Symbion, Inc. (NASDAQ:SMBI), an owner and operator of short stay
surgical facilities, announced today results for the second quarter
and six months ended June�30, 2007. For the second quarter ended
June 30, 2007, revenues increased 4% to $76.7�million compared with
$73.5 million for the second quarter ended June 30, 2006. Net
income for the second quarter of 2007 decreased to $3.9 million
compared with $5.9 million for the second quarter of 2006.
Previously issued results have been reclassified to present certain
facilities as discontinued operations, two of which were
reclassified in 2006 and four of which were reclassified during the
first quarter of 2007. The effective tax rate for the second
quarter of 2007 was 42.0% compared with 38.5% for the second
quarter of 2006. Income per diluted share from continuing
operations for the second quarter of 2007 was $0.18 compared with
$0.28 for the second quarter of 2006. Results for the second
quarter of 2007 included $1.2 million of transaction costs related
to the merger discussed below. The transaction costs incurred by
the Company are not deductible for tax purposes. These transaction
costs increased the Company�s tax rate by approximately 2.9% and
decreased diluted earnings per share by $0.04 for the second
quarter of 2007. Results for the second quarter of 2006 included
$0.03 related to a gain on the sale of assets and $0.01 related to
an adjustment to depreciation expense based on a change in
depreciation estimates at certain of the Company�s newly acquired
surgery centers. EBITDA decreased to $11.6 million for the second
quarter of 2007 compared with $14.4 million for the second quarter
of 2006. Same store net patient service revenues for the second
quarter of 2007 decreased 2% compared with the same period in 2006
primarily as a result of the continuation of the Company�s
transition from out-of-network to in-network billing in certain
markets that was initiated in the third quarter of 2006. At June
30, 2007, the Company�s outstanding indebtedness was $129.2 million
with a ratio of debt to total capitalization of 30%. For the six
months ended June 30, 2007, revenues increased 9% to $153.9�million
compared with $141.0 million for the first half of 2006. Net income
for the first half of 2007 decreased to $8.0 million compared with
$10.5 million for the same period in 2006. The effective tax rate
for the six months ended June 30, 2007, was 40.4% compared with
38.5% for the six months ended June 30, 2006. Income per diluted
share from continuing operations for the six months ended June 30,
2007, was $0.38 compared with $0.49 for the six months ended June
30, 2006. Results for the six months of 2007 included $1.2 million
of transaction costs related to the merger discussed below. These
transaction costs increased the Company�s tax rate by approximately
1.4% and decreased diluted earnings per share by $0.04 for the six
months ended June 30, 2007. Results for the six months of 2006
included $0.04 related to non-recurring gains recorded during the
first and second quarters of 2006 and $0.01 related to an
adjustment to depreciation expense based on a change in
depreciation estimates at certain of the Company�s newly acquired
surgery centers. EBITDA decreased to $23.9 million for the first
half of 2007 compared with $26.5 million for the first half of
2006. Same store net patient service revenues for the six months
ended June 30, 2007, increased 1% compared with the same period in
2006. On June 30, 2007, the Company acquired an additional 55%
equity interest in a surgical facility located in Cape Coral,
Florida, in which the Company already owned 10%. Subsequent to the
additional interest purchase, the Company began consolidating the
operations of the Cape Coral facility on July 1, 2007. Proposed
Merger The Company announced on April 24, 2007, that it had entered
into a merger agreement (the �Merger Agreement�) with a newly
formed subsidiary of Crestview Partners, L.P., a New York-based
private equity firm. Under the terms of the Merger Agreement,
holders of Symbion common stock will receive $22.35 per share in
cash for their shares. The transaction is expected to close in the
third quarter of 2007, subject to satisfaction of the closing
conditions set forth in the Merger Agreement. The Company will hold
a special meeting of its stockholders to consider the merger. The
meeting is scheduled for August 15, 2007, at 9:00 a.m., Central
time, at the offices of Waller Lansden Dortch & Davis, LLP, 511
Union Street, Suite 2700, Nashville, Tennessee 37219. Given the
pending transaction, the Company will not be hosting a conference
call for its second quarter earnings release. Additional
Information and Where to Find It In connection with the proposed
merger, Symbion has filed a definitive proxy statement with the
Securities and Exchange Commission. Before making any voting
decision, the Company�s stockholders are urged to read the proxy
statement regarding the merger carefully in its entirety because it
contains important information about the proposed transaction. The
Company�s stockholders and other interested parties may obtain,
without charge, a copy of the proxy statement and other relevant
documents filed with the SEC from the SEC�s website at www.sec.gov
or by directing a request by mail or telephone to Symbion, Inc., 40
