News Release Details
Surgery Partners, Inc. Announces Fourth Quarter and Full Year 2020 Results
March 10, 2021
Highlights for the Fourth Quarter 2020:
- Revenues increased 6.0% to
$548.3 million and Adjusted Revenues increased 8.5% to$564.7 million - Days adjusted Same-facility Revenues increased 5.8% over prior year period
- Net loss attributable to common stockholders of
$4.8 million - Adjusted EBITDA increased 7.6% over prior year period to
$90.8 million .
Highlights for 2020:
- Revenues increased 1.6% to
$1.9 billion and Adjusted Revenues increased 2.4% to$1.9 billion - Days adjusted Same-facility Revenues decreased 1.5% from prior year
- Net loss attributable to common stockholders of
$155.6 million - Adjusted EBITDA decreased 0.8% over prior year to
$256.6 million
"Our physician recruiting efforts continued despite the pandemic, introducing 156 newly recruited physicians into our facilities in the fourth quarter and over 560 during 2020. Not only are we encouraged by the recruiting success of our 2020 cohort but also by the performance of our 2019 cohort in 2020 that contributed 37% more cases year over year. This intentional focus on recruiting the right physicians over the past two years is especially evident in our same-facility revenue, which increased approximately 6% in the fourth quarter as well as in our expansion of total joint procedures, which grew 110% in our ASCs during the fourth quarter."
Fourth Quarter 2020 Results
Adjusted Revenues for the fourth quarter of 2020 increased 8.5% to $564.7 million from $520.7 million for the fourth quarter of 2019. Days adjusted Same-facility Revenues for the fourth quarter of 2020 increased 5.8% from the same period last year, with a 9.3% increase in revenue per case offset by a 3.2% decrease in same-facility cases due to COVID-related reductions in surgeries. For the fourth quarter of 2020, the Company’s net loss attributable to common stockholders and Adjusted EBITDA were $4.8 million and
Full Year 2020 Results
Adjusted Revenues for 2020 increased 2.4% to
Liquidity
Surgery Partners had cash and cash equivalents of $317.9 million and $112.5 million of borrowing capacity under its revolving credit facility at
Operating cash flows were
On
On
2021 Outlook
The Company projects that it will be able to grow 2021 revenues by 18% to 20% over 2020 results and projects 2021 Adjusted EBITDA of approximately
Conference Call Information
Surgery Partners will hold a conference call today, March 10, 2021 at 8:30 a.m. (Eastern Time). The conference call can be accessed live over the phone by dialing 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 844-512-2921, or for international callers, 1-412-317-6671. The passcode for the live call and the replay is 13716600. The replay will be available until
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 replay will also be available on this same website for a limited time 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
Forward-Looking Statements
This press release contains forward-looking statements, including those regarding growth, our anticipated operating results for future periods 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, (i) the duration and severity of the COVID-19 outbreak in
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,
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 similar measures 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.
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in millions, except per share amounts, shares in thousands)
(Unaudited)
Three Months Ended |
Year Ended |
|||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Revenues | $ | 548.3 | $ | 517.2 | $ | 1,860.1 | $ | 1,831.4 | ||||||||||||
Operating expenses: | ||||||||||||||||||||
Salaries and benefits | 152.1 | 148.8 | 550.3 | 550.0 | ||||||||||||||||
Supplies | 156.2 | 143.3 | 538.4 | 507.9 | ||||||||||||||||
Professional and medical fees | 53.0 | 44.8 | 191.4 | 154.8 | ||||||||||||||||
Lease expense | 22.7 | 22.6 | 87.4 | 85.6 | ||||||||||||||||
Other operating expenses | 28.9 | 28.5 | 112.8 | 109.3 | ||||||||||||||||
Cost of revenues | 412.9 | 388.0 | 1,480.3 | 1,407.6 | ||||||||||||||||
General and administrative expenses | 23.8 | 23.7 | 97.1 | 88.6 | ||||||||||||||||
Depreciation and amortization | 25.5 | 20.2 | 94.8 | 76.5 | ||||||||||||||||
Income from equity investments | (3.2 | ) | (3.6 | ) | (10.8 | ) | (10.2 | ) | ||||||||||||
(Gain) loss on disposals and deconsolidations, net | (1.4 | ) | 2.6 | 5.7 | (4.4 | ) | ||||||||||||||
