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8-K - FORM 8-K - UNITED SURGICAL PARTNERS INTERNATIONAL INC | d71185e8vk.htm |
Exhibit 99.1
Contact:
|
Mark A. Kopser | |
Executive Vice President and Chief Financial Officer | ||
(972) 713-3500 |
UNITED SURGICAL PARTNERS INTERNATIONAL
ANNOUNCES FOURTH QUARTER AND YEAR-END 2009 RESULTS
ANNOUNCES FOURTH QUARTER AND YEAR-END 2009 RESULTS
Highlights:
For the year:
| Added 11 facilities | |
| Operating income growth of 15% | |
| Systemwide revenue growth of 10% | |
| U.S. same-facility revenue growth of 8% |
For the quarter:
| Added five facilities | |
| Operating income growth of 12% | |
| Systemwide revenue growth of 10% | |
| U.S. same-facility revenue growth of 7% |
Dallas, Texas (February 25, 2010) United Surgical Partners International, Inc. (USPI or the
Company) today announced results for the fourth quarter and year ended December 31, 2009.
Fourth Quarter Financial Results
For the quarter ended December 31, 2009, consolidated net revenues were $156.5 million
compared with $160.3 million in the prior year period. On a year-over-year basis, consolidated net
revenues were reduced by $9.7 million due to the deconsolidation of facilities that are now
accounted for under the equity method. Operating income for the fourth quarter increased 12% to
$60.5 million as compared with $54.2 million for the prior year period. Operating income margin
for the fourth quarter of 2009 increased 490 basis points to 38.7% from 33.8% in the prior year
period. For the quarter, EBITDA less noncontrolling interests increased 7% to $52.7 million from
$49.4 million in the prior year period.
The operating results in the quarter were driven by strong same-facility revenue growth and an
increase in margins. The improvement in margins was primarily a result of U.S. same-facility
revenue growth and improved expense management. Same-facility margins in the U.S. increased 200
basis points. In addition, consolidated margins were benefited by the continued growth in equity
in earnings of unconsolidated affiliates, which grew 29% in the fourth quarter.
Cash flows from operating activities for the fourth quarter totaled $40.0 million compared
with $37.8 million for the prior year period. During the fourth quarter, the Company and its
consolidated subsidiaries invested approximately $5.8 million in maintenance capital expenditures
and an additional $9.0 million to develop new facilities and expand existing facilities.
Full Year Financial Results
For the year ended December 31, 2009, consolidated net revenues were $622.4 million compared
with $642.2 million in the prior year period. Operating income for 2009 increased 15% to $229.7
million as compared with $199.8 million for 2008. Operating income margin for the year ended
December 31, 2009, increased 580 basis points to 36.9% from 31.1% in the prior year. For the year
ended December 31, 2009, EBITDA less noncontrolling interests increased 11% to $201.2 million from
$181.4 million in the prior year. On a year-over-year basis, the strengthening of the U.S. dollar
reduced net revenue and operating income by $18.9 million and $4.2 million, respectively.
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United Surgical Partners Announces Fourth Quarter and Year-End 2009 Results
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February 25, 2010
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February 25, 2010
Cash flows from operating activities for the year ended December 31, 2009, totaled $185.2
million, compared with $145.6 million for the prior year. During 2009, the Company and its
consolidated subsidiaries invested approximately $15.0 million in maintenance capital expenditures
and an additional $16.8 million to develop new facilities and expand existing facilities.
Systemwide Financial Results
Due in large part to the Companys partnerships with physicians and not-for-profit healthcare
systems, the Company does not consolidate 109 of the 169 facilities it operates. To help analyze
results of operations, management uses an operating measure called systemwide revenue growth, which
includes revenues of both consolidated and unconsolidated facilities. While revenues of the
Companys unconsolidated facilities are not recorded as revenues by USPI, equity in earnings of
unconsolidated affiliates, which increased $14.7 million, or 31% in
2009, is a significant and growing portion of the Companys overall
earnings. In addition to overall systemwide revenue growth, USPI calculates growth rates and
operating margins for the facilities that were operational in both the current and prior year
periods, a group the Company refers to as same store or same
facility measures. This group also consists of both consolidated and unconsolidated
facilities.
For the quarter and year ended December 31, 2009, systemwide net revenues increased 10%.
Approximately two-thirds of this increase was a result of increases in U.S. same-facility net
revenue, which grew by 7% and 8% for the quarter and year ended December 31, 2009, respectively.
The remaining one-third of the increase was a result of the impact of acquiring additional
facilities, net of the effect of sold facilities, and, with respect to the full year period, by the
strengthening of the U.S. dollar.
