July 1, 2002
AMERIPATH ANNOUNCES INCREASED MALPRACTICE COSTS AND COMMENTS ON
MEDICARE PROPOSAL FOR 2003
Riviera Beach, FL, July 1, 2002 – AmeriPath, Inc. (Nasdaq:PATH),
a leading national provider of cancer diagnostics, genomics,
and related information services, today announced that it has renewed
its medical malpractice coverage for the policy year effective
July 1, 2002 to June 30, 2003. Despite an excellent claims history,
the Company encountered a severe malpractice environment resulting
in an annualized renewal rate in excess of budget by $6 to $8
million.
As a result, the Company anticipates the balance of 2002 to be
negatively impacted by $.03 to $.04 per quarter for the remaining
two quarters of 2002.
“This premium increase is a function of market conditions
and not a result of abnormal loss experience at AmeriPath,” said
James C. New, Chairman and CEO. “Malpractice insurance has
been a well-publicized problem in healthcare, in fact, it is becoming
financially paralyzing in many sectors. We believe some type of
government reform will be necessary before the market experiences
a return to acceptable levels.”
Medicare Proposal
AmeriPath is disappointed by the Department of Health and Human
Services’ proposed revisions to Medicare payment under the
physician fee schedule for calendar year 2003. These proposals
are subject to comment and, in the Company’s experience,
there can be differences between proposed and final fee schedules,
which are normally published in November. Also, there is existing
legislation in Congress, which will minimize the proposal’s
impact. AmeriPath will work with the College of American Pathologists
(CAP) to provide feedback on the proposed rates. Should rates be
implemented per the Center for Medicare and Medicaid Services (CMS)
proposed schedule, AmeriPath would experience up to a $10 million
revenue reduction. If the House Ways and Means recommendation of
2% increase in the conversion factor is adopted, the negative revenue
impact would be reduced to $3 million. The Company believes the
smaller number is the most likely. The Company will provide ’03
guidance at the end of July on its quarterly conference call.
AmeriPath will hold a conference call on Tuesday, July 2, 2002
at 10:00 a.m. Eastern Time. This conference call will offer an
audio broadcast live on the Internet and can be accessed at the
Company’s website,
http://www.ameripath.com. A playback of the call will be available
from 12:00 p.m. July 2 to 12:00 p.m. July 4. PostView dial-in number
of the telephone replay is 800-633-8284, ID #20734071.
AmeriPath is a leading national provider of cancer diagnostics,
genomics, and related information services. The Company’s
extensive diagnostics infrastructure includes the Center for Advanced
Diagnostics (CAD), a division of AmeriPath. CAD provides specialized
diagnostic testing and information services including Fluorescence
In-Situ Hybridization (FISH), Flow Cytometry, DNA Analysis, Polymerase
Chain Reaction (PCR), Molecular Genetics, Cytogenetics and HPV
Typing. Additionally, AmeriPath provides clinical trial and research
development support to firms involved in developing new cancer
and genomic diagnostics and therapeutics.
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The statements contained in this press release
include "forward-looking
statements'' within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements - which are sometimes
identified by words such as "may", "should", "believe'', "expect'', "anticipate'', "estimate" and
similar expressions and which include any financial or operating
estimates, forecasts or projections - are subject to a number of
risks and uncertainties, many of which involve factors or circumstances
that are beyond the Company's control. These risks and uncertainties
could cause actual results to differ materially from results anticipated
by forward-looking statements. These risks and uncertainties include:
the extent of success of the Company's operating initiatives and
growth strategies; ability to manage growth; access to capital
on satisfactory terms; general economic conditions; terrorism or
an escalation of hostilities or war; competition and changes in
competitive factors; federal and state healthcare regulation (and
compliance); reimbursement rates under government and third party
healthcare programs and the payments received under such programs;
changes in coding; changes in technology; dependence upon pathologists
and customer contracts; the ability to attract, motivate, and retain
pathologists; labor, technology and insurance costs; marketing
and promotional efforts; the availability of pathology practices
in appropriate locations that the Company is able to acquire on
suitable terms or develop; and the successful completion and integration
of acquisitions (and achievement of planned or expected synergies).
The forward-looking statements in this press release are made as
of the date hereof based on management's current beliefs and expectations,
and the Company undertakes no obligation to update or revise any
such statements. Further information regarding risks, uncertainties
and other factors that could affect the Company's financial or
operating results or that could cause actual results to differ
materially from those expected, estimated or anticipated are included
in the Company's annual, quarterly, and other reports and filings
with the SEC.
