EX-99 2 g20907exv99.htm EX-99 exv99
Exhibit 99
Press Release
         
 
  Contact:   Claire M. Gulmi
 
      Executive Vice President and
 
      Chief Financial Officer
 
      (615) 665-1283
AMSURG ANNOUNCES THIRD-QUARTER NET EARNINGS
FROM CONTINUING OPERATIONS OF $0.44 PER DILUTED SHARE
NASHVILLE, Tenn. — (October 22, 2009) — Christopher A. Holden, President and Chief Executive Officer of AmSurg Corp. (NASDAQ: AMSG), today announced financial results for the third quarter ended September 30, 2009. Revenues for the third quarter increased 11% to $167,873,000 from $150,749,000 for the third quarter of 2008. Net earnings from continuing operations attributable to AmSurg common shareholders were $13,393,000, up 6% from $12,595,000. Net earnings from continuing operations per diluted share attributable to AmSurg common shareholders increased 13% to $0.44 for the third quarter of 2009 from $0.39 for the third quarter of 2008. As expected, the results for the third quarter of 2009 included an incremental negative impact of $0.02 per diluted share from the effect of the revision of the Medicare payment system for ASCs.
     Revenues for the first nine months of 2009 increased 12% to $500,141,000 from $447,050,000 for the first nine months in 2008. Net earnings from continuing operations attributable to AmSurg common shareholders rose 9% to $39,804,000 from $36,661,000. Net earnings from continuing operations per diluted share attributable to AmSurg common shareholders increased 12% to $1.29 from $1.15 for the comparable period in 2008. The results for the first nine months of 2009 included an incremental negative impact of $0.06 per diluted share from the effect of the revision of the Medicare payment system for ASCs.
     Mr. Holden commented, “We are pleased with our third-quarter performance given the continued impact of the economic downturn and Medicare payment system revision. As expected, our revenues and earnings were consistent with the seasonally stronger second quarter of 2009. The addition of 19 centers in operation since the end of the third quarter of 2008 primarily accounted for our 11% procedure growth for the third quarter of 2009 from the third quarter of 2008. Same-center revenue was flat with the third quarter last year, reflecting current economic conditions. In addition, the impact of the Medicare rule revision reduced same center revenue by approximately 100 basis points.
     “During the third quarter, we completed the acquisition of a small GI center. Through the first nine months of 2009, we have acquired five centers and opened one de novo center. At the quarter’s end, we had two centers under development, one of which is expected to open in the fourth quarter and one in 2010, and two centers under letter of intent, one of which we have subsequently acquired.
     “Our net cash flow provided by operating activities was $61,076,000 for the third quarter of 2009 compared with $55,500,000 for the third quarter of 2008. Distributions to
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AMSG Reports Third-Quarter Results
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October 22, 2009
noncontrolling interests were $32,689,000 and $32,136,000 for the third quarters of 2009 and 2008, respectively, and are included in cash flows from financing activities.
     “After third-quarter capital expenditures of $5.4 million primarily for maintenance and a center under development, we applied the majority of our available cash flow to reduce our debt by $21.8 million. As a result, our total debt to capitalization at the quarter’s end improved to 32.6% from 37.2% at the end of 2008. The ratio of total debt to trailing 12 months EBITDA also improved to 2.0 compared with 2.4 at the end of 2008.
     “Consistent with our guidance, we continue to expect net cash flow provided by operating activities less distributions to noncontrolling interests in a range of $95 million to $100 million for 2009, which should be sufficient to fund the majority of our capital needs. Our cash and cash equivalents totaled $30.6 million at the end of the third quarter and our availability under our revolving credit facility, which matures in July 2011, was approximately $79.7 million.
     “As we have discussed previously, our guidance for the addition of 13 to 16 centers for 2009 anticipated that the majority of our acquisitions would be completed late in the year and would have little impact on our 2009 earnings. Our pipeline of potential acquisitions is robust, and we expect to meet our guidance for center additions.
     “Today, we have revised our earnings guidance by raising the low end of the previously established range. This revision reflects our earnings performance through the first nine months of 2009. We have remained cautious in establishing earnings guidance for the fourth quarter because of the continuing weak economic environment. Our financial guidance for 2009 and the fourth quarter of 2009 is as follows:
•   Revenues in a range of $660 million to $680 million for 2009.
 
