AmSurg Reports Growth in Second-Quarter Earnings to $0.28 Per Diluted Share With 13% Same-Center Revenue Growth.Business Editors NASHVILLE Nashville, city (1990 pop. 487,969), state capital, coextensive with Davidson co., central Tenn., on the Cumberland River, in a fertile farm area; inc. as a city 1806, merged with Davidson co. 1963. , Tenn.--(BUSINESS WIRE)--July 23, 2002 Ken P. McDonald, president and chief executive officer of AmSurg Corp. (Nasdaq:AMSG AMSG Air Mobility Support Group (US Air Force) AMSG Ad Majorem Satanae Gloriam AMSG Allied Military Security Guidelines AMSG Advanced Metal Services Group AMSG Appropriate Military Systems Guide AMSG American Subterfuge Clothing ), today announced record financial results for the second quarter and six months ended June June: see month. 30, 2002. Revenues for the second quarter grew 25% to $61,713,000 from $49,474,000 for the second quarter of 2001. Net earnings were $5,888,000, up 59% from $3,709,000. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the second quarter rose 47% to $0.28 from $0.19 for the second quarter last year. Results for the second quarter and first six months of 2002 include a positive impact of $0.04 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share and $0.08 per diluted share, respectively, from the adoption of FAS 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ." Revenues increased 27% for the first six months of 2002 to $120,003,000 from $94,613,000 for the first six months of 2001. Net earnings rose 76% to $11,260,000 from $6,394,000. Diluted earnings per share increased 53% for the first half of 2002 to $0.55 from $0.36 for the first half of 2001. Commenting on the announcement, Mr. McDonald said, "We believe an important aspect of the success AmSurg has achieved in its markets and in its financial results is the Company's commitment to continuous high quality performance. Our business model is built around a highly focused strategy to make our surgery centers and physician partners more successful. We have proven over the past decade that this business model produces successful and profitable single-specialty surgery centers. By combining this model with a sustainable growth development strategy, we have now achieved positive same-center revenues, as well as record total revenues and net earnings for each of the 18 consecutive quarters that AmSurg has been publicly held. "A significant contributor to AmSurg's revenue growth for the second quarter was the Company's 13% increase in same-center revenues. AmSurg's same-center revenues have also increased 13% through the first half of 2002, following four consecutive years of double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. same-center revenue growth. We believe this performance is a direct reflection of a number of elements that support the growth of the surgery centers, including increasing awareness of colon cancer colon cancer, cancer of any part of the colon (often called the large intestine). Colon cancer is the second most common cancer diagnosed in the United States. ; positive demographics The attributes of people in a particular geographic area. Used for marketing purposes, population, ethnic origins, religion, spoken language, income and age range are examples of demographic data. for our surgical specialties In all modern medical training programs, a surgeon must specialise in an area. The exact number of recognized specialties depends on one's purpose in counting them. The following specialties are often described:
"We also attribute (1) In relational database management, a field within a record. (2) In object technology, a single element of data. See instance attribute and static attribute. revenue growth to the continuing expansion of our base of centers in operation, which increased 9% to 97 centers at the end of the second quarter from 89 at the same time in 2001. This expansion includes two centers added during the second quarter through acquisition. Also during the quarter, we added a new de novo [Latin, Anew.] A second time; afresh. A trial or a hearing that is ordered by an appellate court that has reviewed the record of a hearing in a lower court and sent the matter back to the original court for a new trial, as if it had not been previously heard nor decided. partnership for a center that will require a certificate of need, and we completed the quarter with five centers under development, three centers awaiting certificate of need certification and eight centers under letter of intent. Since the end of the second quarter, we have completed the acquisition of one of the centers under letter of intent, and we have closed in escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. the acquisition of another letter-of-intent center, which we expect to become part of our operations in September September: see month. . "Based on this new center development activity, we remain confident of our ability to add 12 to 15 new centers for 2002 through de novo openings and acquisition. We continue to expect two of the de novo centers currently under construction to open in 2002, which will augment aug·ment v. aug·ment·ed, aug·ment·ing, aug·ments v.tr. 1. To make (something already developed or well under way) greater, as in size, extent, or quantity: the additional acquisitions that we anticipate completing from either our centers under letter of intent or our pipeline of potential center acquisitions." As a result of AmSurg's financial performance for the first six months of 2002, its assumptions regarding the expansion of its base of centers in operation discussed above and its targeted range of 7% to 9% for growth in second half same-center revenues, the Company is reaffirming the following guidance for full-year 2002:
Projected Year Projected
Ending % Increase
December 31, 2002 from 2001
-------------- ----------
Revenues (millions) $237 to $243 17% to 20%
Earnings per diluted share,
excluding impact of FAS 142(1) $0.95 to $0.97 22% to 25%
Earnings per diluted share(1) $1.12 to $1.14 44% to 46%
(1) The Company expects the adoption of FAS 142, "Goodwill and
Other Intangible Assets," effective January 1, 2002, to have a
positive impact on earnings for 2002 of $0.17 per diluted
share.
