America Service Group Inc. (ASGR, Financial) filed Quarterly Report for the period ended 2011-03-31.
America Service Group Inc. has a market cap of $239.84 million; its shares were traded at around $25.8 with a P/E ratio of 25.54 and P/S ratio of 0.38. The dividend yield of America Service Group Inc. stocks is 0.93%. America Service Group Inc. had an annual average earning growth of 11.4% over the past 10 years.
Barclays Bank PLC and Bank of America, N.A. (collectively, the Senior Lenders) have provided customary senior debt commitments letters letter dated March 2, 2011, to provide Valitás with $360.0 million in senior secured credit facilities, comprised of: (i) a term loan facility of $285.0 million; and (ii) a revolving credit facility of $75.0 million (which Valitás will draw upon only in the event that the combined cash on hand of the Company and Valitás upon the completion of the Merger is less than approximately $73.0 million). In addition, funds managed by GSO Capital Partners LP and its affiliates (collectively with the Senior Lenders, the Lenders) have provided customary mezzanine financing commitment letters dated March 2, 2011, to provide Valitás with $100.0 million in gross proceeds from the issuance and sale by Valitás of unsecured senior subordinated notes pursuant to a private placement. The obligations of the Lenders to provide the debt financing under the respective debt commitment letters are subject to a number of conditions which the Company believes are customary for financings of this type or are otherwise similar to certain conditions in the Merger Agreement. The final termination date for the commitments under each debt commitment letter is August 31, 2011. Valitás, obligation to complete the Merger is not subject to any financing condition.
Healthcare expenses include the compensation of physicians, nurses and other healthcare professionals and related benefits and all other direct costs of providing and/or administering the managed care, including the costs associated with services provided and/or administered by off-site medical providers, the costs of professional and general liability insurance and other self-funded insurance reserves discussed more fully below. Many of the Companys contracts require the Companys customers to reimburse the Company for all treatment costs or, in some cases, only treatment costs related to certain catastrophic events, and/or for specific disease diagnoses illnesses. Certain of the Companys contracts do not contain such limits. The Company attempts to compensate for the increased financial risk when pricing contracts that do not contain individual, catastrophic or specific disease diagnosis-related limits. However, the occurrence of severe individual cases, specific disease diagnoses illnesses or a catastrophic event in a facility governed by a contract without such limitations could render the contract unprofitable and could have a material adverse effect on the Companys operations. For certain of its contracts that do not contain catastrophic protection, the Company maintains stop loss insurance from an unaffiliated insurer with respect to, among other things, inpatient and outpatient hospital expenses (as defined in the policy) for amounts in excess of $375,000 per inmate up to an annual cap of $1.0 million per inmate and $3.0 million in total. Amounts reimbursable per claim under the policy are further limited to the lessor of billed charges, the amount paid or the contracted amounts in situations where the Company has negotiated rates with the applicable providers.
To mitigate a portion of this risk, the Company maintains a primary professional liability insurance program, principally on a claims-made basis. For 2002 through 2006 and 2008 through 2011 with respect to the majority of its patients, the Company purchased commercial insurance coverage, but is effectively self-insured due to the terms of the coverage which include adjustable premiums. For 2002 through 2006 and 2008 through 2011, the Company is covered by separate policies, each of which contains a premium that is retroactively adjusted, with adjustment based on actual losses. The Companys ultimate premium for its 2002 through 2006 and 2008 through 2011 policies will depend on the final incurred losses related to each of these separate policy periods. For 2007, the Company is insured through claims made policies subject to per event and aggregate coverage limits. In addition to the coverage described above, for 2010 and 2011, the Company has purchased excess liability policies which provide coverage on a claims made basis for indemnity losses in excess of $4.0 million up to a maximum coverage of $10.0 million per loss and in the aggregate. Any amounts ultimately incurred above these coverage limits would be the responsibility of the Company. Management establishes reserves for the estimated losses that will be incurred under these insurance policies after taking into consideration the Companys professional liability claims department and external counsel evaluations of the merits of the individual claims, analysis of claim history, actuarial analysis and coverage limits where applicable. Any adjustments resulting from the review are reflected in current earnings.
