Shareholders' Equity

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

a.   Common Stock

On July 2, 2014, the Company issued 9,775,000 shares of its common stock in a public offering, at $45.00 per share, prior to underwriting discounts, commissions and other related offering expenses of approximately $18.5 million. Proceeds from the issuance were used to satisfy certain debt obligations with the remaining amount utilized to fund a portion of the Sheridan acquisition. In addition, on July 16, 2014, the Company issued 5,713,909 shares of its common stock in a private offering to the former owners of Sheridan as part of the total consideration for the Sheridan acquisition.

On August 9, 2013, the Board of Directors authorized a stock purchase program for up to $40.0 million of the Company’s shares of common stock which expired on February 9, 2015. During the three months ended March 31, 2015, the Company did not purchase any shares under the stock repurchase program.

In addition, the Company repurchases shares by withholding a portion of employee restricted stock that vested to cover payroll withholding taxes in accordance with the restricted stock agreements.  During the three months ended March 31, 2015 and 2014, the Company repurchased 67,000 shares and 68,014 shares, respectively, of common stock for approximately $3.7 million and $2.9 million, respectively.

b. Mandatory Convertible Preferred Stock

On July 2, 2014, the Company issued 1,725,000 shares of its mandatory convertible preferred stock in a public offering, at $100.00 per share, prior to underwriting discounts, commissions and other related offering expenses of approximately $5.9 million.

The mandatory convertible preferred stock pays dividends at an annual rate of 5.25% of the initial liquidation preference of $100 per share. Dividends accrue and cumulate from the date of issuance and, to the extent lawful and declared by the Company's Board of Directors, will be paid on each January 1, April 1, July 1 and October 1 in cash or, at the Company's election (subject to certain limitations), by delivery of any combination of cash and shares of common stock. Each share of the mandatory convertible preferred stock has a liquidation preference of $100, plus an amount equal to accrued and unpaid dividends. Each share of the mandatory convertible preferred stock will automatically convert on July 1, 2017 (subject to postponement in certain cases), into between 1.8141 and 2.2222 shares of common stock (the “minimum conversion rate” and “maximum conversion rate,” respectively), each subject to adjustment. The number of shares of common stock issuable on conversion will be determined based on the average volume weighted average price per share of the Company's common stock over the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day prior to July 1, 2017. At any time prior to July 1, 2017, holders may elect to convert all or a portion of their shares of mandatory convertible preferred stock into shares of common stock at the minimum conversion rate. If any holder elects to convert shares of mandatory convertible preferred stock during a specified period beginning on the effective date of a fundamental change the conversion rate will be adjusted under certain circumstances and such holder will also be entitled to a fundamental change dividend make-whole amount.

On March 3, 2015, the Company's Board of Directors declared a dividend of $1.3125 per share in cash, or $2.3 million, for the Company’s 5.25% Mandatory Convertible Preferred Stock. As of March 31, 2015, the dividend was funded to the paying agent to be paid to shareholders of record as of March 15, 2015.

c.   Stock Incentive Plans

In May 2014, the Company adopted the AmSurg Corp. 2014 Equity and Incentive Plan.  The Company also has unvested restricted stock and fully vested options outstanding under the AmSurg Corp. 2006 Stock Incentive Plan, as amended, and the AmSurg Corp. 1997 Stock Incentive Plan, as amended, under which no additional awards may be granted.  Under these plans, the Company has granted restricted stock and non-qualified options to purchase shares of common stock to employees and outside directors from its authorized but unissued common stock.  At March 31, 2015, 1,200,000 shares were authorized for grant under the 2014 Equity and Incentive Plan and 773,718 shares were available for future equity grants.  Restricted stock granted to outside directors vests on the first anniversary of the date of grant.  Restricted stock granted to employees vests over four years in three equal installments beginning on the second anniversary of the date of grant. The fair value of restricted stock is determined based on the closing bid price of the Company’s common stock on the grant date.  Under Company policy, shares held by outside directors and senior management are subject to certain holding restrictions and anti-pledging activities.

No options have been issued subsequent to 2008 and all outstanding options are fully vested.  Options were granted at market value on the date of the grant and vested over four years.  Outstanding options have a term of ten years from the date of grant.

