KNOXVILLE, Tenn., March 15 /PRNewswire-FirstCall/ -- Team Finance LLC (the "Company") today announced results for its fiscal year and fourth quarter ended December 31, 2005. On November 23, 2005, affiliates of the Blackstone Group ("Blackstone") acquired a majority interest in Team Health Holdings, LLC, the parent of the Company, in a merger that was accounted for as a recapitalization (the "Transaction"). Team Health, Inc. ("Team Health") is a wholly-owned subsidiary of the Company. The historical financial results of the Company and Team Health have been restated for the effect of the Transaction.
Net revenue less provision for uncollectibles ("revenue less provision") for the fiscal year ended December 31, 2005 increased to $1,014.7 million from $1,008.7 million in the prior year. Military staffing revenue declined $55.6 million year over year as a result of the military re-contracting its healthcare staffing contracts in 2004. Same contract revenue less provision for the year increased by 9.2% to $749.8 million from $686.5 million in 2004. Contributing to the 9.2% increase in same contract revenue was an increase in estimated collections per patient of approximately 4.4% and increases in volume between periods due to an increase in overall fee for service volume of 3.6%. Net earnings for 2005 were $1.7 million compared to a net loss of $57.9 million in 2004. Primarily due to the Transaction occurring in the fourth quarter of 2005, transaction costs of $18.2 million and a loss on extinguishment of debt of $25.3 million were realized in 2005. Additionally, general and administrative expenses in 2005 reflect approximately $4.1 million of costs associated with the Transaction, primarily related to the termination of the prior stock option program. The net loss of $57.9 million in 2004 includes a previously reported goodwill impairment loss of $73.2 million and $14.7 million of refinancing related costs.
Net revenue less provision in the fourth quarter of 2005 increased 3.7% to $249.0 million from $240.2 million in the corresponding period of 2004. Same contract revenue less provision for the quarter increased by 3.8% to $206.9 million from $199.4 million in the same period a year ago. The lower rate of growth in same contract revenue in the fourth quarter of 2005 compared to the full fiscal year rate of same contract revenue growth is due to overall growth in fee for service patient volume of 0.8% as well as reduced growth in estimated collections per patient between periods as compared to the full fiscal year results. Net losses were $30.2 million in the fourth quarter of 2005, compared to net earnings of $1.5 million in the fourth quarter of 2004. The loss in the fourth quarter of 2005 was primarily due to costs incurred in conjunction with the Transaction.
As of December 31, 2005, the Company had cash and cash equivalents of approximately $10.6 million and a revolving credit facility borrowing availability of $119.7 million (without giving effect to $12.6 million of undrawn letters of credit). The Company's total outstanding debt as of December 31, 2005 was $645.3 million. Cash flow provided by operations (after interest, taxes and changes in working capital) for 2005 was $56.8 million compared to $64.6 million in 2004. The decline in operating cash flow is principally due to costs associated with the bond tender offer and an increase in accounts receivable and tax payments.
Lynn Massingale, M.D., Chief Executive Officer of Team Health, said, "The past fiscal year resulted in significant changes for the Company in order to further strengthen the operations of the Company. As previously announced, in November 2005 an affiliate of the Blackstone Group purchased a majority interest in the Company from our existing equity sponsors in a recapitalization transaction. Members of management also retained or purchased additional equity in the Company as part of this transaction. The purchase of the Company by Blackstone is a testament to the high quality affiliated physicians, clinicians, and administrative employees of the Company and the services that they provide to our hospital customers and their patients. As active and knowledgeable investors in the healthcare industry, we look forward to working with Blackstone as we develop solutions to better serve the needs of our customers and patients.
"Despite the challenges of managing through the acquisition and recapitalization during 2005, the Company reported solid financial results driven primarily by strong performance in our core emergency staffing business. The ED staffing business reported year over year growth in net revenue of 8.0% driven by a combination of increases in both patient volume as well as an improvement in estimated collections per patient. During 2004, the Company retained the services of experienced healthcare billing consultants to evaluate our existing billing and collection processes and make recommendations for improvements in this critical area. We believe that a portion of the improvement in our estimated collections per patient visit is due to enhancements in our billing and collection process.
