AmSurg Announces Fourth-Quarter Net Earnings from Continuing Operations of $0.42 Per Diluted Share

Christopher A. Holden, President and Chief Executive Officer of AmSurg Corp. (NASDAQ: AMSG), today announced financial results for the fourth quarter and year ended December 31, 2009. Revenues increased 10% for the quarter to $168,611,000 from $153,057,000 for the fourth quarter of 2008. Net earnings from continuing operations attributable to AmSurg common shareholders were $12,984,000, an increase of 1% from $12,880,000. Net earnings from continuing operations per diluted share attributable to AmSurg common shareholders were $0.42 for the fourth quarter of 2009, up 2% from $0.41 for the fourth quarter of 2008. As expected, the results for the fourth quarter of 2009 included an incremental negative impact of $0.05 per diluted share from the timing of corporate overhead expenses, the effect of a recent accounting rule requiring the expensing of acquisition-related legal costs and the revision of the Medicare payment system for ASCs.

Revenues for 2009 increased 11% to $668,752,000 from $600,107,000 for 2008. Net earnings from continuing operations attributable to AmSurg common shareholders increased 7% to $52,788,000 from $49,541,000. Net earnings from continuing operations per diluted share attributable to AmSurg common shareholders grew 10% to $1.71 from $1.55 for the comparable period in 2008. The results for 2009 included an incremental negative impact of $0.07 per diluted share from the effect of the revision of the Medicare payment system for ASCs.

"We are pleased to have met the high end of earnings guidance for the fourth quarter, while producing 10% per-share earnings growth for the full year. Same-center revenue increased 1% for the fourth quarter, despite the continuing impact of the revised Medicare payment system and an uncertain economic environment,” said Mr. Holden. "As anticipated, the Medicare revisions reduced same-center revenue for the fourth quarter and full year by approximately 100 basis points.

"For the fourth quarter, our revenue growth reflected a 10% increase in procedures, which was driven by the addition of 14 centers during the year. We added eight of these centers during the fourth quarter through the opening of one de novo center and seven acquisitions, six of which were closed on December 31st. Five of these acquired centers are affiliated with one of the largest GI groups in the U.S., comprised of 71 physicians and 30 practice locations in the Dallas metroplex. These centers perform over 40,000 procedures annually. In addition, we acquired a large orthopedic center in Phoenix at the end of the fourth quarter. We now operate the two largest orthopedic centers in Phoenix, partnered with approximately 50 orthopedic physicians in that market. Our ability to complete competitive transactions with leading physician practices reflects the strong and increasing value proposition we offer our physician partners.

"At the end of 2009, we had 202 continuing centers in operation, one center under letter of intent and one center under development, which is expected to open in early 2011. We also had a definitive agreement to acquire one center, subject to certain closing conditions, which we expect to complete in the first quarter of 2010.

"Net cash flows provided by operating activities were $56.6 million for the fourth quarter of 2009 and $232.6 million for the year. Distributions to noncontrolling interests, which are included in cash flows from financing activities, were $33.7 million and $130.9 million for the quarter and year, respectively. Net cash flow provided by operating activities less distributions to noncontrolling interests were $101.8 million for 2009, consistent with our expectations in the range of $95.0 million to $100.0 million.

"Also as expected, this cash flow funded the majority of our net capital expenditures for 2009, which totaled $115.8 million. We completed 2009 with $29.4 million in cash and cash equivalents and total long-term debt of $289.0 million, of which $276.3 million was outstanding under our revolving credit facility. Despite modest growth in total debt during 2009, the ratio of our total debt to capitalization at both the end of 2009 and 2008 was 37%, while the ratio of total debt to EBITDA for 2009 was 2.5 compared with 2.4 for 2008. In the second quarter of 2010, we expect to refinance and expand our revolving credit facility. The incremental financing cost under this new facility is expected to total approximately $0.11 per diluted share for 2010. We anticipate that this new facility, along with our strong operating cash flow, will leave us well positioned to fund our acquisition strategy for the foreseeable future.

