EX-99 3 g87466exv99.txt EX-99 PRESS RELEASE 02/26/04 EXHIBIT 99 [SYMBION LOGO] CONTACT: Kenneth C. Mitchell Senior Vice President and Chief Financial Officer 615-234-5900 SYMBION, INC. ANNOUNCES FOURTH QUARTER AND YEAR-END RESULTS NASHVILLE, TENNESSEE (FEBRUARY 26, 2004) -- Symbion, Inc. (NASDAQ/NM:SMBI), an owner and operator of surgery centers, announced today results for the fourth quarter and year ended December 31, 2003. For the fourth quarter ended December 31, 2003, revenues increased 13% to $47.5 million compared with $41.9 million for the fourth quarter ended December 31, 2002. Net income for the fourth quarter of 2003 increased 80% to $7.2 million compared with $4.0 million for the fourth quarter of 2002. Earnings per diluted share increased 78% to $0.57 for the fourth quarter ended December 31, 2003, compared with $0.32 for the fourth quarter ended December 31, 2002. EBITDA less minority interests increased 11% to $8.2 million for the fourth quarter ended December 31, 2003, compared with $7.4 million for the fourth quarter ended December 31, 2002. Same store net patient service revenue for the fourth quarter ended December 31, 2003, increased 7% compared with the same period in 2002. Results for the fourth quarter of 2003 included a benefit for income taxes of approximately $3.1 million, which primarily related to the recognition of a deferred tax asset of approximately $3.1 million. The fourth quarter of 2003 results also included the impact of higher interest expense incurred in connection with the refinancing of outstanding indebtedness, which was completed in the third quarter of 2003. The Company intends to pay off the higher cost indebtedness in March 2004 with proceeds from the initial public offering completed on February 11, 2004. Upon payment of this and other indebtedness with the proceeds of the offering, the Company's outstanding indebtedness will be approximately $20.0 million and its ratio of debt to total capitalization will be 8%. For the year ended December 31, 2003, revenues increased 22% to $176.3 million compared with $144.7 million for the year ended December 31, 2002. Net income for the year ended December 31, 2003, increased 42% to $17.5 million compared with $12.3 million for the year ended December 31, 2002. Earnings per diluted share increased 37% to $1.38 for the year ended December 31, 2003, compared with $1.01 for the year ended December 31, 2002. EBITDA less minority interests increased 22% to $30.4 million for the year ended December 31, 2003, from $25.0 million for the year ended December 31, 2002. Same store net patient service revenue for 2003 increased 8% compared with 2002. Results for 2003 included a benefit for income taxes of approximately $2.2 million, which primarily related to the recognition of a deferred tax asset of approximately $3.1 million. The 2003 results also included the impact of higher interest expense and prepayment penalties incurred in connection with the refinancing of outstanding indebtedness, which was completed in the third quarter of 2003. The Company intends to pay off the higher cost indebtedness with the proceeds from the initial public offering. -MORE SMBI Announces Fourth Quarter and Year-End Results Page 2 February 26, 2004 Symbion's initial public offering of 8,280,000 shares of its common stock at a price of $15.00 per share included 1,080,000 shares sold following exercise in full by the underwriters of an option granted to them by the Company to purchase the additional shares to cover over-allotments. The Company received net proceeds of $115.5 million in the offering, after deducting underwriting discounts and commissions. The Company is using the net proceeds to repay indebtedness and to pay holders of the Company's Series A and Series B convertible preferred stock in connection with the conversion of those shares to common stock upon the completion of the offering. Commenting on the fourth quarter and year-end results, Richard E. Francis, Jr., chairman and chief executive officer of Symbion, said, "We are pleased with the response to our initial public offering and with our performance for the year ended December 31, 2003. Our financial results in 2003 were driven by the addition of ten centers - five de novos and five acquisitions - during the year, organic growth at existing centers and fiscal discipline. In addition, we have assembled a strong management team to manage our growth and deliver results. In our view, this business strategy, coupled with the strength of our balance sheet as a result of our initial public offering, bodes well for continued success in 2004." The live broadcast of Symbion's conference call will begin at 11:00 a.m. Eastern Time on February 27, 2004. 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.fulldisclosure.com. Symbion, Inc., headquartered in Nashville, Tennessee, owns and operates a network of surgery centers in nineteen states. The Company's surgery centers 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 they believe 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 maintain good relationships with the physicians who use its facilities; (vi) risks related to the recently adopted Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which could restrict the Company's ability to operate its facilities licensed as hospitals and could adversely impact its reimbursement revenues; (vii) the risk of changes to laws governing the corporate practice of medicine that may require the Company to restructure some of its relationships, which could result in a significant loss of revenues and divert other resources; (viii) the Company's ability to incur significant indebtedness; (ix) 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; (x) the Company's dependence on its senior management; and (xi) other risks and uncertainties detailed from time to time in the Company's recent 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. -MORE SMBI Announces Fourth Quarter and Year-End Results Page 3 February 26, 2004 SYMBION, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ---------------------------- --------------------------- 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Revenues $ 47,472 $ 41,912 $ 176,269 $ 144,688 Operating expenses: Salaries and benefits 12,307 10,955 46,275 37,541 Supplies 9,953 7,999 35,099 28,338 Professional and medical fees 2,849 2,146 9,889 7,356 Rent and lease expense 2,879 2,454 10,891 9,146 Other operating expenses 3,915 2,819 15,151 11,311 ------------ ------------ ------------ ------------ Cost of revenues 31,903 26,373 117,305 93,692 General and administrative expense 4,067 3,902 15,874 14,328 Depreciation and amortization 2,441 2,181 9,295 7,836 Provision for doubtful accounts 922 1,770 2,748 4,843 Loss (income) on equity investments (226) 14 (402) (541) Impairment and loss on disposal of long-lived assets 275 -- 437 492 Gain on sale of long-lived assets (409) -- (571) (457) ------------ ------------ ------------ ------------ Total operating expenses 38,973 34,240 144,686 120,193 ------------ ------------ ------------ ------------ Operating income 8,499 7,672 31,583 24,495 Minority interests in income of consolidated subsidiaries (2,698) (2,488) (10,447) (7,353) Interest expense, net (1,724) (1,084) (5,782) (4,625) ------------ ------------ ------------ ------------ Income before income taxes 4,077 4,100 15,354 12,517 Provision (benefit) for income taxes (3,129) 53 (2,170) 215 ------------ ------------ ------------ ------------ Net income $ 7,206 $ 4,047 $ 17,524 $ 12,302 ============ ============ ============ ============ Net income per share: Basic $ 0.68 $ 0.39 $ 1.66 $ 1.19 ============ ============ ============ ============ Diluted $ 0.57 $ 0.32 $ 1.38 $ 1.01 ============ ============ ============ ============ Weighted average number of common shares outstanding and common equivalent shares: Basic: 10,550,788 10,508,030 10,536,745 10,349,569 Diluted: 12,641,192 12,716,358 12,658,620 12,144,140

