AMSG Amsurg Corp.

Increases 2015 Financial Guidance

Christopher A. Holden, President and Chief Executive Officer of AmSurg Corp. (NASDAQ: AMSG), today announced financial results for the first quarter ended March 31, 2015. The Company’s results for the quarter included:

• Net revenues of $570.4 million, an increase of 120% from the first quarter of 2014;
• Net earnings from continuing operations attributable to AmSurg common shareholders of $18.8 million; adjusted net earnings of $31.7 million, up 73% from the first quarter of 2014;
• Net earnings per diluted share from continuing operations attributable to AmSurg common shareholders of $0.39; adjusted net earnings per diluted share of $0.62, up 9% on 59% higher diluted shares outstanding; and
• Adjusted EBITDA of $93.8 million, a 104% increase from the first quarter of 2014.

See page 6 for a reconciliation of all GAAP and non-GAAP financial results.

Mr. Holden commented, “We are pleased to report that AmSurg produced better than anticipated financial results for the first quarter of 2015, with both Ambulatory Services same-center revenues and Physician Services contract organic growth exceeding our expectations. In addition, we completed four acquisitions during the first quarter, which included an ambulatory surgery center (ASC), two radiology groups and an anesthesiology practice that services one of our ASCs. We also acquired an additional anesthesiology practice on the first day of the second quarter. As a result of our first-quarter growth and our pace of acquisitions, we have increased our financial guidance for 2015.”

Ambulatory Services

Net revenues for Ambulatory Services increased 9% for the first quarter of 2015, to $283.9 million from $259.6 million for the first quarter of 2014. Same-center revenue grew 3.6% for first-quarter 2015 compared with the first quarter last year. Adjusted EBITDA increased 3% to $47.3 million for the first quarter of 2015 from $46.0 million for the first quarter of 2014. Adjusted EBITDA margin was 16.7% for the first quarter this year compared with 17.7% for the first quarter last year.

Ambulatory Services added two ASCs to its base of operations during the first quarter and ended the quarter with 248 centers. One of the centers was acquired, and one center was obtained through a new joint venture partnership, to which AmSurg also contributed a center. Ambulatory Services had seven centers under letter of intent at the end of the first quarter and two centers under development, one of which is expected to open in 2015.

Physician Services

Net revenues for Physician Services were $286.5 million for the first quarter of 2015. Adjusted EBITDA was $46.4 million for the quarter, and adjusted EBITDA margin was 16.2%. As anticipated, Physician Services experienced the normal seasonal impact of higher salaries and benefits during the first quarter.

Comparable-quarter revenue growth for Physician Services was 14.2%, of which 5.2% was from same contract revenues, 2.3% from net new contract revenues and 6.7% from acquisition revenues. Contract organic growth in net revenues totaled 9.0% for the first quarter of 2015 reflecting a 6.6% increase in same contract revenues and a 2.4% increase in net new contract revenues. Same contract revenue growth for the first quarter was comprised of a 3.3% increase in patient encounters and a 3.3% increase in net revenue per patient encounter.

During the first quarter, Physician Services completed three acquisitions, including Ambulatory Anesthesia Care in New Jersey, which provides services to our ASC in Mountainside, New Jersey. Physician Services also acquired two radiology groups: Radisphere, which provides radiology and teleradiology services in 25 states, and Radiology Associates of Hollywood, which provides radiology services throughout Broward County, Florida. As previously announced, on April 1, 2015, Physician Services completed the acquisition of Halifax Anesthesiology Associates in Daytona Beach, Florida.

Liquidity

AmSurg had cash and cash equivalents of $116.2 million at the end of the first quarter and availability of $300.0 million under its revolving credit facility. Net cash flows from operations, less distributions to noncontrolling interests and excluding transaction-related costs, were $53.2 million for the first quarter. The Company’s ratio of total debt at the end of the first quarter of 2015 to trailing 12 months EBITDA as calculated under the Company’s credit agreement was 5.1.

