|ENVISION HEALTHCARE CORP filed this Form 8-K on 10/31/2017|
Review of Strategic Alternatives
The Company also announced that its Board of Directors, in consultation with management and financial and legal advisors, has unanimously decided to initiate a full review of a broad range of alternatives to enhance shareholder value. The Board plans to proceed in a timely manner, but has not set a timetable for completion of its review. There can be no assurance that this review will result in a transaction or other alternative of any kind. The Company does not intend to provide updates on its review until it deems further disclosure is appropriate or required.
“After careful consideration, our Board has determined to undertake a review of strategic, financial and operational alternatives with the goal of enhancing shareholder value,” said William Sanger, Chairman of the Envision Board of Directors. “While we have made considerable progress in building the new Envision around a set of highly-differentiated physician-centric clinical solutions, the Board believes that a review at this time - with all options on the table, including continuing to execute on our strategic plan - is in the best interests of Envision shareholders. As the Board conducts its review of potential value-creating alternatives, we remain focused on aggressively executing our strategic plan to deliver value to Envision shareholders.”
Envision reports two operating segments as continuing operations: Physician Services, which includes facility-based and post-acute services; and Ambulatory Services. On August 7, 2017, Envision entered into a definitive agreement to divest American Medical Response, Envision’s Medical Transportation business, which had been moved to discontinued operations in the first quarter of the year. As required by accounting guidelines, Envision re-allocated certain corporate expenses associated with its shared services model to continuing operations. This re-allocation impacts segment Adjusted EBITDA by $9.3 million for the three months ended September 30, 2017. The re-allocation results in a reduction of Adjusted EBITDA in the third quarter of $7.2 million for Physician Services and $2.1 million for Ambulatory Services, with a corresponding Adjusted EBITDA increase of $9.3 million for discontinued operations. Upon completion of the pending divestiture of the Medical Transportation business, a portion of these shared services are likely to remain with that business.
In order to enhance the comparability of results following the merger of AMSURG Corp. (“AMSURG”) and Envision Healthcare Holdings, Inc. (“EHH”), which was completed on December 1, 2016, the following discussion presents Envision Physician Services’ results for the prior-year period as if the two separate Physician Services’ segments of AMSURG and EHH, based on historically reported results, had been combined effective January 1, 2016.
Net revenues for Physician Services were $1.68 billion for the third quarter of 2017, an increase of 7.6% from $1.56 billion during the prior-year period. This includes an estimated impact of $19.0 million due to storm-related disruption. Revenue growth was driven by contributions from acquisitions of 9.6% and same contracts contributed 0.4%. These were partially offset by net contract terminations. New contracts contributed revenue growth of 6.7%, while revenue declined by 7.0% due to contracts terminated in the latter part of 2016, resulting in a net decline of 0.3% from new contracts. New contracts were also impacted by a 2.1% decline due to the previously announced population health contract termination.
Same-contract net revenue growth was 0.6% in the third quarter of 2017 when compared to the prior-year period. Same-contract revenue per patient encounter grew by 1.3% while same-contract patient care volume declined by 0.7% compared to the prior-year period. Envision estimates that the storms had the effect of reducing same-contract revenue growth by approximately 1.1%.