Symbion, Inc. Announces First Quarter 2007 Results

  
    
  
  
    
      Symbion, Inc. (NASDAQ:SMBI), an owner and operator of short stay 
      surgical facilities, announced today results for the first quarter ended 
      March 31, 2007.
    
    
      For the first quarter ended March 31, 2007, revenues increased 14% to 
      $77.2 million compared with $67.5 million for the first quarter ended 
      March 31, 2006. Net income for the first quarter of 2007 decreased to 
      $4.0 million compared with $4.6 million for the first quarter of 2006. 
      During 2006, two facilities were reclassified as discontinued operations 
      and during the first quarter of 2007, four additional facilities were 
      reclassified. Previously issued results have been reclassified to 
      present the six facilities as discontinued operations. The effective tax 
      rate for the first quarter of 2007 was 39% compared with 38.5% for the 
      first quarter of 2006. Income per diluted share from continuing 
      operations for the first quarter of 2007 and 2006 was $0.20. Earnings 
      per diluted share for the first quarter of 2006 reflects a gain of $0.01 
      per diluted share related to a litigation settlement and insurance 
      proceeds related to the hurricanes that affected the Company during the 
      third quarter of 2005. EBITDA increased 3% to $12.3 million for the 
      first quarter of 2007 compared with $12.0 million for the first quarter 
      of 2006. Same store net patient service revenues for the first quarter 
      of 2007 increased 3% compared with the same period in 2006. At March 31, 
      2007, the Company’s outstanding indebtedness 
      was $133.3 million with a ratio of debt to total capitalization of 31%.
    
    
      The Company announced on April 24, 2007, that it had entered into a 
      merger agreement (the “Merger Agreement”) 
      with a newly formed subsidiary of Crestview Partners, L.P., a New 
      York-based private equity firm. Under the terms of the Merger Agreement, 
      holders of Symbion common stock will receive $22.35 per share in cash 
      for their shares. The transaction is valued at approximately $637 
      million, including the assumption of debt obligations of approximately 
      $140 million. The transaction is expected to close in the third quarter 
      of 2007, subject to satisfaction of the closing conditions set forth in 
      the Merger Agreement.
    
    
      The Company also announced that, given the pending transaction, it would 
      not be hosting a conference call for its first quarter earnings release 
      on Thursday, April 26, 2007, as had been previously announced. The 
      Company is also withdrawing its previously issued guidance for 2007 due 
      to the pending transaction.
    
    
      Additional Information and Where to Find It
    
    
      In connection with the proposed merger, Symbion will prepare a proxy 
      statement for the stockholders of the Company to be filed with the SEC. 
      Before making any voting decision, the Company’s 
      stockholders are urged to read the proxy statement regarding the merger 
      carefully in its entirety when it becomes available because it will 
      contain important information about the proposed transaction. The Company’s 
      stockholders and other interested parties will be able to obtain, 
      without charge, a copy of the proxy statement (when available) and other 
      relevant documents filed with the SEC from the SEC’s 
      website at http://www.sec.gov. The 
      Company’s stockholders and other interested 
      parties will also be able to obtain, without charge, a copy of the proxy 
      statement and other relevant documents (when available) by directing a 
      request by mail or telephone to Symbion, Inc., 40 Burton Hills 
      Boulevard, Suite 500, Nashville, Tennessee 37215, Attention: R. Dale 
      Kennedy, telephone: [phone], or from the Company’s 
      website, www.symbion.com.
    
    
      Participants in the Solicitation
    
    
      Symbion and its directors and executive officers may be deemed to be 
      participants in the solicitation of proxies from its stockholders in 
      connection with the merger. A description of the interests of Symbion’s 
      directors and executive officers in Symbion is set forth in the proxy 
      statement for Symbion’s 2007 annual meeting 
      of stockholders, which was filed with the SEC on April 3, 2007. Any 
      benefits to be received by Symbion’s 
      directors and executive officers in connection with the merger will be 
      described in the definitive proxy statement. Investors and stockholders 
      can obtain additional information regarding the direct and indirect 
      interests of Symbion directors and executive officers in the merger by 
      reading the definitive proxy statement when it becomes available.
    
    
      About Symbion, Inc.
    
    
      Symbion, Inc., headquartered in Nashville, Tennessee, owns and operates 
      a network of 59 short stay surgical facilities in 23 states. The Company’s 
      facilities provide non-emergency surgical procedures across many 
      specialties.
    
