Advertisement
US Oncology Second Quarter Results
-- Adjusted EBITDA for the second quarter of 2008 was $57.4 million,compared to $53.0 million for the second quarter of 2007 and $52.2 million forthe first quarter of 2008. The increase from the second quarter of 2007reflects an increase in patient visits at practices affiliated undercomprehensive service agreements ("CSA") and growth in the number ofphysicians affiliated under oncology pharmaceutical service ("OPS") agreementssince the end of the second quarter of 2007 partially offset by reducedutilization of supportive care drugs. The increase from the previous quarterreflects earnings growth in each of our primary operating segments.
Advertisement
-- Cash used for operations in the second quarter of 2008 was$(8.6) million, compared to cash generated by operations of $70.6 million forthe second quarter of 2007 and $50.9 million for the first quarter of 2008.The decrease in operating cash flow from the second quarter of 2007 reflectspayments made under new generic drug inventory management programs, as well ashigher working capital requirements associated with increasing networkvolumes. The decrease from the first quarter of 2008 is due to increasedpayments for inventory and the distribution of pharmaceutical rebates tophysicians, partially offset by lower semi-annual interest payments which weredue on the indebtedness of US Oncology in the first quarter of 2008.
-- During the second quarter, 21 physicians began practicing as part ofthe US Oncology network and 48 physicians separated from the network.Separations include a 32 physician practice that had been affiliated under anOPS agreement, as well as 16 physicians that retired or otherwise leftpractices that remain affiliated with the Company.
-- As of June 30, 2008, 62 physicians had executed agreements to join theUS Oncology network under comprehensive service and OPS agreements and areexpected to begin practicing under these agreements in 2008. An additional 4physicians signed either comprehensive service or OPS agreements during themonth of July to join the US Oncology network. Also, as of June 30, threeintegrated cancer centers and two radiation-only cancer centers were underconstruction. During the second quarter of 2008, two integrated cancercenters were opened and began providing patient care.
-- On July, 15, 2008, Congress enacted the Medicare Improvements forPatients and Providers Act of 2008. As a result, the mid-year 2008 MedicarePhysician Fee Schedule ("MPFS") rate reduction of 10.6 percent wasretroactively replaced with the fee schedule rates in effect fromJanuary - June, 2008, which reflected a 0.5 percent increase from 2007 rates.This rate will remain in effect through December 31, 2008 when an additional1.1 percent increase to the MPFS will take effect on January 1, 2009.
Bruce Broussard, chief executive officer, stated, "Our revenue growth isreflective of the company's success in three strategic areas: increasingpatient access to the US Oncology system; expanding into new servicessynergistic to our size and scale; and broadening our relationships with keycustomers: physicians, manufacturers and payers.
Examples of our success in these areas include:
-- Growth in annual network volume from 550,000 patients in 2005 to over630,000 patients currently as a result of successful development
