UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________ Form 10-Q _____________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-37576 340 Seven Springs Way, Suite 600 Brentwood, Tennessee 37027 (Address of Princip ...

Surgery Partners (SGRY) Q1 2025 Earnings Call May 12, 2025 08:30 AM ET Company Participants Dave Doherty - EVP & CFOEric Evans - CEOBenjamin Rossi - Equity Research AssociateAndrew Mott - Director, Team Leader and Co-Head of Private BankA.J. Rice - Managing DirectorWhit Mayo - Senior Managing DirectorBen Hendrix - Vice President Conference Call Participants Brian Tanquilut - Equity Research Analyst - Healthcare ServicesJoanna Gajuk - Equity Research AnalystSarah James - Managing Director & Equity Analyst - ...

Surgery Partners (SGRY) Q1 2025 Earnings Call May 12, 2025 08:30 AM ET Speaker0 Greetings, and welcome to Surgery Partners First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dave Dougherty, CFO. Thank you. You may begin. Speaker1 Good morning, and thank you for joining Surgery Partners' first ...

Exhibit 99.1 SURGERY PARTNERS, INC. ANNOUNCES FIRST QUARTER 2025 RESULTS REAFFIRMS FULL YEAR 2025 GUIDANCE BRENTWOOD, Tenn., May 12, 2025 (GLOBE NEWSWIRE) - Surgery Partners, Inc. (NASDAQ:SGRY) ("Surgery Partners" or the "Company"), a leading short-stay surgical facility owner and operator, today announced results for the first quarter ended March 31, 2025. First Quarter 2025 Financial Highlights (All comparisons are year-over-year unless otherwise noted) 2025 Guidance • Full year 2025 revenue and Adjusted ...

Group 1 - Surgery Partners, Inc. will release its first quarter 2025 results on May 12, 2025, before the market opens, followed by a conference call at 8:30 a.m. Eastern Time [1] - Interested parties can access the conference call via a webcast on the company's Investor Relations website, with a replay available for a limited time [1] - The company is headquartered in Brentwood, Tennessee, and operates over 200 locations across 30 states, focusing on outpatient surgical services [3] Group 2 - Surgery Partners is recognized as a leading healthcare services company, emphasizing high-quality and cost-effective surgical solutions [3] - The company was founded in 2004 and has rapidly grown to become one of the largest surgical services businesses in the United States [3] - The company operates various facilities, including ambulatory surgery centers, surgical hospitals, multi-specialty physician practices, and urgent care facilities [3]

Financial Performance - Surgery Partners, Inc. reported net losses of $168.1 million, $11.9 million, and $54.6 million for the years 2024, 2023, and 2022, respectively, indicating ongoing challenges in achieving profitability[137]. - The company’s ability to generate cash flow is critical for servicing its debt, and any failure to do so may adversely affect its financial condition[140]. - The company’s financial condition may be adversely affected if it fails to comply with restrictive covenants in its debt instruments[145]. - The company is exposed to significant financial penalties under the False Claims Act for any false claims submitted, which could lead to treble damages[181]. - The company's insurance coverage may not adequately protect against all claims, potentially impacting financial condition and operational results[191]. Debt and Indebtedness - As of December 31, 2024, the company had approximately $3.4 billion in total indebtedness, including $1.4 billion in senior secured term loans and $800 million in senior unsecured notes due 2032[139]. - The company had $192 million in outstanding borrowings under its $703.8 million senior secured revolving credit facility, leaving $501.5 million available for additional borrowings[139]. - The company may incur additional indebtedness in the future, which could exacerbate existing risks associated with its leverage[147]. - The company is exposed to interest rate risk due to variable rate indebtedness, which could increase debt service obligations if interest rates rise[153]. - The company’s subsidiaries are subject to various business considerations and statutory restrictions that may limit the distribution of earnings necessary to meet debt obligations[149]. Regulatory and Compliance Risks - The company is subject to various federal and state laws and regulations, which could result in significant penalties or operational changes if not complied with[164]. - The Affordable Care Act has changed how healthcare services are covered and reimbursed, potentially impacting the company's financial condition and operations[169]. - Violations of self-referral laws could lead to civil or criminal penalties, including up to $15,000 per prohibited service billed and exclusion from Medicare and Medicaid programs[178]. - The company’s surgical facilities do not meet the requirements for safe harbors under the federal Anti-Kickback Statute, which could expose it to penalties and loss of revenue[173]. - The company is regularly subject to federal and state audits, which could result in material repayments and penalties[186]. Legal and Operational Challenges - The company faces potential legal liabilities from ongoing lawsuits and investigations, which could divert resources and negatively impact its business[188]. - The company’s surgical hospitals are restricted from expanding capacity due to the Affordable Care Act, limiting growth opportunities[179]. - The company’s management agreements may not fully comply with the Anti-Kickback Statute, posing risks of legal challenges[174]. - The company faces potential legal claims from former employees alleging violations of labor regulations, which could result in significant financial liabilities[189]. - Increasing malpractice and legal claims against healthcare providers may lead to substantial damages that are not fully covered by insurance[190]. Medicare and Quality Metrics - Compliance with Medicare's conditions is critical, as failure to meet quality metrics could result in reduced payments and significant penalties[193]. - The company is at risk of decreased Medicare payments if it fails to report and meet various quality metrics, which could affect patient volumes[195]. Ownership and Governance - As of December 31, 2024, Bain Capital owns approximately 39.3% of the company's outstanding common stock, influencing key decisions[199]. - The company's charter provisions may deter beneficial takeover efforts, impacting stockholder value[200]. Cybersecurity - Cybersecurity remains a priority, with the company experiencing an immaterial cybersecurity incident in May 2023 that temporarily disrupted operations in Idaho[158]. Interest Rate Management - The company utilizes interest rate swap and cap agreements to manage exposure to interest rate fluctuations, with no expected material effect on net earnings in 2025[292].

