Surgery Partners (SGRY) 8 May 212021 Q1 Earnings call transcript

Greetings, welcome to Surgery Partners, Inc.

First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference call is being recorded. the to turn Cowhey, host, now CFO. will conference your over Tom I you. Thank

You may begin.

welcome Partners' Officer. to earnings and morning, Good Surgery is Cowhey, call. first Tom Chief Financial This XXXX quarter

Partners' Joining are Surgery Chief Officer. me Executive and Wayne Surgery Partners' today Eric Executive DeVeydt, Evans, Chairman;

during release we projected to results press As update this the that from forward-looking currently factors are file SEC. will differ statements. described with morning's future a forward-looking such not The reminder, impact cause those actual make reports we Company Risk results statements. in to may undertake and statements this call and could the duty any materially does

our The our today's to believe results additional our found information presentation which measures, With the call, accordance in discuss will should is which measures can when not over during be report turn with can be that, certain or for on at in Wayne? of we useful these filed. substitute I'll GAAP. considered as the earnings release, A recent a non-GAAP performance. of quarterly website call Additionally, in be isolation Wayne. prepared surgerypartners.com this reconciliation Company our in posted most and evaluating

thank and today. morning, Good all Tom. you, for joining us you Thank

over While growth spoke short in achieving this it's team in been execution weeks only adjusted a last investors, XX% with our year. toward few drives our since we XXXX as EBITDA continues

quarter. to $XXX our April nearly full-year to increase XX% momentum projected in remained COVID and the growth EBITDA give least short saw by year This performance and month strong rates and a confidence representing million storms, early of was While EBITDA. that at of $XX our quarter outlook in delivered adjusted us winter focused the million was teams over the on impacted January first February nearly our XXXX, adjusted rise, prior

as a inoculation seeking remains recent our and patients position safe from industry providers rates COVID as haven the surgical increase unique As in the return, spikes the for country's and care deferred care steadfast.

the XXXX up business over grew many replacement of to XX% as our doubled and prior surging first joint value year development continue XXX% strong increasing efforts, XXXX, year's quarter year quarter almost compared robotic new Our over year. by strong which of showcases compared last with grow last which with XXXX, in and associated by the over accelerated physicians buoyed outpace Total physician versus to compared results in year-to-date is model performance in our XX% period. including the recruiting joint key to our our investments cases to initiatives, the case our to the our first as of prior And continue total growth volume replacements, quarter.

over by All of up approximately with X% complemented of this strong together our growth nearly revenue prior strong net quarter, X%. volumes per revenue equally year same-facility comes XX% in the case growth

our in to short-stay to mentioned XXXX, fourth portfolio on quarter of focus we As our business surgical call, allow us prune continued facilities. core to our during

major a move as primed inpatient what outpatient of from to now migration setting. on the capitalize and we to on are offensive We cases see the

approach into and are which targets, our deploy specialties. capital. previously, discussed and the of nearly musculoskeletal potential raised billion of $XX markets market $XX to in that settings identifying $XXX of can migrating existing approximately cardio in procedures. purpose-built there and and our ASCs from hospitals targeted our with are believe goal we surgeries It vast we've As we lens the early target maintaining majority spent inpatient accretively capital opportunity our year performed represents be negotiating that for in of platforms surgeries part segments, billion disciplined that that a surgical million the proceeds January today the new investments and is with of that further leveraging that with deploying deployable the a We've is believe in our to we while

consolidating few quarters. Our fragmented to In purpose-built pipeline with ahead million cardio weeks more And deploy addressable remains a summary, we ago. robust with to toward industry. our than cases make platform musculoskeletal leader a of progress year, significant the in in coming $XXX goal just over remains billion our surgical expect even and more target industry with or and an a $XXX a market, surgical tailwinds opportunities acuity transitioning proceeds are us this total a to for highly a facilities high we

moment this over built me the of let Eric? for in detail. our greater some through turn that, to Our accomplishments walk company in you time. call With was Eric to recent

and my Wayne, three good will focus areas. everyone. you, Today, I on comments morning, Thank

