Introduces 2018 Financial Guidance
Review of Strategic Alternatives is
Ongoing
Envision Healthcare Corporation (“Envision”) (NYSE: EVHC) today
reported financial results for the three and 12 months ended
December 31, 2017, that exceeded its most recent Adjusted EBITDA
and Adjusted earnings per share guidance.
Highlights for the fourth quarter of 2017 include:
- Net revenue from continuing operations
of $2.00 billion;
- Net earnings from continuing operations
attributable to common stockholders of $137.8 million or $1.13 per
diluted share;
- Adjusted net earnings from continuing
operations of $71.9 million, or $0.59 per diluted share;
- Adjusted EBITDA from continuing
operations of $211.4 million; and
- Net cash flow from operations, less
distributions to non-controlling interests and excluding
transaction costs, of $210.9 million.
Envision’s net earnings from continuing operations for the 2017
fourth quarter were impacted by several factors, including a net
benefit of approximately $600 million from a reduction of deferred
tax liabilities as a result of changes made by the recently enacted
Tax Cuts and Jobs Act, as well as a non-cash impairment charge of
$500 million related to the fair value of goodwill in its Physician
Services segment following its annual goodwill impairment test.
A reconciliation of all non-GAAP financial results to the
comparable GAAP measure is provided on page 6 of this press
release.
“We’re pleased to report results for the fourth quarter of 2017
that were above the high end of our most recent guided range,” said
Christopher A. Holden, President and Chief Executive Officer of
Envision Healthcare Corporation. “During the last several months,
our management team launched a number of new initiatives driving
performance through a combination of efficiencies and cost
reductions. Our fourth quarter results include some initial benefit
from those actions, and we expect continued operational
improvements throughout 2018 and into 2019.”
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 (“AMR”), Envision’s Medical Transportation
business, which was moved to discontinued operations in the first
quarter of 2017. As required by accounting guidelines, Envision
re-allocated certain corporate expenses associated with its shared
services model to continuing operations. This re-allocation reduced
Adjusted EBITDA from continuing operations by $7.4 million for the
three months ended December 31, 2017, consisting of a reduction of
$5.7 million for Physician Services and $1.7 million for Ambulatory
Services, with a corresponding Adjusted EBITDA increase of $7.4
million for discontinued operations. Upon completion of the pending
divestiture of the Medical Transportation business, a substantial
portion of these shared services expenses 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 2016 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 $1.67 billion for the
fourth quarter of 2017, an increase of 8.3% from $1.54 billion
during the prior-year period. Revenue growth was driven by
contributions from acquisitions of 8.6% and from same contracts of
0.4%, which were partially offset by net contract terminations of
0.7%, due to the population health contract terminated effective
December 31, 2016. Excluding the impact of that contract, new
Physician Services’ contracts contributed net revenue growth of
1.6%, which consisted of revenue growth from new contract additions
of 7.6%, partially offset by contract terminations of 6.0%.
Net revenue on a same-contract base, grew by 0.5% in the fourth
quarter of 2017, or by 1.4% when excluding the impact of Evolution
Health when compared to the prior-year period. Same-contract
patient encounters grew by 2.7%, while same-contract revenue per
patient encounter declined by 2.2% for the segment, or by 1.3% when
excluding Evolution Health. Rate for anesthesia and surgical
services lines declined slightly, though anesthesia rate performed
better than expected. The change in anesthesia rate was impacted by
an unfavorable prior-year comparison.
For the fourth quarter of 2017, Physician Services Adjusted
EBITDA was $133.1 million, or $138.8 million when excluding the
corporate expense re-allocation of $5.7 million. Physician Services
results were negatively impacted by higher-than-anticipated
malpractice expense of $7.0 million related to prior-year claims
development.
Ambulatory Services
Net revenues for the fourth quarter of 2017 were $333.1 million,
which compares to $326.7 million for the prior-year period.
Same-center revenue increased 2.7% for the fourth quarter of
2017 due to procedure volume growth of 2.8%, offset by a decline in
net revenue per procedure of 0.1%. Surgery centers deconsolidated
in the 12 months ended December 31, 2017, contributed incremental
revenues of $6.0 million for the fourth quarter of 2016.
