Surgery Partners (SGRY) 6 Aug 24 2024 Q2 Earnings call transcript

Surgery Partners Inc. held its Q2 2024 earnings call, highlighting a strong performance in the first half of the year. The company reported a net revenue of $762 million, marking a 14.2% increase from the previous year, driven by a 9.9% growth in same-facility revenue. This growth was attributed to a focus on higher acuity procedures and targeted recruitment of orthopedic surgeons, leading to a 46% increase in total joint replacements in ASCs.

EBITDA and Financial Highlights

Adjusted EBITDA grew by 18% to $118.3 million, with margins expanding to 15.5%. This growth is a result of the company's strategic focus on high acuity procedures, and the successful execution of its long-term growth algorithm. The company's efforts to capture macro tailwinds, such as the aging population and the shift in site of care for higher acuity procedures, have proved fruitful.

Acquisitions and Capital Deployment

The company's capital deployment strategy remains a key driver of growth, with nearly $280 million deployed in strategic acquisitions. This includes a $60 million transaction that was initially targeted for the fourth quarter of 2023. The company's robust pipeline of acquisitions and de novo investment opportunities suggests that capital deployment remains a significant part of its growth algorithm.

Outlook for the Remainder of 2024

Looking ahead, Surgery Partners Inc. is optimistic about its growth prospects, raising its full-year net revenue and adjusted EBITDA outlook to greater than $3.075 billion and $508 million, respectively. This represents a significant increase from the previous year and emphasizes the resiliency and consistency of the company's business model.

Investor Insights

During the call, analysts probed the company on various topics, including the balance of rate and volume contributions to same-store growth, seasonality patterns for EBITDA, revenue and margin increase guidance, and the impact of professional fees on revenue. The company provided detailed insights into these topics, offering a comprehensive view of its financial health and growth prospects.

Conclusion

Surgery Partners Inc.'s Q2 2024 earnings call underscored the company's strong financial performance and strategic focus on higher acuity procedures. With a robust pipeline of acquisitions and a clear growth trajectory, the company is well-positioned to capitalize on the ongoing shift in site of care for higher acuity procedures. As the company continues to execute on its long-term growth algorithm, it remains a compelling investment opportunity for those interested in the healthcare sector.