Exhibit 99.1
Media inquiries:
Robert Minicucci
Warner Communications
robert@warnerpr.com
603-488-5856
Investor inquiries:
Andrea Clegg
NightHawk Radiology Holdings, Inc.
aclegg@nighthawkrad.net
866-402-4295 or 208-292-2818
NightHawk Radiology Holdings, Inc. Announces Fourth Quarter and Full-Year
2007 Results; Updates 2008 Guidance
COEUR D’ALENE, Idaho, February 13, 2008 – NightHawk Radiology Holdings, Inc. (NASDAQ: NHWK), the leading provider of radiology solutions to radiology groups across the United States, today announced financial results for its fourth quarter and full year ended December 31, 2007.
2007 Highlights
| • | | Full year revenues grew 65% to $151.7 million from $92.2 million for the full-year 2006. Organic revenue grew $21.4 million, or 23% year-over-year, while acquisitions contributed an additional $38.1 million of revenue for the full year. |
| • | | New service offerings represented 15% of total revenue, or $22.4 million, including final interpretations at 8% of total revenue, or $12.1 million, and business services at 7% of total revenue, or $9.9 million. |
| • | | The company completed and integrated three acquisitions: Teleradiology Diagnostic Service, Inc. (TDS) in February, Radlinx Group, Ltd. in April, and Midwest Physician Services, LLC in July. Through these acquisitions, NightHawk increased its market share and the number of affiliated radiologists providing professional interpretations, and expanded its service offerings to include business services such as revenue cycle management, accounting and financial management, and transcription and records management. NightHawk provides the broadest suite of integrated radiology solutions available. |
| • | | The company ended the year providing services to nearly 1,500 sites, representing approximately 26% of all hospitals in the United States. |
| • | | Importantly, the company achieved 33% adjusted EBITDA margins for the full year (excluding the effects of non-cash IBNR malpractice reserves, stock compensation, and a one-time charge related to the settlement of an acquisition-related legal dispute) while investing in both infrastructure and new services. As previously reported, the company also incurred higher short-term expense in 2007 related to the integration of various acquisitions. |
“We accomplished a great deal in 2007,” said Dr. Paul Berger, Chairman and Chief Executive Officer. “Our continued growth and profitability in this highly dynamic industry demonstrates the value and quality of our services and the success of our business model. Customers rely on NightHawk to meet their current and future needs with our advanced and innovative solutions, and our affiliated radiologists are some of the most
productive in the world. We have made important investments in 2007 in new services, acquisitions and infrastructure. These items, combined with strong industry fundamentals, will enable NightHawk to continue growing rapidly while leading the transformation of the practice of radiology.”
Full-Year Results
| • | | Full-year revenue grew 65% to $151.7 million from $92.2 million for the full-year 2006. Full-year scan volumes grew 62% to 2.7 million, scans compared with 1.7 million scans in 2006. |
| • | | Organic revenue and organic scan volumes grew 23% and 27%, respectively, year-over-year. |
| • | | New service offerings, including daytime final and subspecialty reads, cardiac 3D reconstructions and interpretations, and business services, represented 15% of total revenue for the year. Final interpretations comprised approximately 8% of revenue. |
| • | | Adjusted net income grew 35% to $28.3 million, or $0.91 per diluted share, from $20.9 million, or $0.70 per diluted share in the prior year. The company’s adjusted net income excludes certain non-cash charges, including stock compensation, IBNR reserve and the amortization of intangibles associated with acquisitions. Also excluded from the calculation of 2007 adjusted earnings per diluted share is a one-time charge of approximately $0.5 million related to the settlement of an acquisition-related legal dispute with a former advisor. |
| • | | GAAP net income was $14.7 million, or $0.47 per diluted share, compared to ($28.5) million, or ($1.00) per diluted share in the same period of 2006. GAAP net income was impacted by higher non-cash charges for stock compensation, IBNR, and amortization of intangibles and, in 2006, a pre-IPO non cash expense related to the company’s then outstanding preferred stock. |
