Announces Review of Strategic
Alternatives
Financial Outlook Updated Based on Modified
Healthcare Utilization Expectations
Envision Healthcare Corporation (“Envision”) (NYSE: EVHC) today
reported financial results for the three and nine months ended
September 30, 2017. Envision’s operations were disrupted by
Hurricanes Harvey and Irma during the third quarter of 2017, and
the Company estimates that its results from continuing operations
include a negative impact of $22.0 million of revenue and $22.0
million of Adjusted EBITDA.
Highlights for the third quarter of 2017 include:
- Net revenue from continuing operations
of $1.99 billion;
- Net earnings from continuing operations
attributable to common stockholders of $40.7 million or $0.33 per
diluted share;
- Adjusted net earnings from continuing
operations of $89.4 million or $0.73 per diluted share;
- Adjusted EBITDA from continuing
operations of $233.5 million; and
- Net cash flow from operations, less
distributions to non-controlling interests and excluding
transaction costs, of $152.3 million.
A reconciliation of all non-GAAP financial results to the
comparable GAAP measure is provided on page 7 of this press
release.
“During the third quarter of 2017, our organization responded to
a number of challenges, ranging from hurricanes that impacted two
of our key markets to continued deceleration of health sector
utilization following two years of heightened demand driven by
coverage expansion,” said Christopher A. Holden, President and
Chief Executive Officer of Envision. “We are addressing these
challenges. I’m proud of all of our clinical professionals and
particularly those who were on the front line of providing care
before, during and after the hurricanes, including our AMR
emergency medical services. During the quarter, we made excellent
progress on the conversion of our out-of-network services to
participating, or in-network status, and we are advancing an
organizational structure that will allow us to more effectively
execute on the physician-centric strategy that we presented earlier
this year.
“Looking forward we are operating our business based on more
recent utilization trends, and our guidance for the fourth quarter
of 2017 reduces the assumptions for utilization of our services.
Our organization has effectively managed through cycles, and we
feel confident that our leading and diverse position as
facility-based providers will continue to drive long-term growth
and create value for health systems, providers, payors, patients
and, ultimately, for our shareholders.”
Review of Strategic Alternatives
The Company also announced that its Board of Directors, in
consultation with management and financial and legal advisors, has
unanimously decided to initiate a full review of a broad range of
alternatives to enhance shareholder value. The Board plans to
proceed in a timely manner, but has not set a timetable for
completion of its review. There can be no assurance that this
review will result in a transaction or other alternative of any
kind. The Company does not intend to provide updates on its review
until it deems further disclosure is appropriate or required.
“After careful consideration, our Board has determined to
undertake a review of strategic, financial and operational
alternatives with the goal of enhancing shareholder value,” said
William Sanger, Chairman of the Envision Board of Directors. “While
we have made considerable progress in building the new Envision
around a set of highly-differentiated physician-centric clinical
solutions, the Board believes that a review at this time – with all
options on the table, including continuing to execute on our
strategic plan – is in the best interests of Envision shareholders.
As the Board conducts its review of potential value-creating
alternatives, we remain focused on aggressively executing our
strategic plan to deliver value to Envision shareholders.”
Reporting Segments
Envision reports two operating segments as continuing
operations: Physician Services, which includes facility-based and
post-acute services; and Ambulatory Services. On August 7, 2017,
Envision entered into a definitive agreement to divest American
Medical Response, Envision’s Medical Transportation business, which
had been moved to discontinued operations in the first quarter of
the year. As required by accounting guidelines, Envision
re-allocated certain corporate expenses associated with its shared
services model to continuing operations. This re-allocation impacts
segment Adjusted EBITDA by $9.3 million for the three months ended
September 30, 2017. The re-allocation results in a reduction of
Adjusted EBITDA in the third quarter of $7.2 million for Physician
Services and $2.1 million for Ambulatory Services, with a
corresponding Adjusted EBITDA increase of $9.3 million for
discontinued operations. Upon completion of the pending divestiture
of the Medical Transportation business, a portion of these shared
services are likely to remain with that business.
Physician Services
In order to enhance the comparability of results following the
merger of AMSURG Corp. (“AMSURG”) and Envision Healthcare Holdings,
Inc. (“EHH”), which was completed on December 1, 2016, the
following discussion presents Envision Physician Services’ results
for the prior-year period as if the two separate Physician
Services’ segments of AMSURG and EHH, based on historically
reported results, had been combined effective January 1, 2016.