Adjusted EBITDA for the fourth quarter of 2017 was $78.3
million, or $80.0 million when excluding the corporate expense
re-allocation of $1.7 million. This compares with $63.6 million for
the prior-year period. Ambulatory Services’ Adjusted EBITDA was
positively impacted by the recognition of a favorable $7.7 million
legal settlement of a dispute that occurred prior to 2017. When
excluding the benefit from the settlement and corporate expense
re-allocation, which had a 230-basis point impact on margin,
Adjusted EBITDA margin was 21.7%, an increase of approximately 220
basis points from the prior-year period.
Liquidity
Envision had cash and cash equivalents of $352.2 million at
December 31, 2017, which includes $40.0 million of cash
attributable to its Medical Transportation business. The Company
has no amounts outstanding under its asset-based lending facility
as of December 31, 2017. During 2017, Envision invested $757.8
million in acquisitions.
Net cash flows from operations, less distributions to
noncontrolling interests and excluding transaction costs, were
$210.9 million for the fourth quarter of 2017. The Company’s ratio
of total net debt at December 31, 2017, to trailing 12 months
EBITDA, as defined under the Company’s credit agreement, was 4.6
times. Interest expense reflects a re-allocation of $21.8 million
to discontinued operations for the three months ended December 31,
2017.
Discontinued Operations
Net revenues from discontinued operations were $648.5 million
for the fourth quarter of 2017. Adjusted EBITDA was $98.0 million,
or $90.6 million when excluding the favorable impact of $7.4
million from the re-allocation of corporate expenses.
While Envision continues to expect that the divestiture of AMR
will be completed during the first quarter of 2018, and that it
will use net proceeds to reduce debt, the pending divestiture of
AMR remains subject to regulatory approval and customary closing
conditions, including clearance under the Hart-Scott-Rodino
Antitrust Improvements Act. Envision has responded to a second
request from the Federal Trade Commission (“FTC”) asking for
further information related to the transaction, and the buyer has
agreed to divestiture remedies to address certain concerns raised
by the FTC.
Guidance
Envision today introduced its financial and operating guidance
for 2018 and the first quarter of the year, as follows:
- Net revenues of $8.35 billion to $8.53
billion;
- Combined total organic growth for
Envision, including same-contract and net new Physician Services’
contract growth of 2% to 5%;
- Same-contract revenue growth for
Physician Services of 1% to 3%;
- Same-center revenue growth for
Ambulatory Services of 1% to 2%;
- Free-cash flow to fund accretive
acquisitions;
- Adjusted EBITDA of $960 million to
$1.00 billion; and
- Adjusted EPS for 2018 of $3.46 to
$3.70.
For the first quarter of 2018, Envision expects Adjusted EBITDA
from continuing operations to be $195 million to $205 million, and
Adjusted EPS of $0.61 to $0.67, which includes the expected impact
of seasonally higher payroll tax expenses in Physician
Services.
Non-GAAP Adjusted EBITDA guidance for the full year and first
quarter of 2018 excludes interest expense, income taxes,
depreciation, amortization, share-based compensation, impairment
charges, debt extinguishment costs, acquisition-related transaction
and integration costs, changes in contingent purchase price
consideration, purchase accounting adjustments related to mergers
and acquisitions, gain or loss on deconsolidations and discontinued
operations. Non-GAAP Adjusted EPS guidance for the full year and
first quarter of 2018 excludes acquisition-related transaction and
integration costs, acquisition-related amortization expense, gains
and losses on deconsolidation transactions, share-based
compensation, impairment charges, the impact of the Tax Cuts and
Jobs Act, 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 such
exclusions is 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 6 for a
reconciliation of all historical GAAP and non-GAAP financial
results presented in this release).
Ongoing Strategic Review
Envision’s Board of Directors is continuing to conduct a full
review of a broad range of strategic alternatives to enhance
shareholder value.
“Our Board is considering a number of options to create
shareholder value, including execution of our strategic plan,
portfolio rationalization, and a potential sale of the Company,”
said Denny Shelton, Lead Independent Director of Envision’s Board.
“We remain fully engaged in a comprehensive review of our
options.”
Envision’s Board has not set a timetable for the completion of
its review, and there can be no assurance that this review will
result in a transaction or other alternative of any kind.
