Surgery Partners(SGRY)2024-11-12 19:55Financial Data and Key Metrics Changes - The company reported net revenue of 128.6 million, with adjusted EBITDA margins expanding by 100 basis points to 16.7% [6][25] - Same-facility net revenue growth was 4.2%, with surgical case volume growth of 3.7% [14][23] Business Line Data and Key Metrics Changes - Total joint replacements in ASCs increased by 53% in the quarter, with a five-year CAGR exceeding 80% [7] - The company performed nearly 163,000 consolidated surgical cases in the third quarter, with a focus on high acuity business lines [15][22] - Musculoskeletal-related procedures grew by 21% year-to-date, with total joint cases in ASCs growing over 50% in the quarter [17] Market Data and Key Metrics Changes - The company continues to expand its footprint in high-growth markets such as Florida, Texas, California, New York, and Illinois [8][9] - The company completed acquisitions in targeted high-growth markets, including two multi-specialty orthopedic-focused ASCs in Chicago [9][10] Company Strategy and Development Direction - The company is focused on expanding its footprint in existing markets and entering new high-growth markets through M&A and de novo investments [8][11] - The management emphasized the importance of physician recruitment and the expansion of total joint programs as key growth drivers [7][15] - The company aims to maintain a growth algorithm of 4% to 6% for same-facility net revenue in 2024, with a full-year outlook of high single-digit growth [23][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, projecting full-year net revenue and adjusted EBITDA of over 508 million, respectively [12][29] - The impact of Hurricane Helene was noted, but all facilities have reopened, and the company is optimistic about future performance [6][44] - Management highlighted the ongoing shift of higher acuity procedures into lower-cost, higher-quality settings as a long-term growth opportunity [18][50] Other Important Information - The company ended the quarter with 815 million in total liquidity [25] - The ratio of total net debt-to-EBITDA was 3.8x, consistent with the prior quarter, with a projection to reduce this ratio below 3.0x over time [28] Q&A Session Summary Question: Free cash flow expectations - Management indicated that cash flow generation remains strong, but higher transaction costs have impacted free cash flow expectations [31][32] Question: Impact of hurricanes on volumes - Management confirmed that the hurricanes had a marginal impact on revenue and cases, with one facility operating on a partial schedule [43][44] Question: Physician recruitment and market dynamics - Management noted strong interest from physicians in joining the company, emphasizing the benefits of efficiency and autonomy [66][68] Question: Cardiology growth potential - Management expressed excitement about the future of cardiology procedures moving into ASCs, highlighting the potential for rapid growth [82][84] Question: M&A strategy and pipeline - Management stated that they remain opportunistic in M&A, with a focus on high acuity procedures and a strong pipeline of opportunities [90][92]