Net revenues for Physician Services were $1.68 billion for the
third quarter of 2017, an increase of 7.6% from $1.56 billion
during the prior-year period. This includes an estimated impact of
$19.0 million due to storm-related disruption. Revenue growth was
driven by contributions from acquisitions of 9.6% and same
contracts contributed 0.4%. These were partially offset by net
contract terminations. New contracts contributed revenue growth of
6.7%, while revenue declined by 7.0% due to contracts terminated in
the latter part of 2016, resulting in a net decline of 0.3% from
new contracts. New contracts were also impacted by a 2.1% decline
due to the previously announced population health contract
termination.
Same-contract net revenue growth was 0.6% in the third quarter
of 2017 when compared to the prior-year period. Same-contract
revenue per patient encounter grew by 1.3% while same-contract
patient care volume declined by 0.7% compared to the prior-year
period. Envision estimates that the storms had the effect of
reducing same-contract revenue growth by approximately 1.1%.
For the third quarter of 2017, Physician Services Adjusted
EBITDA was $179.0 million, or $186.2 million when excluding the
corporate expense re-allocation of $7.2 million. This compares with
$206.4 million for the prior-year period. Adjusted EBITDA for
Physician Services was impacted by an estimated $20.0 million due
to storm-related disruptions. The Adjusted EBITDA impact of the
storms is higher than the $19.0 million revenue impact because of
premium labor costs paid to providers responding to patient care
needs during the storms.
Ambulatory Services
Net revenues for the third quarter of 2017 were $309.4 million,
which compares to $314.6 million for the prior-year period.
Envision estimates that storm-related disruption reduced Ambulatory
Services revenue by $3.0 million.
Day adjusted same-center revenue increased by 0.8% for the third
quarter of 2017 due entirely to an increase in net revenue per
procedure as same-center procedure volume was unchanged from the
prior-year period. Excluding the estimated impact of storm-related
disruptions, day-adjusted same-center revenue grew by 2.0%. ASCs
deconsolidated in the 12 months ended September 30, 2017,
contributed incremental revenues of $4.3 million for the third
quarter of 2016.
For the third quarter of 2017, Adjusted EBITDA was $54.5
million, or $56.6 million when excluding the corporate expense
re-allocation of $2.1 million. This compares with $61.1 million for
the prior-year period. Ambulatory Services’ Adjusted EBITDA was
reduced by an estimated $2.0 million due to storm-related
disruptions.
Ambulatory Services operated 263 ASCs and one surgical hospital
at September 30, 2017. Ambulatory Services acquired two centers and
disposed of two centers during the quarter.
Liquidity
Envision had cash and cash equivalents of $319.3 million at
September 30, 2017, which includes $41.2 million of cash
attributable to its Medical Transportation business. Availability
under its asset-based lending facility was $664.6 million as of
September 30, 2017. Through the first nine months of 2017, Envision
has invested $694.4 million in acquisitions.
Net cash flows from operations, less distributions to
noncontrolling interests and excluding transaction costs, were
$152.3 million for the third quarter of 2017. The Company’s ratio
of total net debt at September 30, 2017, to trailing 12 months
EBITDA as calculated under the Company’s credit agreement was 4.5
times. Interest expense reflects a re-allocation of $21.8 million
to discontinued operations for the three months ended
September 30, 2017.
Discontinued Operations
Envision’s Medical Transportation business is reported as a
component of discontinued operations following a decision made
earlier this year to market and divest American Medical Response.
On August 7, 2017, Envision signed a definitive agreement to
sell AMR in a cash transaction valued at $2.4 billion. The
transaction is subject to regulatory approval and customary closing
conditions, including clearance under the Hart-Scott-Rodino
Antitrust Improvements Act. Envision received a second request from
the Federal Trade Commission (“FTC”) asking for further information
related to the transaction, and the buyer is exploring potential
divestiture remedies to address certain concerns raised by the FTC.
Envision expects that the transaction will be completed during the
fourth quarter of 2017 or the first quarter of 2018.
Net revenues from discontinued operations were $692.2 million
for the third quarter of 2017, an increase of 18.6% compared to the
prior-year period, due largely to AMR’s contract with the Federal
Emergency Management Agency to coordinate emergency medical
services response in areas impacted by storms during the quarter.
Adjusted EBITDA was $84.6 million, or $75.3 million when excluding
the favorable impact of $9.3 million from the re-allocation of
corporate expenses.
