21st Century Oncology Holdings Inc. Reports First and Second Quarter 2016 Financial Results

FORT MYERS, Fla., Sept. 20, 2016 (GLOBE NEWSWIRE) — 21^st Century Oncology Holdings, Inc. (“21C” or the “Company”), the leading global provider of integrated cancer care (ICC) services, announced today its financial results for the first and second quarters of 2016.

First Quarter 2016

Total revenues for the first quarter of 2016 were $270.3 million, a decline of 1.9% as compared to total revenues of $275.6 million for the same period in the prior year. Net patient service revenue in our ICC line of business declined $2.9 million, or 3.2%, as compared to the same period in the prior year predominantly due to the conversion of our Jacksonville medical oncology group to a professional services agreement (PSA) with the University of Florida, whereby the Company will invoice for chemotherapy administration only, eliminating the drug portion. In addition, our international net patient service revenue declined $3.3 million, or 12.3%, as compared to the same period in the prior year due to the devaluation in the Argentine Peso. Constant currency international revenue growth was approximately 33.3%, or $7.2 million, quarter over quarter. 

Net income for the first quarter of 2016 was $2.6 million as compared to a net loss of $14.4 million for the same period in the prior year. The improvement in net income resulted primarily from a $12.6 million gain on the contribution of a radiation facility to a health system joint venture and changes in fair value measurements of $4.7 million.   

Adjusted EBITDA in the first quarter of 2016 was $39.0 million, or 14.4% of total revenues, as compared to $42.3 million, or 15.3% of total revenues, in the first quarter of 2015. The contributors to the adjusted EBITDA decline were a $5.3 million reduction in revenue offset by a $6.3 million decrease in salaries and benefits. In addition, a net increase in medical supply expense of $1.2 million occurred in the first quarter of 2016 as compared to the first quarter of 2015.  This increase was the result of the expansion of medical oncology in SFRO locations, offset to some degree by a reduction in medical supply cost as a result of converting the Jacksonville medical oncology group to a PSA. Further contributors to the adjusted EBITDA reduction were an increase in other operating and general and administrative costs of $3.5 million offset by a reduction in cash distributions to non-controlling interests of $0.8 million. 

Total radiation oncology treatment plans increased 0.2% in the first quarter of 2016 as compared to the same period in the prior year, and same market radiation oncology treatment plans increased 0.7% for the first quarter of 2016 as compared to the same period in the prior year. 

Total radiation oncology treatments per day during the first quarter of 2016 declined 3.0% as compared to the same period in 2015 due to the closing of our Bronx-Lebanon and Riverhead centers as well as the transition of our Greenville, North Carolina radiation center to an unconsolidated health system joint venture. Same market radiation oncology treatments per day for the first quarter of 2016 declined 1.5% as compared to the same period in 2015. As previously disclosed, the Company has experienced a decrease in treatments per case for breast and some newly diagnosed lung cancers as a result of advances in hypo-fractionated external beam radiotherapy and stereotactic radiosurgery.

Net patient service revenue per radiation oncology treatment increased 1.8% in the first quarter of 2016 as compared to the same period in the prior year and same market net patient service revenue per radiation oncology treatment increased 0.2% in the first quarter of 2016 as compared to the same period in the prior year.  While this change is insignificant, on a same market basis, there are a number of factors affecting this rate, comparatively.  The simulation code bundling that was implemented in July 2015 reduced our rate by 1.6% for the first quarter of 2016 as compared to the same period in the prior year.  In addition, the net effect of the 2016 Final Rule on the Physician Fee Schedule reduced our rate by 1.4% for the first quarter of 2016 as compared to the same period in the prior year.  A further rate reduction of 0.4% occurred in the first quarter of 2016 as compared to the same period in the prior year as a result of not achieving the meaningful use criteria for electronic health records.  Offsetting these reductions in revenue was a 1.0% increase in our rate for the first quarter of 2016 as compared to the same period in 2015 as a result of the SFRO facilities being added to the existing 21C commercial insurance fee schedules.  Finally, our rate in the first quarter of 2015 as compared to the first quarter of 2016 was negatively affected 2.6% by uncertainties driven by the newly issued IMRT G codes.

The number of open cases in our international line of business in the first quarter of 2016 increased 10.5% as compared to the same period in the prior year.  Due to devaluation in the Argentine Peso, revenue per radiation oncology case declined 20.6% for the first quarter of 2016 as compared to the same period in the prior year.  In constant currency, our international revenue per open case increased by approximately 12.7%.

Second Quarter 2016 Results

Total revenues for the second quarter of 2016 were $258.4 million, a decline of 7.1% as compared to total revenues of $278.2 million for the same period in the prior year. Net patient service revenue in our domestic freestanding line of business declined $12.9 million, or 8.1%, as compared to the same period in the prior year.  This decline was driven by a 4.7% decline in total radiation oncology treatments per day and a 3.5% decline in net patient service revenue per radiation oncology treatment for the second quarter of 2016 as compared to the same period in the prior year. Net patient service revenue in our ICC line of business declined $5.1 million, or 5.8%, as compared to the same period in the prior year predominantly due to the conversion of our Jacksonville medical oncology group to a professional services agreement (PSA) with the University of Florida. Our international net patient service revenue declined $1.4 million, or 4.7%, as compared to the same period in the prior year due to the devaluation in the Argentine Peso. Constant currency international revenue growth was approximately 37%, or $10.0 million, quarter over quarter.  In addition, our net patient service revenue professional services declined $0.6 million in the second quarter 2016 as compared to the same period in the prior year. 

Net loss for the second quarter of 2016 was $17.1 million as compared to a net loss of $64.2 million for the same period in the prior year. The improvement in net loss resulted primarily from a $9.7 million reduction in salaries and benefits, a $7.7 million reduction in general and administrative expenses and changes in fair value measurements of $14.7 million for the second quarter 2016 as compared to the same period in 2015.  In addition, the second quarter of 2015 included a $37.4 million expense associated with the early extinguishment of debt. These amounts were offset by a $19.8 million decline in total revenues in the second quarter of 2016 as compared to the second quarter of 2015, a $1.8 million impairment loss in the second quarter of 2016 and a $1.4 million gain on insurance recoveries in the second quarter of 2015. 

Adjusted EBITDA in the second quarter of 2016 was $33.4 million, or 12.9% of total revenues, as compared to $46.2 million, or 16.6% of total revenues, in the second quarter of 2015. The contributors to the adjusted EBITDA decline were a $19.8 million reduction in revenue offset by a $9.7 million decrease in salaries and benefits, and an increase of $2.7 million in other operating expenses. 

Total radiation oncology treatment plans decreased 4.8% in the second quarter of 2016 as compared to the same period in the prior year, and same market radiation oncology treatment plans decreased 3.2% for the second quarter of 2016 as compared to the same period in the prior year. 

Total radiation oncology treatments per day during the second quarter of 2016 declined 4.7% as compared to the same period in 2015 due to the closing of our Bronx-Lebanon and Riverhead centers as well as the conversion of our Greenville, North Carolina radiation center to an unconsolidated health system joint venture in January 2016.  Same market radiation oncology treatments per day for the second quarter of 2016 declined 3.1% as compared to the same period in 2015.

Net patient service revenue per radiation oncology treatment decreased 3.5% in the second quarter of 2016 as compared to the same period in the prior year and same market net patient service revenue per radiation oncology treatment decreased 3.6% in the second quarter of 2016 as compared to the same period in the prior year. The simulation code bundling that was implemented in July 2015 reduced our rate by 1.4% for the second quarter of 2016 as compared to the same period in the prior year. In addition, the net effect of the 2016 Final Rule on the Physician Fee Schedule reduced our rate by 1.4% for the second quarter of 2016 as compared to the same period in the prior year. A rate reduction of 0.4% occurred in the second quarter of 2016 as compared to the same period in the prior year as a result of not achieving the meaningful use criteria for electronic health records.  Our rate in the second quarter of 2015 as compared to the second quarter of 2016 was negatively affected 2.6% by uncertainties driven by the newly issued IMRT G codes. Offsetting these rate reductions was a 1.7% increase in our rate for the second quarter of 2016 as compared to the same period in 2015 as a result of the SFRO facilities being added to the existing 21C commercial insurance fee schedules. 

The number of open cases in our international line of business in the second quarter of 2016 increased 7.8% as compared to the same period in the prior year. Due to devaluation in the Argentine Peso, revenue per radiation oncology case declined 11.6% for the second quarter of 2016 as compared to the same period in the prior year.  In constant currency, our international revenue per open case increased by approximately 17.0%.

Management Transition and Success with First Capital Event

On September 9, 2016, 21st Century Oncology announced that the Company has appointed William R. Spalding as President and Chief Executive Officer of the Company, effective as of such date and that Dr. Daniel E. Dosoretz will continue to serve as a member of the Company’s board of directors and senior physician.

The Company also announced, on September 9, 2016 that Canada Pension Plan Investment Board (CPPIB), a professional investment management organization, has purchased an additional $25 million of preferred stock in the company. 

Bill Spalding, President and Chief Executive Officer, commented, “Dr. Dosoretz led the development of a remarkable organization that today has unparalleled size, scale and relevance in the delivery of academic-quality, integrated cancer care.  Our integrated business model is a distinct advantage, and positions the Company to succeed in the current health care environment.  The Company’s unwavering commitment to providing patients with high-quality, efficient care remains unchanged.”

Mr. Spalding continued, “I’m grateful to CPPIB for their continued commitment to 21^st Century Oncology.”

Earnings Conference Call

The Company will host a conference call on Thursday, September 29, 2016 at 2:00 p.m. Eastern Time, during which management will discuss the financial results of the first and second quarters of 2016.  The conference call and replay of the conference call may be accessed as follows:

Dial-in numbers: 877-407-9039 (Domestic); 201-689-8470 (International)

Replay Dial-in Numbers (Available until October 13, 2016): 877-870-5176 (Domestic); 858-384-5517 (International); Replay Pin Number: 13645618

A live webcast and webcast replay of the call will also be available from the Events section of the corporate website at www.21co.com. 

