Surgery Partners, Inc. (NASDAQ:SGRY) ("Surgery Partners" or
the "Company"), a leading provider of surgical services, today
announced results for the first quarter ended March 31, 2019.
- Revenues increased 1.3% over prior year period to $416.8
million
- Same-facility revenues increased 5.0% over prior year period;
adjusted for business days that we operated in the first quarter of
2019, same-facility revenues increased by 6.7%
- Net loss attributable to common stockholders of $28.6
million
- Adjusted net loss attributable to common stockholders of $20.3
million
- Adjusted EBITDA increased 7.6% over prior year period to $50.7
million
- Diluted net loss per share of $0.60
- Diluted adjusted net loss per share of $0.42
Wayne DeVeydt, Chief Executive Officer of Surgery Partners,
stated, “The first quarter of 2019 demonstrated strong top and
bottom line growth, with excellent same-facility revenue growth and
Adjusted EBITDA that grew moderately better than our
previously-guided mid-single digit growth.”
“The first quarter of 2019 now represents our third consecutive
quarter of same-facility revenue and case volume growth,
encouraging indicators that our strategic initiatives are taking
hold as we build sustainable platforms and position the Company for
future growth. We remain confident in our ability to grow Adjusted
EBITDA at a double-digit rate in 2019 and beyond.”
Tom Cowhey, Chief Financial Officer of Surgery Partners,
commented, “Over the past year, our team undertook substantial
efforts optimizing our portfolio, streamlining our infrastructure
and investing to drive future growth. With the first quarter of
2019 behind us, we are starting to see the fruits of these efforts
as we execute our growth agenda for the benefit of our customers,
physician partners, employees and stakeholders.”
First Quarter 2019 Results
Total revenues for the first quarter of 2019 increased 1.3%
to $416.8 million from $411.3 million for the
first quarter of 2018. The implementation of a recent accounting
standard on revenue recognition lowered total revenues in the first
quarter of 2019 and 2018 by $8.1 million and $6.0 million,
respectively. Same-facility revenues for the first quarter of 2019
increased 5.0% from the same period last year, with a 4.3% increase
in revenue per case and a 0.6% increase in same-facility cases.
When adjusted for business days that we operated in the first
quarter of 2019, same-facility surgical revenues were up 6.7%, with
a 2.2% increase in same-facility cases. For the first quarter of
2019, the Company’s net loss attributable to common stockholders
was $28.6 million compared to $25.3 million for the
same period last year. For the first quarter of 2019, the Company’s
Adjusted EBITDA increased 7.6% to $50.7 million compared
to $47.1 million for the same period last year.
Liquidity
Surgery Partners had cash and cash equivalents
of $142.5 million and $70.9 million borrowing
capacity under its revolving credit facility at March 31, 2019. Net
operating cash outflows, including operating cash flows less
distributions to non-controlling interests, were $13.3 million
for the first quarter of 2019. The Company’s ratio of total net
debt to EBITDA, as calculated under the Company’s credit agreement
was 7.7x at the end of the first quarter of 2019.
Guidance
The Company continues to project that it will be able to grow
revenues at a low single-digit percentage rate in 2019; when the
2018 baseline is adjusted for divested revenues, 2019 revenue
growth is projected to be high single digits. The Company also
continues to project that it will be able to grow Adjusted EBITDA
at a double-digit percentage rate in 2019, which is expected to be
weighted more towards the back half of the year. The Company’s
outlook does not incorporate the impact of unidentified
acquisitions and also does not include the impact of de novo
activity.
Conference Call Information
Surgery Partners will hold a conference call today, May 8, 2019
at 8:30 a.m. (Eastern Time). The conference call can be accessed
live over the phone by dialing 1-877-451-6152, or for international
callers, 1-201-389-0879. 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 13690163. The replay will be available until
May 22, 2019.
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.
About Surgery Partners
Headquartered in Brentwood, 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 180 locations in
31 states, including ambulatory surgery centers, surgical
hospitals, a diagnostic laboratory, multi-specialty physician
practices and urgent care facilities. For additional information,
visit www.surgerypartners.com.
