EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

Investor Inquiries:

Andrea Clegg, NightHawk Radiology Holdings, Inc.

(866) 400-4295

(208) 292-2818

aclegg@nighthawkrad.net

NightHawk Radiology Holdings, Inc. Announces Fourth Quarter 2009 Results

SCOTTSDALE, Arizona, February 17, 2010 – NightHawk Radiology Holdings, Inc. (NASDAQ: NHWK), the leading provider of radiology solutions to radiology groups across the United States, today announced its financial results for fourth quarter 2009.

Fourth Quarter 2009 Highlights

 

   

Revenue was $37.9 million driven by total scan volume of 770,000 scans.

 

   

Total scan volume increased 7% from the year ago quarter.

 

   

Final scan volumes increased 43% from the year ago quarter.

 

   

Adjusted net income was $2.3 million, or $0.09 per diluted share. Adjusted net income excludes non-cash charges for stock compensation, amortization of intangible assets, losses on cancelled interest rate swap contracts, mark to market adjustments on interest rate hedge contracts, malpractice reserve adjustments and true-up of deferred taxes on a previous goodwill impairment charge.

 

   

GAAP net income was $0.7 million, or $0.03 per diluted share. A reconciliation of adjusted net income to GAAP net income is included in the tables attached to this press release.

 

   

Cash flow from operations was $6.8 million and free cash flow generated during the quarter was $4.5 million.

 

   

Cash and investments at December 31, 2009 totaled $32.3 million.

“We are pleased to report adjusted EPS of 9 cents, in the middle of our guidance range in our seasonally slowest quarter of the year. We also reported solid year over year growth in our total scan volumes and particularly our finals volumes. While the growth in our scan volumes is encouraging, we continue to focus on improving the efficiency and effectiveness of our company as we position ourselves to compete in our evolving marketplace,” said David Engert, the company’s president and chief executive officer.

First Quarter 2010 Outlook

The company expects to see typical seasonality in the first quarter of 2010. Volumes are expected to be essentially flat sequentially from the fourth quarter of 2009, but revenue and earnings are expected to be sequentially lower as a result of the impact of price declines. Specifically, revenue for the first quarter of 2010 is expected to be in the range of $35.5 to $37.5 million and adjusted EPS is expected to be in the range of 4 to 6 cents.

Forward Looking Statements

This press release contains statements that are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. These include statements regarding the company’s outlook on its scan volume, revenue and adjusted earnings per share for future periods. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made, including the risks associated with general economic conditions, competitive conditions in the radiology industry, and regulatory risks. Other factors that could cause operating and financial results to differ are described in the company’s periodic reports filed with the Securities and Exchange Commission (“SEC”). Other risks may be detailed from time to time in reports to be filed with the SEC. NightHawk does not undertake any obligation to publicly update its forward- looking statements based on events or circumstances after the date hereof.

Earnings Conference Call

The fourth quarter conference call will be held today, February 17, 2010 at 4:30 p.m. eastern time. A live webcast of the conference call, as well as a replay, will be available online on the company’s corporate website at http://www.nighthawkrad.net. Participants can also access the call by dialing (877)941-8609 or (480)629-9818 (for international callers). A replay of the call will be available approximately two hours after the conclusion of the call and will remain available until midnight eastern time on Friday, March 12, 2010. To access the replay, dial (800)406-7325 or (303)590-3030 (for international callers) and enter the conference ID number: 4207698.


About NightHawk

NightHawk Radiology (Nasdaq: NHWK) is leading the transformation of the practice of radiology by providing high-quality, cost-effective solutions to radiology groups throughout the United States. NightHawk provides the most complete suite of solutions, including professional services, business services, and its advanced, proprietary clinical workflow technology, all designed to increase efficiencies and improve the quality of patient care and the lives of physicians who provide it. NightHawk’s team of U.S. board-certified, state-licensed, and hospital-privileged physicians located in the United States, Australia, and Switzerland, provides services 24 hours a day, seven days a week, to approximately 26% of all hospitals in the United States. For more information, visit http://www.nighthawkrad.net.

