AmSurg Corp.’s (AMSG) first-quarter 2013 adjusted earnings per share ("EPS") of 52 cents were 2 cents ahead of the year-ago quarter EPS and in line with the Zacks Consensus Estimate. The adjusted EPS also met the high end of the company provided guidance range. However, considering one-time pre-tax gain related to the deconsolidation of a surgery center, reported EPS stood at 56 cents.
Revenues during the quarter increased 14% year over year to $260.1 million, almost in line with the Zacks Consensus Estimate. In spite of a 2% decline in same-center revenues, the significant upside in sales was primarily attributable to the acquisition of 17 centers in 2012, including 14 centers in the fourth quarter and the opening of a de novo in 2012.
In the first quarter, AmSurg entered a joint venture with a hospital system and accordingly held controlling interest in one surgery center for the joint venture. As mentioned earlier, this resulted in a $2.2 million gain on the deconsolidation of this surgery center. AmSurg expects this alliance to create future growth opportunities in this market. However, the quarter’s disappointing same-center revenues were primarily the result of two less business days in this period, which had a negative impact of 300 basis points (bps).
Operating expenses increased 13.9% year over year to $172.5 million due to higher salaries and benefits (up 13.1% to $81.6 million), supply cost (up 17.3% to $37.6 million) and other operating expenses (up 13% to $53.3 million). Operating margin, as a result, contracted 21 bps to 33.7% during the quarter.
AmSurg exited the quarter with $42.4 million in cash and cash equivalents versus $46.4 million at the end of 2012, and had $208 million available under its revolving credit facility. For the first quarter, net cash flow from operating activities was $73.9 million compared with $69.1 million in the year-ago quarter.
Outlook
AmSurg reiterated its 2013 revenue guidance in the range of $1.06−$1.09 billion. The current Zacks Consensus Estimate of $1.07 billion remains within the range. However, the company reduced its fiscal 2013 EPS outlook. It now expects the fiscal earnings to remain within $2.13−$2.18 (earlier range being $2.18−$2.23). The current Zacks Consensus Estimate is $2.18.
Further, the company’s 2013 same-center revenue growth forecast was lowered to nil to 1% from the earlier expected nil to 2%. Net cash flow provided by operating activities, less distribution to non-controlling interests, is expected in a range of $140−$150 million in 2013 (unchanged).