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8-K - 8-K - Envision Healthcare Holdings, Inc.a16-4981_18k.htm

Exhibit 99.1

 

 

For Immediate Release

 

Contact:                        Bob Kneeley

Vice President, Investor Relations

303-495-1245

bob.kneeley@evhc.net

 

ENVISION HEALTHCARE REPORTS ADJUSTED EBITDA OF $170.2 MILLION AND

ADJUSTED EPS OF $0.35, FOR FOURTH QUARTER OF 2015

 

Greenwood Village, Colo. (February 22, 2016) — Envision Healthcare Holdings, Inc. (Envision or Company) (NYSE: EVHC) reported results from operations for the three months and 12 months ended December 31, 2015.  All comparisons included in this release are for the 2015 periods to the comparable 2014 periods, unless otherwise noted.

 

Financial Highlights:

 

·                  Net revenue of $1.48 billion for the fourth quarter of 2015 increased by 28%;

 

·                  Adjusted EBITDA was $170.2 million for the fourth quarter of 2015, a margin of 11.5%;

 

·                  Net income for the fourth quarter of 2015 was $41.9 million; and

 

·                  Adjusted earnings per share (EPS) was $0.35, and GAAP diluted EPS was $0.22 for the fourth quarter of 2015.

 

·                  For the 12 months ended December 31, 2015, Envision generated net revenue of $5.45 billion, Adjusted EBITDA of $604.3 million and Adjusted EPS of $1.28.  Net income was $144.9 million and diluted GAAP EPS was $0.76.

 

“Our results for the fourth quarter of 2015 demonstrate continued growth and the progress we are making as we execute on focused initiatives to further strengthen our operating performance, particularly at EmCare,” said William A. Sanger, chairman, president and chief executive officer of Envision.  “Our emphasis on operational efficiency, disciplined capital deployment and infrastructure investments will continue to drive growth across our facility-based physician services and healthcare transportation services.

 

At the same time, strategic investments that we’ve made over many years allow us to succeed under emerging patient care models that reward providers for improving quality while effectively managing the total cost of care.”

 

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“These new patient care models span a variety of settings, from healthcare transportation, to emergency department and inpatient services, transitional care and a variety of post-acute alternative settings. Having these multiple patient touchpoints create additional opportunities for us to contract with both health systems and payors to provide services across a broad care continuum.”

 

Results of Operations for the Fourth Quarter of 2015

 

Envision generated net revenue of $1.48 billion, an increase of 28.0%, which is the result of contributions from acquisitions, including Rural/Metro Corporation, which was completed during the fourth quarter of 2015; organic revenue growth from new contracts, net of terminations; and same-store growth.

 

Adjusted EBITDA of $170.2 million compares with $156.6 million for the prior-year period.  Envision’s Adjusted EBITDA margin of 11.5% compares with 13.5% for the prior-year period.   Adjusted EBITDA margin was impacted by the loss of Medicaid parity payments during 2015, new contract starts at Evolution Health with initially lower margins, and the inclusion of Rural/Metro results that do not include any benefit from anticipated synergies.

 

Envision’s Adjusted EBITDA grew by $27.7 million, or 19.5% for the fourth quarter of 2015 when compared with the third quarter of 2015, primarily driven by operating improvements at its EmCare segment.

 

Adjusted EPS for the quarter was $0.35 and compares to $0.36 per share for the fourth quarter of 2014. On a GAAP basis, Envision earned $0.22 per share on a fully diluted basis, compared to $0.26 per share.

 

Segment Results for the Fourth Quarter of 2015

 

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

 

EmCare

 

EmCare’s net revenue for the fourth quarter of 2015 was $960.3 million, an increase of 26.4% from the prior-year period. Revenue from acquisitions completed during 2015 contributed growth of 19.3% for the quarter.  Organic revenue growth was 7.1% principally from growth from new contracts, net of contract terminations.  Net-new contract growth was attributable to both new and expanding customer relationships at Evolution Health, which is part of the EmCare segment.  Revenue from same-store contracts contributed 0.1% to total revenue growth for the quarter. This consisted of 1.7% growth from patient volume, even when compared with higher volumes associated with Medicaid expansion during the fourth quarter of 2014.   Same-store rate declined by 1.6%, primarily due to discontinued Medicaid parity payments and a slight shift in payor mix.

