Surgery Partners, Inc. (NASDAQ:SGRY) ("Surgery Partners" or
the "Company"), a leading provider of surgical services, today
announced results for the fourth quarter and full year
ended December 31, 2016.
Highlights for the Fourth Quarter of 2016:
- Revenues increased 16.2% to $306.0 million over fourth quarter
2015
- Same-facility revenues increased 10.8% over fourth quarter 2015
to $304.5 million
- Net income attributable to Surgery Partners increased to $16.9
million from $16.7 million in the fourth quarter 2015
- Adjusted EBITDA increased 14.4% over fourth quarter 2015 to
$50.1 million
- Diluted net income per share of $0.35 for both quarterly
periods.
Highlights for 2016:
- Revenues increased 19.3% to $1.1 billion over 2015
- Same-facility revenues increased 12.2% over 2015 to $1.1
billion
- Net income attributable to Surgery Partners increased to $9.5
million from $1.4 million in 2015
- Adjusted EBITDA increased 13.4% over 2015 to $179.3
million
- Diluted net income per share of $0.20 compared to $0.04 for
2015.
“I am pleased to report another quarter of double-digit,
same-facility revenue growth for Surgery Partners,” said Mike
Doyle, Chief Executive Officer. “In our first full year as a public
company, Surgery Partners has expanded significantly, adding two
integrated physician practices with three ambulatory surgery
centers, three standalone ambulatory surgery centers and eight
physician practices. Our facilities provided services to more than
600,000 patients during 2016, and I would like to thank our
physician partners and dedicated staff for consistently carrying
out their mission of providing high quality care to our
patients.
“With a network of more than 150 locations across multiple
service lines, Surgery Partners remains well positioned to continue
providing integrated healthcare solutions for patients, physicians
and payors throughout the country.”
Fourth Quarter 2016 Results
Total revenues for the fourth quarter of 2016 increased 16.2% to
$306.0 million from $263.3 million for the fourth quarter of 2015.
Same-facility revenues for the fourth quarter of 2016 increased
10.8% from the same period last year with same-facility cases
driving 3.7% of the increase with one less day compared to the same
quarter last year.
For the fourth quarter of 2016, the Company’s Adjusted EBITDA
increased 14.4% to $50.1 million compared to $43.8 million for the
same period last year. The quarter included a negative impact of
approximately $2.0 million of employee healthcare costs above
normal seasonal increases.
During the fourth quarter of 2016, the Company added an
integrated physician practice and an anesthesia provider, as well
as, two independent physician practices, all of which were in
existing markets.
Full Year 2016 Results
Total revenues for 2016 increased 19.3% to $1.1 billion from
$959.9 million for 2015. Same-facility revenues for 2016 increased
12.2% from 2015 with same-facility cases driving 6.6% of the
increase.
For the year 2016, the Company’s Adjusted EBITDA increased 13.4%
to $179.3 million compared to $158.1 million for 2015.
Liquidity
Surgery Partners had cash and cash equivalents of $69.7 million
at December 31, 2016 and availability of approximately $62
million under its revolving credit facility. Net operating cash
flow, including operating cash flow less distributions to
non-controlling interests, was $16.0 million for the fourth quarter
of 2016 or $18.0 million on an adjusted basis, excluding merger
transaction and integration costs. The Company’s ratio of total net
debt to EBITDA, as calculated under the Company’s credit agreement,
at the end of the fourth quarter of 2016, was 6.3x.
Guidance
The Company's full year 2017 guidance is as follows:
- Revenues growth in the range of 9% to 11% over 2016.
- EBITDA growth in the range of 10% to 15% over 2016.
This guidance reflects anticipated growth in existing locations,
the full-year contribution of businesses acquired during 2016 and
the ramp up of physician practices added during 2016. It assumes
modest contribution from acquisitions in 2017.
Mike Doyle commented, “After a period of rapid expansion, we are
targeting 10% to 15% EBITDA growth for 2017. We believe
Surgery Partners is well positioned for continued growth of its
integrated services model of surgical care, physician services and
other related services in existing and new markets.”
