HealthTronics, Inc. (NASDAQ:HTRN), a leading provider or Urology
services and products, today announced its financial results for
the quarter and year ended December 31, 2007. Fourth Quarter 2007
Revenue from continuing operations for the fourth quarter 2007
totaled $36.1 million, up from $33.4 million in the fourth quarter
of 2006 and $36.0 million in the third quarter 2007. The Company's
loss from continuing operations for the fourth quarter of 2007, in
accordance with generally accepted accounting principles ("GAAP"),
totaled $15.5 million or $0.44 per diluted share, which compares to
a loss of $17.3 million or $0.49 cents per diluted share in the
fourth quarter of 2006. Excluding a $20.8 million non-cash charge
for goodwill impairment recorded in the fourth quarter of 2007, the
Company recorded income from continuing operations of $1.1 million,
or $0.03 per diluted share. The Company's adjusted EBITDA from
continuing operations for the fourth quarter 2007 was $5.2 million,
which compares to $2.7 million in the fourth quarter of 2006. The
earnings growth was driven by revenue from both the Urology
Services division and the Medical Products division. Urology
Services division growth resulted from increased sales from
existing partnerships and the acquisition of our interest in the
Keystone partnership. Medical Products division growth resulted
from revenue increases at both the ClariPath lab and the service
and maintenance business. The 2007 adjusted EBITDA includes
approximately $900,000 of income related to the Company�s former
Swiss manufacturing subsidiary�s insolvency proceedings. Full Year
2007 Revenue from continuing operations for the year ended December
31, 2007 totaled $140.4 million as compared to $142.9 million for
the year ended December 31, 2006. The Company�s loss from
continuing operations in 2007, in accordance with generally
accepted accounting principles (�GAAP�), totaled $14.5 million or
$0.41 per share on a diluted basis compared to $16.4 million in
2006, or $0.47 per diluted share. These losses were due to goodwill
impairment charges recorded in the fourth quarter of both years.
The Company�s adjusted EBITDA for 2007 was $17.3 million compared
to $17.9 million in 2006. The Company had cash and cash equivalents
totaling $25.2 million and $27.9 million as of December 31, 2007
and December 31, 2006, respectively. The Company had cash flows
from operations totaling $61.9 million, which compares to cash flow
from operations of $48.9 million for fiscal year 2006. In addition,
net working capital was approximately $56 million and there were no
monies drawn on HealthTronics� $50 million revolving line of
credit. Urology Services Urology Services division revenue for the
fourth quarter of 2007 was $31.9 million, up 5 percent from the
$30.3 million recorded in the fourth quarter of 2006. Divisional
adjusted EBITDA was $4.7 million for Urology Services, or fifteen
percent of revenue in the fourth quarter of 2007 which was up
slightly from the fourth quarter of 2006. Same store partnership
revenue was up 5% in the fourth quarter as volumes at these
partnerships also increased 5% from the fourth quarter of 2006.
Medical Products Medical Products division revenue for the fourth
quarter of 2007 was $4.1 million compared to $3.0 million in the
fourth quarter of 2006. Divisional adjusted EBITDA was $1.3 million
in the fourth quarter 2007, which compares to a loss of $952,000 in
the fourth quarter of 2006. Business Outlook James Whittenburg,
President and Chief Executive Officer, commented, "The fourth
quarter results exceeded our forecasts, absent the goodwill charge,
and the year concluded a vigorous period of transformation for
HealthTronics. Most importantly, we stabilized our core Urology
Services business as indicated by the same store partnership
metrics in the fourth quarter. During the year, we also implemented
new growth initiatives, including the introduction of our TotalRad
urology focused radiation therapy center concept, expanded the
ClariPath laboratory business, and deployed additional units of the
RevoLix BPH surgical laser. We also expanded our partnership
network with the purchase of our interest in the KeyStone
partnership.� Mr. Whittenburg continued, "We have exceeded our
internal forecast for the fourth consecutive quarter. Our base
business is now in a position to sustain growth as exhibited by our
performance in the back half of 2007. Absent the proceeds from the
bankruptcy court, the fourth quarter adjusted EBITDA is a good
indicator of the type of quarterly financial results HealthTronics
should deliver in 2008. Our base business EBITDA is on a $19
million annual run rate while we expect to invest approximately $2
million on our radiation therapy initiative during 2008. We will
continue to look for opportunistic acquisitions and growth
opportunities that will either expand our footprint in Urology
Services or expand our product offerings in Medical Products.�
Conference Call and Webcast: Management of HealthTronics will host
a conference call today at 5:00 pm EDT. Interested parties may
participate in the call by dialing 1-877-879-6184 (International
callers dial 1-719-325-4812) and ask for the "HealthTronics Q4 2007
Earnings" call (confirmation code: 5820462). Please call in 10
minutes before the call is scheduled to begin. The conference call
will also be web cast live via the Investors section of
HealthTronics' web site at www.healthtronics.com. To listen to the
live web cast, 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 available on
the HealthTronics web site for approximately two weeks.
