Summary:
AmSurg's third-quarter 2014 adjusted EPS of $0.66 increased 24.5% year over year sailing past the Zacks Consensus Estimate of $0.54. It has also exceeded the company's guidance range. Revenues increased a massive 91.3% but failed to meet the estimate. Apart from strong performance of Sheridan, improved average revenues per procedure and increase in same-center revenues were encouraging. The Sheridan acquisition has paved AmSurg's way into the huge and fast-growing fragmented physician outsourcing market. Nonetheless, headwinds like reduction in workers' compensation reimbursement, sequestration and increased interest expense are intimidating. We are thus Neutral on AmSurg.
Overview:
Headquartered in Nashville, TN, AmSurg Corporation (AMSG) is a leading operator of single-specialty practice-based ambulatory surgery centers (ASCs). The company develops, acquires, and operates practice-based ASCs in partnership with physician practice groups throughout the U.S.
At the end of Mar 2014, AmSurg operated 242 ASCs located in 35 states and the District of Columbia. Among these ASCs, the company owned majority interest in 235 centers and owned a minority interest in seven (three of which are consolidated).
At the end of Mar 2014, 151 centers performed gastrointestinal endoscopy procedures, 48 performed procedures in multiple specialties, 36 performed ophthalmology procedures and seven centers performed orthopedic procedures.
Sources of Revenues
Revenues are derived entirely from facility fee charges, which are largely funded by third-party reimbursement programs such as government and private insurance. The fee varies depending on the procedure but usually includes all charges for operating room usage, special equipment usage, supplies, recovery room usage, nursing staff and medication and in some cases, billing for anesthesia services. However, it does not include consultation charges of the surgeon, anesthesiologist or other attending physicians for patients as these are billed directly by the physicians themselves. In 2013, AmSurg derived approximately 25% of revenues from governmental healthcare programs, primarily Medicare and Medicare managed programs, and the remainder from a wide mix of commercial payors and patient co-pays and deductibles.
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