| |
Alliance HealthCare Services | News Release |
Page 1 of 13 | August 3, 2017 |
Exhibit 99.1
| NEWS RELEASE |
| CONTACT |
| Rhonda Longmore-Grund |
| Executive Vice President Chief Financial Officer |
| 949.242.5300 |
ALLIANCE HEALTHCARE SERVICES REPORTS RESULTS
FOR THE SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2017
IRVINE, CA — August 3, 2017 — Alliance HealthCare Services, Inc. (NASDAQ: AIQ) (the “Company,” “Alliance,” “we” or “our”), a leading national provider of outsourced radiology, oncology and interventional services, announced today the results for the quarter and six months ended June 30, 2017.
Second Quarter and Year-to-Date 2017 Highlights
| • | The Company reported revenue totaling $137.3 million for the second quarter, a $11.9 million or 9.5% increase over the second quarter of last year, and $267.2 million year-to-date, a $18.2 million or 7.3% increase over prior year. | |
| • | The Company generated $38.2 million of Adjusted EBITDA (as defined below) for the quarter, a $3.8 million or 10.9% increase from the second quarter of last year, and $71.0 million year-to-date, a $6.2 million or 9.5% increase over prior year. | |
| • | The Company continued to generate strong cash flow with $29.6 million in quarterly operating cash flow and $49.5 million of year-to-date operating cash flow. | |
| • | Adjusted Net Income Per Share (as defined below) was $0.43 for the quarter, representing an increase of $0.06 per share, or 16.2%, from the second quarter of last year. Adjusted Net Income Per Share (as defined below) was $0.60 year-to-date, representing an increase of $0.18 per share, or 42.9%, from the first half of last year. | |
| • | Alliance Radiology revenue increased by 1.8% to $89.1 million for the quarter and by 2.2% to $176.9 million year-to-date. | |
| • | Alliance Oncology revenue increased 31.4% to $33.9 million for the quarter and by 23.3% to $64.0 million year-to-date. | |
| • | Alliance Interventional revenue increased by 21.3% to 13.8 million for the quarter and by 10.5% to $25.5 million year-to-date. | |
| • | The Company closed with a total leverage ratio, calculated pursuant to its Credit Agreement, of 3.95 to 1.00 as of June 30, 2017. | |
2017 Financial Results
“As outlined with our guidance for the year and consistent with our 2017 expectations, our team continued to deliver solid growth in both revenue and Adjusted EBITDA sequentially and year-over-year. When compared to the second quarter of 2016, Adjusted EBITDA increased by 10.9%, and Adjusted Net Income Per Share increased by 16.2% to $0.43. We continue to make progress in reducing our long-term debt, which is down $11.3 million compared to December 31, 2016,” stated Tom Tomlinson, Chief Executive Officer and President of Alliance HealthCare Services. “Although we continued to experience same-store volume challenges in our Radiology MRI segment and our Oncology SRS segment, the strengthening that began in the first quarter has continued into the second quarter, and same-store volumes in our Radiology PET/CT segment and our Oncology Linac segment have continued to show positive growth. Within each of our businesses, year-over-year and sequential revenue growth continues as our team focuses on enhancing our value proposition and improving our competitive position. We remain confident that we will deliver results for 2017 that are consistent with guidance provided to investors,” continued Mr. Tomlinson.
| |
Alliance HealthCare Services | News Release |
Page 2 of 13 | August 3, 2017 |
Revenue for the second quarter of 2017 increased to $137.3 million, compared to $125.3 million in the second quarter of 2016. This increase was primarily due to increases in Radiology, Oncology and Interventional revenue of $1.6 million, $8.1 million and $2.4 million, respectively.
Revenue for the first half of 2017 increased to $267.2 million, compared to $249.0 million in the first half of 2016. This increase was primarily due to increases in Radiology, Oncology and Interventional revenue of $3.7 million, $12.1 million and $2.4 million, respectively.
Adjusted EBITDA for the second quarter of 2017 increased 10.9% to $38.2 million, compared to $34.4 million in the second quarter of 2016, and 9.5% for the first half of 2017 to $71.0 million from $64.8 million in first half of 2016. The increase was primarily due to increases in earnings from Radiology, Oncology and Interventional, partially offset by Corporate investments. Adjusted EBITDA growth in both Radiology and Oncology was driven by period-over-period same-store volume growth in PET/CT as well as the addition of new partnerships such as the Northern Alabama Cancer Care Network. Adjusted EBITDA growth in Interventional was primarily driven by increases in mix of the procedures performed in Alliance’s new Ambulatory Surgical Centers (“ASCs”), which were partially offset by additional expenses related to new ASC capacity as well as platform investments made to strengthen management and development capabilities. Corporate / Other Adjusted EBITDA decreased due to additional investments in international expansion as well as organization, systems and infrastructure to support expanded workforce, entities and partnerships.
GAAP net (loss) for the second quarter totaled $(0.3) million, compared to net income of $2.5 million in the second quarter of 2016. The $2.8 million decrease in income is largely due to $3.8 million of incremental Adjusted EBITDA generated by the Company’s segments, offset by a $1.0 million increase in shareholder transaction costs, a non-cash remeasurement gain of $3.0 million recognized in the second quarter of 2016 which did not re-occur in 2017, a $1.1 million impairment charge recorded in the second quarter of 2017 primarily related to historical IT investments, and a $0.8 million increase in acquisition-related amortization expense.
