Published:
Team Finance LLC Announces First Quarter 2008 Results
KNOXVILLE, Tenn., May 8 /PRNewswire/ -- TeamHealth Inc.'s parent company,
Team Finance LLC (the "Company") today announced results for the first quarter
ended March 31, 2008.
The Company previously announced the decision to exit the anesthesia
management services business line and substantially completed the disposal of
this business line during the third quarter of 2007. As a result, in
accordance with relevant accounting guidance, the results of the anesthesia
management business are reported as discontinued operations in the statement
of operations for the first quarter of 2007 presented in this release.
Net revenue less provision for uncollectibles ("revenue less provision")
in the first quarter of 2008 increased 9.6% to $330.0 million from $301.1
million in the corresponding period of 2007. Same contract revenue less
provision for the quarter increased by 6.8% to $285.3 million from $267.2
million in the same period a year ago. During the first quarter of 2008,
growth in same contract revenue less provision was positively impacted 3.5% by
an increase in billed patient volume and a 3.2% increase in contract and other
revenue, compared to the first quarter of 2007. New sales, net of contracts
that terminated in the period, and acquisitions contributed $9.7 million and
$1.1 million of growth between periods, respectively. Net earnings were
$17.5 million in the first quarter of 2008, compared to $19.0 million in the
first quarter of 2007. Included in the net earnings for the first quarter of
2007 was a loss from discontinued operations (net of tax benefits) of
$237,000.
Based on the results of the Company's most recent actuarial study
completed in April 2008, first quarter 2008 financial results reflect a
reduction in professional liability reserves related to prior years of $13.8
million, compared to a $19.6 million reduction in the first quarter of 2007.
The professional liability reserve adjustment recognized in the current
quarter resulted from an improved actuarial view of prior period loss
estimates due primarily to favorable loss development during the period and
continued positive trends in the frequency of reported claims.
As of March 31, 2008, the Company had cash and cash equivalents of
approximately $29.5 million and revolving credit facility borrowing
availability of $125.0 million (without giving effect to $7.2 million of
undrawn letters of credit). During the first quarter of 2008, the Company
made a scheduled debt payment of $1.1 million. As a result, the Company's
total outstanding debt as of March 31, 2008 was $630.4 million and there were
no amounts outstanding under the revolving credit facility. Cash flow
provided by operations (after interest, taxes and changes in working capital)
for the three months ended March 31, 2008 was $12.0 million compared to $28.0
million in 2007. The change in operating cash flow between periods is
primarily due to the funding of accounts receivable associated with the
increase in net revenue between periods.
Greg Roth, Chief Executive Officer and President of TeamHealth, said, "We
are pleased to report solid financial results for the first quarter of 2008.
Our financial performance was driven by our core emergency department staffing
operations, with additional contributions generated by our military and locum
tenen staffing divisions. During the quarter, we benefited from an increase
in patient visits which contributed to the 6.8% increase in same contract
revenue, an improvement over the lower level of growth realized in same
contract revenue in the fourth quarter of 2007. New contract relationships
derived through both sales efforts and acquisitions also performed up to
expectations during the quarter. In addition, increases in our compensation
costs were better aligned with our net revenue growth during the quarter. Our
management team continues to focus on maximizing the Company's operational
efficiency. As a result of these efforts, we were able to reduce our general
and administrative costs to 8.5% of net revenue less provision in the first
quarter of 2008."
Lynn Massingale, M.D., Executive Chairman of TeamHealth, added, "In
addition to the sound financial performance in our core business during the
quarter, we again realized a reduction in the loss reserves associated with
our prior year self insured professional liability exposures. As with
previous reductions in these loss reserves, the reduction in the current
quarter was due to continued favorable development in the actuarial estimates
of prior year losses. We continue to believe that such favorable trends are
due in large part to the significant investments we have made over the years
in patient safety and other risk management initiatives as well as the
outstanding commitment of our affiliated physicians and other clinical
providers to these programs.
"As previously announced, effective May 1, 2008, Greg Roth was promoted to
the position of President and Chief Executive Officer and I assumed the role
of Executive Chairman of the Board. I look forward to continuing to work with
Greg in his expanded role and I, as well as the rest of our employees, are
excited about this new arrangement and the opportunities it presents the
Company to better serve and create additional value for our hospital
customers, affiliated physicians and clinicians, and the patients cared for by
each of these constituents."
Conference Call
As previously announced, TeamHealth will hold an investor conference call
at 11:00 a.m. Eastern Time on May 9, 2008. All interested parties may listen
to the call by calling (888) 290-3292. A taped replay of the call will be
available after 2:00 p.m. Eastern Time Friday, May 9, 2008, through midnight
on Friday, May 16, 2008, by calling (800) 642-1687, access code 44050056.
