Surgery Partners, Inc. (NASDAQ:SGRY) ("Surgery Partners" or
the "Company"), a leading provider of surgical services, today
announced results for the second quarter ended June 30,
2017.
- Revenues decreased 0.5% compared to second quarter 2016 to
$288.4 million
- Same facility revenue increased 2.0% over second quarter 2016
to $296.5 million
- Net loss attributable to Surgery Partners was $4.5 million,
compared to net income of $2.1 million in the second quarter
2016
- Adjusted EBITDA was $37.1 million, compared to $46.0 million in
the second quarter 2016
- Diluted EPS of $(0.09) per share compared to $0.04 per share in
the second quarter 2016
“We believe that the shift to high quality, outpatient care
remains a secular growth driver for Surgery Partners, and our model
of partnering with physicians offers an attractive solution for
patients and payors,” said Mike Doyle, Chief Executive Officer.
“However, like many of our peers, Surgery Partners experienced
slower than normal utilization and adverse payor mix during the
second quarter of 2017.”
“While we were disappointed with our overall results for the
quarter, we were able to continue our record of same facility
revenue growth and expansion of higher acuity cases. Unfortunately,
the broader industry trend of slower volumes and a shift to less
favorable payors created challenges to achieving our financial
goals this period. Our performance was hindered by three factors:
the slowing of patient volumes, an adverse payor mix and slow
improvement of our integrated physician practice acquisition. We
believe we will see sequential improvement of these factors through
the remainder of the year.”
“In addition, as discussed on previous calls, total revenue
reflects the anticipated lapse of a break-even anesthesia contract
to an unaffiliated provider. The contract was neutral to EBITDA,
but dilutive to revenue by approximately $8.8 million in the second
quarter.”
“We remain excited about the prospects for our business and are
pleased that the previously announced acquisition of National
Surgical Healthcare is progressing as planned. We have secured
regulatory approval, finalized financing and expect to close on the
transaction during the third quarter. As we continue to build out
our network of services, I would like to thank our physicians and
employees for their continued dedication to delivering high quality
health care.”
As of June 30, 2017, the Company owned or operated 103
surgical facilities primarily in partnership with physicians and,
on a select basis, physicians and health systems, in addition to a
network of 59 physician practices.
Second Quarter 2017 Results
Total revenues for the second quarter of 2017 decreased 0.5% to
$288.4 million from $289.7 million for the second quarter of 2016,
which included approximately $8.8 million of revenue from the
anesthesia contract. Excluding this contract from both periods, we
would have achieved revenue growth of 2.7%. Same facility revenues
for the second quarter of 2017 increased 2.0% to $296.5 million
from $290.7 million in the same period last year. Same facility
revenue per case increased 1.5% and same facility cases increased
0.4%.
For the second quarter of 2017, the Company’s net loss
attributable to Surgery Partners was $4.5 million compared to net
income of $2.1 million for the same period last year. For the
second quarter of 2017, the Company's Adjusted EBITDA was $37.1
million compared to Adjusted EBITDA of $46.0 million for the same
period last year.
Year to Date 2017 Results
Total revenues year to date 2017 increased 3.2% to $574.5
million from $556.8 million for the same period last year, which
included approximately $17.8 million of revenue from the anesthesia
contract. Excluding this contract from both periods, we would have
achieved revenue growth of 6.6%. Same facility revenues for year to
date 2017 increased 5.0% to $581.4 million from $553.7 million in
the same period last year. Results were driven by increased same
facility revenue per case of 3.7% and same facility case growth of
1.3%.
For year to date 2017, the Company’s net loss attributable to
Surgery Partners was $7.2 million compared to a net loss of $5.1
million for the same period last year. For year to date 2017, the
Company's Adjusted EBITDA was $77.2 million compared to Adjusted
EBITDA of $84.5 million for the same period last year.
Liquidity
Surgery Partners had cash and cash equivalents of $57.0 million
at June 30, 2017 and availability of $55.9 million under its
revolving credit facility. Net operating cash flow, including
operating cash flow less distributions to non-controlling
interests, was $4.0 million for the second quarter of 2017, which
reflects approximately $35.0 million of cash interest payments
which were not reflected in the prior quarter, along with $2.9
million of merger transaction and integration related costs. The
Company’s ratio of total debt to EBITDA at the end of the second
quarter of 2017, as calculated under the Company’s credit
agreement, was 6.9x.