 

EmCare’s Adjusted EBITDA was $109.0 million, or 11.4% of revenue, which compares with $102.5 million, or 13.5% of revenue for the fourth quarter of 2014.  Adjusted EBITDA margin declined as a result of discontinued Medicaid parity payments, as well as the impact of certain contracts prior to their being modified or terminated during the fourth quarter.

 

When compared with the third quarter of 2015, EmCare’s Adjusted EBITDA for the fourth quarter of 2015 grew by 26.2% primarily as a result of improvements in staffing ratios and benefits from the modification and termination of certain contracts, including a number that had

 

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generated losses during the third quarter.  On a sequential basis, Adjusted EBITDA margin improved by 220 basis points in the fourth quarter of 2015.

 

American Medical Response

 

AMR’s net revenue for the fourth quarter of 2015 grew by 31.0%, to $521.5 million, from $398.0 million in the prior-year period. Acquisition-related growth was 26.9%, which included contributions from the Rural/Metro transaction. Same-market revenue growth was 1.4%, and net-new contract growth was 2.7%.  Same-market revenue growth consisted of a 4.1% increase in volume, offset by a 2.7% rate decline related to payor mix shift.

 

AMR’s Adjusted EBITDA of $61.2 million grew by 13.1%, from $54.1 million in the prior-year period. Adjusted EBITDA margin was 11.7% for the fourth quarter of 2015 compared with 13.6% for the prior-year period.   AMR’s margin declined year-over-year largely as a result of the inclusion of results from Rural/Metro.  AMR anticipates margin improvement during 2016 as it integrates Rural/Metro into its operations and realizes anticipated synergies.

 

Envision Cash Flows for the Fourth Quarter of 2015

 

Envision generated cash flow from operations of $54.2 million, which compares to $80.0 million in the fourth quarter of 2014.  Cash flow from operations was impacted primarily by initial funding related to an Evolution Health contract started during the fourth quarter of 2015 and a difference in the timing of payroll payments period over period.  Adjusted Free Cash Flow was $34.5 million, compared to $56.2 million in the fourth quarter of 2014.

 

During the fourth quarter of 2015, Envision invested $788.4 million in acquisitions, including Rural/Metro and Questcare Medical Services, a multi-specialty physician group based in Dallas.   Envision funded the acquisitions from proceeds of a new $1 billion term loan completed during the 2015 fourth quarter.  Proceeds from the new term loan were also used to reduce amounts outstanding under the Company’s asset-based revolving lending facility.

 

Results of Operations for the 12 Months Ended December 31, 2015

 

Envision’s net revenue was $5.45 billion, an increase of 23.9% from the prior-year period, with Adjusted EBITDA of $604.3 million.  Adjusted EPS for 2015 was $1.28, which compares with $1.20 for 2014.  Net income was $144.9 million, which compares with $125.5 million.   Envision earned $0.76 per diluted share on a GAAP basis, compared with $0.66 per diluted share in the prior year.   Envision generated cash flow from operations of $249.1 million, which compares with $274.0 million.  Adjusted free cash flow was $202.6 million, compared to $223.4 million.

 

Segment Results for the 12 Months ended December 31, 2015

 

Net revenue at EmCare was $3.65 billion, an increase of 28.4% from the prior-year period and  Adjusted EBITDA was $377.7 million.

 

Net revenue at AMR of $1.80 billion grew by 15.7% from the prior-year period.  Adjusted EBITDA was $226.7 million.

 

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2016 Outlook

 

Envision’s financial outlook for 2016 was provided on January 11, 2016.  For 2016, Envision expects to generate Adjusted EBITDA of $715 million to $740 million, and Adjusted EPS of $1.43 to $1.51.   Envision now expects that Adjusted EBITDA for the 2016 first quarter will be in a range of 19% to 20% of its annual outlook, due to a milder-than-expected flu season along with normal expense seasonality associated with payroll taxes as previously noted.  Envision’s outlook does not include contributions from any acquisitions that may be completed during 2016.

