PART I - FINANCIAL INFORMATION Presents unaudited condensed consolidated financial statements and management's analysis for Surgery Partners, Inc Item 1. Financial Statements Presents unaudited condensed consolidated financial statements and detailed notes for Surgery Partners, Inc. for specified periods Condensed Consolidated Balance Sheets (Unaudited) Presents the unaudited condensed consolidated balance sheets, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheet Highlights (Dollars in millions) | Item | Sep 30, 2023 | Dec 31, 2022 | Change | % Change | | :-------------------------------- | :----------- | :----------- | :----- | :------- | | Assets: | | | | | | Total current assets | $876.2 | $921.0 | $(44.8) | -4.86% | | Property and equipment, net | $939.7 | $876.6 | $63.1 | 7.20% | | Goodwill and other intangible assets, net | $4,301.0 | $4,179.4 | $121.6 | 2.91% | | Total assets | $6,780.1 | $6,682.1 | $98.0 | 1.47% | | Liabilities & Equity: | | | | | | Total current liabilities | $501.4 | $493.4 | $8.0 | 1.62% | | Long-term debt, less current maturities | $2,640.2 | $2,559.0 | $81.2 | 3.17% | | Total stockholders' equity | $2,986.5 | $2,940.9 | $45.6 | 1.55% | | Total liabilities and stockholders' equity | $6,780.1 | $6,682.1 | $98.0 | 1.47% | Condensed Consolidated Statements of Operations (Unaudited) Details the unaudited condensed consolidated statements of operations, including revenues, operating income, net income, and earnings per share Condensed Consolidated Statements of Operations Highlights (Dollars in millions, except per share amounts) | Item | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | YoY Change | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | YoY Change | | :------------------------------------ | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Revenues | $674.1 | $620.6 | 8.62% | $2,007.9 | $1,832.2 | 9.69% | | Operating income | $82.6 | $74.1 | 11.47% | $226.6 | $251.0 | -9.72% | | Income before income taxes | $32.8 | $13.4 | 144.78% | $82.3 | $77.1 | 6.74% | | Net income | $29.7 | $5.6 | 430.36% | $88.6 | $63.7 | 39.09% | | Net loss attributable to Surgery Partners, Inc. | $(4.9) | $(25.0) | 80.40% | $(10.9) | $(31.2) | 65.06% | | Basic Net loss per share | $(0.04) | $(0.28) | 85.71% | $(0.09) | $(0.35) | 74.29% | Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Outlines the unaudited condensed consolidated statements of comprehensive income (loss), including net income and other comprehensive income Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (Dollars in millions) | Item | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | YoY Change | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | YoY Change | | :-------------------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Net income | $29.7 | $5.6 | 430.36% | $88.6 | $63.7 | 39.09% | | Other comprehensive income (loss), net of tax | $(1.8) | $38.5 | -104.68% | $0.8 | $114.3 | -99.30% | | Comprehensive income | $27.9 | $44.1 | -36.73% | $89.4 | $178.0 | -49.77% | | Comprehensive (loss) income attributable to Surgery Partners, Inc. | $(6.7) | $13.5 | -149.63% | $(10.1) | $83.1 | -112.15% | Condensed Consolidated Statements of Stockholders' Equity (Unaudited) Summarizes unaudited consolidated stockholders' equity, detailing changes in common stock, paid-in capital, and retained deficit Stockholders' Equity Changes (Dollars in millions, shares in thousands) | Item | Dec 31, 2022 | Sep 30, 2023 | Change | | :-------------------------------------------------- | :----------- | :----------- | :----- | | Common Stock (Shares) | 125,961 | 126,489 | 528 | | Common Stock (Amount) | $1.3 | $1.3 | $0.0 | | Additional Paid-in Capital | $2,478.0 | $2,494.5 | $16.5 | | Accumulated Other Comprehensive Income | $76.2 | $77.0 | $0.8 | | Retained Deficit | $(557.3) | $(568.2) | $(10.9) | | Non-Controlling Interests—Non-Redeemable | $942.7 | $981.9 | $39.2 | | Total Stockholders' Equity | $2,940.9 | $2,986.5 | $45.6 | Condensed Consolidated Statements of Cash Flows (Unaudited) Presents unaudited consolidated cash flow statements, categorizing cash activities into operating, investing, and financing Condensed Consolidated Statements of Cash Flows Highlights (Dollars in millions) | Cash Flow Activity | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | YoY Change | | :------------------------------------ | :-------------------------- | :-------------------------- | :--------- | | Net cash provided by operating activities | $231.2 | $151.6 | 52.51% | | Net cash used in investing activities | $(167.5) | $(235.7) | 28.93% | | Net cash used in financing activities | $(110.6) | $(151.0) | 26.75% | | Net decrease in cash and cash equivalents | $(46.9) | $(235.1) | 80.05% | | Cash and cash equivalents at end of period | $236.0 | $154.8 | 52.45% | Notes to Condensed Consolidated Financial Statements (Unaudited) Provides detailed notes explaining accounting policies and specific financial statement items for the unaudited consolidated statements 1. Organization and Summary of Accounting Policies Describes the Company's organizational structure, operational footprint, and key accounting policies, including revenue and goodwill - As of September 30, 2023, Surgery Partners, Inc. owned or operated a portfolio of 154 surgical facilities (136 ASCs and 18 surgical hospitals) in 31 states, with a majority interest in 90 and consolidating 117 for financial reporting26 Revenues by Service Type (% of Total Revenues) | Service Type | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Surgical facilities revenues | 95.8% | 95.6% | 95.9% | 95.7% | | Ancillary services revenues | 2.4% | 2.7% | 2.5% | 2.8% | | Total patient service revenues | 98.2% | 98.3% | 98.4% | 98.5% | | Other service revenues | 1.8% | 1.7% | 1.6% | 1.5% | | Total revenues | 100.0% | 100.0% | 100.0% | 100.0% | Patient Service Revenues by Payor Type (% of Total Patient Service Revenues) | Payor Type | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Private insurance | 52.4% | 49.5% | 51.8% | 50.4% | | Government | 41.0% | 44.2% | 42.4% | 43.0% | | Self-pay | 2.6% | 2.6% | 2.5% | 2.7% | | Other | 4.0% | 3.7% | 3.3% | 3.9% | | Total | 100.0% | 100.0% | 100.0% | 100.0% | - The effective tax rate for the nine months ended September 30, 2023, was (7.7)%, a significant decrease from 17.4% in the prior year, primarily due to earnings attributable to non-controlling interests, an increase in valuation allowance for interest expense limitations, and discrete tax benefits from restricted stock awards ($1.6 million) and entity divestitures ($15.8 million)47 Goodwill Activity (Dollars in millions) | Item | Amount | | :------------------------------------ | :------- | | Balance at December 31, 2022 | $4,137.1 | | Acquisitions, including post acquisition adjustments | $145.0 | | Disposals | $(37.0) | | Balance at September 30, 2023 | $4,245.1 | - No indicators of goodwill impairment were identified as of September 30, 2023, despite considering recent increases in interest rates, inflation risk, and market volatility48 - The Company recognized $1.1 million in grant funds as a reduction in operating expenses for the nine months ended September 30, 2023, with no remaining unrecognized grant funds as of that date54 2. Acquisitions and Disposals Details the Company's acquisition and disposal activities of surgical facilities and physician practices during the period - During the nine months ended September 30, 2023, the Company acquired controlling interests in five surgical facilities, one de novo facility, and one physician practice for $50.0 million cash and $1.3 million non-cash consideration61 - It also acquired non-controlling interests in five surgical facilities and two de novo facilities for $50.2 million cash, including $21.0 million for management rights61 - In the same period, the Company sold interests in six surgical facilities for $30.4 million net cash proceeds, recognizing a pre-tax gain of $26.9 million63 - It also disposed of non-controlling interests in a surgical facility and a de novo facility for $1.5 million cash, resulting in a pre-tax loss of $13.7 million63 3. Long-Term Debt Summarizes the Company's long-term debt, including senior secured term loans, unsecured notes, and finance lease obligations Long-Term Debt Summary (Dollars in millions) | Item | Sep 30, 2023 | Dec 31, 2022 | | :------------------------------------ | :----------- | :----------- | | Senior secured term loan | $1,370.4 | $1,370.0 | | 6.750% senior unsecured notes due 2025 | $185.0 | $185.0 | | 10.000% senior unsecured notes due 2027 | $320.0 | $320.0 | | Notes payable and other secured loans | $194.2 | $171.3 | | Finance lease