Full Year 2017 Guidance
For 2017, the Company is modifying the guidance provided on our
conference call in March of this year to reflect the recent
softness in healthcare utilization and payor mix shift experienced
during the quarter. On a standalone basis, the Company now
anticipates revenue in the range of $1.18 billion to $1.20 billion
and Adjusted EBITDA in the range of $174.0 million to $181.0
million for the full year 2017. Including the partial year impact
of NSH, revenue would be in the range of $1.34 billion to $1.36
billion and Adjusted EBITDA in the range of $199.0 million to
$207.0 million. This new guidance does not incorporate any smaller,
one-off acquisitions this year and assumes that we experience a
return to higher demand in the second half of the year, but not to
the extent that we forecast previously.
Conference Call Information
Surgery Partners will hold its conference call tomorrow, August
9, 2017 at 8:30 a.m. (Eastern Time). The conference call can be
accessed live over the phone by dialing 1-877-407-0792, or for
international callers, 1-201-689-8263. 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 13667317. The replay
will be available until August 23, 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
Quarterly Report on form 10-Q for the three months ended June 30,
2017 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: EBITDA and Adjusted EBITDA, 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 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 surgical
services businesses in the country, with more than 150 locations in
29 states, including ambulatory surgery centers, surgical
hospitals, a diagnostic laboratory, multi-specialty physician
practices and urgent care facilities.
SURGERY PARTNERS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(Amounts in
thousands, except shares and per share
amounts)(Unaudited) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
288,353 |
|
|
$ |
289,681 |
|
|
$ |
574,536 |
|
|
$ |
556,755 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Salaries
and benefits |
|
90,022 |
|
|
93,791 |
|
|
179,909 |
|
|
180,677 |
|
Supplies |
|
74,084 |
|
|
66,915 |
|
|
145,244 |
|
|
130,577 |
|
Professional and medical fees |
|
22,577 |
|
|
20,304 |
|
|
43,702 |
|
|
39,957 |
|
Lease
expense |
|
13,674 |
|
|
13,074 |
|
|
27,300 |
|
|
25,508 |
|
Other
operating expenses |
|
16,095 |
|
|
14,768 |
|
|
32,245 |
|
|
28,836 |
|
Cost of
revenues |
|
216,452 |
|
|
208,852 |
|
|
428,400 |
|
|
405,555 |
|
General
and administrative expenses(1) |
|
18,655 |
|
|
15,023 |
|
|
34,196 |
|
|
27,220 |
|
Depreciation and amortization |
|
11,417 |
|
|
9,702 |
|
|
22,525 |
|
|
19,271 |
|
Provision
for doubtful accounts |
|
5,788 |
|
|
3,544 |
|
|
11,463 |
|
|
7,417 |
|
Income
from equity investments |
|
(1,052 |
) |
|
(1,082 |
) |
|
(2,252 |
) |
|
(1,840 |
) |
Loss on
disposal or impairment of long-lived assets, net |
|
405 |
|
|
1,331 |
|
|
1,601 |
|
|
1,125 |
|
Gain on
litigation settlement |
|
(3,794 |
) |
|
— |
|
|
(3,794 |
) |
|
— |
|
Loss on
debt refinancing |
|
— |
|
|
— |
|
|
— |
|
|
8,281 |
|
Merger
transaction and integration costs |
|
2,904 |
|
|
1,325 |
|
|
3,241 |
|
|
4,497 |
|
Electronic health records incentive income |
|
(161 |
) |
|
(2 |
) |
|
(302 |
) |
|
(95 |
) |
Other
expense (income) |
|
— |
|
|
40 |
|
|
(2 |
) |
|
97 |
|
Total
operating expenses |
|
250,614 |
|
|
238,733 |
|
|
495,076 |
|
|
471,528 |
|
Operating
income |
|
37,739 |
|
|
50,948 |
|
|
79,460 |
|
|
85,227 |
|
Interest expense,
net |
|
(25,600 |
) |
|
(26,235 |
) |
|
(50,782 |
) |
|
(48,388 |
) |
Income
before income taxes |
|
12,139 |
|
|
24,713 |
|
|
28,678 |
|
