RGX Radiologix

DALLAS, Aug. 4 /PRNewswire-FirstCall/ -- Radiologix, Inc. (AMEX:RGX), a leading national provider of diagnostic imaging services, today announced second quarter and year to date financial results for the period ended June 30, 2005. Select Financial Information (in thousands of dollars) For the Three Months For the Six Months Ended June 30, Ended June 30, 2005 2004 2005 2004 Service fee revenue, as reported $64,311 $66,211 $127,062 $132,253 Service fee revenue excluding terminated operations(A) $64,272 $62,237 $126,093 $123,088 EBITDA(A) $11,804 $12,535 $23,688 $24,835 EBITDA from continuing operations excluding terminated operations(A) $11,866 $11,114 $23,418 $21,555 Net income (loss), as reported $649 $(2,109) $1,167 $(4,816) Income from continuing operations, as reported $629 $823 $1,416 $1,663 Income (loss) from continuing operations excluding terminated operations(A) $672 $(3,021) $1,254 $(3,029) (A) As defined and reconciled below Second Quarter 2005 Results For the second quarter ended June 30, 2005, service fee revenue was $64.3 million, compared to $66.2 million for the second quarter 2004. Radiologix earned $649,000, or $0.03 per diluted share, compared to a net loss of $2.1 million or $0.09 per share for the second quarter 2004. * Service fee revenue excluding terminated operations was $64.3 million compared to $62.2 million for the second quarter 2004, an increase of 3.3%. * Income from continuing operations was $629,000, or $0.03 per diluted share, compared to income from continuing operations of $823,000, or $0.04 per diluted share, for the second quarter 2004. * Income from continuing operations excluding terminated operations (defined and reconciled below) was $672,000, or $0.03 per diluted share, compared to a loss of $3.0 million, or $0.14 per diluted share for the second quarter 2004. * EBITDA (defined and reconciled below) was $11.8 million, compared to $12.5 million for the second quarter 2004. * EBITDA from continuing operations excluding terminated operations (defined and reconciled below) was $11.9 million, compared to $11.1 million for the second quarter 2004. Year to Date June 30, 2005 Results For the six months ended June 30, 2005, service fee revenue was $127.1 million, compared to $132.3 million for the same period last year. Radiologix earned $1.2 million, or $0.05 per diluted share, compared to a net loss of $4.8 million or $0.22 loss per share for the six months ended June 30, 2004. * Service fee revenue excluding terminated operations was $126.1 million compared to $123.1 million for the six months ended June 30, 2004, a 2.4% increase. * Income from continuing operations was $1.4 million, or $0.06 per diluted share, compared to income from continuing operations of $1.7 million, or $0.07 per diluted share, for the six months ended June 30, 2004. * Income from continuing operations excluding terminated operations was $1.3 million or $0.06 per diluted share, compared to a loss of $3.0 million, or $0.14 per diluted share for the six months ended June 30, 2004. * EBITDA was $23.7 million, compared to $24.8 million for the six months ended June 30, 2004. * EBITDA from continuing operations excluding terminated operations was $23.4 million, compared to $21.6 million for the six months ended June 30, 2004. Balance Sheet * Cash and cash equivalents were $42.6 million at June 30, 2005, compared to $34.1 million at December 31, 2004. * Net debt (total debt less cash and cash equivalents and restricted cash) was $122.1 million at June 30, 2005, compared to $130.9 million at December 31, 2004. Total debt at June 30, 2005 was $170.4 million, compared to $170.5 million at December 31, 2004. * Days sales outstanding (DSOs) were 46 days at June 30, 2005, compared to 48 days at December 31, 2004. "This quarter, we continued to build on the solid operational and financial gains achieved in the first quarter 2005, and we have made significant progress from a year ago," said Sami S. Abbasi, president and chief executive officer of Radiologix. "In the second quarter 2005, we grew EBITDA from continuing operations excluding terminated operations, generated strong positive cash flow from operations, and further improved our impressive DSO performance. For the remainder of 2005, we will continue to focus on improving our primary operations -- with the help of our newly appointed chief operating officer, Carol Gleber -- implement and ensure the success of our Radiologix Enhanced Workflow And Record Distribution ("REWARD") Program, and continue to develop our future strategic direction." Sarbanes-Oxley 