AmSurg Corp. ( AMSG ) reported
earnings per share ("EPS") from continuing operations of 49 cents
in the fourth quarter of 2012, up 6.5% compared with the year-ago
quarter's adjusted EPS of 46 cents. However, the reported EPS
missed the Zacks Consensus Estimate by 2 cents and remained within
the guidance range of 48−51 cents. Notably, the fourth-quarter EPS
included a negative impact of a penny from Hurricane Sandy. Fiscal
2012 EPS from continued operations were $1.98, showing annualized
growth of 19%. However, it missed the Zacks Consensus Estimate of
Revenues during the quarter increased 10% year over year to
$244.2 million. Revenues for fiscal 2012 increased 19% to $928.5
million, comfortably beating the Zacks Consensus Estimate of $924
The significant upside in revenues was primarily attributable to
a 3% rise in same-center revenues combined with an increase in the
number of operating centers to 240 at the end of fourth quarter
2012 (from year-ago 224 centers). Further, the company had two
additional centers under letter of intent at the end of 2012.
Operating expenses increased 10.1% year over year to $163.8
million due to higher salaries and benefits (up 11.8% to $76.6
million), supply cost (up 14.0% to $35.5 million) and other
operating expenses (up 5.1% to $51.7 million). Operating margin,
however, expanded 20 basis points to 32.9% during the quarter.
AmSurg exited fiscal 2012 with $46.4 million in cash and cash
equivalents versus $40.7 million at the end of 2011, and had $195
million available under its revolving credit facility. For the
fourth quarter, net cash flows from operating activities were $72.5
million compared with $67.8 million in the year-ago quarter.
AmSurg provided its 2013 revenue guidance in the range of
$1.06−$1.09 billion, just above of the current Zacks Consensus
Estimate of $1.05 billion. The company also expects the EPS outlook
for 2013 to remain within $2.18−$2.23 (the current Zacks Consensus
Estimate is $2.24).
Further, the company's 2013 same-center revenue growth forecast
is pegged at nil to 2%. Net cash flow provided by operating
activities, less distribution to non-controlling interests, is
expected in a range of $140−$150 million in 2013.
Additionally, AmSurg provided its EPS guidance for the first
quarter of 2013. The company expects EPS in the range of 50−52
cents. The current Zacks Consensus Estimate of 56 cents remains
beyond the range.
We are encouraged by AmSurg's impressive fourth-quarter revenue
growth with improvement in same-center sales in successive quarters
even amid uncertain economic conditions and high unemployment. The
company reported expansion in top line on the back of growth in
total procedures, mainly with the opening of new centers and solid
same-center performances. During the reported quarter, the company
acquired 14 centers and had 2 centers under a letter of intent.
We 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 hospitals.
However, the company is encountering several challenges such as
reimbursement issues, higher expenses and economic uncertainty.
Collectively these result in deferring elective procedures with a
decline in doctor visits by patients, and thereby decreasing
surgical volume. This also mounts pressure on margins. Currently,
AmSurg retains a Zacks Rank #4 (Sell).
Other Stocks to Consider
Amsurg's performance has not been so encouraging. However, other
stocks in the medical device sector, carrying a Zacks Rank
#1(Strong Buy), like Medical Action Industries
Inc. ( MDCI ), Given
Imaging Ltd. ( GIVN ) and
Cyberonics Inc. ( CYBX ) appear
impressive.AMSURG CORP (AMSG): Free Stock Analysis ReportCYBERONICS INC (CYBX): Free Stock Analysis
ReportGIVEN IMAGING (GIVN): Free Stock Analysis
ReportMEDICAL ACTION (MDCI): Free Stock Analysis
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