HealthTronics, Inc. (NASDAQ:HTRN), a leading provider of Urology
services and products, today announced its financial results for
the third quarter ended September 30, 2008. Third Quarter 2008
Revenue from continuing operations for the third quarter 2008
totaled $44.8 million, up from $36 million in the third quarter of
2007. The Company's net income from continuing operations for the
third quarter of 2008, in accordance with generally accepted
accounting principles ("GAAP"), totaled $1.3 million or $0.04 per
diluted share, which compares to $610,000 or $0.02 per diluted
share in the third quarter of 2007. The Company's non-GAAP net
income, which excludes non-cash stock-based compensation expense,
for the third quarter 2008 totaled $0.04 per diluted share as
compared to $0.02 per diluted share for the third quarter of 2007.
Also during the quarter, the IRS completed their examinations of
certain legacy HealthTronics federal income tax returns which we
had amended. As a result of these examinations, we received refunds
which included approximately $700,000 of interest income. Without
this one time interest income, our earnings would have been $0.03
per diluted share. The Company's adjusted EBITDA from continuing
operations for the third quarter 2008 was $6.2 million, which
compares to $4.4 million in the third quarter of 2007, an increase
of 43 percent. The increase was due primarily to revenue growth
from the Urology Services division, generated by our Advanced
Medical Partners, Inc., �AMPI�, acquisition in April 2008, and cost
reductions implemented during the past year. Urology Services
Urology Services division revenue for the third quarter of 2008 was
$39.1 million, up 24 percent from the $31.6 million recorded in the
third quarter of 2007. Urology Services division growth was driven
in part by the acquisition of AMPI. Same store partnership revenue
in the third quarter 2008 was consistent with the third quarter
2007. Divisional adjusted EBITDA was $5.4 million compared to $5
million in the third quarter of 2007. Medical Products Medical
Products division revenue for the third quarter of 2008 was $5.6
million, up 35 percent from the $4.2 million recorded in the third
quarter of 2007. The ClariPath pathology laboratory's revenue
increased 60 percent and service maintenance gross revenue, before
intercompany eliminations, grew 22 percent from the third quarter
of 2007. Manufacturing revenue decreased compared to the third
quarter of 2007 due to a lower number of devices sold in the third
quarter of 2008. Divisional adjusted EBITDA was $1.6 million in the
third quarter of 2008, which compared to $585,000 in the third
quarter of 2007. Medical Products division earnings growth resulted
from revenue increases at our ClariPath pathology laboratory,
improved performance in our service and maintenance business, and
cost reductions implemented during the past 12 months. Business
Outlook James Whittenburg, President and Chief Executive Officer,
commented, �The third quarter�s results were strong as anticipated.
We continue to experience solid growth, particularly in pathology
services, urology services, and medical products. These areas,
along with success in our acquisitions strategy, helped contribute
to our positive results.� Board Restructuring During the past
month, the Board of Directors initiated a restructuring of its
composition to more competitively position the Board�s size and
related costs in relation to its peers. As a result, Kevin A.
Richardson II, Perry M. Waughtal and Mark G. Yudof have voluntarily
resigned as Directors. None of the resignations was the result of
any disagreement with the Company, Management or other Board
members on any matter. Mr. Richardson commented, �I have enjoyed
serving on HealthTronics� Board since March 2006. I joined the
Board to help facilitate changes in management and strategy that
Prides Capital felt were important to shareholders. I am pleased
with HealthTronics� progress and achievements and firmly support
the current management team and direction of the Company. As a
result, I do not believe my continued participation as a director
is needed and believe my resignation in order to help facilitate a
reduction in board size is helpful. Prides Capital remains one of
HealthTronics� largest shareholders and, in that capacity, will
continue to share its thoughts with and provide assistance to
HealthTronics.� Mr. Whittenburg commented, �Kevin, Perry and Mark
have each provided strong leadership as directors and will be
missed. This restructuring will reduce our number of directors from
nine to six, with four independent directors. The Company extends
it sincerest gratitude and best wishes to Kevin, Perry and Mark.�
Conference Call and Webcast: Management of HealthTronics will host
a conference call the afternoon of Thursday, November 6, 2008 at
5:00 pm EST. Interested parties may participate in the call by
dialing 1-888-587-0613 (International callers dial 1-719-325-2237)
and ask for the "HealthTronics Q3 2008 Earnings Call" (confirmation
code: 4117466). Please call in 10 minutes before the call is
scheduled to begin. The conference call will also be webcast live
via the Investors section of HealthTronics' web site at
www.healthtronics.com. To listen to the live webcast, go to the web
site at least 10 minutes early to register, download and install
any necessary audio software. If you are unable to listen live, the
conference call will be archived on the HealthTronics web site.
