Tennessee | 001-36531 | 62-1493316 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
1A Burton Hills Boulevard | ||
Nashville, Tennessee | 37215 | |
(Address of Principal Executive Offices) | (Zip Code) |
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
AMSURG CORP. | ||
By: | /s/ Claire M. Gulmi | |
Claire M. Gulmi | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial and Duly Authorized Officer) |
Exhibit | ||
Number | Description | |
99 | Press release dated November 1, 2016 |
Contact: | Claire M. Gulmi | |
Executive Vice President and | ||
Chief Financial Officer | ||
(615) 665-1283 |
• | Net revenues of $822.2 million, up 26% from $650.2 million for the third quarter of 2015; |
• | Net earnings attributable to AMSURG common shareholders of $37.7 million, a decline of 7%, and $0.69 per diluted share, a decline of 17%, primarily due to transaction costs related to AMSURG’s proposed merger with Envision Healthcare and to AMSURG’s deconsolidation activities; |
• | An increase of 22% in adjusted net earnings to $64.9 million; |
• | A 10% increase in adjusted net earnings per diluted share to $1.13, on a 12% increase in diluted shares outstanding, if converted, primarily due the Company’s December 2015 public offering of common stock; and |
• | Adjusted EBITDA of $153.0 million, an increase of 15%. |
AMSG Reports Third-Quarter Results | ||
Page 2 | ||
November 1, 2016 |
AMSG Reports Third-Quarter Results | ||
Page 3 | ||
November 1, 2016 |
• | Revenues of $3.15 billion to $3.17 billion for 2016 compared with $3.05 billion to $3.09 billion previously; |
• | A same-center revenue increase of 4% to 5% for Ambulatory Services for 2016, compared with 4% to 6% previously, and same-contract revenue growth of 6% to 8% for Physician Services, compared with 4% to 6% previously; |
• | Adjusted EBITDA of $592 million to $598 million for 2016, compared with $592 million to $601 million previously; |
• | Adjusted EPS of $4.28 to $4.33 for 2016, compared with $4.28 to $4.35 previously; and |
• | For the fourth quarter of 2016, adjusted EPS of $1.23 to $1.28. |
AMSG Reports Third-Quarter Results | ||
Page 4 | ||
November 1, 2016 |
AMSG Reports Third-Quarter Results | ||
Page 5 | ||
November 1, 2016 |
AMSURG CORP. Unaudited Selected Consolidated Financial and Operating Data (In thousands, except earnings per share) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
Statement of Earnings Data: | 2016 | 2015 | 2016 | 2015 | |||||||||||
Revenues | $ | 968,822 | $ | 712,719 | $ | 2,646,940 | $ | 2,058,649 | |||||||
Provision for uncollectibles | (146,606 | ) | (62,492 | ) | (341,547 | ) | (196,027 | ) | |||||||
Net revenue | 822,216 | 650,227 | 2,305,393 | 1,862,622 | |||||||||||
Operating expenses: | |||||||||||||||
Salaries and benefits | 461,281 | 327,532 | 1,275,131 | 950,107 | |||||||||||
Supply cost | 47,952 | 45,638 | 144,618 | 134,012 | |||||||||||
Other operating expenses | 114,928 | 98,852 | 333,755 | 294,424 | |||||||||||
Transaction costs | 16,906 | 2,107 | 23,431 | 5,560 | |||||||||||
Depreciation and amortization | 31,585 | 24,106 | 90,711 | 70,536 | |||||||||||
Total operating expenses | 672,652 | 498,235 | 1,867,646 | 1,454,639 | |||||||||||
Net gain on disposals and deconsolidations | 4,144 | 9,112 | 6,739 | 5,854 | |||||||||||
Equity in earnings of unconsolidated affiliates | 4,445 | 4,935 | 18,375 | 11,575 | |||||||||||
Operating income | 158,153 | 166,039 | 462,861 | 425,412 | |||||||||||
Interest expense, net | 32,915 | 30,242 | 95,638 | 90,671 | |||||||||||
Earnings before income taxes | 125,238 | 135,797 | 367,223 | 334,741 | |||||||||||
Income tax expense | 29,658 | 37,518 | 83,820 | 76,960 | |||||||||||
