-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, W0pJkZpc1Imo6JjP5u9Tc1qBsR7s3rDPnpf1CFC1JbdAbfXGR0YrElIB6A4WRwnd ui1bCQ5lG9YoFBr0vbDB3w== 0000950116-02-000813.txt : 20020424 0000950116-02-000813.hdr.sgml : 20020424 ACCESSION NUMBER: 0000950116-02-000813 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20020423 ITEM INFORMATION: Other events FILED AS OF DATE: 20020424 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDQUIST INC CENTRAL INDEX KEY: 0000884497 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 222531298 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19941 FILM NUMBER: 02619248 BUSINESS ADDRESS: STREET 1: FIVE GREENTREE CENTRE STE 311 STREET 2: STATE HIGHWAY 73 N CITY: MARLTON STATE: NJ ZIP: 08053 BUSINESS PHONE: 8568108000 MAIL ADDRESS: STREET 1: 5 GREENTREE CENTRE SUITE 311 STREET 2: ATTN BRUCE VAN FOSSEN CITY: MARLTON STATE: NJ ZIP: 08053 8-K 1 eightk.txt 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): April 23, 2002 MedQuist Inc. ---------------------------------------------------- (Exact name of registrant as specified in its charter) New Jersey 0-19941 22-2531298 - ------------------ -------------- ---------- (State or other (Commission (I.R.S. Employer jurisdiction File Identification No.) of incorporation Number) or organization) Five Greentree Centre Suite 311 Marlton, NJ 08053 ------------------------------------------------- (address of principal executive offices) (Zip Code) Registrants's telephone number, including area code: (856) 810-8000 Item 5. Other Events. - ---------------------- Pursuant to Regulation FD Rules 100-103: Attached as Exhibit 5.1 is the script for the Registrant's first quarter 2002 investor conference call held on April 23, 2002 at 11:00 a.m. (ET). Attached as Exhibit 5.2 is the Registrant's earnings release for the first quarter ended March 31, 2002. Pursuant to Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934, attached as Exhibit 5.3 is a note concerning forward-looking statements and additional information regarding factors that could cause actual results to differ materially from those in such forward-looking statements. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MEDQUIST INC. Date: April 23, 2002 By: /s/Brian J. Kearns ------------------------------------------- Name: Brian J. Kearns Title: Senior Vice President, Treasurer and Chief Financial Officer EX-5 3 exh5-1.txt EX-5.1 Exhibit 5.1 MedQuist Inc. - 2002 First Quarter Conference Call: - --------------------------------------------------- Good morning everyone. I would like to take this opportunity to thank you for participating in our conference call. My name is David Cohen and I am the Chairman, President and Chief Executive Officer of the Company. Also on the call today are Brian Kearns, our Chief Financial Officer, and John Suender, our General Counsel. I first would like to make a brief opening statement and then open the call to your questions and comments. By now everyone should have received a copy of our earnings release or have had the opportunity to review the information distributed by the wire services. As indicated in our press release, MedQuist generated solid results during the first quarter of 2002, despite the additional technology development expense associated with our acquisition of Speech Machines and the reorganization efforts required for our integration of Lernout & Hauspie's medical transcription division. MedQuist delivered 20% year over year revenue growth and more than 21% operating income growth in the first quarter as a result of disciplined business practices. In November of last year, MedQuist acquired Lernout & Hauspie's medical transcription division and reported two months of L&H's operations in our fourth quarter results. This transaction depressed our fourth quarter margins since related operations were and still are roughly breakeven. Margins in the first quarter were also adversely impacted by the L&H acquisition, both compared to the same quarter last year and on a sequential basis, since the first quarter of 2002 includes L&H results for the entire three months. We are currently on track to fully integrate this acquisition over the next 18-24 months and bring L&H transcription operations up to MedQuist performance levels of high teens pretax margins. During the first quarter MedQuist acquired two small medical transcription operations in Canada. These small acquisitions should be viewed as confirmation that we are beginning to execute our long-term strategy of entering new markets with the goal of duplicating the successful business model we have enjoyed in the United States. In January, we increased our investment in A-Life Medical, a West Coast technology start-up company. We believe their Natural Language Processing technology will not only help our coding division, but will give us access to valuable healthcare data that will be important for improved patient care in the future. During the first quarter, for personal