Forward-Looking Statements
This press release contains forward-looking statements,
including those regarding growth, our anticipated operating results
for 2019 and other similar statements. These statements can be
identified by the use of words such as “believes,” “anticipates,”
“expects,” “intends,” “plans,” “continues,” “estimates,”
“predicts,” “projects,” “forecasts,” “may,” “could,” and similar
expressions. All forward looking statements are based on current
expectations and beliefs as of the date of this release and are
subject to risks, uncertainties and assumptions that could cause
actual results to differ materially from those discussed in, or
implied by, the forward-looking statements, including but not
limited to, our ability to execute on our operational and strategic
initiatives, the timing and impact of our portfolio optimization
efforts, our ability to continue to improve same-facility volume
and revenue growth on the timeline anticipated, if at all, our
ability to successfully integrate acquisitions, the anticipated
impact and timing of our ongoing efficiency efforts, including
insurance consolidations and completed headcount actions, as well
as our ongoing procurement and revenue cycle efforts, the impact of
adverse weather conditions and other events outside of our control,
whether or not a settlement is reached with the government
relating to the previously disclosed investigation, the terms of
any such settlement and the ongoing cost of complying with the
terms of any such settlement, as well as the risks identified and
discussed from time to time in the Company’s reports filed with the
SEC, including in Item 1A under the heading “Risk Factors” in the
Company’s most recent Annual Report on Form 10-K. Except as
required by law, the Company undertakes no obligation to revise or
update publicly any forward-looking statements to reflect events or
circumstances after the date of this report, or to reflect the
occurrence of unanticipated events or circumstances.
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 net loss attributable to common stockholders,
Adjusted net loss per share attributable to common stockholders 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
revenue, 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.
SURGERY PARTNERS,
INC.Selected Consolidated Financial
Data(Dollars in millions, except per share
amounts, shares in thousands)
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
Revenues |
|
$ |
416.8 |
|
|
$ |
411.3 |
|
Operating expenses: |
|
|
|
|
Salaries and benefits |
|
129.2 |
|
|
129.7 |
|
Supplies |
|
115.0 |
|
|
114.4 |
|
Professional and medical fees |
|
35.1 |
|
|
35.7 |
|
Lease expense |
|
20.6 |
|
|
21.4 |
|
Other operating expenses |
|
26.2 |
|
|
26.1 |
|
Cost of revenues |
|
326.1 |
|
|
327.3 |
|
General and administrative expenses |
|
21.7 |
|
|
24.2 |
|
Depreciation and amortization |
|
18.8 |
|
|
15.7 |
|
Income from equity investments |
|
(2.0 |
) |
|
(1.9 |
) |
Loss on disposals and deconsolidations, net |
|
0.6 |
|
|
— |
|
Transaction and integration costs |
|
2.0 |
|
|
5.0 |
|
Other income |
|
— |
|
|
(0.2 |
) |
Total operating expenses |
|
367.2 |
|
|
370.1 |
|
Operating income |
|
49.6 |
|
|
41.2 |
|
Tax receivable agreement
expense |
|
(2.4 |
) |
|
— |
|
Interest expense, net |
|
(42.0 |
) |
|
(34.3 |
) |
Income before income taxes |
|
5.2 |
|
|
6.9 |
|
Income tax expense |
|
1.7 |
|
|
1.8 |
|
Net income |
|
3.5 |
|
|
5.1 |
|
Less: Net income attributable
to non-controlling interests |
|
(23.6 |
) |
|
(22.6 |
) |
Net loss attributable to Surgery Partners, Inc. |
|
(20.1 |
) |
|
(17.5 |
) |
Less: Amounts attributable to
participating securities |
|
(8.5 |
) |
|
(7.8 |
) |
Net loss attributable to common stockholders |
|
$ |
(28.6 |
) |
|
$ |
(25.3 |
) |
|
|
|
|
|
Net loss per share
attributable to common stockholders |
|
|
|
|
Basic |
|
$ |
(0.60 |
) |
|
$ |
(0.53 |
) |
Diluted (1) |
|
$ |
(0.60 |
) |
|
$ |
(0.53 |
) |
Weighted average common shares
outstanding |
|
|
|
|
Basic |
|
48,047 |
|
|
48,007 |
|
Diluted (1) |
|
48,047 |
|
|
48,007 |
|
(1) The impact of potentially dilutive
securities for all periods presented was not considered because the
effect would be anti-dilutive in those periods.
SURGERY PARTNERS,
INC.Selected Financial and Operating
Data(Dollars in millions, except per case and per
share amounts)
|
|
March 31, 2019 |
|
December 31, 2018 |
|
|
|
|
|
Balance Sheet Data (at
period end): |
|
|
|
|
Cash and cash equivalents |
|
$ |
142.5 |
|
|
$ |
184.3 |
|
Total current assets |
|
535.3 |
|
|
588.3 |
|
Total assets |
|
4,880.9 |
|
|
4,676.3 |
|
|
|
|
|
|
Current maturities of
long-term debt |
|
57.1 |
|
|
55.6 |
|
Total current liabilities |
|
359.6 |
|
|
349.3 |
|
Long-term debt, less current
maturities |
|
2,384.6 |
|
|
2,270.9 |
|
Total liabilities |
|
3,114.2 |
|
|
2,891.5 |
|
|
|
|
|
|
Non-controlling
interests—redeemable |
|
314.6 |
|
|
326.6 |
|
Redeemable preferred
stock |
|
367.8 |
|
|
359.3 |
|
|
|
|
|
|
Total Surgery Partners, Inc.