Transaction and integration costs | 7.4 | 7.4 | 23.2 | 19.0 | ||||||||||||||||
Impairment charges | — | 7.9 | 33.5 | 7.9 | ||||||||||||||||
Grant funds | (13.0 | ) | — | (46.2 | ) | — | ||||||||||||||
Loss on debt extinguishment | — | — | — | 11.7 | ||||||||||||||||
Litigation settlement | — | 0.2 | 1.2 | 0.2 | ||||||||||||||||
Other income | — | (1.0 | ) | (1.7 | ) | (1.4 | ) | |||||||||||||
Total operating expenses | 452.0 | 445.4 | 1,677.1 | 1,595.5 | ||||||||||||||||
Operating income | 96.3 | 71.8 | 183.0 | 235.9 | ||||||||||||||||
Tax receivable agreement expense | — | — | — | (2.4 | ) | |||||||||||||||
Interest expense, net | (54.0 | ) | (44.8 | ) | (201.8 | ) | (178.9 | ) | ||||||||||||
Income (loss) before income taxes | 42.3 | 27.0 | (18.8 | ) | 54.6 | |||||||||||||||
Income tax expense | (5.6 | ) | 3.4 | (20.1 | ) | 9.5 | ||||||||||||||
Net income | 47.9 | 23.6 | 1.3 | 45.1 | ||||||||||||||||
Less: Net income attributable to non-controlling interests | (42.4 | ) | (41.8 | ) | (117.4 | ) | (119.9 | ) | ||||||||||||
Net income (loss) attributable to |
5.5 | (18.2 | ) | (116.1 | ) | (74.8 | ) | |||||||||||||
Less: Amounts attributable to participating securities | (10.3 | ) | (9.3 | ) | (39.5 | ) | (35.7 | ) | ||||||||||||
Net loss attributable to common stockholders | $ | (4.8 | ) | $ | (27.5 | ) | $ | (155.6 | ) | $ | (110.5 | ) | ||||||||
Net loss per share attributable to common stockholders | ||||||||||||||||||||
Basic | $ | (0.10 | ) | $ | (0.57 | ) | $ | (3.19 | ) | $ | (2.29 | ) | ||||||||
Diluted (1) | $ | (0.10 | ) | $ | (0.57 | ) | $ | (3.19 | ) | $ | (2.29 | ) | ||||||||
Weighted average common shares outstanding | ||||||||||||||||||||
Basic | 48,894 | 48,326 | 48,776 | 48,280 | ||||||||||||||||
Diluted (1) | 48,894 | 48,326 | 48,776 | 48,280 |
(1) The impact of potentially dilutive securities for all periods presented was not considered because the effect would be anti-dilutive in those periods.
Selected Financial and Operating Data
(Dollars in millions, except per case and per share amounts)
(Unaudited)
2020 |
2019 |
|||||||
Balance Sheet Data (at period end): | ||||||||
Cash and cash equivalents | $ | 317.9 | $ | 92.7 | ||||
Total current assets | 801.5 | 525.5 | ||||||
Total assets | 5,413.2 | 5,018.9 | ||||||
Current maturities of long-term debt | 64.4 | 56.0 | ||||||
Total current liabilities | 556.8 | 398.1 | ||||||
Long-term debt, less current maturities | 2,792.4 | 2,524.7 | ||||||
Total liabilities | 3,789.8 | 3,319.5 | ||||||
Non-controlling interests—redeemable | 306.8 | 321.0 | ||||||
Redeemable preferred stock | 434.5 | 395.0 | ||||||
115.6 | 296.8 | |||||||
Non-controlling interests—non-redeemable | 766.5 | 686.6 | ||||||
Total stockholders' equity | 882.1 | 983.4 |
Three Months Ended |
Year Ended |
|||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Cash Flow Data: | ||||||||||||||||||||
Net cash provided by (used in): | ||||||||||||||||||||
Operating activities | $ | 8.9 | $ | 25.4 | $ | 246.9 | $ | 129.5 | ||||||||||||
Investing activities | (95.2 | ) | (23.4 | ) | (88.4 | ) | (85.2 | ) | ||||||||||||
Capital expenditures | (15.1 | ) | (23.4 | ) | (42.9 | ) | (73.6 | ) | ||||||||||||
Payments for acquisitions, net of cash acquired | (90.4 | ) | — | (104.6 | ) | (13.8 | ) | |||||||||||||
Financing activities | (45.8 | ) | (20.6 | ) | 66.7 | (135.9 | ) | |||||||||||||
Distributions to non-controlling interest holders | (27.3 | ) | (31.7 | ) | (109.6 | ) | (121.2 | ) |
Three Months Ended |
Year Ended |
|||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||
Other Data: | ||||||||||||||||||
Number of surgical facilities as of the end of period | 127 | 128 | 127 | 128 | ||||||||||||||
Number of consolidated surgical facilities as of the end of period | 107 | 107 | 107 | 107 | ||||||||||||||
Cases | 134,532 | 137,699 | 459,420 | 525,136 | ||||||||||||||
Adjusted Revenue per case (1) | $ | 4,198 | $ | 3,781 | $ | 4,140 | $ | 3,536 | ||||||||||
Adjusted EBITDA (1) | $ | 90.8 | $ | 84.4 | $ | 256.6 | $ | 258.6 | ||||||||||
Adjusted EBITDA margin (2) | 14.5 | % | 16.2 | % | 11.9 | % | 13.9 | % | ||||||||||
Adjusted net gain (loss) per share attributable to common stockholders - Basic (1) | $ | 0.13 | $ | 0.14 | $ | (1.22 | ) | $ | (0.87 | ) | ||||||||
Adjusted net gain (loss) per share attributable to common stockholders - Diluted (1) | $ | 0.09 | $ | 0.10 | $ | (1.22 | ) | $ | (0.87 | ) |
(1) A reconciliation of these non-GAAP financial measures appears below.
