Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - UNITED SURGICAL PARTNERS INTERNATIONAL INC | d309975d8k.htm |
| EX-99.2 - PRESS RELEASE REGARDING PROPOSED REFINANCING AND PROPOSED SPIN-OUT - UNITED SURGICAL PARTNERS INTERNATIONAL INC | d309975dex992.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 2011 RESULTS
Dallas, Texas (March 1, 2012) – United Surgical Partners International, Inc. (“USPI” or the “Company”) today announced results for the fourth quarter and year ended December 31, 2011.
Fourth Quarter Financial Results
For the quarter ended December 31, 2011, consolidated net revenues increased 5% to $162.0 million compared with $154.2 million in the prior year period. Operating loss for the fourth quarter was $37.0 million as compared with operating income of $53.0 million for the prior year period. Current quarter operating loss included an impairment of goodwill of $107.0 million related to the U.K. reporting unit. 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 Annual Report on Form 10-K. Adjusted EBITDA less noncontrolling interests increased 11% to $61.6 million versus $55.4 million in the prior year quarter.
The financial results for the fourth quarter were driven by systemwide revenue growth of 13%, consisting of 6% U.S. same-facility revenue growth and the remainder being due to acquisition activity.
Cash flows from operating activities for the fourth quarter totaled $43.7 million compared with $31.3 million for the prior year period. During the fourth quarter, the Company and its consolidated subsidiaries invested approximately $6.8 million in maintenance capital expenditures and an additional $16.3 million to develop new facilities and expand existing facilities.
Full Year Financial Results
For the year ended December 31, 2011, consolidated net revenues increased 6% to $609.6 million compared with $576.7 million in the prior year period. Operating income decreased 33% for 2011 to $141.1 million as compared with $210.5 million for the prior year period. Current year operating income included an impairment of goodwill of $107.0 million related to the U.K. reporting unit. 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 Annual Report on Form 10-K. Adjusted EBITDA less noncontrolling interests increased to $212.8 million from $200.2 million in the prior year period.
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United Surgical Partners Announces Fourth Quarter and Year-End 2011 Results
Page 2
March 1, 2012
Cash flows from operating activities for the year ended December 31, 2011, totaled $184.1 million compared with $169.1 million for the prior year period. This increase was due to the higher operating cash flows of our facilities being partially offset by increased federal tax payments. The Company’s federal tax payments in the first half of 2010 were lower due to its still having significant net operating loss carryforwards to apply. During 2011, the Company and its consolidated subsidiaries invested approximately $18.7 million in maintenance capital expenditures and an additional $31.8 million to develop new facilities and expand existing facilities.
Systemwide Financial Results
Due to the Company’s 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 Company’s unconsolidated facilities are not recorded as revenues by USPI, equity in earnings of unconsolidated affiliates is a significant and growing portion of the Company’s 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 December 31, 2011, 141 of the 206 facilities the Company operated were not consolidated.
Revenue Analysis
For the fourth quarter, the systemwide revenues of the facilities operated by the Company increased 13% on a year-over-year basis, while consolidated revenues increased 5%. For 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 December 31, 2011 |
Year Ended December 31, 2011 |
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| As Reported Under GAAP |
Unconsolidated Affiliates |
As Reported Under GAAP |
Unconsolidated Affiliates |
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| Total revenues, period ended December 31, 2010 |
$ | 154,212 | $ | 377,621 | $ | 576,665 | $ | 1,329,041 | ||||||||
| Add: Revenue from acquired facilities and de novos |
5,768 | 35,724 | 17,010 | 105,820 | ||||||||||||
| Less: Revenue of deconsolidated facilities |
(3,822 | ) | 3,822 | (13,569 | ) | 13,569 | ||||||||||
| Less: Revenue of disposed facilities |
— | (4,894 | ) | — | (12,364 | ) | ||||||||||
| Impact of exchange rate |
(168 | ) | — | 3,728 | — | |||||||||||
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| Adjusted base period |
$ | 155,990 | $ | 412,273 | $ | 583,834 | $ | 1,436,066 | ||||||||
| Increase from operations |
4,044 | 23,433 | 16,860 | 97,652 | ||||||||||||
| Non-facility based revenue |
1,954 | 1,058 | 8,892 | 4,312 | ||||||||||||
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| Total revenues, period ended December 31, 2011 |
$ | 161,988 | $ | 436,764 | $ | 609,586 | $ | 1,538,030 | ||||||||
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United Surgical Partners Announces Fourth Quarter and Year-End 2011 Results
Page 3
March 1, 2012
Development Activity
During the year, the Company acquired 19 facilities, opened four de novo facilities, and sold its interest in six facilities. The Company expects to add 15 to 20 facilities in 2012.
