Surgery Partners, Inc. (NASDAQ:SGRY) ("Surgery Partners" or
the "Company"), a leading provider of surgical services, today
announced financial results for the first quarter
ended March 31, 2023.
- Revenue increased 11.7% from the prior
year period to $666.2 million
- Same-facility revenue increasing
10.3%
- Net loss attributable to Surgery
Partners, Inc. was $24.9 million
- Adjusted EBITDA of $90.1 million; 17%
greater than the prior year period
- Adjusted EBITDA margin increased 60
basis points to 13.5%
- Raises outlook for 2023 Adjusted
EBITDA to be greater than $430 million
Wayne DeVeydt, Executive Chairman of the Board of
Surgery Partners, noted, “We are pleased with our early
performance, with all growth levers contributing to another quarter
of strong top-line and same store revenue, margin expansion and
capital deployment. With this continued momentum, we remain
optimistic and confident about the Company's outlook for the
remainder of 2023.”
Eric Evans, Chief Executive Officer, stated, “Our
team continues to focus and execute on our overarching priority of
providing exceptional clinical quality and a differentiated
experience for our patients and physicians. Furthering that
objective, we are also pleased to announce new strategic
partnerships with two leading health systems - Intermountain Health
and OhioHealth. These partnerships provide expansion opportunities
in several new markets, as our combined organizations will bring
together local market knowledge, relationships and trusted legacies
of high-quality patient care and surgical facility management and
growth.”
Dave Doherty, Chief Financial Officer, commented,
“In the first quarter we deployed $60 million on five acquisitions
while generating over $20 million of free cash flow. We continue to
expect to generate at least $140 million in full year free cash
flow and have nearly $800 million in current liquidity. Based on
the strength of our first quarter top line growth, we are raising
our full year Adjusted EBITDA guidance for 2023 to greater than
$430 million.”
First Quarter
2023 Results
Revenue for the first quarter of 2023 increased
11.7% to $666.2 million from $596.2 million for
the first quarter of 2022. Days adjusted same-facility revenues for
the first quarter of 2023 increased 10.3% from the same period last
year, with an increase in revenue per case of 4.8% and an increase
in same-facility cases of 5.3%. For the first quarter of 2023, the
Company’s net (loss) income attributable to Surgery Partners, Inc.
and Adjusted EBITDA was ($24.9) million and $90.1 million,
respectively, compared to $12.2 million and $77.1 million,
respectively, for the same period last year.
Liquidity
Surgery Partners had cash and cash equivalents
of $245.5 million, and $545.9 million of borrowing capacity
under its revolving credit facility, at March 31, 2023. Cash
flows from operating activities was $74.5 million in the first
quarter of 2023, compared to $79.8 million in the prior year
quarter. Free Cash Flow, defined as operating cash flows less
distributions to non-controlling interests and less
maintenance-related capital expenditures, was $20.5 million
for the first quarter of 2023.
The Company’s ratio of total net debt to EBITDA, as
calculated under the Company’s credit agreement, was approximately
4.3x at the end of the first quarter of 2023.
2023 Outlook
The Company raises projected 2023 Adjusted EBITDA
to be greater than $430 million.
Conference Call Information
Surgery Partners will hold a conference call today,
May 1, 2023, at 5:00 p.m. (Eastern Time). The conference call can
be accessed live over the phone by dialing 1-877-451-6152, or for
international callers, 1-201-389-0879. A replay will be available
three hours after the call and can be accessed by dialing
1-844-512-2921, or for international callers, 1-412-317-6671. The
passcode for the live call and the replay is 13738145. The replay
will be available until May 15, 2023.
Interested investors and other parties may also
listen to a simultaneous webcast of the conference call by logging
onto the Investor Relations section of the Company's website
at www.surgerypartners.com. The replay will also be available
on this same website for a limited time following the call.
