EX-99 2 a4940604ex99.txt EXHIBIT 99 - PRESS RELEASE Exhibit 99 Symbion, Inc. Announces Second Quarter Results; Company to Add Five Centers in California and Raises Guidance NASHVILLE, Tenn.--(BUSINESS WIRE)--July 27, 2005--Symbion, Inc. (NASDAQ/NM:SMBI), an owner and operator of surgery centers, announced today results for the second quarter and six months ended June 30, 2005. For the second quarter ended June 30, 2005, revenues increased 23% to $64.7 million compared with $52.7 million for the second quarter ended June 30, 2004. Net income for the second quarter of 2005 increased 36% to $4.9 million compared with $3.6 million for the second quarter of 2004. Earnings per diluted share for the second quarter of 2005 increased 29% to $0.22 compared with $0.17 for the second quarter of 2004. EBITDA less minority interests increased 28% to $11.9 million for the second quarter of 2005 compared with $9.3 million for the second quarter of 2004. Same store net patient service revenue for the second quarter of 2005 increased 6% compared with the same period in 2004. At June 30, 2005, the Company's outstanding indebtedness was $67.7 million with a ratio of debt to total capitalization of 21%. For the six months ended June 30, 2005, revenues increased 21% to $126.8 million compared with $104.7 million for the first half of 2004. Net income for the first half of 2005 increased 50% to $9.3 million compared with $6.2 million for the first half of 2004. Earnings per diluted share for the six months ended June 30, 2005, increased 31% to $0.42 compared with $0.32 for the six months ended June 30, 2004. EBITDA less minority interests increased 23% to $23.2 million for the first half of 2005 compared with $18.8 million for the same period in 2004. Same store net patient service revenue for the first half of 2005 increased 7% compared with the same period in 2004. Commenting on the second quarter results, Richard E. Francis, Jr., chairman and chief executive officer of Symbion, said, "We are pleased with our strong financial results, which reflect outstanding performance from both the management of our existing business and the seamless integration of recent complementary development activity. We continue to have an active pipeline of opportunities to evaluate and ample funding to complete them. We view our progress in the first six months of 2005 as a strong indication of our ability to continue to generate outstanding results." The Company also announced the signing of a definitive agreement to acquire an interest in five surgery centers in Southern California. Symbion intends to use proceeds from the Company's amended credit facility to finance the acquisition. The transaction is expected to close within 30 days. Terms of the transaction were not announced. In the transaction, Symbion would acquire majority interests in three surgery centers: -- Specialty Surgical Center of Beverly Hills/Brighton Way, a three operating room, one minor procedure room, multi-specialty center located in Beverly Hills; -- Specialty Surgical Center of Beverly Hills/Wilshire Boulevard, a four operating room, two minor procedure room, multi-specialty center located in Beverly Hills; and -- Specialty Surgical Center of Encino, a four operating room, two minor procedure room, multi-specialty center located in Encino. Symbion would also acquire minority interests in two recently opened de novo surgery centers: -- Specialty Surgical Center of Irvine, a five operating room, one minor procedure room, multi-specialty center located in Irvine, which opened in July 2004; and -- Specialty Surgical Center of Arcadia, a three operating room, one minor procedure room, multi-specialty center located in Arcadia, which opened in October 2004. Lastly, as part of this transaction, Symbion would also acquire a minority interest in a de novo surgery center currently under development: -- Specialty Surgical Center of Thousand Oaks is expected to be a four operating room, two minor procedure room, multi-specialty center to be located in Thousand Oaks. The center is scheduled to open in mid-2006. Symbion has the right to increase its ownership in the centers in Irvine and Arcadia to a majority interest after the second anniversary of the closing of the transaction. Symbion has the right to increase its ownership in the de novo