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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Amsurg Corp. | NASDAQ:AMSG | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 67.75 | 67.95 | 68.25 | 0 | 01:00:00 |
Increases 2015 Financial Guidance
Announces Acquisition of Bay Area Anesthesia, LLC in Tampa
AmSurg Corp. (NASDAQ: AMSG) today announced financial results for the second quarter ended June 30, 2015. The Company’s results for the quarter included:
See page 6 for a reconciliation of all GAAP and non-GAAP financial results.
“AmSurg produced strong growth for the second quarter, which significantly exceeded our expectations,” said Christopher A. Holden, President and Chief Executive Officer of AmSurg. “Our performance was driven by successful execution of our organic growth and acquisition strategies in both our Ambulatory and Physicians Services businesses. The combination of AmSurg and Sheridan continues to be catalytic for both operating divisions.
“For the second quarter of 2015, Ambulatory Services produced same-center revenue growth of 5.1%, driven by improved reimbursement, case mix and increased volumes. Physician Services produced same-contract revenue growth of 14.3%. Volumes continued to strengthen over prior-year trends, contributing 3.8% to this revenue growth and led primarily by neonatology and radiology encounters. Revenue per encounter increased 10.5% for the quarter, reflecting the continued growth in Florida exchange revenues, increased acuity, annual increases in contracted rates and higher reimbursement trends at several prior-year platform acquisitions. Our organic growth drove improved margins for the quarter and supports the increase in our financial guidance for the full year.
“During the second quarter, we purchased two ambulatory surgery centers (ASCs) and an anesthesia practice. Subsequent to the quarter end, we acquired a multi-specialty ASC and the previously announced acquisition of Coastal Anesthesiology Consultants. In addition, we are pleased to announce the acquisition of Bay Area Anesthesia, LLC, which delivers both inpatient and outpatient anesthesia services at seven healthcare facilities in the Tampa market, including three locations affiliated with BayCare Health System and two ASCs that are owned jointly by AmSurg and BayCare Health System. With these transactions, we have exceeded our 2015 capital expenditure target of $200 million for acquisitions. We remain well positioned to act on additional acquisition opportunities across both operating divisions in 2015, and as indicated by our recent transactions, we have a robust pipeline of potential opportunities.”
Ambulatory Services
Net revenues for Ambulatory Services grew 12% to $311.0 million for the second quarter of 2015 from $278.2 million for the second quarter of 2014. Same-center revenue rose 5.1% for second quarter of 2015 compared with the second quarter of 2014, comprised of a 1.3% increase in procedures and a 3.8% increase in net revenue per procedure. Adjusted EBITDA was $60.3 million for the second quarter of 2015, a 17% increase from $51.6 million for the second quarter of 2014, while adjusted EBITDA margin increased 80 basis points to 19.4% from 18.6%.
Ambulatory Services acquired two ASCs during the second quarter and ended the quarter with 250 centers. Ambulatory Services had six centers under letter of intent at the end of the second quarter, one of which has already been acquired in the third quarter. There were also two centers under development at the end of the second quarter, one of which is expected to open in late 2015.
Physician Services
For the second quarter of 2015, net revenues for Physician Services were $331.0 million. Adjusted EBITDA was $67.7 million for the quarter, and adjusted EBITDA margin was 20.4%.
Comparable-quarter revenue growth for Physician Services was 24.3%, of which 10.9% was from same-contract revenues, 1.6% from net new contract revenues and 11.8% from acquisition revenues. Same-contract growth in net revenues totaled 14.3% for the second quarter of 2015, comprised of a 3.8% increase in patient encounters and a 10.5% increase in net revenue per patient encounter.
Physician Services completed the acquisition of one anesthesiology practice during the second quarter and has acquired two additional anesthesiology practices since the end of the quarter.