GAAP net (loss) for the first half of 2017 totaled $(0.9) million, compared to net income of $1.3 million in the first half of 2016. The $2.2 million decrease in income is largely due to $6.2 million of incremental Adjusted EBITDA generated by the Company’s segments, offset by a non-cash remeasurement gain of $3.6 million recognized in the first half of 2016 which did not re-occur in 2017, a $1.3 million increase in interest expense, a $1.1 million impairment charge recorded in the first half of 2017 primarily related to historical IT investments, a $2.7 million increase in acquisition- and capital investment-related depreciation and amortization, a $1.1 million increase in income tax expense, and a $1.6 million decrease in share-based compensation expense which primarily related to the March 29, 2016 majority ownership purchase of common stock by Tahoe Investment Group Co., Ltd. (“Tahoe”) from Alliance’s former shareholders.
GAAP net (loss) per share for the second quarter of 2017 was $(0.03) per share, compared to GAAP net income per diluted share of $0.23 in the second quarter of 2016. Adjusted Net Income Per Share was $0.43 and $0.37 for the second quarters of 2017 and 2016, respectively. GAAP net income per share on a diluted basis was impacted by net charges of $0.46 and $0.14 in the second quarters of 2017 and 2016, respectively, which were comprised of: severance and related costs; restructuring charges; transaction costs; shareholder transaction costs; impairment charges; deferred financing costs in connection with shareholder transaction; legal matters (income) expense, net; changes in fair value of contingent consideration related to acquisitions; other non-cash benefits, net; and differences in the GAAP income tax rate from the Company’s historical income tax rate of 42.5%.
GAAP net (loss) per share in the first half of 2017 was $(0.08) per share, compared to GAAP net income per diluted share of $0.12 in the first half of 2016. Adjusted Net Income Per Share was $0.60 and $0.42 for in the first half of 2017 and 2016, respectively. GAAP net income per share on a diluted basis was impacted by net charges of $0.68 and $0.30 in the first half of 2017 and 2016, respectively, which were comprised of: severance and related costs; restructuring charges; transaction costs; shareholder transaction costs; impairment charges; deferred financing costs in connection with shareholder transaction; legal matters (income) expense, net; changes in fair value of contingent consideration related to acquisitions; other non-cash benefits, net; and differences in the GAAP income tax rate from the Company’s historical income tax rate of 42.5%.
Cash flows provided by operating activities totaled $29.6 million for the second quarter 2017, compared to $35.2 million in the second quarter of 2016. Total capital expenditures, including cash paid for equipment purchases, deposits on equipment and capital leases, totaled $15.4 million for the second quarter 2017 compared to $27.2 million in the second quarter of 2016. Growth capital expenditures totaled $8.0 million and maintenance capital expenditures totaled $7.4 million in the second quarter of 2017.
Cash flows provided by operating activities totaled $49.5 million in the first half 2017, compared to $57.9 million in the first half of 2016. Total capital expenditures, including cash paid for equipment purchases, deposits on equipment and capital leases, totaled $22.7 million in first half of 2017 compared to $49.3 million in the first half of 2016. Growth capital expenditures totaled $11.9 million and maintenance capital expenditures totaled $10.8 million in the first half of 2017.
| |
Alliance HealthCare Services | News Release |
Page 3 of 13 | August 3, 2017 |
Alliance’s gross debt, defined as total long-term debt (including current maturities but excluding the impact of deferred financing costs) decreased $11.3 million to $561.9 million at June 30, 2017 from $573.2 million at December 31, 2016. Cash and cash equivalents were $22.7 million at June 30, 2017 and $22.2 million at December 31, 2016.
Alliance’s total debt, as defined above, divided by the last twelve months Consolidated Adjusted EBITDA was 3.95x for the twelve months ended June 30, 2017, compared to 4.03x for the year ended December 31, 2016 and 4.15x for the twelve months ended June 30, 2016.
Full Year 2017 Guidance
Based on Alliance’s results thus far this year, the Company reaffirmed full year 2017 guidance ranges as follows:
(in millions) | | Ranges |
Revenue | | $529 - $540 |
Adjusted EBITDA | | $135 - $140 |
Capital expenditures | | $54 - $70 |
Maintenance | | $30 - $35 |
Growth | | $24 - $35 |
Decrease in long-term debt, net of the change in cash and cash equivalents (before investments in acquisitions), before growth capital expenditures or “free cash flow before growth capital expenditures” | | $50 - $55 |
Decrease in long-term debt, net of the change in cash and cash equivalents (before investments in acquisitions), after growth capital expenditures or “free cash flow after growth capital expenditures” | | $19 - $26 |
No Second Quarter 2017 Earnings Conference Call
Due to the Company’s announcement on April 11, 2017 of the signing of a definitive merger agreement to become an indirect wholly owned subsidiary of Tahoe and the scheduled shareholder vote set for August 15, 2017, Alliance will not have a conference call to discuss the quarterly results.
Definition of Non-GAAP Measures
Total Adjusted EBITDA and Adjusted Net Income Per Share are not measures of financial performance under generally accepted accounting principles in the United States (“GAAP”).
