RTSX Radiation Therapy Services (MM)

Second Quarter 2007 Highlights: FORT MYERS, Fla., Aug. 2 /PRNewswire-FirstCall/ -- Radiation Therapy Services, Inc. (NASDAQ:RTSX), a leading operator of radiation therapy centers, today announced financial results for the second quarter ended June 30, 2007. Total revenue for the second quarter was $100.1 million, an increase of 37.9% from $72.6 million in the same quarter of 2006, with $15.0 million of the increase provided by new practices, or practices operated by Radiation Therapy for less than twelve months. Net patient service revenue, or revenue generated from services where the Company bills patients directly, principally at freestanding treatment centers, was $97.6 million. Other revenue, or revenue generated principally from services where Radiation Therapy bills a hospital for services provided, was $2.5 million. Second quarter 2007 net patient service revenue includes $3.0 million related to the cumulative adjustment for an understatement of revenue for one local market. Approximately $2.3 million pertains to the year ended 2006 with the balance attributable to the first quarter of 2007. Second quarter 2007 net patient service revenue was negatively impacted by machine upgrades performed during the quarter, which reduced the number of patients treated at those locations. While essential for long-term earnings growth, the down time for these upgrades negatively impacted second quarter 2007 net patient service revenue by approximately $1.7 million. During the second quarter of 2007, $16.1 million of total net patient service revenue of $97.6 million was generated from professional services, compared to $6.0 million for the second quarter of 2006. This increase includes revenue from urology and surgical practices that enable the Company to offer a more integrated group approach to cancer care in certain local markets. Same practice revenue growth, excluding the impact of the $3.0 million cumulative adjustment, was 14.2% for the quarter resulting from increases in revenue per treatment and treatments per day. For the second quarter 2007, the Company reported an average of 1,702 total treatments per day at its 69 freestanding centers, an 18.2% increase from the same period in 2006. Net income for the second quarter was $10.0 million, or $0.41 per diluted share, an increase of 13.2% from net income of $8.8 million, or $0.37 per diluted share, for the same period in 2006. In May 2007, the Company announced an agreement to acquire a radiation therapy treatment center in Salisbury, Maryland. The acquisition, which was completed in July, builds on Radiation Therapy's presence in the Maryland local market. The facility has intensity modulated radiation therapy (IMRT) and image guided radiation therapy (IGRT) programs. In June 2007, the Company closed a $50 million expansion of its credit facility by exercising the Term B accordion feature of the existing senior credit facility and using the proceeds to repay amounts outstanding under its revolving credit facility. This additional access to capital will support Radiation Therapy's continued expansion within existing markets as well as entry into new local markets. Radiation Therapy generated $28.9 million in net cash from operating activities for the six months ended June 30, 2007, up 33.8% from $21.6 million for the same period of 2006. Total capital expenditures, including capital lease obligations, for the six months ended June 30, 2007 were $20.2 million, compared to $18.2 million for the six months ended June 30, 2006. The Company's adjusted days sales outstanding for the second quarter 2007 were 54 days, compared to 57 days for the second quarter 2006. The Company defines adjusted DSOs as those related to practices it has operated for twelve months or longer. Dr. Daniel Dosoretz, President and Chief Executive Officer, said, "We are pleased with our second quarter results. We continued to successfully execute on our near- and long-term growth strategy, while also investing in new technology platforms. Our growth in same practice treatment volumes as well as in the utilization of advanced technologies continues to fuel our organic growth. Same practice treatments per day and revenue per treatment grew 3.8% and 9.1%, respectively, in-line with our stated guidance. IGRT utilization also continues to expand towards our guidance, reaching 43.8% in the quarter. We also built on our presence in the Maryland local market with the acquisition of the Salisbury facility, an established practice with a respected group of physicians. We continue to evaluate additional acquisition opportunities and have further positioned the Company for acquisition growth by expanding our credit facility during the quarter." Effective July 1, 2007 David N.T. Watson assumed the role of chief financial officer, succeeding David M. Koeninger, who announced his retirement last year. Mr. Koeninger will remain with the Company on a consultant basis until June 2008. In May 2007, the Company announced that Janet Watermeier was appointed to the Company's board of directors. Ms. Watermeier was appointed as an independent director to fill the vacancy created by the untimely death of James Charles Weeks in January 