About HealthTronics, Inc. HealthTronics is a premier urology
company providing an exclusive suite of healthcare services and
technology including urologist partnership opportunities, surgical
and capital equipment, maintenance services offerings, and
anatomical pathology services. For more information, visit
www.healthtronics.com. HealthTronics' use of Non-GAAP Financial
Measures: This press release includes financial measures for net
income (loss), net income (loss) from continuing operations, and
related per share amounts that exclude certain charges and
therefore have not been calculated in accordance with U.S.
generally accepted accounting principles (GAAP). These non-GAAP
financial measures may be different from non-GAAP financial
measures used by other companies. Non-GAAP financial measures
should not be considered as a substitute for, or superior to,
measures of financial performance prepared in accordance with GAAP.
By excluding certain charges, these non-GAAP financial measures
facilitate management's internal comparisons to the Company's
historical operating results, to competitors' operating results,
and to estimates made by securities analysts. Management uses these
non-GAAP financial measures internally to evaluate its performance.
The Company believes these non-GAAP financial measures are useful
to decision-making. In addition, the Company has historically
reported similar non-GAAP financial measures to its investors and
believes that the inclusion of comparative numbers provides
consistency in its financial reporting. Investors are encouraged to
review the reconciliation of the non-GAAP financial measures used
in this press release to their most directly comparable GAAP
financial measure as provided in the financial statements attached
to this press release. EBITDA and Adjusted EBITDA: HealthTronics
has presented EBITDA and Adjusted EBITDA amounts, which are
non-GAAP financial measures. In the SEC filings, HealthTronics has
reconciled such amounts to their most directly comparable financial
measure calculated in accordance with GAAP, which is HealthTronics'
net income. HealthTronics believes that its presentations of EBITDA
and Adjusted EBITDA are important supplemental measures of
operating performance to its investors. Earnings before interest,
taxes, depreciation and amortization ("EBITDA") is a commonly used
measure of performance which HealthTronics believes, when
considered with measures calculated in accordance with GAAP, gives
investors a more complete understanding of HealthTronics' operating
results before the impact of investing and financing transactions
and income taxes. HealthTronics does not subtract minority interest
expense when calculating EBITDA; however, HealthTronics does adjust
for minority interest expense and refers to this measure as
"Adjusted EBITDA." Minority interest is a GAAP measure intended to
reflect our partner's share of our consolidated net income and not
our partner's share of our consolidated EBITDA. For example,
calculation of minority interest expense does not include
adjustments for depreciation, amortization, taxes or interest. As a
result, our partners' share of consolidated EBITDA may not, in a
given reporting period, equal the deduction for minority interest
expense used in arriving at Adjusted EBITDA. HealthTronics has
historically reported Adjusted EBITDA to its investors and believes
that the continued inclusion of Adjusted EBITDA provides
consistency in its financial reporting. Adjusted EBITDA is among
the more significant factors in management's internal evaluation of
total company performance. Adjusted EBITDA is also widely used by
HealthTronics management in the annual budgeting process.
