SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-22758
UNILAB CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 95-4415490
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
18448 Oxnard Street, Tarzana, California 91356
(Address of principal executive offices (Zip Code)
(818)996-7300
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of October 31, 1997, 40,283,208 shares of Registrant's Common Stock, par
value $.01 per share, were outstanding.
Page 1 of 11 pages
<PAGE>
UNILAB CORPORATION
Form 10-Q for the Quarterly Period Ended September 30, 1997
INDEX
Page
Part I - FINANCIAL INFORMATION:
Item 1. Financial Statements
Balance Sheets - September 30, 1997 3
and December 31, 1996.
Statements of Operations -
Three and nine month periods ended
September 30, 1997 and September 30, 1996. 4
Statements of Cash Flows -
Nine month periods ended September 30, 1997
and September 30, 1996. 5
Notes to Financial Statements. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Part II - OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
<PAGE>
<TABLE>
UNILAB CORPORATION
BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(amounts in thousands, except per share data)
<CAPTION>
September 30, December 31,
1997 1996
Assets (Unaudited)
Current Assets:
<S> <C> <C>
Cash and cash equivalents $11,477 $12,176
Restricted cash 584 904
Accounts receivable, net 39,661 37,279
Inventory of supplies 2,647 2,604
Prepaid expenses and other current assets 1,418 1,702
- ----------------------------------------------------------------------------------------------------------
Total current assets 55,787 54,665
Property and Equipment, net 14,307 17,264
Goodwill, net 43,473 44,401
Other Intangible Assets, net 2,904 3,637
Other Assets 6,762 5,952
- ----------------------------------------------------------------------------------------------------------
$123,233 $125,919
- ----------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current Liabilities:
Current portion of long-term debt $1,755 $1,752
Accounts payable and accrued liabilities 20,111 22,024
Accrued payroll and benefits 7,058 5,976
- ----------------------------------------------------------------------------------------------------------
Total current liabilities 28,924 29,752
- ----------------------------------------------------------------------------------------------------------
Long-Term Debt, net of current portion 124,793 126,120
Other Liabilities 3,167 4,735
Commitments and Contingencies
Shareholders' Equity (Deficit):
Convertible preferred stock, $.01 par value
Issued and Outstanding - 400 at September 30
and December 31 4 4
Common stock, $.01 par value
Issued and Outstanding - 40,274 at September 30
and 37,285 at December 31 403 373
Additional paid-in capital 227,583 226,078
Accumulated deficit (261,641) (261,143)
- ----------------------------------------------------------------------------------------------------------
Total shareholders' deficit (33,651) (34,688)
- ----------------------------------------------------------------------------------------------------------
$123,233 $125,919
- ----------------------------------------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these
financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
UNILAB CORPORATION
STATEMENTS OF OPERATIONS
THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
(amounts in thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Sept.30, Nine Months Ended Sept.30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenue $54,238 $52,670 $161,298 $156,269
- ------------------------------------------------------------------------------------------------------------
Direct Laboratory and Field Expenses:
Salaries, wages and benefits 17,174 17,912 52,346 52,808
Supplies 7,488 7,562 22,655 21,314
Other operating expenses 14,649 14,114 43,224 40,513
----------------------------------------------------
39,311 39,588 118,225 114,635
Legal and acquisition related charges - 4,940 - 4,940
Amortization and depreciation 2,210 2,921 6,675 8,645
Selling, general and administrative expenses 8,491 10,606 26,185 32,461
- ------------------------------------------------------------------------------------------------------------
Total Operating Expenses 50,012 58,055 151,085 160,681
- ------------------------------------------------------------------------------------------------------------
Operating Income (Loss) 4,226 (5,385) 10,213 (4,412)
- ------------------------------------------------------------------------------------------------------------
Other Income (Expenses):
Third party interest, net (3,535) (3,525) (10,603) (9,824)
Related party interest - 375 - 1,125
- -----------------------------------------------------------------------------------------------------------
Total Other Income (Expenses) (3,535) (3,150) (10,603) (8,699)
- ------------------------------------------------------------------------------------------------------------
