HealthTronics, Inc. (NASDAQ:HTRN), a leading provider of Urology
services and products, today announced its financial results for
the second quarter ended June 30, 2008. Second Quarter 2008 Revenue
from continuing operations for the second quarter 2008 totaled
$42.6 million, up from $35.6 million in the second quarter of 2007.
The Company's net income from continuing operations for the second
quarter of 2008, in accordance with generally accepted accounting
principles ("GAAP"), totaled $710,000 or $0.02 per diluted share,
which compares to $317,000 or $0.01 per diluted share in the second
quarter of 2007. The Company�s non-GAAP net income for the second
quarter 2008 totaled $0.04 per diluted share, which excludes
non-cash stock-based compensation expense and was up from the $0.02
per diluted share for the second quarter of 2007. The Company's
adjusted EBITDA from continuing operations for the second quarter
2008 was $5.8 million, which compares to $4.2 million in the second
quarter of 2007, an increase of 38 percent. The increase was due
primarily to revenue growth from the Urology Services division and
cost reductions implemented during 2007. Urology Services Urology
Services division revenue for the second quarter of 2008 was $37.9
million, up 23 percent from the $30.8 million recorded in the
second quarter of 2007. Urology Services division growth was driven
by the acquisition of Advanced Medical Partners, Inc. Same store
partnership revenue in the second quarter 2008 was consistent with
the second quarter 2007. Divisional adjusted EBITDA was $5.4
million compared to $5.0 million in the second quarter of 2007.
Medical Products Medical Products division revenue for the second
quarter of 2008 was $4.6 million which was consistent with the
second quarter of 2007. The ClariPath pathology laboratory�s
revenue increased 30 percent and service maintenance gross revenue,
before intercompany eliminations, grew 27 percent from the second
quarter of 2007. Manufacturing revenue decreased compared to the
second quarter of 2007 due to a lower number of devices sold in the
second quarter of 2008. Divisional adjusted EBITDA was $2 million
in the second quarter of 2008, which compared to $437,000 in the
second quarter of 2007. Medical Products division earnings growth
resulted from revenue increases at both the ClariPath laboratory,
the service and maintenance business, and cost reductions
implemented during 2007. Business Outlook James Whittenburg,
President and Chief Executive Officer commented, �We are pleased
with our financial results in the second quarter as we continue to
experience growth in all aspects of the business. We strive to be
the premier company in the urology market and as part of that we
have been active on many fronts this year. The past few quarters
were particularly busy as we cultivated our business through
internal initiatives and opportunistic acquisitions. Simultaneous
with our efforts to grow the business through acquisitions, our
historical businesses remain strong and our quarterly results
continue to be sequentially positive.� Mr. Whittenburg continued,
�We have demonstrated positive quarter over quarter revenue and
adjusted EBITDA growth for six consecutive quarters. This trend
should continue with further enhancement of our services and
successful execution our business development and M&A
strategies.� Conference Call and Webcast: Management of
HealthTronics will host a conference call the afternoon of
Thursday, August 7, 2008 at 5:00 pm EDT. Interested parties may
participate in the call by dialing 1-877-879-6209 (International
callers dial 1-719-325-4842) and ask for the "HealthTronics Q2 2008
Earnings Call" (confirmation code: 8061433). 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 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 it 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 June 30, Six Months Ended June 30, 2008 2007 2008 2007
Revenue: Urology Services $ 37,865 $ 30,836 $ 67,415 $ 59,221
Medical Products 4,584 4,586 8,831 8,825 Other � 131 � � 141 � �
288 � � 268 � Total revenue � 42,580 � � 35,563 � � 76,534 � �
68,314 � � Cost of services and general and administrative
expenses: Urology Services 17,399 13,281 30,390 26,966 Medical
Products 1,736 2,839 3,913 5,243 Selling, general &
administrative 5,269 4,593 9,586 8,907 Depreciation and
amortization � 3,069 � � 2,776 � � 5,697 � � 5,592 � � 27,473 � �
23,489 � � 49,586 � � 46,708 � � Operating income 15,107 12,074
26,948 21,606 � Other income (expenses): Interest and dividends 101
311 292 588 Interest expense � (246 ) � (212 ) � (409 ) � (448 ) �
(145 ) � 99 � � (117 ) � 140 � Income from continuing operations
before provision for income taxes and minority interest 14,962
12,173 26,831 21,746 � Minority interest in consolidated income
13,781 11,275 24,828 20,784 � Provision for income taxes � 471 � �
581 � � 841 � � 566 � � Income from continuing operations 710 317
1,162 396 � Loss from discontinued operations, net of tax � - � �
(138 ) � - � � (247 ) � Net income $ 710 � $ 179 � $ 1,162 � $ 149
� � Basic earnings per share: Income from continuing operations $
0.02 $ 0.01 $ 0.03 $ 0.01 Loss from discontinued operations � - � �
- � � - � � (0.01 ) Net income $ 0.02 � $ 0.01 � $ 0.03 � $ - �
Weighted average shares outstanding � 37,059 � � 35,425 � � 36,242
� � 35,416 � � Diluted earnings per share: Income from continuing
operations $ 0.02 $ 0.01 $ 0.03 $ 0.01 Loss from discontinued
operations � - � � - � � - � � (0.01 ) Net income $ 0.02 � $ 0.01 �
$ 0.03 � $ - � Weighted average shares outstanding � 37,165 � �
35,426 � � 36,295 � � 35,422 � HealthTronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited) � � June 30,
December 31, ($ in thousands) 2008 2007 � ASSETS � Total current
assets $ 68,717 $ 74,214 � Property and equipment, net 31,151
33,019 � Goodwill 233,244 217,505 � Other assets � 12,251 � 11,318
� $ 345,363 $ 336,056 � LIABILITIES � Total current liabilities $
17,779 $ 17,692 � Long-term debt, net of current portion 3,206
4,194 � Other long-term liabilities � 31,423 � 30,099 � Total
liabilities 52,408 51,985 � Minority interest 40,831 41,653 � Total
stockholders' equity � 252,124 � 242,418 � $ 345,363 $ 336,056
HealthTronics, Inc. and Subsidiaries Supplemental Financial
Information Continuing Operations For the Periods Ended June 30,
2008 and 2007 Unaudited In thousands, except per share data � � � �
Three Months Ended June 30, Six Months Ended June 30, 2008 2007
2008 2007 � Summary of Results from Operations Revenues $ 42,580 $
35,563 $ 76,534 $ 68,314 � EBITDA(a) $ 19,622 $ 15,524 $ 34,810 $
28,537 � Adjusted EBITDA(a) $ 5,841 $ 4,249 $ 9,982 $ 7,753 � Net
Income from Continuing Operations $ 710 $ 317 $ 1,162 $ 396 � Net
Income $ 710 $ 179 $ 1,162 $ 149 � EPS from Continuing Operations $
0.02 $ 0.01 $ 0.03 $ 0.01 � EPS $ 0.02 $ 0.01 $ 0.03 $ - � Number
of Shares 37,165 35,426 36,295 35,422 � Segment Information �
Revenues: Urology Services $ 37,865 $ 30,836 $ 67,415 $ 59,221 �
Medical Products $ 4,584 $ 4,586 $ 8,831 $ 8,825 � Adjusted
EBITDA(a): Urology Services $ 5,419 $ 5,030 $ 9,610 $ 8,965 �
Medical Products $ 2,021 $ 437 $ 3,498 $ 1,136 � Other Information:
� Cashflow from Operations $ 18,040 $ 15,716 $ 34,114 $ 27,098 �
Net Draws (Payments) on Senior Credit Facility $ - $ - $ - $ - �
Net Debt $ (11,115 ) $ (8,969 ) $ (11,115 ) $ (8,969 ) � (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 June 30, 2008 and 2007 Unaudited In thousands
� � � � � Three Months Ended June 30, Six Months Ended June 30,
Consolidated 2008 2007 2008 2007 � Income from Continuing
Operations $ 710 $ 317 $ 1,162 $ 396 � Add Back(deduct): Provision
for income taxes 471 581 841 566 Interest expense 246 212 409 448
Depreciation and amortization 3,069 2,776 5,697 5,592 Restructuring
costs (142 ) (36 ) Stockbased compensation costs � 1,487 � � 363 �
� 1,909 � � 751 � � Adjusted EBITDA 5,841 4,249 9,982 7,753 � Add
Back: Minority interest expense � 13,781 � � 11,275 � � 24,828 � �
20,784 � � EBITDA $ 19,622 � $ 15,524 � $ 34,810 � $ 28,537 � � �
Urology Services Segment � Revenues $ 37,865 $ 30,836 $ 67,415 $
59,221 � Expenses: Cost of Services (18,716 ) (14,661 ) (33,132 )
(29,677 ) Other Income (Expenses) � 70 � � 136 � � 184 � � 234 � �
EBITDA 19,219 16,311 34,467 29,778 � Minority interest expense �
(13,800 ) � (11,281 ) � (24,857 ) � (20,813 ) � Adjusted EBITDA $
5,419 � $ 5,030 � $ 9,610 � $ 8,965 � � � Medical Products Segment
� Revenues $ 4,584 $ 4,586 $ 8,831 $ 8,825 � Expenses: Cost of
Services (2,593 ) (4,167 ) (5,384 ) (7,738 ) Other Income
(Expenses) � 12 � � 12 � � 23 � � 21 � � EBITDA 2,003 431 3,470
1,108 � Minority interest expense � 18 � � 6 � � 28 � � 28 � �
Adjusted EBITDA $ 2,021 � $ 437 � $ 3,498 � $ 1,136 �
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