Impairment of Goodwill
During the fourth quarter of 2011, the Company recorded a $107.0 million goodwill impairment charge related to its United Kingdom (U.K.) reporting unit. The impairment primarily resulted from worsening conditions in U.K. and European capital markets and poor overall economic conditions, as further described in the Company’s Annual Report on Form 10-K.
Summary
Commenting on the results, William H. Wilcox, USPI’s chief executive officer, said, “We ended the year with some good momentum as we had solid operational results and continued robust development activity.”
USPI, headquartered in Dallas, Texas, currently has ownership interests in or operates 207 surgical facilities. Of the Company’s 201 domestic facilities, 139 are jointly owned with not-for-profit healthcare systems. The Company also operates six 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 Company’s 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 Company’s ability to attract physicians and retain qualified management and personnel; (iii) the Company’s significant leverage; (iv) geographic concentrations of certain of the Company’s operations; (v) risks associated with the Company’s 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 Company’s filings with the Securities and Exchange Commission. Therefore, the Company’s 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 2011 Results
Page 4
March 1, 2012
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except number of facilities)
| Three Months Ended December 31, |
Year
Ended December 31, |
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| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Revenues |
$ | 161,989 | $ | 154,212 | $ | 609,586 | $ | 576,665 | ||||||||
| Equity in earnings of unconsolidated affiliates |
26,034 | 20,162 | 82,752 | 69,916 | ||||||||||||
| Operating expenses: |
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| Salaries, benefits and other employee costs |
43,024 | 42,506 | 165,083 | 156,213 | ||||||||||||
| Medical services and supplies |
25,702 | 26,063 | 99,559 | 97,940 | ||||||||||||
| Other operating expenses |
25,842 | 26,227 | 98,246 | 99,075 | ||||||||||||
| General and administrative expenses |
11,010 | 10,908 | 43,710 | 38,202 | ||||||||||||
| Provision for doubtful accounts |
2,769 | 2,187 | 9,648 | 8,458 | ||||||||||||
| Goodwill impairment |
107,028 | — | 107,028 | — | ||||||||||||
| Net (gain) loss on deconsolidations, disposals and impairments |
2,220 | 5,842 | (1,529 | ) | 6,378 | |||||||||||
| Depreciation and amortization |
7,420 | 7,671 | 29,462 | 29,799 | ||||||||||||
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| Total operating expenses |
225,015 | 121,404 | 551,207 | 436,065 | ||||||||||||
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| Operating income (loss) |
(36,992 | ) | 52,970 | 141,131 | 210,516 | |||||||||||
| Interest expense, net |
(15,440 | ) | (17,224 | ) | (64,725 | ) | (69,240 | ) | ||||||||
| Other, net |
40 | (14 | ) | (73 | ) | 708 | ||||||||||
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| Income (loss) from continuing operations before income taxes |
(52,392 | ) | 35,732 | 76,333 | 141,984 | |||||||||||
| Income tax expense |
(26,909 | ) | (8,091 | ) | (56,729 | ) | (32,328 | ) | ||||||||
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| Income (loss) from continuing operations |
(79,301 | ) | 27,641 | 19,604 | 109,656 | |||||||||||
| Discontinued operations, net of tax |
— | (7,813 | ) | (519 | ) | (7,003 | ) | |||||||||
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| Net income (loss) |
(79,301 | ) | 19,828 | 19,085 | 102,653 | |||||||||||
| Less: Net income attributable to noncontrolling interests |
(20,337 | ) | (17,481 | ) | (69,929 | ) | (60,560 | ) | ||||||||
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| Net income (loss) attributable to USPI’s common stockholder |
$ | (99,638 | ) | $ | 2,347 | $ | (50,844 | ) | $ | 42,093 | ||||||
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| Supplemental Data: |
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| Facilities operated at period end |
206 | 189 | 206 | 189 | ||||||||||||
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United Surgical Partners Announces Fourth Quarter and Year-End 2011 Results
Page 5
March 1, 2012
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
| Dec. 31, 2011 |
Dec. 31, 2010 |
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| ASSETS | ||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 41,822 | $ | 60,253 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $8,576 and $7,481, respectively |
58,057 | 50,082 | ||||||
| Other receivables |
10,499 | 15,242 | ||||||
| Inventories |
10,117 | 9,191 | ||||||
| Deferred tax assets, net |
14,704 | 14,961 | ||||||
| Other |
20,129 | 14,682 | ||||||
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| Total current assets |
155,328 | 164,411 | ||||||
| Property and equipment, net |
235,321 | 202,260 | ||||||
| Investments in unconsolidated affiliates |
444,734 | 393,561 | ||||||
| Goodwill and intangible assets, net |
1,536,485 | 1,587,877 | ||||||
| Other |
21,630 | 24,630 | ||||||
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| Total assets |
