MOUNT LAUREL, N.J., May 7 /PRNewswire-FirstCall/ -- MedQuist Inc., a leading provider of medical transcription services, and a leader in technology-enabled clinical documentation workflow, today announced its unaudited operating results for its first quarter ended March 31, 2009.
Net income for the first quarter of 2009 was $6.9 million, an increase of $11.3 million over the first quarter of 2008 when a loss of $4.4 million was reported. Earnings per share for the first quarter of 2009 were $0.18 per compared to a loss of $0.12 per share in the first quarter of 2008.
Adjusted EBITDA (operating income (loss) excluding depreciation, amortization of intangible assets, cost of Investigation and legal proceedings, net) increased 130% to $12.1 million for the first quarter of 2009 compared to $5.3 million for the first quarter of 2008.
Net revenues decreased $4.8 million or 5.7% to $78.9 million for the three months ended March 31, 2009 compared with $83.7 million for the three months ended March 31, 2008. The decrease was due primarily to lower medical transcription revenue of $4.5 million resulting from lower medical transcription volume.
Cost of revenues decreased $7.4 million or 12.1% to $53.9 million for the three months ended March 31, 2009 compared with $61.3 million for the three months ended March 31, 2008. This decrease was due to reduced medical transcription payroll cost of $3.0 million related directly to our increased use of speech recognition technology and $1.9 million related to lower medical transcription payroll cost related to the decrease in medical transcription volume. Additionally, costs decreased $1.6 million resulting from headcount reductions taken in 2008 to better align our operating expenses with our lower revenue levels.
Selling, general and administrative costs decreased $2.5 million or 19.2% to $10.6 million for the three months ended March 31, 2009 compared to $13.1 million for the three months ended March 31, 2008. The decrease was primarily due to lower audit costs and work force reductions taking effect in the first quarter of 2009.
Research and development costs decreased $1.7 million or 41.3% to $2.4 million for the three months ended March 31, 2009 compared with $4.1 million for the three months ended March 31, 2008. The decrease was due to lower compensation expense as a result of workforce reductions and an increase in capitalized software development costs.
As of March 31, 2009 the company had $51.9 million in cash compared to $39.9 million at December 31, 2008. The increase was a result of cash provided by operating activities in the amount of $14.1 million offset by cash used to purchase property and equipment of $1.4 million and capitalized software of $.8 million.
In addition to the United States generally accepted accounting principles, or GAAP, results provided throughout this document, MedQuist has provided a non-GAAP financial measurement. Management believes that the non-GAAP financial measures used to manage the business may provide users additional useful information. The table attached to this press release includes a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure and a description of why the non-GAAP financial measures are useful to investors.
This report contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, the industry in which we operate and other matters, as well as management's beliefs and assumptions and other statements regarding matters that are not historical facts. These statements include, in particular, statements about our plans, strategies and prospects. For example, when we use words such as "projects," "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "should," "would," "could," "will," "opportunity," "potential" or "may," variations of such words or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are only predictions and, as such, are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. For a discussion of these risks, uncertainties and assumptions, any of which could cause our actual results to differ from those contained in the forward-looking statement, see the section of MedQuist's Annual Report on Form 10-K for the year ended December 31, 2008, entitled "Risk Factors" and discussions of potential risks and uncertainties in MedQuist's subsequent filings with the Securities and Exchange Commission.