404 As noted in our 2004 Form 10-K, subsequent to December 31, 2004, but prior to the finalization of our 2004 consolidated financial statements, Radiologix placed into operation new controls to address the material weakness we identified in our accounts receivable estimation process. These new controls include a retrospective collection analysis that matches cash collections to billed charges by month of service. We believe these new controls have remediated the material weakness that existed as of December 31, 2004, and that these controls operated effectively during the six months of 2005. Regulation G: GAAP and Non-GAAP Financial Information This release contains certain financial information not derived in accordance with GAAP. Radiologix uses both GAAP and non-GAAP metrics to measure its financial results. We believe that, in addition to GAAP metrics, these non-GAAP metrics assist Radiologix in measuring its cash-based performance. Radiologix believes this information is useful to investors and other interested parties because it removes unusual and nonrecurring charges that occur in the affected period and provides a basis for measuring the Company's financial condition against other quarters. Since Radiologix has historically reported non-GAAP results to the investment community, management also believes the inclusion of non-GAAP measures provides consistency in its financial reporting. Such information should not be considered as a substitute for any measures calculated in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Reconciliation of this information to the most comparable GAAP measures is included in this release in the tables below. Income from continuing operations is defined as income from continuing operations calculated in accordance with GAAP. Income from continuing operations excluding terminated operations is defined as income from continuing operations, excluding terminated San Antonio and certain Mid-Atlantic operations. EBITDA is defined as earnings before interest, taxes, depreciation and amortization, each from continuing operations, plus restricted stock compensation expense, and is reconciled to its nearest comparable GAAP financial measure. EBITDA from continuing operations excluding terminated operations, is defined as EBITDA, excluding terminated San Antonio and certain Mid-Atlantic operations. EBITDA and EBITDA from continuing operations excluding terminated operations are non-GAAP financial measures used as analytical indicators by Radiologix management and the healthcare industry to assess business performance. They also serve as measures of leverage capacity and ability to service debt. EBITDA and EBITDA from continuing operations excluding terminated operations should not be considered measures of financial performance under GAAP, and the items excluded from EBITDA and EBITDA from continuing operations excluding terminated operations should not be considered in isolation or as an alternative to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As EBITDA and EBITDA from continuing operations excluding terminated operations are not measurements determined in accordance with GAAP and are therefore susceptible to varying methods of calculation, these metrics, as presented, may not be comparable to other similarly titled measures of other companies. Conference Call In connection with this press release, you are invited to listen to our conference call with Sami S. Abbasi, president and chief executive officer, and Michael N. Murdock, senior vice president and chief financial officer, that will be on Thursday, August 4, 2005, at 8:00 a.m., Central Time / 9:00 a.m. Eastern Time. You may access the call by dialing (800) 811-8824 and entering code 4846080. A replay of the call is available by dialing (888) 203-1112 and entering code 4846080. In addition, the conference call will be broadcast live over the Internet. You may listen to the call via the Internet by navigating to Radiologix's Web site (http://www.radiologix.com/ ) and from the "Investor Relations" drop-down menu, click on "Conference Calls & Presentations." If you are unable to participate during the live Webcast, the Second Quarter Results Conference Call will be archived on Radiologix's Web site (http://www.radiologix.com/ ). To access the replay, from the "Investor Relations" drop-down menu, click on "Conference Calls & Presentations." About Radiologix Radiologix (http://www.radiologix.com/ ) is a leading national provider of diagnostic imaging services, owning and operating multi-modality diagnostic imaging centers that use advanced imaging technologies such as positron emission tomography ("PET"), magnetic resonance imaging ("MRI"), computed tomography ("CT") and nuclear medicine, as well as x-ray, general radiography, mammography, ultrasound and fluoroscopy. The diagnostic images created, and the radiology reports based on these images, enable more accurate diagnosis and more efficient management of illness for ordering physicians. Radiologix owned or operated 72 diagnostic imaging centers located in 8 states as of June 30, 2005. Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements include words such as "may," "will," "would," "could," "likely," "estimate," "intend," "plan," "continue," "believe," "expect" or "anticipate" and other similar words, and include all discussions about our acquisition and development plans. We do not guarantee that the events described in this press release will occur as described, or that any positive trends noted in this press release will continue. These forward-looking statements generally relate to our plans, objectives and expectations for future operations and are based upon management's reasonable estimates of future results or trends. Although we believe that our plans and objectives reflected in, or suggested by, such forward-looking statements are reasonable, we may not achieve such plans or objectives. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this press release. You should read this press release completely and with the understanding that actual future results may be materially different from what we expect. We will not update forward-looking statements even though our situation may change in the future. Specific factors that might cause actual results to differ from our expectations include, but are not limited to: * economic, demographic, business and other conditions in our markets; * the highly competitive nature of the healthcare business; * changes in patient referral patterns; * changes in the rates or methods of third-party reimbursement for diagnostic imaging services; * changes in our contracts with radiology practice groups; * changes in the number of radiologists operating in our contracted radiology practice groups; * the ability to recruit and retain technologists; * the availability of additional capital to fund capital expenditure requirements; * lawsuits against Radiologix and our contracted radiology practice groups; * changes in operating margins, particularly changes due to our managed care contracts and capitated fee arrangements; * failure by Radiologix to comply with state and federal anti-kickback and anti-self referral laws or any other applicable healthcare regulations; * changes in business strategy and development plans; * changes in federal, state or local regulations affecting the healthcare industry; * our indebtedness, debt service requirements and liquidity constraints; * risks related to our Senior Notes and healthcare securities generally; * interruption of operations due to severe weather or other extraordinary events; and * charges for unusual or infrequent (non-recurring) matters. A more comprehensive list of such factors is set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2004, and our other filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which such statement is made. The information in this press release is as of August 4, 2005. Radiologix undertakes no obligation to update any forward-looking statement or statements to reflect new events or circumstances or future developments. Radiologix, Inc. Consolidated Balance Sheets (In thousands) June 30, December 31, 2005 2004 ASSETS (Unaudited) CURRENT ASSETS: Cash and cash equivalents $42,645 $34,084 Restricted cash 5,594 5,539 Accounts receivable, net of allowances 42,086 44,197 Due from affiliates 2,548 2,029 Federal and state income tax receivables 6,983 3,905 Assets held for sale --- 305 Other current assets 4,727 6,996 Total current assets 104,583 97,055 Property and equipment, net 60,365 58,627 Investments in joint ventures 9,247 8,137 Goodwill 2,241 2,241 Intangible assets, net 69,148 71,200 Deferred financing costs, net 5,766 6,591 Deferred income taxes 3,639 8,892 Other assets 1,275 1,328 Total assets $256,264 $254,071 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and other accrued expenses $7,440 $11,342 Accrued physician retention 8,155 8,384 Accrued salaries and benefits 10,535 7,339 Deferred income taxes 3,649 3,202 Accrued interest 687 708 Current portion of capital lease obligations 30 48 Current portion of long-term debt --- 109 Other current liabilities 