Conference Call Information
Envision will host a conference call at 8:30 a.m. Eastern Time
Wednesday, February 28, 2018, 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 December 31, 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 45 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 264 surgery centers and one
surgical hospital in 35 states and the District of Columbia, with
medical specialties ranging from gastroenterology to ophthalmology
and orthopedics. 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, industry trends, and all
statements (other than statements of historical fact) 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 completion of the
December 2016 merger of equals; (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; (x) the impact of the Company’s previously
announced review of strategic alternatives, as well as any
strategic transaction that may be pursued as a result of such
review, including the Company’s financial and operating results, or
its employees, suppliers and customers; and (xi) 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 December 31, Year
Ended December 31,
Statement of
Operations Data:
2017 2016 2017 2016
Revenues $ 3,232.1 $ 1,675.5 $ 12,177.5 $ 4,322.4 Provision for
uncollectibles (1,229.1 ) (483.0 ) (4,358.2 ) (824.5 ) Net revenue
2,003.0 1,192.5 7,819.3 3,497.9 Operating expenses: Salaries and
benefits 1,457.5 752.3 5,627.4 2,060.6 Supply cost 58.1 53.5 222.7
198.4 Insurance expense 41.9 16.9 144.2 45.5 Other operating
expenses 205.4 145.9 777.7 417.7 Transaction and integration costs
21.0 52.9 88.7 76.3 Impairment charges 500.0 221.3 500.3 221.3
Depreciation and amortization 73.0 46.9 288.9
137.6 Total operating expenses 2,356.9 1,289.7 7,649.9
3,157.4 Net gain (loss) on disposals and deconsolidations 6.4 (1.0
) (2.4 ) 5.7 Equity in earnings of unconsolidated affiliates 6.6
5.3 22.2 23.7 Operating income (loss)
(340.9 ) (92.9 ) 189.2 369.9 Interest expense, net 61.2 46.8 231.1
142.4 Debt extinguishment costs — 30.3 — 30.3 Other income, net 8.5
1.0 11.0 1.0 Earnings (loss) from
continuing operations before income taxes (393.6 ) (169.0 ) (30.9 )
198.2 Income tax benefit (577.0 ) (87.1 ) (496.8 ) (3.3 ) Net
earnings (loss) from continuing operations 183.4 (81.9 ) 465.9
201.5 Discontinued operations: Earnings (loss) from discontinued
operations (487.5 ) 6.4 (461.2 ) 6.4 Income tax (expense) benefit
from discontinued operations 482.3 (2.4 ) (30.7 ) (2.4 ) Net
earnings (loss) from discontinued operations (5.2 ) 4.0
(491.9 ) 4.0 Net earnings (loss) 178.2 (77.9 ) (26.0 ) 205.5
Less net earnings attributable to noncontrolling interests 45.6
57.6 202.0 224.1 Net earnings (loss)
attributable to Envision Healthcare Corporation stockholders 132.6
(135.5 ) (228.0 ) (18.6 ) Preferred stock dividends — (2.3 )
(4.5 ) (9.1 )
Net earnings (loss) attributable to
Envision Healthcare Corporation common stockholders
$ 132.6 $ (137.8 ) $ (232.5 ) $ (27.7 ) Amounts
attributable to Envision Healthcare Corporation common
stockholders: Earnings (loss) from continuing operations, net of
income tax $ 137.8 $ (141.8 ) $ 259.4 $ (31.7 ) Earnings (loss)
from discontinued operations, net of income tax (5.2 ) 4.0
(491.9 ) 4.0
Net earnings (loss) attributable to
Envision Healthcare Corporation common stockholders
$ 132.6 $ (137.8 ) $ (232.5 ) $ (27.7 ) Basic
earnings (loss) per share attributable to common stockholders: Net
earnings (loss) from continuing operations $ 1.15 $ (1.89 ) $ 2.19
$ (0.54 ) Net earnings (loss) from discontinued operations (0.04 )
0.05 (4.15 ) 0.07 Net earnings (loss) $ 1.10 $
(1.84 ) $ (1.96 ) $ (0.47 ) Diluted earnings (loss) per share
attributable to common stockholders: Net earnings (loss) from
continuing operations $ 1.13 $ (1.89 ) $ 2.14 $ (0.54 ) Net
earnings (loss) from discontinued operations (0.04 ) 0.05