For a more detailed discussion of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measure, see the section entitled “Non-GAAP Measures” included in the tables following this release.
About Alliance HealthCare Services
Alliance HealthCare Services (NASDAQ: AIQ) is a leading national provider of outsourced medical services including radiology, oncology and interventional. We partner with healthcare providers and hospitals to provide a full continuum of services from mobile to fixed-site to comprehensive service line management and joint venture partnerships. We also operate freestanding clinics and ASCs that are not owned by hospitals or providers.
| |
Alliance HealthCare Services | News Release |
Page 4 of 13 | August 3, 2017 |
As of June 30, 2017, Alliance operated 609 diagnostic radiology, radiation therapy, and interventional radiology systems, including 99 fixed-site radiology centers across the country, and 36 radiation therapy centers and stereotactic radiosurgery (“SRS”) facilities. With a strategy of partnering with hospitals, health systems and physician practices, Alliance provides quality clinical services for over 1,100 hospitals and other healthcare partners in 46 states, where approximately 2,450 Alliance Team Members are committed to providing exceptional patient care and exceeding customer expectations. For more information, visit www.alliancehealthcareservices-us.com.
Forward-Looking Statements
This press release contains forward-looking statements relating to future events, including statements related to the Company’s long-term growth strategy and efforts to diversify its business model, the Company’s plans to expand its Interventional Division, both organically and through one or more acquisitions, the Company’s expectations regarding growth across the Company’s divisions, the expansion of its service footprint and revenue growth, maximizing shareholder value, and the Company’s Full Year 2017 Guidance, including its forecasts of revenue, Adjusted EBITDA, capital expenditures, and decrease in long-term debt. In this context, forward-looking statements often address the Company’s expected future business and financial results and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks” or “will.” Forward-looking statements by their nature address matters that are uncertain and subject to risks. Such uncertainties and risks include: changes in the preliminary financial results and estimates due to the restatement or review of the Company’s financial statements; the nature, timing and amount of any restatement or other adjustments; the Company’s ability to make timely filings of its required periodic reports under the Securities Exchange Act of 1934; issues relating to the Company’s ability to maintain effective internal control over financial reporting and disclosure controls and procedures; the Company’s high degree of leverage and its ability to service its debt; factors affecting the Company’s leverage, including interest rates; the risk that the counterparties to the Company’s interest rate swap agreements fail to satisfy their obligations under these agreements; the Company’s ability to obtain financing; the effect of operating and financial restrictions in the Company’s debt instruments; the Company’s ability to comply with reporting obligations and other covenants under the Company’s debt instruments, the failure of which could cause the debt to become due; the accuracy of the Company’s estimates regarding its capital requirements; the effect of intense levels of competition and overcapacity in the Company’s industry; changes in the methods of third party reimbursements for medical imaging, oncology and interventional services; fluctuations or unpredictability of the Company’s revenues, including as a result of seasonality; changes in the healthcare regulatory environment; the Company’s ability to keep pace with technological developments within its industry; the growth or lack thereof in the market for radiology, oncology, interventional and other services; the disruptive effect of hurricanes and other natural disasters; adverse changes in general domestic and worldwide economic conditions and instability and disruption of credit and equity markets; difficulties the Company may face in connection with recent, pending or future acquisitions, including unexpected costs or liabilities resulting from the acquisitions, diversion of management’s attention from the operation of the Company’s business, costs, delays and impediments to completing the acquisitions, and risks associated with integration of the acquisitions; and other risks and uncertainties identified in the Risk Factors section of the Company’s Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (the “SEC”), as may be modified or supplemented by the Company’s subsequent filings with the SEC. These uncertainties may cause actual future results or outcomes to differ materially from those expressed in the Company’s forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company does not undertake to update its forward-looking statements except as required under the federal securities laws.
