MedQuist Holdings Inc. (Nasdaq:MEDH), a leading provider of
integrated clinical documentation solutions for the U.S. healthcare
system, increased its performance goals for 2011 to reflect the
contribution from recent acquisitions and performance to date in
the third quarter. The Company also announced that its Board of
Directors has authorized a stock repurchase plan providing for the
repurchase in the aggregate of up to $25 million of the Company's
outstanding common stock.
Vern Davenport, Chairman and Chief Executive Officer of MedQuist
Holdings, noted, "We continue to make progress with the integration
of M*Modal. I'm very encouraged by the validation we're receiving
from customers and partners as we demonstrate our combined vision
for solutions that create and manage actionable clinical
documentation across the continuum of care. These customers and
partners are increasingly recognizing the value we can offer to
accelerate EHR adoption and Meaningful Use qualification, enhance
regulatory compliance – particularly the coding transition to
ICD-10 – and provide deeper insight that enables introduction of
new care delivery models."
Ronald L. Scarboro, Chief Financial Officer of MedQuist
Holdings, added, "The contribution from our recent acquisitions,
along with increased visibility and the execution of our recent
organic growth and implementation initiatives, have enabled us to
increase all of our key performance goals for 2011."
For 2011, the Company expects to report the following:
Net revenues: |
$441 million to $444 million |
Total clinical documentation volume: |
3.40 billion to 3.50 billion lines |
Adjusted EBITDA: |
$115.5 million to $118.0 million |
Adjusted Net Income: |
$1.29 to $1.31 per weighted average Proforma
Share Outstanding |
These estimates are based on the following full year
assumptions:
Restructuring and integration costs: |
$13 million |
Weighted average Proforma Shares
Outstanding: |
54.7 million common shares |
Capital expenditures: |
$19 million to $22 million |
To date in the third quarter, the Company has completed the
acquisition of M*Modal, a technology company with $15 million in
annualized continuing revenue (excluding revenues from MedQuist)
for a closing price of $48.4 million in cash and 4.1 million shares
of common stock in August, and the acquisition of All Type Medical
Transcription Services and JLG Medical Transcription Services, two
medical transcription providers with $13 million in annualized
continuing revenues collectively, for a total of $10.7 million in
cash in September. The Company expects the fourth quarter to
reflect the impact and full benefit of the above acquisitions and
initial integration savings.
The Company also announced that it intends to provide initial
performance goals for 2012 when it reports results for the third
quarter on November 9, 2011 with a conference call to follow on the
morning of November 10, 2011.
Amendment to Credit Facilities
On September 14, the Company amended its credit facilities to
expand the cash portion of its allowable acquisition basket from
$25 million to $50 million per year and from $75 million to $150
million over the life of the loan, to eliminate any restrictions on
the use of common stock for acquisitions and to add a $25 million
accordion feature. On September 14, the Company also amended its
credit agreements to allow for up to $25 million in share
repurchases.
$25 Million Share Repurchase Authorization
Commenting on the share repurchase authorization, Mr. Davenport
added, "We are pleased with the Board's decision to authorize a
stock repurchase program. Given the continued execution of our
growth strategy through acquisitions, our confidence in the
business and relentless focus on execution, we believe this capital
allocation decision is expected to produce long-term returns
comparable to other acquisitions we have completed this
quarter."
The Company intends to conduct the stock repurchase program
through a 10b5-1 trading plan. The shares may be repurchased
from time to time in the open market or negotiated transactions,
and the amount and timing of those purchases will be based on a
variety of factors, including stock acquisition price, regulatory
limitations and other market and economic factors. The stock
repurchase program does not require the Company to repurchase any
specific number of shares, and the Company may terminate the
repurchase program at any time. The Company will fund the
repurchases from available cash or borrowings on its credit
facilities. The Company also will not repurchase any shares
directly from its directors and officers or S.A.C. PEI CB
Investment L.P. and its affiliates under the program.
The repurchase program, which is authorized for a six-month
period, will not commence until the completion of the Company's
previously announced exchange offer to acquire the remaining 3% of
the outstanding shares of MedQuist Inc. common stock not already
owned by the Company and the completion of a short-form merger to
acquire remaining shares not tendered and accepted in the exchange
offer. The Company expects to complete the short-form merger in
mid-November 2011.
About MedQuist Holdings
MedQuist is a leading provider of clinical narrative capture
services, Speech Understanding technology from M*Modal and clinical
documentation workflow. MedQuist's enterprise solutions – including
mobile voice capture devices, speech recognition, Web-based
workflow platforms and global network of medical editors – help
healthcare facilities facilitate adoption of electronic health
records (EHR), improve patient care, increase physician
satisfaction and lower operational costs. For more information,
please visit www.medquist.com.