(4.07 ) 0.07 Net earnings (loss) $ 1.09 $ (1.84 ) $
(1.93 ) $ (0.47 ) Weighted average number of shares and share
equivalents outstanding: Basic 120,223 74,846 118,397 59,002
Diluted 122,249 74,846 120,943 59,002
Envision Healthcare
Corporation
Unaudited Selected Consolidated
Financial and Operating Data, continued
(In millions, except earnings per
share)
Three Months Ended
December 31,
Year Ended
December 31,
2017 2016 2017
2016 Reconciliation of net earnings (loss) to adjusted
net earnings: Net earnings (loss) attributable to Envision
stockholders $ 132.6 $ (135.5 ) $ (228.0 ) $ (18.6 ) (Earnings)
loss from discontinued operations, net of tax 5.2 (4.0 ) 491.9 (4.0
) Income tax benefit related to tax reform (596.6 ) — (596.6 ) —
Amortization of purchased intangibles 47.5 29.1 192.5 84.1
Share-based compensation 6.4 7.4 40.9 28.6 Transaction and
integration costs 21.0 52.9 88.7 76.3 Net (gain) loss on disposals
and deconsolidations, net of noncontrolling interests (12.4 ) 1.0
(9.7 ) (5.7 ) Impairment charges 500.0 221.3 500.3 221.3 Debt
extinguishment costs — 30.3 — 30.3 Net change in fair value of
contingent consideration (0.2 ) — 0.1 (2.6 ) Purchase accounting
adjustments — 4.1 — 4.1 Total
adjustments (29.1 ) 342.1 708.1 432.4 Tax effect 31.6 123.8
134.7 156.3 Total adjustments, net (60.7 )
218.3 573.4 276.1
Adjusted net earnings
$ 71.9 $ 82.8 $ 345.4 $ 257.5
Basic shares outstanding 120,223 74,846 118,397 59,002 Effect of
dilutive securities, options and non-vested shares 2,026
5,253 4,118 3,984 Diluted shares outstanding,
if converted 122,249 80,099 122,515 62,986
Adjusted net earnings per share $ 0.59
$ 1.03 $ 2.82 $ 4.09
Reconciliation
of net earnings to Adjusted EBITDA: Net earnings (loss)
attributable to Envision stockholders $ 132.6 $ (135.5 ) $ (228.0 )
$ (18.6 ) (Earnings) loss from discontinued operations, net of tax
5.2 (4.0 ) 491.9 (4.0 ) Interest expense, net 61.2 46.8 231.1 142.4
Income tax benefit (577.0 ) (87.1 ) (496.8 ) (3.3 ) Depreciation
and amortization 73.0 46.9 288.9 137.6
EBITDA (305.0 ) (132.9 ) 287.1 254.1 Adjustments:
Transaction and integration costs 21.0 52.9 88.7 76.3 Share-based
compensation 6.4 7.4 40.9 28.6 Impairment charges 500.0 221.3 500.3
221.3 Debt extinguishment costs — 30.3 — 30.3 Net (gain) loss on
disposals and deconsolidations, net of noncontrolling interests
(12.4 ) 1.0 (9.7 ) (5.7 ) Net change in fair value of contingent
consideration (0.2 ) — 0.1 (2.6 )
Net change in deferred taxes due to tax
reform attributable to noncontrolling interests
1.6 — 1.6 — Purchase accounting adjustments — 4.1 —
4.1 Total adjustments 516.4 317.0 621.9
352.3
Adjusted EBITDA $ 211.4 $ 184.1
$ 909.0 $ 606.4
See definitions of non-GAAP measures on
page 12
Envision Healthcare Corporation
Unaudited Selected Consolidated
Financial and Operating Data, continued
(In millions)
Three Months Ended December 31,
Year Ended December 31, 2017
2016 2017 2016 Net Revenue by
Segment: Physician Services (1) $ 1,669.9 $ 865.8 $ 6,542.4 $
2,229.7 Ambulatory Services 333.1 326.7 1,276.9
1,268.2
Total net revenue - continuing
operations 2,003.0 1,192.5 7,819.3 3,497.9 Medical
Transportation Services (2) 648.5 198.1 2,523.0
198.1
Net revenue including discontinued
operations $ 2,651.5 $ 1,390.6 $ 10,342.3
$ 3,696.0
Adjusted EBITDA by Segment:
Physician Services (1) $ 133.1 $ 120.5 $ 655.5 $ 366.3 Ambulatory
Services 78.3 63.6 253.5 240.1
Adjusted EBITDA - continuing operations 211.4 184.1 909.0
606.4 Medical Transportation Services (2) 98.0 24.6
323.0 24.6
Adjusted EBITDA including discontinued
operations $ 309.4 $ 208.7 $ 1,232.0 $
631.0
Adjusted EBITDA Margin by Segment:
Physician Services (1) 8.0 % 13.9 % 10.0 % 16.4 % Ambulatory
Services 23.5 19.5 19.9 18.9
Total -
continuing operations 10.6 15.4 11.6 17.3 Medical
Transportation Services (1)(2) 15.1 12.4 12.8
12.4
Total including discontinued operations 11.7 %
