Symbion (NASDAQ:SMBI)
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Symbion, Inc. (NASDAQ:SMBI), an owner and operator of short stay
surgical facilities, announced today results for the second quarter and
six months ended June 30, 2007.
For the second quarter ended June 30, 2007, revenues increased 4% to
$76.7 million compared with $73.5 million for the second quarter ended
June 30, 2006. Net income for the second quarter of 2007 decreased to
$3.9 million compared with $5.9 million for the second quarter of 2006.
Previously issued results have been reclassified to present certain
facilities as discontinued operations, two of which were reclassified in
2006 and four of which were reclassified during the first quarter of
2007. The effective tax rate for the second quarter of 2007 was 42.0%
compared with 38.5% for the second quarter of 2006. Income per diluted
share from continuing operations for the second quarter of 2007 was
$0.18 compared with $0.28 for the second quarter of 2006. Results for
the second quarter of 2007 included $1.2 million of transaction costs
related to the merger discussed below. The transaction costs incurred by
the Company are not deductible for tax purposes. These transaction costs
increased the Company’s tax rate by
approximately 2.9% and decreased diluted earnings per share by $0.04 for
the second quarter of 2007. Results for the second quarter of 2006
included $0.03 related to a gain on the sale of assets and $0.01 related
to an adjustment to depreciation expense based on a change in
depreciation estimates at certain of the Company’s
newly acquired surgery centers. EBITDA decreased to $11.6 million for
the second quarter of 2007 compared with $14.4 million for the second
quarter of 2006. Same store net patient service revenues for the second
quarter of 2007 decreased 2% compared with the same period in 2006
primarily as a result of the continuation of the Company’s
transition from out-of-network to in-network billing in certain markets
that was initiated in the third quarter of 2006. At June 30, 2007, the
Company’s outstanding indebtedness was $129.2
million with a ratio of debt to total capitalization of 30%.
For the six months ended June 30, 2007, revenues increased 9% to
$153.9 million compared with $141.0 million for the first half of 2006.
Net income for the first half of 2007 decreased to $8.0 million compared
with $10.5 million for the same period in 2006. The effective tax rate
for the six months ended June 30, 2007, was 40.4% compared with 38.5%
for the six months ended June 30, 2006. Income per diluted share from
continuing operations for the six months ended June 30, 2007, was $0.38
compared with $0.49 for the six months ended June 30, 2006. Results for
the six months of 2007 included $1.2 million of transaction costs
related to the merger discussed below. These transaction costs increased
the Company’s tax rate by approximately 1.4%
and decreased diluted earnings per share by $0.04 for the six months
ended June 30, 2007. Results for the six months of 2006 included $0.04
related to non-recurring gains recorded during the first and second
quarters of 2006 and $0.01 related to an adjustment to depreciation
expense based on a change in depreciation estimates at certain of the
Company’s newly acquired surgery centers.
EBITDA decreased to $23.9 million for the first half of 2007 compared
with $26.5 million for the first half of 2006. Same store net patient
service revenues for the six months ended June 30, 2007, increased 1%
compared with the same period in 2006.
On June 30, 2007, the Company acquired an additional 55% equity interest
in a surgical facility located in Cape Coral, Florida, in which the
Company already owned 10%. Subsequent to the additional interest
purchase, the Company began consolidating the operations of the Cape
Coral facility on July 1, 2007.
Proposed Merger
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 expected to close in the third
quarter of 2007, subject to satisfaction of the closing conditions set
forth in the Merger Agreement.
The Company will hold a special meeting of its stockholders to consider
the merger. The meeting is scheduled for August 15, 2007, at 9:00 a.m.,
Central time, at the offices of Waller Lansden Dortch & Davis, LLP, 511
Union Street, Suite 2700, Nashville, Tennessee 37219.
Given the pending transaction, the Company will not be hosting a
conference call for its second quarter earnings release.
