) third-quarter 2013 earnings per share (EPS) from continuing
operations were up 10% year over year, marking the company's
second consecutive quarter of double-digit growth. However it
remained in line with the Zacks Consensus Estimate and also
touched the upper end of the company's guidance range of 51−53
Revenues during the quarter increased 19% year over year to
$268.2 million, and surpassed the Zacks Consensus Estimate of
$266 million. Despite ongoing headwinds like reduction in
workers' compensation reimbursement by the State of California,
sequestration and increased interest expense, the growth recorded
was encouraging. According to Amsurg, the growth was backed by
increase in procedures and revenues per procedure from the higher
percentage of multi-specialty centers in the company's overall
Same-center revenues increased 2% year over year, partly on
account of having one additional business day in the reported
quarter. During the quarter, AmSurg acquired two centers,
divested one and merged two, ending up with a total of 243
operational centers at the end of the quarter. Besides, there are
5 centers under letter of intent.
Operating expenses increased 19.2% year over year to $179.7
million due to higher salaries and benefits (up 17.4% to $84.9
million), supply cost (up 22.2% to $38.4 million) and other
operating expenses (up 20.1% to $56.4 million). Adjusted
operating margin remained flat year over year at 33.0%.
AmSurg exited the quarter with $45.5 million in cash and cash
equivalents versus $46.4 million at the end of 2012, and had $209
million available under its revolving credit facility. For the
third quarter, net cash flow from operating activities was $50.8
million up 58% from 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
$1.08 billion remains within the range. However, the company
increased its fiscal 2013 EPS outlook. It now expects the fiscal
earnings to remain within $2.19−$2.21 (earlier provided range was
$2.17−$2.20). The current Zacks Consensus Estimate of $2.20
remains within the guided range.
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 (unchanged).
Additionally, AmSurg provided its EPS guidance for the fourth
quarter of 2013. The company expects EPS in the range of 56−58
cents. The current Zacks Consensus Estimate of 57 cents remains
at the mid-point of the range.
Despite the uncertain economic conditions and high unemployment,
we are encouraged by AmSurg's third-quarter double digit revenue
and EPS growth. The company reported encouraging top-line
expansion owing to strong performance of the acquired centers.
However, still sluggish same-center sales remain as an area of
We are also positive on the company's new joint ventures and
expect AmSurg to progress well on its acquisition pipeline,
supported by a strong cash position. Besides, 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
However, the company is encountering several challenges such
as reimbursement issues, higher expenses and economic
uncertainty. Currently, AmSurg retains a Zacks Rank #3
Other Stocks to Consider
Some better-performing stocks in the medical device sector are
Align Technologies Inc.,
Mindray Medical International Limited
Bio-Rad Laboratories, Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
ALIGN TECH INC (ALGN): Free Stock Analysis
AMSURG CORP (AMSG): Free Stock Analysis
BIO-RAD LABS -A (BIO): Free Stock Analysis
MINDRAY MEDICAL (MR): Free Stock Analysis
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