DEERFIELD, Ill., March 13, 2014 (GLOBE NEWSWIRE) -- Surgical Care Affiliates, Inc. (Nasdaq:SCAI) ("SCA" or the "Company"), today announced financial results for the fourth quarter and year ended December 31, 2013. Total net operating revenues, which excludes revenues from facilities in which SCA owns a noncontrolling interest, increased 10.1% in the fourth quarter of 2013 (from $197.6 million to $217.5 million) and increased 7.7% for the twelve-months ended December 31, 2013 (from $744.9 million to $802.0 million). The Company's systemwide net operating revenues, which includes revenues from all facilities in which SCA has an ownership interest (without adjustment based on SCA's percentage of ownership) and management fee revenues from managed-only facilities, increased 23.0% in the fourth quarter of 2013 and 15.2% for the twelve-months ended December 31, 2013.
Andrew Hayek, President & CEO, said, "Patient care is our first priority, and we continue to achieve strong clinical outcomes as we perform cases across the country. From a financial perspective, we are pleased with our 2013 results as we continue increasing Adjusted EBITDA less NCI, growing our cash flow and deleveraging our balance sheet. In addition, we continue to have success in our efforts to develop new ambulatory surgery centers with our existing health system partners. We have also had continued success in adding additional health system partners and look forward to the growth that will result from these new relationships."
SCA's cash flow from operations decreased in the twelve-months ended December 31, 2013, net of a $14.8 million payment of deferred payment-in-kind ("PIK") interest related to the retirement of our Senior PIK-election Notes, $9.1 million of expensed cash fees related to our initial public offering ("IPO"), a $5.0 million debt call premium paid in conjunction with the retirement of our Senior Subordinated Notes and a $4.6 million cash bonus payment to vested option and restricted stock holders. All the described items were included as uses of cash from operations in 2013. Adjusted operating cash flow, which excludes the amounts described above, increased 14.4% in 2013. Adjusted operating cash flow less distributions to NCI increased 20.5% in 2013.
SCA's cash flow from operations decreased in the three-months ended December 31, 2013, net of $8.3 million of expensed cash fees related to our IPO and a $5.0 million debt call premium paid in conjunction with the retirement of our Senior Subordinated Notes. These items were included as uses of cash from operations in the fourth quarter of 2013. Adjusted operating cash flow, which excludes the amounts described above, decreased 9.0% in the fourth quarter of 2013. Adjusted operating cash flow less distributions to NCI decreased 15.7% in the fourth quarter of 2013. The decreases in fourth quarter cash flow from operations and Adjusted operating cash flow relate primarily to an increase in certain working capital accounts and the timing of interest payments on our debt.
Net loss attributable to SCA, which includes expenses related to the IPO and certain non-cash expenses, was $27.4 million for the fourth quarter of 2013. As expected, Adjusted EBITDA less NCI, which adds back certain costs pertaining to our IPO, decreased 8.2% for the fourth quarter of 2013 to $37.9 million from $41.3 million in the same period of the prior year. This decrease was largely related to approximately $4.5 million in one-time corporate level income items in the fourth quarter of 2012 and does not reflect the performance of the underlying operations. Adjusted net income, which adds back certain costs pertaining to our IPO, increased 30.4% for the fourth quarter of 2013 to $21.0 million from $16.1 million for the same period of the prior year.
Net loss attributable to SCA, which includes expenses related to the IPO and certain non-cash expenses, was $51.3 million for the twelve-months ended December 31, 2013. Adjusted EBITDA less NCI, which adds back certain costs pertaining to the IPO, among other things, increased 9.8% for the twelve-months ended December 31, 2013, to $142.9 million from $130.1 million in 2012. Adjusted net income, which adds back certain costs pertaining to our IPO, increased 47.6% for the twelve-months ended December 31, 2013, to $49.3 million from $33.4 million in 2012.
