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)

The following table presents selected statement of operations data expressed in dollars (in millions) and as a percentage of net revenue for our ambulatory services segment.
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net revenue
$
309.4

 
100.0
 %
 
$
314.6

 
100.0
%
 
$
943.8

 
100.0
%
 
$
941.5

 
100.0
%
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and benefits
97.7

 
31.6

 
97.5

 
31.0

 
291.4

 
30.9

 
294.0

 
31.2

Supply cost
48.5

 
15.7

 
46.8

 
14.9

 
148.0

 
15.7

 
141.4

 
15.0

Insurance expense
1.7

 
0.5

 
1.4

 
0.4

 
5.4

 
0.6

 
4.5

 
0.5

Other operating expenses
63.5

 
20.5

 
61.0

 
19.4

 
190.3

 
20.2

 
186.0

 
19.8

Transaction and integration costs
1.8

 
0.6

 
8.0

 
2.5

 
7.1

 
0.8

 
10.3

 
1.1

Depreciation and amortization
10.0

 
3.2

 
9.1

 
2.9

 
29.5

 
3.1

 
26.7

 
2.8

Total operating expenses
223.2

 
72.1

 
223.8

 
71.1

 
671.7

 
71.2

 
662.9

 
70.4

Net gain (loss) on disposals and deconsolidations
(2.3
)
 
(0.7
)
 
4.1

 
1.3

 
1.2

 
0.1

 
6.7

 
0.7

Equity in earnings of unconsolidated affiliates
5.5

 
1.8

 
5.0

 
1.6

 
16.8

 
1.8

 
14.1

 
1.5

Operating income
$
89.4

 
28.9
 %
 
$
99.9

 
31.8
%
 
$
290.1

 
30.7
%
 
$
299.4

 
31.8
%

Three and Nine Months Ended September 30, 2017 compared to Three and Nine Months Ended September 30, 2016

Ambulatory services revenues decreased $5.2 million, or 1.7%, to $309.4 million and increased $2.3 million, or 0.2%, to $943.8 million in the three and nine months ended September 30, 2017, respectively, from $314.6 million and $941.5 million in the three and nine months ended September 30, 2016, respectively. Our ambulatory services revenues were impacted during the three and nine months ended September 30, 2017 as compared to the prior periods primarily due to the following:

revenue decline of $2.2 million, or 0.7%, recognized by our 2017 same-center group for the three months ended September 30, 2017 due to fewer business days in the current period, and growth of $6.2 million, or 0.7%, recognized by our 2017 same-center group for the nine months ended September 30, 2017 ;
centers acquired in 2016, which contributed $1.7 million and $14.2 million of additional revenues in the three and nine months ended September 30, 2017, respectively, due to having a full period of operations in 2017;
centers acquired in 2017, which contributed $4.6 million and $7.6 million of additional revenues in the three and nine months ended September 30, 2017, respectively;
reduced revenue recognized during the three and nine months ended September 30, 2017 of $4.3 million and $10.6 million, respectively, resulting from the deconsolidation of centers that were consolidated in the prior periods. The deconsolidated centers represented a reduction of 5,899 and 17,516 procedures reported during the three and nine months ended September 30, 2016, respectively. Our share of the results of operations from the deconsolidated centers is reflected in equity in earnings of unconsolidated affiliates in our consolidated statements of operations; and
reduced revenue recognized during the three and nine months ended September 30, 2017 of $3.9 million and $13.5 million, respectively, resulting from the disposal of centers that had a full period of operations during the three and nine months ended September 30, 2016.

Salaries and benefits increased by $0.2 million, or 0.2%, to $97.7 million and decreased $2.6 million, or 0.9%, to $291.4 million in the three and nine months ended September 30, 2017, respectively, from $97.5 million and $294.0 million in the three and nine months ended September 30, 2016, respectively. In the nine months ended September 30, 2017, salaries and benefits decreased due to lower incentive compensation expense and lower corporate expense allocation related to the Merger in the 2017 period, as well as the reduction in expense from the deconsolidated centers that were consolidated in the prior period.

Supply cost increased $1.7 million, or 3.6%, to $48.5 million and $6.6 million, or 4.7%, to $148.0 million in the three and nine months ended September 30, 2017, respectively, from $46.8 million and $141.4 million in the three and nine months ended September 30, 2016, respectively. Increased supply costs for the three and nine months ended September 30, 2017 are primarily due to the change in the mix and cost of certain procedures performed by our same-center group offset by the reduction in expense from the deconsolidated centers that were consolidated in the prior period.
 
Other operating expenses increased $2.5 million, or 4.1%, to $63.5 million and $4.3 million, or 2.3%, to $190.3 million in the three

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