•   Same-center revenue growth is expected to be flat for the full year, which includes a negative impact of one percentage point from the effect of the Medicare payment system revision.
 
•   The addition of 13 to 16 new centers for the year.
 
•   Net earnings from continuing operations per diluted share attributable to common shareholders for 2009 in a range of $1.70 to $1.71, including a negative $0.07 impact from the effect of the revised Medicare payment system revision, compared with the previous guidance of $1.69 to $1.71.
 
•   Net earnings from continuing operations per diluted share attributable to common shareholders for the fourth quarter of 2009 in a range of $0.41 to $0.42 per diluted share.”
     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.
     Mr. Holden concluded, “AmSurg has continued to produce consistent, profitable results in the most difficult operating environment the Company has experienced. We believe the industry dynamics underlying these results combined with the strengths of our proven business
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AMSG Reports Third-Quarter Results
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October 22, 2009
model offer continuing potential for sustained long-term growth, despite the current limited visibility due to the economic environment. Simply put, ASCs provide high quality care in the most cost-effective, yet clinically appropriate, modality for an increasing number of surgical procedures. Demand for access to these procedures is growing. As one of the country’s leading ASC providers, we remain confident in our ability to manage through the current environment and to achieve our long-term growth objectives.”
     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 “Investor Relations” 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 the important factors, among others, set forth in AmSurg’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and other filings with the Securities and Exchange Commission, including the following risks: adverse impacts on the Company’s business associated with current and future economic conditions; 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 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; the Company’s ability to compete for physician partners, managed care contracts, patients and strategic relationships; adverse weather and other factors that may affect the Company’s surgery centers; 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; 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; and potential liability relating to the tax deductibility of goodwill. 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 September 30, 2009, AmSurg owned a majority interest in 194 continuing centers in operation and had two centers under development.
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AMSG Reports Third-Quarter Results
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October 22, 2009
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data
(Dollars in thousands, except per share amounts)
                                 
    For the Three Months     For the Nine Months  
    Ended September 30,     Ended September 30,  
Statement of Earnings Data:   2009     2008     2009     2008  
 
Revenues
   $ 167,873     $ 150,749     $ 500,141     $ 447,050  
Operating expenses:
                                
Salaries and benefits
     51,328       44,206       149,708       130,133  
Supply cost
     20,365       17,351       61,198       51,939  
Other operating expenses
     33,660       31,352       102,082       91,804  
Depreciation and amortization
     5,743       5,252       17,092       15,569  
 
                        
Total operating expenses
     111,096       98,161       330,080       289,445  
 
                        
Operating income
     56,777       52,588       170,061       157,605  
Interest expense, net
     1,921       2,331       5,986       7,626  
 
                        
Earnings from continuing operations before income taxes
     54,856       50,257       164,075       149,979  
Income tax expense
     8,944       8,017       26,855       24,327  
 
                        
Net earnings from continuing operations
     45,912       42,240       137,220       125,652  
Discontinued operations:
                                
(Loss) earnings from operations of discontinued interest in surgery centers, net of income taxes
     (1 )     (207 )     122       251  
Gain (loss) on disposal of discontinued interest in surgery centers, net of income taxes
     411       674       148       (635 )
 
                        
Net gain (loss) from discontinued operations
     410       467       270       (384 )
 
                        
Net earnings
     46,322       42,707       137,490       125,268  
Less net earnings attributable to noncontrolling interests:
                                
Net earnings from continuing operations
     32,519       29,645       97,416       88,991  
Discontinued operations
     —       678       75       943  
 
                        
Total net earnings attributable to noncontrolling interests
     32,519       30,323       97,491       89,934  
 
                        
Net earnings attributable to AmSurg Corp.
   $ 13,803     $ 12,384     $ 39,999     $ 35,334  
 