Conference Call Information
Surgery Partners will hold a conference call tomorrow, March 10,
2017 at 8:30 a.m. (Eastern Time). The conference call can be
accessed live over the phone by dialing 1-877-705-6003, or for
international callers, 1-201-493-6725. A replay will be available
two hours after the call and can be accessed by dialing
1-844-512-2921 or for international callers, 1-412-317-6671. The
passcode for the live call and the replay is 13654468. The replay
will be available until March 24, 2017.
Interested investors and other parties may also listen to a
simultaneous webcast of the conference call by logging onto the
Investor Relations section of the Company's website at
www.surgerypartners.com. The on-line replay will remain available
for a limited time beginning immediately following the call.
To learn more about Surgery Partners, please visit the company's
website at www.surgerypartners.com. Surgery Partners uses its
website as a channel of distribution for material Company
information. Financial and other material information regarding
Surgery Partners is routinely posted on the Company's website and
is readily accessible.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements, which have been included in reliance of
the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995, involve risks and uncertainties and assumptions
relating to our operations, financial condition, business,
prospects, growth strategy and liquidity, which may cause our
actual results to differ materially from those projected by such
forward-looking statements, and the Company cannot give assurances
that such statements will prove to be correct. You can identify
forward-looking statements because they do not relate strictly to
historical or current facts. These statements may include words
such as “aim,” “anticipate,” “believe,” “estimate,” “expect,”
“forecast,” “outlook,” “potential,” “project,” “projection,”
“plan,” “intend,” “seek,” “may,” “could,” “would,” “will,”
“should,” “can,” “can have,” “likely,” the negatives thereof and
other words and terms of similar meaning in connection with any
discussion of the timing or nature of future operating or financial
performance or other events.
The forward-looking statements appear in a number of places
throughout this press release and include statements regarding our
intentions, beliefs or current expectations concerning, among other
things, our results of operations, financial condition, liquidity,
prospects, growth, strategies and the industry in which we operate.
All forward-looking statements are subject to risks and
uncertainties, including but not limited to those risks and
uncertainties described in “Risk Factors” in our soon to be filed
Annual Report on form 10-K for the year ended December 31, 2016
that may cause actual results to differ materially from those that
we expected.
The forward-looking statements made in this press release are
made only as of the date of the hereof. Except as required by law,
we undertake no obligation to update any forward-looking statement,
whether as a result of new information or otherwise. More
information about potential factors that could affect our business
and financial results is included in our filings with
the Securities and Exchange Commission.
Use of Non-GAAP Financial Measures
In addition to the results prepared in accordance with generally
accepted accounting principles in the United
States ("GAAP") provided throughout this press release,
Surgery Partners has presented the following non-GAAP financial
measures: Adjusted EBITDA and adjusted net income per share, which
exclude various items detailed in the attached "Reconciliation of
Non-GAAP Financial Measures".
These non-GAAP financial measures are not intended to replace
financial performance measures determined in accordance with GAAP.
Rather, they are presented as supplemental measures of the
Company's performance that management believes may enhance the
evaluation of the Company's ongoing operating results. These
non-GAAP financial measures are not presented in accordance with
GAAP, and the Company’s computation of these non-GAAP financial
measures may vary from those used by other companies. These
measures have limitations as an analytical tool, and should not be
considered in isolation or as a substitute or alternative to net
income or loss, operating income or loss, cash flows from operating
activities, total indebtedness, earnings per share or any other
measures of operating performance, liquidity or indebtedness
derived in accordance with GAAP.
About Surgery Partners
Headquartered in Nashville, Tennessee, Surgery Partners is a
leading healthcare services company with a differentiated
outpatient delivery model focused on providing high quality, cost
effective solutions for surgical and related ancillary care in
support of both patients and physicians. Founded in 2004, Surgery
Partners is one of the largest and fastest growing outpatient
surgical and ancillary services company in the country, with more
than 150 locations in 29 states, including surgical facilities,
physician practices and urgent care facilities.