| |
Alliance HealthCare Services | News Release |
Page 5 of 13 | August 3, 2017 |
ALLIANCE HEALTHCARE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in thousands, except per share amounts)
| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | 2017 | | | 2016 | | | 2017 | | | 2016 | |
Revenues | | $ | 137,261 | | | $ | 125,317 | | | $ | 267,197 | | | $ | 249,041 | |
Costs and expenses: | | | | | | | | | | | | | | | | |
Cost of revenues, excluding depreciation and amortization | | | 78,154 | | | | 69,939 | | | | 153,203 | | | | 140,853 | |
Selling, general and administrative expenses | | | 22,003 | | | | 23,175 | | | | 45,538 | | | | 48,440 | |
Transaction costs | | | 152 | | | | 431 | | | | 314 | | | | 848 | |
Shareholder transaction costs | | | 2,523 | | | | 1,498 | | | | 3,392 | | | | 2,507 | |
Severance and related costs | | | 389 | | | | 708 | | | | 1,023 | | | | 2,424 | |
Impairment charges | | | 1,085 | | | | — | | | | 1,085 | | | | — | |
Depreciation expense | | | 13,783 | | | | 13,730 | | | | 27,856 | | | | 26,778 | |
Amortization expense | | | 3,274 | | | | 2,494 | | | | 6,549 | | | | 4,937 | |
Interest expense, net | | | 8,937 | | | | 8,872 | | | | 17,637 | | | | 16,367 | |
Other income, net | | | (394 | ) | | | (3,546 | ) | | | (877 | ) | | | (4,334 | ) |
Total costs and expenses | | | 129,906 | | | | 117,301 | | | | 255,720 | | | | 238,820 | |
Income before income taxes, earnings from unconsolidated investees, and noncontrolling interest | | | 7,355 | | | | 8,016 | | | | 11,477 | | | | 10,221 | |
Income tax expense | | | 2,379 | | | | 2,221 | | | | 2,376 | | | | 1,275 | |
Earnings from unconsolidated investees | | | (367 | ) | | | (393 | ) | | | (703 | ) | | | (645 | ) |
Net income | | | 5,343 | | | | 6,188 | | | | 9,804 | | | | 9,591 | |
Less: Net income attributable to noncontrolling interest | | | (5,654 | ) | | | (3,729 | ) | | | (10,729 | ) | | | (8,322 | ) |
Net (loss) income attributable to Alliance HealthCare Services, Inc. | | $ | (311 | ) | | $ | 2,459 | | | $ | (925 | ) | | $ | 1,269 | |
| | | | | | | | | | | | | | | | |
Comprehensive (loss) income, net of taxes: | | | | | | | | | | | | | | | | |
Net income | | | 5,343 | | | | 6,188 | | | | 9,804 | | | | 9,591 | |
Unrealized (loss) gain on hedging transactions, net of taxes | | | (19 | ) | | | 84 | | | | (6 | ) | | | 46 | |
Reclassification adjustment for losses realized and included in net income, net of taxes | | | 10 | | | | — | | | | 29 | | | | — | |
Total comprehensive income, net of taxes | | | 5,334 | | | | 6,272 | | | | 9,827 | | | | 9,637 | |
Comprehensive income attributable to noncontrolling interest | | | (5,654 | ) | | | (3,729 | ) | | | (10,729 | ) | | | (8,322 | ) |
Comprehensive (loss) income attributable to Alliance HealthCare Services, Inc. | | $ | (320 | ) | | $ | 2,543 | | | $ | (902 | ) | | $ | 1,315 | |
| | | | | | | | | | | | | | | | |
(Loss) income per common share attributable to Alliance HealthCare Services, Inc.: | | | | | | | | | | | | | | | | |
Basic | | $ | (0.03 | ) | | $ | 0.23 | | | $ | (0.08 | ) | | $ | 0.12 | |
Diluted | | $ | (0.03 | ) | | $ | 0.23 | | | $ | (0.08 | ) | | $ | 0.12 | |
Weighted average number of shares of common stock and common stock equivalents: | | | | | | | | | | | | | | | | |
Basic | | | 10,989 | | | | 10,882 | | | | 10,981 | | | | 10,771 | |
Diluted | | | 10,989 | | | | 10,893 | | | | 10,981 | | | | 10,796 | |
| |
Alliance HealthCare Services | News Release |
Page 6 of 13 | August 3, 2017 |
ALLIANCE HEALTHCARE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| | June 30, | | | December 31, | |
| | 2017 | | | 2016 | |
| | (unaudited) | | | (audited) | |
ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 22,653 | | | $ | 22,241 | |
Accounts receivable, net of allowance for doubtful accounts | | | 80,922 | | | | 77,496 | |
Prepaid expenses | | | 8,823 | | | | 9,568 | |
Other current assets | | | 4,456 | | | | 3,853 | |
Total current assets | | | 116,854 | | | | 113,158 | |
Plant, property and equipment, net | | | 205,058 | | | | 204,814 | |
Goodwill | | | 120,773 | | | | 119,130 | |
Other intangible assets, net | | | 193,060 | | | | 198,977 | |
Other assets | | | 18,006 | | | | 23,785 | |
Total assets | | $ | 653,751 | | | $ | 659,864 | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 21,681 | | | $ | 28,185 | |
Accrued compensation and related expenses | | | 20,247 | | | | 24,895 | |
Accrued interest payable | | | 3,316 | | | | 3,308 | |
Current portion of long-term debt | | | 33,270 | | | | 17,298 | |
Current portion of obligations under capital leases | | | 4,125 | | | | 3,354 | |
Other accrued liabilities | | | 34,681 | | | | 29,323 | |
Total current liabilities | | | 117,320 | | | | 106,363 | |
Long-term debt, net of current portion | | | 490,668 | | | | 515,407 | |
Obligations under capital leases, net of current portion | | | 13,941 | | | | 12,686 | |
Deferred income taxes | | | 27,966 | | | | 25,818 | |
Other liabilities | | | 12,800 | | | | 9,093 | |
Total liabilities | | | 662,695 | | | | 669,367 | |
| | | | | | | | |
Stockholders’ deficit: | | | | | | | | |
Common stock | | | 110 | | | | 110 | |
Treasury stock | | | (3,138 | ) | | | (3,138 | ) |
Additional paid-in capital | | | 61,963 | | | | 61,353 | |
