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 DATASOURCE: Team Finance LLC CONTACT: David
Jones, CFO of Team Health, Inc., +1-865-693-1000, for Team Finance
LLC Web site: http://www.teamhealth.com/
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