15.0 % 11.9 % 17.1 %
Physician
Services
Ambulatory
Services
Medical
Transportation
(Discontinued
Operations)
Total Three months ended December 31, 2017 Segment
results after impact of discontinued operations $ 133.1 $ 78.3 $
98.0 $ 309.4 Corporate overhead allocation adjustment due to
accounting for discontinued operations (3) 5.7 1.7
(7.4 ) —
Standalone segment results $ 138.8 $
80.0 $ 90.6 $ 309.4
Year ended
December 31, 2017 Segment results after impact of discontinued
operations $ 655.5 $ 253.5 $ 323.0 $ 1,232.0 Corporate overhead
allocation adjustment due to accounting for discontinued operations
(3) 26.3 7.8 (34.1 ) —
Standalone segment
results $ 681.8 $ 261.3 $ 288.9 $ 1,232.0
(1) Includes results from EHH beginning
December 1, 2016.
(2) Amounts from Medical Transportation
represent discontinued operations for the three months and year
ended December 31, 2017 and 2016.
(3) For the three months and year ended
December 31, 2017 and on a before tax basis, approximately $13.2
million and $58.1 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 months and year ended December 31, 2017 of $5.7 million and
$1.7 million and $26.3 million and $7.8 million, respectively.
See definitions of non-GAAP measures on
page 12
Envision Healthcare Corporation
Unaudited Selected Consolidated
Financial and Operating Data, continued
(In millions)
Three Months Ended
December 31, 2017
Year Ended
December 31, 2017
Year Ended
December 31, 2016
Results of discontinued operations: Net revenues $ 648.5 $
2,523.0 $ 198.1 Operating expenses: Salaries and benefits 348.0
1,380.8 114.7 Supply cost 14.6 57.5 4.8 Insurance expense 19.3 82.3
6.7 Other operating expenses 170.6 687.7 49.5 Transaction and
integration costs 9.5 26.8 3.7 Loss on assets held for sale 515.2
515.2 — Depreciation and amortization 36.5 145.0 12.3
Total operating expenses 1,113.7 2,895.3 191.7 Equity in
earnings of unconsolidated affiliates 0.1 0.5 —
Operating income (loss) (465.1 ) (371.8 ) 6.4 Interest
expense, net 22.4 89.4 — Earnings (loss)
before income taxes $ (487.5 ) $ (461.2 ) $ 6.4
Earnings (loss) from discontinued operations $ (487.5 ) $ (461.2 )
$ 6.4 Income tax (expense) benefit of discontinued operations 482.3
(30.7 ) (2.4 ) Net earnings (loss) from discontinued
operations $ (5.2 ) $ (491.9 ) $ 4.0
Three Months Ended
December 31, 2017
Year Ended
December 31, 2017
Results of discontinued operations: Reconciliation of net
earnings to Adjusted EBITDA: Net loss from discontinued
operations $ (5.2 ) $ (491.9 ) Interest expense, net 22.4 89.4
Income tax expense (benefit) (482.3 ) 30.7 Depreciation and
amortization 36.5 145.0
EBITDA (428.6 ) (226.8
) Adjustments: Transaction and integration costs 9.5 26.8
Share-based compensation 1.9 7.8 Loss on assets held for sale 515.2
515.2 Total adjustments 526.6 549.8
Adjusted EBITDA 98.0 323.0 Corporate overhead allocation
adjustment due to accounting for discontinued operations (7.4 )
(34.1 )
Standalone segment results $ 90.6 $ 288.9
Envision Healthcare Corporation
Unaudited Selected Consolidated
Financial and Operating Data, continued
Operating Data -
Physician Services:
Three
Months Ended December 31, Year Ended December 31,
2017 2016 2017 2016 Contribution to
Net Revenue Growth: Same contract 0.4 % 0.8 % 1.6 % 4.9 % New
contracts 7.5 3.0 6.5 3.1 Terminations (8.2 ) (1.1 ) (9.0 ) (1.8 )
Acquired contract and other 8.6 34.3 9.5 34.5 EHH Physician
Services (1) — 92.0 — 26.1 Total net
revenue growth 8.3 % 129.0 % 8.6 % 66.8 % Patient encounters
per day (day adjusted) 2.7 % (0.9 )% 1.5 % 3.7 % Net revenue per
encounter (2.2 ) 2.0 0.9 2.6 Same contract
revenue growth (2) 0.5 % 1.1 % 2.4 % 6.3 % (1) Includes
results of EHH for the period December 1, 2016 (the date of the
Merger) through December 31, 2016. (2) Amount excludes the results
from EHH physician services for the three months and year ended
December 31, 2016.