Accumulated comprehensive income | | | 33 | | | | 10 | |
Accumulated deficit | | | (198,825 | ) | | | (197,900 | ) |
Total stockholders’ deficit attributable to Alliance HealthCare Services, Inc. | | | (139,857 | ) | | | (139,565 | ) |
Noncontrolling interest | | | 130,913 | | | | 130,062 | |
Total stockholders’ deficit | | | (8,944 | ) | | | (9,503 | ) |
Total liabilities and stockholders’ deficit | | $ | 653,751 | | | $ | 659,864 | |
| |
Alliance HealthCare Services | News Release |
Page 7 of 13 | August 3, 2017 |
ALLIANCE HEALTHCARE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
| | Six Months Ended June 30, | |
| | 2017 | | | 2016 | |
Operating activities: | | | | | | | | |
Net income | | $ | 9,804 | | | $ | 9,591 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Provision for doubtful accounts | | | 1,167 | | | | 1,356 | |
Share-based payment | | | 684 | | | | 1,780 | |
Depreciation and amortization | | | 34,405 | | | | 31,715 | |
Amortization of deferred financing costs | | | 4,924 | | | | 3,312 | |
Accretion of discount on long-term debt | | | 263 | | | | 254 | |
Adjustment of derivatives to fair value | | | (11 | ) | | | (45 | ) |
Distributions from unconsolidated investees | | | 523 | | | | 752 | |
Earnings from unconsolidated investees | | | (703 | ) | | | (645 | ) |
Deferred income taxes | | | 2,148 | | | | 940 | |
Gain on sale of assets, net | | | (664 | ) | | | (169 | ) |
Impairment charges | | | 1,085 | | | | — | |
Changes in fair value of contingent consideration related to acquisitions | | | 150 | | | | (3,640 | ) |
Excess tax benefit from share-based payment arrangements | | | — | | | | 436 | |
Changes in operating assets and liabilities, net of the effects of acquisitions: | | | | | | | | |
Accounts receivable | | | (4,054 | ) | | | (1,389 | ) |
Prepaid expenses | | | 851 | | | | (119 | ) |
Other current assets | | | (227 | ) | | | 674 | |
Other assets | | | 68 | | | | 4,240 | |
Accounts payable | | | (4,583 | ) | | | 2,578 | |
Accrued compensation and related expenses | | | (4,708 | ) | | | 2,820 | |
Accrued interest payable | | | 8 | | | | (70 | ) |
Income taxes payable | | | 50 | | | | (36 | ) |
Other accrued liabilities | | | 8,281 | | | | 3,614 | |
Net cash provided by operating activities | | | 49,461 | | | | 57,949 | |
Investing activities: | | | | | | | | |
Equipment purchases | | | (11,205 | ) | | | (33,975 | ) |
Increase in deposits on equipment | | | (8,004 | ) | | | (13,847 | ) |
Acquisitions, net of cash received | | | (2,022 | ) | | | (6,659 | ) |
Proceeds from sale of assets | | | 971 | | | | 370 | |
Net cash used in investing activities | | | (20,260 | ) | | | (54,111 | ) |
| |
Alliance HealthCare Services | News Release |
Page 8 of 13 | August 3, 2017 |
ALLIANCE HEALTHCARE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
(in thousands)
| | Six Months Ended June 30, | |
| | 2017 | | | 2016 | |
Financing activities: | | | | | | | | |
Principal payments on equipment debt and capital lease obligations | | | (8,141 | ) | | | (8,035 | ) |
Proceeds from equipment debt | | | 2,154 | | | | 4,809 | |
Principal payments on term loan facility | | | (2,600 | ) | | | (2,600 | ) |
Principal payments on revolving loan facility | | | (20,000 | ) | | | (24,000 | ) |
Proceeds from revolving loan facility | | | 13,500 | | | | 21,000 | |
Principal payment on note payable | | | (2,954 | ) | | | — | |
Payments of debt issuance costs and deferred financing costs | | | (288 | ) | | | (25,059 | ) |
Distributions to noncontrolling interest in subsidiaries | | | (11,351 | ) | | | (11,703 | ) |
Contributions from noncontrolling interest in subsidiaries | | | 985 | | | | — | |
Payments for employee share-based compensation payroll taxes | | | (74 | ) | | | — | |
Excess tax benefit from share-based payment arrangements | | | — | | | | (436 | ) |
Issuance of common stock | | | — | | | | 1 | |
Proceeds from exercise of stock options | | | — | | | | 614 | |
Settlement of contingent consideration related to acquisitions | | | (20 | ) | | | (810 | ) |
Proceeds from shareholder transaction | | | — | | | | 28,630 | |
Net cash used in financing activities | | | (28,789 | ) | | | (17,589 | ) |
Net increase (decrease) in cash and cash equivalents | | | 412 | | | | (13,751 | ) |
Cash and cash equivalents, beginning of period | | | 22,241 | | | | 38,070 | |
Cash and cash equivalents, end of period | | $ | 22,653 | | | $ | 24,319 | |
Supplemental disclosure of cash flow information: | | | | | | | | |
Interest paid | | $ | 12,561 | | | $ | 12,957 | |
Income taxes paid (refunded), net | | | 47 | | | | (92 | ) |
Supplemental disclosure of non-cash investing and financing activities: | | | | | | | | |
Capital lease obligations related to the purchase of equipment | | | 3,442 | | | | 1,499 | |
Changes in equipment purchases in accounts payable and accrued equipment | | | (1,446 | ) | | | 352 | |
Note payable assumed in connection with acquisition | | | 2,954 | | | | — | |
Noncontrolling interest assumed in connection with acquisitions | | | 488 | | | | 2,948 | |
Fair value of contingent consideration related to acquisitions | | | — | | | | 420 | |
| |
Alliance HealthCare Services | News Release |
Page 9 of 13 | August 3, 2017 |
ALLIANCE HEALTHCARE SERVICES, INC.