To learn more about Surgery Partners, please
visit the Company's website
at www.surgerypartners.com. Surgery Partners uses
its website as a channel of distribution for material Company
information. Financial and other material information
regarding Surgery Partners is routinely posted on the
Company's website and is readily accessible.
About Surgery Partners
Headquartered in Brentwood, Tennessee, Surgery
Partners is a leading healthcare services company with a
differentiated outpatient delivery model focused on providing
high-quality, cost-effective solutions for surgical and related
ancillary care in support of both patients and physicians. Founded
in 2004, Surgery Partners is one of the largest and fastest growing
surgical services businesses in the country, with more than 180
locations in 31 states, including ambulatory surgery centers,
surgical hospitals, multi-specialty physician practices and urgent
care facilities. For additional information, visit
www.surgerypartners.com.
Forward-Looking Statements
This press release contains forward-looking
statements, including those regarding growth, our anticipated
operating results for future periods and other similar statements.
These statements can be identified by the use of words such as
"believes," "anticipates," "expects," "intends," "plans,"
"continues," "estimates," "predicts," "projects," "forecasts,"
"may," "could," and similar expressions. All forward looking
statements are based on current expectations and beliefs as of the
date of this release and are subject to risks, uncertainties and
assumptions that could cause actual results to differ materially
from those discussed in, or implied by, the forward-looking
statements, including but not limited to, potential reductions in
payments from government health care programs and private insurance
payors, such as health maintenance organizations, preferred
provider organizations, and other managed care organizations and
employers; our ability to contract with private insurance payors;
changes in our payor mix or surgical case mix; failure to maintain
or develop relationships with physicians on beneficial or favorable
terms, or at all; the impact of payor controls designed to reduce
the number of surgical procedures; our efforts to integrate
operations of acquired businesses and surgical facilities, attract
new physician partners, or acquire additional surgical facilities;
supply chain issues, including shortages or quality control issues
with surgery-related products, equipment and medical supplies;
competition for physicians, nurses, strategic relationships,
acquisitions and managed care contracts; our ability to attract and
retain qualified health care professionals; our ability to enforce
non-compete restrictions against our physicians; our ability to
manage material liabilities whether known or unknown incurred as a
result of acquiring surgical facilities; the impact of future
legislation and other health care regulatory reform actions, and
the effect of that legislation and other regulatory actions on our
business; our ability to comply with current health care laws and
regulations; the outcome of legal and regulatory proceedings that
have been or may be brought against us; changes in the regulatory,
economic and other conditions of the states where our surgical
facilities are located; our indebtedness; the social and economic
impact of a pandemic, epidemic or outbreak of a contagious disease,
such as COVID-19, on our business; the impact of adverse weather
conditions and other events outside of our control; and the risks
and uncertainties identified and discussed from time to time in the
Company’s reports filed with the SEC, including in Item 1A under
the heading "Risk Factors" in the Company’s Annual Report on Form
10-K for the year ended December 31, 2022. Except as required by
law, the Company undertakes no obligation to revise or update
publicly any forward-looking statements to reflect events or
circumstances after the date of this report, or to reflect the
occurrence of unanticipated events or circumstances.
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, Surgery Partners
has presented the following non-GAAP financial measures: Adjusted
net income (loss) attributable to common stockholders, Adjusted net
income (loss) per share attributable to common stockholders,
Adjusted EBITDA, Adjusted EBITDA excluding grant funds and Free
Cash Flow, which exclude various items detailed in the
"Reconciliation of Non-GAAP Financial Measures" below.
These non-GAAP financial 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 believes may enhance the
evaluation of the Company's ongoing operating results. These
non-GAAP financial measures are not presented in accordance with
GAAP, and the Company’s computation of these non-GAAP financial
measures may vary from similar measures used by other companies.
These measures have limitations as an analytical tool and should
not be considered in isolation or as a substitute or alternative to
revenue, net income or loss, operating income or loss, cash flows
from operating activities, total indebtedness or any other measures
of operating performance, liquidity or indebtedness derived in
accordance with GAAP.
