EX-99 2 a5258960ex99.txt EXHIBIT 99 Exhibit 99 Symbion, Inc. Announces Third Quarter Results Company Announces Acquisition of Surgical Hospital in Colorado NASHVILLE, Tenn.--(BUSINESS WIRE)--Oct. 25, 2006--Symbion, Inc. (NASDAQ:SMBI), an owner and operator of short stay surgery facilities, announced today results for the third quarter and nine months ended September 30, 2006. For the third quarter ended September 30, 2006, revenues increased 12% to $73.8 million compared with $65.8 million for the third quarter ended September 30, 2005. Net income for the third quarter of 2006 decreased to $3.8 million compared with $4.2 million for the third quarter of 2005. Net income of $3.8 million includes the impact of $527,000 of non-cash stock option compensation expense recorded in accordance with the Company's adoption of Statement of Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based Payment." Income per diluted share from continuing operations for the third quarter of 2006 remained constant at $0.19, including the impact of $0.02 per diluted share related to the Company's non-cash stock option compensation expense, compared with income per diluted share from continuing operations of $0.19 for the third quarter of 2005. The Company adopted SFAS No. 123(R) on January 1, 2006, therefore no expense was recorded during 2005 related to the Company's non-cash stock option compensation. EBITDA increased 4% to $12.1 million for the third quarter of 2006, including $857,000 related to the Company's non-cash stock option compensation expense, compared with $11.6 million for the third quarter of 2005. Same store net patient service revenues for the third quarter of 2006 increased 9% compared with the same period in 2005. At September 30, 2006, the Company's outstanding indebtedness was $116.5 million with a ratio of debt to total capitalization of 29%. For the nine months ended September 30, 2006, revenues increased 17% to $223.7 million compared with $191.1 million for the similar period in 2005. Net income for the year-to-date period in 2006 increased 7% to $14.3 million compared with $13.4 million for the same period in 2005. Net income of $14.3 million includes the impact of $1.8 million of non-cash stock option compensation expense. Income per diluted share from continuing operations for the nine months ended September 30, 2006, increased 10% to $0.67, including the impact of $0.08 per diluted share related to the Company's non-cash stock option compensation expense, compared with $0.61 from continuing operations for the nine months ended September 30, 2005. The $0.67 income per diluted share from continuing operations includes $0.04 related to non-recurring gains recorded during the first and second quarters and $0.01 related to an adjustment to depreciation expense based on a change in depreciation estimates at certain of the Company's newly acquired surgery centers during the second quarter. EBITDA increased 13% to $39.3 million for the nine-month period in 2006, including $3.0 million related to the Company's non-cash stock option compensation expense, compared with $34.7 million for the same period in 2005. Same store net patient service revenue for the year-to-date period in 2006 increased 7% compared with the same period in 2005. Commenting on the third quarter results, Richard E. Francis, Jr., chairman and chief executive officer of Symbion, said, "Obviously, the third quarter was a challenging one. Revenue was impacted by lower volumes in the quarter and lower than expected net revenue per case. This variance was driven primarily by certain managed care pressures, which combined with case mix changes with lower net revenue per case and higher supply costs to negatively affect our earnings. Given our third quarter results, we are adjusting our previously announced income per diluted share guidance for 2006 to a range of $0.83 to $0.86 from continuing operations, excluding one-time, non-recurring items as discussed above. We are also adjusting our revenue guidance for 2006 to a range of $300.0 million to $305.0 million." Mr. Francis continued, "We have analyzed the third quarter extensively in an effort to address these issues, leading to what we believe will be both immediate and long-term positive results." The Company also announced the acquisition of a majority interest in the Animas Surgical Hospital, LLC, a multispecialty surgical hospital in Durango, Colorado, and the acquisition of a minority interest in a de novo multispecialty surgery center under construction in Novi, Michigan. Also, during the quarter, the Company initiated the disposition of one marginally profitable center, which was completed in October and has been classified as discontinued operations throughout this release. Mr. Francis commented, "We are very pleased to announce these successful development results for Symbion. We regard the acquisition of Animas Surgical Hospital to be consistent with our mission as a short stay surgical provider and view it as an important step in our growth and strategic direction. We expect this acquisition to not only provide significant 2007 revenue expansion, but also position the Company quite well for what we expect to be an attractive market for future development opportunities. The Novi, Michigan, de novo represents a unique opportunity for the Company. This multispecialty ASC, scheduled for a mid-2007 opening, has 29 physician partners and is expected to have four operating suites and three special procedure rooms." The live broadcast of Symbion's third quarter 2006 conference call will begin at 10:00 a.m. Eastern Time on October 26, 2006. An online replay of the call will be available for 30 days following the conclusion of the live broadcast. A link for these