NightHawk third quarter results show scan volume up 1%, prices off 3%

COEUR D'ALENE, Idaho, Oct 29 -- NightHawk Radiology Holdings announced Wednesday financial results for its third quarter ended Sept. 30.

The following are third quarter 2008 highlights:

• Revenue was $43.4 million compared with $45.2 million in the year-ago quarter. Scan volume grew 1% to 792,000 scans while pricing declined 3%.

• Revenue from new service offerings, including final reads and business services, was $8.9 million, or 20% of total revenue. Final reads revenue increased 34% to $4.9 million, or 11% of total revenue.

• Adjusted net income was $6.2 million, or $0.21 per diluted share, compared with $8.0 million, or $0.26 per diluted share, in the year-ago quarter. Adjusted net income excludes noncash charges for stock compensation, amortization of intangible assets, and malpractice reserve adjustments. Adjusted net income in the third quarter of 2008 also excludes a pretax restructuring charge of $0.7 million ($0.4 million after tax) related to the closure of redundant facilities.

• GAAP net income was $3.3 million, or $0.11 per diluted share, compared with $3.8 million, or $0.12 per diluted share, in the third quarter of 2007.

• Cash flow from operations increased 100% to a record $9.6 million, up from $4.8 million in the third quarter of 2007. Free cash flow was a record $8.8 million during the quarter, up 144% from $3.6 million in the third quarter of 2007.

• Cash and cash equivalents on hand at Sept. 30 totaled $55.2 million.

"Considering the modest sequential increase in scan volume and revenue, we were able to increase adjusted earnings sequentially by 13% through improved productivity and prudently focusing on our costs," said Dr. Paul Berger, chair and CEO. "Our overall financial position remains very strong with $55.2 million in cash on hand and record cash flow from operations of $9.6 million during the third quarter and $22.9 million for the first nine months of 2008. We also saw encouraging results from our initiatives focused on improving our customer service and sales execution.

"In light of the lower than expected volumes we are seeing and the highly uncertain economic outlook, we are revising our full-year outlook and now expect full-year revenues to be in the range of $165 to $168 million and adjusted earnings per share of $0.64 to $0.67. However, I am confident that the solutions and value we provide to our customers remain a solid proposition and position us well for future growth."

The third quarter 2008 conference call was held Oct. 29. A live webcast of the conference call, as well as a replay, will be available online on the company’s website.

Participants can also access the call by dialing 800-257-2182 (or 303-262-2175 for international callers). A replay of the call will be available approximately two hours after the conclusion of the call and will remain available until midnight (EDT) on Thursday Nov. 20. To access the replay, dial 800-405-2236 or 303-590-3000 (for international callers) and enter the conference ID number: 11121223.