UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 11, 2015 (August 11, 2015)
21ST CENTURY ONCOLOGY
HOLDINGS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
333-170812 |
|
26-1747745 |
(Commission File Number) |
|
(I.R.S. Employer Identification No.) |
2270 Colonial Boulevard Fort Myers, Florida |
|
33907 |
(Address of Principal Executive Offices) |
|
(Zip Code) |
(239) 931-7275
(Registrants Telephone Number, including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report.)
|
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |
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o |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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o |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On August 11, 2015, 21st Century Oncology Holdings, Inc. (the Company) issued a press release announcing its financial results for the second quarter and six months ended June 30, 2015. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this item, including Exhibit 99.1, is being furnished, not filed. Accordingly, the information in this item will not be incorporated by reference into any registration statement filed by the Company or any of its subsidiaries under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.
Item 9.01. |
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Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit Number |
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Description |
|
|
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99.1 |
|
Press Release dated August 11, 2015. |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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21st CENTURY ONCOLOGY HOLDINGS, INC. |
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|
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Date: August 11, 2015 |
By: |
/s/ JOSEPH BISCARDI |
|
|
Name: |
Joseph Biscardi |
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|
Title: |
SVP, Assistant Treasurer, Controller and Chief Accounting Officer |
3
EXHIBIT INDEX
Exhibit Number |
|
Description |
|
|
|
99.1 |
|
Press Release dated August 11, 2015. |
4
Exhibit 99.1
21ST CENTURY ONCOLOGY HOLDINGS, INC.
21st Century Oncology Contact: |
Investor Contact: |
Richard Lewis |
The Ruth Group |
SVP, CFO for U.S. Operations |
Nick Laudico |
239-931-7281 |
646-536-7030 |
richard.lewis@21co.com |
nlaudico@theruthgroup.com |
|
|
|
Brandon Vazquez |
|
646-536-7032 |
|
bvazquez@theruthgroup.com |
21ST CENTURY ONCOLOGY HOLDINGS INC. REPORTS SECOND QUARTER 2015 FINANCIAL RESULTS
Second Quarter 2015 Highlights:
· Total pro forma revenues of $285.2 million, a 7.3% year-over-year increase
· Pro Forma Adjusted EBITDA of $51.1 million, a 13.0% year-over-year increase
· 6th consecutive quarter of Pro Forma Adjusted EBITDA margin expansion 17.9% of total pro forma revenues
· International revenues up 27.9% year-over-year
· Completed $1.1 billion debt refinancing that extended debt maturities and provided additional liquidity
Recent Developments:
· Completed the acquisition of remaining 35% interest in South Florida Radiation Oncology (SFRO), proceeding with integration
· Expanded into Colombia through a controlling investment interest in an existing Medellin-based hospital center
FORT MYERS, FL, August 11, 2015 21st Century Oncology Holdings, Inc. (21C or the Company), the leading global, physician-led provider of integrated cancer care services (ICC), announced today its financial results for the second quarter ended June 30, 2015.
Dr. Daniel Dosoretz, Founder, President and Chief Executive Officer, commented, We achieved our revenue and EBITDA targets for the quarter and the first six months of 2015 through same store growth, contributions from acquisitions, strong results from our international operations, and executing on our savings and synergy programs. This marks our sixth consecutive quarter of Pro Forma Adjusted EBITDA (adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation and other non-cash and pro forma items) margin expansion, the result of leveraging existing overhead over a larger revenue base. We remain on track to achieve our full year 2015 Pro Forma Adjusted EBITDA guidance of between $182 million and $190 million. 21Cs management team remains focused on further expense
management, synergy realization, EBITDA expansion, generating positive free cash flow and continued deleveraging.
Dr. Dosoretz continued, On April 30, 2015, 21C completed a comprehensive refinancing of its debt structure. We refinanced our $90.0 million term loan facility, 9 7/8% Senior Subordinated Notes, 8 7/8% Senior Secured Second Lien Notes, and the 11 ¾% Senior Secured Notes issued by OnCure Holdings, Inc., all with maturities of less than two years, with a $610 million, 7-year Term Loan and $360 million of 8-year, 11.00% Senior Unsecured Notes due 2023. Additionally, we improved our liquidity by replacing our $100 million Revolver due 2016 with a new $125 million 5-year Revolver. Just after quarter end, on July 2, we purchased the remaining 35% interest in SFRO, completing one of the most important acquisitions in our recent history. SFROs contributions have exceeded expectations since our initial majority investment in early 2014, and we expect this to continue as we realize synergies with 21Cs existing operations in southeast Florida as well as identify and execute upon incremental investment opportunities in this region.