Systemwide Financial Results
As of December 31, 2013, 60 of our 177 facilities are nonconsolidated. We account for these facilities using the equity method. For our consolidated subsidiaries, our financial statements reflect 100% of the revenues and expenses for these subsidiaries, after elimination of intercompany transactions and accounts. For our nonconsolidated affiliates, our consolidated statements of operations reflect our earnings from such facilities in two line items:
-
Equity in net income of nonconsolidated affiliates, which represents our combined share of the net income of each equity method facility that is based on such equity method facility's net income and the percentage of such equity method facility's outstanding equity interests owned by us; and
- Management fee revenues, which represents our combined income from management fees that we earn from managing the day-to-day operations of the facilities that we do not consolidate for financial reporting purposes.
As a result of this accounting treatment in SCA's reported results, management supplementally focuses on non-GAAP systemwide metrics to analyze our results of operations. These systemwide metrics include systemwide net operating revenues growth, same site systemwide net operating revenues growth, systemwide net patient revenues per case growth, same site systemwide net patient revenues per case growth and same site systemwide case volume (day adjusted). Systemwide metrics treat our nonconsolidated facilities as if they were consolidated. We include management fee revenue from managed-only facilities in systemwide net operating revenues growth and same site systemwide net operating revenues growth but not patient or other revenues from managed-only facilities (in which we hold no ownership interest). We do not include facilities at which we hold no ownership interest and provide only management services in systemwide net patient revenues per case growth or same site systemwide net patient revenues per case growth. While the revenues earned at our nonconsolidated facilities are not recorded in our consolidated financial statements, we believe systemwide growth metrics are important to understand our financial performance because the metrics are used by management to interpret the sources of our growth and provide management with a growth metric incorporating the revenues earned by all of our affiliated facilities, regardless of the accounting treatment. As we execute on our strategy of partnering with health systems, we expect the number of our facilities that we account for as equity method facilities will increase relative to our total number of facilities.
For the fourth quarter of 2013, systemwide net patient revenue per case grew 11.2% over the prior year period. Systemwide net patient revenue per case grew 9.2% in the twelve-months ended December 31, 2013, over the prior year. The growth in our systemwide revenue metrics is largely driven by acquisitions, increased rates paid under certain payor contracts and volume increases.
On a same site basis, systemwide net operating revenue for the fourth quarter of 2013 increased 11.8% over the fourth quarter of 2012. Same site systemwide net patient revenue per case grew 6.3% in the fourth quarter over the prior year period. For the twelve-months ended December 31, 2013, same site systemwide net operating revenue increased 8.8% from the twelve-months ended December 31, 2012. Same site systemwide net patient revenue per case grew 6.0% in the twelve-months ended December 31, 2013, over the prior year. The growth in our same site revenue metrics is driven largely by increased rates paid under certain payor contracts and volume increases.
Same site systemwide case volume grew 3.7% in the fourth quarter of 2013 over the prior year period, on a day-adjusted basis. Same-site systemwide case volume grew 2.1% in the twelve-months ended December 31, 2013, over the prior year on a day-adjusted basis, which adjusts for differences in the number of operating days across periods.
For 2014, we expect Adjusted EBTIDA less NCI to be in the range of $154 million to $158 million, which includes the impact of weather on our business that has occurred in the first quarter. Commenting on 2014 guidance, Mr. Hayek said, "We believe we are well positioned to continue our growth as we pursue our strategies with our partners around the country."
