Exhibit 99.1
Press Contact:
Robert Minicucci, Warner Communications
Phone: (603) 488-5856
Mobile: (339) 206-1722
robert@warnerpr.com
Investor Inquiries:
Andrea Clegg, NightHawk Radiology Holdings, Inc.
(866) 400-4295 (208) 292-2818
aclegg@nighthawkrad.net
NightHawk Radiology Holdings, Inc. Announces First Quarter 2009 Results
COEUR D’ALENE, Idaho, April 29, 2009 – NightHawk Radiology Holdings, Inc. (NASDAQ: NHWK), the leading provider of radiology solutions to radiology groups across the United States, today announced financial results for first quarter 2009.
First Quarter 2009 Highlights
| | • | | Revenue was $38.8 million compared with $41.7 million in the year-ago quarter. |
| | • | | Scan volume was 722,321 exams compared with 745,075 exams in the year-ago quarter. |
| | • | | Revenue from new service offerings, including final reads and business services, was $9.1 million, or 23% of total revenue. |
| | • | | Final reads revenue increased 8% to $5 million, or 13% of total revenue. |
| | • | | Adjusted net income was $4.0 million, or $0.15 per diluted share, compared with $4.2 million, or $0.14 per diluted share, in the year-ago quarter. Adjusted net income excludes non-cash charges for stock compensation, amortization of intangible assets, losses on cancelled interest rate swap contracts and malpractice reserve adjustments. Also excluded in the first quarter of 2009 is a non-cash charge of $68.7 million resulting from the impairment of the company’s goodwill. |
| | • | | GAAP net loss of $52.6 million, or $1.97 per share, compared to GAAP net income of $0.7 million, or $0.02 per diluted share, in the year-ago quarter. A reconciliation of adjusted net income to GAAP net income is included in the tables attached to this press release. |
| | • | | Cash flow from operations was $6.2 million, compared with $5.8 million in the year-ago quarter. Free cash flow was $5.1 million during the quarter, an increase of 21% from $4.2 million in year-ago quarter. |
| | • | | Cash and cash equivalents on-hand at March 31, 2009 totaled $45.6 million. |
“During the quarter we had a non-cash charge relating to the impairment of our goodwill, however, we are pleased with our adjusted operating results for the first quarter and our strong cash flow, even in a quarter that is typically one of our slowest and in a challenging economy. I am also excited about the progress we have made on key initiatives I identified last quarter, including the promotion of a more customer centric organization, a culture of excellence, and importantly, strong financial performance,” said David Engert, the company’s president and chief executive officer.
2009 Outlook
The company expects scan volume and revenue for the second quarter of 2009 to increase sequentially from the first quarter, with revenue expected to be in the range of $39 million to $41 million. The company also expects second quarter 2009 adjusted earnings per share to be in the range of 15 to 17 cents.
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 outlook on its scan volume, revenue and adjusted earnings per share for the second quarter of 2009. 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.
Earnings Conference Call
The first quarter conference call will be held today, April 29, 2009 at 4:30 p.m. eastern. 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)257-1927 or (303)262-2138 (for international callers). A replay of the call will be available approximately two hours after the conclusion of the call and will remain available until midnight (ET) on Wednesday, May 20, 2009. To access the replay, dial (800)405-2236 or (303)590-3000 (for international callers) and enter the conference ID number: 11130519.
About NightHawk
NightHawk Radiology (Nasdaq: NHWK) is leading the transformation of the practice of radiology by providing high-quality, cost-effective solutions 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 approximately 1,560 sites, representing approximately 27% of all hospitals in the United States. For more information, visithttp://www.nighthawkrad.net.
Presentation of Non-GAAP Financial Information
The presentation of adjusted net income 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 provide 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) the non-cash charges related to our stock-based compensation, (ii) the non-cash expense associated with the amortization of intangibles associated with acquisitions, (iii) the non-cash expenses (or credits) associated with adjustments to our IBNR reserve (incurred but not reported medical liability reserves), (iv) the non-cash charges for goodwill impairment, and (v) the non-cash charge for the amortization of losses incurred on cancelled interest rate swap contracts. 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 in the Investor Relations section of our corporate website.