Guidance
Envision is revising its guidance for the fourth quarter of 2017
to reflect changes to assumptions made in its previous forecast.
Specifically, Envision is estimating emergency medicine patient
volume will be lower than the run rate of the third quarter of
2017, and that the revenue per encounter for anesthesia services
will be at levels experienced during the third quarter of 2017.
Envision had previously anticipated an increase on emergency
medicine volume, relative to prior-year comparisons, as well as
anesthesia rate growth. In addition, due to the rate of new
contracts signed in 2017, Envision expects to incur
higher-than-anticipated startup costs. Finally, Envision is
adjusting its outlook for Evolution Health to a slight loss for the
2017 fourth quarter.
For the fourth quarter of 2017, Envision expects to generate
revenue of $1.88 billion to $2.02 billion, Adjusted EBITDA of $182
million to $202 million, and Adjusted EPS of $0.44 to $0.54.
Non-GAAP Adjusted EBITDA guidance for the full year and third
quarter of 2017 excludes interest expense, income taxes,
depreciation, amortization, share-based compensation, impairment
charges, debt extinguishment costs, transaction and integration
costs, changes in contingent purchase price consideration, gain or
loss on deconsolidations and discontinued operations, net of
non-controlling interests. Non-GAAP Adjusted EPS guidance for the
full year and fourth quarter of 2017 excludes acquisition-related
transaction and integration costs, acquisition-related amortization
expense, gains and losses on future deconsolidation transactions,
share-based compensation, impairment charges and debt
extinguishment costs, net of tax impact. Envision is not providing
a reconciliation of its Adjusted EBITDA and Adjusted EPS guidance
because the exact amount of individual adjustments for these items
are not currently determinable, including variability and timing
associated with acquisitions, disposals, deconsolidations and
impairment charges. These amounts may be significant and may vary
significantly from period to period (see page 7 for a
reconciliation of all historical GAAP and non-GAAP financial
results).
Conference Call Information
Envision will host a conference call at 8:30 a.m. Eastern Time
Wednesday, November 1, 2017, to discuss its financial results. The
live broadcast of Envision’s quarterly conference call will be
available on-line by going to www.evhc.net and clicking on the link
to Investors. The on-line replay will follow shortly after the call
and continue for 30 days.
About Envision Healthcare Corporation
Envision Healthcare Corporation is a leading provider of
physician-led services and post-acute care, and ambulatory surgery
services. At September 2017, we delivered physician services,
primarily in the areas of emergency department and hospitalist
services, anesthesiology services, radiology/tele-radiology
services, and children’s services to more than 1,800 clinical
departments in healthcare facilities in 46 states and the District
of Columbia. Post-acute care is delivered through an array of
clinical professionals and integrated technologies which, when
combined, contribute to efficient and effective population health
management strategies. As a market leader in ambulatory surgical
care, the Company owns and operates 263 surgery centers and one
surgical hospital in 35 states and the District of Columbia, with
medical specialties ranging from gastroenterology to ophthalmology
and orthopaedics. In total, the Company offers a differentiated
suite of clinical solutions on a national scale, creating value for
health systems, payors, providers and patients. For additional
information, visit www.evhc.net.
Forward-Looking Statements
Certain statements and information in this communication may be
deemed to be “forward-looking statements” within the meaning of the
Federal Private Securities Litigation Reform Act of 1995.
Forward-looking statements may include, but are not limited to,
statements relating to the Company’s financial and operating
objectives, plans and strategies, and all statements (other than
statements of historical facts) that address activities, events or
developments that the Company intends, expects, projects, believes
or anticipates will or may occur in the future. These statements
are often characterized by terminology such as “believe,” “hope,”
“may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,”
“estimate,” “project,” “positioned,” “strategy” and similar
expressions, and are based on assumptions and assessments made by
the Company’s management in light of their experience and their
perception of historical trends, current conditions, expected
future developments, and other factors they believe to be
appropriate. Any forward-looking statements in this communication
are made as of the date hereof, and the Company undertakes no duty
to update or revise any such statements, whether as a result of new
information, future events or otherwise. Forward-looking statements
are not guarantees of future performance. Whether actual results
will conform to expectations and predictions is subject to known
and unknown risks and uncertainties, including: (i) risks and
uncertainties discussed in the reports and other documents that the
Company files with the Securities and Exchange Commission; (ii)
general economic, market, or business conditions; (iii) the impact
of legislative or regulatory changes, such as changes to the
Patient Protection and Affordable Care Act, as amended by the
Health Care and Education Reconciliation Act of 2010; (iv) changes
in governmental reimbursement programs; (v) decreases in revenue
and profit margin under fee-for-service contracts due to changes in
volume, payor mix and reimbursement rates; (vi) the loss of
existing contracts; (vii) risks associated with the ability to
successfully integrate the Company’s operations and employees
following the merger; (viii) the ability to realize anticipated
benefits and synergies of the business combination; (ix) the
potential impact of the consummation of the transaction on the
Company’s relationships, including with employees, customers and
competitors; and (x) other circumstances beyond the Company’s
control.
