AmSurg Reports Net Earnings from Continuing Operations of $0.51 Per Diluted Share for Second-Quarter 2012
AmSurg Reports Net Earnings from Continuing Operations of $0.51 Per Diluted
Share for Second-Quarter 2012
Same-Center Revenues Increase 3%
Affirms Established Financial Guidance for 2012
Business Wire
NASHVILLE, Tenn. -- July 24, 2012
Christopher A. Holden, President and Chief Executive Officer of AmSurg Corp.
(NASDAQ: AMSG), today announced financial results for the second quarter ended
June 30, 2012. Revenues for the quarter were $231.6 million, a 23% increase
from $187.5 million for the second quarter of 2011. Net earnings from
continuing operations attributable to AmSurg common shareholders increased to
$16.2 million, or $0.51 per diluted share, for the second quarter of 2012 from
$12.7 million, or $0.40 per diluted share, for the second quarter of 2011,
which included acquisition transaction costs of $0.02 per diluted share.
Excluding these costs from the prior year, net earnings from continuing
operations per diluted share attributable to AmSurg common shareholders
increased 21% to $0.51 for the latest quarter from $0.42 for the second
quarter last year.
Revenues for the first six months of 2012 increased 26% to $461.8 million from
$365.2 million for the same period in 2011. Net earnings from continuing
operations attributable to AmSurg common shareholders increased to $31.9
million, or $1.01 per diluted share, for the first six months of 2012 from
$24.3 million, or $0.78 per diluted share, for the first half of 2011, which
included acquisition transaction costs of $0.02 per diluted share. Excluding
these costs from the prior year, net earnings from continuing operations per
diluted share attributable to AmSurg common shareholders increased 26% to
$1.01 for the first half of 2012 from $0.80 for the comparable 2011 period.
Mr. Holden remarked, “AmSurg’s second-quarter results represent the third
consecutive quarter in which our revenues have grown in excess of 20% on a
comparable-quarter basis. For the latest quarter, this growth was driven by a
3% increase in same-center revenue, as well as an expansion in the number of
centers in operation to 228 at the quarter’s end from 206 centers at the end
of the second quarter last year. Our centers produced a 14% increase in
procedures for the latest quarter compared with the second quarter last year,
and revenue per procedure increased 8%, consistent with the growth in
multi-specialty centers as a percentage of our center mix since the second
quarter last year.
“During the second quarter, we completed the scheduled opening of one de novo
center. We also had seven centers under letter of intent at the end of the
quarter. We primarily applied our free cash flow for the quarter to net
repayments of long-term debt of $27.9 million, which contributed to an
improvement in our ratio of total debt to trailing 12 months EBITDA as
calculated under our credit agreement to 2.6 compared with 2.8 and 2.9 at
March 31, 2012 and December 31, 2011, respectively.
“Net cash flows from operating activities increased 21% for the second quarter
of 2012 to $74.5 million from $61.7 million for the second quarter of 2011.
Excluding distributions to noncontrolling interests, net cash flows from
operations grew 17% to $30.7 million from $26.2 million. Excluding
distributions to noncontrolling interests, our cash flow was 1.9 times net
earnings from continuing operations attributable to AmSurg common
shareholders.
“In late June, we amended our credit agreements, which increased availability
under our revolving credit agreement by $25 million to $475 million, reduced
the interest rate on the outstanding borrowings under the agreement and
extended its term through June 2017. At the end of the second quarter, our
availability under our revolving credit facility was $159 million, and we had
cash and cash equivalents of $37.6 million. With expectations for continued
substantial cash flow during 2012, we believe we are well positioned to fund
our planned growth for the year.
“Based on our performance through the first half of 2012 and our outlook for
the remainder of the year, we today affirm our established financial guidance
for 2012, while increasing the lower end of the expected range of same-center
revenue growth for the year. We also establish our guidance for the third
quarter of 2012, which reflects our more typical seasonality, as well as one
less operating day than the second quarter of 2012 and the third quarter last
year, as follows:
* Revenues in a range of $905 million to $925 million for 2012.
* Same-center revenue increase of 2% to 3% for 2012, up from the prior range
of 1% to 3%.
* Center acquisitions for 2012 that generate annualized operating income in
a range of $25 million to $29 million, including approximately $2 million
from centers acquired in the first half of 2012.
* Net cash flow provided by operating activities, less distributions to
noncontrolling interests, in a range of $115 million to $120 million for
2012.
* Net earnings from continuing operations per diluted share attributable to
common shareholders for 2012 in a range of $1.97 to $2.01.