Income (Loss) Before Income Taxes
And Extraordinary Item 691 (8,535) (390) (13,111)
Tax Provision - - - -
- ------------------------------------------------------------------------------------------------------------
Income (Loss) Before Extraordinary Item 691 (8,535) (390) (13,111)
Extraordinary item - loss on early
extinguishment of debt - - - 3,451
- ------------------------------------------------------------------------------------------------------------
Net Income (Loss) $691 ($8,535) ($390) ($16,562)
- ------------------------------------------------------------------------------------------------------------
Preferred Stock Dividends $36 $36 $108 $108
Net Income (Loss) Available to Common
Shareholders $655 ($8,571) ($498) ($16,670)
Net Income (Loss) Per Share:
Income (Loss) Before Extraordinary Item $0.02 ($0.23) ($0.01) ($0.35)
Extraordinary Item $0.00 $0.00 $0.00 ($0.10)
Net Income (Loss) Per Share $0.02 ($0.23) ($0.01) ($0.45)
Weighted Average Common Shares
Outstanding 41,273 36,718 39,780 36,695
- -----------------------------------------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these
financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
UNILAB CORPORATION
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(amounts in thousands)
(Unaudited)
<CAPTION>
Nine months ended Sept.30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss ($390) ($16,562)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Amortization and depreciation 6,675 8,645
Provision for doubtful accounts 11,875 10,608
Extraordinary item - loss on early extinguishment of debt - 3,451
Net changes in assets and liabilities affecting operations:
Increase in Accounts receivable (14,257) (10,995)
Increase in Inventory of supplies (43) (228)
(Increase) decrease in Prepaid expenses and other current assets 309 (44)
Increase in Other assets (942) (284)
Increase (decrease) in Accounts payable and accrued liabilities (2,411) 4,986
Increase in Accrued payroll and benefits 1,698 2,011
Other 362 577
- ---------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 2,876 2,165
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under third party debt - 123,490
Payments of third party debt (1,324) (104,361)
Financing costs under the Senior Notes - (4,932)
Proceeds from the sale of common stock 581 -
Other (108) -
- ----------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities (851) 14,197
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,577) (3,150)
Payments for acquisitions (1,467) (2,146)
- ----------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (3,044) (5,296)
- ----------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH, RESTRICTED CASH
AND CASH EQUIVALENTS (1,019) 11,066
CASH, RESTRICTED CASH AND CASH EQUIVALENTS -
Beginning of Period 13,080 70
- ----------------------------------------------------------------------------------------------------------------
CASH, RESTRICTED CASH AND CASH EQUIVALENTS -
End of Period $12,061 $11,136
- ----------------------------------------------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
UNILAB CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. Management Opinion
In the opinion of management, the accompanying unaudited interim
financial statements reflect all adjustments which are necessary to
present fairly the financial position, results of operations and cash
flows for the interim periods reported. All such adjustments made were of
a normal recurring nature, except for the extraordinary charge of $3.5
million recorded in the first quarter of 1996 for the write-off of
deferred financing costs related to a previous credit facility and the
$4.9 million legal charge recorded in the third quarter of 1996 to
conclude an investigation of certain of the company's billings to
Medicare and certain other governmental entities.
The accompanying interim financial statements and related notes should be
read in conjunction with the financial statements of Unilab Corporation
("Unilab" or the "Company") and related notes as contained in the Annual
Report on Form 10-K for the year ended December 31, 1996.
2. Net Income (Loss) Per Share
Net income (loss) per share is computed by dividing net income (loss)
less preferred stock dividends by the weighted average number of common
shares outstanding for each period presented. Common stock equivalents,
which include options and warrants, are included in the income (loss) per
common share calculation when the effect is dilutive. The assumed
conversion of the convertible preferred stock is excluded from the
calculation since its effect would be immaterial.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings Per Share". SFAS No. 128 is effective for years ending after
December 15, 1997. The implementation of SFAS No. 128 would have had
no impact on the calculation of earnings per share for the three and
nine month periods ended September 30, 1997 and 1996.
