TeamHealth Holdings (TMH) Prelim. Q3 Results Mixed to Consensus
TeamHealth Holdings (NYSE: TMH) announced its preliminary financial and operating results for the third quarter of 2015.
Preliminary Third Quarter 2015 Highlights
- Net Revenue is expected to be $899.2 million, representing 26.2% growth over the third quarter of 2014. (The Street sees revenue of $892.7 million.)
- Acquisitions and hybrid acquisitions developed from new hospital contracting opportunities are expected to contribute the majority of net revenue growth between quarters followed by net new sales, and increases in same contract revenue. Within same contract revenue, both fee for service volume and pricing are anticipated to be modestly positive, but growth in pricing will be constrained by declines in Medicaid parity revenue between quarters.
- Diluted net earnings per share (EPS) is expected to be $0.48; Adjusted EPS is expected to be $0.68. (The Street is at $0.71.)
- Although transaction costs of $2.6 million specifically related to the IPC Healthcare transaction have been excluded from the calculation of expected Adjusted EPS, an elevated level of other severance costs of $3.3 million, or $0.03 per share, is included in the projected results.
- Adjusted EBITDA is expected to increase 13.6% to $101.1 million.
2015 Outlook
- The Company is updating its Full Year 2015 outlook for projected net revenue growth from 24.0% - 26.0% to 25.0% - 26.0% and reiterating its Adjusted EBITDA margin of between 10.5% and 11.0%.
IPC Healthcare Transaction
- Transaction remains on track, with closing expected in the fourth quarter of 2015.
See "Non-GAAP Financial Measures Reconciliations" and "Adjusted Earnings Per Share" below for the definition of expected Adjusted EPS and its reconciliation to expected net earnings and diluted earnings per share attributable to Team Health Holdings, Inc.
The following table sets forth a reconciliation of expected diluted earnings per share to expected Adjusted EPS (note that some totals may not add due to rounding).
Adjusted Earnings Per Share | |||||||||||||||
Three Months Ended September 30, | |||||||||||||||
2014 | 2015 | ||||||||||||||
(in thousands, except for share data) | |||||||||||||||
Diluted weighted average shares outstanding | 72,331 | 73,687 | |||||||||||||
Net earnings and diluted net earnings per share attributable to Team Health Holdings, Inc. | $ | 27,586 | 0.38 | $ | 35,442 | 0.48 | |||||||||
Adjustments: | |||||||||||||||
Contingent purchase and other acquisition compensation expense, net of tax of $(680) and $439 for 2014 and 2015, respectively | 2,406 | 0.03 | (3,091) | (0.04) | |||||||||||
Amortization expense, net of tax of $(4,184) and $(5,530) for 2014 and 2015, respectively | 8,807 | 0.12 | 15,103 | 0.20 | |||||||||||
IPC transaction costs, net of tax of $(0) for 2015 | — | — | 2,582 | 0.04 | |||||||||||
Professional liability loss reserve adjustments associated with prior years, net of tax of $(2,729) for 2014 | 4,359 | 0.06 | — | — | |||||||||||
Net earnings and diluted earnings per share attributable to Team Health Holdings, Inc., as adjusted | $ | 43,158 | $ | 0.60 | $ | 50,036 | $ | 0.68 | |||||||
See "Non-GAAP Financial Measures Reconciliations" and "Adjusted EBITDA" below for the definitions of expected Adjusted EBITDA Margin and Adjusted EBITDA and its reconciliation to expected net earnings attributable to Team Health Holdings, Inc.
The following table sets forth a reconciliation of expected net earnings attributable to Team Health Holdings, Inc. to expected Adjusted EBITDA.
Three Months Ended | ||||||
September 30, | ||||||
2014 | 2015 | |||||
(in thousands) | ||||||
Net earnings attributable to Team Health | $ | 27,586 | $ | 35,442 | ||
Interest expense, net | 3,921 | 5,572 | ||||
Provision for income taxes | 20,895 | 22,837 | ||||
Depreciation | 5,826 | 6,290 | ||||
Amortization | 12,991 | 20,633 | ||||
Other (income) expenses, net(a) | 292 | 2,137 | ||||
Contingent purchase and other acquisition compensation expense(b) | 3,086 | (3,530) | ||||
Transaction costs(c) | 3,107 | 3,869 | ||||
Equity based compensation expense(d) | 3,345 | 3,985 | ||||
Insurance subsidiaries interest income | 503 | 535 | ||||
Professional liability loss reserve adjustments associated with prior years | 7,088 | — | ||||
Severance and other charges | 381 | 3,343 | ||||
Adjusted EBITDA | $ | 89,021 | $ | 101,113 | ||
a. Reflects gain or loss on disposal of assets, realized gains on investments, and changes in fair value of investments associated with the Company's non-qualified retirement plan.b. Reflects expense recognized for historical and estimated future contingent payments and other compensation expense associated with acquisitions.c. Reflects expenses associated with accounting, legal, due diligence and other transaction fees related to acquisition activity, including costs associated with the IPC Healthcare transaction of $2,582.d. Reflects costs related to equity awards granted under the Team Health Holdings, Inc. 2009 Amended and Restated Stock Incentive Plan and the 2010 Nonqualified Stock Purchase Plan. | ||||||
TeamHealth will report its full third quarter 2015 results and file its Form 10-Q after the market close on Tuesday, November 3, 2015, to be followed by a conference call on Wednesday, November 4 at 8:30 a.m. (Eastern Time).
The conference call can be accessed live over the phone by dialing 1-877-407-0784, or for international callers, 1-201-689-8560. A replay will be available two hours after the call and can be accessed by dialing 1-877-870-5176, or for international callers, 1-858-384-5517. The passcode for the live call and the replay is 13621635. The replay will be available until November 11, 2015.
Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the Investor Relations section of the Company's website at www.teamhealth.com. The on-line replay will be available for a limited time beginning immediately following the call.
To learn more about TeamHealth, please visit the company's Web site at www.teamhealth.com. TeamHealth uses its Web site as a channel of distribution of material company information. Financial and other material information regarding TeamHealth is routinely posted on the company's Web site and is readily accessible.