AmeriPath, Inc.


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AmeriPath, Inc.

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Gregory A. Marsh   Michelle D. Getty
Vice President & CFO   Investor Relations
AmeriPath, Inc.   AmeriPath, Inc.
561-712-6211   561-712-6260


Riviera Beach, FL, February 25, 2003 – AmeriPath, Inc. (Nasdaq:PATH), a leading national provider of cancer diagnostics, genomics, and related information services, reported its financial results for the quarter and year ended December 31, 2002. All reported earnings per share amounts are on a fully diluted basis.

Fourth Quarter Results, Excluding Special Charges

Net revenue for the fourth quarter increased 11.5% over the same period of the prior year, from $108.9 million to $121.4 million. Same store revenue excluding national lab business increased 10%, or $9.8 million, compared to the prior year, while acquisitions completed during 2001 and 2002 provided the remaining net revenue increase. Net income for the quarter was $9.8 million, a decrease of $1.7 million, or 14.8%, over 2001 net income of $11.5 million, excluding special charges. Earnings per share for the quarter decreased 17.9% from $0.39 to $0.32.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $21.7 million for the fourth quarter 2002, compared to $28.5 million for the comparable period in 2001. Negative impacts relative to the quarter included: a) a $4.9 million increase in malpractice insurance costs including a $4.0 million increase in incurred but not reported claims (IBNR); b) a $3.9 million increase in SG&A including an increase of $1.2 million in sales and information technology organizations and other major increases attributed to health and workers’ compensation insurances, legal and billing costs; c) a $2.1 million reduction in margin due to a loss of national laboratory business while we retained staff in anticipation of recapturing this volume. These cost increases were in part offset by a reduction to our bonus accrual of $3.6 million. A table attached to the end of this press release shows how we calculate EBITDA.

Full Year Results, Excluding Special Charges

Net revenue for the year ended December 31, 2002 was $478.8 million compared to $418.7 million for the year 2001, an increase of 14.4%. EBITDA, excluding special charges, was $105.1 million for the year ended December 31, 2002, compared to $105.2 million for the year ended December 31, 2001. We estimate pro forma EBITDA, assuming our 2002 acquisitions had been included in our results of operations since January 1, 2002, and other pro forma adjustments to be $110.2 million for the year ended December 31, 2002. Net income, excluding special charges, for the year ended December 31, 2002 was $49.9 million, or $1.60 per share, compared to $37.2 million, or $1.38 per share, for the year ended December 31, 2001. The fully diluted weighted average number of shares outstanding for the year ended December 31, 2002 was 31.1 million as compared to 27.0 million for 2001. Cash flow from operations, excluding non-recurring payments was $69.5 million. Days sales outstanding were 66 at December 31, 2002 compared to 68 days at December 31, 2001.

Fourth Quarter Special Charges

During the fourth quarter of 2002, the Company recorded a special charge of $2.8 million related to expenses in connection with the pending Welsh Carson transaction.



Results of Operations, Including Special Charges

Net income, including special charges, for the quarter ended December 31, 2002 was $7.1 million, or $0.23 per share, compared to $0.07 per share, for the quarter ended December 31, 2001. Net income, including special charges, for the year ended December 31, 2002, was $44.6 million, or $1.44 per share, compared to $0.86 per share in the prior year.

The Company, Welsh, Carson Anderson & Stowe and its financing sources are presently negotiating amended commitment letters, which will reflect among other things, a revised capital structure upon completion of the transaction.

CEO’s Perspective

“Operationally, the Company achieved many goals in the fourth quarter.” commented James C. New, Chairman and Chief Executive Officer. “We continued our double-digit same store growth, expanded both our sales and I.T. organizations, and exceeded our cash objectives. We remain focused on our business while completing financing arrangements and working towards completion of our pending merger transaction with Amy Acquisition Corp., an affiliate of Welsh, Carson, Anderson and Stowe.”

As previously announced, the Company will broadcast its fourth quarter and year-end financial results conference call on Tuesday, February 25, 2003, at 9:00 a.m. EST over the Internet. All stockholders and investors are encouraged to participate. This event is available through AmeriPath’s website, located at There is no charge to access the event.

