May
2, 2000
AMERIPATH, INC. ANNOUNCES 2000 FIRST QUARTER RESULTS
Riviera Beach, FL, May 2, 2000 - AmeriPath, Inc. (Nasdaq:
PATH), the largest physician and laboratory company focused
on providing anatomic pathology diagnostic and healthcare
information services, today reported its results for
the quarter ended March 31, 2000.
Net revenue for the first quarter increased 30% over
the same period of the prior year, from $52.3 million
to $68.2 million. Acquisitions completed during 1999
accounted for two-thirds of the increase, or $10.7 million. Internal
or same practice revenue growth accounted for the remaining
one-third, or $5.2 million. This increase was driven
by a 7.4% increase in outpatient revenue and a 2.5% increase
in reimbursement from Medicare.
The 30% quarter over quarter revenue increase resulted
from a 28% unit growth in biopsies diagnosed (approximately
640,000 in 1Q00 as compared to 500,000 in 1Q99), and
a 50% unit increase in cytology interpretations (approximately
450,000 Pap smears in 1Q00 versus 300,000 in 1Q99).
Net income for the first quarter of 2000 was $6.1 million,
an increase of $850,000, or 16%, over the same period
in 1999. Diluted earnings per share for the quarter
increased to $0.28 from $0.24 for the first quarter of
1999, based on 22.1 million and 21.6 million weighted
average shares outstanding, respectively. Cash flow
from operations for the first quarter of 2000 was $12.7
million, or $0.58 per share.
For the first quarter, the Company's gross margin was
51.9% compared to 54.6% for the same quarter in 1999. The
decline in gross margin was attributable to four factors:
increased physician compensation; increase in lower margin
national clinical lab business; and developmental activities
at the New York lab and the Center for Advanced Diagnostics
(CAD). The Company is continuing its development work
in New York with net revenue reaching a $4 million annual
revenue run rate after only nine months of operations. In
addition, CAD is scheduled to move into its new 10,000
square foot facility in Orlando at the end of the second
quarter 2000, where a wide array of esoteric testing
services will be offered.
Selling, general and administrative costs (SG&A) for
the first quarter was 15.7% of net revenue, a decrease
from 16.8% in the first quarter of 1999. Approximately
40% of SG&A costs relate to billing and collection. Billing
and collection costs increased 37% from the first quarter
of 1999 as payment under a number of billing contracts
are a function of collected revenue, and the Company
continues to invest in upgrading its billing and collection
systems and processes. These investments are directed
at improving cash collections and the aggregation of
billing information and utilization data. Largely as
a result of focusing on these improvements, the Company
reported a reduction in the provision for doubtful accounts
from 11.4% of net revenue for the first quarter of 1999
to 10.4% for the first quarter of 2000.
Non-operating costs, principally amortization and interest
expense, increased approximately 51% from the same period
in the prior year. The increase in amortization expense
of $1.0 million or 38% is attributable to an increase
in the average intangible balance and a reduction of
the weighted average amortization periods from 32 to
31 years. Interest expense increased $1.4 million, or
71%, from the first quarter of 1999. The increase is
due to the increase in the average revolving loan balance
outstanding. In addition, the effective interest rate
on the revolving loan increased from 6.2% to 7.9%. The
increase in rates reflects the renegotiation and increase
in the Company's credit facility in the fourth quarter
of 1999, which increased the borrowing rate 75 basis
points, and the general rise in interest rates during
the past two quarters, which effects the floating rate
under the credit facility.
James C. New, Chairman, President, and Chief Executive
Officer of AmeriPath commented, "The first quarter results
demonstrate our continued ability to deliver strong internal
growth. The 10% increase in internal revenue growth
comes from our focus on building new markets such as
New York and CAD, and continuing to increase our sales
and marketing efforts. For 2000, we anticipate adding
up to five sales people to the 24 currently in the field. The
field sales staff will focus on growing existing dermatopathology
revenue by marketing our nationally prominent team of
dermatopathology experts. In addition, as a natural
complement to CAD, our sales and marketing team will
target the urology and gastroenterology markets as a
potential source of new revenues." Mr. New further commented, "The
Company is committed to transitioning from multiple billing
and lab information systems to common platforms, enabling
it to leverage it's extensive inventory of diagnostic
information. I am very excited to report that our initial
entrée in healthcare diagnostic information will be the
introduction of our web-based PathWay SolutionsTM. This
product will be introduced during our second quarter
and will provide utilization and outcome data to our
referring physicians, hospitals, patients and payors. I
believe these initiatives will increase our competitive
advantage and shape the future for AmeriPath."
* * *
The Company will broadcast its first quarter financial
results conference call on Tuesday, May 2, 2000 at 10:00
a.m. EDT over the Internet. This event is available
through Investor Broadcast Network's Vcall website, located
at http://www.vcall.com. Listeners
should go to the website at least fifteen minutes before
the event to register, download, and install any necessary
audio software. For those unable to attend the live
broadcast, a replay will be available for the next 90
days. There is no charge to access the event. A replay
of the call will also be available by telephone beginning
at 12:00 p.m. May 2 to 12:00 p.m. May 3. The dial-in
number is 800-633-8284, reservation #14370742.
AmeriPath, Inc. is the nation's largest physician and
laboratory company focused on providing anatomic pathology
diagnostic and healthcare information services to physicians,
hospitals, national clinical laboratories and managed
care organizations. The company presently operates in
13 states and employs 302 physicians that provide medical
services through outpatient pathology laboratories, hospital
inpatient laboratories and outpatient surgery centers.
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This
release contains certain forward-looking statements
regarding AmeriPath, including its operations
and prospects. Past
performance is not necessarily indicative of future results. In
addition, AmeriPath's actual results could differ materially
from the results anticipated in these forward-looking
statements as a result of uncertainties, including risks
relating to demand, pricing, government regulation, payments
and reimbursements, dependence upon contracts and pathologists,
acquisitions, integration of acquired practices, the
market for pathology services, competition, technology
and other factors identified in AmeriPath's filings with
the Securities and Exchange Commission.