stockholders' equity |
|
391.4 |
|
|
404.6 |
|
Non-controlling
interests—non-redeemable |
|
692.9 |
|
|
694.3 |
|
Total stockholders'
equity |
|
1,084.3 |
|
|
1,098.9 |
|
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
Cash Flow
Data: |
|
|
|
|
Net cash provided by (used
in): |
|
|
|
|
Operating activities |
|
$ |
20.5 |
|
|
$ |
30.0 |
|
Investing activities |
|
(18.4 |
) |
|
(36.4 |
) |
Capital expenditures |
|
(11.8 |
) |
|
(10.0 |
) |
Payments for acquisitions, net of cash acquired |
|
(7.6 |
) |
|
(25.6 |
) |
Financing activities |
|
(43.9 |
) |
|
(55.7 |
) |
Distributions to non-controlling interests |
|
(33.8 |
) |
|
(30.9 |
) |
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
Other
Data: |
|
|
|
|
Number of surgical facilities
as of the end of period |
|
123 |
|
|
125 |
|
Number of consolidated
surgical facilities as of the end of period |
|
106 |
|
|
108 |
|
|
|
|
|
|
Cases |
|
123,900 |
|
|
124,858 |
|
Revenue per case |
|
$ |
3,364 |
|
|
$ |
3,294 |
|
Adjusted EBITDA |
|
$ |
50.7 |
|
|
$ |
47.1 |
|
Adjusted EBITDA margin |
|
12.2 |
% |
|
11.5 |
% |
Adjusted net loss per share
attributable to common stockholders - Basic |
|
$ |
(0.42 |
) |
|
$ |
(0.26 |
) |
Adjusted net loss per share
attributable to common stockholders - Diluted |
|
$ |
(0.42 |
) |
|
$ |
(0.26 |
) |
|
|
|
|
|
|
|
|
|
SURGERY PARTNERS,
INC.Supplemental
Information(Dollars in millions, except per case
amounts)
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
Same-facility
Information (2): |
|
|
|
|
Cases |
|
131,794 |
|
|
130,962 |
Case growth |
|
0.6 |
% |
|
N/A |
Revenue per case |
|
$ |
3,239 |
|
|
$ |
3,104 |
Revenue per case growth |
|
4.3 |
% |
|
N/A |
Number of work days in the
period |
|
63 |
|
|
64 |
Case growth (days
adjusted) |
|
2.2 |
% |
|
N/A |
Revenue growth (days
adjusted) |
|
6.7 |
% |
|
N/A |
(2) Same-facility information includes cases and revenues
from our consolidated and non-consolidated surgical facilities
(excluding facilities acquired in new markets or divested during
the current and prior periods).
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
Segment
Revenues: |
|
|
|
|
Surgical facility services |
|
$ |
395.8 |
|
|
$ |
388.2 |
|
Ancillary services |
|
19.9 |
|
|
20.1 |
|
Optical services |
|
1.1 |
|
|
3.0 |
|
Total revenues |
|
$ |
416.8 |
|
|
$ |
411.3 |
|
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
|
Surgical facility services |
|
$ |
68.4 |
|
|
$ |
66.5 |
|
Ancillary services |
|
1.2 |
|
|
1.1 |
|
Optical services |
|
0.5 |
|
|
0.8 |
|
All other |
|
(19.4 |
) |
|
(21.3 |
) |
Total adjusted EBITDA |
|
$ |
50.7 |
|
|
$ |
47.1 |
|
|
|
|
|
|
|
|
|
|
SURGERY PARTNERS,
INC.Reconciliation of Non-GAAP Financial
Measures(Dollars in millions)
The following table reconciles Adjusted EBITDA
to income before income taxes in the reported condensed
consolidated financial information, the most directly comparable
GAAP financial measure:
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
Adjusted EBITDA (3) |
|
$ |
50.7 |
|
|
$ |
47.1 |
|
|
|
|
|
|
Net income attributable to
non-controlling interests |
|
23.6 |
|
|
22.6 |
|
Depreciation and
amortization |
|
(18.8 |
) |
|
(15.7 |
) |
Interest expense, net |
|
(42.0 |
) |
|
(34.3 |
) |
Equity-based compensation |
|
(1.9 |
) |
|
(2.0 |
) |
Contingent acquisition
compensation expense |
|
— |
|
|
(0.5 |
) |
Transaction, integration and
acquisition costs (4) |
|
(3.4 |
) |
|
(5.5 |
) |
Reserve adjustments (5) |
|
— |
|
|
(4.8 |
) |
Loss on disposals and
deconsolidations, net |
|
(0.6 |
) |
|
— |
|
Tax receivable agreement
expense |
|
(2.4 |
) |
|
— |
|
Income before income taxes |
|
$ |
5.2 |
|
|
$ |
6.9 |
|
(3) We use Adjusted EBITDA as a measure of financial
performance. Adjusted EBITDA is a key measure used by management to
assess operating performance, make business decisions and allocate
resources. 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. 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.
