AmSurg Reports First-Quarter 2014 Results

  NASHVILLE, Tenn. — Christopher A. Holden, President and Chief Executive Officer of AmSurg Corp. (NASDAQ: AMSG), today announced financial results for the quarter ended March 31, 2014. Revenues were $263.1 million for the quarter, an increase of 2% from $258.2 million for the first quarter of 2013. Net earnings from continuing operations attributable to AmSurg common shareholders were $17.5 million, or $0.55 per diluted share, for the first quarter of 2014 compared with $17.8 million, or $0.56 per diluted share, for the first quarter last year. Results for each of the first quarters of 2014 and 2013 included an after-tax gain related to the deconsolidation of a surgery center that AmSurg contributed to newly formed joint ventures with separate hospital system partners. The after-tax gain was $550,000, or $0.02 per diluted share, for the first quarter of 2014 and $1.3 million, or $0.04 per diluted share, for the first quarter of 2013. Excluding these gains, net earnings from continuing operations per diluted share attributable to AmSurg common shareholders for the first quarter of 2014 were $0.53 compared with $0.52 for the first quarter of 2013.   Mr. Holden remarked, “AmSurg’s results for the first quarter of 2014, which reflected a 2% decline in same-center revenues, were affected materially more by severe winter weather throughout the quarter than we anticipated in the guidance we established in late February. At that time, we estimated that we would lose 4,000 to 5,000 procedures during the quarter, although we now estimate that our total of lost procedures for the quarter was in excess of 8,000, due to the continuing severe weather in March. The inclement weather that occurred across the country impacted over 38% of our centers, resulting in center closures, cancelled procedures and delays in re-establishing normal daily procedure volume. We believe these lost procedures accounted for the 2% decline in same-center revenues for the quarter.   “The 2% growth in revenue we produced for the quarter primarily reflected the positive impact from the six centers acquired in 2013, as well as a 2.4% increase in revenue per procedure. For the first quarter of 2014, we acquired one center in early January, and we divested one center. We also contributed our controlling interest in one center to our second joint venture created with a new hospital system partner. We completed the first quarter of 2014 with seven letters of intent and had one de novo center under development, which we expect to open in 2015. With a robust pipeline of additional potential transactions, in addition to our letters of intent, we continue to expect to meet our center acquisition guidance for 2014.   “For the first quarter, AmSurg’s net operating cash flows, excluding distributions to noncontrolling interests, were $26.6 million. Our net capital expenditures were $12.0 million for the first quarter, and we reduced long-term debt with our free cash flow. At the end of the first quarter of 2014, we had $47.1 million in cash and cash equivalents and our availability under our revolving credit facility was $237.5 million. Our ratio of total debt to trailing 12 months EBITDA as calculated under our credit agreement improved to 2.95 at the end of the first quarter of 2014 from 3.01 at the end of 2013 and 3.15 at March 31, 2013.   “We are today revising our financial and operating guidance for 2014 and establishing guidance for the second quarter of 2014. The revisions to our financial guidance for the full year are primarily being made to incorporate the impact of our first-quarter results. Our guidance is as follows:Revenues in a range of $1.12 billion to $1.13 billion.Same-center revenue increase of 1% to 2%.Center acquisitions that generate annualized operating income in a range of $25 million to $29 million.Net cash flow provided by operating activities, less distributions to noncontrolling interests, in a range of $150 million to $160 million.Net earnings from continuing operations per diluted share attributable to common shareholders in a range of $2.41 to $2.45, excluding the deconsolidation gain.For the second quarter of 2014, net earnings from continuing operations per diluted share attributable to common shareholders in a range of $0.61 to $0.64.”   The information contained in the preceding paragraphs, including information regarding the Company’s acquisition plans and financial results for future periods, is forward-looking information. Forward-looking information involves known and unknown risks and uncertainties as described below. There can be no assurance that AmSurg will be successful in acquiring the surgery centers described above, and the attainment of the financial targets set forth in this press release is dependent on the assumptions described above. The Company’s actual results and performance could differ materially from those expressed or implied by the forward-looking information contained in this press release.   Mr. Holden concluded, “Our outlook for the last nine months of 2014 has not meaningfully changed, despite a challenging first quarter. While our guidance continues to incorporate the impact of fewer acquisitions in 2013 than planned, we also expect to benefit in the remainder of 2014 from having cycled the negative quarterly impact of sequestration.   “In addition, we continue to expect our growth to be supported by the industry’s favorable dynamics, including strong demographic trends, better access to healthcare and increasing demand for high quality care in the most cost effective venue. As the owner and operator of the largest number of ambulatory surgery centers (ASCs) in the country, we believe we are well-positioned to meet our long-term growth objectives.”   AmSurg Corp. will hold a conference call to discuss this release tomorrow, April 23, 2014, at 9:00 a.m. Eastern time. Investors will have the opportunity to listen to the conference call over the Internet by going 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. 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: the risk that payments from third-party payors, including government healthcare programs, may decrease or not increase as costs increase; the Company’s ability to acquire and develop additional surgery centers on favorable terms; the Company’s ability to compete for physician partners, managed care contracts, patients and strategic relationships; adverse developments affecting the medical practices of the Company’s physician partners; the Company’s ability to maintain favorable relations with the Company’s physician partners; the Company’s ability to grow revenues by increasing procedure volume while maintaining operating margins and profitability at the Company’s existing centers; the Company’s ability to manage the growth in its business and integrate acquired businesses; the Company’s ability to obtain sufficient capital resources to complete acquisitions and develop new surgery centers; the Company’s ability to generate sufficient cash to service all of its indebtedness; adverse weather and other factors beyond the Company’s control that may affect the Company’s surgery centers; the Company’s failure to comply with applicable laws and regulations; the Company’s failure to effectively and timely transition to the ICD-10 coding system; 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 from an unpredictable impact of the Health Reform Law; 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 the Company’s 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; potential write-offs of the impaired portion of intangible assets; and potential liabilities relating to the tax deductibility of goodwill; and other risk factors described in AmSurg’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and 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 Corp. acquires, develops and operates ambulatory surgery centers in partnership with physician practice groups throughout the United States. At March 31, 2014, AmSurg owned and operated 242 centers.