Reports Diluted EPS of $0.53 and Adjusted
Diluted EPS of $0.82
AmSurg Corp. (NASDAQ: AMSG) today announced financial results
for the first quarter ended March 31, 2016. The Company’s results
for the quarter included:
- Net revenues of $724.7 million, up 27%
from $570.4 million for the first quarter of 2015;
- Net earnings attributable to AmSurg
common shareholders of $28.6 million;
- Adjusted net earnings of $46.6 million,
an increase of 47% compared with the first quarter of 2015;
- Net earnings per diluted share
attributable to AmSurg common shareholders of $0.53
- Adjusted net earnings per diluted share
of $0.82, up 32%, on a 12% increase in diluted shares outstanding,
if converted, primarily due to the Company’s December 2015 common
stock offering; and
- Adjusted EBITDA of $120.1 million, up
28% compared with the first quarter of 2015.
See page 6 for a reconciliation of all GAAP and non-GAAP
financial results.
“AmSurg had a great start to 2016 with a substantial increase in
first-quarter revenues and adjusted EPS, driven primarily by nearly
$1 billion of acquisitions completed in 2015,” said Christopher A.
Holden, President and Chief Executive Officer of AmSurg. “In
addition, we produced strong organic growth for the first quarter,
with same-center revenues for our Ambulatory Services division
increasing 8.8% and same-contract revenue for our Physician
Services division growing 12.0%. Each division continued to benefit
from increased volume and improved reimbursement during the first
quarter. The quarter had one additional business day compared with
the same prior-year quarter, which contributed 1.7% to the growth
in both divisions.
“Physician Services expanded the Company’s strong presence in
the Phoenix, Arizona, market during the first quarter with our
second acquisition of a neonatology practice in that market.
Subsequent to the quarter end, Ambulatory Services completed the
purchase of one surgery center and Physician Services purchased a
physician practice in Jacksonville, Florida, that established our
presence in the greater northeast Florida market. Our pipeline of
potential acquisitions is robust, and we are evaluating
opportunities for Ambulatory Services and across all our Physician
Services specialties.”
Ambulatory Services
First-quarter net revenues for Ambulatory Services grew 8% to
$307.1 million from $283.9 million for the first quarter of 2015.
Same-center revenue increased 8.8% for first quarter of 2016
compared with the first quarter of 2015, comprised of a 5.0%
increase in procedures per day, a 1.7% increase due to an
additional operating day in the first quarter of 2016 and a 2.1%
increase in net revenue per procedure. Our revenue growth over the
same quarter last year was reduced by the impact of nine centers
that were deconsolidated in 2015 and that represented 5.5% of
revenue for the first quarter of 2015. Adjusted EBITDA increased
13% to $53.6 million for the first quarter of 2016 from $47.3
million for the first quarter of 2015, and adjusted EBITDA margin
increased 80 basis points to 17.5% from 16.7%.
At the end of the first quarter, Ambulatory Services operated
256 ASCs and one surgical hospital, having merged two ASCs during
the quarter. Ambulatory Services had six ASCs under letter of
intent at the end of the quarter and one center under development,
which is expected to open in late 2016.
Physician Services
For the first quarter of 2016, net revenues for Physician
Services increased 46% to $417.5 million from $286.5 million for
the first quarter of 2015. Adjusted EBITDA rose 43% to $66.5
million for the quarter compared with $46.4 million for the first
quarter of 2015, and adjusted EBITDA margin was 15.9% compared with
16.2%.
The comparable-quarter increase in Physician Services revenues
was comprised of growth of 10.1% in same-contract revenues, 1.2% in
net new contract revenues and 34.4% in acquisition revenues.
Same-contract growth in net revenues totaled 12.0% for the first
quarter of 2016, which included a 7.3% increase in patient
encounters per day, a 1.7% increase due to an additional operating
day in the first quarter of 2016 and a 3.0% increase in net revenue
per patient encounter.
