Financial Data and Key Metrics Changes - Net revenue for Q3 2025 was $821.5 million, reflecting a 6.6% year-over-year increase [3][15] - Adjusted EBITDA was $136.4 million, up 6.1% year-over-year, with an adjusted EBITDA margin of 16.6% [3][15] - Same facility revenue grew by 6.3%, with same facility case growth of 3.4% and rate growth of 2.8% [15][20] Business Line Data and Key Metrics Changes - Over 166,000 surgical cases were performed in Q3, representing a 2.1% growth [15] - Growth in total joint surgeries was robust, with a 16% increase in Q3 and a 23% increase year-to-date compared to the same period last year [4][15] - Volume growth in gastrointestinal (GI) and musculoskeletal (MSK) procedures was relatively high, while ophthalmology procedures were slightly lower this quarter [4][5] Market Data and Key Metrics Changes - Payer mix showed commercial payers at 50.6% of revenues, down 160 basis points year-over-year, while governmental sources, primarily Medicare, increased by 120 basis points [5] - Same facility revenue growth for the full year is now expected to align with the midpoint of the long-term target range of 4%-6% [12][20] Company Strategy and Development Direction - The company is focused on organic growth, margin improvement, and capital deployment for M&A [3] - A strategic portfolio optimization process is underway to enhance flexibility and streamline operations [9][10] - The company plans to continue investing in DeNovo facilities, with two opened in Q3 and nine under construction [8][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged softer-than-expected same facility volume growth in recent months, prompting adjustments to the fourth quarter outlook [5][12] - The company remains confident in its long-term growth algorithm and the resilience of its business despite near-term challenges [13][21] - Revised full-year guidance expects revenue in the range of $3.275 billion to $3.3 billion and adjusted EBITDA between $535 million and $540 million [11][19] Other Important Information - The company has deployed approximately $71 million in capital for acquisitions in 2025, with a robust M&A pipeline of over $300 million under evaluation [6][8] - The company completed divestitures of three ASCs, generating cash proceeds of $45 million [18][40] - The inaugural investor day has been shifted to spring 2026 to provide a comprehensive update on portfolio optimization efforts [11] Q&A Session Summary Question: What is causing the weakness in demand or procedure volumes as you think through Q4? - Management noted broad-based weakness in volumes and payer mix, with higher government payer mix than expected [23][24] Question: Is the low level of spend on acquisitions due to deal timing or evaluation? - Management confirmed strong deal flow but emphasized a disciplined approach to acquisitions [25] Question: Can you clarify the payer mix commentary regarding commercial volumes being weaker? - Management indicated that while there is always pressure from payers, the current issue is more about the growth trend not being as strong as expected [29][30] Question: Can you break down the $20 million pressure on EBITDA guidance? - Management stated that approximately 60% of the pressure is related to development or capital timing, with the rest due to recent trend changes [31][32] Question: What are the expectations for free cash flow in Q4 and the year ahead? - Management does not provide specific guidance on free cash flow but noted strong operating cash flow and improvements in working capital [75][78]