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COEUR D'ALENE, Idaho, March 9, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- NightHawk Radiology Holdings, Inc. (Nasdaq: NHWK), a leading provider of nighttime and weekend emergency radiology services to radiology groups across the United States, today announced its financial results for the fourth quarter and full-year ended December 31, 2005. The company reported significantly higher revenues and operating income for both the quarter and the year compared to the comparable periods in 2004.
"Our strong financial results in both the fourth quarter and the year, including record annual revenues and operating income, demonstrate the growing need for teleradiology services in today's marketplace," said Dr. Paul Berger, chairman and chief executive officer. "We believe we are leading a significant transformation in the professional practice of radiology by combining proprietary workflow technology and outstanding U.S. board certified radiologists to create significant efficiencies in, and quality of, patient care. Combining this platform with the low growth in the number of U.S. radiologists and the high growth of the high-tech imaging market has allowed NightHawk to develop an extensive customer base and to build a service offering that is second to none in our industry. These factors have fueled our growth to date and will also be the driving force of our success in the upcoming year."
Fourth Quarter Results
For the fourth quarter ended December 31, 2005, revenue increased 59% to $18.5 million compared with $11.6 million for the fourth quarter of 2004. This produced operating income of $5.2 million during the quarter compared to $2.7 million in the fourth quarter of 2004, an increase of 90%.
For the fourth quarter ended December 31, 2005 our adjusted net income was $3.1 million, or $0.13 per diluted share, a 53% increase over fourth quarter 2004 adjusted net income of $2.0 million, or $0.09 per diluted share. Our adjusted net income excludes the effects of the following non-cash items: the change in the fair value of the conversion feature in the company's redeemable preferred stock, preferred stock accretion, preferred stock dividends and stock compensation (net of tax effect). Net loss under GAAP for the fourth quarter of 2005, which included an $11.6 million charge resulting from a change in the fair value of the conversion feature in the company's redeemable preferred stock, was $9.1 million, or ($0.52) per share, compared with a GAAP net loss of $26 thousand, for the fourth quarter of 2004. A reconciliation of our adjusted net income to our GAAP net income is included in the tables attached to this press release and on our corporate website under the heading investor relations.
During the fourth quarter, cash flow from operations increased 163% to $6.1 million compared to $2.3 million in the fourth quarter of 2004.
Full-Year Results
For the year ended December 31, 2005, revenue increased 63% to $64.1 million compared with $39.3 million for the same period of 2004. This produced operating income of $17.3 million during the year compared to $11.7 million in the prior year, an increase of 48%.
For the year ended December 31, 2005, our adjusted net income was $12.3 million, or $0.51 per diluted share, representing a 50% increase over the prior year of $8.2 million, or $0.28 per diluted share. Our adjusted net income excludes the effects of the following non-cash items: the change in the fair value of the conversion feature in the company's redeemable preferred stock, preferred stock accretion, preferred dividends and stock compensation (net of tax). Net loss under GAAP for the full-year 2005, which included a $39.7 million charge resulting from the change in the fair value of the conversion feature in the company's redeemable preferred stock, was $36.5 million, or ($2.11) per share, compared with net income of $2.6 million, or $0.11 per share, in 2004. A reconciliation of our adjusted net income to our GAAP net income is included in the tables attached to this press release and on our corporate website under the heading investor relations.
Cash flow from operations in 2005 increased 20% to $12.3 million from $10.2 million in 2004.
Commenting on the company's full-year results, Dr. Berger said, "2005 was a very strong year. We grew sales 63% year-over-year, added 166 new customers and increased our staff of highly qualified radiologists by 20. At the end of the year we were providing services to 463 customers serving 860 hospitals, which equates to approximately 15% of all hospitals in the U.S. We are providing a vital service that our customers need, and we're doing it very efficiently with state-of-the-art technology. This translated into an excellent financial performance for the company in 2005."
Change in Fair Value of Redeemable Preferred Stock
As described more fully in the company's registration statement and prospectus filed with the Securities and Exchange Commission, NightHawk had entered into a stockholders agreement with the holders of its Series A preferred stock pursuant to which it had agreed to repurchase all or any portion of the shares of redeemable preferred stock. This feature, along with the conversion feature of the preferred stock, was considered an embedded derivative under SFAS No. 133. The company adjusted the carrying value of the embedded derivative to the estimated fair value and recognized the change in such estimated value in its consolidated statement of operations. The company has incurred charges for this expense up to the date of its IPO on February 9, 2006. These charges, along with preferred stock accretion and preferred dividends, are non-cash in nature and terminated upon the IPO.