| • | | The company’s 2007 results were impacted by slightly lower fourth quarter scan volumes due to greater than expected seasonality and a delay in transitioning the former Radlinx physician contracts to the company’s compensation model to late in the fourth quarter. |
Fourth-Quarter Results
| • | | Fourth quarter 2007 revenue grew 77% to $42.7 million from $24.1 million in the fourth quarter 2006. Fourth quarter 2007 scan volumes grew 63% to 730,992 scans compared with 448,084 scans in the fourth quarter 2006. |
| • | | Fourth quarter organic revenue and organic scan volume grew 19% and 24%, respectively, year-over-year. |
| • | | New service offerings, primarily daytime final reads and business services, represented 21%, or $8.8 million, of total revenue for the quarter. |
| • | | Adjusted net income for the fourth quarter of 2007 grew 72% to $8.1 million, or $0.26 per diluted share, from $4.7 million, or $0.15 per diluted share in the fourth quarter 2006. |
| • | | GAAP net income grew 41% to $3.1 million, or $0.10 per diluted share, compared to $2.2 million, or $0.07 per diluted share in the fourth quarter 2006. |
“NightHawk has strong operating fundamentals and the largest market share in what continues to be a high-growth, dynamic market. Going forward, the company seeks to better execute on the opportunities before us as we expand our business model,” said Dr. Berger.
Updated Full-Year 2008 Guidance
The company updated its full-year 2008 guidance for revenue and adjusted earnings per diluted share. Full year 2008 revenue is now projected to be in the range of $195-$205 million, and adjusted earnings per diluted share is projected to be in the range of $1.10-$1.20.
“Our business continues to remain fundamentally strong, and we are pleased with our continued organic growth, our success at integrating acquisitions, and the traction we’ve achieved with our new service offerings. NightHawk has the leading market presence, a scalable business with high operating margins and strong cash flows, and a brand that is synonymous with quality and service, leaving us well positioned to execute on our vision,” said Dr. Berger.
Other News
The company announced the appointment of Mark Kleinschmidt as Senior Vice President of Sales. Kleinschmidt joined NightHawk through the company’s acquisition of Midwest Physician Services, LLC, the business services division of St. Paul Radiology, in July 2007. As Senior Vice President of Sales, his responsibilities include leading the NightHawk sales organization, including hiring, managing, and training field sales reps; developing efficient sales processes; managing sales performance; developing sales strategies; and pursuing large deals and strategic partnerships. Kleinschmidt has been in the radiology industry for nearly 20 years. Prior to joining NightHawk, he had been the CEO of St. Paul Radiology for nine years. Prior to his role at St. Paul, Kleinschmidt spent many years as a consultant to radiologists and radiology groups.
Earnings Conference Call
The fourth quarter and full-year 2007 conference call will be held on Wednesday, February 13, 2008 at 4:30 p.m. (ET). A live webcast of the conference call, as well as a replay, will be available online on the company’s corporate website athttp://www.nighthawkrad.net. Participants can also access the call by dialing 800-240-4186 (within the United States and Canada) or 303-205-0055 (international callers). A replay of the call will be available approximately two hours after the call has ended and will be available until 11:59 p.m. (ET) on Thursday, March 6, 2008. To access the replay, dial 800-405-2236 (within the United States and Canada), or 303-590-3000 (international callers) and enter the conference ID number: 11107716.
About NightHawk
NightHawk Radiology (Nasdaq: NHWK), headquartered in Coeur d’Alene, Idaho, is leading the transformation of the practice of radiology by providing high-quality, cost-effective services to radiology groups and hospitals throughout the United States. NightHawk provides the most complete suite of solutions, including professional services, business services, and its advanced, proprietary clinical workflow technology, all designed to increase efficiencies and improve the quality of patient care and the lives of physicians who provide it. NightHawk’s team of U.S. board-certified, state-licensed, and hospital-privileged physicians located in the United States, Australia, and Switzerland, provides services 24 hours a day, seven days a week, to nearly 1,500 sites, representing approximately 26% of all hospitals in the United States. For more information, visitwww.nighthawkrad.net.