Presentation of Non-GAAP Financial Information

The presentation of adjusted net income and adjusted earnings per diluted share are not measures of financial performance under GAAP and should not be considered a substitute for or superior to GAAP. Management believes these non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of our core results and provide consistency in financial reporting. Specifically, the company’s non-GAAP adjusted net income measure, and related adjusted earnings per diluted share, described in this release exclude (i) the non-cash charges related to our stock-based compensation, (ii) the non-cash expense associated with the amortization of intangibles associated with acquisitions, (iii) the non-cash expenses (or credits) associated with adjustments to our IBNR reserve (incurred but not reported medical liability reserves), (iv) the non-cash charges for goodwill impairment and related tax benefit, (v) the non-cash charge for the amortization of losses incurred on cancelled interest rate swap contracts, (vi) the non-cash gain (or loss) resulting from mark to market adjustments of our ineffective interest rate hedge contracts, and (vii) the non-cash charges and adjustments for restructuring activities, including severance. We exclude the non-cash charges related to our stock-based compensation due to the varying valuation methodologies, subjective assumptions and the variety of types of awards that companies can use when applying The Compensation Topic of the FASB Accounting Standards Codification (Topic 718) along with the fact that a substantial portion of our outstanding options and restricted stock units are held by our independent contractor physicians and require accounting treatment that differs from the accounting treatment for options and restricted stock units held by employees.

The company provides non-GAAP adjusted net income and related adjusted earnings per diluted share as financial measures because management believes these measures provide greater transparency with respect to information used by management in its financial and operational decision making and to enhance investors’ overall understanding of our current financial performance and our future prospects. For reconciliation of our non-GAAP financial measures to the most applicable GAAP financial measure, please refer to the information included in the attached tables of this press release and in the Investor Relations section of our corporate website.

“NHWKF”


NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (unaudited)

 

     December 31,
2009
    December 31,
2008
 
     (in thousands, except share data)  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 26,293      $ 47,160   

Marketable securities

     6,000        —     

Trade accounts receivable, net

     21,359        24,393   

Deferred income taxes

     910        855   

Prepaid expenses and other current assets

     4,702        6,231   
                

Total current assets

     59,264        78,639   

Property and equipment, net

     13,507        10,528   

Goodwill

     —          68,718   

Intangible assets, net

     72,550        79,616   

Deferred income taxes

     15,707        4,082   

Other assets, net

     4,646        3,566   
                

Total

   $ 165,674      $ 245,149   
                

LIABILITIES

    

Current liabilities:

    

Accounts payable

   $ 6,130      $ 6,327   

Accrued expenses and other liabilities

     3,473        3,617   

Accrued payroll and related benefits

     3,769        3,783   

Long-term debt, due within one year

     802        955   
                

Total current liabilities

     14,174        14,682   

Insurance reserve

     4,018        3,705   

Long-term debt

     77,404        93,145   

Other liabilities

     1,348        3,850   
                

Total liabilities

     96,944        115,382   
                

STOCKHOLDERS’ EQUITY

    

Common stock-150,000,000 shares authorized; $.001 par value; 23,558,890 and 27,590,774 shares issued and outstanding

     24        28   

Additional paid-in capital

     221,105        237,429   

Retained earnings (deficit)

     (151,659     (103,516

Accumulated other comprehensive loss

     (740     (4,174
                

Total stockholders’ equity

     68,730        129,767   
                

Total

   $ 165,674      $ 245,149   
                


NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 

     Three months ended
December 31,
    Twelve months ended
December 31,
 
     2009     2008     2009     2008  
     (in thousands, except per share data)     (in thousands, except per share data)  

Service revenue

   $ 37,944      $ 39,720      $ 162,536      $ 167,607   

Operating costs and expenses:

        

Professional services (includes non-cash compensation expense of $171, $162, $700 and $1,676)

     17,190        15,662        72,368        68,932   

Sales, general, and administrative (includes non-cash compensation expense of $26, $1,107, $3,290 and $6,654)

     14,838        15,709        60,845        65,683   

Depreciation and amortization

     2,789        2,776        11,009        11,362   

Goodwill impairment

     —          —          68,718        —     
                                

Total operating costs and expenses

     34,817        34,147        212,940        145,977   
                                

Operating income (loss)

     3,127        5,573        (50,404     21,630   

Other income (expense):

        

Interest expense

     (1,763     (2,042     (8,466     (8,508

Interest income

     29        170        164        1,380   

Other, net

     (3     95        (16     197   
                                

Total other income (expense)

     (1,737     (1,777     (8,318     (6,931
                                

Income (loss) before income taxes

     1,390        3,796        (58,722     14,699   

Income tax expense (benefit)

     734        1,139        (10,578     5,257   
                                

Net income (loss)

   $ 656      $ 2,657      $ (48,144   $ 9,442   
                                

Earnings (loss) per common share:

        

Basic

   $ 0.03      $ 0.09      $ (1.89   $ 0.32   

Diluted

   $ 0.03      $ 0.09      $ (1.89   $ 0.31   

Weighted averages of common shares outstanding:

        

Basic

     23,553,373        28,506,783        25,443,493        29,482,536   

Diluted

     24,574,278        29,516,571        25,443,493        30,561,942   


NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

 