SURGERY PARTNERS,
INC.SELECTED CONSOLIDATED FINANCIAL
DATA(Amounts in thousands, except shares and per
share amounts) |
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
306,001 |
|
|
$ |
263,322 |
|
|
$ |
1,145,438 |
|
|
$ |
959,891 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Salaries
and benefits |
|
90,774 |
|
|
73,280 |
|
|
357,175 |
|
|
261,685 |
|
Supplies |
|
72,755 |
|
|
65,533 |
|
|
269,239 |
|
|
242,083 |
|
Professional and medical fees |
|
20,372 |
|
|
18,439 |
|
|
81,185 |
|
|
66,583 |
|
Lease
expense |
|
13,435 |
|
|
11,581 |
|
|
52,147 |
|
|
44,848 |
|
Other
operating expenses |
|
16,911 |
|
|
14,341 |
|
|
61,450 |
|
|
54,127 |
|
Cost of
revenues |
|
214,247 |
|
|
183,174 |
|
|
821,196 |
|
|
669,326 |
|
General
and administrative expenses (includes contingent acquisition
compensation expense of $5,092 for the year ended December 31,
2016) |
|
18,041 |
|
|
21,048 |
|
|
60,246 |
|
|
55,992 |
|
Depreciation and amortization |
|
10,567 |
|
|
9,007 |
|
|
39,551 |
|
|
34,545 |
|
Provision
for doubtful accounts |
|
8,281 |
|
|
7,529 |
|
|
24,212 |
|
|
23,578 |
|
Income
from equity investments |
|
(1,757 |
) |
|
(911 |
) |
|
(4,764 |
) |
|
(3,777 |
) |
Loss
(gain) on disposal or impairment of long-lived assets, net |
|
658 |
|
|
(575 |
) |
|
2,355 |
|
|
(2,097 |
) |
Loss on
debt refinancing |
|
— |
|
|
16,102 |
|
|
11,876 |
|
|
16,102 |
|
Merger
transaction and integration costs |
|
2,377 |
|
|
3,023 |
|
|
8,738 |
|
|
17,920 |
|
Gain on
litigation settlement |
|
(14,101 |
) |
|
— |
|
|
(14,101 |
) |
|
— |
|
Termination of management agreement and IPO costs |
|
— |
|
|
5,834 |
|
|
— |
|
|
5,834 |
|
Electronic health records incentive income |
|
(677 |
) |
|
(1,868 |
) |
|
(408 |
) |
|
(1,761 |
) |
Other
(income) expense |
|
(42 |
) |
|
(169 |
) |
|
55 |
|
|
(525 |
) |
Total
operating expenses |
|
237,594 |
|
|
242,194 |
|
|
948,956 |
|
|
815,137 |
|
Operating
income |
|
68,407 |
|
|
21,128 |
|
|
196,482 |
|
|
144,754 |
|
Tax receivable
agreement expense |
|
— |
|
|
(119,911 |
) |
|
(3,733 |
) |
|
(119,911 |
) |
Interest expense,
net |
|
(25,708 |
) |
|
(22,473 |
) |
|
(100,571 |
) |
|
(100,980 |
) |
Income
(loss) before income taxes |
|
42,699 |
|
|
(121,256 |
) |
|
92,178 |
|
|
(76,137 |
) |
Income tax expense
(benefit) |
|
4,599 |
|
|
(157,350 |
) |
|
7,095 |
|
|
(148,982 |
) |
Net
income |
|
38,100 |
|
|
36,094 |
|
|
85,083 |
|
|
72,845 |
|
Less: Net income
attributable to non-controlling interests |
|
(21,238 |
) |
|
(19,355 |
) |
|
(75,630 |
) |
|
(71,416 |
) |
Net
income attributable to Surgery Partners, Inc. |
|
$ |
16,862 |
|
|
$ |
16,739 |
|
|
$ |
9,453 |
|
|
$ |
1,429 |
|
|
|
|
|
|
|
|
|
|
Net income per share
attributable to common stockholders |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.35 |
|
|
$ |
0.35 |
|
|
$ |
0.20 |
|
|
$ |
0.04 |
|
Diluted |
|
$ |
0.35 |
|
|
$ |
0.35 |
|
|
$ |
0.20 |
|
|
$ |
0.04 |
|
Weighted average common
shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
48,019,652 |
|
|
47,971,834 |
|
|
48,018,944 |
|
|
36,066,233 |
|
Diluted |
|
48,217,454 |
|
|
48,161,550 |
|
|
48,190,738 |
|
|
37,464,387 |
|
SURGERY PARTNERS, INC.Selected
Financial and Operating Data(Amounts in thousands,