Forward Looking Statements
This press release contains statements that are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. These include statements regarding the company’s growth strategy, the expansion and market acceptance of its current service offerings, the future benefits of its acquisitions, and an outlook on the company’s future financial results, including its revenue, and adjusted earnings per diluted share for 2008. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made, including the risks associated with general economic conditions, competitive conditions in the radiology industry, and regulatory risks. Other factors that could cause operating and financial results to differ are described in the company’s prospectus and periodic reports filed with the Securities and Exchange Commission (SEC). Other risks may be detailed from time to time in reports to be filed with the SEC. NightHawk does not undertake any obligation to publicly update its forward- looking statements based on events or circumstances after the date hereof.
Presentation of Non-GAAP Financial Information
The presentation of adjusted net income, adjusted EBITDA margins and adjusted earnings per diluted share are not measures of financial performance under GAAP and should not be considered a substitute for or superior to GAAP. Management believes these non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of our core results and providing for consistency in financial reporting. Specifically, the company’s non-GAAP adjusted net income measure, and related adjusted earnings per diluted share, described in this release exclude (i) for 2006 only, the non-cash charges related to the conversion feature and accretion of our preferred stock, which charges ceased upon the closing of our initial public offering when our shares of preferred stock converted into shares of common stock, (ii) the non-cash charges related to our stock-based compensation, (iii) the non-cash expense associated with the amortization of intangibles associated with acquisitions, (iv) the non-cash expense associated with changes to our IBNR reserve (incurred but not reported medical liability reserves) and (v) for 2007 only, a one-time charge of approximately $0.5 million related to the settlement of an acquisition related legal dispute with a former advisor . We exclude the non-cash charges related to our stock-based compensation due to the varying valuation methodologies, subjective assumptions and the variety of types of awards that companies can use when applying FAS 123R along with the fact that a substantial portion of our outstanding options and restricted stock units are held by our independent contractor physicians and require accounting treatment that differs from the accounting treatment for options and restricted stock units held by employees.
The company provides non-GAAP adjusted net income and related adjusted earnings per diluted share as financial measures because management believes these measures provide greater transparency with respect to information used by management in its financial and operational decision making and to enhance investors’ overall understanding of our current financial performance and our future prospects. For reconciliation of our non-GAAP financial measures to the most applicable GAAP financial measure, please refer to the information included in the attached tables of this press release and on our corporate website under the heading investor relations.
“NHWKF”
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| | | | | | | | |
| | | December 31,
2007 | | | December 31,
2006 | |
ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 31,956,468 | | | $ | 46,500,818 | |