NON-GAAP MEASURES
Total Adjusted EBITDA and Adjusted Net Income Per Share (the “Non-GAAP Measures”) are not measures of financial performance under generally accepted accounting principles in the U.S. (“GAAP”).
Total Adjusted EBITDA, as defined by the Company’s management, is consistent with the definition in the Company’s Credit Agreement and represents net (loss) income before: income tax expense; interest expense, net; depreciation expense; amortization expense; share-based payment; severance and related costs; net income attributable to noncontrolling interest; restructuring charges; transaction costs; shareholder transaction costs; impairment charges; legal matters (income) expense, net; changes in fair value of contingent consideration related to acquisitions; and other non-cash (benefits) charges, net, which include non-cash gain on sale of assets, net. The components used to reconcile net (loss) income to Total Adjusted EBITDA are consistent with Company’s historical presentation of Total Adjusted EBITDA.
Adjusted Net Income Per Share, as defined by the Company’s management, represents net (loss) income, on a diluted basis, before: severance and related costs; restructuring charges; transaction costs; shareholder transaction costs; impairment charges; deferred financing costs in connection with shareholder transaction; legal matters (income) expenses, net; changes in fair value of contingent consideration related to acquisitions; other non-cash benefits, net; and differences in the GAAP income tax rate compared to the Company’s historical income tax rate. The components used to reconcile net (loss) income per share to Adjusted Net Income Per Share are consistent with Company’s historical presentation of Adjusted Net Income Per Share.
Management uses the Non-GAAP Measures, and believes they are useful measures for investors, for a variety of reasons. Management regularly communicates the results of its Non-GAAP Measures and management’s interpretation of such results to its board of directors. Management also compares the Company’s results of its Non-GAAP Measures against internal targets as a key factor in determining cash incentive compensation for executives and other employees, largely because management feels that these measures are indicative of how its radiology, oncology and interventional businesses are performing and are being managed. The diagnostic imaging and radiation oncology industry continues to experience significant consolidation. These activities have led to significant charges to earnings, such as those resulting from acquisition costs, and to significant variations among companies with respect to capital structures and cost of capital (which affect interest expense) and differences in taxation and book depreciation of facilities and equipment (which affect relative depreciation expense), including significant differences in the depreciable lives of similar assets among various companies. In addition, management believes that because of the variety of equity awards used by companies, the varying methodologies for determining non-cash share-based compensation expense among companies and from period to period, and the subjective assumptions involved in that determination, excluding non-cash share-based compensation from Adjusted EBITDA enhances company-to-company comparisons over multiple fiscal periods and enhances the Company’s ability to analyze the performance of its radiology, oncology and interventional businesses.
In the future, the Company expects that it may incur expenses similar to the excluded items discussed above. Accordingly, the exclusion of these and other similar items in the Company’s non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual. The Non-GAAP Measures have certain limitations as analytical financial measures, which management compensates for by relying on the Company’s GAAP results to evaluate its operating performance and by considering independently the economic effects of the items that are or are not reflected in the Non-GAAP Measures. Management also compensates for these limitations by providing GAAP-based disclosures concerning the excluded items in the Company’s financial disclosures. As a result of these limitations and because the Non-GAAP Measures may not be directly comparable to similarly titled measures reported by other companies, however, the Non-GAAP Measures should not be considered as an alternative to the most directly comparable GAAP measure, or as an alternative to any other GAAP measure of operating performance.