Net earnings | 95,580 | 98,279 | 283,403 | 257,781 | |||||||||||
Less net earnings attributable to noncontrolling interests | 55,626 | 55,618 | 166,517 | 160,407 | |||||||||||
Net earnings attributable to AmSurg Corp. shareholders | 39,954 | 42,661 | 116,886 | 97,374 | |||||||||||
Preferred stock dividends | (2,264 | ) | (2,264 | ) | (6,792 | ) | (6,792 | ) | |||||||
Net earnings attributable to AmSurg Corp. common shareholders | $ | 37,690 | $ | 40,397 | $ | 110,094 | $ | 90,582 | |||||||
Net earnings per share attributable to common shareholders: | |||||||||||||||
Basic | $ | 0.70 | $ | 0.85 | $ | 2.05 | $ | 1.90 | |||||||
Diluted | $ | 0.69 | $ | 0.83 | $ | 2.03 | $ | 1.89 | |||||||
Weighted average number of shares and share equivalents outstanding: | |||||||||||||||
Basic | 53,757 | 47,707 | 53,720 | 47,652 | |||||||||||
Diluted | 54,258 | 51,275 | 54,152 | 48,050 |
AMSG Reports Third-Quarter Results | ||
Page 6 | ||
November 1, 2016 |
AMSURG CORP. Unaudited Selected Consolidated Financial and Operating Data, continued (In thousands, except earnings per share) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Reconciliation of net earnings to Adjusted net earnings (1): | |||||||||||||||
Net earnings attributable to AmSurg Corp. shareholders | $ | 39,954 | $ | 42,661 | $ | 116,886 | $ | 97,374 | |||||||
Amortization of purchased intangibles | 19,118 | 12,681 | 55,002 | 37,593 | |||||||||||
Share-based compensation | 6,175 | 3,727 | 21,243 | 11,319 | |||||||||||
Transaction costs | 16,906 | 2,107 | 23,431 | 5,560 | |||||||||||
Net gain on disposals and deconsolidations | (4,144 | ) | (9,112 | ) | (6,739 | ) | (5,854 | ) | |||||||
Net change in fair value of contingent consideration | — | 1,928 | (2,598 | ) | 8,338 | ||||||||||
Total pre-tax adjustments | 38,055 | 11,331 | 90,339 | 56,956 | |||||||||||
Tax effect | 13,072 | 946 | 32,525 | 19,669 | |||||||||||
Total adjustments, net | 24,983 | 10,385 | 57,814 | 37,287 | |||||||||||
Adjusted net earnings | $ | 64,937 | $ | 53,046 | $ | 174,700 | $ | 134,661 | |||||||
Basic shares outstanding | 53,757 | 47,707 | 53,720 | 47,652 | |||||||||||
Effect of dilutive securities, options and non-vested shares | 3,630 | 3,568 | 3,561 | 3,534 | |||||||||||
Diluted shares outstanding, if converted | 57,387 | 51,275 | 57,281 | 51,186 | |||||||||||
Adjusted earnings per share | $ | 1.13 | $ | 1.03 | $ | 3.05 | $ | 2.63 | |||||||
Reconciliation of net earnings to Adjusted EBITDA (2): | |||||||||||||||
Net earnings attributable to AmSurg Corp. shareholders | $ | 39,954 | $ | 42,661 | $ | 116,886 | $ | 97,374 | |||||||
Interest expense, net | 32,915 | 30,242 | 95,638 | 90,671 | |||||||||||
Income tax expense | 29,658 | 37,518 | 83,820 | 76,960 | |||||||||||
Depreciation and amortization | 31,585 | 24,106 | 90,711 | 70,536 | |||||||||||
EBITDA | 134,112 | 134,527 | 387,055 | 335,541 | |||||||||||
Adjustments: | |||||||||||||||
Share-based compensation | 6,175 | 3,727 | 21,243 | 11,319 | |||||||||||
Transaction costs | 16,906 | 2,107 | 23,431 | 5,560 | |||||||||||
Net gain on disposals and deconsolidations | (4,144 | ) | (9,112 | ) | (6,739 | ) | (5,854 | ) | |||||||
Net change in fair value of contingent consideration | — | 1,928 | (2,598 | ) | 8,338 | ||||||||||
Total adjustments | 18,937 | (1,350 | ) | 35,337 | 19,363 | ||||||||||
Adjusted EBITDA | $ | 153,049 | $ | 133,177 | $ | 422,392 | $ | 354,904 | |||||||
Segment Information: | |||||||||||||||
Ambulatory Services Adjusted EBITDA | $ | 61,111 | $ | 55,353 | $ | 176,483 | $ | 162,965 | |||||||
Physician Services Adjusted EBITDA | 91,938 | 77,824 | 245,909 | 191,939 | |||||||||||
Adjusted EBITDA | $ | 153,049 | $ | 133,177 | $ | 422,392 | $ | 354,904 | |||||||