Marketable securities | | | 30,624,642 | | | | 37,810,963 | |
Trade accounts receivable, net | | | 25,665,009 | | | | 12,706,146 | |
Deferred income taxes | | | 655,124 | | | | 365,930 | |
Prepaids and other current assets | | | 2,812,231 | | | | 2,076,037 | |
| | | | | | | | |
Total current assets | | | 91,713,474 | | | | 99,459,894 | |
Property and equipment, net | | | 10,554,913 | | | | 6,192,541 | |
Goodwill | | | 68,601,360 | | | | 4,913,844 | |
Intangible assets, net | | | 87,132,789 | | | | 2,922,543 | |
Deferred income taxes | | | 1,251,113 | | | | 2,480,972 | |
Other assets, net | | | 4,212,038 | | | | 96,572 | |
| | | | | | | | |
Total | | $ | 263,465,687 | | | $ | 116,066,366 | |
| | | | | | | | |
LIABILITIES | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 6,071,513 | | | $ | 3,437,458 | |
Accrued expenses | | | 12,880,852 | | | | 5,615,176 | |
Accrued performance bonuses | | | 2,106,610 | | | | 1,024,891 | |
Accrued payroll and related benefits | | | 2,462,813 | | | | 1,359,107 | |
Current portion of notes payable | | | 1,000,000 | | | | | |
| | | | | | | | |
Total current liabilities | | | 24,521,788 | | | | 11,436,632 | |
Insurance reserve | | | 3,038,000 | | | | 2,000,000 | |
Notes payable, less current portion | | | 98,500,000 | | | | | |
Other liabilities | | | 2,717,185 | | | | | |
| | | | | | | | |
Total liabilities | | | 128,776,973 | | | | 13,436,632 | |
| | | | | | | | |
STOCKHOLDERS’ EQUITY: | | | | | | | | |
Common stock-150,000,000 shares authorized; $.001 par value; 30,312,322 and 29,944,069 shares issued and outstanding at December 31, 2007 and December 31, 2006, respectively | | | 30,312 | | | | 29,944 | |
Additional paid-in capital | | | 249,273,581 | | | | 230,116,635 | |
Retained earnings (deficit) | | | (112,957,598 | ) | | | (127,516,845 | ) |
Accumulated other comprehensive income (deficit) | | | (1,657,581 | ) | | | | |
| | | | | | | | |
Total stockholders’ equity | | | 134,688,714 | | | | 102,629,734 | |
| | | | | | | | |
Total | | $ | 263,465,687 | | | $ | 116,066,366 | |
| | | | | | | | |
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, | | | Year Ended December 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Service revenue | | $ | 42,706,085 | | | $ | 24,093,585 | | | $ | 151,662,042 | | | $ | 92,168,246 | |
Operating costs and expenses: | | | | | | | | | | | | | | | | |
Professional services (includes non-cash compensation expense of $862,328, $1,553,248, $4,429,358 and $4,886,678) | | | 16,773,144 | | | | 12,462,455 | | | | 63,617,406 | | | | 38,963,287 | |
Sales, general, and administrative (includes non-cash compensation expense of $4,758,207, $412,943, $10,601,004 and $1,073,455) | | | 17,157,481 | | | | 8,382,875 | | | | 54,018,090 | | | | 27,607,317 | |
Depreciation and amortization | | | 2,648,449 | | | | 618,275 | | | | 7,899,256 | | | | 2,198,714 | |
| | | | | | | | | | | | | | | | |
Total operating costs and expenses | | | 36,579,074 | | | | 21,463,605 | | | | 125,534,752 | | | | 68,769,318 | |
| | | | | | | | | | | | | | | | |
Operating income | | | 6,127,011 | | | | 2,629,980 | | | | 26,127,290 | | | | 23,398,928 | |
Other income (expense): | | | | | | | | | | | | | | | | |
Interest expense | | | (2,220,769 | ) | | | (1,950 | ) | | | (5,885,511 | ) | | | (562,221 | ) |
Interest income | | | 662,186 | | | | 1,001,241 | | | | 3,130,335 | | | | 3,027,917 | |
Other, net | | | (3,321 | ) | | | 29,878 | | | | (62,916 | ) | | | (34,258 | ) |
Change in fair value of redeemable preferred stock conversion feature | | | | | | | | | | | | | | | (44,183,770 | ) |
| | | | | | | | | | | | | | | | |
Total other income (expense) | | | (1,561,904 | ) | | | 1,029,169 | | | | (2,818,092 | ) | | | (41,752,332 | ) |
| | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | 4,565,107 | | | | 3,659,149 | | | | 23,309,198 | | | | (18,353,404 | ) |
Income tax expense | | | 1,504,757 | | | | 1,452,181 | | | | 8,615,352 | | | | 10,047,713 | |
| | | | | | | | | | | | | | | | |
Net income (loss) | | | 3,060,350 | | | | 2,206,968 | | | | 14,693,846 | | | | (28,401,117 | ) |
Redeemable preferred stock accretion | | | | | | | | | | | | | | | (117,534 | ) |
| | | | | | | | | | | | | | | | |
Income (loss) applicable to common stockholders | | $ | 3,060,350 | | | $ | 2,206,968 | | | $ | 14,693,846 | | | $ | (28,518,651 | ) |
| | | | | | | | | | | | | | | | |
Earnings (loss) per common share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.10 | | | $ | 0.07 | | | $ | 0.49 | | | $ | (1.00 | ) |
Diluted | | $ | 0.10 | | | $ | 0.07 | | | $ | 0.47 | | | $ | (1.00 | ) |
Weighted averages of common shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 30,260,996 | | | | 29,912,134 | | | | 30,083,080 | | | | 28,528,079 | |
Diluted | | | 31,319,605 | | | | 30,817,311 | | | | 31,083,971 | | | | 28,528,079 | |
| | | | | | | | | | | | | | | | |
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | December 31, 2007 | | | December 31, 2006 | |
| | | GAAP | | | Adjustments | | | As Adjusted | | | GAAP | | | Adjustments | | | As Adjusted | |
Service revenue | | $ | 42,706,085 | | | | | | | $ | 42,706,085 | | | $ | 24,093,585 | | | | | | | $ | 24,093,585 | |
Operating costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Professional services (includes stock compensation expense of $862,328 and $1,553,248 and IBNR reserve of ($410,924) and $2,000,000) | | | 16,773,144 | | | | (451,404 | ) | | | 16,321,740 | | | $ | 12,462,455 | | | | (3,553,248 | ) | | | 8,909,207 | |
Sales, general, and administrative (includes stock compensation expense of $4,758,207 and $412,943 and one time legal cost of $477,862, and $0) | | | 17,157,481 | | | | (5,236,069 | ) | | | 11,921,412 | | | | 8,382,875 | | | | (412,943 | ) | | | 7,969,932 | |
Depreciation and amortization | | | 2,648,449 | | | | (1,810,734 | ) | | | 837,715 | | | | 618,275 | | | | (117,042 | ) | | | 501,233 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total operating costs and expenses | | | 36,579,074 | | | | (7,498,207 | ) | | | 29,080,867 | | | | 21,463,605 | | | | (4,083,233 | ) | | | 17,380,372 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Operating income | | | 6,127,011 | | | | 7,498,207 | | | | 13,625,218 | | | | 2,629,980 | | | | 4,083,233 | | | | 6,713,213 | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | (2,220,769 | ) | | | | | | | (2,220,769 | ) | | | (1,950 | ) | | | | | | | (1,950 | ) |
Interest income | | | 662,186 | | | | | | | | 662,186 | | | | 1,001,241 | | | | | | | | 1,001,241 | |
Other, net | | | (3,321 | ) | | | | | | | (3,321 | ) | | | 29,878 | | | | | | | | 29,878 | |
Change in fair value of redeemable preferred stock conversion feature | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total other income (expense) | | | (1,561,904 | ) | | | | | | | (1,561,904 | ) | | | 1,029,169 | | | | | | | | 1,029,169 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income before income taxes | | | 4,565,107 | | | | 7,498,207 | | | | 12,063,314 | | | | 3,659,149 | | | | 4,083,233 | | | | 7,742,382 | |
Income tax expense | | | 1,504,757 | | | | 2,465,861 | | | | 3,970,618 | | | | 1,452,181 | | | | 1,592,461 | | | | 3,044,642 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | | 3,060,350 | | | | 5,032,346 | | | | 8,092,696 | | | | 2,206,968 | | | | 2,490,772 | | | | 4,697,740 | |
