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8-K - 8-K - Envision Healthcare Holdings, Inc.a15-16615_18k.htm

Exhibit 99.1

 

 

For Immediate Release

 

Contact:                        Bob Kneeley

VP, Investor Relations

303-495-1245

bob.kneeley@evhc.net

 

ENVISION HEALTHCARE REPORTS SECOND QUARTER ADJUSTED EBITDA OF $162.8 MILLION, UP 21% ON STRONG REVENUE GROWTH AND ADJUSTED EPS INCREASES BY 32%

 

Greenwood Village, Colo. (July 30, 2015) — Envision Healthcare Holdings, Inc. (Envision or Company) (NYSE: EVHC) reported results from operations for the three months and six months ended June 30, 2015.  All comparisons included in this release are for the 2015 periods to the comparable 2014 period, unless otherwise noted.

 

Highlights:

 

·                  Net revenue increased by 25.9% to $1.35 billion;

 

·                  Adjusted EBITDA grew by 20.5% to $162.8 million;

 

·                  Net income was $52.4 million, compared to a net loss of $2.0 million;

 

·                  Adjusted EPS was $0.37, an increase of 32%, and GAAP diluted EPS was $0.27 for the quarter; and

 

·                  Envision, through its AMR subsidiary, has entered into a definitive agreement to acquire the medical transportation company Rural/Metro Corporation, with estimated annual revenue for 2015 of $600 million, further advancing Envision’s mobile integrated healthcare delivery strategy.

 

“We continue to deliver strong financial results while at the same time expanding our clinical capabilities and aligning our resources to care for patients across a variety of healthcare settings,” said William A. Sanger, chairman, president and chief executive officer. “Our top-line growth for the second quarter reflects strong organic growth and contributions from regional provider groups that joined our organization through acquisition.

 

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“As we actively shape healthcare services, the role of medical transportation and the integration of paramedics and emergency medical technicians takes on greater significance. Our agreement to acquire Rural/Metro, with its diverse and complementary presence, enhances our ability to deliver value to the patients we serve in this ever-changing healthcare landscape.”

 

Results of Operations for the Second Quarter of 2015

 

Envision generated net revenue of $1.35 billion, an increase of 25.9%, driven by balanced contributions from acquisitions, as well as net new contract wins and same-store growth from both its EmCare and American Medical Response (AMR) segments.

 

Adjusted EBITDA of $162.8 million grew by 20.5% from the prior-year period, and was driven by revenue growth. Envision’s Adjusted EBITDA margin was 12.0%.

 

Adjusted earnings per share for the quarter was $0.37, an increase of 32% from $0.28 per share, for the second quarter of 2014. On a GAAP basis, Envision earned $0.27 per share on a fully diluted basis, compared to a loss of $0.01 per share.

 

Segment Results for the Second Quarter 2015

 

Envision operates two business segments: EmCare Holdings (EmCare), the Company’s facility-based and post-acute care physician-led services segment and American Medical Response (AMR), the Company’s medical transportation services segment.

 

EmCare

 

EmCare’s net revenue for the second quarter of 2015 was $929.1 million, an increase of 34.6% from the prior-year period. Revenue from acquisitions completed during the past 12 months contributed growth of 20.1%, including three transactions completed during the first quarter of 2015.  Organic revenue growth was 14.5%, and consisted of growth from net new contracts of 9.1% while revenue from same-store contracts contributed 5.4% to total revenue growth for the quarter. When calculated from the comparable contract base for both periods, same-store revenue grew by 6.0%, and consisted of 4.4% growth from patient volume and 1.6% yield growth.

 

EmCare’s Adjusted EBITDA grew by 19.1% to $105.2 million, or 11.3% of revenue, for the second quarter of 2015, from $88.3 million, or 12.8% of revenue for the prior-year period. EmCare’s Adjusted EBITDA margin decline can be attributed primarily to the loss of Medicaid parity revenue during 2015 and lower collection rates from certain anesthesia contracts.

