AmeriPath, Inc. Announces 2000 Third Quarter Results; Net Revenue Up 25% and Net Income Increases 17%.Business Editors RIVIERA BEACH Riviera Beach (rəvēr`ə), resort city (1990 pop. 27,639), Palm Beach co., SE Fla., on Lake Worth (a lagoon); inc. 1922. Research and development firms are located in the growing city. , Fla.--(BUSINESS WIRE)--Oct. 24, 2000 AmeriPath, Inc. (Nasdaq:PATH), the largest physician and laboratory company focused on providing anatomic anatomic /ana·tom·ic/ (an?ah-tom´ik) anatomical. Anatomic Related to the physical structure of an organ or organism. pathology, cancer diagnostic and healthcare information services See Information Systems. , reported its financial results for the quarter and nine months ended September 30, 2000. All reported earnings per share amounts are on a fully 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. basis. Quarterly Financial Results Net revenue for the quarter ended September 30, 2000 was $74.9 million, compared to $59.9 million for the third quarter of the prior year, an increase of 25%. Total unit volume increased to 699,000 biopsies in the third quarter of this year, from 598,000 biopsies in the same period of 1999, a 17% increase. Cytology cytology (sītŏl`əjē), in biology, the study of the structure of all normal and abnormal components of cells and the changes, movements, and transformations of such components. specimen volume increased to 424,000 cytology specimens in the third quarter of 2000 from 342,000 cytology specimens in 1999, a 24% increase. Same practice net revenue for the third quarter of 2000 increased by $8.2 million, or 14%, over the third quarter of the prior year. The remaining increase in net revenue of $6.8 million resulted from the operations of practices that were acquired after July 1, 1999. Net income for the third quarter of 2000 was $6.9 million, or $0.31 per share, compared to $5.9 million, or $0.27 per share, for the same period of the prior year. Year-To-Date Financial Results For the nine months ended September 30, 2000, AmeriPath reported net revenue of $216.8 million, an increase of 29% over the $167.6 million reported for the same period in 1999. Same practice net revenue for the nine month period increased by $21.3 million, or 13%. Net income for the nine month period in 2000 was $19.9 million, or $0.90 per share, before the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge of $5.2 million taken in the second quarter of 2000. With the charge, net income for the nine month period was $16 million, or $0.72 per share. These compare to $16.9 million, or $0.78 per share, for the same period in 1999. Cash flows from operations for the nine months ended September 30, 2000 was $30.4 million, or 14% of net revenue, and $1.37 per share, compared to $27.7 million, or 17% of net revenue, and $1.27 per share, for the same period of the prior year. Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. net revenue per pathologist full-time equivalents Full-time equivalent (FTE) is a way to measure a worker's involvement in a project, or a student's enrollment at an educational institution. An FTE of 1.0 means that the person is equivalent to a full-time worker, while an FTE of 0.5 signals that the worker is only half-time. was over $1.0 million. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (excluding the one time impairment charge) for the nine months ended September 30, 2000 was $58.9 million, or 27% of net revenue, compared to $47.1 million, or 28% of net revenue, for the comparable period of 1999. Net accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying were approximately $52.5 million or 60 days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). . This is down slightly from the 61 days at the end of the second quarter of 2000, and is down from the 65 days for the same period of 1999. Collection performance remains strong. SG&A was 15.9% of net revenue for the first nine months of 2000 compared to 16.4% for the same period of 1999. The Company continues to manage its overhead expense line while making investments in information technology and sales organization staffing. Same Practice Revenue Growth; Operating Data The same practice net revenue growth was 14%, or $8.2 million, for the third quarter, including $2.4 million related to the increase in Medicare reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. . The increase in Medicare reimbursement includes an estimate of additional reimbursement as the result of HCFA's miscalculation mis·cal·cu·late tr. & intr.v. mis·cal·cu·lat·ed, mis·cal·cu·lat·ing, mis·cal·cu·lates To count or estimate incorrectly. mis·cal of certain 2000 technical relative value units. Inpatient inpatient /in·pa·tient/ (in´pa-shent) a patient who comes to a hospital or other health care facility for diagnosis or treatment that requires an overnight stay. in·pa·tient