Virtual Radiologic Corporation Reports Record Revenue and Adjusted EBITDA for the Third Quarter 2009 and Raises Guidance
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Third Quarter Revenue up 9 Percent to $31.6 Million and Adjusted EBITDA up 33 Percent to $8.7 Million
MINNEAPOLIS--(BUSINESS WIRE)-- Virtual Radiologic Corp. (NASDAQ: VRAD), a leading global provider of teleradiology services and technology solutions, today reported financial results for its third quarter ended September 30, 2009.
Third Quarter Highlights
-- Read volume up 17% to 702,000
-- Revenue up 9% to $31.6 million
-- Adjusted EBITDA(1) up 33% to $8.7 million and 27% of revenue
-- Adjusted net income(2) up 19% to $4.3 million; adjusted diluted earnings
per share(3) (EPS) up 24% to $0.26
-- GAAP operating income of $4.8 million; GAAP net income of $3.0 million;
GAAP diluted EPS of $0.19
-- Cash was $47.6 million; the Company has no debt
"We are pleased with our continued growth in revenue and profitability during the third quarter," said Rob Kill, Virtual Radiologic's president and chief executive officer. "These strong results and our continued ability to generate positive cash flow reflect the sound fundamentals of our business model and we believe we are well positioned for continued profitability in the quarters ahead."
Third Quarter Results
Total revenue increased 9% to $31.6 million for the quarter ended September 30, 2009, compared to $29.0 million for the quarter ended September 30, 2008. The increase in revenue over the third quarter of 2008 resulted primarily from an 18% increase in the number of hospitals and medical facilities served to 1,154 as of September 30, 2009, representing approximately 19% of all hospitals in the United States.
Adjusted EBITDA increased 33% to $8.7 million for the quarter ended September 30, 2009, compared to $6.5 million for the quarter ended September 30, 2008 and increased to 27% of revenue compared to 22% for the same periods, respectively.
Adjusted net income increased 19% to $4.3 million for the quarter ended September 30, 2009, compared to $3.6 million for the quarter ended September 30, 2008. This resulted in a 24% increase in adjusted diluted EPS to $0.26 for the quarter ended September 30, 2009, compared to $0.21 for the quarter ended September 30, 2008.
GAAP operating income was $4.8 million for the quarter ended September 30, 2009, compared to $5.2 million for the quarter ended September 30, 2008 and GAAP net income was $3.0 million for the quarter ended September 30, 2009, compared to $3.6 million for the quarter ended September 30, 2008, resulting in diluted earnings per share of $0.19 and $0.21, respectively.
2009 Guidance Update
The Company is providing the following updated guidance for the full year of 2009:
-- Revenue ranging from $118.0 million to $120.0 million, remaining the
same as the previous range
-- Adjusted EBITDA ranging from $26.0 million to $27.0 million, compared to
the previous range of $24.0 million to $25.0 million
-- Adjusted net income ranging from $11.5 million to $12.1 million,
compared to the previous range of $10.3 million to $11.0 million
-- Adjusted diluted earnings per share ranging from $0.71 to $0.75,
compared to the previous range of $0.63 to $0.67
Conference Call Information
The Company will be hosting a conference call October 26, 2009 at 4:30 p.m. Eastern Time to discuss these results and provide a general business update. Participants can access the call by dialing (866) 543-6407 (within the United States and Canada), or (617) 213-8898 (outside the United States and Canada), using passcode 94069836. A live webcast of the conference call will be available on the Company's corporate web site at http://ir.virtualrad.com under "Events and Presentations." A replay of the call will be available from 7:30 p.m. Eastern Time on Monday, October 26, through midnight on Monday, November 9, 2009. Access the replay by dialing (888) 286-8010 or (617) 801-6888, using passcode 26441375.
About Virtual Radiologic
Virtual Radiologic Corporation (http://www.vrad.com) provides teleradiology and technology solutions to radiology practices and medical centers throughout the United States and internationally. Utilizing market-leading, proprietary workflow technology, Virtual Radiologic's affiliated radiologists will perform over 2.5 million preliminary and final read interpretations in 2009, for emergent and non-emergent needs, serving clients and facilities day and night, 365 days a year. Virtual Radiologic's board-certified affiliated radiologists are collectively licensed in all 50 states. Virtual Radiologic is Joint Commission-accredited and serves 658 clients supporting 1,154 medical facilities.
Safe Harbor for Forward-Looking and Cautionary Statements
Certain statements in this press release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, in particular, statements about our plans, objectives, strategies and prospects regarding, among other things, our business and results of operations. These statements can be identified by the use of words such as "will," "believe," "expect," and "anticipate" and similar terms or expressions of future expectation. These statements involve a number of risks, uncertainties and other factors that could cause actual results, performance or achievements of Virtual Radiologic Corporation to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. For examples of such risks and uncertainties, please see our Annual Report on form 10-K, as well as our other filings with the Securities and Exchange Commission. Virtual Radiologic Corporation undertakes no duty to update these forward-looking statements due to new information or as a result of future events.