 

American Medical Response

 

AMR’s net revenue grew by 10.3%, to $425.2 million, from $385.3 million in the prior-year period.  Same-market revenue growth was 7.1%, net new contracts growth was 3.0%, and acquisition-related growth was 0.2%.  Same market growth consisted of a 5.9% increase in volume and a

 

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1.2% increase in yield. In July 2015, AMR also completed its previously announced acquisition of ambulance operations located in the northeastern U.S.

 

AMR’s Adjusted EBITDA of $57.6 million grew by 22.9%, from $46.8 million in the prior-year period. Adjusted EBITDA margin was 13.5% for the second quarter of 2015, a 140-basis point improvement from the prior year. AMR’s margin continued to improve as a result of higher volume, ongoing efficiency initiatives and lower fuel costs.

 

Envision Cash Flows for the Second Quarter of 2015

 

Envision generated cash flow from operations of $115.6 million, an increase of 81.4% when compared to $63.7 million in the second quarter of 2014.  Cash flow from operations’ growth was driven primarily by higher net income and a reduction in days sales outstanding.

 

Adjusted Free Cash Flow was $108.0 million, compared to $43.5 million in the second quarter of 2014.

 

Results of Operations for the Six Months Ended June 30, 2015

 

Envision’s net revenue was $2.60 billion, an increase of 24.4% from the prior year-period, while Adjusted EBITDA of $291.6 million increased by 18.6%. Envision generated cash flow from operations of $160.9 million, an increase of 71.3%, and Adjusted Free Cash Flow of $145.1 million, an increase of 72.1%.

 

Segment Results for the Six Months ended June 30, 2015

 

Net revenue at EmCare was $1.75 billion, an increase of 31.4% from the prior-year period.  Adjusted EBITDA was $182.3 million, an increase of 13.9%.

 

Net revenue at AMR was $844.6 million, an increase of 11.9% from the prior-year period.  Adjusted EBITDA was $109.3 million, an increase of 27.2%.

 

Agreement to Acquire Rural/Metro

 

In a separate announcement, AMR has entered into a definitive agreement to acquire Rural/Metro Corporation (Rural/Metro) in a $620 million all-cash transaction. Rural/Metro is expected to generate annualized 2015 revenue of approximately $600 million and pre-synergy Adjusted EBITDA margins of approximately 10%. Upon closing, the transaction is expected to be accretive to Envision’s Adjusted EPS. The transaction is subject to regulatory approval and customary closing conditions, and is expected to close in the fourth quarter of 2015.

 

2015 Guidance

 

Envision is maintaining its existing 2015 guidance of Adjusted EBITDA in a range of $653 million to $665 million and Adjusted EPS of $1.42 to $1.50. The Company anticipates that its third quarter of 2015 results will be approximately 26% to 26.5% of its full year guidance.  At this time, 2015 guidance does not incorporate any impact from the pending Rural/Metro acquisition.

 

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Conference Call

 

Envision management will host a conference call today, Thursday, July 30, 2015, at 5 p.m. Eastern Time, to discuss the Company’s financial results and the Rural/Metro transaction. Interested participants may listen to the call by dialing 800-857-6175, or 517-623-4852 for international callers, and referencing participant code 909712.  For those unable to participate in the live call, a replay will be available one hour after the call ends through August 31, 2015. To access the replay, dial 800-666-0214, or 203-369-3308 for international callers, and enter access code 909712. An audio file will also be archived for 30 days on the investor relations section of the Company’s website: investor.evhc.net.

 

About Envision Healthcare Holdings, Inc.

