EX-99.1 2 a14-19416_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

21ST CENTURY ONCOLOGY HOLDINGS, INC.

 

Investors:

The Ruth Group

Nick Laudico

646-536-7030

nlaudico@theruthgroup.com

 

21ST CENTURY ONCOLOGY REPORTS SECOND QUARTER 2014 FINANCIAL RESULTS

 

Second Quarter 2014 Highlights:

 

·                  Total Company pro-forma revenues of $265.9 million; 39.3% year-over-year increase, including $65.1 million contribution from OnCure Holdings, Inc (“OnCure”) and South Florida Radiation Oncology (“SFRO”)

·                  Total domestic Radiation Oncology cases completed increased 9.3%

·                  International cases increased 17.3%

·                  Same market freestanding treatments per day grew 2.2% year-over-year

·                  Same market freestanding revenues increased 8.9% year-over-year

·                  Pro Forma Adjusted EBITDA of $43.2 million or 16.2% of total pro-forma revenues

·                  Continued integration of OnCure and SFRO

·                  Signed Recapitalization Support Agreement with existing noteholders in 3Q, 2014

 

FORT MYERS, FL, August 20, 2014 — 21st Century Oncology Holdings, Inc. (“21st Century Oncology”, the “Company”), the leading global, physician-led provider of integrated cancer care (“ICC”) services, announced today its financial results for the second quarter ended June 30, 2014.

 

Dr. Daniel Dosoretz, Founder and Chief Executive Officer, commented, “The first half of 2014 marked a significant transformation of the Company as we continued to integrate the two largest acquisitions in our history.  I am very pleased to report that we have made substantial progress on the integration of OnCure and have made significant headway with the integration of SFRO.  OnCure and SFRO are performing at or ahead of our expectations.  Our dedication and new markets combined with executing our business model has led to continued growth across all of our key operating metrics, including total radiation oncology cases being up 9.3% and same market treatments per day up 2.2%.  We believe our fundamental business remains strong and we continue to execute on our strategy of growth through organic initiatives and selective acquisitions.”

 

“Additionally, we are extremely pleased that investors continue to recognize the Company’s leading position in the industry and long-term potential.  This commitment was demonstrated via the Recapitalization Support Agreement we signed in late July. We believe that this agreement will lead to a deleveraging of the Company sometime in the fourth quarter, thereby enabling us to focus on profitable growth through the build out of our network and further accretive acquisitions,” Dr. Dosoretz added.

 



 

Second Quarter 2014 Results

 

Total revenues for the second quarter of 2014 were $265.9 million, compared to total pro-forma revenues of $190.8 million in the same quarter of 2013. The increase in revenue was principally driven by $65.1 million in revenue contribution from the OnCure and SFRO acquisitions, increased census, and international revenue growth. SFRO revenues for the second quarter of 2014 totaled $41.3 million, or 15.5% of total revenues.

 

Total domestic radiation oncology cases completed increased 9.3% and domestic same market treatments per day increased 2.2% in the second quarter of 2014. The growth was primarily driven by the continued expansion of our physician network. Domestic same market therapy revenue per treatment increased 6.5% from the second quarter of 2013, primarily due to continued improvements in managed care pricing, a stable Medicare pricing environment and the continued application of advanced technologies.

 

Total Relative Value Units (RVUs) per day increased by 44.0% in the second quarter versus the same period of the prior year due to treatment growth and technology mix. On a same market basis, RVUs decreased only 1.3% versus the same period last year due to the Company’s mix of service.

 

Adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation and other non-cash and pro forma items (“Pro Forma Adjusted EBITDA”) in the second quarter of 2014 was $43.2 million, or 16.2% of total revenues, which included $6.1 million from SFRO, compared to $24.8 million, or 13.0% of total pro forma revenues, in the second quarter of 2013. Reconciliation of net loss attributable to 21st Century Oncology, determined in accordance with generally accepted accounting principles to Pro Forma Adjusted EBITDA and total revenues, determined in accordance with generally accepted accounting principles, to total pro forma revenues for the quarters ended June 30, 2014 and 2013 is included in the attached supplemental financial information.