Adjusted EBITDA is not a measurement of
financial performance under GAAP, and should not be considered in
isolation or as a substitute for net income, operating income 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 our
financial performance. We believe such adjustments are appropriate,
as the magnitude and frequency of such items can vary significantly
and are not related to the assessment of normal operating
performance. Our calculation of Adjusted EBITDA may not be
comparable to similarly titled measures reported by other
companies.
(4) Includes transaction and integration costs of $2.0 million
and $5.0 million for three months ended March 31, 2019 and 2018,
respectively; acquisition costs of $0.2 million and $0.5 million
for three months ended March 31, 2019 and 2018, respectively; and
start-up costs related to a de novo surgical hospital of $1.2
million for the three months ended March 31,2019. There were no
comparable start-up costs in the 2018 period.
(5) This amount represents adjustments to
revenue in connection with applying consistent policies to
businesses acquired by Surgery Partners in prior periods.
SURGERY PARTNERS,
INC.Reconciliation of Non-GAAP Financial
Measures(Dollars in millions, except per share
amounts, shares in thousands)
From time to time, the Company incurs certain non-recurring
gains or losses that are normally non-operational 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 loss
attributable to common stockholders and adjusted net loss per share
attributable to common stockholders as supplements to the
comparable GAAP measures. Adjusted net loss attributable to common
stockholders and adjusted net loss per share attributable to common
stockholders should not be considered measures of financial
performance under GAAP, and the items excluded from such measures
are significant components in understanding and assessing financial
performance. These measures should not be considered in isolation
or as an alternative to the comparable GAAP measures as presented
in the consolidated financial statements.
The following table reconciles net income as reflected in the
consolidated statements of operations to adjusted net loss used to
calculate adjusted net loss per share attributable to common
stockholders:
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
Consolidated
Statements of Operations Data: |
|
|
|
|
Net Income |
|
$ |
3.5 |
|
|
$ |
5.1 |
|
Plus (minus): |
|
|
|
|
Net income attributable to non-controlling interests |
|
(23.6 |
) |
|
(22.6 |
) |
Amounts attributable to participating securities |
|
(8.5 |
) |
|
(7.8 |
) |
Equity-based compensation |
|
1.9 |
|
|
2.0 |
|
Contingent acquisition compensation expense |
|
— |
|
|
0.5 |
|
Transaction, integration and acquisition costs |
|
3.4 |
|
|
5.5 |
|
Reserve adjustments |
|
— |
|
|
4.8 |
|
Loss on disposals and deconsolidations, net |
|
0.6 |
|
|
— |
|
Tax receivable agreement expense |
|
2.4 |
|
|
— |
|
Adjusted net loss attributable
to common stockholders |
|
$ |
(20.3 |
) |
|
$ |
(12.5 |
) |
|
|
|
|
|
Adjusted net loss per share
attributable to common stockholders |
|
|
|
|
Basic |
|
$ |
(0.42 |
) |
|
$ |
(0.26 |
) |
Diluted (6) |
|
$ |
(0.42 |
) |
|
$ |
(0.26 |
) |
Weighted average common shares
outstanding |
|
|
|
|
Basic |
|
48,047 |
|
|
48,007 |
|
Diluted (6) |
|
48,047 |
|
|
48,007 |
|
(6) The impact of potentially dilutive securities for all
periods presented was not considered because the effect would be
anti-dilutive in those periods.
Contact
Thomas F. Cowhey, Chief Financial OfficerSurgery Partners,
Inc.(615) 234-8940IR@surgerypartners.com
Surgery Partners (NASDAQ:SGRY)
Historical Stock Chart
Von Feb 2024 bis Mär 2024
Surgery Partners (NASDAQ:SGRY)
Historical Stock Chart
Von Mär 2023 bis Mär 2024