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8-K - FORM 8-K - UNITED SURGICAL PARTNERS INTERNATIONAL INC | d85455e8vk.htm |
Exhibit 99.1
Contact: | Mark A. Kopser Executive Vice President and Chief Financial Officer (972) 713-3500 |
UNITED SURGICAL PARTNERS INTERNATIONAL
ANNOUNCES THIRD QUARTER 2011 RESULTS
ANNOUNCES THIRD QUARTER 2011 RESULTS
Dallas, Texas (November 2, 2011) United Surgical Partners International, Inc. (USPI or the
Company) today announced results for the third quarter and nine months ended September 30, 2011.
Third Quarter Financial Results
For the quarter ended September 30, 2011, consolidated net revenues increased 6% to $149.5
million compared with $141.4 million in the prior year period. Operating income increased 14% for
the third quarter and was $56.6 million as compared with $49.6 million for the prior year period.
Operating income margin for the third quarter increased 280 basis points to 37.9% versus 35.1% in
the prior year period. Both the current and prior year had de novo start-up losses, acquisition
related costs, and certain non-facility operating expenses, which are explained in more detail in
our 10Q filing. Adjusted EBITDA less noncontrolling interests increased to $49.4 million versus
$48.7 million in the prior year quarter.
The financial results for the third quarter were driven by systemwide revenue growth of 12%,
consisting of 6% U.S. same-facility revenue growth and the remainder being due to acquisition
activity.
Cash flows from operating activities for the third quarter totaled $67.7 million compared with
$61.4 million for the prior year period. During the third quarter, the Company and its
consolidated subsidiaries invested approximately $2.8 million in maintenance capital expenditures
and an additional $9.3 million to develop new facilities and expand existing facilities.
Nine-Month Financial Results
For the nine months ended September 30, 2011, consolidated net revenues increased 6% to $447.6
million compared with $422.5 million in the prior year period. Operating income increased 13% for
the first nine months of 2011 to $178.1 million as compared with $157.5 million for the prior year
period. Operating income margin for the first nine months of 2011 increased 250 basis points to
39.8% versus 37.3% in the prior year period. Both the current and prior year had de novo start-up
losses, acquisition related costs, and certain non-facility operating expenses, which are explained
in more detail in our 10Q filing. Adjusted EBITDA less noncontrolling
interests increased to $151.4
million from $144.3 million in the prior year period.
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United Surgical Partners Announces Third Quarter 2011 Results
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Cash flows from operating activities for the nine months ended September 30, 2011, totaled
$140.4 million compared with $137.8 million for the prior year period. This increase was due to
the Companys 19% growth in net income being mostly offset by increased federal tax payments. The
Companys federal tax payments in the first half of 2010 were lower due to its still having
significant net operating loss carryforwards to apply. During the first nine months of 2011, the
Company and its consolidated subsidiaries invested approximately $11.9 million in maintenance
capital expenditures and an additional $15.4 million to develop new facilities and expand existing
facilities.
Systemwide Financial Results
Due to the Companys partnerships with physicians and not-for-profit healthcare systems, the
Company does not consolidate the financial results of the majority of its facilities. While
revenues of the Companys unconsolidated facilities are not recorded as revenues by USPI, equity in
earnings of unconsolidated affiliates is a significant and growing portion of the Companys overall
earnings. To help analyze results of operations, management uses systemwide operating measures
such as systemwide revenue growth, which include revenues of both consolidated and unconsolidated
facilities. 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. This group also consists of
both consolidated and unconsolidated facilities. At September 30, 2011, 143 of the 204 facilities
the Company operated were not consolidated.
Revenue Analysis
For the third quarter, the systemwide revenues of the facilities operated by the Company
increased 12% on a year-over-year basis, while consolidated revenues increased 6%. For the first
nine months of 2011, the systemwide revenues of the facilities operated by the Company increased
13% on a year-over-year basis, while consolidated revenues increased 6%. The table below lists the
key drivers of year-over-year changes in revenues.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2011 | September 30, 2011 | |||||||||||||||
As Reported | Unconsolidated | As Reported | Unconsolidated | |||||||||||||
Under GAAP | Affiliates | Under GAAP | Affiliates | |||||||||||||
Total revenues, period ended
September 30, 2010 |
$ | 141,392 | $ | 329,882 | $ | 422,454 | $ | 951,420 | ||||||||
Add: Revenue from acquired facilities |
4,255 | 22,303 | 10,615 | 62,443 | ||||||||||||
Less: Revenue of deconsolidated facilities |
(3,411 | ) | 3,411 | (9,747 | ) | 9,747 | ||||||||||
Less: Revenue of disposed facilities |
| (3,237 | ) | | (6,628 | ) | ||||||||||
Impact of exchange rate |
936 | | 3,896 | | ||||||||||||
Adjusted base period |
$ | 143,172 | $ | 352,359 | $ | 427,218 | $ | 1,016,982 | ||||||||
Increase from operations |
4,469 | 22,501 | 12,402 | 75,318 | ||||||||||||
Non-facility based revenue |
1,817 | 3,784 | 7,978 | 8,697 | ||||||||||||
Total revenues, period ended
September 30, 2011 |
$ | 149,458 | $ | 378,644 | $ | 447,598 | $ | 1,100,997 | ||||||||
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United Surgical Partners Announces Third Quarter 2011 Results
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Development Activity
During the quarter, the Company acquired 14 facilities through the acquisition of Titan Health
Corporation. Year-to-date, USPI has acquired 16 facilities, opened four de novo facilities, and
sold its interest in five facilities.