Guidance

AmSurg today has raised its financial and operating guidance for 2015 and established its financial guidance for the second quarter of the year. The Company’s guidance for adjusted net earnings per diluted share from continuing operations attributable to common shareholders (“Adjusted EPS”) excludes transaction and severance costs related to acquisitions, acquisition-related amortization expense, gains and losses on deconsolidations and share-based compensation expense. The Company’s guidance is as follows:

• Revenues in a range of $2.46 billion to $2.49 billion, up from a range of $2.44 billion to $2.47 billion;
• Same-center revenue increase of 2% to 3% for Ambulatory Services, compared with the prior range of 1% to 3%; contract organic revenue growth of 6% to 8% in Physician Services, up from a range of 5% to 7%;
• Adjusted EBITDA of $454 million to $460 million, up from a range of $445 million to $451 million;
• Adjusted EPS in a range of $3.31 to $3.39, up from a range of $3.24 to $3.32; and
• For the second quarter of 2015, adjusted EPS in a range of $0.81 to $0.84.

The information contained in the preceding paragraphs, including information regarding the Company’s financial results for future periods, is forward-looking information. Forward-looking information involves known and unknown risks and uncertainties as described below. There can be no assurance that AmSurg will attain the financial targets set forth in this press release. The Company’s actual results and performance could differ materially from those expressed or implied by the forward-looking information contained in this press release.

Non-GAAP adjusted earnings per share guidance for the second quarter and full year of 2015 exclude acquisition-related transaction costs, acquisition-related amortization expense, gains and losses on future deconsolidation transactions and share-based compensation expense, net of the tax impact thereon, the exact amount of which are not currently determinable but may be significant and may vary significantly from period to period (see page 6 for a reconciliation of all GAAP and non-GAAP financial results).

Conference Call

AmSurg Corp. will hold a conference call to discuss this release Wednesday, May 6, 2015, at 9:00 a.m. Eastern time. Investors will have the opportunity to listen to the conference call over the Internet by going to www.amsurg.com and clicking “Investors” at least 15 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available at these sites shortly after the call and continue for 30 days.

Safe Harbor

This press release contains forward-looking statements. These statements, which have been included in reliance on the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, involve risks and uncertainties. Investors are hereby cautioned that these statements may be affected by important factors, including, but not limited to, the following risks: we may face challenges managing our Physician Services Division as a new business and may not realize anticipated benefits; we may become subject to investigations by federal and state entities and unpredictable impacts of the Health Reform Law; we may not be able to successfully maintain effective internal controls over financial reporting; we may not be able to implement our business strategy, manage the growth in our business, and integrate acquired businesses; our substantial indebtedness and restrictions in our debt instruments could adversely affect our business or our ability to implement our growth strategy, or limit our ability to react to changes in the economy or our industry; we may not generate sufficient cash to service our indebtedness; regulatory changes may obligate us to buy out interests of physicians who are minority owners of our surgery centers; we may not be able to successfully maintain our information systems and processes, implement new systems and processes, and maintain the security of those systems and processes; we may be subject to litigation and investigations and liability claims for damages and other expenses not covered by insurance; we may be required to write-off a portion of our intangible assets; payments from third-party payors, including government healthcare programs, may decrease or not increase as our costs increase; there may be adverse developments affecting the medical practices of our physician partners; we may not be able to maintain favorable relations with our physician partners; we may not be able to grow our ambulatory services revenue by increasing procedure volume while maintaining operating margins and profitability at our existing surgery centers; we may not be able to compete for physician partners, managed care contracts, patients and strategic relationships; adverse weather and other factors beyond our control may affect our business; we may be adversely impacted by changes in patient volume and patient mix; several client relationships generate a significant portion of our physician services revenues; our physician services contracts may be cancelled or not renewed or we may not be able to enter into additional contracts under terms acceptable to us; reimbursement rates, revenue and profit margin under our fee-for-service physician services payor contracts may decrease; we may not be able to timely or accurately bill for services; we may not be able to enroll our physician services providers in the Medicare and Medicaid programs on a timely basis; our strategic partnerships with healthcare providers may not be successful; we may not be able to successfully recruit and retain physicians, nurses and other clinical providers; we may not be able to accurately assess the costs we will incur under new contracts; our margins may be negatively impacted by cross-selling to existing clients or selling bundled services to new clients; we may not be able to enforce non-compete agreements with our physicians and other clinical employees in some jurisdictions; there may be unfavorable changes in regulatory, economic and other conditions in the states where we operate; legislative or regulatory action may make our captive insurance company arrangement less feasible or otherwise reduce our profitability; our reserves with respect to our losses covered under our insurance programs may not be sufficient; and the other risk factors are described in AmSurg’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as updated by other filings with the Securities and Exchange Commission. Consequently, actual results, performance or developments may differ materially from the forward-looking statements included above. AmSurg disclaims any intent or obligation to update these forward-looking statements.

