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8-K - NOVAMED INC | v211853_8k.htm |
Exhibit
99.1
For
Release at 6:00 Am Central Time (7:00 Am Eastern Time)
NOVAMED
REPORTS FOURTH QUARTER EARNINGS FROM CONTINUING OPERATIONS OF $0.26 PER DILUTED
SHARE
CHICAGO,
IL (February 17, 2011) – NovaMed, Inc. (Nasdaq: NOVA), a leading operator of
ambulatory surgery centers in partnership with physicians, today announced
results for the fourth quarter and year ended December 31,
2010. Total net revenue was $38,634,000 compared to $39,261,000 in
the prior year fourth quarter. Same-facility net revenue declined 2%
for the quarter. Net income from continuing operations
attributable to NovaMed in the fourth quarter of 2010 was $2,073,000, or $0.26
per diluted share, compared to $2,020,000, or $0.26 per diluted share, in the
prior year fourth quarter. Fourth quarter 2010 results included
$425,000 in pretax income from the settlement of an outstanding lawsuit as well
as $379,000 in pretax merger related expenses. Net cash provided by
operating activities in the fourth quarter of 2010 was $11,094,000 and
distributions to noncontrolling interests, which are included in net cash used
in financing activities, were $3,929,000. In the fourth quarter of
2010, net cash provided by operating activities less distributions to
noncontrolling interests was $7,165,000, or $0.90 per diluted
share.
Interest
expense in the fourth quarter of 2010 included non-cash, imputed interest of
$1,202,000, or $0.09 per diluted share, compared to $1,100,000, or $0.09 per
diluted share, in the fourth quarter of 2009. This interest expense
is recorded in accordance with NovaMed’s adoption of Accounting Standards
Codification (“ASC”) 470-20. There was no income tax impact related
to the $425,000 settlement payment noted above as a valuation allowance was
taken on the tax benefit associated with the original loss of $1,041,000
recorded in 2007. The loss related to NovaMed’s minority investment
in a surgery center and the $425,000 settlement represents a partial recovery of
this loss. This settlement payment resulted in a lower effective tax
rate in the fourth quarter of 2010 as compared to prior periods.
Highlights
of fourth quarter continuing operations include:
|
·
|
Total
net revenue of $38,634,000
|
|
·
|
Earnings
per diluted share from continuing operations of
$0.26
|
|
·
|
Net
cash from operating activities less distributions to noncontrolling
interests of $7,165,000, or $0.90 per diluted
share
|
|
·
|
Reduced
senior debt outstanding by
$5,364,000
|
For the
year ended December 31, 2010, total net revenue was $151,802,000 compared to
$154,031,000 in 2009. Same-facility net revenue in 2010 declined 2%
from 2009. Net income from continuing operations attributable to
NovaMed in 2010 was $7,208,000, or $0.92 per diluted share, compared to
$8,251,000, or $1.06 per diluted share, in 2009. 2010 results
included $425,000 in pretax income from the settlement of an outstanding lawsuit
as well as $454,000 in pretax merger related expenses. Net cash
provided by operating activities in 2010 was $41,150,000 and distributions to
noncontrolling interests, which are included in net cash used in financing
activities, were $16,305,000. For 2010, net cash provided by
operating activities less distributions to noncontrolling interests was
$24,845,000, or $3.16 per diluted share.
On
January 21, 2011, NovaMed announced that it had entered into a definitive merger
agreement to be acquired by an affiliate of Surgery Center Holdings,
Inc. The transaction is subject to the approval of the merger
agreement by holders of a majority of the outstanding shares of NovaMed’s common
stock and is expected to close in the second quarter of 2011, subject to
customary closing conditions, including antitrust and regulatory
approvals.
Impact
of Adoption of ASC 470-20
Effective
January 1, 2009, NovaMed adopted ASC 470-20, Debt with Conversion and Other
Options. ASC 470-20 impacts the accounting treatment of our 1.0%
convertible senior subordinated notes due June 15, 2012. As noted
above, the adoption of ASC 470-20 added non-cash, imputed interest expense of
$1,202,000 and $1,100,000 to the fourth quarters of 2010 and 2009, respectively,
and $4,614,000 and $4,225,000 to 2010 and 2009,
respectively. We estimate that the adoption of ASC 470-20 will
add approximately $5.1 million of imputed interest expense to our 2011 results
of operations. However, the adoption of ASC 470-20 will not have an
impact on our cash flows.