center under development in Thousand Oaks to a majority interest after the center has been operating for two years. In commenting on the acquisitions, Mr. Francis said, "This is an important transaction for our company, both in terms of the scope of the acquisition and future development aspects. The transaction represents a meaningful opportunity as we enter the California market, one we view as having considerable growth potential. We are very pleased with this transaction because of the quality of the facilities and, more importantly, the outstanding clinical reputations of the physicians and management professionals involved. We look forward to a very productive relationship." The Company also announced that it had sold its 51% ownership interest in an Erie, Pennsylvania, imaging center to Touchstone Medical Imaging, LLC, the minority partner and manager of the facility. In addition, the Company announced that it is raising its previously announced 2005 guidance of $245 million to $249 million in revenues and $0.78 to $0.80 in diluted earnings per share to a range of $260 million to $266 million in revenues and $0.84 to $0.86 in diluted earnings per share. This guidance assumes the completion of the Specialty Surgical Center ("SSC") acquisition in August 2005. This guidance does not include any impact from additional future acquisitions. The live broadcast of Symbion's second quarter conference call will begin at 10:00 a.m. Eastern Time on July 28, 2005. 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 surgery centers in 21 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 successfully complete the acquisition of the SSC centers within the expected timeframe and to acquire and develop additional surgery centers on favorable terms; (iii) numerous business risks in acquiring and developing the SSC centers and other 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 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; (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 those 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, ------------------ ------------------ 2005 2004 2005 2004 -------- -------- -------- -------- Revenues $64,653 $52,727 $126,832 $104,674 Operating expenses: Salaries and benefits 15,851 13,738 31,859 27,319 Supplies 11,802 10,563 23,255 20,846 Professional and medical fees 3,487 2,708 6,806 5,306 Rent and lease expense 4,077 3,282 7,907 6,439 Other operating expenses 5,035 4,556 9,623 8,926 -------- -------- -------- -------- Cost of revenues 40,252 34,847 79,450 68,836 General and administrative expense 5,904 4,633 11,308 9,177 Depreciation and amortization 3,114 2,746 6,260 5,458 Provision for doubtful accounts 1,068 832 1,782 1,529 Income on equity investments (325) (366) (609) (487) Impairment and loss on disposal of long-lived assets 745 -- 856 16 Gain on sale of long-lived assets (782) (77) (1,027) (157) -------- -------- -------- -------- Total operating expenses 49,976 42,615 98,020 84,372 -------- -------- -------- -------- Operating income 14,677 10,112 28,812 20,302 Minority interests in income of consolidated subsidiaries (5,863) (3,538) (11,832) (6,958) Interest expense, net (880) (696) (1,914) (3,273) -------- -------- -------- -------- Income before income taxes 7,934 5,878 15,066 10,071 Provision for income taxes 3,054 2,263 5,800 3,877 -------- -------- -------- -------- Net income $4,880 $3,615 $9,266 $6,194 ======== ======== ======== ======== Net income per share: Basic $0.23 $0.17 $0.44 $0.34 ======== ======== ======== ======== Diluted $0.22 $0.17 $0.42 $0.32 ======== ======== ======== ======== Weighted average number of common shares outstanding and common equivalent shares: Basic 21,269 20,822 21,195 18,479 Diluted 22,000 21,401 21,871 19,397 SYMBION, INC. Condensed Consolidated Balance Sheets (dollars in thousands) June 30, Dec. 31, 2005 2004 -------- -------- (Unaudited) (Audited) ASSETS Current assets: Cash and cash equivalents $25,011 $23,276 Accounts receivable, less allowance for doubtful accounts 27,966 28,893 Inventories 6,391 6,068 Prepaid expenses and other current assets 6,550 7,246 -------- -------- Total current assets 65,918 65,483 Property and equipment, net of accumulated depreciation 66,359 67,793 Goodwill 222,180 215,533 Other intangible assets, net 800 950 Investments in and advances