EXHIBIT 99.1 |
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FOR IMMEDIATE RELEASE HEALTHTRONICS ANNOUNCES 2006 FIRST QUARTER RESULTS NEW INITIATIVES UNDERWAY |
AUSTIN, TX, May 15, 2006 — HealthTronics, Inc. (NASDAQ: HTRN), today announced its financial results for the first quarter ended March 31, 2006. See attached tables. |
Total revenues for the first quarter of 2006 were $64.5 million, as compared to $61.6 million in the same quarter of last year, a 5% increase. Net income for the first quarter 2006 was $1.3 million, or $0.04 per share, as compared to $1.5 million, or $0.04 per share, for the same period last year. During the first quarter 2006, the Company incurred approximately $515,000 of expenses related to severance and consulting payments to former executives, approximately $350,000 of research and development expenses related to new devices and $93,000 of stock option expenses. Without these items, our fully-diluted EPS would have been $0.05 per share at March 31, 2006. Weighted average shares outstanding increased to 35.3 million in the current quarter, up from 34.3 million in the same period a year ago. |
HealthTronics’ Sr. Vice President & CFO, John Q. Barnidge, commented, “The first quarter 2006 top line revenue met our expectations. We will continue to focus on improving our operating margins across all three business segments: Urology Services, Medical Device Sales & Services and Specialty Vehicles.” |
SEGMENT ANALYSIS
UROLOGY
| ($000's) | Q-1 | Q-1 | ||||||
|---|---|---|---|---|---|---|---|---|
| 2006 | 2005 | |||||||
| Procedures | 15,859 | 15,852 | ||||||
| Revenue | $ | 32,688 | $ | 33,360 | ||||
| Adjusted EBITDA | $ | 5,535 | $ | 7,436 | ||||
“The Company continues to advance its prostate therapies initiatives. The Company conducted approximately 2,700 procedures in the first quarter 2006 as compared to approximately 2,100 in the same period last year, a 29% increase.” |
New Urology Initiatives
Exclusive Distributorship for BPH Surgical Laser
The Company has entered into an exclusive United States distribution agreement for Revolix, an FDA approved, surgical laser device used for the treatment of benign prostatic hyperplasia (BPH). |
Christopher B. Schneider, Urology Division COO, said, “We have deployed several Revolix systems to date and the response from our urology partners has been extremely positive in comparison to the current technology available. They like the front-end firing mode of the laser as well as other unique features not offered on current BPH laser devices. In addition to the clinical benefits, the economics of the Revolix are clearly more favorable than those associated with the KTP laser technology. The improved economics will benefit our physician partners and our growing prostate treatment business.” |
Kenneth Blunt, M.D., Medical Director who is managing the Revolix clinical demonstrations, stated, “The Revolix produces a wave length that is absorbed by water rather than hemoglobin which provides more consistent vaporization as compared to a KTP type laser. Also, the Revolix is a continuous wave laser as opposed to the less efficient pulsed method of a holmium type laser which some believe is less efficient. This continuous wave creates a cleaner, smoother application to the soft tissue or gland.” |
Anatomical Pathology Lab Opens
In January 2006, the Company opened ClariPath Labs, its new anatomical pathology laboratory. ClariPath is located in a modern life sciences building on the campus of the Medical College of Georgia. |
Mr. Barnidge stated, “We are very proud of this new facility which offers state of the art technology and equipment. Our customers and physician partners will benefit from technological innovations, including web-based reporting capabilities and bar code assisted workflow. With input from our physician partners, we have also developed a unique, patent-pending biopsy kit to maximize efficiencies and quality assurance for both the physician and lab personnel. We are fortunate to have a talented and experienced clinical staff and pathologist working with us.” |
HIFU Trials Started
Mr. Schneider added, “We are progressing with our efforts to obtain FDA approval for the emerging technology of High Intensity Focused Ultrasound (“HIFU”), for treating cancer of the prostate. The clinical trial is underway and we are now treating patients with this unique, minimally invasive technology. This cancer therapy addresses an enormous market and, as previously stated, there are over 10,000 successful clinical procedures on record in Europe for this technology. In the U.S. alone, there are approximately 35 million males in the so-called “Baby-Boom” generation and each year nearly 240,000 men are affected by prostate cancer.” |