2007. Guidance Including announced acquisition activity, the Company is updating guidance for the full year 2007. The Company is increasing its expectation of revenues to the range of $390 to $402 million, and reducing its expectation of diluted earnings per share to the range of $1.50 to $1.56. For the third quarter of 2007, the Company expects revenue to be in the range of $93 million to $99 million, with diluted earnings per share in the range of $0.27 per share to $0.30 per share. The projections and guidance set forth above are estimates only and actual performance could differ. The Company's guidance includes announced acquisition activity. Conference Call Management will host a conference call today at 10:00 a.m. ET to discuss financial results, guidance and other developments and business plans. A live Web cast of the conference call will be available online on the Company's corporate Web site at http://www.rtsx.com/. The dial-in numbers are (877) 407-0784 for domestic callers, and (201) 689-8560 for international. After the live Web cast, the call will remain available on Radiation Therapy's Web site until September 2, 2007. In addition, a telephonic replay of the call will be available until August 16, 2007. The replay dial-in numbers are (877) 660-6853 for domestic callers and (201) 612-7415 for international callers. Please use account number 3055 and conference ID number 248073. About Radiation Therapy Services, Inc. Radiation Therapy Services, Inc., which operates radiation treatment centers primarily under the name 21st Century Oncology, is a provider of radiation therapy services to cancer patients. The Company's 80 treatment centers are clustered into 25 local markets in 16 states, including Alabama, Arizona, California, Delaware, Florida, Kentucky, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island and West Virginia. The Company is headquartered in Fort Myers, Florida. More information about the Company can be found at its Web site http://www.rtsx.com/. RTSXG This release may contain forward-looking statements about the Company's future plans, expectations and objectives, including, but not limited to, the Company's expected financial results and estimates for 2007. Words such as "may," "will," "expect," "intend," "anticipate," "plan," "believe," "seek," "could" and "estimate" and variations of these words and similar expressions are intended to identify forward- looking statements. These forward-looking statements are not historical facts and are subject to risks and uncertainties that could cause the actual results to differ materially from those projected in these forward-looking statements including, but not limited to the Company's actual financial results and those risk factors described in the "Risk Factors" section and other information in the Company's most recently filed quarterly report on Form 10-Q and annual report on Form 10-K, as well as the Company's other filings with the Securities and Exchange Commission which are available on the SEC's website at http://www.sec.gov/. Readers of this release are cautioned not to place undue reliance on forward-looking statements. The Company undertakes no obligation to publicly update or revise the forward- looking statements contained herein to reflect changed events or circumstances after the date of this release. Contact: Investors: David N.T. Watson Nick Laudico / Zack Kubow Chief Financial Officer The Ruth Group Radiation Therapy Services, Inc. 646-536-7030 / 7020 239-931-7281 RADIATION THERAPY SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (in thousands, except per share amounts) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Net patient service revenue $97,637 $69,666 $193,150 $140,883 Other revenue 2,504 2,965 4,807 5,690 Total revenues 100,141 72,631 197,957 146,573 Salaries and benefits 50,842 35,438 100,763 71,381 Medical supplies 3,013 1,712 5,838 3,898 Facility rent expense 3,189 2,239 6,211 4,493 Other operating expenses 4,304 2,599 8,611 5,611 General and administrative expenses 9,943 7,581 19,595 14,793 Depreciation and amortization 5,742 4,020 11,215 7,729 Provision for doubtful accounts 2,812 2,805 5,716 5,327 Interest expense, net 3,793 2,277 7,596 4,442 Total expenses 83,638 58,671 165,545 117,674 Income before minority interests 16,503 13,960 32,412 28,899 Minority interests in net (earnings) losses of consolidated entities (217) 403 (599) (112) Income before income taxes 16,286 14,363 31,813 28,787 Income tax expense 6,270 5,515 12,248 11,083 Net income 10,016 8,848 19,565 17,704 Other comprehensive income: Unrealized gain on derivative interest rate swap agreement, net of tax 121 124 70 237 Comprehensive income $10,137 $8,972 $19,635 $17,941 Net income per common share outstanding - basic $0.43 $0.38 $0.83 $0.77 Net income per common share outstanding - diluted $0.41 $0.37 $0.81 $0.74 Weighted average shares outstanding: Basic 23,477 23,165 23,445 23,063 Diluted 24,167 23,955 24,155 23,927 RADIATION THERAPY SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) June 30, December 31, 2007 2006 (unaudited) (a) ASSETS Current assets: Cash and cash equivalents $12,605 $15,413 Accounts receivable, net 66,695 52,764 Income taxes receivable 3,635 938 Prepaid expenses 