SURGERY PARTNERS, INC. Selected Consolidated
Financial Data(Dollars in millions, except per
share amounts, shares in thousands) |
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
|
|
|
|
Revenues |
$ |
666.2 |
|
|
$ |
596.2 |
|
Operating expenses: |
|
|
|
Salaries and benefits |
|
202.2 |
|
|
|
178.9 |
|
Supplies |
|
188.4 |
|
|
|
171.6 |
|
Professional and medical fees |
|
74.6 |
|
|
|
63.6 |
|
Lease expense |
|
21.4 |
|
|
|
20.0 |
|
Other operating expenses |
|
45.6 |
|
|
|
37.3 |
|
Cost of revenues |
|
532.2 |
|
|
|
471.4 |
|
General and administrative expenses |
|
32.0 |
|
|
|
29.5 |
|
Depreciation and amortization |
|
33.7 |
|
|
|
27.4 |
|
Transaction and integration costs |
|
12.5 |
|
|
|
7.1 |
|
Grant funds |
|
(1.1 |
) |
|
|
(1.2 |
) |
Net loss (gain) on disposals, consolidations and
deconsolidations |
|
10.5 |
|
|
|
(0.1 |
) |
Equity in earnings of unconsolidated affiliates |
|
(3.3 |
) |
|
|
(3.1 |
) |
Litigation settlements |
|
3.0 |
|
|
|
(32.8 |
) |
Other expense (income), net |
|
0.3 |
|
|
|
(2.4 |
) |
|
|
619.8 |
|
|
|
495.8 |
|
Operating income |
|
46.4 |
|
|
|
100.4 |
|
Interest expense, net |
|
(46.8 |
) |
|
|
(56.3 |
) |
(Loss) income before income taxes |
|
(0.4 |
) |
|
|
44.1 |
|
Income tax benefit (expense) |
|
1.6 |
|
|
|
(1.3 |
) |
Net income |
|
1.2 |
|
|
|
42.8 |
|
Less: Net income attributable to non-controlling interests |
|
(26.1 |
) |
|
|
(30.6 |
) |
Net (loss) income attributable to Surgery Partners, Inc. |
$ |
(24.9 |
) |
|
$ |
12.2 |
|
|
|
|
|
Net (loss) income per share attributable to common
stockholders |
|
|
|
Basic |
$ |
(0.20 |
) |
|
$ |
0.14 |
|
Diluted (1) |
$ |
(0.20 |
) |
|
$ |
0.14 |
|
Weighted average common shares outstanding |
|
|
|
Basic |
|
125,206 |
|
|
|
87,995 |
|
Diluted (1) |
|
125,206 |
|
|
|
90,272 |
|
(1) The impact of potentially dilutive securities
for the three months ended March 31, 2023 was not considered
because the effect would be anti-dilutive.