Other information pertaining to share-based activity during the three months ended March 31, 2015 and 2014 was as follows (in thousands):

	Three Months Ended March 31,
	2015		2014
Share-based compensation expense	$	3,709	$	2,458
Fair value of shares vested	11,474		9,175
Cash received from option exercises	1,746		488
Tax benefit from option exercises	3,317		1,727

As of March 31, 2015, the Company had total unrecognized compensation cost of approximately $24.9 million related to non-vested awards, which the Company expects to recognize through 2018 and over a weighted average period of 1.4 years.

For the three months ended March 31, 2015 and 2014, there were no options that were anti-dilutive.

A summary of the status of non-vested restricted shares at March 31, 2015 and changes during the three months ended March 31, 2015 is as follows:

			Weighted
	Number		Average
	of Shares		Grant Price
Non-vested shares at December 31, 2014	668,109		$	33.51
Shares granted	295,527		55.40
Shares vested	(208,701	)	26.62
Shares forfeited	(5,328	)	35.06
Non-vested shares at March 31, 2015	749,607		$	44.05

In addition to the non-vested restricted shares, during the three months ended March 31, 2015, the Company granted 68,945 performance-based restricted stock units to certain of its officers and physician employees. The fair value of our common stock on the grant date of these performance-based units was $55.40. The vesting of these restricted stock units is contingent on the Company’s achievement of a specified one-year financial performance goal for the year ended December 31, 2015. The performance-based restricted stock units will vest ratably over a three year period from the grant date. If the financial performance goal is not achieved, the restricted stock units will be forfeited. The number of performance-based units that ultimately vest will range from 0% to 150% of the units granted, depending on the Company’s level of achievement with respect to the financial performance goal. At March 31, 2015, the Company believes the performance-based units will vest at approximately 100%.

A summary of stock option activity for the three months ended March 31, 2015 is summarized as follows:

					Weighted
			Weighted		Average
			Average		Remaining
	Number		Exercise		Contractual
	of Shares		Price		Term (in years)
Outstanding at December 31, 2014	158,721		$	22.89	1.7
Options exercised with total intrinsic value of $2.9 million	(76,962	)	22.68
Options terminated	(5,000	)	25.76
Outstanding, Vested and Exercisable at March 31, 2015 with an aggregate intrinsic value of $3.0 million	76,759		$	22.92	0.7

The aggregate intrinsic value represents the total pre-tax intrinsic value received by the option holders on the exercise date or that would have been received by the option holders had all holders of in-the-money outstanding options at March 31, 2015 exercised their options at the Company’s closing stock price on March 31, 2015.

d. Earnings per Share

Basic net earnings attributable to AmSurg Corp. common stockholders, per common share, excludes dilution and is computed by dividing net earnings attributable to AmSurg Corp. common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net earnings attributable to AmSurg common stockholders, per common share is computed by dividing net earnings attributable to AmSurg Corp. common stockholders by the weighted-average number of common shares outstanding during the period plus any potential dilutive common share equivalents, including shares issuable (1) upon the vesting of restricted stock awards as determined under the treasury stock method and (2) upon conversion of the Company's 5.250% Mandatory Convertible Preferred Stock as determined under the if-converted method. For purposes of calculating diluted earnings per share, preferred stock dividends have been subtracted from both net earnings from continuing operations attributable to AmSurg Corp. and net earnings attributable to AmSurg Corp. common shareholders in periods in which utilizing the if-converted method would be anti-dilutive. For the three months ended March 31, 2015, approximately 3.2 million common share equivalents related to the Mandatory Convertible Preferred Stock were anti-dilutive and therefore are excluded from the dilutive weighted average number of shares outstanding.

The following is a reconciliation of the numerator and denominators of basic and diluted earnings per share (in thousands, except per share amounts):

	Three Months Ended March 31,
	Earnings		Shares	Per Share
	(Numerator)		(Denominator)	Amount
2015:
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders (basic)	$	18,774	47,572	$	0.39
Effect of dilutive securities, options and non-vested shares	—		333
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders (diluted)	$	18,774	47,905	$	0.39
2014:
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders (basic)	$	17,392	31,716	$	0.55
Effect of dilutive securities, options and non-vested shares	—		404
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders (diluted)	$	17,392	32,120	$	0.54