Exhibit 99.1
NEWS RELEASE
Contact:
Alliance Imaging
R. Brian Hanson
Executive Vice President
Chief Financial Officer
(714) 688-7100
ALLIANCE IMAGING REPORTS RESULTS
FOR THE SECOND QUARTER
AND FIRST SIX MONTHS ENDED JUNE 30, 2005
ANAHEIM, CA—August 3, 2005–Alliance Imaging, Inc. (NYSE:AIQ), a leading national provider of diagnostic imaging services, announced results for the second quarter and first six months ended June 30, 2005.
Revenue was $108.4 million for the second quarter of 2005, in line with the Company’s guidance range, which was $106.5 million to $109.5 million. The second quarter 2005 revenue of $108.4 million represents a decrease of $1.1 million, or 1.0%, compared to $109.5 million reported in the second quarter of 2004. For the first six months of 2005, revenue was $214.4 million compared to $215.1 million in the same period of 2004, a decrease of 0.3%.
Alliance’s Adjusted EBITDA (earnings before interest expense, net of interest income; income taxes; depreciation expense; amortization expense; minority interest expense and non-cash stock-based compensation), was $41.8 million in the second quarter of 2005. Adjusted EBITDA was in line with the Company’s second quarter guidance range of $41.5 million to $43.5 million. The second quarter 2005 Adjusted EBITDA of $41.8 million represents a decrease of $1.6 million, or 3.6%, compared to $43.4 million reported in the second quarter of 2004. Of this decrease, $1.0 million was due to the Company recording $1.0 million in the provision for doubtful accounts in the second quarter of 2005, or 1.0% of revenue, compared to no amounts in the second quarter of 2004 due to the collection of higher than normal amounts of aged accounts receivable in the second quarter of 2004.
For the first six months of 2005, Adjusted EBITDA totaled $83.0 million compared to $84.2 million in the first six months of 2004, a decrease of $1.2 million, or 1.5%. As discussed above, $1.0 million of this decrease was due to the Company recording $1.5 million in the provision for doubtful accounts in the first six months of 2005, or 0.7% of revenue, compared to $0.5 million, or 0.2% of revenue, in the first six months of 2004 due to the collection of higher than normal amounts of aged accounts receivable in the first half of 2004.
As stated in the Company’s first quarter 2005 earnings release, the Company modified its definition of Adjusted EBITDA to conform to a similar measure used in Alliance’s amended credit agreement. Adjusted EBITDA now includes minority interest expense and excludes employment agreement costs and other income and expense, net. For a more detailed discussion of Adjusted EBITDA and reconciliation to net income, see the table entitled “Adjusted EBITDA” included in the tables following this release.
Earnings per share on a diluted basis, in accordance with generally accepted accounting principles, was $0.12 per share for the second quarter of 2005, compared to $0.24 per share in the comparable period of 2004. Earnings per share on a diluted basis were $0.24 and $0.34 per share for the first six months of 2005 and 2004, respectively. In the second quarter and first six months of 2004, the Company increased net income by recording the reversal of income tax reserves totaling $5.1 million, or $0.11 per diluted share, primarily related to the favorable outcome of examinations of the Company’s 1998 and 1999 federal income tax returns and a favorable outcome of the treatment of an income item in a federal income tax return of one of the Company’s subsidiaries. Employment agreement costs reduced diluted earnings per share by approximately $0.00 and $0.01 per share in the second quarters of 2005 and 2004, respectively, and approximately $0.00 and $0.02 per share in the first six months of 2005 and 2004, respectively.
Cash flow provided by operating activities was $23.6 million in the second quarter of 2005 compared to $25.1 million in the corresponding quarter of 2004, and was $50.7 million and $61.0 million for the first six months of 2005 and 2004, respectively. Alliance made $28.0 million of net payments on its long-term debt in the first six months of 2005. The Company’s cash and cash equivalents balance decreased by $0.7 million to $20.0 million at June 30, 2005 from $20.7 million at December 31, 2004.
Paul S. Viviano, Chairman of the Board and Chief Executive Officer, stated, “Alliance continues to focus on implementing the Company’s core initiatives: stabilizing our core mobile MRI business, growing our PET and PET/CT business, expanding Alliance’s fixed-site business, primarily in partnership with hospitals and health systems, and developing a unified, performance-oriented culture. Healthcare providers are experiencing increased utilization pressures from insurers, which impacts Alliance’s business. Despite these factors, diagnostic imaging plays a significant role in healthcare, and we believe that Alliance is positioned for long-term success.”
