Amsurg (AMSG) 10-Q 2010 Q3 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2010

Commission File Number 000-22217

AMSURG CORP.

(Exact Name of Registrant as Specified in its Charter)

Tennessee	62-1493316
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
20 Burton Hills Boulevard
Nashville, TN	37215
(Address of principal executive offices)	(Zip code)

(615) 665-1283
(Registrant’s Telephone Number, Including Area Code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yesþ Noo

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yesþ Noo

      Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filerþ  Accelerated filero  Non-accelerated filer  o
(Do not check if a smaller reporting company) Smaller reporting companyo 

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yeso Noþ

     As of November 4, 2010 there were outstanding 30,933,458 shares of the registrant’s Common Stock, no par value.

Table of Contents to Form 10-Q for the Nine Months Ended September 30, 2010

Part I
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3. Quantitative and Qualitative Disclosures About Market Risk	23
Item 4. Controls and Procedures	23
Part II
Item 1. Legal Proceedings	24
Item 1A. Risk Factors	24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3. Defaults Upon Senior Securities	24
Item 4. [Removed and Reserved]	24
Item 5. Other Information	24
Item 6. Exhibits	24
Signature	25
EX-31.1
EX-31.2
EX-32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

i 

Part I

Item 1. Financial Statements

AmSurg Corp.
Consolidated Balance Sheets
September 30, 2010 (unaudited) and December 31, 2009

(Dollars in thousands)

	September 30,			December 31,
	2010			2009
Assets
Current assets:
Cash and cash equivalents	$	28,797		$	29,377
Accounts receivable, net of allowance of $13,201 and $12,375, respectively		71,270			66,886
Supplies inventory		9,145			8,745
Deferred income taxes		2,652			2,324
Prepaid and other current assets		15,629			15,408
Current assets held for sale		232			34
Total current assets		127,725			122,774
Long-term receivables and other assets		—			56
Property and equipment, net		111,487			112,084
Goodwill, net		873,797			813,876
Intangible assets, net		13,679			9,797
Long-term assets held for sale		48			170
Total assets	$	1,126,736		$	1,058,757
Liabilities and Equity
Current liabilities:		��
Current portion of long-term debt	$	5,750		$	5,657
Accounts payable		12,436			14,821
Accrued salaries and benefits		15,928			18,156
Other accrued liabilities		3,446			3,208
Current income taxes payable		—			402
Current liabilities held for sale		169			37
Total current liabilities		37,729			42,281
Long-term debt		284,842			289,041
Deferred income taxes		86,117			71,665
Other long-term liabilities		20,880			22,036
Commitments and contingencies
Noncontrolling interests – redeemable		139,436			123,363
Preferred stock, no par value, 5,000,000 shares authorized, no shares issued or outstanding		—			—
Equity:
Common stock, no par value, 70,000,000 shares authorized, 30,925,206 and 30,674,525 shares outstanding, respectively		168,212			163,729
Retained earnings		382,193			343,236
Accumulated other comprehensive loss, net of income taxes		(908	)		(1,849	)
Total AmSurg Corp. equity		549,497			505,116
Noncontrolling interests – non-redeemable		8,235			5,255
Total equity		557,732			510,371
Total liabilities and equity	$	1,126,736		$	1,058,757

See accompanying notes to the unaudited consolidated financial statements.

1

Item 1. Financial Statements – (continued)

AmSurg Corp.
Consolidated Statements of Earnings (unaudited)
Three Months and Nine Months Ended September 30, 2010 and 2009

(In thousands, except earnings per share)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Revenues	$	180,275		$	167,873		$	532,692		$	500,141
Operating expenses:
Salaries and benefits		54,400			51,328			158,725			149,708
Supply cost		23,900			20,365			70,474			61,198
Other operating expenses		37,740			33,660			114,081			102,082
Depreciation and amortization		7,113			5,743			18,896			17,092
Total operating expenses		123,153			111,096			362,176			330,080
Operating income		57,122			56,777			170,516			170,061
Interest expense		4,042			1,921			9,079			5,986
Earnings from continuing operations before income taxes		53,080			54,856			161,437			164,075
Income tax expense		7,880			8,944			25,966			26,855
Net earnings from continuing operations		45,200			45,912			135,471			137,220
Discontinued operations:
Earnings (loss) from operations of discontinued interests in surgery centers, net of income tax		32			(1	)		(99	)		122
(Loss) gain on disposal of discontinued interests in surgery centers, net of income tax		(97	)		411			(97	)		148
Net (loss) earnings from discontinued operations		(65	)		410			(196	)		270
Net earnings		45,135			46,322			135,275			137,490
Less net earnings attributable to noncontrolling interests:
Net earnings from continuing operations		31,997			32,519			96,288			97,416
Net earnings from discontinued operations		20			—			30			75
Total net earnings attributable to noncontrolling interests		32,017			32,519			96,318			97,491
Net earnings attributable to AmSurg Corp. common shareholders	$	13,118		$	13,803		$	38,957		$	39,999
Amounts attributable to AmSurg Corp. common shareholders:
Earnings from continuing operations, net of income tax	$	13,203		$	13,393		$	39,183		$	39,804
Discontinued operations, net of income tax		(85	)		410			(226	)		195
Net earnings attributable to AmSurg Corp. common shareholders	$	13,118		$	13,803		$	38,957		$	39,999
Earnings per share-basic:
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders	$	0.44		$	0.44		$	1.30		$	1.30
Net earnings (loss) from discontinued operations attributable to AmSurg Corp. common shareholders		—			0.01			(0.01	)		0.01
Net earnings attributable to AmSurg Corp. common shareholders	$	0.43		$	0.46		$	1.29		$	1.30
Earnings per share-diluted:
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders	$	0.43		$	0.44		$	1.28		$	1.29
Net earnings (loss) from discontinued operations attributable to AmSurg Corp. common shareholders		—			0.01			(0.01	)		0.01
Net earnings attributable to AmSurg Corp. common shareholders	$	0.43		$	0.45		$	1.27		$	1.29
Weighted average number of shares and share equivalents outstanding:
Basic		30,251			30,195			30,234			30,699
Diluted		30,620			30,528			30,663			30,921

See accompanying notes to the unaudited consolidated financial statements.

2

Item 1. Financial Statements – (continued)

AmSurg Corp.
Consolidated Statements of Comprehensive Income (unaudited)
Three Months and Nine Months Ended September 30, 2010 and 2009

(In thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2010		2009		2010		2009
Net earnings	$	45,135	$	46,322	$	135,275	$	137,490
Other comprehensive income, net of income tax:
Unrealized gain on interest rate swap, net of income tax		333		150		941		700
Comprehensive income, net of income tax		45,468		46,472		136,216		138,190
Less comprehensive income attributable to noncontrolling interests		32,017		32,519		96,318		97,491
Comprehensive income attributable to AmSurg Corp. common shareholders	$	13,451	$	13,953	$	39,898	$	40,699

See accompanying notes to the unaudited consolidated financial statements.

3

Item 1. Financial Statements – (continued)

AmSurg Corp.
Consolidated Statements of Changes in Equity (unaudited)
Nine Months Ended September 30, 2010 and 2009

(In thousands)

																		Non-
	AmSurg Corp. Shareholders											Non-						controlling
									Accumulated			controlling						Interests –
									Other			Interests –			Total			Redeemable
	Common Stock						Retained		Comprehensive			Non-			Equity			(Temporary			Net
	Shares			Amount			Earnings		Loss			redeemable			(Permanent)			Equity)			Earnings
Balance at December 31, 2009		30,674		$	163,729		$	343,236	$	(1,849	)	$	5,255		$	510,371		$	123,363
Issuance of restricted common stock		231			—			—		—			—			—			—
Cancellation of restricted common stock		(23	)		—			—		—			—			—			—
Stock options exercised		43			683			—		—			—			683			—
Share-based compensation		—			3,425			—		—			—			3,425			—
Change in tax benefit related to exercise of stock options		—			(16	)		—		—			—			(16	)		—
Net earnings		—			—			38,957		—			3,278			42,235			93,040		$	135,275
Distributions to noncontrolling interests, net of capital contributions		—			—			—		—			(3,766	)		(3,766	)		(94,872	)
Purchase of noncontrolling interest		—			893			—		—			(137	)		756			(1,046	)
Sale of noncontrolling interest		—			(502	)		—		—			219			(283	)		614
Acquisitions and other transactions impacting noncontrolling interests		—			—			—		—			3,386			3,386			18,337
Gain on interest rate swap, net of income tax expense of $607		—			—			—		941			—			941			—
Balance at September 30, 2010		30,925		$	168,212		$	382,193	$	(908	)	$	8,235		$	557,732		$	139,436
Balance at January 1, 2009		31,342		$	172,192		$	291,088	$	(2,851	)	$	2,877		$	463,306		$	63,202
Issuance of restricted common stock		162			—			—		—			—			—			—
Cancellation of restricted common stock		(14	)		—			—		—			—			—			—
Stock options exercised		12			178			—		—			—			178			—
Stock repurchased		(831	)		(12,587	)		—		—			—			(12,587	)		—
Share-based compensation		—			3,102			—		—			—			3,102			—
Change in tax benefit related to exercise of stock options		—			1			—		—			—			1			—
Net earnings		—			—			39,999		—			2,987			42,986			94,504		$	137,490
Distributions to noncontrolling interests, net of capital contributions		—			—			—		—			(2,858	)		(2,858	)		(94,246	)
Sale of noncontrolling interest		—			(80	)		—		—			—			(80	)		90
Acquisitions and other transactions impacting noncontrolling interests		—			—			—		—			2,161			2,161			12,546
Gain on interest rate swap, net of income tax expense of $451		—			—			—		700			—			700			—
Balance at September 30, 2009		30,671		$	162,806		$	331,087	$	(2,151	)	$	5,167		$	496,909		$	76,096

See accompanying notes to the unaudited consolidated financial statements.