obligations | $641.2 | $585.7 | | Less: unamortized debt issuance costs and discounts | $(8.5) | $(10.2) | | Total debt | $2,702.3 | $2,621.8 | | Less: Current maturities | $62.1 | $62.8 | | Total long-term debt | $2,640.2 | $2,559.0 | - The Company increased its revolving credit facility by $203.8 million in January 2023, with $544.9 million available as of September 30, 202364 - In June 2023, the interest benchmark for the Credit Agreement transitioned from LIBOR to SOFR65 4. Leases Presents the Company's lease assets and liabilities, distinguishing between operating and finance leases, and total lease costs Lease Assets and Liabilities (Dollars in millions) | Item | Sep 30, 2023 | Dec 31, 2022 | | :-------------------------- | :----------- | :----------- | | Operating lease assets | $244.5 | $279.1 | | Finance lease assets | $571.8 | $529.6 | | Total leased assets | $816.3 | $808.7 | | Total operating lease liabilities | $276.6 | $307.9 | | Total finance lease liabilities | $641.2 | $585.7 | | Total lease liabilities | $917.8 | $893.6 | - During the nine months ended September 30, 2023, the Company reclassified certain facility real estate leases from operating to finance, increasing finance lease liabilities by $97.1 million and assets by $95.7 million67 Total Lease Costs (Dollars in millions) | Item | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------- | :-------------------------- | :-------------------------- | | Operating lease costs | $48.7 | $49.5 | | Total finance lease costs | $64.9 | $58.8 | | Variable and short-term lease costs | $16.3 | $13.7 | | Total lease costs | $129.9 | $122.0 | 5. Derivatives and Hedging Activities Discusses the Company's use of interest rate derivatives for hedging variable cash flows and their fair values - As of September 30, 2023, the Company had nine interest rate swaps with a total net notional amount of $1.2 billion and two interest rate caps with a total notional amount of $162.1 million, primarily to hedge variable cash flows from existing variable-rate debt7273 Fair Values of Derivatives (Dollars in millions) | Item | Sep 30, 2023 Assets | Sep 30, 2023 Liabilities | Dec 31, 2022 Assets | Dec 31, 2022 Liabilities | | :------------------------------------ | :------------------ | :--------------------- | :------------------ | :--------------------- | | Derivatives not designated as hedging instruments | $2.0 | $2.0 | $17.5 | $8.5 | | Derivatives in cash flow hedging relationships | $80.3 | $21.3 | $95.9 | $31.9 | | Total | $82.3 | $23.3 | $113.4 | $40.4 | - The Company estimates that an additional $53.8 million will be reclassified as a decrease to interest expense from accumulated OCI over the next 12 months due to derivatives designated as cash flow hedges79 6. Earnings Per Share Provides details on the calculation of basic and diluted net loss per share attributable to Surgery Partners, Inc Net Loss Attributable to Surgery Partners, Inc. and EPS (Dollars in millions, shares in thousands) | Item | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss attributable to Surgery Partners, Inc. | $(4.9) | $(25.0) | $(10.9) | $(31.2) | | Weighted average shares outstanding- basic | 125,747 | 88,907 | 125,559 | 88,604 | | Basic Loss per share | $(0.04) | $(0.28) | $(0.09) | $(0.35) | | Diluted Loss per share | $(0.04) | $(0.28) | $(0.09) | $(0.35) | 7. Other Current Liabilities Itemizes the components of other current liabilities, including right-of-use operating lease liabilities and accrued expenses Other Current Liabilities (Dollars in millions) | Item | Sep 30, 2023 | Dec 31, 2022 | | :-------------------------- | :----------- | :----------- | | Right-of-use operating lease liabilities | $35.7 | $36.5 | | Amounts due to patients and payors | $27.1 | $31.9 | | Cost report liabilities | $23.4 | $23.5 | | Interest payable | $22.7 | $19.4 | | Acquisition escrow | $17.4 | $28.8 | | Accrued expenses and other | $81.9 | $70.0 | | Total | $208.2 | $210.1 | 8. Commitments and Contingencies Outlines significant commitments and contingencies, including a cybersecurity incident and a stockholder litigation settlement - In May 2023, the Company experienced a cybersecurity incident that temporarily disrupted facilities in its Idaho market, resulting in an estimated adverse pre-tax impact of approximately $7 million for the nine months ended September 