 

Conference Call

 

Envision management will host a conference call today, Monday, February 22, 2016, at 8:30 a.m. Eastern Time, to discuss the Company’s financial results. 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 March 22, 2016. To access the replay, dial 866-448-2574, or 203-369-1170 for international callers. 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., offers an array of physician-led healthcare-related services to consumers, hospitals, healthcare systems, health plans and local, state and national government entities. The organization provides care across a broad patient continuum via American Medical Response, Inc. (AMR), EmCare Holdings, Inc. (EmCare) and Evolution Health, LLC (Evolution Health). AMR provides community-based healthcare transportation services, including emergency (‘911’), non-emergency, managed transportation, air ambulance and disaster response. EmCare’s integrated facility-based physician services include emergency, anesthesiology, hospitalist/inpatient care, radiology, tele-radiology and surgery. Evolution Health’s innovative and comprehensive care coordination solutions result in improved patient care delivery across a number of healthcare settings.   Envision Healthcare is headquartered in Greenwood Village, Colorado. For additional information, visit www.evhc.net.

 

Forward-Looking Statements

 

Certain statements and information in this press release may be deemed to be “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our 2016 Adjusted EBITDA and Adjusted EPS guidance, objectives, plans and strategies, and all statements (other than statements of historical facts) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in our filings with the Securities and Exchange Commission from time to time, including in the section entitled “Risk Factors” in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Factors that could cause future results to differ materially from those provided in this press release include, but are not limited to: decreases in our revenue and profit margin under our fee-for-service contracts; failure to implement our business strategies, the loss of existing contracts; failure to accurately assess

 

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costs under new contracts; our ability to integrate acquisitions; competition in markets we serve; the cost of required capital expenditures; retention of our senior management; our ability to maintain or implement information systems; the impact of labor union representation; failure to comply with extensive and complex government regulation of our industry; the impact of changes in the healthcare sector; our ability to service our debt obligations; and other factors discussed in our filings with the Securities and Exchange Commission.  Any forward-looking statements herein are made as of the date of this press release, and we undertake no duty to update or revise any such statements. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties.

 

Non-GAAP Financial Measures Description and Reconciliation

 

This press release includes presentations of Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted EPS.  These are financial measures that are not calculated and presented in accordance with generally accepted accounting principles in the United States of America (GAAP).  These non-GAAP measures may not be comparable to similarly titled measures of other companies. 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, restructuring and other 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 and other charges, severance and related costs, loss on early debt extinguishment, and transaction costs related to acquisition activities, net of an estimated tax benefit.

 

These non-GAAP measures are used by management and investors as performance measures or liquidity indicators. The items excluded from these non-GAAP measures are important in understanding the Company’s financial performance, and should not be considered in isolation of, or as an alternative to, GAAP financial measures. These non-GAAP measures may not be comparable to 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 2016 Adjusted EBITDA and Adjusted EPS projections presented herein is not being provided, as the Company does not currently have sufficient data to accurately estimate the variables and 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 December 31,

 

Year ended December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

1,481,786

 

$

1,157,777

 

$

5,447,916

 

$

4,397,644

 

Compensation and benefits

 

1,047,945

 

826,459

 

3,922,273

 

3,156,480

 

Operating expenses

 

208,388

 

122,956

 

681,342

 

487,841

 

Insurance expense

 

31,046

 

30,892

 

145,829

 

120,983

 

Selling, general and administrative expenses

 

32,997

 

24,911

 

120,158

 

90,731

 

Depreciation and amortization expense

 

53,533

 

37,369

 

182,897

 

146,155

 

Restructuring and other charges

 

169

 

2,062

 

30,169

 

6,968

 

Income from operations

 

107,708

 

113,128

 

365,248

 

388,486

 

Interest income from restricted assets

 

209

 

628

 

651

 

1,135

 

Interest expense, net

 

(34,823

)

(25,712

)

(117,183

)

(110,505

)

Realized gains (losses) on investments

 

55

 

(277

)

21

 

371

 

Other income (expense), net

 

(373

)

(548

)

(966

)

(3,980

)

Loss on early debt extinguishment

 

 

 

 

(66,397

)

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

 

72,776

 

87,219

 

247,771

 

209,110

 

Income tax benefit (expense)

 

(28,365

)

(39,798

)

(97,374

)

(89,498

)

Equity in earnings of unconsolidated subsidiary

 

151

 

69

 

353

 

254

 

Net income (loss)

 