At March 31, 2011, the Companys reserves for both known as well as incurred but not reported claims totaled $24.3 million. Reserves for medical malpractice claims fluctuate because the number of claims and the severity of the underlying incidents change from one period to the next. Reserves for medical malpractice claims can also fluctuate as a result of court decisions or as new facts become available. Furthermore, payments with respect to previously estimated liabilities frequently differ from the estimated liability. Changes in estimates of losses resulting from such fluctuations and differences between managements established reserves and actual loss payments are recognized by an adjustment to the reserve for medical malpractice claims in the period in which the estimates are changed or payments are made. For the quarter ended March 31, 2011 and 2010, the Company recorded increases of approximately $1.5 million and $0.6 million, respectively, related to its prior year known
At March 31, 2011, the Company has approximately $8.8 million in accrued liabilities for employee health and workers compensation claims. Approximately $7.3 million of this amount is related to workers compensation claims, of which approximately $4.0 million is included within the noncurrent portion of accrued expenses as it is not expected to be paid within a year. The Company is essentially self-insured for employee health and workers compensation claims subject to certain individual case stop loss levels. As such, its insurance expense is largely dependent on claims experience and the ability to control claims. The Company accrues the estimated liability for employee health insurance based on its history of claims experience and estimated time lag between the incident date and the date of actual claim payment. The Company accrues the estimated liability for workers compensation claims based on evaluations of the merits of the individual claims and analysis of claims history. These estimated liabilities are recorded on an undiscounted basis. An actuarial analysis is prepared at least annually as an additional tool to be considered by management in evaluating the adequacy of the Companys reserve for workers compensation claims. These estimates of self-funded insurance reserves could change in the future based on changes in the factors discussed above. Any adjustments resulting from such changes in estimates are reflected in current earnings.
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America Service Group Inc. has a market cap of $239.84 million; its shares were traded at around $25.8 with a P/E ratio of 25.54 and P/S ratio of 0.38. The dividend yield of America Service Group Inc. stocks is 0.93%. America Service Group Inc. had an annual average earning growth of 11.4% over the past 10 years.
Highlight of Business Operations:
The Merger Agreement also contains certain termination rights in favor of each party, including rights allowing the Company to terminate the Merger Agreement in order to accept a Superior Proposal. Upon termination of the Merger Agreement under certain specified circumstances, the Company will be required to pay to Valitás a specified fee and to reimburse Valitás for up to $2.0 million in documented transaction expenses. While the Merger Agreement provided for a reduced fee of $4.5 million in connection with terminations based on the Companys acceptance of a Superior Proposal made by an Excluded Party, because the No-Shop Period Start Date has passed and no third party qualifies as an Excluded Party, the Company will be required to pay to Valitás a fee in the amount of $8.0 million, plus documented transaction expenses, in connection with any termination that requires payment of a termination fee.Barclays Bank PLC and Bank of America, N.A. (collectively, the Senior Lenders) have provided customary senior debt commitments letters letter dated March 2, 2011, to provide Valitás with $360.0 million in senior secured credit facilities, comprised of: (i) a term loan facility of $285.0 million; and (ii) a revolving credit facility of $75.0 million (which Valitás will draw upon only in the event that the combined cash on hand of the Company and Valitás upon the completion of the Merger is less than approximately $73.0 million). In addition, funds managed by GSO Capital Partners LP and its affiliates (collectively with the Senior Lenders, the Lenders) have provided customary mezzanine financing commitment letters dated March 2, 2011, to provide Valitás with $100.0 million in gross proceeds from the issuance and sale by Valitás of unsecured senior subordinated notes pursuant to a private placement. The obligations of the Lenders to provide the debt financing under the respective debt commitment letters are subject to a number of conditions which the Company believes are customary for financings of this type or are otherwise similar to certain conditions in the Merger Agreement. The final termination date for the commitments under each debt commitment letter is August 31, 2011. Valitás, obligation to complete the Merger is not subject to any financing condition.