The MedQuist Holdings Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=10083
Forward-Looking Statements
Information provided and statements contained in this press
release that are not purely historical, such as
statements regarding our 2011 financial and operating performance,
the timing of the release of our initial performance goals for
2012, our stock repurchase plan, the integration of M*Modal and the
timing of the exchange offer and short-form merger, are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act
of 1934 and the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements only speak as of the date of this
press release and the Company assumes no obligation to update the
information included in this press release. Statements made in this
press release that are forward-looking in nature may involve risks
and uncertainties. Accordingly, readers are cautioned that any such
forward-looking statements are not guarantees of future performance
and are subject to certain risks, uncertainties and assumptions
that are difficult to predict, including, without limitation,
specific factors discussed herein and in other releases and public
filings made by the Company (including filings by the Company with
the Securities and Exchange Commission). Although the Company
believes that the expectations reflected in such forward-looking
statements are reasonable as of the date made, expectations may
prove to have been materially different from the results expressed
or implied by such forward-looking statements. Unless otherwise
required by law, the Company also disclaims any obligation to
update its view of any such risks or uncertainties or to announce
publicly the result of any revisions to the forward-looking
statements made in this press release.
Total Clinical Documentation Volume
Management believes that total clinical documentation volume is
an important measure of the Company's operating results. Total
clinical documentation volume is defined as total lines processed
on our clinical documentation platforms and/or transcribed or
edited by our personnel.
Non-GAAP Financial Measures
We have provided the Company's Adjusted EBITDA, Adjusted Net
Income and Adjusted Net Income per weighted average proforma share
outstanding, each a non-GAAP financial measure, on a
forward-looking basis in this release. We are unable to
present a quantitative reconciliation of these forward-looking
non-GAAP financial measures to the most directly comparable
forward-looking GAAP financial measures because management cannot
predict, with sufficient reliability, contingencies relating to
potential changes in tax valuation allowances, potential changes to
customer accommodation accruals, potential restructuring impacts,
contingencies related to past and future acquisitions, and changes
in fair values of our derivative instruments, all of which are
difficult to estimate primarily due to dependencies on future
events.
Adjusted EBITDA
Adjusted EBITDA is a metric used by management to measure
operating performance. Adjusted EBITDA is defined as net income
(loss) attributable to MedQuist Holdings Inc., as applicable, plus
net income attributable to non-controlling interests, income taxes,
interest expense, net, depreciation and amortization, cost
(benefit) of legal proceedings, settlements, and accommodations,
acquisition and restructuring charges, the effect of the sale of
our Patient Financial Services business (discontinued operations),
equity in income of affiliated company and share based compensation
and other non cash awards.
We present Adjusted EBITDA as a supplemental performance measure
because we believe it facilitates operating performance comparisons
from period to period and company to company by backing out the
following:
- potential differences caused by variations in capital
structures (affecting interest expense, net), tax positions (such
as the impact on periods or companies for changes in effective tax
rates), the age and book depreciation of fixed assets (affecting
depreciation expense);
- the impact of non-cash charges; and
- the impact of acquisition and integration related charges,
restructuring charges, and certain unusual or nonrecurring
items.
Because Adjusted EBITDA facilitates internal comparisons of
operating performance on a more consistent basis, we also use
Adjusted EBITDA in measuring our performance relative to that of
our competitors. Adjusted EBITDA is not a measurement of our
financial performance under GAAP and should not be considered as an
alternative to net income, operating income or any other
performance measures derived in accordance with GAAP or as an
alternative to cash flow from operating activities as measures of
our profitability or liquidity. We understand that although
Adjusted EBITDA is frequently used by securities analysts, lenders
and others in their evaluation of companies, Adjusted EBITDA has
limitations as an analytical tool, and you should not consider it
in isolation, or as a substitute for analysis of our results as
reported under GAAP. Some of these limitations are:
- Adjusted EBITDA does not reflect our cash expenditures or
future requirements for capital expenditures or contractual
commitments;
- Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs;
- Although depreciation is a non-cash charge, the assets being
depreciated will often have to be replaced in the future, and
Adjusted EBITDA does not reflect any cash requirements for such
replacements; and
- Other companies in our industry may calculate Adjusted EBITDA
differently than we do, limiting its usefulness as a comparative
measure.
Adjusted Net Income
Adjusted Net Income, a non-GAAP financial measure, is defined by
the Company as Adjusted EBITDA less amortization expense for
capitalized intangible assets (excluding acquired intangibles),
less interest expense (net of non-cash interest), and less current
tax provision. We measure Adjusted Net Income based on Proforma
Shares Outstanding (see below). Management believes that
utilization of Adjusted Net Income is an important non-GAAP
financial measure of our normalized operating results.
Proforma Shares Outstanding
For purposes of evaluating our results on per-share metrics,
many of our computations utilize proforma share
computations. Our measure of proforma shares includes our
Basic and Diluted share computations utilized for GAAP purposes,
plus our estimate of the impacts of the following effective as of
the beginning of 2011: restrictive stock issuable to certain key
employees, shares issued to former principal stockholders, shares
issued in our February 2011 initial public offering, our February
2011 private exchange with certain of MedQuist Inc.'s
non-controlling shareholders, our March 2011 public exchange offer
and shares issuable to the remaining non-controlling shareholders
of MedQuist Inc.
CONTACT: Investor Contacts:
Ron Scarboro
Chief Financial Officer
ronald.scarboro@medquist.com
(615) 798-4350
Tripp Sullivan
Corporate Communications, Inc.
tripp.sullivan@cci-ir.com
(615) 324-7335
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