“NHWKF”
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | | | | | | | |
| | | March 31,
2009 | | | December 31,
2008 | |
| | | (in thousands, except share data) | |
ASSETS | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 40,597 | | | $ | 47,160 | |
Marketable securities | | | 4,991 | | | | — | |
Trade accounts receivable, net | | | 22,684 | | | | 24,393 | |
Deferred income taxes | | | — | | | | 855 | |
Prepaids and other current assets | | | 6,904 | | | | 6,231 | |
| | | | | | | | |
Total current assets | | | 75,176 | | | | 78,639 | |
Property and equipment, net | | | 10,915 | | | | 10,528 | |
Goodwill | | | — | | | | 68,718 | |
Intangible assets, net | | | 77,747 | | | | 79,616 | |
Deferred income taxes | | | 18,749 | | | | 4,082 | |
Other assets, net | | | 3,807 | | | | 3,566 | |
| | | | | | | | |
Total | | $ | 186,394 | | | $ | 245,149 | |
| | | | | | | | |
LIABILITIES | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 5,842 | | | $ | 6,327 | |
Accrued expenses and other liabilities | | | 3,041 | | | | 3,617 | |
Accrued payroll and related benefits | | | 3,061 | | | | 3,783 | |
Long-term debt, due within one year | | | 955 | | | | 955 | |
| | | | | | | | |
Total current liabilities | | | 12,899 | | | | 14,682 | |
Professional liability reserve | | | 4,097 | | | | 3,705 | |
Long-term debt | | | 92,906 | | | | 93,145 | |
Other liabilities | | | 3,088 | | | | 3,850 | |
| | | | | | | | |
Total liabilities | | | 112,990 | | | | 115,382 | |
| | | | | | | | |
STOCKHOLDERS’ EQUITY | | | | | | | | |
Common stock-150,000,000 shares authorized; $.001 par value; 26,481,401 and 27,590,774 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively | | | 26 | | | | 28 | |
Additional paid-in capital | | | 232,849 | | | | 237,429 | |
Retained earnings (deficit) | | | (156,129 | ) | | | (103,516 | ) |
Accumulated other comprehensive loss | | | (3,342 | ) | | | (4,174 | ) |
| | | | | | | | |
Total stockholders’ equity | | | 73,404 | | | | 129,767 | |
| | | | | | | | |
Total | | $ | 186,394 | | | $ | 245,149 | |
| | | | | | | | |
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
| | | | | | | | |
| | | Three months ended March 31, | |
| | | 2009 | | | 2008 | |
| | | (in thousands, except per share amts) | |
Service revenue | | $ | 38,798 | | | $ | 41,688 | |
Operating costs and expenses: | | | | | | | | |
Professional services (includes non-cash compensation expense of $71 and $590) | | | 16,656 | | | | 17,867 | |
Sales, general, and administrative (includes non-cash compensation expense of $974 and $2,356) | | | 14,734 | | | | 18,170 | |
Depreciation and amortization | | | 2,798 | | | | 2,798 | |
Goodwill impairment | | | 68,718 | | | | — | |
| | | | | | | | |
Total operating costs and expenses | | | 102,906 | | | | 38,835 | |
| | | | | | | | |
Operating income (loss) | | | (64,108 | ) | | | 2,853 | |
Other income (expense): | | | | | | | | |
Interest expense | | | (2,302 | ) | | | (2,187 | ) |
Interest income | | | 55 | | | | 527 | |
Other, net | | | 10 | | | | 28 | |
| | | | | | | | |
Total other income (expense) | | | (2,237 | ) | | | (1,632 | ) |
| | | | | | | | |
Income (loss) before income taxes | | | (66,345 | ) | | | 1,221 | |
Income tax expense (benefit) | | | (13,732 | ) | | | 490 | |
| | | | | | | | |
Net income (loss) | | $ | (52,613 | ) | | $ | 731 | |
| | | | | | | | |
Earnings (loss) per common share: | | | | | | | | |
