EXHIBIT 99.1
Universal Hospital Services, Inc. Announces First Quarter Earnings
BLOOMINGTON, Minn.--(BUSINESS WIRE)--May 17, 2004--Universal
Hospital Services, Inc., ("UHS") today announced financial results for
the first quarter ended March 31, 2004.
Total revenues were $49.0 million for the first quarter of 2004,
representing a $6.4 million or 15.1% increase from total revenues of
$42.6 million for the same period of 2003. Medical equipment
outsourcing revenues were $39.9 million for the first quarter of 2004,
representing a $4.0 million or 10.9% increase from medical equipment
outsourcing revenues of $35.9 million for the same period of 2003.
Sales of supplies and equipment grew to $4.4 million in the quarter,
representing a 33.8% increase from the prior year. Service revenues
grew by 46.3% to $4.7 million.
Gross profit increased by 9.4% to $22.1 million during the quarter
on the strength of revenue offset by increased costs incurred due to
our continued focus on growing our technical and professional services
and medical equipment remarketing segments. Gross profit as a percent
of total revenues decreased from 47.6% to 45.2% as a result of the
investment in field service personnel and the shift in revenue mix
toward non-capital sales and service businesses.
Net income for the quarter was $1.4 million, down $1.3 million
from last year due to a $3.1 million increase in interest expense
related to our recapitalization in the fourth quarter of 2003 which
offset the $0.3 million growth in operating income.
During the quarter, we completed the acquisition of Affiliated
Clinical Engineering Services (ACES) and purchased certain rental
assets from Cardinal Health. "ACES brings us a strong, respected
provider of biomedical equipment services throughout the New England
states. This acquisition is in line with our stated strategy of
growing our less capital intensive equipment services business,"
commented President and CEO Gary D. Blackford on the acquisition.
Neither purchase had a material impact on first quarter results.
After the completion of the quarter, we initiated a national
roll-out into the specialty bed outsourcing arena. Our goal is to
become a significant player in the specialty bed market by providing
best of class products with our tradition of best of class service. As
part of that, following the completion of the quarter, we acquired the
assets of two specialty bed companies, Galaxy Medical, located in Ohio
and Advanced Therapeutics, located in Wisconsin. "The acquisition of
Galaxy and Advanced will help us jump start our reentry into this fast
growing market," said Gary Blackford about the acquisitions.
Operating cash flow for the first quarter of 2004 was $18.0
million compared to $6.8 million in the prior year. Operating cash
flow increased from last year's first quarter due primarily to the
timing of the interest payment on our new bonds which benefited
current year's operating cash flow by approximately $9.3 million. As
of March 31, 2004, we had outstanding $279.6 million of total debt,
consisting of $260.0 million in senior notes, $19.0 million
outstanding under our revolving credit facility, and $0.6 million in
capital lease obligations. Borrowing availability under the revolving
credit facility at March 31, 2004 was $68.6 million, net of
outstanding letters of credit of $0.6 million.
Earnings before interest, taxes, depreciation and amortization
("EBITDA") for the first quarter of 2004 were $18.4 million compared
to $17.4 million for the prior year. EBITDA is not intended to
represent an alternative to operating income or cash flows from
operating, financing or investing activities (as determined in
accordance with generally accepted accounting principles (GAAP)) as a
measure of performance, and is not representative of funds available
for discretionary use due to the Company's financing obligations.
EBITDA, as defined by the Company, may not be calculated consistently
among other companies applying similar reporting measures. EBITDA is
included herein because it is a widely accepted financial indicator
used by certain investors and financial analysts to assess and compare
companies and is an integral part of the Company's debt covenant
calculations. Management believes that EBITDA provides an important
perspective on the Company's ability to service its long-term
obligations, the Company's ability to fund continuing growth, and the
Company's ability to continue as a going concern. A reconciliation of
EBITDA to operating cash flows is included on the attached Statements
of Cash Flows.
We are announcing today that our Senior Vice President Finance and
Chief Financial Officer, John A. Gappa, will be leaving the company to
pursue new executive management opportunities. Mr. Gappa will remain
with UHS as the company begins a search for his successor to
facilitate a smooth transition. Gary Blackford, President and CEO,
commented; "John has played a major role in the growth and success of
UHS over the past four and a half years. UHS would not be where it is
today without his contributions. I would like to thank John for his
many contributions and wish him continued success in his future
endeavors." Mr. Gappa commented, "I have enjoyed the many
opportunities UHS presented and wish Gary and the whole UHS team the
best in the years to come. I am looking forward to taking the
additional skills and experience I gained at UHS and applying them to
an expanded scope of responsibilities in my next opportunity."
We will conduct a conference call regarding the First Quarter 2004
results on Wednesday, May 19th at 10:00 AM CDT. To participate, you
may call (877) 284-1151 and indicate you would like to join in the UHS
First Quarter Results Call with Gary Blackford as the leader. A taped
replay of this call will be available from 11:30 AM CDT on May 19th
until 12:00 PM CDT on May 26th. The "Encore Dial-in" number is: (800)
642-1687 or (706) 645-9291, confirmation #6914238.