Additional Information and Where to Find It
In connection with the proposed merger, Symbion has filed a definitive
proxy statement with the Securities and Exchange Commission. Before
making any voting decision, the Company’s
stockholders are urged to read the proxy statement regarding the merger
carefully in its entirety because it contains important information
about the proposed transaction. The Company’s
stockholders and other interested parties may obtain, without charge, a
copy of the proxy statement and other relevant documents filed with the
SEC from the SEC’s website at www.sec.gov
or 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: (615) 234-5900, 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 Symbion’s
proxy statements and Annual Reports on Form 10-K, previously filed with
the SEC, and in the definitive proxy statement relating to the merger.
About Symbion, Inc.
Symbion, Inc., headquartered in Nashville, Tennessee, owns and operates
a network of 57 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 legal proceedings 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; (iv) the failure to obtain the
necessary debt financing arrangements for 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, including potential difficulties in integrating the business
operations of such surgery centers; (x) the Company’s
ability to enter into strategic alliances with health care systems and
other health care providers that are leaders in their markets; (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
Six Months Ended
June 30,
June 30,
2007
2006
2007
2006
Revenues
$
76,670
$
73,501
$
153,890
$
140,997
Operating expenses:
Salaries and benefits
20,289
19,055
41,127
36,910
Supplies
15,350
13,868
30,296
26,616
Professional and medical fees
4,703
3,699
9,402
6,506
Rent and lease expense
4,711
4,387
9,401
8,639
Other operating expenses
5,950
4,975
11,728
9,255
Cost of revenues
51,003
45,984
101,954
87,926
General and administrative expense
7,219
6,506
13,672
13,043
Depreciation and amortization
2,904
2,471
6,001
5,696
Provision for doubtful accounts
1,300
689
2,195
1,296
Income on equity investments
(236
)
(727
)
(199
)
(973
)
Impairment and loss on disposal of long-lived assets
229
527
245
566
Gain on sale of long-lived assets
(478
)
(1,652
)
(506
)
(1,652
)
Proceeds from insurance settlement
-
-
(161
)
(410
)
Proceeds from litigation settlement
-
-
-
(588
)
Total operating expenses
61,941
53,798
123,201
104,904
Operating income
14,729
19,703
30,689
36,093
Minority interests in income of consolidated subsidiaries
(6,020
)
(7,764
)
(12,753
)
(15,332
)
Interest expense, net
(1,959
)
(1,828
)
(3,926
)
(3,330
)
Income from continuing operations before income taxes
6,750
10,111
14,010
17,431
Provision for income taxes
2,832
3,893
5,663
6,711
Income from continuing operations
3,918
6,218
8,347
10,720
Gain/(loss) from discontinued operations, net of tax
25
(316
)
(374
)
(241
)
Net income
$
3,943
$
5,902
$
7,973
$
10,479
Net income per share - continuing operations:
Basic
$
0.18
$
0.29
$
0.38
$
0.50
Diluted
$
0.18
$
0.28
$
0.38
$
0.49
Net income per share:
Basic
$
0.18
$
0.27
$
0.37
$
0.49
Diluted
$
0.18
$
0.27
$
0.36
$
0.48
Weighted average number of common shares outstanding and common
equivalent shares:
Basic
21,715
21,507
21,691
21,484
Diluted
22,180
21,922
22,060
21,987
SYMBION, INC.
Condensed Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
June 30,
Dec. 31,
2007
2006
ASSETS
Current assets:
Cash and cash equivalents
$
27,987
$
26,909
Accounts receivable, less allowance for doubtful accounts
37,436
34,700
Inventories
8,266
8,070
Prepaid expenses and other current assets
12,231
13,927
Current assets of discontinued operations
1,552
3,299
Total current assets
87,472
86,905
Property and equipment, net of accumulated depreciation
77,329
76,277
Goodwill
327,668
314,980
Investments in and advances to affiliates
16,288
16,463
Other assets
4,110
3,079
Long-term assets of discontinued operations
4,528
6,102
Total assets
$
517,395
$
503,806
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
4,380
$
5,145
Accrued payroll and benefits
6,527
7,950
Other accrued expenses
24,299
13,413
Current maturities of long-term debt
3,606
2,108
Current liabilities of discontinued operations
990
1,646
Total current liabilities
39,802
30,262
Long-term debt, less current maturities
125,576
136,533
Other liabilities
20,032
18,734
Long-term liabilities of discontinued operations
214
404
Minority interests
35,267
32,594
Total stockholders' equity
296,504
285,279
Total liabilities and stockholders' equity
$
517,395
$
503,806
SYMBION, INC.
