MOUNT LAUREL, N.J., July 30 /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 second quarter ended June 30, 2009.
Net income for the second quarter of 2009 was $0.8 million, a decrease of $1.0 million compared to the second quarter of 2008. Earnings per share for the second quarter of 2009 were $0.02 per share compared to $0.05 per share in the second quarter of 2008.
Adjusted EBITDA (operating income (loss) excluding depreciation, amortization of intangible assets, and cost of legal proceedings, and settlements, net) increased 76.0% to $15.3 million for the second quarter of 2009 compared to $8.7 million reported for the second quarter of 2008.
Net revenues declined $5.0 million or 6.0% to $77.5 million for the three months ended June 30, 2009 compared with $82.5 million for the prior year comparable period. The decline was due primarily to lower medical transcription revenue of $2.7 million resulting from lower average prices for MedQuist's services.
Cost of revenues decreased $6.7 million or 11.5% to $51.4 million for the three months ended June 30, 2009 compared with $58.0 million for the three months ended June 30, 2008. This decrease was due to reduced medical transcription volume, lower payroll related to increased use of speech recognition technology, offshore outsourcing, and cost containment actions.
Selling, general and administrative costs decreased $3.6 million or 30.0% to $8.5 million for the three months ended June 30, 2009 compared to $12.1 million for the three months ended June 30, 2008. The decrease was due primarily to work force reductions and cost containment actions.
Research and development costs decreased $1.4 million or 36.3% to $2.4 million for the three months ended June 30, 2009 compared with $3.7 million for the three months ended June 30, 2008. The decrease was due to lower compensation expense as a result of workforce reductions and an increase in capitalized software development costs.
Cost of legal proceedings and settlements, net, increased $7.7 million to $10.2 million for the three months ended June 30, 2009 compared with $2.5 million for the three months ended June 30, 2008. The increase was due primarily to the settlement of the Anthurium lawsuit.
As of June 30, 2009 the company had $54.2 million in cash compared to $39.9 million at December 31, 2008. The increased cash was provided by operating activities in the amount of $18.4 million offset by cash used for investments of $4.3 million.
For the six months ended June 30, 2009, net revenues declined 5.9% to $156.4 million while the company's net income improved to $7.7 million compared to a net loss of $2.6 million for the six months ended June 30, 2008. On a non-GAAP basis (excluding the cost of legal proceedings and settlements, net), adjusted EBITDA for the six months ended June 30, 2009 improved by $14.4 million. Non-GAAP adjusted EBITDA in the six months ended June 30, 2009 was $28.5 million compared to a non-GAAP Adjusted EBITDA of $14.1 million in the six months ended June 30, 2008.
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 Six months ended ended June 30, June 30, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- Net revenues $77,471 $82,454 $156,415 $166,179 ------- ------- -------- -------- Operating costs and expenses: Cost of revenues 51,357 58,015 105,225 119,273 Selling, general and administrative 8,451 12,066 17,889 24,950 Research and development 2,380 3,735 4,796 7,854 Depreciation 2,669 2,996 5,221 5,924 Amortization of intangible assets 1,504 1,373 3,015 2,734 Cost of legal proceedings and settlements, net 10,134 2,466 12,058 9,075 Restructuring charges - (45) - (45) Total operating costs and expenses 76,495 80,606 148,204 169,765 ------ ------ ------- ------- Operating income (loss) 976 1,848 8,211 (3,586) Equity in income of affiliated company 356 25 428 41 Other income - - - 438 Interest income, net 19 895 65 2,183 -- --- -- ----- Income (loss) before income taxes 1,351 2,768 8,704 (924) Income tax provision 515 933 1,014 1,658 --- --- ----- ----- Net income (loss) $836 $1,835 $7,690 $(2,582) ==== ====== ====== ======= Net income (loss) per share: Basic $0.02 $0.05 $0.20 $(0.07) ----- ----- ----- ------ Diluted $0.02 $0.05 $0.20 $(0.07) ----- ----- ----- ------ Weighted average shares outstanding: Basic 37,556 37,544 37,556 37,544 ------ ------ ------ ------ Diluted 37,556 37,553 37,556 37,544 ------ ------ ------ ------ MedQuist Inc. and Subsidiaries Consolidated Balance Sheets (In thousands) Unaudited June 30, December 31, 2009 2008 ---- ---- Assets Current assets: Cash and cash equivalents $54,165 $39,918 Accounts receivable, net of allowance of $3,879 and $4,802, respectively 44,996 50,374 Income tax receivable 183 154 Other current assets 7,322 8,053 ----- ----- Total current assets 106,666 98,499 Property and equipment, net 13,428 15,785 Goodwill 40,731 40,545 Other intangible assets, net 38,161 39,877 Deferred income taxes 1,355 1,204 Other assets 7,609 6,295 ----- ----- Total assets $207,950 $202,205 ======== ======== Liabilities and Shareholders' Equity Current liabilities: Accounts payable $7,274 $7,487 Accrued expenses 9,020 11,994 Accrued compensation 12,982 11,204 Customer accommodation 11,973 12,055 Deferred income tax liability - current 651 651 Deferred revenue 13,700 15,630 ------ ------ Total current liabilities 55,600 59,021 Deferred income taxes 1,240 799 Other non-current liabilities 2,295 2,033 ----- ----- Commitments and contingencies Shareholders' equity: Common stock - no par value; authorized 60,000 shares; 37556 and 37556 shares issued and outstanding, respectively 238,003 237,907 Accumulated deficit (91,506) (99,198) Accumulated other comprehensive income 2,318 1,643 ----- ----- Total shareholders' equity 148,815 140,352 ------- ------- Total liabilities and shareholders' equity $207,950 $202,205 ======== ======== MedQuist Inc. and Subsidiaries Consolidated Statements of Cash Flows (In thousands) Unaudited Six months ended June 30, -------- 2009 2008 ---- ---- Operating activities: Net income (loss) $7,690 $(2,582) Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation and amortization 8,236 8,658 Equity in income of affiliated company (428) (41) Deferred income tax provision 435 1,491 Stock option expense 96 162 Provision for doubtful accounts 89 1,205 Loss on disposal of property and equipment 26 38 Changes in operating assets and liabilities: Accounts receivable 5,287 (1,334) Income tax receivable (29) 99 Other current assets 743 (837) Other non-current assets (34) 116 Accounts payable 361 (2,065) Accrued expenses (3,872) (5,405) Accrued compensation 1,765 (309) Customer accommodation - (5,593) Deferred revenue (2,045) 172 Other non-current liabilities 112 8 --- - Net cash provided by (used in) operating activities $18,432 $(6,217) ------- ------- Investing activities: Purchase of property and equipment (2,135) (3,078) Capitalized software (1,283) (1,862) Proceeds from sale of investments - 692 Investment in A-Life Medical, Inc. (852) - Net cash used in investing activities (4,270) (4,248) ------ ------ Financing activities: Net cash provided by financing activities - - --- --- Effect of exchange rate changes 85 (22) -- --- Net increase (decrease) in cash and cash equivalents 14,247 (10,487) ------ ------- Cash and cash equivalents - beginning of period 39,918 161,582 ------ ------- Cash and cash equivalents - end of period $54,165 $151,095 ======= ======== Supplemental cash flow information: Cash paid for income taxes $197 $263 ---- ---- Accommodation payments paid with credits $82 $611 --- ---- MedQuist Inc. and Subsidiaries Reconciliation of GAAP financial measures to the non-GAAP measures Adjusted EBITDA (In thousands) Unaudited Three months Six months ended ended June 30, June 30, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- GAAP operating income (loss) $976 $1,848 $8,211 $(3,586) Add: Depreciation 2,669 2,996 5,221 5,924 Add: Amortization of intangible assets 1,504 1,373 3,015 2,734 Add: Cost of legal proceedings and settlements, net 10,134 2,466 12,058 9,075 ------- ------ ------- ------- Adjusted EBITDA $15,283 $8,683 $28,505 $14,147 ======= ====== ======= =======
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,
dgolio@medquist.com
Web Site: http://www.medquist.com/