Basic | | $ | (1.97 | ) | | $ | 0.02 | |
Diluted | | $ | (1.97 | ) | | $ | 0.02 | |
Weighted averages of common shares outstanding: | | | | | | | | |
Basic | | | 26,649,147 | | | | 30,444,195 | |
Diluted | | | 26,649,147 | | | | 31,424,363 | |
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
| | | | | | | | |
| | | Three months ended March 31, | |
| | | 2009 | | | 2008 | |
| | | (in thousands) | |
Cash flows from operating activities: | | | | | | | | |
Net income (loss) | | $ | (52,613 | ) | | $ | 731 | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 2,798 | | | | 2,798 | |
Goodwill impairment | | | 68,718 | | | | — | |
Amortization of debt issuance costs and interest rate swaps | | | 1,046 | | | | 162 | |
Loss (gain) on disposal of fixed assets and other, net | | | 104 | | | | (1 | ) |
Deferred income taxes | | | (14,287 | ) | | | (170 | ) |
Non-cash stock compensation expense | | | 1,045 | | | | 2,946 | |
Excess tax benefit from exercise of stock options | | | (5 | ) | | | (79 | ) |
Provision for doubtful accounts | | | 317 | | | | 190 | |
Changes in operating assets and liabilities (excluding effects of acquisitions): | | | | | | | | |
Trade accounts receivable, net | | | 1,347 | | | | 224 | |
Prepaid expenses and other assets | | | (1,097 | ) | | | (2,478 | ) |
Accounts payable | | | (649 | ) | | | 321 | |
Accrued expenses and other liabilities | | | 203 | | | | 579 | |
Accrued payroll and related benefits | | | (733 | ) | | | 580 | |
| | | | | | | | |
Net cash provided by operating activities | | | 6,194 | | | | 5,803 | |
Cash flows from investing activities: | | | | | | | | |
Purchase of marketable securities | | | (4,991 | ) | | | (10,305 | ) |
Proceeds from maturities of marketable securities | | | — | | | | 7,765 | |
Purchase of property and equipment | | | (1,110 | ) | | | (1,634 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (6,101 | ) | | | (4,174 | ) |
Cash flows from financing activities: | | | | | | | | |
Repayment of debt | | | (239 | ) | | | (250 | ) |
Proceeds from exercise of stock options | | | 30 | | | | 206 | |
Excess tax benefit from exercise of stock options | | | 5 | | | | 79 | |
Purchase and retirement of common stock shares | | | (6,452 | ) | | | — | |
| | | | | | | | |
Net cash (used in) provided by financing activities | | | (6,656 | ) | | | 35 | |
| | | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | (6,563 | ) | | | 1,664 | |
Cash and cash equivalents—beginning of period | | | 47,160 | | | | 31,956 | |
| | | | | | | | |
Cash and cash equivalents—end of period | | $ | 40,597 | | | $ | 33,620 | |
| | | | | | | | |
NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended | |
| | | March 31, 2009 | | | March 31, 2008 | |
| | | (in thousands, except per share amts) | | | (in thousands, except per share amts) | |
| | | GAAP | | | Adjustments | | | As Adjusted | | | GAAP | | | Adjustments | | | As Adjusted | |
Service revenue | | $ | 38,798 | | | | | | | $ | 38,798 | | | $ | 41,688 | | | | | | | $ | 41,688 | |
Operating costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Professional services (1) | | | 16,656 | | | | (463 | ) | | | 16,193 | | | $ | 17,867 | | | | (1,459 | ) | | | 16,408 | |
Sales, general, and administrative (2) | | | 14,734 | | | | (974 | ) | | | 13,760 | | | | 18,170 | | | | (2,356 | ) | | | 15,814 | |