4

Item 1. Financial Statements – (continued)

AmSurg Corp.
Consolidated Statements of Cash Flows (unaudited)
Nine Months Ended September 30, 2010 and 2009

(In thousands)

	Nine Months Ended
	September 30,
	2010			2009
Cash flows from operating activities:
Net earnings		$135,275			$137,490
Adjustments to reconcile net earnings to net cash flows provided by operating activities:
Depreciation and amortization		18,896			17,092
Net loss on sale of long-lived assets held for sale		159			434
Share-based compensation		3,425			3,102
Excess tax benefit from share-based compensation		(81	)		(27	)
Deferred income taxes		13,417			11,240
Increase (decrease) in cash and cash equivalents, net of effects of acquisitions and dispositions, due to changes in:
Accounts receivable, net		(2,953	)		(2,102	)
Supplies inventory		360			376
Prepaid and other current assets		(180	)		1,021
Accounts payable		(2,253	)		(944	)
Accrued expenses and other liabilities		(1,948	)		8,138
Other, net		639			248
Net cash flows provided by operating activities		164,756			176,068
Cash flows from investing activities:
Acquisition of interests in surgery centers and related transactions		(41,615	)		(19,705	)
Acquisition of property and equipment		(13,500	)		(16,509	)
Proceeds from sale of surgery centers		—			898
Repayment of notes receivable		—			1,666
Net cash flows used in investing activities		(55,115	)		(33,650	)
Cash flows from financing activities:
Proceeds from long-term borrowings		156,589			52,459
Repayment on long-term borrowings		(164,537	)		(87,049	)
Distributions to noncontrolling interests		(98,661	)		(97,195	)
Proceeds from issuance of common stock upon exercise of stock options		683			178
Repurchase of common stock		—			(12,587	)
Capital contributions and ownership transactions by noncontrolling interests		64			858
Excess tax benefit from share-based compensation		81			27
Financing cost incurred		(4,440	)		(11	)
Net cash flows used in financing activities		(110,221	)		(143,320	)
Net decrease in cash and cash equivalents		(580	)		(902	)
Cash and cash equivalents, beginning of period		29,377			31,548
Cash and cash equivalents, end of period		$28,797			$30,646

See accompanying notes to the unaudited consolidated financial statements.

5

Item 1. Financial Statements – (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements

(1) Basis of Presentation

AmSurg Corp. (the “Company”), through its wholly owned subsidiaries, owns majority interests, primarily 51%, in limited partnerships and limited liability companies (“LLCs”) which own and operate ambulatory surgery centers (“centers”). The Company also has majority ownership interests in other limited partnerships and LLCs formed to develop additional centers. The consolidated financial statements include the accounts of the Company and its subsidiaries and the majority owned limited partnerships and LLCs in which the Company’s wholly owned subsidiaries are the general partner or majority member. Consolidation of such limited partnerships and LLCs is necessary as the Company’s wholly owned subsidiaries have 51% or more of the financial interest, are the general partner or majority member with all the duties, rights and responsibilities thereof, are responsible for the day-to-day management of the limited partnerships and LLCs, and have control of the entities. The responsibilities of the Company’s noncontrolling partners (limited partners and noncontrolling members) are to supervise the delivery of medical services, with their rights being restricted to those that protect their financial interests, such as approval of the acquisition of significant assets or the incurrence of debt which they are generally required to guarantee on a pro rata basis based upon their respective ownership interests. Intercompany profits, transactions and balances have been eliminated. All limited partnerships and LLCs and noncontrolling partners are referred to herein as partnerships and partners, respectively.

Ownership interests in subsidiaries held by parties other than the Company are identified and generally presented in the consolidated financial statements within the equity section but separate from the Company’s equity. However, in instances in which certain redemption features that are not solely within the control of the Company are present, classification of noncontrolling interests outside of permanent equity is required. Consolidated net income attributable to the Company and to the noncontrolling interests are identified and presented on the face of the consolidated statements of earnings; changes in ownership interests are accounted for as equity transactions; and when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary and the gain or loss on the deconsolidation of the subsidiary is measured at fair value. Certain transactions with noncontrolling interests are also classified within financing activities in the statements of cash flows.

As further described in note 11, upon the occurrence of certain fundamental regulatory changes, the Company would be obligated, under the terms of substantially all of its partnership and operating agreements, to purchase the noncontrolling interests related to those partnerships. While the Company believes that the likelihood of a change in current law that would trigger such purchases was remote as of September 30, 2010, the occurrence of such regulatory changes is outside the control of the Company. As a result, these noncontrolling interests that are subject to this redemption feature are not included as part of the Company’s equity and are classified as noncontrolling interests – redeemable on the Company’s consolidated balance sheets.

Center profits and losses are allocated to the Company’s partners in proportion to their ownership percentages and reflected in the aggregate as net earnings attributable to noncontrolling interests. The partners of the Company’s center partnerships typically are organized as general partnerships, limited partnerships or limited liability companies that are not subject to federal income tax. Each partner shares in the pre-tax earnings of the center in which it is a partner. Accordingly, the earnings attributable to noncontrolling interests in each of the Company’s partnerships are generally determined on a pre-tax basis, and total net earnings attributable to noncontrolling interests are presented after net earnings. However, the Company considers the impact of the net earnings attributable to noncontrolling interests on earnings before income taxes in order to determine the amount of pre-tax earnings on which the Company must determine its tax expense. In addition, distributions from the partnerships are made to both the Company’s wholly owned subsidiaries and the partners on a pre-tax basis.

The Company operates in one reportable business segment, the ownership and operation of ambulatory surgery centers.

These unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and in accordance with Rule 10-01 of Regulation S-X. In the opinion of management, the unaudited interim financial statements contained in this report reflect all adjustments, consisting of only normal recurring accruals, which are necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year.

The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s 2009 Annual Report on Form 10-K.

6

Item 1. Financial Statements – (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements – (continued)

(2) Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The determination of contractual and bad debt allowances constitutes a significant estimate. Some of the factors considered by management in determining the amount of such allowances are the historical trends of the centers’ cash collections and contractual and bad debt write-offs, accounts receivable agings, established fee schedules, contracts with payors and procedure statistics. Accordingly, net accounts receivable at September 30, 2010 and December 31, 2009 reflect allowances for contractual adjustments of $116,928,000 and $100,088,000, respectively, and allowances for bad debt expense of $13,201,000 and $12,375,000, respectively. Bad debt expense is included in other operating expenses and was approximately $4,239,000 and $13,385,000 for the three and nine months ended September 30, 2010, respectively, and $4,315,000 and $13,085,000 for the three and nine months ended September 30, 2009, respectively.

(3) Revenue Recognition

Center revenues consist of billing for the use of the centers’ facilities (the “facility fee”) directly to the patient or third-party payor and, in limited instances, billing for anesthesia services. Such revenues are recognized when the related surgical procedures are performed. Revenues exclude any amounts billed for physicians’ surgical services, which are billed separately by the physicians to the patient or third-party payor.

Revenues from centers are recognized on the date of service, net of estimated contractual adjustments from third-party medical service payors including Medicare and Medicaid. During the nine months ended September 30, 2010 and 2009, the Company derived approximately 32%, in both periods presented, of its revenues from governmental healthcare programs, primarily Medicare. Concentration of credit risk with respect to other payors is limited due to the large number of such payors.

(4) Acquisitions and Dispositions

The Company accounts for its business combinations under the fundamental requirements of the acquisition method of accounting and under the premise that an acquirer be identified for each business combination. The acquirer is the entity that obtains control of one or more businesses in the business combination and the acquisition date is the date the acquirer achieves control. The assets acquired, liabilities assumed and any noncontrolling interests in the acquired business at the acquisition date are recognized at their fair values as of that date, and the direct costs incurred in connection with the business combination are recorded and expensed separately from the business combination.

