Surgery Partners, Inc.

Greetings and welcome to the Surgery Partners third 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. At this time, I would like to turn the call over to Dave Dougherty. Please go ahead.

Good morning. My name is Dave Doherty, CFO of Surgery Partners. I'm joined today by Eric Evans, our CEO, and Wayne Devita, our executive chairman. During this 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 FCC, 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. Before turning the call over to my colleagues, I would like to share highlights of our third quarter financial results and our outlook for the balance of the year. This morning, we reported net revenue of $770 million, representing growth of greater than 14% over the prior year quarter. On a same facility basis, net revenues grew 4.2%, with surgical case volume growth in the quarter at 3.7%. Adjusted EBITDA grew 22% to $128.6 million, generating adjusted EBITDA margins of 16.7%, expanding 100 basis points as compared to the prior year quarter. Our results were marginally affected by Hurricane Helene, which impacted several of our facilities and operations in Florida, Georgia, and North Carolina, as many took precautionary measures in the last week of September. This storm and Hurricane Milton that followed largely only affected the scheduling of cases, but we did have several facilities that sustained damage, At this point, all of our facilities are reopened, but some are only performing limited volume. In the third quarter, we continue to see growth in total joint replacements in our ASCs, increasing 53% in the quarter when compared to last year and a five-year CAGR that's greater than 80%. We continue to experience strong and sustained growth in this area as physicians, payers, and patients increasingly see the value of performing these procedures in an ASC environment and we are well positioned to capture this ongoing shift into our sites of care. Eric will provide additional insights into our physician recruitment and expansion of our total joint programs in his remarks. Moving to M&A. While we continue to focus on expanding our footprint in existing markets, we've been pleased with our team's ability to enter and grow in those markets that represent the largest commercial and Medicare footprint opportunity, specifically Florida, Texas, California, New York, and Illinois. In the quarter, we deployed $24 million on five in-market transactions. On a year-to-date basis, three of our acquisitions were in our targeted high-growth markets of New York and Texas. In addition, last week we completed an acquisition of two leading multi-specialty orthopedic-focused ASCs in the Chicago market in partnership with Dooley Health, the largest independent multi-specialty physician-directed medical group in the nation. These ASCs have a demonstrated history of strong operating and financial performance and have a very favorable outlook for high-acuity growth moving forward. These new ASCs will join two other ASCs we operate in the Chicago market. We're excited about the growth potential of this market, fueled by a strong network, Dooley's reputation for providing an excellent patient experience, and high-quality clinical care and execution on our proven growth and efficiency capabilities. Our business development team continues to source a robust pipeline of acquisitions and de novo investment opportunities, and we believe the capital deployment aspects of our growth algorithm remain achievable. On the strength of these results, we continue to project full-year net revenue and adjusted EBIT outlook of greater than $3.075 billion and $508 million, respectively. This outlook represents at least 13% and 16% growth in net revenue and adjusted EBITDA, respectively, as compared to the prior year. With that, let me turn the call over to Eric to provide additional highlights for the quarter. Eric? Thanks, Wayne, and good morning, everyone.