Attached files
| file | filename |
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| 8-K - FORM 8-K - UNITED SURGICAL PARTNERS INTERNATIONAL INC | d722737d8k.htm |
Exhibit 99.1
| Contact: | Jason B. Cagle | |
| Chief Financial Officer | ||
| (972) 713-3500 |
UNITED SURGICAL PARTNERS INTERNATIONAL
ANNOUNCES FIRST QUARTER 2014 RESULTS
Dallas, Texas (May 7, 2014) – United Surgical Partners International, Inc. (“USPI” or the “Company”) today announced results for the first quarter ended March 31, 2014.
First Quarter Financial Results
For the quarter ended March 31, 2014, consolidated net revenues were essentially flat at $145.3 million compared with $145.1 million in the prior year period, driven by a decline in same store cases of 3.1%. Operating income for the first quarter decreased 18% to $47.6 million, as compared with $58.2 million for the prior year period. Operating income margins were negatively impacted during the quarter by significant strategic investments in the infrastructure of the Company as well as the consolidation of a hospital that previously was not consolidated, and which operates at a lower margin than the rest of the Company’s facilities. EBITDA less noncontrolling interests decreased 17% to $39.7 million in the first quarter of 2014 compared with $47.8 million for the prior year period.
Cash flows from operating activities for the first quarter of 2014 totaled $61.0 million compared with $38.6 million in the prior year period, driven by timing of distributions from joint ventures with health system partners and a decrease in tax payments in the quarter. During the first quarter of 2014, the Company and its consolidated subsidiaries invested $2.0 million in maintenance capital expenditures and an additional $0.9 million to invest in the infrastructure of existing facilities.
Systemwide Financial Results
Due to the Company’s partnerships with physicians and prominent 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 portion of the Company’s overall earnings. To help analyze results of operations, management uses systemwide operating measures such as systemwide revenue growth, which includes 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 March 31, 2014, 150 of the 215 facilities the Company operated were not consolidated. For the first quarter, the systemwide revenues of the facilities operated by the Company were essentially flat year-over-year.
Development Activity
During the quarter, the Company acquired two facilities and closed one facility. Subsequent to the end of the quarter, the Company acquired another facility. The Company expects to add five to 10 additional facilities in the remainder of 2014.
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United Surgical Partners Announces First Quarter 2014 Results
Page 2
May 7, 2014
Conclusion
Commenting on the results, William H. Wilcox, USPI’s chief executive officer, said, “This was a challenging start to 2014 for USPI, with a combination of severe weather in certain markets and continuing change in insurance plan design impacting first quarter volumes. In addition, the consolidation of a lower margin hospital, together with the significant infrastructure and strategic investments we have made in the recent year, has adversely impacted our results. We remain comfortable with our long-term strategy, optimistic about our development pipeline and believe the capabilities we are building will be beneficial long-term to our partnerships with prominent health systems and physicians.”
The live broadcast of USPI’s first quarter conference call will begin at 5:00 p.m. Eastern Time today May 7, 2014. 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 Company’s website at www.uspi.com. Additional financial information pertaining to United Surgical Partners International may be found by visiting the Investor Relations section of the Company’s website.
USPI, headquartered in Dallas, Texas, currently has ownership interests in or operates 216 facilities, of which 148 are jointly owned with not-for-profit healthcare systems.