|
36,839 |
|
Income tax expense |
|
512 |
|
|
2,420 |
|
|
2,629 |
|
|
4,190 |
|
Net
income |
|
11,627 |
|
|
22,293 |
|
|
26,049 |
|
|
32,649 |
|
Less: Net income
attributable to non-controlling interests |
|
(16,098 |
) |
|
(20,173 |
) |
|
(33,274 |
) |
|
(37,720 |
) |
Net
(loss) income attributable to Surgery Partners, Inc. |
|
$ |
(4,471 |
) |
|
$ |
2,120 |
|
|
$ |
(7,225 |
) |
|
$ |
(5,071 |
) |
|
|
|
|
|
|
|
|
|
Net (loss) income per
share attributable to common stockholders |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.09 |
) |
|
$ |
0.04 |
|
|
$ |
(0.15 |
) |
|
$ |
(0.11 |
) |
Diluted
(2) |
|
$ |
(0.09 |
) |
|
$ |
0.04 |
|
|
$ |
(0.15 |
) |
|
$ |
(0.11 |
) |
Weighted average common
shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
48,145,729 |
|
|
48,019,652 |
|
|
48,112,909 |
|
|
48,018,228 |
|
Diluted
(2) |
|
48,145,729 |
|
|
48,129,041 |
|
|
48,112,909 |
|
|
48,018,228 |
|
(1) Includes contingent acquisition compensation expense of $1.8
million and $1.5 million for the three months ended June 30,
2017 and 2016, respectively, and $3.8 million and $1.5 million for
the six months ended June 30, 2017 and 2016, respectively.
(2) The impact of potentially dilutive securities for the three
and six months ended June 30, 2017 and the six months ended
June 30, 2016 was not considered because the effect would be
anti-dilutive in those periods.
SURGERY PARTNERS, INC. Unaudited
Selected Financial and Operating Data(Amounts in
thousands, except shares and per share
amounts) |
|
June 30, 2017 |
|
December 31, 2016 |
|
|
|
|
Balance Sheet
Data (at period end): |
|
|
|
Cash and cash
equivalents |
$ |
57,034 |
|
|
$ |
69,699 |
|
Total current
assets |
352,311 |
|
|
361,955 |
|
Total assets |
2,671,487 |
|
|
2,304,958 |
|
|
|
|
|
Current maturities of
long-term debt |
29,919 |
|
|
27,822 |
|
Total current
liabilities |
186,002 |
|
|
186,725 |
|
Long-term debt, less
current maturities |
1,795,265 |
|
|
1,414,421 |
|
Total liabilities |
2,179,719 |
|
|
1,799,763 |
|
|
|
|
|
Total Surgery Partners,
Inc. stockholders' equity |
6,252 |
|
|
9,677 |
|
Non-controlling
interests-non-redeemable |
309,264 |
|
|
314,997 |
|
Total stockholders'
equity |
315,516 |
|
|
324,674 |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
Cash Flow
Data: |
|
|
|
|
|
|
|
Net cash provided by
(used in): |
|
|
|
|
|
|
|
Operating
activities |
$ |
21,601 |
|
|
$ |
48,793 |
|
|
$ |
56,471 |
|
|
$ |
74,037 |
|
Investing
activities |
(22,570 |
) |
|
(114,514 |
) |
|
(29,195 |
) |
|
(133,367 |
) |
Capital
expenditures |
(8,752 |
) |
|
(8,546 |
) |
|
(15,102 |
) |
|
(20,350 |
) |
Investments in new businesses |
(13,888 |
) |
|
(105,968 |
) |
|
(14,163 |
) |
|
(113,017 |
) |
Financing
activities |
2,037 |
|
|
(17,727 |
) |
|
(39,941 |
) |
|
52,996 |
|
Distributions to non-controlling interests |
(17,579 |
) |
|
(14,849 |
) |
|
(36,841 |
) |
|
(32,362 |
) |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Other
Data: |
|
|
|
|
|
|
|
Number of surgical
facilities as of the end of period |
103 |
|
|
103 |
|
|
103 |
|
|
103 |
|
Number of consolidated
surgical facilities as of the end of period |
93 |
|
|
92 |
|
|
93 |
|
|
92 |
|
Cases |
111,758 |
|
|
107,931 |
|
|
220,587 |
|
|
208,687 |
|
Revenue per case |
$ |
2,580 |
|
|
$ |
2,684 |
|
|
$ |
2,605 |
|
|
$ |
2,668 |
|
Adjusted EBITDA |
$ |
37,055 |
|
|
$ |
46,032 |
|
|
$ |
77,162 |
|
|
$ |
84,457 |
|
Adjusted EBITDA as a %
of revenues |
12.9 |
% |
|
15.9 |
% |
|
13.4 |
% |
|
15.2 |
% |
Adjusted EPS-
Basic |
(0.01 |
) |
|
0.16 |
|
|
0.03 |
|
|
0.26 |
|
Adjusted EPS-
Diluted |
(0.01 |
) |
|
0.16 |
|
|
0.03 |
|
|
0.26 |
|
SURGERY PARTNERS, INC. Supplemental