$ | 2,393,498 | $ | 2,372,739 | ||||
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| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: |
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| Accounts payable |
$ | 28,765 | $ | 23,488 | ||||
| Accrued expenses and other |
222,985 | 218,786 | ||||||
| Current portion of long-term debt |
25,487 | 22,386 | ||||||
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| Total current liabilities |
277,237 | 264,660 | ||||||
| Long-term debt |
1,042,969 | 1,047,440 | ||||||
| Other liabilities |
198,753 | 157,820 | ||||||
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| Total liabilities |
1,518,959 | 1,469,920 | ||||||
| Noncontrolling interests - redeemable |
106,668 | 81,668 | ||||||
| USPI stockholder’s equity |
732,688 | 786,757 | ||||||
| Noncontrolling interests - nonredeemable |
35,183 | 34,394 | ||||||
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| Total equity |
767,871 | 821,151 | ||||||
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| Total liabilities and equity |
$ | 2,393,498 | $ | 2,372,739 | ||||
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United Surgical Partners Announces Fourth Quarter and Year-End 2011 Results
Page 6
March 1, 2012
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Key Operating Statistics
(in thousands, except for number of facilities, cases and percentages)
| Three Months Ended December 31, | ||||||||||||
| 2011 | 2010 | % Change | ||||||||||
| Systemwide same-facility statistics(1) (2): |
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| United States: |
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| Facility cases |
230,062 | 226,833 | 1.4 | % | ||||||||
| Net revenue/case |
$ | 2,320 | $ | 2,227 | 4.2 | % | ||||||
| Net revenue (in thousands) |
$ | 533,797 | $ | 505,140 | 5.7 | % | ||||||
| Facility operating income margin(3) |
29.8 | % | 29.5 | % | 30 | bps | ||||||
| United Kingdom: |
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| Adjusted admissions |
5,222 | 5,272 | (0.9 | %) | ||||||||
| Net revenue/adjusted admission |
$ | 5,245 | $ | 5,010 | 4.7 | % | ||||||
| Net revenue/adjusted admission |
$ | 5,245 | $ | 4,979 | 5.3 | % | ||||||
| Net revenue (in thousands) |
$ | 27,391 | $ | 26,413 | 3.7 | % | ||||||
| Facility operating income margin(3) |
18.8 | % | 21.4 | % | (260 | ) bps | ||||||
| Other: |
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| Total consolidated facilities |
65 | 57 | ||||||||||
| EBITDA less noncontrolling interests(5) |
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| GAAP operating income (loss) |
$ | (36,992 | ) | $ | 52,970 | (169.8 | %) | |||||
| Depreciation and amortization |
7,420 | 7,671 | ||||||||||
| Goodwill impairment |
107,028 | — | ||||||||||
| Net (gain) loss on deconsolidations, disposals and impairments |
2,219 | 5,842 | ||||||||||
| Impairment of unconsolidated affiliate |
— | 3,676 | ||||||||||
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| EBITDA |
79,675 | 70,159 | ||||||||||
| Net income attributable to noncontrolling interests |
(20,337 | ) | (17,481 | ) | ||||||||
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| EBITDA less noncontrolling interests |
$ | 59,338 | $ | 52,678 | 12.6 | % | ||||||
| De novo start-up losses |
1,286 | 35 | ||||||||||
| Acquisition costs |
927 | 2,713 | ||||||||||
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| Adjusted EBITDA |
$ | 61,551 | $ | 55,426 | 11.1 | % | ||||||
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United Surgical Partners Announces Fourth Quarter and Year-End 2011 Results
Page 7
March 1, 2012
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Key Operating Statistics (Continued)
(in thousands, except for number of facilities, cases and percentages)
| Year Ended December 31, | ||||||||||||
| 2011 | 2010 | % Change | ||||||||||
| EBITDA less noncontrolling interests(5) |
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| GAAP operating income |
$ | 141,131 | $ | 210,516 | (33.0 | %) | ||||||
| Depreciation and amortization |
29,462 | 29,799 | ||||||||||
| Goodwill impairment |
107,028 | — | ||||||||||
| Net (gain) loss on deconsolidations, disposals and impairments |
(1,529 | ) | 6,378 | |||||||||
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| Impairment of unconsolidated affiliate |
— | 3,676 | ||||||||||
| EBITDA |
276,092 | 250,369 | ||||||||||
| Net income attributable to noncontrolling interests |
(69,929 | ) | (60,560 | ) | ||||||||
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| EBITDA less noncontrolling interests |
$ | 206,163 | $ | 189,809 | 8.6 | % | ||||||
| De novo start-up losses |
4,009 | 136 | ||||||||||
| Acquisition costs |
2,661 | 3,300 | ||||||||||
| Expense related to prior acquisition |
— | 6,000 | ||||||||||
| VAT assessment |
— | 1,000 | ||||||||||
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| Adjusted EBITDA |
$ | 212,833 | $ | 200,245 | 6.3 | % | ||||||
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| (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 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 and good will impairment, 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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