EX-5 4 ex5-2.txt EXHIBIT 5.2 Exhibit 5.2 News Release NASDAQ: MEDQ FOR IMMEDIATE RELEASE MEDQUIST REPORTS FINANCIAL RESULTS FOR THIRD QUARTER 2002 MARLTON, NJ October 23, 2002 - MedQuist Inc. (NASDAQ:MEDQ) reported revenue of $129.8 million, EBITDA of $22.4 million and net income of $9.5 million or $0.25 per diluted share for the three months ended September 30, 2002. For the comparable 2001 period, revenue was $102.7 million, EBITDA was $23.9 million and net income was $10.6 million or $0.28 per diluted share. The net income for the three months ended September 30, 2001 included $874,000 of goodwill amortization, which as of January 1, 2002 is no longer amortized. Excluding goodwill amortization, the net income for the three months ended September 30, 2001 was $11.2 million or $0.29 per diluted share. For the nine months ended September 30, 2002 revenue was $357.4 million, EBITDA was $73.5 million and net income was $33.8 million or $0.89 per share on a diluted basis. For the comparable 2001 period revenue was $295.8 million, EBITDA was $68.1 million and net income was $33.5 million or $0.89 per diluted share. The net income for the nine months ended September 30, 2001 included approximately $3.0 million of pretax income related to a favorable legal settlement, $600,000 of pretax income related to the adjustment of the restructuring reserves established in 1997 and 1998 and $2.5 million of goodwill amortization, which as of January 1, 2002 is no longer amortized. Excluding the foregoing, the net income for the nine months ended September 30, 2001 was $32.9 million or $0.87 per diluted share. David A. Cohen, Chairman and Chief Executive Officer, stated, "The current quarter's shortfall was due to the challenging operating environment, distractions related to the roll out of our New Transcription Platform and significant resources involved in the active integration of recently acquired businesses. We anticipate that our fourth quarter results will not significantly improve from the third quarter, but we remain optimistic that we can achieve our 2003 full year earnings growth goal of 15%. We continue to believe that MedQuist is pursuing a solid strategy for growth and our company remains extremely well positioned for the future." On July 1, 2002, MedQuist completed the acquisition of Lanier Healthcare, a leading provider of digital dictation systems and services to the acute care hospital market. Cohen added, "Lanier Healthcare brings to MedQuist a well established suite of products and services and a solid base of recurring revenue. In addition, Lanier Healthcare has a significant distribution effort including 65 direct sales professionals and a high quality research and development team, both of which will be levered across MedQuist's entire business to the benefit of our healthcare clients nationwide." 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 such as our anticipated future earnings growth, 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, inability to predict future economic or market conditions, 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 ext. 4418 Tables Follow MedQuist Inc. Financial Highlights (Unaudited) In thousands, except per share data and percentages Three Months Ended September 30, 2002 2001 ---- ---- Revenues $129,750 $102,695 Gross profit 30,694 27,260 Gross margin 23.7% 26.5% Selling, general & administrative 6,891 3,328 % of revenues 5.3% 3.2% Research and development 1,426 -- % of revenues 1.1% n/a EBITDA 22,377 23,932 % of revenues 17.2% 23.3% Depreciation expense 5,113 4,378 Amortization expense 1,772 2,559 Operating income 15,492 16,995 Net interest (income)/expense (261) (662) Equity in loss of investee 243 248 Pretax income 15,510 17,409 Tax provision 5,971 6,797 Net income 9,539 10,612 Net income per diluted share $0.25 $0.28 Fully diluted shares outstanding 37,917 37,870 MedQuist Inc. Financial Highlights (Unaudited) In thousands, except per share data and percentages Nine Months Ended September 30, 2002 2001 ---- ---- Revenues $357,355 $295,772 Gross profit 89,035 77,661 Gross margin 24.9% 26.3% Selling, general & administrative 14,073 9,607 % of revenues 3.9% 3.2% Research and development 1,426 -- % of revenues 0.4% n/a EBITDA 73,536 68,054 % of revenues 20.6% 23.0% Depreciation expense 13,697 12,265 Amortization expense 5,086 6,840 Other (income) -- (3,600) Operating income 54,753 52,549 Net interest (income)/expense (950) (3,327) Equity in loss of investee 674 816 Pretax income 55,029 55,060 Tax provision 21,186 21,511 Net income 33,843 33,549 Earnings per diluted share $0.89 $0.89 Fully diluted shares outstanding 37,945 37,703 MedQuist Inc. Reconciliation to net income before special items In thousands, except per share data and percentages
Three Months Nine Months Ended September 30, Ended September 30, 2002 2001 2002 2001 ---- ---- ---- ---- Pre-tax income $15,510 $17,409 $55,029 $55,060 Adjustment for amortization of goodwill (1) -- 874 -- 2,496 Adjustment for non-recurring items (2) -- -- -- (3,600) ------- ------- ------- ------- Adjusted pre-tax income 15,510 18,283 55,029 53,956 Tax provision 5,971 7,133 21,186 21,087 ------- ------- ------- ------- Adjusted net income $9,539 $11,150 $33,843 $32,869 Adjusted net income per diluted share $0.25 $0.29 $0.89 $0.87
Notes: (1) In accordance with FASB No. 142, goodwill is no longer amortized, beginning January 1, 2002. For the three months ended September 30, 2001, the pretax income includes $874 of such goodwill amortization with an after tax effect of $538. For the nine months ended September 30, 2001, the pretax income includes $2,496 of such goodwill amortization with an after tax effect of $1,535. (2) Other income for the nine months ended September 30, 2001 includes the following non-recurring items; $3,000 of income related to favorable settlement of a lawsuit and $600 of income related to the adjustment of the restructuring reserves established in 1997 and 1998. MedQuist Inc. Financial Highlights In thousands
September30, December 31, 2002 2001 ---- ---- (Unaudited) (Audited) Assets: Current assets: Cash and cash equivalents $ 83,972 $ 86,334 Accounts receivable (net) 87,736 78,429 Other current assets 14,738 7,892 -------- --------- Total current assets 186,446 172,655 PPE (net) 38,602 34,167 Intangible assets (net) 212,466 167,803 Other assets 20,768 29,412 -------- --------- Total assets $ 458,282 $ 404,037 ======== ========= Liabilities and Shareholder's Equity: Current liabilities: Current portion of long term debt $ 34 $ 1,067 Accounts payable 9,630 4,562 Deferred revenue 15,863 333 Accrued expenses 30,660 30,990 ---------- --------- Total current liabilities 56,187 36,952 Long term debt 55 1,088 Other long term liabilities 1,342 1,187 Shareholder's equity 400,698 364,810 ---------- --------- Total liabilities and Shareholder's $ 458,282 $ 404,037 ========== =========