Envision Healthcare
Corporation
Unaudited Selected Consolidated
Financial and Operating Data
(In millions, except earnings per
share)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Statement of
Operations Data:
2017 2016 2017
2016 Revenues $ 3,069.0 $ 968.8 $ 8,945.4 $ 2,646.9
Provision for uncollectibles (1,078.3 ) (146.6 ) (3,129.1 ) (341.5
) Net revenue 1,990.7 822.2 5,816.3 2,305.4 Operating expenses:
Salaries and benefits 1,424.9 463.9 4,136.6 1,281.5 Supply cost
53.3 47.9 164.3 144.6 Insurance expense 45.2 19.2 136.6 56.0 Other
operating expenses 198.3 93.1 571.6 271.5 Transaction and
integration costs 18.8 16.9 67.7 23.4 Impairment charges — — 0.3 —
Depreciation and amortization 73.0 31.6 215.9
90.7 Total operating expenses 1,813.5 672.6 5,293.0 1,867.7
Net gain (loss) on disposals and deconsolidations (3.3 ) 4.1 (8.8 )
6.7 Equity in earnings of unconsolidated affiliates 5.0 4.4
15.6 18.4 Operating income 178.9 158.1 530.1
462.8 Interest expense, net 61.4 32.9 169.9 95.6 Other income, net
1.0 — 2.5 — Earnings from continuing
operations before income taxes 118.5 125.2 362.7 367.2 Income tax
expense 27.1 29.6 80.2 83.8 Net
earnings from continuing operations 91.4 95.6 282.5 283.4
Discontinued operations: Earnings from discontinued operations 9.6
— 26.3 — Income tax expense from discontinued operations (22.0 ) —
(513.0 ) — Net loss from discontinued operations
(12.4 ) — (486.7 ) — Net earnings (loss) 79.0 95.6
(204.2 ) 283.4 Less net earnings attributable to noncontrolling
interests 50.7 55.6 156.4 166.5 Net
earnings (loss) attributable to Envision Healthcare Corporation
stockholders 28.3 40.0 (360.6 ) 116.9 Preferred stock dividends —
(2.3 ) (4.5 ) (6.8 ) Net earnings (loss) attributable to
Envision Healthcare Corporation common stockholders $ 28.3 $
37.7 $ (365.1 ) $ 110.1 Amounts attributable
to Envision Healthcare Corporation common stockholders: Earnings
from continuing operations, net of income tax $ 40.7 $ 37.7 $ 121.6
$ 110.1 Loss from discontinued operations, net of income tax (12.4
) — (486.7 ) — Net earnings (loss) attributable to
Envision Healthcare Corporation common stockholders $ 28.3 $
37.7 $ (365.1 ) $ 110.1 Basic earnings (loss)
per share attributable to common stockholders: Net earnings from
continuing operations $ 0.34 $ 0.70 $ 1.03 $ 2.05 Net loss from
discontinued operations (0.10 ) — (4.13 ) — Net
earnings (loss) $ 0.24 $ 0.70 $ (3.10 ) $ 2.05
Diluted earnings (loss) per share attributable to common
stockholders: Net earnings from continuing operations $ 0.33 $ 0.69
$ 1.01 $ 2.03 Net loss from discontinued operations (0.10 ) —
(4.13 ) — Net earnings (loss) $ 0.23 $ 0.69
$ (3.10 ) $ 2.03 Weighted average number of shares
and share equivalents outstanding: Basic 119,949 53,757 117,788
53,720 Diluted 122,700 54,258 120,558 54,152
Envision Healthcare Corporation
Unaudited Selected Consolidated
Financial and Operating Data, continued
(In millions, except earnings per
share)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017 2016 2017
2016 Reconciliation of net earnings (loss) to adjusted
net earnings: Net earnings (loss) attributable to Envision
stockholders $ 28.3 $ 40.0 $ (360.6 ) $ 116.9 Loss from
discontinued operations, net of tax 12.4 — 486.7 — Amortization of
purchased intangibles 49.8 19.1 145.0 55.0 Share-based compensation
9.2 6.1 34.5 21.2 Transaction and integration costs 18.8 16.9 67.7