44,562

 

47,490

 

150,750

 

119,866

 

Less: Net (income) loss attributable to noncontrolling interest

 

(2,697

)

2,409

 

(5,858

)

5,642

 

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

 

41,865

 

49,899

 

144,892

 

125,508

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

0.22

 

$

0.27

 

$

0.78

 

$

0.69

 

Diluted earnings per common share

 

$

0.22

 

$

0.26

 

$

0.76

 

$

0.66

 

Weighted average common shares outstanding, basic

 

186,760,348

 

183,555,357

 

185,603,780

 

182,019,732

 

Weighted average common shares outstanding, diluted

 

192,034,713

 

190,542,120

 

191,538,699

 

189,921,434

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

EmCare weighted patient encounters

 

4,598,278

 

3,914,040

 

17,992,294

 

14,634,542

 

AMR weighted transports

 

1,051,176

 

793,336

 

3,554,907

 

3,112,931

 

 

Earnings Per Share Reconciliation

 

 

 

Quarter ended December 31,

 

Year ended December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

Weighted average common shares outstanding, diluted

 

192,034,713

 

190,542,120

 

191,538,699

 

189,921,434

 

 

 

 

 

 

 

 

 

 

 

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

 

$

41,865

 

$

49,899

 

$

144,892

 

$

125,508

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense related to secondary offering/other filings, net of tax of $(25) and $21 for quarter 2015 and 2014, respectively and $(234) and $(1,623) for year ended 2015 and 2014, respectively

 

38

 

(57

)

355

 

2,531

 

 

 

 

 

 

 

 

 

 

 

Amortization expense, net of tax of $(11,837) and $(5,578) for quarter 2015 and 2014, respectively and $(42,250) and $(31,466) for year ended 2015 and 2014, respectively

 

18,254

 

15,026

 

64,117

 

49,093

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation expense, net of tax of $(710) and $(405) for quarter 2015 and 2014, respectively and $(2,618) and $(1,996) for year ended 2015 and 2014, respectively

 

1,094

 

1,092

 

3,972

 

3,113

 

 

 

 

 

 

 

 

 

 

 

Restructuring and other charges, net of tax of $(66) and $(558) for quarter 2015 and 2014, respectively and $(11,984) and $(2,722) for year ended 2015 and 2014, respectively

 

103

 

1,504

 

18,185

 

4,246

 

 

 

 

 

 

 

 

 

 

 

Severance and related costs, net of tax of $(459) and $(1,824) for quarter and year ended 2015, respectively

 

708

 

 

2,769

 

 

 

 

 

 

 

 

 

 

 

 

Loss on early debt extinguishment, net of tax of ($25,935) for year ended 2014

 

 

 

 

40,462

 

 

 

 

 

 

 

 

 

 

 

Transaction costs related to acquisition activities, net of tax of $(3,118) and $(475) for quarter 2015 and 2014, respectively and $(7,799) and $(1,948) for year ended 2015 and 2014, respectively

 

4,808

 

1,280

 

11,835

 

3,040

 

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

 

$

66,870

 

$

68,744

 

$

246,125

 

$

227,993

 

Adjusted EPS

 

$

0.35

 

$

0.36

 

$

1.28

 

$

1.20

 

 

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Envision Healthcare Holdings, Inc.

Reconciliation of Adjusted EBITDA to Net Income (Loss)

(unaudited; in thousands)

 

 

 

Quarter ended December 31,

 

Year ended December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

170,214

 

$

156,589

 

$

604,319

 

$

556,224

 

Depreciation and amortization expense

 

(53,533

)

(37,369

)

(182,897

)

(146,155

)

Restructuring and other charges

 

(169

)

(2,062

)

(30,169

)

(6,968

)

Interest income from restricted assets

 

(209

)

(628

)

(651

)

(1,135

)

Transaction costs

 

(7,926

)

(1,755

)

(19,634

)

(4,988

)

Severance and related costs

 

(1,167

)

 

(4,593

)

 

Equity-based compensation expense

 

(1,804

)

(1,497

)

(6,590

)

(5,109

)

Net income (loss) attributable to noncontrolling interest

 

2,697

 

(2,409

)

5,858

 

(5,642

)

Adjustment to net income (loss) attributable to noncontrolling interest due to deferred taxes