About
NovaMed
NovaMed
operates, develops and acquires ambulatory surgery centers in partnership with
physicians and holds majority ownership interests in 37 surgery centers located
in 19 states. Learn more at www.novamed.com.
Due to
the pending merger, NovaMed will not be holding a conference call to discuss
fourth quarter and 2010 results.
NovaMed
measures same-facility results using only those facilities that it has owned and
operated for the entire current and prior year periods reported. This
press release contains forward-looking statements that relate to possible future
events. These statements are based on management’s current
expectations and are subject to risks and uncertainties, which could cause our
actual results to differ materially from those expressed or implied in this
press release. These risks and uncertainties include: the current
difficult economy and tightened credit markets; our current and future debt
levels; our ability to access capital on a cost-effective basis to continue to
successfully implement our growth strategy; reduced prices and reimbursement
rates for surgical procedures; our ability to acquire, develop or manage a
sufficient number of profitable surgical facilities; our ability to maintain
successful relationships with the physicians who use our surgical facilities;
our ability to grow and manage effectively our increasing number of surgical
facilities; competition from other companies in the acquisition, development and
operation of surgical facilities; and uncertainty around national healthcare
reform and the application of existing or proposed government regulations, or
the adoption of new laws and regulations, that could limit our business
operations, require us to incur significant expenditures or limit our ability to
relocate our facilities if necessary. Readers are encouraged to
review a more complete discussion of the factors affecting NovaMed’s business
and prospects in its filings with the Securities and Exchange Commission,
including the company’s 2009 Form 10-K filed on March 16,
2010. Readers should not place undue reliance on any forward-looking
statements. Except as required by the federal securities laws,
NovaMed undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events, changing circumstances or any other reason after the date of this press
release.
# #
#
CONTACT
Scott
T. Macomber
Executive
Vice President and Chief Financial
Officer
(312)
664-4100
smacomber@novamed.com
Investor
Relations:
Susan
A. Noonan
S. A.
Noonan Communications
(212)
966-3650
susan@sanoonan.com
NovaMed,
Inc.
Unaudited
Condensed Consolidated Statements of Operations
(In
thousands, except per share data, ASCs operated and procedures
performed)
Three
months ended December 31,
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Twelve
months ended December 31,
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|||||||||||||||
2010
|
2009
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2010
|
2009
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|||||||||||||
Net
revenue:
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||||||||||||||||
Surgical
facilities
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$ | 33,127 | $ | 33,831 | $ | 128,509 | $ | 131,192 | ||||||||
Product
sales and other
|
5,507 | 5,430 | 23,293 | 22,839 | ||||||||||||
Total
net revenue
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38,634 | 39,261 | 151,802 | 154,031 | ||||||||||||
Operating
expenses:
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||||||||||||||||
Salaries,
wages and benefits
|
11,325 | 11,470 | 45,003 | 45,569 | ||||||||||||
Cost
of sales and medical supplies
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9,671 | 9,099 | 36,819 | 35,370 | ||||||||||||
Selling,
general and administrative
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7,128 | 7,026 | 28,060 | 27,409 | ||||||||||||
Depreciation
and amortization
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1,203 | 1,397 | 5,040 | 5,654 | ||||||||||||
Total
operating expenses
|
29,327 | 28,992 | 114,922 | 114,002 | ||||||||||||
Operating
income
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9,307 | 10,269 | 36,880 | 40,029 | ||||||||||||
Interest
(income) expense, net
|
2,137 | 2,358 | 8,896 | 8,774 | ||||||||||||
Other
(income) expense, net
|
(378 | ) | (33 | ) | (318 | ) | 11 | |||||||||
Income
before income taxes
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7,548 | 7,944 | 28,302 | 31,244 | ||||||||||||
Income
tax provision
|
1,076 | 1,292 | 4,428 | 5,276 | ||||||||||||
Net
income from continuing operations
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6,472 | 6,652 | 23,874 | 25,968 | ||||||||||||
Net
loss from discontinued operations
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- | (222 | ) | (335 | ) | (740 | ) | |||||||||
Gain
(loss) on disposal of discontinued operations
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- | - | (1,554 | ) | - | |||||||||||
Net
income
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$ | 6,472 | $ | 6,430 | $ | 21,985 | $ | 25,228 | ||||||||
Net
income attributable to noncontrolling interests
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4,399 | 4,632 | 16,666 | 17,717 | ||||||||||||
Net
income attributable to NovaMed, Inc.