The information contained in the preceding table is forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information, and the attainment of these targets is dependent not only on AmSurg's achievement of its assumptions discussed above, but also on the risks and uncertainties listed below that could cause actual results, performance or developments to differ materially from those expressed or implied by this forward-looking information. "Mr. McDonald concluded, "Because going forward we expect to strengthen AmSurg's position as the acknowledged leader in the single specialty surgery center industry, we are also targeting continued growth in earnings per diluted share for 2003 in a range of 22% to 25%. Supporting this goal, we have a proven business model, a veteran management organization and a market opportunity that includes hundreds of physician practices who either offer the potential for de novo surgery center development or operate centers that are potential acquisition candidates. We also enjoy the strongest financial position in the Company's history - cash and cash equivalents of $11.8 million, current and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. bank debt of $13.1 million and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of $202.0 million - complemented by significant cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , which, at $10.6 million for the second quarter, was 1.8 times net earnings." AmSurg Corp. will hold a conference call to discuss this release today at 4:15 p.m. Eastern time. Investors will have the opportunity to listen to the conference call over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by going to www.amsurg.com and clicking Investor Relations Investor relations The process by which the corporation communicates with its investors. or by going to www.streetevents.com or www.companyboardroom.com at least 15 minutes early to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. , 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 through the end of business on August 22, 2002. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . These statements, which have been included in reliance on the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, involve risks and uncertainties. Investors are hereby cautioned that these statements may be affected by the important factors, among others, set forth in AmSurg's filings with the Securities and Exchange Commission, and, consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, the Company's ability to enter into partnership or operating agreements An operating agreement is an agreement among limited liability company ("LLC") members governing the LLC's business, and Member's financial and management rights and duties. No state requires an LLC to have an Operating agreement. for new practice-based ambulatory surgery centers ambulatory surgery center A free-standing center that performs various types of surgery ; its ability to identify suitable acquisition candidates and negotiate and close acquisition transactions, including centers under letter of intent; its ability to obtain the necessary financing or capital on terms satisfactory to the Company to execute its expansion strategy; its ability to generate and manage growth; its ability to contract with managed care payers on terms satisfactory to the Company for its existing centers and its centers that are currently under development; its ability to obtain and retain appropriate licensing approvals for its existing centers and centers currently under development; its ability to minimize start-up Start-up The earliest stage of a new business venture. losses of its development centers; its ability to maintain favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. relations with its physician partners; the Centers for Medicare and Medicaid Services The Centers for Medicare and Medicaid Services (CMS), previously known as the Health Care Financing Administration (HCFA), is a federal agency within the United States Department of Health and Human Services (DHHS) that administers the Medicare program and may update the rate setting methodology, payment rates, payment policies and the list of covered surgical procedures Surgical procedures have long and possibly daunting names. The meaning of many surgical procedure names can often be understood if the name is broken into parts. For example in splenectomy, "ectomy" is a suffix meaning the removal of a part of the body. "Splene-" means spleen. for ambulatory surgery centers; risks associated with the Company's status as a general partner of limited partnerships; our ability to maintain our technological capabilities in compliance with regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. ; risks associated with the valuation and tax deductibility of goodwill; and our ability to obtain the necessary financing to fund the purchase of our physician partners' minority interest in the event of a regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. change that would require such a purchase. AmSurg disclaims any intent or obligation to update these forward-looking statements. AmSurg Corp. develops, acquires and manages physician practice-based ambulatory surgery centers in partnership with surgical and other group practices. At June 30, 2002, AmSurg owned a majority interest in 97 centers and had five centers under development.