6,072 8,273 Current portion of lease receivable 275 427 Inventories 1,764 1,613 Deferred income taxes 6,579 5,583 Other 1,222 2,527 Total current assets 98,847 87,538 Lease receivable, less current portion 42 154 Equity investments in joint ventures 1,205 1,215 Property and equipment, net 171,654 152,379 Goodwill 147,477 138,785 Intangible assets, net 7,400 7,599 Other assets 18,273 11,424 Total assets $444,898 $399,094 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $10,360 $10,604 Accrued expenses 21,111 14,679 Current portion of long-term debt 12,919 12,285 Total current liabilities 44,390 37,568 Long-term debt, less current portion 202,473 192,959 Other long-term liabilities 2,870 2,584 Deferred income taxes 27,146 24,070 Minority interest in consolidated entities 12,234 7,104 Total liabilities 289,113 264,285 Shareholders' equity Preferred stock, $0.0001 par value, 10,000 shares authorized, none issued or outstanding -- -- Common stock, $0.0001 par value, 75,000 shares authorized, 23,512 and 23,367 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively 2 2 Additional paid-in capital 82,869 81,465 Retained earnings 73,136 53,683 Notes receivable from shareholders (337) (386) Accumulated other comprehensive income, net of tax 115 45 Total shareholders' equity 155,785 134,809 Total liabilities and shareholders' equity $444,898 $399,094 (a) Derived from audited financial statements RADIATION THERAPY SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six months ended June 30, 2007 2006 Cash flows from operating activities Net income $19,565 $17,704 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 10,278 6,911 Amortization 937 818 Deferred rent expense 327 163 Deferred income tax provision 2,036 735 Stock based compensation 113 34 Tax benefit from stock option exercise (612) (1,339) Provision for doubtful accounts 5,716 5,327 Loss on the sale of property and equipment 2 39 Minority interests in net earnings of consolidated entities 599 112 Equity interest in net loss (income) of joint ventures 10 (22) Changes in operating assets and liabilities: Accounts receivable, gross (19,647) (11,848) Income taxes receivable 3,003 1,418 Inventories (151) (238) Prepaid expenses 2,201 (756) Accounts payable (1,866) 198 Accrued expenses 6,425 2,375 Net cash provided by operating activities 28,936 21,631 Cash flows from investing activities Purchase of property and equipment (17,119) (10,369) Acquisition of radiation centers (10,165) (12,907) Payment of assumed acquisition liability (5,200) -- Proceeds from the sale of property and equipment 2 4 Sales of marketable securities, net -- 5,450 (Loans to) repayments from employees (499) 11 Contribution of capital to joint venture entities (4,305) (14) Change in lease receivable 264 350 Change in other assets 641 (253) Net cash used in investing activities (36,381) (17,728) Cash flows from financing activities Proceeds from issuance of debt 12,500 1,800 Principal repayments of debt (8,894) (5,498) Proceeds from exercise of stock options 679 3,818 Tax benefit from stock option exercise 612 1,339 Payments of notes receivable from shareholders 49 47 Minority interest in partnership distribution (159) (92) Payments of loan costs (150) (60) Net cash provided by financing activities 4,637 1,354 Net (decrease) increase in cash and cash equivalents (2,808) 5,257 Cash and cash equivalents, at beginning of period 15,413 8,980 Cash and cash equivalents, at end of period $12,605 $14,237 Supplemental disclosure of non-cash transactions Recorded capital lease obligations related to the acquisition of equipment $3,087 $7,863 Recorded non-cash contribution of capital by minority interest holder $4,782 $-- Recorded non-cash contribution of capital to joint venture entities $1,099 $-- Recorded Term B loan borrowing used to pay down the revolver $50,000 $-- RADIATION THERAPY SERVICES, INC. AND SUBSIDIARIES KEY OPERATING STATISTICS (unaudited) Three Months Ended Six Months Ended June 30, % June 30, % 2007 2006 Change 2007 2006 Change Number of treatment days 64 64 128 128 Total treatments - freestanding centers 108,951 92,129 18.3% 219,973 187,525 17.3% Treatments per day - freestanding centers 1,702 1,440 18.2% 1,719 1,465 17.3% Percentage change in revenue per treatment - freestanding centers - same practice basis 9.1% 21.9% 8.1% 18.6% Percentage change in treatments per day - freestanding centers - same practice basis 3.8% 2.4% 3.5% 4.3% Local markets at period end 25 23 8.7% Treatment centers - freestanding 69 58 19.0% Treatment centers - hospital 11 12 -8.3% 80 70 14.3 % Adjusted days sales outstanding for the quarter * 54 57 * Excludes office locations operating for less than one year Percentage change in total revenues - same practice basis 14.2% 20.2% 11.6% 20.0% Net patient service revenue - professional services only (in thousands) $16,137 $6,006 $31,729 $12,748 DATASOURCE: Radiation Therapy Services, Inc. CONTACT: David N.T. Watson, Chief Financial Officer of Radiation Therapy Services, Inc., +1-239-931-7281, ; or Investors, Nick Laudico, +1-646-536-7030, , or Zack Kubow, +1-646-536-7020, , both of The Ruth Group, for Radiation Therapy Services, Inc. Web site: http://www.rtsx.com/

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