SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the quarterly period ended September 30, 2004.
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the transition period from to .
Commission file number: 000-50802
RADIATION THERAPY SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Florida | 65-0768951 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
| 2234 Colonial Boulevard, Fort Myers, Florida | 33907 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(239) 931-7275
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of November 1, 2004, we had outstanding 22,448,314 shares of Common Stock, par value $0.0001 per share.
RADIATION THERAPY SERVICES, INC.
Form 10-Q
INDEX
2
FINANCIAL INFORMATION
RADIATION THERAPY SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(in thousands, except per share amounts)
(unaudited)
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||
| Net patient service revenue |
$ | 38,378 | $ | 29,914 | $ | 118,451 | $ | 96,460 | ||||||
| Other revenue |
2,296 | 2,110 | 7,305 | 7,142 | ||||||||||
| Total revenues |
40,674 | 32,024 | 125,756 | 103,602 | ||||||||||
| Salaries and benefits |
21,749 | 18,709 | 63,546 | 53,542 | ||||||||||
| Medical supplies |
808 | 488 | 2,560 | 1,628 | ||||||||||
| Facility rent expenses |
1,273 | 1,080 | 3,950 | 3,222 | ||||||||||
| Other operating expenses |
1,816 | 2,009 | 5,601 | 6,520 | ||||||||||
| General and administrative expenses |
6,296 | 3,785 | 14,513 | 11,389 | ||||||||||
| Depreciation and amortization |
1,675 | 1,243 | 4,797 | 3,652 | ||||||||||
| Provision for doubtful accounts |
1,427 | 811 | 4,180 | 2,474 | ||||||||||
| Interest expense, net |
787 | 467 | 2,641 | 1,509 | ||||||||||
| Total expenses |
35,831 | 28,592 | 101,788 | 83,936 | ||||||||||
| Income before minority interests |
4,843 | 3,432 | 23,968 | 19,666 | ||||||||||
| Minority interests in net losses (earnings) of consolidated entities |
20 | (2 | ) | 5 | 20 | |||||||||
| Income before income taxes |
4,863 | 3,430 | 23,973 | 19,686 | ||||||||||
| Income tax expense |
1,945 | — | 20,171 | — | ||||||||||
| Net income |
2,918 | 3,430 | 3,802 | 19,686 | ||||||||||
| Other comprehensive income: |
||||||||||||||
| Unrealized gain (loss) on derivative interest rate swap agreement |
1 | 15 | 37 | (60 | ) | |||||||||
| Comprehensive income |
$ | 2,919 | $ | 3,445 | $ | 3,839 | $ | 19,626 | ||||||
| Net income per common share outstanding-basic |
$ | 0.13 | $ | 0.20 | $ | 0.19 | $ | 1.16 | ||||||
| Net income per common share outstanding-diluted |
$ | 0.13 | $ | 0.19 | $ | 0.19 | $ | 1.06 | ||||||
| Weighted average shares outstanding: |
||||||||||||||
| Basic |
22,448 | 16,943 | 19,562 | 16,979 | ||||||||||
| Diluted |
23,044 | 18,438 | 20,360 | 18,491 | ||||||||||
| Pro forma income data: |
||||||||||||||
| Income before income taxes, as reported |
$ | 3,430 | $ | 23,973 | $ | 19,686 | ||||||||
| Pro forma income taxes |
1,372 | 9,589 | 7,874 | |||||||||||
| Pro forma net income |
$ | 2,058 | $ | 14,384 | $ | 11,812 | ||||||||
| Pro forma net income per common share outstanding – basic |
$ | 0.12 | $ | 0.74 | $ | 0.70 | ||||||||
| Pro forma net income per common share outstanding - diluted |
$ | 0.11 | $ | 0.71 | $ | 0.64 | ||||||||
See accompanying notes.
3
RADIATION THERAPY SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| September 30, 2004 |
December 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 6,453 | $ | 2,606 | ||||
| Accounts receivable, net |
24,893 | 22,816 | ||||||
| Prepaid expenses |
1,893 | 2,921 | ||||||
| Current portion of notes receivable from related parties |
— | 122 | ||||||
| Current portion of lease receivable |
728 | 597 | ||||||
| Inventories |
1,041 | 802 | ||||||
| Deferred income taxes |
4,097 | — | ||||||
| Other |
518 | 1,136 | ||||||
| Total current assets |
39,623 | 31,000 | ||||||
| Notes receivable from related parties, less current portion |
— | 540 | ||||||
| Lease receivable, less current portion |
1,399 | 1,883 | ||||||
| Equity investments in joint ventures |
1,264 | 1,229 | ||||||
| Property and equipment, net |
76,457 | 65,569 | ||||||
| Goodwill, net |
34,392 | 24,915 | ||||||
| Intangible assets, net |
1,126 | 718 | ||||||
| Other assets |
5,274 | 2,431 | ||||||
| Total assets |
$ | 159,535 | $ | 128,285 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 2,556 | $ | 3,464 | ||||
| Accrued expenses |
10,358 | 11,866 | ||||||
| Income taxes payable |
4,176 | — | ||||||
| Current portion of long-term debt |
9,062 | 8,065 | ||||||
| Total current liabilities |
26,152 | 23,395 | ||||||
| Long-term debt, less current portion |
49,541 | 51,746 | ||||||
| Other long-term liabilities |
710 | 610 | ||||||
| Deferred income taxes |
20,096 | — | ||||||
| Minority interest in consolidated entities |
1,556 | 1,561 | ||||||
| Total liabilities |
98,055 | 77,312 | ||||||
| Shareholders’ equity: |
||||||||
| Preferred stock, $0.0001 par value, 10,000 shares authorized, none issued or outstanding |
— | — | ||||||
| Common stock, $0.0001 par value, 75,000 shares authorized, 22,448 and 17,282 shares issued and outstanding at September 30, 2004 and December 31, 2003, respectively |
2 | 2 | ||||||
| Additional paid-in capital |
69,179 | 16,616 | ||||||
| Retained (deficit) earnings |
(5,602 | ) | 37,037 | |||||
| Notes receivable from shareholders |
(2,099 | ) | (2,645 | ) | ||||
| Accumulated other comprehensive loss, net of tax |
— | (37 | ) | |||||
| Total shareholders’ equity |
61,480 | 50,973 | ||||||
| Total liabilities and shareholders’ equity |
$ | 159,535 | $ | 128,285 | ||||
See accompanying notes.
4
RADIATION THERAPY SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Nine months ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities |
||||||||
| Net income |
$ | 3,802 | $ | 19,686 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation |
4,670 | 3,540 | ||||||
| Amortization |
127 | 112 | ||||||
| Write down of machine parts inventory |
1,223 | — | ||||||
| Deferred income tax provision |
15,999 | — | ||||||
| Stock based compensation |
104 | — | ||||||
| Provision for bad debts |
4,180 | 2,474 | ||||||
| Loss on the sale of property and equipment |
40 | 17 | ||||||
| Minority interests in net losses of consolidated entities |
(5 | ) | (20 | ) | ||||
| Write off of loan costs |
336 | — | ||||||
| Equity interest in net income of joint ventures |
(35 | ) | (46 | ) | ||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(6,257 | ) | (4,164 | ) | ||||
| Inventories |
(239 | ) | 108 | |||||
| Prepaid expenses |
1,028 | |||||||