Information(Unaudited, in thousands, except cases
and growth rates) |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Same-facility
Information: |
|
|
|
|
|
|
|
Cases (3) |
112,314 |
|
|
111,818 |
|
|
218,300 |
|
|
215,530 |
|
Case growth |
0.4 |
% |
|
N/A |
|
|
1.3 |
% |
|
N/A |
|
Revenue per case
(3) |
$ |
2,640 |
|
|
$ |
2,600 |
|
|
$ |
2,663 |
|
|
$ |
2,569 |
|
Revenue per case
growth |
1.5 |
% |
|
N/A |
|
|
3.7 |
% |
|
N/A |
|
(3) 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 June 30, |
|
Six Months Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Segment
Revenues: |
|
|
|
|
|
|
|
Surgical facility
services |
$ |
262,810 |
|
|
$ |
263,783 |
|
|
$ |
520,960 |
|
|
$ |
509,453 |
|
Ancillary services |
22,640 |
|
|
22,503 |
|
|
47,852 |
|
|
40,283 |
|
Optical services |
2,903 |
|
|
3,395 |
|
|
5,724 |
|
|
7,019 |
|
Total
revenues |
$ |
288,353 |
|
|
$ |
289,681 |
|
|
$ |
574,536 |
|
|
$ |
556,755 |
|
Adjusted EBITDA is the primary profit/loss
metric reviewed by the CODM in making key business decisions and on
allocation of resources. The segment disclosures below provide a
reconciliation from adjusted EBITDA back to net income in the
reported condensed consolidated financial information.
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Segment
Adjusted EBITDA: |
|
|
|
|
|
|
|
Surgical facility
services |
$ |
49,946 |
|
|
$ |
54,311 |
|
|
$ |
98,187 |
|
|
$ |
99,971 |
|
Ancillary services |
429 |
|
|
3,068 |
|
|
4,211 |
|
|
6,568 |
|
Optical services |
883 |
|
|
849 |
|
|
1,659 |
|
|
1,728 |
|
Total segment
adjusted EBITDA (4) |
$ |
51,258 |
|
|
$ |
58,228 |
|
|
$ |
104,057 |
|
|
$ |
108,267 |
|
|
|
|
|
|
|
|
|
General and
administrative expenses |
$ |
(18,655 |
) |
|
$ |
(15,023 |
) |
|
$ |
(34,196 |
) |
|
$ |
(27,220 |
) |
Non-cash stock
compensation expense |
1,435 |
|
|
502 |
|
|
2,069 |
|
|
635 |
|
Contingent acquisition
compensation expense |
1,814 |
|
|
1,530 |
|
|
3,847 |
|
|
1,530 |
|
Acquisition related
costs |
1,203 |
|
|
795 |
|
|
1,385 |
|
|
1,245 |
|
Total adjusted EBITDA
(4) |
$ |
37,055 |
|
|
$ |
46,032 |
|
|
$ |
77,162 |
|
|
$ |
84,457 |
|
|
|
|
|
|
|
|
|
Net income attributable
to non-controlling interests |
$ |
16,098 |
|
|
$ |
20,173 |
|
|
$ |
33,274 |
|
|
$ |
37,720 |
|
Depreciation and
amortization |
(11,417 |
) |
|
(9,702 |
) |
|
(22,525 |
) |
|
(19,271 |
) |
Interest expense,
net |
(25,600 |
) |
|
(26,235 |
) |
|
(50,782 |
) |
|
(48,388 |
) |
Income tax expense |
(512 |
) |
|
(2,420 |
) |
|
(2,629 |
) |
|
(4,190 |
) |
Non-cash stock
compensation expense |
(1,435 |
) |
|
(502 |
) |
|
(2,069 |
) |
|
(635 |
) |
Contingent acquisition
compensation expense |
(1,814 |
) |
|
(1,530 |
) |
|
(3,847 |
) |
|
(1,530 |
) |
Merger transaction,
integration and practice acquisition costs (5) |
(4,137 |
) |
|
(2,192 |
) |
|
(4,728 |
) |
|
(6,108 |
) |
Gain on litigation
settlement |
3,794 |
|
|
— |
|
|
3,794 |
|
|
— |
|
Loss on disposal or
impairment of long-lived assets, net |
(405 |
) |
|
(1,331 |
) |
|
(1,601 |
) |
|
(1,125 |
) |
Loss on debt
refinancing |
— |
|
|
— |
|
|
— |
|
|
(8,281 |
) |
Total net
income |
$ |
11,627 |
|
|
$ |
22,293 |
|
|
$ |
26,049 |
|
|
$ |
32,649 |
|
(4) The above table reconciles adjusted EBITDA by segment to net
income as reflected in the unaudited condensed 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) depreciation and amortization, (c) interest
expense, net, (d) income tax expense, (e) non-cash stock
compensation expense, (f) contingent acquisition compensation
expense, (g) merger transaction, integration and practice
acquisition costs, (h) gain on litigation, (i) loss on disposal or
impairment of long-lived assets and (j) loss on debt refinancing.