About 21^st Century Oncology Holdings, Inc.

21^st Century Oncology Holdings, Inc. is the largest global provider of integrated cancer care services. The Company offers a comprehensive range of cancer treatment services, focused on delivering academic quality, cost-effective patient care in personal and convenient settings. As of June 30, 2016, the Company operated 183 treatment centers, including 147 centers located in 17 U.S. states and 36 centers located in seven countries in Latin America.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. Statements preceded by, followed by or that otherwise include the words “believes”, “expects”, “anticipates”, “intends”, “projects”, “estimates”, “plans”, “may increase”, “forecast” and similar expressions or future or conditional verbs such as “will”, “should”, “would”, “may” and “could” are generally forward-looking in nature and not historical facts. Forward-looking statements are based on management’s current expectations or beliefs about the Company’s future plans, expectations and objectives. These forward-looking statements are not historical facts and are subject to risks and uncertainties that could cause the actual results to differ materially from those projected in these forward-looking statements including, but not limited to reductions in Medicare reimbursement, healthcare reform, state and federal investigations, claims and litigation matters, decreases in payments by managed care organizations and other commercial payers, liquidity, leverage ratios and compliance with other debt covenants  and other risk factors that may be described from time to time in the Company’s filings with the Securities and Exchange Commission. Readers of this release are cautioned not to place undue reliance on forward-looking statements contained herein, which speak only as of the date stated, or if no date is stated, as of the date of this press release. The Company undertakes no obligation to publicly update or revise the forward-looking statements contained herein to reflect changed events or circumstances after the date of this release, unless required by law.

21ST CENTURY ONCOLOGY HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
		March 31,				December 31,
		2016				2015
		(unaudited)				(a)
ASSETS
Current assets:
Cash and cash equivalents		$	72,403			$	65,211
Restricted cash			196				195
Marketable securities			1,041				1,078
Accounts receivable, net			146,436				122,355
Prepaid expenses			8,077				7,822
Inventories			3,440				3,918
Income tax receivable			4,174				4,966
Other			15,843				15,732
Total current assets			251,610				221,277
Equity investments in joint ventures			14,874				1,214
Property and equipment, net			242,005				238,585
Real estate subject to finance obligation			12,768				12,631
Goodwill			492,896				498,680
Intangible assets, net			66,671				70,115
Embedded derivative & other financial instrument features of Series A convertible redeemable preferred stock			21,407				17,883
Other assets			41,394				41,588
Deferred income taxes			1,850				1,888
Total assets		$	1,145,475			$	1,103,861
LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable		$	73,617			$	59,888
Accrued expenses			84,625				111,653
Income taxes payable			1,923				2,501
Current portion of long-term debt			1,094,066				1,023,877
Current portion of finance obligation			276				283
Other current liabilities			14,602				14,265
Total current liabilities			1,269,109				1,212,467
Long-term debt, less current portion			34,007				49,233
Finance obligation, less current portion			13,567				13,318
Embedded derivative & other financial instrument features of Series A convertible redeemable preferred stock			21,110				19,911
Other long-term liabilities			69,878				70,928
Deferred income taxes			4,477				3,887
Total liabilities			1,412,148				1,369,744
Series A convertible redeemable preferred stock, $0.001 par value, $1,000 stated value, 3,500,000 authorized, 385,000 issued and outstanding at March 31, 2016 and December 31, 2015			409,332				389,514
Noncontrolling interests – redeemable			19,955				19,233
Commitments and Contingencies
Equity:
Common stock, $0.01 par value, 1,000,000 shares authorized 1,059 shares issued and outstanding at March 31, 2016 and December 31, 2015			–				–
Additional paid-in capital			559,967				579,920
Retained deficit			(1,225,473	)			(1,226,298	)
Accumulated other comprehensive loss, net of tax			(57,498	)			(54,574	)
Total 21st Century Oncology Holdings, Inc. shareholder’s deficit			(723,004	)			(700,952	)
Noncontrolling interests – nonredeemable			27,044				26,322
Total deficit			(695,960	)			(674,630	)
Total liabilities and deficit		$	1,145,475			$	1,103,861
(a)  Derived from audited financial statements

 

21ST CENTURY ONCOLOGY HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands)
(unaudited)
	Three Months Ended
	March 31,
	2016				2015
Revenues:
Net patient service revenue	$	250,784			$	254,255
Management fees		14,631				15,870
Other revenue		4,883				5,508
Total revenues		270,298				275,633
Expenses:
Salaries and benefits		140,098				146,959
Medical supplies		27,510				26,291
Facility rent expenses		17,342				16,821
Other operating expenses		16,104				14,948
General and administrative expenses		29,373				28,974
Depreciation and amortization		21,120				22,132
Provision for doubtful accounts		4,696				4,313
Interest expense, net		24,619				25,687
Other gains and losses		(12,629	)			(384	)
Fair value measurements		(2,534	)			2,153
Loss on foreign currency transactions		71				238
Total expenses		265,770				288,132
Income (loss) before income taxes and equity interest in net income of joint ventures		4,528				(12,499	)
Income tax expense		2,259				1,933
Net income (loss) before equity interest in net income of joint ventures		2,269				(14,432	)
Equity interest in net income of joint ventures, net of tax		352				24
Net income (loss)		2,621				(14,408	)
Net  income attributable to noncontrolling interests- redeemable and non-redeemable		(1,796	)			(2,259	)
Net income (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder		825				(16,667	)
Other comprehensive loss, net of tax:
Unrealized loss on foreign currency translation		(3,173	)			(2,193	)
Other comprehensive loss		(3,173	)			(2,193	)
Comprehensive loss		(552	)			(16,601	)
Comprehensive income attributable to noncontrolling interests- redeemable and non-redeemable		(1,547	)			(1,952	)
Comprehensive loss attributable to 21st Century
Oncology Holdings, Inc. shareholder	$	(2,099	)		$	(18,553	)

 

21ST CENTURY ONCOLOGY HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
						Three Months Ended
						March 31,
							2016				2015
Cash flows from operating activities
Net income (loss)						$	2,621			$	(14,408	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
	Depreciation and amortization						21,120				22,132
	Deferred rent expense						97				165
	Deferred income taxes						415				(437	)
	Stock-based compensation						–				1
	Provision for doubtful accounts						4,696				4,313
	Gain on the sale/disposal of property and equipment						–				(384	)
	Gain on the contribution of a radiation facility to a joint venture						(12,629	)			–
	Loss on foreign currency transactions						25				141
	Fair value adjustment of earn-out liabilities						1				460
	Fair value adjustment of embedded derivatives and other financial instruments						(2,535	)			1,693
	Amortization of debt discount						475				446
	Amortization of loan costs						1,034				1,455
	Paid in kind interest on notes payable						393				–
	Equity interest in net income of joint ventures, net of tax						(352	)			(24	)
	Distribution received from unconsolidated joint ventures						–				53
	Changes in operating assets and liabilities:
				Accounts receivable and other current assets			(33,244	)			(22,445	)
				Prepaid expenses and other assets			958				623
				Inventories			547				183
				Accounts payable			5,511				4,106
				Accrued deferred compensation			366				393
				Income taxes payable			52				1,048
				Accrued expenses / other liabilities			(26,239	)			23,105
Net cash (used in) provided by operating activities							(36,688	)			22,619
Cash flows from investing activities
Purchase of property and equipment							(12,259	)			(12,199	)
Acquisition of medical practices							(129	)			(25,965	)
Change in restricted cash associated with medical practice acquisitions							(1	)			(815	)
Proceeds from the sale of equity interest in a joint venture							6,170				–
Purchase of joint venture interests							(502	)			–
Proceeds from the sale of property and equipment							29				1,103
Loans to employees							(35	)			(117	)
Purchase of company owned life insurance policies							(394	)			(321	)
Change in other assets and other liabilities							194				(62	)
Net cash used in investing activities							(6,927	)			(38,376	)
Cash flows from financing activities
Proceeds from issuance of debt							60,033				2,863
Principal repayments of debt							(8,789	)			(9,901	)
Repayments of finance obligation							(52	)			(84	)
Proceeds from issuance of noncontrolling interest							–				743
Proceeds from noncontrolling interest holders – redeemable and non-redeemable							–				3,230
Purchase of noncontrolling interest – non-redeemable							–				(1,233	)
Cash distributions to noncontrolling interest holders – redeemable and non-redeemable							(214	)			(964	)
Payments for contingent considerations							(149	)			–
Net cash provided by (used in) financing activities							50,829				(5,346	)
Effect of exchange rate changes on cash and cash equivalents							(22	)			(6	)
Net increase (decrease) in cash and cash equivalents							7,192				(21,109	)
Cash and cash equivalents, beginning of period							65,211				99,082
Cash and cash equivalents, end of period						$	72,403			$	77,973