Liquidity
At March 31, 2016, AmSurg had cash and cash equivalents of $85.9
million and availability under its $500 million revolving credit
facility of $345 million. Net cash flows from operations, less
distributions to noncontrolling interests, were $25.0 million for
the first quarter. The Company’s ratio of total debt at the end of
the first quarter to trailing 12 months EBITDA as calculated under
the Company’s credit agreement was 4.1.
Guidance
AmSurg today adjusted its financial and operating guidance for
2016 and for the second quarter of the year. The Company’s guidance
is as follows:
- Revenues in a range of $3.09 billion to
$3.13 billion;
- A same-center revenue increase of 4% to
6% for Ambulatory Services and same-contract revenue growth of 4%
to 6% in Physician Services;
- Adjusted EBITDA of $592 million to $601
million;
- Adjusted EPS in a range of $4.28 to
$4.35; and
- For the second quarter of 2016,
adjusted EPS in a range of $1.06 to $1.09.
Non-GAAP Adjusted EBITDA guidance for the full year of 2016
excludes interest expense, income taxes, depreciation,
amortization, share-based compensation, transaction costs, changes
in contingent purchase price consideration, gain or loss on
deconsolidations and discontinued operations. Non-GAAP Adjusted EPS
guidance for the second quarter and full year of 2016 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 such exclusions 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
today, May 3, 2016, 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,
including the Company’s financial and operating guidance for the
first quarter and full year of 2016. 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 Patient
Protection and Affordable Care Act, as amended by the Health Care
and Education Reconciliation Act of 2010; there may be governmental
or commercial health changes designed to reduce the number of
surgical procedures; we may fail to comply with applicable laws and
regulations including the federal Anti-Kickback statue and similar
state laws; 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; the attention of management may
be diverted by the process of making new acquisitions; 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, including any future indebtedness;
restricted covenants in our indenture documents may restrict our
business strategies or could result in an acceleration of our debt;
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 fail to effectively
and timely transition to the ICD-10 coding system; we may fail to
effectively manage and implement security measures protecting our
information technology systems to protect confidential data; our
disaster recovery systems or management continuity plans may be
disrupted; we may face shortages or quality control issues of
products, equipment, and medical supplies that could adversely
affect our operations and profitability; enforcement authorities
may conclude that our market share in any particular market is too
concentrated or our clients’ commercial payor contract negotiating
practices are illegal; 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; our physician partners may fail to perform on their pro
rata share of any indebtedness or lease agreements; 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; our legal
responsibility to minority owners of our surgery centers may
conflict with our interests and prevent us from acting solely in
our best interests; 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; laws and regulations that regulate payments for medical
services made by government healthcare programs could cause our
revenues to decrease; 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; our segments of the market for medical
services have a high level of competition; 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, 2015, 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 March 31, 2016, AmSurg owned and operated 256 ASCs
and one surgical hospital in 34 states and the District of Columbia
and provided physician services to more than 450 healthcare
facilities in 29 states. AmSurg has partnerships with, or employs,
over 5,000 physicians and other healthcare professionals 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 Ended March 31,
Statement of
Earnings Data:
2016 2015 Revenues $ 818,286 $ 638,197
Provision for uncollectibles (93,608 ) (67,752 ) Net revenue
724,678 570,445 Operating expenses: Salaries and benefits 409,839
302,179 Supply cost 46,963 42,584 Other operating expenses 107,682
90,570 Transaction costs 1,390 1,471 Depreciation and amortization
29,072 22,818 Total operating expenses 594,946
459,622 Net loss on deconsolidations — (223 ) Equity in earnings of
unconsolidated affiliates 6,579 2,651 Operating
income 136,311 113,251 Interest expense, net 30,810 30,247
Earnings before income taxes 105,501 83,004 Income tax
expense 20,797 14,249 Net earnings 84,704 68,755 Less
net earnings attributable to noncontrolling interests 53,841
47,717 Net earnings attributable to AmSurg Corp.
shareholders 30,863 21,038 Preferred stock dividends (2,264 )
(2,264 ) Net earnings attributable to AmSurg Corp. common
shareholders $ 28,599 $ 18,774 Net earnings
per share attributable to common shareholders: Basic $ 0.53 $ 0.39
Diluted $ 0.53 $ 0.39 Weighted average number of shares and share
equivalents outstanding: Basic 53,665 47,572 Diluted 54,001 47,905
AMSURG CORP.