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 First Quarter 2014 Results
Page 3
May 7, 2014
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except number of facilities)
| Three Months Ended March 31, |
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| 2014 | 2013 | |||||||
| Revenues |
$ | 145,301 | $ | 145,108 | ||||
| Equity in earnings of unconsolidated affiliates |
17,882 | 19,325 | ||||||
| Operating expenses: |
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| Salaries, benefits and other employee costs |
41,896 | 39,013 | ||||||
| Medical services and supplies |
24,555 | 22,836 | ||||||
| Other operating expenses |
27,886 | 24,591 | ||||||
| General and administrative expenses |
11,785 | 9,904 | ||||||
| Provision for doubtful accounts |
1,988 | 3,044 | ||||||
| Net loss (gain) on deconsolidations, disposals and impairments |
1,014 | (101 | ) | |||||
| Depreciation and amortization |
6,485 | 6,903 | ||||||
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| Total operating expenses |
115,609 | 106,190 | ||||||
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| Operating income |
47,574 | 58,243 | ||||||
| Interest expense, net |
(23,099 | ) | (28,560 | ) | ||||
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| Income from continuing operations before income taxes |
24,475 | 29,683 | ||||||
| Income tax expense |
(3,501 | ) | (4,857 | ) | ||||
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| Income from continuing operations |
20,974 | 24,826 | ||||||
| Discontinued operations, net of tax |
(332 | ) | — | |||||
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| Net income |
20,642 | 24,826 | ||||||
| Less: Net income attributable to noncontrolling interests |
(15,412 | ) | (17,240 | ) | ||||
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| Net income attributable to USPI’s common stockholder |
$ | 5,230 | $ | 7,586 | ||||
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| Supplemental Data: |
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| Facilities operated at period end |
215 | 214 | ||||||
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United Surgical Partners Announces First Quarter 2014 Results
Page 4
May 7, 2014
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
| March 31, 2014 |
Dec. 31, 2013 |
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| ASSETS | ||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 57,987 | $ | 78,741 | ||||
| Available for sale securities |
10,335 | 10,802 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $9,139 and $10,236, respectively |
46,208 | 51,608 | ||||||
| Other receivables |
29,024 | 24,191 | ||||||
| Inventories of supplies |
9,003 | 9,049 | ||||||
| Deferred tax assets, net |
22,690 | 22,333 | ||||||
| Other |
18,837 | 16,076 | ||||||
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| Total current assets |
194,084 | 212,800 | ||||||
| Property and equipment, net |
130,331 | 132,474 | ||||||
| Investments in unconsolidated affiliates |
505,009 | 521,833 | ||||||
| Goodwill and intangible assets, net |
1,591,170 | 1,585,401 | ||||||
| Other |
29,122 | 28,176 | ||||||
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| Total assets |
$ | 2,449,716 | $ | 2,480,684 | ||||
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| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: |
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| Accounts payable |
$ | 18,015 | $ | 17,407 | ||||
| Accrued expenses and other |
243,942 | 278,876 | ||||||
| Current portion of long-term debt |
18,758 | 18,916 | ||||||
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| Total current liabilities |
280,715 | 315,199 | ||||||
| Long-term debt |
1,451,252 | 1,454,692 | ||||||
| Other liabilities |
220,979 | 217,573 | ||||||
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| Total liabilities |
1,952,946 | 1,987,464 | ||||||
| Noncontrolling interests - redeemable |
171,771 | 166,578 | ||||||
| USPI stockholder’s equity |
278,377 | 279,622 | ||||||
| Noncontrolling interests - nonredeemable |
46,622 | 47,020 | ||||||
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| Total equity |
324,999 | 326,642 | ||||||
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| Total liabilities and equity |
$ | 2,449,716 | $ | 2,480,684 | ||||
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United Surgical Partners Announces First Quarter 2014 Results
Page 5
May 7, 2014
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Key Operating Statistics
(in thousands, except for number of facilities, cases and percentages)
| Three Months Ended March 31, | ||||||||||||
| 2014 | 2013 | % Change | ||||||||||
| Systemwide same-facility statistics(1) (2): |
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| Facility cases |
221,772 | 228,869 | (3.1 | )% | ||||||||
| Net revenue/case |
$ | 2,332 | $ | 2,266 | 2.9 | % | ||||||
| Net revenue |
$ | 517,085 | $ | 518,580 | (0.3 | )% | ||||||
| Facility operating income margin(3) |
21.2 | % | 23.4 | % | (220 | ) bps | ||||||
| Other: |
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| Total consolidated facilities |
65 | 64 | ||||||||||
| EBITDA less noncontrolling interests(4) |
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| GAAP operating income |
$ | 47,574 | $ | 58,243 | (18.3 | )% | ||||||
| Depreciation and amortization |
6,485 | 6,903 | ||||||||||
| Net loss (gain) on deconsolidations, disposals and impairments |
1,014 | (101 | ) | |||||||||
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| EBITDA |
55,073 | 65,045 | ||||||||||
| Net income attributable to noncontrolling interests |
(15,412 | ) | (17,240 | ) | ||||||||
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| EBITDA less noncontrolling interests |
$ | 39,661 | $ | 47,805 | (17.0 | )% | ||||||
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| (1) | Excludes de novo facilities in their first year of operations. Includes facilities accounted for under the equity method as well as consolidated facilities. |
| (2) | Statistics for acquired facilities are included in both periods. |
| (3) | Calculated as operating income divided by net revenue. |
| (4) | 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, depreciation and amortization, and net loss (gain) 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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