July 25, 2000
AMERIPATH, INC. ANNOUNCES 2000 SECOND QUARTER RESULTS
Riviera Beach, FL, July 25, 2000 - AmeriPath, Inc. (Nasdaq:
PATH), the largest physician and laboratory company focused
on providing anatomic pathology diagnostic and healthcare
information services, today reported its financial results
for the quarter and six months ended June 30, 2000. All
reported earnings per share amounts are on a fully diluted
basis.
Net revenue for the second quarter increased 33% over
the same period of the prior year, from $55.4 million
to $73.7 million. Acquisitions completed during 1999
and 2000 accounted for 56% of the increase or $10.3 million. Same
practice revenue growth accounted for the remaining $8.0
million or 15%. As previously disclosed, the Company
recorded a charge during the second quarter of approximately
$5.2 million in connection with the impairment of certain
intangible assets and related charges of an acquired
practice in Cleveland, Ohio. Net income for the quarter,
including this charge, was $3.0 million, or $0.13 per
share. Net income, excluding this charge, was $6.9 million,
an increase of $1.2 million over the 1999 net income
of $5.7 million. Excluding the $5.2 million charge,
earnings per share for the quarter increased to $0.31
from $0.26 for the second quarter of 1999.
Net revenue for the six months ended June 30, 2000 was
$141.9 million compared to $107.7 million for the same
period of 1999, an increase of 32%. Same practice revenue
growth for the first six months of 2000 increased 12%
or $12.5 million. Net income, including the $5.2 million
charge, was $9.1 million or $0.41 per share. Net income
excluding the charge was $13.0 million or $0.59 per share
compared to $11.0 million or $0.51 per share for the
same period of 1999. Cash flow from operations for the
six months was $18.9 million or $0.85 per share.
The same practice net revenue growth was 15%, or $8.0
million, one of the highest in Company history. Inpatient
revenues increased $2.9 million and outpatient revenues
increased $5.1 million, including approximately $1.4
million attributable to the increase in Medicare reimbursement.
Outpatient revenue growth was driven by the efforts of
the expanded sales and marketing staff and an increase
in revenues from the national labs. The increase in
inpatient revenue was principally due to higher surgical
volumes and clinical revenues, particularly in Texas. Further,
volume and revenue from its de novo New York lab continues
to increase and is currently at an annual revenue run
rate of almost $5.0 million. The New York lab was profitable
in the month of June, less than one year after its opening.
For the second quarter, the Company's gross margin was
53.5% compared to 55.0% for the same quarter of 1999. The
decrease was the result of increased physician compensation,
additional volumes of cytology and histology from national
lab contracts which have lower margins, and below standard
margins and start-up costs at the Center for Advanced
Diagnostics (CAD) and the de novo New York lab. CAD
officially opened its new facility in June.
Non-operating costs for the second quarter, principally
amortization and interest expense, increased 44% from
the same period in the prior year. The increase in amortization
expense of $900,000 is primarily related to the increase
in the intangible assets due to acquisitions and contingent
note payments. Interest expense increased $1.3 million,
or 62%, from the same quarter of 1999. The increase
is due to a higher average outstanding loan balance and
an increase in the effective interest rate from 6.6%
to 8.1%.
As previously announced, AmeriPath formed an alliance
with Genomics Collaborative, Inc. ("GCI") to provide
samples from normal, diseased, and cancerous tissue to
researchers in industry and academic laboratories who
are working to discover genes associated with prevalent
diseases, such as heart disease, hypertension, diabetes,
osteoporosis, depression, dementia, asthma, and cancer,
with a special focus on breast, colon, and prostate tumors. This
alliance leverages the Company's national network of
hospitals, physicians, and pathologists and GCI's capabilities
in large scale DNA tissue analysis and handling.
AmeriPath continues its transition to becoming a fully
integrated healthcare diagnostic information company
with the expansion of its information technology ("IT")
organization. Five highly qualified personnel were added
in the second quarter, including a Director of IT Operations,
database administrator, NT network specialist, and two
project managers. Four more positions expect to be filled
in the third quarter to include a senior web developer,
a manager of production control, a director of application
development, and another project manager. The Company
formed a strategic alliance with Per-Se Technologies
to assist in the development and implementation of PathWay
SolutionsTM, AmeriPath's web-based business intelligence
solution designed to provide utilization and outcome
data to AmeriPath customers, referring physicians, hospitals,
patients and payors.
The Company acquired three pathology practices this
year: one each in Texas, Virginia, and Florida, enhancing
its already strong markets in Texas and the Southeast. The
Company's acquisition strategy remains steady with continued
focus on large pedestal practices and fold-ins, which
densify our existing markets.
James C. New, Chairman, President, and Chief Executive
Officer of AmeriPath commented, "The second quarter of
2000 has been very exciting for AmeriPath. We reported
one of the largest quarterly increases in same practice
net revenue in the Company's history. Our plans include
the continued investment in sales and marketing to further
increase same practice revenue in the areas of dermatopathology,
urology, and gastroenterology. Our Center for Advanced
Diagnostics officially opened its 10,000 square foot
facility in Orlando, confirming the Company's commitment
to providing a state-of-the-art esoteric testing lab
and a single source for pathology for our customers. Finally,
our alliance with GCI will position AmeriPath in a pivotal
and indispensable role in the development and implementation
of molecular and genetic diagnostics and therapeutics."
The Company will broadcast its second quarter financial
results conference call on Tuesday, July 25, 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., July 25 to 12:00 p.m., July 26. The dial-in
number is 800-633-8284, reservation #15779392.
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
14 states and employs 301 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.