30, 202387 - In March 2022, the Company received $32.8 million from the settlement of a stockholder litigation matter (Delaware Action)88 9. Segment Reporting Presents financial information by reportable segment, including Surgical Facility Services and Ancillary Services revenues and Adjusted EBITDA - The Company operates in two reportable segments: Surgical Facility Services (ASCs, surgical hospitals, anesthesia) and Ancillary Services (multi-specialty physician practices)89 Segment Revenues (Dollars in millions) | Segment | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Surgical Facility Services | $657.3 | $603.9 | $1,956.5 | $1,780.6 | | Ancillary Services | $16.8 | $16.7 | $51.4 | $51.6 | | Total | $674.1 | $620.6 | $2,007.9 | $1,832.2 | Segment Adjusted EBITDA (Dollars in millions) | Segment | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Surgical Facility Services | $138.6 | $110.2 | $384.1 | $319.9 | | Ancillary Services | $(1.2) | $(1.5) | $(2.7) | $(2.2) | | All other | $(31.9) | $(12.5) | $(85.6) | $(58.3) | | Total Adjusted EBITDA | $105.5 | $96.2 | $295.8 | $259.4 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis of financial condition and operational results, covering revenue, expenses, liquidity, and non-GAAP measures Cautionary Note Regarding Forward-Looking Statements Highlights that the report contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ - The report contains forward-looking statements based on current expectations, estimates, and assumptions, which involve risks and uncertainties that could cause actual results to differ materially99 Executive Overview Provides a high-level summary of the Company's operations, key performance indicators, and strategic focus for the period - As of September 30, 2023, Surgery Partners operated 154 surgical facilities (136 ASCs, 18 surgical hospitals) across 31 states, consolidating 117 of these facilities102 Q3 2023 Key Performance Indicators (Dollars in millions) | Metric | Q3 2023 | Q3 2022 | YoY Change | | :------------------------------------ | :------ | :------ | :--------- | | Total revenues | $674.1 | $620.6 | 8.6% | | Days adjusted same-facility revenues | | | 14.2% | | - Revenue per case | | | 11.0% | | - Same-facility cases | | | 2.9% | | Adjusted EBITDA | $105.5 | $96.2 | 9.7% | | Net loss attributable to Surgery Partners, Inc. | $(4.9) | $(25.0) | 80.4% | | Operating cash inflows | $104.6 | $29.7 | 252.2% | | Net operating cash inflows (less distributions) | $70.5 | $(5.6) | -1357.1% | - The Company's strategic focus includes improving same-facility performance, selective acquisitions, developing new facilities, and other portfolio management initiatives103 Revenues Analyzes the primary drivers of the Company's total revenues, predominantly patient service revenues from surgical facility services - Patient service revenues, primarily from surgical facility services, constitute the vast majority of total revenues (98.2% for Q3 2023 and 98.4% for 9M 2023), with other service revenues contributing a smaller portion106107 Payor Mix Details the distribution of patient service revenues across different payor types, including private insurance and government payors Patient Service Revenues by Payor Type (% of Total Patient Service Revenues) | Payor Type | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Private insurance payors | 52.4% | 49.5% | 51.8% | 50.4% | | Government payors | 41.0% | 44.2% | 42.4% | 43.0% | | Self-pay payors | 2.6% | 2.6% | 2.5% | 2.7% | | Other payors | 4.0% | 3.7% | 3.3% | 3.9% | | Total | 100.0% | 100.0% | 100.0% | 100.0% | Surgical Case Mix Presents the breakdown of surgical cases by specialty, such as orthopedic, ophthalmology, and gastrointestinal procedures Surgical Case Mix by Specialty (% of Total Cases) | Specialty | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Orthopedic and pain management | 35.7% | 35.7% | 35.4% | 36.0% | | Ophthalmology | 24.8% | 24.4% | 24.5% | 24.5% | | Gastrointestinal | 23.6% | 23.4% | 24.0% | 23.1% | | General surgery | 2.5% | 3.0% | 2.7% | 3.0% | | Other | 13.4% | 13.5% | 13.4% | 13.4% | | Total | 100.0% | 100.0% | 100.0% | 100.0% | Critical Accounting Policies Confirms that there have been no material changes to the Company's critical accounting policies since the last annual report - There have been no material changes in