Revenue Analysis
The revenues of the facilities operated by the Company increased on a year-over-year basis,
but consolidated and unconsolidated revenues were also affected by other transactions and a
strengthening U.S. dollar. The table below lists the key drivers of year-over-year changes in
revenues.
Three Months Ended | Year Ended | |||||||||||||||
December 31, 2009 | December 31, 2009 | |||||||||||||||
As Reported Under GAAP | Unconsolidated | As Reported Under GAAP | Unconsolidated | |||||||||||||
Total revenues, period ended December 31,
2008 |
$ | 160,259 | $ | 277,449 | $ | 642,223 | $ | 998,483 | ||||||||
Add: Revenue from acquired facilities |
2,584 | 17,198 | 23,467 | 68,098 | ||||||||||||
Less: Revenue of disposed facilities |
| (7,123 | ) | | (29,799 | ) | ||||||||||
Less: Revenue of deconsolidated facilities |
(9,742 | ) | 9,742 | (42,420 | ) | 42,420 | ||||||||||
Impact of exchange rate |
1,056 | | (18,884 | ) | | |||||||||||
Adjusted base period |
154,157 | 297,266 | 604,386 | 1,079,202 | ||||||||||||
Operating growth |
3,587 | 22,702 | 17,848 | 93,761 | ||||||||||||
Non-facility based revenue |
(1,267 | ) | 4,609 | 131 | 1,455 | |||||||||||
Total revenues, period ended December 31, 2009 |
$ | 156,477 | $ | 324,577 | $ | 622,365 | $ | 1,174,418 | ||||||||
Development Activity
During the year, the Company added eleven facilities and completed the sale of its interest in
six facilities. At December 31, 2009, the Company had eight facilities under development, of which
four were under construction; one of these facilities opened in February 2010. In addition to the
six divestitures, the Company deconsolidated the financial results of four facilities that it
continues to operate.
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United Surgical Partners Announces Fourth Quarter and Year-End 2009 Results
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February 25, 2010
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February 25, 2010
Other Transactions
In the three months ended December 31, 2009, the Company paid a special cash dividend of
approximately $89.0 million on its common stock. The proceeds of the dividend were used by USPI
Holdings, Inc., the Companys sole stockholder, to pay a special cash dividend on its common stock.
In turn, the proceeds were used by USPI Group Holdings, Inc., the sole stockholder of USPI
Holdings, Inc., to pay dividends currently accrued on its preferred stock. In addition, the
Company recorded an $8 million loss related to the sale and deconsolidation of three facilities.
Summary
Commenting on the results, William H. Wilcox, USPIs chief executive officer, said, Overall,
we are pleased with the performance of our company in 2009. Solid
financial results were achieved despite a difficult economic environment.
Impact of Adoption of SFAS No. 160
Effective January 1, 2009, the Company adopted Statement of Financial Accounting Standards No.
160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of Accounting
Research Bulletin No. 51, now codified in the FASBs Accounting Standards Codification, Topic 810,
Consolidation (ASC 810) which requires changes to the financial statement presentation. Net
income attributable to noncontrolling interests, previously referred to as minority interests in
the income of consolidated subsidiaries, is now reported after net earnings. This change results
in pretax income being subtotaled before net income attributable to noncontrolling interests has
been subtracted.
In addition, a portion of the noncontrolling interests in the Companys subsidiaries is now
included as a component of total equity on the Companys consolidated balance sheet. Cash flows
related to noncontrolling interests are also classified differently under ASC 810. Cash flows from
operating activities no longer include distributions of earnings to noncontrolling interests; under
ASC 810 those amounts are classified within financing activities, as are certain amounts previously
classified within investing activities. The impact of all of these presentation changes has been
reflected in all periods presented.
The live broadcast of USPIs fourth quarter and year-end conference call will begin at 10:00
a.m. Eastern Time on February 26, 2010. A 30-day online replay will be available approximately an
hour following the conclusion of the live broadcast. A link to these events can be found on the
Companys website at www.unitedsurgical.com or at www.earnings.com. Additional
financial information pertaining to United Surgical Partners International may be found by visiting
the Investor Relations section of the Companys website.
USPI, headquartered in Dallas, Texas, currently has ownership interests in or operates 169
surgical facilities. Of the Companys 165 domestic facilities, 111 are jointly owned with
not-for-profit healthcare systems. The Company also operates four facilities in London, England.
The above includes forward-looking statements based on current management expectations.