MEDICAL DEVICE SALES & SERVICE SEGMENT
| ($000's) | Q-1 | Q-1 | ||||||
|---|---|---|---|---|---|---|---|---|
| 2006 | 2005 | |||||||
| Total Revenue | $ | 9,860 | $ | 6,588 | ||||
| Revenue, net of interco | $ | 5,934 | $ | 2,698 | ||||
| EBITDA | $ | 292 | $ | 2,037 | ||||
The Medical Device segment posted strong revenue growth in the 1st Quarter 2006. EBITDA margins were negatively affected by approximately $200,000 in research & development expenses related to new product modification. |
Mr. Schneider stated, “Revenue growth was driven by sales of nine lithotripter/imaging devices, an increase in the number of devices under service contract and the trailing consumable revenue on our growing installed base. Comparing profit margin to same period prior year is difficult due to the first quarter 2005 sales of several devices acquired at a low cost basis from a former Swiss-based subsidiary.” |
American Urology Association (“AUA”) Annual Meeting
The company will actively participate in this comprehensive global urology meeting in Atlanta, GA later this month. “There are several key HealthTronics-sponsored events at the AUA this year, including a clinical presentation of the Revolix BPH surgical laser, the introduction of our new lithotripsy technology via our LithoDiamond platform and the launch of ClariPath, our new full-service anatomical pathology laboratory”, Mr. Schneider concluded. |
SPECIALTY VEHICLE MANUFACTURING
| ($000's) | Q-1 | Q-1 | ||||||
|---|---|---|---|---|---|---|---|---|
| 2006 | 2005 | |||||||
| Units Delivered | 82 | 103 | ||||||
| Revenue | $ | 25,679 | $ | 25,337 | ||||
| EBITDA | $ | 3,239 | $ | 2,614 | ||||
The Specialty Vehicle Division (“AKSV”) continued to show improvement in all three markets in which AKSV participates: high-end mobile medical, broadcast & communications, and Homeland Security. AKSV’s backlog of units ordered has increased by 17% year-over-year from $31.8 million to $37.1 million at March 31, 2006. |
During the first quarter 2006, AKSV’s revenue totaled $25.7 million compared to $25.3 million for the same period in 2005, a 2% increase. However, EBITDA for the first quarter 2006 rose to $3.2 million compared to $2.6 million for the first quarter 2005, a 23% increase. |
Status of AKSV Strategic Initiative
During the first quarter of 2006, the Company engaged Robert W. Baird & Company to advise it on strategic alternatives for AKSV and market and solicit offers for a possible sale of the division. Management believes that this process is progressing as planned. |
CONCLUSION
Mr. Barnidge stated, “We are looking forward to having Sam Humphries join our management team as our new President and CEO. Sam’s experience in the healthcare industry and urology, in particular, will be invaluable to HealthTronics as we begin this new era. Sam will be hosting an earnings call following our 2nd quarter 2006 earnings release in early August, 2006. |
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. EBITDA includes GAAP minority interest expense and “Adjusted EBITDA” equals EBITDA less GAAP minority interest expense and, when used with respect to a particular segment, corporate selling, general and administrative and research & development expenses. 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 and distributes medical devices. The Company also manufactures specialty vehicles used for the transport of high technology medical devices, broadcast & communications equipment and the Homeland Security marketplace. For more information, visit www.healthtronics.com. |
Statements by the Company’s management made 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, 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. John Q. Barnidge, Sr. Vice President & CFO John.barnidge@healthtronics.com www.healthtronics.com |
HEALTHTRONICS, INC. AND SUBSIDIARIES |
($ in thousands, except per share data) |
| Three Months Ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2006 | 2005 | |||||||
| Revenue: | (Restated) | |||||||
| Urology | $ | 32,688 | $ | 33,360 | ||||
| Medical Device Sales and Service | 5,934 | 2,698 | ||||||
| Specialty Vehicle Manufacturing | 25,679 | 25,337 | ||||||
| Other | 152 | 194 | ||||||
| Total revenue | 64,453 | 61,589 | ||||||
| Cost of services and general and administrative expenses: | ||||||||
| Urology | 16,859 | 14,561 | ||||||
| Medical Device Sales and Service | 5,658 | 678 | ||||||
| Specialty Vehicle Manufacturing | 22,442 | 22,724 | ||||||
| Corporate | 1,756 | 1,537 | ||||||
| Depreciation and amortization | 3,207 | 3,277 | ||||||
| 49,922 | 42,777 | |||||||
| Operating income | 14,531 | 18,812 | ||||||
| Other income (expenses): | ||||||||
| Interest and dividends | 133 | 142 | ||||||
| Interest expense | (2,253 | ) | (2,929 | ) | ||||