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$ | 2,073 | $ | 1,798 | $ | 5,319 | $ | 7,511 | ||||||||
Amounts
attributable to NovaMed, Inc.:
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||||||||||||||||
Net
income from continuing operations
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$ | 2,073 | $ | 2,020 | $ | 7,208 | $ | 8,251 | ||||||||
Net
income (loss) from discontinued operations
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- | (222 | ) | (1,889 | ) | (740 | ) | |||||||||
Net
income attributable to NovaMed, Inc.
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$ | 2,073 | $ | 1,798 | $ | 5,319 | $ | 7,511 | ||||||||
Diluted
earnings per common share attributable to NovaMed, Inc
(1).:
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||||||||||||||||
Earnings
from continuing operations
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$ | 0.26 | $ | 0.26 | $ | 0.92 | $ | 1.06 | ||||||||
Loss
from discontinued operations
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- | (0.03 | ) | (0.24 | ) | (0.10 | ) | |||||||||
Net
earnings
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$ | 0.26 | $ | 0.23 | $ | 0.68 | $ | 0.96 | ||||||||
Shares
used in computing diluted earnings per share (1)
|
7,932 | 7,838 | 7,870 | 7,772 |
(1)
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Adjusted
for 1-for-3 reverse stock split effective June 1,
2010.
|
Three
months ended December 31,
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Twelve
months ended December 31,
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|||||||||||||||
2010
|
2009
|
2010
|
2009
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|||||||||||||
Selected
Operating Data:
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||||||||||||||||
ASCs
operated at end of period
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37 | 37 | 37 | 37 | ||||||||||||
Procedures
performed during the period
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38,659 | 40,533 | 151,725 | 159,633 | ||||||||||||
Reconciliation
of net income from continuing operations
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||||||||||||||||
attributable
to NovaMed, Inc. to EBITDA (1)(2):
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||||||||||||||||
Net
income from continuing operations attributable to NovaMed,
Inc.
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$ | 2,073 | $ | 2,020 | $ | 7,208 | $ | 8,251 | ||||||||
Add:
income tax provision
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1,076 | 1,292 | 4,428 | 5,276 | ||||||||||||
Add:
interest expense, net
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2,137 | 2,358 | 8,896 | 8,774 | ||||||||||||
Add:
depreciation and amortization
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1,203 | 1,397 | 5,040 | 5,654 | ||||||||||||
Add:
stock compensation expense
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405 | 434 | 1,729 | 2,067 | ||||||||||||
EBITDA
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$ | 6,894 | $ | 7,501 | $ | 27,301 | $ | 30,022 | ||||||||
Reconciliation
of net income from continuing operations
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||||||||||||||||
attributable
to NovaMed, Inc. to non-GAAP net income
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||||||||||||||||
from
continuing operations attributable to NovaMed, Inc.
(1)(3):
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||||||||||||||||
Net
income from continuing operations attributable to NovaMed,
Inc.
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$ | 2,073 | $ | 2,020 | $ | 7,208 | $ | 8,251 | ||||||||
After-tax
imputed interest expense required by ASC 470-20
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727 | 671 | 2,792 | 2,577 | ||||||||||||
Non-GAAP
net income from continuing operations
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||||||||||||||||
attributable
to NovaMed, Inc.
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$ | 2,800 | $ | 2,691 | $ | 10,000 | $ | 10,828 | ||||||||
Reconciliation
of diluted earnings per common share from
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||||||||||||||||
continuing
operations attributable to NovaMed, Inc. to
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||||||||||||||||
non-GAAP
diluted earnings per common share from
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||||||||||||||||
continuing
operations attributable to NovaMed, Inc. (1)(3)(4):
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||||||||||||||||
Diluted
earnings per common share from continuing operations
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||||||||||||||||
attributable
to NovaMed, Inc.
