AmSurg Second-Quarter Earnings Increase 29% to $0.36.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 22, 2003 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 financial results for the second quarter and first six months of 2003. Revenues for the second quarter, which ended June June: see month. 30, 2003, increased 20% to $74,247,000 from $61,713,000 for the second quarter of 2002. Net earnings for the quarter increased 25% to $7,337,000 from $5,888,000 for the second quarter last year. Net earnings 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 were $0.36 for the second quarter of 2003, up 29% from $0.28 for the second quarter of 2002. Revenues for the first six months of 2003 rose 21% to $145,307,000 from $120,003,000 for the first six months of 2002. Net earnings for the first half of 2003 increased 27% to $14,340,000, or $0.70 per diluted share, from $11,260,000, or $0.55 per diluted share, for the comparable period in 2002. Mr. McDonald commented, "We are pleased that AmSurg's second-quarter financial results extended our five-and-a-half-year record of producing increased revenue and net earnings every quarter, as well as positive comparable-quarter same-center revenue growth. AmSurg's revenue growth for the second quarter reflected the expansion in the number of the Company's centers in operation to 107 at the end of the second quarter from 97 at the same time in 2002. During the second quarter, we added one center to our total of 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. centers under development, giving us 12 at June 30, 2003. We are excited about the operational growth opportunities over the next 18 months that this strong base of de novo centers under development represents. We also completed the second quarter with five centers under letter of intent. Shortly after the end of the second quarter, we consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. the acquisitions of two of these centers under letter of intent, one of which is a large center that, like the center acquired in the first quarter of 2003, generates revenues approximately three times the size of our average surgery center. Because of the combined size and timing of these transactions, we expect these three acquisitions alone will enable us to exceed our acquisition revenue target for 2003. "Our centers experienced 6% same-center revenue growth for the quarter and 7% year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. . The growth rate for the second quarter, while measured against a strong same-center growth rate of 13% for the second quarter last year, was below our guidance. Although there are 94 centers in our same-center group, the vast majority of this lower same-center growth rate is attributable to only seven centers that are experiencing physician transition issues. Each of these centers remains profitable, and we expect their growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. to improve over the next 12 months. At these particular centers, which are geographically dispersed dis·perse v. dis·persed, dis·pers·ing, dis·pers·es v.tr. 1. a. To drive off or scatter in different directions: The police dispersed the crowd. b. , one or more physicians left their respective physician partnership for unrelated reasons. For most of these centers, the related physician partnership is actively recruiting replacement physicians, who we anticipate will utilize the respective center. Although we experience these types of doctor transitions from time to time, it is unusual that this number would occur concurrently. "Due to the fact that we have exceeded our expected acquisition revenues year-to-date, we are reconfirming our guidance for revenues of $300 to $310 million and earnings per diluted share of $1.44 to $1.48 for 2003. We are modifying our same-center revenue projections for the remainder of the year to 6% to 8% and would expect to return to our previous guidance for same-center growth for 2004 of 7% to 9%. "AmSurg also continued to produce 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 , totaling $9.4 million for the quarter, which was used primarily to repay long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . During the second quarter, we repurchased $21.2 million, or 845,200 shares, of the Company's common stock under AmSurg's $25 million stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program. Primarily because of borrowings related to this program, we completed the second quarter with long-term debt of $45.4 million, cash and cash equivalents of $13.0 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 $211.3 million. We remain confident that our anticipated cash flow, combined with cash on hand and available through our credit facility, will be sufficient to finance our expansion plans." The information contained in the preceding paragraphs 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. In January 2003, the Medicare Payment Noun 1. medicare payment - a check reimbursing an aged person for the expenses of health care medicare check bank check, check, cheque - a written order directing a bank to pay money; "he paid all his bills by check" Advisory Commission (MedPAC) voted to recommend that the reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. for procedures performed in surgery centers be no higher than the reimbursement rate for the same procedures performed in hospital outpatient outpatient /out·pa·tient/ (-pa-shent) a patient who comes to the hospital, clinic, or dispensary for diagnosis and/or treatment but does not occupy a bed. out·pa·tient n. departments. Also in January 2003, the Office of Inspector General Noun 1. Office of Inspector General - the investigative arm of the Federal Trade Commission OIG independent agency - an agency of the United States government that is created by an act of Congress and is independent of the executive departments issued a report that included a similar recommendation. The current proposed Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. reform bills do not include these recommendations; however, there can be no assurance that Congress will not include the MedPAC recommendations in final legislation. If these recommendations were to be implemented, the Company believes that its annual revenues would be reduced by approximately 2%, after which the Company would expect to return to its established 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. objectives for growth in same-center revenues of 7% to 9% and earnings per diluted share of 22% to 25%. Mr. McDonald concluded, "We believe that the national debate over rising healthcare costs only strengthens AmSurg's value proposition. We have developed a significant leadership position in the single-specialty surgery center market exactly because we not only provide a high quality, low-cost alternative to traditional venues for many 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. , but also because our business model achieves this goal while increasing both physician and patient satisfaction. We are confident that we can leverage this successful model to produce additional profitable growth and increased shareholder value." 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 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, 2003. 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; changes in the medical staff at its centers; changes in the rate setting methodology, payment rates, payment policies and the list of covered surgical procedures for ambulatory surgery centers by 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 ; the risk of legislative or regulatory changes that would establish uniform rates for outpatient surgical services, regardless of setting; risks associated with the Company's status as a general partner of limited partnerships; the Company's ability to maintain its 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; the risk of legislative or regulatory changes that would prohibit pro·hib·it tr.v. pro·hib·it·ed, pro·hib·it·ing, pro·hib·its 1. To forbid by authority: Smoking is prohibited in most theaters. See Synonyms at forbid. 2. physician ownership in ambulatory surgery centers; and the Company's ability to obtain the necessary financing to fund the purchase of its physician partners' minority interest in the event of a regulatory 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, 2003, AmSurg owned a majority interest in 107 centers and had 12 centers under development.