The Company is reaffirming guidance for full year 2005. Revenue is expected to range from $427 million to $437 million; Adjusted EBITDA is expected to range from $166 million to $172 million; and earnings per share to range from $0.44 to $0.51 per share. For the third quarter of 2005, revenue is expected to range from $107 million to $110 million and Adjusted EBITDA is expected to range from $41.5 million to $43.5 million.
Investors and all others are invited to listen to a conference call discussing second quarter 2005 results. The conference call is scheduled for Thursday, August 4, 2005 at 1:00 p.m. Eastern Time. The call will be broadcast live on the Internet and can be accessed by visiting the Company’s website at www.allianceimaging.com. Click on Audio Presentations in the Investor Relations section of the website to access the link. The conference call can also be accessed at (888) 874-9713 (United States) or (973) 582-2706 (International). Interested parties should call at least five minutes prior to the conference call to register. A replay of the call can be accessed until November 4, 2005 by visiting the Company’s website or by calling (877) 519-4471 (United States) or (973) 341-3080 (International). The conference call identification number is 6301186.
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Alliance Imaging is a leading national provider of shared-service and fixed-site diagnostic imaging services, based upon annual revenue and number of systems deployed. Alliance provides imaging services primarily to hospitals and other healthcare providers on a shared and full-time service basis, in addition to operating a growing number of fixed-site imaging centers. The Company had 465 diagnostic imaging systems, including 352 MRI systems and 57 PET or PET/CT systems, and over 1,000 clients in 43 states at June 30, 2005.
This press release contains forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected. For a complete list of risks and uncertainties, please refer to the Risk Factor section of the Company’s Form 10-K/A for the year ended December 31, 2004 filed with the Securities and Exchange Commission.
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ALLIANCE IMAGING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
(in thousands, except per share amounts)
| | Second Quarter Ended | | First Six Months Ended | |
| | June 30, | | June 30, | |
| | 2004 | | 2005 | | 2004 | | 2005 | |
| | | | | | | | | |
Revenues | | $ | 109,481 | | $ | 108,434 | | $ | 215,127 | | $ | 214,398 | |
| | | | | | | | | |
Costs and expenses: | | | | | | | | | |
Cost of revenues, excluding depreciation and amortization | | 54,536 | | 53,892 | | 107,808 | | 107,828 | |
Selling, general and administrative expenses | | 11,752 | | 13,677 | | 23,920 | | 25,363 | |
Employment agreement costs | | 1,210 | | 92 | | 1,515 | | 366 | |
Depreciation expense | | 19,789 | | 20,463 | | 40,634 | | 40,926 | |
Amortization expense | | 879 | | 901 | | 1,755 | | 1,782 | |
Interest expense, net of interest income | | 10,820 | | 9,508 | | 21,428 | | 18,569 | |
Other (income) and expense, net | | (161 | ) | (55 | ) | (127 | ) | (387 | ) |
Total costs and expenses | | 98,825 | | 98,478 | | 196,933 | | 194,447 | |
Income before income taxes, minority interest expense, and earnings from unconsolidated investees | | 10,656 | | 9,956 | | 18,194 | | 19,951 | |
Income tax expense (benefit) | | (580 | ) | 4,169 | | 2,526 | | 8,301 | |
Minority interest expense | | 647 | | 544 | | 1,432 | | 956 | |
Earnings from unconsolidated investees | | (1,134 | ) | (912 | ) | (2,027 | ) | (1,596 | ) |
Net income | | $ | 11,723 | | $ | 6,155 | | $ | 16,263 | | $ | 12,290 | |
| | | | | | | | | |
Comprehensive income, net of taxes: | | | | | | | | | |
Net income | | $ | 11,723 | | $ | 6,155 | | $ | 16,263 | | $ | 12,290 | |
Unrealized (loss) gain on hedging transactions, net of taxes | | (123 | ) | (1,144 | ) | (123 | ) | 1,601 | |
Comprehensive income, net of taxes: | | $ | 11,600 | | $ | 5,011 | | $ | 16,140 | | $ | 13,891 | |
| | | | | | | | | |
Earnings per common share: | | | | | | | | | |
Basic | | $ | 0.24 | | $ | 0.12 | | $ | 0.34 | | $ | 0.25 | |
Diluted | | $ | 0.24 | | $ | 0.12 | | $ | 0.34 | | $ | 0.24 | |
| | | | | | | | | |
Weighted average number of shares of common stock and common stock equivalents: | | | | | | | | | |
Basic | | 48,193 | | 49,286 | | 48,081 | | 49,210 | |
Diluted | | 48,480 | | 50,270 | | 48,397 | | 50,290 | |
ALLIANCE IMAGING, INC.
