Exhibit 99.1
NEWS RELEASE
Contact:
Alliance Imaging
Howard Aihara
Executive Vice President
Chief Financial Officer
(714) 688-7100
ALLIANCE IMAGING REPORTS RESULTS
FOR THE FIRST QUARTER ENDED MARCH 31, 2006;
RAISES FULL YEAR 2006 GUIDANCE
ANAHEIM, CA—May 4, 2006–Alliance Imaging, Inc. (NYSE:AIQ), a leading national provider of diagnostic imaging services, announced results for the first quarter ended March 31, 2006.
Revenue for the first quarter of 2006 increased 8.9% to $115.3 million from $106.0 million in the comparable 2005 quarter.
Alliance’s Adjusted EBITDA (as defined below), was $43.6 million in the first quarter, a 6.0% increase compared to $41.1 million in the same quarter a year ago. “Adjusted EBITDA” as defined under the terms of Alliance’s Credit Agreement, is earnings before interest expense, net of interest income; income taxes; depreciation expense; amortization expense; minority interest expense; non-cash share-based compensation; a maximum of $750,000 of severance and related costs in each fiscal year; and any other non-cash charges. 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 $0.10 per share for the first quarter of 2006, compared to $0.12 per share in the comparable period of 2005. Severance and related costs reduced diluted earnings per share by approximately $0.01 in the first quarter of 2006. Non-cash share-based compensation reduced diluted earnings per share by $0.01 in the first quarter of 2006 primarily as a result of the Company’s adoption of Statement of Financial Accounting Standard No. 123 (revised December 2004) “Share-Based Payment” effective January 1, 2006.
Cash flow provided by operating activities was $19.5 million in the first quarter of 2006 compared to $27.1 million in the corresponding quarter of 2005. Capital expenditures in the first quarter of 2006 were $24.3 million compared to $13.5 million in the first quarter of 2005. Alliance opened one new fixed-site in the first quarter of 2006.
Alliance’s long-term debt decreased $5.7 million to $573.9 million as of March 31, 2006 from $579.6 million as of December 31, 2005. Cash and cash equivalents decreased $3.7 million to $9.7 million at March 31, 2006 from $13.4 million at December 31, 2005.
Paul S. Viviano, Chairman of the Board and Chief Executive Officer, stated, “Due to our strong first quarter 2006 results, we are raising our guidance for the full year. While the healthcare services environment will continue to face many challenges, we are pleased with our progress.”
Full Year 2006 Guidance
The Company’s previous guidance was for revenue to range from $428 million to $438 million, Adjusted EBITDA to range from $138 million to $146 million, and capital expenditures to range from $75 million to $80 million.
Alliance is raising its full year 2006 guidance. Revenue is now expected to range from $445 million to $453 million, Adjusted EBITDA to range from $157 million to $163 million, capital expenditures to range from $85 million to $90 million, and long-term debt, net of the change in cash and cash equivalents, is expected to decrease by $25 million to $30 million. Consistent with previous guidance, the Company expects to open 10 to 15 fixed-sites in 2006, a portion of which are planned to replace mobile service to the Company’s current customers. The Company’s income tax rate is expected to total approximately 41% of pretax income.
First Quarter 2006 Earnings Conference Call
Investors and all others are invited to listen to a conference call discussing first quarter 2006 results. The conference call is scheduled for Friday, May 5, 2006 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) 247-2250 (United States) or (973) 935-8452 (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 August 5, 2006 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 7320546.
About Alliance Imaging
Alliance Imaging is a leading national provider of diagnostic imaging services. Alliance provides imaging and therapeutic 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 509 diagnostic imaging systems, including 345 MRI systems and 74 PET or PET/CT systems, and served over 1,000 clients in 44 states at March 31, 2006. Of these 509 diagnostic imaging systems, 73 were located in fixed-sites, which includes systems installed in hospitals or other buildings on or near hospital campuses, medical groups’ offices, or medical buildings and retail sites.
Forward-Looking Statements
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 for the year ended December 31, 2005 filed with the Securities and Exchange Commission.