Redeemable preferred stock accretion | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income applicable to common stockholders | | $ | 3,060,350 | | | $ | 5,032,346 | | | $ | 8,092,696 | | | $ | 2,206,968 | | | $ | 2,490,772 | | | $ | 4,697,740 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Earnings per share: | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.10 | | | | | | | $ | 0.27 | | | $ | 0.07 | | | | | | | $ | 0.16 | |
Diluted | | $ | 0.10 | | | | | | | $ | 0.26 | | | $ | 0.07 | | | | | | | $ | 0.15 | |
Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | 30,260,996 | | | | | | | | 30,260,996 | | | | 29,912,134 | | | | | | | | 29,912,134 | |
Diluted | | | 31,319,605 | | | | | | | | 31,319,605 | | | | 30,817,311 | | | | | | | | 30,817,311 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME (LOSS)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended | |
| | | December 31, 2007 | | | December 31, 2006 | |
| | | GAAP | | | Adjustments | | | As Adjusted | | | GAAP | | | Adjustments | | | As Adjusted | |
Service revenue | | $ | 151,662,042 | | | | | | | $ | 151,662,042 | | | $ | 92,168,246 | | | | | | | $ | 92,168,246 | |
Operating costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Professional services (includes stock compensation expense of $4,429,358 and $4,886,678 and IBNR reserve of $1,038,000 and $2,000,000) | | | 63,617,406 | | | | (5,467,358 | ) | | | 58,150,048 | | | $ | 38,963,287 | | | | (6,886,678 | ) | | | 32,076,609 | |
Sales, general, and administrative (includes stock compensation expense of $10,601,004 and $1,073,455 and one time legal cost of $477,862 and $0) | | | 54,018,090 | | | | (11,078,866 | ) | | | 42,939,224 | | | | 27,607,317 | | | | (1,073,455 | ) | | | 26,533,862 | |
Depreciation and amortization | | | 7,899,256 | | | | (5,029,754 | ) | | | 2,869,502 | | | | 2,198,714 | | | | (508,875 | ) | | | 1,689,839 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total operating costs and expenses | | | 125,534,752 | | | | (21,575,978 | ) | | | 103,958,774 | | | | 68,769,318 | | | | (8,469,008 | ) | | | 60,300,310 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Operating income | | | 26,127,290 | | | | 21,575,978 | | | | 47,703,268 | | | | 23,398,928 | | | | 8,469,008 | | | | 31,867,936 | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | (5,885,511 | ) | | | | | | | (5,885,511 | ) | | | (562,221 | ) | | | | | | | (562,221 | ) |
Interest income | | | 3,130,335 | | | | | | | | 3,130,335 | | | | 3,027,917 | | | | | | | | 3,027,917 | |
Other, net | | | (62,916 | ) | | | | | | | (62,916 | ) | | | (34,258 | ) | | | | | | | (34,258 | ) |
Change in fair value of redeemable preferred stock conversion feature | | | | | | | | | | | | | | | (44,183,770 | ) | | | 44,183,770 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total other income (expense) | | | (2,818,092 | ) | | | | | | | (2,818,092 | ) | | | (41,752,332 | ) | | | 44,183,770 | | | | 2,431,438 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | 23,309,198 | | | | 21,575,978 | | | | 44,885,176 | | | | (18,353,404 | ) | | | 52,652,778 | | | | 34,299,374 | |
Income tax expense | | | 8,615,352 | | | | 7,983,112 | | | | 16,598,464 | | | | 10,047,713 | | | | 3,302,913 | | | | 13,350,626 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | | 14,693,846 | | | | 13,592,866 | | | | 28,286,712 | | | | (28,401,117 | ) | | | 49,349,865 | | | | 20,948,748 | |
Redeemable preferred stock accretion | | | | | | | | | | | | | | | (117,534 | ) | | | 117,534 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) applicable to common stockholders | | $ | 14,693,846 | | | $ | 13,592,866 | | | $ | 28,286,712 | | | $ | (28,518,651 | ) | | $ | 49,467,399 | | | $ | 20,948,748 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Earnings (loss) per share: | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.49 | | | | | | | $ | 0.94 | | | $ | (1.00 | ) | | | | | | $ | 0.73 | |