    
      This press release contains forward-looking statements based on 
      management’s current expectations and 
      projections about future events and trends that management believes may 
      affect the Company’s financial condition, 
      results of operations, business strategy and financial needs. The 
      words “anticipate,” 
      “believe,” “continue,” 
      “estimate,” “expect,” 
      “intend,” “may,” 
      “plan,” “will” 
      and similar expressions are generally intended to identify 
      forward-looking statements. These statements, including those 
      regarding the Company’s growth and continued 
      success, have been included in reliance on the “safe 
      harbor” provisions of the Private Securities 
      Litigation Reform Act of 1995. These statements involve risks, 
      uncertainties and other factors that may cause actual results to differ 
      from the expectations expressed in the statements. Many of these 
      factors are beyond the ability of the Company to control or predict. These 
      factors include, without limitation: (i) the occurrence of any event, 
      change or other circumstances that could give rise to the termination of 
      the Merger Agreement; (ii) the outcome of any legal proceedings that may 
      be instituted against Symbion and others following announcement of the 
      Merger Agreement; (iii) the inability to complete the merger due to the 
      failure to obtain stockholder approval or the failure to satisfy other 
      conditions to completion of the merger, including the receipt of 
      stockholder approval and expiration of the waiting period under the 
      Hart-Scott-Rodino Antitrust Improvements Act of 1976; (iv) the failure 
      to obtain the necessary debt financing arrangements set forth in 
      commitment letters received in connection with the merger; (v) risks 
      that the proposed transaction disrupts current plans and operations and 
      the potential difficulties in employee retention as a result of the 
      merger; (vi) the ability to recognize the benefits of the merger; (vii) 
      the amount of the costs, fees, expenses and charges related to the 
      merger and the actual terms of certain financings that will be obtained 
      for the merger; (viii) the Company’s 
      dependence on payments from third-party payors, including government 
      health care programs and managed care organizations; (ix) the Company’s 
      ability to acquire and develop additional surgery centers on favorable 
      terms; (x) numerous business risks in acquiring and developing 
      additional surgery centers, including potential difficulties in 
      operating and integrating such surgery centers; (xi) efforts to regulate 
      the construction, acquisition or expansion of health care facilities; 
      (xii) the risk that the Company’s revenues 
      and profitability could be adversely affected if it fails to attract and 
      maintain good relationships with the physicians who use its facilities; 
      (xiii) the Company’s ability to comply with 
      applicable laws and regulations, including health care regulations, 
      corporate governance laws and financial reporting standards; (xiv) risks 
      related to pending or future heightened regulation of specialty 
      hospitals which could restrict the Company’s 
      ability to operate its facilities licensed as hospitals and could 
      adversely impact its reimbursement revenues; (xv) the risk of changes to 
      physician self-referral laws that may require the Company to restructure 
      some of its relationships, which could result in a significant loss of 
      revenues and divert other resources; (xvi) the Company’s 
      significant indebtedness; (xvii) the intense competition for physicians, 
      strategic relationships, acquisitions and managed care contracts, which 
      may result in a decline in the Company’s 
      revenues, profitability and market share; (xviii) the geographic 
      concentration of the Company’s operations, 
      which makes the Company particularly sensitive to regulatory, economic 
      and other conditions in certain states; (xix) the Company’s 
      dependence on its senior management; (xx) the Company’s 
      ability to enhance operating efficiencies at its surgery centers and to 
      control costs as the volume of cases performed at the Company’s 
      facilities changes; (xxi) efforts by certain states to reduce payments 
      from workers’ compensation payors for 
      services provided to injured workers; (xxii) risks associated with the 
      practice of some of the Company’s centers in 
      billing for services “out-of-network,” 
      including the risk that out-of-network payments by some third-party 
      payors may be reduced or eliminated; and (xxiii) other risks and 
      uncertainties detailed from time to time in the Company’s 
      filings with the Securities and Exchange Commission. In light of 
      the significant uncertainties inherent in the forward-looking statements 
      contained in this press release, you should not place undue reliance on 
      them. The Company undertakes no obligation to update any 
      forward-looking statements or to make any other forward-looking 
      statements, whether as a result of new information, future events or 
      otherwise.
    
    
      
        
          SYMBION, INC.
        