AmeriPath is a leading national provider of cancer diagnostics, genomics, and related information services. The Company’s extensive diagnostics infrastructure includes the Center for Advanced Diagnostics (CAD), a division of AmeriPath. CAD provides specialized diagnostic testing and information services including Fluorescence In-Situ Hybridization (FISH), Flow Cytometry, DNA Analysis, Polymerase Chain Reaction (PCR, performed pursuant to an agreement with Roche Molecular Systems, Inc.), Molecular Genetics, Cytogenetics and HPV Typing. Additionally, AmeriPath provides clinical trial and research development support to firms involved in developing new cancer and genomic diagnostics and therapeutics.

The statements contained in this press release may include “forward-looking statements’’ within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements — which are sometimes identified by words such as “may”, “should”, “believe’’, “expect’’, “anticipate’’, “estimate” and similar expressions and which include any financial or operating estimates, forecasts or projections — are subject to a number of risks and uncertainties and completion of the Company’s audit for 2002, many of which involve factors or circumstances that are beyond the Company’s control. These risks and uncertainties could cause actual results to differ materially from results anticipated by forward-looking statements. These risks and uncertainties include the possibility that the merger may not occur due to the failure of the parties to satisfy the conditions set forth therein, such as the inability of Welsh, Carson to obtain financing, the failure of AmeriPath to obtain stockholder approval or the occurrence of events that would have a material adverse effect on AmeriPath as described in the merger agreement. Additional risks and uncertainties relating to the Company’s operations include: the extent of success of the Company’s operating initiatives and growth strategies; ability to manage growth; access to capital on satisfactory terms; general economic conditions; terrorism or an escalation of hostilities or war; competition and changes in competitive factors; federal and state health care regulation (and compliance); reimbursement rates under government and third- party healthcare programs and the payments received under such programs; changes in coding; changes in technology; dependence upon pathologists and customer contracts; the ability to attract, motivate, and retain pathologists; labor, technology and insurance costs; marketing and promotional efforts; the availability of pathology practices in appropriate locations that the Company is able to acquire on suitable terms or develop; and the successful completion and integration of acquisitions (and achievement of planned or expected synergies). The forward-looking statements in this press release are made as of the date hereof based on management’s current beliefs and expectations, and the Company undertakes no obligation to update or revise any such statements. Further information regarding risks, uncertainties and other factors that could affect the Company’s financial or operating results or that could cause actual results to differ materially from those expected, estimated or anticipated are included in the Company’s annual, quarterly, and other reports and filings with the SEC.

.# # #

Editor’s Note: This release is also available at



AmeriPath, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)

      Including Special Charges   Excluding Special Charges
      Three Months Ended   Year Ended   Three Months Ended   Year Ended
      December 31,   December 31,   December 31,   December 31,
      2002   2001   2002   2001   2002   2001   2002   2001
Net revenue
  $ 121,446     $ 108,877     $ 478,818     $ 418,732     $ 121,446     $ 108,877     $ 478,818     $ 418,732  
Operating costs and expenses:
Cost of services
    64,098       51,359       238,573       200,102       64,098       51,359       238,573       200,102  
Selling, general & admin. expense
    22,326       18,381       84,868       71,856       22,326       18,381       84,868       71,856  
Provision for doubtful accounts
    15,297       12,464       58,170       48,287       15,297       12,464       58,170       48,287  
Amortization expense
    2,912       4,802       11,389       18,659       2,912       4,802       11,389       18,659  
Merger-related charges
    2,836             2,836       7,103                          
Asset impairment and related charges
          3,809       2,753       3,809                          
Total operating costs and expenses
    107,469       90,815       398,589       349,816       104,633       87,006       393,000       338,904  
Income from operations
    13,977       18,062       80,229       68,916       16,813       21,871       85,818       79,828  
Write down of investment
                (1,000 )                              
Interest expense
    (757 )     (2,470 )     (4,016 )     (16,350 )     (757 )     (2,470 )     (4,016 )     (16,350 )
Termination of interest rate swap agreement
          (10,386 )           (10,386 )                        
Other income (expense), net
    14       75       548       145       14       75       295       145  
Income before income taxes and extraordinary loss
    13,234       5,281       75,761       42,325       16,070       19,476       82,097       63,623  
Provision for income taxes
    6,170       2,220       31,120       18,008       6,292       8,015       32,223       26,429  
Net income before extraordinary loss
    7,064       3,061       44,641       24,317       9,778       11,461       49,874       37,194  
Extraordinary loss, net of tax benefit
          (965 )           (965 )                        
Net income
  $ 7,064     $ 2,096     $ 44,641     $ 23,352     $ 9,778     $ 11,461     $ 49,874     $ 37,194  
Diluted net income per common share
  $ 0.23     $ 0.07     $ 1.44     $ 0.86     $ 0.32     $ 0.39     $ 1.60     $ 1.38  
Weighted average common shares outstanding
    31,029       29,678       31,081       27,049       31,029       29,678       31,081       27,049  



