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Radiation Therapy Services Reports First Quarter 2006 Financial Results

Posted on: Wednesday, 3 May 2006, 18:00 CDT

FORT MYERS, Fla., May 3 /PRNewswire-FirstCall/ -- Radiation Therapy Services, Inc. , a provider of radiation therapy services to cancer patients, today announced financial results for the first quarter ended March 31, 2006 and increased its 2006 financial guidance.

Total revenue for the first quarter was $73.9 million, an increase of 41.1% from $52.4 million in the same quarter of 2005, with 21.2% of the increase provided by new practices, or practices operated by Radiation Therapy for less than twelve months. Net patient service revenue, or revenue generated from services where the Company bills patients directly, principally at freestanding treatment centers, was $71.2 million. Other revenue, or revenue generated principally from services where Radiation Therapy bills the hospital for services provided, was $2.7 million. Same practice total revenues increased by 19.9% as compared to the first quarter of 2005.

Net income for the first quarter 2006 increased $2.6 million, or 40.6%, to $8.9 million, or $0.37 per diluted share, from $6.3 million, or $0.27 per diluted share, for the first quarter of 2005.

Revenue per treatment on a same practice basis at the Company's freestanding centers increased 15.2%, reflecting a favorable development in the use of advanced technologies over the same period 2005. For the first quarter 2006, the Company reported an average of 1,491 total treatments per day at its 57 freestanding centers, a 24.4% increase from the same period in 2005. Same practice treatments per day grew 6.2% over the first quarter 2005.

In January of 2006, the Company acquired a single radiation therapy treatment center in Opp, Alabama for approximately $1.8 million. The center became the Company's 69th treatment center in operation and the second center in the state, adding to the Company's existing networks in the Northwestern Florida -- Southeastern Alabama local markets.

In May 2006, the Company entered the Los Angeles local market with the acquisition of a single radiation therapy treatment center in Santa Monica, California. The acquisition represents the Company's entrance into its second local market in Southern California. The facility currently has an Intensity Modulated Radiation Therapy (IMRT) program and other advanced technologies. In conjunction with the acquisition, Dr. Michael Steinberg, Healthcare Policy and Economics Council Chair, American Society of Therapeutic Radiology and Oncology (ASTRO), joined the Company as Senior Vice President.

Dr. Daniel Dosoretz, President and Chief Executive Officer, said, "Our execution in the first quarter of 2006 was solid, producing robust growth in revenues and earnings. We were particularly pleased with our achievement of very strong growth in same practice treatments per day. We continue deploying IGRT, supplementing the continued utilization of IMRT, adding high dose rate brachytherapy, extracranial radiosurgery and other advanced services. The expansion of IGRT capabilities across additional facilities should continue to be a source of revenue growth. As it relates to growth through acquisitions, we entered the Los Angeles, CA market with the acquisition of a Santa Monica facility and strengthened our presence in Southeast Alabama with the acquisition of a facility in Opp, which will be technologically improved."

Radiation Therapy generated $10.9 million in net cash from operations for the three months ended March 31, 2006, compared to $11.3 million in the same period of 2005. The Company's days sales outstanding for the first quarter 2006 were 56 days, compared to 48 days for the first quarter 2005. Total capital expenditures, including capital lease obligations, for the first quarter 2006 were $13.3 million, compared to $4.6 million for the first quarter 2005.

Guidance

Based on its current expectations, the Company is increasing guidance for the full year 2006. The Company now expects revenues to be in the range of $267 million to $284 million, with diluted earnings per share in the range of $1.27 to $1.31. For the second quarter of 2006, the Company expects revenues to be in the range of $65 million to $70 million, with diluted earnings per share in the range of $0.34 per share and $0.36 per share. These projections are estimates only and actual performance could differ.

Conference Call

Management will host a conference call tomorrow at 10:00 a.m. EDT to discuss financial results, guidance and other developments and business plans. A live Web cast of the conference call will be available online on the Company's corporate Web site at http://www.rtsx.com/. The dial-in numbers are (877) 407-0784 for domestic callers, and (201) 689-8560 for international. After the live Web cast, the call will remain available on Radiation Therapy's Web site until June 2, 2006. In addition, a telephonic replay of the call will be available until May 18, 2006. The replay dial-in numbers are (877) 660-6853 for domestic callers and (201) 612-7415 for international callers. Please use account number 3055 and conference ID number 198672.