Initial Public Offering
On February 9, 2006, the company completed an initial public offering of 5.8 million shares at a price of $16 per share. NightHawk received cash proceeds of approximately $86.3 million from the offering, a portion of which was used to repay outstanding debt and interest of $30.1 million. The remainder is available for general corporate purposes and to help fund the company's growth strategy, which includes (1) the expansion of the company's core service offerings, (2) the possible acquisitions of complementary businesses, and (3) the expansion of the company's services to further support radiologists in their practices and improve the quality of care for their patients.
Outlook
Dr. Berger concluded, "We are delighted with our operational and financial success in 2005. Our goal is to continue to build upon our position as the leading U.S. off-hours emergency radiology services provider by growing beyond nighttime and weekend hours. Our operating model, customer base, and group of outstanding radiologists provide a strong foundation from which to extend the same efficiencies and quality of care to daytime services. In addition, as a result of our IPO in early February, we now have the resources to expand the scope of our service and support offerings in order to drive further revenue and earnings growth."
Conference Call & Webcast
A conference call will be held today, Thursday, March 9, 2006 at 11:00 a.m. (ET). A live webcast of the conference call as well as a replay will be available online on the company's corporate Web site at http://www.nighthawkrad.net . Participants can also access the call by dialing 800-257-1836 (within the United States and Canada), or 303-262-2194 (international callers). A replay of the call will be available approximately two hours after the call has ended and will be available until 11:59 p.m. (CT) on Thursday, March 23, 2006. To access the replay, dial 800-405-2236 (within the United States and Canada), or 303-590-3000 (international callers) and enter the conference ID number: 11055405.
About NightHawk
NightHawk, headquartered in Coeur d'Alene, Idaho, is a leading provider of nighttime and weekend emergency radiology services to radiology groups across the United States. Its team of highly-qualified, U.S. state-licensed and hospital-privileged radiologists use its proprietary workflow technology to provide radiology group customers in the United States radiological interpretations primarily from centralized reading facilities located in Sydney, Australia and Zurich, Switzerland.
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 growth strategy, the expansion of its current service offerings, and the possibility of acquisitions of complementary businesses. 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 prospectus filed with the Securities and Exchange Commission on February 9, 2006. 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.
Adjusted net income as described in this release and in the attached financial statement tables is not a measure of financial performance under generally accepted accounting principles (GAAP) and should not be considered a substitute for or superior to GAAP net income. Management believes the non- GAAP results provide useful information to both management and investors by excluding certain expenses that may not be indicative of our core results and provides for consistency in financial reporting. We provide these non-GAAP financial measures because we believe they provide greater transparency with respect to supplemental information used by management in its financial and operational decision making. Specifically, these non-GAAP measures are provided to enhance investor's overall understanding of our current financial performance and our future prospects. For reconciliation of adjusted net income to GAAP net income, please refer to the information included in the attached tables of this press release and on our corporate website under the heading investor relations.
Financial Statements to follow:
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
ASSETS 2004 2005
(unaudited) (unaudited)
Current assets:
Cash and cash equivalents $5,813,861 $12,610,487
Trade accounts receivable, net 6,072,502 10,485,571
Deferred income taxes - 19,839
Prepaids and other current assets 340,513 2,164,126
Total current assets 12,226,876 25,280,023
Property and equipment, net 3,042,598 5,079,280
Goodwill 954,788 1,335,788
Intangible assets, net 1,004,322 3,431,418