Second Quarter 2015 Results
Total pro forma revenues for the second quarter of 2015 were $285.2 million, compared to total pro forma revenues of $265.9 million in the same quarter of 2014, driven primarily by higher freestanding revenues, contributions from acquisitions, and international revenue growth.
Pro Forma Adjusted EBITDA in the second quarter of 2015 was $51.1 million, or 17.9% of total revenues, up 13.0% compared to $45.2 million, or 17.0% of total pro forma revenues, in the second quarter of 2014. A reconciliation of net loss attributable to 21C, determined in accordance with generally accepted accounting principles (GAAP) to Pro Forma Adjusted EBITDA and total revenues, determined in accordance with GAAP, to total pro forma revenues for the quarters ended June 30, 2015 and 2014 is included in the attached supplemental financial information.
Income tax expense in the second quarter of 2015 was $3.1 million, compared to $0.9 million in the second quarter of 2014. The net loss for the second quarter of 2015 was $62.5 million, primarily driven primarily by approximately $37.4 million in the early extinguishment of debt related to the April 30, 2015 refinancing, compared to a net loss of $204.6 million in the second quarter of 2014.
Recent Developments
On July 2, 2015, the Company completed its acquisition of the remaining 35% interest in SFRO for approximately $49.0 million, funded through a combination of cash, notes and equity, and is proceeding with integrating SFRO into 21C. The Company made its initial 65% investment in SFRO on February 10, 2014.
On August 1, 2015, the Company expanded into Colombia through a partnership with a leading Medellin-based oncology group which together acquired a controlling stake in the hospital-based radiation therapy operation of Unidad de Oncología Hospital Manuel Uribe de Envigado S.A.
Conference Call
The Company will host a conference call on Wednesday, August 12, 2015 at 12:00 p.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 August 26, 2015. 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 13616012 to access the replay.
A live webcast and webcast replay of the call will also be available from the events section on the Investors portion of the corporate web site at www.21co.com.
About 21st Century Oncology Holdings, Inc.
21C 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. As of June 30, 2015, the Company operated 183 treatment centers, including 148 centers located in 17 U.S. states and 35 centers located in six countries in Latin America. (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 managements current expectations or beliefs about the Companys future plans, expectations and objectives, including, but not limited to, the Companys expected financial results and estimates for 2015 and the effects of the Centers for Medicare & Medicaid Services Final Rule for the 2016 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 Companys 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, |
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December 31, |
|
|
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2015 |
|
2014 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
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Current assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
62,082 |
|
$ |
99,167 |
|
Restricted cash |
|
3,050 |
|
7,051 |
|
Accounts receivable, net |
|
163,117 |
|
137,807 |
|
Prepaid expenses |
|
11,792 |
|
8,728 |
|
Inventories |
|
4,414 |
|
4,526 |
|
Deferred income taxes |
|
146 |
|
227 |
|
Other |
|
8,506 |
|
7,457 |
|
Total current assets |
|
253,107 |
|
264,963 |
|
|
|
|
|
|
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Equity investments in joint ventures |
|
1,251 |
|
1,646 |
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Property and equipment, net |
|
260,065 |
|
270,757 |
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Real estate subject to finance obligation |
|
11,556 |
|
22,552 |
|
Goodwill |
|
492,724 |
|
469,596 |
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Intangible assets, net |