ADJUSTED EBITDA
(in thousands)
EBITDA represents earnings before interest expense, net of interest income; income taxes; depreciation expense and amortization expense. Adjusted EBITDA represents EBITDA adjusted for non-cash stock-based compensation and minority interest expense. Adjusted EBITDA is not a presentation made in accordance with accounting principles generally accepted in the United States of America. Adjusted EBITDA should not be considered in isolation or as a substitute for net income, cash flows from operating activities and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Adjusted EBITDA is included because the Company’s amended credit agreement uses a measure similar to this to calculate the Company’s compliance with covenants such as interest coverage ratio (as defined in Section 7.6A of the Company’s amended credit agreement) and leverage ratio (as defined in Section 7.6B of the Company’s amended credit agreement). The Company’s failure to comply with these covenants could result in the amounts borrowed under these instruments, together with accrued interest and fees, becoming immediately due and payable. If the Company is not able to refinance this debt when it becomes due, the Company could become subject to bankruptcy proceedings. Per the credit agreement, the Company was required to maintain a minimum interest coverage ratio in excess of 2.25 to 1.00 and 2.50 to 1.00 for the quarters ended June 30, 2004 and 2005, respectively, and was required to maintain a maximum leverage ratio not to exceed 4.50 to 1.00 and 4.00 to 1.00 as of June 30, 2004 and 2005, respectively. The Company was in compliance with these covenants for the quarters ended June 30, 2004 and 2005. While Adjusted EBITDA is used to measure the Company’s compliance with its debt covenants, it is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. The calculation of Adjusted EBITDA in accordance with the Company’s amended credit agreement is shown below:
| | Second Quarter Ended June 30, | | Six Months Ended June, 30, | |
| | 2004 | | 2005 | | 2004 | | 2005 | |
Net income | | $ | 11,723 | | $ | 6,155 | | $ | 16,263 | | $ | 12,290 | |
Income tax expense (benefit) | | (580 | ) | 4,169 | | 2,526 | | 8,301 | |
Interest expense, net of interest income | | 10,820 | | 9,508 | | 21,428 | | 18,569 | |
Amortization expense | | 879 | | 901 | | 1,755 | | 1,782 | |
Depreciation expense | | 19,789 | | 20,463 | | 40,634 | | 40,926 | |
Non-cash stock-based compensation (included in selling, general & administrative) | | 98 | | 63 | | 196 | | 126 | |
Minority interest expense | | 647 | | 544 | | 1,432 | | 956 | |
Adjusted EBITDA | | $ | 43,376 | | $ | 41,803 | | $ | 84,234 | | $ | 82,950 | |
Interest coverage ratio is defined under our credit agreement as the ratio of consolidated Adjusted EBITDA to consolidated cash interest expense for the four fiscal quarter period ending on the last day of any fiscal quarter. For the quarters ended June 30, 2004 and 2005, our interest coverage ratio was as follows:
| | Second Quarter Ended June 30, | |
| | 2004 | | 2005 | |
Last 12 Months consolidated Adjusted EBITDA | | $ | 168,116 | | $ | 166,597 | |
Last 12 Months consolidated cash interest expense | | 42,959 | | 44,905 | |
Interest coverage ratio | | 3.91 | x | 3.71 | x |
| | | | | | | |
Consolidated leverage ratio, as of the last day of any fiscal quarter, is defined under our credit agreement as the ratio of the consolidated total debt as of that date to the consolidated adjusted EBITDA for the four fiscal quarters ending on that date. As of June 30, 2004 and 2005, our consolidated leverage ratio was as follows:
| | June 30, 2004 | | June 30, 2005 | |
Consolidated total debt | | $ | 568,409 | | $ | 547,692 | |
Last 12 months consolidated Adjusted EBITDA | | 168,116 | | 166,597 | |
Leverage ratio | | 3.38 | x | 3.29 | x |
| | | | | | | |
ALLIANCE IMAGING, INC.