                        
Amounts attributable to AmSurg Corp. common shareholders:
                                
Net earnings from continuing operations
   $ 13,393     $ 12,595     $ 39,804     $ 36,661  
Discontinued operations
     410       (211 )     195       (1,327 )
 
                        
Net earnings
   $ 13,803     $ 12,384     $ 39,999     $ 35,334  
 
                        
Basic earnings per common share attributable to AmSurg Corp. common shareholders
                                
Net earnings from continuing operations
   $ 0.44     $ 0.40     $ 1.30     $ 1.16  
Discontinued operations
     0.01       (0.01 )     0.01       (0.04 )
 
                        
Net earnings
   $ 0.46     $ 0.39     $ 1.30     $ 1.12  
 
                        
Diluted earnings per common share attributable to AmSurg Corp. common shareholders
                                
Net earnings from continuing operations
   $ 0.44     $ 0.39     $ 1.29     $ 1.15  
Discontinued operations
     0.01       (0.01 )     0.01       (0.04 )
 
                        
Net earnings
   $ 0.45     $ 0.38     $ 1.29     $ 1.10  
 
                        
Weighted average number of shares and share equivalents (000’s):
                                
Basic
     30,195       31,719       30,699       31,499  
Diluted
     30,528       32,303       30,921       32,018  
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October 22, 2009
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data, continued
(Dollars in thousands, except per share amounts)
                                 
    For the Three Months     For the Nine Months  
    Ended September 30,     Ended September 30,  
Operating Data:   2009     2008     2009     2008  
 
                                
Continuing centers in operation at end of period
     194       175       194       175  
New centers added during the period
     1       3       6       7  
Centers under development/not opened at end of period
     2       3       2       3  
Centers under letter of intent
     2       13       2       13  
Average number of centers in operation
     194       173       192       171  
Average revenue per center
   $ 865     $ 870     $ 2,602     $ 2,608  
Same center revenues increase
     0 %     4 %     0 %     4 %
Procedures performed during the period
     310,676       279,537       927,499       825,702  
Income tax expense attributable to noncontrolling interests
   $ 93     $ 168     $ 439     $ 451  
Reconciliation of net earnings to EBITDA (1):
                                
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders
   $ 13,393     $ 12,595     $ 39,804     $ 36,661  
Add: income tax expense
     8,944       8,017       26,855       24,327  
Add: interest expense, net
     1,921       2,331       5,986       7,626  
Add: depreciation and amortization
     5,743       5,252       17,092       15,569  
 
                        
EBITDA
   $ 30,001     $ 28,195     $ 89,737     $ 84,183  
 
                        
 
(1)   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 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.
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October 22, 2009
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data, continued
(Dollars in thousands)
                 
    September 30,     Dec. 31,  
Balance Sheet Data:   2009     2008  
 
                
Assets
                
 
                
Current assets:
                
Cash and cash equivalents
   $ 30,646     $ 31,548  
Accounts receivable, net of allowance of $11,724 and $11,757 respectively
     66,647       63,602  
Supplies inventory
     7,811       8,083  
Deferred income taxes
     1,666       1,378  
Prepaid and other current assets
     13,640       17,223  
Current assets held for sale
     115       25  
 
            
 
                
Total current assets
     120,525       121,859  
 
                
Long-term receivables and deposits
     58       46  
Property and equipment, net
     109,271       111,884  
Goodwill, net
     694,067       661,693  
Intangible assets, net
     9,896       10,221  
Long-term assets held for sale
     640       176  
 
            
Total assets
   $ 934,457     $ 905,879  
 
            
 
                
Liabilities and Shareholders’ Equity
                
 
                
Current liabilities:
                
Current portion of long-term debt
   $ 5,341     $ 6,801  
Accounts payable
     10,961       14,240  
Accrued salaries and benefits
     19,272       12,040  
Other accrued liabilities
     3,309       3,246  
Current liabilities held for sale
     283       35  
 