Numerous factors exist that may cause results to differ from these expectations. Many of the
factors that will determine the Companys future results are beyond the ability of the Company to
control or predict. These statements are subject to risks and uncertainties relating to the
Company, including without limitation, (i) reduction in reimbursement from payors; (ii) the
Companys ability to attract physicians and retain qualified management and personnel; (iii) the
Companys significant leverage; (iv) geographic concentrations of certain of the Companys
operations; (v) risks associated with the Companys acquisition and development strategies; (vi)
the regulated nature of the healthcare industry; (vii) the highly competitive nature of the
healthcare business; and (viii) those risks and uncertainties described from time to time in the
Companys filings with the Securities and Exchange Commission. Therefore, the Companys actual
results may differ materially. The Company undertakes no obligation to update any forward-looking
statements or to make any other forward-looking statements, whether as a result of new information,
future events or otherwise.
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United Surgical Partners Announces Fourth Quarter and Year-End 2009 Results
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February 25, 2010
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February 25, 2010
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except number of facilities)
Unaudited Condensed Consolidated Statements of Income
(in thousands, except number of facilities)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Revenues |
$ | 156,477 | $ | 160,259 | $ | 622,365 | $ | 642,223 | ||||||||
Equity in earnings of unconsolidated affiliates |
18,661 | 14,480 | 61,771 | 47,042 | ||||||||||||
Operating expenses: |
||||||||||||||||
Salaries, benefits and other employee costs |
44,060 | 46,051 | 174,148 | 184,871 | ||||||||||||
Medical services and supplies |
26,654 | 27,317 | 102,673 | 112,499 | ||||||||||||
Other operating expenses |
24,728 | 26,267 | 94,633 | 107,659 | ||||||||||||
General and administrative expenses |
9,061 | 10,222 | 38,769 | 40,155 | ||||||||||||
Provision for doubtful accounts |
1,405 | 1,612 | 8,958 | 7,568 | ||||||||||||
Depreciation and amortization |
8,687 | 9,055 | 35,297 | 36,757 | ||||||||||||
Total operating expenses |
114,595 | 120,524 | 454,478 | 489,509 | ||||||||||||
Operating income |
60,543 | 54,215 | 229,658 | 199,756 | ||||||||||||
Interest expense, net |
(17,162 | ) | (19,819 | ) | (68,285 | ) | (82,421 | ) | ||||||||
Other, net |
(8,936 | ) | (1,327 | ) | (28,082 | ) | (1,790 | ) | ||||||||
Income from continuing operations before income
taxes |
34,445 | 33,069 | 133,291 | 115,545 | ||||||||||||
Income tax benefit (expense) |
(9,407 | ) | (3,648 | ) | 97 | (22,333 | ) | |||||||||
Income from continuing operations |
25,038 | 29,421 | 133,388 | 93,212 | ||||||||||||
Discontinued operations, net of tax |
| 338 | | (560 | ) | |||||||||||
Net income |
25,038 | 29,759 | 133,388 | 92,652 | ||||||||||||
Less: Net income attributable to noncontrolling
interests |
(16,515 | ) | (13,869 | ) | (63,722 | ) | (55,138 | ) | ||||||||
Net income attributable to USPIs common stockholder |
$ | 8,523 | $ | 15,890 | $ | 69,666 | $ | 37,514 | ||||||||
Supplemental Data: |
||||||||||||||||
Facilities operated at period end |
169 | 164 | 169 | 164 |
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United Surgical Partners Announces Fourth Quarter and Year-End 2009 Results
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February 25, 2010
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February 25, 2010
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
Dec. 31, | Dec. 31, | |||||||
2009 | 2008 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 34,890 | $ | 49,435 | ||||
Accounts receivable, net of allowance for
doubtful accounts of $8,160 and $11,544,
respectively |
54,237 | 57,213 | ||||||
Other receivables |
15,246 | 17,070 | ||||||
Inventories |
8,789 | 9,079 | ||||||
Deferred tax assets, net |
16,400 | | ||||||
Other |
14,382 | 11,735 | ||||||
Total current assets |
143,944 | 144,532 | ||||||
Property and equipment, net |
198,506 | 201,824 | ||||||
Investments in unconsolidated affiliates |
355,499 | 307,771 | ||||||
Goodwill and intangible assets, net |
1,602,187 | 1,589,139 | ||||||
Other |
25,256 | 24,897 | ||||||
Total assets |
$ | 2,325,392 | $ | 2,268,163 | ||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 23,475 | $ | 22,194 | ||||
Accrued expenses and other |
210,148 | 136,688 | ||||||
Current portion of long-term debt |
23,337 | 24,488 | ||||||