23.4
Net loss (gain) on disposals and
deconsolidations, net of noncontrolling interests
3.0 (4.1 ) 2.7 (6.7 ) Impairment charges — — 0.3 — Net change in
fair value of contingent consideration 0.3 — 0.3 (2.6
) Total pre-tax adjustments 93.5 38.0 737.2 90.3 Tax effect 32.4
13.0 103.1 32.5 Total adjustments, net 61.1
25.0 634.1 57.8
Adjusted net earnings $
89.4 $ 65.0 $ 273.5 $ 174.7 Basic
shares outstanding 119,949 53,757 117,788 53,720 Effect of dilutive
securities, options and non-vested shares 2,751 3,630 4,866
3,561 Diluted shares outstanding, if converted
122,700 57,387 122,654 57,281
Adjusted net earnings per share $ 0.73 $ 1.13 $ 2.23
$ 3.05
Reconciliation of net earnings to
Adjusted EBITDA: Net earnings (loss) attributable to Envision
stockholders $ 28.3 $ 40.0 $ (360.6 ) $ 116.9 Loss from
discontinued operations, net of tax 12.4 — 486.7 — Interest
expense, net 61.4 32.9 169.9 95.6 Income tax expense 27.1 29.6 80.2
83.8 Depreciation and amortization 73.0 31.6 215.9
90.7
EBITDA 202.2 134.1 592.1 387.0 Adjustments:
Transaction and integration costs 18.8 16.9 67.7 23.4 Share-based
compensation 9.2 6.1 34.5 21.2 Impairment charges — — 0.3 —
Net loss (gain) on disposals and
deconsolidations, net of noncontrolling interests
3.0 (4.1 ) 2.7 (6.7 ) Net change in fair value of contingent
consideration 0.3 — 0.3 (2.6 ) Total adjustments 31.3
18.9 105.5 35.3
Adjusted EBITDA $ 233.5
$ 153.0 $ 697.6 $ 422.3
See definitions of non-GAAP measures on
page 13
Envision Healthcare
Corporation
Unaudited Selected Consolidated
Financial and Operating Data, continued
(In millions)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017 2016 2017 2016
Net Revenue by Segment: Physician Services (1) $ 1,681.3 $
507.6 $ 4,872.5 $ 1,363.9 Ambulatory Services 309.4 314.6
943.8 941.5
Total net revenue - continuing
operations 1,990.7 822.2 5,816.3 2,305.4 Medical Transportation
Services (2) 692.2 — 1,874.5 —
Net
revenue including discontinued operations $ 2,682.9 $
822.2 $ 7,690.8 $ 2,305.4
Adjusted
EBITDA by Segment: Physician Services (1) $ 179.0 $ 91.9 $
522.4 $ 245.9 Ambulatory Services 54.5 61.1 175.2
176.4
Adjusted EBITDA - continuing operations
233.5 153.0 697.6 422.3 Medical Transportation Services (2) 84.6
— 225.1 —
Adjusted EBITDA including
discontinued operations $ 318.1 $ 153.0 $ 922.7
$ 422.3
Adjusted EBITDA Margin by
Segment: Physician Services (1) 10.6 % 18.1 % 10.7 % 18.0 %
Ambulatory Services 17.6 19.4 18.6 18.7
Total - continuing operations 11.7 18.6 12.0 18.3 Medical
Transportation Services (1)(2) 12.2 — 12.0 —
Total including discontinued operations 11.9 % 18.6 %
12.0 % 18.3 %
Physician
Services
Ambulatory
Services
Medical
Transportation
(Discontinued
Operations)
Total Three months ended September 30, 2017 Segment
results after impact of discontinued operations $ 179.0 $ 54.5 $
84.6 $ 318.1 Corporate overhead allocation adjustment due to
accounting for discontinued operations (3) 7.2 2.1
(9.3 ) —
Standalone segment results $ 186.2 $
56.6 $ 75.3 $ 318.1
Nine months
ended September 30, 2017 Segment results after impact of
discontinued operations $ 522.4 $ 175.2 $ 225.1 $ 922.7 Corporate
overhead allocation adjustment due to accounting for discontinued
operations (3) 20.6 6.1 (26.7 ) —
Standalone segment results $ 543.0 $ 181.3 $
198.4 $ 922.7
_______________
(1) Excludes amounts from EHH for the
three and nine months ended September 30, 2016.