As a significant part of its growth strategy, the Company acquires controlling interests in centers. During the nine months ended September 30, 2010 and 2009, the Company, through a wholly owned subsidiary and in separate transactions, acquired controlling interests in four centers and five centers, respectively. The aggregate amount paid for the acquisitions during the nine months ended September 30, 2010 and 2009 was approximately $41,615,000 and $19,705,000, respectively, and was paid in cash and funded by a combination of operating cash flow and borrowings under the Company’s revolving credit facility. The total fair value of an acquisition includes an amount allocated to goodwill, which results from the centers’ favorable reputations in their markets, their market positions and their ability to deliver quality care with high patient satisfaction consistent with the Company’s business model.

The acquisition date fair value of the total consideration transferred and acquisition date fair value of each major class of consideration for the acquisitions completed in the nine months ended September 30, 2010 are as follows (in thousands):

Accounts receivable	$	2,033
Supplies inventory, prepaid and other current assets		792
Property and equipment		1,720
Accounts payable		(1,077	)
Other accrued liabilities		(90	)
Long-term debt		(199	)
Goodwill (approximately $39,600 deductible for tax purposes)		60,250
Total fair value		63,429
Less: Fair value attributable to noncontrolling interests		21,814
Acquisition date fair value of total consideration transferred	$	41,615

7

Item 1. Financial Statements – (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements – (continued)

Fair value attributable to noncontrolling interests is based on significant inputs that are not observable in the market. Key inputs used to determine the fair value include financial multiples used in the purchase of noncontrolling interests in centers. Such multiples, based on earnings, are used as a benchmark for the discount to be applied for the lack of control or marketability. The fair value of noncontrolling interests may be subject to adjustment as the Company completes its initial accounting for acquired tangible assets.

The Company incurred and expensed in other operating expenses approximately $189,000 and $104,000 in the nine months ended September 30, 2010 and 2009, respectively, in acquisition related costs, primarily attorney fees.

Revenues and net earnings included in the nine months ended September 30, 2010 and 2009 associated with these acquisitions are as follows (in thousands):

	Nine Months Ended
	September 30,
	2010		2009
Revenues	$	10,071	$	6,882
Net earnings		3,246		2,389
Less: Net earnings attributable to noncontrolling interests		1,597		1,448
Net earnings attributable to AmSurg Corp. common shareholders	$	1,649	$	941

The unaudited consolidated pro forma results for the nine months ended September 30, 2010 and 2009, assuming all 2010 and 2009 acquisitions had been consummated on January 1, 2009, are as follows (in thousands, except per share data):

	Nine Months Ended
	September 30,
	2010		2009
Revenues	$	539,655	$	549,424
Net earnings		136,727		148,364
Amounts attributable to AmSurg Corp. common shareholders:
Net earnings from continuing operations		39,688		45,405
Net earnings		39,462		45,600
Net earnings from continuing operations per common share:
Basic	$	1.31	$	1.48
Diluted	$	1.29	$	1.47
Net earnings:
Basic	$	1.31	$	1.49
Diluted	$	1.29	$	1.47
Weighted average number of shares and share equivalents:
Basic		30,234		30,699
Diluted		30,663		30,921

At September 30, 2010, the Company held one surgery center for sale, which was subsequently sold in October 2010. The Company classified and completed the disposition of an additional center in 2009. The decision to dispose of these centers was the result of management’s assessment of the limited growth and operational opportunities at the centers. The results of operations of these centers have been classified as discontinued operations in all periods presented. Results of operations of all discontinued surgery centers disposed of or classified as held for sale in 2010 and 2009 for the three and nine months ended September 30, 2010 and 2009 were as follows (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2010		2009			2010			2009
Revenues	$	362	$	431		$	1,008		$	1,268
Earnings before income taxes		40		(1	)		60			153
Net earnings (loss)		32		(1	)		(99	)		122

8

Item 1. Financial Statements – (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements – (continued)

(5) Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the three and nine months ended September 30, 2010 and 2009 are as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Balance, beginning of period	$	859,759		$	694,752		$	813,876		$	661,693
Purchase price allocations		14,053			(685	)		59,936			32,764
Disposals		(15	)		—			(15	)		(390	)
Balance, end of period	$	873,797		$	694,067		$	873,797		$	694,067

Amortizable intangible assets at September 30, 2010 and December 31, 2009 consisted of the following (in thousands):

	September 30, 2010							December 31, 2009
	Gross							Gross
	Carrying		Accumulated					Carrying		Accumulated
	Amount		Amortization			Net		Amount		Amortization			Net
Deferred financing cost	$	4,493	$	(326	)	$	4,167	$	2,780	$	(2,310	)	$	470
Customer and restrictive covenant agreements		3,180		(1,768	)		1,412		3,180		(1,618	)		1,562
Total amortizable intangible assets	$	7,673	$	(2,094	)	$	5,579	$	5,960	$	(3,928	)	$	2,032

Amortization of intangible assets for the three months ended September 30, 2010 and 2009 was $278,000 and $123,000, respectively, and for the nine months ended September 30, 2010 and 2009 was $892,000 and $368,000, respectively. Estimated amortization of intangible assets for the remainder of 2010 and the following five years and thereafter is $278,000, $1,108,000, $1,108,000, $1,105,000, $1,101,000, $598,000 and $281,000, respectively. The Company expects to recognize amortization of intangible assets over a weighted average period of 5.2 years.

At September 30, 2010 and December 31, 2009, other non-amortizable intangible assets related to restrictive covenant arrangements were $8,100,000 and $7,765,000, respectively.

(6) Long-term Debt

Long-term debt at September 30, 2010 and December 31, 2009 was comprised of the following (in thousands):

	September 30,		December 31,
	2010		2009
Revolving credit agreement	$	199,000	$	276,300
Fixed rate senior secured notes		75,000		—
Other debt		10,803		14,250
Capitalized lease arrangements		5,789		4,148
		290,592		294,698
Less current portion		5,750		5,657
Long-term debt	$	284,842	$	289,041

The Company refinanced its revolving credit facility on May 28, 2010. The new revolving credit agreement permits the Company to borrow up to $375,000,000 to, among other things, finance its acquisition and development projects and any future stock repurchase programs at an interest rate equal to, at the Company’s option, the base rate plus 1.25% to 2.50%, or LIBOR plus 2.25% to 3.50%, or a combination thereof; provides for a fee of 0.25% to 0.625% of unused commitments; and contains certain covenants relating to the ratio of debt to operating performance measurements, interest coverage ratios and minimum net worth. Borrowings under the revolving credit agreement mature in May 2015 and are secured primarily by a pledge of the stock of our subsidiaries that serve as the general partners of our limited partnerships and our partnership and membership interests in the limited partnerships and limited liability companies. The Company was in compliance with all covenants contained in the revolving credit agreement at September 30, 2010.

9

Item 1. Financial Statements – (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements – (continued)

On May 28, 2010, the Company issued, pursuant to a note purchase agreement, $75,000,000 of 6.04% senior secured notes due May 28, 2020. The senior secured notes are pari passu with the indebtedness under the Company’s revolving credit facility and require payment of principal beginning in year four. The note purchase agreement governing the senior secured notes contains covenants similar to the covenants in the revolving credit agreement. The Company was in compliance with all covenants contained in the note purchase agreement at September 30, 2010.

(7) Derivative Instruments

The Company entered into an interest rate swap agreement in April 2006, the objective of which is to hedge exposure to the variability of the future expected cash flows attributable to the variable interest rate of a portion of the Company’s outstanding balance under its revolving credit facility. The interest rate swap has a notional amount of $50,000,000. The Company pays to the counterparty a fixed rate of 5.365% of the notional amount of the interest rate swap and receives a floating rate from the counterparty based on LIBOR. The interest rate swap matures in April 2011. The critical terms of the underlying hedge arrangement remained unchanged upon the refinancing of the revolving credit facility. In the opinion of management and as permitted by Accounting Standards Codification Topic 815,Derivatives and Hedging(“ASC 815”), the interest rate swap (as a cash flow hedge) is a fully effective hedge. Payments or receipts of cash under the interest rate swap are shown as a part of operating cash flows, consistent with the interest expense incurred pursuant to the revolving credit agreement. The value of the swap represents the estimated amount the Company would have paid as of September 30, 2010 upon termination of the agreement based on a valuation obtained from the financial institution that is the counterparty to the interest rate swap agreement. An increase of $333,000 and $941,000 in the fair value of the interest rate swap, net of tax, was included in other comprehensive income for the three and nine months ended September 30, 2010, respectively. An increase of $150,000 and $700,000 in the fair value of the interest rate swap, net of tax, was included in other comprehensive income for the three and nine months ended September 30, 2009, respectively. Accumulated other comprehensive loss, net of income taxes, was $908,000 and $1,849,000 at September 30, 2010 and December 31, 2009, respectively.

