AmeriPath, Inc. Announces 2007 First Quarter Financial Results.

PALM BEACH GARDENS, Fla. -- AmeriPath, Inc. ("AmeriPath" or the "Company"), a leading provider of physician based anatomic pathology, dermatopathology, molecular diagnostic services, and other esoteric services, reported its financial results for the first quarter ended March 31, 2007.

On April 15, 2007, AmeriPath's ultimate parent, Group Holdings, Inc., a Delaware corporation, signed a definitive agreement to be acquired by Quest Diagnostics Incorporated, a Delaware corporation, in an all cash transaction valued at approximately $2 billion, including approximately $770 million in anticipated debt at closing. The consummation of the merger is subject to various conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The Company expects the transaction to be completed during the second quarter of 2007.

Net revenues for the first quarter of 2007 increased 17.5% to $200.7 million from $170.9 million in the first quarter of 2006. Net revenues and results of operations include the results of Specialty Laboratories, Inc., ("Specialty"), a hospital-focused clinical reference laboratory specializing in esoteric testing, from the effective date of the acquisition by AmeriPath, which was January 31, 2006. Net revenues from Specialty for the first quarter of 2007 were $44.6 million. Net revenues from Specialty for the three months ended March 31, 2006 were $26.4 million. Same store net revenues increased $13.9 million or 8.1% to $184.8 million for the three months ended March 31, 2007 from $170.9 million for the three months ended March 31, 2006.

EBITDA (earnings before interest, taxes, depreciation and amortization), which is a non-GAAP financial measure, for the first quarter of 2007 was $24.4 million compared to $19.8 million for the first quarter of 2006. A reconciliation of net income to EBITDA is found in the attached table.

Costs of services for the first quarter of 2007 increased to $117.0 million (58.3% of net revenues) from $96.9 million (56.7% of net revenues) in the first quarter of 2006. The increases in costs of services as a percentage of net revenues is primarily due to the shift of business mix from inpatient practice revenues to outpatient practice revenues. Inpatient practices generally have very low costs of services compared to outpatient practices. For the three months ended March 31, 2007 compared to the three months ended March 31, 2006, excluding Specialty, outpatient revenues grew 15.6%.

Selling, general and administrative expenses for the first quarter of 2007 were $46.6 million (23.3% of net revenues) compared to $35.8 million (21.0% of net revenues) in the first quarter of 2006. The increases in selling, general, and administrative expenses as a percentage of net revenues for the three months ended March 31, 2007 are primarily due to adding additional resources in information technology, increased sales and marketing costs, billing conversions to the new internal billing information system ("BIS"), and increased Sarbanes Oxley and audit related costs.

The provision for doubtful accounts for the first quarter of 2007 was $19.4 million (9.7% of net revenues) compared to $19.8 million (11.6% of net revenues) in the first quarter of 2006. Outpatient and esoteric revenues, as a percentage of total revenues, continued to grow at a faster rate than inpatient revenues. The bad debt percentages on outpatient and esoteric revenues are generally lower than on inpatient revenues and therefore reduces total bad debt expense as a percentage of total revenues. Outpatient and esoteric revenues, as a percentage of total revenues, for the three months ended March 31, 2007 were 74.0% compared to 68.3% for the three months ended March 31, 2006.

Net income for the first quarter of 2007 was $0.2 million compared to net loss of $2.1 million for the comparable period of 2006.

More detailed information regarding the business, operations and financial performance of the Company through March 31, 2007, and related and other matters will be included in the Company's Form 10-Q for the quarter ended March 31, 2007, which is expected to be filed with the SEC on May 15, 2007.

AmeriPath, a leading national provider of physician-based anatomic pathology, dermatopathology and molecular diagnostic services to physicians, hospitals, clinical laboratories and surgery centers, supports community-based medicine by helping physicians provide excellent and effective care for their patients. A team of subspecialized pathologists and Ph.D. scientists provide medical expertise, diagnostic quality, and personal consultation services. AmeriPath's team of more than 390 highly trained, board-certified pathologists provide medical diagnostics services in outpatient laboratories owned, operated and managed by AmeriPath, as well as in hospitals and ambulatory surgical centers.

Specialty Laboratories supports local pathology and community-based medicine by partnering with pathologists and hospitals to improve patient care and reduce episodes-of-care costs. Specialty offers hospitals an extensive menu of highly advanced clinical tests used by physicians to diagnose, monitor and treat disease and a single-source solution for esoteric testing needs.

The statements contained in this press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements -- which are sometimes identified by words such as "may," "should," "believe," "expect," "anticipate," "estimate" and similar expressions and which include any financial or operating estimates, forecasts or projections -- are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond the Company's control. These risks and uncertainties could cause actual results to differ materially from results anticipated by forward-looking statements. These risks and uncertainties include: the successful integration of the merger with Specialty Laboratories (and achievement of planned or expected synergies); ability to manage growth, access to capital on satisfactory terms, general economic conditions; federal and state healthcare regulation (and compliance); reimbursement rates under government and third party healthcare programs and the payments received under such programs; changes in coding: changes in technology; dependence upon pathologists and customer contracts; the ability to attract, motivate and retain pathologists; labor, technology and insurance costs; and marketing and promotional efforts. The forward-looking statements in this press release are made as of the date hereof based on management's current beliefs and expectations, and the Company undertakes no obligation to update or revise any such statements. Further information regarding risks, uncertainties and other factors that could affect the Company's financial or operating results or that could cause actual results to differ materially from those expected, estimated or anticipated, are included in the Company's annual, quarterly, and other reports and filings with the SEC.

Editor's Note: This release is also available at http://www.ameripath.com.

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