3. Long-Term Debt
During the third quarter of 1997 the Company remained in compliance with
all covenants contained in an agreement with a financial institution to
sell up to $20.0 million of accounts receivable (the "Receivables
Agreement").
While the full amount of the facility is currently available to the
Company, the Company had not sold any receivables under the Receivables
Agreement as of October 31, 1997.
4. Supplemental Disclosure of Cash Flow Information
(amounts in thousands) Nine months ended Sept. 30,
1997 1996
Cash paid during the period for:
Interest $7,335 $3,405
Income taxes 1 8
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Three and Nine Month Periods Ended September 30, 1997
Compared with the
Three and Nine Month Periods Ended September 30, 1996
Revenue increased to $54.2 million and $161.3 million for the three and
nine month periods ended September 30, 1997 from $52.7 million and $156.3
million for the comparable prior year periods, representing increases of
$1.5 million or 3.0% and $5.0 million or 3.2%, respectively. The increases
were the result of additional specimen volume generating approximately $3.1
million and $15.8 million offset by changes in payor mix and decreases in
reimbursement levels of approximately $1.6 million and $10.8 million during
the three and nine month periods ended September 30, 1997 and 1996.
The $3.1 million and $15.8 million increase in specimen volume was due to a
5.8% and 10.0% increase in the number of specimens processed during the
three and nine month periods ended September 30, 1997 versus the comparable
prior year periods. Such increases were primarily attributable to growth in
the Company's core business.
The Company experienced a 2.6% and 6.2% decline in the average
reimbursement received for each specimen processed during the three and
nine month periods ended September 30, 1997 versus the comparable prior
year periods. Such decreases were primarily due to an increase in managed
care business and a general softening in reimbursement levels across most
payor groups, most notably from insurance carriers.
While average reimbursement was down over prior year periods, the third
quarter 1997 average reimbursement increased approximately 1% over the
average reimbursement in the second quarter 1997, the first time in over
two years that average reimbursement has increased from the preceding
quarter. This increase follows a stabilization of average reimbursement in
the second quarter 1997 compared to the first quarter of the year.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
were $6.4 million and $16.9 million for the three and nine month periods
ended September 30, 1997, compared to $2.5 million and $9.2 million for the
comparable prior year periods (excluding a 1996 first quarter extraordinary
charge and a 1996 third quarter non-recurring legal charge).
Salaries, wages and benefits decreased to $17.2 million and $52.3 million
for the three and nine month periods ended September 30, 1997 from $17.9
million and $52.8 million for the comparable prior year periods. As a
percentage of revenue, salaries, wages and benefits decreased to 31.7% and
32.5% for the three and nine month periods ended September 30, 1997 from
34.0% and 33.8% for the comparable prior year periods. Such decreases
primarily reflect a reduction in headcount, control over the growth in wage
increases and economies of scale associated with fewer employees processing
a significantly higher specimen volume.
Supplies expense was $7.5 million and $22.7 million for the three and nine
month periods ended September 30, 1997 versus $7.6 million and $21.3
million for the comparable prior year periods. As a percentage of revenue,
supplies expense was 13.8% and 14.0% for the three and nine month periods
ended September 30, 1997 versus 14.4% and 13.6% for the comparable prior
year periods. The decrease in specimen cost in the third quarter 1997 is
the result of economies of scale associated with an increased specimen
volume, which has resulted in a steady decline throughout 1997 in the cost
of supplies for each specimen processed.