 

Envision Healthcare Holdings, Inc., and our more than 35,000 employees and affiliated clinicians, offers an array of healthcare related services to consumers, hospitals, healthcare systems, health plans and local, state and national government entities. Through Envision Healthcare Corporation, we operate American Medical Response, Inc. (AMR), EmCare Holdings, Inc. (EmCare) and Evolution Health, LLC (Evolution Health). AMR is a provider and manager of community-based medical transportation services, including emergency (‘911’), non-emergency, managed transportation, fixed-wing air ambulance and disaster response. EmCare is a provider of integrated facility-based physician services, including emergency, anesthesiology, hospitalist/inpatient care, radiology, tele-radiology and surgery. Evolution Health provides comprehensive care to patients across various settings, many of whom suffer from advanced illnesses and chronic diseases. We are headquartered in Greenwood Village, Colorado. For additional information, visit www.evhc.net.

 

Forward-Looking Statements

 

Certain statements and information herein may be deemed to be “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995 including, but not limited to, statements relating to our 2015 guidance, 2015 performance, objectives, plans and strategies, including the proposed acquisition of Rural/Metro, and all statements that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future, including statements regarding the benefits of the Rural/Metro acquisition. Any forward-looking statements herein are made as of the date of this press release, and Envision undertakes no duty to update any such statements. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Important factors that could cause actual results to differ materially from forward-looking statements are described in Envision’s filings with the U.S. Securities and Exchange Commission from time to time.  Among the factors that could cause future results to differ materially are: decreases in our revenue and profit margin under our fee-for-service contracts due to changes in volume, payor mix and third party reimbursement rates, including from political discord in the federal budgeting process; the loss of existing contracts; failure to accurately assess costs under new contracts; difficulties in our ability to recruit and retain qualified physicians and other healthcare professionals, and enforce our non-compete agreements with our physicians; failure to implement some or all of our business strategies, including our efforts to grow our Evolution

 

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Health business and cross-sell our services; lawsuits for which we are not fully reserved; the adequacy of our insurance coverage and insurance reserves; our ability to successfully integrate strategic acquisitions, including the Rural/Metro acquisition; closing of the Rural/Metro acquisition may not occur or may be delayed; expected synergies and other financial benefits of the acquisition may not be realized; litigation related to the acquisition or limitations or retrictions imposed by regulatory authorities may delay or negative impact the acquisition; unanticipated restructuring costs may be incurred or undisclosed liabilities assumed from the acquisition; attempts to retain key personnel and customers from Rural/Metro may not succeed; the high level of competition in the markets we serve; the cost of capital expenditures to maintain and upgrade our vehicle fleet and medical equipment; the loss of one or more members of our senior management; our ability to maintain or implement complex information systems; disruptions in disaster recovery systems, management continuity planning, or information systems; our ability to adequately protect our intellectual property and other proprietary rights or to defend against intellectual property infringement claims; challenges by tax authorities on our treatment of certain physicians as independent contractors; the impact of labor union representation; the impact of fluctuations in results due to our national contract with FEMA; potential penalties or changes to our operations, including our ability to collect accounts receivable if we fail to comply with extensive and complex government regulation of our industry; the impact of changes in the healthcare industry, including changes due to healthcare reform; our ability to timely enroll our providers in the Medicare program; our ability to restructure our operations to comply with future changes in government regulation; the outcome of government investigations of certain of our business practices; our ability to comply with the terms of our settlement agreements with the government; and our ability to generate cash flow to service our substantial debt obligations and the factors discussed in “Risk Factors” in the Company’s Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q.

 

Non-GAAP Financial Measures Description and Reconciliation

 

This press release includes presentations of Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted EPS, which are not financial measures calculated and presented in accordance with generally accepted accounting principles in the United States of America (GAAP).  Adjusted EBITDA is defined as net income (loss) before equity in earnings of unconsolidated subsidiary, income tax benefit (expense), loss on early debt extinguishment, other income (expense), net, realized gains (losses) on investments, interest expense, net, equity-based compensation expense, transaction costs related to acquisition activities, related party management fees, restructuring charges, adjustment to net loss (income) attributable to non-controlling interest due to deferred taxes, and depreciation and amortization expense.  Adjusted Free Cash Flow is defined as cash flow from operations adjusted for cash used in non-acquisition related investing activities and certain out-of-period or non-recurring cash payments.  Adjusted EPS is defined as diluted earnings per share adjusted for expenses related to the Company’s secondary offerings, amortization expense, equity-based compensation expense, restructuring charges and loss on early debt extinguishment, net of an estimated tax benefit.  Adjusted EBITDA and Adjusted EPS for the three months and six months ended June 30, 2014, as presented herein, excludes transaction costs related to acquisition activities to conform to the Company’s current definitions of Adjusted EBITDA and Adjusted EPS, respectively.