(2) Amounts from Medical Transportation
represent discontinued operations for the three and nine months
ending September 30, 2017.
(3) For the three and nine months ended
September 30, 2017 and on a before tax basis, approximately $15.3
million and $44.9 million, respectively, of general corporate
expenses, including allocations for corporate salaries and stock
based compensation, general and administrative costs and
depreciation, were removed from the medical transportation business
and reallocated to the Company’s remaining segments. This removal
of corporate expenses resulted in a reduction of Adjusted EBITDA in
the physician services and ambulatory services segments for the
three and nine months ended September 30, 2017 of $7.2 million and
$2.1 million and $20.6 million and $6.1 million, respectively.
See definitions of non-GAAP measures on
page 13
Envision Healthcare
Corporation
Unaudited Selected Consolidated
Financial and Operating Data, continued
(In millions)
Three Months Ended
September 30, 2017
Nine Months Ended
September 30, 2017
Results of discontinued operations: Net revenues $ 692.2 $
1,874.5 Operating expenses: Salaries and benefits 358.9 1,032.8
Supply cost 15.1 42.9 Insurance expense 22.0 63.0 Other operating
expenses 213.6 517.1 Transaction and integration costs 11.3 17.3
Depreciation and amortization 39.6 108.5 Total
operating expenses 660.5 1,781.6 Equity in earnings of
unconsolidated affiliates 0.1 0.4 Operating income
31.8 93.3 Interest expense, net 22.2 67.0 Earnings
before income taxes $ 9.6 $ 26.3 Earnings from
discontinued operations $ 9.6 $ 26.3 Income tax expense of
discontinued operations (22.0 ) (513.0 ) Net loss from discontinued
operations $ (12.4 ) $ (486.7 )
Envision Healthcare Corporation
Unaudited Selected Consolidated
Financial and Operating Data, continued
Operating Data -
Physician Services:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017 2016 2017
2016 Contribution to Net Revenue Growth: Same
contract 0.4 % 5.9 % 2.1 % 6.6 % New contracts 6.7 2.8 6.2 3.1
Terminations (9.1 ) (1.8 ) (9.4 ) (2.1 ) Acquired contract and
other 9.6 41.9 9.8
34.7 Total net revenue growth 7.6 % 48.8 %
8.7 % 42.3 % Patient encounters per day (day
adjusted) (0.7 )% 2.9 % 1.1 % 4.8 % Net revenue per encounter
1.3 4.6 2.0 2.8
Same contract revenue growth (1) 0.6 % 7.5 %
3.1 % 7.6 %
____________________
(1) Amount excludes the results from EHH
physician services for the three and nine months ended September
30, 2016.