About AmSurg

AmSurg’s Ambulatory Services Division acquires, develops and operates ambulatory surgery centers in partnership with physicians throughout the U.S. AmSurg’s Physician Services Division, Sheridan, provides outsourced physician services in multiple specialties to hospitals, ASCs and other healthcare facilities throughout the U.S., primarily in the areas of anesthesiology, children’s services, emergency medicine and radiology. Through these businesses as of March 31, 2015, AmSurg owned and operated 248 ASCs in 34 states and provided physician services to more than 330 healthcare facilities in 27 states, employing more than 2,900 physicians and other healthcare professionals.

    AMSURG CORP.

Unaudited Selected Consolidated Financial and Operating Data

(In thousands, except earnings per share)

  Three Months Ended March 31,

Statement of Earnings Data:

2015     2014 Revenues $ 638,197 $ 259,561 Provision for uncollectibles (67,752 ) —   Net revenue 570,445 259,561 Operating expenses: Salaries and benefits 302,179 82,149 Supply cost 42,584 37,805 Other operating expenses 90,570 54,169 Transaction costs 1,471 — Depreciation and amortization 22,818   8,259   Total operating expenses 459,622 182,382 Gain (loss) on deconsolidation (223 ) 2,045 Equity in earnings of unconsolidated affiliates 2,651   764   Operating income 113,251 79,988 Interest expense, net 30,247   6,960   Earnings from continuing operations before income taxes 83,004 73,028 Income tax expense 14,249   12,982   Net earnings from continuing operations 68,755 60,046 Net earnings from discontinued operations —   68   Net earnings 68,755 60,114 Less net earnings attributable to noncontrolling interests 47,717   42,919   Net earnings attributable to AmSurg Corp. shareholders 21,038 17,195 Preferred stock dividends (2,264 ) —   Net earnings attributable to AmSurg Corp. common shareholders $ 18,774   $ 17,195     Amounts attributable to AmSurg Corp. common shareholders: Earnings from continuing operations, net of income tax $ 18,774 $ 17,392 Loss from discontinued operations, net of income tax —   (197 ) Net earnings attributable to AmSurg Corp. common shareholders $ 18,774   $ 17,195   Basic earnings per share attributable to AmSurg Corp. common shareholders: Net earnings from continuing operations $ 0.39 $ 0.55 Net loss from discontinued operations —   (0.01 ) Net earnings $ 0.39   $ 0.54   Diluted earnings per share attributable to AmSurg Corp. common shareholders: Net earnings from continuing operations $ 0.39 $ 0.54 Net loss from discontinued operations —   (0.01 ) Net earnings $ 0.39   $ 0.54   Weighted average number of shares and share equivalents outstanding: Basic 47,572 31,716 Diluted 47,905 32,120     AMSURG CORP.

Unaudited Selected Consolidated Financial and Operating Data, continued

(In thousands, except earnings per share)

