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 March 31, 2005.
| ¨ | 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 May 12, 2005, we had outstanding 22,718,274 shares of Common Stock, par value $0.0001 per share.
RADIATION THERAPY SERVICES, INC.
AND SUBSIDIARIES
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 March 31, |
||||||||
| (Restated) | ||||||||
| 2005 |
2004 |
|||||||
| Net patient service revenue |
$ | 49,592 | $ | 40,462 | ||||
| Other revenue |
2,828 | 2,486 | ||||||
| Total revenues |
52,420 | 42,948 | ||||||
| Salaries and benefits |
25,668 | 21,098 | ||||||
| Medical supplies |
1,459 | 883 | ||||||
| Facility rent expenses |
1,542 | 1,333 | ||||||
| Other operating expenses |
2,082 | 1,641 | ||||||
| General and administrative expenses |
5,879 | 4,297 | ||||||
| Depreciation and amortization |
2,105 | 1,541 | ||||||
| Provision for doubtful accounts |
1,552 | 1,361 | ||||||
| Interest expense, net |
922 | 595 | ||||||
| Impairment loss |
1,226 | — | ||||||
| Total expenses |
42,435 | 32,749 | ||||||
| Income before minority interests |
9,985 | 10,199 | ||||||
| Minority interests in net losses of consolidated entities |
162 | 9 | ||||||
| Income before income taxes |
10,147 | 10,208 | ||||||
| Income tax expense |
3,850 | — | ||||||
| Net income |
6,297 | 10,208 | ||||||
| Other comprehensive income: |
||||||||
| Unrealized loss on derivative interest rate swap agreement, net of tax |
(9 | ) | (10 | ) | ||||
| Comprehensive income |
$ | 6,288 | $ | 10,198 | ||||
| Net income per common share outstanding-basic |
$ | 0.28 | $ | 0.59 | ||||
| Net income per common share outstanding-diluted |
$ | 0.27 | $ | 0.55 | ||||
| Weighted average shares outstanding: |
||||||||
| Basic |
22,602 | 17,444 | ||||||
| Diluted |
23,366 | 18,526 | ||||||
| Pro forma income data: |
||||||||
| Income before income taxes, as reported |
$ | 10,208 | ||||||
| Pro forma income taxes |
4,083 | |||||||
| Pro forma net income |
$ | 6,125 | ||||||
| Pro forma net income per common share outstanding – basic |
$ | 0.35 | ||||||
| Pro forma net income per common share outstanding - diluted |
$ | 0.33 | ||||||
See accompanying notes.
3
RADIATION THERAPY SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| March 31, 2005 |
December 31, 2004 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 12,770 | $ | 5,019 | ||||
| Marketable securities, at market |
3,550 | 2,400 | ||||||
| Accounts receivable, net |
27,898 | 25,834 | ||||||
| Income taxes receivable |
— | 426 | ||||||
| Prepaid expenses |
2,533 | 2,882 | ||||||
| Current portion of lease receivable |
668 | 653 | ||||||
| Inventories |
1,109 | 1,065 | ||||||
| Other |
827 | 680 | ||||||
| Total current assets |
49,355 | 38,959 | ||||||
| Lease receivable, less current portion |
1,057 | 1,230 | ||||||
| Equity investments in joint ventures |
878 | 1,422 | ||||||
| Property and equipment, net |
83,891 | 83,000 | ||||||
| Goodwill, net |
35,442 | 35,442 | ||||||
| Intangible assets, net |
1,193 | 1,328 | ||||||
| Other assets |
7,146 | 6,797 | ||||||
| Total assets |
$ | 178,962 | $ | 168,178 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 2,536 | $ | 2,955 | ||||
| Accrued expenses |
10,129 | 9,482 | ||||||
| Income taxes payable |
2,904 | — | ||||||
| Deferred income taxes |
1,389 | 1,729 | ||||||
| Current portion of long-term debt |
9,893 | 9,620 | ||||||
| Total current liabilities |
26,851 | 23,786 | ||||||
| Long-term debt, less current portion |
56,922 | 56,483 | ||||||
| Other long-term liabilities |
1,987 | 2,005 | ||||||
| Deferred income taxes |
15,479 | 15,479 | ||||||
| Minority interest in consolidated entities |
3,332 | 4,104 | ||||||
| Total liabilities |
104,571 | 101,857 | ||||||
| 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, 22,718 and 22,489 shares issued and outstanding at March 31, 2005 and December 31, 2004, respectively |
2 | 2 | ||||||
| Additional paid-in capital |
70,520 | 69,687 | ||||||
| Retained earnings (deficit) |
4,688 | (1,610 | ) | |||||
| Notes receivable from shareholders |
(819 | ) | (1,767 | ) | ||||
| Accumulated other comprehensive loss, net of tax |
— | 9 | ||||||
| Total shareholders’ equity |
74,391 | 66,321 | ||||||
| Total liabilities and shareholders’ equity |
$ | 178,962 | $ | 168,178 | ||||
See accompanying notes.
4
RADIATION THERAPY SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three months ended March 31, |
||||||||
| 2005 |
2004 |
|||||||
| (Restated) | ||||||||
| Cash flows from operating activities |
||||||||
| Net income |
$ | 6,297 | $ | 10,208 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation |
1,970 | 1,499 | ||||||
| Amortization |
135 | 42 | ||||||
| Deferred rent expense |
33 | 37 | ||||||
| Deferred income tax provision |
(340 | ) | — | |||||
| Stock based compensation |
211 | — | ||||||
| Impairment loss |
1,226 | — | ||||||
| Provision for bad debts |
1,552 | 1,361 | ||||||
| Loss on the sale of property and equipment |
69 | — | ||||||
| Minority interests in net losses of consolidated entities |
(162 | ) | (9 | ) | ||||
| Write off of loan costs |
355 | 336 | ||||||
| Equity interest in net loss (income) of joint ventures |
359 | (66 | ) | |||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(4,282 | ) | (3,615 | ) | ||||
| Inventories |
(44 | ) | (177 | ) | ||||
| Prepaid expenses |
349 | 956 | ||||||
| Accounts payable |
(419 | ) | (340 | ) | ||||
| Accrued expenses |
638 | 441 | ||||||
| Income taxes currently payable |
3,330 | — | ||||||
| Net cash provided by operating activities |
11,277 | 10,673 | ||||||
| Cash flows from investing activities |
||||||||
| Purchases of property and equipment |
(3,256 | ) | (4,347 | ) | ||||
| Receipts of principal payments of notes receivable from shareholders |
— | 30 | ||||||
| Purchases of marketable securities |
(1,150 | ) | — | |||||
| Repayments from (loans to) employees |
206 | (23 | ) | |||||
| Distribution received from joint venture |
185 | — | ||||||
| Change in lease receivable |
158 | 144 | ||||||
| Change in other assets |
36 | 409 | ||||||
| Net cash used in investing activities |
(3,821 | ) | (3,787 | ) | ||||
| Cash flows from financing activities |
||||||||
| Proceeds from issuance of debt |
— | 41,000 | ||||||
| Principal repayments of debt |
(690 | ) | (3,159 | ) | ||||
| Proceeds from exercise of stock options |
623 | 1,756 | ||||||
| Payments of notes receivable from shareholders |
948 | 83 | ||||||
| Distributions to shareholders |
— | (3,182 | ) | |||||
| Payments of loan costs |
(586 | ) | (1,576 | ) | ||||
| Net cash provided by financing activities |
295 | 34,922 | ||||||
| Net increase i | ||||||||