 

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These non-GAAP financial measures are commonly used by management and investors as performance measures or liquidity indicators. However, the items excluded from these non-GAAP financial measures are significant components in understanding and assessing the Company’s financial performance, and as a result, these measures should not be considered in isolation or as an alternative to GAAP measures such as net income, cash flows provided by or used in operating, investing or financing activities or other financial statement data presented in the Company’s consolidated financial statements as an indicator of financial performance or liquidity. Since these non-GAAP financial measures are not measures determined in accordance with GAAP and are susceptible to varying calculations, these measures, as presented, may not be comparable to other similarly titled measures of other companies.  Reconciliations of non-GAAP financial measures are provided in this press release.  Reconciliation for the forward-looking full-year 2015 Adjusted EBITDA and Adjusted EPS projections presented herein is not being provided due to the number of variables in the projected full-year 2015 Adjusted EBITDA and Adjusted EPS ranges and thus the Company does not currently have sufficient data to accurately estimate the individual adjustments for such reconciliation.

 

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Envision Healthcare Holdings, Inc.

Consolidated Statements of Operations and Other Information

(unaudited; in thousands, except shares, per share data and other information)

 

 

 

Quarter ended June 30,

 

Six months ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

1,354,258

 

$

1,075,327

 

$

2,598,760

 

$

2,089,538

 

Compensation and benefits

 

969,458

 

767,007

 

1,877,115

 

1,510,668

 

Operating expenses

 

156,129

 

120,715

 

307,855

 

235,350

 

Insurance expense

 

38,166

 

31,583

 

73,692

 

62,564

 

Selling, general and administrative expenses

 

31,249

 

23,594

 

57,698

 

42,969

 

Depreciation and amortization expense

 

44,936

 

35,558

 

84,817

 

71,990

 

Restructuring charges

 

 

3,731

 

 

4,540

 

Income from operations

 

114,320

 

93,139

 

197,583

 

161,457

 

Interest income from restricted assets

 

163

 

246

 

293

 

332

 

Interest expense, net

 

(28,094

)

(29,002

)

(54,781

)

(59,051

)

Realized gains (losses) on investments

 

(34

)

508

 

(34

)

1,114

 

Other income (expense), net

 

(40

)

(1,964

)

(372

)

(2,772

)

Loss on early debt extinguishment

 

 

(66,397

)

 

(66,397

)

Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary

 

86,315

 

(3,470

)

142,689

 

34,683

 

Income tax benefit (expense)

 

(32,698

)

1,412

 

(55,214

)

(15,263

)

Equity in earnings of unconsolidated subsidiary

 

71

 

66

 

143

 

113

 

Net income (loss)

 

53,688

 

(1,992

)

87,618

 

19,533

 

Less: Net (income) loss attributable to noncontrolling interest

 

(1,272

)

 

(1,827

)

3,300

 

Net income (loss) attributable to Envision Healthcare Holdings, Inc.