Financial Data and Key Metrics Changes - Surgery Partners reported full-year adjusted EBITDA growth of 16% and net revenue growth of 13.5%, resulting in margin expansion of 30 basis points [7][17] - The company achieved revenue over $3 billion and adjusted EBITDA over $500 million for the first time [8] - Adjusted EBITDA for Q4 was $163.8 million, with a margin of 18.9%, while full-year adjusted EBITDA was $508.2 million, reflecting a 16% increase over 2023 [40][41] Business Line Data and Key Metrics Changes - The company performed over 656,000 surgical cases in 2024, an increase from 605,000 in 2023, with significant growth in orthopedic cases, which rose by 11% [12][38] - Total joint procedures within orthopedics grew by 50% in 2024, with over 70% of surgical facilities capable of performing higher acuity orthopedic procedures [13] - Same facility revenue increased by 5.6% in Q4 and 8% for the full year, exceeding the growth algorithm target of 4% to 6% [39] Market Data and Key Metrics Changes - Approximately 90% of the company's revenue was generated from commercial payers and Medicare in 2024 [18] - The managed care team secured over 99% of expected contractual rates for 2025, with Medicare rate increases projected at approximately 3% [19] Company Strategy and Development Direction - The company focuses on organic growth, margin improvement, and capital deployment for M&A as part of its growth algorithm [6][20] - Surgery Partners plans to continue investing in acquisitions, facility expansions, and service line expansions, with expectations of at least 10 de novo facilities annually [16][21] - The company aims for margin expansion in 2025 and beyond, supported by procurement and operational efficiency initiatives [20][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning relative to the current regulatory environment, noting minimal exposure to Medicaid and site neutrality legislation [28][30] - The company anticipates continued growth driven by a robust pipeline of acquisitions and strong operational execution [37][49] - Initial guidance for 2025 includes net revenue in the range of $3.3 billion to $3.45 billion and adjusted EBITDA between $555 million and $565 million [27][49] Other Important Information - Surgery Partners has a strong liquidity position with $270 million in cash and over $770 million in total liquidity [40] - The company incurred approximately $11 million in costs related to strategic alternatives considered by the Board in 2024, with expectations for similar costs in 2025 [45][134] Q&A Session Summary Question: Impact of potential legislation on site neutrality - Management indicated that the worst-case scenario would limit revenue impact to approximately 1%, with potential upside from procedures shifting from acute care to their facilities [55][60] Question: Guidance considerations for Q1 - Management noted that unusual weather patterns in January were factored into guidance, with expectations for a consistent quarterly pattern [64][66] Question: M&A strategy and pipeline - Management confirmed that the ongoing special committee review has not impacted their M&A approach, maintaining a strong pipeline for 2025 [71][74] Question: De novo facility ramp-up and costs - Management expressed optimism about the de novo pipeline, with expectations for facilities to reach breakeven within the first year [76][80] Question: Revenue impact from divestitures - Management clarified that divestitures would contribute less than 2% to revenue growth, emphasizing a focus on portfolio optimization [88][89] Question: Operating costs and EBITDA pressure - Management acknowledged higher operating costs due to performance management incentives and payer mix, but indicated these are manageable [125][128] Question: Transaction and integration costs visibility - Management expects a significant reduction in transaction and integration costs in 2025, improving free cash flow [131][132]

Surgery Partners, Inc. (NASDAQ:SGRY) Q4 2024 Earnings Conference Call March 3, 2025 8:30 AM ET Company Participants Eric Evans - Chief Executive Officer Dave Doherty - Executive Vice President and Chief Financial Officer Conference Call Participants Brian Tanquilut - Jefferies Benjamin Rossi - JPMorgan Chase Joanna Gajuk - Bank of America A.J. Rice - Credit Suisse Tao Qiu - Macquarie Research Andrew Mok - Barclays Matthew Gillmor - KeyBanc Capital Markets Whit Mayo - SVB Leerink Sarah James - Cantor Fitzge ...