SCA will hold a webcast conference call to discuss this release tomorrow, March 14, 2014, at 9:00 a.m. EDT. The live webcast of the conference call will be available by accessing http://investor.scasurgery.com. Following the call, an archived replay of the webcast will be available on the corporate website for 30 days.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements, which have been included in reliance of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, involve risks and uncertainties and assumptions relating to our operations, financial condition, business, prospects, growth strategy and liquidity, which may cause our actual results to differ materially from those projected by such forward-looking statements, and the Company cannot give assurances that such statements will prove to be correct. Investors are hereby cautioned that these statements may be affected by important factors, including, but not limited to, the following risks: our dependence on payments from third-party payors, including governmental healthcare programs, commercial payors and workers' compensation programs; our inability or the inability of our healthcare system partners to negotiate favorable contracts or renew existing contracts with non-governmental third-party payors on favorable terms; significant changes in our payor mix or case mix resulting from fluctuations in the types of cases performed at our facilities; the fact that the Medicare and Medicaid programs provide a significant portion of our revenues and are each particularly susceptible to legislative and regulatory change; the implementation by states of reduced fee schedules and reimbursement rates for workers' compensation programs; our inability to maintain good relationships with our current health system partners or our inability to enter into relationships with new health system partners; material changes in Internal Revenue Service revenue rulings, case law or the interpretation of such rulings; our dependence on physician utilization of our facilities, which could decrease if we fail to maintain good relationships with these physicians; the potential reduction in the number of surgical procedures because of physician treatment methodologies and governmental or commercial health insurance controls; our inability to attract new physician investors and to acquire and develop additional surgical facilities on favorable terms; shortages of, or quality control issues with, surgery-related products, equipment and medical supplies that could result in a disruption of our operations; the competition for staffing, shortages of qualified personnel or other factors that drive up labor costs; the intense competition we face for patients, physician use of our facilities, strategic relationships and commercial payor contracts; the fact that we are subject to significant malpractice and related legal claims, and we could be required to pay significant damages in connection with those claims; the adverse effect of current and future economic conditions on volume and case mix; the regulatory, economic and other conditions in certain states in which many of our facilities are concentrated; the fact that we have a history of net losses and may not achieve profitability in the future; the fact that we may have a special legal responsibility to the holders of ownership interests in the entities through which we own our facilities, which may conflict with, and prevent us from acting solely in, our own best interest; the difficulty in operating and integrating newly acquired or developed facilities; the growth of patient receivables or the deterioration in the ability to collect on those accounts; the loss of the service of our senior management; our reliance on our private equity sponsor; our substantial indebtedness, and our ability to incur additional indebtedness in the future; our inability to generate sufficient cash in order to meet our debt service obligations; restrictions on our current and future operations because of the terms of our senior secured credit facilities; market risks related to interest rate changes; significant loans that we have made to the partnerships and limited liability companies that own and operate certain of our facilities; our liability for certain debt and other obligations of the partnerships and limited liability companies that own and operate certain of our facilities; recognition of impairment on our long-lived assets or equity method investments; our inability to manage and secure our information systems effectively, which could disrupt our operations; our inability to fully realize the value of our net operating loss carry-forwards; adverse impact of weather and other factors beyond our control on our facilities; our inability to predict the impact on us of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act of 2010, which represents a significant change to the healthcare industry; our failure to comply with numerous federal and state laws and regulations relating to our facilities, which could lead to the incurrence of significant penalties by us or require us to make significant changes to our operations; our obligations to purchase some or all of the ownership interests of our physician partners or renegotiate some of our partnership and operating agreements because of changes to laws or regulations governing physician ownership of our facilities; our failure to comply with a federal criminal law referred to as the Anti-Kickback Statute or the physician self-referral laws; restrictions by federal law on our ability to expand surgical capacity of our surgical hospitals; our being subject to federal and state audits and investigations, including actions for false and improper claims; our failure to comply with Medicare's conditions for coverage and conditions of participation, which could result in loss of program payment or other government sanctions; ensuring our continued compliance with the Health Insurance Portability and Accountability Act of 1996 or HIPAA, which could require us to expend significant resources and capital; our failure to effectively and timely implement electronic health records systems and transition to the ICD-10 coding system; efforts to regulate the construction, relocation, acquisition, change of ownership, change of control or expansion of healthcare facilities, which could prevent us from acquiring additional facilities, renovating our existing facilities or expanding the breadth of services we offer; our being subject to enforcement action from antitrust authorities; our being subject to constantly evolving healthcare laws and regulations; the fact that we are a "controlled company" within the meaning of the NASDAQ Stock Market listing rules and as a result, our stockholders do not have certain corporate governance protections concerning the independence of our board of directors and certain board committees that would otherwise apply to us; and the fact that our private equity sponsor has significant influence over us and key decisions about our business that could limit other stockholders' ability to influence the outcome of matters submitted to stockholders for a vote.