21ST CENTURY ONCOLOGY HOLDINGS, INC.
Supplemental Financial Information (Unaudited)
Reconciliation of Total Revenue and Adjusted EBITDA to Net Loss Attributable
to 21st Century Oncology Holdings, Inc. Shareholder
	Three Months Ended
	March 31,
		2016				2015
(in thousands):
Total revenues	$	270,298			$	275,633
Net income (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder	$	825			$	(16,667	)
Income tax expense		2,259				1,933
Interest expense, net		24,619				25,687
Depreciation and amortization		21,120				22,132
Gain on the contribution of a radiation facility to a joint venture		(12,629	)			–
Fair value adjustment of earn-out liabilities		1				460
Fair value adjustment of embedded derivatives and other financial instruments		(2,535	)			1,693
Net income attributable to noncontrolling interests, net of cash distributions		1,582				1,295
Other expenses (a)		1,703				1,937
Non-cash expenses (b)		840				1,011
Sale-lease back adjustments (c)		(289	)			(449	)
Acquisition-related costs (d)		632				1,310
Litigation matters (e)		866				1,941
Adjusted EBITDA (1)	$	38,994			$	42,283
Adjusted EBITDA as a percentage of total revenues		14.4	%			15.3	%
(1) Adjusted EBITDA, as defined in our Credit Agreement, dated as of April 30, 2015, is calculated as income (loss) before interest expense (net of interest income), income taxes, depreciation and amortization, net income attributable to noncontrolling interests, net of cash distributions, gain on the sale of an interest in a joint venture, loss on sale leaseback transaction, early extinguishment of debt, fair value adjustment of earn-out liability, fair value adjustment of embedded derivative, impairment loss, foreign currency derivative contract loss (gain), management fees accrued to our sponsor, non-cash expenses including costs relating to stock compensation, amortization of straight-line rent and amortization of capital expenditures relating to repairs and maintenance, non-cash equipment rent, sale-lease back adjustments, acquisition-related costs, other expenses including loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums on termed physicians, franchise taxes, costs relating to consulting services on Medicare reimbursement, litigation settlements with physicians, costs associated with tradename and rebranding initiatives, expenses associated with idle/closed radiation therapy treatment facilities.
(a) Other expenses include management fees accrued to our sponsor, Vestar Capital Partners, loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums paid on terminated physicians, franchise taxes and costs relating to consulting services on Medicare reimbursement. Expenses related to the costs associated with the Company’s tradename and rebranding initiatives and expenses associated with idle/closed radiation therapy facilities, costs associated with the CMS Medicare freeze and costs associated with the restatement process.
(b) Non-cash expenses including costs relating to stock compensation, amortization of straight-line rent, amortization of capital expenditures relating to warranty arrangements amortized to repairs and maintenance and non-cash equipment rent.
(c) Sale-lease back adjustments relates to the adjustment of benefit derived from the classification of operating leases as finance obligations reflecting a reclassification of interest expense and depreciation and amortization expense as rent expense.
(d) Acquisition related costs associated with ASC 805, “Business Combinations,” including professional fees, corporate development, integration and due diligence costs relating to the acquisition of medical practices.
(e) Litigation matters relate to loss contingency reserves related to the Medicare investigative matters and costs associated with the termination of physicians.
We believe the Adjusted EBITDA provides useful information about our financial performance to investors, lenders, financial analysts and rating agencies as these groups have historically used EBITDA-related measures in the healthcare industry, along with other measures, to estimate the value of a company, to make informed investment decisions, to evaluate a company’s leverage capacity and its ability to meet its debt service requirements.  Adjusted EBITDA eliminates the uneven effect of non-cash depreciation of tangibles assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting.  Adjusted EBITDA is also used by us to measure individual performance for incentive compensation purposes and as an analytical indicator for purposes of allocating resources to our operating business and assessing their performance, both internally and relative to our peers, as well as to evaluate the performance of our operating management teams, and for purposes in the calculation of debt covenants and related disclosures.
Adjusted EBITDA is not intended as a substitute for net income (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder, operating cash flows or other cash flow data determined in accordance with accounting principles generally accepted in the United States. Due to varying methods of calculation, Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

	21ST CENTURY ONCOLOGY HOLDINGS, INC.
	KEY OPERATING STATISTICS
	(unaudited)
		Three Months Ended
		March 31,								%
Operating Metrics			2016				2015			Change
	Number of operating days		64				63				1.6	%
	Domestic
	Radiation oncology treatment plans (total) (1)		9,369				9,352				0.2	%
	Radiation oncology treatments per day (total)		3,276				3,378				-3.0	%
	Net patient service revenue per radiation oncology treatment (total)	$	752			$	739				1.8	%
	Radiation oncology treatment plans (same market) (1,2)		9,236				9,169				0.7	%
	Radiation oncology treatments per day (same market) (2)		3,258				3,308				-1.5	%
	Net patient service revenue per radiation oncology treatment (same market) (2)	$	747			$	745				0.2	%
	International
	Total number of open cases		4,974				4,501				10.5	%
	Revenue per radiation oncology case	$	4,766			$	6,003				-20.6	%
		Three Months Ended
		March 31,								%
Revenue Details			2016				2015			Change
	Net patient service revenue per Consolidated Statements of Operations and Comprehensive Loss	$	250,784			$	254,255
	Less net patient service revenue ICC		(86,619	)			(89,469	)
	Less net patient service revenue professional services		(1,969	)			(1,944	)
	Plus net patient service revenue unconsolidated MSAs (3)		19,255				21,504
	Less international net patient service revenue		(23,708	)			(27,020	)
	Domestic freestanding net patient service revenue	$	157,743			$	157,326				0.3	%
		March 31,
Center Details			2016				2015
	Radiation therapy centers – freestanding (domestic)		135				133
	Radiation therapy centers – freestanding (international)		36				36
	Radiation therapy centers – professional / other		12				11
	Total radiation therapy centers		183				180
	(1) Total radiation oncology treatment plans represent the number of prescriptions issued by the physicians to start the treatment process.
	(2) Same market is defined as markets that have been open in excess of 12 months.
	This includes in-market acquisitions and conversion of existing professional only relationships to freestanding.
	(3) Medical services agreement

 

21ST CENTURY ONCOLOGY HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
		June 30,				December 31,
			2016				2015
		(unaudited)				(a)
ASSETS
Current assets:
Cash and cash equivalents		$	52,206			$	65,211
Restricted cash			307				195
Marketable securities			1,080				1,078
Accounts receivable, net			128,715				122,355
Prepaid expenses			8,029				7,822
Inventories			3,418				3,918
Income tax receivable			5,285				4,966
Other			15,298				15,732
Total current assets			214,338				221,277
Equity investments in joint ventures			15,328				1,214
Property and equipment, net			230,748				238,585
Real estate subject to finance obligation			13,997				12,631
Goodwill			492,143				498,680
Intangible assets, net			61,937				70,115
Embedded derivative & other financial instrument features of Series A convertible redeemable preferred stock			33,284				17,883
Other assets			40,946				41,588
Deferred income taxes			2,119				1,888
Total assets		$	1,104,840			$	1,103,861
LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable		$	67,398			$	59,888
Accrued expenses			68,488				111,653
Income taxes payable			2,680				2,501
Current portion of long-term debt			1,102,452				1,023,877
Current portion of finance obligation			269				283
Other current liabilities			11,430				14,265
Total current liabilities			1,252,717				1,212,467
Long-term debt, less current portion			24,899				49,233
Finance obligation, less current portion			14,903				13,318
Embedded derivative & other financial instrument features of Series A convertible redeemable preferred stock			22,212				19,911
Other long-term liabilities			70,971				70,928
Deferred income taxes			4,953				3,887
Total liabilities			1,390,655				1,369,744
Series A convertible redeemable preferred stock, $0.001 par value, $1,000 stated value, 3,500,000 authorized, 385,000 issued and outstanding at June 30, 2016 and December 31, 2015			429,966				389,514
Noncontrolling interests – redeemable			19,825				19,233
Commitments and Contingencies
Equity:
Common stock, $0.01 par value, 1,000,000 shares authorized 1,059 shares issued and outstanding at June 30, 2016 and December 31, 2015			–				–
Additional paid-in capital			539,093				579,920
Retained deficit			(1,243,855	)			(1,226,298	)
Accumulated other comprehensive loss, net of tax			(57,809	)			(54,574	)
Total 21st Century Oncology Holdings, Inc. shareholder’s deficit			(762,571	)			(700,952	)
Noncontrolling interests – nonredeemable			26,965				26,322
Total deficit			(735,606	)			(674,630	)
Total liabilities and deficit		$	1,104,840			$	1,103,861
(a)  Derived from audited financial statements

21ST CENTURY ONCOLOGY HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands)
(unaudited)
	Three Months Ended									Six Months Ended
	June 30,									June 30,
		2016					2015				2016					2015
Revenues:
Net patient service revenue	$	238,685				$	257,854			$	489,469				$	512,109
Management fees		14,643					15,211				29,274					31,081
Other revenue		5,055					5,148				9,938					10,656
Total revenues		258,383					278,213				528,681					553,846
Expenses:
Salaries and benefits		137,653					147,397				277,751					294,356
Medical supplies		24,494					24,774				52,004					51,065
Facility rent expenses		17,522					17,017				34,864					33,838
Other operating expenses		15,567					16,095				31,671					31,043
General and administrative expenses		36,353					44,061				65,726					73,035
Depreciation and amortization		20,973					22,204				42,093					44,336
Provision for doubtful accounts		3,964					3,753				8,660					8,066
Interest expense, net		25,583					24,378				50,202					50,065
Other gains and losses		(551	)				(1,283	)			(13,180	)				(1,667	)
Impairment loss		1,825					–				1,825					–
Early extinguishment of debt		–					37,390				–					37,390
Fair value measurements		(10,255	)				4,452				(12,789	)				6,605
Loss (gain) on foreign currency transactions		234					(34	)			305					204
Total expenses		273,362					340,204				539,132					628,336
Loss before income taxes and equity interest in net income of joint ventures		(14,979	)				(61,991	)			(10,451	)				(74,490	)
Income tax expense		2,542					2,414				4,801					4,347
Net loss before equity interest in net income of joint ventures		(17,521	)				(64,405	)			(15,252	)				(78,837	)
Equity interest in net income of joint ventures, net of tax		455					188				807					212
Net loss		(17,066	)				(64,217	)			(14,445	)				(78,625	)
Net income attributable to noncontrolling interests- redeemable and non-redeemable		(1,316	)				(1,821	)			(3,112	)				(4,080	)
Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder		(18,382	)				(66,038	)			(17,557	)				(82,705	)
Other comprehensive loss, net of tax:
Unrealized loss on foreign currency translation		(823	)				(1,806	)			(3,996	)				(3,999	)
Other comprehensive loss		(823	)				(1,806	)			(3,996	)				(3,999	)
Comprehensive loss		(17,889	)				(66,023	)			(18,441	)				(82,624	)
Comprehensive income attributable to noncontrolling interests- redeemable and non-redeemable		(804	)				(1,580	)			(2,351	)				(3,532	)
Comprehensive loss attributable to 21st Century Oncology Holdings, Inc. shareholder	$	(18,693	)			$	(67,603	)		$	(20,792	)			$	(86,156	)