events can be found on the Company's website at www.symbion.com or at www.earnings.com. Symbion, Inc., headquartered in Nashville, Tennessee, owns and operates a network of 61 short stay surgery facilities in 23 states. The Company's facilities provide non-emergency surgical procedures across many specialties. This press release contains forward-looking statements based on management's current expectations and projections about future events and trends that management believes may affect the Company's financial condition, results of operations, business strategy and financial needs. The words "anticipate," "believe," "continue," "estimate," "expect," "intend," "may," "plan," "will" and similar expressions are generally intended to identify forward-looking statements. These statements, including those regarding the Company's growth and continued success, have been included in reliance on the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks, uncertainties and other factors that may cause actual results to differ from the expectations expressed in the statements. Many of these factors are beyond the ability of the Company to control or predict. These factors include, without limitation: (i) the Company's dependence on payments from third-party payors, including government health care programs and managed care organizations; (ii) the Company's ability to acquire and develop additional surgery centers on favorable terms; (iii) numerous business risks in acquiring and developing additional surgery centers, including potential difficulties in operating and integrating such surgery centers; (iv) efforts to regulate the construction, acquisition or expansion of health care facilities; (v) the risk that the Company's revenues and profitability could be adversely affected if it fails to attract and maintain good relationships with the physicians who use its facilities; (vi) the Company's ability to comply with applicable laws and regulations, including health care regulations, corporate governance laws and financial reporting standards; (vii) risks related to pending or future heightened regulation of specialty hospitals which could restrict the Company's ability to operate its facilities licensed as hospitals and could adversely impact its reimbursement revenues; (viii) the risk of changes to physician self-referral laws that may require the Company to restructure some of its relationships, which could result in a significant loss of revenues and divert other resources; (ix) the Company's significant indebtedness; (x) the intense competition for physicians, strategic relationships, acquisitions and managed care contracts, which may result in a decline in the Company's revenues, profitability and market share; (xi) the geographic concentration of the Company's operations, which makes the Company particularly sensitive to regulatory, economic and other conditions in certain states; (xii) the Company's dependence on its senior management; (xiii) the Company's ability to enhance operating efficiencies at its surgery centers and to control costs as the volume of cases performed at the Company's facilities changes; (xiv) efforts by certain states to reduce payments from workers' compensation payors for services provided to injured workers; (xv) risks associated with the practice of some of the Company's centers in billing for services "out-of-network", including the risk that out-of-network payments by some third-party payors may be reduced or eliminated; and (xvi) other risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking statements contained in this press release, you should not place undue reliance on them. The Company undertakes no obligation to update any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. SYMBION, INC. Unaudited Condensed Consolidated Statement of Operations (in thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------- 2006 2005 2006 2005 --------- -------- --------- --------- Revenues $73,803 $65,782 $223,688 $191,051 Operating expenses: Salaries and benefits, includes non-cash stock option compensation expense 19,947 17,486 59,554 48,800 Supplies 14,738 11,857 43,771 34,755 Professional and medical fees 4,454 3,458 12,110 10,078 Rent and lease expense 4,809 4,402 14,239 12,136 Other operating expenses 5,534 4,412 15,860 13,813 --------- -------- --------- --------- Cost of revenues 49,482 41,615 145,534 119,582 General and administrative expense, includes non-cash stock option compensation expense 5,018 5,069 18,062 16,377 Depreciation and amortization 3,587 3,315 10,157 9,488 Provision for doubtful accounts 1,438 1,350 2,891 3,134 Income on equity investments (511) (233) (1,483) (842) Impairment and loss on disposal of long-lived assets 137 664 705 1,520 Gain on sale of long-lived assets (81) (758) (1,733) (1,785) Proceeds from insurance settlement - - (410) - Proceeds from litigation settlement - - (588) - --------- -------- --------- --------- Total operating expenses 59,070 51,022 173,135 147,474 --------- -------- --------- --------- Operating income 14,733 14,760 50,553 43,577 Minority interests in income of consolidated subsidiaries (6,211) (6,462) (21,437) (18,347) Interest expense, net (1,790) (1,442) (5,110) (3,362) --------- -------- --------- --------- Income from continuing operations before income taxes 6,732 6,856 24,006 21,868 Provision for income taxes 2,589 2,640 9,238 8,419 --------- -------- --------- --------- Income from continuing operations 4,143 4,216 14,768 13,449 Loss from discontinued operations, net of tax (328) (34) (474) (1) --------- -------- --------- --------- Net income $3,815 $4,182 $14,294 $13,448 ========= ======== ========= ========= Income per share - continuing operations: Basic $0.19 $0.20 $0.69 $0.63 ========= ======== ========= ========= Diluted $0.19 $0.19 $0.67 $0.61 ========= ======== ========= ========= Net income per share: Basic $0.18 $0.20 $0.66 $0.63 ========= ======== ========= ========= Diluted $0.17 $0.19 $0.65 $0.61 ========= ======== ========= ========= Weighted average number of common shares outstanding and common equivalent shares: Basic 21,582 21,321 21,517 21,237 Diluted 21,969 22,075 21,944 21,929 SYMBION, INC. Condensed Consolidated Balance Sheets (dollars in thousands) (unaudited) Sept. 30, Dec. 31, 2006 2005 --------- --------- ASSETS Current assets: Cash and cash equivalents $30,058 $28,394 Accounts receivable, less allowance for doubtful accounts 34,072 32,391 Inventories 7,963 7,484 Prepaid expenses and other current assets 11,752 7,959 Current assets of discontinued operations - 267 --------- --------- Total current assets 83,845 76,495 Property and equipment, net of accumulated depreciation 76,085 72,798 Goodwill 293,897 268,312 Other intangible assets, net - 650 Investments in and advances to affiliates 13,769 13,770 Other assets 3,203 3,740 Long-term assets of discontinued operations - 613 --------- --------- Total assets $470,799 $436,378 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $4,545 $6,577 Accrued payroll and benefits 7,003 8,623 Other accrued expenses 12,061 10,846 Current maturities of long-term debt 1,298 1,347 Current liabilities of discontinued operations - 318 --------- --------- Total current liabilities 24,907 27,711 Long-term debt, less current maturities 115,188 101,969 Other liabilities 19,852 17,845 Long-term liabilities of discontinued operations - (39) Minority interests 31,125 28,834 Total stockholders' equity 279,727 260,058 --------- --------- Total liabilities and stockholders' equity $470,799 $436,378 ========= ========= SYMBION, INC. Supplemental Operating Data (dollars in thousands, except per case and per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------- 2006 2005 2006 2005 --------- -------- --------- --------- Same store statistics (1): Cases 57,909 53,930 172,664 163,543 Cases percentage growth 7.4% N/A 5.6% N/A Net patient service revenue per case $1,191 $1,177 $1,193 $1,173 Net patient service revenue per case percentage growth 1.2% N/A 1.7% N/A Number of same store surgery centers 46 N/A 43 N/A Consolidated statistics - continuing operations: Cases 57,985 51,945 173,959 152,959 Cases percentage growth 11.6% N/A 13.7% N/A Net patient service revenue per case $1,208 $1,206 $1,217 $1,188 Net patient service revenue per case percentage growth 0.2% N/A 2.4% N/A Number of surgery centers operated as of end of period (2) 61 58 61 58 Number of states in which the Company operates surgery centers 23 22 23 22 Revenues - continuing operations: Net patient service revenues $70,040 $62,623 $211,701 $181,726 Physician service revenues 1,117 1,091 3,377 3,235 Other service revenues 2,646 2,068 8,610 6,090 --------- -------- --------- --------- Total revenues $73,803 $65,782 $223,688 $191,051 ========= ======== ========= ========= Cash flow information - continuing operations: Net cash provided by operating activities $4,846 $11,324 $20,898 $27,217 Net cash used in investing activities (2,315) (49,115) (34,841) (61,805) Net cash provided by (used in) financing activities (5,914) 39,555 15,222 38,204 Other information: EBITDA, (3) includes non-cash stock option compensation expense $12,109 $11,613 $39,273 $34,718 (1) For purposes of this release, the Company defines same store facilities as those centers that the Company owned an interest in and managed throughout each of the respective periods shown. The Company has also included the results of a surgery center in which it owns an interest that opened during the first quarter of 2006 within the market served by another surgery center in which the Company owns an interest. The Company has not included the surgery center that is reported as a discontinued operation. The definition of same store facilities includes non-consolidated centers and allows for comparability to other companies in the industry. SYMBION, INC. Supplemental Operating Data (Continued) (2) This data includes nine surgery centers that the Company managed but in which it did not have an ownership interest. (3) The following table reconciles EBITDA to net cash provided by operating activities - continuing operations: Three Months Ended Nine Months Ended (in thousands) September 30, September 30, ------------------ ----------------- 2006 2005 2006 2005 --------- -------- -------- -------- EBITDA $12,109 $11,613 $39,273 $34,718 Depreciation and amortization (3,587) (3,315) (10,157) (9,488) Interest expense, net (1,790) (1,442) (5,110) (3,362) Income taxes (2,589) (2,640) (9,238) (8,419) Loss on discontinued operations, net of taxes (328) (34) (474) (1) --------- -------- -------- -------- Net income 3,815 4,182 14,294 13,448 Depreciation and amortization 3,587 3,315 10,157 9,488 Non-cash compensation expense 890 - 3,064 - Non-cash gains and losses 56 (94) (1,028) (265) Minority interests in income of consolidated subsidiaries 6,211 6,462 21,437 18,347 Income taxes 2,589 2,640 9,238 8,419 Distributions to minority partners (6,306) (5,689) (19,096) (15,645) Income on equity investments (511) (233) (1,483) (842) Provision for doubtful accounts 1,438 1,350 2,891 3,134 Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: Accounts receivable (311) 998 (2,994) (1,159) Other assets and liabilities (6,612) (1,607) (15,582) (7,708) --------- -------- -------- -------- Net cash provided by operating activities - continuing operations $4,846 $11,324 $20,898 $27,217 ========= ======== ======== ======== CONTACT: Symbion, Inc. Kenneth C. Mitchell, 615-234-5904 Senior Vice President and Chief Financial Officer