Notes Regarding the Use of Non-GAAP Financial Measures
The Company records its results of operations in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In addition, the Company is providing certain supplemental non-GAAP information which the Company believes to be an important indicator of its financial performance. The Company uses the following non-GAAP financial measures:
-- Adjusted EBITDA - operating income excluding the effects of depreciation
and amortization, non-cash stock-based compensation expense and medical
malpractice loss reserves (other than specific case reserves);
-- Adjusted net income - net income excluding the effects of non-cash
stock-based compensation, net of tax, and medical malpractice loss
reserves (other than specific case reserves), net of tax; and
-- Adjusted diluted earnings per share - adjusted net income divided by
weighted average diluted shares outstanding.
The Company presents these non-GAAP financial measures because it believes that they are a useful indicator of its performance and on-going operations. The Company believes that these non-GAAP financial measures are useful to investors in part because such measures are frequently used by securities analysts to measure a company's operating performance without regard to certain items, such as income tax expense, interest expense and depreciation and amortization, which can vary substantially from company to company. The Company's management also uses these non-GAAP financial measures in order to review and assess its operating performance and its management team in connection with certain incentive programs and the preparation of its financial projections.
Adjusted EBITDA, adjusted net income and adjusted diluted earnings per share are not measurements of the Company's financial performance under GAAP and may not be comparable to the calculation of similarly titled measures reported by other companies. These measures should not be considered as an alternative to operating income, net income, earnings per share or any other performance measures derived in accordance with GAAP.
Adjusted EBITDA consists of operating income excluding the effects of
depreciation and amortization, non-cash stock-based compensation expense
(1) and medical malpractice loss reserves (other than specific case
reserves). See "Notes Regarding the Use of Non-GAAP Financial Measures"
and "Supplemental Information and Non-GAAP Reconciliations" for more
information related to adjusted EBITDA.
Adjusted net income consists of net income excluding the effects of
non-cash stock-based compensation, net of tax, and medical malpractice
(2) loss reserves (other than specific case reserves), net of tax. See "Notes
Regarding the Use of Non-GAAP Financial Measures" and "Supplemental
Information and Non-GAAP Reconciliations" for more information related to
adjusted net income.
Adjusted diluted earnings per share consists of adjusted net income
divided by weighted average diluted shares outstanding. See "Notes
(3) Regarding the Use of Non-GAAP Financial Measures" and "Supplemental
Information and Non-GAAP Reconciliations" for more information related to
adjusted diluted earnings per share.
VIRTUAL RADIOLOGIC CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
Three Months Ended September Nine Months Ended September 30,
30,
2009 2008 2009 2008
Revenue $ 31,638 $ 29,025 $ 90,791 $ 78,266
Operating costs
and expenses
Professional 15,293 12,899 43,455 35,176
services
Sales, general
and 9,679 9,600 31,271 27,667
administrative
Depreciation
and 1,819 1,286 4,992 3,357
amortization
Total operating
costs and 26,791 23,785 79,718 66,200
expenses
Operating 4,847 5,240 11,073 12,066
income
Other income
(expense)
Interest income 55 185 157 450
Interest (2 ) - (5 ) -
expense
Total other 53 185 152 450
income
Income before
income tax 4,900 5,425 11,225 12,516
expense
Income tax 1,874 1,859 4,417 4,942
expense
Net income 3,026 3,566 6,808 7,574
Non-controlling
interest (4 ) 2 - 10
(income)
expense
Net income
attributable to $ 3,030 $ 3,564 $ 6,808 $ 7,564
Virtual
Radiologic
Earnings per
common share
Basic $ 0.19 $ 0.21 $ 0.43 $ 0.45
Diluted $ 0.19 $ 0.21 $ 0.42 $ 0.44
Weighted
average common
shares
outstanding
Basic 15,849 16,733 15,861 16,689
Diluted 16,281 17,186 16,267 17,218
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(Unaudited)
(in thousands, except per share data)
Three Months Ended September Nine Months Ended September 30,
30,
2009 2008 2009 2008
Adjusted EBITDA $ 8,663 $ 6,524 $ 21,761 $ 15,566
(1)
Adjusted net $ 4,260 $ 3,565 $ 10,263 $ 7,661
income(1)
Adjusted
diluted $ 0.26 $ 0.21 $ 0.63 $ 0.44
earnings per
share(1)
(1) See "Notes Regarding the Use of Non-GAAP Financial Measures" and
"Supplemental Information and Non-GAAP Reconciliations" for more information
related to the non-GAAP financial measures presented in this table.
VIRTUAL RADIOLOGIC CORPORATION
SUPPLEMENTAL INFORMATION AND NON-GAAP RECONCILIATIONS
(Unaudited)
(in thousands, except per share data)
The following table reconciles the GAAP financial measure of Operating income to
the non-GAAP supplemental financial measure of Adjusted EBITDA which excludes
the effects of depreciation and amortization, non-cash stock-based compensation
expense and medical malpractice loss reserves (other than specific case
reserves). See "Notes Regarding the Use of Non-GAAP Financial Measures" for more
information related to the non-GAAP financial measures presented in this table.