* Net earnings from continuing operations per diluted share attributable to
common shareholders for the third quarter of 2012 in a range of $0.47 to
$0.49.”
Mr. Holden concluded, “We are pleased with the improved operating environment
evidenced by two consecutive quarters of at least 3% same-center revenue
growth, compared with 1% for the first two quarters last year. While not
discounting the potential impact of uncertain economic conditions and high
unemployment, our second-quarter results support our confidence in meeting our
guidance of revenue and earnings growth in the mid to high teens for 2012.
“Beyond 2012, we expect AmSurg’s unique positioning in the free-standing ASC
industry to support sustained growth. In operating the largest number of
centers in the country, we are playing a significant role in expanding access
to lower cost, high quality healthcare at a time when demand for such access
from patients, payers and physicians is expected to steadily grow for the
foreseeable future. In addition to organic growth, we have an unequaled record
of expanding our center base through acquisition in an industry that remains
highly fragmented. As the only public company focused on ambulatory care, we
believe our access to capital represents a competitive advantage in
implementing our center acquisition strategy, in addition to our strong cash
flows and financial position. We further believe that we have built a
market-leading position as the physician partner of choice due to our
fundamental commitment to differentiating AmSurg through a physician-centric
culture. As a result of our competitive strengths in an industry experiencing
favorable long-term growth trends, we are confident of our prospects for
producing long-term growth in earnings and shareholder value.”
The information contained in the preceding paragraphs is forward-looking
information, and the attainment of these targets is dependent not only on
AmSurg’s achievement of its assumptions discussed above, but also on the risks
and uncertainties listed below that could cause actual results, performance or
developments to differ materially from those expressed or implied by this
forward-looking information.
AmSurg Corp. will hold a conference call to discuss this release today 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” or by going to www.earnings.com 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.
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: the risk that payments from third-party payors, including government
healthcare programs, may decrease or not increase as the Company’s costs
increase; adverse developments affecting the medical practices of the
Company’s physician partners; the Company’s ability to maintain favorable
relations with its physician partners; the Company’s ability to compete for
physician partners, managed care contracts, patients and strategic
relationships; the Company’s ability to acquire and develop additional surgery
centers on favorable terms; the Company’s ability to grow revenues by
increasing procedure volume while maintaining its operating margins and
profitability at its existing centers; the Company’s ability to manage the
growth in its business; the Company’s ability to obtain sufficient capital
resources to complete acquisitions and develop new surgery centers; adverse
weather and other factors beyond the Company’s control that may affect the
Company’s surgery centers; adverse impacts on the Company’s business
associated with current and future economic conditions; the Company’s failure
to comply with applicable laws and regulations; the risk of changes in
legislation, regulations or regulatory interpretations that may negatively
affect the Company; the risk of becoming subject to federal and state
investigation; uncertainties regarding the impact of the Health Reform Law;
the risk of regulatory changes that may obligate the Company to buy out
interests of physicians who are minority owners of its surgery centers;
potential liabilities associated with the Company’s status as a general
partner of limited partnerships; liabilities for claims brought against our
facilities; the Company’s legal responsibility to minority owners of its
surgery centers, which may conflict with its interests and prevent it from
acting solely in its best interests; risks associated with the potential
write-off of the impaired portion of intangible assets; potential liability
relating to the tax deductibility of goodwill; and other risk factors
described in AmSurg’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2011 and 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.
AmSurg Corp. acquires, develops and operates ambulatory surgery centers in
partnership with physician practice groups throughout the United States. At
June 30, 2012, AmSurg owned and operated 228 centers.
