Theragenics Corp. (TGX, Financial) filed Quarterly Report for the period ended 2012-03-31.
Theragenics Cp has a market cap of $59.9 million; its shares were traded at around $1.73 with a P/E ratio of 15.7 and P/S ratio of 0.7. Theragenics Cp had an annual average earning growth of 2.1% over the past 5 years.
Our brachytherapy segment revenues increased 6% compared to the first quarter of 2011. Incremental revenues from the acquisition of the Core Oncology customer base totaled $586,000 for the first quarter of 2012 over 29 working days between the closing of the transaction and March 31, 2012. See “Acquisition of Core Oncology s Prostate Brachytherapy Customer Base” above. Excluding the incremental sales to the acquired customers, brachytherapy product revenue declined 6%.
We have non-exclusive distribution agreements in place for the distribution of our TheraSeed® device. Under our third party distribution agreements, we are the exclusive palladium-103 seed supplier for the treatment of prostate cancer for each distributor, and each distributor has the non-exclusive right to sell TheraSeed® in the U.S. and Canada. Certain agreements also provide distributors with the right to distribute TheraSeed® for the treatment of solid localized tumors other than in the prostate and with rights to distribute to certain locations outside of North America. Such applications (non-prostate and outside of North America) have not been material and are not expected to become material in the near future. Our principal non-exclusive distribution agreement is with C.R. Bard (“Bard”). Our agreement with Bard provides for automatic one year extensions of the term, unless either party gives notice of its intent not to renew at least twelve months prior to the end of the current term. The current term expires December 31, 2013 and will be automatically extended for one additional year unless either party gives notice of its intent not to extend by December 31, 2012. Sales to Bard by our brachytherapy segment represented 29% of brachytherapy seed segment revenue in both the first quarter of 2012 and 2011.
Operating income in our brachytherapy business was $1.4 million and $1.1 million in the first quarter of 2012 and 2011, respectively. Manufacturing related expenses in our brachytherapy business tend to be fixed in nature. Accordingly, even modest changes in revenue can have a significant impact on operating income. Gross margins and operating income in our brachytherapy seed business are expected to continue to be highly dependent on sales levels due to this high fixed cost component. Accordingly, our operating income in the first quarter of 2012 benefited from the increase in our revenue. This was partially offset by the amortization of the intangible assets acquired in the Core transaction. The first quarter of 2011 included $215,000 of bad debt expense related to amounts due under our prior distribution agreement with Core that was considered as uncollectible. No such bad debt expense related to Core was incurred in the 2012 period. Professional fees were also higher in the 2011 period.
Estimates related to the acquisition of Core Oncology Customer Base. On February 17, 2012, we acquired Core Oncology s prostate brachytherapy customer base. This transaction is expected to substantially increase our share of the iodine-125 segment of the prostate brachytherapy market. In addition to the customer base, we also acquired certain packaging technologies, equipment related to the packaging technologies, and certain existing component inventory. We did not acquire Core s facilities, manufacturing equipment or processes, or Core s employees. The total purchase price for the acquired assets is equal to one times the actual revenue generated from the acquired customers over the twelve-month period from September 2012 to August 2013, in excess of a $2.5 million Threshold Amount. We paid $3.8 million in cash as a prepayment of a portion of the earn-out at closing (and also incurred $300,000 of transaction costs) and will make six quarterly earn-out payments thereafter, beginning in June 2012 and ending in September 2013. Each quarterly earn-out payment is based upon that quarter s revenue from the acquired customers, reduced by a portion of the Threshold Amount and by a portion of the prepayment made at closing. The final earn-out payment is calculated as one times the revenue actually recognized from the acquired customer base over the twelve-month period from September 2012 to August 2013 in excess of the total Threshold Amount, reduced by the prepayment and the cumulative amount of all previous earn-out payments made. Based on our current estimates, we expect to make aggregate payments of $5.2 million over the next 18 months (through September 2013) for this earn-out based acquisition, representing a total purchase price of $9.3 million, including transaction costs. However, we estimate that the total purchase price may range from $7.5 million to $10.5 million.
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Theragenics Cp has a market cap of $59.9 million; its shares were traded at around $1.73 with a P/E ratio of 15.7 and P/S ratio of 0.7. Theragenics Cp had an annual average earning growth of 2.1% over the past 5 years.