    Three Months Ended March 31, 2015     2014 Reconciliation of net earnings to Adjusted net earnings (1): Net earnings attributable to AmSurg Corp. shareholders $ 21,038 $ 17,195 Loss from discontinued operations — 328 Amortization of purchased intangibles 12,422 — Share-based compensation 3,709 2,458 (Gain) loss on deconsolidation 223 (2,045 ) Transaction costs 1,471 —   Total pre-tax adjustments 17,825 741 Tax effect 7,130 (375 ) Total adjustments, net 10,695 1,116   Adjusted net earnings $ 31,733 $ 18,311     Basic shares outstanding 47,572 31,716 Effect of dilutive securities, options and non-vested shares 3,485 404   Diluted shares outstanding, if converted 51,057 32,120     Adjusted earnings per share $ 0.62 $ 0.57     Reconciliation of net earnings to Adjusted EBITDA (2): Net earnings attributable to AmSurg Corp. shareholders $ 21,038 $ 17,195 Loss from discontinued operations — 197 Interest expense, net 30,247 6,960 Income tax expense 14,249 12,982 Depreciation and amortization 22,818 8,259   EBITDA 88,352 45,593 Adjustments: Share-based compensation 3,709 2,458 Transaction costs 1,471 — (Gain) loss on deconsolidation 223 (2,045 ) Total adjustments 5,403 413   Adjusted EBITDA $ 93,755 $ 46,006     Segment Information: Ambulatory Services Adjusted EBITDA $ 47,308 $ 46,006 Physician Services Adjusted EBITDA 46,447 —   Adjusted EBITDA $ 93,755 $ 46,006     Net Revenue by Segment: Ambulatory Services $ 283,910 $ 259,561 Physician Services 286,535 —   Total net revenue $ 570,445 $ 259,561    

See footnotes on page 10

    AMSURG CORP.

Unaudited Selected Consolidated Financial and Operating Data, continued

(Dollars in thousands)

    Three Months Ended March 31,

Operating Data- Ambulatory Services:

2015     2014 Procedures performed during the period at consolidated centers 404,519 384,697 Centers in operation at end of period (consolidated) 237 233 Centers in operation at end of period (unconsolidated) 11 4 Average number of continuing centers in operation (consolidated) 235 234 New centers added during the period 2 1 Centers discontinued during the period — 1 Centers under development at end of period 2 1 Centers under letter of intent at end of period 7 7 Average revenue per consolidated center $               1,206 $ 1,110 Same center revenues increase (decrease) 3.6 % (2.0 )% Income tax expense attributable to noncontrolling interests $ 174 $ 168  

Operating Data-Physician Services:

Three Months EndedMarch 31, 2015

Same contract revenue growth

6.6

%

Net new contract revenue growth

 

2.4

%

Total contract organic revenue growth

 

9.0

%

    AMSURG CORP.

Unaudited Selected Consolidated Financial and Operating Data, continued

(In thousands)

        March 31, December 31,

Balance Sheet Data:

2015 2014 Assets Current assets: Cash and cash equivalents $ 116,156 $ 208,079 Restricted cash and marketable securities 10,957 10,219 Accounts receivable, net of allowance of $124,606 and $113,357, respectively 244,002 233,053 Supplies inventory 20,473 19,974 Prepaid and other current assets 97,361 115,362 Total current assets 488,949 586,687 Property and equipment, net 183,446 180,448 Investments in unconsolidated affiliates 79,311 75,475 Goodwill 3,500,668 3,381,149 Intangible assets, net 1,306,267 1,273,879 Other assets 25,368 25,886 Total assets $ 5,584,009 $ 5,523,524 Liabilities and Equity Current liabilities: Current portion of long-term debt $ 18,858 $ 18,826 Accounts payable 25,808 29,585 Accrued salaries and benefits 144,607 140,044 Accrued interest 17,857 29,644 Other accrued liabilities 75,701 67,986 Total current liabilities 282,831 286,085 Long-term debt 2,229,994 2,232,186 Deferred income taxes 648,444 633,480 Other long-term liabilities 92,485 89,443 Commitments and contingencies Noncontrolling interests – redeemable 183,459 184,099 Equity: Mandatory convertible preferred stock, no par value, 5,000 shares authorized, 1,725 shares issued and outstanding 166,632 166,632 Common stock, no par value, 70,000 shares authorized, 48,413 and 48,113 shares issued and outstanding, respectively 888,748 885,393 Retained earnings 646,296 627,522 Total AmSurg Corp. equity 1,701,676 1,679,547 Noncontrolling interests – non-redeemable 445,120 418,684 Total equity 2,146,796 2,098,231 Total liabilities and equity $ 5,584,009 $ 5,523,524     AMSURG CORP.