Operating Data -
Ambulatory Services:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017 2016 2017 2016 Procedures
performed during the period at consolidated centers 418,863 429,621
1,274,044 1,283,145 Centers in operation, end of period
(consolidated) 237 238 237 238 Centers in operation, end of period
(unconsolidated) 26 22 26 22 Average number of continuing centers
in operation (consolidated) 237 237 237 237 New centers added,
during period 2 3 8 7 Centers merged into existing centers, during
period — — — 1 Centers disposed, during period 2 1 5 3 Surgical
hospitals in operation, end of period (unconsolidated) 1 1 1 1
Centers under development, end of period — 1 — 1 Centers under
letter of intent, end of period — 2 — 2 Average revenue per
consolidated center (in thousands) $ 1,306 $ 1,326 $ 3,979 $ 3,981
Same center revenues increase, day adjusted (consolidated) 0.8 %
2.3 % 1.3 % 4.7 %
Envision Healthcare Corporation
Unaudited Selected Consolidated
Financial and Operating Data, continued
(Dollars in millions, shares in
thousands)
September 30,
December 31,
Balance Sheet
Data:
2017 2016 Assets Current assets: Cash and cash
equivalents $ 278.1 $ 316.9 Insurance collateral 102.5 87.0
Accounts receivable, net of allowance of $2,477.8 and $584.0,
respectively 1,378.6 1,297.8 Supplies inventory 22.9 23.4 Prepaid
and other current assets 144.4 135.1 Current assets held for sale
3,296.4 551.1 Total current assets 5,222.9 2,411.3 Property
and equipment, net 298.8 300.8 Investments in unconsolidated
affiliates 135.0 114.7 Goodwill 8,101.2 7,584.0 Intangible assets,
net 3,687.7 3,675.5 Other assets 146.3 134.2 Noncurrent assets held
for sale — 2,488.4 Total assets $ 17,591.9 $ 16,708.9
Liabilities and Equity Current liabilities: Current portion
of long-term debt $ 52.5 $ 46.6 Accounts payable 59.6 69.9 Accrued
salaries and benefits 498.9 483.8 Accrued interest 35.1 51.4 Other
accrued liabilities 290.2 253.2 Current liabilities held for sale
797.0 249.4 Total current liabilities 1,733.3 1,154.3
Long-term debt, net of deferred financing costs of $101.7 and
$111.0, respectively 6,270.7 5,790.2 Deferred income taxes 1,887.4
1,343.7 Insurance reserves 308.6 278.9 Other long-term liabilities
149.5 102.4 Noncurrent liabilities held for sale — 468.6
Commitments and contingencies Noncontrolling interests – redeemable
185.1 182.9 Equity: Preferred stock, $0.01 par value, 100,000
shares authorized, 0 and 1,725 shares issued and outstanding,
respectively — 0.1 Common stock, $0.01 par value, 1,000,000 shares
authorized, 120,889 and 117,478 shares issued and outstanding,
respectively 1.2 1.2 Additional paid-in capital 6,000.3 5,976.3
Retained earnings 388.6 753.7 Accumulated other comprehensive
income (loss) 1.1 (0.2 ) Total Envision Healthcare Corporation
equity 6,391.2 6,731.1 Noncontrolling interests – non-redeemable
666.1 656.8 Total equity 7,057.3 7,387.9 Total
liabilities and equity $ 17,591.9 $ 16,708.9
Envision Healthcare Corporation
Unaudited Selected Consolidated
Financial and Operating Data, continued
(In millions)
Three Months Ended September 30,
Nine Months Ended September 30,
Statement of Cash
Flow Data:
2017 2016 2017
2016 Cash flows from operating activities: Net
earnings (loss) $ 79.0 $ 95.6 $ (204.2 ) $ 283.4
Adjustments to reconcile net earnings
(loss) to net cash flows provided by operating activities:
Depreciation and amortization 112.6 31.6 324.4 90.7 Amortization of
deferred loan costs 4.4 2.2 12.8 6.4 Provision for uncollectibles
1,302.2 152.3 3,813.1 359.3 Net (gain) loss on disposals and
deconsolidations 3.3 (4.1 ) 8.8 (6.7 ) Share-based compensation
11.1 6.1 40.4 21.2 Deferred income taxes 45.4 13.6 574.7 34.6
Equity in earnings of unconsolidated affiliates (5.1 ) (4.4 ) (16.0
) (18.4 ) Impairment charges — — 0.3 — Net change in fair value of
contingent consideration 0.3 — 0.3 (2.6 ) Other, net — (0.2 ) —
(3.9 )
Increases (decreases) in cash and cash
equivalents, net of acquisitions and dispositions:
Accounts receivable (1,433.8 ) (159.4 ) (4,011.7 ) (387.7 )
Supplies inventory 0.4 (0.3 ) (0.3 ) (0.7 ) Prepaid and other
current assets 4.5 7.6 (0.6 ) (16.1 ) Accounts payable (0.9 ) (2.3
) (7.0 ) (5.6 ) Accrued expenses and other liabilities 60.4 13.8
15.0 (14.4 ) Other, net (1.5 ) 3.9 11.0 11.5
Net cash flows provided by operating activities 182.3 156.0 561.0
351.0
Cash flows from investing activities: Acquisitions and
related expenses, net of cash acquired (208.7 ) (70.6 ) (694.4 )
(351.7 ) Acquisition of property and equipment (47.8 ) (26.4 )
(138.5 ) (64.0 ) Increase in cash due to consolidation of
previously unconsolidated affiliates — 31.4 — 31.4 Purchases of
marketable securities (2.8 ) — (18.7 ) (0.5 ) Maturities of
marketable securities 0.2 0.3 7.2 3.0 Other, net 1.0 2.2
(4.2 ) (6.5 )
Net cash flows used in investing
activities
