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- **Revenue Growth**: Q3 revenue up 6.6% to $821.5M, driven by 16% YoY growth in total joint surgeries.
- **Strategic Challenges**: 20% EBITDA reduction due to delayed M&A ($71M vs. $250M target) and softer commercial payer mix.
- **Portfolio Optimization**: Evaluating divestitures of larger surgical hospitals to reduce leverage and improve cash flow conversion.
- **De Novo Risks**: Regulatory delays push breakeven timelines, but long-term accretive potential remains.

**【CEO Summary Section】**
- **Revenue Growth**: Q3 net revenue of $821.5 million (+6.6% YoY), adjusted EBITDA of $136.4 million (+6.1% YoY), and same-facility revenue growth of 6.3%.
- **Organic Growth**: 166,000 surgical cases, with 16% YoY growth in total joint surgeries. Robotics investment (74 surgical robots) and 500+ new physician recruits drive high-acuity demand.
- **Challenges**: Modest payer mix shift (commercial -160bps, Medicare +120bps) and softer-than-expected volume growth, prompting Q4 outlook revision.
- **Capital Deployment**: $71M in M&A, $45M from 3 ASC divestitures, and 9 de novo facilities under construction. Full year guidance revised to $3.275B-$3.3B revenue and $535M-$540M EBITDA.
- **Portfolio Optimization**: Evaluating strategic divestitures of larger surgical hospitals to reduce leverage and improve cash flow conversion.

**【CFO Financial Commentary】**
- **Financial Health**: Cash balance of $203.4M, operating cash flow of $83.6M, and net leverage of 4.2x. Repriced debt reduces interest rates to SOFR +250bps.
- **Expense Management**: Salaries (29.6% of revenue), supply costs (25.4%), and G&A (2.7%) reflect cost discipline. Procurement initiatives offset inflationary pressures.
- **Guidance Adjustment**: Full year EBITDA reduced by ~$20M due to delayed M&A ($71M deployed vs. $250M target), divestiture earnings loss, and cautious Q4 volume outlook.
- **De Novo Challenges**: Regulatory and construction delays delay breakeven for new facilities, but long-term accretive potential remains.

**【Q&A Highlights】**
- **Demand Weakness**: Broader-based commercial payer mix softness, not tied to specific procedures or geographies. Q4 growth expected but below internal targets.
- **M&A Timing**: Pipeline remains robust ($>300M opportunities), but 2025 deployment slower than planned. 60% of EBITDA reduction attributed to M&A timing.
- **Portfolio Strategy**: Focusing on higher-acuity ASCs and potential partnerships to streamline operations and improve cash flow.
- **Free Cash Flow**: Operating cash flow strong ($83.6M Q3), but variability in physician distributions limits predictability.
- **De Novo Outlook**: Delays in 2025 openings, but 12-18-month timeline for new facilities to reach breakeven remains intact.

Surgery Partners, Inc. (SGRY) Q3 2025 Earnings Call Transcript

- **Revenue Growth**: Q2 net revenue $826 million (+8.4% YoY), same-facility growth 5.1% (3.4% cases, 1.6% rates). Full-year 2025 same-facility growth expected near 6%.
- **Margin Expansion**: EBITDA margin 15.6% (+10 bps YoY). Cost control driving G&A and COGS improvements.
- **Strategic Initiatives**: 10 de novo facilities under construction, $66M M&A YTD, targeting $200M annually. Portfolio optimization to accelerate leverage reduction (target 3x+).
- **Regulatory Tailwinds**: CMS 2026 rate proposal (+2.4%) and inpatient-only list phasing out support ASC growth. Minimal tariff exposure.
- **Liquidity**: $645M total liquidity, no incremental capital needs through 2025+. Interest rate caps limit variable rate exposure.


**【CEO Summary Section】**
- **Q2 2025 Results**: Net revenue of $826 million (+8.4% YoY), adjusted EBITDA of $129 million (+9% YoY). Same-facility revenue growth of 5.1% (3.4% case growth, 1.6% rate growth). Full-year 2025 same-facility growth expected near 6%.
- **Organic Growth**: 173,000 surgical cases (+3.8% YoY), with 26% growth in total joint procedures. 300 new physicians recruited (skewed toward orthopedics). 10 de novo facilities under construction, targeting higher acuity specialties.
- **Margin Expansion**: Cost of revenues and G&A expenses as % of revenue improved. 2025 guidance implies continued margin expansion.
- **M&A Activity**: $66 million deployed in 2025, targeting $200 million annually. Acquired facilities at <8x EBITDA, with potential to lower multiples by 1 turn within 18 months.
- **Strategic Review**: Board reaffirmed public company value, with focus on portfolio optimization (e.g., selling non-core assets to accelerate leverage reduction). Investor Day planned for later 2025.

