Adeptus Health's net revenue increases 108.0% to $70.1 million in fourth quarter 2014

Adeptus Health Inc. (NYSE: ADPT) ("ADPT" or the "Company"), the largest operator of freestanding emergency rooms in the U.S., announced its results for the fourth quarter and full year ended December 31, 2014. All comparisons included in this release are for the same period in the prior year, unless otherwise noted.

Fourth Quarter 2014 Highlights:

• Net revenue increased 108.0% to $70.1 million from $33.7 million in prior year;
• Adjusted EBITDA increased 54.5% to $10.2 million from $6.6 million in prior year;
• Net income attributable to Adeptus Health Inc. was $0.3 million;
• Adjusted earnings per share was $0.09 and GAAP earnings per share was $0.03;
• Patient volume (number of patient visits) increased 91.1%, to 47,643, over prior year; and
• The Company opened 4 freestanding facilities during the fourth quarter 2014 for a full year total of 55 operating facilities.

Year End 2014 Highlights:

• Net revenue increased 104.8% to $210.7 million from $102.9 million in prior year;
• Adjusted EBITDA increased 76.1% to $28.2 million from $16.0 million in prior year;
• Net loss attributable to Adeptus Health Inc. was $3.4 million;
• Adjusted earnings per share was $0.04 and GAAP net loss per share was $0.34;
• Patient volume (number of patient visits) increased 89.6%, to 146,058, over prior year; and
• The Company opened 29 freestanding facilities during 2014 for a total of 55 operating facilities.

2015 Guidance:

• Systemwide net revenue of $367.0 million to $377.0 million; Adjusted EBITDA of $49.0 million to $53.0 million.

"2014 was a milestone year of expansion for Adeptus Health. We added 29 new emergency rooms, more than doubling our number of freestanding facilities, built our first hospital and maintained our focus of delivering the highest quality care to the communities we serve. Our patients rated our care among the top 1% in the nation, our team members voted us among the best companies to work for, and our partnership with an industry leader is expanding our model into new markets to enhance the continuum of care," said Thomas S. Hall, Chairman, President and Chief Executive Officer.

Results of Operations for the Fourth Quarter 2014

For the fourth quarter of 2014, ADPT generated net revenue of $70.1 million, an increase of 108.0%. The increase was primarily attributable to the impact of increased patient volumes from the expansion of the number of freestanding facilities from 26 to 55. This increase was negatively impacted by the Ebola virus in the DFW market during the fourth quarter 2014 compared to the same period in 2013.

Adjusted EBITDA increased 54.5% to $10.2 million. This increase was primarily attributable to a $36.3 million increase in net revenue, partially offset by increases in salaries, wages and benefits and other costs related to our growth initiatives. See "Non-GAAP Financial Measures Description and Reconciliation" and "Reconciliation of Adjusted EBITDA to Net Loss" below for further information related to Adjusted EBITDA and its reconciliation to net loss.

ADPT incurred a net loss of $1.5 million for the quarter, of which $0.3 million of net income was attributable to Adeptus Health Inc., compared to a net loss of $2.0 million from the prior year. The decrease in net loss was due to an increase of $36.3 million in net revenue, partially offset by increases in salaries, wages and benefits and other costs related to our growth initiatives, including an increase in interest expense and fees of $1.2 million related to our long-term debt, an increase of $2.2 million in preopening costs associated with new facility openings, including $0.9 million related to its equity interest in Dignity Health Arizona General Hospital, and an increase of $2.1 million in depreciation and amortization expense.

Adjusted earnings per share was $0.09 per share and GAAP earnings per share was $0.03 per share for the quarter. Adjusted earnings per share is calculated using a weighted average of both Class A and Class B common shares outstanding, which was 20,626,169 common shares at December 31, 2014. Adjustments for the quarter include $4.4 million of preopening costs associated with new facility openings, including Dignity Health Arizona General Hospital, $0.3 million of stock compensation expense, $0.4 million of other costs associated with our growth initiatives and an adjustment for taxes in order to establish a normalized tax rate of 35% for comparability purposes. See "Non-GAAP Financial Measures Description and Reconciliation" and "Earnings Per Share Reconciliation" below for further information related to Adjusted earnings per share and its reconciliation to net loss.

