NASHVILLE, Tenn. ─ (February 24, 2016) ─ AmSurg Corp. (NASDAQ: AMSG) today announced financial results for the fourth quarter and year ended December 31, 2015. The Company’s results for the quarter included:
- Growth of 21% in net revenues to $704.3 million from $581.8 million for the fourth quarter of 2014;
- Net earnings from continuing operations attributable to AmSurg common shareholders of $64.3 million and adjusted net earnings of $56.7 million, up 43% compared with the fourth quarter of 2014;
- Net earnings per diluted share from continuing operations attributable to AmSurg common shareholders of $1.26 and a 39% increase in adjusted net earnings per diluted share to $1.07; and
- Adjusted EBITDA of $137.4 million, an increase of 24% compared with the fourth quarter of 2014.
See page 6 for a reconciliation of all GAAP and non-GAAP financial results.
For fiscal 2015, net revenues were $2.57 billion, a 58% increase from $1.62 billion for fiscal 2014. Net earnings from continuing operations attributable to AmSurg common shareholders were $154.9 million for 2015, and adjusted net earnings increased 68% to $191.3 million from $114.2 million for 2014. Net earnings per diluted share from continuing operations attributable to AmSurg common shareholders were $3.18 for 2015, and adjusted net earnings per diluted share increased 35% to $3.71. For 2015, weighted average diluted shares outstanding, if dilutive securities, options and non-vested shares were converted, increased 24% from 2014, primarily related to the equity issued to complete the acquisition of Sheridan Healthcare in July 2014. Adjusted EBITDA for 2015 was $492.3 million.
“AmSurg had an exceptional year for 2015, the first full year following our transformative acquisition of Sheridan Healthcare in July 2014,” said Christopher A. Holden, President and Chief Executive Officer of AmSurg. “We exceeded every element of our 2015 financial guidance that was provided in our 2014 fourth-quarter news release.
“Our strong organic growth was evident in the 6.0% same-center revenue growth of Ambulatory Services for 2015 and the 9.9% same contact growth of Physician Services. As expected, the combination of AmSurg and Sheridan has indeed proven catalytic to our acquisition growth strategy, as we deployed $963 million in capital for acquisitions during 2015, completed 16 transactions, expanded our platform into the large, attractive markets of Phoenix and Atlanta and created significant growth momentum for 2016. Our strong cash flow, combined with our December equity offering, enabled us to execute on this large acquisition pipeline, significantly reducing our leverage ratio to 4.1.
“Our outstanding financial and operating performance and strong profitable growth continued in the fourth quarter of 2015. We drove organic growth for the quarter through a 6.9% increase in same-center revenues for Ambulatory Services and an 8.3% increase in same contract revenue for Physician Services. This growth reflects increased volume and improved reimbursement for the quarter for both divisions.
“During the fourth quarter, Ambulatory Services purchased two ambulatory surgery centers (ASCs) and entered into three joint ventures with new health system partners. As a result of our joint venture activity, we contributed six of our existing centers and obtained an interest in two additional ASCs that were contributed by our new partners. As previously announced, Physician Services completed three acquisitions in the fourth quarter, including the acquisition of Valley Anesthesia in Phoenix, Arizona; Premier Emergency Medical Specialists, also in Phoenix; and Northside Anesthesiology Consultants in Atlanta, Georgia.”
Net revenues for Ambulatory Services grew 10% to $326.2 million for the fourth quarter of 2015 from $295.7 million for the fourth quarter of 2014. Same-center revenue rose 6.9% for fourth quarter of 2015 compared with the fourth quarter of 2014, comprised of a 2.2% increase in procedures and a 4.7% increase in net revenue per procedure. Adjusted EBITDA was $63.3 million for the fourth quarter of 2015, a 22% increase from $51.9 million for the fourth quarter of 2014, and adjusted EBITDA margin increased 180 basis points to 19.4% from 17.6%.
At the end of the quarter, Ambulatory Services operated 257 ASCs and one surgical hospital. Ambulatory Services had five ASCs under letter of intent at the end of the fourth quarter and one center under development, which is expected to open in late 2016.
For the fourth quarter of 2015, net revenues for Physician Services increased 32% to $378.1 million from $286.1 million for the fourth quarter of 2014. Adjusted EBITDA increased 25% to $74.1 million for the quarter compared with $59.1 million for the fourth quarter of 2014, and adjusted EBITDA margin was 19.6% compared with 20.7%.
Comparable-quarter increase in Physician Services revenues was comprised of growth of 6.2% in same-contract revenues, 1.7% in net new contract revenues and 24.3% in acquisition revenues. Same-contract growth in net revenues totaled 8.3% for the fourth quarter of 2015, which included a 6.6% increase in patient encounters and a 1.7% increase in net revenue per patient encounter.
Physician Services continues to evaluate additional acquisition opportunities in its robust pipeline of potential transactions.
At the end of 2015, AmSurg had cash and cash equivalents of $106.7 million and availability under its $500 million revolving credit facility of $325 million. Net cash flows from operations, less distributions to noncontrolling interests, were $54.0 million for quarter and $323.1 million for full-year 2015. Although 2015 capital expenditures for maintenance and acquisitions were more than $1 billion, the Company’s ratio of total debt at the end of 2015 to trailing 12 months EBITDA as calculated under the Company’s credit agreement was 4.1 compared with 5.3 at the end of 2014.
AmSurg today established its financial and operating guidance for 2016 and for the first 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 3.0% to 5.0% for Ambulatory Services and same-contract revenue growth of 4.0% to 6.0% in Physician Services;
- Adjusted EBITDA of $590 million to $600 million;
- Adjusted EPS in a range of $4.26 to $4.34; and
- For the first quarter of 2016, adjusted EPS in a range of $0.77 to $0.80, which includes the seasonally higher salary-related expenses historically experienced in Physician Services.
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 first 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).
AmSurg Corp. will hold a conference call to discuss this release Wednesday, February 24, 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.
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; 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; 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; 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 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; 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, 2014, 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.
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 December 31, 2015, AmSurg owned and operated 257 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.