SEC Filings

10-Q
ENVISION HEALTHCARE CORP filed this Form 10-Q on 11/03/2017
Entire Document
 
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)

Operating income increased $20.8 million, or 13.2%, to $178.9 million during the three months ended September 30, 2017, from $158.1 million in the three months ended September 30, 2016. Operating income increased $67.3 million, or 14.5%, to $530.1 million during the nine months ended September 30, 2017, from $462.8 million in the nine months ended September 30, 2016. Our operating income was impacted during the three and nine months ended September 30, 2017 primarily due to the following:

an increase of $31.3 million and $76.6 million during the three and nine months ended September 30, 2017, respectively, associated with results from our physician services segment primarily due to the full period of results of operations received from the Merger and acquisitions completed during 2017 and 2016; and
a decrease of $10.5 million and $9.3 million during the three and nine months ended September 30, 2017, respectively, experienced by our ambulatory services segment primarily as a result of disposal and deconsolidation activity offset in part by the operations of acquisitions completed during 2017 and 2016 and same-contract growth.

As a percentage of our consolidated net revenue, our physician services segment represented 83.8% of our net revenue for the nine months ended September 30, 2017 as compared to 59.2% for the nine months ended September 30, 2016. As a result, our consolidated operations compared to prior periods has changed as a percentage of net revenue in both individual operating expense categories as well as in our net earnings attributable to noncontrolling interests. See further discussion of specific operating expense categories within our discussion of each of our operating segments.

Net interest expense increased $28.5 million, or 86.6%, to $61.4 million in the three months ended September 30, 2017, from $32.9 million in the three months ended September 30, 2016, and increased $74.3 million, or 77.7%, to $169.9 million in the nine months ended September 30, 2017, from $95.6 million in the nine months ended September 30, 2016, primarily as a result of increased borrowings related to the Merger and incremental term loan borrowings to fund recent acquisitions. See “- Liquidity and Capital Resources” for additional information.

We recognized income tax expense of $27.1 million and $80.2 million for the three and nine months ended September 30, 2017, respectively, compared to $29.6 million and $83.8 million in the three and nine months ended September 30, 2016, respectively. Our effective tax rate during the nine months ended September 30, 2017 was approximately 22% of earnings from continuing operations. This differs from the federal statutory income tax rate of 35% primarily due to the exclusion of the noncontrolling interests’ share of pre-tax earnings and the impact of state income taxes. However, excluding the earnings attributable to non-controlling interest, our adjusted effective tax rate was approximately 39% for the nine months ended September 30, 2017.

Noncontrolling interests in net earnings for the nine months ended September 30, 2017 decreased $10.1 million from the nine months ended September 30, 2016, primarily due to recent disposal and deconsolidation activity offset, in part, by operations from noncontrolling interests in earnings at surgery centers added to operations during 2017 and 2016.


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