|
77,830 |
|
81,680 |
|
Other assets |
|
50,498 |
|
35,530 |
|
Total assets |
|
$ |
1,147,031 |
|
$ |
1,146,724 |
|
|
|
|
|
|
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LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
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Current liabilities: |
|
|
|
|
|
Accounts payable |
|
$ |
60,161 |
|
$ |
57,635 |
|
Accrued expenses |
|
101,108 |
|
82,609 |
|
Income taxes payable |
|
3,621 |
|
2,114 |
|
Current portion of long-term debt |
|
30,890 |
|
26,350 |
|
Current portion of finance obligation |
|
277 |
|
433 |
|
Other current liabilities |
|
8,739 |
|
19,687 |
|
Total current liabilities |
|
204,796 |
|
188,828 |
|
Long-term debt, less current portion |
|
999,679 |
|
940,771 |
|
Finance obligation, less current portion |
|
12,197 |
|
23,610 |
|
Embedded derivative features of Series A convertible redeemable preferred stock |
|
22,402 |
|
15,843 |
|
Other long-term liabilities |
|
44,694 |
|
51,079 |
|
Deferred income taxes |
|
3,598 |
|
4,480 |
|
Total liabilities |
|
1,287,366 |
|
1,224,611 |
|
|
|
|
|
|
|
Series A convertible redeemable preferred stock, $0.001 par value, $1,000 stated value, 3,500,000 authorized, 385,000 issued and outstanding at June 30, 2015 and December 31, 2014 |
|
378,471 |
|
328,926 |
|
Noncontrolling interests - redeemable |
|
68,794 |
|
49,797 |
|
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
|
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Equity: |
|
|
|
|
|
Common stock, $0.01 par value, 1,000,000 shares authorized 1,028 shares issued and outstanding at June 30, 2015 and December 31, 2014 |
|
|
|
|
|
Additional paid-in capital |
|
576,083 |
|
626,001 |
|
Retained deficit |
|
(1,147,267 |
) |
(1,067,487 |
) |
Accumulated other comprehensive loss, net of tax |
|
(42,735 |
) |
(38,690 |
) |
Total 21st Century Oncology Holdings, Inc. shareholders deficit |
|
(613,919 |
) |
(480,176 |
) |
Noncontrolling interests - nonredeemable |
|
26,319 |
|
23,566 |
|
Total deficit |
|
(587,600 |
) |
(456,610 |
) |
Total liabilities and equity |
|
$ |
1,147,031 |
|
$ |
1,146,724 |
|
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, |
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
Net patient service revenue |
|
$ |
263,380 |
|
$ |
245,950 |
|
$ |
520,137 |
|
$ |
459,858 |
|
Management fees |
|
15,211 |
|
16,856 |
|
31,081 |
|
33,453 |
|
Other revenue |
|
6,618 |
|
3,092 |
|
12,474 |
|
5,984 |
|
Total revenues |
|
285,209 |
|
265,898 |
|
563,692 |
|
499,295 |
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
Salaries and benefits |
|
147,397 |
|
135,803 |
|
294,356 |
|
261,712 |
|
Medical supplies |
|
24,774 |
|
24,502 |
|
51,065 |
|
46,236 |
|
Facility rent expenses |
|
16,922 |
|
17,167 |
|
33,797 |
|
32,662 |
|
Other operating expenses |
|
16,073 |
|
16,096 |
|
30,997 |
|
30,477 |
|
General and administrative expenses |
|
43,776 |
|
34,060 |
|
72,686 |
|
64,174 |
|
Depreciation and amortization |
|
22,242 |
|
22,162 |
|
44,811 |
|
42,884 |
|
Provision for doubtful accounts |
|
3,753 |
|
3,428 |
|
8,221 |
|
7,724 |
|
Interest expense, net |
|
24,326 |
|
29,899 |
|
50,013 |
|
57,426 |
|
Impairment loss |
|
|
|
182,000 |
|
|
|
182,000 |
|
Early extinguishment of debt |
|
37,390 |
|
|
|
37,390 |
|
|
|
Equity initial public offering expenses |
|
|
|
4,163 |
|
|
|
4,163 |
|
Loss on sale leaseback transaction |
|
|
|
|
|
|
|
135 |
|
Fair value adjustment of noncontrolling interest and earn-out liabilities |
|
2,745 |
|
204 |
|
3,205 |
|
403 |
|
Fair value adjustment of embedded derivative |
|
5,217 |
|
|
|
6,559 |
|
|
|
(Gain) loss on foreign currency transactions |
|
(31 |
) |
79 |
|
211 |
|
107 |
|
Gain on foreign currency derivative contracts |
|
|
|
|
|
|
|
(4 |
) |
Total expenses |
|
344,584 |
|
469,563 |
|
633,311 |
|
730,099 |
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
(59,375 |
) |
(203,665 |
) |
(69,619 |
) |
(230,804 |
) |
Income tax expense |
|
3,088 |
|
934 |
|
5,778 |
|
3,040 |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
(62,463 |
) |
(204,599 |
) |
(75,397 |
) |