About TeamHealth
Founded in 1979, TeamHealth is headquartered inKnoxville, Tennessee.
TeamHealth is affiliated with approximately 5,900 healthcare professionals who
provide emergency medicine, radiology, hospital medicine, urgent care and
pediatric staffing and management services to approximately 550 civilian and
military hospitals, and clinics and physician groups in 44 states. For more
information about TeamHealth, visit www.teamhealth.com or call 800.818.1498.
Statements made in this communication that are not historical facts and
that reflect the current view of Team Finance LLC or TeamHealth, Inc.
(collectively the "Company") about future events and financial
performance are hereby identified as "forward looking statements." Some
of these statements can be identified by terms and phrases such as
"anticipate," "believe," "intend," "estimate," "expect," "continue,"
"could," "should," "may," "plan," "project," "predict" and similar
expressions and include references to assumptions that we believe are
reasonable and relate to our future prospects, developments and business
strategies. The Company cautions readers of this communication that such
"forward looking statements", including without limitation, those
relating to the Company's future business prospects, revenue, working
capital, professional liability expense, liquidity, capital needs,
interest costs and income, wherever they occur in this communication or
in other statements attributable to the Company, are necessarily
estimates reflecting the judgment of the Company's senior management and
involve a number of risks and uncertainties that could cause actual
results to differ materially from those suggested by the "forward
looking statements". Factors that could cause our actual results to
differ materially from those expressed or implied in such forward-
looking statements, include, but are not limited to those factors
detailed from time to time in the Company's filings with the Securities
and Exchange Commission, including filings on Forms 10-Q and 10-K.
The Company disclaims any intent or obligation to update "forward looking
statements" made in this communication to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating results over
time.
- tables attached -
Team Finance LLC
Financial Highlights
Three Months Ended
March 31,
2008 2007
(Unaudited)
(In thousands)
Net revenue $559,021 $485,953
Provision for uncollectibles 229,002 184,852
Net revenue less provision
for uncollectibles 330,019 301,101
Cost of services rendered
Professional service expenses 255,236 228,324
Professional liability costs 54 (5,675)
Gross profit 74,729 78,452
General and administrative
expenses 28,129 27,819
Management fee and other
expenses 886 931
Depreciation and amortization 3,882 3,490
Interest expense, net 12,642 14,469
Earnings from continuing
operations before income
taxes 29,190 31,743
Provision for income taxes 11,702 12,473
Earnings from continuing
operations 17,488 19,270
Loss from discontinued
operations less applicable
benefit from income taxes
of $150 --- (237)
Net earnings $17,488 $19,033
Under the indenture governing the senior subordinated notes, the Company's
ability to engage in certain activities such as incurring certain additional
indebtedness, making certain investments, and paying certain dividends is tied
to ratios based on Adjusted EBITDA (which is defined as "EBITDA" in the
indenture). Adjusted EBITDA under the indenture is defined as net earnings
before interest expense, taxes, depreciation and amortization, as further
adjusted to exclude unusual items, non-cash items and the other adjustments
shown in the table below. We believe that the disclosure of the calculation of
Adjusted EBITDA provides information that is useful to an investor's
understanding of the Company's liquidity and financial flexibility. Adjusted
EBITDA is not a measurement of financial performance or liquidity under
generally accepted accounting principles. It should not be considered in
isolation or as a substitute for net income, operating income, cash flows from
operating, investing or financing activities, or any other measure calculated
in accordance with generally accepted accounting principles. Adjusted EBITDA
as calculated under the indenture for the senior subordinated notes is as
follows (in thousands):
Three Months Ended
March 31,
2008 2007
(Unaudited)
Net earnings $17,488 $19,033
Loss from discontinued operations, net of taxes --- 237
Interest expense, net 12,642 14,469
Provision for income taxes 11,702 12,473
Depreciation and amortization 3,882 3,490
EBITDA 45,714 49,702
Management fee and other expenses (a) 886 931
Restricted unit expense (b) 140 140
Insurance subsidiary interest income 1,075 640
Severance and other charges 383 1,638
Adjusted EBITDA* $48,198 $53,051
* Adjusted EBITDA totals include the effects of professional liability
loss reserve adjustments of $13,835 and $19,599 for the three months
ended March 31, 2008 and 2007, respectively.
(a) Reflects management sponsor fee and loss on disposal of assets.
(b) Reflects costs related to the recognition of expense in connection
with the issuance of restricted units under the 2005 unit plan
Team Finance LLC
Financial Highlights
Balance Sheet Data March 31, December 31,
2008 2007
(Unaudited)
(In thousands)
Cash and cash equivalents $29,464 $30,290
Accounts receivable, net 235,987 222,603
Long term debt, including current portion 630,437 631,500
SOURCE TeamHealth, Inc.
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