 

52,416

 

(1,992

)

85,791

 

22,833

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

0.28

 

$

(0.01

)

$

0.46

 

$

0.13

 

Diluted earnings per common share

 

$

0.27

 

$

(0.01

)

$

0.45

 

$

0.12

 

Weighted average common shares outstanding, basic

 

185,493,085

 

181,140,242

 

184,830,033

 

180,962,123

 

Weighted average common shares outstanding, diluted

 

191,511,920

 

181,140,242

 

191,166,956

 

189,460,445

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

EmCare weighted patient encounters

 

4,611,766

 

3,586,048

 

8,808,625

 

6,884,578

 

AMR weighted transports

 

830,578

 

776,202

 

1,655,042

 

1,524,171

 

 

Earnings Per Share Reconciliation

 

 

 

Quarter ended June 30,

 

Six months ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

Weighted average common shares outstanding, diluted

 

191,511,920

 

181,140,242

 

191,166,956

 

189,460,445

 

Adjustment to dilute basic shares

 

 

8,362,994

 

 

 

Adjusted diluted shares

 

191,511,920

 

189,503,236

 

191,166,956

 

189,460,445

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Envision Healthcare Holdings, Inc.

 

$

52,416

 

$

(1,992

)

$

85,791

 

$

22,833

 

Adjustments:

 

 

 

 

 

 

 

 

 

Other expense related to secondary offering/other filings, net of tax of $(18) and $(680) for quarter 2015 and 2014, respectively and $(158) and $(1,156) for six months 2015 and 2014, respectively

 

22

 

977

 

214

 

1,643

 

 

 

 

 

 

 

 

 

 

 

Amortization expense, net of tax of $(12,454) and $(7,914) for quarter 2015 and 2014, respectively and $(21,106) and $(16,256) for six months 2015 and 2014, respectively

 

14,950

 

11,379

 

28,473

 

23,095

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation expense, net of tax of $(760) and $(610) for quarter 2015 and 2014, respectively and $(1,288) and $(1,053) for six months 2015 and 2014, respectively

 

912

 

878

 

1,737

 

1,497

 

 

 

 

 

 

 

 

 

 

 

Restructuring expense, net of tax of $(1,530) and $(1,875) for quarter and six months 2014, respectively

 

 

2,201

 

 

2,665

 

 

 

 

 

 

 

 

 

 

 

Severance and related costs, net of tax of $(395) and $(1,091) for quarter and six months 2015, respectively

 

474

 

 

1,472

 

 

 

 

 

 

 

 

 

 

 

 

Loss on early debt extinguishment, net of tax of $(27,236) and ($27,429) for quarter and six months 2014, respectively

 

 

39,161

 

 

38,968

 

 

 

 

 

 

 

 

 

 

 

Transaction costs related to acquisition activities, net of tax of $(942) and $(396) for quarter 2015 and 2014, respectively and $(2,202) and $(718) for six months 2015 and 2014, respectively

 

1,131

 

569

 

2,971

 

1,020

 

Net income (loss) attributable to Envision Healthcare Holdings, Inc., adjusted

 

$

69,905

 

$

53,173

 

$

120,658

 

$

91,721

 

Adjusted EPS

 

$

0.37

 

$

0.28

 

$

0.63

 

$

0.48

 

 

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Envision Healthcare Holdings, Inc.

Reconciliation of Adjusted EBITDA to Net Income (Loss)

(unaudited; in thousands)

 

 

 

Quarter ended June 30,

 

Six months ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

162,761

 

$

135,127

 

$

291,627

 

$

245,907

 

Depreciation and amortization expense

 

(44,936

)

(35,558

)

(84,817

)

(71,990

)

Restructuring charges

 

 

(3,731

)

 

(4,540

)

Interest income from restricted assets

 

(163

)

(246

)

(293

)

(332

)

Transaction costs

 

(2,073

)

(965

)

(5,173

)

(1,738

)

Severance and related costs

 

(869

)

 

(2,563

)

 

Equity-based compensation expense

 

(1,672

)

(1,488

)

(3,025

)

(2,550

)

Net income (loss) attributable to noncontrolling interest

 

1,272

 

 

1,827

 

(3,300

)

Income from operations

 

114,320

 

93,139

 

197,583

 

161,457

 

Interest income from restricted assets

 

163

 

246

 

293

 

332

 

Interest expense, net

 

(28,094

)

(29,002

)

(54,781

)

(59,051

)

Realized gains (losses) on investments

 

