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AKU Akumin

Filed: 1 Apr 21, 6:11am

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Akumin Inc. Announces Fourth Quarter and Releases 2021 Financial Guidance

March 31, 2021 – Plantation, FL – Akumin Inc. (NASDAQ/TSX: AKU) (“Akumin” or the “Corporation”) announced today its financial results for the quarter (“Q4 Fiscal 2020”) and year ended December 31, 2020.

Summary Consolidated Financial Results

 

(in thousands, except for per share amounts)  3-month period
ended

Dec. 31, 2020
   3-month period
ended

Dec.31, 2019
   Year ended
Dec.31, 2020
   Year ended
Dec. 31, 2019
 

Volume in RVUs

   1,533    1,583    5,642    5,247 

Revenue

   58,195    77,026    251,283    247,436 

EBITDA (1)

   (13,217   18,716    27,093    49,534 

Adjusted EBITDA (1)

   15,861    20,231    53,704    59,813 

EPS –Diluted

   (0.31   0.05    (0.29   0.14 

 

(1)

See “Non-GAAP Measures” below.

Commenting on the Q4 Fiscal 2020 financial results, Riadh Zine, President and Chief Executive Officer of the Corporation, said, “During the fourth quarter, we generated Adjusted EBITDA of $15.9 million. Akumin’s volume during the quarter was approximately 1,533,000 RVUs compared to approximately 1,583,000 RVUs in Q4 Fiscal 2019. On an organic volume basis, RVUs decreased by 6% compared to the same prior period. However, on a sequential basis, RVUs increased approximately 3% versus Q3 Fiscal 2020. This sequential increase reflects continued recovery from the pandemic impact.”

The Corporation closed the fourth quarter with a strong cash position of $44.4 million, which included an additional grant of approximately $4.1 million received in December 2020 from Health and Human Services (“HHS”) to Medicare providers pursuant to the CARES Act. Earlier in the same year, we also received $1.1 million in grant funds from HHS pursuant to the CARES Act. These grants have been included in our financial statements as other revenue, consistent with market practices.

The financial performance of fiscal 2020 was severely impacted by multiple factors, including: (i) the significant negative effect of the pandemic on our volume, revenues and profitability in the second quarter of 2020, where RVU volume declined sequentially by 28%; (ii) a change, during the fourth quarter, in the Company’s estimates of the implicit price concessions related to its customers, primarily based on historical experience of collections impacted by the pandemic and the integration of imaging centers acquired in 2018 and 2019, which resulted in an increase in cumulative implicit price concessions for outstanding receivables of approximately $12 million when compared to fiscal 2019; and (iii) the refinancing, during the fourth quarter, of our credit facilities with a U.S. private placement of $400 million Senior Secured Notes due 2025, which, while it resulted in improved financial flexibility, resulted in a loss of approximately $18 million after expensing debt issuance costs and pre-payment penalties.


“Notwithstanding the challenges we faced in 2020, Akumin’s business demonstrated its resilience. As an essential healthcare service provider, we continued to operate throughout the pandemic to serve our valued

patients and partners, while taking steps to maintain strong margins,” Mr. Zine continued. “We would like to take this opportunity to thank again our staff, radiologists, and all our stakeholders for their efforts and support during this challenging year.

“We continue to execute on our planned U.S. capital markets strategy, as the Corporation adopted U.S. GAAP as the basis for preparation of its annual financial statements effective for the fiscal year-ended December 31, 2020. In addition to our entry into the U.S. debt capital markets, our common shares commenced trading on the NASDAQ on September 2, 2020 and we became an “SEC Issuer” for purposes of the Canadian Securities Administrators’ National Instrument 51-102Continuous Disclosure Obligations around that time.

“Furthermore, and according to our stated objective of modernizing our ERP platform, effective March 1, 2021, Akumin completed a common equity investment in an artificial intelligence technology company as part of a private placement offering for approximately $4.6 million. As a result of this investment and another previous investment in May 2020, Akumin owns a 34.5% equity interest in the company. In collaboration with Akumin, the company has been developing AI-based software for use in the outpatient imaging space, which is expected to be an integral part of Akumin’s new ERP platform,” Mr. Zine concluded.

