) second-quarter 2013 earnings per share (EPS) from continuing
operations of 58 cents were 3 cents ahead of the Zacks Consensus
Estimate and up 14% year over year. The EPS from continuing
operations also sailed past the company's guidance range of 55−57
Revenues during the quarter increased 17% year over year to
$269.3 million, ahead of the Zacks Consensus Estimate of $266
million. Amsurg believes that the reported quarter has been the
strongest seasonally, due to strong performance of the 17 centers
acquired last year.
However, same-center revenues remained flat year over year,
due to reduction in workers' compensation reimbursement by the
State of California and sequestration. This impact more than
offset the benefits from having one additional business day in
the reported quarter.
Operating expenses increased 15.6% year over year to $175.7
million due to higher salaries and benefits (up 15.7% to $81.7
million), supply cost (up 19.6% to $39.5 million) and other
operating expenses (up 12.5% to $54.5 million). However, adjusted
operating margin expanded 78 bps to 34.8% during the quarter.
AmSurg exited the quarter with $39.9 million in cash and cash
equivalents versus $46.4 million at the end of 2012, and had $215
million available under its revolving credit facility. For the
second quarter, net cash flow from operating activities was $78.7
million compared with $74.5 million in the year-ago quarter.
AmSurg reiterated its 2013 revenue guidance in the range of
$1.06−$1.09 billion. The current Zacks Consensus Estimate of
$1.07 billion remains within the range. However, the company
increased its fiscal 2013 EPS outlook. It now expects the fiscal
earnings to remain within $2.17−$2.20 (earlier $2.13−$2.18). The
current Zacks Consensus Estimate of $2.16 remains below the
Further, the company's 2013 same-center revenue growth
forecast was reaffirmed at nil to 1%. Net cash flow provided by
operating activities, less distribution to non-controlling
interests, is expected in a range of $140−$150 million in 2013
(unchanged). Center acquisitions are expected to generate annual
operating income of $25−$29 million.
Additionally, AmSurg provided its EPS guidance for the third
quarter of 2013. The company expects EPS in the range of 51−53
cents. The current Zacks Consensus Estimate of 53 cents remains
at the high end of the range.
Despite the uncertain economic conditions and high unemployment,
we are encouraged by AmSurg's second-quarter revenue growth of
17%. However, we are concerned with the flat same-center sales.
The company reported expansion in top line on the back of growth
through strong performance of the acquired centers.
We are also encouraged with the company's new joint venture
with a hospital system and expect AmSurg to go ahead with its
acquisition pipeline, supported by a strong cash position.
Government agencies have undertaken initiatives to curtail
healthcare expenditure, thereby resulting in a shift toward
ambulatory surgery centers from admission to traditional
However, the company is encountering several challenges such
as reimbursement issues, higher expenses and economic
uncertainty. Currently, AmSurg retains a Zacks Rank #2 (Buy).
Other Stocks to Consider
Some of the stocks in the medical device sector, carrying a
Zacks Rank #1 (Strong Buy) are
Jazz Pharmaceuticals Plc.
AMSURG CORP (AMSG): Free Stock Analysis
HEALTH NET INC (HNT): Free Stock Analysis
JAZZ PHARMACEUT (JAZZ): Free Stock Analysis
WELLPOINT INC (WLP): Free Stock Analysis
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