Net Revenue by Segment: | |||||||||||||||
Ambulatory Services | $ | 314,609 | $ | 308,983 | $ | 941,490 | $ | 903,884 | |||||||
Physician Services | 507,607 | 341,244 | 1,363,903 | 958,738 | |||||||||||
Total net revenue | $ | 822,216 | $ | 650,227 | $ | 2,305,393 | $ | 1,862,622 |
AMSG Reports Third-Quarter Results | ||
Page 7 | ||
November 1, 2016 |
AMSURG CORP. Unaudited Selected Consolidated Financial and Operating Data, continued | |||||||||||||||
Operating Data- Ambulatory Services: | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Procedures performed during the period at consolidated centers | 429,621 | 434,720 | 1,283,145 | 1,280,541 | |||||||||||
Centers in operation, end of period (consolidated) | 238 | 240 | 238 | 240 | |||||||||||
Centers in operation, end of period (unconsolidated) | 22 | 13 | 22 | 13 | |||||||||||
Average number of continuing centers in operation (consolidated) | 237 | 239 | 237 | 237 | |||||||||||
New centers added, during period | 3 | 3 | 7 | 7 | |||||||||||
Centers merged into existing centers, during period | — | — | 1 | — | |||||||||||
Centers disposed, during period | 1 | — | 3 | — | |||||||||||
Centers under development, end of period | 1 | 1 | 1 | 1 | |||||||||||
Centers under letter of intent, end of period | 2 | 5 | 2 | 5 | |||||||||||
Average revenue per consolidated center (in thousands) | $ | 1,326 | $ | 1,295 | $ | 3,981 | $ | 3,810 | |||||||
Same center revenues increase (consolidated) | 2.3 | % | 6.6 | % | 5.2 | % | 5.5 | % | |||||||
Surgical hospitals in operation, end of period (unconsolidated) | 1 | 1 | 1 | 1 |
Operating Data- Physician Services: | |||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Contribution to Net Revenue Growth: | |||||||||||
Same contract | 5.9 | % | 7.6 | % | 6.6 | % | 7.9 | % | |||
New contract | 1.0 | 2.9 | 1.0 | 2.3 | |||||||
Acquired contract and other (1) | 41.9 | 15.4 | 34.7 | 11.4 | |||||||
Total net revenue growth | 48.8 | % | 25.9 | % | 42.3 | % | 21.6 | % | |||
Same contract revenue growth | 7.5 | % | 10.1 | % | 7.6 | % | 10.4 | % |
AMSG Reports Third-Quarter Results | ||
Page 8 | ||
November 1, 2016 |
AMSURG CORP. Unaudited Selected Consolidated Financial and Operating Data, continued (In thousands) | |||||||
September 30, | December 31, | ||||||
Balance Sheet Data: | 2016 | 2015 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 106,058 | $ | 106,660 | |||
Restricted cash and marketable securities | 12,794 | 13,506 | |||||
Accounts receivable, net of allowance of $251,414 and $167,411, respectively | 424,895 | 337,330 | |||||
Supplies inventory | 22,505 | 21,406 | |||||
Prepaid and other current assets | 64,454 | 75,771 | |||||
Total current assets | 630,706 | 554,673 | |||||
Property and equipment, net | 227,213 | 189,168 | |||||
Investments in unconsolidated affiliates | 111,006 | 169,170 | |||||
Goodwill | 4,300,102 | 3,970,210 | |||||
Intangible assets, net | 1,678,927 | 1,594,637 | |||||
Other assets | 48,985 | 21,450 | |||||
Total assets | $ | 6,996,939 | $ | 6,499,308 | |||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 22,020 | $ | 20,377 | |||
Accounts payable | 27,191 | 32,561 | |||||
Accrued salaries and benefits | 213,298 | 202,537 | |||||
Accrued interest | 18,577 | 30,480 | |||||
Other accrued liabilities | 101,625 | 119,237 | |||||
Total current liabilities | 382,711 | 405,192 | |||||
Long-term debt, net of deferred financing costs of $40,768 and $47,174, respectively | 2,591,895 | 2,357,956 | |||||
Deferred income taxes | 760,504 | 699,498 | |||||
Other long-term liabilities | 129,897 | 96,183 | |||||
Commitments and contingencies | |||||||
Noncontrolling interests – redeemable | 177,877 | 175,732 | |||||
