) declined 7.6% to close at $43.66 on Apr 25, 2014, following the
company's announcement of its first-quarter 2014 financial
results on Apr 22, 2014. The company's adjusted earnings per
share (EPS) from continuing operations moved up 1.9% year over
year to 53 cents. However, the EPS figure lagged the Zacks
Consensus Estimate of 55 cents and coincided with the lower end
of the company's guidance range of 53−57 cents. Including
one-time item of gains from deconsolidation of a surgery center
the company reported first-quarter 2014 net earnings per share
from continuing operations of 55 cents, down 1.8% year over
Revenues during the quarter scaled up 1.9% year over year to
$263.1 million, lagging the Zacks Consensus Estimate of $271.0
million. According to Amsurg, the growth was backed by 2.4%
increase in revenues per procedure, mainly attributable to six
centers acquired in 2013.
Same-center revenues during the quarter declined 2% year over
year. The decline was on account of adverse weather impacts on
38% of the centers in the portfolio resulting in a loss of 8,000
procedures. AmSurg exited first-quarter 2014 with a total of 242
Operating expenses increased 3.7% year over year to $177.2
million due to higher salaries and benefits (up 2.8% to $83.2
million), supply cost (up 4.0% to $38.7 million) and other
operating expenses (up 4.8% to $55.3 million). Moreover, on the
back of increased expenses, adjusted operating margin contracted
120 basis points to 32.6% in the first quarter.
AmSurg exited the reported quarter with $47.1 million in cash
and cash equivalents versus $50.8 million at the end of 2013, and
had $237.5 million available under its revolving credit facility.
For the first quarter, net cash flow from operating activities
was $69.8 million, down 5.5% from the year-ago quarter. Moreover,
the company incurred $12.1 million capital expenditure in the
reported quarter resulting in free cash flow of $57.7
AmSurg revised its 2014 operating and financial guidance. The
company now lowered its revenues guidance to the range of
$1.12−$1.13 billion (earlier guidance: $1.12−$1.15 billion).The
current Zacks Consensus Estimate of $1.12 billion coincides with
the lower end of the range. AmSurg also downgraded its full-year
EPS outlook within $2.41−$2.45 (earlier $2.45−$2.49), excluding
the deconsolidation gain. However, the current Zacks Consensus
Estimate of $2.44 is pegged close to the upper end of the
Further, the company's 2014 same-center revenue growth
continues to be forecasted at 1%-2% (unchanged). Expected net
cash flow provided by operating activities, less distribution to
non-controlling interests, is reiterated in the range of
$150−$160 million in 2014. Center acquisitions are continued to
be estimated to generate annual operating income of $25−$29
Additionally, AmSurg provided its EPS guidance for the second
quarter of 2014. The company expects EPS in the range of 61−64
cents. The current Zacks Consensus Estimate of 63 cents remains
near the upper end of the range.
AmSurg delivered disappointing first-quarter 2014 results
missing the Zacks Consensus Estimate on both fronts. Adverse
weather conditions served as the main obstacle for the company in
the reported quarter. Moreover, still-sluggish same-center sales
continue to be an area of concern. The revised bearish 2014
outlook also fails to indicate any near-term catalyst that may
improve the economic scenario in the near future.
However, we are positive on the company's new joint ventures
and also expect AmSurg to progress well on its acquisition
pipeline, supported by a strong cash position. Moreover, we are
optimistic about the fact that government agencies have
undertaken initiatives to curtail healthcare expenditure, thereby
resulting in a shift toward ambulatory surgery centers from
admission to traditional hospitals.
Currently, AmSurg retains a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked stocks in the broader healthcare sector
that warrant a look are
Myriad Genetics Inc.
Natus Medical Inc.
). Enzymotec and Myriad Genetics sport a Zacks Rank #1 (Strong
Buy) while Natus Medical carries a Zacks Rank #2 (Buy).
AMSURG CORP (AMSG): Free Stock Analysis
NATUS MEDICAL (BABY): Free Stock Analysis
ENZYMOTEC LTD (ENZY): Free Stock Analysis
MYRIAD GENETICS (MYGN): Free Stock Analysis
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