| |
Alliance HealthCare Services | News Release |
Page 10 of 13 | August 3, 2017 |
The calculation of Total Adjusted EBITDA is shown below:
| | Three Months Ended June 30, | | | Six Months Ended June 30, | | | Twelve Months Ended June 30, | |
(in thousands) | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | 2017 | |
Net (loss) income attributable to Alliance HealthCare Services, Inc. | | $ | (311 | ) | | $ | 2,459 | | | $ | (925 | ) | | $ | 1,269 | | | $ | (1,701 | ) |
Income tax expense | | | 2,379 | | | | 2,221 | | | | 2,376 | | | | 1,275 | | | | 3,953 | |
Interest expense, net | | | 8,937 | | | | 8,872 | | | | 17,637 | | | | 16,367 | | | | 35,776 | |
Depreciation expense | | | 13,783 | | | | 13,730 | | | | 27,856 | | | | 26,778 | | | | 56,050 | |
Amortization expense | | | 3,274 | | | | 2,494 | | | | 6,549 | | | | 4,937 | | | | 12,173 | |
Share-based payment (included in “Selling, general and administrative expenses”) | | | 303 | | | | 379 | | | | 684 | | | | 2,243 | | | | 1,617 | |
Severance and related costs | | | 389 | | | | 708 | | | | 1,023 | | | | 2,424 | | | | 2,509 | |
Net income attributable to noncontrolling interest | | | 5,654 | | | | 3,729 | | | | 10,729 | | | | 8,322 | | | | 19,392 | |
Restructuring charges | | | 542 | | | | 1,120 | | | | 757 | | | | 1,351 | | | | 1,041 | |
Transaction costs | | | 152 | | | | 431 | | | | 314 | | | | 848 | | | | 1,352 | |
Shareholder transaction costs | | | 2,523 | | | | 1,498 | | | | 3,392 | | | | 2,507 | | | | 5,104 | |
Impairment charges | | | 1,085 | | | | — | | | | 1,085 | | | | — | | | | 1,717 | |
Legal matters (income) expense, net (included in “Selling, general and administrative expenses”) | | | (500 | ) | | | 39 | | | | (500 | ) | | | 194 | | | | (588 | ) |
Changes in fair value of contingent consideration related to acquisitions (included in “Other income, net”) | | | 150 | | | | (3,040 | ) | | | 150 | | | | (3,640 | ) | | | (1,000 | ) |
Other non-cash (benefits) charges, net (included in “Other income, net”) | | | (149 | ) | | | (198 | ) | | | (158 | ) | | | (61 | ) | | | 228 | |
Total Adjusted EBITDA | | $ | 38,211 | | | $ | 34,442 | | | $ | 70,969 | | | $ | 64,814 | | | $ | 137,623 | |
Adjusted EBITDA by segment is shown below:
| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
(in thousands) | | 2017 | | | 2016 | | | 2017 | | | 2016 | |
Adjusted EBITDA: | | | | | | | | | | | | | | | | |
Radiology | | $ | 30,484 | | | $ | 28,802 | | | $ | 59,689 | | | $ | 55,246 | |
Oncology | | | 15,332 | | | | 12,559 | | | | 29,140 | | | | 24,717 | |
Interventional | | | 2,653 | | | | 1,787 | | | | 3,708 | | | | 3,042 | |
Corporate / Other | | | (10,258 | ) | | | (8,706 | ) | | | (21,568 | ) | | | (18,191 | ) |
Total | | $ | 38,211 | | | $ | 34,442 | | | $ | 70,969 | | | $ | 64,814 | |
The leverage ratio calculations as of June 30, 2017 are shown below:
(dollars in thousands) | | Consolidated | |
Total debt | | $ | 561,869 | |
Less: Cash and cash equivalents | | | (22,653 | ) |
Net debt | | $ | 539,216 | |
Last 12 months’ Adjusted EBITDA | | | 137,623 | |
Pro-forma acquisitions in the last 12 month period(1) | | | 4,608 | |
Last 12 months’ Consolidated Adjusted EBITDA | | $ | 142,231 | |
Total leverage ratio | | | 3.95 | x |
Net leverage ratio | | | 3.79 | x |
| (1) | Gives pro-forma effect to acquisitions occurring during the last twelve months, pursuant to the terms of the Credit Agreement. |
| |
Alliance HealthCare Services | News Release |
Page 11 of 13 | August 3, 2017 |
The reconciliation of (loss) income per diluted share – GAAP to Adjusted Net income Per Share – non-GAAP is shown below:
| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | 2017 | | | 2016 | | | 2017 | | | 2016 | |
(Loss) income per diluted share – GAAP | | $ | (0.03 | ) | | $ | 0.23 | | | $ | (0.08 | ) | | $ | 0.12 | |
Reconciling charges (benefits) to arrive at Adjusted Net Income Per Share – non-GAAP: | | | | | | | | | | | | | | | | |
Severance and related costs, net of taxes | | | 0.02 | | | | 0.04 | | | | 0.05 | | | | 0.13 | |
Restructuring charges, net of taxes | | | 0.03 | | | | 0.06 | | | | 0.04 | | | | 0.07 | |
Transaction costs, net of taxes | | | 0.01 | | | | 0.02 | | | | 0.02 | | | | 0.05 | |
Shareholder transaction costs, net of taxes | | | 0.13 | | | | 0.08 | | | | 0.18 | | | | 0.13 | |
Impairment charges, net of taxes | | | 0.06 | | | | — | | | | 0.06 | | | | — | |
Deferred financing costs in connection with shareholder transaction, net of taxes | | | 0.10 | | | | 0.10 | | | | 0.20 | | | | 0.10 | |
Legal matters (income) expense, net, net of taxes | | | (0.03 | ) | | | — | | | | (0.03 | ) | | | 0.01 | |
Changes in fair value of contingent consideration related to acquisitions, net of taxes | | | 0.01 | | | | (0.16 | ) | | | 0.01 | | | | (0.19 | ) |
Other non-cash benefits, net, net of taxes | | | (0.01 | ) | | | (0.01 | ) | | | (0.01 | ) | | | (0.02 | ) |
GAAP income tax rate compared to the Company's historical income tax rate | | | 0.14 | | | | 0.01 | | | | 0.16 | | | | 0.02 | |
Total reconciling charges | | | 0.46 | | | | 0.14 | | | | 0.68 | | | | 0.30 | |
Adjusted Net Income Per Share – non-GAAP | | $ | 0.43 | | | $ | 0.37 | | | $ | 0.60 | | | $ | 0.42 | |
The reconciliation from net income to Total Adjusted EBITDA for the 2017 guidance range is shown below (in millions):
| | 2017 Full Year | |
| | Guidance Range | |
Net income | | $ | 1 | | | $ | 2 | |
Income tax benefit | | | — | | | | (2 | ) |
Interest expense, net; depreciation expense; amortization expense; share-based payment and other expenses; net income attributable to noncontrolling interest | | | 134 | | | | 140 | |
Total Adjusted EBITDA | | $ | 135 | | | $ | 140 | |
| |
Alliance HealthCare Services | News Release |
Page 12 of 13 | August 3, 2017 |
ALLIANCE HEALTHCARE SERVICES, INC.