 

(395

)

2,259

 

(395

)

2,259

 

Income from operations

 

107,708

 

113,128

 

365,248

 

388,486

 

Interest income from restricted assets

 

209

 

628

 

651

 

1,135

 

Interest expense, net

 

(34,823

)

(25,712

)

(117,183

)

(110,505

)

Realized gains (losses) on investments

 

55

 

(277

)

21

 

371

 

Other income (expense), net

 

(373

)

(548

)

(966

)

(3,980

)

Loss on early debt extinguishment

 

 

 

 

(66,397

)

Income tax benefit (expense)

 

(28,365

)

(39,798

)

(97,374

)

(89,498

)

Equity in earnings of unconsolidated subsidiary

 

151

 

69

 

353

 

254

 

Net (income) loss attributable to noncontrolling interest

 

(2,697

)

2,409

 

(5,858

)

5,642

 

 

 

 

 

 

 

 

 

 

 

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

 

$

41,865

 

$

49,899

 

$

144,892

 

$

125,508

 

 

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Envision Healthcare Holdings, Inc.

Reconciliation of Segment Adjusted EBITDA to Income from Operations

(unaudited; in thousands)

 

 

 

Quarter ended December 31,

 

Year ended December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

EmCare

 

 

 

 

 

 

 

 

 

Net revenue

 

$

960,275

 

$

759,797

 

$

3,648,392

 

$

2,842,458

 

Compensation and benefits

 

746,666

 

596,695

 

2,922,381

 

2,258,227

 

Operating expenses

 

70,516

 

31,513

 

195,154

 

111,624

 

Insurance expense

 

18,092

 

19,351

 

95,737

 

71,855

 

Selling, general and administrative expenses

 

17,879

 

12,611

 

68,203

 

47,979

 

Interest income from restricted assets

 

(98

)

(517

)

(207

)

(691

)

Transaction costs

 

(2,353

)

(1,485

)

(9,641

)

(4,186

)

Severance and related costs

 

(910

)

 

(3,390

)

 

Equity-based compensation expense

 

(811

)

(674

)

(2,965

)

(2,300

)

Net income (loss) attributable to noncontrolling interest

 

2,697

 

(2,409

)

5,858

 

(5,642

)

Adjustment to net income (loss) attributable to noncontrolling interest due to deferred taxes

 

(395

)

2,259

 

(395

)

2,259

 

Adjusted EBITDA

 

108,992

 

102,453

 

377,657

 

363,333

 

Depreciation and amortization expense

 

(26,418

)

(18,293

)

(97,249

)

(69,242

)

Restructuring and other charges

 

(169

)

(164

)

(30,169

)

(1,036

)

Interest income from restricted assets

 

(98

)

(517

)

(207

)

(691

)

Transaction costs

 

(2,353

)

(1,485

)

(9,641

)

(4,186

)

Severance and related costs

 

(910

)

 

(3,390

)

 

Equity-based compensation expense

 

(811

)

(674

)

(2,965

)

(2,300

)

Net income (loss) attributable to noncontrolling interest

 

2,697

 

(2,409

)

5,858

 

(5,642

)

Adjustment to net income (loss) attributable to noncontrolling interest due to deferred taxes

 

(395

)

2,259

 

(395

)

2,259

 

Income from operations

 

$

80,535

 

$

81,170

 

$

239,499

 

$

282,495

 

 

 

 

 

 

 

 

 

 

 

AMR

 

 

 

 

 

 

 

 

 

Net revenue

 

$

521,511

 

$

397,980

 

$

1,799,524

 

$

1,555,186

 

Compensation and benefits

 

301,279

 

229,764

 

999,892

 

898,253

 

Operating expenses

 

137,872

 

91,443

 

486,188

 

376,217

 

Insurance expense

 

12,954

 

11,541

 

50,092

 

49,128

 

Selling, general and administrative expenses

 

15,118

 

12,300

 

51,955

 

42,752

 

Interest income from restricted assets

 

(111

)

(111

)

(444

)

(444

)

Transaction costs

 

(5,573

)

(270

)

(9,993

)

(802

)

Severance and related costs

 

(257

)

 

(1,203

)

 

Equity-based compensation expense

 

(993

)

(823

)

