Surgery Partners, Inc.

Greetings. Welcome to Surgery Partners' third quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the call over to your host, Tom Cowhey. Please go ahead.

Good afternoon. And welcome to Surgery Partners' third quarter 2021 earnings call. This is Tom Cowie, Chief Financial Officer. Joining me today are Wayne Devite, Surgery Partners Executive Chairman, and Eric Evans, Surgery Partners Chief Executive Officer. As a reminder, during this call, we will make forward-looking statements. Risk factors that may impact those statements and could cause actual future results to differ materially from currently projected results are described in this afternoon's press release, and the reports we file with the SEC. The company does not undertake any duty to update such forward-looking statements. Additionally, during today's call, the company will discuss certain non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of these measures can be found in our earnings release and in our most recent quarterly report when filed. which will be available on our website at surgerypartners.com. With that, I'll turn the call over to Wayne. Wayne?

Thank you, Tom. Good afternoon, and thank you all for joining us today. As we approach the end of 2021, we continue to be encouraged by the resiliency of our business model and the execution of our associates in these rapidly changing times. The third quarter had many headwinds to navigate, including surging COVID-19 cases, labor shortages and inflation, and a major hurricane in Louisiana that impacted a number of our facilities. Despite these headwinds, the strength of our value proposition combined with our organic and inorganic strategies resulted in 10% year-over-year case growth and record-breaking quarterly revenues of $559 million. Our third quarter adjusted EBITDA grew to $76.4 million, representing 25% growth over the prior year quarter. While we continue to remain cautious as to the impact of the previously mentioned headwinds on our operations, we are pleased to be able to increase our full year 2021 outlook today to between $325 and $330 million of projected adjusted EBITDA. Our growth continues to be driven by a relentless focus on and execution of our key strategic drivers. Some highlights. Our physician recruiting efforts continue to outpace last year's strong results Our current active physician base, having added nearly 10% new physicians to our facilities this year, is now over 4,400 strong and continuing to grow. Total ASC joint replacements, which approximately doubled in 2020 compared to 2019, continue to grow in 2021, increasing approximately 108% on a year-to-date basis as compared to the prior year period. This growth is led by Medicare total joints which grew by approximately 300% year to date, and now represents over one third of our ASC total joint procedures. On a same facility basis, we continue to be pleased with our same facility revenue growth, which increased 8.3% in the quarter over a more normalized third quarter 2020 baseline. Volume made up over 6% of this growth, while net revenue per case increased by approximately 2%, as the return of lower acuity cases such as ophthalmology and GI, partially offset other rate and high acuity growth. When compared to the 2019 pre-COVID baseline, quarter-to-date same-facility revenues are up nearly 17% as compared to 2019, with approximately three points attributable to volume growth. On the capital deployment front, we've spent much of the year identifying and negotiating with potential targets while maintaining a disciplined approach. We are pleased to announce that we have closed over 130 million in transactions so far this year at an average adjusted EBITDA multiple of less than 7.5 times. The vast majority of which was deployed in three transactions that closed August of 2021 and in a syndication transaction that closed this week. Our pipeline continues to expand driven by the persistent efforts of our business development teams. Currently, we have approximately 225 million of single site acquisitions under letter of intent at attractive multiples that are expected to close in the next three to six months, subject to our typical due diligence procedures. We continue to target deploying at least an additional 100 million in proceeds by the end of this year. And at this stage, we believe we were highly likely to exceed our annual capital deployment goal of 200 million in 2021. In summary, We are executing well on our growth plans. We remain a leader in an industry with significant tailwinds and a total addressable market of $150 billion with high acuity, musculoskeletal surgical cases, and cardio procedures continuing to transition to our purpose-built surgical facilities. We are executing on our organic and inorganic strategies and plan to be a consolidator in this highly fragmented industry. With the benefit of capital deployment, and a continued strong pipeline of both organic and inorganic opportunities, we believe our business is capable of sustained mid-teens adjusted EBITDA growth. With that, let me turn the call over to Eric to walk you through some of our recent accomplishments in greater detail. Eric?