Surgery Partners, Inc. Reports Strong Growth in 2023 with Adjusted EBITDA Exceeding $438 Million

Surgery Partners, Inc. has announced a remarkable year of growth in 2023, as revealed in their Q4 2023 Earnings Call. With key participants including Dave Doherty (CFO), Wayne DeVeydt (Executive Chairman), and Eric Evans (CEO), the company reported impressive adjusted EBITDA surpassing $438 million, marking a significant 15% increase compared to the previous year. Notably, Surgery Partners achieved mid-teens growth in their growth algorithm, expanding margins by 210 basis points. In 2023, they performed approximately 707,000 cases, a 4% increase from 2022, with all specialties showing anticipated growth. Net revenue also grew 8% to $2.74 billion, driven by growth in same-facility revenue, increased acuity, and contributions from acquisitions. Furthermore, the company deployed $165 million for 15 acquisitions in 2023, with plans for further acquisitions in 2024. By refinancing their term loan and increasing their revolving credit facility, Surgery Partners has strengthened its balance sheet. Looking ahead, they have provided initial guidance for 2024, projecting net revenue of at least $3 billion and an adjusted EBITDA exceeding $495 million. The company maintains its focus on organic growth, strategic acquisitions, physician recruitment, and expanding their capabilities in orthopedic procedures.

Q4 2023 Earnings Call

Surgery Partners, Inc. held their Q4 2023 Earnings Call, which was attended by key participants including Dave Doherty (CFO), Wayne DeVeydt (Executive Chairman), and Eric Evans (CEO). During the call, the company reported strong growth in 2023, with adjusted EBITDA exceeding $438 million, representing a 15% growth over the previous year.

Growth Algorithm and Margins

Surgery Partners, Inc. achieved mid-teens growth in their growth algorithm, which is a significant accomplishment. This growth indicates the company’s ability to expand its operations and increase its market share. Additionally, the company successfully expanded its margins by 210 basis points. This expansion in margins demonstrates the company’s focus on efficiency and cost management, which has contributed to its overall growth and profitability.

Number of Cases

In 2023, Surgery Partners, Inc. performed approximately 707,000 cases, which represents a 4% increase compared to the previous year. This growth in the number of cases is a positive indicator for the company, as it signifies an increasing demand for their services. Furthermore, all specialties within the company experienced growth as expected, demonstrating the company’s ability to effectively target and cater to different segments of the healthcare market.

Net Revenue

Surgery Partners, Inc. achieved an 8% growth in net revenue, which amounted to $2.74 billion. This growth in net revenue can be attributed to several factors. Firstly, the company experienced growth in same-facility revenue, which indicates the positive performance of their existing facilities. Additionally, the company benefited from increased acuity, which refers to the severity or complexity of patients’ medical conditions. The ability to handle more acute patients has allowed the company to generate higher revenue. Lastly, Surgery Partners, Inc. also saw contributions from acquisitions, indicating the strategic value of these transactions in furthering the company’s revenue growth.

Acquisitions

In 2023, Surgery Partners, Inc. allocated approximately $165 million for 15 acquisitions. These acquisitions have played a significant role in driving the company’s growth and expanding its market presence. Looking ahead, the company anticipates more acquisitions in 2024, demonstrating their commitment to strategic expansion and their confidence in the benefits that acquisitions can provide.

Refinancing and Balance Sheet

During the year, Surgery Partners, Inc. took steps to strengthen its financial position. This included the refinancing of their term loan, which likely allowed for more favorable terms and reduced interest expenses. Additionally, the company increased its revolving credit facility, providing them with additional liquidity and flexibility. These actions have contributed to the strengthening of the company’s balance sheet, which is essential for long-term stability and growth.

Initial Guidance for 2024

For the upcoming year, Surgery Partners, Inc. has provided initial guidance. They expect net revenue to be at least $3 billion, indicating a significant increase compared to the previous year. This guidance reflects the company’s confidence in its growth trajectory and its ability to capture a larger share of the market. Additionally, adjusted EBITDA is projected to be greater than $495 million, further highlighting the company’s strong financial performance.

Organic Growth

Surgery Partners, Inc. places a strong emphasis on organic growth, which refers to the growth that comes from within the company as opposed to growth through acquisitions. By focusing on organic growth, the company aims to leverage its existing resources and capabilities to expand its operations and increase its market share. This strategy allows Surgery Partners, Inc. to maintain control over its growth trajectory and optimize its performance.

Strategic Acquisitions

While organic growth is a key focus for Surgery Partners, Inc., the company also recognizes the importance of strategic acquisitions. Acquisitions enable the company to rapidly expand its operations, enter new markets, and acquire specialized expertise or technologies. Surgery Partners, Inc. has demonstrated its commitment to strategic acquisitions by completing 15 acquisitions in 2023 and expressing their anticipation for more acquisitions in 2024. These acquisitions will play a crucial role in the company’s growth strategy, allowing them to further strengthen their market position and diversify their service offerings.

Physician Recruitment and Expansion

To support its growth and expansion plans, Surgery Partners, Inc. has placed a strong focus on physician recruitment. By attracting and retaining talented physicians, the company can ensure access to high-quality healthcare professionals and enhance the range of services it can provide. Additionally, the company has plans for expanding its capabilities in orthopedic procedures. This focus on orthopedic procedures aligns with the growing demand for these services and allows the company to capitalize on this opportunity.

In conclusion, Surgery Partners, Inc. has reported strong growth in 2023, with adjusted EBITDA exceeding $438 million and a 15% growth over the previous year. The company has achieved mid-teens growth in its growth algorithm and expanded margins by 210 basis points. The number of cases performed by the company also increased by 4% compared to the previous year, with all specialties growing as expected. Net revenue grew by 8% to $2.74 billion, driven by growth in same-facility revenue, increased acuity, and contributions from acquisitions. Surgery Partners, Inc. has allocated a significant amount for acquisitions and anticipates more acquisitions in 2024. The company has also taken steps to strengthen its financial position through refinancing and increasing its revolving credit facility. Looking ahead, Surgery Partners, Inc. has provided initial guidance for 2024, expecting net revenue of at least $3 billion and adjusted EBITDA projected to be greater than $495 million. The company focuses on organic growth, strategic acquisitions, physician recruitment, and expanding capabilities in orthopedic procedures to drive further growth and increase its market share.