About Radiation Therapy Services

Radiation Therapy Services, Inc., which operates radiation treatment centers primarily under the name 21st Century Oncology, is a provider of radiation therapy services to cancer patients. The Company's 70 treatment centers are clustered into 23 local markets in 14 states, including Alabama, Arizona, California, Delaware, Florida, Kentucky, Maryland, Massachusetts, Nevada, New Jersey, New York, North Carolina, Rhode Island and West Virginia. The Company is headquartered in Fort Myers, Florida. More information about the Company can be found at its Web site http://www.rtsx.com/. RTSXG

This release may contain forward-looking statements about the Company's future plans, expectations and objectives. Words such as "may,""will,""expect,""intend,""anticipate,""plan,""believe,""seek,""could" and "estimate" and variations of these words and similar expressions are intended to identify forward-looking statements. These forward-looking statements are not historical facts and are subject to risks and uncertainties that could cause the actual results to differ materially from those projected in these forward-looking statements including, actual 2006 financial performance and actual opening of new centers contemplated in a timely and cost effective basis, and those risk factors described in the "Risk Factors" section and other information in the Company's annual report on Form 10-K, as well as the Company's other filings with the Securities and Exchange Commission which are available on the SEC's website at http://www.sec.gov/. Readers of this release are cautioned not to place undue reliance on forward-looking statements. The Company undertakes no obligation to publicly update or revise the forward- looking statements contained herein to reflect changed events or circumstances after the date of this release.

