EXHIBIT 99.1 |
FOR IMMEDIATE RELEASE HEALTHTRONICS ANNOUNCES STRONG SECOND QUARTER RESULTS AND RAISES 2005 EARNINGS GUIDANCE Urology Procedures Increase Continued Growth in Medical Device Segment Margin Gains Highlight Vehicle Business |
AUSTIN, TX, July 28, 2005 — HealthTronics, Inc. (NASDAQ: HTRN), today announced its financial results for the second quarter ended June 30, 2005. Financial results for the second quarter of 2004 reflect the operations of Prime Medical Services, Inc. exclusively, and do not include HealthTronics Surgical Services, Inc. Comparable non-financial metrics and financial variances incorporated in this news release reflect the combined operations of both companies. As previously disclosed, the Company’s Orthopaedics segment is reported as income (loss) from discontinued operations and assets held for sale. See attached tables. |
Total revenues from continuing operations during the second quarter 2005 were $64.7 million. Under GAAP, income from continuing operations was $3.2 million, or $0.09 per share. Excluding mandatory redemption premiums associated with the early extinguishment of debt, income from continuing operations was $4.1 million or $0.12 per share. Fully-diluted weighted average shares outstanding for the quarter were 35.2 million. |
HealthTronics’ President & CEO, Brad A. Hummel, commented, “Second quarter results were in-line with our expectations, highlighted by steady gains in our medical device segment and margin improvement within the specialty vehicle group. We continue to meet our integration objectives by eliminating redundant costs and streamlining operations while attacking our strategic goals. Notably in the second quarter, we introduced the HealthTronics UroVantage®, our intra-operative imaging system, at the American Urology Association Conference in San Antonio. Market reaction has been very favorable and our first installation will be completed next month.” |
SEGMENT ANALYSIS
UROLOGY
Urology procedures (all modalities) totaled 16,587 during the quarter, an increase of 2.5% over the same period a year ago. Lithotripsy procedures, at 14,124, decreased approximately 5% from the previous year, suggesting a generally late start to the normally busier stone season. Partnership constituency and the total number of referring physicians was consistent with that of the prior quarter. Segment EBITDA totaled $7.1 million in the quarter. Average lithotripsy revenue per case was $2,050, slightly below the previous quarter, reflecting case mix and indicative of continued wholesale pricing stability. Minority interest in lithotripsy partnerships remained stable. |
Prostate therapies grew markedly to 2,070 treatments during the quarter, up from 821 in the same period a year ago. Prostate laser procedures totaled 1,070 and TUMT accounted for 1,000 cases during the second quarter. The Company also realized gains in cryotherapy treatment delivery, with procedures increasing to 387 in the quarter, up from 207 in the same quarter a year ago. |
The operating environment for the services group remains very good. The Company’s position as a wholesaler provides a comfortable level of insulation against reimbursement fluctuation in each of our service profiles. The proposed 2006 Hospital Outpatient Payment System (“HOPPS”) rate for lithotripsy is unchanged at $2,541 per case, which positions our average charge at approximately 20% below this benchmark Medicare reimbursement and nearly 35% below average private pay reimbursement. The proposed cutback in the 2006 HOPPS rate for GreenLight PVP from $3,750 to $2,500 per case, while severe, would place our average charge at a 52% discount to the proposed rate – and a total fee (including fibers) at a 23.5% discount to the proposed rate.” |
Mr Hummel stated, “The endurability of our lithotripsy model is well established and we believe that our contractual structure in prostate therapies, both for laser treatments and TUMT, was designed thoughtfully and it, too, will withstand the test of time.” |
MEDICAL DEVICE SALES & SERVICE
“During the second quarter Medical Device group revenue grew to $9.0 million, and $4.8 million after intercompany eliminations, resulting in a 37% increase in revenue from the same period a year ago. Production efficiencies and rationalized SG&A allocation helped drive substantial improvement in group contribution, as segment EBITDA grew to $2.2 million, up from $1.1 million in the same period a year ago. |
