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Transcend Reports 18% Revenue Growth, 28% Increase in Pre-Tax Income and Earnings Per Share of $.17
ATLANTA--(BUSINESS WIRE)--January 29, 2009--TRANSCEND SERVICES, INC. (NASDAQ: TRCR), the third largest provider of medical transcription services to the U.S. healthcare market, today announced its unaudited results for the quarter and year ended December 31, 2008.
Three Months Ended December 31, 2008
Revenue for the fourth quarter of 2008 was $12,833,000, an increase of $1,949,000, or 18%, over fourth quarter 2007 revenue of $10,884,000. Pre-tax income (income before income taxes) was $2,283,000, an increase of $499,000, or 28%, over fourth quarter 2007 pre-tax income of $1,784,000.
Diluted earnings per share was $.17 in the fourth quarter of 2008 at an effective income tax rate of 35% compared to $.60 in the fourth quarter of 2007. The results for the fourth quarter of 2007 included an unusual income tax benefit of $3,550,000 related primarily to the reversal of a deferred tax valuation allowance against net operating loss carryforwards. For comparative purposes, if fourth quarter 2007 pre-tax results had been taxed at the same effective rate as that used in the fourth quarter of 2008, earnings per share for the fourth quarter of 2007 would have been $.13. In 2009, the effective tax rate is expected to be easier to compare to prior year results.
“2008 was a fantastic year for our company,” stated Larry Gerdes, President and Chief Executive Officer. “The highlight of the year for us was the announcement that Transcend was ranked the #1 transcription company in the 2008 Best in KLAS report. This report, which is based on customer surveys, validated all of our hard work and is a real testament to our employees. As a leader in a growing, fragmented, recession-resistant industry, we believe we are poised for success in 2009 and beyond.”
“We were very pleased to see our revenue grow 18% over the fourth quarter of 2007,” stated Leo Cooper, Executive Vice President of Sales and Marketing. “We are getting closer to achieving our goal of 20% organic growth. Including our recent acquisition of DeVenture Health Partners, 2009 revenue growth should exceed 25% if customer retention remains high. The sales team closed seven contracts in the fourth quarter, which we estimate will generate between $2.4 and $3.1 million of annual revenue once fully implemented. The current estimated annual value of our 2008 sales is between $10 and $11 million. About $3.5 to $4.1 million of annual revenue was in our implementation backlog as of December 31, 2008. We expect this business to be implemented over the first two quarters of 2009.”
Gross profit increased $1,086,000, or 29%, to $4,769,000 in the fourth quarter of 2008 from $3,683,000 in the fourth quarter of 2007. As a percentage of revenue, gross profit increased to 37% in the fourth quarter of 2008 from 34% in the fourth quarter of 2007.
“We finished 2008 with a 98% customer retention rate, and our commitment to excellent customer service will always be our top priority,” stated Sue McGrogan, Chief Operating Officer. “Our ability to maintain high customer satisfaction rates while also improving our gross profit margins speaks to our commitments to cost-effectiveness and productivity without sacrificing quality. About 19% of our work was performed offshore in the fourth quarter, compared to 15% in the fourth quarter of 2007. Our offshore partners help us staff our night shift and weekends and are an important supplement to our domestic workforce, but we don’t expect them to displace any of our domestic transcriptionists. We continue to be successful in deploying speech recognition technology. 35% of our total fourth quarter volume was edited using speech recognition technology on our BeyondTXT platform, compared to 24% in the same quarter of last year.”
The following information was filed by Transcend Services Inc (TRCR) on Friday, January 30, 2009 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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