CHICAGO -- NovaMed, Inc. today reported results for the third quarter and nine months ended Sept. 30, 2004. Net income from continuing operations in the third quarter of 2004 increased 34 percent to $1,070,000, or $0.05 per diluted share, from $799,000, or $0.04 per diluted share, in the prior year third quarter. The third quarter results for 2004 and 2003 included pre-tax net losses on the sale of minority interests of $64,000 and $188,000, respectively.
For the third quarter ended Sept. 30, 2004, total net revenue increased 21 percent to $17,394,000 from $14,374,000 for the prior year third quarter. Net revenue from surgical facilities was $12,890,000, up 38 percent from $9,374,000 in the prior year third quarter. This revenue increase was primarily due to a 36 percent increase in total surgical procedures performed in the third quarter of 2004 as compared to the same period in the prior year. On a same-facility basis, surgical facilities net revenue increased 8 percent over the prior year third quarter. Product sales and other revenue was $4,504,000 in the third quarter of 2004, down 10 percent from the prior year third quarter. Operating income in the third quarter of 2004 increased 56 percent to $3,400,000, or 20 percent of net revenue, from $2,175,000, or 15 percent of net revenue, in the same period last year. Minority interest in the third quarter of 2004 was $1,485,000, up 112 percent over the prior year third quarter. This increase is due to the sale of minority interests in existing surgical facilities in 2003 and 2004 as well as surgical facilities acquired in 2004.
Net income from continuing operations for the nine months ended September 30, 2004 increased 23 percent to $2,646,000, or $0.12 per diluted share, from $2,148,000, or $0.10 per diluted share, for the nine months ended September 30, 2003. The results for the first nine months of 2004 included a pre-tax net gain on the sale of minority interests of $99,000 and the results for the first nine months of 2003 included a pre-tax net loss on the sale of minority interests of $73,000.
For the nine months ended Sept. 30, 2004, total net revenue increased 12 percent to $47,098,000 from $41,895,000 for the nine months ended Sept. 30, 2003. Net revenue from surgical facilities was $33,382,000, up 23 percent from $27,202,000 in the first nine months of the prior year. This revenue increase was primarily due to a 25 percent increase in total surgical procedures performed in the first nine months of 2004 as compared to the same period in the prior year. On a same-facility basis, surgical facilities net revenue increased 8 percent over the first nine months of the prior year. Product sales and other revenue was $13,716,000 in the first nine months of 2004, down 7 percent from the same period in the prior year. Operating income in the first nine months of 2004 increased 39 percent to $7,735,000, or 16 percent of net revenue, from $5,549,000, or 13 percent of net revenue, in the same period last year. Minority interest in the first nine months of 2004 was $3,415,000, up 75 percent from the same period last year.
"I believe our third quarter results are beginning to show that both our internal and external growth strategies are working. The positive contribution from our five 2004 surgery center acquisitions plus our strong same-facility revenue growth of 8 percent produced total surgical facilities revenue growth of 38 percent," commented Stephen J. Winjum, NovaMed chairman, president and CEO. "I am pleased with this revenue growth which contributed to our operating income growth of 56 percent, net income growth of 34 percent and operating income margin improvement of five percentage points over the prior year," said Winjum.
"We will continue to focus on growth opportunities within our existing portfolio of 22 surgery centers as well as pursue attractive acquisition and development opportunities," said Winjum. "Our acquisition pipeline remains strong and the recently announced increase in our credit facility to $50 million further enhances our ability to execute our growth strategy and continue our growth momentum," stated Winjum.
NovaMed acquires, develops and operates ambulatory surgery centers in partnership with physicians. NovaMed currently owns a majority interest in 22 centers located in 12 states. NovaMed's executive offices are located in Chicago.
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