Unaudited Selected Consolidated
Financial and Operating Data, continued
(In thousands, except earnings per
share)
Three Months Ended March 31,
2016 2015 Reconciliation of net
earnings to Adjusted net earnings (1): Net
earnings attributable to AmSurg Corp. shareholders $ 30,863 $
21,038 Amortization of purchased intangibles 17,695 12,422
Share-based compensation 7,168 3,709 Transaction costs 1,390 1,471
Net loss on deconsolidations — 223 Total pre-tax adjustments
26,253 17,825
Tax effect
10,501 7,130 Total adjustments, net 15,752 10,695
Adjusted net earnings $ 46,615 $ 31,733 Basic
shares outstanding 53,665 47,572 Effect of dilutive securities,
options and non-vested shares 3,466 3,485 Diluted shares
outstanding, if converted 57,131 51,057
Adjusted
earnings per share $ 0.82 $ 0.62
Reconciliation of net earnings to Adjusted EBITDA
(2): Net earnings attributable to AmSurg Corp.
shareholders $ 30,863 $ 21,038 Interest expense, net 30,810 30,247
Income tax expense 20,797 14,249 Depreciation and amortization
29,072 22,818
EBITDA 111,542 88,352 Adjustments:
Share-based compensation 7,168 3,709 Transaction costs 1,390 1,471
Net loss on deconsolidations — 223 Total adjustments 8,558
5,403
Adjusted EBITDA $ 120,100 $ 93,755
Segment Information: Ambulatory Services Adjusted
EBITDA $ 53,626 $ 47,308 Physician Services Adjusted EBITDA 66,474
46,447
Adjusted EBITDA $ 120,100 $ 93,755
Net Revenue by Segment: Ambulatory Services $ 307,134
$ 283,910 Physician Services 417,544 286,535
Total net
revenue $ 724,678 $ 570,445
See footnotes on page 10
AMSURG CORP.
Unaudited Selected Consolidated
Financial and Operating Data, continued
Operating Data-
Ambulatory Services:
Three Months Ended March 31, 2016 2015
Procedures performed during the period at consolidated centers
416,584 404,519 Centers in operation, end of period (consolidated)
235 237 Centers in operation, end of period (unconsolidated) 21 11
Average number of continuing centers in operation (consolidated)
236 235 New centers added, during period — 2 Centers merged into
existing centers, during period 1 — Centers under development, end
of period 1 2 Centers under letter of intent, end of period 6 7
Average revenue per consolidated center (in thousands) $ 1,303 $
1,206 Same center revenues increase (consolidated) 8.8 % 3.6 %
Surgical hospitals in operation, end of period (unconsolidated) 1 —
Operating Data-
Physician Services:
Three Months Ended March 31, 2016 2015
Contribution to Net Revenue Growth: Same contract 10.1 % 5.2
% New contract 1.2 2.3 Acquired contract and other 34.4
6.7 Total net revenue growth 45.7 %
14.2 % Same contract revenue growth 12.0 % 6.6 %
AMSURG CORP.
