Exhibit 99.1
[TEAM HEALTH LOGO]
FOR IMMEDIATE RELEASE Contact:
Team Health, Inc.
Knoxville, Tennessee
David Jones, CFO
(865) 693-1000
TEAM HEALTH ANNOUNCES SECOND QUARTER 2005 RESULTS
KNOXVILLE, TENN. - AUGUST 10, 2005 - Team Health, Inc. today announced results
for its second quarter ended June 30, 2005.
The Company reported net earnings of $12.1 million in the second quarter of 2005
versus a net loss of $55.9 million in the second quarter of 2004. The 2004
results included an impairment loss provision of $65.8 million to reduce the
carrying value of goodwill associated with the Company's military staffing
business. Net revenue less provision for uncollectibles ("revenue less
provision") excluding military staffing revenues increased 12.9% or $25.1
million. Military staffing revenue declined $23.3 million between periods as a
result of the military re-contracting its healthcare staffing contracts
beginning in the second quarter of 2004. Same contract revenue less provision
increased 14.5% or $26.1 million, to $205.7 million in the second quarter of
2005 from $179.7 million for the same period of 2004. Overall, total revenue
less provision in the second quarter of 2005, increased 0.7% to $257.7 million
from $256.0 million in the same period in 2004.
Net earnings for the six months ended June 30, 2005 were $30.1 million compared
to a loss of $56.0 million for the six months ended June 30, 2004. Included in
the financial results for the six months ended June 30, 2005 is a reduction in
professional liability reserves related to prior years of $7.6 million. The
financial results for the six months ended June 30, 2004 include approximately
$16.0
million of pretax refinancing costs and compensatory bonus expenses associated
with a refinancing of the Company's capital structure as well as the impairment
loss provision in the amount of $65.8 million. For the first six months of 2005,
same contract revenue less provision increased 13.2% or $46.4 million, to $397.4
million in 2005 from $351.1 million in the same period of 2004. Net revenue less
provision for the six months ended June 30, 2005 decreased 1.8% to $508.3
million from $517.4 million in the prior year period. The decrease between
periods includes a reduction of military staffing revenue of $49.2 million.
As of June 30, 2005, Team Health had cash of $15.2 million and $74.9 million of
available capacity under its revolving credit facility. As previously announced
and effective April 6, 2005, the Company amended the terms of its senior credit
agreement. As a result of the amendment, the Company made a partial prepayment
of its term debt in the amount of $30.0 million, converted its existing term
loan B into a new term loan C in the amount of $203.1 million, and reduced the
pricing on the new term loan by 50 basis points to LIBOR plus 275 basis points.
Also, the amendment granted the Company the ability to purchase up to $35.0
million of its outstanding 9% Senior Subordinated Notes. Total debt reduction
during the second quarter of 2005 was $65.2 million, including $34.3 million of
the Company's 9% Senior Subordinated Notes. In the six months ended June 30,
2005, the Company repaid $80.1 million of outstanding debt. Total outstanding
indebtedness as of June 30, 2005 was $348.0 million. Cash flow provided by
operations (after interest, taxes and changes in working capital) for the first
six months ended June 30, 2005 was $28.0 million compared to $26.2 million in
2004.
Lynn Massingale, M.D., President and CEO of Team Health said, "During the second
quarter of 2005 our core Emergency Department (ED) business continued its strong
financial performance. As in the first quarter of 2005, both volumes and pricing
once again increased on a year over year basis. Steady state ED volume increased
5.6% and net estimated revenue per patient visit increased 10.2% in the second
quarter of 2005 compared to the second quarter of 2004. In the first six months
of 2005, steady state ED volume increased 6.2% and net estimated revenue per
patient visit increased 9.7%. The increase in overall ED volume in both the
three and six months periods of 2005 reflected a nominal increase in self-pay
patient visits, but a decrease in self-pay visits as a percentage of our total
visits as other payer types increased at a higher rate.
"Performance in our military staffing unit continued to meet our expectations
despite lower revenue and profitability following the military's 2004
re-contracting process and our restructuring of this
business line. During the next several months we will face contract renewal
bidding on approximately $65 million of our annual revenue relating to this
business originally obtained under one-year contracts, while an additional $79
million of our annual revenue is subject to the military's option to exercise
its right to extend such multi-year contracts for an additional year. We will
have the opportunity to bid on an estimated $100 million of annual staffing
revenue now held by others. However, we expect to be ineligible to bid on a
substantial portion of the business held by others due to the government's
practice of reserving a substantial portion of its contracts for award to small
businesses.
"While we are highly focused on our core ED business and have a significant
presence in military staffing, we have over the past several years invested in
developing other healthcare staffing and service business lines. Our investment
in the field of radiology has been spread over several different types of
radiology services. We recently re-evaluated our strategy with respect to these
various radiology services. This evaluation led us to the conclusion to divest
our two imaging centers over the balance of 2005. We concluded that operating
capital intensive imaging centers in a very competitive market with ever
changing technology did not fit with our strategic direction. In the second
quarter we recorded an estimated $1.6 million impairment loss related to the
assets of these centers. Additionally, in evaluating the overall profitability
of our radiology operations, we concluded that certain hospital staffing
contracts did not meet our profitability goals and we have decided to terminate
such contracts over the balance of 2005. We will work with the administrations
of the hospitals impacted by this decision to ensure a smooth and orderly
transition of such services. As a result, we anticipate incurring severance
related costs currently estimated at approximately $1.0 million in the third and
fourth quarters of 2005. Overall, the aforementioned operations contributed less
than 2.0% of our net revenues on an annual basis.