| Loan fees | -- | (1,183 | ) | |||||
| (2,120 | ) | (3,970 | ) | |||||
| Income from continuing operations before provision | ||||||||
| for income taxes and minority interest | 12,411 | 14,842 | ||||||
| Minority interest in consolidated income | 10,370 | 11,433 | ||||||
| Provision for income taxes | 768 | 1,299 | ||||||
| Income from continuing operations | 1,273 | 2,110 | ||||||
| Loss from discontinued operations, net of $355 tax benefit | -- | (576 | ) | |||||
| Net income | $ | 1,273 | $ | 1,534 | ||||
| Basic earnings per share: | ||||||||
| Income from continuing operations | $ | 0.04 | $ | 0.07 | ||||
| Discontinued operations | $ | -- | $ | (0.02 | ) | |||
| Net income | $ | 0.04 | $ | 0.05 | ||||
| Weighted average shares outstanding | 34,906 | 33,315 | ||||||
| Diluted earnings per share: | ||||||||
| Income from continuing operations | $ | 0.04 | $ | 0.06 | ||||
| Discontinued operations | $ | -- | $ | (0.02 | ) | |||
| Net income | $ | 0.04 | $ | 0.04 | ||||
| Weighted average shares outstanding | 35,251 | 34,316 | ||||||
Continuing Operations |
| 1st Quarter | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2006 | 2005 | |||||||
| Summary of Results from Operations | ||||||||
| Revenues | $ | 64,453 | $ | 61,589 | ||||
| EBITDA(a) | $ | 17,872 | $ | 21,655 | ||||
| Adjusted EBITDA(a) | $ | 7,502 | $ | 10,222 | ||||
| Net Income | $ | 1,273 | $ | 1,534 | ||||
| EPS | $ | 0.04 | $ | 0.04 | ||||
| Number of Shares | 35,251 | 34,316 | ||||||
| Segment Information | ||||||||
| Revenues: | ||||||||
| Urology | $ | 32,688 | $ | 33,360 | ||||
| Medical Device Sales & Service | $ | 5,934 | $ | 2,698 | ||||
| Specialty Vehicles | $ | 25,679 | $ | 25,337 | ||||
| Adjusted EBITDA(b): | ||||||||
| Urology | $ | 5,535 | $ | 7,436 | ||||
| Medical Device Sales & Service | $ | 292 | $ | 2,037 | ||||
| Specialty Vehicles | $ | 3,239 | $ | 2,614 | ||||
| Capital Expenditures: | ||||||||
| Consolidated, net to HealthTronics | $ | 1,492 | $ | 2,213 | ||||
| Urology, net to HealthTronics | $ | 909 | $ | 1,716 | ||||
| Medical Device Sales & Service | $ | 30 | $ | 296 | ||||
| Specialty Vehicles Manufacturing | $ | 456 | $ | 159 | ||||
| Corporate/R&D | $ | 97 | $ | 41 | ||||
| Other Information: | ||||||||
| Cashflow from Operations | $ | 12,246 | $ | 7,978 | ||||
| Net Draws (Payments) on Senior Credit Facility | $ | (313 | ) | $ | 1,000 | |||
| Net Debt | $ | 120,993 | $ | 134,927 | ||||
| Days Sales Outstanding | 34.0 | 39.1 | ||||||
(a) See accompanying reconciliation of EBITDA and Adjusted EBITDA |
HealthTronics, Inc. |
| 1st Qtr | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2006 | 2005 | |||||||
| Net Income | $ | 1,273 | $ | 1,534 | ||||
| Add Back(deduct): | ||||||||
| Provision for income taxes | 768 | 1,299 | ||||||
| Interest expense, including loan fees | 2,253 | 4,112 | ||||||
| Depreciation and amortization | 3,207 | 3,277 | ||||||
| Adjusted EBITDA | 7,501 | 10,222 | ||||||
| Add Back: | ||||||||
| Minority interest expense | 10,370 | 11,433 | ||||||
| EBITDA | $ | 17,872 | $ | 21,655 | ||||
HealthTronics, Inc. |
| 1st Qtr | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2006 | 2005 | |||||||
| Urology Segment | ||||||||
| Revenues | $ | 32,688 | $ | 33,360 | ||||
| Expenses: | ||||||||
| Cost of Services | (16,859 | ) | (14,561 | ) | ||||
| Other Income (Expenses) | 76 | 70 | ||||||
| EBITDA | 15,905 | 18,869 | ||||||
| Minority interest expense | (10,370 | ) | (11,433 | ) | ||||
| Adjusted EBITDA | $ | 5,535 | $ | 7,436 | ||||
| Medical Device Sales and Service Segment | ||||||||
| Revenues | $ | 5,934 | $ | 2,698 | ||||
| Expenses: | ||||||||
| Cost of Services | (5,658 | ) | (678 | ) | ||||
| Other Income (Expenses) | 16 | 17 | ||||||
| EBITDA | $ | 292 | $ | 2,037 | ||||
| Specialty Vehicle Manufacturing | ||||||||
| Revenues | $ | 25,679 | $ | 25,337 | �� | |||
| Expenses: | ||||||||
| Cost of Services | (22,442 | ) | (22,724 | ) | ||||
| Other Income (Expenses) | 2 | 1 | ||||||
| EBITDA | $ | 3,239 | $ | 2,614 | ||||
HealthTronics, Inc. and Subsidiaries |
($ in thousands) | March 31, 2006 | December 31, 2005 | ||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| Total current assets | $ | 121,619 | $ | 123,966 | ||||
| Property and equipment, net | 42,224 | 41,339 | ||||||
| Other assets | 318,191 | 317,427 | ||||||
| $ | 482,034 | $ | 482,732 | |||||
| LIABILITIES | ||||||||
| Total current liabilities | $ | 48,846 | $ | 50,970 | ||||
| Long-term debt, net of current portion | 128,871 | 129,213 | ||||||
| Other long-term liabilities | 29,534 | 27,420 | ||||||
| Total liabilities | 207,251 | 207,603 | ||||||
| Minority interest | 31,248 | 33,647 | ||||||
| Total stockholders' equity | 243,535 | 241,482 | ||||||
| $ | 482,034 | $ | 482,732 | |||||