Other operating expenses increased to $14.6 million and $43.2 million for
the three and nine month periods ended September 30, 1997 from $14.1
million and $40.5 million for the comparable prior year periods. As a
percentage of revenue, other operating expenses increased to 27.0% and
26.8% for the three and nine month periods ended September 30, 1997 from
26.8% and 25.9% for the comparable prior year periods. Such increases were
primarily due to increases in lab subcontracting expenses due to increases
in volume sent to outside reference laboratories and increases in bad debt
expenses, both being consistent with the higher trends recognized by the
Company throughout 1996.
During the third quarter of 1996, the Company recorded charges of
approximately $4.9 million, primarily related to settlements reached with
the U.S. Government and certain other entities in connection with the
Company's sales, marketing and billing practices. The Company agreed to pay
the U.S. Government approximately $4.0 million to conclude an investigation
of certain of Unilab's billings to Medicare and certain other governmental
entities for hematology indices being billed in conjunction with complete
blood counts. Unilab also paid the California MediCal program approximately
$160,000 in October 1996 to settle all their claims concerning the same
issue.
Amortization and depreciation expense decreased to $2.2 million and $6.7
million for the three and nine month periods ended September 30, 1997 from
$2.9 million and $8.6 million for the comparable prior year periods. Such
decreases were primarily due to the reduction in amortization expense from
the write-off of goodwill and customer lists of $61.7 million in the fourth
quarter of 1996 offset by increased depreciation expense from approximately
$4.1 million of laboratory computer equipment and software placed into
service at one of the Company's laboratory locations in the first quarter
of 1997.
Selling, general and administrative expenses decreased to $8.5 million and
$26.2 million for the three and nine month periods ended September 30, 1997
from $10.6 million and $32.5 million for the comparable prior year periods.
As a percentage of revenue, selling, general and administrative expenses
decreased to 15.7% and 16.2% for the three and nine month periods ended
September 30, 1997 from 20.1% and 20.8% for the comparable prior year
periods. Such decreases continue the trend realized by the Company in the
latter half of 1996 and relates to a reduction in the level of expenditures
incurred in the sales and marketing area, including revisions in incentive
programs and reduction in staffing levels and organizational and support
services, and reduction in corporate managerial and administrative
positions.
Third party interest expense, net was $3.5 million and $10.6 million for
the three and nine month periods ended September 30, 1997 versus $3.5
million and $9.8 million for the comparable prior year periods. The
increase in the nine months results for 1997 is primarily due to the full
year effect of increased indebtedness incurred by the Company under an
offering of $120.0 million of senior notes (the "Senior Notes") in March
1996.
Related party interest income of $0.4 million and $1.1 million for the
three and nine month periods ended September 30, 1996 reflects interest
income on a $15.0 million promissory note the Company received upon the
sale, effective June 30, 1995, of an equity investment. In November 1996,
the Company sold a 100% participation interest in its rights under the
$15.0 million promissory note to a third party.
Upon completion of the Senior Notes offering, the Company wrote off $3.5
million of deferred financing costs related to the Company's previous
credit agreements.
Liquidity and Capital Resources
Net cash provided by operating activities was $2.9 million for the nine
months ended September 30, 1997 and reflects an improvement of $0.7 million
over the comparable prior year period when net cash provided by operating
activities was $2.2 million.
Net cash used by financing activities was $0.9 million for the nine months
ended September 30, 1997, resulting from scheduled principal repayments
under capital lease obligations of $1.3 million and the issuance of
preferred dividends of $0.1 million offset by the proceeds of $0.6 million
from the sale of common stock to a member of the Board of Directors and the
Company's former Chief Executive Officer.
Net cash used by investing activities was $3.0 million for the nine months
ended September 30, 1997, resulting from $1.6 million of capital
expenditures and $1.4 million of payments made on acquisitions completed in
1996 and 1995.