Diluted | | $ | 0.47 | | | | | | | $ | 0.91 | | | $ | (1.00 | ) | | | | | | $ | 0.70 | |
Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | 30,083,080 | | | | | | | | 30,083,080 | | | | 28,528,079 | | | | | | | | 28,528,079 | |
Diluted | | | 31,083,971 | | | | | | | | 31,083,971 | | | | 28,528,079 | | | | | | | | 29,988,558 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION BETWEEN NET INCOME AND ADJUSTED EBITDA
| | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, | | | Year Ended December 31, | |
| | | 2007 | | | 2006 | | | 2007 | | 2006 | |
Net income (loss) | | $ | 3,060,350 | | | $ | 2,206,968 | | | $ | 14,693,846 | | $ | (28,518,651 | ) |
Interest expense (income) | | | 1,558,583 | | | | (999,291 | ) | | | 2,755,176 | | | (2,465,696 | ) |
Income tax expense | | | 1,504,757 | | | | 1,452,181 | | | | 8,615,352 | | | 10,047,713 | |
Depreciation and amortization | | | 2,648,449 | | | | 618,275 | | | | 7,899,256 | | | 2,198,714 | |
| | | | | | | | | | | | | | | |
EBITDA | | | 8,772,139 | | | | 3,278,133 | | | | 33,963,630 | | | (18,737,920 | ) |
| | | | | | | | | | | | | | | |
Stock compensation expense | | | 5,620,535 | | | | 1,966,191 | | | | 15,030,362 | | | 5,960,133 | |
IBNR reserve | | | (410,924 | ) | | | 2,000,000 | | | | 1,038,000 | | | 2,000,000 | |
One time legal cost | | | 477,862 | | | | | | | | 477,862 | | | | |
Change in fair value of redeemable preferred stock conversion feature | | | | | | | | | | | | | | 44,183,770 | |
Redeemable preferred stock accretion | | | | | | | | | | | | | | 117,534 | |
| | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 14,459,612 | | | $ | 7,244,324 | | | $ | 50,509,854 | | $ | 33,523,517 | |
| | | | | | | | | | | | | | | |
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
HISTORICAL VOLUMES
| | | | | | | | | | | | | | | | | | |
| | | | | | | Growth Rates | | | Acquisition Contribution - First 12 months |
Quarter | | Year | | Total Volumes | | Sequential | | | Year over Year | | | DayHawk | | ATN | | TDS | | Radlinx |
Q1 | | 2004 | | 120,554 | | 36 | % | | 210 | % | | — | | — | | — | | — |
Q2 | | 2004 | | 152,640 | | 27 | % | | 178 | % | | — | | — | | — | | — |
Q3 | | 2004 | | 182,737 | | 20 | % | | 133 | % | | — | | — | | — | | — |
Q4 | | 2004 | | 193,883 | | 6 | % | | 119 | % | | 8,316 | | — | | — | | — |
| | | | | | | | | | | | | | | | | | |
FY | | 2004 | | 649,814 | | 149 | % | | 149 | % | | | | | | | | |
Q1 | | 2005 | | 222,341 | | 15 | % | | 84 | % | | 15,850 | | — | | — | | — |
Q2 | | 2005 | | 266,023 | | 20 | % | | 74 | % | | 17,355 | | — | | — | | — |
Q3 | | 2005 | | 298,759 | | 12 | % | | 63 | % | | 18,905 | | — | | — | | — |
Q4 | | 2005 | | 328,815 | | 10 | % | | 70 | % | | 8,480 | | 29,640 | | — | | — |
| | | | | | | | | | | | | | | | | | |
FY | | 2005 | | 1,115,938 | | 72 | % | | 72 | % | | | | | | | | |
Q1 | | 2006 | | 364,155 | | 11 | % | | 64 | % | | — | | 32,130 | | — | | — |
Q2 | | 2006 | | 417,269 | | 15 | % | | 57 | % | | — | | 32,622 | | — | | — |
Q3 | | 2006 | | 463,028 | | 11 | % | | 55 | % | | — | | 32,086 | | — | | — |
Q4 | | 2006 | | 448,084 | | (3 | %) | | 36 | % | | — | | — | | — | | — |
| | | | | | | | | | | | | | | | | | |
FY | | 2006 | | 1,692,536 | | 52 | % | | 52 | % | | | | | | | | |
Q1 | | 2007 | | 484,477 | | 8 | % | | 33 | % | | — | | — | | 27,089 | | — |
Q2 | | 2007 | | 731,418 | | 51 | % | | 75 | % | | — | | — | | 51,095 | | 137,611 |
Q3 | | 2007 | | 787,673 | | 8 | % | | 70 | % | | — | | — | | 52,708 | | 143,339 |
Q4 | | 2007 | | 730,992 | | (7 | %) | | 63 | % | | — | | — | | 51,644 | | 124,394 |
| | | | | | | | | | | | | | | | | | |
FY | | 2007 | | 2,734,560 | | 62 | % | | 62 | % | | | | | | | | |