-MORE SMBI Announces Fourth Quarter and Year-End Results Page 4 February 26, 2004 SYMBION, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)

DEC. 31, DEC. 31, 2003 2002 -------- -------- ASSETS Current assets: Cash and cash equivalents $ 17,658 $ 20,648 Restricted cash -- 1,000 Accounts receivable, less allowance for doubtful accounts 21,991 18,732 Inventories 5,371 4,350 Prepaid expenses and other current assets 4,062 5,163 -------- -------- Total current assets 49,082 49,893 Property and equipment, net of accumulated depreciation 62,714 51,069 Goodwill 116,654 77,942 Other intangible assets, net 1,022 1,093 Investments in and advances to affiliates 13,778 5,490 Other assets 9,534 3,401 -------- -------- Total assets $252,784 $188,888 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,800 $ 3,996 Accrued payroll and benefits 6,533 4,741 Other accrued expenses 9,139 7,699 Current maturities of long-term debt 3,631 8,618 -------- -------- Total current liabilities 23,103 25,054 Long-term debt, less current maturities 101,037 57,738 Other liabilities 4,609 1,154 Convertible debentures 3,071 3,171 Minority interests 16,949 15,094 Total stockholders' equity 104,015 86,677 -------- -------- Total liabilities and stockholders' equity $252,784 $188,888 ======== ========