<PAGE>
The Company had $11.5 million of unrestricted cash and cash equivalents on
hand at September 30, 1997. However, the Company made interest payments of
$6.6 million to the holders of $120.0 million of senior notes on October 1,
1997, thereby reducing the amount of unrestricted cash and cash equivalents
on hand. In addition, during the third quarter of 1997 the Company remained
in compliance with all covenants contained in the Receivables Agreement and
therefore the Company may sell up to $20.0 million of accounts receivables
under the Receivables Agreement. While the full amount of the facility is
currently available to the Company, the Company had not sold any
receivables under the Receivables Agreement as of October 31, 1997.
While the Company has had continued success in implementing the actions to
improve its operating results, and in turn, its operating cash flows as
described in its Annual Report on Form 10-K for the year ended December 31,
1996, the Company is continuing to implement those and other opportunities
to further improve its operating performance. Ongoing efforts include
further renegotiation of capitated contracts, further reductions in field
infrastructure expenses, increased billing and collection efforts, and
targeted reductions in overhead and other operating expenses. While the
Company believes that the amount of unrestricted cash and cash equivalents
and borrowing capabilities of $20.0 million under the Receivables Agreement
will be sufficient for the Company to meet anticipated requirements for
working capital, interest payments, capital expenditures and scheduled
principal payments under capital lease obligations for the foreseeable
future, the Company must continue to show improvement in its operating
results in order to meet those same requirements in subsequent years.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
Exhibit 99.1 - Press Release, dated November 3, 1997, announcing
third quarter earnings results.
Exhibit 99.2 - Press Release, dated September 17, 1997,
announcing addition of two new directors.
(B) Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNILAB CORPORATION
By: /s/ Brian D. Urban
Date: November 3, 1997 Brian D. Urban
Chief Financial Officer and Treasurer
<PAGE>
EXHIBIT 99.1
PRESS RELEASE UNILAB CORPORATION
(AMEX:ULB)
18448 Oxnard Street
Tarzana, CA 91356
www.Unilab.com
For Further Information:
Richard A. Michaelson
Phone: (818) 758-6607
e-mail: [email protected]
IMMEDIATE RELEASE
November 3, 1997
UNILAB CORPORATION ANNOUNCES THIRD QUARTER RESULTS
TARZANA, CA, November 3, 1997 -- UNILAB Corporation (AMEX:ULB) announced today
that net sales for the quarter ended September 30, 1997 increased to $54.2
million from $52.7 million in the same period last year. The Company reported
net income for the third quarter of 1997 of $0.7 million or $0.02 per common
share, compared to a net loss of $8.5 million, or ($0.23) per common share in
the same period last year, which included a $4.9MM non-recurring charge.
Excluding that non-recurring charge, net loss for the third quarter of 1996
would have been $3.6 million, or ($0.10) per common share.
"Our third quarter results continue the positive performance trend that we have
seen throughout this year," said David Weavil, Chairman and Chief Executive
Officer of Unilab. "We have addressed the demanding environment in California
with a successful focus on improved pricing and cost discipline. Earnings before
Interest, Taxes, Depreciation and Amortization (EBITDA) grew to $6.4 million for
the quarter, more than 2 1/2 times last year's $2.5 million, which is the
highest it's been in over two years. Year to date EBITDA of $16.9 million, up
from $9.2 million EBITDA earned in the first nine months of 1996, is a Unilab
record."
Unilab again reported record sales in the third quarter, testing approximately
6% more patients than it did in the third quarter of last year. Average pricing,
though down by approximately 2.6% from the prior year level, was slightly higher
than the first two quarters of 1997, and represents the best quarter to quarter
comparison in over a year.
"Cost efficiency continues to be a high priority for Unilab, and this quarter
continued the progress we have seen throughout 1997. Despite the 6% higher
specimen volume we enjoyed this quarter, we spent $3.1 million, or 5.8% less
than we spent in the third quarter of 1996," said Mr. Weavil. "Careful
identification of specific services that are most valued by our clients has
allowed us to steadily reduce key operating expenses elsewhere throughout our
business. We have been able to drive direct staffing expense down to its lowest
absolute and percent level in two years. Similarly, we have been successful in
cutting selling, general and administrative expense (SG&A) to the lowest level
it's been in 2 1/2 years. These SG&A expenses are now 15.7% of sales; a
measurable decline from the 20% levels they represented throughout much of
1996."