Liquidity
AmSurg had cash and cash equivalents of $126.3 million at the end of the second quarter and availability of $300 million under its revolving credit facility. Net cash flows from operations, less distributions to noncontrolling interests, were $98.7 million for the second quarter. The Company’s ratio of total debt at the end of the second quarter of 2015 to trailing 12 months EBITDA as calculated under the Company’s credit agreement was 4.7.
Guidance
AmSurg today has raised its financial and operating guidance for 2015 and established its financial guidance for the third quarter of the year. The Company’s guidance for adjusted net earnings per diluted share from continuing operations attributable to common shareholders (“Adjusted EPS”) excludes transaction and severance costs related to acquisitions, acquisition-related amortization expense, gains and losses on deconsolidations, share-based compensation expense and changes in contingent purchase price consideration. The Company’s guidance is as follows:
The information contained in the preceding paragraphs, including information regarding the Company’s financial results for future periods, is forward-looking information. Forward-looking information involves known and unknown risks and uncertainties as described below. There can be no assurance that AmSurg will attain the financial targets set forth in this press release. The Company’s actual results and performance could differ materially from those expressed or implied by the forward-looking information contained in this press release.
Non-GAAP adjusted earnings per share guidance for the second quarter and full year of 2015 exclude acquisition-related transaction costs, acquisition-related amortization expense, gains and losses on future deconsolidation transactions and share-based compensation expense, net of the tax impact thereon, the exact amount of which are not currently determinable but may be significant and may vary significantly from period to period (see page 6 for a reconciliation of all GAAP and non-GAAP financial results).
Conference Call
AmSurg Corp. will hold a conference call to discuss this release Tuesday, August 4, 2015, at 5:00 p.m. Eastern time. Investors will have the opportunity to listen to the conference call over the Internet by going to www.amsurg.com and clicking “Investors” at least 15 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available at these sites shortly after the call and continue for 30 days.
Safe Harbor
This press release contains forward-looking statements. These statements, which have been included in reliance on the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, involve risks and uncertainties. Investors are hereby cautioned that these statements may be affected by important factors, including, but not limited to, the following risks: we may face challenges managing our Physician Services Division as a new business and may not realize anticipated benefits; we may become subject to investigations by federal and state entities and unpredictable impacts of the Health Reform Law; we may not be able to successfully maintain effective internal controls over financial reporting; we may not be able to implement our business strategy, manage the growth in our business, and integrate acquired businesses; our substantial indebtedness and restrictions in our debt instruments could adversely affect our business or our ability to implement our growth strategy, or limit our ability to react to changes in the economy or our industry; we may not generate sufficient cash to service our indebtedness; regulatory changes may obligate us to buy out interests of physicians who are minority owners of our surgery centers; we may not be able to successfully maintain our information systems and processes, implement new systems and processes, and maintain the security of those systems and processes; we may be subject to litigation and investigations and liability claims for damages and other expenses not covered by insurance; we may be required to write-off a portion of our intangible assets; payments from third-party payors, including government healthcare programs, may decrease or not increase as our costs increase; there may be adverse developments affecting the medical practices of our physician partners; we may not be able to maintain favorable relations with our physician partners; we may not be able to grow our ambulatory services revenue by increasing procedure volume while maintaining operating margins and profitability at our existing surgery centers; we may not be able to compete for physician partners, managed care contracts, patients and strategic relationships; adverse weather and other factors beyond our control may affect our business; we may be adversely impacted by changes in patient volume and patient mix; several client relationships generate a significant portion of our physician services revenues; our physician services contracts may be cancelled or not renewed or we may not be able to enter into additional contracts under terms acceptable to us; reimbursement rates, revenue and profit margin under our fee-for-service physician services payor contracts may decrease; we may not be able to timely or accurately bill for services; we may not be able to enroll our physician services providers in the Medicare and Medicaid programs on a timely basis; our strategic partnerships with healthcare providers may not be successful; we may not be able to successfully recruit and retain physicians, nurses and other clinical providers; we may not be able to accurately assess the costs we will incur under new contracts; our margins may be negatively impacted by cross-selling to existing clients or selling bundled services to new clients; we may not be able to enforce non-compete agreements with our physicians and other clinical employees in some jurisdictions; there may be unfavorable changes in regulatory, economic and other conditions in the states where we operate; legislative or regulatory action may make our captive insurance company arrangement less feasible or otherwise reduce our profitability; our reserves with respect to our losses covered under our insurance programs may not be sufficient; and the other risk factors are described in AmSurg’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as updated by other filings with the Securities and Exchange Commission. Consequently, actual results, performance or developments may differ materially from the forward-looking statements included above. AmSurg disclaims any intent or obligation to update these forward-looking statements.