The fair values of derivative instruments in the consolidated balance sheets as of September 30, 2010 and December 31, 2009 were as follows (in thousands):

Asset Derivatives

Liability Derivatives

September 30, 2010

December 31, 2009

September 30, 2010

December 31, 2009

Balance

Balance

Balance

Balance

Sheet

Fair

Sheet

Fair

Sheet

Fair

Sheet

Fair

Location

Value

Location

Value

Location

Value

Location

Value

Derivatives designated as hedging instruments

Other assets, net

$

—

Other assets, net

$

—

Other long-term liabilities

$

1,548

Other long-term liabilities

$

3,095

(8) Fair Value Measurements

The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants to sell the asset or transfer the liability. The inputs used by the Company to measure fair value are classified into the following fair value hierarchy:

Level 1:	Quoted prices in active markets for identical assets or liabilities.
Level 2:	Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date.
Level 3:	Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

Effective January 1, 2010, the Company adopted the updated guidance of the Financial Accounting Standards Board (“FASB”) related to fair value measurements and disclosures, which requires a reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and to describe the reasons for the transfers. In addition, in the reconciliation for fair value measurements using significant unobservable inputs, or Level 3, a reporting entity should disclose separately information about purchases, sales, issuances and settlements. The updated guidance also requires that an entity should provide fair value measurement disclosures for each class of assets and liabilities and disclosures about the valuation techniques and inputs used to measure fair value for both recurring and non-recurring fair value measurements for Level 2 and Level 3 fair value measurements. The guidance is effective for interim or annual financial reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. Therefore, the Company has not yet adopted the guidance with respect to the roll

10

Item 1. Financial Statements – (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements – (continued)

forward activity in Level 3 fair value measurements. The adoption of the updated guidance for Levels 1 and 2 fair value measurements did not have an impact on the Company’s consolidated results of operations or financial condition.

In determining the fair value of assets and liabilities that are measured on a recurring basis, the following measurement methods were applied as of September 30, 2010 and December 31, 2009 and were commensurate with the market approach (in thousands):

			Fair Value Measurements at								Fair Value Measurements at
	September 30,		Reporting Date Using:						December 31,		Reporting Date Using:
	2010		Level 1		Level 2		Level 3		2009		Level 1		Level 2		Level 3
Assets:
Supplemental executive retirement savings plan investments	$	5,897	$	—	$	5,897	$	—	$	4,544	$	—	$	4,544	$	—
Liabilities:
Interest rate swap agreement	$	1,548	$	—	$	1,548	$	—	$	3,095	$	—	$	3,095	$	—

The fair value of the supplemental executive retirement savings plan investments, which are included in prepaid and other current assets, was determined using the calculated net asset values obtained from the plan administrator and observable inputs of similar public mutual fund investments. The fair value of the interest rate swap agreement, which is included in other long-term liabilities, was determined by a valuation obtained from the financial institution that is the counterparty to the interest rate swap agreement. The valuation, which represents the amount that the Company would have paid as of September 30, 2010 upon termination of the agreement, considered current interest rate swap rates, the critical terms of the agreement and interest rate projections. There were no transfers to or from Levels 1 and 2 during the three and nine months ended September 30, 2010.

Cash and cash equivalents, receivables and payables are reflected in the consolidated financial statements at cost, which approximates fair value. The fair value of fixed rate long-term debt, with a carrying value of $137,929,000, was $139,640,000 at September 30, 2010. The fair value of variable rate long-term debt approximates its carrying value of $152,663,000 at September 30, 2010. The fair value of fixed rate long-term debt, with a carrying value of $63,348,000, was $59,548,000 and the fair value of variable-rate long-term debt, with a carrying value of $231,350,000, was $227,536,000 at December 31, 2009. The fair value of the fixed and variable rate long-term debt as quoted above is determined based on an estimation of discounted future cash flows of the debt at rates currently quoted or offered to the Company for similar debt instruments of comparable maturities by its lenders.

(9) Shareholders’ Equity

a. Common Stock

During the nine months ended September 30, 2009, the Company purchased 830,700 shares of the Company’s common stock for approximately $12,587,000, at an average price of $15 per share, which completed a $25,000,000 stock repurchase program authorized by the Company’s board of directors in September 2008. On April 22, 2009 the Company’s board of directors approved an additional stock repurchase program for up to $40,000,000 of the Company’s shares of common stock over the following 18 months. As of September 30, 2010, no shares had been repurchased pursuant to this plan.

b. Stock Incentive Plans

In May 2006, the Company adopted the AmSurg Corp. 2006 Stock Incentive Plan. The Company also has options outstanding under the AmSurg Corp. 1997 Stock Incentive Plan, under which no additional options may be granted. Under these plans, the Company has granted restricted stock and non-qualified options to purchase shares of common stock to employees and outside directors from its authorized but unissued common stock. Restricted stock granted to outside directors in 2010 vests in two equal installments on the first and second anniversary of the date of grant. Restricted stock granted to outside directors prior to 2010 vests one-third on the date of grant, with the remaining shares vesting over a two-year term, and is restricted from trading for five years from the date of grant. Restricted stock granted to employees in 2010 vests over four years in three equal installments beginning on the second anniversary of the date of grant. Restricted stock granted to employees prior to 2010 vests at the end of four years from the date of grant. The fair value of restricted stock is determined based on the closing price of the Company’s common stock on the grant date.

Options are granted at market value on the date of the grant. Prior to 2007, granted options vested ratably over four years. Options granted in 2007 and 2008 vest at the end of four years from the grant date. Options have a term of ten years from the date of grant. No options were granted in 2009 or 2010. At September 30, 2010, 2,760,250 shares were authorized for grant under the 2006 Stock Incentive Plan and 1,466,164 shares were available for future equity grants, including 753,391 shares available for issuance as awards other than stock options or stock appreciation rights.

11

Item 1. Financial Statements – (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements – (continued)

Other information pertaining to share-based activity during the three and nine months ended September 30, 2010 and 2009 was as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2010		2009		2010		2009
Share-based compensation expense	$	885	$	861	$	3,425	$	3,102
Fair value of shares vested		242		517		2,809		4,994
Cash received from option exercises		141		178		683		178
Tax benefit from option exercises		12		27		81		27

As of September 30, 2010, the Company had total unrecognized compensation cost of approximately $8,700,000 related to non-vested awards, which the Company expects to recognize through 2014 and over a weighted average period of 1.2 years.

Average outstanding share-based awards to purchase approximately 2,346,580 and 2,622,655 shares of common stock that had an exercise price in excess of the average market price of the common stock during the nine months ended September 30, 2010 and 2009, respectively, were not included in the calculation of diluted securities options under the treasury method for purposes of determining diluted earnings per share due to their anti-dilutive impact.

A summary of the changes in non-vested restricted shares during the nine months ended September 30, 2010 is as follows:

				Weighted
	Number			Average
	of			Grant
	Shares			Price
Non-vested shares at December 31, 2009		466,387		$	22.29
Shares granted		231,708			21.95
Shares vested		(6,838	)		20.15
Shares forfeited		(23,472	)		22.10
Non-vested shares at September 30, 2010		667,785		$	22.20

A summary of stock option activity for the nine months ended September 30, 2010 is summarized as follows:

						Weighted
						Average
				Weighted		Remaining
	Number			Average		Contractual
	of			Exercise		Term
	Shares			Price		(in years)
Outstanding at December 31, 2009		3,151,052		$	22.22		5.0
Options granted		—			—
Options exercised with total intrinsic value of $211,000		(64,320	)		18.87
Options terminated		(49,938	)		23.73
Outstanding at September 30, 2010 with aggregate intrinsic value of $1,107,000		3,036,794		$	22.27		4.3
Vested or expected to vest at September 30, 2010 with aggregate intrinsic value of $1,107,000		3,036,794		$	22.27		4.3
Exercisable at September 30, 2010 with aggregate intrinsic value of $1,107,000		2,560,077		$	22.08		3.8

The aggregate intrinsic value represents the total pre-tax intrinsic value received by the option holders on the exercise date or that would have been received by the option holders had all holders of in-the-money outstanding options at September 30, 2010 exercised their options at the Company’s closing stock price on September 30, 2010.