The forward-looking statements made in this press release are made only as of the date of the hereof. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information or otherwise. More information about potential factors that could affect our business and financial results is included in our filings with the Securities and Exchange Commission, including in our most recent annual and quarterly reports on Form 10-K and Form 10-Q, respectively.
Use of Non-GAAP Financial Measures
In addition to the results prepared in accordance with generally accepted accounting principles in the United States ("GAAP") provided throughout this press release, SCA has presented the following non-GAAP financial measures, which management uses to gauge operating performance: Adjusted EBITDA less NCI, Adjusted net income (including basic Adjusted net income per share), Adjusted operating cash flow and Adjusted operating cash flow less distributions to NCI. These non-GAAP financial measures exclude various items detailed in the attached "Reconciliation of Non-GAAP Financial Measures".
These measures are not intended to replace financial performance measures determined in accordance with GAAP. Rather, they are presented as supplemental measures of the Company's performance that management finds useful in assessing the Company's operating performance between periods and we believe are useful for investors to analyze our operating performance on the same basis as used by our management. You should be aware that there is no certainty that we will not incur expenses in the future that are similar to those excluded in the calculation of Adjusted EBITDA less NCI, Adjusted net income (including basic Adjusted net income per share), Adjusted operating cash flow and Adjusted operating cash flow less distributions to NCI. Other companies in our industry may calculate Adjusted EBITDA less NCI, Adjusted net income (including basic Adjusted net income per share), Adjusted operating cash flow and Adjusted operating cash flow less distributions to NCI differently than we do, limiting their usefulness as comparative measures. Because of these limitations, none of Adjusted EBITDA less NCI, Adjusted net income (including basic Adjusted net income per share), Adjusted operating cash flow and Adjusted operating cash flow less distributions to NCI should be considered the primary measure of the operating performance of our business. We strongly encourage you to review the GAAP financial statements and not to rely on any single financial measure to evaluate our business.
About Surgical Care Affiliates
An industry leader, SCA partners with physicians, health systems and payors to develop and implement surgery strategies across the country. As of December 31, 2013, SCA operated 177 surgical facilities – including ambulatory surgery centers, surgical hospitals and one sleep center – in partnership with approximately 2,000 physicians and in affiliation with 43 health systems across the country. SCA's clinical systems, service line growth strategies, benchmarking processes and efficiency programs create measurable advantage for surgical facilities – clinically, operationally and financially. For more information on SCA, visit www.scasurgery.com.