About AmSurg
AmSurg’s Ambulatory Services Division acquires, develops and operates ambulatory surgery centers in partnership with physicians throughout the U.S. AmSurg’s Physician Services Division, Sheridan, provides outsourced physician services in multiple specialties to hospitals, ASCs and other healthcare facilities throughout the U.S., primarily in the areas of anesthesiology, children’s services, emergency medicine and radiology. Through these businesses as of June 30, 2015, AmSurg owned and operated 250 ASCs in 34 states and provided physician services to more than 350 healthcare facilities in 27 states. AmSurg has partnerships with, or employs, over 5,000 physicians in 38 states and the District of Columbia.
AMSURG CORP.Unaudited Selected Consolidated Financial and Operating Data
(In thousands, except earnings per share)
Three Months EndedJune 30,
Six Months EndedJune 30,
Statement of Earnings Data:
2015 2014 2015 2014 Revenues $ 707,733 $ 278,227 $ 1,345,930 $ 537,788 Provision for uncollectibles (65,783 ) — (133,535 ) — Net revenue 641,950 278,227 1,212,395 537,788 Operating expenses: Salaries and benefits 320,396 84,053 622,575 166,202 Supply cost 45,790 40,873 88,374 78,678 Other operating expenses 105,002 55,812 195,572 109,981 Transaction costs 1,982 3,579 3,453 3,579 Depreciation and amortization 23,612 8,436 46,430 16,695 Total operating expenses 496,782 192,753 956,404 375,135 Gain (loss) on deconsolidation (3,035 ) 1,366 (3,258 ) 3,411 Equity in earnings of unconsolidated affiliates 3,989 539 6,640 1,303 Operating income 146,122 87,379 259,373 167,367 Interest expense, net 30,182 6,892 60,429 13,852 Earnings from continuing operations before income taxes 115,940 80,487 198,944 153,515 Income tax expense 25,193 12,798 39,442 25,780 Net earnings from continuing operations 90,747 67,689 159,502 127,735 Net earnings from discontinued operations — 483 — 551 Net earnings 90,747 68,172 159,502 128,286Less net earnings attributable to noncontrolling interests
57,072 49,211 104,789 92,130 Net earnings attributable to AmSurg Corp. shareholders 33,675 18,961 54,713 36,156 Preferred stock dividends (2,264 ) — (4,528 ) —Net earnings attributable to AmSurg Corp. common shareholders
$ 31,411 $ 18,961 $ 50,185 $ 36,156 Amounts attributable to AmSurg Corp. common shareholders: Earnings from continuing operations, net of income tax $ 31,411 $ 18,771 $ 50,185 $ 36,163 Earnings (loss) from discontinued operations, net of income tax — 190 — (7 ) Net earnings attributable to AmSurg Corp. common shareholders $ 31,411 $ 18,961 $ 50,185 $ 36,156
Basic earnings per share attributable to AmSurg Corp. common shareholders:
Net earnings from continuing operations $ 0.66 $ 0.59 $ 1.05 $ 1.14 Net earnings from discontinued operations — 0.01 — — Net earnings $ 0.66 $ 0.60 $ 1.05 $ 1.14
Diluted earnings per share attributable to AmSurg Corp. common shareholders:
Net earnings from continuing operations $ 0.65 $ 0.58 $ 1.05 $ 1.12 Net earnings from discontinued operations — 0.01 — — Net earnings $ 0.65 $ 0.59 $ 1.05 $ 1.12 Weighted average number of shares and share equivalents outstanding: Basic 47,678 31,825 47,625 31,770 Diluted 48,099 32,233 48,002 32,177
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data, continued
(In thousands, except earnings per share)
Three Months EndedJune 30,
Six Months EndedJune 30,
