Mar 1 2012
United Surgical Partners International, Inc. ("USPI" or the "Company") today announced results for the fourth quarter and year ended December 31, 2011.
Fourth Quarter Financial Results
For the quarter ended December 31, 2011, consolidated net revenues increased 5% to $162.0 million compared with $154.2 million in the prior year period. Operating loss for the fourth quarter was $37.0 million as compared with operating income of $53.0 million for the prior year period. Current quarter operating loss included an impairment of goodwill of $107.0 million related to the U.K. reporting unit. Both the current and prior year had de novo start-up losses, acquisition related costs and certain non-facility operating expenses, which are explained in more detail in our Annual Report on Form 10-K. Adjusted EBITDA less noncontrolling interests increased 11% to $61.6 million versus $55.4 million in the prior year quarter.
The financial results for the fourth quarter were driven by systemwide revenue growth of 13%, consisting of 6% U.S. same-facility revenue growth and the remainder being due to acquisition activity.
Cash flows from operating activities for the fourth quarter totaled $43.7 million compared with $31.3 million for the prior year period. During the fourth quarter, the Company and its consolidated subsidiaries invested approximately $6.8 million in maintenance capital expenditures and an additional $16.3 million to develop new facilities and expand existing facilities.
Full Year Financial Results
For the year ended December 31, 2011, consolidated net revenues increased 6% to $609.6 million compared with $576.7 million in the prior year period. Operating income decreased 33% for 2011 to $141.1 million as compared with $210.5 million for the prior year period. Current year operating income included an impairment of goodwill of $107.0 million related to the U.K. reporting unit. Both the current and prior year had de novo start-up losses, acquisition related costs and certain non-facility operating expenses, which are explained in more detail in our Annual Report on Form 10-K. Adjusted EBITDA less noncontrolling interests increased to $212.8 million from $200.2 million in the prior year period.
Cash flows from operating activities for the year ended December 31, 2011, totaled $184.1 million compared with $169.1 million for the prior year period. This increase was due to the higher operating cash flows of our facilities being partially offset by increased federal tax payments. The Company's federal tax payments in the first half of 2010 were lower due to its still having significant net operating loss carryforwards to apply. During 2011, the Company and its consolidated subsidiaries invested approximately $18.7 million in maintenance capital expenditures and an additional $31.8 million to develop new facilities and expand existing facilities.
Systemwide Financial Results
Due to the Company's partnerships with physicians and not-for-profit healthcare systems, the Company does not consolidate the financial results of the majority of its facilities. While revenues of the Company's unconsolidated facilities are not recorded as revenues by USPI, equity in earnings of unconsolidated affiliates is a significant and growing portion of the Company's overall earnings. To help analyze results of operations, management uses systemwide operating measures such as systemwide revenue growth, which include revenues of both consolidated and unconsolidated facilities. In addition to overall systemwide revenue growth, USPI calculates growth rates and operating margins for the facilities that were operational in both the current and prior year periods, a group the Company refers to as same-store or same-facility. This group also consists of both consolidated and unconsolidated facilities. At December 31, 2011, 141 of the 206 facilities the Company operated were not consolidated.
Revenue Analysis
For the fourth quarter, the systemwide revenues of the facilities operated by the Company increased 13% on a year-over-year basis, while consolidated revenues increased 5%. For 2011, the systemwide revenues of the facilities operated by the Company increased 13% on a year-over-year basis, while consolidated revenues increased 6%. The table below lists the key drivers of year-over-year changes in revenues.
Development Activity
During the year, the Company acquired 19 facilities, opened four de novo facilities, and sold its interest in six facilities. The Company expects to add 15 to 20 facilities in 2012.
Impairment of Goodwill
During the fourth quarter of 2011, the Company recorded a $107.0 million goodwill impairment charge related to its United Kingdom (U.K.) reporting unit. The impairment primarily resulted from worsening conditions in U.K. and European capital markets and poor overall economic conditions, as further described in the Company's Annual Report on Form 10-K.
Summary
Commenting on the results, William H. Wilcox, USPI's chief executive officer, said, "We ended the year with some good momentum as we had solid operational results and continued robust development activity."
Source:
United Surgical Partners International, Inc.