     Twelve months ended
December 31,
 
     2009     2008  
     (in thousands)  

Cash flows from operating activities:

    

Net income (loss)

   $ (48,144   $ 9,442   

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation and amortization

     11,009        11,362   

Goodwill Impairment

     68,718        —     

Accretion of premiums on marketable securities

     (11     (21

Amortization of debt issuance costs and effect of interest rate swaps

     3,830        648   

Loss on disposal of fixed assets and other, net

     103        646   

Deferred income taxes

     (13,804     (1,210

Non-cash stock compensation expense

     3,990        8,330   

Excess Tax benefit from exercise of stock options

     (32     (234

Provision for doubtful accounts

     583        1,127   

Other, net

     —          —     

Changes in operating assets and liabilities (excluding effects of acquisitions):

    

Trade accounts receivable, net

     2,545        371   

Prepaid expenses and other assets

     1,389        (3,420

Accounts payable

     (454     527   

Accrued expenses and other liabilities

     (1,205     346   

Accrued payroll and related benefits

     (140     1,173   
                

Net cash provided by operating activities

     28,377        29,087   

Cash flows from investing activities:

    

Purchase of marketable securities

     (13,988     (26,390

Proceeds from maturities of marketable securities

     8,000        33,755   

Proceeds from sale of marketable securities

     —          23,303   

Purchase of property and equipment

     (6,699     (4,757

Cash paid for acquisitions

     —          (7,650
                

Net cash provided by (used in) investing activities

     (12,687     18,261   

Cash flows from financing activities:

    

Repayment of debt

     (15,894     (5,400

Settlement of interest rate swaps

     —          (5,331

Proceeds from exercise of stock options

     134        559   

Excess tax benefit from exercise of stock options

     32        234   

Purchase and retirement of common stock

     (20,342     (22,206

Debt amendment costs

     (434     —     

Cash exchange for stock options

     (53     —     
                

Net cash used in financing activities

     (36,557     (32,144
                

Net increase (decrease) in cash and cash equivalents

     (20,867     15,204   

Cash and cash equivalents—beginning of period

     47,160        31,956   
                

Cash and cash equivalents—end of period

   $ 26,293      $ 47,160   
                


NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME

 

     Three months ended  
     December 31, 2009     December 31, 2008  
     (in thousands, except share data)     (in thousands, except share data)  
     GAAP     Adjustments     As Adjusted     GAAP     Adjustments     As Adjusted  

Service revenue

   $ 37,944        —        $ 37,944      $ 39,720        —        $ 39,720   

Operating costs and expenses:

            

Professional services (1)

     17,190        44        17,234        15,662        170        15,832   

Sales, general, and administrative (2)

     14,838        (26     14,812        15,709        (1,107     14,602   

Depreciation and amortization (3)

     2,789        (1,728     1,061        2,776        (1,869     907   

Goodwill impairment

     —          —          —          —          —          —     
                                                

Total operating costs and expenses

     34,817        (1,710     33,107        34,147        (2,806     31,341   
                                                

Operating income

     3,127        1,710        4,837        5,573        2,806        8,379   

Other income (expense):

            

Interest expense (4)

     (1,763     471        (1,292     (2,042     —          (2,042

Interest income

     29        —          29        170        —          170   

Other, net

     (3     —          (3     95        —          95   
                                                

Total other income (expense)

     (1,737     471        (1,266     (1,777     —          (1,777
                                                

Income before income taxes

     1,390        2,181        3,571        3,796        2,806        6,602   

Income tax expense (5)

     734        560        1,294        1,139        1,397        2,536   
                                                

Net income

   $ 656      $ 1,621      $ 2,277      $ 2,657      $ 1,409      $ 4,066   
                                                

Earnings per share:

            

Basic

   $ 0.03        $ 0.10      $ 0.09        $ 0.14   

Diluted

   $ 0.03        $ 0.09      $ 0.09        $ 0.14   

Weighted average of shares outstanding:

            

Basic

     23,553,373          23,553,373        28,506,783          28,506,783   

Diluted

     24,574,278          24,574,278        29,516,571          29,516,571   

 