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data
(Dollars in thousands, except per share amounts)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
Statement of Earnings 2012 2011 2012 2011
Data:
Revenues $ 231,581 $ 187,522 $ 461,792 $ 365,248
Operating expenses:
Salaries and benefits 70,957 57,127 143,410 112,380
Supply cost 33,169 23,938 65,386 46,418
Other operating 48,681 40,393 96,090 78,153
expenses
Depreciation and 7,463 6,133 14,838 12,046
amortization
Total operating 160,270 127,591 319,724 248,997
expenses
Equity in earnings of
unconsolidated 316 - 711 -
affiliates
Operating income 71,627 59,931 142,779 116,251
Interest expense 4,159 3,631 8,428 7,573
Earnings from
continuing operations 67,468 56,300 134,351 108,678
before income taxes
Income tax expense 11,263 8,899 22,204 17,166
Net earnings from 56,205 47,401 112,147 91,512
continuing operations
Discontinued
operations:
Earnings (loss) from
operations of
discontinued interests - 60 (110 ) 758
in surgery centers,
net of income tax
Loss on disposal of
discontinued interests (660 ) (1,084 ) (1,553 ) (1,265 )
in surgery centers,
net of income tax
Net loss from
discontinued (660 ) (1,024 ) (1,663 ) (507 )
operations
Net earnings 55,545 46,377 110,484 91,005
Less net earnings
attributable to
noncontrolling
interests:
Net earnings from 40,009 34,718 80,232 67,224
continuing operations
Net earnings (loss)
from discontinued - 29 (60 ) 458
operations
Total net earnings
attributable to 40,009 34,747 80,172 67,682
noncontrolling
interests
Net earnings
attributable to AmSurg $ 15,536 $ 11,630 $ 30,312 $ 23,323
Corp. common
shareholders
Amounts attributable
to AmSurg Corp. common
shareholders:
Earnings from
continuing operations, $ 16,196 $ 12,683 $ 31,915 $ 24,288
net of income tax
Discontinued
operations, net of (660 ) (1,053 ) (1,603 ) (965 )
income tax
Net earnings
attributable to AmSurg $ 15,536 $ 11,630 $ 30,312 $ 23,323
Corp. common
shareholders
Earnings per
share-basic:
Net earnings from
continuing operations
attributable to AmSurg $ 0.53 $ 0.42 $ 1.04 $ 0.80
Corp. common
shareholders
Net loss from
discontinued
operations (0.02 ) (0.03 ) (0.05 ) (0.03 )
attributable to AmSurg
Corp. common
shareholders
Net earnings
attributable to AmSurg $ 0.51 $ 0.38 $ 0.99 $ 0.77
Corp. common
shareholders
Earnings per
share-diluted:
Net earnings from
continuing operations
attributable to AmSurg $ 0.51 $ 0.40 $ 1.01 $ 0.78
Corp. common
shareholders
Net loss from
discontinued
operations (0.02 ) (0.03 ) (0.05 ) (0.03 )
attributable to AmSurg
Corp. common
shareholders
Net earnings
attributable to AmSurg $ 0.49 $ 0.37 $ 0.96 $ 0.75
Corp. common
shareholders
Weighted average
number of shares and
share equivalents
(000's):
Basic 30,743 30,415 30,681 30,418
Diluted 31,577 31,335 31,489 31,180
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data, continued
(Dollars in thousands, except per share amounts)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
Operating Data: 2012 2011 2012 2011
Continuing
centers in
operation at end 226 206 226 206
of period
(consolidated)
Continuing
centers in
operation at end 2 - 2 -
of period
(unconsolidated)
Average number of
continuing
centers in 225 206 225 203
operation
(consolidated)
New centers added 1 5 2 6
during the period
Centers
discontinued - 1 2 2
during the period
Centers under
development/not - 1 - 1
opened at end of
period
Centers under
letter of intent 7 4 7 4
at end of period
Average revenue
per consolidated $ 1,028 $ 912 $ 2,054 $ 1,798
center
Same center 3 % 1 % 4 % 1 %
revenues increase
Procedures
performed during
the period at 385,630 338,331 768,180 656,601
consolidated
centers
Income tax
expense
attributable to $ 210 $ 175 $ 422 $ 304
noncontrolling
interests
Reconciliation of
net earnings to
EBITDA (1):
Net earnings from
continuing
operations
attributable to $ 16,196 $ 12,683 $ 31,915 $ 24,288
AmSurg Corp.
common
shareholders
Add: income tax 11,263 8,899 22,204 17,166
expense
Add: interest 4,159 3,631 8,428 7,573
expense, net
Add: depreciation 7,463 6,133 14,838 12,046
and amortization
EBITDA $ 39,081 $ 31,346 $ 77,385 $ 61,073
EBITDA is defined as earnings before interest, income taxes and
depreciation and amortization. EBITDA should not be considered a measure
of financial performance under generally accepted accounting principles.
Items excluded from EBITDA are significant components in understanding and
assessing financial performance. 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. EBITDA
should not be considered in isolation or as an alternative to net income,
cash flows generated by operations, investing or financing activities, or
(1) other financial statement data presented in the consolidated financial
statements as indicators of financial performance or liquidity. Because
EBITDA is not a measurement determined in accordance with generally
accepted accounting principles and is thus susceptible to varying
calculations, 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 EBITDA as
defined.