(34

)

508

 

(34

)

1,114

 

Other income (expense), net

 

(40

)

(1,964

)

(372

)

(2,772

)

Loss on early debt extinguishment

 

 

(66,397

)

 

(66,397

)

Income tax benefit (expense)

 

(32,698

)

1,412

 

(55,214

)

(15,263

)

Equity in earnings of unconsolidated subsidiary

 

71

 

66

 

143

 

113

 

Net (income) loss attributable to noncontrolling interest

 

(1,272

)

 

(1,827

)

3,300

 

Net income (loss) attributable to Envision Healthcare Holdings, Inc.

 

$

52,416

 

$

(1,992

)

$

85,791

 

$

22,833

 

 

8



 

Envision Healthcare Holdings, Inc.

Reconciliation of Segment Adjusted EBITDA to Income from Operations

(unaudited; in thousands)

 

 

 

Quarter ended June 30,

 

Six months ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

EmCare

 

 

 

 

 

 

 

 

 

Net revenue

 

$

929,068

 

$

690,015

 

$

1,754,176

 

$

1,334,581

 

Compensation and benefits

 

741,035

 

546,989

 

1,417,336

 

1,072,074

 

Operating expenses

 

40,215

 

25,689

 

78,221

 

49,325

 

Insurance expense

 

25,793

 

18,787

 

49,134

 

35,754

 

Selling, general and administrative expenses

 

18,536

 

12,276

 

33,292

 

23,533

 

Interest income from restricted assets

 

(52

)

(135

)

(71

)

(110

)

Transaction costs

 

(1,374

)

(1,229

)

(4,468

)

(1,537

)

Severance and related costs

 

(808

)

 

(2,032

)

 

Equity-based compensation expense

 

(752

)

(670

)

(1,361

)

(1,148

)

Net income (loss) attributable to noncontrolling interest

 

1,272

 

 

1,827

 

(3,300

)

Adjusted EBITDA

 

105,203

 

88,308

 

182,298

 

159,990

 

Depreciation and amortization expense

 

(25,558

)

(16,638

)

(46,087

)

(32,919

)

Restructuring charges

 

 

(792

)

 

(897

)

Interest income from restricted assets

 

(52

)

(135

)

(71

)

(110

)

Transaction costs

 

(1,374

)

(1,229

)

(4,468

)

(1,537

)

Severance and related costs

 

(808

)

 

(2,032

)

 

Equity-based compensation expense

 

(752

)

(670

)

(1,361

)

(1,148

)

Net income (loss) attributable to noncontrolling interest

 

1,272

 

 

1,827

 

(3,300

)

Income from operations

 

$

77,931

 

$

68,844

 

$

130,106

 

$

120,079

 

 

 

 

 

 

 

 

 

 

 

AMR

 

 

 

 

 

 

 

 

 

Net revenue

 

$

425,190

 

$

385,312

 

$

844,584

 

$

754,957

 

Compensation and benefits

 

228,423

 

220,018

 

459,779

 

438,594

 

Operating expenses

 

115,914

 

95,026

 

229,634

 

186,025

 

Insurance expense

 

12,373

 

12,796

 

24,558

 

26,810

 

Selling, general and administrative expenses

 

12,713

 

11,318

 

24,406

 

19,436

 

Interest income from restricted assets

 

(111

)

(111

)

(222

)

(222

)

Transaction costs

 

(699

)

264

 

(705

)

(201

)

Severance and related costs

 

(61

)

 

(531

)

 

Equity-based compensation expense

 

(920

)

(818

)

(1,664

)

(1,402

)

Adjusted EBITDA

 

57,558

 

46,819

 

109,329

 

85,917

 

Depreciation and amortization expense

 

(19,378

)

(18,920

)

(38,730

)

(39,071

)

Restructuring charges

 

 

(2,939

)

 

(3,643

)

Interest income from restricted assets

 

(111

)

(111

)

(222

)

(222

)

Transaction costs

 

(699

)

264

 

(705

)

(201

)

Severance and related costs

 

(61

)

 

(531

)

 

Equity-based compensation expense

 

(920

)

(818

)

(1,664

)

(1,402

)

Income from operations

 

$

36,389

 

$

24,295

 

$

67,477

 

$

41,378

 

 

9



 

Envision Healthcare Holdings, Inc.