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$ | 0.26 | $ | 0.26 | $ | 0.92 | $ | 1.06 | ||||||||
After-tax
imputed interest expense required by ASC 470-20
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0.09 | 0.09 | 0.35 | 0.33 | ||||||||||||
Non-GAAP
diluted earnings per common share from continuing
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||||||||||||||||
operations
attributable to NovaMed, Inc. (5)
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$ | 0.35 | $ | 0.34 | $ | 1.27 | $ | 1.39 | ||||||||
Computation
of net cash provided by operating activities less
distributions
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||||||||||||||||
to
noncontrolling interests per diluted share (1)(4):
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||||||||||||||||
Net
cash provided by operating activities
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$ | 11,094 | $ | 10,444 | $ | 41,150 | $ | 44,080 | ||||||||
Distributions
to noncontrolling interests
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(3,929 | ) | (4,120 | ) | (16,305 | ) | (18,531 | ) | ||||||||
Net
cash provided by operating activities less distributions
to
|
||||||||||||||||
noncontrolling
interests
|
7,165 | 6,324 | 24,845 | 25,549 | ||||||||||||
Diluted
shares outstanding
|
7,932 | 7,838 | 7,870 | 7,772 | ||||||||||||
Net
cash provided by operating activities less distributions
to
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||||||||||||||||
noncontrolling
interests per diluted share
|
$ | 0.90 | $ | 0.81 | $ | 3.16 | $ | 3.29 |
December
31,
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December
31,
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|||||||||||||||
Balance
Sheet Data:
|
2010
|
2009
|
||||||||||||||
Cash
and cash equivalents
|
$ | 4,521 | $ | 3,884 | ||||||||||||
Accounts
receivable, net
|
18,333 | 18,673 | ||||||||||||||
Working
capital
|
(10,211 | ) | 7,146 | |||||||||||||
Total
assets
|
242,853 | 247,967 | ||||||||||||||
Long-term
debt
|
70,982 | 104,282 | ||||||||||||||
Total
NovaMed, Inc. stockholders' equity
|
99,061 | 91,028 | ||||||||||||||
Noncontrolling
interests
|
15,208 | 14,984 |
Statement
of Cash Flow Data:
|
Three
months ended December 31,
|
Twelve
months ended December 31,
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||||||||||||||
2010
|
2009
|
2010
|
2009
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|||||||||||||
Net
cash provided by operating activities
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$ | 11,094 | $ | 10,444 | $ | 41,150 | $ | 44,080 | ||||||||
Net
cash used in investing activities
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$ | (378 | ) | $ | (635 | ) | $ | (2,010 | ) | $ | (4,368 | ) | ||||
Net
cash used in financing activities
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$ | (9,353 | ) | $ | (8,801 | ) | $ | (38,503 | ) | $ | (40,703 | ) |
Notes:
(1)
|
NovaMed
uses certain non-GAAP financial measures which are adjusted from the most
directly comparable GAAP financial measures as shown in the
reconciliations provided in this press release. NovaMed
believes that providing these non-GAAP financial measures, in addition to
the GAAP financial results, is useful to investors for the reasons noted
below. There are limitations in using non-GAAP financial
measures because they are not prepared in accordance with GAAP and may be
different from non-GAAP financial measures used by other
companies. In addition, non-GAAP financial measures may be
limited in value because they exclude certain items that may have a
material impact upon NovaMed's reported financial results. The
non-GAAP financial measures supplement, and should be viewed in
conjunction with, GAAP financial measures. Investors should review the
reconciliations of the non-GAAP financial measures to their most directly
comparable GAAP financial measures as provided in this press
release.
|
(2)
|
NovaMed
defines EBITDA as earnings before interest, income taxes, depreciation and
amortization, and stock compensation expense. EBITDA is a
non-GAAP financial measure used by management, the health care industry
and the financial community to evaluate company performance, allocate
resources and measure leverage and debt service capacity. Other
companies may calculate EBITDA differently than NovaMed, limiting its
usefulness as a comparative measure.
|
(3)
|
NovaMed
adopted ASC 470-20 effective January 1, 2009. This new
accounting rule resulted in the addition of $727,000 and $671,000 in
non-cash, after-tax interest expense for the three months ended December
31, 2010 and 2009, respectively and $2,792,000 and $2,577,000 in non-cash,
after-tax interest expense for the twelve months ended December 31, 2010
and 2009, respectively. NovaMed is providing this non-GAAP
financial measure to highlight to the long-term readers of its financial
statements the cause of the significant reduction in its earnings from
what was reported in prior years.
|
(4)
|
Adjusted
for 1-for-3 reverse stock split effective June 1, 2010.
|
(5)
|
Discrepancies
between the totals and the sums of the amounts listed are due to
rounding.
|