Highlight of Business Operations:
The total purchase price for the acquired assets is equal to one times the actual revenue generated from the acquired customers over the twelve-month period from September 2012 to August 2013, in excess of a $2.5 million Threshold Amount. We paid $3.8 million in cash as a prepayment of a portion of the earn-out at closing (and also incurred $300,000 of transaction costs) and will make six quarterly earn-out payments thereafter, beginning in June 2012 and ending in September 2013. Each quarterly earn-out payment is based upon that quarter s revenue from the acquired customers, reduced by a portion of the Threshold Amount and by a portion of the prepayment made at closing. The final earn-out payment is calculated as one times the revenue actually recognized from the acquired customer base over the twelve-month period from September 2012 to August 2013 in excess of the total Threshold Amount, reduced by the prepayment and the cumulative amount of all previous earn-out payments made. Based on our current estimates, we expect to make aggregate payments of $5.2 million over the next 18 months (through September 2013) for this earn-out based acquisition, representing a total purchase price of $9.3 million, including transaction costs. However, we estimate that the total purchase price may range from $7.5 million to $10.5 million.Our brachytherapy segment revenues increased 6% compared to the first quarter of 2011. Incremental revenues from the acquisition of the Core Oncology customer base totaled $586,000 for the first quarter of 2012 over 29 working days between the closing of the transaction and March 31, 2012. See “Acquisition of Core Oncology s Prostate Brachytherapy Customer Base” above. Excluding the incremental sales to the acquired customers, brachytherapy product revenue declined 6%.
We have non-exclusive distribution agreements in place for the distribution of our TheraSeed® device. Under our third party distribution agreements, we are the exclusive palladium-103 seed supplier for the treatment of prostate cancer for each distributor, and each distributor has the non-exclusive right to sell TheraSeed® in the U.S. and Canada. Certain agreements also provide distributors with the right to distribute TheraSeed® for the treatment of solid localized tumors other than in the prostate and with rights to distribute to certain locations outside of North America. Such applications (non-prostate and outside of North America) have not been material and are not expected to become material in the near future. Our principal non-exclusive distribution agreement is with C.R. Bard (“Bard”). Our agreement with Bard provides for automatic one year extensions of the term, unless either party gives notice of its intent not to renew at least twelve months prior to the end of the current term. The current term expires December 31, 2013 and will be automatically extended for one additional year unless either party gives notice of its intent not to extend by December 31, 2012. Sales to Bard by our brachytherapy segment represented 29% of brachytherapy seed segment revenue in both the first quarter of 2012 and 2011.
Operating income in our brachytherapy business was $1.4 million and $1.1 million in the first quarter of 2012 and 2011, respectively. Manufacturing related expenses in our brachytherapy business tend to be fixed in nature. Accordingly, even modest changes in revenue can have a significant impact on operating income. Gross margins and operating income in our brachytherapy seed business are expected to continue to be highly dependent on sales levels due to this high fixed cost component. Accordingly, our operating income in the first quarter of 2012 benefited from the increase in our revenue. This was partially offset by the amortization of the intangible assets acquired in the Core transaction. The first quarter of 2011 included $215,000 of bad debt expense related to amounts due under our prior distribution agreement with Core that was considered as uncollectible. No such bad debt expense related to Core was incurred in the 2012 period. Professional fees were also higher in the 2011 period.
Estimates related to the acquisition of Core Oncology Customer Base. On February 17, 2012, we acquired Core Oncology s prostate brachytherapy customer base. This transaction is expected to substantially increase our share of the iodine-125 segment of the prostate brachytherapy market. In addition to the customer base, we also acquired certain packaging technologies, equipment related to the packaging technologies, and certain existing component inventory. We did not acquire Core s facilities, manufacturing equipment or processes, or Core s employees. The total purchase price for the acquired assets is equal to one times the actual revenue generated from the acquired customers over the twelve-month period from September 2012 to August 2013, in excess of a $2.5 million Threshold Amount. We paid $3.8 million in cash as a prepayment of a portion of the earn-out at closing (and also incurred $300,000 of transaction costs) and will make six quarterly earn-out payments thereafter, beginning in June 2012 and ending in September 2013. Each quarterly earn-out payment is based upon that quarter s revenue from the acquired customers, reduced by a portion of the Threshold Amount and by a portion of the prepayment made at closing. The final earn-out payment is calculated as one times the revenue actually recognized from the acquired customer base over the twelve-month period from September 2012 to August 2013 in excess of the total Threshold Amount, reduced by the prepayment and the cumulative amount of all previous earn-out payments made. Based on our current estimates, we expect to make aggregate payments of $5.2 million over the next 18 months (through September 2013) for this earn-out based acquisition, representing a total purchase price of $9.3 million, including transaction costs. However, we estimate that the total purchase price may range from $7.5 million to $10.5 million.
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