reasons, John Donohoe stepped down as President of MedQuist. John will continue as a MedQuist employee for the next two years working on special projects. We have divided certain responsibilities among the senior management team to allow our customers to continue to enjoy the high level of quality and service they expect from MedQuist. Investors should also continue to enjoy the highly recurring revenue and consistent cash flow you expect from MedQuist. As I re-assume the role of President, I personally guarantee you the senior management team has never been so strong. With MedQuist's significant history to serve as our foundation, we will not look back, but forward with excitement for what lies ahead, as we execute our strategy for growth. MedQuist continues to deliver on our strategic plan, which is positioning our company for profitable growth well into the future. We remain comfortable with our prior guidance of 15% year over year earnings growth. In conclusion, we believe the first quarter 2002 financial performance demonstrates that MedQuist continues to make progress on our long-term strategy for growth. Development of our new platform is on schedule and we have begun our first beta test for our automated coding process. MedQuist will continue to move forward in our strategic transition to a full service medical document management company, which we believe will result in profitable growth and increased shareholder value in future years. One last personal note - this is the most fun I've had in several years. Being back in operations has reenergized me. Our senior staff has stepped up and taken a negative situation and made it a positive one. And I'm thrilled by their reactions. I've read where a few of the analysts said let's wait and see about management changes. Well, I can confirm everyone is on board and the excitement about MedQuist's future has never been stronger. At this time I would like to turn it over to Brian Kearns for a review of our financial results. Thank you David and good morning everyone. For the first quarter: MedQuist generated revenue of $114.0 million and EBITDA of $25.3 million or 22.2% of revenue. Pro forma net income was $12.0 million or $0.32 per share on a diluted basis. Pro forma results for the prior year period, first quarter of 2001, exclude a $3.0 million pretax gain on the favorable settlement of a lawsuit and income of $600 thousand related to the reversal of a restructuring reserve. At March 31, 2002, MedQuist had $145 million in working capital including over $100 million in cash. Accounts receivable were $79.6 million and DSO decreased to 64 days, a decrease of one day from last quarter and the lowest level since 1998. The Company had less than $2 million of debt and shareholders equity was $378 million. At this time I will turn the presentation over to John Suender, MedQuist's General Counsel. During the conference call management will make forward-looking statements within the meaning of the safe-harbor provisions of the U.S. federal securities laws, such as market estimates, growth and expansion plans and opportunities, potential revenue and cost synergies, revenue and earnings projections, expected growth rates, and the benefits of new technologies. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from these forward-looking statements is set forth in our periodic reports filed with the SEC, including our Form 10-Q's and Form 10-K for the year ended December 31, 2001 and our form 8-K filed in relation to today's call. At this time we would like to open up the call to your questions. Please announce your name before asking your question. Thank you. EX-5 4 exh5-2.txt EX-5.2 Exhibit 5.2 - ----------- News Release NASDAQ: MEDQ FOR IMMEDIATE RELEASE MEDQUIST REPORTS FINANCIAL RESULTS FOR FIRST QUARTER 2002 MARLTON, NJ April 23, 2002 - MedQuist Inc. (NASDAQ:MEDQ) reported revenue of $114.0 million for the three months ended March 31, 2002. EBITDA for the three-month period ended March 31, 2002 was $25.3 million, or 22.2% of revenue, which represents a 16.8% increase versus Proforma EBITDA for the three-month period ended March 31, 2001. Net income was $12.0 million, or $0.32 per share on a diluted basis. Proforma results for the first quarter of 2001 exclude $3.0 million of income related to a favorable legal settlement and $600 thousand of income related to the adjustment of the restructuring reserves established in 1997 and 1998. At March 31, 2002, MedQuist had $100.8 million of cash and cash equivalents, $79.6 million in net accounts receivable and $145.0 million of working capital. David A. Cohen, Chairman and Chief Executive Officer, stated, "MedQuist generated solid results during the first quarter of 2002 in spite of increased expenses related to development of our digital platform and the integration of the L&H transcription business. MedQuist remains an extremely strong company, with a blue chip client base, high recurring revenue, strong earnings and consistent