First, a few of provide I first additional results. highlights will quarter our

orthopedic quarter, both Falls, at of over meaningful as we net cases GI increased achieved XX% quarter. such were Second, very with cases, I'll volumes I third, pleased a spine first our strong adjusted that the expectations in and in our will and well by and hospital our new around of grew see year key and the in the rebound revenue some XX% revenue and We company spend and mix by following: of XXXX. growth revenue of Idaho to of with continue our highlighted EBITDA provide year-over-year for as growth as in results, revenues same-facility of on quarter additional our initiatives, approximately revenue strategic approaching growth higher $XX the rest details moment led nearly total XX% first Also in exceeded prior acuity over which surgeries. a the case, note, per expectations quarter, million our growth

optimistic forward continued of XXXX. and will adjusted in as EBITDA quarter solid strength our trajectory margins the April first performance we are We we by with these Margin XX.X%. encouraged continue are into see of trends rest quite the reaching the in was move

adjusted first Looking year EBITDA more margins quarter the XXXX and recognition, are first when closely margins. quarter, our at point consistent you with prior basis quarter XXX grants our XX.X%, exclude underlying a increase over performance, CARES

mix are we we prior that performance the consider by in We to first and periods. to encouraged see both results mix continue increases compared this in quarter acuity government as as substantial our payer

to on operational Moving some highlights.

Our is growth care leading and targeted facility of line and same-facility investments recruiting, a contracting. focus to physician level result our direct service drive managed expansions, our in ability data-driven on relentless

quality see has continue to surgical the targeted short-stay physician efforts increased physicians and physicians. on focused We recruitment demand for our our new from highest approach facilities our

of XXXX over joint to cases an This to quarter as continue the well we and and year. and year-ago. in our a an added has recruitment prior of the our Wayne footprint XXXX continue compared focus total both our result. of mentioned, as XXXX to in new as March first compared in total exceptional of we in XX% Over increase we toward XX% As to number the acuity to alone, joint performing in targeting cases. quarter ASCs quarter increase are more this first ASCs a we cases in the first performed over importantly physicians compared in year; area the higher in our execute of joints XXX% XX% led the to who saw Further, physicians total performed prior

of installed component ASC over expand March of XX% Robotic investments. of robotics believe we an prior that our key across up XX on footprint. ASCs nearly of were the been cases on base we investments our the has this where can return year Another end our reached continues and increase as an over in has quarter achieve to appropriate

to under to quarters. we of As add intent continue look and transactions we that excellence our million portfolio currently continue we We of pipeline coming capital. letter to execution, to improve to total also have and $XXX refine the that look our over and deploy in operational will close a

of also process. stage over million $XXX at transactions an earlier in evaluating We are the

is are goals in robust of activity acquisition capital fickle us to While exceed is attractive specialties to this we confidence meet deployment gives be and geographies, for and change, a subject year. that at high and our of which attractive always or able opportunities, level pipeline will this multiples

the Moving on to XXXX. outlook for of remainder

now for reasonably we the that the quarter a as while how prudent produce EBITDA XXXX. our performance maintaining given we we posture, think least this year have calendar. organization, we our adjusted million will at captures first $XXX early we in believe upside believe results, We we in about are recognized the floor of this As an momentum in

some operational this continued We of additional I thinking a Act we spend to last recognition capital strong and believe moment years. deployment outlook. revised could execution, about to that several milestones to over have the the CARES summarize, opportunities continue grant further upside want To achieved represent

in significant portfolio, made progress closing have and toxicology We businesses our selling non-core our lab. focusing

value significant teams growth. in invested teams we our we robust recruiting earn to paid are in leading We care for and our new fairly the have business to ensure create same-facility managed to

musculoskeletal estimate procedures on We that lines. our is over XX% from now have acuity of focused our revenue service higher we and generated

weeks, We have to preferred savings capital prudently future dilution. to our achieve operational obligations shareholder few robust returns, sheet, restructuring and reducing to And balance interest defer just has will convert raising our in which to the accelerate maturities. execution inorganic stock our led a growth managed shares equity this allow company and into outstanding common

our by will will on color over we that Tom, and excited continue who we turn progress momentum. I outlook. can call so year our results With the financial We additional build Tom? this confident that, remain far are on to this to and provide

Eric. Thanks,

over our on minutes quarter prior surgical XX% were performance liquidity the on with and $XXX first period. XXXX. as topline, X% over the year before few to quarter the Starting in to we a financial spend Revenues I'll increased than million, quarter into some over move for First, moving higher considerations first the cases. XXX,XXX cases