This call is being webcast by CCBN and can be accessed at the
Universal Hospital Services, Inc. web site at www.uhs.com. Click on
"Financials", "Webcasts" and then on "First Quarter 2004 Results Call"
to participate.
The webcast is also being distributed over CCBN's Investor
Distribution Network to both institutional and individual investors.
Individual investors can listen to the call through CCBN's individual
investor center at www.fulldisclosure.com or by visiting any of the
investor sites in CCBN's Individual Investor Network. Institutional
investors can access the call via CCBN's password-protected event
management site, StreetEvents (www.streetevents.com).
About Universal Hospital Services, Inc.
Based in Bloomington, Minnesota, Universal Hospital Services is a
leading nationwide provider of medical technology outsourcing and
services to more than 6,050 acute care hospitals and alternate site
providers and major medical equipment manufacturers. Our services fall
into three general categories: Medical Equipment Outsourcing,
Technical and Professional Services, and Medical Equipment Sales and
Remarketing. We provide a comprehensive range of support services,
including equipment delivery, training, technical and educational
support, inspection, maintenance and complete documentation. Universal
Hospital Services currently operates through 71 district offices and
13 regional service centers, serving customers in all 50 states and
the District of Columbia.
Universal Hospital Services, Inc.
3800 American Boulevard West, Suite 1250
Bloomington, MN 55431-4442
952-893-3200
www.uhs.com
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: We believe statements in this release looking
forward in time involve risks and uncertainties. The following
factors, among others, could adversely affect our business, operations
and financial condition causing our actual results to differ
materially from those expressed in any forward-looking statements: the
Company's history of net losses and substantial interest expense; the
Company's need for substantial cash to operate and expand its business
as planned; the Company's substantial outstanding debt and debt
service obligations; restrictions imposed by the terms of the
Company's debt; a decrease in the number of patients our customers are
serving; the Company's ability to effect change in the manner in which
healthcare providers traditionally procure medical equipment; the
Company's relationships with certain key suppliers and any adverse
developments concerning these suppliers; the absence of long-term
commitments with customers; the Company's ability to renew contracts
with group purchasing organizations and integrated delivery networks;
the Company's ability to acquire adequate insurance to cover claims;
the fluctuation in our quarterly operating results; changes in
reimbursement rates and policies by third-party payors; the impact of
health care reform initiatives; the impact of significant regulation
of the health care industry and the need to comply with those
regulations; changes and trends in customer preferences, including
increased purchasing of movable medical equipment; difficulties or
delays in our continued expansion into certain areas and developments
of new areas; additional credit risks in increasing business with home
care providers and nursing homes; consolidations in the healthcare
industry; unanticipated costs or difficulties or delays in
implementing the components of our strategy and plan and possible
adverse consequences relating to our ability to successfully integrate
acquisitions; actions by competitors; and the availability of and
ability to retain qualified personnel, especially sales
representatives. These and other risk factors are detailed in the
Company's Annual Report on Form 10-K/A for the year ended December 31,
2003 filed with Securities and Exchange Commission.
UNIVERSAL HOSPITAL SERVICES, INC.
BALANCE SHEETS
(dollars in thousands except share and per share information)
ASSETS
March 31, December 31,
2004 2003
----------- -------------
(unaudited)
Current assets:
Accounts receivable, less allowance for
doubtful accounts of $1,850 and $1,750
at March 31, 2004 and December 31, 2003,
respectively $38,009 $33,943
Inventories 4,231 3,441
Deferred income taxes 2,060 2,205
Other current assets 1,239 1,961
----------- -------------
Total current assets 45,539 41,550
Property and equipment, net:
Movable medical equipment, net 123,828 122,931
Property and office equipment, net 7,438 6,784
----------- -------------
Total property and equipment, net 131,266 129,715
Intangible assets:
Goodwill 37,402 36,348
Other, primarily deferred financing costs,
net 11,214 11,423
Other intangibles, net 3,421 1,183
----------- -------------
Total assets $228,842 $220,219
=========== =============
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Current portion of long-term debt $325 $284
Accounts payable 9,065 13,775
Accrued compensation and pension 7,119 7,699
Accrued interest 12,203 5,600
Other accrued expenses 3,199 2,010
Book overdrafts 343 3,891
----------- -------------
Total current liabilities 32,254 33,259
Long-term debt, less current portion 279,226 270,798
Deferred compensation and pension 3,890 3,860
Deferred income taxes 2,060 2,205
Commitments and contingencies
Shareholders' deficiency:
Common stock, $0.01 par value; 500,000,000
shares authorized, 122,725,618 and
122,768,962 shares issued
and outstanding at March 31, 2004 and
December 31, 2003, respectively 1,227 1,228
Additional paid-in capital - -
Accumulated deficit (87,059) (88,375)
Accumulated other comprehensive loss (2,756) (2,756)
----------- -------------
Total shareholders' deficiency (88,588) (89,903)
----------- -------------
Total liabilities and shareholders'
deficiency $228,842 $220,219
=========== =============
Universal Hospital Services, Inc.