Burton Hills Boulevard, Suite�500, Nashville, Tennessee 37215,
Attention: R. Dale Kennedy, telephone: (615)�234-5900, or from the
Company�s website, www.symbion.com. Participants in the
Solicitation Symbion and its directors and executive officers may
be deemed to be participants in the solicitation of proxies from
its stockholders in connection with the merger. A description of
the interests of Symbion�s directors and executive officers in
Symbion is set forth in Symbion�s proxy statements and Annual
Reports on Form 10-K, previously filed with the SEC, and in the
definitive proxy statement relating to the merger. About Symbion,
Inc. Symbion, Inc., headquartered in Nashville, Tennessee, owns and
operates a network of 57 short stay surgical facilities in 23
states. The Company�s facilities provide non-emergency surgical
procedures across many specialties. This press release contains
forward-looking statements based on management�s current
expectations and projections about future events and trends that
management believes may affect the Company�s financial condition,
results of operations, business strategy and financial needs. The
words �anticipate,� �believe,� �continue,� �estimate,� �expect,�
�intend,� �may,� �plan,� �will� and similar expressions are
generally intended to identify forward-looking statements. These
statements, including those regarding the Company�s growth and
continued success, have been included in reliance on the �safe
harbor� provisions of the Private Securities Litigation Reform Act
of 1995. These statements involve risks, uncertainties and other
factors that may cause actual results to differ from the
expectations expressed in the statements. Many of these factors are
beyond the ability of the Company to control or predict. These
factors include, without limitation: (i) the occurrence of any
event, change or other circumstances that could give rise to the
termination of the Merger Agreement; (ii) the outcome of legal
proceedings instituted against Symbion and others following
announcement of the Merger Agreement; (iii) the inability to
complete the merger due to the failure to obtain stockholder
approval or the failure to satisfy other conditions to completion
of the merger; (iv) the failure to obtain the necessary debt
financing arrangements for the merger; (v) risks that the proposed
transaction disrupts current plans and operations and the potential
difficulties in employee retention as a result of the merger; (vi)
the ability to recognize the benefits of the merger; (vii) the
amount of the costs, fees, expenses and charges related to the
merger and the actual terms of certain financings that will be
obtained for the merger; (viii) the Company�s dependence on
payments from third-party payors, including government health care
programs and managed care organizations; (ix) the Company�s ability
to acquire and develop additional surgery centers on favorable
terms, including potential difficulties in integrating the business
operations of such surgery centers; (x) the Company�s ability to
enter into strategic alliances with health care systems and other
health care providers that are leaders in their markets; (xi)
efforts to regulate the construction, acquisition or expansion of
health care facilities; (xii) the risk that the Company�s revenues
and profitability could be adversely affected if it fails to
attract and maintain good relationships with the physicians who use
its facilities; (xiii) the Company�s ability to comply with
applicable laws and regulations, including health care regulations,
corporate governance laws and financial reporting standards; (xiv)
risks related to pending or future heightened regulation of
specialty hospitals which could restrict the Company�s ability to
operate its facilities licensed as hospitals and could adversely
impact its reimbursement revenues; (xv) the risk of changes to
physician self-referral laws that may require the Company to
restructure some of its relationships, which could result in a
significant loss of revenues and divert other resources; (xvi) the
Company�s significant indebtedness; (xvii) the intense competition
for physicians, strategic relationships, acquisitions and managed
care contracts, which may result in a decline in the Company�s
revenues, profitability and market share; (xviii) the geographic
concentration of the Company�s operations, which makes the Company
particularly sensitive to regulatory, economic and other conditions
in certain states; (xix) the Company�s dependence on its senior
management; (xx) the Company�s ability to enhance operating
efficiencies at its surgery centers and to control costs as the
volume of cases performed at the Company�s facilities changes;
(xxi) efforts by certain states to reduce payments from workers�
compensation payors for services provided to injured workers;
(xxii) risks associated with the practice of some of the Company�s
centers in billing for services �out-of-network,� including the
risk that out-of-network payments by some third-party payors may be
reduced or eliminated; and (xxiii) other risks and uncertainties
detailed from time to time in the Company�s filings with the
Securities and Exchange Commission. In light of the significant
uncertainties inherent in the forward-looking statements contained
in this press release, you should not place undue reliance on them.
