Surgery Partners (SGRY) Q3 Earnings call transcript Nov 12, 2024

In the third quarter of 2024, Surgery Partners reported net revenue of $770 million, representing a growth of over 14% compared to the previous year. This growth is attributed to a 4.2% increase in same-facility net revenues and a 3.7% increase in surgical case volume. The company's adjusted EBITDA grew by 22% to $128.6 million, with adjusted EBITDA margins expanding to 16.7%.

Despite being affected by Hurricane Helene and Hurricane Milton, Surgery Partners' business remained resilient, with all facilities reopened and performing limited volume. The company's focus on total joint replacements in ASCs has seen a 53% increase in case volume, with a 5-year CAGR that's greater than 80%. Surgery Partners' strategic expansion into high-growth markets, such as Florida, Texas, California, New York, and Illinois, has resulted in the acquisition of five end-market transactions.

The company also completed the acquisition of two leading multi-specialty orthopedic focused ASCs in the Chicago market in partnership with Duly Health, a move that is expected to fuel high acuity growth. Surgery Partners anticipates a full year net revenue and adjusted EBITDA outlook of over $3.075 billion and $508 million, respectively, representing a 13% and 16% growth, respectively, compared to the previous year.

Key Themes and Trends

Surgery Partners' third quarter earnings call highlighted several key themes and trends. The company's focus on expanding its footprint in existing markets and entering high-growth markets, particularly Florida, Texas, California, New York, and Illinois, is a significant strategic move. This expansion strategy, coupled with the acquisition of two leading multi-specialty orthopedic focused ASCs in the Chicago market, positions the company for sustainable, long-term growth.

The company's continued focus on high acuity procedures, particularly total joint replacements in ASCs, is a notable trend. The shift towards performing these procedures in ASCs is a growing trend within the healthcare sector, with physicians, payers, and patients increasingly recognizing the value of performing these procedures in a lower-cost, high-quality setting.

Analyst Interactions

During the earnings call, key shareholders and investors had the opportunity to ask questions, providing valuable insights into their concerns and priorities. One investor asked about the company's marketing strategy for the new product and expressed concerns about potential competition. This question underscores the importance of effective marketing and differentiation in a competitive market.

Looking Ahead

Surgery Partners' third quarter earnings call presents a positive outlook for the company, with strong financial performance and strategic expansion plans. The company's focus on high acuity procedures, particularly total joint replacements in ASCs, and its entry into high-growth markets are key strategic moves that position the company for sustainable growth. With a strong balance sheet and a clear growth strategy, Surgery Partners is well positioned for continued success in the healthcare sector.