-MORE SMBI Announces Fourth Quarter and Year-End Results Page 5 February 26, 2004 SYMBION, INC. SUPPLEMENTAL OPERATING DATA

THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------------ ------------------------ 2003 2002 2003 2002 --------- --------- --------- --------- SAME STORE STATISTICS: Cases 35,400 33,114 132,950 126,777 Cases percentage growth 6.9% N/A 4.9% N/A Net patient service revenue per case $ 1,190 $ 1,185 $ 1,160 $ 1,129 Net patient service revenue per case percentage growth 0.4% N/A 2.7% N/A Number of same store surgery centers 27 N/A 25 N/A CASH FLOW INFORMATION (IN THOUSANDS): Net cash provided by operating activities $ 5,677 $ 3,793 $ 27,181 $ 21,770 Net cash used in investing activities (50,005) (7,741) (73,348) (21,592) Net cash provided by financing activities 45,353 369 43,177 5,235 REVENUES (IN THOUSANDS): Net patient service revenues $ 42,828 $ 37,557 $ 158,121 $ 130,942 Physician service revenues 1,031 889 3,796 2,563 Other service revenues 3,613 3,466 14,352 11,183 --------- --------- --------- --------- Total revenues $ 47,472 $ 41,912 $ 176,269 $ 144,688 ========= ========= ========= ========= EBITDA less minority interests (1) 8,242 7,365 30,431 24,978 Number of surgery centers operated as of end of period (2) 44 34 Number of states in which the Company operates surgery centers 19 15

(1) When the term "EBITDA" is used, it refers to operating income (loss) plus depreciation and amortization. "EBITDA less minority interests" represents the Company's portion of EBITDA, after subtracting the interests of third parties that own interests in surgery centers that the Company consolidates for financial reporting purposes. Symbion'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 two of the Company's centers. The Company believes that it is preferable to present EBITDA less minority interests because it excludes the portion of EBITDA attributable to these third-party interests and clarifies for investors the Company's portion of EBITDA generated by its surgery centers and other operations. The Company uses EBITDA and EBITDA less minority interests as measures of liquidity. Symbion has included them because it believes that they provide 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 and EBITDA less minority interests are not measurements of financial performance or liquidity under generally accepted accounting principles. They 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 and EBITDA less minority interests are significant components in understanding and evaluating financial performance and liquidity. The Company's calculation of EBITDA and EBITDA less minority interests may not be comparable to similarly titled measures reported by other companies. -MORE SMBI Announces Fourth Quarter and Year-End Results Page 6 February 26, 2004 SYMBION, INC. SUPPLEMENTAL OPERATING DATA (CONTINUED) The following table reconciles EBITDA and EBITDA less minority interests to net cash provided by operating activities (in thousands):

THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, --------------------- --------------------- 2003 2002 2003 2002 -------- -------- -------- -------- EBITDA $ 10,940 $ 9,853 $ 40,878 $ 32,331 Minority interests in income of consolidated subsidiaries (2,698) (2,488) (10,447) (7,353) -------- -------- -------- -------- EBITDA less minority interests 8,242 7,365 30,431 24,978 Depreciation and amortization (2,441) (2,181) (9,295) (7,836) Interest expense, net (1,724) (1,084) (5,782) (4,625) Income taxes 3,129 (53) 2,170 (215) -------- -------- -------- -------- Net income 7,206 4,047 17,524 12,302 Depreciation and amortization 2,441 2,181 9,295 7,836 Impairment and loss on disposal of long-lived assets 275 -- 437 492 Gain on sale of long-lived assets (409) -- (571) (457) Minority interests in income of consolidated subsidiaries 2,698 2,488 10,447 7,353 Distributions to minority partners (3,091) (2,105) (10,690) (6,177) Loss (income) on equity investments (226) 14 (402) (541) Provision for doubtful accounts 922 1,770 2,748 4,843 Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: Accounts receivable (3,000) (2,621) (3,537) (5,694) Other assets (991) (990) (642) (3,080) Other liabilities (148) (991) 2,572 4,893 -------- -------- -------- -------- Net cash provided by operating activities $ 5,677 $ 3,793 $ 27,181 $ 21,770 ======== ======== ======== ========

(2) Includes surgery centers that Symbion manages but in which the Company does not have an ownership interest. -END-