The Company undertakes no obligation to update any forward-looking
statements or to make any other forward-looking statements, whether
as a result of new information, future events or otherwise.
SYMBION, INC. Unaudited Condensed Consolidated Statement of
Operations (in thousands, except per share amounts) � Three Months
Ended Six Months Ended June 30, June 30, 2007 2006 2007 � 2006
Revenues $ 76,670 $ 73,501 $ 153,890 $ 140,997 Operating expenses:
Salaries and benefits 20,289 19,055 41,127 36,910 Supplies 15,350
13,868 30,296 26,616 Professional and medical fees 4,703 3,699
9,402 6,506 Rent and lease expense 4,711 4,387 9,401 8,639 Other
operating expenses � 5,950 � � 4,975 � � 11,728 � � 9,255 � Cost of
revenues 51,003 45,984 101,954 87,926 General and administrative
expense 7,219 6,506 13,672 13,043 Depreciation and amortization
2,904 2,471 6,001 5,696 Provision for doubtful accounts 1,300 689
2,195 1,296 Income on equity investments (236 ) (727 ) (199 ) (973
) Impairment and loss on disposal of long-lived assets 229 527 245
566 Gain on sale of long-lived assets (478 ) (1,652 ) (506 ) (1,652
) Proceeds from insurance settlement - - (161 ) (410 ) Proceeds
from litigation settlement - � - � - � � (588 ) Total operating
expenses 61,941 53,798 123,201 104,904 Operating income 14,729
19,703 30,689 36,093 Minority interests in income of consolidated
subsidiaries (6,020 ) (7,764 ) (12,753 ) (15,332 ) Interest
expense, net � (1,959 ) � (1,828 ) � (3,926 ) � (3,330 ) Income
from continuing operations before income taxes 6,750 10,111 14,010
17,431 Provision for income taxes � 2,832 � � 3,893 � � 5,663 � �
6,711 � Income from continuing operations 3,918 6,218 8,347 10,720
Gain/(loss) from discontinued operations, net of tax � 25 � � (316
) � (374 ) � (241 ) Net income $ 3,943 � $ 5,902 � $ 7,973 � $
10,479 � � Net income per share - continuing operations: Basic $
0.18 � $ 0.29 � $ 0.38 � $ 0.50 � Diluted $ 0.18 � $ 0.28 � $ 0.38
� $ 0.49 � � Net income per share: Basic $ 0.18 � $ 0.27 � $ 0.37 �
$ 0.49 � Diluted $ 0.18 � $ 0.27 � $ 0.36 � $ 0.48 � � Weighted
average number of common shares outstanding and common equivalent
shares: � Basic 21,715 21,507 21,691 21,484 Diluted 22,180 21,922
22,060 21,987 SYMBION, INC. Condensed Consolidated Balance Sheets
(dollars in thousands) (unaudited) � June 30, Dec. 31, 2007 2006
ASSETS � Current assets: Cash and cash equivalents $ 27,987 $
26,909 Accounts receivable, less allowance for doubtful accounts
37,436 34,700 Inventories 8,266 8,070 Prepaid expenses and other
current assets 12,231 13,927 Current assets of discontinued
operations � 1,552 � 3,299 Total current assets 87,472 86,905
Property and equipment, net of accumulated depreciation 77,329
76,277 Goodwill 327,668 314,980 Investments in and advances to
affiliates 16,288 16,463 Other assets 4,110 3,079 Long-term assets
of discontinued operations � 4,528 � 6,102 � Total assets $ 517,395
$ 503,806 � LIABILITIES AND STOCKHOLDERS' EQUITY � Current
liabilities: Accounts payable $ 4,380 $ 5,145 Accrued payroll and
benefits 6,527 7,950 Other accrued expenses 24,299 13,413 Current
maturities of long-term debt 3,606 2,108 Current liabilities of
discontinued operations � 990 � 1,646 Total current liabilities
39,802 30,262 Long-term debt, less current maturities 125,576
136,533 Other liabilities 20,032 18,734 Long-term liabilities of
discontinued operations 214 404 Minority interests 35,267 32,594
Total stockholders' equity � 296,504 � 285,279 � Total liabilities
and stockholders' equity $ 517,395 $ 503,806 SYMBION, INC.