"Subsequent to the end of the second quarter, a jury in Florida rendered a
verdict that awarded $15.0 million to a plaintiff in connection with a
professional liability lawsuit involving the death of a patient. Team Health,
Inc. was named as a co-defendant in the verdict. The jury award of $15.0 million
was in excess of combined insurance coverage of $2.0 million at the time of the
incident. We are currently awaiting the trial judge's final judgment. While our
sincere sympathies go to this patient's family, we believe that neither the
facts, circumstances nor the law in this matter justify the jury's conclusions
nor the excessive award. We intend to pursue a request for relief from the
unwarranted award through a full exercise of our legal rights.
"On a final note, the proposed Medicare physician fee schedule for 2006
currently includes a 4.3% reduction in physician payment rates under the present
statutory formula. We continue to monitor and support several bills currently
being considered by Congress to reduce or eliminate this formulaic reduction in
the fee schedule."
ABOUT TEAM HEALTH
Founded in 1979, Team Health is headquartered in Knoxville, Tennessee. Team
Health is affiliated with over 7,000 healthcare professionals who provide
emergency medicine, radiology, anesthesia, hospitalist, urgent care and
pediatric staffing and management services to over 450 civilian and military
hospitals, surgical centers, imaging centers and clinics in 44 states. For more
information about Team Health, visit www.teamhealth.com.
As previously announced, Team Health will hold an investor conference call at
9:00 a.m. Eastern Time on August 11, 2005. All interested parties may listen to
the call by calling (800) 430-9375. A taped replay of the call will be available
after 12:00 p.m. Eastern Time Thursday, August 11, 2005, through midnight on
August 18, 2005, by calling (800) 642-1687, access code 7659904.
Statements in this document that are not historical facts are hereby identified
as "forward looking statements" for purposes of the safe harbor provided by
Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") and
Section 27A of the Securities Act of 1933 (the "Securities Act"). Team Health,
Inc. (the "Company") cautions readers that such "forward looking statements",
including without limitation, those relating to the Company's future business
prospects, revenue, working capital, professional liability expense, liquidity,
capital needs, interest costs and income, wherever they occur in this document
or in other statements attributable to the Company, are necessarily estimates
reflecting the judgment of the Company's senior management and involve a number
of risks and uncertainties that could cause actual results to differ materially
from those suggested by the "forward looking statements." Moreover, the Company,
through its senior management, may from time to time make "forward looking
statements" about matters described herein or other matters concerning the
Company. The Company disclaims any intent or obligation to update "forward
looking statements" to reflect changed assumptions, the occurrence of
unanticipated events or changes to future operating results over time.
- tables attached -
TEAM HEALTH, INC.
FINANCIAL HIGHLIGHTS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
June 30,
-----------------------
2005 2004
--------- ---------
(UNAUDITED)
(IN THOUSANDS)
Net revenue $ 401,605 $ 388,730
Provision for uncollectibles 143,888 132,736
--------- ---------
Net revenue less provision for uncollectibles 257,717 255,994
Cost of services rendered
Professional service expenses 186,315 191,237
Professional liability costs 13,149 13,617
--------- ---------
Gross profit 58,253 51,140
General and administrative expenses 25,877 24,124
Management fee and other expenses 1,758 457
Depreciation and amortization 3,083 3,459
Interest expense, net 6,722 7,008
Estimated impairment loss 1,560 65,819
--------- ---------
Earnings (loss) before income taxes 19,253 (49,727)
Provision for income taxes 7,109 6,190
--------- ---------
Net earnings (loss) attributable to common stockholders $ 12,144 $ (55,917)
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TEAM HEALTH, INC.
FINANCIAL HIGHLIGHTS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
June 30,
-----------------------
2005 2004
--------- ---------
(UNAUDITED)
(IN THOUSANDS)
Net revenue $ 799,672 $ 786,032
Provision for uncollectibles 291,364 268,628
--------- ---------
Net revenue less provision for uncollectibles 508,308 517,404
Cost of services rendered
Professional service expenses 366,643 385,948
Professional liability costs 18,392 29,891
--------- ---------
Gross profit 123,273 101,565
General and administrative expenses 50,765 48,819
Management fee and other expenses 2,162 613
Depreciation and amortization 6,166 6,944
Interest expense, net 13,913 14,326
Refinancing costs -- 14,731
Estimated impairment loss 1,560 65,819
--------- ---------
Earnings (loss) before income taxes 48,707 (49,687)
Provision (benefit) for income taxes 18,641 6,266
--------- ---------
Net earnings (loss) 30,066 (55,953)
Dividends on preferred stock -- 3,602
--------- ---------
Net earnings (loss) attributable to common stockholders $ 30,066 $ (59,555)
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TEAM HEALTH, INC.
SUPPLEMENTAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
JUNE 30, DECEMBER 31,
2005 2004
-------- --------
Cash and cash equivalents $ 15,187 $ 17,931
Short-term investments -- 64,651
Accounts receivable, net 167,837 160,852
Long-term debt, including current portion 347,975 428,125
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