      
      
        
          Unaudited Condensed Consolidated Statement of Operations
        
      
      
        
          (in thousands, except per share amounts)
        
      
      
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Three Months Ended
        
      
      
        
        
        
        
        
          March 31,
        
      
      
        
        
        
        
        
          2007 
        
        
        
        
          2006 
        
      
      
        
          Revenues
        
        
        
        
          $77,220 
        
        
        
        
          $67,496 
        
      
      
        
          Operating expenses:
        
        
        
        
        
        
        
        
        
      
      
        
          Salaries and benefits
        
        
        
        
          20,838 
        
        
        
        
          17,854 
        
      
      
        
          Supplies
        
        
        
        
          14,946 
        
        
        
        
          12,748 
        
      
      
        
          Professional and medical fees
        
        
        
        
          4,699 
        
        
        
        
          2,808 
        
      
      
        
          Rent and lease expense
        
        
        
        
          4,690 
        
        
        
        
          4,252 
        
      
      
        
          Other operating expenses
        
        
        
        
          5,779 
        
        
        
        
          4,280 
        
      
      
        
          Cost of revenues
        
        
        
        
          50,952 
        
        
        
        
          41,942 
        
      
      
        
          General and administrative expense
        
        
        
        
          6,453 
        
        
        
        
          6,538 
        
      
      
        
          Depreciation and amortization
        
        
        
        
          3,098 
        
        
        
        
          3,225 
        
      
      
        
          Provision for doubtful accounts
        
        
        
        
          894 
        
        
        
        
          607 
        
      
      
        
          Income (loss) on equity investments
        
        
        
        
          36 
        
        
        
        
          (245)
        
      
      
        
          Impairment and loss on disposal of long-lived assets
        
        
        
        
          16 
        
        
        
        
          39 
        
      
      
        
          Gain on sale of long-lived assets
        
        
        
        
          (28)
        
        
        
        
          - 
        
      
      
        
          Proceeds from insurance settlement
        
        
        
        
          (161)
        
        
        
        
          (410)
        
      
      
        
          Proceeds from litigation settlement
        
        
        
        
          - 
        
        
        
        
          (588)
        
      
      
        
          Total operating expenses
        
        
        
        
          61,260 
        
        
        
        
          51,108 
        
      
      
        
          Operating income
        
        
        
        
          15,960 
        
        
        
        
          16,388 
        
      
      
        
          Minority interests in income of consolidated subsidiaries
        
        
        
        
          (6,733)
        
        
        
        
          (7,568)
        
      
      
        
          Interest expense, net
        
        
        
        
          (1,967)
        
        
        
        
          (1,501)
        
      
      
        
          Income from continuing operations before income taxes
        
        
        
        
          7,260 
        
        
        
        
          7,319 
        
      
      
        
          Provision for income taxes
        
        
        
        
          2,831 
        
        
        
        
          2,818 
        
      
      
        
          Income from continuing operations
        
        
        
        
          4,429 
        
        
        
        
          4,501 
        
      
      
        
          Gain/(loss) from discontinued operations, net of tax
        
        
        
        
          (399)
        
        
        
        
          76 
        
      
      
        
          Net income
        
        
        
        
          $4,030 
        
        
        
        
          $4,577 
        
      
      
        
        
        
        
        
           
        
      
      
        
          Net income per share - continuing operations:
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
          $0.20 
        
        
        
        
          $0.21 
        
      
      
        
          Diluted
        
        
        
        
          $0.20 
        
        
        
        
          $0.20 
        
      
      
        
        
        
        
        
           
        
      
      
        
          Net income per share:
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
          $0.19 
        
        
        
        
          $0.21 
        
      
      
        
          Diluted
        
        
        
        
          $0.18 
        
        
        
        
          $0.21 
        
      
      
        
        
        
        
        
           
        
      
      
        
          Weighted average number of common shares
        
        
        
        
        
        
        
        
        
      
      
        
          outstanding and common equivalent shares:
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
          21,668 
        
        
        
        
          21,461 
        
      
      
        
          Diluted
        
        
        
        
          22,163 
        
        
        
        
          22,135 
        
      
    
    
      
        
          SYMBION, INC.
        