Supplemental Operating Data
(dollars in thousands, except per case and per share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2007
2006
2007
2006
Same store statistics(1):
Cases
62,610
61,154
118,310
112,639
Cases percentage growth
2.4
%
N/A
5.0
%
N/A
Net patient service revenue per case
$
1,285
$
1,342
$
1,290
$
1,338
Net patient service revenue per case percentage growth
(4.2
)%
N/A
(3.6
)%
N/A
Number of same store surgery centers
46
N/A
44
N/A
Consolidated statistics - continuing operations:
Cases
55,568
53,920
110,241
104,111
Cases percentage growth
3.1
%
N/A
5.9
%
N/A
Net patient service revenue per case
$
1,310
$
1,284
$
1,327
$
1,276
Net patient service revenue per case percentage growth
2.0
%
N/A
4.0
%
N/A
Number of surgery centers operated as of end of period(2)
54
57
54
57
Number of states in which the Company operates surgery centers
23
23
23
23
Revenues - continuing operations:
Net patient service revenues
$
72,818
$
69,249
$
146,242
$
132,800
Physician service revenues
1,315
1,120
2,645
2,261
Other service revenues
2,537
3,132
5,003
5,936
Total revenues
$
76,670
$
73,501
$
153,890
$
140,997
Cash flow information - continuing operations:
Net cash provided by operating activities
$
7,503
$
8,668
$
13,853
$
15,504
Net cash used in investing activities
(2,111
)
(16,874
)
(3,621
)
(31,448
)
Net cash provided by (used in) financing activities
(4,251
)
14,223
(9,399
)
21,098
Other information:
EBITDA(3)
$
11,613
$
14,410
$
23,937
$
26,457
(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 facilities that the Company managed but in
which it did not have an ownership interest. The Company has not
included the facilities that are reported as discontinued
operations.
(3) The following table reconciles EBITDA to net cash provided by
operating activities - continuing operations:
Three Months Ended
Six Months Ended
(in thousands)
June 30,
June 30,
2007
2006
2007
2006
EBITDA
$
11,613
$
14,410
$
23,937
$
26,457
Depreciation and amortization
(2,904
)
(2,471
)
(6,001
)
(5,696
)
Interest expense, net
(1,959
)
(1,828
)
(3,926
)
(3,330
)
Income taxes
(2,832
)
(3,893
)
(5,663
)
(6,711
)
Gain/(loss) on discontinued operations, net of tax
25
(316
)
(374
)
(241
)
Net income
3,943
5,902
7,973
10,479
Depreciation and amortization
2,904
2,471
6,001
5,696
Non-cash compensation expense
878
1,082
1,787
2,174
Non-cash gains and losses
201
(1,125
)
(289
)
(1,086
)
Minority interests in income of consolidated subsidiaries
6,020
7,764
12,753
15,332
Income taxes
2,832
3,893
5,663
6,711
Distributions to minority partners
(6,201
)
(6,654
)
(12,600
)
(12,497
)
Income on equity investments
236
727
199
973
Provision for doubtful accounts
1,300
689
2,195
1,296
Changes in operating assets and liabilities, net of effects of
acquisitions and dispositions:
Accounts receivable
(2,003
)
(2,164
)
(1,309
)
(2,756
)
Income tax payments
(2,700
)
(4,500
)
(6,790
)
(5,100
)
Other assets and liabilities
93
583
(1,730
)
(5,718
)
Net cash provided by operating activities - continuing operations
$
7,503
$
8,668
$
13,853
$
15,504