HealthTronics believes these measures continue to be used by
investors and creditors in their assessment of HealthTronics'
operational performance and the valuation of the company. EBITDA
and Adjusted EBITDA are used in addition to and in conjunction with
results presented in accordance with GAAP. EBITDA and Adjusted
EBITDA should not be considered as an alternative to net income,
operating income, a liquidity measure, or any other operating
performance measure prescribed by GAAP, nor should these measures
be relied upon to the exclusion of GAAP financial measures. EBITDA
and Adjusted EBITDA reflect additional ways of viewing
HealthTronics' operations that HealthTronics believes, when viewed
with its GAAP results and the reconciliations to the corresponding
GAAP financial measures provide a more complete understanding of
factors and trends affecting HealthTronics' business than could be
obtained absent this disclosure. Cautionary Language: Statements by
the Company's management made in this press release that are not
strictly historical, including statements regarding plans,
objective and future financial performance, are "forward-looking"
statements that are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Although
HealthTronics believes that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be
given that the expectations will prove to be correct. Factors that
could cause actual results to differ materially from HealthTronics'
expectations include, among others, the existence of demand for and
acceptance of HealthTronics' services, regulatory approvals,
economic conditions, the impact of competition and pricing,
financing efforts and other factors described from time to time in
HealthTronics' periodic filings with the Securities and Exchange
Commission. HealthTronics, Inc. and Subsidiaries Condensed
Consolidated Statements of Income (Unaudited) � � � � � � ($ in
thousands, except per share data) � Three Months Ended September
30, Nine Months Ended September 30, 2008 2007 2008 2007 Revenue:
Urology Services $ 39,135 $ 31,625 $ 106,550 $ 90,846 Medical
Products 5,636 4,176 14,467 13,002 Other � - � � 154 � � 288 � �
421 � Total revenue � 44,771 � � 35,955 � � 121,305 � � 104,269 � �
Cost of services and general and administrative expenses: Urology
Services 16,899 13,160 47,289 40,126 Medical Products 3,055 2,834
6,968 8,077 Selling, general & administrative 4,600 4,052
14,186 12,959 Depreciation and amortization � 3,073 � � 2,747 � �
8,770 � � 8,339 � � 27,627 � � 22,793 � � 77,213 � � 69,501 � �
Operating income 17,144 13,162 44,092 34,768 � Other income
(expenses): Interest and dividends 806 247 1,098 835 Interest
expense � (182 ) � (196 ) � (591 ) � (644 ) � 624 � � 51 � � 507 �
� 191 � Income from continuing operations before provision for
income taxes and minority interest 17,768 13,213 44,599 34,959 �
Minority interest in consolidated income 15,552 12,214 40,380
32,998 � Provision for income taxes � 889 � � 389 � � 1,730 � � 956
� � Income from continuing operations 1,327 610 2,489 1,005 � Gain
(loss) from discontinued operations, net of tax � - � � 135 � � - �
� (111 ) � Net income $ 1,327 � $ 745 � $ 2,489 � $ 894 � � Basic
earnings per share: Income from continuing operations $ 0.04 $ 0.02
$ 0.07 $ 0.03 Gain (loss) from discontinued operations � - � � - �
� - � � - � Net income $ 0.04 � $ 0.02 � $ 0.07 � $ 0.03 � Weighted
average shares outstanding � 37,503 � � 35,425 � � 36,666 � �
35,419 � � Diluted earnings per share: Income from continuing
operations $ 0.04 $ 0.02 $ 0.07 $ 0.03 Gain (loss) from