cash flow. Management is enthusiastic about leveraging recent acquisitions and technology enhancements into profitable growth in medical document management services." During the three months ended March 31, 2002, MedQuist completed two strategic acquisitions that expanded its medical transcription business into Canada. MedQuist is the largest electronic medical transcription service company in the United States. Other than historical information set forth herein, this press release contains forward-looking statements, which involve risks and uncertainties. The Company's actual results may differ materially from those anticipated or implied in any such forward-looking statements as a result of various risks, including, without limitation, rapidly changing technology; inability to manage and maintain growth; inability to penetrate new markets; inability to make and successfully integrate acquisitions and transition our business strategy; decreased demand for existing products; lack of a market for new products; and failure to successfully negotiate agreements to take advantage of the opportunities facing MedQuist to broaden its service offering. Additional risks associated with the Company's business can be found in its December 31, 2001 Annual Report on Form 10-K and its other periodic filings with the SEC. Contact: Brian J. Kearns, Chief Financial Officer, MedQuist Inc., 856-810-8000 x-4418 Tables Follow MedQuist Inc. Financial Highlights (Unaudited) In thousands, except per share data
Three Months Ended March 31, 2002 2001(2)(3) ---- ---------- Revenues $113,974 $95,099 Cost of Revenues 85,010 70,367 % of Revenues 74.6% 74.0% Gross Profit 28,964 24,732 Gross Margin 25.4% 26.0% Selling, General & Administrative 3,700 3,095 % of Revenues 3.2% 3.3% EBITDA (1) 25,264 21,637 % of Revenues 22.2% 22.8% Depreciation Expense 4,234 3,768 % of Revenues 3.7% 4.0% Amortization Expense 1,701 1,952 % of Revenues 1.5% 2.1% Operating Income 19,329 15,917 % of Revenues 17.0% 16.7% Interest (Income)/Expense (313) (1,405) Other (Income) Expense 184 0 Pretax Income 19,458 17,322 % of Revenues 17.1% 18.2% Tax Provision 7,492 6,669 % of Pretax 38.5% 38.5% Net Income 11,966 10,653 % of Revenues 10.5% 11.2% Earnings Per Share $0.32 $0.28 Shares Outstanding 37,958 37,520
Notes: - ------ (1) Earnings before interest, taxes, depreciation and amortization. (2) Excludes $3,000 of income related to the favorable settlement of a lawsuit and $600 of income related to the adjustment of the restructuring reserves established in 1997 and 1998. (3) In accordance with FASB No. 142, goodwill will no longer be amortized. For the three months ended March 31, 2001, the pretax income includes $736 of such goodwill amortization and an after tax effect of $453. EX-5 5 exh5-3.txt EX-5.3 Exhibit 5.3 - ----------- Risk Factors Concerning Forward Looking Statements - -------------------------------------------------- During our investor conference call held on the date of this filing we referred to, and during future oral disclosures or written statements we may refer to, certain risk factors concerning forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. These statements include forward-looking language such as "will likely result," "may," "are expected to," "is anticipated," "estimated," "projected," "intends to," or other similar words. Our actual results are likely to differ, and could differ materially, from the results expressed in, or implied by, these forward-looking statements. There are many factors that could cause these forward-looking statements to be incorrect, including but not limited to the following risks: risks associated with (1) our ability to recruit and retain qualified transcriptionists; (2) inability to complete and assimilate acquisitions of businesses; (3) dependence on our senior management team; (4) the impact of new services or products on the demand for our services; (5) our dependence on a single line of business; (6) our ability to expand our customer base; (7) our ability to maintain our current growth rate in revenue and earnings; (8) the volatility of our stock price; (9) our ability to compete with others; (10) changes in law, including, without limitation, the Health Insurance Portability and Accountability Act of 1996 (HIPAA); (11) infringement on the proprietary rights of others; (12) our failure to comply with confidentiality requirements, including, without limitation, those imposed under HIPAA; (13) changes in economic conditions; and (14) inherent uncertainties in general relating to predicting future financial results and events. When considering these forward-looking statements, you should keep in mind these risk factors and other cautionary statements, and should recognize that those forward-looking statements speak only as of the date made. MedQuist does not undertake any obligation to update any forward-looking statement included in this Form 8-K or made elsewhere. -----END PRIVACY-ENHANCED MESSAGE-----