"We are confident in our ability to drive procedure growth for 2010 through the strength of our 2009 acquisitions and those planned for the current year. Our guidance for 2010 reflects both the impact from the Medicare payment system revision and increased costs from refinancing our revolving credit facility, which we expect to more than offset through the continuing growth in our operations. Our financial guidance for 2010 and the first quarter of 2010 is as follows:

• Revenues in a range of $720.0 million to $750.0 million for 2010.
• Same-center revenue growth is expected to be flat for the full year, which includes a negative impact of one percentage point from the effect of the Medicare payment system revision.
• The addition of 13 to 16 new centers for the year.
• Net cash flow provided by operating activities less distributions to noncontrolling interests in a range of $105.0 million to $110.0 million.
• Net earnings from continuing operations per diluted share attributable to common shareholders for 2010 in a range of $1.77 to $1.80, including a negative $0.06 impact from the effect of the revised Medicare payment system revision and a negative $0.11 impact from higher interest costs related to the refinancing our revolving credit facility.
• Net earnings from continuing operations per diluted share attributable to common shareholders for the first quarter of 2010 in a range of $0.41 to $0.43 per diluted share, including a negative $0.01 impact from the effect of the revised Medicare payment system revision and the impact of severe weather conditions that have affected many of our centers during the first quarter to-date.”

The information contained in the preceding paragraphs is forward-looking information, and the attainment of these targets is dependent not only on AmSurg’s achievement of its assumptions discussed above, but also on the risks and uncertainties listed below that could cause actual results, performance or developments to differ materially from those expressed or implied by this forward-looking information.

Mr. Holden added, "Given the difficult economic environment, we are pleased with 10% growth in earnings per diluted share for 2009 and the operating growth inherent in our guidance for 2010. Our confidence in our 2010 outlook is supported by our continued profitability throughout the economic downturn, our robust pipeline of potential center acquisitions and our strong cash flow and financial position.

"On a longer-term basis, we expect our procedure growth to reflect a number of compelling trends, such as the aging U.S. population, the increasing prevalence of obesity and other health risk factors and continuing health care reform initiatives to improve care for the large population that is today underserved due to access and cost factors. Compounding the favorable anticipated effect of these trends on AmSurg’s procedure growth, we expect the national focus on the cost and quality of healthcare to strengthen the migration of procedures to ASCs as the most affordable high quality modality, even as overall capacity within the ASC industry declines.

"We are also encouraged by new opportunities to expand our value proposition for our physician partners. By leveraging our brand equity and scale, we are well positioned to meet increasing demand among our physician partners for services that enable them to adapt to changing market conditions, enhance their operations and improve patient care. Over the past two years we have substantially redesigned our corporate structure to engage these opportunities, which we believe have the potential to contribute meaningfully to our long-term growth in earnings and shareholder value.”

AmSurg Corp. will hold a conference call to discuss this release today at 5:00 p.m. Eastern time. Investors will have the opportunity to listen to the conference call over the Internet by going to www.amsurg.com and clicking "Investor Relations” or by going to www.earnings.com at least 15 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available at these sites shortly after the call and continue for 30 days.

This press release contains forward-looking statements. These statements, which have been included in reliance on the "safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, involve risks and uncertainties. Investors are hereby cautioned that these statements may be affected by the important factors, among others, set forth in AmSurg’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and other filings with the Securities and Exchange Commission, including the following risks: adverse impacts on the Company’s business associated with current and future economic conditions; the risk that payments from third-party payors, including government healthcare programs, may decrease or not increase as the Company’s costs increase; adverse developments affecting the medical practices of the Company’s physician partners; the Company’s ability to maintain favorable relations with its physician partners; the Company’s ability to acquire and develop additional surgery centers on favorable terms; the Company’s ability to grow revenues by increasing procedure volume while maintaining its operating margins and profitability at its existing centers; the Company’s ability to manage the growth in its business; the Company’s ability to obtain sufficient capital resources to complete acquisitions and develop new surgery centers; the Company’s ability to compete for physician partners, managed care contracts, patients and strategic relationships; adverse weather and other factors that may affect the Company’s surgery centers; the Company’s failure to comply with applicable laws and regulations; the risk of changes in legislation, regulations or regulatory interpretations that may negatively affect the Company; the risk of becoming subject to federal and state investigation; the risk of regulatory changes that may obligate the Company to buy out interests of physicians who are minority owners of its surgery centers; potential liabilities associated with the Company’s status as a general partner of limited partnerships; liabilities for claims brought against our facilities; the Company’s legal responsibility to minority owners of its surgery centers, which may conflict with its interests and prevent it from acting solely in its best interests; risks associated with the potential write-off of the impaired portion of intangible assets; and potential liability relating to the tax deductibility of goodwill. Consequently, actual results, performance or developments may differ materially from the forward-looking statements included above. AmSurg disclaims any intent or obligation to update these forward-looking statements.

AmSurg Corp. acquires, develops and operates ambulatory surgery centers in partnership with physician practice groups throughout the United States. At December 31, 2009, AmSurg owned a majority interest in 202 continuing centers in operation, had a definitive agreement to acquire one center and had one center under development.