“Gross margin on device and consumables for the quarter was 48%. We look forward to continued growth and expanded margins in this division as higher end products such as the UroVantage® impact product mix, complementing high margin consumable sales and opportunities for expanded service and maintenance revenue.” |
“On the heels of the successful launch of the UroVantage® system, we are continuing our initiatives to develop new devices to expand our product portfolio. Additionally, the physician interest in emerging technologies such as High Intensity Focused Ultrasound (“HIFU”) and the promise of expanded applications of our UroVantage® platform creates the opportunity to move beyond our significant reach within the urology community and into other specialties and the global marketplace.” |
SPECIALTY VEHICLE MANUFACTURING
“Second quarter results from our Specialty Vehicles unit reflect a continuation of margin improvements achieved in each of the two previous quarters. Division EBITDA grew 25%, to $3.4 million, on revenue of $25.5 million. EBITDA margins increased to 13.3% from 8.2% in the same period last year, despite a 16% revenue decline. |
“ Following last year’s decision to consolidate plants, the Company directed its top-line focus to revenue opportunities where our core engineering capabilities could distinguish our products, furthering our marketplace prominence and leading to higher profitability. |
“The improved outlook in demand for mobile medical product, good visibility in our broadcast group and modest but steady improvements in efficiency are encouraging, adding to our confidence that we can attain our previously stated profitability goals for the division in 2005.” |
INTEGRATION & FINANCIAL GUIDANCE
John Q. Barnidge, HealthTronics’ Chief Financial Officer, commented, “Our integration efforts relating to the Prime/HealthTronics merger continue to progress and are yielding synergies in excess of our projected amounts. We have also realized the value of our much strengthened balance sheet. These cost savings have contributed to our strong net working capital position, which was $75.5 million at June 30, 2005, an increase of $18.8 million during the quarter. Net debt was $135.2 million at June 30, 2005.” |
Mr Barnidge concluded, “Given the positive outlook in each of our three business segments, we are raising our previously stated guidance from $0.48-$0.52 to $0.52-$0.54 in diluted earnings per share from continuing operations for the year ending December 31, 2005.” |
Conference Call and Webcast
Management of HealthTronics will host a conference call the morning of Thursday, July 28, 2005 at 10:30 a.m. EDT. To participate in the live call, please dial 888-743-0342 (706-679-0861 for international callers) and ask for the “HealthTronics” call (conference I.D. #7808233). 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 the Company’s web site atwww.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 Company’s web site. A telephone replay will be available for two weeks by dialing 800-642-1687 (706-645-9291 for international callers) and entering the conference I.D. #5542492. |
HEALTHTRONICS’ USE OF NON-GAAP FINANCIAL MEASURES
This press release includes financial measures for net income 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). Non-GAAP income from continuing operations and earnings per share exclude certain expenses in 2005 related to loan fees and incremental interest expense related to the Company’s refinancing of long-term debt and its senior credit facility, and in 2004 charges related to expenses primarily associated with the implementation of FAS 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, (collectively “Certain Charges”). 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 investors in allowing for greater transparency of supplemental information used by management in its financial and operational 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 with 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 various filings with the SEC. 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 reflect minority interest expense when calculating EBITDA, however, HealthTronics adjusts for minority interest expense and refers to this measure as “Adjusted EBITDA”. HealthTronics has historically reported this measure 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 budget process. HealthTronics believes these measures continue to be used by investors and creditors in their assessment of HealthTronics’ operating 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. HealthTronics strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure. |