(258.1 ) (63.1 ) (848.6 ) (388.3 )
Cash flows from financing
activities: Proceeds from long-term borrowings 2.9 112.9 801.2
430.0 Repayment on long-term borrowings (13.7 ) (115.5 ) (328.0 )
(214.3 ) Distributions to noncontrolling interests (55.3 ) (56.5 )
(174.3 ) (172.1 ) Proceeds from issuance of common stock upon
exercise of stock options 0.3 — 4.0 0.5 Repurchase of common stock
(0.5 ) (0.5 ) (9.4 ) (6.1 ) Financing costs incurred (0.6 ) — (3.5
) — Other, net (2.6 ) (1.3 ) (14.7 ) (1.3 ) Net cash flows provided
by (used in) financing activities (69.5 ) (60.9 ) 275.3 36.7
Net increase (decrease) in cash and cash equivalents (145.3
) 32.0 (12.3 ) (0.6 ) Cash and cash equivalents, beginning of
period 464.6 74.1 331.6 106.7 Less cash and cash equivalents of
held for sale assets, end of period 41.2 — 41.2
— Cash and cash equivalents, end of period $ 278.1
$ 106.1 $ 278.1 $ 106.1
Envision Healthcare Corporation
Footnotes to Reconciliations of
Non-GAAP Measures to GAAP Measures
(1) We believe the calculation of adjusted net earnings from
continuing operations per diluted share attributable to Envision
Healthcare Corporation common shareholders provides a better
measure of our ongoing performance and provides better
comparability to prior periods because it excludes discontinued
operations, the gains or loss from deconsolidations, net of
noncontrolling interests, which are non-cash in nature, impairment
charges, transaction and integration costs, including associated
debt extinguishment costs and deferred financing write-off, and
acquisition-related amortization expense, changes in contingent
purchase price consideration, purchase accounting adjustments
related to mergers and acquisitions and share-based compensation
expense. Adjusted net earnings from continuing operations per
diluted share attributable to Envision Healthcare Corporation
common shareholders should not be considered as a measure of
financial performance under accounting principles generally
accepted in the United States, and the items excluded from it is a
significant component in understanding and assessing financial
performance. Because adjusted net earnings from continuing
operations per diluted share attributable to Envision Healthcare
Corporation common shareholders is not a measurement determined in
accordance with accounting principles generally accepted in the
United States and is thus susceptible to varying calculations, it
may not be comparable as presented to other similarly titled
measures of other companies. For purposes of calculating adjusted
earnings per share, we utilize the if-converted method to determine
the number of diluted shares outstanding. In periods where
utilizing the if-converted method is anti-dilutive, the mandatory
convertible preferred stock will not be included in the calculation
of diluted shares outstanding. (2) We define Adjusted EBITDA
of Envision Healthcare Corporation as earnings before interest
expense, net, income taxes, depreciation, amortization, transaction
and integration costs, share-based compensation, impairment
charges, debt extinguishment costs, gain or loss on
deconsolidations, net of noncontrolling interests, changes in
contingent purchase price consideration, purchase accounting
adjustments related to mergers and acquisitions and discontinued
operations. Adjusted EBITDA should not be considered a measure of
financial performance under generally accepted accounting
principles. Items excluded from Adjusted EBITDA are significant
components in understanding and assessing financial performance.
Adjusted EBITDA is an analytical indicator used by management and
the health care industry to evaluate company performance, allocate
resources and measure leverage and debt service capacity. Adjusted
EBITDA should not be considered in isolation or as an alternative
to net income, cash flows from operations, investing or financing
activities, or other financial statement data presented in the
consolidated financial statements as indicators of financial
performance or liquidity. Because Adjusted EBITDA is not a
measurement determined in accordance with generally accepted
accounting principles and is thus susceptible to varying
calculations, Adjusted EBITDA as presented may not be comparable to
other similarly titled measures of other companies. Net earnings
from continuing operations attributable to Envision Healthcare
Corporation common shareholders is the financial measure calculated
and presented in accordance with generally accepted accounting
principles that is most comparable to Adjusted EBITDA as defined.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171031006482/en/
Envision Healthcare CorporationBob Kneeley, 303-495-1245Vice
President, Investor Relationsbob.kneeley@evhc.net
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