 

21ST CENTURY ONCOLOGY HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
						Six Months Ended
						June 30,
							2016				2015
Cash flows from operating activities
Net loss						$	(14,445	)		$	(78,625	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
	Depreciation and amortization						42,093				44,336
	Deferred rent expense						144				379
	Deferred income taxes						1,061				(809	)
	Stock-based compensation						–				5
	Provision for doubtful accounts						8,660				8,066
	Gain on the sale/disposal of property and equipment						(34	)			(303	)
	Gain on the contribution of a radiation facility to a joint venture						(12,629	)			–
	Impairment loss						1,825				–
	Early extinguishment of debt						–				37,390
	Debt modification costs						197				–
	Loss on foreign currency transactions						227				38
	Fair value adjustment of earn-out liabilities						1				(530	)
	Fair value adjustment of embedded derivatives and other financial instruments						(12,790	)			7,135
	Amortization of debt discount						947				746
	Amortization of loan costs						2,095				2,630
	Paid in kind interest on notes payable						795				–
	Equity interest in net income of joint ventures, net of tax						(807	)			(212	)
	Distribution received from unconsolidated joint ventures						–				106
	Changes in operating assets and liabilities:
				Accounts receivable and other current assets			(25,282	)			(34,636	)
				Prepaid expenses and other assets			1,228				(1,003	)
				Inventories			468				124
				Accounts payable			10,864				3,556
				Accrued deferred compensation			799				686
				Income taxes payable			(1,030	)			346
				Accrued expenses / other liabilities			(39,844	)			23,533
Net cash (used in) provided by operating activities							(35,457	)			12,958
Cash flows from investing activities
Purchase of property and equipment							(20,195	)			(25,753	)
Acquisition of medical practices							(129	)			(29,258	)
Change in restricted cash associated with medical practice acquisitions							(112	)			4,040
Proceeds from the sale of equity interest in a joint venture							6,170				–
Purchase of joint venture interests							(502	)			–
Proceeds from the sale of property and equipment							123				1,122
(Loans to) repayments from employees							(191	)			160
Purchase of company owned life insurance policies							(656	)			(670	)
Change in other assets and other liabilities							113				(156	)
Net cash used in investing activities							(15,379	)			(50,515	)
Cash flows from financing activities
Proceeds from issuance of debt							60,789				970,618
Principal repayments of debt							(19,264	)			(911,717	)
Repayments of finance obligation							(108	)			(136	)
Proceeds from issuance of noncontrolling interest							–				743
Proceeds from noncontrolling interest holders – redeemable and non-redeemable							–				3,230
Purchase of noncontrolling interest – non-redeemable							–				(1,233	)
Cash distributions to noncontrolling interest holders – redeemable and non-redeemable							(1,407	)			(2,022	)
Payments for contingent considerations							(149	)			(8,537	)
Payment of call premium on long-term debt							–				(24,877	)
Payment of debt modification costs							(197	)			–
Payments of loan costs							(1,811	)			(25,626	)
Net cash provided by financing activities							37,853				443
Effect of exchange rate changes on cash and cash equivalents							(22	)			(10	)
Net decrease in cash and cash equivalents							(13,005	)			(37,124	)
Cash and cash equivalents, beginning of period							65,211				99,082
Cash and cash equivalents, end of period						$	52,206			$	61,958

 

21ST CENTURY ONCOLOGY HOLDINGS, INC.
Supplemental Financial Information (Unaudited)
Reconciliation of Total Revenue and Adjusted EBITDA to Net Loss Attributable
to 21st Century Oncology Holdings, Inc. Shareholder
	Three Months Ended							Six Months Ended
	June 30,							June 30,
		2016			2015				2016			2015
(in thousands):
Total revenues	$	258,383		$	278,213			$	528,681		$	553,846
Net income (loss) attributable to 21st Century
Oncology Holdings, Inc. shareholder	$	(18,382	)	$	(66,038	)		$	(17,557	)	$	(82,705	)
Income tax expense		2,542			2,414				4,801			4,347
Interest expense, net		25,583			24,378				50,202			50,065
Depreciation and amortization		20,973			22,204				42,093			44,336
Gain on the contribution of a radiation facility to a joint venture		–			–				(12,629	)		–
Gain on BP settlement		(517	)		–				(517	)		–
Impairment loss		1,825			–				1,825			–
Early extinguishment of debt		–			37,390				–			37,390
Fair value adjustment of earn-out liabilities		–			(990	)			1			(530	)
Fair value adjustment of embedded derivatives
and other financial instruments		(10,255	)		5,442				(12,790	)		7,135
Net income attributable to noncontrolling interests,
net of cash distributions		123			763				1,705			2,058
Other expenses (a)		2,232			2,008				3,735			3,945
Non-cash expenses (b)		793			1,338				1,633			2,349
Sale-lease back adjustments (c)		(292	)		(315	)			(582	)		(764	)
Acquisition-related costs (d)		358			1,069				990			2,379
Litigation matters (e)		386			16,578				1,252			18,519
Expenses associated with debt/waiver amendments and
restatement of previously issued financial statements (f)		7,981			–				8,181			–
Adjusted EBITDA (1)	$	33,350		$	46,241			$	72,343		$	88,524
Adjusted EBITDA as a percentage of
total revenues		12.9	%		16.6	%			13.7	%		16.0	%
(1) Adjusted EBITDA, as defined in our Credit Agreement, dated as of April 30, 2015, is calculated as income (loss) before interest expense (net of interest income), income taxes, depreciation and amortization, net income attributable to noncontrolling interests, net of cash distributions, gain on the sale of an interest in a joint venture, loss on sale leaseback transaction, early extinguishment of debt, fair value adjustment of earn-out liability, fair value adjustment of embedded derivative, impairment loss, foreign currency derivative contract loss (gain), management fees accrued to our sponsor, non-cash expenses including costs relating to stock compensation, amortization of straight-line rent and amortization of capital expenditures relating to repairs and maintenance, non-cash equipment rent, sale-lease back adjustments, acquisition-related costs, other expenses including loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums on termed physicians, franchise taxes, costs relating to consulting services on Medicare reimbursement, litigation settlements with physicians, costs associated with tradename and rebranding initiatives, expenses associated with idle/closed radiation therapy treatment facilities.
(a) Other expenses include management fees accrued to our sponsor, Vestar Capital Partners, loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums paid on terminated physicians, franchise taxes and costs relating to consulting services on Medicare reimbursement. Expenses related to the costs associated with the Company’s tradename and rebranding initiatives and expenses associated with idle/closed radiation therapy facilities, costs associated with the CMS Medicare freeze and costs associated with the restatement process.
(b) Non-cash expenses including costs relating to stock compensation, amortization of straight-line rent, amortization of capital expenditures relating to warranty arrangements amortized to repairs and maintenance and non-cash equipment rent.
(c) Sale-lease back adjustments relates to the adjustment of benefit derived from the classification of operating leases as finance obligations reflecting a reclassification of interest expense and depreciation and amortization expense as rent expense.
(d) Acquisition related costs associated with ASC 805, “Business Combinations,” including professional fees, corporate development, integration and due diligence costs relating to the acquisition of medical practices.
(e) Litigation matters relate to loss contingency reserves related to the Medicare investigative matters and costs associated with the termination of physicians.
(f) Expenses associated with debt/waiver amendments and accounting, legal and consulting fees associated with the restatement of previously issued financial statements.
We believe the Adjusted EBITDA provides useful information about our financial performance to investors, lenders, financial analysts and rating agencies as these groups have historically used EBITDA-related measures in the healthcare industry, along with other measures, to estimate the value of a company, to make informed investment decisions, to evaluate a company’s leverage capacity and its ability to meet its debt service requirements.  Adjusted EBITDA eliminates the uneven effect of non-cash depreciation of tangibles assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting.  Adjusted EBITDA is also used by us to measure individual performance for incentive compensation purposes and as an analytical indicator for purposes of allocating resources to our operating business and assessing their performance, both internally and relative to our peers, as well as to evaluate the performance of our operating management teams, and for purposes in the calculation of debt covenants and related disclosures.
Adjusted EBITDA is not intended as a substitute for net income (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder, operating cash flows or other cash flow data determined in accordance with accounting principles generally accepted in the United States. Due to varying methods of calculation, Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

	21ST CENTURY ONCOLOGY HOLDINGS, INC.
	KEY OPERATING STATISTICS
	(unaudited)
		Three Months Ended												Six Months Ended
		June 30,								%				June 30,								%
Operating Metrics			2016				2015			Change					2016				2015			Change
	Number of operating days		64				64				0.0	%			128				127				0.8	%
	Domestic
	Radiation oncology treatment plans (total) (1)		8,854				9,297				-4.8	%			18,223				18,649				-2.3	%
	Radiation oncology treatments per day (total)		3,140				3,296				-4.7	%			3,208				3,337				-3.9	%
	Net patient service revenue per radiation oncology	$	731			$	758				-3.5	%		$	742			$	749				-0.9	%
	treatment (total)
	Radiation oncology treatment plans (same market) (1,2)		8,829				9,122				-3.2	%			18,065				18,291				-1.2	%
	Radiation oncology treatments per day (same market) (2)		3,140				3,242				-3.1	%			3,199				3,275				-2.3	%
	Net patient service revenue per radiation oncology
	treatment (same market) (2)	$	729			$	757				-3.6	%		$	738			$	747				-1.1	%
	International
	Total number of open cases		4,987				4,626				7.8	%			9,961				9,127				9.1	%
	Revenue per radiation oncology case	$	5,521			$	6,248				-11.6	%		$	5,144			$	6,127				-16.0	%
		Three Months Ended												Six Months Ended
		June 30,								%				June 30,								%
Revenue Details			2016				2015			Change					2016				2015			Change
	Net patient service revenue per Consolidated Statements
	of Operations and Comprehensive Loss	$	238,685			$	257,854							$	489,469			$	512,109
	Less net patient service revenue ICC		(81,842	)			(86,893	)							(168,461	)			(176,362	)
	Less net patient service revenue professional services		(1,863	)			(2,416	)							(3,832	)			(4,360	)
	Plus net patient service revenue unconsolidated MSAs (3)		19,551				20,294								38,806				41,798
	Less international net patient service revenue		(27,534	)			(28,905	)							(51,242	)			(55,925	)
	Domestic freestanding net patient service revenue	$	146,997			$	159,934				-8.1	%		$	304,741			$	317,259				-3.9	%
		June 30,
Center Details			2016				2015
	Radiation therapy centers – freestanding (domestic)		135				136
	Radiation therapy centers – freestanding (international)		36				35
	Radiation therapy centers – professional / other		12				12
	Total radiation therapy centers		183				183
	(1) Total radiation oncology treatment plans represent the number of prescriptions issued by the physicians to start the treatment process.
	(2) Same market is defined as markets that have been open in excess of 12 months.
	This includes in-market acquisitions and conversion of existing professional only relationships to freestanding.
	(3) Medical services agreement