Operating Data -
Ambulatory Services:
Three Months Ended December 31, Year Ended December
31, 2017 2016 2017 2016 Procedures
performed during the period at consolidated centers 441,551 438,254
1,715,595 1,721,399 Centers in operation, end of period
(consolidated) 234 238 234 238 Centers in operation, end of period
(unconsolidated) 30 22 30 22 Average number of continuing centers
in operation (consolidated) 236 238 237 237 New centers added,
during period 2 1 10 8 Centers merged into existing centers, during
period — — — 1 Centers disposed, during period 1 1 6 4 Surgical
hospitals in operation, end of period (unconsolidated) 1 1 1 1
Centers under letter of intent, end of period 2 3 2 3 Average
revenue per consolidated center (in thousands) $ 1,413 $ 1,371 $
5,392 $ 5,352 Same center revenues increase, day adjusted
(consolidated) 2.7 % 3.4 % 1.8 % 4.3 %
Envision
Healthcare Corporation
Unaudited Selected Consolidated
Financial and Operating Data, continued
(Dollars in millions, shares in
thousands)
December 31, December 31,
Balance Sheet
Data:
2017 2016 Assets Current assets: Cash and cash
equivalents $ 312.2 $ 316.9 Insurance collateral 86.2 87.0 Accounts
receivable, net of allowance of $2,554.5 and $584.0, respectively
1,405.8 1,297.8 Supplies inventory 22.7 23.4 Prepaid and other
current assets 165.6 135.1 Current assets held for sale 2,751.8
551.1 Total current assets 4,744.3 2,411.3 Property
and equipment, net 302.7 300.8 Investments in unconsolidated
affiliates 156.7 114.7 Goodwill 7,536.1 7,584.0 Intangible assets,
net 3,665.5 3,675.5 Other assets 167.3 134.2 Noncurrent assets held
for sale — 2,488.4 Total assets $ 16,572.6 $
16,708.9
Liabilities and Equity Current liabilities:
Current portion of long-term debt $ 52.1 $ 46.6 Accounts payable
62.2 69.9 Accrued salaries and benefits 548.0 483.8 Accrued
interest 52.1 51.4 Other accrued liabilities 281.6 253.2 Current
liabilities held for sale 399.1 249.4 Total current
liabilities 1,395.1 1,154.3 Long-term debt, net of deferred
financing costs of $97.3 and $111.0, respectively 6,263.3 5,790.2
Deferred income taxes 1,089.3 1,343.7 Insurance reserves 318.5
278.9 Other long-term liabilities 149.9 102.4 Noncurrent
liabilities held for sale — 468.6 Commitments and contingencies
Noncontrolling interests – redeemable 187.1 182.9 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, 121,021 and 117,478 shares issued and
outstanding, respectively
1.2 1.2 Additional paid-in capital 6,008.9 5,976.3 Retained
earnings 521.2 753.7 Accumulated other comprehensive loss (4.2 )
(0.2 ) Total Envision Healthcare Corporation equity 6,527.1 6,731.1
Noncontrolling interests – non-redeemable 642.3 656.8
Total equity 7,169.4 7,387.9 Total liabilities and
equity $ 16,572.6 $ 16,708.9
Envision
Healthcare Corporation
Unaudited Selected Consolidated
Financial and Operating Data, continued
(In millions)
Three Months Ended December 31,
Year Ended December 31,
Statement of Cash
Flow Data:
2017 2016 2017
2016 Cash flows from operating activities: Net
earnings (loss) $ 178.2 $ (77.9 ) $ (26.0 ) $ 205.5 Adjustments to
reconcile net earnings (loss) to net cash flows provided by
operating activities: Depreciation and amortization 109.6 59.2
434.0 149.9 Amortization of deferred loan costs 4.4 2.8 17.2 9.2
Provision for uncollectibles 1,463.1 557.9 5,276.2 917.2 Net (gain)
loss on disposals and deconsolidations (6.4 ) 1.0 2.4 (5.7 )
Share-based compensation 8.3 8.2 48.7 29.4 Deferred income taxes
