NASHVILLE, Tenn. ─ (November 3, 2015) ─ AmSurg Corp. (NASDAQ: AMSG) today announced financial results for the third quarter ended September 30, 2015. The Company’s results for the quarter included:
- Growth in net revenues of 29% to $650.2 million from $502.4 million for the third quarter of 2014;
- Net earnings from continuing operations attributable to AmSurg common shareholders of $40.4 million. Adjusted net earnings increased 53% to $53.0 million from the third quarter of 2014;
- Net earnings per diluted share from continuing operations attributable to AmSurg common shareholders of $0.83 and 49% growth in adjusted net earnings per diluted share to $1.03; and
- Adjusted EBITDA of $133.2 million, up 39% from the third quarter of 2014.
See page 6 for a reconciliation of all GAAP and non-GAAP financial results.
“AmSurg continued to perform meaningfully better than we expected during the third quarter of 2015, resulting in our raising our financial guidance for the year for the third consecutive quarter,” said Christopher A. Holden, President and Chief Executive Officer of AmSurg. “Our strong results reflected outstanding organic growth for the quarter, with an acceleration in our Ambulatory Services same-center revenues for the third consecutive quarter and double-digit growth in Physician Services same-contract revenue growth for the second consecutive quarter.
“For the third quarter of 2015, Ambulatory Services produced same-center revenue growth of 6.6%, due primarily to improved reimbursement, increased volume and improved case mix. Physician Services produced same-contract revenue growth of 10.1%, driven by increased volume, improved reimbursement and higher acuity.
“In addition, the combination of AmSurg and Sheridan continued to be catalytic to our acquisition growth strategies in the third quarter. In a time of increasing industry integration and consolidation, this combination gives AmSurg a unique and nationally scaled platform that addresses strategically imperative needs of health systems as they focus on building integrated networks. The market reception for this platform continues to exceed our expectations.
“During the third quarter, Ambulatory Services purchased two ambulatory surgery centers (ASCs) and opened a de novo ASC. The division also entered into a new joint venture with a health system in California whereby we contributed two ASCs and the health system contributed a surgical hospital. In addition, subsequent to quarter end, Ambulatory Services acquired two ASCs. As previously announced, Physician Services purchased two anesthesia practices during the third quarter, and today we announced the acquisition of Valley Anesthesia in Phoenix, Arizona, one of the largest independent anesthesiology practices in the country.”
Net revenues for Ambulatory Services grew 12% to $309.0 million for the third quarter of 2015 from $276.4 million for the third quarter of 2014. Same-center revenue rose 6.6% for third quarter of 2015 compared with the third quarter of 2014, comprised of a 2.7% increase in procedures and a 3.9% increase in net revenue per procedure. Adjusted EBITDA was $55.4 million for the third quarter of 2015, a 16% increase from $47.9 million for the third quarter of 2014, while adjusted EBITDA margin increased 60 basis points to 17.9% from 17.3%.
At the end of the quarter, Ambulatory Services operated 253 ASCs and one surgical hospital. Ambulatory Services had five ASCs under letter of intent at the end of the third quarter and one center under development, which is expected to open in 2016.
For the third quarter of 2015, net revenues for Physician Services were $341.2 million. Adjusted EBITDA was $77.8 million for the quarter, and adjusted EBITDA margin was 22.8%.
Comparable-quarter revenue growth for Physician Services was 25.9%, of which 7.6% was from same-contract revenues, 2.9% from net new contract revenues and 15.4% from acquisition revenues. Same-contract growth in net revenues totaled 10.1% for the third quarter of 2015, which included a 5.0% increase in patient encounters and a 5.1% increase in net revenue per patient encounter.
Having completed the Valley Anesthesia transaction thus far in the fourth quarter, Physician Services continues to evaluate additional acquisition opportunities in its robust pipeline of potential transactions.
AmSurg had cash and cash equivalents of $187.4 million at the end of the third quarter. Subsequent to quarter end, the Company executed the accordion feature under its credit agreement, which increased its borrowing capacity to $500.0 million under its revolving credit facility. A portion of this credit facility was used to fund acquisitions subsequent to quarter end. The remaining availability under the Company’s revolving credit facility is $244.0 million. Net cash flows from operations, less distributions to noncontrolling interests, were $118.7 million for the third quarter. The Company’s ratio of total debt at the end of the third quarter of 2015 to trailing 12 months EBITDA as calculated under the Company’s credit agreement was 4.4.
AmSurg today has raised its financial and operating guidance for 2015 and established its financial guidance for the fourth quarter of the year. The Company’s guidance is as follows:
- Revenues in a range of $2.52 billion to $2.54 billion, up from a range of $2.50 billion to $2.52 billion;
- A same-center revenue increase of 4% to 5% for Ambulatory Services, compared with the prior range of 3% to 4%; affirms guidance for same-contract revenue growth of 8% to 10% in Physician Services;
- Adjusted EBITDA of $486 million to $490 million, up from a range of $474 million to $480 million;
- Adjusted EPS in a range of $3.66 to $3.69, up from a range of $3.52 to $3.59; and
- For the fourth quarter of 2015, adjusted EPS in a range of $1.03 to $1.06.
Non-GAAP Adjusted EBITDA guidance for the full year of 2015 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 fourth quarter and full year of 2015 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 Tuesday, November 3, 2015, 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 fourth quarter and full year of 2015. 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 September 30, 2015, AmSurg owned and operated 253 ASCs and one surgical hospital in 34 states and provided physician services to more than 360 healthcare facilities in 27 states. AmSurg has partnerships with, or employs, over 5,000 physicians in 38 states and the District of Columbia.