The Company's cash position at the end of the third quarter was $12.0 million,
reflecting continued strong receivables collections that held the number of days
sales outstanding (DSO), a measure of billing and collection efficiency, to 67
days, the same as last quarter, and a reduction of two days from the end of last
year.
For the first nine months of 1997, Unilab reported a net loss of $0.4 million,
or ($0.01) per common share on sales of $161.3 million. For the prior year's
first nine months, the Company had a net loss, excluding first quarter and third
quarter charges of $3.5 million and $4.9 million respectively, of $8.2 million,
or ($0.23) per common share, on sales of $156.3 million.
Unilab Corporation is the largest provider of clinical laboratory testing
services in California through its primary testing facilities in Los Angeles,
San Jose and Sacramento and over 200 regional service and testing facilities
located throughout the state.
- tables to follow -
<PAGE>
<TABLE>
Unilab Corporation
Consolidated Statement of Operations
(amounts in thousands, except per share data)
<CAPTION>
Three months ended Sept. 30, Nine months ended Sept. 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenue $54,238 $52,670 $161,298 $156,269
Direct Laboratory and Field Expenses:
Salaries, Wages and Benefits 17,174 17,912 52,346 52,808
Supplies 7,488 7,562 22,655 21,314
Other Operating Expenses 14,649 14,114 43,224 40,513
------ ------ ------ ------
39,311 39,588 118,225 114,635
------ ------ ------- -------
Legal and Acquisition Related Charges - 4,940 - 4,940
Amortization and Depreciation 2,210 2,921 6,675 8,645
Selling, General and Administrative Expenses 8,491 10,606 26,185 32,461
----- ------ ------ ------
Total Operating Expenses 50,012 58,055 151,085 160,681
Operating Income (Loss) 4,226 (5,385) 10,213 (4,412)
Other Income (Expenses)
Interest Expense, net (3,535) (3,150) (10,603) (8,699)
Income (Loss) Before Income Taxes and
Extraordinary Item 691 (8,535) (390) (13,111)
Extraordinary Item - Loss on Early
Extinguishment of Debt - - - 3,451
----------- ------------ ------------ -------
Net Income (Loss) 691 (8,535) (390) (16,562)
Preferred Stock Dividends 36 36 108 108
-- -- --- ---
Net Income (Loss) Available to Common
Stockholders $655 ($8,571) ($498) ($16,670)
Net Income (Loss) per Share:
Income (Loss) Before Extraordinary Item $0.02 ($0.23) ($0.01) ($0.35)
Extraordinary Item - - - ($0.10)
Net Income (Loss) $0.02 ($0.23) ($0.01) ($0.45)
Weighted Average Common
Shares Outstanding 41,273 36,718 40,211 36,695
EBITDA, excluding extraordinary item $6,436 $2,476 $16,888 $9,173
</TABLE>
<PAGE>
<TABLE>
Unilab Corporation
Consolidated Balance Sheet
(amounts in thousands)
<CAPTION>
September 30 December 31,
1997 1996
<S> <C> <C>
Cash, Restricted Cash and Cash Equivalents $12,061 $13,080
Accounts Receivable, net 39,661 37,279
Other Current Assets 4,065 4,306
-------- -----
Total Current Assets 55,787 54,665
Fixed Assets, net 14,307 17,264
Goodwill and Other Intangible Assets 46,377 48,038
Other Assets 6,762 5,952
----- -----
Total Assets $123,233 $125,919
-------- --------
Total Current Liabilities 28,924 29,752
Long-Term Debt, net of current portion 124,793 126,120
Other Liabilities 3,167 4,735
Total Shareholders' Deficit (33,651) (34,688)
-------- --------
Total Liabilities and Shareholders' Deficit $123,233 $125,919
-------- --------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000899714
<NAME> UNILAB CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 12,061
<SECURITIES> 0
<RECEIVABLES> 47,409
<ALLOWANCES> (7,748)
<INVENTORY> 2,647
<CURRENT-ASSETS> 55,787
<PP&E> 41,187
<DEPRECIATION> (26,880)
<TOTAL-ASSETS> 123,233
<CURRENT-LIABILITIES> 28,924
<BONDS> 119,231
0
4
<COMMON> 403
<OTHER-SE> (34,058)