n. revenues increased $2.4 million and outpatient revenues increased $5.8 million. The increase in inpatient revenue was principally due to higher surgical volumes and clinical revenues, particularly in Texas. Outpatient revenue increased in almost all dermatopathology practices, especially in Texas, Pennsylvania, and the 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. operation in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . On a same practice comparison, national clinical lab business increased 21%, or $1.1 million, in the third quarter 2000 from the same period in 1999. Expanded contracts in Texas, New York Texas is a hamlet in Oswego County, New York, USA, near the southeastern corner of Lake Ontario. It is officially part of the town of Mexico. Geography Texas lies on Little Salmon Creek, about one-half mile above the mouth of that stream on Lake Ontario, on an east-west , and Pennsylvania contributed to these increases. Gross Margin For the third quarter, the Company's gross margin remains strong at 53.2%, compared to 53.3% for the same quarter of 1999. The decrease is partially attributable to the increase in national clinical lab business. The margin was also affected, to a lesser extent, by lower start-up margins at the Company's Center for Advanced Diagnostics and the de novo lab in New York. Non-Operating Costs Non-operating costs for the third quarter, principally amortization and interest expense, increased 26% from the same period in the prior year. The increase in amortization expense of $570,000 is primarily related to the increase in 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. from acquisitions and contingent note payments. Interest expense increased $960,000, or 38%, from the same quarter of 1999. The increase is due to a higher average outstanding loan balance and an increase in the effective interest rate from 7.0% to 8.2%. As the result of the expiration of certain interest rate protection agreements, the Company anticipates its effective interest rate in the fourth quarter to be approximately 9.7%. Initiatives The Company continues to benefit from a number of key initiatives in the quarter. The alliance with Genomics Collaborative, Inc. ("GCI GCI Ground Circuit Interrupter GCI Getty Conservation Institute GCI Global Commerce Initiative GCI Green Cross International (non-profit international environmental organization) GCI Growth Competitiveness Index GCI Great Cities Institute ") began to take shape. The Company made a $1 million investment in GCI, and began the tissue collection process directed toward building the world's largest tissue repository. AmeriPath continues its transition to becoming a fully integrated healthcare diagnostic information company with the expansion of its information technology ("IT") organization. Four highly qualified personnel were added in the third quarter, including an Infrastructure Project Manager, NT Operating System operating system (OS) Software that controls the operation of a computer, directs the input and output of data, keeps track of files, and controls the processing of computer programs. Analyst, Production Control Manager, and a Director of Applications Development. In addition, the Company formed a strategic alliance with Per-Se Technologies to assist in the development and implementation of PathWay SolutionsTM, AmeriPath's web-based business intelligence solution designed to provide utilization and outcome data to AmeriPath's customers, referring physicians, hospitals, patients and payors. The conversion of all of the Company's billing systems to the IDX (IDX Systems Corporation, South Burlington, VT, www.idx.com) One of the largest health care information systems companies in the country, acquired in 2006 by GE Healthcare (www.gehealthcare.com), a unit of the General Electric Company. software platform continues. Two operations were successfully converted during the third quarter, and three are in process. The conversion process will continue at an aggressive pace in the fourth quarter, and is currently expected to be completed by the end of 2001. The Company's effective tax rate for the quarter was 41.9%, compared to 43.0% for the prior period. This reduction was partially due to the Company's initiative to restructure certain practices to save state income taxes. Excluding the second quarter asset impairment charge, the Company anticipates its effective tax rate for the year to be 42.5%. In an effort to motivate and retain the Company's talented and dedicated employees, a program called Situational Leadership(R)II was instituted, providing our executives, managers, and supervisors with critical leadership skills to help them develop empowered work teams and future leaders Future Leaders is a UK schools-led charitable organisation that aims to widen the pool of talented leaders especially for urban