(2) Defined as Adjusted EBITDA as a % of Adjusted Revenues.
Supplemental Information
(Dollars in millions, except per case amounts)
(Unaudited)
Three Months Ended |
Year Ended |
|||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||
Same-facility Information (1): | ||||||||||||||||||
Cases | 144,395 | 149,130 | 490,161 | 565,589 | ||||||||||||||
Case growth | (3.2 | ) | % | 2.0 | % | (13.3 | ) | % | 2.0 | % | ||||||||
Revenue per case | $ | 3,820 | $ | 3,494 | $ | 3,720 | $ | 3,261 | ||||||||||
Revenue per case growth | 9.3 | % | 5.9 | % | 14.1 | % | 5.5 | % | ||||||||||
Number of work days in the period | 62 | 62 | 254 | 253 | ||||||||||||||
Case growth (days adjusted) | (3.2 | ) | % | 2.0 | % | (13.7 | ) | % | 2.0 | % | ||||||||
Revenue growth (days adjusted) | 5.8 | % | 7.9 | % | (1.5 | ) | % | 7.6 | % |
(1) 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 |
Year Ended |
|||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Segment Revenues: | ||||||||||||||||
Surgical facility services | $ | 530.6 | $ | 497.3 | $ | 1,793.4 | $ | 1,748.2 | ||||||||
Ancillary services | 16.7 | 19.1 | 63.6 | 79.4 | ||||||||||||
Optical services | 1.0 | 0.8 | 3.1 | 3.8 | ||||||||||||
Total revenues | $ | 548.3 | $ | 517.2 | $ | 1,860.1 | $ | 1,831.4 |
Three Months Ended |
Year Ended |
|||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Adjusted EBITDA: | ||||||||||||||||||||
Surgical Facility Services | $ | 109.6 | $ | 105.0 | $ | 339.3 | $ | 328.9 | ||||||||||||
Ancillary Services | 0.5 | (0.9 | ) | (3.4 | ) | 2.6 | ||||||||||||||
Optical Services | 0.4 | 0.1 | 1.4 | 1.4 | ||||||||||||||||
All other | (19.7 | ) | (19.8 | ) | (80.7 | ) | (74.3 | ) | ||||||||||||
Total Adjusted EBITDA | $ | 90.8 | $ | 84.4 | $ | 256.6 | $ | 258.6 |
Reconciliation of Non-GAAP Financial Measures
(Dollars in millions)
(Unaudited)
The following table reconciles Adjusted Revenues to revenues in the selected consolidated financial information, the most directly comparable GAAP measure:
Three Months Ended |
Year Ended |
|||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Adjusted Revenues (1): | ||||||||||||||||
Revenues | $ | 548.3 | $ | 517.2 | $ | 1,860.1 | $ | 1,831.4 | ||||||||
Add: provision for doubtful accounts | 16.4 | 3.5 | 41.7 | 25.3 | ||||||||||||
Total Adjusted Revenues | $ | 564.7 | $ | 520.7 | $ | 1,901.8 | $ | 1,856.7 |
(1) In accordance with a new accounting standard that was effective prospectively beginning
The following table reconciles Adjusted EBITDA and Adjusted EBITDA excluding grant funds to income (loss) before income taxes in the reported condensed consolidated financial information, the most directly comparable GAAP financial measure:
Three Months Ended |
Year Ended |
|||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Income (loss) before income taxes | $ | 42.3 | $ | 27.0 | $ | (18.8 | ) | $ | 54.6 | |||||||||||
Net income attributable to non-controlling interests | (42.4 | ) | (41.8 | ) | (117.4 | ) | (119.9 | ) | ||||||||||||
Depreciation and amortization | 25.5 | 20.2 | 94.8 | 76.5 | ||||||||||||||||
Interest expense, net | 54.0 | 44.8 | 201.8 | 178.9 | ||||||||||||||||
Equity-based compensation expense | 3.3 | 2.6 | 13.2 | 10.2 | ||||||||||||||||
Transaction, integration and acquisition costs (1) | 8.0 | 19.3 | 38.2 | 36.1 | ||||||||||||||||
Impairment charges | — | 7.9 | 33.5 | 7.9 | ||||||||||||||||
(Gain) loss on disposals and deconsolidations, net | (1.4 | ) | 2.6 | 5.7 | (4.4 | ) | ||||||||||||||
Litigation settlement and other litigation costs (2) | 1.5 | 1.8 | 6.4 | 4.6 | ||||||||||||||||