to affiliates 13,499 12,927 Other assets 3,699 3,075 -------- -------- Total assets $372,455 $365,761 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $3,987 $5,237 Accrued payroll and benefits 7,342 7,985 Other accrued expenses 8,199 9,186 Current maturities of long-term debt 1,330 1,620 -------- -------- Total current liabilities 20,858 24,028 Long-term debt, less current maturities 66,387 69,747 Other liabilities 12,120 10,350 Minority interests 25,220 23,638 Total stockholders' equity 247,870 237,998 -------- -------- Total liabilities and stockholders' equity $372,455 $365,761 ======== ======== 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, ------------------ ------------------ 2005 2004 2005 2004 -------- -------- -------- -------- Same store statistics (1): Cases 51,652 48,363 101,486 95,519 Cases percentage growth 6.8% N/A 6.2% N/A Net patient service revenue per case $1,114 $1,125 $1,124 $1,121 Net patient service revenue per case percentage growth (1.0)% N/A 0.3% N/A Number of same store surgery centers 37 N/A 37 N/A Consolidated Statistics: Cases 52,413 43,291 102,826 86,171 Cases percentage growth 21.1% N/A 19.3% N/A Net patient service revenue per case $1,176 $1,138 $1,174 $1,134 Net patient service revenue per case percentage growth 3.3% N/A 3.5% N/A Number of surgery centers operated as of end of period (2) 56 45 56 45 Number of states in which the Company operates surgery centers 21 20 21 20 Revenues: Net patient service revenues $61,609 $49,276 $120,666 $97,741 Physician service revenues 1,100 1,000 2,144 2,004 Other service revenues 1,944 2,451 4,022 4,929 -------- -------- -------- -------- Total revenues $64,653 $52,727 $126,832 $104,674 ======== ======== ======== ======== Cash flow information: Net cash provided by operating activities $8,924 $9,065 $15,632 $12,207 Net cash used in investing activities (4,273) (8,685) (12,712) (42,092) Net cash provided by (used in) financing activities (3,319) 208 (1,185) 33,064 Other information: EBITDA less minority interests (3) $11,928 $9,320 $23,240 $18,802 ------------ (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 both of the respective periods shown. Same store facilities include centers that the Company does not consolidate for financial reporting purposes. (2) The data for 2005 and 2004 includes nine and eight, respectively, surgery centers that the Company managed but in which it did not have an ownership interest. (3) When the term "EBITDA" is used, it refers to operating income 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. 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 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. The Company 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. The following table reconciles EBITDA and EBITDA less minority interests to net cash provided by operating activities: Three Months Ended Six Months Ended (in thousands) June 30, June 30, ------------------ ------------------ 2005 2004 2005 2004 -------- -------- -------- -------- EBITDA $17,791 $12,858 $35,072 $25,760 Minority interests in income of consolidated subsidiaries (5,863) (3,538) (11,832) (6,958) -------- -------- -------- -------- EBITDA less minority interests 11,928 9,320 23,240 18,802 Depreciation and amortization (3,114) (2,746) (6,260) (5,458) Interest expense, net (880) (696) (1,914) (3,273) Income taxes (3,054) (2,263) (5,800) (3,877) -------- -------- -------- -------- Net income 4,880 3,615 9,266 6,194 Depreciation and amortization 3,114 2,746 6,260 5,458 Impairment and loss on disposal of long-lived assets 745 -- 856 16 Gain on sale of long-lived assets (782) (77) (1,027) (157) Minority interests in income of consolidated subsidiaries 5,863 3,538 11,832 6,958 Income taxes 3,054 2,263 5,800 3,877 Distributions to minority partners (5,223) (3,905) (9,956) (6,909) Income on equity investments (325) (366) (609) (487) Provision for doubtful accounts 1,068 832 1,782 1,529 Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: Accounts receivable (1,720) (771) (2,135) (1,102) Other assets and liabilities (1,750) 1,190 (6,437) (3,170) -------- -------- -------- -------- Net cash provided by operating activities $8,924 $9,065 $15,632 $12,207 ======== ======== ======== ======== CONTACT: Symbion, Inc., Nashville Kenneth C. Mitchell, 615-234-5904 www.symbion.com