Amsurg Corp. (AMSG)

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AmSurg Corp. (AMSG)

Q1 2008 Earnings Call

April 22, 2008 5:00 pm ET


Christopher A. Holden - President and Chief Executive Officer

Claire M. Gulmi - Executive Vice President, Chief Financial Officer


Ryan Daniels - William Blair

Darren Lehrich – Deutsche Bank

Kevin Ellich - RBC Capital Markets

Shelley Gnall - Goldman Sachs

Bill Bonello - Wachovia

Rob Hawkins - Stifel Nicolaus

Andreas Dirnagl - JP Morgan

David Bachman - Longbow Research

Adam Feinstein - Lehman Brothers

Whit Mayo - Stephens



Welcome to the AmSurg Corporation conference call. (Operator Instructions) And now at this time for openings remarks and introduction, I’d like to turn the conference over to the President and Chief Executive Officer, Chris Holden.

Christopher A. Holden

Joining me today is Claire Gulmi, Executive Vice President and Chief Financial Officer of AmSurg. We’d also like to welcome everyone that’s participating by way of the webcast. And I think, as you know it’s my responsibility at this point to read the following disclaimer.

Certain statements in the conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect management expectations and are based solely upon currently available information.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of AmSurg to differ materially from those that are expressed and/or implied by the forward-looking statements.

These factors are discussed in more detail in the company’s reports that are filed with the Securities and Exchange Commission including without limitation, AmSurg’s annual report on Form 10-K for the year ended December 2007 and quarterly report on Form 10-Q for the quarter ended December 31, 2007. Copies of these filings are available from AmSurg on request.

Let me begin by saying that we are pleased that we produced solid growth for the first quarter of 2008 and met our expectations for EPS for the quarter. After my opening comments I will turn it over to Claire for the financial summary for the quarter ending March 31, 2008.

Net earnings from continuing operations for the period increased 16% over prior year to $11.7 million. EPS increased to $0.37 or 12% over the prior year. Our performance is consistent with guidance for 2008.

Same-store revenue growth for the quarter was 3% for Q1 ‘08 including a negative impact of 1% for the revised Medicare payment system for ASCs. And also note that the quarter had one fewer days and a timing issue with Easter which arguably would have yielded an additional 1% negative impact.

On the development highlights our pipeline continues to produce favorable growth opportunities. We are in the process of rebuilding our pipeline after a record Q4 ‘07. For Q1 2008, we added two centers, both of which were gastroenterology centers and both of which were acquisitions.

Today we have one center held for sale, and at the quarters end we had two centers under development, one of which is expected to open in 2008, and one center pending CON approval with a possible 2009 opening. There are three acquisition centers under letter of intent. At quarter end we have 177 facilities, 125 of which are GI, 35 which are ophthalmology and 17 multi-specialty.

I want to give you an update on the few key issues. One issue is that we have filed litigation. AmSurg initiated a certain legal action against an existing partnership in the Southeast. And as a general statement, let me say that the decision to pursue this course of action is carefully considered and also very difficult for us.

We pride ourselves on partnerships. We have a successful track record of nearly 200 partnership with almost 1500 positions. And we take pride in our ability to navigate through all types of both positive and negative issues with our physician partners.

It’s unfortunate when disputes cannot be resolved outside the court room. However, in rare instances such as this, certain actions and conduct rise to a level demanding the most aggressive defense of the rights of AmSurg and its investors.

It’s our policy not to comment on the specifics of any active litigation, so my ability to answer questions about the details of this complaint is limited. The operational earnings impact of this issue is budgeted and reflected accordingly in our guidance.

Also mentioned on the last call about the issues surrounding the Codey Legislation in New Jersey, the draft language for this legislation is moving through the process. We expect the legislature to take it up in May. We do expect an outcome that protects our current interests and the debate centers around the impact the legislation will have on future expansion and development within the state. We remain actively engaged in the process of this legislative solution and continue to monitor its progress.

You recall on the last call we reviewed a number of strategic engineering moves here at AmSurg and just to give you some brief color on the status of a few of those. On the development front, the pipeline remains very robust. We’ve had a tremendous amount of activity in that regard in discussions.

Talked a lot last time about looking at the multi-specialty front and speculating in the chain pool and we’ve had significant amount of discussion in those lines. But the multiples continue to reflect high expectations on that front. The single center pipeline does remain solid and we feel that the opportunities continue to be more than adequate for our foreseeable future.

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