 

Income tax expense in the second quarter of 2014 was $0.9 million, compared to $1.4 million in the second quarter of 2013. The net loss for the second quarter of 2014 was $204.6 million, compared to a net loss of $19.5 million in the second quarter of 2013.  The net loss in the second quarter of 2014 included a preliminary impairment charge of approximately $182.0 million attributable to the recapitalization support agreement and revisions of the Company’s financial forecasts, primarily to write down goodwill to their implied fair values.

 

Recent Developments

 

In July 2014, the Company entered into two agreements with a group of noteholders of its outstanding 9 7/8% Senior Subordinated Notes due 2017, a Recapitalization Support Agreement (“RSA”) and a $17.5 million short-term Credit Agreement.   The RSA signed by the Company, the Company’s principal stockholder, affiliates of Vestar Capital Partners, and the holders of 72% in aggregate principal amount of the Company’s Senior Subordinated Notes, provides a pathway to a recapitalization of the Company via either an equity contribution or subordinated debt issuance of a minimum of $150 million or the consummation of a recapitalization whereby the holders of the Senior Subordinated Notes would exchange their notes for 95% of the equity interests in the reorganized Company, subject to dilution for a new management incentive plan and new warrants.   The recapitalization is expected to occur in October or November, 2014,

 



 

resulting in a meaningful reduction in debt and interest expense, and consequently permitting the Company to continue to pursue its business plan.  Separately, Medical Developers LLC, a subsidiary of the Company, entered into a new credit agreement providing for term loans in an aggregate amount of $17.5 million to fund working capital and general corporate expenses. Additionally, the Company’s subsidiary, SFRO amended its credit agreement to provide for an incremental term loan of approximately $9.9 million (net of original issue discount) in order to refinance certain existing capital lease obligations and to repay an outstanding inter-company loan.

 

A detailed Form 8-K filing that includes the specifics of the new term loan and recapitalization support agreement is available on the U.S. Securities and Exchange Commission (SEC) website, www.sec.gov.

 

Conference Call

 

Management will host a conference call on August 28, 2014 at 9:00 a.m. Eastern Time, during which management will discuss its financial results in further detail. The dial-in numbers are (877) 407-9039 for domestic callers and (201) 689-8470 for international callers.  In addition, a telephonic replay of the call will be available until September 11, 2014.  The replay dial-in numbers are (877) 870-5176 for domestic callers and (858) 384-5517 for international callers.  Please use the conference ID number 13589401 to access the replay.

 

A live webcast and webcast replay of the call will also be available from the Events section on the corporate web site at www.21co.com.

 

About 21st Century Oncology Holdings, Inc.

 

21st Century Oncology Holdings, Inc. is the largest global, physician led provider of Integrated Cancer Care Services. The Company offers a comprehensive range of cancer treatment services, focused on delivering academic quality, cost-effective patient care in personal and convenient settings. The Company operates 180 treatment centers, including 145 centers located in 16 U.S. states. The Company also operates 35 centers located in six countries in Latin America. The Company holds market leading positions in most of its domestic local markets and abroad.

 

(Source: 21st Century Oncology Holdings, Inc.)

 

Forward-Looking Statements

 

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended.  Statements preceded by, followed by or that otherwise include the words “believes”, “expects”, “anticipates”, “intends”, “projects”, “estimates”, “plans”, “may increase”, “forecast” and similar expressions or future or conditional verbs such as “will”, “should”, “would”, “may” and “could” are generally forward-looking in nature and not historical facts. Forward-looking statements are based on management’s current expectations or beliefs about the Company’s future plans, expectations and objectives, including, but not limited to, the Company’s expected financial results and estimates for 2014 and the effects of the CMS’s Final Rule for the 2014 Physician Fee Schedule on its results.  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 reductions in Medicare reimbursement, healthcare reform, decreases in payments by managed care organizations and other commercial payers  and other risk factors that may be described from time to time in the Company’s filings with the Securities and Exchange Commission.  Readers of this release are cautioned not to place undue reliance on forward-looking statements contained herein, which speak only as of the date stated, or if no date is stated, as of the date of this press release. 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, unless required by law.