challenging secondary schools. It was founded in March 2006 by Nat Wei, a former founder of Teach First. within an ever-changing and challenging environment. The program was rolled out in June to 140 managers and supervisors, will continue until nearly all of the Company's managers and supervisors are trained, and will be offered on an ongoing basis to all new managers and supervisors. Acquisitions The Company acquired four pathology practices during the quarter: two in Texas, enhancing its already strong presence in the Dallas/Ft. Worth area, and two in Florida. MedGenetics, a cytogenetics cytogenetics /cy·to·ge·net·ics/ (-je-net´iks) the branch of genetics devoted to cellular constituents concerned in heredity, i.e. chromosomes. facility in the central Florida
Central Florida is the central region of the United States state of Florida, on the East Coast. region, will be integrated into the Company's Center for Advanced Diagnostics, based in Orlando. A small hospital-based practice in Orange Park, Florida Orange Park is a town in Clay County, Florida, USA. The population was 9,081 at the 2000 census. According to the U.S. Census Bureau's 2004 estimates, the town had grown to 9,243. was also acquired. Although the market for acquisition and affiliation opportunities remains both competitive and difficult, the Company remains dedicated to the acquisition of large and strong pedestal pedestal In Classical architecture, a support or base for a column, statue, vase, or obelisk. It may be square, octagonal, or circular. A single pedestal may also support a group of columns, or colonnade (see podium). and strategic fold-in pathology practices in existing markets. At present, the Company is in discussions with a number of pathology practices of varying sizes. They are located in the Company's existing and certain new markets. Two of the practices have a combined annual net revenue run-rate of approximately $50 million. At this time, the negotiations are going well, and the Company's management is optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that one or both of these acquisitions should be 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. prior to year-end; however, neither of these acquisitions is the subject of a signed letter of intent or definitive acquisition agreement. Therefore, no assurance can be given that either acquisition will be consummated. CEO's Perspective James C. New, Chairman and Chief Executive Officer of AmeriPath, commented: "The Company's third quarter produced strong earnings and cash flow, and we continue to meet analysts' consensus estimates. The third quarter of 2000 has been very exciting for AmeriPath, demonstrating our continued ability to deliver strong internal growth. Our plans for the fourth quarter and beyond include the continued investment in sales and marketing in an effort to further increase same practice revenue in the areas of dermatopathology, urology urology Medical specialty dealing with the urinary system and male reproductive organs. It traces its origin to medieval lithologists, itinerant healers who specialized in surgical removal of bladder stones. , and gastroenterology gastroenterology Medical specialty dealing with digestion and the digestive system. In the 17th century Jan Baptista van Helmont conducted the first scientific studies in the field; William Beaumont published his own observations in 1833. . Our alliance with GCI should position AmeriPath in a pivotal and indispensable role in the development and implementation of molecular and genetic diagnostics and therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. . The Company is also committed to transitioning from multiple billing and lab information systems to common platforms, thereby enabling it to leverage it's extensive inventory of diagnostic information. These initiatives should increase our competitive advantage and shape the future for AmeriPath." More detailed information regarding the business, operations and financial performance of the Company through September 30, 2000, and related and other matters, will be included in the Company's Form 10-Q Form 10-Q See 10-Q. for the quarter ended September 30, 2000, which is expected to be filed with the SEC by November 14, 2000. As previously announced, the Company will broadcast its third quarter financial results conference call on Tuesday, October 24, 2000, at 10:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy over the Internet. All stockholders and investors are encouraged to participate. This event is available through Investor Broadcast Network's Vcall website, located at http://www.vcall.com. Listeners should go to the website at least fifteen minutes before the event to register, download, and install any necessary audio software. For those unable to attend the live broadcast, a replay will be available for the