(3,625

)

(2,809

)

Adjusted EBITDA

 

61,222

 

54,136

 

226,662

 

192,891

 

Depreciation and amortization expense

 

(27,115

)

(19,076

)

(85,648

)

(76,913

)

Restructuring and other charges

 

 

(1,898

)

 

(5,932

)

Interest income from restricted assets

 

(111

)

(111

)

(444

)

(444

)

Transaction costs

 

(5,573

)

(270

)

(9,993

)

(802

)

Severance and related costs

 

(257

)

 

(1,203

)

 

Equity-based compensation expense

 

(993

)

(823

)

(3,625

)

(2,809

)

Income from operations

 

$

27,173

 

$

31,958

 

$

125,749

 

$

105,991

 

 

 

 

 

 

 

 

 

 

 

Envision

 

 

 

 

 

 

 

 

 

Net revenue

 

$

1,481,786

 

$

1,157,777

 

$

5,447,916

 

$

4,397,644

 

Compensation and benefits

 

1,047,945

 

826,459

 

3,922,273

 

3,156,480

 

Operating expenses

 

208,388

 

122,956

 

681,342

 

487,841

 

Insurance expense

 

31,046

 

30,892

 

145,829

 

120,983

 

Selling, general and administrative expenses

 

32,997

 

24,911

 

120,158

 

90,731

 

Interest income from restricted assets

 

(209

)

(628

)

(651

)

(1,135

)

Transaction costs

 

(7,926

)

(1,755

)

(19,634

)

(4,988

)

Severance and related costs

 

(1,167

)

 

(4,593

)

 

Equity-based compensation expense

 

(1,804

)

(1,497

)

(6,590

)

(5,109

)

Net income (loss) attributable to noncontrolling interest

 

2,697

 

(2,409

)

5,858

 

(5,642

)

Adjustment to net income (loss) attributable to noncontrolling interest due to deferred taxes

 

(395

)

2,259

 

(395

)

2,259

 

Adjusted EBITDA

 

170,214

 

156,589

 

604,319

 

556,224

 

Depreciation and amortization expense

 

(53,533

)

(37,369

)

(182,897

)

(146,155

)

Restructuring and other charges

 

(169

)

(2,062

)

(30,169

)

(6,968

)

Interest income from restricted assets

 

(209

)

(628

)

(651

)

(1,135

)

Transaction costs

 

(7,926

)

(1,755

)

(19,634

)

(4,988

)

Severance and related costs

 

(1,167

)

 

(4,593

)

 

Equity-based compensation expense

 

(1,804

)

(1,497

)

(6,590

)

(5,109

)

Net income (loss) attributable to noncontrolling interest

 

2,697

 

(2,409

)

5,858

 

(5,642

)

Adjustment to net income (loss) attributable to noncontrolling interest due to deferred taxes

 

(395

)

2,259

 

(395

)

2,259

 

Income from operations

 

$

107,708

 

$

113,128

 

$

365,248

 

$

388,486

 

 

8



 

Envision Healthcare Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

December 31,

 

 

 

2015

 

2014

 

 

 

(Unaudited)

 

(Audited)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

141,677

 

$

318,895

 

Trade and other accounts receivable, net

 

1,257,021

 

950,115

 

Other current assets

 

199,729

 

94,229

 

Total current assets

 

1,598,427

 

1,363,239

 

Non-current assets:

 

 

 

 

 

Property, plant and equipment, net

 

335,869

 

211,276

 

Goodwill and other intangible assets, net

 

4,323,564

 

3,063,115

 

Other long-term assets

 

130,331

 

66,123

 

Total assets

 

$

6,388,191

 

$

4,703,753

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current liabilities

 

$

791,745

 

$

576,868

 

Long-term debt and capital lease obligations

 

2,993,100

 

2,025,877

 

Long-term deferred tax liabilities

 

283,345

 

130,963

 

Insurance reserves and other long-term liabilities

 

318,560

 

201,004

 

Total liabilities

 

4,386,750

 

2,934,712

 

Total equity

 

2,001,441

 

1,769,041

 

Total liabilities and equity

 

$

6,388,191

 

$

4,703,753

 

 

9



 

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 December 31,

 

Year ended December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

44,562

 

$

47,490

 

$

150,750

 