<TOTAL-LIABILITY-AND-EQUITY> 123,233
<SALES> 161,298
<TOTAL-REVENUES> 161,298
<CGS> 0
<TOTAL-COSTS> 106,350
<OTHER-EXPENSES> 32,860
<LOSS-PROVISION> 11,875
<INTEREST-EXPENSE> 10,603
<INCOME-PRETAX> (390)
<INCOME-TAX> 0
<INCOME-CONTINUING> (390)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (390)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
PRESS RELEASE UNILAB CORPORATION
(AMEX:ULB)
18448 Oxnard Street
Tarzana, CA 91356
www.Unilab.com
For Further Information:
Richard A. Michaelson
Phone: (818) 758-6607
e-mail: [email protected]
IMMEDIATE RELEASE
September 17, 1997
UNILAB CORPORATION ADDS BILL GEDALE AND RICHARD MICHAELSON
TO BOARD OF DIRECTORS
TARZANA, CA, September 17, 1997 -- UNILAB Corporation (Amex: ULB) today
announced the appointment of Bill Gedale and Richard Michaelson as new members
to its Board of Directors, increasing the size of the Board to seven members.
Mr. Gedale is President and CEO of Mount Everest Advisors, LLC, an investment
counseling and management firm. Previously, he served as President and CEO of
General American Investors, a New York Stock Exchange closed-end investment
company. Mr. Gedale has more than 30 years experience in the investment
management business and has focused for much of that time on health care
companies. He currently serves as a director of Bioreliance Corporation, a
leading biological pre-clinical contract research organization. He previously
served as a director of Allied Clinical Labs (until its merger with National
Health Laboratories) and of U.S. Home Health Care. He is a director of New
York Hospital Departmental Associates and is a trustee of the Neuroscience
Research Foundation.
Mr. Michaelson, a founding officer of Unilab and the Company's Chief Financial
Officer since 1992, has been in the clinical laboratory testing industry since
1980. Mr. Michaelson held a series of senior finance and business
development positions for predecessor companies to Quest Diagnostics, which
he joined following three years at IBM Corporation.
The Company also announced that Mr. Michaelson will shortly be terminating his
full time employment with Unilab in order to return to the east coast as a
Principal in Focused Healthcare Partners, Ltd., a health care investment
company, and will be taking on responsibilities as President and CEO of Family
Choice Health Alliance Inc., a NJ-based health network provider. In addition
to his new role with Unilab as a Director, Mr. Michaelson will continue in an
advisory capacity as a consultant to the Company.
David Weavil, Unilab's Chairman and CEO, commented, "We are very pleased and
honored to have Bill Gedale join us. His extensive experience in the financial
and health care fields will serve as a valuable resource and guide to our
Company. We believe Bill's intelligence and insights will increase the
depth and breadth of the Company's Board of Directors."
Mr. Weavil continued "The appointment of Rich Michaelson to our Board
recognizes the valuable role he has played in this Company, as well as
provides a means for us to continue to benefit from his experience and
perspective. While we regret losing his full time services, we respect his
desire to return to the east coast in his new capacity, and we wish him the
best. I am enthusiastic that his new role as Director and Consultant will
allow him to achieve his personal goals while allowing the Company to
benefit from his continued involvement."
Unilab Corporation is the largest provider of clinical laboratory testing
services in California through its primary testing facilities in Los Angeles,
San Jose and Sacramento and over 200 regional service and testing facilities
located throughout the state.
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