Unaudited Selected Consolidated Financial and Operating Data, continued

(In thousands)

    Three Months Ended March 31,

Statement of Cash Flow Data:

2015     2014 Cash flows from operating activities: Net earnings $ 68,755 $ 60,114 Adjustments to reconcile net earnings to net cash flows provided by operating activities: Depreciation and amortization 22,818 8,259 Amortization of deferred loan costs 2,074 498 Provision for uncollectibles 73,999 5,216 Net loss on sale of long-lived assets — 604 Loss (gain) on deconsolidation 223 (2,045 ) Share-based compensation 3,709 2,458 Excess tax benefit from share-based compensation (3,317 ) (1,727 ) Deferred income taxes 3,334 11,933 Equity in earnings of unconsolidated affiliates (2,651 ) (764 ) Increases (decreases) in cash and cash equivalents, net of acquisitions and dispositions: Accounts receivable (74,214 ) (6,867 ) Supplies inventory (30 ) (245 ) Prepaid and other current assets 13,842 (3,638 ) Accounts payable (2,526 ) (3,578 ) Accrued expenses and other liabilities (7,886 ) (606 ) Other, net 697   207   Net cash flows provided by operating activities 98,827 69,819 Cash flows from investing activities: Acquisitions and related expenses (126,578 ) (5,038 ) Acquisition of property and equipment (14,783 ) (7,038 ) Proceeds from sale of interests in surgery centers — 1,111 Other (220 ) (418 ) Net cash flows used in investing activities (141,581 ) (11,383 ) Cash flows from financing activities: Proceeds from long-term borrowings 2,227 31,945 Repayment on long-term borrowings (5,213 ) (50,853 ) Distributions to noncontrolling interests (47,202 ) (43,194 ) Cash dividends for preferred shares (2,264 ) — Proceeds from issuance of common stock upon exercise of stock options 1,746 488 Repurchase of common stock (3,684 ) (2,857 ) Excess tax benefit from share-based compensation 3,317 1,727 Other 1,904   584   Net cash flows used in financing activities (49,169 ) (62,160 ) Net decrease in cash and cash equivalents (91,923 ) (3,724 ) Cash and cash equivalents, beginning of period 208,079   50,840   Cash and cash equivalents, end of period $ 116,156   $ 47,116      

AMSURG CORP.

Footnotes to Reconciliations of Non-GAAP Measures to GAAP Measures

  (1)   We believe the calculation of adjusted net earnings per diluted share attributable to AmSurg Corp. common shareholders provides a better measure of our ongoing performance and provides better comparability to prior periods because it excludes the gains or loss from deconsolidations, which are non-cash in nature, transaction costs, including associated debt extinguishment costs and deferred financing write-off, and acquisition-related amortization expense (the majority of which relate to the Sheridan Transaction and which are of a nature and significance not generally associated with our historical individual center acquisition activity) and share-based compensation expense. Adjusted net earnings from continuing operations per diluted share attributable to AmSurg Corp. common shareholders should not be considered as a measure of financial performance under accounting principles generally accepted in the United States, and the items excluded from it is a significant component in understanding and assessing financial performance. Because adjusted net earnings from continuing operations per diluted share attributable to AmSurg Corp. common shareholders is not a measurement determined in accordance with accounting principles generally accepted in the United States and is thus susceptible to varying calculations, it may not be comparable as presented to other similarly titled measures of other companies. For purposes of calculating adjusted earnings per share, we utilize the if-converted method to determine the number of diluted shares outstanding. In periods where utilizing the if-converted method is anti-dilutive, the mandatory convertible preferred stock will not be included in the calculation of diluted shares outstanding.   (2) We define Adjusted EBITDA of AmSurg as earnings before interest expense, net, income taxes, depreciation, amortization, share-based compensation, transaction costs, gain or loss on deconsolidations and discontinued operations. Adjusted EBITDA should not be considered a measure of financial performance under generally accepted accounting principles. Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA is an analytical indicator used by management and the health care industry to evaluate company performance, allocate resources and measure leverage and debt service capacity. Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows from operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA is not a measurement determined in accordance with generally accepted accounting principles and is thus susceptible to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies. Net earnings from continuing operations attributable to AmSurg Corp. common shareholders is the financial measure calculated and presented in accordance with generally accepted accounting principles that is most comparable to Adjusted EBITDA as defined.

AmSurg Corp.Claire M. Gulmi, 615-665-1283Executive Vice President and Chief Financial Officer