EX-99 2 g14317exv99.htm EX-99 PRESS RELEASE EX-99 PRESS RELEASE
Exhibit 99
AMSG Reports Second-Quarter Results
Page 2
July 22, 2008
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 $0.39 PER DILUTED SHARE
NASHVILLE, Tenn. — (July 22, 2008) — Christopher A. Holden, President and Chief Executive Officer of AmSurg Corp. (NASDAQ: AMSG), today announced financial results for the second quarter and six months ended June 30, 2008. Revenues increased 18% to a record $152,105,000 for the quarter from $128,406,000 for the second quarter of 2007. Net earnings from continuing operations rose 18% to $12,548,000 from $10,634,000. Net earnings from continuing operations per diluted share were $0.39 for the second quarter of 2008, an increase of 15% from $0.34 for the second quarter of 2007.
     Revenue for the first six months of 2008 was $299,210,000, up 19% from $252,097,000 for the first half of 2007. Net earnings from continuing operations increased 19% to $24,294,000 from $20,397,000. Net earnings from continuing operations per diluted share grew 15% to $0.76 for the first six months of 2008 from $0.66 for the comparable period in 2007.
     Mr. Holden commented, “With solid second-quarter results that met our expectations, AmSurg remains well on-track to achieve its financial and operating objectives for 2008. We are pleased to note that, even with the impact of the Medicare rule revising the payment system for ASCs, which reduced net earnings from continuing operations during the quarter by approximately $0.01 per diluted share, we were able to maintain a strong EBITDA margin of 18.9%.
     “Our second-quarter revenue growth reflected a 19% increase in procedures compared with the second quarter of 2007. We produced most of this increase through the addition of 19 acquired or de novo centers since the second quarter last year. Procedure growth accounted for a 3% increase in same-center revenue for the second quarter. During the quarter, we acquired two centers that had been under letter of intent at the end of the first quarter, classified one center as held for sale and disposed of two centers, bringing the total of continuing centers in operation to 176 at the end of the quarter. We also added a center under development and completed the quarter with three centers under development, one of which is expected to open in 2008. We entered into four new letters of intent during the quarter for three center acquisitions and a de novo center, giving us a total of five centers under letter of intent at the quarter’s end, and we had one center awaiting certificate of need certification.
     “The center classified as held for sale will be sold to a hospital and is expected to close in the third quarter. We also disposed of two non-operational centers. The net loss associated with the operations and dispositions of these centers was $0.04 per share and is reflected in discontinued operations.
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AMSG Reports Second-Quarter Results
Page 2
July 22, 2008
     “AmSurg’s cash flow from operations for the second quarter was $20.3 million, which funded all of our acquisition and maintenance capital expenditures during the period. Cash and cash equivalents increased to $24,319,000 at June 30, 2008, from $24,116,000 at the end of the first quarter of 2008, while long-term debt decreased to $198,620,000 from $200,219,000. We remain well positioned to execute our center acquisition strategy, with debt to total capital of 32% at the end of the second quarter and a ratio of total debt to trailing 12 months EBITDA of 1.9. We also have approximately $115 million in availability under our revolving credit facility.
     Based on AmSurg’s financial performance for the first six months of 2008, as well as its outlook for the remainder of the year, the Company today affirmed its established guidance for 2008 and provided its guidance for the third quarter of the year as follows:
  •   Revenues in a range of $600 million to $620 million for 2008.
 
  •   Same-center revenue growth of 3% to 4% for the full year, which includes a negative impact of one percentage point from the effect of the Medicare rule revising the payment system for ASCs, which was effective January 1, 2008.
 
  •   The addition of 12 to 15 centers for the year, including the opening of one de novo center.
 
  •   An estimated effective income tax rate for the year of 39.8%.
 
  •   Net earnings per diluted share for 2008 in a range of $1.53 to $1.55, including a negative $0.05 impact from the effect of the revised Medicare payment system.
 
