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. -0- *T 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 ======== ======== ======== ======== *T
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