HealthTronics' Use of Non-GAAP Financial Measures: This press
release includes financial measures for net income (loss), 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 this
press release, 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. 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-imaging equipment,
maintenance services offerings, and anatomical pathology services.
For more information, visit www.healthtronics.com. Statements by
the Company's management in this press release or during the
conference call announced in this press release that are not
strictly historical, including statements regarding plans,
objectives 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' products and 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 Year Ended
December 31, December 31, 2007 2006 2007 2006 Revenue: Urology
Services $ 31,890 $ 30,290 $ 122,736 $ 123,265 Medical Products
4,100 3,030 17,101 19,080 Other 159 � 128 � 581 � 546 � Total
revenue 36,149 � 33,448 � 140,418 � 142,891 � � Cost of services
and general and administrative expenses: Urology Services 13,364
14,014 53,490 51,262 Medical Products 3,148 3,801 11,225 16,797
Selling, general and administrative 2,925 4,971 15,884 20,298
Impairment charges 20,800 20,600 20,800 20,600 Depreciation and
amortization 2,768 � 2,943 � 11,107 � 11,275 � 43,005 � 46,329 �
112,506 � 120,232 � � Operating income (6,856 ) (12,881 ) 27,912
22,659 � Other income (expenses): Interest and dividends 312 259
1,146 755 Interest expense (185 ) (251 ) (829 ) (1,146 ) 127 � 8 �
317 � (391 ) Income from continuing operations before provision for
income taxes and minority interest (6,729 ) (12,873 ) 28,229 22,268
� Minority interest in consolidated income 12,570 10,247 45,568
43,277 � Provision (benefit) for income taxes (3,809 ) (5,825 )
(2,854 ) (4,563 ) � Income (loss) from continuing operations
(15,490 ) (17,295 ) (14,485 ) (16,446 ) � Income (loss) from
discontinued operations, net of tax (36 ) (7,840 ) (147 ) 25,129 �
� Net income $ (15,526 ) $ (25,135 ) $ (14,632 ) $ 8,683 � � Basic
earnings per share: Income (loss) from continuing operations $
(0.44 ) $ (0.49 ) $ (0.41 ) $ (0.47 ) Income (loss) from
discontinued operations $ - � $ (0.22 ) $ - � $ 0.72 � Net income $
(0.44 ) $ (0.71 ) $ (0.41 ) $ 0.25 � Weighted average shares
outstanding 35,425 � 35,373 � 35,421 � 35,157 � � Diluted earnings
per share: Income (loss) from continuing operations $ (0.44 ) $
(0.49 ) $ (0.41 ) $ (0.47 ) Income (loss) from discontinued
operations $ - � $ (0.22 ) $ - � $ 0.72 � Net income $ (0.44 ) $
(0.71 ) $ (0.41 ) $ 0.25 � Weighted average shares outstanding
35,425 � 35,373 � 35,424 � 35,347 � HealthTronics, Inc.