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Reconciliation of Operating income
to Adjusted EBITDA:
Operating income $ 4,847 $ 5,240 $ 11,073 $ 12,066
Depreciation and amortization 1,819 1,286 4,992 3,357
Physician non-cash stock-based 369 (419 ) 653 (978 )
compensation
Employee non-cash stock-based 558 417 1,835 1,121
compensation
Medical malpractice loss reserves 1,070 - 3,208 -
(1)
Adjusted EBITDA $ 8,663 $ 6,524 $ 21,761 $ 15,566
(1) Medical malpractice loss reserves exclude specific case reserves.
The following table reconciles the GAAP financial measure of Net income to the
non-GAAP supplemental financial measure of Adjusted net income which excludes
non-cash stock-based compensation expense, net of tax, and medical malpractice
loss reserves (other than specific case reserves), net of tax, and presents the
related Adjusted diluted earnings per share. See "Notes Regarding the Use of
Non-GAAP Financial Measures" for more information related to the non-GAAP
financial measures presented in this table.
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Reconciliation of Net income to
Adjusted net income:
Net income $ 3,026 $ 3,566 $ 6,808 $ 7,574
Physician non-cash stock-based 228 (275 ) 396 (591 )
compensation, net of tax
Employee non-cash stock-based 345 274 1,113 678
compensation, net of tax
Medical malpractice loss reserves, 661 - 1,946 -
net of tax(1)
Adjusted net income $ 4,260 $ 3,565 $ 10,263 $ 7,661
Adjusted diluted earnings per $ 0.26 $ 0.21 $ 0.63 $ 0.44
share
Weighted average diluted shares 16,281 17,186 16,267 17,218
outstanding
(1) Medical malpractice loss reserves exclude specific case reserves.
VIRTUAL RADIOLOGIC CORPORATION
SUPPLEMENTAL INFORMATION AND NON-GAAP RECONCILIATIONS - CONTINUED
(Unaudited)
(in millions, except per share data)
The following tables reconcile the non-GAAP financial measures provided in
the Company's updated full year 2009 guidance to their closest comparable
GAAP financial measure. See "Notes Regarding the Use of Non-GAAP Financial
Measures" for more information related to the non-GAAP financial measures
presented in this table.
Year Ended
December 31,
2009
Net income $ 7.1 - $ 7.6
Income tax expense 4.7 - 5.2
Interest income, net (0.2 ) - (0.2 )
Depreciation and amortization 6.8 - 6.8
EBITDA 18.4 - 19.4
Physician non-cash stock-based compensation 0.9 - 0.9
Employee non-cash stock-based compensation 2.4 - 2.4
Medical malpractice loss reserves 4.3 - 4.3
Adjusted EBITDA $ 26.0 - $ 27.0
Net income $ 7.1 - $ 7.6
Physician non-cash stock-based compensation, net of tax 0.4 - 0.5
Employee non-cash stock-based compensation, net of tax 1.4 - 1.4
Medical malpractice loss reserves, net of tax 2.6 - 2.6
Adjusted net income $ 11.5 - $ 12.1
Diluted earnings per share $ 0.44 - $ 0.47
Physician non-cash stock-based compensation, net of tax 0.02 - 0.03
Employee non-cash stock-based compensation, net of tax 0.09 - 0.09
Medical malpractice loss reserves, net of tax 0.16 - 0.16
Adjusted diluted earnings per share $ 0.71 - $ 0.75
Diluted weighted average shares outstanding(1) 16.3
(1)Diluted weighted average shares outstanding for the full year 2009 are
calculated using the treasury stock method in accordance with GAAP based on
forecast assumptions made by the Company.
VIRTUAL RADIOLOGIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS AND SELECTED OPERATING DATA
(Unaudited)
As of As of
September 30, December 31,
2009 2008
(in thousands)
Cash and cash equivalents $ 47,558 $ 19,180
Short-term investments - 10,136
Accounts receivable, net 18,132 17,383
Other current assets 3,971 4,826
Non-current assets 20,780 19,476
Total assets $ 90,441 $ 71,001
Current liabilities $ 13,616 $ 11,087
Non-current liabilities 10,116 3,397
Total liabilities 23,732 14,484
Total stockholders' equity 66,709 56,517
Total liabilities and $ 90,441 $ 71,001
stockholders' equity
As of September 30,
2009 2008
Affiliated radiologists 140 134
providing services
Customers 658 601
Hospitals and other medical 1,154 978
facilities served
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Total reads 702,323 600,386 1,980,745 1,609,274
Percentage growth over prior 17 % 27 % 23 % 30 %
year period
Same site volume growth(1) 6 % 1 % 4 % 7 %
Percentage of read revenue 28 % 24 % 27 % 23 %
from final reads
(1) Same-site volume growth is calculated as the percentage increase in the
number of reads over the comparable prior year period generated by a facility
that has been under contract for at least three months at the beginning of the
measurement period and remains a customer throughout that period.
Source: Virtual Radiologic Corporation
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