Radiation Therapy Svcs (RTSX)

Radiation Therapy Services, Inc (RTSX), based in Fort Myers, Florida, provides radiation therapy services to cancer patients in 27 local markets across 16 states. Founded in 1983 and floated in 2004, the company currently operates 83 treatment centers, both freestanding and hospital-based, and offers a range of radiation therapy services through its wholly owned subsidiary, 21st Century Oncology, Inc. The company's current suite of treatments include: conventional external beam radiation therapy, intensity modulated radiation therapy, respiratory gating, 3-D conformal treatment planning, stereotactic radiosurgery, and high/low dose rate brachytherapy.

The company receives payments for services rendered to patients from Medicare and Medicaid programs, commercial insurers, managed care organizations and patients directly. The reimbursement for radiation therapy services includes a professional component for the physician's service and a technical component to cover the costs of the machine, facility and services provided by the technical staff. In the freestanding centers the company provides both services while in a hospital-based center the hospital, rather than RTSX, provides the technical services. Generally, revenue is determined by a number of factors, including the payor mix, the number and nature of procedures performed and the rate of payment for the procedures. The average revenue per treatment is sensitive to the mix of services used in treating a patient's tumor and typically higher for the more advanced treatment technologies.

In FY06, RTSX reported total revenue of $294M, up 29% y/y, consisting of revenue generated from services billed to patients directly, principally at freestanding treatment centers, of $284.1M, and revenue generated principally from services billed to hospitals for services provided, of $9.9M. The company has grown primarily by acquisition, strategic alliances and joint ventures. In 2006 RTSX entered 2 new local markets and acquired 11 treatment centers. To date RTSX has entered 12 local markets through acquisitions and acquired 44 treatment centers.

On October 19, 2007, RTSX entered into an agreement to be purchased by Vestar Capital for $32.50 per share plus assumed debt, for a deal valued at $1.1B. The Board of Directors of Radiation Therapy Services has approved the merger agreement on the unanimous recommendation of a Special Committee of independent directors and recommends that Radiation Therapy Services' shareholders adopt the agreement. The transaction is expected to close in 1Q08.

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