12

Item 1. Financial Statements – (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements – (continued)

c. Earnings per Share

The following is a reconciliation of the numerator and denominators of basic and diluted earnings per share (in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
					Per						Per
	Earnings		Shares		Share		Earnings		Shares		Share
	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
2010:
Net earnings from continuing operations attributable to AmSurg Corp. per common share (basic)	$	13,203		30,251	$	0.44	$	39,183		30,234	$	1.30
Effect of dilutive securities options and non-vested shares		—		369				—		429
Net earnings from continuing operations attributable to AmSurg Corp. per common share (diluted)	$	13,203		30,620	$	0.43	$	39,183		30,663	$	1.28
Net earnings attributable to AmSurg Corp. per common share (basic)	$	13,118		30,251	$	0.43	$	38,957		30,234	$	1.29
Effect of dilutive securities options and non-vested shares		—		369				—		429
Net earnings attributable to AmSurg Corp. per common share (diluted)	$	13,118		30,620	$	0.43	$	38,957		30,663	$	1.27
2009:
Net earnings from continuing operations attributable to AmSurg Corp. per common share (basic)	$	13,393		30,195	$	0.44	$	39,804		30,699	$	1.30
Effect of dilutive securities options and non-vested shares		—		333				—		222
Net earnings from continuing operations attributable to AmSurg Corp. per common share (diluted)	$	13,393		30,528	$	0.44	$	39,804		30,921	$	1.29
Net earnings attributable to AmSurg Corp. per common share (basic)	$	13,803		30,195	$	0.46	$	39,999		30,699	$	1.30
Effect of dilutive securities options and non-vested shares		—		333				—		222
Net earnings attributable to AmSurg Corp. per common share (diluted)	$	13,803		30,528	$	0.45	$	39,999		30,921	$	1.29

13

Item 1. Financial Statements – (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements – (continued)

(10) Income Taxes

The Company files a consolidated federal income tax return. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company applies recognition thresholds and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return as it relates to accounting for uncertainty in income taxes. In addition, it is the Company’s policy to recognize interest accrued and penalties, if any, related to unrecognized benefits as income tax expense in its statement of earnings. The Company does not expect significant changes to its tax positions or liability for tax uncertainties during the next 12 months.

The Company and its subsidiaries file U.S. federal and various state tax returns. With few exceptions, the Company is no longer subject to U.S. federal or state income tax examinations for years prior to 2006.

(11) Commitments and Contingencies

The Company and its partnerships are insured with respect to medical malpractice risk on a claims-made basis. The Company also maintains insurance for general liability, director and officer liability and property. Certain policies are subject to deductibles. In addition to the insurance coverage provided, the Company indemnifies its officers and directors for actions taken on behalf of the Company and its partnerships. Management is not aware of any claims against it or its partnerships which would have a material financial impact on the Company.

The Company’s wholly owned subsidiaries, as general partners in the limited partnerships, are responsible for all debts incurred but unpaid by the limited partnerships. As manager of the operations of the limited partnerships, the Company has the ability to limit potential liabilities by curtailing operations or taking other operating actions.

In the event of a change in current law that would prohibit the physicians’ current form of ownership in the partnerships, the Company would be obligated to purchase the physicians’ interests in substantially all of the Company’s partnerships. The purchase price to be paid in such event would be determined by a predefined formula, as specified in the partnership agreements. The Company believes the likelihood of a change in current law that would trigger such purchases was remote as of September 30, 2010.

(12) Recent Accounting Pronouncements

In June 2009, the FASB amended the consolidation guidance related to variable interest entities. The amendments include the elimination of the exemption for qualifying special purpose entities, revised criteria for determining the primary beneficiary of a variable interest entity, and expanded the requirements for reconsideration of the primary beneficiary. Effective January 1, 2010 the Company adopted this standard, which did not have an impact on its consolidated results of operations or financial condition.

14

Item 1. Financial Statements – (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements – (continued)

(13) Supplemental Cash Flow Information

Supplemental cash flow information for the nine months ended September 30, 2010 and 2009 is as follows (in thousands):

	Nine Months Ended
	September 30,
	2010			2009
Cash paid during the period for:
Interest	$	8,102		$	5,962
Income taxes, net of refunds		14,647			14,048
Non-cash investing and financing activities:
Decrease in accounts payable associated with acquisition of property and equipment		(712	)		(2,752	)
Capital lease obligations incurred to acquire equipment		3,542			148
Effect of acquisitions:
Assets acquired, net of cash and adjustments		64,954			35,651
Liabilities assumed and noncontrolling interests		(23,339	)		(15,946	)
Payment for assets acquired	$	41,615		$	19,705

(14) Subsequent Events

The Company assessed events occurring subsequent to September 30, 2010 for potential recognition and disclosure in the consolidated financial statements. In October and November 2010, the Company, through a wholly owned subsidiary acquired a majority interest in two centers for an aggregate purchase price of approximately $12.3 million.

Subsequent to September 30, 2010, the $40.0 million stock repurchase program approved by the Company’s board of directors on April 22, 2009 expired. On October 20, 2010, the board of directors approved a new stock repurchase program for up to $40.0 million of the Company’s outstanding shares of common stock to be purchased over the following 18 months. The Company intends to fund the purchase price for any shares acquired using primarily cash generated from operations and borrowings under the Company’s revolving credit agreement.

15

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report contains certain forward-looking statements (all statements other than with respect to historical fact) within the meaning of the federal securities laws, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve known and unknown risks and uncertainties including, without limitation, those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, some of which are beyond our control. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate. Therefore there can be no assurance that the forward-looking statements included in this report will prove to be accurate. Actual results could differ materially and adversely from those contemplated by any forward-looking statement. In light of the significant risks and uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. We undertake no obligation to publicly release any revisions to any forward-looking statements in this discussion to reflect events and circumstances occurring after the date hereof or to reflect unanticipated events.

Forward-looking statements and our liquidity, financial condition and results of operations, may be affected by the following risks and uncertainties and the other risks and uncertainties discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 under “Item 1A. – Risk Factors,” as well as other unknown risks and uncertainties:

• adverse impacts on our business associated with current and future economic conditions;

• the risk that payments from third-party payors, including government healthcare programs, may decrease or not increase as our costs increase;

• adverse developments affecting the medical practices of our physician partners;

• our ability to maintain favorable relations with our physician partners;

• our ability to acquire and develop additional surgery centers on favorable terms;

• our ability to grow revenues by increasing procedure volume while maintaining operating margins and profitability at our existing centers;

• our ability to manage the growth in our business;

• our ability to obtain sufficient capital resources to complete acquisitions and develop new surgery centers;

• our ability to compete for physician partners, managed care contracts, patients and strategic relationships;

• adverse weather and other factors beyond our control that may affect our surgery centers;

• our failure to comply with applicable laws and regulations;

• the risk of changes in legislation, regulations or regulatory interpretations that may negatively affect us;

• the risk of becoming subject to federal and state investigation;

• the risk of regulatory changes that may obligate us to buy out the ownership interests of physicians who are minority owners of our surgery centers;

• potential liabilities associated with our status as a general partner of limited partnerships;

• liabilities for claims brought against our facilities;

• our legal responsibility to minority owners of our surgery centers, which may conflict with our interests and prevent us from acting solely in our best interests;

• potential write-off of all or a portion of intangible assets; and

• potential liabilities relating to the tax deductibility of goodwill.

16

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)

Overview

We acquire, develop and operate ambulatory surgery centers, or centers or ASCs, in partnership with physicians. As of September 30, 2010, we owned a majority interest (51% or greater) in 206 ASCs. The following table presents the number of procedures performed at our continuing centers and changes in the number of ASCs in operation, under development and under letter of intent for the three and nine months ended September 30, 2010 and 2009. An ASC is deemed to be under development when a limited partnership or limited liability company has been formed with the physician partners to develop the ASC.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2010		2009		2010		2009
Procedures		327,003		310,676		959,813		927,499
Continuing centers in operation, end of period		206		194		206		194
Average number of continuing centers in operation, during period		206		194		204		192
New centers added during period		2		1		4		6
Centers under development, end of period		1		2		1		2
Centers held for sale, end of period		1		2		1		2
Centers under letter of intent, end of period		7		2		7		2

Of the continuing centers in operation at September 30, 2010, 143 centers performed gastrointestinal endoscopy procedures, 37 centers performed ophthalmology surgery procedures, 18 centers performed procedures in multiple specialties and eight centers performed orthopedic procedures. We intend to expand primarily through the acquisition and development of additional ASCs in targeted surgical specialties and through future same-center growth. Our growth targets for 2010 include the acquisition or development of 13 to 16 surgery centers. We expect our same-center revenue to decline by 2% in 2010 due to the current economic environment and high unemployment, which we believe will result in reduced patient visits and surgical procedures.

While we generally own 51% of the entities that own the centers, our consolidated statements of earnings include 100% of the results of operations of the entities, reduced by the noncontrolling partners’ share of the net earnings or loss of the surgery center entities. The noncontrolling interest in each limited partnership or limited liability company is generally held directly or indirectly by physicians who perform procedures at the center.