(1) Adjustments to the 2009 GAAP amounts represent $171 of non-cash stock compensation expense and a credit to expense of $215 associated with adjustments to our incurred but not reported medical liability reserves (“IBNR”). The 2008 adjustments to GAAP amounts represent $162 of non-cash stock compensation expense and a credit to expense of $332 associated with adjustments to our IBNR reserves.
(2) Adjustments to the 2009 GAAP amounts represent $26 of non-cash stock compensation expense. The 2008 adjustments to GAAP amounts represent $1,107 of non-cash stock compensation expense.
(3) Adjustments to 2009 and 2008 GAAP amounts represent non-cash expense associated with the amortization of intangibles associated with acquisitions.
(4) Adjustments to the 2009 GAAP amounts represent $670 of amortization of losses incurred on interest rate swap contracts canceled in 2008 and $199 gain resulting from mark to market adjustments of two ineffective interest rate hedge contracts.
(5) Represents the tax effect on the adjustments to GAAP. Additionally, in 2009, $284 of expense represents a true up of the tax benefit associated with the goodwill impairment to reflect a change in our effective annual tax rate, and in 2008 we adjusted out a tax credit of $358 from a change in tax methodology for prior periods.


NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME

 

     Twelve months ended  
     December 31, 2009     December 31, 2008  
     (in thousands, except share data)     (in thousands, except share data)  
     GAAP     Adjustments     As Adjusted     GAAP     Adjustments     As Adjusted  

Service revenue

   $ 162,536        —        $ 162,536      $ 167,607        —        $ 167,607   

Operating costs and expenses:

            

Professional services (1)

     72,368        (1,013     71,355        68,932        (2,345     66,587   

Sales, general, and administrative (2)

     60,845        (3,342     57,503        65,683        (7,832     57,851   

Depreciation and amortization (3)

     11,009        (7,066     3,943        11,362        (7,516     3,846   

Goodwill impairment

     68,718        (68,718     —          —          —          —     
                                                

Total operating costs and expenses

     212,940        (80,139     132,801        145,977        (17,693     128,284   
                                                

Operating income (loss)

     (50,404     80,139        29,735        21,630        17,693        39,323   

Other income (expense):

            

Interest expense (4)

     (8,466     3,022        (5,444     (8,508     —          (8,508

Interest income

     164        —          164        1,380        —          1,380   

Other, net

     (16     —          (16     197        —          197   
                                                

Total other income (expense)

     (8,318     3,022        (5,296     (6,931     —          (6,931
                                                

Income (loss) before income taxes

     (58,722     83,161        24,439        14,699        17,693        32,392   

Income tax expense (benefit) (5)

     (10,578     20,003        9,425        5,257        7,094        12,351   
                                                

Net income (loss)

   $ (48,144   $ 63,158      $ 15,014      $ 9,442      $ 10,599      $ 20,041   
                                                

Earnings (loss) per share:

            

Basic

   $ (1.89     $ 0.59      $ 0.32        $ 0.68   

Diluted

   $ (1.89     $ 0.58      $ 0.31        $ 0.66   

Weighted average of shares outstanding:

            

Basic

     25,443,493          25,443,493        29,482,536          29,482,536   

Diluted

     25,443,493          26,066,784        30,561,942          30,561,942   

 

(1) Adjustments to the 2009 GAAP amounts represent $700 of non-cash stock compensation expense and $313 of non-cash expense associated with adjustments to our incurred but not reported medical liability reserves (“IBNR”). The 2008 adjustments to GAAP amounts represent $1,676 of non-cash stock compensation expense and $669 of non-cash expense associated with adjustments to our IBNR reserves.
(2) Adjustments to the 2009 GAAP amounts represent $3,290 of non-cash stock compensation expense and $52 of restructuring charges and adjustments. The 2008 adjustments to GAAP amounts represent $6,654 of non-cash stock compensation expense, $703 of restructuring charges, $164 of employee severance expense and $311 of non-cash fixed asset charges associated with a restructuring event.
(3) Adjustments to the 2009 and 2008 GAAP amounts represent non-cash expense associated with the amortization of intangibles associated with acquisitions.
(4) Adjustments to the 2009 GAAP amounts represent $3,322 of amortization of losses incurred on interest rate swap contracts canceled in 2008 and $300 gain resulting from mark to market adjustments of two ineffective interest rate hedge contracts.
(5) Represents the tax effect on the adjustments to GAAP. Additionally, in 2008 we adjusted out a tax credit of $358 from a change in tax methodology for prior periods.


NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

HISTORICAL VOLUMES

 

               Growth Rates  

Quarter

   Year    Total Volumes    Sequential     Year over Year  

Q1

   2008    745,075    2   54

Q2

   2008    780,108    5   7

Q3

   2008    791,613    1   1

Q4

   2008    718,299    (9 )%    (2 )% 
                    

FY

   2008    3,035,095    11   11

Q1

   2009    722,321    1   (3 )% 

Q2

   2009    817,315    13   5

Q3

   2009    864,898    6   9

Q4

   2009    769,789    (11 )%    7
                    

FY

   2009    3,174,323    5   5