Other assets, net 33,746 409,253
Total $17,262,330 $35,535,762
LIABILITIES
Current liabilities:
Accounts payable and accrued
expenses $3,194,066 $5,502,977
Dividends declared - 7,000,000
Accrued payroll and related
benefits 1,844,179 2,366,430
Accrued interest payable 248,219 424,601
Acquisition consideration payable 500,000 -
Deferred income taxes 25,334 -
Long-term debt, due within one year 2,250,000 6,229,991
Total current liabilities 8,061,798 21,523,999
Long-term debt 9,750,000 17,773,438
Fair value of redeemable preferred
stock conversion feature 5,527,777 45,256,250
Deferred income taxes 128,846 630,303
Total liabilities 23,468,421 85,183,990
Redeemable common stock 4,408,394 15,356,253
Redeemable convertible preferred
stock 12,094,465 13,156,916
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock- 40,000,000 shares
authorized; $.001 par value;
15,522,867 and 15,838,139 shares
issued and outstanding at
December 31, 2004 and December 31,
2005, respectively 15,523 15,838
Additional paid-in capital 2,916,406 9,434,351
Retained earnings (deficit) (25,640,879) (87,611,586)
Total stockholders' equity
(deficit) (22,708,950) (78,161,397)
Total $17,262,330 $35,535,762
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Twelve months ended
December 31, December 31,
2004 2005 2004 2005
(Unaudited) (Unaudited)
Service revenue $11,609,372 $18,473,941 $39,283,002 $64,061,528
Operating costs
and expenses:
Professional
services
(includes non-
cash
compensation
expense of
$687,714,
$394,363,
$1,544,781
and $916,170) 4,781,511 6,604,962 15,049,399 22,401,184
Sales, general,
and
administrative
(includes non-
cash
compensation
expense of
$109,521,
$97,955,
$144,822 and
$3,273,018) 3,908,919 6,193,385 11,991,386 22,988,027
Depreciation
and
amortization 207,229 521,159 528,126 1,350,536
Total operating
costs and
expenses 8,897,659 13,319,506 27,568,911 46,739,747
Operating income 2,711,713 5,154,435 11,714,091 17,321,781
Other income
(expense):
Interest
expense (275,740) (455,069) (880,671) (1,178,323)
Interest income 21,016 32,837 40,835 67,072
Other, net 23,100 9,668 (28,953) (51,147)
Change in fair
value of
redeemable
preferred
stock
conversion
feature (1,290,509) (11,618,750) (3,857,500) (39,728,473)
Total other
income
(expense) (1,522,133) (12,031,314) (4,726,289) (40,890,871)
Income (loss)
before income
taxes 1,189,580 (6,876,879) 6,987,802 (23,569,090)
Income tax expense 957,226 1,961,282 3,662,563 6,391,302
Net income (loss) 232,354 (8,838,161) 3,325,239 (29,960,392)
Redeemable preferred
stock accretion (258,894) (272,440) (764,742) (1,062,451)
Preferred dividends (5,486,555)
Income (loss)
applicable to
common
stockholders $(26,540) $(9,110,601) $2,560,497 $(36,509,398)
Earnings (loss)
per common share:
Basic and
diluted $(0.002) $(0.52) $0.11 $(2.11)
Weighted averages
of common shares
outstanding:
Basic and
diluted 16,907,329 17,509,558 24,196,437 17,273,970
CONSOLIDATED STATEMENTS OF OPERATIONS
RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME (LOSS)
Three months ended
December 31, 2004
(unaudited)
GAAP Adjustments As Adjusted
Service revenue $11,609,372 $11,609,372
Operating costs and expenses:
Professional services (includes
non-cash compensation
expense of $687,714 and
$394,363) 4,781,511 $(687,714) 4,093,797
Sales, general, and
administrative (includes non-
cash compensation expense of
$109,521 and $97,955) 3,908,919 (109,521) 3,799,398
Depreciation and amortization 207,229 207,229
Total operating costs
and expenses 8,897,659 (797,235) 8,100,424
Operating income 2,711,713 797,235 3,508,948
Other income (expense):
Interest expense (275,740) (275,740)
Interest income 21,016 21,016
Other, net 23,100 23,100
Change in fair value of
redeemable preferred stock
conversion feature (1,290,509) 1,290,509
Total other income (expense) (1,522,133) 1,290,509 (231,624)
Income (loss) before
income taxes 1,189,580 2,087,744 3,277,324
Income tax expense 957,226 310,922 1,268,148
Net income (loss) 232,354 1,776,822 2,009,176
Redeemable preferred stock
accretion (258,894) 258,894
Income (loss) applicable to
common stockholders $(26,540) $2,035,716 $2,009,176
Earnings (loss) per share:
Basic $(0.00) $0.12
Diluted $(0.00) $0.09
Weighted average shares outstanding:
Basic 16,907,329 16,907,329
Diluted 16,907,329 23,407,332
Three months ended
December 31, 2005
(unaudited)
GAAP Adjustments As Adjusted
Service revenue $18,473,941 $18,473,941
Operating costs and expenses:
Professional services
(includes non-cash
compensation expense of