Sources of Revenues

Substantially all of our revenues are derived from facility fees charged for surgical procedures performed in our surgery centers. These fees vary depending on the procedure, but usually include all charges for operating room usage, special equipment usage, supplies, recovery room usage, nursing staff and medications. Facility fees do not include the charges of the patient’s surgeon, anesthesiologist or other attending physicians, which are billed directly by the physicians. In limited instances, our surgery centers provide and bill separately for anesthesia services. Our revenues are recorded net of estimated contractual adjustments from third-party medical service payors.

ASCs depend upon third-party reimbursement programs, including governmental and private insurance programs, to pay for services rendered to patients. The amount of payment a surgery center receives for its services may be adversely affected by market and cost factors as well as other factors over which we have no control, including changes to the Medicare and Medicaid payment systems and the cost containment and utilization decisions of third-party payors. We derived approximately 32% of our revenues in the nine months ended September 30, 2010 and 2009, from governmental healthcare programs, primarily Medicare, and the remainder from a wide mix of commercial payors and patient co-pays and deductibles. The Medicare program currently pays ASCs in accordance with predetermined fee schedules.

Effective January 1, 2008, the Centers for Medicare and Medicaid Services, or CMS, revised the payment system for services provided in ASCs. The key points of the revised payment system as it relates to us are:

• ASCs are paid based upon a percentage of the payments to hospital outpatient departments pursuant to the hospital outpatient prospective payment system;

• a scheduled phase in of the revised rates over four years, beginning January 1, 2008; and

• planned annual increases in the ASC rates beginning in 2010 based on the consumer price index, or CPI, net of a productivity adjustment.

The revised payment system has resulted in a significant reduction in the reimbursement rates for gastroenterology procedures, which comprise approximately 79% of the procedures performed by our surgery centers, and certain ophthalmology and pain procedures. We estimate that our net earnings per share were negatively impacted by the revised payment system by $0.05 in 2008 and an additional $0.07 in 2009. In October 2009, CMS announced final reimbursement rates for 2010 under the revised payment system, which included a 1.2% CPI increase to the scheduled rate for 2010. Based upon our current procedure mix, payor mix and volume,

17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)

we believe the 2010 payment rates will reduce our net earnings per diluted share for 2010 by approximately $0.06 as compared to 2009. Further, based on the final reimbursement rates announced in November 2010 by CMS for 2011, which reflect a 1.5% CPI increase and a 1.3% productivity adjustment decrease, we believe that our diluted earnings per share in 2011 will be reduced by an incremental $0.06 as compared to the prior year. Beginning in 2012, the scheduled phase-in of the revised rates will be completed, and reimbursement rates for our ASCs should be increased annually based upon increases in the CPI, net of a productivity adjustment. Effective for fiscal year 2011 and subsequent years, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Health Reform Law”) provides for the annual CPI increases applicable to ASCs to be reduced by a productivity adjustment, which will be based on historical nationwide productivity gains. There can be no assurance, however, that CMS will not further revise the payment system or that any annual CPI increases will be material.

In March 2010, President Obama signed the Health Reform Law. The Health Reform Law represents significant change across the healthcare industry. The Health Reform Law contains a number of provisions designed to reduce Medicare program spending, including an annual productivity adjustment that will reduce payment updates to ASCs beginning in fiscal year 2011. However, the Health Reform Law also expands coverage of uninsured individuals through a combination of public program expansion and private sector health insurance reforms. For example, the Health Reform Law expands eligibility under existing Medicaid programs, imposes financial penalties on individuals who fail to carry insurance coverage, creates affordability credits for those not enrolled in an employer-sponsored health plan, requires each state to establish a health insurance exchange and permits states to create federally funded, non-Medicaid plans for low-income residents not eligible for Medicaid. The Health Reform Law also establishes a number of private health insurance market reforms, including a ban on lifetime limits and pre-existing condition exclusions, new benefit mandates, and increased dependent coverage.

Effective for plan years beginning on or after September 23, 2010, many health plans are required to cover, without cost-sharing, certain preventive services designated by the U.S. Preventive Services Task Force, including colonoscopies. Beginning January 1, 2011, Medicare must also cover these preventive services without cost-sharing, and, beginning in 2013, states that provide Medicaid coverage of these preventive services without cost-sharing will receive a one percentage point increase in their federal medical assistance percentage for these services.

Health insurance market reforms that expand insurance coverage may result in an increased volume for certain procedures at our centers. However, many of these provisions of the Health Reform Law will not become effective until 2014 or later, and these provisions may be amended or eliminated or their impact could be offset by reductions in reimbursement under the Medicare program.

Because of the many variables involved, including the law’s complexity, lack of implementing regulations or interpretive guidance, gradual implementation, and possible amendment or repeal, we are unable to predict the net effect of the reductions in Medicare spending, the expected increases in revenues from increased procedure volumes, and numerous other provisions in the law that may affect the Company. We are further unable to foresee how individuals and employers will respond to the choices afforded them by the Health Reform Law. Thus, we cannot predict the full impact of the Health Reform Law on the Company at this time.

CMS is increasing its administrative audit efforts through the nationwide expansion of the recovery audit contractor, or RAC, program. RACs are private contractors that conduct post-payment reviews of providers and suppliers that bill Medicare to detect and correct improper payments for services. The Health Reform Law expands the RAC program’s scope to include Medicaid claims by requiring all states to establish programs to contract with RACs by December 31, 2010. In addition to RACs, other contractors, such as Medicaid Integrity Contractors, perform payment audits to identify and correct improper payments. We could incur costs associated with appealing any alleged overpayments and be required to repay any alleged overpayments identified by these or other administrative audits.

We expect value-based purchasing programs, including programs that condition reimbursement on patient outcome measures, to become more common and involve a higher percentage of reimbursement amounts. Effective January 15, 2009, CMS promulgated three national coverage determinations that prevent Medicare from paying for certain serious, preventable medical errors performed in any healthcare facility, such as surgery performed on the wrong patient. Several commercial payors also do not reimburse providers for certain preventable adverse events. In addition, federal law authorizes CMS to require ASCs to submit data on certain quality measures. ASCs that fail to submit the required data would face a two percentage point reduction in their annual reimbursement rate increase. CMS has not yet implemented the quality measure reporting requirement, but has announced that it expects to do so in a future rulemaking. Further, the Health Reform Law requires the Department of Health and Human Services, or HHS, to present a plan to Congress by January 1, 2011 for implementing a value-based purchasing system that would tie Medicare payments to ASCs to quality and efficiency measures. The Health Reform Law also requires HHS to study whether to expand to ASCs its current policy of not paying additional amounts for care provided to treat conditions acquired during an inpatient hospital stay.

In addition to payment from governmental programs, ASCs derive a significant portion of their revenues from private healthcare insurance plans. These plans include both standard indemnity insurance programs as well as managed care programs, such as PPOs and HMOs.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)

Critical Accounting Policies

A summary of significant accounting policies is disclosed in our 2009 Annual Report on Form 10-K. Our critical accounting policies are further described under the caption “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2009 Annual Report on Form 10-K. There have been no changes in the nature of our critical accounting policies or the application of those policies since December 31, 2009.

Results of Operations

Our revenues are directly related to the number of procedures performed at our centers. Our overall growth in procedure volume is impacted directly by the increase in the number of centers in operation and the growth in procedure volume at existing centers. We increase our number of centers through both acquisitions and developments. Procedure growth at any existing center may result from additional contracts entered into with third-party payors, increased market share of our physician partners, additional physicians utilizing the center and/or scheduling and operating efficiencies gained at the center. A significant measurement of how much our revenues grow from year to year for existing centers is our same-center revenue percentage. We define our same-center group each year as those centers that contain full year-to-date operations in both comparable reporting periods, including the expansion of the number of operating centers associated with a limited partnership or limited liability company. Our 2010 same-center group, comprised of 192 centers and constituting approximately 93% of our total number of centers, had a 2% revenue decline during the three and nine months ended September 30, 2010. We believe this decline is primarily related to the soft economic environment and high unemployment, which we believe has caused patients to delay or cancel surgical procedures. This trend was generally experienced throughout our same-center base, without significant variations in any particular geography or surgical specialty. We expect our same-center revenue to decline 2% for 2010.

Expenses directly and indirectly related to procedures performed at our centers include clinical and administrative salaries and benefits, supply cost and other operating expenses such as linen cost, repair and maintenance of equipment, billing fees and bad debt expense. The majority of our corporate salary and benefits cost is associated directly with the number of centers we own and manage and tends to grow in proportion to the growth of our centers in operation. Our centers and corporate offices also incur costs that are more fixed in nature, such as lease expense, legal fees, property taxes, utilities and depreciation and amortization.

Our interest expense results primarily from our borrowings used to fund acquisition and development activity, as well as interest incurred on capital leases. We refinanced our revolving credit facility in May 2010, which resulted in the payment of additional fees and has increased our interest expense as a result of higher interest rates under our new credit facilities. See “– Liquidity and Capital Resources.”