      
      
        
          Condensed Consolidated Balance Sheets
        
      
      
        
          (dollars in thousands)
        
      
      
        
          (unaudited)
        
      
      
        
        
        
        
        
          March 31,
        
        
        
        
          Dec. 31,
        
      
      
        
        
        
        
        
          2007 
        
        
        
        
          2006 
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Current assets:
        
        
        
        
        
        
        
        
        
      
      
        
          Cash and cash equivalents
        
        
        
        
          $26,593 
        
        
        
        
          $26,909 
        
      
      
        
          Accounts receivable, less allowance for doubtful accounts
        
        
        
        
          34,819 
        
        
        
        
          34,700 
        
      
      
        
          Inventories
        
        
        
        
          8,130 
        
        
        
        
          8,070 
        
      
      
        
          Prepaid expenses and other current assets
        
        
        
        
          12,058 
        
        
        
        
          13,927 
        
      
      
        
          Current assets of discontinued operations
        
        
        
        
          2,594 
        
        
        
        
          3,299 
        
      
      
        
          Total current assets
        
        
        
        
          84,194 
        
        
        
        
          86,905 
        
      
      
        
          Property and equipment, net of accumulated depreciation
        
        
        
        
          74,469 
        
        
        
        
          76,277 
        
      
      
        
          Goodwill
        
        
        
        
          315,462 
        
        
        
        
          314,980 
        
      
      
        
          Investments in and advances to affiliates
        
        
        
        
          16,189 
        
        
        
        
          16,463 
        
      
      
        
          Other assets
        
        
        
        
          2,627 
        
        
        
        
          3,079 
        
      
      
        
          Long-term assets of discontinued operations
        
        
        
        
          5,720 
        
        
        
        
          6,102 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total assets
        
        
        
        
          $498,661 
        
        
        
        
          $503,806 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES AND STOCKHOLDERS' EQUITY
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Current liabilities:
        
        
        
        
        
        
        
        
        
      
      
        
          Accounts payable
        
        
        
        
          $5,253 
        
        
        
        
          $5,145 
        
      
      
        
          Accrued payroll and benefits
        
        
        
        
          5,800 
        
        
        
        
          7,950 
        
      
      
        
          Other accrued expenses
        
        
        
        
          9,816 
        
        
        
        
          13,413 
        
      
      
        
          Current maturities of long-term debt
        
        
        
        
          3,581 
        
        
        
        
          2,108 
        
      
      
        
          Current liabilities of discontinued operations
        
        
        
        
          1,486 
        
        
        
        
          1,646 
        
      
      
        
          Total current liabilities
        
        
        
        
          25,936 
        
        
        
        
          30,262 
        
      
      
        
          Long-term debt, less current maturities
        
        
        
        
          129,695 
        
        
        
        
          136,533 
        
      
      
        
          Other liabilities
        
        
        
        
          19,757 
        
        
        
        
          18,734 
        
      
      
        
          Long-term liabilities of discontinued operations
        
        
        
        
          265 
        
        
        
        
          404 
        
      
      
        
          Minority interests
        
        
        
        
          32,681 
        
        
        
        
          32,594 
        
      
      
        
          Total stockholders' equity
        
        
        
        
          290,327 
        
        
        
        
          285,279 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total liabilities and stockholders' equity
        
        
        
        
          $498,661 
        
        
        
        
          $503,806 
        
      
    
    
      
        
          SYMBION, INC.
        
      
      
        
          
            Supplemental Operating Data
          
        
      
      
        
          (dollars in thousands, except per case and per share data)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Three Months Ended
        
        
        
      
      
        
        
        
        
        
          March 31,
        
        
        
      
      
        
        
        
        
        
          2007 
        
        
        
        
          2006 
        
        
        
      
      
        
          Same store statistics (1):
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Cases
        
        
        
        
          58,869 
        
        
        
        
          55,020 
        
        
        
      
      
        
          Cases percentage growth
        
        
        
        
          7.0%
        
        
        
        
          N/A 
        
        
        
      
      
        
          Net patient service revenue per case
        
        
        
        
          $1,281 
        
        
        
        
          $1,328 
        
        
        
      
      
        
          Net patient service revenue per case percentage growth
        
        
        
        
          (3.5)%
        
        
        
        
          N/A 
        
        
        
      
      
        
          Number of same store surgery centers
        
        
        
        
          45 
        
        
        
        
          N/A 
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Consolidated statistics - continuing operations:
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Cases
        
        
        
        
          54,672 
        
        
        
        
          50,191 
        
        
        
      
      
        
          Cases percentage growth
        
        
        
        
          8.9%
        
        
        
        
          N/A 
        
        
        
      
      
        
          Net patient service revenue per case
        
        
        
        
          $1,343 
        
        
        
        
          $1,266 
        
        
        
      
      
        
          Net patient service revenue per case percentage growth
        
        
        
        
          6.1%
        
        
        
        
          N/A 
        
        
        
      
      
        
          Number of surgery centers operated as of end of period (2)
        