"Over the past several years, the Company made a significant commitment to improving our internal risk and claims management processes in key functions such as the recruitment of physicians and provider communication in regard to identified risk areas and activities. These investments, combined with recent tort reform efforts in several key states and a conscious decision to terminate high risk contracts have contributed to very favorable claim and loss trends over the past several years. Due in part to such favorable trends and the resulting improvement in actuarial loss estimates, the Company experienced an overall reduction in professional liability costs of $19.5 million between years.
"Our military staffing business was able to successfully rebuild its operations following the military's re-bidding of substantially all healthcare staffing relationships which was completed in late 2004. As a result of the re-bidding process, we experienced a decline in our military staffing revenues of approximately $55.6 million during 2005 as well as a decline in operating margin. Despite the year over year declines in revenue and profitability, we feel our military operations have now stabilized. We truly appreciate the effort put forth by our management and employees of the military healthcare staffing division during this very challenging time and look forward to refocusing on growth opportunities in this market. We continue to believe that our military staffing business is the premier provider of healthcare staffing services to the military.
"During the last several years, the Company added several experienced healthcare executives in order to further develop our management team. We have also been focusing intensely on making incremental improvements in the execution of our day to day operations. The results of these efforts are being realized today, as Company has been able to deliver sound financial performance during a challenging environment. In addition, these investments have allowed us continue to meet the needs of our hospital customers, affiliated physicians and clinical providers. With our new partners at Blackstone, we look forward to continuing to grow the Company and capitalizing on future opportunities in the healthcare staffing market during 2006."
About Team Health
Founded in 1979, Team Health is headquartered in Knoxville, Tennessee. Team Health is affiliated with over 5,600 healthcare professionals who provide emergency medicine, radiology, anesthesia, hospitalist, urgent care and pediatric staffing and management services to over 500 civilian and military hospitals, surgical centers, imaging centers and clinics in 43 states. For more information about Team Health, visit http://www.teamhealth.com/.
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.
Team Finance LLC
Financial Highlights
Year ended December 31,
2005 2004
(In thousands)
Net revenues $1,613,358 $1,572,174
Provision for uncollectibles 598,611 563,483
Net revenues less provision for uncollectibles 1,014,747 1,008,691
Cost of services rendered
Professional service expenses 753,176 754,222
Professional liability costs 40,383 59,839
Gross profit 221,188 194,630
General and administrative expenses 109,252 100,473
Management fee and other expenses 1,901 1,387
Impairment of intangibles -- 73,177
Depreciation and amortization 26,135 28,001
Interest expense, net 29,981 28,949
Loss on extinguishment of debt 25,340 14,731
Transaction costs 18,223 --
Earnings (loss) before income taxes 10,356 (52,088)
Provision (benefit) for income taxes 8,645 5,855
Net earnings (loss) 1,711 (57,943)
Dividends on preferred stock -- 3,602
Net earnings (loss) attributable to
common shareholders/members $1,711 $(61,545)
Capital expenditures $10,917 $6,713
Team Finance LLC
Financial Highlights
(unaudited)
For the three months ended
December 31,
2005 2004
(In thousands)
Net revenue $403,265 $393,396
Provision for uncollectibles 154,246 153,154
Net revenue less provision for
uncollectibles 249,019 240,242
Cost of services rendered
Professional service expenses 192,807 181,946
Professional liability costs 8,900 15,027
Gross profit 47,312 43,269
General and administrative expenses 32,520 25,765
Loss on extinguishment of debt 23,938 --
Management fee and other expenses (income) (215) 613
Transaction costs 16,976 --
Depreciation and amortization 6,582 6,945
Interest expense, net 9,456 7,274
Earnings (loss) before income
taxes (41,945) 2,672
Provision (benefit) for income taxes (11,784) 1,220
Net earnings (loss) $(30,161) $1,452
Capital expenditures $4,750 $2,178
Team Finance LLC
Financial Highlights
December 31, December 31,
Balance Sheet Data 2005 2004
(In thousands)
Cash and cash equivalents $10,644 $17,931
Short term investments - 64,651
Accounts receivable, net 180,407 160,852
Long-term debt, including current
portion 645,300 428,125