$XX XX% first hospital from reported prior basis, in revenue increased community year mentioned, On a Falls, same-facility approximately quarter. Eric Idaho new over nearly compared the XX% as in quarter. contribution As million an our of total the included increase to results

increased the our components was approximately revenue of higher case almost prior net mix and period the at year acuity Looking and X% driven per this pricing. than case by increase, X%, volume

earnings. operating Turning to

been EBITDA nearly quarter, million adjusted quarter treated EBITDA was of Act recognized funds and and sheet. an Our not by accounting new the income, million in non-controlling we as XXXX. guidance million than $XX.X grants HHS, additional March million balance for that comparable XX% in XX, of we are grant approximately period grant as received we liability from our At increasing higher a $XX million, $X the grants first earnings using after quarter $X XXXX CARES on $XX.X interests. have recognized in In the have approximately of deferred adjusted first

in We actively continue of ultimate it believe on recognition when determine sheet is from balance with expect guidance the of the In to to be event monitor recognize majority these unable current XXXX. we recognize await year. guidelines, to Act government. appropriateness CARES accordance the portal to this clarity grants our opens submission possible continue as to remaining are grant in repay will funds that able we we the Based the them the later HHS unlikely on to to we guidance, that we CMS

costs. we continues to integration in quarter, losses transaction quarter our progress make integration recorded toward Idaho achieving in and the with million profitability. approximately acquisition During million and hospital Of Falls, associated $X as note, of first of in de included $X.X facility transaction novo acquisition costs that

We results profitable, of until in from half becomes expect through which the this facility to expect XXXX the the report year. facility second separately we

payments. We cash advance $XXX which million, strong position and includes liquidity. ended approximately on of with to cash flow the $XXX of million quarter a Medicare Moving

on held and funds the these Medicare have financial early these commenced in will advance XXXX. quarter revenue statements. into deferred second revenue continue We future as Recoupment payments from our of

cash of $XXX quarter. cash inflow of Moving from operating back the of shareholders. equity Partners million on in approximately approximately million offering, inflows $X net dilution to $XX.X disposals, activity Surgery million, had payment $XX and made million investments; a stock and the reduce acquisitions, through net to XXXX syndication preferred February approximately to CapEx common generated the cash first deployed dividend

the impact as Hospital forward the debt payment million in total to agreement of the of $XX until the Idaho ratio payments of offering to equity projected first trailing quarter; X.Xx. at net the credit XX-months and X.Xx and of of from for Falls of funds, quarter the profitable; of repayments ratio increased been continued EBITDA EBITDA. this fourth becomes Normalizing result under adjusted company's total payment calculated the end receivable include the EBITDA of net million $XX Looking debt to remainder advance approximately cash approximately the uses to advance Community decreased tax proceeds some the would of for other the have a year. net as Medicare The Medicare material of XXXX, for it funding company's

the payment to its of X, of Department Additionally, April $XX made on relating agreement. delayed final Labs, Justice payment settlement to Surgery XXXX Logan subsequent the as a of to million that part agreed Partners to quarter was close, our

a the third As Logan ceased operations XXXX. Lab quarter reminder, in of

like these incurred agencies of company refinancing As Surgery million The on continue light $X.XX that our also on upgraded completed We'd and X, XXXX, on $XXX of Eric debt extending $X credit the to of we August the rate. swaps support will extended our in the the corporate is extending loans company XXXX. thank that in is cash billion continued of refinancing million rating the and of $X.X to Moody's of prevailing transactions January, for while including transactions transaction May the raise capital we term and moment company as credit of it a the The loans to refinancing term process In April Partners this maturities. XXXX, which deleveraging of mentioned, closed save in take their strategies. the take on in rate to billion annual maturity growth, incremental approximately of we to also April interest over net lenders equity of XX. advantage of interest, the execute its important projects market

the stock stock notice of XX closing trading Finally, convert the all out May weighted it April XXXX shares criteria the including its average had Capital's million late a as achieving of of company company, XX, in a the for excess days conversion Bain based into the of announced meeting entirety $XX of approximately per election in XX, to volume XXXX. for at common of that price on Capital of Bain April, XX.X prior XX on share sent preferred the intent to

