Surgery Partners, Inc.

Greetings. Welcome to Surgery Partners' first quarter 2024 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 conference over to Dave Dougherty, CFO. Thank you. You may begin.

Good morning. Good morning. My name is Dave Doherty, CFO of Surgery Partners. I am joined today by Eric Evans, our CEO, and Wayne DeVite, our Executive Chairman. During this call, we will make forward-looking statements. There are risk factors that can 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 filed with the SEC, each of which are available on our website, 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 GAAP measure in this morning's press release. With that, I will turn the call over to Wayne. Wayne?

Thank you, Dave. Good morning, and thank you all for joining us today. My initial comments will briefly highlight our consolidated first quarter results and the strength we continue to see in our long-term growth algorithm as it relates to both our organic and capital deployment initiatives. I will then provide a brief update on our recent acquisition activity and refreshed outlook for the remainder of the year before I hand over the call to Eric and Dave. They will provide additional insights into our operating and financial performance for the quarter along with recent activities to further strengthen our balance sheet and support our long-term mid-teens growth goals. Turning to our first quarter results, we reported net revenue of approximately $717 million, representing growth of 7.7% over the prior year quarter. On a same facility basis, net revenues grew 10.2% as compared to the comparable period, representing a combination of both case and net revenue per case growth. Adjusted EBITDA was $97.5 million, representing 8.2% growth over the prior year quarter, with adjusted EBITDA margins improving in the quarter by 10 basis points to 13.6%. Finally, our efforts to pursue higher acuity procedures continue to produce strong results, with total joint replacements increasing by 54% over the first quarter of 2023. Eric will provide additional insights into our physician recruitment and total joint expansion programs, along with our early success in targeting orthopedic surgeons specializing in total shoulder procedures, which were removed from the inpatient only list starting January 1st of this year. We continue to be extremely pleased with our same facility growth and the expected long-term sustainability of our organic top line and margin expanse and growth goals. As previously stated, our short-stay surgical facilities have been purpose-built to capture the macro tailwinds of both an aging population and the increased movement of higher acuity procedures into a purpose-built outpatient setting. We believe our results reflect the strength and durability of our business model as we pursue this highly fragmented segment, which currently consists of over 6,000 ambulatory surgical facilities and an estimated $150 billion total addressable market, representing both current and expected surgical procedures to be performed in an outpatient setting in the coming years. Moving to our capital deployment activities. We maintained our disciplined approach to sourcing and executing on strategically important acquisitions at attractive multiples. As a reminder, we previously completed a $60 million transaction in early January that we had initially targeted closing in the fourth quarter of 2023. Since that time, We've maintained a robust pipeline and anticipate closing an additional $200 to $250 million in acquisitions in the second quarter of this year, with the low end of that range having closed on April 30th. This level of deployment reflects both an annual targeted goal of at least $200 million, along with the redeployment of the remaining net proceeds from assets divested in 2023. Our business development team continues to source a robust pipeline of acquisition and de novo investment opportunities, and we believe the capital deployment aspects of our growth algorithm remain predictable and executable. Before I turn the call over to Eric, let me provide a brief update on our outlook for the remainder of 2024. Based on our strong organic performance in the first quarter and the timing of our recently completed acquisitions, we are increasing full-year net revenue and adjusted EBITDA outlook to at least $3.05 billion and $505 million, respectively. This refreshed outlook represents at least 11% and 15% growth in net revenue and adjusted EBITDA, respectively, as compared to the prior year, and balances our optimism for the company's growth with an appropriate amount of conservatism. We look forward to updating you on our progress as the year unfolds With that, let me turn the call over to Eric to provide additional insights for the quarter. Eric?