Financial Data and Key Metrics Changes - Surgery Partners reported first quarter net revenue of $776 million and adjusted EBITDA of $103.9 million, both meeting expectations [5][18] - Adjusted EBITDA grew nearly 7% and net revenue grew 8% compared to the prior year's first quarter [5][18] - Same facility revenue growth was over 5%, with total revenue increasing by 5.2% in the first quarter [5][18] Business Line Data and Key Metrics Changes - Surgical case growth was 6.5%, with a decline in rates of approximately 1%, primarily due to growth in lower acuity specialties [6][8] - Orthopedic cases grew by 3.4% year-over-year, driven by a 22% increase in total joint procedures [9][10] - The company performed over 60,000 surgical cases in the first quarter, with growth across all core specialties [8][18] Market Data and Key Metrics Changes - The company expects full year 2025 same facility growth to be at or above the high end of the target of 6% [7] - The company has opened 20 de novo facilities since February 2022, with 10 currently under construction [11] Company Strategy and Development Direction - Surgery Partners focuses on organic growth, margin improvement, and capital deployment for mergers and acquisitions (M&A) [4][12] - The company has a robust pipeline of attractive partnership opportunities and has deployed $55 million in 2025 for five surgical facilities [12][13] - The company aims to maintain a balance between volume and rate growth as the year progresses [7][30] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory and the ability to navigate regulatory uncertainties [15][17] - The company does not foresee material exposure to tariff-related price increases or significant risks from potential legislative changes to Medicaid [15] - Management reiterated guidance for full year 2025 revenue and adjusted EBITDA, expecting continued margin expansion [23][22] Other Important Information - The company ended the quarter with $229 million in cash and over $615 million in total liquidity [19][22] - The effective interest rate on corporate debt is fixed at approximately 6%, with no maturity until 2030 [21] Q&A Session Summary Question: Current utilization trends and sustainability - Management acknowledged tough comparisons but noted strong growth in de novos and MSK procedures contributing to case growth [25][26] Question: Pricing and payer mix - Management confirmed no significant changes in payer mix, with strong commercial growth and good visibility in rate negotiations [41][43] Question: Labor dynamics and specialty areas - Management indicated that professional fees were in line with expectations, driven by recent acquisitions, and noted no major headwinds from anesthesia costs [52][54] Question: Physician recruiting and acuity - Management highlighted a diverse recruiting class with a focus on higher acuity service lines, noting a 14% increase in net revenue per physician compared to last year [56][57] Question: Impact of GI mix on revenue - Management reported slight growth in GI cases, with a marginal impact on revenue per case, and expects continued growth throughout the year [61][64] Question: Tariff exposure confidence - Management expressed confidence due to strong relationships with HealthTrust and good visibility into contract protections [70][74] Question: Free cash flow expectations - Management expects free cash flow to improve as the year progresses, despite some timing issues in the first quarter [92][94] Question: Margin expansion efforts - Management discussed ongoing improvements in revenue cycle management and operational efficiencies as key drivers for margin expansion [97][100]

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][39] - 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 cases in 2023, with significant growth in orthopedic procedures, particularly total joint procedures, which grew by 50% [12][13] - Same facility revenue growth was 8% for the year, with Q4 same facility total revenue increasing by 5.6% [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 company expects Medicare rate increases of approximately 3% for 2025, contributing to revenue growth [19] Company Strategy and Development Direction - The company focuses on organic growth, margin improvement, and capital deployment for M&A as part of its long-term growth algorithm [6][11] - Surgery Partners plans to continue investing in acquisitions, facility expansions, and service line expansions, with a target of at least 10 de novo facilities annually [16][24] - The company aims to maintain a robust pipeline of attractive partnership opportunities, having added seven surgical facilities in 2024 [21] 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 [30][32] - The company anticipates continued margin expansion and double-digit adjusted EBITDA growth in 2025, with initial guidance for net revenue between $3.3 billion and $3.45 billion [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 revenue - Management indicated that the worst-case scenario from site neutrality legislation could impact revenue by approximately 1%, but they expect a net positive effect as procedures may shift from acute care to their facilities [55][60] Question: Guidance for Q1 considering weather impacts - Management noted that while unusual weather conditions may cause some rescheduling, it has been factored into their guidance, expecting Q1 to contribute about 23% of the annual revenue midpoint [64][66] Question: Changes in M&A approach due to Bain Capital's proposal - Management stated that the M&A pipeline remains strong and has not been impacted by the proposal, with three facilities already closed in Q1 2025 [71][74] Question: Revenue contribution from divested assets - Management clarified that less than 2% of the projected revenue growth is related to divestitures, emphasizing a focus on portfolio optimization [88][89] Question: Visibility on reducing transaction and integration costs - Management expressed confidence in reducing transaction and integration costs in 2025, with expectations for free cash flow improvement as these costs normalize [131][132]