Surgery Partners (SGRY) came out with quarterly earnings of $0.44 per share, beating the Zacks Consensus Estimate of $0.38 per share. This compares to earnings of $0.44 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 15.79%. A quarter ago, it was expected that this surgical facilities operator would post earnings of $0.25 per share when it actually produced earnings of $0.19, delivering a surprise of -24%.Over the last four qu ...

Revenue Growth - Fourth quarter 2024 revenues increased 17.5% to $864.4 million compared to $735.4 million in Q4 2023[3] - Full year 2024 revenues rose 13.5% to $3.1 billion from $2.7 billion in 2023[4] - Same-facility revenue growth for 2024 was 8.0%, with a 4.0% increase in revenue per case and a 3.9% increase in same-facility cases[4] Adjusted EBITDA - Adjusted EBITDA for Q4 2024 was $163.8 million, a 15.1% increase from $142.3 million in Q4 2023[4] - Full year 2024 Adjusted EBITDA increased 16.0% to $508.2 million compared to $438.1 million in 2023[4] - Adjusted EBITDA for the three months ended December 31, 2024, was $163.8 million, compared to $142.3 million in 2023, marking a year-over-year increase of 15.1%[25] Net Loss and Income - The net loss attributable to Surgery Partners, Inc. for Q4 2024 was $108.5 million, and for the full year, it was $168.1 million[4] - For the three months ended December 31, 2024, the net income was $(46.6) million, compared to $46.7 million in the same period of 2023[30] - Adjusted net income attributable to common stockholders for the year ended December 31, 2024, was $118.8 million, down from $126.7 million in 2023, representing a decrease of approximately 6.2%[30] Cash and Liquidity - The liquidity position at the end of 2024 was over $770 million, including $269.5 million in cash and $501.5 million in borrowing capacity[5] - Cash and cash equivalents increased to $269.5 million in 2024 from $195.9 million in 2023, representing a growth of 37.4%[21] Assets and Liabilities - Total assets rose to $7,890.0 million in 2024, up from $6,876.7 million in 2023, reflecting an increase of 14.7%[21] - Total liabilities increased to $4,254.8 million in 2024 from $3,514.8 million in 2023, an increase of 21.0%[21] - The ratio of total net debt to EBITDA was approximately 3.7x at the end of Q4 2024[6] Acquisitions and Growth - The company deployed nearly $400 million on accretive acquisitions and opened eight new facilities in 2024[2] - The company reported a case growth of 6.8% for the three months ended December 31, 2024, compared to the same period in 2023[23] - The number of cases performed in Q4 2024 was 174,185, up from 153,193 in Q4 2023, indicating a growth of 13.7%[21] Shareholder Information - Adjusted net income per share (diluted) remained stable at $0.44 for Q4 2024, compared to $0.44 in Q4 2023[21] - The adjusted net income per share attributable to common stockholders for 2024 was $0.94 (basic) and $0.93 (diluted), compared to $1.01 (basic) and $1.00 (diluted) in 2023[30] - The weighted average common shares outstanding for basic shares was 126,209 for the three months ended December 31, 2024, compared to 125,774 in 2023[30] Costs and Expenses - The company incurred transaction, integration, and acquisition costs of $36.8 million in Q4 2024, compared to $26.1 million in Q4 2023, reflecting an increase of 40.5%[25] - Equity-based compensation expense increased to $6.2 million for the three months ended December 31, 2024, compared to $4.5 million in 2023[30] - The company reported a net loss on disposals, consolidations, and deconsolidations of $19.1 million for the three months ended December 31, 2024, up from $6.9 million in 2023[30] Future Projections - The company projects 2025 revenue to be between $3.30 billion and $3.45 billion, with Adjusted EBITDA expected to be between $555 million and $565 million[7] Tax Information - The company made income tax payments of $1.6 million and $1.4 million for the years ended December 31, 2024, and 2023, respectively[30] - No federal income tax payments were made during the years ended December 31, 2024, and 2023, due to the utilization of net operating loss carryforwards[30] Valuation Allowance - The change in valuation allowance on deferred tax assets contributed $99.5 million for the year ended December 31, 2024[30]