644 536 Total current liabilities 31,140 31,668 Long-term debt, net of current portion 158,270 158,270 Convertible debt 11,980 11,980 Capital lease obligations, net of current portion 83 92 Deferred revenue 6,699 6,903 Other liabilities 1,281 1,000 Total liabilities 209,453 209,913 Commitments and contingencies Minority interests in consolidated subsidiaries 1,545 1,242 STOCKHOLDERS' EQUITY: Common stock 2 2 Treasury stock (180) (180) Additional paid-in capital 15,393 14,210 Retained earnings 30,051 28,884 Total stockholders' equity 45,266 42,916 Total liabilities and stockholders' equity $256,264 $254,071 Radiologix, Inc. Consolidated Statements of Operations (In thousands, except per share data) For the Three Months For the Six Months Ended June 30, Ended June 30, 2005 2004 2005 2004 Service fee revenue $64,311 $66,211 $127,062 $132,253 Costs of operations: Cost of services 40,629 39,306 80,449 79,583 Equipment leases 3,231 4,868 6,037 9,391 Provision for doubtful accounts 4,659 5,364 9,126 10,856 Depreciation and amortization 6,051 5,881 11,889 12,035 Gross profit 9,741 10,792 19,561 20,388 Corporate general and administrative 4,985 4,707 9,333 8,498 Impairment of goodwill, intangible and long-lived assets --- 5,752 --- 5,752 Gain on sale of operations --- (4,669) --- (4,669) Interest expense, net, including amortization of deferred financing costs 4,565 4,666 9,241 9,412 Income before equity in earnings of unconsolidated affiliates, Minority interests in consolidated subsidiaries, income taxes and discontinued operations 191 336 987 1,395 Equity in earnings of investments 1,039 758 1,661 1,354 Minority interests in income of consolidated subsidiaries (154) (189) (303) (444) INCOME BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS 1,076 905 2,345 2,305 Income tax expense 447 82 929 642 INCOME FROM CONTINUING OPERATIONS 629 823 1,416 1,663 Discontinued Operations: Income (loss) from discontinued operations before income taxes 30 (4,887) (404) (10,799) Income tax expense (benefit) 10 (1,955) (155) (4,320) Income (loss) from discontinued operations 20 (2,932) (249) (6,479) NET INCOME (LOSS) $649 $(2,109) $1,167 $(4,816) INCOME (LOSS) PER COMMON SHARE Income from continuing operations-basic $0.03 $0.04 $0.06 $0.08 Income (loss) from discontinued operations-basic --- (0.14) (0.01) (0.30) Net income (loss)-basic $0.03 $(0.10) $0.05 $(0.22) Income from continuing operations-diluted $0.03 $0.04 $0.06 $0.07 Income (loss) from discontinued operations-diluted --- (0.13) (0.01) (0.29) Net income (loss)-diluted $0.03 $(0.09) $0.05 $(0.22) WEIGHTED AVERAGE SHARES OUTSTANDING Basic 22,339,815 21,769,804 22,128,425 21,767,894 Diluted 22,572,909 22,369,560 22,625,931 22,328,560 Radiologix, Inc. Reconciliation of Non-GAAP Financial Information (In thousands) Reconciliation of Income from Continuing Operations to EBITDA For the Three Months For the Six Months Ended June 30, Ended June 30, 2005 2004 2005 2004 GAAP: Income from continuing operations $629 823 $1,416 1,663 Add: Income tax expense 447 82 929 642 Add: Interest expense, net 4,565 4,666 9,241 9,412 Add: Depreciation and amortization 6,051 5,881 11,889 12,035 Add: Impairment of goodwill, intangible, and long-lived assets --- 5,752 --- 5,752 Add: Gain on sale of operations --- (4,669) --- (4,669) Add: Restricted stock compensation expense 112 --- 213 --- EBITDA $11,804 $12,535 $23,688 $24,835 Radiologix, Inc. Reconciliation of Non-GAAP Financial Information, Excluding Terminated Operations (In thousands) Reconciliation of Income from Continuing Operations to EBITDA from Continuing Operations Excluding Terminated Operations For the Three Months For the Six Months Ended June 30, Ended June 30, 2005 2004 2005 2004 Income (loss) from continuing operations excluding terminated operations $672 $(3,021) $1,254 $(3,029) Add: Income tax expense (benefit) 466 (1,924) 822 (1,841) Add: Interest expense, net 4,565 4,620 9,241 9,262 Add: Depreciation and amortization 6,051 5,687 11,888 11,411 Add: Restricted stock compensation expense 112 --- 213 --- Add: Impairment of goodwill, intangible, and long-lived assets --- 5,752 --- 5,752 EBITDA from continuing operations excluding terminated operations $11,866 $11,114 $23,418 $21,555 Radiologix, Inc. Reconciliation of Financial Information, Excluding Terminated Operations (In thousands) For the Three Months Ended June 30, 2005 Radiologix Excluding Terminated Terminated Radiologix Operations Operations Service fee revenue $64,311 $39 $64,272 Costs of operations: Cost of services 40,629 84 40,545 Equipment leases 3,231 18 3,213 Provision for