EX-99 2 g24115exv99.htm EX-99 exv99
Exhibit 99
Press Release
         
 
  Contact:   Claire M. Gulmi
 
      Executive Vice President and
 
      Chief Financial Officer
 
      (615) 665-1283
AMSURG ANNOUNCES SECOND-QUARTER NET EARNINGS
FROM CONTINUING OPERATIONS OF $0.43 PER DILUTED SHARE
 

ESTABLISHES THIRD-QUARTER EARNINGS GUIDANCE
NASHVILLE, Tenn. — (July 22, 2010) — Christopher A. Holden, President and Chief Executive Officer of AmSurg Corp. (NASDAQ: AMSG), today announced financial results for the second quarter ended June 30, 2010. Revenues were $179,895,000 for the quarter, an increase of 7% from $168,844,000 for the second quarter of 2009. Net earnings from continuing operations attributable to AmSurg common shareholders for the second quarter of 2010 were $13,133,000, or $0.43 per diluted share, compared with $13,798,000, or $0.45 per diluted share, for the second quarter last year. The results for the second quarter of 2010 included an incremental negative impact of $0.01 per diluted share from the revision of the Medicare payment system for ASCs and $0.02 per diluted share from the higher interest costs related to the refinancing of the Company’s credit facility in May 2010.
     Revenues for the first six months of 2010 increased 6% to $352,417,000 from $332,268,000 for the first six months of 2009. Net earnings from continuing operations attributable to AmSurg common shareholders were $25,980,000, or $0.85 per diluted share, for the first half of 2010 compared with $26,411,000, or $0.85 per diluted share, for the first six months of 2009. The results for the first six months of 2010 included an incremental negative impact of $0.03 per diluted share from the revision of the Medicare payment system for ASCs and $0.02 per diluted share from the higher interest costs related to the refinancing of the Company’s credit facility.
     Mr. Holden commented, “AmSurg’s operating and financial results for the second quarter continued to reflect the impact of a challenging economic environment for the ASC industry. We are pleased that our second-quarter performance improved over the first quarter of 2010. However, consistent with our guidance and prior-quarter experience, same-center revenues were down 2%. Total procedures increased 3% for the quarter due to the 13 acquired or de novo centers added since the beginning of the second quarter last year, including one center that was acquired in the quarter just ended. This procedure growth, together with a procedure mix-driven increase in average revenue per procedure, accounted for the 7% growth in second-quarter revenues from the second quarter last year.
     “AmSurg acquired two centers during the first half of 2010 and at June 30, 2010, had six centers under letter of intent, one of which has since been acquired. We also had one center under development, which is expected to open in early 2011. We continue to expect to acquire a total of 13 to 16 centers for all 2010.
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AMSG Reports Second-Quarter Results
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July 22, 2010
     “Our ability to fund this expansion plan was strengthened during the second quarter through our successful debt refinancing. We secured a new $375 million revolving credit facility that matures in May 2015 and completed a private placement of $75 million in 6.04% fixed rate senior notes maturing in 2020. In addition, our net cash flows provided by operating activities less distributions to noncontrolling interests totaled $17,168,000 for the second quarter, which funded all our net capital expenditures for the quarter with the remaining free cash flow used primarily for debt reduction.
     “As a result of our second-quarter earnings and debt reduction, the ratio of total debt to trailing 12 months EBITDA at the end of the second quarter improved to 2.5 from 2.6 at March 31, 2010. Through the combination of cash and cash equivalents of $26,513,000 at June 30, 2010, anticipated net cash flows provided by operating activities for 2010 and availability under the revolving credit facility of approximately $170 million, we are well positioned to fund our acquisition strategy for the foreseeable future.
     “Based on AmSurg’s results for the first half of 2010 and outlook for the remainder of the year, we today affirm our existing financial guidance for 2010 revenues and earnings, while reducing the range for net cash flow, and establish guidance for the third quarter of 2010, as follows:
  •   Revenues in a range of $715.0 million to $735.0 million for 2010.
  •   Same-center revenues to decline 1% to 2% for 2010.
  •   The addition of 13 to 16 new centers for the year.
  •   Net cash flow provided by operating activities less distributions to noncontrolling interests in a range of $90.0 million to $100.0 million compared with previous guidance of $100.0 million to $105.0 million.
  •   Net earnings from continuing operations per diluted share attributable to common shareholders for 2010 in a range of $1.69 to $1.75, which includes a negative $0.06 impact from the effect of the revised Medicare payment system revision and a negative $0.10 impact from higher interest costs related to the refinancing of our revolving credit facility.
  •   Net earnings from continuing operations per diluted share attributable to common shareholders for the third quarter of 2010 in a range of $0.41 to $0.43 per diluted share, including a negative $0.01 impact from the effect of the revised Medicare payment system revision and a negative $0.04 impact from the higher interest costs related to the refinancing of our credit facility.”
     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, “We continue to be cautious in our outlook for the remainder of 2010, given the soft procedure volume for the first half of the year and continued uncertainty about the strength of the economy during the second half of 2010. Despite this difficult environment, AmSurg continued to produce solid profitability for the second quarter and substantial cash flows. Our financial position is strong, and we have a robust pipeline of
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AMSG Reports Second-Quarter Results
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July 22, 2010
potential acquisitions, supporting our confidence in meeting our center addition guidance for the year. We are very well positioned to manage our business successfully through this current uncertainty, while building our center network, systems infrastructure, service capabilities and human capital to leverage our long-term growth opportunities.
     “Demographic trends clearly support sustained long-term growth in GI, ophthalmology and other types of procedures that are performed in our centers. In addition, under healthcare reform, millions of people previously underserved by the healthcare system will have new or enhanced access to these types of services. We expect that the freestanding ASC industry, with a proven record of providing high quality care in the most affordable modality, will play a significant role in meeting this demand. Based on AmSurg’s operating the largest number of ASC centers in the country and maintaining the leading market share in GI and ophthalmology ASC procedures, we are also confident these market dynamics also strengthen AmSurg’s prospects for long-term growth and increased shareholder value.”
     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, 2009, 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
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AMSG Reports Second-Quarter Results
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July 22, 2010
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 June 30, 2010, AmSurg owned a majority interest in 204 continuing centers in operation and had one center under development.
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AMSG Reports Second-Quarter Results
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July 22, 2010
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,  
    2010     2009     2010     2009  
Statement of Earnings Data:
                                