except shares and per share amounts) |
|
|
|
|
|
December 31, 2016 |
|
December 31, 2015 |
|
|
|
|
Balance Sheet
Data (at period end): |
|
|
|
Cash and cash
equivalents |
$ |
69,699 |
|
|
$ |
57,933 |
|
Total current
assets |
361,955 |
|
|
310,957 |
|
Total assets |
2,304,958 |
|
|
2,104,443 |
|
|
|
|
|
Current maturities of
long-term debt |
27,822 |
|
|
27,247 |
|
Total current
liabilities |
186,725 |
|
|
181,289 |
|
Long-term debt, less
current maturities |
1,414,421 |
|
|
1,228,112 |
|
Total liabilities |
1,799,763 |
|
|
1,623,077 |
|
|
|
|
|
Total Surgery Partners,
Inc. stockholders' equity (deficit) |
9,677 |
|
|
(4,028 |
) |
Non-controlling
interests--non-redeemable |
314,997 |
|
|
301,955 |
|
Total stockholders'
equity |
324,674 |
|
|
297,927 |
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
Cash Flows
Data: |
|
|
|
|
|
|
|
Net cash provided by
(used in): |
|
|
|
|
|
|
|
Operating
activities |
$ |
32,376 |
|
|
$ |
24,189 |
|
|
$ |
125,239 |
|
|
$ |
84,481 |
|
Investing
activities |
(30,354 |
) |
|
(95,358 |
) |
|
(184,749 |
) |
|
(134,842 |
) |
Capital
expenditures |
(10,732 |
) |
|
(15,324 |
) |
|
(39,109 |
) |
|
(33,439 |
) |
Investments in new businesses |
(20,387 |
) |
|
(80,034 |
) |
|
(146,405 |
) |
|
(112,596 |
) |
Financing
activities |
12,468 |
|
|
72,254 |
|
|
71,276 |
|
|
33,374 |
|
Distributions to non-controlling interests |
(16,335 |
) |
|
(18,525 |
) |
|
(65,778 |
) |
|
(69,720 |
) |
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Other
Data: |
|
|
|
|
|
|
|
Number of surgical
facilities as of the end of the period |
104 |
|
|
101 |
|
|
104 |
|
|
101 |
|
Number of consolidated
surgical facilities as of the end of the period |
94 |
|
|
90 |
|
|
94 |
|
|
90 |
|
Cases |
113,234 |
|
|
102,689 |
|
|
428,742 |
|
|
389,650 |
|
Revenues per case |
$ |
2,702 |
|
|
$ |
2,564 |
|
|
$ |
2,672 |
|
|
$ |
2,463 |
|
Adjusted EBITDA |
$ |
50,058 |
|
|
$ |
43,754 |
|
|
$ |
179,263 |
|
|
$ |
158,053 |
|
Adjusted EBITDA as a %
of revenues |
16.4 |
% |
|
16.6 |
% |
|
15.7 |
% |
|
16.5 |
% |
Adjusted EPS-
Basic |
$ |
0.19 |
|
|
$ |
0.58 |
|
|
$ |
0.67 |
|
|
$ |
0.82 |
|
Adjusted EPS-
Diluted |
$ |
0.19 |
|
|
$ |
0.57 |
|
|
$ |
0.66 |
|
|
$ |
0.79 |
|
SURGERY PARTNERS,
INC.Supplemental
Information(Unaudited, in thousands, except cases,
per case and growth rates) |
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Same-facility Information(1): |
|
|
|
|
|
|
|
Cases |
112,497 |
|
|
108,431 |
|
|
427,537 |
|
|
401,134 |
|
Case
growth |
3.7 |
% |
|
|
N/A |
|
|
6.6 |
% |
|
|
N/A |
|
Revenues
per case |
$ |
2,706 |
|
|
$ |
2,535 |
|
|
$ |
2,611 |
|
|
$ |
2,481 |
|
Revenues
per case growth |
6.7 |
% |
|
|
N/A |
|
|
5.2 |
% |
|
|
N/A |
|
(1) Same-facility revenues include revenues from our
consolidated and non-consolidated surgical facilities (excluding
facilities acquired in new markets or divested during the current
and prior periods) along with the revenues from our ancillary
services comprised of a diagnostic laboratory, multi-specialty
physician practices, urgent care facilities, anesthesia services,
optical services and specialty pharmacy services that complement
our surgical facilities in our existing markets.