(233,844 |
) |
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interests- redeemable and non-redeemable |
|
(2,075 |
) |
(2,925 |
) |
(4,383 |
) |
(3,861 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder |
|
(64,538 |
) |
(207,524 |
) |
(79,780 |
) |
(237,705 |
) |
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss: |
|
|
|
|
|
|
|
|
|
Unrealized loss on foreign currency translation |
|
(2,062 |
) |
(750 |
) |
(4,497 |
) |
(10,606 |
) |
|
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
(64,525 |
) |
(205,349 |
) |
(79,894 |
) |
(244,450 |
) |
Comprehensive income attributable to noncontrolling interests- redeemable and non-redeemable |
|
(1,866 |
) |
(2,873 |
) |
(3,931 |
) |
(2,990 |
) |
Comprehensive loss attributable to 21st Century Oncology Holdings, Inc. shareholder |
|
$ |
(66,391 |
) |
$ |
(208,222 |
) |
$ |
(83,825 |
) |
$ |
(247,440 |
) |
21ST CENTURY ONCOLOGY HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
2015 |
|
2014 |
|
Cash flows from operating activities |
|
|
|
|
|
Net loss |
|
$ |
(75,397 |
) |
$ |
(233,844 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
Depreciation |
|
38,331 |
|
35,275 |
|
Amortization |
|
6,480 |
|
7,609 |
|
Deferred rent expense |
|
338 |
|
230 |
|
Deferred income taxes |
|
(781 |
) |
378 |
|
Stock-based compensation |
|
5 |
|
71 |
|
Provision for doubtful accounts |
|
8,221 |
|
7,724 |
|
(Gain) loss on the sale/disposal of property and equipment |
|
(243 |
) |
59 |
|
Loss on sale leaseback transaction |
|
|
|
135 |
|
Impairment loss |
|
|
|
182,000 |
|
Early extinguishment of debt |
|
37,390 |
|
|
|
Equity initial public offering expenses |
|
|
|
4,163 |
|
Loss on foreign currency transactions |
|
38 |
|
|
|
Gain on foreign currency derivative contracts |
|
|
|
(4 |
) |
Fair value adjustment of noncontrolling interest and earn-out liabilities |
|
3,205 |
|
403 |
|
Fair value adjustment of embedded derivative |
|
6,559 |
|
|
|
Amortization of debt discount |
|
746 |
|
1,301 |
|
Amortization of loan costs |
|
2,630 |
|
3,039 |
|
Equity interest in net (earnings) loss of joint ventures |
|
(212 |
) |
135 |
|
Distribution received from unconsolidated joint ventures |
|
106 |
|
106 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
Accounts receivable and other current assets |
|
(37,921 |
) |
(26,977 |
) |
Income taxes payable |
|
1,649 |
|
(649 |
) |
Inventories |
|
124 |
|
(439 |
) |
Prepaid expenses |
|
(1,003 |
) |
3,096 |
|
Accounts payable and other current liabilities |
|
2,395 |
|
13,857 |
|
Accrued deferred compensation |
|
686 |
|
591 |
|
Accrued expenses / other current liabilities |
|
19,690 |
|
11,610 |
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
13,036 |
|
9,869 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Purchase of property and equipment |
|
(25,753 |
) |
(33,147 |
) |
Acquisition of medical practices |
|
(25,611 |
) |
(40,843 |
) |
Restricted cash associated with medical practice acquisitions |
|
4,001 |
|
(10,992 |
) |
Proceeds from the sale of property and equipment |
|
1,122 |
|
73 |
|
Repayments from (loans to) employees |
|
160 |
|
(410 |
) |
Contribution of capital to joint venture entities |
|
|
|
(620 |
) |
Purchase of noncontrolling interest - non-redeemable |
|
(1,233 |
) |
|
|
Proceeds from foreign currency derivative contracts |
|
|
|
26 |
|
Premiums on life insurance policies |
|
(670 |
) |
(450 |
) |
Change in other assets and other liabilities |
|
(156 |
) |
(401 |
) |
|
|
|
|
|
|
Net cash used in investing activities |
|
(48,140 |
) |
(86,764 |
) |
|
|
|
|
|
|
|
|
21ST CENTURY ONCOLOGY HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
2015 |
|
2014 |
|
Cash flows from financing activities |
|
|
|
|
|
Proceeds from issuance of debt |
|
970,618 |
|
130,016 |
|
Principal repayments of debt |
|
(911,717 |
) |
(41,759 |
) |
Repayments of finance obligation |
|
(136 |
) |
(113 |
) |
Proceeds from issuance of noncontrolling interest |
|
743 |
|
1,250 |
|
Proceeds from noncontrolling interest holders - redeemable and non-redeemable |
|
3,230 |
|
229 |
|