Equity: | |||||||
Preferred stock, no par value, 5,000 shares authorized, 1,725 shares issued and outstanding | 166,632 | 166,632 | |||||
Common stock, no par value, 120,000 shares authorized, 54,804 and 54,294 shares issued and outstanding, respectively | 1,361,581 | 1,345,418 | |||||
Retained earnings | 891,507 | 781,413 | |||||
Total AmSurg Corp. equity | 2,419,720 | 2,293,463 | |||||
Noncontrolling interests – non-redeemable | 534,335 | 471,284 | |||||
Total equity | 2,954,055 | 2,764,747 | |||||
Total liabilities and equity | $ | 6,996,939 | $ | 6,499,308 |
AMSG Reports Third-Quarter Results | ||
Page 9 | ||
November 1, 2016 |
AMSURG CORP. Unaudited Selected Consolidated Financial and Operating Data, continued (In thousands) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
Statement of Cash Flow Data: | 2016 | 2015 | 2016 | 2015 | |||||||||||
Cash flows from operating activities: | |||||||||||||||
Net earnings | $ | 95,580 | $ | 98,279 | $ | 283,403 | $ | 257,781 | |||||||
Adjustments to reconcile net earnings to net cash flows provided by operating activities: | |||||||||||||||
Depreciation and amortization | 31,585 | 24,106 | 90,711 | 70,536 | |||||||||||
Amortization of deferred loan costs | 2,140 | 2,083 | 6,419 | 6,238 | |||||||||||
Provision for uncollectibles | 152,244 | 68,032 | 359,290 | 212,546 | |||||||||||
Net gain on disposals and deconsolidations | (4,144 | ) | (9,112 | ) | (6,739 | ) | (5,854 | ) | |||||||
Share-based compensation | 6,175 | 3,727 | 21,243 | 11,319 | |||||||||||
Excess tax benefit from share-based compensation | (176 | ) | (246 | ) | (3,910 | ) | (3,779 | ) | |||||||
Deferred income taxes | 13,618 | 4,610 | 34,605 | 7,309 | |||||||||||
Equity in earnings of unconsolidated affiliates | (4,445 | ) | (4,935 | ) | (18,375 | ) | (11,575 | ) | |||||||
Net change in fair value of contingent consideration | — | 1,928 | (2,598 | ) | 8,338 | ||||||||||
Increases (decreases) in cash and cash equivalents, net of acquisitions and dispositions: | |||||||||||||||
Accounts receivable | (159,359 | ) | (75,409 | ) | (387,733 | ) | (232,465 | ) | |||||||
Supplies inventory | (287 | ) | (423 | ) | (699 | ) | (533 | ) | |||||||
Prepaid and other current assets | 7,626 | 6,152 | (16,118 | ) | 36,479 | ||||||||||
Accounts payable | (2,270 | ) | 3,012 | (5,617 | ) | 2,316 | |||||||||
Accrued expenses and other liabilities | 13,781 | 52,112 | (14,423 | ) | 64,760 | ||||||||||
Other, net | 3,917 | 1,891 | 11,631 | 3,786 | |||||||||||
Net cash flows provided by operating activities | 155,985 | 175,807 | 351,090 | 427,202 | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Acquisitions and related expenses | (70,623 | ) | (37,458 | ) | (351,736 | ) | (233,490 | ) | |||||||
Acquisition of property and equipment | (26,389 | ) | (14,341 | ) | (64,007 | ) | (47,006 | ) | |||||||
Increase in cash due to consolidation of previously unconsolidated affiliates | 31,412 | — | 31,412 | — | |||||||||||
Purchases of marketable securities | — | (498 | ) | (498 | ) | (1,743 | ) | ||||||||
Maturities of marketable securities | 249 | 1,245 | 2,987 | 4,233 | |||||||||||
Other, net | 2,236 | (1,987 | ) | (6,488 | ) | (3,974 | ) | ||||||||
Net cash flows used in investing activities | (63,115 | ) | (53,039 | ) | (388,330 | ) | (281,980 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from long-term borrowings and revolving credit facility | 112,855 | 2,402 | 430,006 | 10,197 | |||||||||||
Repayment on long-term borrowings and revolving credit facility | (115,505 | ) | (5,449 | ) | (214,268 | ) | (15,737 | ) | |||||||
Distributions to noncontrolling interests | (56,486 | ) | (57,111 | ) | (172,075 | ) | (158,144 | ) | |||||||