doubtful accounts 4,659 (1) 4,660 Depreciation and amortization 6,051 --- 6,051 Gross profit 9,741 (62) 9,803 Corporate general and administrative 4,985 --- 4,985 Interest expense, net, including amortization of deferred financing costs 4,565 --- 4,565 Income (loss) before equity in earnings of unconsolidated affiliates, minority interests in consolidated subsidiaries, income taxes and discontinued operations 191 (62) 253 Equity in earnings of unconsolidated affiliates 1,039 --- 1,039 Minority interests in income of consolidated subsidiaries (154) --- (154) INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS 1,076 (62) 1,138 Income tax expense (benefit) 447 (19) 466 INCOME (LOSS) FROM CONTINUING OPERATIONS $629 $(43) $672 Radiologix, Inc. Reconciliation of Financial Information, Excluding Terminated Operations (In thousands) For the Three Months Ended June 30, 2004 Radiologix Excluding Terminated Terminated Radiologix Operations Operations Service fee revenue $66,211 $3,974 $62,237 Costs of operations: Cost of services 39,306 1,784 37,522 Equipment leases 4,868 113 4,755 Provision for doubtful accounts 5,364 636 4,728 Depreciation and amortization 5,881 194 5,687 Gross profit 10,792 1,247 9,545 Corporate general and administrative 4,707 --- 4,707 Impairment of goodwill, intangible and long-lived assets 5,752 --- 5,752 Gain on sale of operations (4,669) (4,669) --- Interest expense, net, including amortization of deferred financing costs 4,666 46 4,620 Income (loss) before equity in earnings of unconsolidated affiliates, minority interests in consolidated subsidiaries, income taxes and discontinued operations 336 5,870 (5,534) Equity in earnings of unconsolidated affiliates 758 7 751 Minority interests in income of consolidated subsidiaries (189) (27) (162) INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS 905 5,850 (4,945) Income tax expense (benefit) 82 2,006 (1,924) INCOME (LOSS) FROM CONTINUING OPERATIONS $823 $3,844 $(3,021) Radiologix, Inc. Reconciliation of Financial Information, Excluding Terminated Operations (In thousands) For the Six Months Ended June 30, 2005 Radiologix Excluding Terminated Terminated Radiologix Operations Operations Service fee revenue $127,062 $969 $126,093 Costs of operations: Cost of services 80,449 438 80,011 Equipment leases 6,037 18 6,019 Provision for doubtful accounts 9,126 243 8,883 Depreciation and amortization 11,889 1 11,888 Gross profit 19,561 269 19,292 Corporate general and administrative 9,333 --- 9,333 Interest expense, net, including amortization of deferred financing costs 9,241 --- 9,241 Income before equity in earnings of unconsolidated affiliates, minority interests in consolidated subsidiaries, income taxes and discontinued operations 987 269 718 Equity in earnings of unconsolidated affiliates 1,661 --- 1,661 Minority interests in income of consolidated subsidiaries (303) --- (303) INCOME BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS 2,345 269 2,076 Income tax expense 929 107 822 INCOME FROM CONTINUING OPERATIONS $1,416 $162 $1,254 Radiologix, Inc. Reconciliation of Financial Information, Excluding Terminated Operations (In thousands) For the Six Months Ended June 30, 2004 Radiologix Excluding Terminated Terminated Radiologix Operations Operations Service fee revenue $132,253 $9,165 $123,088 Costs of operations: Cost of services 79,583 4,415 75,168 Equipment leases 9,391 117 9,274 Provision for doubtful accounts 10,856 1,339 9,517 Depreciation and amortization 12,035 624 11,411 Gross profit 20,388 2,670 17,718 Corporate general and administrative 8,498 --- 8,498 Impairment of goodwill, intangible and long-lived assets 5,752 --- 5,752 Gain on sale of operations (4,669) (4,669) --- Interest expense, net, including amortization of deferred financing costs 9,412 150 9,262 Income (loss) before equity in earnings of unconsolidated affiliates, minority interests in consolidated subsidiaries, income taxes and discontinued operations 1,395 7,189 (5,794) Equity in earnings of unconsolidated affiliates 1,354 114 1,240 Minority interests in income of consolidated subsidiaries (444) (128) (316) INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS 2,305 7,175 (4,870) Income tax expense (benefit) 642 2,483 (1,841) INCOME (LOSS) FROM CONTINUING OPERATIONS $1,663 $4,692 $(3,029) http://www.newscom.com/cgi-bin/prnh/19991026/RLGXLOGO http://photoarchive.ap.org/ DATASOURCE: Radiologix, Inc. CONTACT: Paul R. Streiber, Investor Relations of Radiologix, Inc., +1-214-303-2702, or Web site: http://www.radiologix.com/

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