 Additional Supplemental Financial Information

21ST CENTURY ONCOLOGY HOLDINGS, INC.
Supplemental Financial Information (Unaudited)
Reconciliation of Restated Total Pro-forma Revenue and Pro-forma Adjusted EBITDA to Prior Reported
	Three Months Ended						Three Months Ended
	September 30,						September 30,
	2015						2015
	Prior Reported			Adjustments			Restated
(in thousands):
Total revenues	$	257,985		$	4,272		$	262,257
Pro-forma full period effect of acquisitions		169			–			169
Total pro-forma revenues	$	258,154		$	4,272		$	262,426
Net income (loss) attributable to 21st Century
Oncology Holdings, Inc. shareholder	$	(56,904	)	$	(872	)	$	(57,776	)
Income tax expense		1,152			1,699			2,851
Interest expense, net		23,724			47			23,771
Depreciation and amortization		22,479			(40	)		22,439
Gain on BP settlement		(5,796	)		–			(5,796	)
Fair value adjustment of earn-out liabilities		(3,723	)		3,735			12
Fair value adjustment of embedded derivatives
and other financial instruments		2,363			(576	)		1,787
Net income attributable to noncontrolling interests,
net of cash distributions		408			72			480
Other expenses (b)		2,200			–			2,200
Non-cash expenses (c)		782			162			944
Sale-lease back adjustments (d)		4			–			4
Acquisition-related costs (e)		1,128			–			1,128
Litigation matters (f)		39,256			–			39,256
Pro-Forma full period effect of acquisition EBITDA (a)		117			–			117
Pro-Forma Adjusted EBITDA (1)	$	27,190		$	4,227		$	31,417
Pro-Forma Adjusted EBITDA as a percentage of
total pro-forma revenues		10.5	%		1.4	%		12.0	%
(1) Pro-Forma Adjusted EBITDA, as defined in our Credit Agreement, dated as of April 30, 2015, is calculated as income (loss) before interest expense (net of interest income), income taxes, depreciation and amortization, net income attributable to noncontrolling interests, net of cash distributions, gain on the sale of an interest in a joint venture, loss on sale leaseback transaction, early extinguishment of debt, fair value adjustment of earn-out liability, fair value adjustment of embedded derivative, impairment loss, foreign currency derivative contract loss (gain), management fees accrued to our sponsor, non-cash expenses including costs relating to stock compensation, amortization of straight-line rent and amortization of capital expenditures relating to repairs and maintenance, non-cash equipment rent, sale-lease back adjustments, acquisition-related costs, other expenses including loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums on termed physicians, franchise taxes, costs relating to consulting services on Medicare reimbursement, litigation settlements with physicians, costs associated with tradename and rebranding initiatives, expenses associated with idle/closed radiation therapy treatment facilities.
(a) Pro-forma amounts related to adjustments to total revenues and Pro-forma Adjusted EBITDA to reflect the full period effect of our acquisitions and Value Added Services contracts completed during 2015.  The adjustments reflect the impact to our total revenues and Pro-forma Adjusted EBITDA as if the acquisitions and Value Added Services contracts had occurred at the beginning of the year.
(b) Other expenses include management fees accrued to our sponsor, Vestar Capital Partners, loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums paid on terminated physicians, franchise taxes and costs relating to consulting services on Medicare reimbursement. Expenses related to the costs associated with the Company’s tradename and rebranding initiatives and expenses associated with idle/closed radiation therapy facilities, costs associated with the CMS Medicare freeze and costs associated with the restatement process.
(c) Non-cash expenses including costs relating to stock compensation, amortization of straight-line rent, amortization of capital expenditures relating to warranty arrangements amortized to repairs and maintenance and non-cash equipment rent.
(d) Sale-lease back adjustments relates to the adjustment of benefit derived from the classification of operating leases as finance obligations reflecting a reclassification of interest expense and depreciation and amortization expense as rent expense.
(e) Acquisition related costs associated with ASC 805, “Business Combinations,” including professional fees, corporate development, integration and due diligence costs relating to the acquisition of medical practices.
(f) Litigation matters relate to loss contingency reserves related to the Medicare investigative matters and costs associated with the termination of physicians.
We believe the Pro-Forma Adjusted EBITDA provides useful information about our financial performance to investors, lenders, financial analysts and rating agencies as these groups have historically used EBITDA-related measures in the healthcare industry, along with other measures, to estimate the value of a company, to make informed investment decisions, to evaluate a company’s leverage capacity and its ability to meet its debt service requirements.  Pro-Forma Adjusted EBITDA eliminates the uneven effect of non-cash depreciation of tangibles assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting.  Pro-Forma Adjusted EBITDA is also used by us to measure individual performance for incentive compensation purposes and as an analytical indicator for purposes of allocating resources to our operating business and assessing their performance, both internally and relative to our peers, as well as to evaluate the performance of our operating management teams, and for purposes in the calculation of debt covenants and related disclosures.
Pro-Forma Adjusted EBITDA is not intended as a substitute for net income (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder, operating cash flows or other cash flow data determined in accordance with accounting principles generally accepted in the United States. Due to varying methods of calculation, Pro-Forma Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

21ST CENTURY ONCOLOGY HOLDINGS, INC.
Supplemental Financial Information (Unaudited)
Reconciliation of Restated Total Revenue and Adjusted EBITDA to Prior Reported
	Three Months Ended						Three Months Ended
	June 30,						June 30,
	2015						2015
	Prior Reported			Adjustments			Restated
(in thousands):
Total revenues	$	285,209		$	(6,996	)	$	278,213
Net income (loss) attributable to 21st Century
Oncology Holdings, Inc. shareholder	$	(64,538	)	$	(1,500	)	$	(66,038	)
Income tax expense		3,088			(674	)		2,414
Interest expense, net		24,326			52			24,378
Depreciation and amortization		22,242			(38	)		22,204
Early extinguishment of debt		37,390			–			37,390
Fair value adjustment of earn-out liabilities		2,745			(3,735	)		(990	)
Fair value adjustment of embedded derivatives
and other financial instruments		5,217			225			5,442
Net income attributable to noncontrolling interests,
net of cash distributions		1,018			(255	)		763
Other expenses (a)		1,034			974			2,008
Non-cash expenses (b)		1,243			95			1,338
Sale-lease back adjustments (c)		(315	)		–			(315	)
Acquisition-related costs (d)		1,070			(1	)		1,069
Litigation matters (e)		16,579			(1	)		16,578
Adjusted EBITDA (1)	$	51,099		$	(4,858	)	$	46,241
Adjusted EBITDA as a percentage of
total revenues		17.9	%		-1.3	%		16.6	%
(1) Adjusted EBITDA, as defined in our Credit Agreement, dated as of April 30, 2015, is calculated as income (loss) before interest expense (net of interest income), income taxes, depreciation and amortization, net income attributable to noncontrolling interests, net of cash distributions, gain on the sale of an interest in a joint venture, loss on sale leaseback transaction, early extinguishment of debt, fair value adjustment of earn-out liability, fair value adjustment of embedded derivative, impairment loss, foreign currency derivative contract loss (gain), management fees accrued to our sponsor, non-cash expenses including costs relating to stock compensation, amortization of straight-line rent and amortization of capital expenditures relating to repairs and maintenance, non-cash equipment rent, sale-lease back adjustments, acquisition-related costs, other expenses including loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums on termed physicians, franchise taxes, costs relating to consulting services on Medicare reimbursement, litigation settlements with physicians, costs associated with tradename and rebranding initiatives, expenses associated with idle/closed radiation therapy treatment facilities.
(a) Other expenses include management fees accrued to our sponsor, Vestar Capital Partners, loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums paid on terminated physicians, franchise taxes and costs relating to consulting services on Medicare reimbursement. Expenses related to the costs associated with the Company’s tradename and rebranding initiatives and expenses associated with idle/closed radiation therapy facilities, costs associated with the CMS Medicare freeze and costs associated with the restatement process.
(b) Non-cash expenses including costs relating to stock compensation, amortization of straight-line rent, amortization of capital expenditures relating to warranty arrangements amortized to repairs and maintenance and non-cash equipment rent.
(c) Sale-lease back adjustments relates to the adjustment of benefit derived from the classification of operating leases as finance obligations reflecting a reclassification of interest expense and depreciation and amortization expense as rent expense.
(d) Acquisition related costs associated with ASC 805, “Business Combinations,” including professional fees, corporate development, integration and due diligence costs relating to the acquisition of medical practices.
(e) Litigation matters relate to loss contingency reserves related to the Medicare investigative matters and costs associated with the termination of physicians.
We believe the Adjusted EBITDA provides useful information about our financial performance to investors, lenders, financial analysts and rating agencies as these groups have historically used EBITDA-related measures in the healthcare industry, along with other measures, to estimate the value of a company, to make informed investment decisions, to evaluate a company’s leverage capacity and its ability to meet its debt service requirements.  Adjusted EBITDA eliminates the uneven effect of non-cash depreciation of tangibles assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting.  Adjusted EBITDA is also used by us to measure individual performance for incentive compensation purposes and as an analytical indicator for purposes of allocating resources to our operating business and assessing their performance, both internally and relative to our peers, as well as to evaluate the performance of our operating management teams, and for purposes in the calculation of debt covenants and related disclosures.
Adjusted EBITDA is not intended as a substitute for net income (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder, operating cash flows or other cash flow data determined in accordance with accounting principles generally accepted in the United States. Due to varying methods of calculation, Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