SELECTED CONDENSED
CONSOLIDATED BALANCE SHEET INFORMATION
(in thousands)
| | December 31, | | June 30, | |
| | 2004 | | 2005 | |
| | | | | |
Cash and cash equivalents | | $ | 20,721 | | $ | 20,057 | |
Accounts receivable, net | | 50,146 | | 49,871 | |
Total current assets | | 90,054 | | 104,342 | |
Equipment, net | | 353,511 | | 340,677 | |
Total assets | | 622,198 | | 621,115 | |
Total current liabilities | | 69,328 | | 61,505 | |
Long-term debt, including current maturities | | 575,664 | | 547,692 | |
Total stockholders’ deficit | | (67,528 | ) | (51,622 | ) |
| | | | | | | |
ALLIANCE IMAGING, INC.
SELECTED STATISTICAL INFORMATION
| | Second Quarter Ended | |
| | June 30, | |
| | 2004 | | 2005 | |
| | | | | |
MRI | | | | | |
Average number of total systems | | 343.7 | | 336.4 | |
Average number of scan-based systems | | 293.9 | | 285.2 | |
Scans per system per day (scan-based systems) | | 9.72 | | 9.61 | |
Total number of scan-based MRI scans | | 207,398 | | 195,479 | |
Price per scan | | $ | 353.71 | | $ | 354.60 | |
| | | | | |
Scan-based MRI revenue (in millions) | | $ | 73.4 | | $ | 69.3 | |
Non-scan based MRI revenue (in millions) | | 6.9 | | 6.9 | |
Total MRI revenue (in millions) | | $ | 80.3 | | $ | 76.2 | |
| | | | | |
PET and PET/CT | | | | | |
Average number of systems | | 48.8 | | 52.4 | |
Scans per system per day | | 4.99 | | 5.46 | |
Total number of PET and PET/CT scans | | 14,430 | | 17,025 | |
Price per scan | | $ | 1,345 | | $ | 1,327 | |
| | | | | |
Total PET and PET/CT revenue (in millions) | | $ | 19.5 | | $ | 22.7 | |
| | | | | |
Revenue breakdown (in millions) | | | | | |
Total MRI revenue | | $ | 80.3 | | $ | 76.2 | |
PET and PET/CT revenue | | 19.5 | | 22.7 | |
Other modalities and other revenue | | 9.7 | | 9.5 | |
Total revenues | | $ | 109.5 | | $ | 108.4 | |
ALLIANCE IMAGING, INC.
SELECTED STATISTICAL INFORMATION
MRI REVENUE GAP
(in millions)
The Company utilizes the MRI revenue gap as a statistical measure of its MRI client losses and new client contracts. The MRI revenue gap is calculated by measuring the difference between (a) the quarterly MRI revenue run rate lost as a result of clients choosing to terminate contracts with the Company, excluding clients for which Alliance provides interim service and clients that the Company elects to terminate, and (b) projected quarterly new MRI revenue from new client contracts commencing service in the quarter.
The MRI revenue gap for the last eight calendar quarters and the last twelve month period ended June 30, 2005 is as follows:
| | (a) | | (b) | | | |
| | Revenue | | New | | MRI | |
| | Lost | | Revenue | | Revenue Gap | |
| | | | | | | |
2003 | | | | | | | |
Third Quarter | | $ | (10.7 | ) | $ | 6.9 | | $ | (3.8 | ) |
Fourth Quarter | | (15.6 | ) | 5.0 | | (10.6 | ) |
| | | | | | | |
2004 | | | | | | | |
First Quarter | | (3.4 | ) | 10.0 | | 6.6 | |
Second Quarter | | (13.7 | ) | 10.1 | | (3.6 | ) |
Third Quarter | | (11.0 | ) | 6.5 | | (4.5 | ) |
Fourth Quarter | | (16.4 | ) | 5.9 | | (10.5 | ) |
| | | | | | | |
2005 | | | | | | | |
First Quarter | | (9.4 | ) | 5.9 | | (3.5 | ) |
Second Quarter | | (12.2 | ) | 8.8 | | (3.4 | ) |
| | | | | | | |
Last Twelve Months Ended June 30, 2005 | | $ | (49.0 | ) | $ | 27.1 | | $ | (21.9 | ) |