        
        
        
          56 
        
        
        
        
          56 
        
        
        
      
      
        
          Number of states in which the Company operates surgery centers
        
        
        
        
          23 
        
        
        
        
          22 
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Revenues - continuing operations:
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Net patient service revenues
        
        
        
        
          $73,425 
        
        
        
        
          $63,552 
        
        
        
      
      
        
          Physician service revenues
        
        
        
        
          1,330 
        
        
        
        
          1,140 
        
        
        
      
      
        
          Other service revenues
        
        
        
        
          2,465 
        
        
        
        
          2,804 
        
        
        
      
      
        
          Total revenues
        
        
        
        
          $77,220 
        
        
        
        
          $67,496 
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cash flow information - continuing operations:
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Net cash provided by operating activities
        
        
        
        
          $6,350 
        
        
        
        
          $6,836 
        
        
        
      
      
        
          Net cash used in investing activities
        
        
        
        
          (1,528)
        
        
        
        
          (14,574)
        
        
        
      
      
        
          Net cash provided by (used in) financing activities
        
        
        
        
          (5,138)
        
        
        
        
          6,875 
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Other information:
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          EBITDA (3)
        
        
        
        
          $12,325 
        
        
        
        
          $12,045 
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            (1) For purposes of this release, the Company defines same store 
            facilities as those facilities that the Company owned an interest 
            in and managed throughout each of the respective periods shown. 
            The Company has not included the facilities that are reported as 
            discontinued operations. The definition of same store facilities 
            includes non-consolidated facilities and allows for comparability 
            to other companies in the industry.
          
        
      
      
        
           
        
      
      
        
          
            (2) This data includes nine facilities that the Company managed 
            but in which it did not have an ownership interest.
          
        
      
    
    
      
        
          SYMBION, INC.
        
      
      
        
          Supplemental Operating Data (Continued)
        
      
      
        
           
        
      
      
        
          (3) The following table reconciles EBITDA to net cash provided by 
          operating activities - continuing operations:
        
      
      
        
           
        
      
      
        
        
        
        
        
          Three Months Ended
        
      
      
        
          (in thousands)
        
        
        
        
          March 31,
        
      
      
        
        
        
        
        
          2007 
        
        
        
        
          2006 
        
      
      
        
          EBITDA
        
        
        
        
          $12,325 
        
        
        
        
          $12,045 
        
      
      
        
          Depreciation and amortization
        
        
        
        
          (3,098)
        
        
        
        
          (3,225)
        
      
      
        
          Interest expense, net
        
        
        
        
          (1,967)
        
        
        
        
          (1,501)
        
      
      
        
          Income taxes
        
        
        
        
          (2,831)
        
        
        
        
          (2,818)
        
      
      
        
          Gain/(loss) on discontinued operations, net of tax
        
        
        
        
          (399)
        
        
        
        
          76 
        
      
      
        
          Net income
        
        
        
        
          4,030 
        
        
        
        
          4,577 
        
      
      
        
          Depreciation and amortization
        
        
        
        
          3,098 
        
        
        
        
          3,225 
        
      
      
        
          Non-cash compensation expense
        
        
        
        
          849 
        
        
        
        
          1,092 
        
      
      
        
          Non-cash gains and losses
        
        
        
        
          (12)
        
        
        
        
          (576)
        
      
      
        
          Minority interests in income of consolidated subsidiaries
        
        
        
        
          6,733 
        
        
        
        
          7,568 
        
      
      
        
          Income taxes
        
        
        
        
          2,831 
        
        
        
        
          2,818 
        
      
      
        
          Distributions to minority partners
        
        
        
        
          (6,399)
        
        
        
        
          (5,843)
        
      
      
        
          Income (loss) on equity investments
        
        
        
        
          36 
        
        
        
        
          (245)
        
      
      
        
          Provision for doubtful accounts
        
        
        
        
          894 
        
        
        
        
          607 
        
      
      
        
          Changes in operating assets and liabilities, net of effects of 
          acquisitions and dispositions:
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Accounts receivable
        
        
        
        
          694 
        
        
        
        
          (592)
        
      
      
        
          Income tax payments
        
        
        
        
          (4,090)
        
        
        
        
          (600)
        
      
      
        
          Other assets and liabilities
        
        
        
        
          (2,314)
        
        
        
        
          (5,195)
        
      
      
        
          Net cash provided by operating activities - continuing operations
        
        
        
        
          $6,350 
        
        
        
        
          $6,836