Supplemental Operating Data (dollars in thousands, except per case
and per share data) � Three Months Ended Six Months Ended June 30,
June 30, 2007 2006 2007 2006 Same store statistics(1): Cases 62,610
61,154 118,310 112,639 Cases percentage growth 2.4 % N/A 5.0 % N/A
Net patient service revenue per case $ 1,285 $ 1,342 $ 1,290 $
1,338 Net patient service revenue per case percentage growth (4.2
)% N/A (3.6 )% N/A Number of same store surgery centers 46 N/A 44
N/A � Consolidated statistics - continuing operations: Cases 55,568
53,920 110,241 � 104,111 Cases percentage growth 3.1 % N/A 5.9 %
N/A Net patient service revenue per case $ 1,310 $ 1,284 $ 1,327 $
1,276 Net patient service revenue per case percentage growth 2.0 %
N/A 4.0 % N/A Number of surgery centers operated as of end of
period(2) 54 57 54 57 Number of states in which the Company
operates surgery centers 23 23 23 23 � Revenues - continuing
operations: Net patient service revenues $ 72,818 $ 69,249 $
146,242 $ 132,800 Physician service revenues 1,315 1,120 2,645
2,261 Other service revenues � 2,537 � � 3,132 � � 5,003 � � 5,936
Total revenues $ 76,670 � $ 73,501 � $ 153,890 � $ 140,997 � Cash
flow information - continuing operations: Net cash provided by
operating activities $ 7,503 $ 8,668 $ 13,853 $ 15,504 Net cash
used in investing activities (2,111 ) (16,874 ) (3,621 ) (31,448 )
Net cash provided by (used in) financing activities (4,251 ) 14,223
(9,399 ) 21,098 � Other information: EBITDA(3) $ 11,613 $ 14,410 $
23,937 $ 26,457 � � (1) For purposes of this release, the Company
defines same store facilities as those facilities that the Company
owned an interest in and managed throughout each of the respective
periods shown. The Company has not included the facilities that are
reported as discontinued operations. The definition of same store
facilities includes non-consolidated facilities and allows for
comparability to other companies in the industry. � (2) This data
includes facilities that the Company managed but in which it did
not have an ownership interest. The Company has not included the
facilities that are reported as discontinued operations. � (3) The
following table reconciles EBITDA to net cash provided by operating
activities - continuing operations: Three Months Ended Six Months
Ended (in thousands) June 30, June 30, 2007 2006 2007 2006 EBITDA $
11,613 $ 14,410 $ 23,937 $ 26,457 Depreciation and amortization
(2,904 ) (2,471 ) (6,001 ) (5,696 ) Interest expense, net (1,959 )
(1,828 ) (3,926 ) (3,330 ) Income taxes (2,832 ) (3,893 ) (5,663 )
(6,711 ) Gain/(loss) on discontinued operations, net of tax � � 25
� � (316 ) � (374 ) � (241 ) Net income 3,943 5,902 7,973 10,479
Depreciation and amortization 2,904 2,471 6,001 5,696 Non-cash
compensation expense 878 1,082 1,787 2,174 Non-cash gains and
losses 201 (1,125 ) (289 ) (1,086 ) Minority interests in income of
consolidated subsidiaries 6,020 7,764 12,753 15,332 Income taxes
2,832 3,893 5,663 6,711 Distributions to minority partners (6,201 )
(6,654 ) (12,600 ) (12,497 ) Income on equity investments 236 727
199 973 Provision for doubtful accounts 1,300 689 2,195 1,296
Changes in operating assets and liabilities, net of effects of
acquisitions and dispositions: � Accounts receivable (2,003 )
(2,164 ) (1,309 ) (2,756 ) Income tax payments (2,700 ) (4,500 )
(6,790 ) (5,100 ) Other assets and liabilities � � 93 � � 583 � �
(1,730 ) � (5,718 ) Net cash provided by operating activities -
continuing operations � $ 7,503 � $ 8,668 � $ 13,853 � $ 15,504 �
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