Financial Data and Key Metrics Changes - Surgery Partners reported Q2 2025 net revenue of $826 million, an increase of 8.4% compared to Q2 2024, and adjusted EBITDA of $129 million, reflecting a 9% growth year-over-year [6][25]. - The adjusted EBITDA margin improved to 15.6%, up 10 basis points from the previous year [25]. - The company ended the quarter with $250 million in cash and total liquidity of $645 million [25][26]. Business Line Data and Key Metrics Changes - Same facility revenue growth was 5.1%, driven by a 3.4% increase in surgical case volume and a 1.6% increase in rates [24][25]. - Total joint procedures grew by 26% year-over-year, indicating strong demand in orthopedic surgeries [9]. - The company performed nearly 173,000 surgical cases in Q2 2025, a 3.8% increase from the previous year [24]. Market Data and Key Metrics Changes - The total addressable market for Surgery Partners is estimated to exceed $150 billion, with a current market size of over $40 billion [21]. - The company has limited exposure to Medicaid, accounting for less than 5% of revenue, which mitigates risks from regulatory changes [17]. - Proposed changes by CMS could add 276 procedures to the ASC covered list, enhancing the company's market position [18]. Company Strategy and Development Direction - The company focuses on three growth pillars: organic growth, margin improvement, and M&A activities [5][14]. - Surgery Partners plans to deploy $200 million in acquisitions for 2025, with a disciplined approach to ensure long-term value [15][29]. - The company is actively evaluating its asset portfolio to optimize operations and reduce leverage [21][44]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current regulatory environment, with minimal exposure to tariff-related price increases [16][17]. - The company anticipates continued growth in same facility revenue, aiming for the high end of the 6% growth target for the full year [8][25]. - Management highlighted the importance of physician recruitment and the positive impact of new facilities on long-term growth [11][20]. Other Important Information - Surgery Partners opened eight de novo facilities in 2024 and has 10 more under construction, focusing on higher acuity specialties [12][20]. - The company recorded a 27% sequential decrease in transaction and integration costs, indicating improved efficiency in M&A activities [15][16]. - The strategic review process concluded with a reaffirmation of the company's value creation opportunities as a publicly traded entity [20][22]. Q&A Session Summary Question: What is the pace of acquisitions and how should it be modeled going forward? - Management indicated that while the pace of acquisitions has been slower, they remain confident in achieving the $200 million target for the year, emphasizing the importance of finding the best deals [32][34]. Question: What are the economics of de novo facilities and their impact on margins? - Management explained that de novo facilities take time to ramp up but are expected to contribute positively to margins as they focus on higher acuity procedures [35][39]. Question: Are there any service lines considered less core during portfolio optimization? - Management stated they are evaluating opportunities to maximize long-term shareholder value, which may include partnerships or sales in certain markets [42][44]. Question: What is the company's exposure to health exchange volume and its potential impact? - Management noted that their exposure to health exchange volume is limited and not a significant part of their business, indicating minimal risk from potential declines in exchange membership [97]. Question: What drove the increase in operating expenses and variability in other OpEx? - Management clarified that fluctuations in operating expenses are due to various miscellaneous items and that the increase in professional fees is related to newly acquired surgical facilities [84][86].