21ST CENTURY ONCOLOGY HOLDINGS, INC.
Supplemental Financial Information (Unaudited)
Reconciliation of Restated Total Revenue and Adjusted EBITDA to Prior Reported
	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2015						2015
	Prior Reported			Adjustments			Restated
(in thousands):
Total revenues	$	278,483		$	(2,850	)	$	275,633
Net income (loss) attributable to 21st Century
Oncology Holdings, Inc. shareholder	$	(15,242	)	$	(1,425	)	$	(16,667	)
Income tax expense		2,690			(757	)		1,933
Interest expense, net		25,687			–			25,687
Depreciation and amortization		22,569			(437	)		22,132
Fair value adjustment of earn-out liabilities		460			–			460
Fair value adjustment of embedded derivatives
and other financial instruments		1,342			351			1,693
Net income attributable to noncontrolling interests,
net of cash distributions		1,344			(49	)		1,295
Other expenses (a)		967			970			1,937
Non-cash expenses (b)		1,065			(54	)		1,011
Sale-lease back adjustments (c)		(449	)		–			(449	)
Acquisition-related costs (d)		1,310			–			1,310
Litigation matters (e)		1,941			–			1,941
Adjusted EBITDA (1)	$	43,684		$	(1,401	)	$	42,283
Adjusted EBITDA as a percentage of
total revenues		15.7	%		-0.3	%		15.3	%
(1) Adjusted EBITDA, as defined in our Credit Agreement, dated as of April 30, 2015, is calculated as income (loss) before interest expense (net of interest income), income taxes, depreciation and amortization, net income attributable to noncontrolling interests, net of cash distributions, gain on the sale of an interest in a joint venture, loss on sale leaseback transaction, early extinguishment of debt, fair value adjustment of earn-out liability, fair value adjustment of embedded derivative, impairment loss, foreign currency derivative contract loss (gain), management fees accrued to our sponsor, non-cash expenses including costs relating to stock compensation, amortization of straight-line rent and amortization of capital expenditures relating to repairs and maintenance, non-cash equipment rent, sale-lease back adjustments, acquisition-related costs, other expenses including loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums on termed physicians, franchise taxes, costs relating to consulting services on Medicare reimbursement, litigation settlements with physicians, costs associated with tradename and rebranding initiatives, expenses associated with idle/closed radiation therapy treatment facilities.
(a) Other expenses include management fees accrued to our sponsor, Vestar Capital Partners, loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums paid on terminated physicians, franchise taxes and costs relating to consulting services on Medicare reimbursement. Expenses related to the costs associated with the Company’s tradename and rebranding initiatives and expenses associated with idle/closed radiation therapy facilities, costs associated with the CMS Medicare freeze and costs associated with the restatement process.
(b) Non-cash expenses including costs relating to stock compensation, amortization of straight-line rent, amortization of capital expenditures relating to warranty arrangements amortized to repairs and maintenance and non-cash equipment rent.
(c) Sale-lease back adjustments relates to the adjustment of benefit derived from the classification of operating leases as finance obligations reflecting a reclassification of interest expense and depreciation and amortization expense as rent expense.
(d) Acquisition related costs associated with ASC 805, “Business Combinations,” including professional fees, corporate development, integration and due diligence costs relating to the acquisition of medical practices.
(e) Litigation matters relate to loss contingency reserves related to the Medicare investigative matters and costs associated with the termination of physicians.
We believe the Adjusted EBITDA provides useful information about our financial performance to investors, lenders, financial analysts and rating agencies as these groups have historically used EBITDA-related measures in the healthcare industry, along with other measures, to estimate the value of a company, to make informed investment decisions, to evaluate a company’s leverage capacity and its ability to meet its debt service requirements.  Adjusted EBITDA eliminates the uneven effect of non-cash depreciation of tangibles assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting.  Adjusted EBITDA is also used by us to measure individual performance for incentive compensation purposes and as an analytical indicator for purposes of allocating resources to our operating business and assessing their performance, both internally and relative to our peers, as well as to evaluate the performance of our operating management teams, and for purposes in the calculation of debt covenants and related disclosures.
Adjusted EBITDA is not intended as a substitute for net income (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder, operating cash flows or other cash flow data determined in accordance with accounting principles generally accepted in the United States. Due to varying methods of calculation, Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

21ST CENTURY ONCOLOGY HOLDINGS, INC.
Supplemental Financial Information (Unaudited)
Reconciliation of Restated Total Revenue and Adjusted EBITDA to Prior Reported
	Three Months Ended						Three Months Ended
	December 31,						December 31,
	2014						2014
	Prior Reported			Adjustments			Restated
(in thousands):
Total revenues	$	269,261		$	(2,674	)	$	266,587
Net income (loss) attributable to 21st Century
Oncology Holdings, Inc. shareholder	$	(24,168	)	$	(4,173	)	$	(28,341	)
Income tax expense		946			(868	)		78
Interest expense, net		25,620			–			25,620
Depreciation and amortization		21,429			(32	)		21,397
Fair value adjustment of earn-out liabilities		1,015			–			1,015
Fair value adjustment of embedded derivatives
and other financial instruments		837			–			837
Net income attributable to noncontrolling interests,
net of cash distributions		(109	)		(1,364	)		(1,473	)
Other expenses (a)		4,035			1			4,036
Non-cash expenses (b)		1,085			63			1,148
Sale-lease back adjustments (c)		(441	)		–			(441	)
Acquisition-related costs (d)		2,261			–			2,261
Litigation matters (e)		2,108			–			2,108
Expenses associated with note-holder negotiations and
management of liquidity (f)		2,482			–			2,482
Adjusted EBITDA (1)	$	37,100		$	(6,373	)	$	30,727
Adjusted EBITDA as a percentage of
total revenues		13.8	%		-2.3	%		11.5	%
(1) Adjusted EBITDA, as defined in our Credit Agreement, dated as of April 30, 2015, is calculated as income (loss) before interest expense (net of interest income), income taxes, depreciation and amortization, net income attributable to noncontrolling interests, net of cash distributions, gain on the sale of an interest in a joint venture, loss on sale leaseback transaction, early extinguishment of debt, fair value adjustment of earn-out liability, fair value adjustment of embedded derivative, impairment loss, foreign currency derivative contract loss (gain), management fees accrued to our sponsor, non-cash expenses including costs relating to stock compensation, amortization of straight-line rent and amortization of capital expenditures relating to repairs and maintenance, non-cash equipment rent, sale-lease back adjustments, acquisition-related costs, other expenses including loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums on termed physicians, franchise taxes, costs relating to consulting services on Medicare reimbursement, litigation settlements with physicians, costs associated with tradename and rebranding initiatives, expenses associated with idle/closed radiation therapy treatment facilities.
(a) Other expenses include management fees accrued to our sponsor, Vestar Capital Partners, loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums paid on terminated physicians, franchise taxes and costs relating to consulting services on Medicare reimbursement. Expenses related to the costs associated with the Company’s tradename and rebranding initiatives and expenses associated with idle/closed radiation therapy facilities, costs associated with the CMS Medicare freeze and costs associated with the restatement process.
(b) Non-cash expenses including costs relating to stock compensation, amortization of straight-line rent, amortization of capital expenditures relating to warranty arrangements amortized to repairs and maintenance and non-cash equipment rent.
(c) Sale-lease back adjustments relates to the adjustment of benefit derived from the classification of operating leases as finance obligations reflecting a reclassification of interest expense and depreciation and amortization expense as rent expense.
(d) Acquisition related costs associated with ASC 805, “Business Combinations,” including professional fees, corporate development, integration and due diligence costs relating to the acquisition of medical practices.
(e) Litigation matters relate to loss contingency reserves related to the Medicare investigative matters and costs associated with the termination of physicians.
(f) Expenses associated with negotiating with note-holders, recapitalization support agreement and legal and consulting fees associated with management of liquidity.
We believe the Adjusted EBITDA provides useful information about our financial performance to investors, lenders, financial analysts and rating agencies as these groups have historically used EBITDA-related measures in the healthcare industry, along with other measures, to estimate the value of a company, to make informed investment decisions, to evaluate a company’s leverage capacity and its ability to meet its debt service requirements.  Adjusted EBITDA eliminates the uneven effect of non-cash depreciation of tangibles assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting.  Adjusted EBITDA is also used by us to measure individual performance for incentive compensation purposes and as an analytical indicator for purposes of allocating resources to our operating business and assessing their performance, both internally and relative to our peers, as well as to evaluate the performance of our operating management teams, and for purposes in the calculation of debt covenants and related disclosures.
Adjusted EBITDA is not intended as a substitute for net income (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder, operating cash flows or other cash flow data determined in accordance with accounting principles generally accepted in the United States. Due to varying methods of calculation, Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