| Surgical Care Affiliates, Inc. | ||||
| Unaudited Selected Financial and Operating Data | ||||
| (In millions, except per share data) | ||||
|
Three-Months Ended December 31, |
Year Ended December 31, |
|||
| 2013 | 2012 | 2013 | 2012 | |
| Statement of Operations Data: | ||||
| Net operating revenues | ||||
| Net patient revenues | $ 198.9 | $ 189.8 | $ 746.6 | $ 714.6 |
| Management fee revenues | 14.2 | 4.2 | 40.5 | 17.8 |
| Other revenues | 4.4 | 3.6 | 14.9 | 12.4 |
| Total net operating revenues | 217.5 | 197.6 | 802.0 | 744.9 |
| Equity in net income of nonconsolidated affiliates | 7.3 | 0.1 | 23.4 | 16.8 |
| Operating expenses: | ||||
| Salaries and benefits | 76.1 | 62.6 | 277.7 | 241.8 |
| Supplies | 47.1 | 46.1 | 175.2 | 170.1 |
| Other operating expenses | 42.7 | 29.2 | 131.8 | 118.5 |
| Depreciation and amortization | 11.0 | 11.2 | 42.9 | 41.6 |
| Occupancy costs | 6.7 | 6.9 | 27.0 | 26.8 |
| Provision for doubtful accounts | 4.7 | 2.9 | 15.0 | 13.2 |
| Impairment of intangible or long-lived assets | -- | 0.7 | -- | 1.1 |
| Loss (gain) on disposal of assets | (0.2) | (0.1) | 0.1 | (0.3) |
| Total operating expenses | 188.1 | 159.5 | 669.8 | 612.7 |
| Operating income | 36.7 | 38.2 | 155.6 | 148.9 |
| Interest expense | 11.6 | 14.2 | 60.4 | 58.8 |
| Loss from extinguishment of debt | 6.5 | -- | 10.3 | -- |
| Interest income | -- | (0.1) | (0.2) | (0.3) |
| Loss on sale of investments | 11.3 | 9.1 | 12.3 | 7.1 |
| Income from continuing operations before income tax expense | 7.3 | 15.1 | 72.7 | 83.3 |
| Provision (benefit) for income tax expense | 2.5 | (0.3) | 12.6 | 8.9 |
| Income from continuing operations | 4.8 | 15.4 | 60.1 | 74.4 |
| (Loss) gain from discontinued operations, net of income tax expense | (3.1) | 1.3 | (7.4) | (2.1) |
| Net income | 1.7 | 16.7 | 52.7 | 72.3 |
| Less: Net income attributable to noncontrolling interests | (29.2) | (23.5) | (104.0) | (92.4) |
| Net loss attributable to SCA | $ (27.4) | $ (6.9) | $ (51.3) | $ (20.0) |
| Net loss per basic and diluted share attributable to SCA | $ (0.77) | $ (0.23) | $ (1.62) | $ (0.66) |
| Surgical Care Affiliates, Inc. | ||||
| Unaudited Selected Financial and Operating Data, continued | ||||
| (In millions, except number of shares in thousands and facility count) | ||||
|
December 31, 2013 |
December 31, 2012 |
|||
| Balance Sheet Data (at period end): | ||||
| Cash and cash equivalents | $ 82.5 | $ 118.7 | ||
| Total current assets | 235.7 | 267.4 | ||
| Total assets | 1,422.4 | 1,412.1 | ||
| Current portion of long-term debt | 23.2 | 15.2 | ||
| Long-term debt, net of current portion | 649.7 | 774.5 | ||
| Total current liabilities | 197.5 | 175.2 | ||
| Total liabilities | 987.6 | 1,073.5 | ||
| Total SCA equity | 202.6 | 144.4 | ||
| Noncontrolling interests -- non-redeemable | 210.3 | 172.5 | ||
| Total equity | 412.8 | 316.9 | ||
| Facilities (at period end): | ||||
| Consolidated facilities | 87 | 87 | ||
| Equity method facilities | 60 | 52 | ||
| Managed-only facilities | 30 | 8 | ||
| Total facilities | 177 | 147 | ||
|
Three-Months Ended December 31, |
Year Ended December 31, |
|||
| 2013 | 2012 | 2013 | 2012 | |
| Net loss per share(1) | ||||
| Basic and diluted net loss per share attributable to SCA | $ (0.77) | $ (0.23) | $ (1.62) | $ (0.66) |
| Adjusted number of shares outstanding used to compute basic and diluted net loss per share | 35,664 | 30,343 | 31,688 | 30,340 |
| Cash Flow Data: | ||||
| Net cash provided by (used in): | ||||