SELECTED STATISTICAL INFORMATION
| | Three Months Ended June 30, | |
| | 2017 | | | 2016 | |
MRI: | | | | | | | | |
Average number of total systems | | | 280.9 | | | | 274.5 | |
Average number of scan-based systems | | | 214.9 | | | | 216.5 | |
Scans per system per day (scan-based systems) | | | 9.36 | | | | 9.36 | |
Total number of scan-based MRI scans | | | 135,014 | | | | 136,251 | |
Revenue per scan | | $ | 312.53 | | | $ | 307.39 | |
Scan-based MRI revenue (in thousands) | | $ | 42,196 | | | $ | 41,883 | |
Non-scan based MRI revenue (in thousands) | | $ | 8,272 | | | $ | 6,872 | |
Total MRI revenue (in thousands) | | $ | 50,468 | | | $ | 48,755 | |
PET/CT: | | | | | | | | |
Average number of total systems | | | 115.1 | | | | 120.5 | |
Average number of scan-based systems | | | 109.1 | | | | 110.7 | |
Scans per system per day | | | 5.67 | | | | 5.51 | |
Total number of PET/CT scans | | | 35,957 | | | | 34,863 | |
Revenue per scan | | $ | 865.82 | | | $ | 885.34 | |
Scan-based PET/CT revenue (in thousands) | | $ | 31,133 | | | $ | 30,866 | |
Non-scan-based PET/CT revenue (in thousands) | | $ | 898 | | | $ | 1,233 | |
Total PET/CT revenue (in thousands) | | $ | 32,031 | | | $ | 32,099 | |
Oncology: | | | | | | | | |
Linac treatments | | | 33,812 | | | | 22,421 | |
Stereotactic radiosurgery patients | | | 806 | | | | 900 | |
Total Oncology revenue (in thousands) | | $ | 33,948 | | | $ | 25,829 | |
Interventional: | | | | | | | | |
Visits | | | 55,788 | | | | 57,825 | |
Total Interventional revenue (in thousands) | | $ | 13,830 | | | $ | 11,398 | |
Revenue breakdown (in thousands): | | | | | | | | |
MRI revenue | | $ | 50,468 | | | $ | 48,755 | |
PET/CT revenue | | | 32,031 | | | | 32,099 | |
Other radiology revenue | | | 6,616 | | | | 6,692 | |
Radiology revenue | | | 89,115 | | | | 87,546 | |
Oncology revenue | | | 33,948 | | | | 25,829 | |
Interventional revenue | | | 13,830 | | | | 11,398 | |
Corporate / Other | | | 368 | | | | 544 | |
Total revenues | | $ | 137,261 | | | $ | 125,317 | |
| |
Alliance HealthCare Services | News Release |
Page 13 of 13 | August 3, 2017 |
ALLIANCE HEALTHCARE SERVICES, INC.
SELECTED STATISTICAL INFORMATION
RADIOLOGY AND ONCOLOGY DIVISION SAME-STORE VOLUME
The Company utilizes same-store volume growth as a historical statistical measure of the MRI and PET/CT imaging procedure, linear accelerator (“Linac”) treatment and SRS case growth at its customers in a specified period on a year-over-year basis. Same-store volume growth is calculated by comparing the cumulative scan, treatment or case volume at all locations in the current year quarter to the same quarter in the prior year. The group of customers whose volume is included in the scan, treatment or case volume totals is only those that received service from Alliance for the full quarter in each of the comparison periods. A positive percentage represents growth over the prior year quarter and a negative percentage represents a decline over the prior year quarter. Alliance measures each of its major radiology and oncology modalities (MRI, PET/CT, Linac and SRS) separately.
The Radiology Division same-store volume growth (decline) for the last four calendar quarters ended June 30, 2017 is as follows:
| Same-Store Volume | |
| MRI | | | PET/CT | |
2017 | | | | | | | |
Second quarter | | (0.3 | )% | | | 6.6 | % |
First quarter | | (0.7 | )% | | | 5.8 | % |
2016 | | | | | | | |
Fourth quarter | | (1.2 | )% | | | 5.8 | % |
Third quarter | | 1.1 | % | | | 5.3 | % |
The Oncology Division same-store volume growth (decline) for the last four calendar quarters ended June 30, 2017 is as follows:
| Same-Store Volume | |
| Linac | | | SRS | |
2017 | | | | | | | |
Second quarter | | 6.8 | % | | | (3.6 | )% |
First quarter | | (7.6 | )% | | | (11.8 | )% |
2016 | | | | | | | |
Fourth quarter | | 1.5 | % | | | (2.5 | )% |
Third quarter | | 5.7 | % | | | (4.6 | )% |