2021 Fiscal Year Guidance

For fiscal 2021, Akumin announces its guidance ranges as follows:

 

  

Volume:

  

6,250,000 RVUs to 6,450,000 RVUs

  

Revenue:

  

$270 million to $279 million

  

Adjusted EBITDA:        

  

$65 million to $70 million

This financial guidance takes into account the improved levels of volume in RVUs as compared to fiscal 2020, which was impacted by the COVID-19 pandemic, and assumes the service fee revenue per RVU realized in fiscal 2020 and our existing cost structure. The potential upside from our guidance ranges is expected to result from our planned cost reduction initiatives and any tuck-in acquisitions completed during fiscal 2021.

Fourth Quarter and Year-End Fiscal 2020 Financial Results Call

Akumin would like to invite interested parties to the Corporation’s Fourth Quarter and Fiscal Year-End Fiscal 2020 Financial Results Call, to be held on April 1, 2021 from 8:30 a.m. to 9:00 a.m. Eastern Time. To access the conference call, dial toll-free in Canada or the U.S. 888-231-8191 or, for international callers, 647-427-7450. A related presentation will be available for download on Akumin’s website (www.akumin.com) and at https://akum.in/Q42020-ResultsCall. Participants are asked to connect at least 10 minutes prior to the beginning of the call to ensure participation. The webcast archive will be available for 90 days. A replay of the conference call will also be available until Thursday, April 8, 2021 by calling 416-849-0833 or toll-free 1-855-859-2056, using passcode number 3575808.

Unless otherwise indicated, all amounts are expressed in U.S. dollars. Certain metrics, including those expressed on an adjusted or comparable basis, are non-GAAP measures. See “Non-GAAP Measures” and “Selected Consolidated Financial Information” of this press release for further details. The Corporation’s consolidated financial statements for Q4 Fiscal 2020 and related management’s discussion and analysis are available in Akumin’s public disclosure at www.sedar.com and www.sec.gov.

 

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About Akumin

Akumin is a leading provider of freestanding, fixed-site outpatient diagnostic imaging services in the United States with a network of owned and/or operated imaging centers located in Florida, Texas, Pennsylvania, Delaware, Illinois, Kansas and Georgia. By combining our clinical expertise with the latest advances in technology and information systems, our centers provide physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders and may reduce unnecessary invasive procedures, minimizing the cost and amount of care for patients. Our imaging procedures include MRI, CT, positron emission tomography (PET), ultrasound, diagnostic radiology (X-ray), mammography, and other interventional procedures.

Non-GAAP Measures

This press release refers to certain non-GAAP measures. These non-GAAP measures are not recognized measures under United States generally accepted accounting principles (“GAAP”) and do not have a standardized meaning prescribed by GAAP. There is unlikely to be comparable or similar measures presented by other companies. Rather, these non-GAAP measures are provided as additional information to complement those GAAP measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these non-GAAP measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under GAAP. We use non-GAAP financial measures, including “EBITDA”, “Adjusted EBITDA”, “Adjusted EBITDA Margin” and “Adjusted net income (loss) attributable to shareholders of Akumin” (each as defined below). These non-GAAP measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on GAAP measures. We believe the use of these non-GAAP measures, along with GAAP financial measures, enhances the reader’s understanding of our operating results and is useful to us and to investors in comparing performance with competitors, estimating enterprise value, and making investment decisions. We also believe that securities analysts, investors, and other interested parties frequently use non-GAAP measures in the evaluation of issuers. Our management uses non-GAAP measures to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. Definitions and reconciliations of non-GAAP measures to the relevant reported measures can be found in our Management’s Discussion and Analysis dated March 31, 2021 available in our public disclosure at www.sedar.com and www.sec.gov.

We define such non-GAAP measures as follows:

“EBITDA” means net income (loss) attributable to shareholders of the Company before interest expense (net), income tax expense (benefit) and depreciation and amortization.

“Adjusted EBITDA” means EBITDA, as further adjusted for stock-based compensation, impairment of property and equipment, provisions for certain credit losses, settlement costs, provisions, acquisition-related and public offering costs, gains (losses) in the period, deferred rent expense (credit) and one-time adjustments.