MedQuist Inc. and Subsidiaries Consolidated Statements of Operations (In thousands, except per share amounts) Unaudited Three months ended March 31, --------- 2009 2008 ---- ---- Net revenues $78,944 $83,725 ------- ------- Operating costs and expenses: Cost of revenues 53,868 61,258 Selling, general and administrative 10,577 13,095 Research and development 2,416 4,119 Depreciation 2,552 2,928 Amortization of intangible assets 1,511 1,361 Cost of investigation and legal proceedings, net 785 6,398 ------ ------ Total operating costs and expenses 71,709 89,159 ------ ------ Operating income (loss) 7,235 (5,434) Equity in income of affiliated company 72 16 Other income - 438 Interest income, net 46 1,288 --- ----- Income (loss) before income taxes 7,353 (3,692) Income tax provision 499 725 --- --- Net income (loss) $6,854 $(4,417) ====== ======= Net income (loss) per share: Basic $0.18 $(0.12) ----- ------ Diluted $0.18 $(0.12) ----- ------ Weighted average shares outstanding: Basic 37,556 37,544 ------ ------ Diluted 37,556 37,544 ------ ------ MedQuist Inc. and Subsidiaries Consolidated Balance Sheets (In thousands) Unaudited March 31, December 31, 2009 2008 ---- ---- Assets Current assets: Cash and cash equivalents $51,854 $39,918 Accounts receivable, net of allowance of $4,148 and $4,802, respectively 46,465 50,374 Income tax receivable 174 154 Other current assets 7,133 8,053 ----- ----- Total current assets 105,626 98,499 Property and equipment, net 13,916 15,785 Goodwill 40,372 40,545 Other intangible assets, net 39,053 39,877 Deferred income taxes 1,178 1,204 Other assets 6,385 6,295 ----- ----- Total assets $206,530 $202,205 ======== ======== Liabilities and Shareholders' Equity Current liabilities: Accounts payable $7,129 $7,487 Accrued expenses 10,238 11,994 Accrued compensation 12,126 11,204 Customer accommodation 11,994 12,055 Deferred income taxes 651 651 Deferred revenue 14,207 15,630 ------ ------ Total current liabilities 56,345 59,021 Deferred income taxes 1,104 799 Other non-current liabilities 2,090 2,033 ----- ----- Commitments and contingencies (Note 10) Shareholders' equity: Common stock - no par value; authorized 60,000 shares; 37,556 and 37,556 shares issued and outstanding, respectively 237,955 237,907 Accumulated deficit (92,342) (99,198) Accumulated other comprehensive income 1,378 1,643 ----- ----- Total shareholders' equity 146,991 140,352 ------- ------- Total liabilities and shareholders' equity $206,530 $202,205 ======== ======== MedQuist Inc. and Subsidiaries Consolidated Statements of Cash Flows (In thousands) Unaudited Three months ended March 31, --------- 2009 2008 ---- ---- Operating activities: Net income (loss) $6,854 $(4,417) Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation and amortization 4,063 4,289 Equity in income of affiliated company (72) (16) Deferred income tax provision 309 719 Stock option expense 48 92 Provision for doubtful accounts (105) 263 Loss on disposal of property and equipment 24 26 Changes in operating assets and liabilities excluding effects of acquisitions: Accounts receivable 3,920 (3,700) Income tax receivable (20) 78 Other current assets 923 (189) Other non-current assets (18) 70 Accounts payable 392 (2,773) Accrued expenses (1,739) (746) Accrued compensation 930 (999) Customer accommodation - (459) Deferred revenue (1,424) 1,441 Other non-current liabilities 63 (70) --- --- Net cash provided by (used in) operating activities $14,148 $(6,391) ------- ------- Investing activities: Purchase of property and equipment (1,393) (1,837) Capitalized software (766) (611) Net cash used in investing activities (2,159) (2,448) ------ ------ Financing activities: Net cash provided by financing activities - - --- --- Effect of exchange rate changes (53) (32) --- --- Net increase (decrease) in cash and cash equivalents 11,936 (8,871) ------ ------ Cash and cash equivalents - beginning of period 39,918 161,582 ------ ------- Cash and cash equivalents - end of period $51,854 $152,711 ======= ======== Supplemental cash flow information: Cash paid (recovered) for income taxes $(131) $95 ----- --- Accommodation payments paid with credits $61 $404 --- ---- MedQuist Inc. and Subsidiaries Reconciliation of GAAP financial measures to the non-GAAP measures Adjusted EBITDA (In thousands) Unaudited Three months ended March 31, --------- 2009 2008 ---- ---- GAAP operating (loss) $7,235 $(5,434) Add: Depreciation 2,552 2,928 Add: Amortization of intangible assets 1,511 1,361 Add: Cost of investigation and legal proceedings, net 785 6,398 ------- ------ Adjusted EBITDA $12,083 $5,253 ======= ======
Adjusted EBITDA is a financial measure not computed in accordance with United States generally accepted accounting principles, or GAAP. The Company believes that this non-GAAP measure, when presented in conjunction with comparable GAAP measures, is useful to both management and investors in analyzing the Company's ongoing business and operating performance. The Company believes that providing the non-GAAP information to investors, in addition to the GAAP presentation, allows investors to view the Company's financial results in the way that management views financial results. Management believes Adjusted EBITDA is useful as supplemental measures of the Company's financial results because it removes costs not related to the Company's operating performance. Management believes that Adjusted EBITDA should be considered in addition to, but not as a substitute for items presented in accordance with GAAP that are presented in this press release. A reconciliation of Adjusted EBITDA to Operating income (loss) is provided above.
MedQuist Inc.
CONTACT: Dominick Golio, Chief Financial Officer, +1-856-206-4000
Web Site: http://www.medquist.com/