the nature or application of the Company's critical accounting policies since December 31, 2022111 Results of Operations Analyzes the Company's financial performance, including revenues, expenses, and net income, for the reported periods Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022 Compares the Company's financial performance for the third quarter of 2023 against the same period in the prior year Q3 2023 vs Q3 2022 Financial Performance (Dollars in millions) | Item | Q3 2023 | Q3 2022 | YoY Change | YoY % Change | | :------------------------------------ | :------ | :------ | :--------- | :----------- | | Revenues | $674.1 | $620.6 | $53.5 | 8.6% | | Patient service revenues | $662.3 | $610.1 | $52.2 | 8.6% | | Cost of revenues | $508.3 | $489.4 | $18.9 | 3.9% | | General and administrative expenses | $36.8 | $17.9 | $18.9 | 105.6% | | Operating income | $82.6 | $74.1 | $8.5 | 11.5% | | Interest expense, net | $(49.8) | $(60.7) | $10.9 | -17.9% | | Net loss attributable to Surgery Partners, Inc. | $(4.9) | $(25.0) | $20.1 | 80.4% | - The 8.6% increase in patient service revenues was driven by a 14.2% increase in days adjusted same-facility revenues, comprising an 11.0% increase in revenue per case and a 2.9% increase in same-facility case volumes, partially offset by divestitures113 - Cost of revenues as a percentage of total revenues improved to 75.4% in Q3 2023 from 78.9% in Q3 2022, despite an absolute increase due to acquisitions114 Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 Compares the Company's financial performance for the nine months ended September 30, 2023, against the same period in the prior year 9M 2023 vs 9M 2022 Financial Performance (Dollars in millions) | Item | 9M 2023 | 9M 2022 | YoY Change | YoY % Change | | :------------------------------------ | :------ | :------ | :--------- | :----------- | | Revenues | $2,007.9 | $1,832.2 | $175.7 | 9.6% | | Patient service revenues | $1,976.7 | $1,805.1 | $171.6 | 9.5% | | Cost of revenues | $1,554.0 | $1,441.6 | $112.4 | 7.8% | | General and administrative expenses | $100.0 | $73.5 | $26.5 | 36.1% | | Operating income | $226.6 | $251.0 | $(24.4) | -9.7% | | Interest expense, net | $(144.3) | $(173.9) | $29.6 | -17.0% | | Net loss attributable to Surgery Partners, Inc. | $(10.9) | $(31.2) | $20.3 | 65.1% | - The 9.5% increase in patient service revenues was driven by a 10.6% increase in days adjusted same-facility revenues, consisting of a 6.9% increase in revenue per case and a 3.5% increase in same-facility case volumes122 - The Company recorded an income tax benefit of $6.3 million for 9M 2023, compared to an expense of $13.4 million for 9M 2022, with the effective tax rate shifting from 17.4% to (7.7)%130 Liquidity and Capital Resources Assesses the Company's ability to meet its financial obligations, focusing on cash flows, cash equivalents, and capital management - Cash and cash equivalents decreased to $236.0 million at September 30, 2023, from $282.9 million at December 31, 2022132 - Net cash provided by operating activities increased by $79.6 million to $231.2 million for 9M 2023, primarily due to non-repeating 2022 items (Medicare repayments, litigation proceeds) and reduced interest paid133 - Net cash used in investing activities decreased to $167.5 million for 9M 2023 from $235.7 million for 9M 2022, driven by lower acquisition payments and higher proceeds from asset sales134 - Net cash used in financing activities decreased to $110.6 million for 9M 2023 from $151.0 million for 9M 2022, mainly due to increased long-term debt borrowings and decreased payments related to non-controlling interest ownership transactions134 Capital Resources Examines the Company's working capital and its strategies for securing both short-term and long-term funding needs - Net working capital decreased to $374.8 million at September 30, 2023, from $427.6 million at December 31, 2022, primarily due to the decrease in cash135 - The Company anticipates meeting its short-term and long-term liquidity needs through cash flows from operations, available cash, capacity on its Revolver, and continued access to capital markets139 Material Cash Requirements Confirms no material changes to the Company's future cash obligations since the previous annual report - There have been no material changes to the Company's upcoming