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8-K - 8-K - Envision Healthcare Holdings, Inc.a16-10667_18k.htm

Exhibit 99.1

 

GRAPHIC

 

Contact:                                                Bob Kneeley

303-495-1245

bob.kneeley@evhc.net

 

Envision Healthcare Reports Strong 2016 First Quarter Results:

Adjusted EBITDA of $152 million, Adjusted EPS of $0.28

Company Raises 2016 Financial Outlook

 

Greenwood Village, Colo. — May 5, 2016 — Envision Healthcare Holdings, Inc. (Envision or Company) (NYSE: EVHC) reported results from operations for the three months ended March 31, 2016, and is increasing its 2016 financial outlook.  All comparisons included in this release are for the 2016 period to the comparable 2015 period, unless otherwise noted.

 

Financial Highlights:

 

·                  Net revenue of $1.6 billion increased by 28%;

·                  Adjusted EBITDA of $151.6 million increased by 18%;

·                  Adjusted diluted earnings per share (EPS) was $0.28;

·                  Net income was $26.9 million and GAAP diluted EPS was $0.14;

·                  Cash flow from operations of $89.6 million increased by 98%; and

·                  2016 Outlook for Adjusted EBITDA and Adjusted EPS increases to $725 million to $750 million, and $1.46 to $1.54, respectively.

 

“We reported strong top-line growth across all of Envision’s business units as we continue to expand the breadth of our services to advance our integrated care delivery strategy while expanding our geographic presence to new markets,” said William A. Sanger, chairman, president and chief executive officer of Envision.  “We are pleased with the progress we have made, and will continue to make, in achieving targeted operational improvement, integrating acquisitions, and advancing new care delivery models.  We expect our efforts will yield continued improvement throughout 2016.”

 

Results of Operations for the First Quarter of 2016

 

Envision generated net revenue of $1.60 billion, an increase of 28.4% from $1.24 billion, primarily as a result of contributions from acquisitions completed during recent periods.  Acquisition-related growth was 21.9% and organic growth was 6.5% in the first quarter.

 

Adjusted EBITDA of $151.6 million increased by 17.6%, from $128.9 million. Adjusted EBITDA margin was 9.5%, which compares with 10.4% for the prior-year period and was primarily impacted by new business starts and recent acquisitions with lower initial margins.

 

Adjusted EPS for the quarter was $0.28, and compares to $0.26 for the prior-year period.  On a GAAP basis, Envision earned $0.14 per fully diluted share, compared to $0.17 for the prior-year period.

 



 

Segment Results for the First Quarter of 2016

 

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 was $1.01 billion, an increase of 22.8% that included contributions from acquisitions of 14.6% and organic revenue growth of 8.2%.

 

EmCare’s organic revenue growth consisted of 5.2% same-store and 3.0% related to net new contracts.  Net new contract growth of 3.0% for the EmCare segment was attributable to new Evolution Health business.

 

Same-store revenue growth calculated on a comparable same-store revenue basis was 6.8% consisting of patient volume growth of 6.9%, offset by a same-store rate decline of 0.1%.  EmCare’s same-store emergency department volume grew by 4.2%, with a higher rate of volume growth for hospitalist and radiology services.

 

EmCare’s Adjusted EBITDA for the first quarter of 2016 was $87.3 million, an increase of 13.3%.  Adjusted EBITDA margin of 8.6% declined from 9.3% from the prior-year period as a result of new start-up business at Evolution Health.  Excluding EmCare’s post-acute services provided through Evolution Health, EmCare’s Adjusted EBITDA margin increased by 30 basis points, to 9.7% compared to the prior-year period, as revenue and Adjusted EBITDA grew by 15.1% and 18.4%, respectively.  Margins and profitability for Evolution Health are expected to improve as contracts mature.

 

AMR

 

AMR’s net revenue for the first quarter of 2016 was $584.7 million, an increase of 39.4% from $419.4 million in the prior-year period.  Acquisition-related growth was 36.3% and organic growth was 3.1%.  AMR’s same-market revenue growth was 2.4%, which was comprised of 4.5% volume growth, offset by a 2.1% rate decline due to an increase in the percentage of non-emergency transports from new health system relationships, and changes to the service model in one of AMR’s contracts.  Revenue growth associated with net new contracts was 0.7%.

 

AMR’s Adjusted EBITDA of $64.3 million increased by 24.1%, from $51.8 million.  Adjusted EBITDA was 11.0% of revenue for the first quarter of 2016, which compares with 12.3% of revenue for the prior-year period.  Adjusted EBITDA margin was primarily impacted by AMR’s acquisition of Rural/Metro Corporation during the fourth quarter of 2015, which has lower initial margins than AMR, impacting blended margin.  AMR anticipates margin improvement throughout 2016 as the acquisition is integrated into its operations and anticipated synergies are realized.