 
                                
Revenues
   $ 179,895     $ 168,844     $ 352,417     $ 332,268  
 
                                
Operating expenses:
                                
Salaries and benefits
     52,471       49,388       104,325       98,380  
Supply cost
     23,537       20,967       46,574       40,833  
Other operating expenses
     38,767       34,383       76,341       68,422  
Depreciation and amortization
     5,986       5,702       11,783       11,349  
 
                        
 
                                
Total operating expenses
     120,761       110,440       239,023       218,984  
 
                        
 
                                
Operating income
     59,134       58,404       113,394       113,284  
 
                                
Interest expense
     3,166       2,038       5,037       4,065  
 
                        
Earnings from continuing operations before income taxes
     55,968       56,366       108,357       109,219  
Income tax expense
     9,362       9,365       18,086       17,911  
 
                        
 
                                
Net earnings from continuing operations
     46,606       47,001       90,271       91,308  
 
                                
Discontinued operations:
                                
Earnings (loss) from operations of discontinued interest in surgery centers, net of income tax
     22       115       (131 )     123  
Loss on disposal of discontinued interest in surgery centers, net of income tax
     —       (263 )     —       (263 )
 
                        
 
                                
Net earnings (loss) from discontinued operations
     22       (148 )     (131 )     (140 )
 
                        
 
                                
Net earnings
     46,628       46,853       90,140       91,168  
 
                                
Less net earnings attributable to noncontrolling interests:
                                
Net earnings from continuing operations
     33,473       33,203       64,291       64,897  
Net earnings from discontinued operations
     13       70       10       75  
 
                        
 
                                
Total net earnings attributable to noncontrolling interests
     33,486       33,273       64,301       64,972  
 
                        
 