(1,056.1 ) (113.5 ) (481.4 ) (78.9 ) Equity in earnings of
unconsolidated affiliates (6.7 ) (5.3 ) (22.7 ) (23.7 ) Debt
extinguishment costs — 30.3 — 30.3 Impairment charges 500.0 221.3
500.3 221.3 Net change in fair value of contingent consideration
(0.2 ) — 0.1 (2.6 ) Loss on assets held for sale 515.2 — 515.2 —
Other, net — — — (3.9 ) Increases (decreases) in cash and cash
equivalents, net of acquisitions and dispositions: Accounts
receivable (1,443.8 ) (615.3 ) (5,455.5 ) (1,003.0 ) Supplies
inventory 1.3 (0.2 ) 1.0 (0.9 ) Prepaid and other current assets
(13.2 ) (26.2 ) (13.8 ) (42.3 ) Accounts payable (5.1 ) 4.0 (12.1 )
(1.6 ) Accrued expenses and other liabilities (5.6 ) 16.7 9.4 2.3
Other, net (6.6 ) 5.8 4.4 17.3 Net cash flows
provided by operating activities 236.4 68.8 797.4 419.8
Cash
flows from investing activities: Acquisitions and related
expenses, net of cash acquired (63.4 ) (42.6 ) (757.8 ) (394.3 )
Acquisition of property and equipment (70.4 ) (35.5 ) (208.9 )
(99.5 ) Increase in cash due to merger with EHH — 165.8 — 165.8
Increase in cash due to consolidation of previously unconsolidated
affiliates — — — 31.4 Purchases of marketable securities (5.8 )
(1.1 ) (24.5 ) (1.6 ) Maturities of marketable securities 7.8 0.8
15.0 3.8 Other, net (1.7 ) (2.8 ) (5.9 ) (9.3 ) Net cash flows
provided by (used in) investing activities (133.5 ) 84.6 (982.1 )
(303.7 )
Cash flows from financing activities: Proceeds from
long-term borrowings 0.7 4,079.2 801.9 4,509.2 Repayment on
long-term borrowings (13.7 ) (3,847.8 ) (341.7 ) (4,062.1 )
Distributions to noncontrolling interests (55.5 ) (55.8 ) (229.8 )
(227.9 ) Proceeds from issuance of common stock upon exercise of
stock options 1.4 0.2 5.4 0.7 Repurchase of common stock (0.1 ) —
(9.5 ) (6.1 ) Financing costs incurred — (103.4 ) (3.5 ) (103.4 )
Other, net (2.8 ) (0.3 ) (17.5 ) (1.6 ) Net cash flows provided by
(used in) financing activities (70.0 ) 72.1 205.3
108.8 Net increase in cash and cash equivalents 32.9 225.5
20.6 224.9 Cash and cash equivalents, beginning of period 319.3
106.1 331.6 106.7 Less cash and cash equivalents of held for sale
assets, end of period 40.0 14.7 40.0 14.7
Cash and cash equivalents, end of period $ 312.2 $
316.9 $ 312.2 $ 316.9
Envision Healthcare
CorporationFootnotes 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 common
stockholders 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, the
impact of the Tax Cuts and Jobs Act of 2017 and share-based
compensation expense. Adjusted net earnings from continuing
operations per diluted share attributable to common stockholders
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 common stockholders 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 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, the impact of the
Tax Cuts and Jobs Act of 2017 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. Adjusted EBITDA should not be
considered in isolation or as an alternative to net earnings, cash
flows from operations, investing or financing activities, or other
financial statement data presented in the consolidated financial
statements as indicators of financial performance. 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 common stockholders 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/20180227006619/en/
Envision Healthcare CorporationBob Kneeley, 303-495-1245Vice
President, Investor Relationsbob.kneeley@evhc.net
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