Contacts: Dave Koeninger Chief Financial Officer Radiation Therapy Services, Inc. 239-931-7282 dkoeninger@rtsx.com Investors: Carol Ruth/Nick Laudico The Ruth Group 646-536-7004/7030 cruth@theruthgroup.com nlaudico@theruthgroup.com Media: Jason Rando The Ruth Group 646-536-7025 jrando@theruthgroup.com 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, 2006 2005 Net patient service revenue $71,217 $50,105 Other revenue 2,724 2,315 Total revenues 73,941 52,420 Salaries and benefits 35,943 25,668 Medical supplies 2,186 1,459 Facility rent expense 2,254 1,542 Other operating expenses 3,011 2,082 General and administrative expenses 7,211 5,879 Depreciation and amortization 3,710 2,105 Provision for doubtful accounts 2,522 1,552 Interest expense, net 2,165 922 Impairment loss - 1,226 Total expenses 59,002 42,435 Income before minority interests 14,939 9,985 Minority interests in net (earnings) losses of consolidated entities (515) 162 Income before income taxes 14,424 10,147 Income tax expense 5,568 3,850 Net income 8,856 6,297 Other comprehensive income: Unrealized gain (loss) on derivative interest rate swap agreement, net of tax 114 (9) Comprehensive income $8,970 $6,288 Net income per common share outstanding - basic $0.39 $0.28 Net income per common share outstanding - diluted $0.37 $0.27 Weighted average shares outstanding: Basic 22,960 22,602 Diluted 23,668 23,366 RADIATION THERAPY SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) March 31, December 31, 2006 2005 (unaudited) (a) ASSETS Current assets: Cash and cash equivalents $18,425 $8,980 Marketable securities, at market 5,450 5,450 Accounts receivable, net 49,834 40,301 Income taxes receivable - 2,560 Prepaid expenses 3,448 3,153 Current portion of lease receivable 605 647 Inventories 1,337 1,280 Deferred income taxes 2,635 2,144 Other 812 1,200 Total current assets 82,546 65,715 Lease receivable, less current portion 451 581 Equity investments in joint ventures 821 803 Property and equipment, net 121,682 113,397 Goodwill 67,803 66,537 Intangible assets, net 6,612 6,774 Other assets 11,445 9,538 Total assets $291,360 $263,345 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $6,891 $5,676 Accrued expenses 13,627 11,434 Income taxes currently payable 1,126 - Current portion of long-term debt 7,938 6,506 Total current liabilities 29,582 23,616 Long-term debt, less current portion 123,479 116,957 Other long-term liabilities 2,356 2,284 Deferred income taxes 19,427 18,489 Minority interest in consolidated entities 7,069 6,616 Total liabilities 181,913 167,962 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, 23,146 and 22,831 shares issued and outstanding at March 31, 2006 and December 31, 2005, respectively 2 2 Additional paid-in capital 77,560 72,730 Unearned compensation on nonvested stock - (241) Retained earnings 32,216 23,360 Notes receivable from shareholders (458) (481) Accumulated other comprehensive income, net of tax 127 13 Total shareholders' equity 109,447 95,383 Total liabilities and shareholders' equity $291,360 $263,345 (a) Derived from audited financial statements RADIATION THERAPY SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three months ended March 31, 2006 2005 Cash flows from operating activities Net Income $8,856 $6,297 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,318 1,970 Amortization 392 135 Deferred rent expense 74 33 Deferred income tax provision 368 (340) Stock based compensation 14 211 Tax benefit from stock option exercise (1,339) - Impairment loss - 1,226 Provision for doubtful accounts 2,522 1,552 Loss on the sale of property and equipment - 69 Minority Interests in net earnings (losses) of consolidated entities 515 (162) Write off of loan costs - 355 Equity interest in (net income) loss of joint ventures (18) 359 Changes in operating assets and liabilities: Accounts receivable, gross (12,055) (4,282) Inventories (57) (44) Prepaid expenses (91) 349 Accounts payable 1,215 (419) Accrued expenses 2,180 638 Income taxes currently payable 5,025 3,330 Net cash provided by operating activities 10,919 11,277 Cash flows from investing activities Purchase of property and equipment (5,397) (3,256) Acquisition of radiation centers (1,800) - Purchases of marketable securities, net - (1,150) Repayments from employees 26 206 Distribution received from joint venture - 185 Change in lease receivable 172 158 Change in other assets 477 36 Net cash used in investing activities (6,522) (3,821) Cash flows from financing activities Proceeds from issuance of debt 1,800 - Principal repayments of debt (1,710) (690) Proceeds from exercise of stock options 3,718 623 Tax benefit from stock option exercise 1,339 - Payments of notes receivable from shareholders 23 948 Minority interest in partnership distribution (62) - Payments of loan costs (60) (586) Net cash provided by financing activities 5,048 295 Net increase in cash and cash equivalents 9,445 7,751 Cash and cash equivalents, at beginning of period 8,980 5,019 Cash and cash equivalents, at end of period $18,425 $12,770 Supplemental disclosure of non-cash transactions Recorded capital lease obligations related to the acquisition of equipment $7,863 $1,352 RADIATION THERAPY SERVICES, INC. AND SUBSIDIARIES KEY OPERATING STATISTICS (unaudited) Three Months Ended March 31, % 2006 2005 Change Number of treatment days 64 64 Total treatments - freestanding centers 95,396 76,711 24.4% Treatments per day - freestanding centers 1,491 1,199 24.4% Percentage change in revenue per treatment - freestanding centers - same practice basis 15.2% 11.0% Percentage change in treatments per day - freestanding centers - same practice basis 6.2% 1.5% Local markets at period end 22 19 15.8% Treatment centers - freestanding 57 45 26.7% Treatment centers - hospital 12 10 20.0% 69 55 25.5% Days sales outstanding for the quarter 56 48 Percentage change in total revenues - same practice basis 19.9% 16.6%

Radiation Therapy Services, Inc.

CONTACT: Dave Koeninger, Chief Financial Officer of Radiation TherapyServices, Inc., +1-239-931-7282, dkoeninger@rtsx.com; or Investors, CarolRuth, +1-646-536-7004, cruth@theruthgroup.com, or Nick Laudico,+1-646-536-7030, nlaudico@theruthgroup.com, or Media, Jason Rando,+1-646-536-7025, jrando@theruthgroup.com, all of The Ruth Group

Web site: http://www.rtsx.com/

Source: PRNewswire-FirstCall

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