Depreciation and amortization (3) | | | 2,798 | | | | (1,869 | ) | | | 929 | | | | 2,798 | | | | (1,883 | ) | | | 915 | |
Goodwill impairment | | | 68,718 | | | | (68,718 | ) | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total operating costs and expenses | | | 102,906 | | | | (72,024 | ) | | | 30,882 | | | | 38,835 | | | | (5,698 | ) | | | 33,137 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Operating income (loss) | | | (64,108 | ) | | | 72,024 | | | | 7,916 | | | | 2,853 | | | | 5,698 | | | | 8,551 | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense (4) | | | (2,302 | ) | | | 885 | | | | (1,417 | ) | | | (2,187 | ) | | | | | | | (2,187 | ) |
Interest income | | | 55 | | | | | | | | 55 | | | | 527 | | | | | | | | 527 | |
Other, net | | | 10 | | | | | | | | 10 | | | | 28 | | | | | | | | 28 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total other income (expense) | | | (2,237 | ) | | | 885 | | | | (1,352 | ) | | | (1,632 | ) | | | | | | | (1,632 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | (66,345 | ) | | | 72,909 | | | | 6,564 | | | | 1,221 | | | | 5,698 | | | | 6,919 | |
Income tax expense (benefit)(5) | | | (13,732 | ) | | | 16,299 | | | | 2,567 | | | | 490 | | | | 2,182 | | | | 2,672 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | (52,613 | ) | | $ | 56,610 | | | $ | 3,997 | | | $ | 731 | | | $ | 3,516 | | | $ | 4,247 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Earnings (loss) per share: | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | (1.97 | ) | | | | | | $ | 0.15 | | | $ | 0.02 | | | | | | | $ | 0.14 | |
Diluted | | $ | (1.97 | ) | | | | | | $ | 0.15 | | | $ | 0.02 | | | | | | | $ | 0.14 | |
Weighted average of shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | 26,649,147 | | | | | | | | 26,649,147 | | | | 30,444,195 | | | | | | | | 30,444,195 | |
Diluted | | | 26,649,147 | | | | | | | | 27,204,606 | | | | 31,424,363 | | | | | | | | 31,424,363 | |
| (1) | Adjustments to the 2009 GAAP amounts represent $71 of non-cash stock compensation expense and $392 of non-cash malpractice reserve changes. The 2008 adjustments to GAAP amounts represent $590 of non-cash stock compensation expense and $869 of non-cash malpractice reserve changes. |
| (2) | Adjustments to the 2009 GAAP amounts represent $974 of non-cash stock compensation expense. The 2008 adjustments to GAAP amounts represent $2,356 of non-cash stock compensation expense. |
| (3) | Adjustment to GAAP amounts represent non-cash expense associated with the amortization of intangibles associated with acquisitions. |
| (4) | Represents the amortization of losses incurred on interest rate swap contracts canceled in 2008. |
| (5) | Represents the tax effect on the adjustments to GAAP. In addition, in 2009 we adjusted our tax expense amount to properly reflect the impact of the non-deductible portions of our goodwill impairment. |
NIGHTHAWK RADIOLOGY HOLDINGS, INC.
HISTORICAL VOLUMES
| | | | | | | | | | |
| | | | | | | Growth Rates | |
| Quarter | | Year | | Total Volumes | | Sequential | | | Year over Year | |
| Q1 | | 2008 | | 745,075 | | 2 | % | | 54 | % |
| Q2 | | 2008 | | 780,108 | | 5 | % | | 7 | % |
| Q3 | | 2008 | | 791,613 | | 1 | % | | 1 | % |
| Q4 | | 2008 | | 718,299 | | (9 | %) | | (2 | %) |
| | | | | | | | | | |
| FY | | 2008 | | 3,035,095 | | 11 | % | | 11 | % |
| Q1 | | 2009 | | 722,321 | | 1 | % | | (3 | %) |