cash obligations during the nine months ended September 30, 2023, from those disclosed in its 2022 Annual Report on Form 10-K136 Summary Summarizes potential negative impacts of broad economic factors on the Company's financial performance and operations - Broad economic factors such as increased interest rates, inflation, and supply chain risks could negatively impact payor mix, increase lower-margin services, reduce patient volumes, and diminish the ability to collect receivables137 Certain Non-GAAP Measures Explains the Company's use of non-GAAP financial measures like Adjusted EBITDA for performance assessment and credit compliance - Adjusted EBITDA and Adjusted EBITDA excluding grant funds are non-GAAP measures used by management to assess operating performance and make business decisions, with reconciliations provided to GAAP income before income taxes140141 - Credit Agreement EBITDA is a non-GAAP measure used for liquidity assessment and compliance with credit facility covenants, further adjusted for acquisitions and synergies146147148 Item 3. Quantitative and Qualitative Disclosures About Market Risk Discusses the Company's exposure to market risk, primarily interest rate fluctuations, and its hedging strategies - The Company manages interest rate risk through a balanced mix of fixed and variable rate debt and periodically uses interest rate swap and cap agreements150 - Variable rate debt is primarily indexed to the prime rate or SOFR151 - As of September 30, 2023, changes in interest rates are not expected to have a material effect on net earnings or cash flows in 2023152 Item 4. Controls and Procedures Confirms the effectiveness of the Company's disclosure controls and internal control over financial reporting - The Company's disclosure controls and procedures were evaluated and deemed effective as of September 30, 2023153 - There were no material changes in internal control over financial reporting during the quarter ended September 30, 2023154 PART II - OTHER INFORMATION Presents other information not included in the financial statements, such as legal proceedings, risk factors, and equity security details Item 1. Legal Proceedings States that the Company is not currently involved in any legal proceedings expected to have a material adverse effect - Management believes there are no current legal proceedings that would have a material adverse effect on the Company's business, financial condition, or results of operations157 Item 1A. Risk Factors Indicates no material changes to the risk factors previously disclosed in the Company's annual report - No material changes have occurred with respect to the risk factors discussed in the Company's 2022 Annual Report on Form 10-K158 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities Reports on the Company's equity security transactions, including no common stock repurchases during the period - The Company did not repurchase any shares of common stock during the nine months ended September 30, 2023159 - As of September 30, 2023, the Company had authority to repurchase up to $46.0 million of common stock under its board-authorized share repurchase program159 Item 3. Defaults Upon Senior Securities Confirms that there were no defaults upon senior securities during the reported period - There were no defaults upon senior securities160 Item 4. Mine Safety Disclosures States that mine safety disclosures are not applicable to the Company's operations - Mine safety disclosures are not applicable to the Company161 Item 5. Other Information Notes the absence of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or officers - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by the Company's directors or officers during the three months ended September 30, 2023162 Item 6. Exhibits Lists the exhibits accompanying the Form 10-Q filing, including required certifications and XBRL documents - The exhibits include certifications from the Principal Executive Officer and Principal Financial Officer, as well as Inline XBRL Taxonomy Extension documents164 Signatures Contains the certification signature of the Company's Executive Vice President and Chief Financial Officer - The report is signed by David T. Doherty, Executive Vice President and Chief Financial Officer, on November 7, 2023168
Surgery Partners(SGRY) - 2023 Q3 - Quarterly Report