21ST CENTURY ONCOLOGY HOLDINGS, INC.
Supplemental Financial Information (Unaudited)
Reconciliation of Restated Total Revenue and Adjusted EBITDA to Prior Reported
	Three Months Ended						Three Months Ended
	September 30,						September 30,
	2014						2014
	Prior Reported			Adjustments			Restated
(in thousands):
Total revenues	$	257,618		$	(1,599	)	$	256,019
Net income (loss) attributable to 21st Century
Oncology Holdings, Inc. shareholder	$	(87,377	)	$	(506	)	$	(87,883	)
Income tax expense		1,173			(645	)		528
Interest expense, net		30,233			–			30,233
Depreciation and amortization		22,388			(30	)		22,358
Impairment loss		47,526			–			47,526
Early extinguishment of debt		8,558			–			8,558
Equity initial public offering expenses		742			(742	)		–
Fair value adjustment of earn-out liabilities		209			–			209
Net income attributable to noncontrolling interests,
net of cash distributions		(365	)		(21	)		(386	)
Other expenses (a)		4,090			–			4,090
Non-cash expenses (b)		1,120			–			1,120
Sale-lease back adjustments (c)		(331	)		–			(331	)
Acquisition-related costs (d)		1,371			(120	)		1,251
Litigation matters (e)		1,097			–			1,097
Expenses associated with note-holder negotiations and
management of liquidity (f)		9,258			121			9,379
Adjusted EBITDA (1)	$	39,692		$	(1,943	)	$	37,749
Adjusted EBITDA as a percentage of
total revenues		15.4	%		-0.7	%		14.7	%
(1) Adjusted EBITDA, as defined in our Credit Agreement, dated as of April 30, 2015, is calculated as income (loss) before interest expense (net of interest income), income taxes, depreciation and amortization, net income attributable to noncontrolling interests, net of cash distributions, gain on the sale of an interest in a joint venture, loss on sale leaseback transaction, early extinguishment of debt, fair value adjustment of earn-out liability, fair value adjustment of embedded derivative, impairment loss, foreign currency derivative contract loss (gain), management fees accrued to our sponsor, non-cash expenses including costs relating to stock compensation, amortization of straight-line rent and amortization of capital expenditures relating to repairs and maintenance, non-cash equipment rent, sale-lease back adjustments, acquisition-related costs, other expenses including loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums on termed physicians, franchise taxes, costs relating to consulting services on Medicare reimbursement, litigation settlements with physicians, costs associated with tradename and rebranding initiatives, expenses associated with idle/closed radiation therapy treatment facilities.
(a) Other expenses include management fees accrued to our sponsor, Vestar Capital Partners, loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums paid on terminated physicians, franchise taxes and costs relating to consulting services on Medicare reimbursement. Expenses related to the costs associated with the Company’s tradename and rebranding initiatives and expenses associated with idle/closed radiation therapy facilities, costs associated with the CMS Medicare freeze and costs associated with the restatement process.
(b) Non-cash expenses including costs relating to stock compensation, amortization of straight-line rent, amortization of capital expenditures relating to warranty arrangements amortized to repairs and maintenance and non-cash equipment rent.
(c) Sale-lease back adjustments relates to the adjustment of benefit derived from the classification of operating leases as finance obligations reflecting a reclassification of interest expense and depreciation and amortization expense as rent expense.
(d) Acquisition related costs associated with ASC 805, “Business Combinations,” including professional fees, corporate development, integration and due diligence costs relating to the acquisition of medical practices.
(e) Litigation matters relate to loss contingency reserves related to the Medicare investigative matters and costs associated with the termination of physicians.
(f) Expenses associated with negotiating with note-holders, recapitalization support agreement and legal and consulting fees associated with management of liquidity.
We believe the Adjusted EBITDA provides useful information about our financial performance to investors, lenders, financial analysts and rating agencies as these groups have historically used EBITDA-related measures in the healthcare industry, along with other measures, to estimate the value of a company, to make informed investment decisions, to evaluate a company’s leverage capacity and its ability to meet its debt service requirements.  Adjusted EBITDA eliminates the uneven effect of non-cash depreciation of tangibles assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting.  Adjusted EBITDA is also used by us to measure individual performance for incentive compensation purposes and as an analytical indicator for purposes of allocating resources to our operating business and assessing their performance, both internally and relative to our peers, as well as to evaluate the performance of our operating management teams, and for purposes in the calculation of debt covenants and related disclosures.
Adjusted EBITDA is not intended as a substitute for net income (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder, operating cash flows or other cash flow data determined in accordance with accounting principles generally accepted in the United States. Due to varying methods of calculation, Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

 

21ST CENTURY ONCOLOGY HOLDINGS, INC.
Supplemental Financial Information (Unaudited)
Reconciliation of Restated Total Revenue and Adjusted EBITDA to Prior Reported
	Three Months Ended						Three Months Ended
	June 30,						June 30,
	2014						2014
	Prior Reported			Adjustments			Restated
(in thousands):
Total revenues	$	265,898		$	(2,660	)	$	263,238
Net income (loss) attributable to 21st Century
Oncology Holdings, Inc. shareholder	$	(207,524	)	$	(2,714	)	$	(210,238	)
Income tax expense		934			(839	)		95
Interest expense, net		29,899			–			29,899
Depreciation and amortization		22,162			(28	)		22,134
Impairment loss		182,000			–			182,000
Equity initial public offering expenses		4,163			742			4,905
Fair value adjustment of earn-out liabilities		204			–			204
Net income attributable to noncontrolling interests,
net of cash distributions		2,014			(45	)		1,969
Other expenses (a)		3,659			(1	)		3,658
Non-cash expenses (b)		1,248			(1	)		1,247
Sale-lease back adjustments (c)		(329	)		1			(328	)
Acquisition-related costs (d)		4,213			–			4,213
Litigation matters (e)		2,568			–			2,568
Adjusted EBITDA	$	45,211		$	(2,885	)	$	42,326
Adjusted EBITDA as a percentage of
total revenues		17.0	%		-0.9	%		16.1	%
(1) Adjusted EBITDA, as defined in our Credit Agreement, dated as of April 30, 2015, is calculated as income (loss) before interest expense (net of interest income), income taxes, depreciation and amortization, net income attributable to noncontrolling interests, net of cash distributions, gain on the sale of an interest in a joint venture, loss on sale leaseback transaction, early extinguishment of debt, fair value adjustment of earn-out liability, fair value adjustment of embedded derivative, impairment loss, foreign currency derivative contract loss (gain), management fees accrued to our sponsor, non-cash expenses including costs relating to stock compensation, amortization of straight-line rent and amortization of capital expenditures relating to repairs and maintenance, non-cash equipment rent, sale-lease back adjustments, acquisition-related costs, other expenses including loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums on termed physicians, franchise taxes, costs relating to consulting services on Medicare reimbursement, litigation settlements with physicians, costs associated with tradename and rebranding initiatives, expenses associated with idle/closed radiation therapy treatment facilities.
(a) Other expenses include management fees accrued to our sponsor, Vestar Capital Partners, loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums paid on terminated physicians, franchise taxes and costs relating to consulting services on Medicare reimbursement. Expenses related to the costs associated with the Company’s tradename and rebranding initiatives and expenses associated with idle/closed radiation therapy facilities, costs associated with the CMS Medicare freeze and costs associated with the restatement process.
(b) Non-cash expenses including costs relating to stock compensation, amortization of straight-line rent, amortization of capital expenditures relating to warranty arrangements amortized to repairs and maintenance and non-cash equipment rent.
(c) Sale-lease back adjustments relates to the adjustment of benefit derived from the classification of operating leases as finance obligations reflecting a reclassification of interest expense and depreciation and amortization expense as rent expense.
(d) Acquisition related costs associated with ASC 805, “Business Combinations,” including professional fees, corporate development, integration and due diligence costs relating to the acquisition of medical practices.
(e) Litigation matters relate to loss contingency reserves related to the Medicare investigative matters and costs associated with the termination of physicians.
We believe the Adjusted EBITDA provides useful information about our financial performance to investors, lenders, financial analysts and rating agencies as these groups have historically used EBITDA-related measures in the healthcare industry, along with other measures, to estimate the value of a company, to make informed investment decisions, to evaluate a company’s leverage capacity and its ability to meet its debt service requirements.  Adjusted EBITDA eliminates the uneven effect of non-cash depreciation of tangibles assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting.  Adjusted EBITDA is also used by us to measure individual performance for incentive compensation purposes and as an analytical indicator for purposes of allocating resources to our operating business and assessing their performance, both internally and relative to our peers, as well as to evaluate the performance of our operating management teams, and for purposes in the calculation of debt covenants and related disclosures.
Adjusted EBITDA is not intended as a substitute for net income (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder, operating cash flows or other cash flow data determined in accordance with accounting principles generally accepted in the United States. Due to varying methods of calculation, Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

