Symbion ends Q3 with sufficient cash flow to cover debt-service costs

By Paul Deckelman

New York, Nov. 19 - Symbion Inc. ended the fiscal 2013 third quarter with $57.7 million of consolidated cash on its balance sheet, an undrawn revolving credit line and sufficient cash-flow generation capacity to cover its debt-service costs, the company's chairman and chief executive officer said on Tuesday.

"Our cash flow profile and liquidity remain strong," CEO Richard E. Francis Jr. declared on the conference call following the release of the Nashville-based short-stay non-emergency surgical facilities operator's results for the quarter and the nine months ended Sept. 30. Of that consolidated cash figure, $17.1 million was considered corporate cash, with the remainder held at various subsidiaries. The consolidated cash figure was down from $74.3 million at the end of the 2012 fiscal year on Dec. 31.

The balance sheet showed total debt at Sept. 30 of $549.7 million, of which $542.6 million was long-term debt, less the $7.1 million current portion of that debt. As of Dec. 31, 2012, debt had stood at $573.6 million - $534 million of long-term debt less a $39.5 million current portion.

The capital structure at Sept. 30 consisted mostly of $337.8 million of 8% senior secured notes due 2016, $114 million of 8% PIK exchangeable notes due 2017 and $73.4 million of 11%/11¾% toggle notes due 2015. Since February 2012, all interest on the latter notes has been payable in cash only. The company redeemed $21.2 million of the toggle notes in August under the mandatory redemption provision in the notes' indenture.

Besides that redemption during the quarter, Francis said that one of the company's facilities refinanced its debt during the quarter, resulting in the use of $6.1 million of cash to pay down the facility's line of credit.

Within leverage covenants

At the quarter's end, Francis said that Symbion's leverage ratio of debt as a multiple of EBITDA stood at 3.95 times, which he said represented a 34.1% cushion versus the 6 times maximum allowed under the company's credit covenants. The ratio is based on consolidated EBITDA of $77.7 million.

He also said that Symbion's consolidated interest coverage ratio was 2.78 times. And he noted that besides its cash on hand, the company could tap $48.5 million of borrowing availability under its revolver due 2015, which showed no borrowings at the end of the quarter other than $1.8 million in letters of credit.

Francis said that Symbion - which owns and operates 49 facilities in 24 states, in addition to some joint-venture and partnership activities - is constantly on the lookout for potential merger opportunities for other facilities operating in its current markets as well as partnership opportunities with health-care systems.

He said that "our balance sheet is well-positioned to enhance the value of the company" in this way.

The CEO predicted that Symbion's cash flow from operations over the next 12 to 18 months "should sufficiently cover our debt service, therefore allowing us to use a combination of cash on the balance sheet and [our] revolver to fund these growth opportunities."

Symbion did a debt refinancing in June 2011, issuing $350 million of the 8% secured 2016 notes and using the deal proceeds plus cash on hand to repay its existing credit facility in full and to repurchase a portion of its 11%/11¾% then-PIK 2015 toggle notes. It repurchased or exchanged a total of $156.2 million of the latter bonds, buying back $70.8 million of the notes at par plus accrued interest using proceeds from the new bond deal, and then taking out an additional $85.4 million of those notes by giving holders an equal amount of the 8% senior PIK exchangeables in a swap for the 2015 PIK notes.

During the conference call, Francis said that "we will continue to monitor the financial markets as we evaluate our overall capital structure."

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