 



 

21ST CENTURY ONCOLOGY HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

(unaudited)

 

 

 

June 30,

 

December 31,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

25,682

 

$

17,462

 

Restricted cash

 

14,760

 

3,768

 

Accounts receivable, net

 

144,325

 

117,044

 

Prepaid expenses

 

7,319

 

7,577

 

Inventories

 

4,841

 

4,393

 

Deferred income taxes

 

46

 

375

 

Other

 

7,617

 

12,534

 

Total current assets

 

204,590

 

163,153

 

 

 

 

 

 

 

Equity investments in joint ventures

 

2,925

 

2,555

 

Property and equipment, net

 

275,297

 

240,371

 

Real estate subject to finance obligation

 

16,476

 

19,239

 

Goodwill

 

486,536

 

578,013

 

Intangible assets, net

 

87,451

 

85,025

 

Other assets

 

38,192

 

39,835

 

Total assets

 

$

1,111,467

 

$

1,128,191

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

83,153

 

$

57,613

 

Accrued expenses

 

84,130

 

64,021

 

Income taxes payable

 

180

 

2,372

 

Current portion of long-term debt

 

38,180

 

17,536

 

Current portion of finance obligation

 

278

 

317

 

Other current liabilities

 

18,880

 

12,237

 

Total current liabilities

 

224,801

 

154,096

 

Long-term debt, less current portion

 

1,097,473

 

974,130

 

Finance obligation, less current portion

 

17,246

 

20,333

 

Other long-term liabilities

 

45,549

 

38,453

 

Deferred income taxes

 

4,790

 

4,498

 

Total liabilities

 

1,389,859

 

1,191,510

 

 

 

 

 

 

 

Noncontrolling interests - redeemable

 

46,652

 

15,899

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

Common stock, $0.01 par value, 1,028 shares authorized, 1,028 issued and outstanding at June 30, 2014 and December 31, 2013

 

 

 

Additional paid-in capital

 

651,034

 

650,879

 

Retained deficit

 

(955,942

)

(718,237

)

Accumulated other comprehensive loss, net of tax

 

(36,128

)

(26,393

)

Total 21st Century Oncology Holdings, Inc. shareholder’s deficit

 

(341,036

)

(93,751

)

Noncontrolling interests - nonredeemable

 

15,992

 

14,533

 

Total deficit

 

(325,044

)

(79,218

)

Total liabilities and equity

 

$

1,111,467

 

$

1,128,191

 

 



 

21ST CENTURY ONCOLOGY HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Net patient service revenue

 

$

245,950

 

$

175,847

 

$

459,858

 

$

347,820

 

Management fees

 

16,856

 

 

33,453

 

 

Other revenue

 

3,092

 

2,262

 

5,984

 

4,266

 

Total revenues

 

265,898

 

178,109

 

499,295

 

352,086

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

135,803

 

99,687

 

261,712

 

195,940

 

Medical supplies

 

24,502

 

14,407

 

46,236

 

30,249

 

Facility rent expenses

 

17,167

 

10,675

 

32,662

 

20,858

 

Other operating expenses

 

16,096

 

10,997

 

30,477

 

21,273

 

General and administrative expenses

 

34,060

 

23,161

 

64,174

 

43,896

 

Depreciation and amortization

 

22,162

 

15,320

 

42,884

 

30,491

 

Provision for doubtful accounts

 

3,428

 

2,015

 

7,724

 

5,090

 

Interest expense, net

 

29,899

 

20,473

 

57,426

 

40,417

 

Impairment loss

 

182,000

 

 

182,000

 

 

Equity initial public offering expenses

 

4,163

 

 

4,163

 

 

Loss on sale leaseback transaction

 