Gain on escrow release (3) | — | — | (0.8 | ) | — | |||||||||||||||
Loss on debt extinguishment | — | — | — | 11.7 | ||||||||||||||||
Tax receivable agreement expense | — | — | — | 2.4 | ||||||||||||||||
Adjusted EBITDA (4) | $ | 90.8 | $ | 84.4 | $ | 256.6 | $ | 258.6 | ||||||||||||
Less: Impact of grant funds (5) | (9.2 | ) | — | (31.1 | ) | — | ||||||||||||||
Adjusted EBITDA excluding grant funds | $ | 81.6 | $ | 84.4 | $ | 225.5 | $ | 258.6 |
(1) For the three months ended
For the year ended
(2) For the three months ended
For the years ended
(3) Included in other income in the condensed consolidated statement of operations for the year ended
(4) 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 GAAP. 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.
(5) Represents the impact of grant funds recognized, net of amounts attributable to non-controlling interests.
Reconciliation of Non-GAAP Financial Measures
(Dollars in millions, except per share amounts, shares in thousands)
(Unaudited)
From time to time, the Company incurs certain non-recurring gains or losses that are normally non-operational in nature and that management does not consider relevant in assessing the Company's 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, management 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 gain (loss) attributable to common stockholders and adjusted net gain (loss) per share attributable to common stockholders as supplements to the comparable GAAP measures. Adjusted net gain (loss) attributable to common stockholders and adjusted net gain (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 (loss) as reflected in the consolidated statements of operations to adjusted net gain (loss) attributable to common stockholders which measure is used to calculate adjusted net gain (loss) per share attributable to common stockholders:
Three Months Ended |
Year Ended |
||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Consolidated Statements of Operations Data: | |||||||||||||||||||
Net Income | $ | 47.9 | $ | 23.6 | $ | 1.3 | $ | 45.1 | |||||||||||
Plus (minus): | |||||||||||||||||||
Net income attributable to non-controlling interests | (42.4 | ) | (41.8 | ) | (117.4 | ) | (119.9 | ) | |||||||||||
Amounts attributable to participating securities | (10.3 | ) | (9.3 | ) | (39.5 | ) | (35.7 | ) | |||||||||||
Equity-based compensation expense | 3.3 | 2.6 | 13.2 | 10.2 | |||||||||||||||
Transaction, integration and acquisition costs | 8.0 | 19.3 | 38.2 | 36.1 | |||||||||||||||
(Gain) loss on disposals and deconsolidations, net | (1.4 | ) | 2.6 | 5.7 | (4.4 | ) | |||||||||||||
Impairment charges | — | 7.9 | 33.5 | 7.9 | |||||||||||||||
Loss on litigation settlements and other litigation costs | 1.5 | 1.8 | 6.4 | 4.6 | |||||||||||||||
Loss on debt extinguishment | — | — | — | 11.7 | |||||||||||||||
Tax receivable agreement expense | — | — | — | 2.4 | |||||||||||||||
Gain on escrow release | — | — | (0.8 | ) | — | ||||||||||||||
Adjusted net gain (loss) attributable to common stockholders | $ | 6.6 | $ | 6.7 | $ | (59.4 | ) | $ | (42.0 | ) | |||||||||
Adjusted net gain (loss) per share attributable to common stockholders | |||||||||||||||||||
Basic | $ | 0.13 | $ | 0.14 | $ | (1.22 | ) | $ | (0.87 | ) | |||||||||
Diluted (1) | $ | 0.09 | $ | 0.10 | $ | (1.22 | ) | $ | (0.87 | ) | |||||||||
Weighted average common shares outstanding | |||||||||||||||||||
Basic | 48,894 | 48,326 | 48,776 | 48,280 | |||||||||||||||
Diluted (1) | 73,519 | 69,079 | 48,776 | 48,280 |
(1) For the years ended
Contact
(615) 234-8940
IR@surgerypartners.com
Source: Surgery Partners, Inc.