Reconciliation of Segment Adjusted EBITDA to Income from Operations

(unaudited; in thousands)

 

 

 

Quarter ended June 30,

 

Six months ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

Total

 

 

 

 

 

 

 

 

 

Net revenue

 

$

1,354,258

 

$

1,075,327

 

$

2,598,760

 

$

2,089,538

 

Compensation and benefits

 

969,458

 

767,007

 

1,877,115

 

1,510,668

 

Operating expenses

 

156,129

 

120,715

 

307,855

 

235,350

 

Insurance expense

 

38,166

 

31,583

 

73,692

 

62,564

 

Selling, general and administrative expenses

 

31,249

 

23,594

 

57,698

 

42,969

 

Interest income from restricted assets

 

(163

)

(246

)

(293

)

(332

)

Transaction costs

 

(2,073

)

(965

)

(5,173

)

(1,738

)

Severance and related costs

 

(869

)

 

(2,563

)

 

Equity-based compensation expense

 

(1,672

)

(1,488

)

(3,025

)

(2,550

)

Net income (loss) attributable to noncontrolling interest

 

1,272

 

 

1,827

 

(3,300

)

Adjusted EBITDA

 

162,761

 

135,127

 

291,627

 

245,907

 

Depreciation and amortization expense

 

(44,936

)

(35,558

)

(84,817

)

(71,990

)

Restructuring charges

 

 

(3,731

)

 

(4,540

)

Interest income from restricted assets

 

(163

)

(246

)

(293

)

(332

)

Transaction costs

 

(2,073

)

(965

)

(5,173

)

(1,738

)

Severance and related costs

 

(869

)

 

(2,563

)

 

Equity-based compensation expense

 

(1,672

)

(1,488

)

(3,025

)

(2,550

)

Net income (loss) attributable to noncontrolling interest

 

1,272

 

 

1,827

 

(3,300

)

Income from operations

 

$

114,320

 

$

93,139

 

$

197,583

 

$

161,457

 

 

10



 

Envision Healthcare Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

June 30,
2015

 

December 31,
2014

 

 

 

(Unaudited)

 

(Audited)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

172,605

 

$

318,895

 

Trade and other accounts receivable, net

 

1,085,036

 

950,115

 

Other current assets

 

115,241

 

94,229

 

Total current assets

 

1,372,882

 

1,363,239

 

Non-current assets:

 

 

 

 

 

Property, plant and equipment, net

 

226,242

 

211,276

 

Goodwill and other intangible assets, net

 

3,545,606

 

3,063,115

 

Other long-term assets

 

96,188

 

66,123

 

Total assets

 

$

5,240,918

 

$

4,703,753

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current liabilities

 

$

672,885

 

$

576,868

 

Long-term debt and capital lease obligations

 

2,224,433

 

2,025,877

 

Long-term deferred tax liabilities

 

187,265

 

130,963

 

Insurance reserves and other long-term liabilities

 

242,570

 

201,004

 

Total liabilities

 

3,327,153

 

2,934,712

 

Total equity

 

1,913,765

 

1,769,041

 

Total liabilities and equity

 

$

5,240,918

 

$

4,703,753

 

 

11



 

Envision Healthcare Holdings, Inc.

