EX-99 2 a5196889ex99.txt EXHIBIT 99 Exhibit 99 Symbion, Inc. Announces Second Quarter Results NASHVILLE, Tenn.--(BUSINESS WIRE)--July 26, 2006--Highlights for Second Quarter 2006 Compared with Second Quarter 2005: -- Revenues increased 21%; -- Same store net patient service revenues increased 7%; and -- Earnings per diluted share increased to $0.27, including the impact of $0.04 of non-recurring items. Symbion, Inc. (NASDAQ:SMBI), an owner and operator of short stay surgery facilities, announced today results for the second quarter and six months ended June 30, 2006. For the second quarter ended June 30, 2006, revenues increased 21% to $78.2 million compared with $64.7 million for the second quarter ended June 30, 2005. Net income for the second quarter of 2006 increased 20% to $5.9 million compared with $4.9 million for the second quarter of 2005. Net income of $5.9 million includes the impact of $642,000 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." Earnings per diluted share for the second quarter of 2006 increased 23% to $0.27, including the impact of $0.03 per diluted share related to the Company's non-cash stock option compensation expense, compared with earnings per diluted share of $0.22 for the second 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. The $0.27 earnings per diluted share includes $0.03 related to a gain on the sale of assets 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. EBITDA increased 20% to $14.3 million for the second quarter of 2006, including $1.1 million related to the Company's non-cash stock option compensation expense, compared with $11.9 million for the second quarter of 2005. Same store net patient service revenues for the second quarter of 2006 increased 7% compared with the same period in 2005. At June 30, 2006, the Company's outstanding indebtedness was $122.6 million with a ratio of debt to total capitalization of 31%. For the six months ended June 30, 2006, revenues increased 19% to $151.0 million compared with $126.8 million for the first half of 2005. Net income for the first half of 2006 increased 13% to $10.5 million compared with $9.3 million for the first half of 2005. Net income of $10.5 million includes the impact of $1.3 million of non-cash stock option compensation expense. Earnings per diluted share for the six months ended June 30, 2006, increased 14% to $0.48, including the impact of $0.06 per diluted share related to the Company's non-cash stock option compensation expense, compared with $0.42 for the six months ended June 30, 2005. The $0.48 earnings per diluted share 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. EBITDA increased 16% to $27.0 million for the first half of 2006 compared with $23.2 million for the same period in 2005. Same store net patient service revenue for the first half of 2006 increased 6% compared with the same period in 2005. Commenting on the second quarter results, Richard E. Francis, Jr., chairman and chief executive officer of Symbion, said, "The Company's continued focus and execution of its business strategies have resulted in a healthy first half of 2006 and will provide a sound foundation for the remainder of the year. We continue to see a compelling development pipeline, and we are pleased with the opportunities available to increase our presence in existing and new markets." The Company raised its previously announced 2006 guidance for revenues of $300 million to $305 million to a range of $303 million to $308 million. The Company confirmed its guidance for 2006 of earnings per diluted share in the range of $0.88 to $0.91, which includes the estimated expense of $0.11 per diluted share from the Company's implementation on January 1, 2006, of SFAS No. 123(R). The Company continues to anticipate same store net patient service revenue growth of 5% to 8% over 2005. The Company's guidance includes previously announced 2006 acquisitions. In closing, Mr. Francis added, "We are very pleased with our progress in the first half of this year, and we are committed to continuing our focus on the fundamentals of our business. We believe our operating strategy is sound and that these strategies ultimately benefit our physicians and their patients. We strongly believe that we are in a very promising segment of the health care services sector, which will continue to benefit from technological advances, patient