                                
Net earnings attributable to AmSurg Corp. common shareholders
   $ 13,142     $ 13,580     $ 25,839     $ 26,196  
 
                        
 
                                
Amounts attributable to AmSurg Corp. common shareholders:
                                
Earnings from continuing operations, net of income tax
   $ 13,133     $ 13,798     $ 25,980     $ 26,411  
Discontinued operations, net of income tax
     9       (218 )     (141 )     (215 )
 
                        
 
                                
Net earnings attributable to AmSurg Corp. common shareholders
   $ 13,142     $ 13,580     $ 25,839     $ 26,196  
 
                        
 
                                
Earnings per share-basic:
                                
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders
   $ 0.43     $ 0.45     $ 0.86     $ 0.85  
Net loss from discontinued operations attributable to AmSurg Corp. common shareholders
     —       (0.01 )     —       (0.01 )
 
                        
 
                                
Net earnings attributable to AmSurg Corp. common shareholders
   $ 0.43     $ 0.44     $ 0.85     $ 0.85  
 
                        
 
                                
Earnings per share — diluted:
                                
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders
   $ 0.43     $ 0.45     $ 0.85     $ 0.85  
Net loss from discontinued operations attributable to AmSurg Corp. common shareholders
     —       (0.01 )     —       (0.01 )
 
                        
 
                                
Net earnings attributable to AmSurg Corp. common shareholders
   $ 0.43     $ 0.44     $ 0.84     $ 0.84  
 
                        
 
                                
Weighted average number of shares and share equivalents (000’s):
                                
Basic
     30,239       30,660       30,226       30,952  
Diluted
     30,655       30,828       30,685       31,117  
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July 22, 2010
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,  
    2010     2009     2010     2009  
Operating Data:
                                
 
                                
Continuing centers in operation at end of period
     204       193       204       193  
New centers added during the period
     1       2       2       5  
Centers under development/not opened at end of period
     1       2       1       2  
Centers under letter of intent
     6       1       6       1  
Average number of centers in operation
     204       192       203       191  
Average revenue per center
   $ 884     $ 880     $ 1,737     $ 1,737  
Same center revenues (decrease) increase
     (2 %)     0 %     (2 %)     0 %
Procedures performed during the period
     324,504       313,797       632,810       616,823  
Income tax expense attributable to noncontrolling interests
   $ 213     $ 183     $ 399     $ 346  
Reconciliation of net earnings to EBITDA (1):
                                
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders
   $ 13,133     $ 13,798     $ 25,980     $ 26,411  
Add: income tax expense
     9,362       9,365       18,086       17,911  
Add: interest expense, net
     3,166       2,038       5,037       4,065  
Add: depreciation and amortization
     5,986       5,702       11,783       11,349  
 
                        
EBITDA
   $ 31,647     $ 30,903     $ 60,886     $ 59,736  
 
                        
 
(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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AMSG Reports Second-Quarter Results
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July 22, 2010
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data, continued
(Dollars in thousands)
                 
    June 30,     December 31,  
    2010     2009  
Balance Sheet Data:
                
 
Assets
                
 
                
Current assets:
                
Cash and cash equivalents
   $ 26,513     $ 29,377  
Accounts receivable, net of allowance of $13,632 and $12,375 respectively
     70,985       66,886  
Supplies inventory
     9,260       8,745  
Deferred income taxes
     2,717       2,324  
Prepaid and other current assets
     13,547       15,408  
Current assets held for sale
     28       34  
 
            
 
                
Total current assets
     123,050       122,774  
 
                
Long-term receivables and deposits
     —       56  
Property and equipment, net
     112,502       112,084  
Goodwill
     859,759       813,876  
Intangible assets, net
     13,920       9,797  
Long-term assets held for sale
     181       170  
 
            
 
                
Total assets
   $ 1,109,412     $ 1,058,757  
 
            
 
                
Liabilities and Equity
                
 
                
Current liabilities:
                
Current portion of long-term debt
   $ 5,968     $ 5,657  
Accounts payable
     12,114       14,821  
Accrued salaries and benefits
     15,136       18,156  
Other accrued liabilities
     3,398       3,208  
Income taxes payable
     —       402  
Current liabilities held for sale
     39       37  
 