SURGERY PARTNERS, INC. Selected Financial and
Operating Data(Dollars in millions, except per
case and per share amounts) |
|
March 31,2023 |
|
December 31,2022 |
Balance Sheet Data: |
|
|
|
Cash and cash equivalents |
$ |
245.5 |
|
$ |
282.9 |
Total current assets |
|
868.9 |
|
|
921.0 |
Total assets |
|
6,643.3 |
|
|
6,682.1 |
|
|
|
|
Current maturities of long-term debt |
|
62.9 |
|
|
62.8 |
Total current liabilities |
|
475.1 |
|
|
493.4 |
Long-term debt, less current maturities |
|
2,530.9 |
|
|
2,559.0 |
Total liabilities |
|
3,355.0 |
|
|
3,399.2 |
|
|
|
|
Non-controlling interests—redeemable |
|
345.8 |
|
|
342.0 |
|
|
|
|
Total Surgery Partners, Inc. stockholders' equity |
|
1,962.0 |
|
|
1,998.2 |
Non-controlling interests—non-redeemable |
|
980.5 |
|
|
942.7 |
Total stockholders' equity |
|
2,942.5 |
|
|
2,940.9 |
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
Cash Flow Data: |
|
|
|
Net cash provided by (used in): |
|
|
|
Operating activities |
$ |
74.5 |
|
|
$ |
79.8 |
|
Investing activities |
|
(70.7 |
) |
|
|
(47.1 |
) |
Purchases of property and equipment |
|
(24.3 |
) |
|
|
(18.2 |
) |
Payments for acquisitions, net of cash acquired |
|
(40.7 |
) |
|
|
(31.1 |
) |
Financing activities |
|
(41.2 |
) |
|
|
(43.7 |
) |
Distributions to non-controlling interests |
|
(41.9 |
) |
|
|
(36.2 |
) |
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
Other Data: |
|
|
|
Number of surgical facilities as of the end of period |
|
145 |
|
|
|
127 |
|
Number of consolidated surgical facilities as of the end of
period |
|
118 |
|
|
|
108 |
|
|
|
|
|
Cases |
|
150,954 |
|
|
|
142,266 |
|
Revenue per case |
$ |
4,413 |
|
|
$ |
4,191 |
|
Adjusted EBITDA (1) |
$ |
90.1 |
|
|
$ |
77.1 |
|
Adjusted EBITDA excluding grant funds (1) |
$ |
89.0 |
|
|
$ |
76.1 |
|
Adjusted EBITDA margin (2) |
|
13.5 |
% |
|
|
12.9 |
% |
Adjusted EBITDA excluding grant funds margin (3) |
|
13.4 |
% |
|
|
12.8 |
% |
Adjusted net income (loss) per share attributable to common
stockholders - Basic (1) |
$ |
0.08 |
|
|
$ |
(0.09 |
) |
Adjusted net income (loss) per share attributable to common
stockholders - Diluted (1) |
$ |
0.08 |
|
|
$ |
(0.09 |
) |
Free Cash Flow (1) |
$ |
20.5 |
|
|
|
N/A |
|
(1) A reconciliation of these non-GAAP financial
measures appears below.(2) Defined as Adjusted EBITDA as a % of
Revenues.(3) Defined as Adjusted EBITDA excluding grant funds as a
% of Revenues.
SURGERY PARTNERS, INC. Supplemental
Information(Dollars in millions, except per case
amounts) |
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
Same-facility Information
(1): |
|
|
|
Cases |
|
156,806 |
|
|
|
148,955 |
Case growth |
|
5.3 |
% |
|
N/A |
Revenue per case |
$ |
4,066 |
|
|
$ |
3,882 |
Revenue per case growth |
|
4.8 |
% |
|
N/A |
Number of work days in the period |
|
64 |
|
|
|
64 |
Case growth (days adjusted) |
|
5.3 |
% |
|
N/A |
Revenue growth (days adjusted) |
|
10.3 |
% |
|
N/A |
(1) Same-facility information includes cases and
revenues from our consolidated and non-consolidated surgical
facilities (excluding facilities acquired in new markets or
divested during the current and prior periods).