Results of Operations for the Year Ended 2014

For the year ended December 31, 2014, ADPT generated net revenue of $210.7 million, an increase of 104.8%. The increase was primarily attributable to the impact of increased patient volumes from the expansion of the number of freestanding facilities from 26 to 55.

Adjusted EBITDA increased 76.1% to $28.2 million. This increase was primarily attributable to a $107.8 million increase in net revenue, partially offset by increases in salaries, wages and benefits and other costs related to our growth initiatives. See "Non-GAAP Financial Measures Description and Reconciliation" and "Reconciliation of Adjusted EBITDA to Net Loss" below for further information related to Adjusted EBITDA and its reconciliation to net loss.

ADPT incurred a net loss of $17.3 million for the year ended December 31, 2014, of which $3.4 million was attributable to Adeptus Health Inc., compared to a net loss of $3.0 million from the prior year. The increase in net loss was due to an increase in interest expense and fees of $9.1 million related to our long-term debt, an increase of $6.6 million in preopening costs associated with new facility openings, an increase of $6.4 million related to our initial public offering and other public company costs, and an increase of $7.1 million in depreciation and amortization expense. The increase in these expenditures was partially offset by new facility operating income.

Adjusted earnings per share was $0.04 per share and GAAP net loss per share was $0.34 per share for the year ended December 31, 2014. Adjusted earnings per share is calculated using a weighted average of both Class A and Class B common shares outstanding, which was 20,626,169 common shares at December 31, 2014. Adjustments for the year include $10.6 million of preopening costs associated with new facility openings, $1.0 million of stock compensation expense, $5.2 million of initial public offering costs, $8.3 million of other costs associated with our growth initiatives and an adjustment for taxes in order to establish a normalized tax rate of 35% for comparability purposes. See "Non-GAAP Financial Measures Description and Reconciliation" and "Earnings Per Share Reconciliation" below for further information related to Adjusted earnings per share and its reconciliation to net loss.

At December 31, 2014, the Company had total long-term debt of $106.8 million. Total availability under the debt facility was $84.2 million, contingent upon meeting its debt covenants.

Market Outlook

In December 2014, the new partnership with Dignity Health became effective with Dignity Health Arizona General Hospital, a full service general hospital located in Laveen, Arizona. In December, the facility began its training and certification phase of operation and received CMS certification from the Joint Commission on January 30, 2015. All activity related to this facility is deemed preopening and added back in the calculation of adjusted EBITDA and adjusted earnings per share prior to receiving CMS certification.

ADPT continues to expand its freestanding emergency room network at an expected rate of opening 24 new sites per year. During January 2015, ADPT opened four new First Choice Emergency Rooms. Additionally, ADPT began construction on its second new hospital in late 2014. The hospital in Carrollton, Texas, a Dallas-Ft Worth suburb, is scheduled to open in late 2015. The hospital will feature inpatient rooms, advanced operating suites, an emergency department, a high complexity laboratory and a full radiology suite and will be capable of inpatient and outpatient surgical procedures. The new hospital will also provide Carrollton-area residents with 24/7 access to emergency medical care treating a broad spectrum of illnesses and injuries that require immediate medical attention.

ADPT sees strong opportunities for continued growth as it strives to play a leading role in meeting demand for increased access to quality medical care and improved emergency care in the U.S. In their 2014 National Report Card on America's emergency care environment, the American College of Emergency Physicians, or ACEP, assigned an overall grade of "D-" for the category of access to emergency care. The poor grade reflects too few emergency departments to meet the needs of a growing, aging population and the projected increase in the number of insured individuals as a result of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act of 2010, or PPACA.

"We are literally helping to change the delivery of emergency medical care in America. Our thesis remains the same, which is to bring access to the highest quality care to the communities we serve," added Mr. Hall.

2015 Guidance

Based on our strong 2014 performance and continued growth plans including 24 freestanding facilities and two new hospitals, we expect to generate systemwide net revenue, which includes revenue from our unconsolidated joint venture, of $367.0 million to $377.0 million for the full year 2015. We expect Adjusted EBITDA of $49.0 million to $53.0 million for 2015.