FOOL CONFERENCE CALL SYNOPSIS*
By Greg Markus (TMF Boring)
Prime Medical Services
(Nasdaq:PMSI)
1301 Capital of Texas Hwy, Suite C-300
Austin, TX 78476
(512) 328-2892
ANN ARBOR, Mich. (July 24, 1997) /FOOLWIRE/ -- Prime Medical Services is the largest
operator of lithotripters in the U.S., currently performing over 36,000 procedures annually, through
contracts with approximately 400 hospitals and 255 managed care companies. Prime operates a
fleet of 58 lithotripters in 33 states. The company is also developing mobile routes to provide
thermotherapy services to treat benign prostatic hyperplasia (BPH).
SECOND QUARTER RESULTS. Quarterly revenues increased 24% to $23.22 million from
$18.70 million for the second quarter of 1996. Pretax income for the second quarter increased by
38% to $4.84 million from $3.50 million for the year-ago period. The 1996 second quarter pretax
results exclude a non-recurring writeoff of $3.54 million related to financing costs associated with
the acquisition of Lithotripters Inc. Net income for the second quarter increased to $3.67 million,
or $0.19 per share, compared to $3.18 million, or $0.17 per share, for the year ago period. The net
income results reflect a change in Prime's tax rate from 9% in 1996 to 24% in 1997.
SIX MONTH RESULTS. Revenues for the six month period ending June 30, 1997 increased by
70% to $44.1 million from $25.9 million for the year ago period. Pretax income for the six month
period ending June 30, 1997 increased by 59% to $9.01 million from $5.67 million for the year ago
period (excluding financing costs). Net income for the six month period ending June 30, 1997
increased by 36% to $6.91 million, or $0.35 per share, from $5.09 million, or $0.28 per share for
the year ago period, despite the higher tax rate in 1997.
FINANCIAL DETAILS. Prime will be filing its 10-Q with the SEC in a few days, and that will
provide full financial details. At the end of the quarter, long-term debt stood at $83 million and
other debt at $3 million.
COST EFFICIENCIES. Prime is consolidating its billing and scheduling activities at one
location and also consolidating other accounting. This will result in additional cost efficiencies
going forward.
ACQUISITIONS. Prime completed acquisitions of three lithotripters during the quarter, which
are not fully reflected in the results. The company is currently reviewing additional acquisition
opportunities, with a target of five lithotripter acquisitions total for the year. Prime's new
lithotripter route in Hawaii will be operational in September. The slower rate of lithotripter
acquisitions reflects Prime's decision to focus efforts on other, potentially higher-growth
opportunities, such as Prostatron routes and providing management services for urology offices.
BPH TREATMENT. Prime continues to development new mobile routes to provide
thermotherapy services for the treatment of BPH. Three routes are expected to be operational in
1997. One of those routes already has more than 100 doctors signed up as limited partners with
Prime. Plans are to accelerate the development of new routes in 1998, with the goal of 10 routes by
the end of the year. The response from doctors and hospitals has been very favorable, and Medicare
reimbursement approval for the treatment is progressing faster than management had anticipated.
Medicare approval has been granted in at least 17 states, including Florida, and over 80 insurance
carriers have also granted approval (counting separately each state in which a carrier has granted
approval). Prime is not committed to use the EDAP Prostatron exclusively, and it will consider
other devices if it makes economic sense to do so. Right now, the Prostatron is the only such device
with FDA approval. Prostatron procedure pricing should be close to that of lithotripsy, or perhaps
somewhat higher; and the potential market is probably larger. Many of the Prostatron procedures
will presumably be under Medicare reimbursement.
MEDICARE REIMBURSEMENT RATES. Medicare reimbursement comprises approximately
20% of Prime's lithotripsy business. Medicare reimbursement rates are somewhat lower relative to
other payment methods, but the company sees no pressure at all to reduce Medicare reimbursement
rates for lithotripsy further.
UROLOGY PRACTICE MANAGEMENT. Prime deals with approximately 2,000 urologists
nationally, about half of whom own an interest in a limited partnership with Prime and half of
whom do not but utilize Prime's lithotripters. The company thus has very good relationships
throughout the urology community. Prime has started a practice management division recently,
hiring an experienced attorney and consultant about three months ago to develop that business.
Prime was recently hired to run an independent practice association (IPA) of 46 urologists in New
Jersey. In IPA management, Prime's goals are to obtain managed care contracts, to provide
purchasing power through purchasing in quantity (prostate cancer drugs, for example), and to
provide management efficiencies. Prime is also investigating whether it makes economic sense to
buy into urology practices in order to grow them.
GALLSTONE TREATMENT. MEDSTONE (NYSE:MEDS) is currently seeking FDA approval
for use of a modified lithotripter for treatment of gallstones. Medstone estimates that the procedure
could be useful for treating 25% of all gallstones. If Medstone gets approval, Dornier and
SIEMENS (Nasdaq:SMAWY) would almost certainly move to get approval, also. Prime has no
specific information on the progress of Medstone's application, but if and when that approval
occurs, that could provide additional uses for lithotripters. |