“Adjusted EBITDA Margin” means Adjusted EBITDA divided by the total revenue in the period.

“Adjusted net income (loss) attributable to shareholders of Akumin” means Adjusted EBITDA less depreciation and amortization and interest expense, taxed at Akumin’s estimated effective tax rate, which is a blend of U.S. federal and state statutory tax rates for Akumin for the period.

 

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Forward-Looking Information

Certain information in this press release constitutes forward-looking information. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “is positioned”, “estimates”, “intends”, “assumes”, “anticipates” or “does not anticipate” or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events.

Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by Akumin as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in greater detail in the “Risk Factors” section of our Annual Information Form dated March 31, 2021, which is available at www.sedar.com and www.sec.gov. These factors are not intended to represent a complete list of the factors that could affect Akumin; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. The forward-looking statements contained in this press release are made as of the date of this press release, and Akumin expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.

For further information:

R. Jeffrey White

Investor Relations

1-866-640-5222

jeffrey.white@akumin.com

<Financial tables follow.>

 

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Selected Consolidated Financial Information

 

(in thousands)

  Three-month period
ended
Dec 31, 2020
  Three-month period
ended
Dec 31, 2019
 

Service fees – net of allowances and discounts

   53,600   76,253 

Other revenue

   4,595   773 
  

 

 

  

 

 

 

Revenue

   58,195   77,026 
  

 

 

  

 

 

 

Employee compensation

   21,967   25,442 

Reading fees

   9,964   11,002 

Rent and utilities

   7,319   7,532 

Third party services and professional fees

   5,204   6,447 

Administrative

   3,629   3,562 

Medical supplies and other expenses

   3,178   2,902 

Depreciation and amortization

   5,050   4,228 

Stock-based compensation

   358   749 

Operational financial instruments revaluation and other (gains) losses

   383   360 

Interest expense

   8,343   7,627 

Settlement costs (recoveries)

   (167  (443

Acquisition related costs

   605   410 

Other financial instruments revaluation and other (gains) losses

   18,198   (269
  

 

 

  

 

 

 

Income (loss) before income taxes

   (25,836  7,447 
  

 

 

  

 

 

 

Income tax provision (benefit)

   (4,785  3,588 

Non-controlling interests

   774   616 
  

 

 

  

 

 

 

Net income (loss) attributable to shareholders of Akumin

   (21,825  3,273 
  

 

 

  

 

 

 

Adjusted EBITDA
(in thousands)

  Three-month period
ended
Dec 31, 2020
  Three-month period
ended
Dec 31, 2019
 

Revenue

   58,195   77,026 
  

 

 

  

 

 

 

Less:

   

Employee compensation

   21,967   25,442 

Reading fees

   9,964   11,002 

Rent and utilities

   7,319   7,532 

Third party services and professional fees

   5,204   6,447 

Administrative

   3,629   3,562 

Medical supplies and other expenses

   3,178   2,902 

Deferred rent (expense) credit

   48   (708

Sub-total

   51,309   56,179 

Non-controlling interests

   774   616 

One-time adjustments

   (9,749  —   
  

 

 

  

 

 

 

Adjusted EBITDA

   15,861   20,231 
  

 

 

  

 

 

 

Adjusted EBITDA Margin

   27  26
  

 

 

  

 

 

 

 

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(in thousands)

  Year
ended
Dec 31, 2020
  Year
ended
Dec 31, 2019
 

Service fees – net of allowances and discounts

   243,981   244,841 

Other revenue

   7,302   2,595 
  

 

 

  

 

 

 

Revenue

   251,283   247,436 
  

 

 

  

 

 

 

Employee compensation

   84,038   85,900 

Reading fees

   37,817   35,244 

Rent and utilities

   30,203   26,332 

Third party services and professional fees

   21,707   19,084 

Administrative

   12,876   12,459 

Medical supplies and other expenses

   11,162   8,784 

Depreciation and amortization

   20,460   15,587 

Stock-based compensation

   2,084   3,555 

Operational financial instruments revaluation and other (gains) losses

   (3,908  1,017 

Interest expense

   32,781   20,783 

Settlement costs (recoveries)

   2,324   (1,881

Acquisition related costs

   1,079   3,403 

Other financial instruments revaluation and other (gains) losses

   22,079   1,805 
  

 