**【CFO Financial Commentary】**
- **Top Line**: Q2 revenue $826 million (+8.4% YoY), driven by 3.8% case growth. Operating cash flow $81 million, DSO improved 3 days to 42.5.
- **Profitability**: Adjusted EBITDA margin 15.6% (+10 bps YoY). GAAP net income $42 million, EPS $0.43. Full-year 2025 guidance: Revenue $3.3-3.45 billion, EBITDA $555-565 million.
- **Liquidity**: $250 million cash, $645 million total liquidity. Debt $2.2 billion (4.1x debt/EBITDA). Interest expense up $23 million QoQ due to expiring swaps, now capped at 5% via interest rate caps.
- **Capital Allocation**: Self-funding growth through 2025+ without debt/equity markets. Evaluating portfolio optimization to accelerate cash flow and leverage reduction.

**【Q&A Highlights】**
- **M&A Cadence**: $66 million deployed YTD, targeting $200 million annually. Pipeline strong, but prioritizing accretive deals. Timing variability may push to lower end of guidance range.
- **De Novo Economics**: 6-12 months to breakeven, 1-2 years to full run rate. 12 of 20 post-2022 de novos now profitable. Management fees and equity earnings drive incremental revenue.
- **Portfolio Optimization**: Exploring asset sales/partnerships to accelerate leverage reduction (target 3x+). Surgical hospitals may be divested if better owned by others.
- **Regulatory Impact**: Minimal tariff exposure. CMS 2026 rate proposal (+2.4%) and inpatient-only list phasing out create long-term ASC growth tailwinds.
- **Leverage Outlook**: Current 4.7x (incl. NCI). Expect decline with earnings growth. Interest rate caps limit variable rate exposure.
- **Payer Behavior**: Focused on removing obstacles for ASC utilization. Commercial payers appreciate cost savings (e.g., 30% lower for joint procedures).


Surgery Partners, Inc. (SGRY) Q2 2025 Earnings Call Transcript

- **Revenue Growth**: Q1 2025 net revenue up 8% YoY to $776 million, driven by 6.5% surgical case growth and 5.2% same-facility revenue growth.
- **Organic Momentum**: 22% YoY increase in orthopedic total joint procedures, 150 new physician recruits with 14% higher net revenue per doc.
- **Margin Expansion**: 7% YoY EBITDA growth to $103.9 million; cost control and integration synergies support 2025 margin expansion.
- **M&A Activity**: $55M deployed in 5 facilities (under 8x EBITDA), 10 de novo facilities under construction with <50% of traditional acquisition multiples.
- **Liquidity & Debt**: $615M total liquidity, 4.1x leverage ratio, fixed 6% interest rate on $2.2B debt.
- **Regulatory Resilience**: <5% revenue exposure to Medicaid/exchange programs, no material tariff risk via GPO transparency.


**【CEO Opening Remarks】**
- Q1 2025 net revenue: $776 million (8% YoY growth), adjusted EBITDA: $103.9 million (7% YoY growth). Same-facility revenue growth of 5.2%, driven by 6.5% surgical case growth and 1% rate decline due to lower acuity specialties.
- Organic growth highlights: 160,000+ surgical cases, 22% YoY increase in orthopedic total joint procedures, 150 new physician recruits (14% higher net revenue per physician vs. 2024).
- Margin expansion initiatives: Procurement cost savings, integration synergies, and 68 surgical robots for higher acuity procedures.
- M&A activity: $55 million deployed in 5 facilities (under 8x EBITDA multiple), 10 de novo facilities under construction.
- Regulatory resilience: <5% revenue exposure to Medicaid/exchange programs, no material tariff risk via GPO contracts.

**【CFO Financial Details】**
- Q1 2025 cash: $229 million, total liquidity: $615 million. Operating cash flow: $6 million (seasonal low), distributions to partners: $62 million.
- Debt: $2.2 billion (6% fixed rate), leverage: 4.1x (credit agreement basis). Interest rate cap limits variable rate at 5%.
- Full year 2025 guidance: Revenue $3.3-3.45 billion, EBITDA $555-565 million. Confident in margin expansion and cash flow generation.

**【Q&A Key Takeaways】**
- **Volume Sustainability**: GI and MSK growth offset rate pressure; 2025 same-facility growth expected to balance volume/rate. De novo ramp-up contributing to mix shift.
- **Cash Flow Dynamics**: Seasonal Q1 weakness, but improving days sales outstanding (DPO -2 days). Interest rate cap adds 220bps headwind for 2025H2.
- ** Physician Recruitment**: 150 new docs (50%+ in high acuity), 160% YoY case growth from 2024 cohort. Robotics adoption supporting recruitment.
- **Regulatory & Tariff Risks**: Minimal exposure to Medicaid/exchange programs or tariffs. Strong GPO visibility mitigates supply chain risks.
- **M&A Pipeline**: 10+ de novo targets, robust accretive acquisition pipeline. No need to tap capital markets for 5+ years.


Surgery Partners (SGRY)-12 May 25-2025 Q1 Earnings call transcript

- **Record Growth**: 2024 revenue $3.1B (+13.5%), EBITDA $508M (+16%). 2025 targets 6-11% revenue growth, $555-565M EBITDA.
- **Orthopedic Dominance**: 50% total joint procedure growth, 41% ASCs performing total joints, 14 new surgical robots added.
- **M&A Efficiency**: 2024 acquisitions generated 1.5x EBITDA multiple reduction; 2025 deployment $200M at 8x multiple.
- **Regulatory Resilience**: <1% revenue exposure to site neutrality, <5% from Medicaid/state programs.
- **Leverage Path**: Debt-to-EBITDA 3.7x (down 10bps QoQ), targeting mid-3s by 2025 with no capital market needs.