            
Total current liabilities
     39,166       36,362  
 
                
Long-term debt
     232,792       265,835  
Deferred income taxes
     67,354       54,758  
Other long-term liabilities
     22,105       22,416  
Long-term liabilities held for sale
     35       —  
Noncontrolling interests — redeemable
     76,096       63,202  
Equity:
                
Common stock, no par value 70,000,000 shares authorized, 30,670,843 and 31,342,241 shares outstanding, respectively
     162,806       172,192  
Retained earnings
     331,087       291,088  
Accumulated other comprehensive loss, net of income taxes
     (2,151 )     (2,851 )
 
            
 
                
Total AmSurg Corp. shareholders’ equity
     491,742       460,429  
Noncontrolling interests — non-redeemable
     5,167       2,877  
 
            
Total equity
     496,909       463,306  
 
            
Total liabilities and shareholders’ equity
   $ 934,457     $ 905,879  
 
            
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October 22, 2009
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data, continued
(Dollars in thousands)
                                 
    For the Three Months     For the Nine Months  
    Ended September 30,     Ended September 30,  
Statement of Cash Flow Data:   2009     2008     2009     2008  
 
                                
Cash flows from operating activities:
                                
Net earnings
   $ 46,322     $ 42,707     $ 137,490     $ 125,268  
Adjustments to reconcile net earnings to net cash flows provided by operating activities:
                                
Depreciation and amortization
     5,743       5,252       17,092       15,569  
Net loss on sale and impairment of long-lived assets held for sale
     —       215       434       1,076  
Share-based compensation
     861       1,293       3,102       3,701  
Excess tax benefit from share-based compensation
     (27 )     (838 )     (27 )     (1,316 )
Deferred income taxes
     4,099       4,258       11,240       10,190  
Increase (decrease) in cash and cash equivalents, net of effects of acquisition and dispositions, due to changes in:
                                
Accounts receivable, net
     991       (164 )     (2,102 )     (3,063 )
Supplies inventory
     4       190       376       16  
Prepaid and other current assets
     476       872       1,021       1,972  
Accounts payable
     (1,254 )     38       (944 )     (1,765 )
Accrued expenses and other liabilities
     3,877       2,228       8,138       2,416  
Other, net
     (16 )     (551 )     248       111  
 
                        
Net cash flows provided by operating activities
     61,076       55,500       176,068       154,175  
 
                                
Cash flows from investing activities:
                                
Acquisition of interest in surgery centers and related transactions
     (370 )     (19,213 )     (19,705 )     (42,810 )
Acquisition of property and equipment
     (5,079 )     (4,127 )     (16,509 )     (13,565 )
Proceeds from sale of surgery center
     —       3,753       898       3,753  
Repayment of notes receivable
     417       209       1,666       1,459  
 
                        
Net cash flows used in investing activities
     (5,032 )     (19,378 )     (33,650 )     (51,163 )
 
                                
Cash flows from financing activities:
                                
Proceeds from long-term borrowings
     11,309       22,615       52,459       57,771  
Repayment on long-term borrowings
     (33,116 )     (32,824 )     (87,049 )     (87,653 )
Distributions to noncontrolling interests
     (32,689 )     (32,136 )     (97,195 )     (88,993 )
Proceeds from issuance of common stock upon exercise of stock options
     178       6,946       178       9,935  
Repurchase of common stock
     —       —       (12,587 )     —  
Capital contributions and ownership transactions by noncontrolling interests
     746       —       858       548  
Excess tax benefit from share-based compensation
     27       838       27       1,316  
Financing cost incurred
     (9 )     (23 )     (11 )     (32 )
 
                        
Net cash flows used in financing activities
     (53,554 )     (34,584 )     (143,320 )     (107,108 )
 
                        
Net increase (decrease) in cash and cash equivalents
     2,490       1,538       (902 )     (4,096 )
Cash and cash equivalents, beginning of period
     28,156       24,319       31,548       29,953  
 
                        
Cash and cash equivalents, end of period
   $ 30,646     $ 25,857     $ 30,646     $ 25,857  
 
                        
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