Surgery center profits are allocated to our noncontrolling partners in proportion to their individual ownership percentages and reflected in the aggregate as total net earnings attributable to noncontrolling interests and are presented after net earnings. The noncontrolling partners of our center limited partnerships and limited liability companies typically are organized as general partnerships, limited partnerships or limited liability companies that are not subject to federal income tax. Each noncontrolling partner shares in the pre-tax earnings of the center of which it is a partner. Accordingly, net earnings attributable to the noncontrolling interests in each of our center limited partnerships and limited liability companies are generally determined on a pre-tax basis, and pre-tax earnings are presented before net earnings attributable to noncontrolling interests have been subtracted.

Accordingly, the effective tax rate on pre-tax earnings as presented has been reduced to approximately 16%. However, the effective tax rate based on pre-tax earnings attributable to AmSurg Corp. common shareholders, on an annual basis, will remain near the historical percentage of 39.6%. We file a consolidated federal income tax return and numerous state income tax returns with varying tax rates. Our income tax expense reflects the blending of these rates.

Net earnings from continuing operations attributable to AmSurg Corp. common shareholders are supplementally disclosed on the consolidated statements of earnings.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)

The following table shows certain statement of earnings items expressed as a percentage of revenues for the three and nine months ended September 30, 2010 and 2009:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Revenues		100.0	%		100.0	%		100.0	%		100.0	%
Operating expenses:
Salaries and benefits		30.2			30.6			29.8			30.0
Supply cost		13.3			12.1			13.2			12.2
Other operating expenses		20.9			20.1			21.5			20.4
Depreciation and amortization		3.9			3.4			3.5			3.4
Total operating expenses		68.3			66.2			68.0			66.0
Operating income		31.7			33.8			32.0			34.0
Interest expense		2.3			1.1			1.7			1.2
Earnings from continuing operations before income taxes		29.4			32.7			30.3			32.8
Income tax expense		4.3			5.3			4.9			5.4
Net earnings from continuing operations, net of income tax		25.1			27.4			25.4			27.4
Discontinued operations:
Earnings from operations of discontinued interests in surgery centers, net of income tax		—			—			—			—
(Loss) gain on disposal of discontinued interests in surgery centers, net of income tax		—			0.2			—			0.1
Net loss from discontinued operations		—			0.2			—			0.1
Net earnings		25.1			27.6			25.4			27.5
Less net earnings attributable to noncontrolling interests:
Net earnings from continuing operations		17.8			19.4			18.1			19.5
Net earnings from discontinued operations		—			—			—			—
Total net earnings attributable to noncontrolling interests		17.8			19.4			18.1			19.5
Net earnings attributable to AmSurg Corp. common shareholders		7.3	%		8.2	%		7.3	%		8.0	%
Amounts attributable to AmSurg Corp. common shareholders:
Earnings from continuing operations, net of income tax		7.3	%		8.0	%		7.4	%		8.0	%
Discontinued operations, net of income tax		—			0.2			(0.1	)		—
Net earnings attributable to AmSurg Corp. common shareholders		7.3	%		8.2	%		7.3	%		8.0	%

Revenues increased $12.4 million, or 7.4%, to $180.3 million and $32.6 million, or 6.5%, to $532.7 million in the three and nine months ended September 30, 2010, respectively, from $167.9 million and $500.1 million in the comparable 2009 periods. The number of procedures performed in our ASCs increased by 16,327, or 5.3%, to 327,003 and 32,314, or 3.5%, to 959,813 in the three and nine months ended September 30, 2010, respectively, from 310,676 and 927,499 in the comparable 2009 periods. Our same-center revenue growth declined approximately 2% during the three and nine months ended September 30, 2010, primarily due to the soft economic environment and high unemployment, which we believe has resulted in reduced patient visits and surgical procedures. The increase in procedure and revenue growth is attributable to the additional centers acquired in 2009 and 2010 as follows:

• centers acquired or opened in 2009, which contributed $11.9 million and $35.0 million of additional revenues in the three and nine months ended September 30, 2010, respectively, due to having a full period of operations in 2010; and

• centers acquired in 2010, which generated $5.2 million and $10.1 million in revenues during the three and nine months ended September 30, 2010, respectively.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)

Salaries and benefits increased in total by 6.0% to $54.4 million and $158.7 million in the three and nine months ended September 30, 2010, respectively, from $51.3 million and $149.7 million in the comparable 2009 periods. Salaries and benefits as a percentage of revenues were 30.2% and 29.8% in the three and nine months ended September 30, 2010, consistent with comparable prior year periods. Staff at newly acquired and developed centers, as well as the additional staffing required at existing centers, resulted in a 9.3% increase in salaries and benefits at our surgery centers in the three and nine months ended September 30, 2010. However, we experienced an 8.8% decrease in salaries and benefits at our corporate offices during the three and nine months ended September 30, 2010, over the comparable 2009 periods, primarily due to lower bonus expense.

Supply cost was $23.9 million and $70.5 million in the three and nine months ended September 30, 2010, respectively, an increase of $3.5 million and $9.3 million, or 17.4% and 15.2%, over supply cost in the comparable 2009 periods. This increase was primarily the result of additional procedure volume. Our average supply cost per procedure in the nine months ended September 30, 2010, increased by approximately $7.This increase is related to greater use of premium cataract lenses at our ophthalmology centers, the migration from reusable to disposable supplies, the temporary increase in certain drug costs at our gastroenterology centers, and procedures with greater acuity performed at our multi-specialty centers, which had a higher weighted average cost.

Other operating expenses increased $4.1 million, or 12.1%, and $12.0 million, or 11.8%, to $37.7 million and $114.1 million in the three and nine months ended September 30, 2010, respectively, from $33.7 million and $102.1 million in the comparable 2009 periods. The additional expense in the 2010 periods resulted primarily from:

• centers acquired or opened during 2009, which resulted in an increase of $1.9 million and $6.0 million in other operating expenses in the three and nine months ended September 30, 2010, respectively;

• an increase of $536,000, or 1.7%, and $1.9 million, or 2.0%, in other operating expenses at our 2010 same-center group in the three and nine months ended September 30, 2010, respectively, resulting primarily from general inflationary cost increases; and

• centers acquired during 2010, which resulted in an increase of $819,000 and $1.3 million in the three and nine months ended September 30, 2010, respectively, in other operating expenses.

Depreciation and amortization expense increased $1.4 million, or 23.9%, and $1.8 million, or 10.6%, in the three and nine months ended September 30, 2010, respectively, from the comparable 2009 periods, primarily as a result of centers acquired since 2009 and newly developed surgery centers in operation, which have an initially higher level of depreciation expense due to their construction costs. In addition, the Company recorded additional depreciation expense of approximately $1.1 million associated with the acceleration of scheduled leasehold improvement depreciation at a center that will be relocated in 2011, prior to the expiration of its original expected lease term.

We anticipate further increases in operating expenses in 2010, primarily due to additional acquired centers and additional start-up centers expected to be placed in operation. Typically, a start-up center will incur start-up losses while under development and during its initial months of operation and will experience lower revenues and operating margins than an established center. This typically continues until the case load at the center grows to a more normal operating level, which generally is expected to occur within 12 months after the center opens. At September 30, 2010, we had one center under development and one center that had been open for less than one year.

Interest expense increased $2.1 million, or 110.4%, and $3.0 million, or 51.7%, to $4.0 million and $9.1 million in the three and nine months ended September 30, 2010, respectively, from $1.9 million and $6.0 million in the comparable 2009 periods. We refinanced our revolving credit facility in May 2010, which resulted in an increase of approximately $2.3 million and $3.3 million in interest expense in the three and nine months ended September 30, 2010, due to higher interest rates under our new credit agreements and the write-off of remaining unamortized deferred financing costs in May 2010. See “– Liquidity and Capital Resources.”

We recognized income tax expense from continuing operations of $7.9 million and $26.0 million in the three and nine months ended September 30, 2010, compared to $8.9 million and $26.9 million in the comparable 2009 periods. Our effective tax rate in the nine months ended September 30, 2010 and 2009 was 16.1% and 16.3%, respectively, of earnings from continuing operations before income taxes. This differs from the federal statutory income tax rate of 35.0%, primarily due to the exclusion of the noncontrolling interests’ share of pre-tax earnings and the impact of state income taxes. In the three months ended September 30, 2010, our effective rate was positively impacted by approximately 1% due to the recording of a previously disallowed state net operating loss and changes to our tax liability for certain tax uncertainties. Because we deduct goodwill amortization for tax purposes only, approximately 40% of our income tax expense is deferred and our deferred tax liability continues to increase, which would only be due in part or in whole upon the disposition of a portion or all of our surgery centers.

