Alliance HealthCare Services, Inc. (AIQ)

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Alliance Healthcare Services (AIQ)

Q4 2012 Earnings Call

March 14, 2013 8:30 am ET


Richard W. Johns - Executive Vice President, General Counsel and Secretary

Larry C. Buckelew - Chairman, Interim Chief Executive Officer, Co-Chairman of Strategic Planning & Finance Committee, Member of Audit Committee and Member of Compensation Committee

Michael J. Shea - Chief Operating Officer

Howard K. Aihara - Chief Financial Officer and Executive Vice President


Henry Reukauf - Deutsche Bank AG, Research Division

Jason Adler

Elie Radinsky - Cantor Fitzgerald & Co.


Richard W. Johns

Good morning, and welcome ladies and gentlemen to the Alliance HealthCare Services Fourth Quarter and Full Year 2012 Earnings and 2013 Guidance Conference Call. My name is Richard Johns, and I am the company's Executive Vice President and General Counsel. This conference is being recorded for rebroadcast. [Operator Instructions]

This conference call will contain forward-looking statements which are based on the company's current expectations, forecasts, and assumptions, including statements related to our 2013 guidance and statements related to expected capital expenditures, imaging and radiation therapy center openings, long-term debt reduction, expected cost reduction, the company's effective tax rate and the weighted average number of shares outstanding.

As most of you know, forward-looking statements involve risks and uncertainties, which could cause actual outcomes and results to differ materially from the company’s expectations, forecasts and assumptions. These risks and uncertainties are described in the 2013 guidance release under the heading Forward-looking Statements, as well as in the Risk Factors section of the company’s annual audit report on Form 10-K for the year ended December 31, 2011, as such report may be modified or supplemented by the company’s subsequent filings with the SEC.

The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Financial and other statistical information presented on this conference call or in the company’s 2013 guidance release or information required by the SEC’s Regulation G may be accessed through the Investor Relations section of the company’s website. Please visit our website for replay information of this call.

On today's call, Larry Buckelew, our Chairman and CEO, will first provide an overview of our business and 2012 results and achievements; followed by Mike Shae, our Chief Operating Officer, providing an update on trends in the economy and the HealthCare Services sector. Our Chief Financial Officer, Howard Aihara, will follow with the details of our financial results, as well as our 2013 guidance. We will conduct a Q&A session after our prepared remarks.

With that, I will now turn the conference over to Larry Buckelew. Larry, please go ahead.

Larry C. Buckelew

Thanks so much, Rick, and good morning, everyone. I'm very pleased to welcome you to the Alliance fourth quarter and full year earnings call. We appreciate your time, your interest and your participation in this event.

The fourth quarter for 2012 was a strong end to an important year in the history of our company. And in addition to it being a strong into a really solid year, we now know that it's providing us some positive momentum as we continue to execute against our strategic growth plans as we're heading into 2013.

Some of the more significant accomplishments in 2012 include many key areas that we're proud of. I think a lot of companies will set some goals and they may stumble on some, but let me share with you some highlights because we feel like every goal that we set up for the year we knocked it down and achieved what we said we would.

Let me give you a few examples. During 2012, we returned Alliance to a path of growth. We did this through some diligent and disciplined expense management, but we also achieved a real success story in terms of reducing our revenue GAAP, showing that we have the ability to grow our business and do it during a time when we were going through some rapid restructuring of our business. So with all that going on, many companies will stumble, we did not.

In 2012, we delivered adjusted EBITDA of $154 million, and we did this while pruning our portfolio of some unprofitable customers, so this achievement represented approximately a 3% growth over 2011 and it was just about at the midpoint of our guidance that we highlighted for the year. So a lot happened in 2012, a lot of pruning, a lot of cost reduction, making sure we are rightsizing our business, but in spite of that, we achieved the growth that we promised.

Another key area we're excited about is the Alliance Imaging area. We talked about stabilizing that business. It was going through some turmoil. Later on here in the call, I'll give some additional examples of some success we're having, but I think one of the more exciting areas that we announced publicly near the end of the year was the new relationship that we have with Emory Healthcare, where we've demonstrated not only our ability to deliver our traditional model, but we're finding ways to work with them closely in an expanded value proposition, and this is one of many customer accounts where we're finding success and migrating to a broader offering and becoming the partner of choice for hospitals and health care groups as we deliver our expanded value proposition in imaging services.

Another key area I would simply highlight, a goal we set, we knocked it down and delivered it, was a continued focus on migrating our services in the Alliance Oncology segment of our business, driving more focus towards our stereotactic radiosurgery products, our SRS platforms. And worth mentioning and reminding you that during the year, we wrapped up the year with our AO division with now 29 total centers in operation, with 17 of those now dedicated as SRS sites.

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