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 our 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. Our calculation of Adjusted EBITDA may not be
comparable to similarly titled measures reported by other
companies.
(5) This amount includes merger transaction and integration
costs of $2.9 million and $1.3 million for the three months ended
June 30, 2017 and 2016, respectively, and practice acquisition
costs of $1.2 million and $867,000 for the three months ended
June 30, 2017 and 2016, respectively.
This amount includes merger transaction and integration costs of
$3.2 million and $4.5 million for the six months ended
June 30, 2017 and 2016, respectively, and practice acquisition
costs of $1.5 million and $1.6 million for the six months ended
June 30, 2017 and 2016, respectively.
SURGERY PARTNERS, INC.
Reconciliation of Non-GAAP Financial
Measures(Unaudited, Amounts in
thousands)
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 Ended June 30, |
|
Six Months Ended June 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Consolidated
Statements of Operations Data: |
|
|
|
|
|
|
|
|
Net
Income |
|
$ |
11,627 |
|
|
$ |
22,293 |
|
|
$ |
26,049 |
|
|
$ |
32,649 |
|
Less: |
|
|
|
|
|
|
|
|
Net
income attributable to non-controlling interests |
|
16,098 |
|
|
20,173 |
|
|
33,274 |
|
|
37,720 |
|
Plus: |
|
|
|
|
|
|
|
|
Merger
transaction, integration and practice acquisition costs |
|
4,137 |
|
|
2,192 |
|
|
4,728 |
|
|
6,108 |
|
Non-cash
stock compensation expense |
|
1,435 |
|
|
502 |
|
|
2,069 |
|
|
635 |
|
Contingent acquisition compensation expense |
|
1,814 |
|
|
1,530 |
|
|
3,847 |
|
|
1,530 |
|
Loss on
debt refinancing |
|
— |
|
|
— |
|
|
— |
|
|
8,281 |
|
Gain on
litigation settlement |
|
(3,794 |
) |
|
— |
|
|
(3,794 |
) |
|
— |
|
Loss on
disposal or impairment of long-lived assets, net |
|
405 |
|
|
1,331 |
|
|
1,601 |
|
|
1,125 |
|
Adjusted net
(loss) income |
|
$ |
(474 |
) |
|
$ |
7,675 |
|
|
$ |
1,226 |
|
|
$ |
12,608 |
|
|
|
|
|
|
|
|
|
|
Adjusted net
(loss) income per share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.01 |
) |
|
$ |
0.16 |
|
|
$ |
0.03 |
|
|
$ |
0.26 |
|
Diluted(6) |
|
$ |
(0.01 |
) |
|
$ |
0.16 |
|
|
$ |
0.03 |
|
|
$ |
0.26 |
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
48,145,729 |
|
|
48,019,652 |
|
|
48,112,909 |
|
|
48,018,228 |
|
Diluted(6) |
|
48,145,729 |
|
|
48,129,041 |
|
|
48,302,307 |
|
|
48,118,788 |
|
(6) The impact of potentially dilutive securities for the three
ended June 30, 2017 was not considered because the effect
would be anti-dilutive in the period.
Contact
Teresa Sparks, CFO
Surgery Partners, Inc.
(615) 234-8940
IR@surgerypartners.com
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