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data
(Dollars in thousands, except per share amounts)
For the Three Months
Ended June 30,
--------------------
Statement of Earnings Data: 2002 2001
---------------------------
-------- --------
Revenues $61,713 $49,474
Operating expenses:
Salaries and benefits 15,876 13,374
Supply cost 7,178 5,519
Other operating expenses 13,552 10,367
Depreciation and amortization 2,340 3,567
-------- --------
Total operating expenses 38,946 32,827
-------- --------
Operating income 22,767 16,647
Minority interest 12,685 9,876
Interest expense, net 269 589
-------- --------
Earnings before income taxes 9,813 6,182
Income tax expense 3,925 2,473
-------- --------
Net earnings $5,888 $3,709
======== ========
Earnings per common share:
Basic $0.29 $0.20
Diluted $0.28 $0.19
Weighted average number of shares and
share equivalents (000's):
Basic 20,375 18,912
Diluted 20,766 19,621
Operating Data:
Centers in operation at
end of period 97 89
Centers under development/not
opened at end of period 5 3
Development centers awaiting CON
approval at end of period 3 1
Centers under letter of intent 8 6
Average number of centers in
operation 96 88
Average revenue per center $645 $564
Same center revenues increase 13% 9%
Procedures performed during the period 115,890 96,144
EBITDA after minority interest $12,422 $10,338
Operating cash flow per share $0.51 $0.46
For the Six Months
Ended June 30,
--------------------
2002 2001
-------- --------
Revenues $120,003 $94,613
Operating expenses:
Salaries and benefits 31,170 25,430
Supply cost 14,333 11,104
Other operating expenses 26,295 19,872
Depreciation and amortization 4,687 6,819
-------- --------
Total operating expenses 76,485 63,225
-------- --------
Operating income 43,518 31,388
Minority interest 24,132 18,421
Interest expense, net 619 2,310
-------- --------
Earnings before income taxes 18,767 10,657
Income tax expense 7,507 4,263
-------- --------
Net earnings $11,260 $6,394
======== ========
Earnings per common share:
Basic $0.56 $0.38
Diluted $0.55 $0.36
Weighted average number of shares and
share equivalents (000's):
Basic 20,258 16,831
Diluted 20,634 17,580
Operating Data:
Centers in operation at
end of period 97 89
Centers under development/not
opened at end of period 5 3
Development centers awaiting CON
approval at end of period 3 1
Centers under letter of intent 8 6
Average number of centers in
operation 95 86
Average revenue per center $1,259 $1,103
Same center revenues increase 13% 10%
Procedures performed during the period 224,442 185,180
EBITDA after minority interest $24,073 $19,786
Operating cash flow per share $1.00 $0.83
Balance Sheet Data:
June 30, December 31,
2002 2001
-------- --------
Cash and cash equivalents $ 11,774 $ 11,074
Accounts receivable, net 28,760 28,069
Working capital 31,476 34,909
Total assets 259,576 241,383
Long-term debt 4,520 12,685
Minority interest 26,721 25,047
Shareholders' equity 202,028 185,569
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