  •   Net earnings per diluted share for the third quarter of 2008 in a range of $0.38 to $0.39 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, “We are encouraged by AmSurg’s steady operating and financial performance in an uncertain economic environment. The consistency of our continuing centers in operation, our robust pipeline of potential new centers and our strong financial position support our confidence in achieving our guidance for 2008.
     “We also remain fully engaged in a number of initiatives designed to improve our business model and, thereby, enhance our continuing ability to be the strategic partner of choice for physicians. As we progress on these initiatives in the quarters ahead, we expect to increase the value proposition we provide our physician partners, our center patients and our shareholders.”
     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 through the end of business on October 20, 2008.
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AMSG Reports Second-Quarter Results
Page 2
July 22, 2008
     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, 2007, and other filings with the Securities and Exchange Commission, including 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; 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; risks associated with weather and other factors that may affect the Company’s surgery centers; uncertainties associated with judicial, regulatory and legislative developments in New Jersey; 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; risks associated with the Company’s status as a general partner of limited partnerships; 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 write-off of the impaired portion of intangible assets; and risks associated with 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, 2008, AmSurg owned a majority interest in 176 continuing centers in operation and had three centers under development.
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AMSG Reports Second-Quarter Results
Page 4
July 22, 2008
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,  
    2008     2007     2008     2007  
Statement of Earnings Data:
                                
 
Revenues
   $ 152,105     $ 128,406     $ 299,210     $ 252,097  
 
                                
Operating expenses:
                                
Salaries and benefits
     43,999       37,231       86,893       74,622  
Supply cost
     17,786       14,566       34,798       28,533  
Other operating expenses
     30,759       27,229       61,213       51,404  
Depreciation and amortization
     5,303       4,589       10,533       9,131  
 
                        
 
Total operating expenses
     97,847       83,615       193,437       163,690  
 
                        
 
Operating income
     54,258       44,791       105,773       88,407  
 
Minority interest
     30,879       25,638       59,992       50,599  
Interest expense, net
     2,509       2,160       5,311       4,609  
 
                        
 
Earnings from continuing operations before income taxes
     20,870       16,993       40,470       33,199  
Income tax expense
     8,322       6,359       16,176       12,802  
 
                        
 
Net earnings from continuing operations
     12,548       10,634       24,294       20,397  
 
Discontinued operations:
                                
(Loss) earnings from operations of discontinued interests in surgery centers, net of income tax expense
     (115 )     411       (155 )     925  
(Loss) gain on disposal of discontinued interests in surgery centers, net of income tax (benefit) expense
     (1,189 )     147       (1,189 )     147  
 
                        
 
Net (loss) earnings from discontinued operations
     (1,304 )     558       (1,344 )     1,072  
 
                        
 
Net earnings
   $ 11,244     $ 11,192     $ 22,950     $ 21,469  
 
                        
 
                                
Basic earnings per common share:
                                
Net earnings from continuing operations
   $ 0.40     $ 0.35     $ 0.77     $ 0.67  
Net earnings
   $ 0.36     $ 0.37     $ 0.73     $ 0.71  
Diluted earnings per common share:
                                
Net earnings from continuing operations
   $ 0.39     $ 0.34     $ 0.76     $ 0.66  
Net earnings
   $ 0.35     $ 0.36     $ 0.72     $ 0.70  
 
                                
Weighted average number of shares and share equivalents (000’s):
                                
Basic
     31,479       30,541       31,388       30,294  
Diluted
     31,962       31,085       31,876       30,795  
 
                                
Operating Data:
                                
 
Continuing centers in operation at end of period
     176       157       176       157  
Centers under development/not opened at end of period
     3       4       3       4  
Development centers awaiting CON approval at end of period
     1       —       1       —  
Centers under letter of intent
     5       8       5       8  
Average number of centers in operation
     175       159       175       159  
Average revenue per center
   $ 869     $ 806     $ 1,715     $ 1,586  
Same center revenues increase
     3 %     3 %     3 %     3 %
Procedures performed during the period
     282,205       236,234       552,808       463,826  
Reconciliation of net earnings to EBITDA (1):
                                
Net earnings from continuing operations
   $ 12,548     $ 10,634     $ 24,294     $ 20,397  
Add: income tax expense
     8,322       6,359       16,176       12,802  
Add: interest expense, net
     2,509       2,160       5,311       4,609  
Add: depreciation and amortization
     5,303       4,589       10,533       9,131  
 
                        
 
EBITDA
   $ 28,682     $ 23,742     $ 56,314     $ 46,939  
 
                        
 
(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 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
Page 5
July 22, 2008
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data
(Dollars in thousands)
                 
    June 30,     Dec. 31,  
    2008     2007  
Balance Sheet Data:
                
 
Assets
                
 
                
Current assets:
                
Cash and cash equivalents
   $ 24,319     $ 29,953  
Accounts receivable, net of allowance of $9,328 and $8,310 respectively
     64,960       61,284  
Supplies inventory
     7,441       6,882  
Deferred income taxes
     1,559       1,354  
Prepaid and other current assets
     17,391       18,509  
Current assets held for sale
     163       —  
 