Proceeds from issuance of common stock upon exercise of stock options | — | 276 | 450 | 2,356 | |||||||||||
Repurchase of common stock | (457 | ) | — | (6,145 | ) | (3,684 | ) | ||||||||
Other, net | (1,324 | ) | (1,753 | ) | (1,330 | ) | (867 | ) | |||||||
Net cash flows provided by (used in) financing activities | (60,917 | ) | (61,635 | ) | 36,638 | (165,879 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents | 31,953 | 61,133 | (602 | ) | (20,657 | ) | |||||||||
Cash and cash equivalents, beginning of period | 74,105 | 126,289 | 106,660 | 208,079 | |||||||||||
Cash and cash equivalents, end of period | $ | 106,058 | $ | 187,422 | $ | 106,058 | $ | 187,422 |
AMSG Reports Third-Quarter Results | ||
Page 10 | ||
November 1, 2016 |
(1) | We believe the calculation of adjusted net earnings from continuing operations per diluted share attributable to AmSurg Corp. common shareholders provides a better measure of our ongoing performance and provides better comparability to prior periods because it excludes discontinued operations, the gains or loss from deconsolidations, which are non-cash in nature, transaction costs, including associated debt extinguishment costs and deferred financing write-off, and acquisition-related amortization expense, changes in contingent purchase price consideration and share-based compensation expense. Adjusted net earnings from continuing operations per diluted share attributable to AmSurg Corp. common shareholders should not be considered as a measure of financial performance under accounting principles generally accepted in the United States, and the items excluded from it is a significant component in understanding and assessing financial performance. Because adjusted net earnings from continuing operations per diluted share attributable to AmSurg Corp. common shareholders is not a measurement determined in accordance with accounting principles generally accepted in the United States and is thus susceptible to varying calculations, it may not be comparable as presented to other similarly titled measures of other companies. For purposes of calculating adjusted earnings per share, we utilize the if-converted method to determine the number of diluted shares outstanding. In periods where utilizing the if-converted method is anti-dilutive, the mandatory convertible preferred stock will not be included in the calculation of diluted shares outstanding. |
(2) | We define Adjusted EBITDA of AmSurg as earnings before interest expense, net, income taxes, depreciation, amortization, share-based compensation, transaction costs, changes in contingent purchase price consideration, gain or loss on deconsolidations and discontinued operations. Adjusted EBITDA should not be considered a measure of financial performance under generally accepted accounting principles. Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA is an analytical indicator used by management and the health care industry to evaluate company performance, allocate resources and measure leverage and debt service capacity. Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows from operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA is not a measurement determined in accordance with generally accepted accounting principles and is thus susceptible to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies. Net earnings from continuing operations attributable to AmSurg Corp. common shareholders is the financial measure calculated and presented in accordance with generally accepted accounting principles that is most comparable to Adjusted EBITDA as defined. |
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