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data
(Dollars in thousands, except per share amounts)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
-------------------- -------------------
Statement of Earnings Data: 2003 2002 2003 2002
--------------------------- ---------- --------- --------- ---------
Revenues $74,247 $61,713 $145,307 $120,003
Operating expenses:
Salaries and benefits 19,397 15,876 37,872 31,170
Supply cost 8,597 7,178 16,907 14,333
Other operating expenses 15,359 13,552 30,460 26,295
Depreciation and amortization 3,009 2,340 5,701 4,687
-------- --------- --------- ---------
Total operating expenses 46,362 38,946 90,940 76,485
-------- --------- --------- ---------
Operating income 27,885 22,767 54,367 43,518
Minority interest 15,223 12,685 29,736 24,132
Interest expense, net 433 269 732 619
-------- --------- --------- ---------
Earnings before income taxes 12,229 9,813 23,899 18,767
Income tax expense 4,892 3,925 9,559 7,507
-------- --------- --------- ---------
Net earnings $7,337 $5,888 $14,340 $11,260
======== ========= ========= =========
Earnings per common share:
Basic $0.37 $0.29 $0.71 $0.56
Diluted $0.36 $0.28 $0.70 $0.55
Weighted average number of shares and share
equivalents (000's):
Basic 19,848 20,375 20,202 20,258
Diluted 20,164 20,766 20,468 20,634
Operating Data:
---------------
Centers in operation at end of
period 107 97 107 97
Centers under development/not
opened at end of period 12 5 12 5
Development centers awaiting CON
approval at end of period - 3 - 3
Centers under letter of intent 5 8 5 8
Average number of centers in
operation 107 96 107 95
Average revenue per center $694 $645 $1,358 $1,259
Same center revenues increase 6% 13% 7% 13%
Procedures performed during the
period 135,280 115,890 265,164 224,442
Cash flows provided by operating
activities $9,424 $10,619 $20,015 $20,553
Cash flows used by investing
activities $(4,748) $(18,083) $(17,166) $(20,540)
Cash flows provided (used) by
financing activities $(4,897) $8,117 $(3,201) $687
Reconciliation of net earnings
to EBITDA (1):
Net earnings $7,337 $5,888 $14,340 $11,260
Add: income tax expense 4,892 3,925 9,559 7,507
Add: interest expense, net 433 269 732 619
Add: depreciation and
amortization 3,009 2,340 5,701 4,687
-------- --------- --------- ---------
EBITDA $15,671 $12,422 $30,332 $24,073
======== ========= ========= =========
AMSURG CORP.
Unaudited Selected Consolidated Financial and Operating Data
(In thousands)
June 30, December 31,
Balance Sheet Data: 2003 2002
------------------- --------- -----------
Cash and cash equivalents $12,968 $13,320
Accounts receivable, net 32,179 29,597
Working capital 41,762 37,414
Total assets 314,404 299,814
Long-term debt 45,445 27,884
Minority interest 31,864 29,869
Shareholders' equity 211,334 216,364
(1) EBITDA is defined as earnings before interest, income taxes and
depreciation and amortization. EBITDA should not be considered a
measure of financial performance under generally accepted
accounting principles. Items excluded from EBITDA are significant
components in understanding and assessing financial performance.
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. EBITDA
should not be considered in isolation or as alternatives to net
income, cash flows generated by operations, investing or financing
activities, or other financial statement data presented in the
consolidated financial statements as indicators of financial
performance or liquidity. Because EBITDA is not a measurement
determined in accordance with generally accepted accounting
principles and is thus susceptible to varying calculations, EBITDA
as presented may not be comparable to other similarly titled
measures of other companies. Net earnings is the financial measure
calculated and presented in accordance with generally accepted
accounting principles that is most comparable to EBITDA, as
defined.
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