 

 

135

 

 

Fair value adjustment of earn-out liability

 

204

 

 

403

 

 

Gain on the sale of an interest in a joint venture

 

 

(1,460

)

 

(1,460

)

Loss on foreign currency transactions

 

79

 

758

 

107

 

802

 

Loss (gain) on foreign currency derivative contracts

 

 

190

 

(4

)

242

 

Total expenses

 

469,563

 

196,223

 

730,099

 

387,798

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(203,665

)

(18,114

)

(230,804

)

(35,712

)

Income tax expense

 

934

 

1,371

 

3,040

 

3,150

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

(204,599

)

(19,485

)

(233,844

)

(38,862

)

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests- redeemable and non-redeemable

 

(2,925

)

(654

)

(3,861

)

(1,018

)

 

 

 

 

 

 

 

 

 

 

Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder

 

(207,524

)

(20,139

)

(237,705

)

(39,880

)

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

Unrealized loss on foreign currency translation

 

(750

)

(3,408

)

(10,606

)

(5,589

)

Other comprehensive loss

 

(750

)

(3,408

)

(10,606

)

(5,589

)

 

 

 

 

 

 

 

 

 

 

Comprehensive loss:

 

(205,349

)

(22,893

)

(244,450

)

(44,451

)

Comprehensive income attributable to noncontrolling interests- redeemable and non-redeemable

 

(2,873

)

(294

)

(2,990

)

(491

)

Comprehensive loss attributable to 21st Century Oncology Holdings, Inc. shareholder

 

$

(208,222

)

$

(23,187

)

$

(247,440

)

$

(44,942

)

 



 

21ST CENTURY ONCOLOGY HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2014

 

2013

 

Cash flows from operating activities

 

 

 

 

 

Net loss

 

$

(233,844

)

$

(38,862

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

Depreciation

 

35,275

 

26,222

 

Amortization

 

7,609

 

4,269

 

Deferred rent expense

 

230

 

422

 

Deferred income taxes

 

378

 

(1,138

)

Stock-based compensation

 

71

 

345

 

Provision for doubtful accounts

 

7,724

 

5,090

 

Loss on the sale/disposal of property and equipment

 

59

 

76

 

Loss on sale leaseback transaction

 

135

 

 

Impairment loss

 

182,000

 

 

Equity initial public offering expenses

 

4,163

 

 

Gain on the sale of an interest in a joint venture

 

 

(1,460

)

Loss on foreign currency transactions

 

 

34

 

(Gain) loss on foreign currency derivative contracts

 

(4

)

242

 

Fair value adjustment of earn-out liability

 

403

 

 

Amortization of debt discount

 

1,301

 

391

 

Amortization of loan costs

 

3,039

 

2,731

 

Equity interest in net loss of joint ventures

 

135

 

332

 

Distribution received from unconsolidated joint ventures

 

106

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable and other current assets

 

(26,977

)

(9,677

)

Income taxes payable

 

(649

)

(261

)

Inventories

 

(439

)

(461

)

Prepaid expenses

 

3,096

 

46

 

Accounts payable and other current liabilities

 

13,857

 

8,822

 

Accrued deferred compensation

 

591

 

656

 

Accrued expenses / other current liabilities

 

11,610

 

5,795

 

 

 

 

 

 

 

Net cash provided by operating activities

 

9,869

 

3,614

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchase of property and equipment

 

(33,147

)

(17,769

)

Acquisition of medical practices

 

(40,843

)

(22,848

)

Restricted cash associated with medical practice acquisitions

 

(10,992

)

(5,001

)

Proceeds from the sale of equity interest in a joint venture

 

 

1,460

 

Proceeds from the sale of property and equipment

 

73

 

4

 

Loans to employees

 

(410

)

(153

)

Contribution of capital to joint venture entities

 

(620

)

(542

)

Proceeds (payment) of foreign currency derivative contracts

 

26

 

(171

)

Premiums on life insurance policies

 

(450

)

(626

)

