Surgery Partners, Inc.

Greetings and welcome to Surgery Partners' fourth quarter 2021 earnings conference call. At this time, all participants are in 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. As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Dave Doherty, Chief Financial Officer. Please go ahead.

Good afternoon, and welcome to Surgery Partners' fourth quarter and year-end 2021 earnings call. This is Dave Doherty, 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 filed 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, which is posted on our website at surgerypartners.com, and in our most recent annual report when filed. With that, I'll turn the call over to Wayne. Wayne?

Thank you, Dave. Good afternoon, and thank you all for joining us today. Before we begin, I would like to take a moment to thank all of our employees and frontline workers supporting the U.S. healthcare system during these unique times. They truly embody the American spirit of caring and providing for others, and we appreciate the opportunity to support these efforts and to have the privilege of serving our communities. Turning to our financial results, I'm pleased to report full year adjusted EBITDA of $339.6 million, a 32% increase as compared to the prior year. For the full year, we performed just shy of 550,000 surgical cases, nearly 20% more than 2020 and almost 5% greater than the pre-pandemic period in 2019, resulting in annual revenue of $2.2 billion, a new record high for surgery partners. We are especially proud of these results as our company was not isolated from the continued impact of the pandemic. With rising cases and successive waves of the Delta and Omicron variants, associated labor pressures and a rapidly changing regulatory landscape. As we've discussed before, our operating model has proven resilient in this dynamic environment, and the Board of Directors continues to be proud of how this management team and our 10,000 plus associates has navigated these challenges while providing the highest quality care to our patients. As we look closer at our fourth quarter, results were impacted by regional COVID-19 cases, some labor pressures in select markets, and the continued recovery from Hurricane Ida in our Louisiana facilities. Despite these headwinds, our results continue to affirm the power of our business model and the value proposition we provide. Some notable highlights of the fourth quarter include the following. Net revenues increased to 610 million, approximately 11.3% growth over the prior year quarter. Same facility revenues increased by 9.6% compared to the prior year quarter with 5.2% higher net revenue per case and 4.2% case volume growth. New physician recruiting efforts continue to produce strong outcomes, adding 24% more new recruits to our facilities in the fourth quarter compared to the same quarter in 2020. We now estimate over 4,600 physicians use our facilities on a regular basis. And finally, the transition of procedures out of traditional acute care inpatient settings continues to accelerate. Joint replacements in our ASCs were up 55% as compared to the prior year quarter and approximately 88% for the year. We continue to believe that our strong financial results are a reflection of the numerous macro tailwinds associated with the benefit of performing procedures in a high-quality, lower-cost, patient- and physician-centric setting. With a total addressable market of over $150 billion, our company was built for this moment in time. Before I turn the call over to Eric, I would like to take a moment to discuss the M&A pipeline and our efforts to continue to consolidate this highly fragmented industry. After raising significant capital in 2021, we are pleased to announce that we've closed approximately $325 million in transactions at an average adjusted EBITDA multiple of approximately eight times, including three deals that were closed in late December. Our business development team consistently manages an active and robust pipeline that remains strong heading into 2022. As a point of reference, we have already deployed an incremental $34 million in acquisitions since the beginning of 2022. As Dave will discuss in a moment, we entered 2022 with a strong balance sheet with significant cash on hand and an untapped revolver. This position gives us conviction to reach our commitment to deploying at least $200 million in capital for the full year 2022. I want to emphasize the confidence we have in our long-term growth prospects. Our management team continues to demonstrate their ability to navigate the complexities of not only the pandemic, but other challenges as it executes on the organic and inorganic growth strategies to provide significant year-over-year growth. Off the strength of our fourth quarter reported results and recent acquisitions, we are raising our outlook guidance for 2022 adjusted EBITDA to a range of $370 million to $380 million. This outlook is inclusive of the anticipated headwinds we see associated with the pandemic, including labor and supply cost pressures. With that, let me turn the call over to Eric. Eric? Thank you, Wayne, and good afternoon.