| Operating activities | $ 31.5 | $ 49.3 | $ 162.3 | $ 171.2 |
| Investing activities | (40.1) | (4.0) | (76.8) | (21.8) |
| Capital expenditures | (10.6) | (7.7) | (36.8) | (28.4) |
| Investments in new businesses | (33.8) | (14.1) | (55.3) | (17.4) |
| Financing activities | 2.5 | (28.4) | (121.7) | (102.1) |
| Distributions to noncontrolling interests | (23.8) | (24.4) | (103.0) | (94.2) |
| Surgical Care Affiliates, Inc. | ||||||
| Supplemental Information | ||||||
| (Unaudited; in millions, except cases, growth rates and per share data) | ||||||
|
Three-Months Ended December 31, |
Year Ended December 31, |
|||||
| 2013 | 2012 | 2013 | 2012 | |||
| Consolidated and Equity Method Facility Data: | ||||||
| Net Operating Revenues: | ||||||
| Consolidated facilities | $ 217.5 | $ 197.6 | $ 802.0 | $ 744.9 | ||
| Equity method facilities | 186.0 | 130.6 | 605.8 | 477.5 | ||
| Net Patient Revenues: | ||||||
| Consolidated facilities | $ 198.9 | $ 189.8 | $ 746.6 | $ 714.6 | ||
| Equity method facilities | 184.6 | 129.2 | 600.6 | 474.4 | ||
| Case Volume: | ||||||
| Consolidated facilities | 114,884 | 114,534 | 436,560 | 443,361 | ||
| Equity method facilities | 72,009 | 58,403 | 258,942 | 226,860 | ||
| Systemwide case volume(2) | 186,893 | 172,937 | 695,502 | 670,221 | ||
| Number of work days in the period | 64 | 63 | 255 | 254 | ||
| Systemwide net operating revenues growth(3) | 23.0% | 6.8% | 15.2% | 16.4% | ||
| Systemwide net patient revenues per case growth(4) | 11.2% | 4.0% | 9.2% | 7.4% | ||
| Same site systemwide net operating revenues growth(3)(5) | 11.8% | 5.4% | 8.8% | 5.8% | ||
| Same site systemwide net patient revenues per case growth(4)(5) | 6.3% | 3.8% | 6.0% | 4.1% | ||
| Same site systemwide case volume growth (day adjusted)(2)(5) | 3.7% | 1.3% | 2.1% | 0.9% | ||
| Other Financial Data: | ||||||
| Adjusted EBITDA-NCI(6) | $ 37.9 | $ 41.3 | $ 142.9 | $ 130.1 | ||
| Adjusted net income(6) | $ 21.0 | $ 16.1 | $ 49.3 | $ 33.4 | ||
| Basic Adjusted net income per share(1)(6) | $ 0.59 | $ 0.53 | $ 1.56 | $ 1.10 | ||
| Surgical Care Affiliates, Inc. | ||||
| Reconciliation of Non-GAAP Financial Measures | ||||
| (Unaudited; in millions, except per share count in thousands) | ||||
|
Three-Months Ended December 31, |
Year Ended December 31, |
|||
| 2013 | 2012 | 2013 | 2012 | |
| Adjusted EBITDA-NCI: | ||||
| Net income | $ 1.7 | $ 16.7 | $ 52.7 | $ 72.3 |
| Plus (minus) | ||||
| Interest expense, net | 11.6 | 14.1 | 60.2 | 58.5 |
| Provision for income tax expense | 2.5 | (0.3) | 12.6 | 8.9 |
| Depreciation and amortization | 11.0 | 11.2 | 42.9 | 41.6 |
| Loss (gain) from discontinued operations, net | 3.1 | (1.3) | 7.4 | 2.1 |
| Equity method amortization expense(7) | 8.0 | 5.1 | 25.9 | 20.3 |
| Loss on sale of investments | 11.3 | 9.1 | 12.3 | 7.1 |
| Loss on extinguishment of debt | 6.5 | -- | 10.3 | -- |
| Asset impairments | 2.7 | 9.8 | 6.1 | 10.2 |
| (Gain) loss on disposal of assets | (0.2) | (0.1) | 0.1 | (0.3) |
| IPO related expense | 8.3 | -- | 9.1 | -- |
| Stock compensation expense | 0.6 | 0.5 | 7.3 | 1.7 |
| Adjusted EBITDA | 67.1 | 64.8 | 246.9 | 222.5 |
| (Minus) | ||||
| Net income attributable to noncontrolling interests | (29.2) | (23.5) | (104.0) | (92.4) |
| Adjusted EBITDA-NCI | $ 37.9 | $ 41.3 | $ 142.9 | $ 130.1 |
| Adjusted net income: | ||||
| Net loss attributable to SCA | $ (27.4) | $ (6.9) | $ (51.3) | $ (20.0) |
| Plus (minus) | ||||
| Change in deferred income tax | 6.6 | (1.5) | 15.4 | 7.4 |