Change in other assets and other liabilities

 

(401

)

5

 

 

 

 

 

 

 

Net cash used in investing activities

 

(86,764

)

(45,641

)

 



 

21ST CENTURY ONCOLOGY HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Six Months Ended
June 30,

 

 

 

2014

 

2013

 

Cash flows from financing activities

 

 

 

 

 

Proceeds from issuance of debt

 

130,016

 

83,880

 

Principal repayments of debt

 

(41,759

)

(45,501

)

Repayments of finance obligation

 

(113

)

(99

)

Proceeds from issuance of noncontrolling interest

 

1,250

 

 

Proceeds from noncontrolling interest holders - redeemable and non-redeemable

 

229

 

765

 

Cash distributions to noncontrolling interest holders - redeemable and non-redeemable

 

(956

)

(650

)

Payments of costs for equity securities offering

 

(2,550

)

 

Payments of loan costs

 

(967

)

 

 

 

 

 

 

 

Net cash provided by financing activities

 

85,150

 

38,395

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(35

)

(19

)

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

8,220

 

(3,651

)

Cash and cash equivalents, beginning of period

 

17,462

 

15,410

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

25,682

 

$

11,759

 

 

 

 

 

 

 

Supplemental disclosure of noncash transactions

 

 

 

 

 

Finance obligation related to real estate projects

 

$

1,106

 

$

5,029

 

Derecognition of finance obligation related to real estate projects

 

$

4,119

 

$

 

Capital lease obligations related to the purchase of equipment

 

$

7,069

 

$

78

 

Service contract component related to the acquisition of equipment through accounts payable

 

$

5,175

 

$

 

Issuance of notes payable relating to the acquisition of medical practices

 

$

2,000

 

$

2,097

 

Liability relating to the escrow debt and purchase price of medical practices

 

$

11,687

 

$

 

Capital lease obligations related to the acquisition of medical practices

 

$

47,796

 

$

8,748

 

Earn-out accrual related to the acquisition of medical practices

 

$

1,003

 

$

 

Amounts payable to sellers in the purchase of a medical practice

 

$

390

 

$

 

Incurred offering costs

 

$

1,613

 

$

 

Noncash dividend declared to noncontrolling interest

 

$

282

 

$

 

Noncash contribution of capital by noncontrolling interest holders

 

$

 

$

4,235

 

 



 

21ST CENTURY ONCOLOGY HOLDINGS, INC.

Supplemental Financial Information (Unaudited)

Reconciliation of Total Pro-forma Revenue and Pro-forma Adjusted EBITDA to Net Loss Attributable

to 21st Century Oncology Holdings, Inc. Shareholder

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

(in thousands):

 

 

 

 

 

 

 

 

 

Total revenues

 

$

265,898

 

$

178,109

 

$

499,295

 

$

352,086

 

Pro-forma full period effect of acquisitions (a) 

 

 

12,729

 

8,819

 

28,185

 

Total pro-forma revenues

 

$

265,898

 

$

190,838

 

$

508,114

 

$

380,271

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder

 

$

(207,524

)

$

(20,139

)

$

(237,705

)

$

(39,880

)

Income tax expense

 

934

 

1,371

 

3,040

 

3,150

 

Interest expense, net

 

29,899

 

20,473

 

57,426

 

40,417

 

Depreciation and amortization

 

22,162

 

15,320

 

42,884

 

30,491

 

Impairment loss

 

182,000

 

 

182,000

 

 

Equity initial public offering expenses

 

4,163

 

 

4,163

 

 

Gain on the sale of an interest in a joint venture

 

 

(1,460

)

 

(1,460

)

Loss on sale leaseback transaction

 

 

 

135

 

 

Fair value adjustment of earn-out liability

 

204

 

 

403

 

 

Loss (gain) on foreign currency derivative contracts

 

 

190

 

(4

)

242

 

Management fees (b) 

 

170

 

223

 

340

 

481

 

Non-cash expenses (c) 

 

1,248

 

1,033

 