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Segment Net
Revenues: |
|
|
|
|
|
|
|
Surgical Facility
Services |
$ |
275,849 |
|
|
$ |
240,244 |
|
|
$ |
1,042,097 |
|
|
$ |
884,144 |
|
Ancillary Services |
27,869 |
|
|
19,618 |
|
|
90,836 |
|
|
61,175 |
|
Optical Services |
2,283 |
|
|
3,460 |
|
|
12,505 |
|
|
14,572 |
|
Total
Revenues |
$ |
306,001 |
|
|
$ |
263,322 |
|
|
$ |
1,145,438 |
|
|
$ |
959,891 |
|
During the second quarter of 2016, the Company reassessed its
segment reporting and realigned the disclosures to reflect the
review and decision making made by the Chief Operating Decision
Maker (“CODM”). The purpose of these changes was to replace
operating income with adjusted EBITDA as the primary profit/loss
metric reviewed by the CODM in making key business decisions and on
allocation of resources. The Company has revised the segment
disclosures below to replace operating income with adjusted EBITDA
and has provided a reconciliation from adjusted EBITDA back to net
income in the reported consolidated financial information. These
changes had no effect on the Company’s reportable segments, which
are presented consistent with prior periods.
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Segment
Adjusted EBITDA: |
|
|
|
|
|
|
|
Surgical facility
services |
$ |
60,900 |
|
|
$ |
50,776 |
|
|
$ |
214,218 |
|
|
$ |
180,113 |
|
Ancillary services |
3,544 |
|
|
5,458 |
|
|
12,685 |
|
|
18,715 |
|
Optical services |
304 |
|
|
785 |
|
|
3,308 |
|
|
3,905 |
|
Total
segment adjusted EBITDA (2) |
$ |
64,748 |
|
|
$ |
57,019 |
|
|
$ |
230,211 |
|
|
$ |
202,733 |
|
|
|
|
|
|
|
|
|
General and
administrative expenses |
$ |
(18,041 |
) |
|
$ |
(21,048 |
) |
|
$ |
(60,246 |
) |
|
$ |
(55,992 |
) |
Non-cash stock
compensation expense |
695 |
|
|
6,223 |
|
|
2,021 |
|
|
7,502 |
|
Contingent acquisition
compensation expense |
2,032 |
|
|
— |
|
|
5,092 |
|
|
— |
|
Management fee (3) |
— |
|
|
— |
|
|
— |
|
|
2,250 |
|
Acquisition related
costs |
624 |
|
|
1,560 |
|
|
2,185 |
|
|
1,560 |
|
|
|
|
|
|
|
|
|
Total adjusted EBITDA
(2) |
$ |
50,058 |
|
|
$ |
43,754 |
|
|
$ |
179,263 |
|
|
$ |
158,053 |
|
|
|
|
|
|
|
|
|
Net income attributable
to non-controlling interests |
$ |
21,238 |
|
|
$ |
19,355 |
|
|
$ |
75,630 |
|
|
$ |
71,416 |
|
Depreciation and
amortization |
(10,567 |
) |
|
(9,007 |
) |
|
(39,551 |
) |
|
(34,545 |
) |
Interest and other
expense, net |
(25,708 |
) |
|
(22,473 |
) |
|
(100,571 |
) |
|
(100,980 |
) |
Income tax (expense)
benefit |
(4,599 |
) |
|
157,350 |
|
|
(7,095 |
) |
|
148,982 |
|
Non-cash stock
compensation expense |
(695 |
) |
|
(6,223 |
) |
|
(2,021 |
) |
|
(7,502 |
) |
Contingent acquisition
compensation expense |
(2,032 |
) |
|
— |
|
|
(5,092 |
) |
|
— |
|
Termination of
management agreement and IPO costs |
— |
|
|
(5,834 |
) |
|
— |
|
|
(5,834 |
) |
Management fee (3) |
— |
|
|
— |
|
|
— |
|
|
(2,250 |
) |
Merger transaction,
integration and practice acquisition costs (4) |
(3,038 |
) |
|
(5,390 |
) |
|
(11,617 |
) |
|
(20,579 |
) |
Gain on litigation
settlement |
14,101 |
|
|
|
— |
|
|
14,101 |
|
|
— |
|
(Loss) gain on disposal
or impairment of long-lived assets, net |
(658 |
) |
|
575 |
|
|
(2,355 |
) |
|
2,097 |
|
Tax receivable
agreement expense |
— |
|
|