| Loss on extinguishment of debt | 6.5 | -- | 10.3 | -- |
| Asset impairments | 2.7 | 9.8 | 6.1 | 10.2 |
| Amortization expense | 1.5 | 1.4 | 6.7 | 4.9 |
| Loss (gain) from discontinued operations, net | 3.1 | (1.3) | 7.4 | 2.1 |
| Loss (gain) on sale of investments | 11.3 | 9.1 | 12.3 | 7.1 |
| (Gain) loss on disposal of assets | (0.2) | (0.1) | 0.1 | (0.3) |
| Equity method amortization expense | 8.0 | 5.1 | 25.9 | 20.3 |
| IPO related expense | 8.3 | -- | 9.1 | -- |
| Stock compensation expense | 0.6 | 0.5 | 7.3 | 1.7 |
| Adjusted net income | $ 21.0 | $ 16.1 | $ 49.3 | $ 33.4 |
| Number of shares outstanding used to compute basic | ||||
| Adjusted net income per share(1) | 35,664 | 30,343 | 31,688 | 30,340 |
| Adjusted operating cash flow less distributions to NCI: | ||||
| Net cash provided by operating activities | $ 31.5 | $ 49.3 | $ 162.3 | $ 171.2 |
| Plus (minus) | ||||
| Payment of deferred interest | -- | -- | 14.8 | -- |
| Debt call premium | 5.0 | -- | 5.0 | -- |
| IPO bonus payout on vested options | -- | -- | 4.6 | -- |
| IPO related costs | 8.3 | -- | 9.1 | -- |
| Adjusted operating cash flow | 44.8 | 49.3 | 195.8 | 171.2 |
| Distributions to noncontrolling interests of consolidated affiliates | (23.8) | (24.4) | (103.0) | (94.2) |
| Adjusted operating cash flow less distributions to NCI | $ 21.0 | $ 24.9 | $ 92.8 | $ 77.0 |
Note: Totals may not sum due to rounding.
(1) Calculated based on weighted average number of shares outstanding during the relevant period, to reflect our conversion from a Delaware limited liability company to a Delaware corporation in conjunction with the IPO, at a ratio of 10.25 membership units of ASC Acquisition LLC to one share of common stock of Surgical Care Affiliates, Inc.
(2) The number of cases performed at our consolidated and equity method facilities (does not include managed-only facilities) is a key metric utilized to regularly evaluate performance.
(3) The revenues and expenses of equity method facilities are not directly included in our consolidated GAAP results, rather only the net income earned from such facilities is reported on a net basis in the line item "Equity in net income of nonconsolidated affiliates." Because of this, management supplementally focuses on non-GAAP systemwide results, which measure results from all our facilities, including revenues from our consolidated facilities and our equity method facilities (without adjustment based on our percentage of ownership). We include management fee revenue from managed-only facilities in systemwide net operating revenues growth and same site systemwide net operating revenues growth, but not patient or other revenues from managed-only facilities (in which we hold no ownership interest).
(4) The revenues and expenses of equity method facilities are not directly included in our consolidated GAAP results, rather only the net income earned from such facilities is reported on a net basis in the line item "Equity in net income of nonconsolidated affiliates." Because of this, management supplementally focuses on non-GAAP systemwide results, which measure results from all our facilities, including revenues from our consolidated facilities and our equity method facilities (without adjustment based on our percentage of ownership). We do not include facilities at which we hold no ownership interest and provide only management services in systemwide net patient revenues per case growth or same site systemwide net patient revenues per case growth.