1,970

 

2,151

 

Sale-lease back adjustments (d) 

 

(329

)

(355

)

(632

)

(660

)

Acquisition-related costs (e) 

 

4,213

 

2,745

 

8,704

 

3,804

 

Other expenses (f) 

 

1,996

 

1,246

 

3,824

 

2,355

 

Litigation settlement (g) 

 

2,568

 

888

 

3,325

 

1,520

 

Tradename / rebranding initiative (h) 

 

250

 

169

 

592

 

340

 

Expenses associated with idle / closed treatment facilities (i) 

 

1,243

 

499

 

2,444

 

978

 

Pro-forma full period effect of acquisition EBITDA (a) 

 

 

2,626

 

742

 

5,595

 

 

 

 

 

 

 

 

 

 

 

Pro-forma Adjusted EBITDA (1) 

 

$

43,197

 

$

24,829

 

$

73,651

 

$

49,524

 

 

 

 

 

 

 

 

 

 

 

Pro-forma Adjusted EBITDA as a percentage of total pro-forma revenues

 

16.2

%

13.0

%

14.5

%

13.0

%

 



 


(1) Pro-forma Adjusted EBITDA is defined as income (loss) before interest expense (net of interest income), income taxes, depreciation and amortization, gain on the sale of an interest in a joint venture, loss on sale leaseback transaction, early extinguishment of debt, fair value adjustment of earn-out liability, impairment loss, foreign currency derivative contract loss (gain), management fees accrued to our sponsor, non-cash expenses including costs relating to stock compensation, amortization of straight-line rent and amortization of capital expenditures relating to repairs and maintenance, non-cash equipment rent, sale-lease back adjustments, acquisition-related costs, other expenses including loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums on termed physicians, franchise taxes, costs relating to consulting services on Medicare reimbursement, litigation settlements with physicians, expenses associated with the provision for income taxes, costs associated with tradename and rebranding initiatives, expenses associated with idle / closed radiation therapy treatment facilities and pro-forma full period effect of acquisition EBITDA.

 

(a) Pro-forma amounts related to adjustments to total revenues and Pro-forma Adjusted EBITDA to reflect the full period effect of our acquisitions and Value Added Services contracts completed during 2014 and 2013.  The adjustments reflect the impact to our total revenues and Pro-forma Adjusted EBITDA as if the acquisitions and Value Added Services contracts had occurred at the beginning of the year.

 

(b) Management fees are fees accrued to our sponsor, Vestar Capital Partners.

 

(c) Non-cash expenses including costs relating to stock compensation, amortization of straight-line rent, amortization of capital expenditures relating to warranty arrangements amortized to repairs and maintenance and non-cash equipment rent.

 

(d) Sale-lease back adjustments relates to the adjustment of benefit derived from the classification of operating leases as finance obligations reflecting a reclassification of interest expense and depreciation and amortization expense as rent expense.

 

(e) Acquisition related costs associated with ASC 805, “Business Combinations”, including professional fees, corporate development, integration and due diligence costs relating to the acquisition of medical practices.

 

(f) Other expenses include loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums paid on terminated physicians, franchise taxes and costs relating to consulting services on Medicare reimbursement.

 

(g) Litigation settlement relates to costs associated with the termination of physicians during 2013 and 2014.

 

(h) Expenses related to the costs associated with the Company’s tradename and rebranding initiatives.

 

(i) Expenses associated with idle / closed radiation therapy treatment facilities.

 

We believe the Pro-forma Adjusted EBITDA provides useful information about our financial performance to investors, lenders, financial analysts and rating agencies since these groups have historically used EBITDA-related measures in the healthcare industry, along with other measures, to estimate the value of a company, to make informed investment decisions, to evaluate a company’s leverage capacity and its ability to meet its debt service requirements.  Pro-forma Adjusted EBITDA eliminates the uneven effect of non-cash depreciation of tangibles assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting.  Pro-forma Adjusted EBITDA is also used by us to measure individual performance for incentive compensation purposes and as an analytical indicator for purposes of allocating resources to our operating business and assessing their performance, both internally and relative to our peers, as well as to evaluate the performance of our operating management teams, and for purposes in the calculation of debt covenants and related disclosures.