Summary
Commenting on the results, William H. Wilcox, USPIs chief executive officer, said, We
continue to see pressure on organic volume growth due to overall weakness in the economy. However,
we still believe that the fundamentals of the surgical business are sound and therefore continue to
invest in acquisitions.
The live broadcast of USPIs third quarter conference call will begin at 5:00 p.m. Eastern
Time on November 2, 2011. 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.uspi.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 204
surgical facilities. Of the Companys 199 domestic facilities, 138 are jointly owned with
not-for-profit healthcare systems. The Company also operates five facilities in the United
Kingdom.
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 Third Quarter 2011 Results
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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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
$ | 149,458 | $ | 141,392 | $ | 447,598 | $ | 422,454 | ||||||||
Equity in earnings of unconsolidated
affiliates |
18,684 | 17,247 | 56,718 | 49,754 | ||||||||||||
Operating expenses: |
||||||||||||||||
Salaries, benefits and other
employee costs |
41,589 | 39,027 | 122,060 | 113,707 | ||||||||||||
Medical services and supplies |
24,680 | 23,571 | 73,857 | 71,878 | ||||||||||||
Other operating expenses |
24,694 | 27,568 | 72,405 | 72,847 | ||||||||||||
General and administrative expenses |
11,807 | 9,626 | 32,700 | 27,295 | ||||||||||||
Provision for doubtful accounts |
2,845 | 1,964 | 6,878 | 6,271 | ||||||||||||
Net (gain) loss on
deconsolidations, disposals and
impairments |
(1,271 | ) | (57 | ) | (3,749 | ) | 536 | |||||||||
Depreciation and amortization |
7,169 | 7,342 | 22,042 | 22,128 | ||||||||||||
Total operating expenses |
111,513 | 109,041 | 326,193 | 314,662 | ||||||||||||
Operating income |
56,629 | 49,598 | 178,123 | 157,546 | ||||||||||||
Interest expense, net |
(15,507 | ) | (16,994 | ) | (49,284 | ) | (52,016 | ) | ||||||||
Other, net |
5 | 367 | (114 | ) | 723 | |||||||||||
Income from continuing operations
before income taxes |
41,127 | 32,971 | 128,725 | 106,253 | ||||||||||||
Income tax expense |
(9,253 | ) | (7,095 | ) | (29,821 | ) | (24,238 | ) | ||||||||
Income from continuing operations |
31,874 | 25,876 | 98,904 | 82,015 | ||||||||||||
Discontinued operations, net of tax |
10 | 281 | (519 | ) | 810 | |||||||||||
Net income |
31,884 | 26,157 | 98,385 | 82,825 | ||||||||||||
Less: Net income attributable to
noncontrolling interests |
(16,598 | ) | (14,309 | ) | (49,592 | ) | (43,079 | ) | ||||||||
Net income attributable to USPIs
common stockholder |
$ | 15,286 | $ | 11,848 | $ | 48,793 | $ | 39,746 | ||||||||
Supplemental Data: |
||||||||||||||||
Facilities operated at period end |
204 | 174 | 204 | 174 |
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United Surgical Partners Announces Third Quarter 2011 Results
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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
Sept. 30, | Dec. 31, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 55,926 | $ | 60,253 | ||||
Accounts receivable, net of allowance for doubtful
accounts of $7,908 and $7,481, respectively |
48,336 | 50,082 | ||||||
Other receivables |
15,177 | 15,242 | ||||||
Inventories |
8,778 | 9,191 | ||||||
Deferred tax assets, net |
11,050 | 14,961 | ||||||
Other |
22,239 | 14,682 | ||||||
Total current assets |
161,506 | 164,411 | ||||||
Property and equipment, net |
203,132 | 202,260 | ||||||
Investments in unconsolidated affiliates |
419,313 | 393,561 | ||||||
Goodwill and intangible assets, net |
1,616,183 | 1,587,877 | ||||||
Other |
21,436 | 24,630 | ||||||
Total assets |
$ | 2,421,570 | $ | 2,372,739 | ||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 24,887 | $ | 23,488 | ||||
Accrued expenses and other |
224,896 | 218,786 | ||||||
Current portion of long-term debt |
23,840 | 22,386 | ||||||
Total current liabilities |
273,623 | 264,660 | ||||||
Long-term debt |
1,018,207 | 1,047,440 | ||||||