next 90 days. There is no charge to access the event. A replay of the call will also be available by telephone beginning at 12:00 p.m., October 24 to 12:00 p.m., October 25. The dial-in number is 800-633-8284, reservation no. 16603282. AmeriPath, Inc. is the nation's largest physician and laboratory company focused on providing anatomic pathology cancer, diagnostic, and healthcare information services to physicians, hospitals, national clinical laboratories and managed care organizations. The company presently operates in 14 states and employs 314 physicians who provide medical services through outpatient pathology laboratories, hospital inpatient laboratories and outpatient surgery Outpatient Surgery, also referred to as ambulatory surgery or same-day surgery, is surgery that does not require an overnight hospital stay. The term “outpatient” arises from the fact that surgery patients may go home do not need an overnight hospital centers. The statements of James C. New and other statements contained in this press release are "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. " which are based on management's current beliefs and expectations. Past performance is not necessarily indicative of future results. In addition, forward-looking statements - which are identified by words such as "may", "should", "believe," "expect," "anticipate" and similar expressions -- are subject to a number of risks and uncertainties which could cause actual results to differ materially from historical results or those expected or anticipated. These include risks and uncertainties relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc demand for pathology services, pricing, federal and state regulation (and compliance), reimbursement rates, government and third party payments,the ability to attract, motivate, and retain pathologists, dependence upon pathologists and contracts, completion and integration of acquisitions and affiliations, competitive factors and technology. Further information regarding risks, uncertainties and other factors that could affect the Company's financial results, or could cause actual results to differ materially from those expected or anticipated, are included in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 1999 and subsequent filings with the SEC. Editor's Note Editor's Note (foaled in 1993 in Kentucky) is an American thoroughbred Stallion racehorse. He was sired by 1992 U.S. Champion 2 YO Colt Forty Niner, who in turn was a son of Champion sire Mr. Prospector and out of the mare, Beware Of The Cat. Trained by D. : This release is also available at http://www.ameripath.com
AmeriPath, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
----------------------------------------------
Net revenue $74,918 $59,866 $216,776 $167,608
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Operating costs and
expenses:
Cost of services 35,094 27,931 102,122 76,590
Selling, general &
admin. expense 11,806 9,790 34,423 27,516
Provision for
doubtful accounts 8,825 6,005 24,199 18,546
Amortization expense 3,887 3,317 11,357 8,846
Asset impairment and
related charges -- -- 5,245 --
----------------------------------------------
Total operating
costs and expenses 59,612 47,043 177,346 131,498
----------------------------------------------
Income from
operations 15,306 12,823 39,430 36,110
Interest expense (3,488) (2,528) (10,198) (6,568)
Other income
(expense), net 23 50 103 55
----------------------------------------------
Income before income
taxes 11,841 10,345 29,335 29,597
Provision for
income taxes 4,959 4,448 13,370 12,726
----------------------------------------------
Net income $6,882 $5,897 $15,965 $16,871
==============================================
Diluted net income
per share $0.31 $0.27 $0.72 $0.78
==============================================
Weighted average
shares
outstanding 22,517 22,034 22,240 21,742
==============================================
AmeriPath, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2000 1999
------------- ------------
(unaudited)
Cash and cash equivalents $2,342 $620
Accounts receivable, net 52,538 45,969
Inventories 468 482
Other current assets 6,998 7,144
------------ ------------
Total current assets 62,346 54,215
------------ ------------
Property and equipment, net 17,418 14,129
------------ ------------
Other assets 413,784 381,802
------------ ------------
Total assets $493,548 $450,146
============ ============
Total current liabilities $25,702 $19,047
------------ ------------
Revolving loan 176,821 163,300
Subordinated notes 111 777
Deferred taxes 68,835 62,980
------------ ------------
Total long term liabilities 245,767 227,057
------------ ------------
Total stockholders' equity 222,079 204,042
------------ ------------
Total liabilities and
stockholders' equity $493,548 $450,146
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