and physician preference and demographic trends." The live broadcast of Symbion's second quarter 2006 conference call will begin at 10:00 a.m. Eastern Time on July 27, 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 62 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 the Deficit Reduction Act of 2005 and future legislation, 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 (xiv) 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 Six Months Ended June 30, June 30, ------------------ ------------------ 2006 2005 2006 2005 -------- -------- -------- -------- Revenues $78,181 $64,653 $150,950 $126,832 Operating expenses: Salaries and benefits, includes non-cash stock option compensation expense 20,583 15,851 40,089 31,859 Supplies 15,359 11,802 29,285 23,255 Professional and medical fees 4,357 3,487 7,721 6,806 Rent and lease expense 4,887 4,077 9,604 7,907 Other operating expenses 5,626 5,035 10,546 9,623 -------- -------- -------- -------- Cost of revenues 50,812 40,252 97,245 79,450 General and administrative expense, includes non-cash stock option compensation expense 6,505 5,904 13,043 11,308 Depreciation and amortization 2,921 3,114 6,666 6,260 Provision for doubtful accounts 825 1,068 1,468 1,782 Income on equity investments (728) (325) (973) (609) Impairment and loss on disposal of long-lived assets 528 745 567 856 Gain on sale of long-lived assets (1,652) (782) (1,652) (1,027) Proceeds from insurance settlement -- -- (410) -- Proceeds from litigation settlement -- -- (588) -- -------- -------- -------- -------- Total operating expenses 59,211 49,976 115,366 98,020 -------- -------- -------- -------- Operating income 18,970 14,677 35,584 28,812 Minority interests in income of consolidated subsidiaries (7,551) (5,863) (15,226) (11,832) Interest expense, net (1,822) (880) (3,319) (1,914) -------- -------- -------- -------- Income before income taxes 9,597 7,934 17,039 15,066 Provision for income taxes 3,695 3,054 6,560 5,800 -------- -------- -------- -------- Net income $5,902 $4,880 $10,479 $9,266 ======== ======== ======== ======== Net income per share: Basic $0.27 $0.23 $0.49 $0.44 ======== ======== ======== ======== Diluted $0.27 $0.22 $0.48 $0.42 ======== ======== ======== ======== Weighted average number of common shares outstanding and common equivalent shares: Basic 21,507 21,269 21,484 21,195 Diluted 21,922 22,000 21,987 21,871 SYMBION, INC. Condensed Consolidated Balance Sheets (dollars in thousands) June 30, Dec. 31, 2006 2005 -------- -------- (Unaudited) (Audited) ASSETS Current assets: Cash and cash equivalents $33,174 $28,434 Accounts receivable, less allowance for doubtful accounts 35,212 32,487 Inventories 7,918 7,572 Prepaid expenses and other current assets 7,988 8,002 -------- -------- Total current assets 84,292 76,495 Property and equipment, net of accumulated depreciation 76,586 73,410 Goodwill 293,586 268,312 Other intangible assets, net -- 650 Investments in and advances to affiliates 13,981 13,770 Other assets 4,487 3,741 -------- -------- Total assets $472,932 $436,378 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $5,469 $6,727 Accrued payroll and benefits 8,324 8,680 Other accrued expenses 10,075 10,957 Current maturities of long-term debt 1,369 1,347 -------- -------- Total current liabilities 25,237 27,711 Long-term debt, less current maturities 121,236 101,969 Other liabilities 20,153 17,845 Minority interests 31,480 28,795 Total stockholders' equity 274,826 260,058 -------- -------- Total liabilities and stockholders' equity $472,932 $436,378 ======== ======== SYMBION, INC. Supplemental Operating Data (dollars in thousands, except per case and per share data) Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 2006 2005 2006 2005 -------- -------- -------- -------- Same store statistics (1): Cases 59,864 57,472 116,407 111,963 Cases percentage growth 4.2% N/A 4.0% N/A Net patient service revenue per case $1,202 $1,168 $1,193 $1,166 Net patient service revenue per case percentage growth 2.9% N/A 2.3% N/A Number of same store surgery centers 46 N/A 44 N/A Consolidated Statistics: Cases 60,378 52,413 117,050 102,826 Cases percentage growth 15.2% N/A 13.8% N/A Net patient service revenue per case $1,224 $1,176 $1,219 $1,174 Net patient service revenue per case percentage growth 4.1% N/A 3.8% N/A Number of surgery centers operated as of end of period (2) 62 56 62 