Cash distributions to noncontrolling interest holders - redeemable and non-redeemable |
|
(2,022 |
) |
(956 |
) |
Payments for contingent considerations |
|
(12,184 |
) |
|
|
Payments of costs for equity securities offering |
|
|
|
(2,550 |
) |
Payment of call premium on long term debt |
|
(24,877 |
) |
|
|
Payments of loan costs |
|
(25,626 |
) |
(967 |
) |
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
(1,971 |
) |
85,150 |
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
(10 |
) |
(35 |
) |
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
|
(37,085 |
) |
8,220 |
|
Cash and cash equivalents, beginning of period |
|
99,167 |
|
17,462 |
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
62,082 |
|
$ |
25,682 |
|
|
|
|
|
|
|
Supplemental disclosure of noncash investing and financing activities |
|
|
|
|
|
Finance obligation related to real estate projects |
|
$ |
782 |
|
$ |
1,106 |
|
Derecognition of finance obligation related to real estate projects |
|
$ |
12,215 |
|
$ |
4,119 |
|
Capital lease obligations related to the purchase of equipment |
|
$ |
582 |
|
$ |
7,069 |
|
Medical equipment and service contract component related to the acquisition of medical equipment through accounts payable |
|
$ |
1,265 |
|
$ |
5,175 |
|
Issuance of notes payable relating to the acquisition of medical practices |
|
$ |
|
|
$ |
2,000 |
|
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 |
|
Earn-out accrual related to the acquisition of medical practices |
|
$ |
1,258 |
|
$ |
1,003 |
|
Assumed debt obligations related to the acquisition of medical practices |
|
$ |
290 |
|
$ |
|
|
Amounts payable to sellers in the purchase of a medical practice |
|
$ |
|
|
$ |
390 |
|
Costs incurred for professional fees relating to issuance of equity securities |
|
$ |
|
|
$ |
1,613 |
|
Amounts payable for related deferred financing costs |
|
$ |
855 |
|
$ |
|
|
Noncash dividend declared to noncontrolling interest |
|
$ |
10 |
|
$ |
282 |
|
Noncash dividend declared from unconsolidated joint venture |
|
$ |
496 |
|
$ |
|
|
Accrued dividends on Series A convertible preferred stock |
|
$ |
45,534 |
|
$ |
|
|
Accretion of redemption value on Series A convertible preferred stock |
|
$ |
4,011 |
|
$ |
|
|
Change in additional paid-in capital from sale/purchase of interest in subsidiaries |
|
$ |
378 |
|
$ |
|
|
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, |
|
(in thousands): |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
285,209 |
|
$ |
265,898 |
|
$ |
563,692 |
|
$ |
499,295 |
|
Pro-forma full period effect of acquisitions (a) |
|
|
|
|
|
|
|
8,819 |
|
Total pro-forma revenues |
|
$ |
285,209 |
|
$ |
265,898 |
|
$ |
563,692 |
|
$ |
508,114 |
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder |
|
$ |
(64,538 |
) |
$ |
(207,524 |
) |
$ |
(79,780 |
) |
$ |
(237,705 |
) |
Income tax expense |
|
3,088 |
|
934 |
|
5,778 |
|
3,040 |
|
Interest expense, net |
|
24,326 |
|
29,899 |
|
50,013 |
|
57,426 |
|
Depreciation and amortization |
|
22,242 |
|
22,162 |
|
44,811 |
|
42,884 |
|
Impairment loss |
|
|
|
182,000 |
|
|
|
182,000 |
|
Early extinguishment of debt |
|
37,390 |
|
|
|
37,390 |
|
|
|
Equity initial public offering expenses |
|
|
|
4,163 |
|
|
|
4,163 |
|
Loss on sale leaseback transaction |
|
|
|
|
|
|
|
135 |
|
Fair value adjustment of noncontrolling interest and earn-out liabilities |
|
2,745 |
|
204 |
|
3,205 |
|
403 |
|
Fair value adjustment of embedded derivative |
|
5,217 |
|
|
|
6,559 |
|
|
|
Gain on foreign currency derivative contracts |
|
|
|
|
|
|
|
(4 |
) |
Net income attributable to noncontrolling interests, net of cash distributions |
|
1,018 |
|
2,014 |
|
2,361 |
|
2,905 |
|
Other expenses (b) |
|
1,034 |
|
3,659 |
|
1,999 |
|
7,200 |
|
Non-cash expenses (c) |
|
1,243 |
|
1,248 |
|
2,308 |
|
1,970 |
|
Sale-lease back adjustments (d) |
|
(315 |
) |
(329 |
) |
(764 |
) |
(632 |
) |
Acquisition-related costs (e) |
|
1,070 |
|
4,213 |
|
2,379 |
|
8,704 |
|
Litigation settlement (f) |
|
16,579 |
|
2,568 |
|
18,520 |
|
3,325 |
|
Pro-Forma full period effect of acquisition EBITDA (a) |
|
|
|
|
|
|
|
742 |
|
|
|
|
|
|
|
|