 

2



 

Envision Cash Flows and Balance Sheet for the First Quarter of 2016

 

Envision generated cash flow from operations of $89.6 million, an increase of 97.8% from the prior-year period.  Cash flow improved as a result of lower days sales outstanding, which declined by two days year-over-year and by three days on a sequential basis.  Adjusted free cash flow of $62.9 million increased by 69.4% from the prior year. Adjusted free cash flow was impacted by higher capital expenditures from the prior-year period related to investments to support new business at AMR, as well as the Rural/Metro acquisition.

 

At March 31, 2016, Envision had $191.7 million of cash and equivalents, and total debt was $3.0 billion.

 

Outlook

 

Envision Healthcare is raising its outlook for 2016.  Envision now expects to generate Adjusted EBITDA of $725 million to $750 million for 2016, and Adjusted EPS of $1.46 to $1.54.

 

Conference Call

 

Envision management will host a conference call today, Thursday, May 5, 2016, at 5 p.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.  A replay of the conference call will be available approximately one hour after the call ends through June 5, 2016, at 888-567-0422, or 203-369-3440 for international callers.  An audio file will also be archived for 30 days on the investor relations section of the Company’s website at 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

 

3



 

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 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. Reconciliations of non-GAAP financial measures are provided in the tables included 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.

 

4



 

Envision Healthcare Holdings, Inc.

Consolidated Statements of Operations and Other Information

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

 

 

 

Quarter ended March 31,

 

 

 

2016

 

2015

 

 

 

 

 

 

 

Net revenue

 

$

1,597,546

 

$

1,244,502

 

Compensation and benefits

 

1,123,873

 

907,657

 

Operating expenses

 

253,215

 

151,726

 

Insurance expense

 

37,420

 

35,526

 

Selling, general and administrative expenses

 

37,990

 

26,449

 

Depreciation and amortization expense

 

57,433

 

39,881

 

Restructuring and other charges

 

106

 

 

Income from operations

 

87,509

 

83,263

 

Interest income from restricted assets

 

363

 

130

 

Interest expense, net

 

(38,883

)

(26,687

)

Realized gains (losses) on investments

 

15

 

 

Other income (expense), net

 

722

 

(332

)

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

 

49,726

 

56,374

 

Income tax benefit (expense)

 

(19,392

)

(22,516

)

Equity in earnings of unconsolidated subsidiary

 

132

 

72

 

Net income (loss)

 

30,466

 

33,930

 

Less: Net (income) loss attributable to noncontrolling interest

 

(3,616

)

(555

)

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

 

26,850

 

33,375

 

 

 

 

 

 

 

Basic earnings per common share

 

$

0.14

 

$

0.18

 

Diluted earnings per common share

 

$

0.14

 

$

0.17

 

Weighted average common shares outstanding, basic

 

187,047,309

 

184,586,249

 

Weighted average common shares outstanding, diluted

 

191,930,811

 

191,241,676

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

EmCare weighted patient encounters

 

4,718,515

 

4,196,859

 

AMR weighted transports

 

1,184,956

 

824,464

 

 

Earnings Per Share Reconciliation

 

 

 

Quarter ended March 31,

 

 

 

2016

 

2015

 

Weighted average common shares outstanding, diluted

 

191,930,811

 

191,241,676

 

 

 

 

 

 

 

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

 

$

26,850

 

$

33,375

 

Net income (loss) allocated to participating securities

 

69

 

 

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

 

$

26,781

 

$

33,375

 

Adjustments:

 

 

 

 

 

Other expense related to secondary offering/other filings, net of tax of $(145) for quarter 2015

 

 

187

 

 

 

 

 

 

 

Amortization expense, net of tax of $(12,234) and $(9,680) for quarter 2016 and 2015, respectively

 

19,877

 

12,495

 

 

 

 

 

 

 

Equity-based compensation expense, net of tax of $(871) and $(591) for quarter 2016 and 2015, respectively

 

1,414

 

762

 

 

 

 

 

 

 

Restructuring and other charges, net of tax of $(40) for quarter 2016

 

66

 

 

 

 

 

 

 

 

Severance and related costs, net of tax of $(694) and $(740) for quarter 2016 and 2015, respectively

 

1,128

 

954

 

 

 

 

 

 

 

Transaction costs related to acquisition activities, net of tax of $(2,167) and $(1,353) for quarter 2016 and 2015, respectively

 

3,519

 

1,747

 

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

 

$

52,785

 

$

49,520

 

Adjusted EPS

 

$

0.28

 

$

0.26

 

 

5



 

Envision Healthcare Holdings, Inc.