About HealthTronics, Inc.
HealthTronics provides healthcare services, primarily to the urology community, and manufactures medical devices as well as specialty vehicles used for the transport of high technology medical and broadcast & communications equipment. For more information, visit www.healthtronics.com. |
Statements by the Company’s management during the conference call announced 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, the integration of Prime’s and HealthTronics’ businesses, 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. |
CONTACT: HealthTronics, Inc. Brad A. Hummel, President & CEO John Q. Barnidge, Senior VP & CFO (512) 314-4554 www.healthtronics.com | -OR- | INVESTOR RELATIONS COUNSEL: The Equity Group Inc. Loren G. Mortman (212) 836-9604, LMortman@equityny.com Lauren Barbera (212) 836-9610, LBarbera@equityny.com www.theequitygroup.com |
HealthTronics, Inc. and Subsidiaries |
GAAP RESULTS | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
($ in thousands, except per share data) | 2005 | 2004 | 2005 | 2004 | ||||||||||
Revenue: | ||||||||||||||
Urology | $ | 34,182 | $ | 16,484 | $ | 67,542 | $ | 30,879 | ||||||
Device Sales and Service | 4,814 | 3,283 | 7,512 | 5,107 | ||||||||||
Specialty Vehicle Manufacturing | 25,530 | 30,513 | 52,504 | 54,270 | ||||||||||
Other | 196 | 238 | 390 | 475 | ||||||||||
Total revenue | 64,722 | 50,518 | 127,948 | 90,731 | ||||||||||
Cost of services and general and administrative expenses: | ||||||||||||||
Urology | 15,739 | 6,578 | 30,300 | 12,509 | ||||||||||
Device Sales and Service | 2,664 | 2,206 | 3,342 | 3,254 | ||||||||||
Specialty Vehicle Manufacturing | 22,135 | 27,507 | 46,165 | 49,213 | ||||||||||
Corporate | 1,233 | 1,045 | 2,770 | 1,997 | ||||||||||
Depreciation and amortization | 3,229 | 1,846 | 6,506 | 3,466 | ||||||||||
45,000 | 39,182 | 89,083 | 70,439 | |||||||||||
Operating income | 19,722 | 11,336 | 38,865 | 20,292 | ||||||||||
Other income (expenses): | ||||||||||||||
Interest and dividends | 153 | 61 | 296 | 149 | ||||||||||
Interest expense | (1,804 | ) | (2,364 | ) | (4,732 | ) | (4,653 | ) | ||||||
Loan fees | (1,463 | ) | -- | (2,646 | ) | -- | ||||||||
(3,114 | ) | (2,303 | ) | (7,082 | ) | (4,504 | ) | |||||||
Income from continuing operations before provision | ||||||||||||||
for income taxes and minority interest | 16,608 | 9,033 | 31,783 | 15,788 | ||||||||||
Minority interest in consolidated income | 11,414 | 5,373 | 22,848 | 10,264 | ||||||||||
Provision for income taxes | 2,010 | 1,338 | 3,440 | 2,021 | ||||||||||
Income from continuing operations | 3,184 | 2,322 | 5,495 | 3,503 | ||||||||||
Income from discontinued operations, net of tax benefit | (359 | ) | -- | (935 | ) | -- | ||||||||
Net income | 2,825 | $ | 2,322 | 4,560 | $ | 3,503 | ||||||||
Diluted income from continuing operations per share: | ||||||||||||||
Income from continuing operations | $ | 0.09 | $ | 0.11 | $ | 0.16 | $ | 0.18 | ||||||
Weighted average shares outstanding | 35,218 | 20,952 | 34,627 | 19,913 | ||||||||||
PRO FORMA RESULTS | ||||||||||||||
Income from continuing operations, as reported | $ | 3,184 | $ | 2,322 | $ | 5,495 | $ | 3,503 | ||||||
Compensation charge for employee | ||||||||||||||
puts and stock buybacks, net of tax | -- | (313 | ) | -- | (517 | ) | ||||||||
Loan fees and incremental interest charges, net of tax | 900 | -- | 2,279 | -- | ||||||||||
Income from continuing operations, pro forma | $ | 4,084 | $ | 2,009 | $ | 7,774 | $ | 2,986 | ||||||
Diluted income from continuing operations per share: | ||||||||||||||
Income from continuing operations, pro forma | $ | 0.12 | $ | 0.10 | $ | 0.22 | $ | 0.15 | ||||||
Weighted average shares outstanding | 35,218 | 20,952 | 34,627 | 19,913 | ||||||||||
HealthTronics, Inc. and Subsidiaries |
($ in thousands) | June 30, 2005 | December 31, 2004 | ||||||
---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||
Total current assets | $ | 114,706 | $ | 102,535 | ||||
Property and equipment, net | 41,972 | 42,343 | ||||||
Assets held for sale | 13,971 | 16,169 | ||||||
Other assets | 309,828 | 313,226 | ||||||
$ | 480,477 | $ | 474,273 | |||||
LIABILITIES | ||||||||