21ST CENTURY ONCOLOGY HOLDINGS, INC.
Supplemental Financial Information (Unaudited)
Reconciliation of Restated Total Pro-forma Revenue and Pro-forma Adjusted EBITDA to Prior Reported
	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2014						2014
	Prior Reported			Adjustments			Restated
(in thousands):
Total revenues	$	233,397		$	(1,059	)	$	232,338
Pro-forma full period effect of acquisitions		8,819			–			8,819
Total pro-forma revenues	$	242,216		$	(1,059	)	$	241,157
Net income (loss) attributable to 21st Century
Oncology Holdings, Inc. shareholder	$	(30,181	)	$	(648	)	$	(30,829	)
Income tax expense		2,106			(488	)		1,618
Interest expense, net		27,527			–			27,527
Depreciation and amortization		20,722			(28	)		20,694
Loss on sale leaseback transaction		135			–			135
Fair value adjustment of earn-out liabilities		199			–			199
Gain on foreign currency derivative contracts		(4	)		–			(4	)
Net income attributable to noncontrolling interests,
net of cash distributions		891			(5	)		886
Other expenses (b)		3,541			(1	)		3,540
Non-cash expenses (c)		723			–			723
Sale-lease back adjustments (d)		(303	)		–			(303	)
Acquisition-related costs (e)		4,491			–			4,491
Litigation matters (f)		757			–			757
Pro-Forma full period effect of acquisition EBITDA (a)		742			–			742
Pro-Forma Adjusted EBITDA (1)	$	31,346		$	(1,170	)	$	30,176
Pro-Forma Adjusted EBITDA as a percentage of
total pro-forma revenues		12.9	%		-0.4	%		12.5	%
(1) Pro-Forma Adjusted EBITDA, as defined in our Credit Agreement, dated as of April 30, 2015, is calculated as income (loss) before interest expense (net of interest income), income taxes, depreciation and amortization, net income attributable to noncontrolling interests, net of cash distributions, gain on the sale of an interest in a joint venture, loss on sale leaseback transaction, early extinguishment of debt, fair value adjustment of earn-out liability, fair value adjustment of embedded derivative, impairment loss, foreign currency derivative contract loss (gain), management fees accrued to our sponsor, non-cash expenses including costs relating to stock compensation, amortization of straight-line rent and amortization of capital expenditures relating to repairs and maintenance, non-cash equipment rent, sale-lease back adjustments, acquisition-related costs, other expenses including loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums on termed physicians, franchise taxes, costs relating to consulting services on Medicare reimbursement, litigation settlements with physicians, costs associated with tradename and rebranding initiatives, expenses associated with idle/closed radiation therapy treatment facilities.
(a) Pro-forma amounts related to adjustments to total revenues and Pro-forma Adjusted EBITDA to reflect the full period effect of our acquisitions and Value Added Services contracts completed during 2014.  The adjustments reflect the impact to our total revenues and Pro-forma Adjusted EBITDA as if the acquisitions and Value Added Services contracts had occurred at the beginning of the year.
(b) Other expenses include management fees accrued to our sponsor, Vestar Capital Partners, loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums paid on terminated physicians, franchise taxes and costs relating to consulting services on Medicare reimbursement. Expenses related to the costs associated with the Company’s tradename and rebranding initiatives and expenses associated with idle/closed radiation therapy facilities, costs associated with the CMS Medicare freeze and costs associated with the restatement process.
(c) Non-cash expenses including costs relating to stock compensation, amortization of straight-line rent, amortization of capital expenditures relating to warranty arrangements amortized to repairs and maintenance and non-cash equipment rent.
(d) Sale-lease back adjustments relates to the adjustment of benefit derived from the classification of operating leases as finance obligations reflecting a reclassification of interest expense and depreciation and amortization expense as rent expense.
(e) Acquisition related costs associated with ASC 805, “Business Combinations,” including professional fees, corporate development, integration and due diligence costs relating to the acquisition of medical practices.
(f) Litigation matters relate to loss contingency reserves related to the Medicare investigative matters and costs associated with the termination of physicians.
We believe the Pro-Forma Adjusted EBITDA provides useful information about our financial performance to investors, lenders, financial analysts and rating agencies as these groups have historically used EBITDA-related measures in the healthcare industry, along with other measures, to estimate the value of a company, to make informed investment decisions, to evaluate a company’s leverage capacity and its ability to meet its debt service requirements.  Pro-Forma Adjusted EBITDA eliminates the uneven effect of non-cash depreciation of tangibles assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting.  Pro-Forma Adjusted EBITDA is also used by us to measure individual performance for incentive compensation purposes and as an analytical indicator for purposes of allocating resources to our operating business and assessing their performance, both internally and relative to our peers, as well as to evaluate the performance of our operating management teams, and for purposes in the calculation of debt covenants and related disclosures.
Pro-Forma Adjusted EBITDA is not intended as a substitute for net income (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder, operating cash flows or other cash flow data determined in accordance with accounting principles generally accepted in the United States. Due to varying methods of calculation, Pro-Forma Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

Additional Supplemental Key Operating Statistics 

	21ST CENTURY ONCOLOGY HOLDINGS, INC.
	KEY OPERATING STATISTICS
	(unaudited)
		Three Months Ended
		September 30,								%
Operating Metrics			2015				2014			Change
	Number of operating days		64				64				0.0	%
	Domestic
	Radiation oncology treatment plans (total) (1)		8,832				8,479				4.2	%
	Radiation oncology treatments per day (total)		3,124				3,135				-0.3	%
	Net patient service revenue per radiation oncology	$	754			$	768				-1.8	%
	treatment (total)
	Radiation oncology treatment plans (same market) (1,2)		8,442				8,479				-0.4	%
	Radiation oncology treatments per day (same market) (2)		2,983				3,126				-4.6	%
	Net patient service revenue per radiation oncology
	treatment (same market) (2)	$	757			$	760				-0.3	%
	International
	Total number of open cases		4,907				4,480				9.5	%
	Revenue per radiation oncology case	$	6,421			$	5,306				21.0	%
		Three Months Ended
		September 30,								%
Revenue Details			2015				2014			Change
	Net patient service revenue per Consolidated Statements
	of Operations and Comprehensive Loss	$	243,768			$	236,581
	Less net patient service revenue ICC		(79,292	)			(79,278	)
	Less net patient service revenue professional services		(1,820	)			(1,950	)
	Plus net patient service revenue unconsolidated MSAs (3)		19,653				22,551
	Less international net patient service revenue		(31,508	)			(23,770	)
	Domestic freestanding net patient service revenue	$	150,801			$	154,134				-2.2	%
		September 30,
Center Details			2015				2014
	Radiation therapy centers – freestanding (domestic)		134				132
	Radiation therapy centers – freestanding (international)		36				35
	Radiation therapy centers – professional / other		12				11
	Total radiation therapy centers		182				178
	(1) Total radiation oncology treatment plans represent the number of prescriptions issued by the physicians to start the treatment process.
	(2) Same market is defined as markets that have been open in excess of 12 months.
	This includes in-market acquisitions and conversion of existing professional only relationships to freestanding.
	(3) Medical services agreement

 

	21ST CENTURY ONCOLOGY HOLDINGS, INC.
	KEY OPERATING STATISTICS
	(unaudited)
		Three Months Ended
		June 30,								%
Operating Metrics			2015				2014			Change
	Number of operating days		64				64				0.0	%
	Domestic
	Radiation oncology treatment plans (total) (1)		9,297				8,742				6.3	%
	Radiation oncology treatments per day (total)		3,296				3,175				3.8	%
	Net patient service revenue per radiation oncology	$	758			$	780				-2.8	%
	treatment (total)
	Radiation oncology treatment plans (same market) (1,2)		8,913				8,734				2.0	%
	Radiation oncology treatments per day (same market) (2)		3,153				3,168				-0.5	%
	Net patient service revenue per radiation oncology
	treatment (same market) (2)	$	768			$	769				-0.2	%
	International
	Total number of open cases		4,626				4,600				0.6	%
	Revenue per radiation oncology case	$	6,248			$	4,707				32.7	%
		Three Months Ended
		June 30,								%
Revenue Details			2015				2014			Change
	Net patient service revenue per Consolidated Statements
	of Operations and Comprehensive Loss	$	257,854			$	243,149
	Less net patient service revenue ICC		(86,893	)			(83,022	)
	Less net patient service revenue professional services		(2,416	)			(2,193	)
	Plus net patient service revenue unconsolidated MSAs (3)		20,294				22,145
	Less international net patient service revenue		(28,905	)			(21,653	)
	Domestic freestanding net patient service revenue	$	159,934			$	158,426				1.0	%
		June 30,
Center Details			2015				2014
	Radiation therapy centers – freestanding (domestic)		136				133
	Radiation therapy centers – freestanding (international)		35				35
	Radiation therapy centers – professional / other		12				12
	Total radiation therapy centers		183				180
	(1) Total radiation oncology treatment plans represent the number of prescriptions issued by the physicians to start the treatment process.
	(2) Same market is defined as markets that have been open in excess of 12 months.
	This includes in-market acquisitions and conversion of existing professional only relationships to freestanding.
	(3) Medical services agreement

 

	21ST CENTURY ONCOLOGY HOLDINGS, INC.
	KEY OPERATING STATISTICS
	(unaudited)
		Three Months Ended
		March 31,								%
Operating Metrics			2015				2014			Change
	Number of operating days		63				63				0.0	%
	Domestic
	Radiation oncology treatment plans (total) (1)		9,352				8,261				13.2	%
	Radiation oncology treatments per day (total)		3,378				3,017				12.0	%
	Net patient service revenue per radiation oncology	$	739			$	753				-1.8	%
	treatment (total)
	Radiation oncology treatment plans (same market) (1,2)		8,113				7,914				2.5	%
	Radiation oncology treatments per day (same market) (2)		2,893				2,869				0.8	%
	Net patient service revenue per radiation oncology
	treatment (same market) (2)	$	744			$	758				-1.9	%
	International
	Total number of open cases		4,501				4,281				5.1	%
	Revenue per radiation oncology case	$	6,003			$	4,595				30.6	%
		Three Months Ended
		March 31,								%
Revenue Details			2015				2014			Change
	Net patient service revenue per Consolidated Statements
	of Operations and Comprehensive Loss	$	254,255			$	212,796
	Less net patient service revenue ICC		(89,469	)			(69,712	)
	Less net patient service revenue professional services		(1,944	)			(1,917	)
	Plus net patient service revenue unconsolidated MSAs (3)		21,504				21,639
	Less international net patient service revenue		(27,020	)			(19,672	)
	Domestic freestanding net patient service revenue	$	157,326			$	143,134				9.9	%
		March 31,
Center Details			2015				2014
	Radiation therapy centers – freestanding (domestic)		136				138
	Radiation therapy centers – freestanding (international)		35				35
	Radiation therapy centers – professional / other		11				12
	Total radiation therapy centers		182				185
	(1) Total radiation oncology treatment plans represent the number of prescriptions issued by the physicians to start the treatment process.
	(2) Same market is defined as markets that have been open in excess of 12 months.
	This includes in-market acquisitions and conversion of existing professional only relationships to freestanding.
	(3) Medical services agreement

CONTACT: 21st Century Oncology Contact:
LeAnne M. Stewart		
Chief Financial Officer	
239-931-7281			
[email protected]	

Investor Contact:
The Ruth Group
Nick Laudico			
646-536-7030			
[email protected]	

Brandon Vazquez		
646-536-7032
[email protected]