 

Pro-forma Adjusted EBITDA is not intended as a substitute for net income (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder, operating cash flows or other cash flow data determined in accordance with accounting principles generally accepted in the United States. Due to varying methods of calculation, Pro-forma Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

 



 

21ST CENTURY ONCOLOGY HOLDINGS, INC.

KEY OPERATING STATISTICS

(unaudited)

 

 

 

Three Months Ended

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

 

%

 

June 30,

 

%

 

United States

 

2014

 

2013

 

Change

 

2014

 

2013

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of treatment days

 

64

 

64

 

 

 

127

 

127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total RVU’s - freestanding centers

 

4,071,139

 

2,828,004

 

44.0

%

7,864,948

 

5,546,897

 

41.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RVU’s per day - freestanding centers

 

63,612

 

44,188

 

44.0

%

61,929

 

43,676

 

41.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage change in RVU’s per day - freestanding centers - same market basis

 

-1.3

%

-4.7

%

 

 

-0.3

%

-6.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total treatments - freestanding centers

 

203,311

 

132,139

 

53.9

%

395,304

 

257,809

 

53.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treatments per day - freestanding centers

 

3,177

 

2,065

 

53.9

%

3,113

 

2,030

 

53.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage change in revenue per treatment - freestanding centers - same market basis

 

6.5

%

-7.6

%

 

 

4.9

%

-6.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage change in treatments per day - freestanding centers - same market basis

 

2.2

%

3.2

%

 

 

2.8

%

1.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage change in freestanding revenues - same market basis

 

8.9

%

-4.7

%

 

 

7.8

%

-5.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Radiation oncology cases completed:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3-D cases

 

2,002

 

1,850

 

 

 

3,837

 

3,605

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IMRT cases

 

3,294

 

3,007

 

 

 

6,214

 

5,805

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other cases

 

583

 

523

 

 

 

1,106

 

1,050

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total radiation oncology cases completed

 

5,879

 

5,380

 

9.3

%

11,157

 

10,460

 

6.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treatments per radiation oncology case completed

 

24.1

 

24.2

 

 

 

23.9

 

24.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue per radiation oncology case

 

$

19,386

 

$

19,288

 

 

 

$

19,234

 

$

19,218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of employed, contracted and affiliated physicians:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Radiation oncologists

 

177

 

114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Urologists

 

164

 

122

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Surgeons

 

48

 

36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical oncologists

 

41

 

23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gynecologic oncologists

 

8

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other physicians

 

25

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliated physicians

 

319

 

269

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total physicians

 

782

 

577

 

35.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treatment centers - freestanding (global)

 

168

 

126

 

33.3

%

 

 

 

 

 

 

Treatment centers - professional / other (global)

 

12

 

5

 

140.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total treatment centers

 

180

 

131

 

37.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Days sales outstanding at quarter end

 

40

 

35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net patient service revenue - professional services only (in thousands)

 

$

82,060

 

$

52,574

 

 

 

$

152,918

 

$

105,479

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net patient service revenue - excluding physician practice expense (in thousands)

 

$

268,095

 

$

175,848

 

 

 

$

503,642

 

$

347,820

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

 

%

 

June 30,

 

%

 

International

 

2014

 

2013

 

Change

 

2014

 

2013

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of new cases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2-D cases

 

807

 

947

 

 

 

1,573

 

1,937

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3-D cases

 

3,050

 

2,539

 

 

 

5,919

 

4,784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IMRT / IGRT cases

 

743

 

434

 

 

 

1,389

 

806

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

4,600

 

3,920

 

17.3

%

8,881

 

7,527

 

18.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue per radiation oncology case

 

$

5,283

 

$

5,730

 

 

 

$

5,120

 

$

5,732

 

 

 

 

###