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
Segment Revenues: |
|
|
|
Surgical facility services |
$ |
649.0 |
|
$ |
578.8 |
Ancillary services |
|
17.2 |
|
|
17.4 |
Total revenues |
$ |
666.2 |
|
$ |
596.2 |
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Adjusted EBITDA: |
|
|
|
Surgical facility services |
$ |
118.8 |
|
|
$ |
101.0 |
|
Ancillary services |
|
(1.4 |
) |
|
|
0.1 |
|
All other |
|
(27.3 |
) |
|
|
(24.0 |
) |
Total Adjusted EBITDA |
$ |
90.1 |
|
|
$ |
77.1 |
|
SURGERY PARTNERS,
INC.Reconciliation of Non-GAAP Financial
Measures(Dollars in millions, except per share
amounts, shares in thousands)
The following table reconciles Adjusted EBITDA and
Adjusted EBITDA excluding grant funds to (loss) income before
income taxes in the reported condensed consolidated financial
information, the most directly comparable GAAP financial
measure:
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
|
|
|
|
(Loss) income before income taxes |
$ |
(0.4 |
) |
|
$ |
44.1 |
|
|
|
|
|
Net income attributable to non-controlling interests |
|
(26.1 |
) |
|
|
(30.6 |
) |
Interest expense, net |
|
46.8 |
|
|
|
56.3 |
|
Depreciation and amortization |
|
33.7 |
|
|
|
27.4 |
|
Equity-based compensation expense |
|
4.2 |
|
|
|
3.7 |
|
Transaction, integration and acquisition costs (1) |
|
12.8 |
|
|
|
7.1 |
|
Net loss (gain) on disposals, consolidations and
deconsolidations |
|
10.5 |
|
|
|
(0.1 |
) |
Litigation settlements and regulatory change impact (2) |
|
8.0 |
|
|
|
(30.8 |
) |
Undesignated derivative activity |
|
0.6 |
|
|
|
— |
|
Adjusted EBITDA (3) |
$ |
90.1 |
|
|
$ |
77.1 |
|
Less: Impact of grant funds (4) |
|
(1.1 |
) |
|
|
(1.0 |
) |
Adjusted EBITDA excluding grant funds |
$ |
89.0 |
|
|
$ |
76.1 |
|
(1) This amount includes transaction and
integration costs of $12.5 million and $7.1 million for the three
months ended March 31, 2023 and 2022, respectively. This
amount further includes start-up costs related to de novo surgical
facilities of $0.3 million for the three months ended
March 31, 2023, with no comparable costs for the three months
ended March 31, 2022.
(2) This amount includes a litigation settlement
loss of $3.0 million and a gain of $32.8 million for the three
months ended March 31, 2023 and 2022, respectively. This
amount also includes other litigation costs of $0.6 million and
$2.0 million for the three months ended March 31, 2023 and
2022, respectively. Additionally, the three months ended March 31,
2023, includes $4.4 million related to the impact of recent changes
in Florida law regarding the use of letters of protection.
(3) We use Adjusted EBITDA as a measure of
financial performance. Adjusted EBITDA is a key measure used by
management to assess operating performance, make business decisions
and allocate resources. Non-controlling interests represent the
interests of third parties, such as physicians, and in some cases,
healthcare systems that own an interest in surgical facilities that
we consolidate for financial reporting purposes. We believe that it
is helpful to investors to present Adjusted EBITDA as defined above
because it excludes the portion of net income attributable to these
third-party interests and clarifies for investors our portion of
Adjusted EBITDA generated by our surgical facilities and other
operations. Adjusted EBITDA is not a measurement of financial
performance under GAAP, and should not be considered in isolation
or as a substitute for net income, operating income or any other
measure calculated in accordance with GAAP. The items excluded from
Adjusted EBITDA are significant components in understanding and
evaluating our financial performance. We believe such adjustments
are appropriate, as the magnitude and frequency of such items can
vary significantly and are not related to the assessment of normal
operating performance. Our calculation of Adjusted EBITDA may not
be comparable to similarly titled measures reported by other
companies.
(4) Represents the impact of grant funds
recognized, net of amounts attributable to non-controlling
interests.