Reconciliation of Adjusted EBITDA to Net Income (Loss)

(unaudited; in thousands)

 

 

 

Quarter ended March 31,

 

 

 

2016

 

2015

 

Envision

 

 

 

 

 

Adjusted EBITDA

 

$

151,588

 

$

128,866

 

Depreciation and amortization expense

 

(57,433

)

(39,881

)

Restructuring and other charges

 

(106

)

 

Interest income from restricted assets

 

(363

)

(130

)

Transaction costs

 

(5,686

)

(3,100

)

Severance and related costs

 

(1,822

)

(1,694

)

Equity-based compensation expense

 

(2,285

)

(1,353

)

Net income (loss) attributable to noncontrolling interest

 

3,616

 

555

 

Income from operations

 

87,509

 

83,263

 

Interest income from restricted assets

 

363

 

130

 

Interest expense, net

 

(38,883

)

(26,687

)

Realized gains (losses) on investments

 

15

 

 

Other income (expense), net

 

722

 

(332

)

Income tax benefit (expense)

 

(19,392

)

(22,516

)

Equity in earnings of unconsolidated subsidiary

 

132

 

72

 

Net (income) loss attributable to noncontrolling interest

 

(3,616

)

(555

)

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

 

$

26,850

 

$

33,375

 

 

6



 

Envision Healthcare Holdings, Inc.

Reconciliation of Segment Adjusted EBITDA to Income from Operations

(unaudited; in thousands)

 

 

 

Quarter ended March 31,

 

 

 

2016

 

2015

 

EmCare

 

 

 

 

 

Net revenue

 

$

1,012,848

 

$

825,108

 

Compensation and benefits

 

789,664

 

676,301

 

Operating expenses

 

93,344

 

38,006

 

Insurance expense

 

22,484

 

23,341

 

Selling, general and administrative expenses

 

21,278

 

14,756

 

Interest income from restricted assets

 

(252

)

(19

)

Transaction costs

 

(2,914

)

(3,094

)

Severance and related costs

 

(603

)

(1,224

)

Equity-based compensation expense

 

(1,097

)

(609

)

Net income (loss) attributable to noncontrolling interest

 

3,616

 

555

 

Adjusted EBITDA

 

87,328

 

77,095

 

Depreciation and amortization expense

 

(26,991

)

(20,529

)

Restructuring and other charges

 

(106

)

 

Interest income from restricted assets

 

(252

)

(19

)

Transaction costs

 

(2,914

)

(3,094

)

Severance and related costs

 

(603

)

(1,224

)

Equity-based compensation expense

 

(1,097

)

(609

)

Net income (loss) attributable to noncontrolling interest

 

3,616

 

555

 

Income from operations

 

$

58,981

 

$

52,175

 

 

 

 

 

 

 

AMR

 

 

 

 

 

Net revenue

 

$

584,698

 

$

419,394

 

Compensation and benefits

 

334,209

 

231,356

 

Operating expenses

 

159,871

 

113,720

 

Insurance expense

 

14,936

 

12,185

 

Selling, general and administrative expenses

 

16,712

 

11,693

 

Interest income from restricted assets

 

(111

)

(111

)

Transaction costs

 

(2,772

)

(6

)

Severance and related costs

 

(1,219

)

(470

)

Equity-based compensation expense

 

(1,188

)

(744

)

Adjusted EBITDA

 

64,260

 

51,771

 

Depreciation and amortization expense

 

(30,442

)

(19,352

)

Interest income from restricted assets

 

(111

)

(111

)

Transaction costs

 

(2,772

)

(6

)

Severance and related costs

 

(1,219

)

(470

)

Equity-based compensation expense

 

(1,188

)

(744

)

Income from operations

 

$

28,528

 

$

31,088

 

 

 

 

 

 

 

Envision

 

 

 

 

 

Net revenue

 

$

1,597,546

 

$

1,244,502

 

Compensation and benefits

 

1,123,873

 

907,657

 

Operating expenses

 

253,215

 

151,726

 

Insurance expense

 

37,420

 

35,526

 

Selling, general and administrative expenses

 

37,990

 

26,449

 

Interest income from restricted assets

 

(363

)

(130

)

Transaction costs

 

(5,686

)

(3,100

)

Severance and related costs

 

(1,822

)

(1,694

)

Equity-based compensation expense

 

(2,285

)

(1,353

)

Net income (loss) attributable to noncontrolling interest

 

3,616

 

555

 

Adjusted EBITDA

 

