.00 per share, and as part of his compensation package, received a grant of options to purchase 500,000 shares of common stock at $1.00 per share. "While it is impossible to ignore the bottomline disappointment in the third quarter, I see a hundred million dollar company, with 40 oncologists in 10 medical oncology practices, a $35 million pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. business, 44 IMPACT Centers in 23 states with approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 400 affiliating physicians, extensive experience and strong relationships in oncology circles, extraordinary clinical outcomes data and a raft of other related assets that can be leveraged into a broader cancer care company" commented Anthony M. LaMacchia, president and chief executive officer of Response Oncology. "I have accepted my responsibilities with a compelling vision of what can be done with these assets to build a much larger company with greater shareholder value. It is for this reason that I am very pleased to be given the opportunity to provide new leadership and to become a substantial shareholder in the Company." CONFERENCE CALL PLAYBACK Playback could mean:
"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 mpany could differ significantly from those statements. Factors that could cause or contribute to such differences include, but are not limited to continued decline in high dose chemotherapy referrals due to the high dose chemotherapy breast cancer study results, transition of senior management of the Company, and continued decline in margins for cancer drugs. 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 centers, providing 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. 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 400 affiliating oncologists. (Tables To Follow) -0-
RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(Dollar amounts in thousands except for share data)
Three Months Ended
-------------------------
September 30, September 30,
1999 1998
----------- -----------
NET REVENUE $ 32,589 $ 31,858
COSTS AND EXPENSES
Salaries and benefits 6,209 6,291
Pharmaceuticals and supplies 19,600 16,031
Other operating costs 2,787 3,422
General and administrative 1,634 1,478
Depreciation and amortization 1,143 1,538
Interest 799 771
Provision for doubtful accounts 461 198
----------- -----------
32,633 29,729
----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES
AND MINORITY INTEREST
(44) 2,129
Minority owners' share of net earnings (220) (264)
---,156
=========== ===========
EARNINGS (LOSS) PER COMMON SHARE:
Basic $ (0.01) $ 0.10
=========== ===========
Diluted $ (0.01) $ 0.10
=========== ===========
Weighted average number of common shares:
Basic 11,966,597 12,048,501
=========== ===========
Diluted 11,966,597 12,087,248
=========== ===========
RESPONSE ONCOLOGY, INC. AND SUB
--------------------------
September 30, September 30,
1999 1998
----------- -----------
NET REVENUE $ 102,951 $ 94,080
COSTS AND EXPENSES
Salaries and benefits 19,218 18,363
Pharmaceuticals and supplies 59,843 47,428
Other operating costs 8,905 9,997
General and administrative 5,002 4,561
Depreciation and amortization 3,380 3,792
Interest 2,505 2,196
Provision for doubtful accounts 1,156 809
----------- -----------
100,009 87,146
----------- -----------
EARNINGS BEFORE INCOME TAXES AND
MINORITY INTEREST 2,942 6,934
Minority owners' share of net earnings (606) (682)
----------- -----------
EARNINGS BEFORE INCOME TAXES 2,336 6,252
Provision for income taxes 888 2,376
----------- -----------
NET EARNINGS TO COMMON STOCKHOLDERS $ 1,448 $ 3,876
=========== ===========
EARNINGS PER COMMON SHARE:
Basic $ 0.12 $ 0.32
=========== ===========
Diluted $ 0.12 $ 0.32
=========== ===========
Weighted average number of
common shares:
Basic 11,982,250 12,036,259
=========== ===========
Diluted 12,006,954 12,225,657
=========== ===========
RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
Sept. 30, 1999
ASSETS (Unaudited) Dec. 31, 1998
--------- ---------
CURRENT ASSETS
Cash and cash equivalents $ 7,076 $ 1,083
Accounts receivable, less allowance
for doubtful accounts
of $2,833 and $2,772 18,717 22,844
Supplies and pharmaceuticals 3,143 3,406
Prepaid expenses and other
current assets 4,351 6,276
Due from affiliated physician groups 17,852 18,630
--------- ---------
TOTAL CURRENT ASSETS 51,139 52,239
Property and equipment, less
accumulated depreciation and
amortization of $11,980 and $11,150 4,477 5,273
Deferred charges, less accumulated
amortization of $47 and $496 414 50
Management service agreements,
less accumulated amortization of
$7,445 and $5,160 66,886 68,087
Other assets 308 1,104
========= =========
TOTAL ASSETS $ 123,224 $ 126,753
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 14,331 $ 16,528
Accrued expenses and other liabilities 6,960 7,350
Current portion of notes payable 8,062 11,107
Current portion of capital lease
obligations 291 357
Deferred income taxes 473 473
--------- ---------
TOTAL CURRENT LIABILITIES 30,117 35,815
Capital lease obligations, less
current portion 641 962
Notes payable, less current portion 33,618 32,290
Deferred income taxes 7,236 7,295
Minority interest 994 981
STOCKHOLDERS' EQUITY
Series A convertible preferred stock,
$1.00 par value (aggregate
involuntary liquidation preference
$293) authorized 3,000,000 shares
issued and outstanding 26,631 shares 27 27
Common stock, $.01 par value,
authorized 30,000,000 shares; issued
and outstanding 11,968,601 and
12,049,331 shares 120 120
Paid-in capital 101,672 101,912
Accumulated deficit (51,201) (52,649)
--------- ---------
50,618 49,410
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 123,224 $ 126,753
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