2015 2014 2015 2014 Reconciliation of net earnings to Adjusted net earnings (1): Net earnings attributable to AmSurg Corp. shareholders $ 33,675 $ 18,961 $ 54,713 $ 36,156 (Earnings) loss from discontinued operations — (312 ) — 16 Amortization of purchased intangibles 12,490 — 24,912 — Share-based compensation 3,883 2,506 7,592 4,964 Net change in fair value of contingent consideration 6,410 — 6,410 — (Gain) loss on deconsolidation 3,035 (1,366 ) 3,258 (3,411 ) Transaction costs 1,982 3,579 3,453 3,579 Total pre-tax adjustments 27,800 4,407 45,625 5,148 Tax effect 11,593 1,769 18,723 1,394 Total adjustments, net 16,207 2,638 26,902 3,754 Adjusted net earnings $ 49,882 $ 21,599 $ 81,615 $ 39,910 Basic shares outstanding 47,678 31,825 47,625 31,770 Effect of dilutive securities, options and non-vested shares 3,550 408 3,518 407 Diluted shares outstanding, if converted 51,228 32,233 51,143 32,177 Adjusted earnings per share $ 0.97 $ 0.67 $ 1.60 $ 1.24 Reconciliation of net earnings to Adjusted EBITDA (2): Net earnings attributable to AmSurg Corp. shareholders $ 33,675 $ 18,961 $ 54,713 $ 36,156 (Earnings) loss from discontinued operations — (190 ) — 7 Interest expense, net 30,182 6,892 60,429 13,852 Income tax expense 25,193 12,798 39,442 25,780 Depreciation and amortization 23,612 8,436 46,430 16,695 EBITDA 112,662 46,897 201,014 92,490 Adjustments: Net change in fair value of contingent consideration 6,410 — 6,410 — Share-based compensation 3,883 2,506 7,592 4,964 Transaction costs 1,982 3,579 3,453 3,579 (Gain) loss on deconsolidation 3,035 (1,366 ) 3,258 (3,411 ) Total adjustments 15,310 4,719 20,713 5,132 Adjusted EBITDA $ 127,972 $ 51,616 $ 221,727 $ 97,622 Segment Information: Ambulatory Services Adjusted EBITDA $ 60,304 $ 51,616 $ 107,612 $ 97,622 Physician Services Adjusted EBITDA 67,668 — 114,115 — Adjusted EBITDA $ 127,972 $ 51,616 $ 221,727 $ 97,622 Net Revenue by Segment: Ambulatory Services $ 310,991 $ 278,227 $ 594,901 $ 537,788 Physician Services 330,959 — 617,494 — Total net revenue $ 641,950 $ 278,227 $ 1,212,395 $ 537,788See footnotes on page 10
AMSURG CORP.Unaudited Selected Consolidated Financial and Operating Data, continued
(Dollars in thousands)
Operating Data- Ambulatory Services:
Three Months Ended
June 30,
Six Months EndedJune 30,
20152014
2015
2014 Procedures performed during the period at consolidated centers 441,302 416,320 845,821 801,017 Centers in operation at end of period (consolidated) 239 231 239 231 Centers in operation at end of period (unconsolidated) 11 7 11 7 Average number of continuing centers in operation (consolidated) 238 233 237 233 New centers added during the period 2 1 4 2 Centers discontinued during the period — — — 1 Centers under development at end of period 2 1 2 1 Centers under letter of intent at end of period 6 6 6 6 Average revenue per consolidated center $ 1,308 $ 1,199 $ 2,515$ 2,309
Same center revenues increase (decrease) 5.1 %0.9
%
4.4
%
(0.7 )%Operating Data- Physician Services:
Three MonthsEndedJune 30, 2015
Six MonthsEndedJune 30, 2015
Contribution to Net Revenue Growth: Same contract 10.9 % 8.1 % New contract 1.6 2.0 Acquired contract and other 11.8 9.3 Total net revenue growth 24.3 % 19.4 % Same contract revenue growth 14.3 % 10.5 %AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data, continued
(In thousands)
June 30,2015
December 31,2014
Balance Sheet Data:
Assets Current assets: Cash and cash equivalents $ 126,289 $ 208,079 Restricted cash and marketable securities 11,581 10,219 Accounts receivable, net of allowance of $125,123 and $113,357, respectively 259,872 233,053 Supplies inventory 20,985 19,974 Prepaid and other current assets 83,857 115,362 Total current assets 502,584 586,687 Property and equipment, net 188,755 180,448 Investments in unconsolidated affiliates 83,679 75,475 Goodwill 3,586,021 3,381,149 Intangible assets, net 1,282,377 1,273,879 Other assets 24,616 25,886 Total assets $ 5,668,032 $ 5,523,524 Liabilities and Equity Current liabilities: Current portion of long-term debt $ 19,778 $ 18,826 Accounts payable 28,514 29,585 Accrued salaries and benefits 141,719 140,044 Accrued interest 29,804 29,644 Other accrued liabilities 97,149 67,986 Total current liabilities 316,964 286,085 Long-term debt 2,229,683 2,232,186 Deferred income taxes 623,667 633,480 Other long-term liabilities 91,954 89,443 Commitments and contingencies Noncontrolling interests – redeemable 185,177 184,099 Equity:Preferred stock, no par value, 5,000 shares authorized, 1,725 shares issued and outstanding
166,632 166,632 Common stock, no par value, 120,000 shares authorized, 48,443 and 48,113 shares issued and outstanding, respectively 893,319 885,393 Retained earnings 677,707 627,522 Total AmSurg Corp. equity 1,737,658 1,679,547 Noncontrolling interests – non-redeemable 482,929 418,684 Total equity 2,220,587 2,098,231 Total liabilities and equity $ 5,668,032 $ 5,523,524 AMSURG CORP.Unaudited Selected Consolidated Financial and Operating Data, continued
(In thousands)
Three Months EndedJune 30,
Six Months EndedJune 30,
Statement of Cash Flow Data:
2015 2014 2015 2014 Cash flows from operating activities: Net earnings $ 90,747 $ 68,172 $ 159,502 $ 128,286Adjustments to reconcile net earnings to net cash flows provided by operating activities:
Depreciation and amortization 23,612 8,436 46,430 16,695 Amortization of deferred loan costs 2,081 498 4,155 996 Provision for uncollectibles 70,515 5,542 144,514 10,736 Net loss on sale of long-lived assets — 7 — 611 Loss (gain) on deconsolidation 3,035 (1,366 ) 3,258 (3,411 ) Share-based compensation 3,883 2,506 7,592 4,964 Excess tax benefit from share-based compensation (216 ) (363 ) (3,533 ) (2,090 ) Deferred income taxes (635 ) 5,939 2,699 17,872 Equity in earnings of unconsolidated affiliates (3,989 ) (539 ) (6,640 ) (1,303 ) Net change in fair value of contingent consideration 6,410 — 6,410 — Increases (decreases) in cash and cash equivalents, net of acquisitions and dispositions: Accounts receivable (82,842 ) (9,870 ) (157,056 ) (16,715 ) Supplies inventory (80 ) 238 (110 ) (7 ) Prepaid and other current assets 16,485 1,328 30,327 (2,310 ) Accounts payable 1,830 1,181 (696 ) (2,397 ) Accrued expenses and other liabilities 20,534 1,375 12,648 769 Other, net 1,198 678 1,895 885 Net cash flows provided by operating activities 152,568 83,762 251,395 153,581 Cash flows from investing activities: Acquisitions and related expenses (69,454 ) (19,399 ) (196,032 ) (24,437 ) Acquisition of property and equipment (17,882 ) (9,037 ) (32,665 ) (16,075 ) Proceeds from sale of interests in surgery centers — 981 — 2,092 Purchases of marketable securities (1,245 ) — (1,245 ) — Maturities of marketable securities 2,988 — 2,988 — Other (1,767 ) (963 ) (1,987 ) (1,381 ) Net cash flows used in investing activities (87,360 ) (28,418 ) (228,941 ) (39,801 ) Cash flows from financing activities: Proceeds from long-term borrowings 5,568 42,301 7,795 74,246 Repayment on long-term borrowings (5,075 ) (51,473 ) (10,288 ) (102,326 ) Distributions to noncontrolling interests (53,831 ) (48,816 ) (101,033 ) (92,010 ) Cash dividends for preferred shares (2,264 ) — (4,528 ) — Proceeds from issuance of common stock upon exercise of stock options 334 1,158 2,080 1,646 Repurchase of common stock — — (3,684 ) (2,857 ) Excess tax benefit from share-based compensation 216 363 3,533 2,090 Other (23 ) (1,082 ) 1,881 (498 ) Net cash flows used in financing activities (55,075 ) (57,549 ) (104,244 ) (119,709 ) Net increase (decrease) in cash and cash equivalents 10,133 (2,205 ) (81,790 ) (5,929 ) Cash and cash equivalents, beginning of period 116,156 47,116 208,079 50,840 Cash and cash equivalents, end of period $ 126,289 $ 44,911 $ 126,289 $ 44,911AMSURG CORP.