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ALLIANCE IMAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
(in thousands, except per share amounts)
| | First Quarter Ended | |
| | March 31, | |
| | 2005 | | 2006 | |
| | | | | |
Revenues | | $ | 105,964 | | $ | 115,343 | |
| | | | | |
Costs and expenses: | | | | | |
Cost of revenues, excluding depreciation and amortization | | 53,936 | | 59,867 | |
Selling, general and administrative expenses | | 11,686 | | 13,756 | |
Employment agreement costs | | 274 | | — | |
Severance and related costs | | — | | 489 | |
Depreciation expense | | 20,463 | | 21,001 | |
Amortization expense | | 881 | | 1,244 | |
Interest expense, net of interest income | | 9,061 | | 10,216 | |
Other (income) and expense, net | | (332 | ) | 728 | |
Total costs and expenses | | 95,969 | | 107,301 | |
Income before income taxes, minority interest expense, and earnings from unconsolidated investees | | 9,995 | | 8,042 | |
Income tax expense | | 4,132 | | 3,474 | |
Minority interest expense | | 412 | | 540 | |
Earnings from unconsolidated investees | | (684 | ) | (1,040 | ) |
Net income | | $ | 6,135 | | $ | 5,068 | |
| | | | | |
Comprehensive income, net of taxes: | | | | | |
Net income | | $ | 6,135 | | $ | 5,068 | |
Unrealized gain on hedging transactions, net of taxes | | 2,745 | | 817 | |
Comprehensive income, net of taxes: | | $ | 8,880 | | $ | 5,885 | |
| | | | | |
Earnings per common share: | | | | | |
Basic | | $ | 0.12 | | $ | 0.10 | |
Diluted | | $ | 0.12 | | $ | 0.10 | |
| | | | | |
Weighted average number of shares of common stock and common stock equivalents: | | | | | |
Basic | | 49,132 | | 49,608 | |
Diluted | | 50,312 | | 49,974 | |
ALLIANCE IMAGING, INC.
ADJUSTED EBITDA
(in thousands)
Adjusted EBITDA represents net income before interest expense, net of interest income; income taxes; depreciation expense; amortization expense; minority interest expense; non-cash share-based compensation; a maximum of $750,000 of severance and related costs in each fiscal year; and any other non-cash charges. 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), consolidated leverage ratio (as defined in Section 7.6B of the Company’s amended credit agreement) and consolidated senior leverage ratio (as defined in Section 7.6J 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 maximum consolidated leverage ratio not to exceed 4.00 to 1.00 as of both March 31, 2005 and 2006, and maintain a minimum interest coverage ratio in excess of 2.50 to 1.00 and 2.75 to 1.00 for the quarters ended March 31, 2005 and 2006, respectively. As a result of the fourth amendment to the credit agreement, beginning December 31, 2005, the Company was further required to maintain a maximum consolidated senior leverage ratio not to exceed 3.00 to 1.00 for the duration of the agreement. The Company was in compliance with these covenants for the quarters ended March 31, 2005 and 2006. 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:
| | 1st Quarter Ended March 31, | |
| | 2005 | | 2006 | |
Net income | | $ | 6,135 | | $ | 5,068 | |
Income tax expense | | 4,132 | | 3,474 | |
Interest expense, net of interest income | | 9,061 | | 10,216 | |
Amortization expense | | 881 | | 1,244 | |
Depreciation expense | | 20,463 | | 21,001 | |
Non-cash share-based compensation | | 63 | | 715 | |
Minority interest expense | | 412 | | 540 | |
Severance and related costs | | — | | 489 | |
Other non-cash charges (included in other income and expense, net) | | — | | 858 | |
Adjusted EBITDA | | $ | 41,147 | | $ | 43,605 | |
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 March 31, 2005 and 2006, our consolidated leverage ratio was as follows:
| | March 31, | |
| | 2005 | | 2006 | |
Consolidated total debt | | $ | 549,379 | | $ | 573,913 | |
Last 12 months consolidated Adjusted EBITDA | | 168,170 | | 162,454 | |
Consolidated leverage ratio | | 3.27 | x | 3.53 | x |
| | | | | | | |
Consolidated senior leverage ratio, as of the last day of any fiscal quarter, is defined under our credit agreement as the ratio of the consolidated senior debt as of that date to the consolidated adjusted EBITDA for the four fiscal quarters ending on that date. As of March 31, 2006, our consolidated senior leverage ratio was as follows:
| | March 31, | |
| | 2006 | |
Consolidated senior debt | | $ | 420,372 | |
Last 12 months consolidated Adjusted EBITDA | | 162,454 | |
Consolidated senior leverage ratio | | 2.59 | x |
| | | | |
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 March 31, 2005 and 2006, our interest coverage ratio was as follows:
| | First Quarter Ended March 31, | |
| | 2005 | | 2006 | |
Last 12 months consolidated Adjusted EBITDA | | $ | 168,170 | | $ | 162,454 | |
Last 12 months consolidated cash interest expense | | 48,004 | | 35,427 | |
Interest coverage ratio | | 3.50 | x | 4.59 | x |
| | | | | | | |
ALLIANCE IMAGING, INC.