56 Number of states in which the Company operates surgery centers 23 21 23 21 Revenues: Net patient service revenues $73,914 $61,609 $142,725 $120,666 Physician service revenues 1,121 1,100 2,261 2,144 Other service revenues 3,146 1,944 5,964 4,022 -------- -------- -------- -------- Total revenues $78,181 $64,653 $150,950 $126,832 ======== ======== ======== ======== Cash flow information: Net cash provided by operating activities $9,542 $8,924 $16,276 $15,632 Net cash used in investing activities (17,616) (4,273) (32,666) (12,712) Net cash provided by (used in) financing activities 14,208 (3,319) 21,130 (1,185) Other information: EBITDA, (3) includes non-cash stock option compensation expense $14,340 $11,928 $27,024 $23,240 (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 definition of same store facilities includes non-consolidated centers and allows for comparability to other companies in the industry. (2) This data includes nine surgery centers that the Company managed but in which it did not have an ownership interest. (3) When the Company uses the term "EBITDA", it is referring to net income plus (a) income tax expense, (b) interest expense, net and (c) depreciation and amortization. The Company's calculation of EBITDA is after minority interest expense. Minority interest expense represents the interests of third parties, such as physicians, hospitals and other health care providers, that own interests in surgery centers that the Company consolidates for financial reporting purposes. The Company's operating strategy involves sharing ownership of its surgery centers with physicians, physician groups and hospitals, and these third parties own an interest in all but one of the Company's centers. The Company believes that it is helpful to investors to present EBITDA as defined above because it excludes the portion of net income attributable to these third-party interests. The Company uses EBITDA as a measure of liquidity. The Company has included it because the Company believes that it provides investors with additional information about the Company's ability to incur and service debt and make capital expenditures. The Company also uses EBITDA, with some variation in the calculation, to determine compliance with some of the covenants under the Company's senior credit facility, as well as to determine the interest rate and commitment fee payable under the senior credit facility. EBITDA is not a measurement of financial performance or liquidity under generally accepted accounting principles. It should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles. The items excluded from EBITDA are significant components in understanding and evaluating financial performance and liquidity. The Company's calculation of EBITDA is not comparable to the EBITDA measure the Company has used in certain prior periods but is consistent with the measure EBITDA less minority interests previously reported. The Company's calculation of EBITDA may not be comparable to similarly titled measures reported by other companies. The following table reconciles EBITDA to net cash provided by operating activities: Three Months Ended Six Months Ended (in thousands) June 30, June 30, ------------------ ------------------ 2006 2005 2006 2005 -------- -------- -------- -------- EBITDA $14,340 $11,928 $27,024 $23,240 Depreciation and amortization (2,921) (3,114) (6,666) (6,260) Interest expense, net (1,822) (880) (3,319) (1,914) Income taxes (3,695) (3,054) (6,560) (5,800) -------- -------- -------- -------- Net income 5,902 4,880 10,479 9,266 Depreciation and amortization 2,921 3,114 6,666 6,260 Non-cash compensation expense 1,082 -- 2,174 -- Non-cash gains and losses (509) (37) (1,085) (171) Minority interests in income of consolidated subsidiaries 7,551 5,863 15,226 11,832 Income taxes 3,695 3,054 6,560 5,800 Distributions to minority partners (6,718) (5,223) (12,790) (9,956) Income on equity investments (728) (325) (973) (609) Provision for doubtful accounts 825 1,068 1,468 1,782 Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: Accounts receivable (1,956) (1,720) (2,617) (2,135) Other assets and liabilities (2,523) (1,750) (8,832) (6,437) -------- -------- -------- -------- Net cash provided by operating activities $9,542 $8,924 $16,276 $15,632 ======== ======== ======== ======== CONTACT: Symbion, Inc. Kenneth C. Mitchell, 615-234-5904