AmeriPath, Inc.
Condensed Consolidated Balance Sheets
(In thousands)

          December 31,   December 31,
          2002   2001
Cash and cash equivalents
  $ 964     $ 4,808  
Restricted cash
Accounts receivable, net
    90,886       81,595  
    1,823       1,892  
Other current assets
    21,982       15,758  
Total current assets
    124,108       104,053  
Property and equipment, net
    26,126       24,118  
Other assets
    558,226       476,269  
Total assets
  $ 708,460     $ 604,440  
Total current liabilities
  $ 60,323     $ 47,233  
Revolving loan
    113,190       90,000  
Subordinated notes and other debt
    2,630       2,853  
Other liabilities
    1,547       2,690  
Deferred taxes
    79,444       62,474  
Total long term liabilities
    196,811       158,017  
Total stockholders’ equity
    451,326       399,190  
Total liabilities and stockholders’ equity
  $ 708,460     $ 604,440  



AmeriPath, Inc.
Reconciliation of EBITDA, Excluding Special Charges
(In thousands)

      Three Months Ended   Year Ended
      December 31,   December 31,
      2002   2001   2002   2001
Net income
  $ 7,064     $ 2,096     $ 44,641     $ 23,352  
Add back: Interest
    757       2,470       4,016       16,350  
    6,170       2,220       31,120       18,008  
Depreciation and amortization
    4,845       6,603       18,992       25,260  
Write down of investment
Extraordinary loss, net of tax
          965             965  
Termination of interest rate swap
          10,386             10,386  
Merger-related charges
    2,836             2,836       7,103  
Asset impairment and related charges
          3,809       2,753       3,809  
Gain of managed practice sale
                (254 )      
  $ 21,672     $ 28,549     $ 105,104     $ 105,233  


The proposed merger transaction will be submitted to AmeriPath’s stockholders for their consideration. AmeriPath will file with the SEC a definitive proxy statement to be used to solicit its stockholders’ approval of the proposed transaction, as well as other relevant documents concerning the proposed transaction. STOCKHOLDERS OF AMERIPATH ARE URGED TO READ THE PROXY STATEMENT REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. You will be able to obtain a free copy of the proxy statement, as well as other filings containing information about AmeriPath, at the SEC’s Internet site ( Copies of the proxy statement and the SEC filings that will be incorporated by reference in the proxy statement can also be obtained, without charge, by directing a request to: Michelle D. Getty, Investor Relations, AmeriPath, Inc., Suite 200, 7289 Garden Road, Riviera Beach, FL 33404, or by telephone at 561-712-6260 or by e-mail to


AmeriPath and its directors, executive officers and other members of their management and employees may be soliciting proxies from the AmeriPath stockholders in favor of the transaction. Information concerning persons who may be considered participants in the solicitation of AmeriPath’s stockholders under the rules of the Commission is set forth in public filings filed by AmeriPath with the Commission and will be set forth in the proxy statement when it is filed with the Commission.