            
 
Total current assets
     115,833       117,982  
 
                
Long-term receivables and deposits
     348       1,653  
Property and equipment, net
     102,499       104,874  
Intangible assets, net
     577,612       557,125  
Long-term assets held for sale
     2,613       —  
 
            
 
Total assets
   $ 798,905     $ 781,634  
 
            
 
                
Liabilities and Shareholders’ Equity
                
 
                
Current liabilities:
                
Current portion of long-term debt
   $ 4,993     $ 5,781  
Accounts payable
     10,263       12,703  
Accrued salaries and benefits
     13,090       12,415  
Other accrued liabilities
     2,847       2,291  
Current income taxes payable
     —       1,000  
Current liabilities held for sale
     616       —  
 
            
 
Total current liabilities
     31,809       34,190  
 
                
Long-term debt
     198,620       216,822  
Deferred income taxes
     48,223       41,990  
Other long-term liabilities
     14,522       15,401  
Long-term liabilities held for sale
     184       —  
Minority interest
     65,453       62,006  
Shareholders’ equity:
                
Common stock, no par value 70,000,000 shares authorized, 31,516,921 and 31,202,629 shares outstanding, respectively
     181,039       172,536  
Deferred compensation
     (6,544 )     (3,916 )
Retained earnings
     266,992       244,042  
Accumulated other comprehensive loss, net of income taxes
     (1,393 )     (1,437 )
 
            
 
Total shareholders’ equity
     440,094       411,225  
 
            
 
Total liabilities and shareholders’ equity
   $ 798,905     $ 781,634  
 
            

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AMSG Reports Second-Quarter Results
Page 6
July 22, 2008
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data
(Dollars in thousands)
                                 
    For the Three Months     For the Six Months  
    Ended June 30,     Ended June 30,  
    2008     2007     2008     2007  
Statement of Cash Flow Data:
                                
 
Cash flows from operating activities:
                                
Net earnings
   $ 11,244     $ 11,192     $ 22,950     $ 21,469  
Adjustments to reconcile net earnings to net cash flows provided by operating activities:
                                
Minority interest
     30,879       25,638       59,992       50,599  
Distributions to minority partners
     (29,918 )     (26,773 )     (56,857 )     (49,352 )
Depreciation and amortization
     5,303       4,589       10,533       9,131  
Net loss on sale and impairment of long-lived assets
     861       1,066       861       1,066  
Share-based compensation
     1,342       1,194       2,408       2,272  
Excess tax benefit from share-based compensation
     (207 )     (1,044 )     (478 )     (1,924 )
Deferred income taxes
     3,418       1,679       5,932       3,410  
Increase (decrease) in cash and cash equivalents, net of effects of acquisition and dispositions, due to changes in:
                                
Accounts receivable, net
     (540 )     (1,892 )     (2,899 )     (4,193 )
Supplies inventory
     (42 )     30       (174 )     208  
Prepaid and other current assets
     837       1,697       1,100       627  
Accounts payable
     (10 )     149       (1,803 )     (2,381 )
Accrued expenses and other liabilities
     (2,794 )     (3,628 )     188       1,596  
Other, net
     (50 )     485       65       940  
 
                        
 
Net cash flows provided by operating activities
     20,323       14,382       41,818       33,468  
 
                                
Cash flows from investing activities:
                                
Acquisition of interest in surgery centers
     (15,700 )     (6,654 )     (23,597 )     (48,867 )
Acquisition of property and equipment
     (4,903 )     (6,053 )     (9,438 )     (10,202 )
Proceeds from sale of surgery center
     —       1,659       —       1,659  
Decrease in long-term receivables
     625       640       1,250       1,071  
 
                        
 
Net cash flows used in investing activities
     (19,978 )     (10,408 )     (31,785 )     (56,339 )
 
                                
Cash flows form financing activities:
                                
Proceeds from long-term borrowings
     24,200       11,568       35,156       55,269  
Repayment on long-term borrowings
     (26,623 )     (25,076 )     (54,829 )     (44,609 )
Proceeds from issuance of common stock upon exercise of stock options
     1,850       4,705       2,989       8,608  
Proceeds from capital contributions by minority partners
     227       —       548       32  
Excess tax benefit from share-based compensation
     207       1,044       478       1,924  
Financing cost incurred
     (3 )     (1 )     (9 )     (6 )
 
                        
 
