Surgery Partners(US:SGRY)2025-11-10 21:05Financial Performance - Total revenues for Q3 2025 increased by 6.6% to $821.5 million from $770.4 million in Q3 2024, driven by same-facility revenue growth and acquisitions [105]. - Adjusted EBITDA for Q3 2025 rose by 6.1% to $136.4 million compared to $128.6 million in Q3 2024, attributed to revenue growth and cost management initiatives [105]. - Patient service revenues increased by 6.0% to $798.5 million in Q3 2025 from $753.2 million in Q3 2024, supported by a 3.4% increase in same-facility case volumes [116]. - Revenues for the nine months ended September 30, 2025, increased by 7.7% to $2,423.7 million compared to $2,249.9 million for the same period in 2024 [125]. - Patient service revenues rose by 7.0% to $2,361.1 million for the nine months ended September 30, 2025, driven by a 5.4% increase in days adjusted same-facility revenues [125]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $369.3 million, an increase from $344.4 million in 2024 [145]. Costs and Expenses - Cost of revenues for Q3 2025 was $626.2 million, representing 76.2% of total revenues, compared to 77.0% in Q3 2024 [117]. - General and administrative expenses decreased to $22.4 million in Q3 2025 from $29.2 million in Q3 2024, accounting for 2.7% of revenues [118]. - Cost of revenues was $1,870.9 million for the nine months ended September 30, 2025, maintaining a consistent percentage of revenues at 77.2% [126]. - General and administrative expenses decreased to $94.5 million, representing 3.9% of revenues for the nine months ended September 30, 2025, down from 4.6% in 2024 [127]. Interest and Debt - Interest expense for Q3 2025 was $74.9 million, or 9.1% of revenues, up from $50.0 million and 6.5% in Q3 2024, due to increased borrowings [122]. - Interest expense, net increased to $205.0 million for the nine months ended September 30, 2025, accounting for 8.5% of revenues, up from 6.6% in 2024 [132]. - The total interest expense, net, is reported at $257.9 million, with transaction and integration costs at $89.4 million [152]. - The company utilizes a balanced mix of maturities and both fixed and variable rate debt to manage interest rate exposure [153]. - Interest rate swap and cap agreements are in place to mitigate exposure to interest rate fluctuations, with low credit risk associated with these agreements [153]. Acquisitions and Investments - The company acquired a controlling interest in four surgical facilities and five physician practices for $52.6 million during Q3 2025 [105]. - The impact of acquisitions and synergies is estimated at $43.6 million, as if each acquisition had occurred on October 1, 2024 [152]. - Net cash used in investing activities decreased significantly to $120.5 million for the nine months ended September 30, 2025, down from $376.8 million in 2024 [137]. Net Income and Loss - Net loss attributable to Surgery Partners, Inc. was $22.7 million in Q3 2025, an improvement from a net loss of $31.7 million in Q3 2024 [115]. - The company reported a net loss attributable to Surgery Partners, Inc. of $62.9 million for the nine months ended September 30, 2025, compared to a loss of $59.6 million in 2024 [125]. - Net income attributable to non-controlling interests was 5.5% of revenues for the nine months ended September 30, 2025, compared to 5.3% in 2024 [134]. Cash Flow - Cash flows from operating activities were $170.9 million for the nine months ended September 30, 2025, a decrease of $17.8 million from $188.7 million in 2024 [136]. - Cash flows from operating activities for the same period amount to $282.3 million [152]. - Changes in operating assets and liabilities, net of acquisitions and divestitures, contributed $123.5 million [152]. Payor Mix and Operations - The payor mix for Q3 2025 showed private insurance payors at 50.6%, government payors at 43.5%, and self-pay at 3.3% [111]. - The company operated a portfolio of 165 surgical facilities, including 146 ASCs and 19 surgical hospitals across 30 states as of September 30, 2025 [104]. Other Financial Metrics - Non-cash interest expense, net, is reported at $(7.9) million, while non-cash lease expense is $(38.8) million [152]. - The company expects no material effect on net earnings or cash flows in 2025 due to interest rate changes, based on current indebtedness and interest rate cap agreements [154]. - The company recognizes changes in the fair value of derivatives designated as cash flow hedges in other comprehensive income [153].