The following table reconciles Free Cash Flow to
net cash provided by operating activities in the reported condensed
consolidated financial information, the most directly comparable
GAAP financial measure:
|
Three Months Ended March 31, |
|
2023 |
|
|
Net cash provided by operating activities |
$ |
74.5 |
|
|
|
Less: Maintenance capital expenditures |
|
(12.1 |
) |
Less: distributions to non-controlling interest holders |
|
(41.9 |
) |
Free Cash Flow (1) |
$ |
20.5 |
|
|
|
Growth capital expenditures |
|
(12.2 |
) |
Maintenance capital expenditures |
|
(12.1 |
) |
Purchases of property and equipment |
$ |
(24.3 |
) |
(1) Free Cash Flow is defined as cash flow provided
by operating activities, less distributions to non-controlling
interest holders and less maintenance capital expenditures, which
are capital expenditures primarily to maintain our existing
facilities. We use the non-GAAP measure of Free Cash Flow as a
measure of liquidity to determine amounts we can reinvest in our
core businesses, such as amounts available to make acquisitions and
invest in growth projects. In order to provide a meaningful basis
for comparison, we are providing information with respect to our
Free Cash Flow for the three months ended March 31, 2023,
reconciled to net cash provided by operating activities, which we
believe to be the most directly comparable measure under GAAP. We
are not presenting the comparative prior year period since we did
not track capital expenditures in this manner prior to the current
fiscal year. Our calculation of Free Cash Flow may not be
comparable to similarly titled measures reported by other
companies.
From time to time, the Company incurs certain
non-recurring gains or losses that are normally non-operational in
nature and that it does not consider relevant in assessing its
ongoing operating performance. When significant, Surgery Partners’
management and Board of Directors typically exclude these gains or
losses when evaluating the Company’s operating performance and in
certain instances when evaluating performance for incentive
compensation purposes. Additionally, the Company believes that
certain investors and equity analysts exclude these or similar
items when evaluating the Company’s current or future operating
performance and in making informed investment decisions regarding
the Company. Accordingly, the Company provides adjusted net income
(loss) attributable to common stockholders and adjusted net income
(loss) per share attributable to common stockholders as supplements
to the comparable GAAP financial measures. Adjusted net income
(loss) attributable to common stockholders and adjusted net income
(loss) per share attributable to common stockholders should not be
considered measures of financial performance under GAAP, and the
items excluded from such measures are significant components in
understanding and assessing financial performance. These measures
should not be considered in isolation or as an alternative to the
comparable GAAP financial measures as presented in the consolidated
financial statements.
The following table reconciles net income as
reflected in the consolidated statements of operations to adjusted
net income (loss) attributable to common stockholders used to
calculate adjusted net income (loss) per share attributable to
common stockholders:
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
Consolidated Statements of Operations Data: |
|
|
|
Net income |
$ |
1.2 |
|
|
$ |
42.8 |
|
Plus (minus): |
|
|
|
Net income attributable to non-controlling interests |
|
(26.1 |
) |
|
|
(30.6 |
) |
Equity-based compensation expense |
|
4.2 |
|
|
|
3.7 |
|
Transaction, integration and acquisition costs |
|
12.8 |
|
|
|
7.1 |
|
Net loss (gain) on disposals, consolidations and
deconsolidations |
|
10.5 |
|
|
|
(0.1 |
) |
Litigation settlements and regulatory change impact |
|
8.0 |
|
|
|
(30.8 |
) |
Adjusted net income (loss) attributable to common stockholders |
$ |
10.6 |
|
|
$ |
(7.9 |
) |
|
|
|
|
Adjusted net income (loss) per share attributable to common
stockholders |
|
|
|
Basic |
$ |
0.08 |
|
|
$ |
(0.09 |
) |
Diluted (1) |
$ |
0.08 |
|
|
$ |
(0.09 |
) |
Weighted average common shares outstanding |
|
|
|
Basic |
|
125,206 |
|
|
|
87,995 |
|
Diluted (1) |
|
126,611 |
|
|
|
87,995 |
|
(1) The impact of potentially dilutive securities
for the three months ended March 31, 2022 was not considered
because the effect would be anti-dilutive.
Contact
Surgery Partners Investor Relations (615) 234-8940
IR@surgerypartners.com
Surgery Partners (NASDAQ:SGRY)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Surgery Partners (NASDAQ:SGRY)
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De Jun 2023 a Jun 2024