$687,714 and $394,363) 6,604,962 $(394,363) 6,210,599
Sales, general, and
administrative (includes
non-cash compensation expense
of $109,521 and $97,955) 6,193,385 (97,955) 6,095,430
Depreciation and amortization 521,159 521,159
Total operating costs
and expenses 13,319,506 (492,318) 12,827,188
Operating income 5,154,435 492,318 5,646,753
Other income (expense):
Interest expense (455,069) (455,069)
Interest income 32,837 32,837
Other, net 9,668 9,668
Change in fair value of
redeemable preferred stock
conversion feature (11,618,750) 11,618,750
Total other income (expense) (12,031,314) 11,618,750 (412,564)
Income (loss) before
income taxes (6,876,879) 12,111,068 5,234,189
Income tax expense 1,961,282 192,004 2,153,286
Net income (loss) (8,838,161) 11,919,064 3,080,903
Redeemable preferred stock
accretion (272,440) 272,440
Income (loss) applicable to
common stockholders $(9,110,601) $12,191,504 $3,080,903
Earnings (loss) per share:
Basic $(0.52) $0.18
Diluted $(0.52) $0.13
Weighted average shares
outstanding:
Basic 17,509,558 17,509,558
Diluted 17,509,558 24,415,664
CONSOLIDATED STATEMENTS OF OPERATIONS
RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME (LOSS)
Twelve months ended
December 31, 2004
(unaudited)
GAAP Adjustments As Adjusted
Service revenue $39,283,002 $39,283,002
Operating costs and expenses:
Professional services (includes
non-cash compensation
expense of $1,544,781 and
$916,170) 15,049,399 $(1,544,781) 13,504,618
Sales, general, and
administrative (includes
non-cash compensation expense
of $144,822 and $3,273,018) 11,991,386 (144,822) 11,846,564
Depreciation and amortization 528,126 528,126
Total operating costs
and expenses 27,568,911 (1,689,603) 25,879,308
Operating income 11,714,091 1,689,603 13,403,694
Other income (expense):
Interest expense (880,671) (880,671)
Interest income 40,835 40,835
Other, net (28,953) (28,953)
Change in fair value of
redeemable preferred stock
conversion feature (3,857,500) 3,857,500
Total other income (expense) (4,726,289) 3,857,500 (868,789)
Income (loss) before
income taxes 6,987,802 5,547,103 12,534,905
Income tax expense 3,662,563 658,945 4,321,508
Net income (loss) 3,325,239 4,888,158 8,213,397
Redeemable preferred stock
accretion (764,742) 764,742
Preferred dividends
Income (loss) applicable to
common stockholders $2,560,497 $5,652,900 $8,213,397
Earnings (loss) per share:
Basic $0.11 $0.34
Diluted $0.11 $0.28
Weighted average shares
outstanding:
Basic 24,196,437 24,196,437
Diluted 24,196,437 29,071,440
Twelve months ended
December 31, 2005
(unaudited)
GAAP Adjustments As Adjusted
Service revenue $64,061,528 $64,061,528
Operating costs and expenses:
Professional services
(includes non-cash
compensation expense of
$1,544,781 and $916,170) 22,401,184 $(916,170) 21,485,014
Sales, general, and
administrative (includes
non-cash compensation expense
of $144,822 and $3,273,018) 22,988,027 (3,273,018) 19,715,009
Depreciation and amortization 1,350,536 1,350,536
Total operating
costs and expenses 46,739,747 (4,189,188) 42,550,559
Operating income 17,321,781 4,189,188 21,510,969
Other income (expense):
Interest expense (1,178,323) (1,178,323)
Interest income 67,072 67,072
Other, net (51,147) (51,147)
Change in fair value of
redeemable preferred stock
conversion feature (39,728,473) 39,728,473
Total other income (expense) (40,890,871) 39,728,473 (1,162,398)
Income (loss) before
income taxes (23,569,090) 43,917,661 20,348,571
Income tax expense 6,391,302 1,633,783 8,025,085
Net income (loss) (29,960,392) 42,283,878 12,323,486
Redeemable preferred stock
accretion (1,062,451) 1,062,451
Preferred dividends (5,486,555) 5,486,555
Income (loss) applicable to
common stockholders $(36,509,398) $48,832,884 $12,323,486
Earnings (loss) per share:
Basic $(2.11) $0.71
Diluted $(2.11) $0.51
Weighted average shares
outstanding:
Basic 17,273,970 17,273,970
Diluted 17,273,970 23,967,786
Media inquiries:
Lonny White
lonny@scanloncc.com
or Elizabeth Scanlon
elizabeth@scanloncc.com
Scanlon Corporate Communications
312-372-4400
Investor inquiries:
Andrea Clegg
NightHawk Radiology Holdings, Inc.
866-402-4295 or 208-292-2818
aclegg@nighthawkrad.net
"NHWKF"
SOURCE NightHawk Radiology Holdings, Inc.
Media, Lonny White, lonny@scanloncc.com , or Elizabeth Scanlon, elizabeth@scanloncc.com , both of Scanlon Corporate Communications, +1-312-372-4400; or Investors, Andrea Clegg of NightHawk Radiology Holdings, Inc., +1-866-402-4295 or +1-208-292-2818, or aclegg@nighthawkrad.net
http://www.prnewswire.com
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