            
 
                
Total current liabilities
     36,655       42,281  
 
                
Long-term debt
     292,833       289,041  
Deferred income taxes
     80,498       71,665  
Other long-term liabilities
     21,825       22,036  
Noncontrolling interests — redeemable
     137,321       123,363  
Equity:
                
Common stock, no par value 70,000,000 shares authorized, 30,918,014 and 30,674,327 shares outstanding, respectively
     167,663       163,729  
Retained earnings
     369,075       343,236  
Accumulated other comprehensive loss, net of income taxes
     (1,241 )     (1,849 )
 
            
 
                
Total AmSurg Corp. equity
     535,497       505,116  
Noncontrolling interests — non-redeemable
     4,783       5,255  
 
            
 
                
Total equity
     540,280       510,371  
 
            
 
                
Total liabilities and equity
   $ 1,109,412     $ 1,058,757  
 
            
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AMSG Reports Second-Quarter Results
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July 22, 2010
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,  
    2010     2009     2010     2009  
Statement of Cash Flow Data:
                                
 
                                
Cash flows from operating activities:
                                
Net earnings
   $ 46,628     $ 46,853     $ 90,140     $ 91,168  
Adjustments to reconcile net earnings to net cash flows provided by operating activities:
                                
Depreciation and amortization
     5,986       5,702       11,783       11,349  
Net loss on sale and impairment of long-lived assets held for sale
     —       434       —       434  
Share-based compensation
     1,309       1,167       2,540       2,241  
Excess tax benefit from share-based compensation
     (23 )     —       (69 )     —  
Deferred income taxes
     4,339       3,407       8,045       7,141  
Increase (decrease) in cash and cash equivalents, net of effects of acquisition and dispositions, due to changes in:
                                
Accounts receivable, net
     (1,916 )     1,475       (2,882 )     (3,093 )
Supplies inventory
     207       147       225       372  
Prepaid and other current assets
     760       (2,107 )     1,895       545  
Accounts payable
     (1,120 )     (454 )     (2,773 )     310  
Accrued expenses and other liabilities
     (3,908 )     (1,028 )     (2,385 )     4,261  
Other, net
     298       84       365       264  
 
                        
 
                                
Net cash flows provided by operating activities
     52,560       55,680       106,884       114,992  
 
                                
Cash flows from investing activities:
                                
Acquisition of interest in surgery centers and related transactions
     (5,526 )     (2,920 )     (33,201 )     (19,246 )
Acquisition of property and equipment
     (4,021 )     (4,010 )     (7,531 )     (11,430 )
Repayment of notes receivable
     —       625       —       2,147  
 
                        
 
                                
Net cash flows used in investing activities
     (9,547 )     (6,305 )     (40,732 )     (28,529 )
 
                                
Cash flows from financing activities:
                                
Proceeds from long-term borrowings
     103,068       15,200       139,689       41,150  
Repayment on long-term borrowings
     (113,243 )     (33,270 )     (139,156 )     (53,933 )
Distributions to noncontrolling interests
     (35,392 )     (34,561 )     (65,621 )     (64,506 )
Proceeds from issuance of common stock upon exercise of stock options
     246       —       542       —  
Repurchase of common stock
     —       —       —       (12,587 )
Capital contributions and ownership transactions by noncontrolling interests
     3       23       (137 )     23  
Excess tax benefit from share-based compensation
     23       —       69       —  
Financing cost incurred
     (4,377 )     —       (4,402 )     (2 )
 
                        
 
                                
Net cash flows used in financing activities
     (49,672 )     (52,608 )     (69,016 )     (89,855 )
 
                        
 
                                
Net decrease in cash and cash equivalents
     (6,659 )     (3,233 )     (2,864 )     (3,392 )
Cash and cash equivalents, beginning of period
     33,172       31,389       29,377       31,548  
 
                        
 
                                
Cash and cash equivalents, end of period
   $ 26,513     $ 28,156     $ 26,513     $ 28,156  
 
                        
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