AMSURG REPORTS FIRST-QUARTER NET EARNINGS FROM CONTINUING OPERATIONS OF $0.56 PER DILUTED SHARE, OR $0.52 EXCLUDING GAIN
ADJUSTS 2013 FINANCIAL GUIDANCE FOR PREVIOUSLY DISCUSSED IMPACT OF SEQUESTER
NASHVILLE, Tenn. ─ (April 23, 2013) ─ Christopher A. Holden, President and Chief Executive Officer of AmSurg Corp. (NASDAQ: AMSG), today announced financial results for the first quarter ended March 31, 2013. Revenues increased 14% for the quarter to $260.1 million from $228.9 million for the first quarter of 2012. Net earnings from continuing operations attributable to AmSurg common shareholders were $17.8 million, or $0.56 per diluted share, for the first quarter of 2013 compared with $14.8 million, or $0.50 per diluted share, for the first quarter of 2012. Results for the first quarter of 2013 include a pre-tax gain of $2.2 million related to the deconsolidation of a surgery center that AmSurg contributed to a newly formed joint venture with a hospital system partner. Excluding this gain, net earnings from continuing operations per diluted share attributable to AmSurg common shareholders increased 4% to $0.52 per diluted share for the first quarter of 2013
Mr. Holden said, “AmSurg’s earnings for the first quarter met the high end of our guidance, as adjusted for the deconsolidation gain. As anticipated, our results for the first quarter also include the impact of a reduction in workers’ compensation reimbursement by the State of California and increased interest expense related to our debt offering in the fourth quarter of 2012, which totaled $0.07 per diluted share in aggregate. “Our same center revenue declined 2% for the quarter. As we previously discussed, the decline was primarily the result of having two less business days than the first quarter last year, which had a negative impact of approximately 300 basis points on this growth metric. The growth in the Company’s revenues and adjusted earnings for the first quarter was primarily due to the acquisition of 17 centers during 2012, including 14 centers in the fourth quarter. In addition, we opened a de novo center during 2012.
“As mentioned above, during the first quarter, we entered into a joint venture with a hospital system. In connection with the formation of the joint venture, we contributed our controlling interest in one surgery center to the joint venture, which resulted in the $2.2 million gain on the deconsolidation of this surgery center. Our joint venture partner also contributed one surgery center to the joint venture. We believe this partnership will provide both economies of scale and potential future growth opportunities in this market. As a result of this transaction, we operated a total of 241 centers at the end of the quarter. We also added three centers under letter of intent to end the quarter with four letters of intent.
“Net cash flows from operating activities were $73.9 million for the first quarter of 2013, compared with $69.1 million for the first quarter of 2012. Excluding distributions to noncontrolling interests, net cash flows from operations were $30.0 million for the first quarter of 2013 compared with $30.1 million in the first quarter of 2012. Our ratio of total debt to trailing 12 months EBITDA as calculated under our credit agreement was 3.2 at March 31, 2013. We continue to expect to generate strong cash flow in 2013, which, combined with availability of $208 million under our revolving credit facility, positions us well to fund our planned growth for the year. “As we discussed when we issue d our 2013 financial guidance, our guidance did not reflect any impact related to sequestration; however, we indicated that, in the event sequestration occurred, we expected it, under then current legislation, to negatively affect our results by $0.06 per diluted share on an annualized basis. Today, we adjust our guidance for the impact of sequestration, which we expect to total $0.05 per diluted share for the year. As a result, we are lowering the high end of our guidance for 2013 same-center revenue growth to 1% from 2%.
“As noted previously, for 2013 we expect our results to reflect increased interest expense of $0.20 per diluted share related to our debt offering in the fourth quarter of 2012, as well as reductions by the State of California in workers’ compensation reimbursement that are expected to have a negative impact on 2013 same-center revenues of approximately 100 basis points and on net earnings from continuing operations attributable to common shareholders of $0.06 per diluted share, spread relatively evenly through the year. Our financial guidance for 2013 and, as indicated, the second quarter of 2013 is as follows:
- Revenues in a range of $1.06 billion to $1.09 billion.
- Same-center revenue increase of 0% to 1%.
- 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 $140 million to $150 million.
- Net earnings from continuing operations per diluted share attributable to common shareholders in a range of $2.13 to $2.18, excluding the impact of the deconsolidation gain.
- For the second quarter of 2013, net earnings from continuing operations per diluted share attributable to common shareholders in a range of $0.55 to $0.57.”
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 guidance for 2013 reflects the near-term headwinds we face for the year related to state and federal reimbursement and an uncertain economic and employment environment. We believe that our best response to these pressures is to continue implementing our proven business model to prepare the Company for stronger growth as the headwinds subside.
“We are confident of the long-term growth potential of both the ASC industry and our position as the largest owner and operator of ASCs. Our quality and cost effectiveness is recognized by our physician partners and patients who use our facilities and who continue to be highly satisfied with their experience. At a time of intensifying focus on quality and cost, expanded healthcare access for millions of people and strong demographic trends, we believe long-term demand for our services will expand steadily. As a result, we will remain primarily focused on strengthening our position as the provider of choice for our physician partners through the continued execution and enhancement of our value proposition, on increasing our same-center revenues and on expanding our geographic footprint through accretive acquisitions in a fragmented industry.”
AmSurg Corp. will hold a conference call to discuss this release tomorrow, April 24, 2013, at 9:00 a.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” 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 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 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 compete for physician partners, managed care contracts, patients and strategic relationships; 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 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 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; uncertainties regarding the 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 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; potential liability 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, 2012 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, 2013, AmSurg owned and operated 241 centers.