Condensed Consolidated Statements of Cash Flows and Reconciliation of Net Cash Provided by (Used in)

Operating Activities to Adjusted Free Cash Flow

(unaudited; in thousands)

 

 

 

Quarter ended June 30,

 

Six months ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

53,688

 

$

(1,992

)

$

87,618

 

$

19,533

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

Depreciation, amortization, and other

 

48,867

 

40,167

 

92,549

 

79,298

 

Excess tax benefits from equity-based compensation

 

(13,531

)

(868

)

(24,476

)

(15,658

)

Loss on early debt extinguishment

 

 

66,397

 

 

66,397

 

Deferred income taxes

 

580

 

(442

)

1,100

 

486

 

Changes in operating assets/liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

 

Trade and other accounts receivable, net

 

18,458

 

(22,783

)

(37,766

)

(58,212

)

Parts and supplies inventory

 

(39

)

(96

)

(161

)

(423

)

Prepaids and other current assets

 

(11,502

)

(15,459

)

(4,572

)

(18,927

)

Accounts payable and accrued liabilities

 

26,052

 

(2,917

)

48,851

 

31,266

 

Insurance reserves

 

(6,966

)

1,713

 

(2,221

)

(9,820

)

Net cash provided by (used in) operating activities

 

115,607

 

63,720

 

160,922

 

93,940

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

 

Purchases of available-for-sale securities

 

(1,595

)

(914

)

(2,067

)

(3,372

)

Sales and maturities of available-for-sale securities

 

9,009

 

2,367

 

9,209

 

10,527

 

Purchases of property, plant and equipment

 

(29,521

)

(22,766

)

(43,028

)

(33,480

)

Proceeds from sale of property, plant and equipment

 

308

 

60

 

352

 

2,216

 

Acquisition of businesses, net of cash received

 

(634

)

(163,507

)

(498,917

)

(199,298

)

Net change in insurance collateral

 

(1,198

)

13

 

(5,706

)

1,213

 

Other investing activities

 

1,883

 

163

 

971

 

(2,363

)

Net cash provided by (used in) investing activities

 

(21,748

)

(184,584

)

(539,186

)

(224,557

)

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

 

Borrowings under the ABL Facility

 

20,000

 

50,000

 

305,000

 

50,000

 

Proceeds from issuance of senior notes

 

 

740,625

 

 

740,625

 

Repayments of the Term Loan

 

(3,343

)

 

(6,686

)

(3,343

)

Repayments of the ABL Facility

 

(50,000

)

(50,000

)

(100,000

)

(50,000

)

Repayments of senior notes

 

 

(607,750

)

 

(607,750

)

Payment for debt extinguishment premiums

 

 

(37,630

)

 

(37,630

)

Debt issuance costs

 

 

(1,374

)

(27

)

(1,374

)

Proceeds from stock options exercised

 

5,802

 

 

9,350

 

 

Excess tax benefits from equity-based compensation

 

13,531

 

868

 

24,476

 

15,658

 

Shares repurchased for tax withholdings

 

 

 

 

(14,430

)

Contributions from (distributions to) non-controlling interest, net

 

 

 

100

 

250

 

Other financing activities

 

(119

)

(2,268

)

(239

)

(3,498

)

Net cash provided by (used in) financing activities

 

(14,129

)

92,471

 

231,974

 

88,508

 

 

 

 

 

 

 

 

 

 

 

Change in cash and cash equivalents

 

79,730

 

(28,393

)

(146,290

)

(42,109

)

Cash and cash equivalents, beginning of period

 

92,875

 

190,996

 

318,895

 

204,712

 

Cash and cash equivalents, end of period

 

$

172,605

 

$

162,603

 

$

172,605

 

$

162,603

 

 

 

 

 

 

 

 

 

 

 

Operating and non-acquisition investing cash flow

 

$

94,493

 

$

42,643

 

$

120,653

 

$

68,681

 

 

 

 

 

 

 

 

 

 

 

Non-recurring cash flow adjustments:

 

 

 

 

 

 

 

 

 

Excess tax benefits from equity-based compensation

 

13,531

 

868

 

24,476

 

15,658

 

 

 

 

 

 

 

 

 

 

 

Adjusted Free Cash Flow

 

$

108,024

 

$

43,511

 

$

145,129

 

$

84,339

 

 

12