Consolidated Balance Sheets (Unaudited) � � December 31, December
31, ($ in thousands) 2007 2006 � ASSETS � Total current assets $
74,214 $ 71,825 � Property and equipment, net 33,019 34,270 �
Assets held for sale - 1,258 � Goodwill 217,505 229,261 � Other
assets 11,318 10,119 � $ 336,056 $ 346,733 � LIABILITIES � Total
current liabilities $ 17,692 $ 30,123 � Long-term debt, net of
current portion 4,194 5,673 � Liabilities held for sale - 258 �
Other long-term liabilities 30,099 25,058 � Total liabilities
51,985 61,112 � Minority interest 41,653 30,104 � Total
stockholders' equity 242,418 255,517 � $ 336,056 $ 346,733
HealthTronics, Inc. Supplemental Financial Information Continuing
Operations For the Periods Ended December 31, 2007 and 2006
Unaudited In thousands, except per share data � � � � � 4th Quarter
Year to Date 2007 2006 2007 2006 � Summary of Results from
Operations Revenues $ 36,149 $ 33,448 $ 140,418 $ 142,891 �
EBITDA(a) $ 17,757 $ 12,899 $ 62,878 $ 61,145 � Adjusted EBITDA(a)
$ 5,187 $ 2,652 $ 17,310 $ 17,868 � Net Income (loss) from
Continuing Operations $ (15,490 ) $ (17,295 ) $ (14,485 ) $ (16,446
) � Net Income $ (15,526 ) $ (25,135 ) $ (14,632 ) $ 8,683 � EPS
from Continuing Operations $ (0.44 ) $ (0.49 ) $ (0.41 ) $ (0.47 )
� EPS $ (0.44 ) $ (0.71 ) $ (0.41 ) $ 0.25 � Number of Shares
35,425 35,373 35,424 35,347 � Segment Information � Revenues:
Urology Services $ 31,890 $ 30,290 $ 122,736 $ 123,265 � Medical
Products $ 4,100 $ 3,030 $ 17,101 $ 19,080 � Adjusted EBITDA(a):
Urology Services $ 4,746 $ 4,712 $ 18,691 $ 23,567 � Medical
Products $ 1,336 $ (952 ) $ 3,057 $ (597 ) � Other Information: �
Cashflow from Operations $ 16,313 $ 12,046 $ 61,877 $ 48,892 � Net
Draws (Payments) on Senior Credit Facility $ - $ - $ - $ (124,063 )
� Net Debt $ (16,672 ) $ (16,520 ) $ (16,672 ) $ (16,520 ) � (a)
See accompanying reconciliation of EBITDA and Adjusted EBITDA
Continuing Operations Non-GAAP Financial Measures Reconciliation of
EBITDA and Adjusted EBITDA Continuing Operations For the Periods
Ended December 31, 2007 and 2006 Unaudited In thousands � � � � �
4th Qtr Year to Date Consolidated 2007 2006 2007 2006 � Income
(loss) from Continuing Operations $ (15,490 ) $ (17,295 ) $ (14,485
) $ (16,446 ) � Add Back(deduct): Provision for income taxes (3,809
) (5,825 ) (2,854 ) (4,563 ) Interest expense 185 251 829 1,146
Depreciation and amortization 2,768 2,943 11,107 11,275
Restructuring costs 403 1,039 803 4,234 Impairment of goodwill
20,800 20,600 20,800 20,600 Stockbased compensation costs 330 � 939
� 1,110 � 1,622 � � Adjusted EBITDA 5,187 2,652 17,310 17,868 � Add
Back: Minority interest expense 12,570 � 10,247 � 45,568 � 43,277 �
� EBITDA $ 17,757 � $ 12,899 � $ 62,878 � $ 61,145 � � � Urology
Services Segment � Revenues $ 31,890 $ 30,290 $ 122,736 $ 123,265 �
Expenses: Cost of Services (14,728 ) (15,602 ) (58,941 ) (57,247 )
Other Income (Expenses) 171 � 90 � 523 � 294 � � EBITDA 17,333
14,778 64,318 66,312 � Minority interest expense (12,587 ) (10,279
) (45,627 ) (43,358 ) � Adjusted EBITDA before add backs: $ 4,746 �
$ 4,499 � $ 18,691 � $ 22,954 � � Add Backs: Restructuring costs -
� 213 � - � 613 � � Adjusted EBITDA $ 4,746 � $ 4,712 � $ 18,691 �
$ 23,567 � � � Medical Products Segment � Revenues $ 4,100 $ 3,030
$ 17,101 $ 19,080 � Expenses: Cost of Services (2,791 ) (4,644 )
(14,140 ) (20,430 ) Other Income (Expenses) 11 � 12 � 38 � 55 � �
EBITDA 1,320 (1,602 ) 2,999 (1,295 ) � Minority interest expense 16
� 33 � 58 � 81 � � Adjusted EBITDA before add backs: $ 1,336 � $
(1,569 ) $ 3,057 � $ (1,214 ) � Add Backs: Restructuring costs - �
617 � - � 617 � � Adjusted EBITDA $ 1,336 � $ (952 ) $ 3,057 � $
(597 )
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