(5) Same site refers to facilities that were operational in both the current and prior period, as applicable.
(6) Represents Adjusted EBITDA-NCI and Adjusted net income (including basic Adjusted net income per share) as computed and used by our management. Adjusted EBITDA-NCI means net income before provisions for income tax expense, net interest expense, depreciation and amortization, net loss from discontinued operations, equity method amortization expense, loss on sale of investments, loss on extinguishment of debt, asset impairments, gain (loss) on disposal of assets, IPO related expenses and stock compensation expense less net income attributable to noncontrolling interests. Adjusted net income means net loss attributable to SCA before change in deferred income tax, loss on extinguishment of debt, asset impairments, amortization expense, net loss from discontinued operations, loss on sale of investments, gain (loss) on disposal of assets, equity method amortization expense, IPO related expenses and stock compensation expense. We present Adjusted EBITDA-NCI and Adjusted net income (including basic Adjusted net income per share) because we believe they are useful for investors to analyze our operating performance on the same basis as that used by our management. Our management believes Adjusted EBITDA-NCI can be useful to facilitate comparisons of operating performance between periods because it excludes the effect of depreciation and amortization, which represents a non-cash charge to earnings, income tax, interest expense and other expenses or income not related to the normal, recurring operations of our business. Our management believes Adjusted net income (including basic Adjusted net income per share) can be useful to facilitate comparisons of our operating performance between periods because it excludes the effect of certain non-cash and other charges to earnings whose fluctuations from period-to-period do not necessarily correspond to the normal, recurring operations of our business. Adjusted EBITDA-NCI and Adjusted net income (including basic Adjusted net income per share) are each considered a "non-GAAP financial measure" under SEC rules and should not be considered a substitute for net income (loss) or net operating income (or net loss per share) as determined in accordance with GAAP. In addition Adjusted EBITDA-NCI and Adjusted net income (including basic Adjusted net income per share) have limitations as analytical tools, including the following:
- Adjusted EBITDA-NCI and Adjusted net income (including basic Adjusted net income per share) do not reflect our historical capital expenditures, or future requirements for capital expenditures, or contractual commitments;
- Adjusted EBITDA-NCI and Adjusted net income (including basic Adjusted net income per share) do not reflect changes in, or cash requirements for, our working capital needs;
- Adjusted EBITDA-NCI does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments under our credit agreement;
- Adjusted EBITDA-NCI and Adjusted net income (including basic Adjusted net income per share) do not reflect our historical impairments recognized;
- Adjusted EBITDA-NCI and Adjusted net income (including basic Adjusted net income per share) do not reflect our historical amortization expenses; and
- Adjusted EBITDA-NCI does not reflect income tax expense or the cash requirements to pay our taxes.
In addition, you should be aware that there is no certainty that we will not incur expenses in the future that are similar to those excluded in the calculation of Adjusted EBITDA-NCI or Adjusted net income (including basic Adjusted net income per share). Other companies in our industry may calculate Adjusted EBITDA-NCI or Adjusted net income (including basic Adjusted net income per share) differently than we do, limiting their usefulness as comparative measures.
Because of these limitations, neither Adjusted EBITDA-NCI nor Adjusted net income (including basic Adjusted net income per share) should be considered the primary measure of the operating performance of our business. We strongly encourage you to review the GAAP financial statements and not to rely on any single financial measure to evaluate our business.
(7) For the three months-ended December 31, 2013 and December 31, 2012, we recorded $8.0 million and $5.1 million, respectively, of amortization expense for definite-lived intangible assets attributable to equity method investments. For the years ended December 31, 2013 and December 31, 2012, we recorded $25.9 million and $20.3 million, respectively, of amortization expense for definite-lived intangible assets attributable to equity method investments. These expenses are included in Equity in net income of nonconsolidated affiliates in our consolidated financial statements.