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data, continued
(Dollars in thousands)
June 30, December 31,
Balance Sheet Data: 2012 2011
Assets
Current assets:
Cash and cash equivalents $ 37,649 $ 40,718
Accounts receivable, net of allowance of 90,446 93,454
$23,009 and $18,844, respectively
Supplies inventory 14,741 15,039
Deferred income taxes 2,478 2,129
Prepaid and other current assets 21,813 21,875
Total current assets 167,127 173,215
Property and equipment, net 143,830 144,558
Investment in unconsolidated affiliates 11,851 10,522
and long-term notes receivable
Goodwill 1,240,422 1,229,298
Intangible assets, net 16,248 15,425
Total assets $ 1,579,478 $ 1,573,018
Liabilities and Equity
Current liabilities:
Current portion of long-term debt $ 10,018 $ 10,800
Accounts payable 17,442 19,746
Current income taxes payable - 1,796
Accrued salaries and benefits 22,576 22,224
Other accrued liabilities 9,664 9,088
Total current liabilities 59,700 63,654
Long-term debt 409,726 447,963
Deferred income taxes 125,853 114,167
Other long-term liabilities 28,480 28,131
Commitments and contingencies
Noncontrolling interests - redeemable 171,412 170,636
Preferred stock, no par value, 5,000,000
shares authorized, no shares issued or - -
outstanding
Equity:
Common stock, no par value, 70,000,000
shares authorized, 31,624,480 and 174,690 173,187
31,283,772 shares outstanding,
respectively
Retained earnings 473,370 443,058
Total AmSurg Corp. equity 648,060 616,245
Noncontrolling interests - non-redeemable 136,247 132,222
Total equity 784,307 748,467
Total liabilities and equity $ 1,579,478 $ 1,573,018
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data, continued
(Dollars in thousands)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
Statement of Cash 2012 2011 2012 2011
Flow Data:
Cash flows from
operating activities:
Net earnings $ 55,545 $ 46,377 $ 110,484 $ 91,005
Adjustments to
reconcile net
earnings to net cash
flows provided by
operating activities:
Depreciation and 7,463 6,133 14,838 12,046
amortization
Net (gain) loss on
sale of long-lived - (465 ) 599 (363 )
assets
Share-based 1,620 1,578 3,412 3,171
compensation
Excess tax benefit
from share-based (450 ) (61 ) (529 ) (463 )
compensation
Deferred income taxes 4,666 5,814 13,388 11,460
Equity in earnings of
unconsolidated (316 ) - (711 ) -
affiliates, net
Increase (decrease)
in cash and cash
equivalents, net of
effects of
acquisition and
dispositions, due to
changes in:
Accounts receivable, 4,054 (290 ) 2,935 (1,534 )
net
Supplies inventory 156 141 333 67
Prepaid and other 302 1,144 (331 ) 2,506
current assets
Accounts payable 2,594 (1,590 ) 901 (3,737 )
Accrued expenses and (1,631 ) 2,666 (2,616 ) (1,866 )
other liabilities
Other, net 476 298 921 733
Net cash flows
provided by operating 74,479 61,745 143,624 113,025
activities
Cash flows from
investing activities:
Acquisition of
interest in surgery (115 ) (41,979 ) (9,972 ) (45,674 )
centers and related
transactions
Acquisition of
property and (8,523 ) (5,959 ) (14,569 ) (10,303 )
equipment
Proceeds from the
sale of interests in - 3 - 3,369
surgery centers
Net cash flows used
in investing (8,638 ) (47,935 ) (24,541 ) (52,608 )
activities
Cash flows from
financing activities:
Proceeds from 13,778 57,364 33,378 72,984
long-term borrowings
Repayment on (41,640 ) (40,076 ) (72,517 ) (64,852 )
long-term borrowings
Distributions to
noncontrolling (43,750 ) (35,497 ) (82,759 ) (67,360 )
interests
Distributions
received from 400 - 400 -
unconsolidated
affiliates
Proceeds from
issuance of common 4,151 891 6,672 4,628
stock upon exercise
of stock options
Repurchase of common (4,396 ) - (7,219 ) (6,185 )
stock
Capital contributions
and ownership
transactions by 250 675 1,119 698
noncontrolling
interests
Excess tax benefit
from share-based 450 61 529 463
compensation
Financing cost (1,755 ) (1,982 ) (1,755 ) (1,986 )
incurred
Net cash flows used
in financing (72,512 ) (18,564 ) (122,152 ) (61,610 )
activities
Net decrease in cash (6,671 ) (4,754 ) (3,069 ) (1,193 )
and cash equivalents
Cash and cash
equivalents, 44,320 37,708 40,718 34,147
beginning of period
Cash and cash
equivalents, end of $ 37,649 $ 32,954 $ 37,649 $ 32,954
period
Contact:
AmSurg Corp.
Claire M. Gulmi, 615-665-1283
Executive Vice President and Chief Financial Officer
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