(119,911 |
) |
|
(3,733 |
) |
|
(119,911 |
) |
Loss on debt
refinancing |
— |
|
|
(16,102 |
) |
|
(11,876 |
) |
|
(16,102 |
) |
Total net
income |
$ |
38,100 |
|
|
$ |
36,094 |
|
|
$ |
85,083 |
|
|
$ |
72,845 |
|
(2) The above table reconciles adjusted EBITDA by segment to net
income as reflected in the consolidated statements of
operations.
When we use the term “Adjusted EBITDA,” it is referring to net
income minus (a) net income attributable to non-controlling
interests plus (b) income tax (benefit) expense, (c) interest
and other expense, net, (d) depreciation and amortization, (e)
termination of management agreement and IPO costs, (f) management
fee, (g) merger transaction, integration and practice acquisition
costs, (h) non-cash stock compensation expense, (i) loss on debt
refinancing, (j) contingent acquisition compensation expense, (k)
tax receivable agreement expense, (l) gain on litigation settlement
and (m) (loss) gain on disposal or impairment of long-lived assets.
Non-controlling interests represent the interests of third parties,
such as physicians, and in some cases, healthcare systems that own
an interest in surgical facilities that we consolidate for
financial reporting purposes. Our operating strategy is to apply a
market-based approach in structuring its partnerships with
individual market dynamics driving the structure. We believe that
it is helpful to investors to present Adjusted EBITDA as defined
above because it excludes the portion of net income attributable to
these third-party interests and clarifies for investors our portion
of Adjusted EBITDA generated by its surgical facilities and other
operations.
We use Adjusted EBITDA as a measure of liquidity. It is included
because we believe that it provides investors with additional
information about its ability to incur and service debt and make
capital expenditures.
Adjusted EBITDA is not a measurement of financial performance or
liquidity under GAAP. It should not be considered in
isolation or as a substitute for net income, operating income, cash
flows from operating, investing or financing activities, or any
other measure calculated in accordance with generally accepted
accounting principles. The items excluded from Adjusted
EBITDA are significant components in understanding and evaluating
financial performance and liquidity. The Company's calculation of
Adjusted EBITDA may not be comparable to similarly titled measures
reported by other companies.
(3) Fee payable pursuant the Management and Investment
Advisory Services Agreement between the Company and Bayside
Capital, Inc., which was terminated in connection with our IPO.
(4) This amount includes merger transaction and
integration costs of $2.4 million and $8.7 million for the three
and twelve months ended December 31, 2016, respectively, and
practice acquisition costs of $661,000 and $2.9 million for the
three and twelve months ended December 31, 2016,
respectively.
This amount includes merger transaction and integration costs of
$3.0 million and $17.9 million for the three and twelve months
ended December 31, 2015, respectively, and practice
acquisition costs of $2.4 million and $2.7 million for the three
and twelve months ended December 31, 2015, respectively.
