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Surgery center firm completes stock offering

AmSurg Corp. continues to grow by buying more centers and boosting the number of surgeries.

By Cheryl Jackson, amednews staff. May 7, 2001.

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AmSurg Corp., which joins doctors in operating single-specialty surgery facilities, has completed a stock offering that netted the company $66.3 million.

The Nashville, Tenn.-based firm sold its new shares April 19, while announcing greater revenue growth and earnings in line with Wall Street expectations. But its stock sold for less than its 52-week high of $25, and the company's share price has fluctuated since the offering was completed.

AmSurg President and Chief Executive Ken McDonald said he was sure his company's 4-million-share offering would be well-received, despite recent stock market downturns. The new shares sold for about $18 each, and proceeds were to be used to pay debt.

AmSurg operates single-specialty surgery facilities with doctors who are investors and who often work from offices attached to the centers. It grew from 64 centers last year to 84 in 2001.

Because the surgical centers concentrate on particular procedures, outcomes are better and fees are lower than at hospitals, McDonald said.

The 9-year-old firm is enjoying a field fairly free of competition, analysts say. In the time that practice management companies sprang up and imploded, AmSurg has seen record growth.

Revenues last year rose 41% to $143.3 million. First quarter 2001 revenues were up 43% to $45.14 million from $31.63 million for the same period in 2000. Earnings per share were up 21%, to 17 cents.

"This company's in great shape operationally," said Charles Lynch, analyst at CIBC World Markets. "They're kind of peeling out this low-end surgery from the hospital industry."

AmSurg tends to focus on markets where it's not in head-to-head competition with hospitals. "The physicians are happier. The patients are happier. The HMOs are happier," Lynch said.

Compared with hospitals, the facilities are more "user-friendly" for physicians and patients, said John Popp, MD, managing partner of the Columbia Gastroenterology Associates. His group operated the Columbia Gastrointestinal Endoscopy Center in Columbia, S.C. before selling part to AmSurg a few years ago.

"It's a lot less aggravation for us," he said. "Now we have someone much more knowledgeable ... who can help us with the nuts and bolts of running a health care facility."

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