TeamHealth sees YoY net revenue increase of 28% in Q2 2016
TeamHealth Holdings has announced financial results for its second quarter 2016, confirming net revenue increased 27.9% to $1.12 billion from $878m in the second quarter of 2015.
The US healthcare specialist said in terms of the increase in quarter-over-quarter growth in net revenue, IPC contributed 21.1%, legacy (non-IPC) acquisitions contributed 3.1%, same contract revenue contributed 2.4%, and net new growth contributed 1.2%.
Same contract revenue increased $21m, or 2.6%, to $826.9m from $805.9m in the second quarter of 2015. A 2.5% increase in same contract volumes contributed 1.9% to same contract growth while an increase in estimated collections on fee for service visits provided a 0.1% increase in same contract revenue growth between quarters.
Same contract pricing growth was constrained by a decline in unbilled revenue between periods and a reduction in prior year revenue estimates in the second quarter of 2016 compared to a favourable change in prior year revenue estimates in the second quarter of 2015.
The company said the negative change in prior year revenue estimates recognized in 2016 is due in part to an elevated level of claims write-offs realized in the quarter associated with provider credentialing and claims adjudication on an increased level of new and acquired contract relationships that commenced in 2014 and 2015.
In addition, same contract pricing was impacted by changes in payer mix and a reduced contribution from managed care revenue offset by an increase in average acuity between periods. Contract and other revenue contributed 0.6% to same contract revenue growth between quarters. IPC reported revenue of $185.7 million in the second quarter of 2016 while legacy acquisitions contributed $27.5 million of revenue growth and net new contract revenue increased by $10.4 million between quarters.
TeamHealth president and chief executive, Mike Snow, said, "We delivered another quarter of double digit growth in net revenue and adjusted EBITDA, coupled with solid growth in operating cash flows, although results were slightly constrained compared to our expectations due to a reduced benefit from same contract pricing and timing on potential transactions in our acquisition pipeline.
"In the second quarter, the largest contributor to revenue growth was the impact of the IPC acquisition. We continue to focus on integrating IPC to provide for future growth and remain on target to achieve the cost and revenue synergies as initially targeted. Our legacy acquisitions, same contract, and net new contract sales also contributed to positive revenue growth between quarters although at a lower rate than we have realized in prior quarters.
“Same contract revenue was impacted by a reduced contribution from same contract pricing, and while our acquisition pipeline remains active and robust, the contribution from acquisitions in our second quarter results was slightly lower than expected due to the timing of a few near term opportunities. However, as we look ahead, we continue to see significant growth opportunities in the market and remain enthusiastic about our prospects, strategic plan and the ability to drive long term value for our shareholders.
"As a result of our financial performance in the first half of 2016, and our current expectations about operating trends and growth opportunities for the remainder of the year, we have revised our estimate for net revenue growth for fiscal year 2016 to range between $4.64 billion and $4.71 billion, reflecting an annual growth rate of 29% to 31% with an Adjusted EBITDA margin revised towards the lower end of the range previously provided. This guidance excludes any benefit from the BPCI program for the 2015 measurement period, which we believe could be recognized at some point in 2016. We remain confident in our ability to execute in this environment and maintain committed to delivering the highest quality patient care, supporting our affiliated clinicians and hospital partners, and achieving our operational and financial goals for 2016.”