$

119,866

 

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

 

 

 

 

 

 

 

 

 

Depreciation, amortization, and other

 

57,842

 

40,887

 

198,762

 

158,783

 

Excess tax benefits from equity-based compensation

 

(2,809

)

(6,030

)

(36,860

)

(44,550

)

Loss on early debt extinguishment

 

 

 

 

66,397

 

Deferred income taxes

 

(4,096

)

43,197

 

(593

)

44,651

 

Changes in operating assets/liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

 

Trade and other accounts receivable, net

 

(9,476

)

(36,702

)

(92,541

)

(129,239

)

Parts and supplies inventory

 

(577

)

(113

)

(1,062

)

(687

)

Prepaids and other current assets

 

(28,403

)

(1,198

)

(32,099

)

(12,157

)

Accounts payable and accrued liabilities

 

(7,270

)

(1,824

)

59,026

 

81,997

 

Insurance reserves

 

(6,049

)

(7,144

)

(8,306

)

(13,683

)

Other assets and liabilities, net

 

10,439

 

1,481

 

12,031

 

2,670

 

Net cash provided by (used in) operating activities

 

54,163

 

80,044

 

249,108

 

274,048

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

 

Purchases of available-for-sale securities

 

(2,087

)

(27,097

)

(4,594

)

(79,751

)

Sales and maturities of available-for-sale securities

 

2,000

 

22,248

 

11,409

 

62,673

 

Purchases of property, plant and equipment

 

(29,403

)

(22,387

)

(95,090

)

(78,046

)

Proceeds from sale of property, plant and equipment

 

336

 

145

 

713

 

2,444

 

Acquisition of businesses, net of cash received

 

(788,356

)

17,619

 

(1,356,926

)

(181,642

)

Net change in insurance collateral

 

5,783

 

(1,540

)

4,533

 

481

 

Other investing activities

 

906

 

(1,203

)

(320

)

(2,977

)

Net cash provided by (used in) investing activities

 

(810,821

)

(12,215

)

(1,440,275

)

(276,818

)

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

 

Borrowing under the Term Loan

 

1,000,000

 

 

1,000,000

 

 

Borrowings under the ABL Facility

 

90,000

 

 

455,000

 

50,000

 

Proceeds from issuance of senior notes

 

 

 

 

740,625

 

Repayments of the Term Loan

 

(3,343

)

(3,343

)

(13,372

)

(13,372

)

Repayments of the ABL Facility

 

(300,000

)

 

(455,000

)

(50,000

)

Repayments of senior notes

 

 

 

 

(607,750

)

Payment for debt extinguishment premiums

 

 

 

 

(37,630

)

Debt issuance costs

 

(26,436

)

(3

)

(26,463

)

(2,224

)

Proceeds from stock options exercised and issuance of shares under employee stock purchase plan and provider stock purchase plan

 

5,646

 

325

 

17,413

 

7,730

 

Excess tax benefits from equity-based compensation

 

2,809

 

6,030

 

36,860

 

44,550

 

Shares repurchased for tax withholdings

 

 

 

 

(14,430

)

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

 

 

(1,174

)

100

 

(924

)

Other financing activities

 

(231

)

2,061

 

(589

)

378

 

Net cash provided by (used in) financing activities

 

768,445

 

3,896

 

1,013,949

 

116,953

 

 

 

 

 

 

 

 

 

 

 

Change in cash and cash equivalents

 

11,787

 

71,725

 

(177,218

)

114,183

 

Cash and cash equivalents, beginning of period

 

129,890

 

247,170

 

318,895

 

204,712

 

Cash and cash equivalents, end of period

 

$

141,677

 

$

318,895

 

$

141,677

 

$

318,895

 

 

 

 

 

 

 

 

 

 

 

Operating and non-acquisition investing cash flow

 

$

31,698

 

$

50,210

 

$

165,759

 

$

178,872

 

 

 

 

 

 

 

 

 

 

 

Non-recurring cash flow adjustments:

 

 

 

 

 

 

 

 

 

Excess tax benefits from equity-based compensation

 

2,809

 

6,030

 

36,860

 

44,550

 

Adjusted Free Cash Flow

 

$

34,507

 

$

56,240

 

$

202,619

 

$

223,422

 

 

10