Surgery Partners, Inc.

Good morning and welcome to the Surgery Partners second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dave Dougherty, CFO, please go ahead.

Good morning. My name is Dave Doherty, CFO of Surgery Partners, and I'm here with our CEO, Eric Evans, and our Executive Chairman, Wayne Devite. Thank you for joining us for our second quarter 2023 earnings announcement. During our call, we will make forward-looking statements. There are risk factors that could cause future results to be materially different from these statements. These risk factors are described in this morning's press release and the reports we file with the SEC, each of which are available on our website at surgerypartners.com. The company does not undertake any duty to update these forward-looking statements. In addition, we will reference certain financial measures that are considered non-GAAP, which we believe can be useful in evaluating our performance. The presentation of this information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. These measures are reconciled to the most applicable gap measure in this morning's press release. With that, I'll turn the call over to Wayne. Wayne?

Thank you, Dave. Good morning, and thank you all for joining us today. We are pleased to report another quarter of strong top-line revenue of $667.6 million and adjusted EBITDA of $100.2 million, both of which exceeded our expectations, inclusive of the cyber headwind that occurred in the quarter. Before we dive into our financial results, I want to remind everyone that in late May, a few of our facilities in Idaho were impacted by a cyber event. Out of an abundance of caution, we immediately enacted a well-rehearsed business continuity plan designed to help protect our patients, key stakeholders, and the integrity of our IT environment. This deliberate process was completed within the month of June, and all activities in these facilities have returned to normal. Throughout the event, we continued to safely care for patients, albeit with capacity constraints associated with downtime protocols. The team's proactive reaction mitigated the impact, which we estimate to have reduced revenue by approximately $8 million. While we anticipate insurance recoveries, our financial highlights related to consolidated revenue, margins, and same facility metrics are inclusive of this $8 million revenue headwind. Despite the impact of the cyber headwind, both our revenue and adjusted EBITDA exceeded our expectations for the quarter. Some highlights. Net revenue was $667.6 million, nearly 8.5% more than the prior year, with same facility revenue growth of 8.3%. We estimate same facility revenue growth would have grown approximately 10% normalizing for the impact of the event I just described. Adjusted EBITDA was $100.2 million. representing 16.4% growth year over year. Adjusted EBITDA margins improved 100 basis points over the prior year and 150 basis points sequentially to 15%. For our consolidated and unconsolidated facilities, we performed over 155,000 and 23,000 surgical cases, respectively, representing case growth of 5% over the prior year. Our surgical case growth continues to show resilience in both the pandemic and macroinflationary environment, Since 2019, our same facility cases have posted a 3.2% growth per year. Finally, we deployed approximately 60 million acquiring ownership interests in new and existing facilities, opened one new de novo, and announced a new three-way partnership with Methodist Health System. And our pipeline for each of these development areas remains robust. Eric will provide more detail in his remarks. We continue to be pleased with our balanced approach to growth, with all pillars of our long-term growth algorithm either exceeding or meeting our expectations. Based on the strength of our second quarter results and our continued positive outlook related to our numerous investments in the business, we are raising our full-year adjusted EBITDA guidance to greater than $435 million and are maintaining our revenue outlook of at least $2.75 billion. This refreshed outlook is inclusive of the impact related to the cyber event. Dave will discuss our guidance in more detail later in the call. With that, let me turn the call over to Eric to highlight some of our operational initiatives and recent investment activities. Eric?