Surgery Partners Q4 2024: Navigating Contradictions in M&A Strategy, Cash Flow, and Growth Expectations

These are the key contradictions discussed in Surgery Partners' latest 2024Q4 earnings call, specifically including: M&A Pipeline Impact, Consistency in Free Cash Flow Expectations, Site Neutrality Policy Impact, Organic Growth Contribution, M&A Strategy and Impact, and Revenue Growth Expectations:



Strong Financial Performance:
- Surgery Partners reported adjusted EBITDA growth of 16% and net revenue growth of 13.5% for the full year, resulting in margin expansion of 30 basis points.
- This growth was driven by strong organic results, including same facility revenue growth of 8%, and contributions from acquisitions.

Focus on Orthopedic Procedures:
- The company performed over 117,000 orthopedic cases in 2024, reflecting a 11% increase from 2023.
- This growth was attributed to targeted recruiting, acquisitions, and de novo facilities, with a focus on total joint procedures.

Capital Deployment and M&A Strategy:
- Surgery Partners deployed just under $400 million in capital for acquiring facilities, primarily focused on higher acuity specialties like orthopedics and spine.
- This strategy is aimed at immediately accretive orthopedic assets and generating margin expansion through integration.

De Novo Expansion:
- The company opened eight de novo facilities in 2024 and has 12 in the pipeline, in line with their goal of at least 10 de nos per year.
- This expansion is part of a strategy to position assets to meet the expanding orthopedic demand and is syndicated with high-quality physician partners.