151,588

 

128,866

 

Depreciation and amortization expense

 

(57,433

)

(39,881

)

Restructuring and other charges

 

(106

)

 

Interest income from restricted assets

 

(363

)

(130

)

Transaction costs

 

(5,686

)

(3,100

)

Severance and related costs

 

(1,822

)

(1,694

)

Equity-based compensation expense

 

(2,285

)

(1,353

)

Net income (loss) attributable to noncontrolling interest

 

3,616

 

555

 

Income from operations

 

$

87,509

 

$

83,263

 

 

7



 

Envision Healthcare Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

March 31, 
2016

 

December 31,
2015

 

 

 

(Unaudited)

 

(Audited)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

191,657

 

$

141,677

 

Trade and other accounts receivable, net

 

1,296,320

 

1,257,021

 

Other current assets

 

214,535

 

199,729

 

Total current assets

 

1,702,512

 

1,598,427

 

Non-current assets:

 

 

 

 

 

Property, plant and equipment, net

 

351,469

 

335,869

 

Goodwill and intangible assets, net

 

4,319,336

 

4,323,564

 

Other long-term assets

 

95,421

 

95,712

 

Total assets

 

$

6,468,738

 

$

6,353,572

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current liabilities

 

$

783,993

 

$

705,980

 

Long-term debt and capital lease obligations

 

2,954,829

 

2,958,481

 

Long-term deferred tax liabilities

 

391,248

 

369,110

 

Insurance reserves and other long-term liabilities

 

304,122

 

318,560

 

Total liabilities

 

4,434,192

 

4,352,131

 

Total equity

 

2,034,546

 

2,001,441

 

Total liabilities and equity

 

$

6,468,738

 

$

6,353,572

 

 

Note:  Certain prior period balances in the consolidated balance sheets have been reclassified to conform to the current year presentation. Such reclassifications had no impact on the results of operations or cash flows previously reported.

 

8



 

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 March 31,

 

 

 

2016

 

2015

 

Cash Flows from Operating Activities

 

 

 

 

 

Net income (loss)

 

$

30,466

 

$

33,930

 

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

 

 

 

 

 

Depreciation, amortization and other

 

63,188

 

43,682

 

Excess tax benefits from equity-based compensation

 

(1,130

)

(10,945

)

Deferred income taxes

 

8,575

 

520

 

Changes in operating assets/liabilities, net of acquisitions:

 

 

 

 

 

Trade and other accounts receivable, net

 

(37,953

)

(56,224

)

Parts and supplies inventory

 

348

 

(122

)

Prepaids and other current assets

 

(23,603

)

6,837

 

Accounts payable and accrued liabilities

 

50,958

 

21,688

 

Insurance reserves

 

(1,698

)

4,745

 

Other assets and liabilities, net

 

467

 

1,204

 

Net cash provided by (used in) operating activities

 

89,618

 

45,315

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

Purchases of available-for-sale securities

 

(8

)

(472

)

Sales and maturities of available-for-sale securities

 

1,448

 

200

 

Purchases of property, plant and equipment

 

(39,121

)

(13,507

)

Proceeds from sale of property, plant and equipment

 

28

 

44

 

Acquisition of businesses, net of cash received

 

(6,686

)

(498,283

)

Net change in insurance collateral

 

10,075

 

(4,508

)

Other investing activities

 

(301

)

(912

)

Net cash provided by (used in) investing activities

 

(34,565

)

(517,438

)

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

Borrowings under the ABL Facility

 

70,000

 

285,000

 

Repayments of the ABL Facility

 

(70,000

)

(50,000

)

Repayments of the Term Loan

 

(5,843

)

(3,343

)

Debt issuance costs

 

(703

)

(27

)

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

 

689

 

3,548

 

Excess tax benefits from equity-based compensation

 

1,130

 

10,945

 

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

 

 

100

 

Other financing activities

 

(346

)

(120

)

Net cash provided by (used in) financing activities

 

(5,073

)

246,103

 

 

 

 

 

 

 

Change in cash and cash equivalents

 

49,980

 

(226,020

)

Cash and cash equivalents, beginning of period

 

141,677

 

318,895

 

Cash and cash equivalents, end of period

 

$

191,657

 

$

92,875

 

 

 

 

 

 

 

Operating and non-acquisition investing cash flow

 

$

61,739

 

$

26,160

 

 

 

 

 

 

 

Non-recurring cash flow adjustments:

 

 

 

 

 

Excess tax benefits from equity-based compensation

 

1,130

 

10,945

 

 

 

 

 

 

 

Adjusted Free Cash Flow

 

$

62,869

 

$

37,105

 

 

9