|
|
|
Pro-Forma Adjusted EBITDA (1) |
|
$ |
51,099 |
|
$ |
45,211 |
|
$ |
94,779 |
|
$ |
76,556 |
|
|
|
|
|
|
|
|
|
|
|
Pro-Forma Adjusted EBITDA as a percentage of total pro-forma revenues |
|
17.9 |
% |
17.0 |
% |
16.8 |
% |
15.1 |
% |
(1) Pro-Forma Adjusted EBITDA is defined as income (loss) before interest expense (net of interest income), income taxes, depreciation and amortization, net income attributable to noncontrolling interests, net of cash distributions, 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, fair value adjustment of embedded derivative, 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, 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 2015 and 2014. 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) Other expenses include management fees accrued to our sponsor, Vestar Capital Partners, 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. Expenses related to the costs associated with the Companys tradename and rebranding initiatives and expenses associated with idle / closed radiation therapy facilities.
(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) Litigation settlement relates to costs associated with the termination of physicians and loss contingency reserves related to the Medicare diagnostic testing matter.
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 companys 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 |
|
2015 |
|
2014 |
|
Change |
|
2015 |
|
2014 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of treatment days |
|
64 |
|
64 |
|
|
|
127 |
|
127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total treatments - freestanding centers (same store basis) |
|
204,503 |
|
202,779 |
|
0.9 |
% |
392,320 |
|
383,516 |
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treatments per day - freestanding centers (same store basis) |
|
3,195 |
|
3,168 |
|
0.9 |
% |
3,089 |
|
3,020 |
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in freestanding revenues - same store basis |
|
0.0 |
% |
8.9 |
% |
|
|
2.1 |
% |
7.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total radiation oncology cases completed * |
|
9,081 |
|
8,201 |
|
10.7 |
% |
17,698 |
|
15,725 |
|
12.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total radiation oncology cases (same store basis) |
|
8,926 |
|
8,183 |
|
9.1 |
% |
16,884 |
|
15,364 |
|
9.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per radiation oncology case (same store basis) |
|
$ |
17,556 |
|
$ |
19,153 |
|
|
|
$ |
17,765 |
|
$ |
19,117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radiation therapy centers - freestanding (global) |
|
171 |
|
168 |
|
|
|
|
|
|
|
|
|
Radiation therapy centers - professional / other (global) |
|
12 |
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total radiation therapy centers |
|
183 |
|
180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Days sales outstanding at quarter end |
|
40 |
|
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net patient service revenue (global) - professional services only (in thousands) |
|
$ |
89,332 |
|
$ |
82,060 |
|
|
|
$ |
180,767 |
|
$ |
152,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net patient service revenue (global) - excluding physician practice expense (in thousands) |
|
$ |
283,673 |
|
$ |
268,095 |
|
|
|
$ |
561,934 |
|
$ |
503,642 |
|
|
|
* |
Total cases completed represents a count of patients that have completed their course of treatment. Total case counts are based on legacy and acquired clinical systems. |
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
|
|
June 30, |
|
% |
|
June 30, |
|
% |
|
International |
|
2015 |
|
2014 |
|
Change |
|
2015 |
|
2014 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total number of new cases |
|
4,626 |
|
4,600 |
|
0.6 |
% |
9,127 |
|
8,881 |
|
2.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per radiation oncology case |
|
$ |
6,701 |
|
$ |
5,283 |
|
|
|
$ |
6,607 |
|
$ |
5,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21st Century Oncology Holdings, (NYSE:ICC)
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