 

  

 

 

 

Income (loss) before income taxes

   (23,419  15,364 
  

 

 

  

 

 

 

Income tax provision (benefit)

   (5,750  3,736 

Non-controlling interests

   2,729   2,200 
  

 

 

  

 

 

 

Net income (loss) attributable to shareholders of Akumin

   (20,398  9,428 
  

 

 

  

 

 

 

Adjusted EBITDA
(in thousands)

  Year
ended
Dec 31, 2020
  Year
ended
Dec 31, 2019
 

Revenue

   251,283   247,436 
  

 

 

  

 

 

 

Less:

   

Employee compensation

   84,038   85,900 

Reading fees

   37,817   35,244 

Rent and utilities

   30,203   26,332 

Third party services and professional fees

   21,707   19,084 

Administrative

   12,876   12,459 

Medical supplies and other expenses

   11,162   8,784 

Deferred rent (expense) credit

   (2,953  (2,380

Sub-total

   194,850   185,423 

Non-controlling interests

   2,729   2,200 
  

 

 

  

 

 

 

Adjusted EBITDA

   53,704   59,813 
  

 

 

  

 

 

 

Adjusted EBITDA Margin

   21  24
  

 

 

  

 

 

 

 

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Reconciliation of Non-GAAP Measures

 

(in thousands)

  Three-month
period ended
Dec 31, 2020
  Three-month
period ended
Dec 31, 2019
  Year
ended
Dec 31, 2020
  Year
ended
Dec 31, 2019
 

Net income (loss) attributable to shareholders of Akumin

   (21,825  3,273   (20,398  9,428 
  

 

 

  

 

 

  

 

 

  

 

 

 

Income tax provision (benefit)

   (4,785  3,588   (5,750  3,736 

Depreciation and amortization

   5,050   4,228   20,460   15,587 

Interest expense

   8,343   7,627   32,781   20,783 
  

 

 

  

 

 

  

 

 

  

 

 

 

EBITDA

   (13,217  18,716   27,093   49,534 
  

 

 

  

 

 

  

 

 

  

 

 

 

Adjustments:

     

Stock-based compensation

   358   749   2,084   3,555 

Settlement costs (recoveries)

   (167  (443  2,324   (1,881

Acquisition-related costs

   605   410   1,079   3,403 

Operational financial instrument

   383   360   (3,908  1,017 

revaluation and other (gains) losses Other financial instruments

   18,198   (269  22,079   1,806 

revaluation and other (gains) losses Deferred rent expense (credit)(1)

   (48  708   2,953   2,380 

One-time adjustments(2)

   9,749   —     —     —   
  

 

 

  

 

 

  

 

 

  

 

 

 

Adjusted EBITDA

   15,861   20,231   53,704   59,813 
  

 

 

  

 

 

  

 

 

  

 

 

 

Revenue

   58,195   77,026   251,283   247,436 
  

 

 

  

 

 

  

 

 

  

 

 

 

Adjusted EBITDA Margin

   27  26  21  24
  

 

 

  

 

 

  

 

 

  

 

 

 

Adjusted EBITDA

   15,861   20,231   53,704   59,813 
  

 

 

  

 

 

  

 

 

  

 

 

 

Less:

     

Depreciation and amortization

   5,050   4,228   20,460   15,587 

Interest expense

   8,343   7,627   32,781   20,783 

Sub-total

   2,468   8,376   463   23,443 

Effective tax rate(3)

   24.1  24.3  24.1  24.3

Tax effect

   594   2,031   111   5,685 
  

 

 

  

 

 

  

 

 

  

 

 

 

Adjusted net income attributable to shareholders of Akumin

   1,874   6,345   352   17,758 
  

 

 

  

 

 

  

 

 

  

 

 

 

 

(1)

Deferred rent expense (credit) is defined as operating lease cost less operating cash flows from operating leases.

(2)

Represents one-time adjustments to revenue resulting from changes to estimates of implicit price concessions and a one-time adjustment to expenses for incentive-based cash compensation.

(3)

Effective tax rate is the U.S. federal and state blended statutory tax rate estimated for Akumin for the period.

 

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