Net cash flows (used in) provided by financing activities
     (142 )     (7,760 )     (15,667 )     21,218  
 
                        
 
Net increase (decrease) in cash and cash equivalents
     203       (3,786 )     (5,634 )     (1,653 )
Cash and cash equivalents, beginning of period
     24,116       22,216       29,953       20,083  
 
                        
 
Cash and cash equivalents, end of period
   $ 24,319     $ 18,430     $ 24,319     $ 18,430  
 
                        

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AMSG Reports Second-Quarter Results
Page 7
July 22, 2008
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data
(In thousands)
Presented below is certain statement of earnings and operating data for the three months ended March 31, 2008 and fiscal year 2007, which have been restated in order to present additional discontinued operations.
                                                 
    Three                                     Year  
    Months Ended     Three Months Ended     Ended  
    March 31,     March 31,     June 30,     Sept. 30,     Dec. 31,     Dec. 31,  
    2008     2007     2007     2007     2007     2007  
Statement of Earnings Data:
                                                
 
Revenues
   $ 147,105     $ 123,691     $ 128,406     $ 129,295     $ 143,006     $ 524,398  
 
                                                
Operating expenses:
                                                
Salaries and benefits
     42,894       37,391       37,231       38,218       41,360       154,200  
Supply cost
     17,012       13,967       14,566       15,076       16,681       60,290  
Other operating expenses
     30,454       24,175       27,229       26,165       29,747       107,316  
Depreciation and amortization
     5,230       4,542       4,589       4,735       5,257       19,123  
 
                                    
 
Total operating expenses
     95,590       80,075       83,615       84,194       93,045       340,929  
 
                                    
 
Operating income
     51,515       43,616       44,791       45,101       49,961       183,469  
 
Minority interest
     29,113       24,961       25,638       25,687       27,999       104,285  
Interest expense, net
     2,802       2,449       2,160       2,179       2,869       9,657  
 
                                    
 
Earnings from continuing operations before income taxes
     19,600       16,206       16,993       17,235       19,093       69,527  
Income tax expense
     7,854       6,443       6,359       6,689       7,554       27,045  
 
                                    
 
Net earnings from continuing operations
     11,746       9,763       10,634       10,546       11,539       42,482  
 
                                                
Discontinued operations:
                                                
(Loss) earnings from operations of discontinued interest in surgery centers, net of income taxes
     (40 )     514       411       149       289       1,363  
Gain (loss) on disposal of discontinued interest in surgery centers, net of income tax expense (benefit)
     —       —       147       (705 )     888       330  
 
                                    
 
Net earnings (loss) from discontinued operations
     (40 )     514       558       (556 )     1,177       1,693  
 
                                    
 
 
                                                
Net earnings
   $ 11,706     $ 10,277     $ 11,192     $ 9,990     $ 12,716     $ 44,175  
 
                                    
 
                                                
Basic earnings per common share:
                                                
Net earnings from continuing operations
   $ 0.38     $ 0.32     $ 0.35     $ 0.34     $ 0.37     $ 1.39  
Net earnings
   $ 0.37     $ 0.34     $ 0.37     $ 0.32     $ 0.41     $ 1.44  
Diluted earnings per common share:
                                                
Net earnings from continuing operations
   $ 0.37     $ 0.32     $ 0.34     $ 0.34     $ 0.36     $ 1.37  
Net earnings
   $ 0.37     $ 0.34     $ 0.36     $ 0.32     $ 0.40     $ 1.42  
 
                                                
Weighted average number of shares and share equivalents (000’s):
                                                
Basic
     31,298       30,046       30,541       30,778       31,110       30,619  
Diluted
     31,790       30,505       31,085       31,175       31,644       31,102  
 
                                                
Operating Data:
                                                
 
                                                
Procedures
     270,603       227,592       236,234       241,688       261,864       967,378  
Reconciliation of net earnings to EBITDA (1):
                                                
Net earnings from continuing operations
   $ 11,746     $ 9,763     $ 10,634     $ 10,546     $ 11,539     $ 42,482  
Add: income tax expense
     7,854       6,443       6,359       6,689       7,554       27,045  
Add: interest expense, net
     2,802       2,449       2,160       2,179       2,869       9,657  
Add: depreciation and amortization
     5,230       4,542       4,589       4,735       5,257       19,123  
 
                                    
 
EBITDA
   $ 27,632     $ 23,197     $ 23,742     $ 24,149     $ 27,219     $ 98,307  
 
                                    
- END -