Unaudited Selected Consolidated
Financial and Operating Data, continued
(In thousands)
March 31, December
31,
Balance Sheet
Data:
2016 2015 Assets Current assets: Cash and cash
equivalents $ 85,883 $ 106,660 Restricted cash and marketable
securities 14,435 13,506 Accounts receivable, net of allowance of
$188,086 and $167,411, respectively 352,891 337,330 Supplies
inventory 21,584 21,406 Prepaid and other current assets 76,513
75,771 Total current assets 551,306 554,673 Property and
equipment, net 191,920 189,168 Investments in unconsolidated
affiliates 172,826 169,170 Goodwill 3,967,902 3,970,210 Intangible
assets, net 1,580,337 1,594,637 Other assets 19,655 21,450
Total assets $ 6,483,946 $ 6,499,308
Liabilities and
Equity Current liabilities: Current portion of long-term debt $
20,231 $ 20,377 Accounts payable 26,412 32,561 Accrued salaries and
benefits 204,191 202,537 Accrued interest 18,005 30,480 Other
accrued liabilities 101,861 119,237 Total current
liabilities 370,700 405,192 Long-term debt 2,336,284 2,357,956
Deferred income taxes 706,452 699,498 Other long-term liabilities
99,007 96,183 Commitments and contingencies Noncontrolling
interests – redeemable 174,671 175,732 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, 54,789 and 54,294 shares issued and outstanding,
respectively 1,349,877 1,345,418 Retained earnings 810,012
781,413 Total AmSurg Corp. equity 2,326,521 2,293,463
Noncontrolling interests – non-redeemable 470,311 471,284
Total equity 2,796,832 2,764,747 Total liabilities and
equity $ 6,483,946 $ 6,499,308
AMSURG
CORP.
Unaudited Selected Consolidated
Financial and Operating Data, continued
(In thousands)
Three Months Ended March 31,
Statement of Cash
Flow Data:
2016 2015 Cash flows from operating
activities: Net earnings $ 84,704 $ 68,755 Adjustments to
reconcile net earnings to net cash flows provided by operating
activities: Depreciation and amortization 29,072 22,818
Amortization of deferred loan costs 2,140 2,074 Provision for
uncollectibles 99,440 73,999 Net loss on deconsolidations — 223
Share-based compensation 7,168 3,709 Excess tax benefit from
share-based compensation (3,605 ) (3,317 ) Deferred income taxes
6,602 3,334 Equity in earnings of unconsolidated affiliates (6,579
) (2,651 ) Increases (decreases) in cash and cash equivalents, net
of acquisitions and dispositions: Accounts receivable (114,523 )
(74,214 ) Supplies inventory (178 ) (30 ) Prepaid and other current
assets (8,423 ) 13,842 Accounts payable (6,108 ) (2,526 ) Accrued
expenses and other liabilities (11,056 ) (7,886 ) Other, net 3,119
697 Net cash flows provided by operating activities
81,773 98,827
Cash flows from investing activities:
Acquisitions and related expenses (2,990 ) (126,578 ) Acquisition
of property and equipment (15,691 ) (14,783 ) Maturities of
marketable securities 2,240 — Other (1,509 ) (220 ) Net cash flows
used in investing activities (17,950 ) (141,581 )
Cash flows
from financing activities: Proceeds from long-term borrowings
and revolving credit facility 16,197 2,227 Repayment on long-term
borrowings and revolving credit facility (40,332 ) (5,213 )
Distributions to noncontrolling interests (56,801 ) (47,202 )
Proceeds from issuance of common stock upon exercise of stock
options 276 1,746 Repurchase of common stock (5,688 ) (3,684 )
Other 1,748 2,957 Net cash flows used in financing
activities (84,600 ) (49,169 ) Net decrease in cash and cash
equivalents (20,777 ) (91,923 ) Cash and cash equivalents,
beginning of period 106,660 208,079 Cash and cash
equivalents, end of period $ 85,883 $ 116,156
AMSURG CORP.
Footnotes to Reconciliations of
Non-GAAP Measures to GAAP Measures
(1) We believe the calculation of adjusted net earnings from
continuing operations 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 discontinued operations, 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,
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/20160503006993/en/
AmSurg Corp.Claire M. Gulmi, 615-665-1283Executive Vice
President andChief Financial Officer
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