Healthcare expenses include the compensation of physicians, nurses and other healthcare professionals and related benefits and all other direct costs of providing and/or administering the managed care, including the costs associated with services provided and/or administered by off-site medical providers, the costs of professional and general liability insurance and other self-funded insurance reserves discussed more fully below. Many of the Companys contracts require the Companys customers to reimburse the Company for all treatment costs or, in some cases, only treatment costs related to certain catastrophic events, and/or for specific disease diagnoses illnesses. Certain of the Companys contracts do not contain such limits. The Company attempts to compensate for the increased financial risk when pricing contracts that do not contain individual, catastrophic or specific disease diagnosis-related limits. However, the occurrence of severe individual cases, specific disease diagnoses illnesses or a catastrophic event in a facility governed by a contract without such limitations could render the contract unprofitable and could have a material adverse effect on the Companys operations. For certain of its contracts that do not contain catastrophic protection, the Company maintains stop loss insurance from an unaffiliated insurer with respect to, among other things, inpatient and outpatient hospital expenses (as defined in the policy) for amounts in excess of $375,000 per inmate up to an annual cap of $1.0 million per inmate and $3.0 million in total. Amounts reimbursable per claim under the policy are further limited to the lessor of billed charges, the amount paid or the contracted amounts in situations where the Company has negotiated rates with the applicable providers.
To mitigate a portion of this risk, the Company maintains a primary professional liability insurance program, principally on a claims-made basis. For 2002 through 2006 and 2008 through 2011 with respect to the majority of its patients, the Company purchased commercial insurance coverage, but is effectively self-insured due to the terms of the coverage which include adjustable premiums. For 2002 through 2006 and 2008 through 2011, the Company is covered by separate policies, each of which contains a premium that is retroactively adjusted, with adjustment based on actual losses. The Companys ultimate premium for its 2002 through 2006 and 2008 through 2011 policies will depend on the final incurred losses related to each of these separate policy periods. For 2007, the Company is insured through claims made policies subject to per event and aggregate coverage limits. In addition to the coverage described above, for 2010 and 2011, the Company has purchased excess liability policies which provide coverage on a claims made basis for indemnity losses in excess of $4.0 million up to a maximum coverage of $10.0 million per loss and in the aggregate. Any amounts ultimately incurred above these coverage limits would be the responsibility of the Company. Management establishes reserves for the estimated losses that will be incurred under these insurance policies after taking into consideration the Companys professional liability claims department and external counsel evaluations of the merits of the individual claims, analysis of claim history, actuarial analysis and coverage limits where applicable. Any adjustments resulting from the review are reflected in current earnings.
At March 31, 2011, the Companys reserves for both known as well as incurred but not reported claims totaled $24.3 million. Reserves for medical malpractice claims fluctuate because the number of claims and the severity of the underlying incidents change from one period to the next. Reserves for medical malpractice claims can also fluctuate as a result of court decisions or as new facts become available. Furthermore, payments with respect to previously estimated liabilities frequently differ from the estimated liability. Changes in estimates of losses resulting from such fluctuations and differences between managements established reserves and actual loss payments are recognized by an adjustment to the reserve for medical malpractice claims in the period in which the estimates are changed or payments are made. For the quarter ended March 31, 2011 and 2010, the Company recorded increases of approximately $1.5 million and $0.6 million, respectively, related to its prior year known
At March 31, 2011, the Company has approximately $8.8 million in accrued liabilities for employee health and workers compensation claims. Approximately $7.3 million of this amount is related to workers compensation claims, of which approximately $4.0 million is included within the noncurrent portion of accrued expenses as it is not expected to be paid within a year. The Company is essentially self-insured for employee health and workers compensation claims subject to certain individual case stop loss levels. As such, its insurance expense is largely dependent on claims experience and the ability to control claims. The Company accrues the estimated liability for employee health insurance based on its history of claims experience and estimated time lag between the incident date and the date of actual claim payment. The Company accrues the estimated liability for workers compensation claims based on evaluations of the merits of the individual claims and analysis of claims history. These estimated liabilities are recorded on an undiscounted basis. An actuarial analysis is prepared at least annually as an additional tool to be considered by management in evaluating the adequacy of the Companys reserve for workers compensation claims. These estimates of self-funded insurance reserves could change in the future based on changes in the factors discussed above. Any adjustments resulting from such changes in estimates are reflected in current earnings.
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