NightHawk Radiology Holdings, Inc. Announces Second Quarter 2010 Results

SCOTTSDALE, Ariz., Aug. 5, 2010 (GLOBE NEWSWIRE) -- NightHawk Radiology Holdings, Inc. (Nasdaq:NHWK), the leading provider of radiology solutions to radiology groups across the United States today announced its financial results for second quarter 2010.

Settlement with St. Paul Radiology, P.A. and Related Change in Reporting Basis

As previously announced, on June 30, 2010, the company completed its settlement transaction with St. Paul Radiology P.A. ("SPRPA"). As part of that settlement the company sold certain of its operations to a third party. Accordingly, these operations are classified as "discontinued operations" in the company's financial statements. This presentation, as required under GAAP, reports the revenue and expenses of the discontinued operations "net" in one line item as "net income (loss) from discontinued operations" on the company's statement of operations. 

Highlights for the Second Quarter – Combined Operations

• Combined revenue was $38.8 million during the quarter, above the company's guidance range of $37.5 million to $38.5 million.
• GAAP net loss was $4.2 million, or 18 cents per share.
• Adjusted net income was $2.5 million, or 10 cents per diluted share, above the company's guidance range of 6 to 7 cents per diluted share. A reconciliation of adjusted net income to GAAP net loss is included in the tables attached to this press release.  
• Cash flow from operations was $8.0 million.
• During the quarter we repaid $26.2 million on our term loan, reducing the remaining debt to $51.8 million.
• Cash and cash equivalents at June 30, 2010 totaled $24.3 million.

Highlights for the Second Quarter – Continuing Operations

• Revenue from continuing operations was $33.6 million for the quarter.
• Total scan volume increased 1% from the year ago quarter to 800,000 scans.
• Final scan volumes increased 37% from the year ago quarter, while preliminary scan volumes decreased 3% from the year ago quarter.
• GAAP net loss from continuing operations was $2.6 million, or 11 cents per share.
• Adjusted net income from continuing operations was $1.6 million, or 7 cents per diluted share.  A reconciliation of adjusted net income to GAAP net loss is included in the tables attached to this press release.

Highlights of the Settlement with SPRPA

• The settlement with SPRPA is expected to result in payments to the Company totaling $26 million.
• At closing we received $12 million, consisting of $2.5 million in operating cash inflows and $9.5 million in cash flows from investing activities. 
• The company also recorded a note receivable from SPRPA with a principal amount of $14 million. Under the terms of the note, SPRPA is obligated to pay the Company 48 monthly payments of $250,000 starting in August 2010 and a one-time payment of $2 million on or before March 31, 2011.
• The Company also recorded an income tax receivable of approximately $10 million related to the settlement, which we expect to receive during 2011.

Management Commentary

"We are pleased to report that our total revenue and adjusted EPS were above our guidance range as demand for our services remained solid and as we began to see benefits from our cost reduction efforts," said David Engert, the company's president and chief executive officer. "Looking ahead, we are focused on new opportunities to service and collaborate with our customers to help them meet their evolving needs in today's complex marketplace."

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