Total current liabilities |
256,960 | 183,370 | ||||||
Long-term debt |
1,048,191 | 1,073,459 | ||||||
Other liabilities |
158,373 | 153,156 | ||||||
Total liabilities |
1,463,524 | 1,409,985 | ||||||
Noncontrolling interests redeemable |
63,865 | 51,961 | ||||||
USPI stockholders equity |
757,952 | 764,137 | ||||||
Noncontrolling interests nonredeemable |
40,051 | 42,080 | ||||||
Total equity |
798,003 | 806,217 | ||||||
Total liabilities and equity |
$ | 2,325,392 | $ | 2,268,163 | ||||
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United Surgical Partners Announces Fourth Quarter and Year-End 2009 Results
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February 25, 2010
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February 25, 2010
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Key Operating Statistics
Key Operating Statistics
Three Months Ended December 31, | ||||||||||||
2009 | 2008 | %Change | ||||||||||
Systemwide statistics (in thousands): |
||||||||||||
Revenue |
$ | 468,831 | $ | 427,061 | 9.8 | % | ||||||
Operating income |
131,109 | 114,185 | 14.8 | % | ||||||||
Systemwide same-facility statistics(1) (2): |
||||||||||||
United States |
||||||||||||
Facility cases |
190,838 | 188,781 | 1.1 | % | ||||||||
Net revenue/case |
$ | 2,239 | $ | 2,122 | 5.5 | % | ||||||
Net revenue (in thousands) |
$ | 427,233 | $ | 400,644 | 6.6 | % | ||||||
Facility operating income margin(3) |
29.0 | % | 27.0 | % | 200 bps | |||||||
United Kingdom: |
||||||||||||
Adjusted admissions |
5,394 | 5,759 | (6.3 | %) | ||||||||
Net revenue/adjusted admission |
$ | 5,026 | $ | 4,452 | 12.9 | % | ||||||
Net revenue/adjusted admission (at constant currency translation
rates)(4) |
$ | 5,026 | $ | 4,625 | 8.7 | % | ||||||
Net revenue (in thousands) |
$ | 27,109 | $ | 25,642 | 5.7 | % | ||||||
Facility operating income margin(3) |
22.6 | % | 25.8 | % | (320) bps | |||||||
Other: |
||||||||||||
Total consolidated facilities |
60 | 62 | ||||||||||
EBITDA less noncontrolling interests(5) (in thousands): |
||||||||||||
GAAP operating income |
$ | 60,543 | $ | 54,215 | 11.7 | % | ||||||
Depreciation and amortization |
8,687 | 9,055 | ||||||||||
EBITDA |
69,230 | 63,270 | ||||||||||
Net income attributable to noncontrolling interests |
(16,515 | ) | (13,869 | ) | ||||||||
EBITDA less noncontrolling interests |
$ | 52,715 | $ | 49,401 | 6.7 | % | ||||||
(1) | Excludes facilities in their first year of operations. Includes facilities accounted for under the equity method as well as consolidated facilities. | |
(2) | Statistics are included in both periods for current year acquisitions. | |
(3) | Calculated as operating income divided by net revenue. | |
(4) | Calculated using fourth quarter 2009 exchange rates. The Company believes net revenue per adjusted admission is an important measure of the United Kingdom operations and that using a constant currency translation rate more accurately reflects the trend of the business. | |
(5) | EBITDA and EBITDA less noncontrolling interests are not measures defined under generally accepted accounting principles (GAAP). The Company believes EBITDA and EBITDA less noncontrolling interests are important measures for purposes of allocating resources and assessing performance. EBITDA, which is computed by adding operating income plus depreciation and amortization, is commonly used as an analytical indicator within the healthcare industry and also serves as a measure of leverage capacity and debt service ability. EBITDA less noncontrolling interests, which is computed by subtracting net income attributable to noncontrolling interests from EBITDA, adjusts both years EBITDA to reflect that the Company does not own 100% of each facility. EBITDA and EBITDA less noncontrolling interests should not be considered as measures of financial performance under GAAP, and the items |
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United Surgical Partners Announces Fourth Quarter and Year-End 2009 Results
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February 25, 2010
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February 25, 2010
excluded from EBITDA and EBITDA less noncontrolling interests are significant components in understanding and assessing financial performance. Because EBITDA and EBITDA less noncontrolling interests are not measurements determined in accordance with GAAP and are thus susceptible to varying calculation methods, EBITDA and EBITDA less noncontrolling interests as presented by United Surgical Partners International may not be comparable to similarly titled measures of other companies. |
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