Statements of Income
(dollars in thousands)
Three Months
Ended March 31,
-----------------
2004 2003
-------- --------
(unaudited)
Medical equipment outsourcing $39,888 $35,964
Sales of supplies and equipment, and other 4,387 3,365
Service 4,722 3,227
-------- --------
Total revenues 48,997 42,556
Costs of equipment outsourcing, sales and service 26,850 22,314
-------- --------
Gross profit 22,147 20,242
Selling, general and administrative 13,092 11,476
-------- --------
Operating income 9,055 8,766
Interest expense 7,449 4,351
-------- --------
Income before income taxes 1,606 4,415
Provision for income taxes 248 1,778
-------- --------
Net income $1,358 $2,637
======== ========
Additional information
EBITDA as a percentage of total revenues 37.6% 41.0%
Movable medical equipment (approximate number of
units at end of period) 147,000 142,000
Offices (at end of period) 71 65
Number of hospital customers (at end of period) 3,000 2,800
Number of total customers (at end of period) 6,050 5,900
Movable medical equipment depreciation expense $8,638 $7,852
Universal Hospital Services, Inc.
Segmented Reporting
(dollars in thousands)
Outsourcing Sales Service
-----------------------------------------------
2004 2003 2004 2003 2004 2003
-----------------------------------------------
Revenue $39,888 $35,964 $4,367 $3,264 $4,722 $3,227
Cost 20,284 N/A 3,351 N/A 3,215 N/A
Gross Profit % 49.1% N/A 23.2% N/A 31.9% N/A
Corp/Elim Consolidated
-------------------------------------------
2004 2003 2004 2003
-------------------------------------------
Revenue $20 $101 $48,997 $42,556
Cost - - 26,850 22,314
Gross Profit % - - 45.2% 47.6%
Percent of Total Percent Increase
Revenues (Decrease)
Three Months
Ended March 31, Qtr 1 2004
2004 2003 Over Qtr 1 2003
---------------- ----------------
Medical equipment outsourcing 81.4% 84.5% 10.9%
Sales of supplies and equipment, and
other 8.9 7.9 30.4
Service 9.7 7.6 46.3
-------- -------
Total revenues 100.0 100.0 15.1
Costs of equipment outsourcing, sales
and service 54.8 52.4 20.3
-------- -------
Gross profit 45.2 47.6 9.4
Selling, general and administrative 26.7 27.0 14.1
-------- -------
Operating income 18.5 20.6 3.3
Interest expense 15.2 10.2 71.2
-------- -------
Income before income taxes 3.3 10.4 (63.6)
Provision for income taxes 0.5 4.2 (86.1)
-------- -------
Net income 2.8% 6.2% (48.5%)
======== =======
Universal Hospital Services, Inc.
Statements of Cash Flows
(dollars in thousands)
Three Months Ended
March 31,
--------------------
2004 2003
Cash flows from operating activities: (unaudited)
Net income $1,358 $2,637
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 9,315 8,378
Amortization of intangibles 46 286
Accretion of bond discount - 132
Provision for doubtful accounts 363 218
Non-cash stock-based compensation expense - 53
Loss on sales/disposal of equipment 63 93
Deferred income taxes - 1,711
Changes in operating assets and liabilities,
net of impact of acquisitions:
Accounts receivable (4,275) (2,573)
Inventories and other operating
assets (72) (232)
Accounts payable and accrued expenses 11,191 (3,858)
---------- ---------
Net cash provided by operating activities 17,989 6,845
---------- ---------
Cash flows from investing activities:
Movable medical equipment purchases (18,619) (11,329)
Property and office equipment purchases (1,328) (502)
Proceeds from disposition of movable medical
equipment 784 419
Acquisitions (3,297) -
Other (362) (103)
---------- ---------
Net cash used in investing activities (22,822) (11,515)
---------- ---------
Cash flows from financing activities:
Proceeds under loan agreements 24,325 20,450
Payments under loan agreements (15,901) (13,086)
Repurchase of common stock (44) -
Change in book overdraft (3,547) (2,694)
---------- ---------
Net cash provided by financing activities 4,833 4,670
---------- ---------
Net change in cash and cash equivalents $--- $---
========== =========
Supplemental cash flow information:
Interest paid $426 $7,814
========== =========
Income taxes paid $6 $94
========== =========
Movable medical equipment purchases in
accounts payable $2,265 $3,324
========== =========
Movable medical equipment additions $10,381 $8,919
========== =========
Additional information
Net cash provided by operating activities $17,989 $6,845
Changes in operating assets and liabilities (6,844) 6,663
Other non-cash expenses (426) (496)
Current income taxes 248 67
Interest expense 7,449 4,351
---------- ---------
EBITDA $18,416 $17,430
========== =========
CONTACT: Universal Hospital Services, Inc., Bloomington
Bethany A. Oliver, 952-893-3288