By a News Reporter-Staff News Editor at Health & Medicine Week -- Alliance HealthCare Services, Inc. (NASDAQ:AIQ) (the "Company" or "Alliance"), a leading national provider of outsourced radiology services through its Alliance HealthCare Radiology ("Alliance Radiology") Division and radiation therapy services through its Alliance Oncology Division, announced results for the second quarter ended June 30, 2014. Second Quarter 2014 Highlights Generated $36.7 million of Adjusted EBITDA (as defined below), consistent with 2Q13, when adjusted for planned investments outlined below (see also Alliance HealthCare Services, Inc.).
Second quarter revenue grew 0.6% to $111.2 million over the same quarter last year, after adjustments outlined below.
Alliance Oncology revenue grew by 21% in the second quarter of 2014, to $23.9 million, when compared to the second quarter of 2013.
Continued to generate strong cash flow, with $44.4 million reduction in net debt in the last twelve month period, after adjusting for acquisitions and fees paid in connection with debt refinancing.
Alliance Oncology same store volume growth was 4.2% for Linear Accelerator and 4.1% for Stereotactic Radiosurgery in 2Q14 compared to 2Q13.
Alliance Radiology's MRI same store volume growth improved to 5.3% in the second quarter of 2014 compared to the same quarter last year.
Adjusted Net Income Per Share (as defined below) increased 126% to $0.52 compared to the second quarter of the prior year.
Company confirms 2014 guidance ranges. Second Quarter 2014 Financial Results "Alliance Oncology delivered double-digit growth for the second straight quarter, with revenues up 21% over the prior year period," commented Tom Tomlinson, Chief Executive Officer and President of Alliance HealthCare Services. "Solid increases in same store volumes for both linear accelerator and stereotactic radiosurgery, up 4.2% and 4.1%, respectively, over the prior year, along with new revenue generated from Alliance Oncology's relationship with the Medical University of South Carolina (MUSC) were the primary drivers of this strong growth. Alliance Radiology revenues rebounded as expected following the impact of severe weather challenges experienced in the first quarter, but trailed prior year due largely to the impact of the sale of the professional radiology services business and some weakness in PET/CT. MRI same-store volume was up 5.3%, aided partly by the Medicaid expansion and new Affordable Care Act (ACA) enrollees entering the healthcare system, but PET/CT volume continues to trail prior year due to payor changes and RBM's moving patients from PET/CT to CT."
Tomlinson continued, "We are just beginning to see the fruits of investments made to build our sales and business development teams across both divisions. We have also made strategic investments to build our Alliance RAD360™ Program ("RAD360") capabilities within our Radiology Division. This quarter we acquired two fixed site imaging centers on behalf of a new joint venture partnership with a for-profit health system. New hospital and health system partnerships like MUSC, along with a strong pipeline of radiation oncology and RAD360 growth opportunities provide us increased confidence that the steps we are taking to transform Alliance into the outsourced partner of choice is resonating well in the market. Additionally, we are optimistic that we will continue to see improvement in healthcare services volumes, including increased patient flow, due to Medicaid expansion and ACA enrollees utilizing the healthcare system in the remaining portion of the year."
Revenue for the second quarter of 2014, computed in accordance with generally accepted accounting principles ("GAAP"), was $111.2 million compared to $114.4 million in the second quarter of 2013. This decrease was primarily due to the sale of our Professional Radiology Services business line in December 2013, and pruning of unprofitable business in our Radiology Division, which impacted the total by $3.8 million. This was partially offset by growth in the Alliance Oncology Division as a result of revenue generated from the new partnership with MUSC.
Alliance's Adjusted EBITDA (as defined below) decreased 5.0% to $36.7 million from $38.6 million in the second quarter of 2013. During the second quarter of 2014, we invested approximately $1.5 million to build our consultative, sales, marketing, and strategic business development capabilities to support our Alliance RAD360 Program, and continue to invest in this initiative. These costs are primarily part of our selling, general and administrative expenses. In the first half of 2014, we invested approximately $2.5 million in building our consultative, sales, marketing, and strategic business development capabilities to support RAD360 and expect to invest a total of $5 million for the full year of 2014.
Alliance's net income (loss), computed in accordance with GAAP, totaled $2.8 million in the second quarter of 2014 and ($13.0) million in the second quarter of 2013.
Alliance's historical income tax rate has been 42%, compared to the GAAP income tax rate of 39.3% in the second quarter of 2014 and 35.7% in the second quarter of 2013.
Net income (loss) on a diluted basis, computed in accordance with GAAP, increased to $0.26 per share in the second quarter of 2014 compared to ($1.22) per share for the same quarter of 2013. Net income (loss) per share on a diluted basis was impacted by ($0.26) in the second quarter of 2014 and ($1.45) in the second quarter of 2013 in the aggregate due to restructuring charges, severance and related costs, transaction costs, legal matter expenses and differences in the GAAP income tax rate from our historical income tax rate.
Cash flows provided by operating activities totaled $23.9 million in the second quarter of 2014 compared to $22.0 million in the second quarter of 2013. In the second quarter of 2014, capital expenditures were $7.5 million compared to $4.8 million in the second quarter of 2013.
Alliance's net debt, defined as total long-term debt (including current maturities), less cash and cash equivalents, decreased $18.3 million to $476.7 million at June 30, 2014 from $495.0 million at December 31, 2013. Cash and cash equivalents were $31.3 million at June 30, 2014 and $34.7 million at December 31, 2013. During the second quarter of 2014, the Company used approximately $1.5 million cash in connection with the acquisition of two radiology centers in a new joint venture partnership with a for-profit health care system as part of our Alliance RAD360 Program, and the acquisition of OnPoint Medical Diagnostics, a healthcare IT start-up commercializing medical imaging quality assurance technologies. In addition, as a result of the Company's successful term loan refinancing in 2013, the Company's net debt was increased by $7.5 million related to fees and expenses incurred and the change in the unamortized discount related to the Company's debt refinancing activities during 2013. The Company's net debt, as defined above, divided by the last twelve months Consolidated Adjusted EBITDA was 3.33x for the twelve month period ended June 30, 2014 compared to 3.39x for the twelve month period ended a year ago. The Company's total debt, as defined above, divided by the last twelve months Consolidated Adjusted EBITDA was 3.55x for the twelve month period ended June 30, 2014 compared to 3.70x for the twelve month period last year. Full Year 2014 Guidance Tomlinson added, "The strong performance in our Alliance Oncology Division during the second quarter, along with the momentum from the new partnerships we've announced, plus our growing pipeline of new opportunities, validate our full service line outsourced partnership model.. We are on track with our strategic transformation, and on target with our growth strategy. Looking ahead, I am confident that we have the right pieces in place to achieve our full year guidance by driving service line growth for our customers, strategic growth for our divisions, and long-term growth for our shareholders."
Keywords for this news article include: Oncology, Economics, Radiology, Advertising, Alliance HealthCare Services Inc., Marketing and Licensing Agreements.
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