Other liabilities |
168,482 | 157,820 | ||||||
Total liabilities |
1,460,312 | 1,469,920 | ||||||
Noncontrolling interests redeemable |
98,838 | 81,668 | ||||||
USPI stockholders equity |
827,752 | 786,757 | ||||||
Noncontrolling interests nonredeemable |
34,668 | 34,394 | ||||||
Total equity |
862,420 | 821,151 | ||||||
Total liabilities and equity |
$ | 2,421,570 | $ | 2,372,739 | ||||
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United Surgical Partners Announces Third Quarter 2011 Results
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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Key Operating Statistics
(in thousands, except for number of facilities, cases and percentages)
Key Operating Statistics
(in thousands, except for number of facilities, cases and percentages)
Three Months Ended September 30, | ||||||||||||
2011 | 2010 | % Change | ||||||||||
Systemwide same-facility statistics(1) (2): |
||||||||||||
United States: |
||||||||||||
Facility cases |
208,911 | 209,324 | (0.2 | )% | ||||||||
Net revenue/case |
$ | 2,260 | $ | 2,132 | 6.0 | % | ||||||
Net revenue (in thousands) |
$ | 472,075 | $ | 446,253 | 5.8 | % | ||||||
Facility operating income margin(3) |
26.7 | % | 26.3 | % | 40 bps | |||||||
United Kingdom: |
||||||||||||
Adjusted admissions |
5,218 | 5,226 | (0.2 | )% | ||||||||
Net revenue/adjusted admission |
$ | 5,185 | $ | 4,787 | 8.3 | % | ||||||
Net revenue/adjusted admission
(at constant currency translation rates)(4) |
$ | 5,185 | $ | 4,967 | 4.4 | % | ||||||
Net revenue (in thousands) |
$ | 27,056 | $ | 25,016 | 8.2 | % | ||||||
Facility operating income margin(3) |
16.9 | % | 21.7 | % | (480) bps | |||||||
Other: |
||||||||||||
Total consolidated facilities |
61 | 60 | ||||||||||
EBITDA less noncontrolling interests(5) |
||||||||||||
GAAP operating income |
$ | 56,629 | $ | 49,598 | 14.2 | % | ||||||
Depreciation and amortization |
7,169 | 7,342 | ||||||||||
Net (gain) loss on deconsolidations, disposals
and impairments |
(1,271 | ) | (57 | ) | ||||||||
EBITDA |
62,527 | 56,883 | ||||||||||
Net income attributable to noncontrolling interests |
(16,598 | ) | (14,309 | ) | ||||||||
EBITDA less noncontrolling interests |
$ | 45,929 | $ | 42,574 | 7.9 | % | ||||||
De novo start-up losses |
1,817 | 133 | ||||||||||
Titan acquisition costs |
1,611 | | ||||||||||
Expense related to previous acquisitions |
| 6,000 | ||||||||||
Adjusted EBITDA |
$ | 49,357 | $ | 48,707 | 1.3 | % | ||||||
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United Surgical Partners Announces Third Quarter 2011 Results
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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Key Operating Statistics (Continued)
(in thousands, except for number of facilities, cases and percentages)
Key Operating Statistics (Continued)
(in thousands, except for number of facilities, cases and percentages)
Nine Months Ended September 30, | ||||||||||||
2011 | 2010 | % Change | ||||||||||
EBITDA less noncontrolling interests(5) |
||||||||||||
GAAP operating income |
$ | 178,123 | $ | 157,546 | 13.1 | % | ||||||
Depreciation and amortization |
22,042 | 22,128 | ||||||||||
Net (gain) loss on deconsolidations, disposals
and impairments |
(3,749 | ) | 536 | |||||||||
EBITDA |
196,416 | 180,210 | ||||||||||
Net income attributable to noncontrolling interests |
(49,592 | ) | (43,079 | ) | ||||||||
EBITDA less noncontrolling interests |
$ | 146,824 | $ | 137,131 | 7.1 | % | ||||||
De novo start-up losses |
2,889 | 147 | ||||||||||
Titan acquisition costs |
1,734 | | ||||||||||
Expense related to prior acquisition |
| 6,000 | ||||||||||
VAT assessment |
| 1,000 | ||||||||||
Adjusted EBITDA |
$ | 151,447 | $ | 144,278 | 5.0 | % | ||||||
(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 third quarter 2011 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, net (gain) loss on deconsolidations, disposals and impairments, 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 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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