AMSURG REPORTS NET EARNINGS FROM CONTINUING OPERATIONS OF $0.49 PER DILUTED SHARE FOR THIRD-QUARTER 2012
UPDATES GUIDANCE FOR 2012
ENDS QUARTER WITH 15 CENTERS UNDER LETTER OF INTENT
NASHVILLE, Tenn. ─ (October 23, 2012) ─ Christopher A. Holden, President and Chief Executive Officer of AmSurg Corp. (NASDAQ: AMSG), today announced financial results for the third quarter ended September 30, 2012. Revenues for the quarter were $226.4 million, a
16% increase from $194.8 million for the third quarter of 2011. Net earnings from continuing operations attributable to AmSurg common shareholders were $15.4 million, or $0.49 per diluted share, for the third quarter of 2012 compared with $13.0 million, or $0.42 per diluted share, for the third quarter of 2011. The 2011 period included acquisition transaction costs of $0.03 per diluted share. Excluding these costs from the prior year, net earnings from continuing operations per diluted share attributable to AmSurg common shareholders increased 9% for 2012.
Revenues for the first nine months of 2012 increased 23% to $688.2 million from $560.1 million for the first nine months of 2011. Net earnings from continuing operations attributable to AmSurg common shareholders increased to $47.4 million, or $1.50 per diluted share, for the first nine months of 2012 from $37.3 million, or $1.20 per diluted share, for the same period in 2011. The 2011 period included acquisition transaction costs of $0.05 per diluted share. Excluding these costs from the prior year, net earnings from continuing operations per diluted share attributable to AmSurg common shareholders increased 20% for 2012.
Commenting on the announcement, Mr. Holden remarked, “We are pleased with AmSurg’s earnings performance for the third quarter, which met the high end of our guidance. We produced same-center revenue growth for the quarter of 2%, even though there was one less business day in the quarter compared with the third quarter last year. With this extra day, same- center revenue would have increased 3% for the quarter. Our revenue growth also reflected an increase in centers in operation to 229 at the end of the quarter, up from 223 at same time in 2011. Our new centers contributed to an increase in total procedures for the quarter of 8%, while revenue per procedure increased 7%, as multi-specialty centers grew as a percentage of our center mix.
“We acquired one center during the third quarter and, at the end of the third quarter, had 15 centers under letter of intent, which generate annualized operating income in aggregate of approximately $60 million. We acquired one of these centers in the fourth quarter, and we expect to complete the acquisition of many, if not all, of the remaining centers in the next 90 to180 days. To effect these potential transactions, we are considering a number of alternative funding scenarios, with the dual goals of completing the current transactions and using the strength of our balance sheet to build a capital structure that will support our long-term growth objectives. We expect that such a change in our capital structure could result in annual costs of $0.15 to $0.20 per diluted share above our current funding costs. Although these costs would offset a portion of the incremental earnings anticipated from the acquisition of the immediate letter of intent pipeline, such a change would also be expected to enhance our ability to implement our future growth strategy.
“Net cash flows from operating activities increased 16% for the third quarter of 2012 to $72.5 million from $62.6 million for the third quarter of 2011. Excluding distributions to noncontrolling interests, net cash flows from operations rose 21% to $32.2 million from $26.5 million. After capital expenditures for maintenance and acquisitions of $12.4 million for the third quarter of 2012, we primarily applied our free cash flow for the quarter to net repayments of long-term debt of $21.8 million. At the end of the third quarter, our ratio of total debt to trailing 12 months EBITDA as calculated under our credit agreement improved to 2.5 compared with 2.8 at June 30, 2012 and 2.9 at the end of 2011. We had cash and cash equivalents of $35.7 million at the end of the quarter and availability under our revolving credit facility of $179 million.
“Based on our performance through the first nine months of 2012 and our outlook for the remainder of the year, we today adjust our financial guidance for 2012, while establishing our guidance for the fourth quarter of 2012, as follows:
- Revenues in a range of $915 million to $925 million for 2012 compared with the previous range of $905 million to $925 million.
- Same-center revenue increase of 3% for 2012, up from the prior range of 2% to 3%.
- Center acquisitions for 2012 that generate annualized operating income in a range of $60 million to $65 million, including approximately $3.8 million from centers acquired in the first nine months of 2012.
- Net cash flow provided by operating activities, less distributions to noncontrolling interests, in a range of $115 million to $120 million for 2012.
- Net earnings from continuing operations per diluted share attributable to common shareholders for 2012 in a range of $1.98 to $2.01 compared with the previous range of $1.97 to $2.01.
- Net earnings from continuing operations per diluted share attributable to common shareholders for the fourth quarter of 2012 in a range of $0.48 to $0.51.”
Mr. Holden concluded, “While we believe the unusual spike we have experienced in our acquisition activity is a consequence, in part, of the unresolved budget and tax issues facing the federal government, it is also reflective of trends we have discussed for some time. The pressures on physician practices have grown more intense and become more complex due to increased government regulation, changing reimbursement policies, growing requirements for IT and other expenditures, and the economic downturn.
“As a result, we expect to see an increase in consolidation momentum in the years to come, although this year’s surge does not necessarily mean we will expand our annual acquisition goals. In addition, for reasons explained earlier, we believe our pipeline of centers under letter of intent affords us the opportunity to optimize our capital structure to support our growth for the long-term, rather than an opportunity to generate an immediate stair-step in our growth.
“Ultimately, we believe the centers under letter of intent at the end of the third quarter and the increasing trends toward consolidation validate our commitment to building the market leading position as the physician partner of choice. In an industry that remains highly fragmented, we believe our success at differentiating AmSurg through our physician centric culture is one of our most important strengths and will support the long-term growth in our earnings and shareholder value.”
The information contained in the preceding paragraphs, including information regarding our future acquisition and financing plans and our 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 we will be successful in acquiring the surgery centers described above, or that financing will be available to us or available on the terms currently anticipated. The attainment of the financial targets set forth in this press release is dependent on the assumptions described above, and 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.
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 towww.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; adverse weather and other factors beyond the Company’s control that may affect the Company’s surgery centers; adverse impacts on the Company’s business associated with current and future economic conditions; 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, 2011 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 September 30, 2012, AmSurg owned and operated 229 centers.