SURGERY PARTNERS,
INC.Reconciliation of Non-GAAP Financial
Measures(Amounts in thousands, except shares and
per share amounts)
From time to time, the Company incurs certain non-recurring
gains or losses that are normally nonoperational in nature and that
it does not consider relevant in assessing its ongoing operating
performance. When significant, Surgery Partners’ management and
Board of Directors typically exclude these gains or losses when
evaluating the Company’s operating performance and in certain
instances when evaluating performance for incentive compensation
purposes. Additionally, the Company believes that certain investors
and equity analysts exclude these or similar items when evaluating
the Company’s current or future operating performance and in making
informed investment decisions regarding the Company. Accordingly,
the Company provides adjusted net income per share attributable to
Surgery Partners, Inc. stockholders as a supplement to its
comparable GAAP measure of net income per share attributable to
Surgery Partners, Inc. Adjusted net income per share attributable
to Surgery Partners, Inc. stockholders should not be considered a
measure of financial performance under GAAP, and the items excluded
from adjusted net income per share attributable to Surgery
Partners, Inc. stockholders are significant components in
understanding and assessing financial performance. Adjusted net
income per share attributable to Surgery Partners, Inc.
stockholders should not be considered in isolation or as an
alternative to net income per share attributable to Surgery
Partners, Inc. stockholders as presented in the consolidated
financial statements.
The following table reconciles net income as reflected in the
consolidated statements of operations to adjusted net income used
to calculate adjusted net income per share attributable to Surgery
Partners, Inc. stockholders:
|
|
Three Months EndedDecember
31, |
|
Year Ended December 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Consolidated
Statements of Operations Data: |
|
|
|
|
|
|
|
|
Net
Income |
|
$ |
38,100 |
|
|
$ |
36,094 |
|
|
$ |
85,083 |
|
|
$ |
72,845 |
|
Less: |
|
|
|
|
|
|
|
|
Net
income attributable to non-controlling interests |
|
21,238 |
|
|
19,355 |
|
|
75,630 |
|
|
71,416 |
|
Plus: |
|
|
|
|
|
|
|
|
Management fee (5) |
|
— |
|
|
— |
|
|
— |
|
|
2,250 |
|
Merger
transaction, integration and practice acquisition costs |
|
3,038 |
|
|
5,390 |
|
|
11,617 |
|
|
20,579 |
|
Non-cash
stock compensation expense |
|
695 |
|
|
6,223 |
|
|
2,021 |
|
|
7,502 |
|
Contingent acquisition compensation expense |
|
2,032 |
|
|
— |
|
|
5,092 |
|
|
— |
|
Loss on
debt refinancing |
|
— |
|
|
16,102 |
|
|
11,876 |
|
|
16,102 |
|
Tax
receivable agreement expense |
|
— |
|
|
119,911 |
|
|
3,733 |
|
|
119,911 |
|
Tax
valuation allowance release |
|
— |
|
|
(136,201 |
) |
|
— |
|
|
(136,201 |
) |
Gain on
litigation settlement |
|
(14,101 |
) |
|
— |
|
|
(14,101 |
) |
|
— |
|
Loss
(gain) on disposal or impairment of long-lived assets, net |
|
658 |
|
|
(575 |
) |
|
2,355 |
|
|
(2,097 |
) |
Adjusted net
income |
|
$ |
9,184 |
|
|
$ |
27,589 |
|
|
$ |
32,046 |
|
|
$ |
29,475 |
|
|
|
|
|
|
|
|
|
|
Adjusted net
income per share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.19 |
|
|
$ |
0.58 |
|
|
$ |
0.67 |
|
|
$ |
0.82 |
|
Diluted |
|
$ |
0.19 |
|
|
$ |
0.57 |
|
|
$ |
0.66 |
|
|
$ |
0.79 |
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
48,019,652 |
|
|
47,971,834 |
|
|
48,018,944 |
|
|
36,066,233 |
|
Diluted |
|
48,217,454 |
|
|
48,161,550 |
|
|
48,190,738 |
|
|
37,464,387 |
|
(5) Fee payable pursuant the Management and Investment Advisory
Services Agreement between the Company and Bayside Capital, Inc.,
which was terminated in connection with our IPO.
Contact
Teresa Sparks, CFO
Surgery Partners, Inc.
(615) 234-8940
IR@surgerypartners.com
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