discontinued operations � - � � - � � - � � - � Net income $ 0.04 �
$ 0.02 � $ 0.07 � $ 0.03 � Weighted average shares outstanding �
37,604 � � 35,425 � � 36,734 � � 35,423 � HealthTronics, Inc. and
Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) � �
� � � September 30, December 31, ($ in thousands) 2008 2007 �
ASSETS � Total current assets $ 77,078 $ 74,214 � Property and
equipment, net 31,232 33,019 � Goodwill 234,796 217,505 � Other
assets � 10,614 � 11,318 � $ 353,720 $ 336,056 � LIABILITIES �
Total current liabilities $ 16,295 $ 17,692 � Long-term debt, net
of current portion 9,308 4,194 � Other long-term liabilities �
29,964 � 30,099 � Total liabilities 55,567 51,985 � Minority
interest 44,249 41,653 � Total stockholders' equity � 253,904 �
242,418 � $ 353,720 $ 336,056 For the Periods Ended September 30,
2008 and 2007 Unaudited In thousands, except per share data � � � �
� � Three Months Ended September 30, Nine Months Ended September
30, 2008 2007 2008 2007 � Summary of Results from Operations
Revenues $ 44,771 $ 35,955 $ 121,305 $ 104,269 � EBITDA(a) $ 21,782
$ 16,583 $ 56,590 $ 45,120 � Adjusted EBITDA(a) $ 6,230 $ 4,369 $
16,210 $ 12,122 � Net Income from Continuing Operations $ 1,327 $
610 $ 2,489 $ 1,005 � Net Income $ 1,327 $ 745 $ 2,489 $ 894 � EPS
from Continuing Operations $ 0.04 $ 0.02 $ 0.07 $ 0.03 � EPS $ 0.04
$ 0.02 $ 0.07 $ 0.03 � Number of Shares 37,604 35,425 36,734 35,423
� Segment Information � Revenues: Urology Services $ 39,135 $
31,625 $ 106,550 $ 90,846 � Medical Products $ 5,636 $ 4,176 $
14,467 $ 13,002 � Adjusted EBITDA(a): Urology Services $ 5,428 $
4,980 $ 15,039 $ 13,944 � Medical Products $ 1,588 $ 585 $ 5,088 $
1,722 � Other Information: � Cashflow from Operations $ 17,191 $
18,466 $ 51,305 $ 45,564 � Net Draws (Payments) on Senior Credit
Facility $ 6,000 $ - $ 6,000 $ - � Net Debt $ (6,322 ) $ (13,589 )
$ (6,322 ) $ (13,589 ) � � � (a) See accompanying reconciliation of
EBITDA and Adjusted EBITDA HealthTronics, Inc. and Subsidiaries
Non-GAAP Financial Measures Reconciliation of EBITDA and Adjusted
EBITDA Continuing Operations For the Periods Ended September 30,
2008 and 2007 Unaudited In thousands � � � � � � Three Months Ended
September 30, Nine Months Ended September 30, Consolidated 2008
2007 2008 2007 � Income from Continuing Operations $ 1,327 $ 610 $
2,489 $ 1,005 � Add Back(deduct): Provision for income taxes 889
389 1,730 956 Interest expense 182 196 591 644 Depreciation and
amortization 3,073 2,747 8,770 8,339 Restructuring costs 198 400
160 400 Stockbased compensation costs � 561 � � 27 � � 2,470 � �
778 � � Adjusted EBITDA 6,230 4,369 16,210 12,122 � Add Back:
Minority interest expense � 15,552 � � 12,214 � � 40,380 � � 32,998
� � EBITDA $ 21,782 � $ 16,583 � $ 56,590 � $ 45,120 � � � Urology
Services Segment � Revenues $ 39,135 $ 31,625 $ 106,550 $ 90,846 �
Expenses: Cost of Services (18,191 ) (14,536 ) (51,322 ) (44,214 )
Other Income (Expenses) � 55 � � 118 � � 239 � � 352 � � EBITDA
20,999 17,207 55,467 46,984 � Minority interest expense � (15,571 )
� (12,227 ) � (40,428 ) � (33,040 ) � Adjusted EBITDA $ 5,428 � $
4,980 � $ 15,039 � $ 13,944 � � � Medical Products Segment �
Revenues $ 5,636 $ 4,176 $ 14,467 $ 13,002 � Expenses: Cost of
Services (4,076 ) (3,612 ) (9,460 ) (11,349 ) Other Income
(Expenses) � 10 � � 7 � � 34 � � 27 � � EBITDA 1,570 571 5,041
1,680 � Minority interest expense � 18 � � 14 � � 47 � � 42 � �
Adjusted EBITDA $ 1,588 � $ 585 � $ 5,088 � $ 1,722 �
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