Footnotes to Reconciliations of Non-GAAP Measures to GAAP Measures
(1) We believe the calculation of adjusted net earnings per diluted share attributable to AmSurg Corp. common shareholders provides a better measure of our ongoing performance and provides better comparability to prior periods because it excludes the gains or loss from deconsolidations, which are non-cash in nature, transaction costs, including associated debt extinguishment costs and deferred financing write-off, and acquisition-related amortization expense (the majority of which relate to the Sheridan Transaction and which are of a nature and significance not generally associated with our historical individual center acquisition activity), changes in contingent purchase price consideration and share-based compensation expense. Adjusted net earnings from continuing operations per diluted share attributable to AmSurg Corp. common shareholders should not be considered as a measure of financial performance under accounting principles generally accepted in the United States, and the items excluded from it is a significant component in understanding and assessing financial performance. Because adjusted net earnings from continuing operations per diluted share attributable to AmSurg Corp. common shareholders is not a measurement determined in accordance with accounting principles generally accepted in the United States and is thus susceptible to varying calculations, it may not be comparable as presented to other similarly titled measures of other companies. For purposes of calculating adjusted earnings per share, we utilize the if-converted method to determine the number of diluted shares outstanding. In periods where utilizing the if-converted method is anti-dilutive, the mandatory convertible preferred stock will not be included in the calculation of diluted shares outstanding. (2) We define Adjusted EBITDA of AmSurg as earnings before interest expense, net, income taxes, depreciation, amortization, share-based compensation, transaction costs, changes in contingent purchase price consideration, gain or loss on deconsolidations and discontinued operations. Adjusted EBITDA should not be considered a measure of financial performance under generally accepted accounting principles. Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA is an analytical indicator used by management and the health care industry to evaluate company performance, allocate resources and measure leverage and debt service capacity. Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows from operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA is not a measurement determined in accordance with generally accepted accounting principles and is thus susceptible to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies. Net earnings from continuing operations attributable to AmSurg Corp. common shareholders is the financial measure calculated and presented in accordance with generally accepted accounting principles that is most comparable to Adjusted EBITDA as defined.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150804006790/en/
AmSurg Corp.Claire M. Gulmi, 615-665-1283Executive Vice President andChief Financial Officer
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