We have one center classified as held for sale at September 30, 2010, which was subsequently disposed in October 2010. The net earnings derived from the operations and the loss on disposal of the discontinued surgery center held for sale were $99,000 and $97,000, respectively, for the nine months ended September 30, 2010. For the nine months ended September 30, 2009, we sold our interest in one surgery center and had one center classified as held for sale, which resulted in net earnings derived from operations and a gain on disposal of discontinued surgery centers of $122,000 and $148,000, respectively. Discontinued centers’ results of operations and losses associated with the dispositions have been classified as discontinued operations in all periods presented.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)

Noncontrolling interests in net earnings for the three and nine months ended September 30, 2010 decreased $502,000, or 1.5%, and $1.2 million, or 1.2%, from the comparable 2009 periods, primarily as a result of reduced center profit margins caused by lower same-center revenue growth. As a percentage of revenues, noncontrolling interests decreased to 17.8% in the 2010 period from 19.4% in the 2009 period, and to 18.1% from 19.5% in the three and nine months ended September 30, 2010, respectively, as a result of reduced center profit margins caused by lower same-center revenue growth. The net earnings from discontinued operations attributable to noncontrolling interests was $20,000 and $30,000 in the three and nine months ended September 30, 2010, respectively, and the net earnings from discontinued operations attributable to noncontrolling interests was $75,000 during the nine months ended September 30, 2009.

Liquidity and Capital Resources

Cash and cash equivalents at September 30, 2010 and 2009 were $28.8 million and $30.6 million, respectively. At September 30, 2010, we had working capital of $90.0 million, compared to $80.5 million at December 31, 2009. Operating activities for the nine months ended September 30, 2010 generated $164.8 million in cash flow from operations, compared to $176.1 million in the nine months ended September 30, 2009. The decrease in operating cash flow resulted primarily from higher corporate bonus payments related to 2009 that were paid in the 2010 period and additional interest expense paid in 2010 compared to 2009. Positive operating cash flows of individual centers are the sole source of cash used to make distributions to our wholly-owned subsidiaries, as well as to the partners, which we are obligated to make on a monthly basis in accordance with each partnership’s partnership or operating agreement. Distributions to noncontrolling interests, which is considered a financing activity, in the nine months ended September 30, 2010 and 2009 were $98.7 million and $97.2 million, respectively. Distributions to noncontrolling interests increased $1.5 million, primarily as a result of additional centers in operation.

The principal source of our operating cash flow is the collection of accounts receivable from governmental payors, commercial payors and individuals. Each of our surgery centers bills for services as delivered, usually within several days following the date of the procedure. Generally, unpaid amounts that are 30 days past due are rebilled based on a standard set of procedures. If amounts remain uncollected after 60 days, our surgery centers proceed with a series of late-notice notifications until amounts are either collected, contractually written off in accordance with contracted rates or determined to be uncollectible, typically after 90 to 120 days. Receivables determined to be uncollectible are written off and such amounts are applied to our estimate of allowance for bad debts as previously established in accordance with our policy for bad debt expense. The amount of actual write-offs of account balances for each of our surgery centers is continuously compared to established allowances for bad debt to ensure that such allowances are adequate. At September 30, 2010 and 2009, our net accounts receivable represented 32 and 34 days of revenue outstanding, respectively.

During the nine months ended September 30, 2010, we had total acquisitions and capital expenditures of $55.1 million, which included:

• $41.6 million for acquisitions of interests in ASCs and related transactions;

• $14.8 million for new or replacement property at existing centers, including $3.5 million in new capital leases; and

• $2.2 million for centers under development.

At September 30, 2010, we had unfunded construction and equipment purchase commitments for centers under development or under renovation of approximately $5.5 million, which we intend to fund through additional borrowings of long-term debt, operating cash flow and capital contributions by our partners.

During the nine months ended September 30, 2010, we had net repayments on long-term debt of $7.9 million, and at September 30, 2010 we had $199.0 million outstanding under our revolving credit agreement and $75.0 million outstanding in senior secured notes. At September 30, 2010, we were in compliance with all covenants contained in our revolving credit agreement and note purchase agreement.

We refinanced our revolving credit facility on May 28, 2010. Our revolving credit agreement permits us to borrow up to $375.0 million to, among other things, finance our acquisition and development projects and any future stock repurchase programs at an interest rate equal to, at our option, the base rate plus 1.25% to 2.50%, or LIBOR plus 2.25% to 3.50%, or a combination thereof; provide for a fee of 0.25% to 0.625% of unused commitments; and contain certain covenants relating to the ratio of debt to net worth, operating performance and minimum net worth. Borrowings under the revolving credit agreement mature in May 2015 and are secured primarily by a pledge of the stock of our subsidiaries that serve as the general partners of our limited partnerships and our partnership and membership interests in the limited partnerships and limited liability companies.

On May 28, 2010, we issued, pursuant to a note purchase agreement, $75.0 million of 6.04% senior secured notes due May 29, 2020. The senior secured notes are pari passu with the indebtedness under our revolving credit facility and require payment of principal beginning in year four. The note purchase agreement governing the senior secured notes contains covenants similar to the covenants contained in the revolving credit agreement.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)

The refinancing of our revolving credit facility, an increase in the interest rate under our new credit facilities, and additional fixed rate debt under the private placement debt arrangement will result in an increase in interest expense and a decrease in operating cash flow of approximately $5.5 million in 2010.

In September 2008, our board of directors authorized a stock repurchase program for up to $25.0 million of our outstanding common stock. During the nine months ended September 30, 2009, we repurchased 830,700 shares for $12.6 million, which completed this program. On April 22, 2009, our board of directors approved an additional stock repurchase program for up to $40.0 million of our outstanding shares of common stock to be purchased over the following 18 months. As of September 30, 2010, no shares had been repurchased pursuant to this repurchase program. In October 2010, our board of directors approved a new stock repurchase program for up to $40.0 million of our outstanding shares of common stock to be purchased over the following 18 months. We intend to fund the purchase price for any shares acquired using primarily cash generated from our operations and borrowings under our revolving credit agreement.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board amended the consolidation guidance related to variable-interest entities. The amendments include the elimination of the exemption for qualifying special purpose entities, revised criteria for determining the primary beneficiary of a variable-interest entity, and expanded the requirements for reconsideration of the primary beneficiary. Effective January 1, 2010 we adopted this standard, which did not have an impact on our consolidated results of operations or financial condition.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to market risk from exposure to changes in interest rates based on our financing, investing and cash management activities. We utilize a balanced mix of maturities along with both fixed rate and variable rate debt to manage our exposures to changes in interest rates. Our debt instruments are primarily indexed to the prime rate or LIBOR. We entered into an interest rate swap agreement in April 2006 in which $50.0 million of the principal amount outstanding under the revolving credit facility will bear interest at a fixed rate of 5.365% for the period from April 28, 2006 to April 28, 2011. The principal amounts of our senior secured notes due May 29, 2020 bear interest at a fixed rate of 6.04%. Interest rate changes would result in gains or losses in the market value of our debt portfolio due to differences in market interest rates and the rates at the inception of the debt agreements. Based upon our indebtedness at September 30, 2010, a 100 basis point interest rate change would impact our net earnings and cash flow by approximately $930,000 annually. Although there can be no assurances that interest rates will not change significantly, we do not expect changes in interest rates to have a material effect on our net earnings or cash flows in 2010.

As previously discussed, we refinanced our revolving credit facility and entered into a private placement debt arrangement in May 2010. The new credit agreements provide for additional fees and higher interest rate spreads. Accordingly, we expect our interest expense will increase and our operating cash flow will decrease by approximately $5.5 million in 2010.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management team, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of September 30, 2010. Based on that evaluation, our chief executive officer (principal executive officer) and chief financial officer (principal accounting officer) have concluded that our disclosure controls and procedures are effective to allow timely decisions regarding disclosure of material information required to be included in our periodic reports.

Changes in Internal Control Over Financial Reporting

During the period covered by this report, there has been no change in our internal control over financial reporting that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

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Part II

Item 1.Legal Proceedings

Not applicable.

Item 1A.Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. [Removed and Reserved]

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

Exhibits

31.1	Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a)
31.2	Certification of Executive Vice President and Chief Financial Officer pursuant to Rule 13a-14(a)
32.1	Section 1350 Certification
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at September 30, 2010 and December 31, 2009, (ii) the Consolidated Statements of Earnings for the three and nine month periods ended September 30, 2010 and 2009, (iii) the Consolidated Statements of Comprehensive Income for the three and nine month periods ended September 30, 2010 and 2009, (iv) the Consolidated Statements of Changes in Equity for the nine month periods ended September 30, 2010 and 2009 and (v) the Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2010 and 2009.

24

Signature

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AMSURG CORP.
Date: November 5, 2010	By:	/s/ Claire M. Gulmi
		Claire M. Gulmi
		Executive Vice President and Chief Financial Officer (Principal Financial and Duly Authorized Officer)

25