SELECTED CONDENSED
CONSOLIDATED BALANCE SHEET INFORMATION
(in thousands)
| | December 31,
2005 | | March 31,
2006 | |
| | | | | |
Cash and cash equivalents | | $ | 13,421 | | $ | 9,744 | |
Accounts receivable, net | | 48,236 | | 52,847 | |
Total current assets | | 80,512 | | 91,531 | |
Equipment, net | | 358,949 | | 360,190 | |
Total assets | | 675,342 | | 682,703 | |
Total current liabilities | | 79,253 | | 72,736 | |
Long-term debt, including current maturities | | 579,582 | | 573,913 | |
Total stockholders’ deficit | | (40,256 | ) | (33,474 | ) |
| | | | | | | |
ALLIANCE IMAGING, INC.
SELECTED STATISTICAL INFORMATION
| | First Quarter Ended
March 31, | |
| | 2005 | | 2006 | |
MRI | | | | | |
Average number of total systems | | 332.2 | | 328.1 | |
Average number of scan-based systems | | 281.9 | | 279.7 | |
Scans per system per day (scan-based systems) | | 9.45 | | 9.36 | |
Total number of scan-based MRI scans | | 191,042 | | 182,422 | |
Price per scan | | $ | 355.86 | | $ | 358.60 | |
| | | | | |
Scan-based MRI revenue (in millions) | | $ | 68.0 | | $ | 65.4 | |
Non-scan based MRI revenue (in millions) | | 6.7 | | 6.5 | |
Total MRI revenue (in millions) | | $ | 74.7 | | $ | 71.9 | |
| | | | | |
PET and PET/CT | | | | | |
Average number of systems | | 50.3 | | 67.1 | |
Scans per system per day | | 5.18 | | 5.82 | |
Total number of PET and PET/CT scans | | 15,784 | | 24,464 | |
Price per scan | | $ | 1,371 | | $ | 1,312 | |
| | | | | |
Total PET and PET/CT revenue (in millions) | | $ | 21.8 | | $ | 32.3 | |
| | | | | |
Revenue breakdown (in millions) | | | | | |
Total MRI revenue | | $ | 74.7 | | $ | 71.9 | |
PET and PET/CT revenue | | 21.8 | | 32.3 | |
Other modalities and other revenue | | 9.5 | | 11.1 | |
Total revenues | | $ | 106.0 | | $ | 115.3 | |
| | | | | |
Total fixed-site revenue (in millions) | | $ | 15.6 | | $ | 17.8 | |
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 March 31, 2006 is as follows:
| | (a)
Revenue
Lost | | (b)
New
Revenue | | MRI
Revenue Gap | |
2004 | | | | | | | |
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 | ) |
Third Quarter | | (14.2 | ) | 4.4 | | (9.8 | ) |
Fourth Quarter | | (8.9 | ) | 9.7 | | 0.8 | |
| | | | | | | |
2006 | | | | | | | |
First Quarter | | (10.2 | ) | 6.4 | | (3.8 | ) |
| | | | | | | |
Last Twelve Months Ended March 31, 2006 | | $ | (45.5 | ) | $ | 29.3 | | $ | (16.2 | ) |