Total current liabilities | $ | 39,235 | $ | 84,774 | ||||
Long-term debt, net of current portion | 142,877 | 110,304 | ||||||
Other long-term liabilities | 25,452 | 26,339 | ||||||
Total liabilities | 207,564 | 221,417 | ||||||
Liabillities held for sale | 7,224 | 6,352 | ||||||
Minority interest | 32,969 | 29,277 | ||||||
Total stockholders' equity | 232,720 | 217,227 | ||||||
$ | 480,477 | $ | 474,273 | |||||
HealthTronics, Inc. |
2nd Quarter | YTD | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 | 2004 (a) | 2005 | 2004 (a) | |||||||||||
Summary of Results from Operations | ||||||||||||||
Revenues | $ | 64,722 | $ | 50,518 | $ | 127,948 | $ | 90,731 | ||||||
EBITDA | $ | 23,104 | $ | 12,749 | $ | 45,667 | $ | 23,091 | ||||||
Adjusted EBITDA | $ | 11,690 | $ | 7,376 | $ | 22,819 | $ | 12,827 | ||||||
Net Income | $ | 4,084 | $ | 2,009 | $ | 7,774 | $ | 2,986 | ||||||
EPS | $ | 0.12 | $ | 0.10 | $ | 0.22 | $ | 0.15 | ||||||
Number of Shares | 35,218 | 20,952 | 34,627 | 19,913 | ||||||||||
Segment Information | ||||||||||||||
Revenues: | ||||||||||||||
Urology | $ | 34,182 | $ | 16,484 | $ | 67,542 | $ | 30,879 | ||||||
Medical Device Sales & Service | $ | 4,814 | $ | 3,283 | $ | 7,512 | $ | 5,107 | ||||||
Specialty Vehicles | $ | 25,530 | $ | 30,513 | $ | 52,504 | $ | 54,270 | ||||||
Adjusted EBITDA: | ||||||||||||||
Urology | $ | 7,121 | $ | 4,539 | $ | 14,557 | $ | 8,240 | ||||||
Medical Device Sales & Service | $ | 2,161 | $ | 1,100 | $ | 4,198 | $ | 1,885 | ||||||
Specialty Vehicles | $ | 3,399 | $ | 2,515 | $ | 6,344 | $ | 4,245 | ||||||
Capital Expenditures: | ||||||||||||||
Consolidated, net to HealthTronics | $ | 1,346 | $ | 950 | $ | 3,559 | $ | 2,629 | ||||||
Urology, net to HealthTronics | $ | 661 | $ | 415 | $ | 2,377 | $ | 1,085 | ||||||
Medical Device Sales & Service | $ | 111 | $ | -- | $ | 407 | $ | -- | ||||||
Specialty Vehicles Manufacturing | $ | 362 | $ | 365 | $ | 521 | $ | 1,242 | ||||||
Corporate | $ | 212 | $ | 170 | $ | 254 | $ | 302 | ||||||
Other Information: | ||||||||||||||
Net Draws (Payments) on Line of Credit | $ | (313 | ) | $ | -- | $ | 687 | $ | (3,000 | ) | ||||
Net Debt | $ | 135,217 | $ | 106,276 | $ | 135,217 | $ | 106,276 | ||||||
Days Sales Outstanding | 30.8 | 37.3 | $ | 30.8 | 37.3 |
(a) In accordance with General Accepted Accounting Principals, 2004 amounts are for Prime Medical Services, Inc. only. |
HealthTronics, Inc. |
2005 | ||||||||
---|---|---|---|---|---|---|---|---|
Q-2 | Q-1 | |||||||
Urology Segment | ||||||||
Procedures: | ||||||||
Litho | 13,926 | 13,475 | ||||||
Holmium Renal | 198 | 220 | ||||||
Prostate Laser | 1,070 | 940 | ||||||
TUMT | 1,000 | 818 | ||||||
Cryotherapy | 387 | 372 | ||||||
Other | 6 | 13 | ||||||
Total Procedures | 16,587 | 15,838 | ||||||
Revenues: | ||||||||
Litho | $ | 28,548 | $ | 28,405 | ||||
Holmium Renal | 129 | 146 | ||||||
Prostate Laser | 2,084 | 1,770 | ||||||
TUMT | 2,008 | 1,598 | ||||||
Cryotherapy | 1,370 | 1,414 | ||||||
Other | 43 | 27 | ||||||
Segment Revenue | $ | 34,182 | $ | 33,360 | ||||
Adjusted EBITDA | $ | 7,121 | $ | 7,436 | ||||
Specialty Vehicle Manufacturing Segment | ||||||||
Units: | ||||||||
Mobile Medical | 38 | 32 | ||||||
Broadcast | 32 | 34 | ||||||
Command/Homeland Security | 11 | 36 | ||||||
Other | 2 | 1 | ||||||
Total Units | 83 | 103 | ||||||
Revenues: | ||||||||
Mobile Medical | $ | 14,112 | $ | 11,945 | ||||
Broadcast | 4,658 | 6,170 | ||||||
Command/Homeland Security | 3,532 | 5,706 | ||||||
Other | 3,228 | 3,153 | ||||||
Segment Revenue | $ | 25,530 | $ | 26,974 | ||||
Adjusted EBITDA | $ | 3,399 | $ | 2,945 | ||||
HealthTronics, Inc |
2nd Quarter | YTD | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 | 2004 | 2005 | 2004 | |||||||||||
Net Income from continuing operations as reported | $ | 3,184 | $ | 2,322 | $ | 5,495 | $ | 3,503 | ||||||
Add Back(deduct): | ||||||||||||||
Provision for Income Taxes | 2,010 | 1,338 | 3,440 | 2,021 | ||||||||||
Interest Expense, Including Loan Fees | 3,267 | 2,364 | 7,378 | 4,653 | ||||||||||
Depreciation & Amortization | 3,229 | 1,846 | 6,506 | 3,466 | ||||||||||
Compensation charge for employee | ||||||||||||||
puts and stock buybacks | -- | (494 | ) | -- | (816 | ) | ||||||||
Adjusted EBITDA | 11,690 | 7,376 | 22,819 | 12,827 | ||||||||||
Add Back: | ||||||||||||||
Minority Interest Expense | 11,414 | 5,373 | 22,848 | 10,264 | ||||||||||
EBITDA | $ | 23,104 | $ | 12,749 | $ | 45,667 | $ | 23,091 | ||||||