**【CEO Opening Remarks】**
- Full-year 2024 net revenue reached $3.1 billion (+13.5% YoY), with adjusted EBITDA of $508.2 million (+16% YoY). Same-facility revenue grew 8%, driven by case volume and rate improvements.
- Organic growth highlights: 117,000 orthopedic cases (+11% YoY), 50% growth in total joint procedures, and 750 new physician recruits (many in orthopedics). 2024 acquisitions added $400 million in capital, focusing on high-acuity specialties.
- 2025 outlook: Revenue $3.3-3.45 billion, adjusted EBITDA $555-565 million, with margin expansion and M&A deployment of $200 million.

**【CFO Financial Details】**
- Q4 2024 revenue: $864 million (+17.5% YoY), adjusted EBITDA $163.8 million (18.9% margin). Full-year operating cash flow $300 million, with $270 million in cash and $770 million total liquidity.
- 2024 challenges: Higher integration costs ($11 million for strategic alternatives), but 2025 expects normalization of M&A expenses. Debt-to-EBITDA ratio improved to 3.7x, targeting mid-3s by 2025.

**【Q&A Key Themes】**
- **Regulatory Environment**: <1% revenue exposure to site neutrality legislation, with potential upside from shifting cases from hospitals. <5% revenue from Medicaid/state programs.
- **M&A Activity**: 2024 deployed $400 million, 2025 guidance $200 million. Early 2025 acquisitions ($53 million) in California/Texas at 8x EBITDA multiple.
- **Cost Management**: SWB (salaries + benefits) as % of revenue stable, 2024 integration costs peaking at $100 million but expected to decline in 2025.
- **Debt & Liquidity**: No capital market needs for next 5 years; 2025 free cash flow growth driven by EBITDA expansion and reduced transaction costs.

Surgery Partners (SGRY)-3 Mar 25-2024 Q4 Earnings call transcript

Surgery Partners (SGRY)-12 Nov 24-2024 Q3 Earnings call transcript

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

Surgery Partners (SGRY)-7 May 24-2024 Q1 Earnings call transcript

- **Record Growth**: 2023 EBITDA up 15% to $438M, net revenue $2.74B (+8%), with 707K cases (+4%). 
- **Margin Expansion**: 2023 margin 16% (+100bps), 2024 guided for >$495M EBITDA (+13%). 
- **Strategic M&A**: $165M deployed in 15 deals at <8x EBITDA, 2024 target $200M+. 
- **ASC Growth**: 50% increase in total joint procedures, 70% facilities performing orthopedics. 
- **Free Cash Flow**: 2023 $110M (vs. negative prior), 2024 guided $140-160M. 
- **Robotics Expansion**: 50+ robots deployed, targeting ASC robotics for shoulders/ankles. 


**【CEO Summary Section】**
- **2023 Performance Highlights**: Adjusted EBITDA grew 15% to $438 million, with 707,000 cases (+4%) and net revenue of $2.74 billion (+8%). Same-facility revenue rose 11% (4% cases, 7% rate), driven by higher acuity and managed care rate improvements. 
- **Strategic Initiatives**: Deployed $165 million in M&A at <8x EBITDA, closed 15 transactions, and added 700 new physician positions with 27% higher net revenue per case. Total joint procedures in ASCs increased 50%, with 70% of facilities performing orthopedics and 35% total joints. 
- **2024 Outlook**: Guidance for >$495 million EBITDA (+13%) and >$3 billion revenue, with focus on ASC expansion, de novo openings, and partnerships like Parkview Health. 

**【CFO Financial Commentary】**
- **Q4 2023 Results**: Adjusted EBITDA of $142.3 million (+17.8%), margin 19.4% (vs. 17.2% in 2022). Free cash flow turned positive at $110 million for the year, with 2024 guidance of $140-160 million. 
- **Balance Sheet**: Refinanced $1.9 billion term loan to 2030, reducing leverage to 3.5x. Deployed $200+ million annually in M&A, with $60 million closed in Q1 2024. 
- **Cash Flow Dynamics**: 2023 free cash flow impacted by delayed collections ($30 million) and state programs, expected to normalize in 2024. 

**【Q&A Highlights】**
- **New Joint Procedures**: Ankle and shoulder removal from inpatient-only list to drive ASC growth, with 50% of ASCs performing total joints. 
- **Margin Expansion**: 2023 margin +100bps to 16%, 2024 guided for further expansion via rate growth, cost control, and minority partnerships. 
- **Health System Partnerships**: 4 partnerships (e.g., Parkview) targeting double-digit ASCs over 3-5 years, with Intermountain de novo openings. 
- **Case Growth**: 2024 core case growth 2-3%, with upside from higher acuity and new partnerships. 
- **Robotics**: 50+ robots deployed, ROI-driven investments in ASC robotics for shoulders/ankles. 


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