in quarter, a first XX.X conversion, service investor company confident this key Bain continued has go to Throughout emphasis adjusted trajectory. in and to stated will continued lines and capital of our as time commitment and and opportunity execution on expanding enabled recruits management have opportunity strategic growth, million. negotiations at confident announcement, the the their valuable cardiology, common the available to offensive been have has drive deploy, $XXX quarter this execute the coupled of continues growth core the to fuel the year. We have outstanding. supporting Following our remain targeting shareholder engaging be has EBITDA our remain approximately performance us in our shares on conversion million Bain us the our rate physician at XXXX growth the and musculoskeletal we such model all high-value increase to to we the guidance and continued and This returns. to with as on strategies growth to we first as partner our least provided

performance, CARES as Act strong as including March, and outlook first well quarter of a remains the strong in revenue for Our from sequestration. recognition our the grants outlook our Key in performance change volume unchanged. tailwinds considerations delay include of

community we is hospital earnings and While statements deferred would about year, guidance, as continue related that that returns, in to more we as new weighted achieves provide in to think of quarterly the earnings. brought our this of believe our do profitability previous Falls as we XXXX COVID earnings seasonal remind care back-end be Idaho will investors not and progression into we

growth $XX.X our stage adjusted are for persists prudent April Operator? remainder and that approximately on With I'd which believe are the our volume acuity of momentum we on continuing that, will this the XXXX start second year revised the grow. excited and the accelerate off focused beyond. a growth over a rebound EBITDA capital we as short, year. Further, second in continue the of outlook XX% volumes that We and at trends, to remains questions. we As to represent quarter, is like the encouraged based early we by show year acuity more to lower operator our to call the directly our look and back the deployment are over cases team prospects throughout turn project by million. of through In to quarter it strong higher

is Jefferies. Thank Tanquilut question Brian first you. proceed. Instructions] with [Operator from Our Please

start guys. quarter. a Hey. I'll guidance. you since Congrats the Good morning, on Tom, with strong you really mentioned

As I a number by think the raising about think right raise, to conservatism that the for beat just lower slightly you're that your than your beat guidance in that's QX is year quarter? and it the just

Hey, Brian. Wayne. actually This is

appreciate all, of the and morning question. First good

a pandemic simply strong, in a down stating those would obviously the while plus we clearly by start by facilities million. at guidance I prudent it's and obvious, if say being and and would Texas But saw we the the were we giving heavy in year March quarter were in were more quite many guidance the for and quarter XQ. and trends we by We still year. that $XXX to the are April the in particular January the saw be the and impacted we seeing in cover there. impact Let in post remain to that persist, me the with we we just least all able had in from equally in raising saw still early was storms by impacts XX% that we that said,

think prudent right months more come, it's into to we year. So four the the We're maintain just to now but posture.

ability your sense. been to charts, thinking Wayne, that, levels off you growth want of right? it a I high since have you sustain How has these really Now, going performance of strong, to are forward? the about that organic call you same-store And if makes lot now, obviously

Yes.

these to growth think as because I investments Falls, over really a multitude as many ASCs volumes at effect Brian, of whether that of I'm recruiting built I think been going the proud and is as because community same-store And we're years, last one and, the we these that from built hospital comment out efforts. our because, really that that what the of to coming this our physician operations. forward we de most management a is that execution, actually three years, Eric necessarily ask in the we're X.X not it's interesting I isn't want which of had Idaho put culture we've growth last all company were it's of we've in team the about, thing is to surprised the on in novo emanating So compounding be where it emphasize the talking

so And like, growth, is about surprised that very it small of bit a piece the when everything maybe be Idaho think will a maybe, hospital I some you that that, Eric, in of think highlight about see to happening. relative else it's people little while to driving

over with what Yes. would And really as thanks this, surprised question. couple Brian, into growth pleased expectation is. our that to growth. Clearly, of as Portfolio would things. actually far the our same-store growth. out coming a I this it's XX% is by And for wins where I is balanced we're not year point this – point

this even couple Idaho standpoint, So that, a if growth which Falls into of that same-store of earlier Community than if Hospital, less the at points a year it's look growth. came you remove from you

by feel it's facility, performance. physician like service of it region, way just really is would balanced was driven no number will type the plan of recovery. came about the ortho, focus But efforts, where growth. by balanced, it's It's growth is operating the one a kind and specific point type way obviously. growth, specific the with this approaching investments, pleased we what and combination by So our driven the on you not really that you're geography, We're the of good we're is surprised really the and across that the out not not specific one one operators' we facilities, line facility still we're it's a I feel facility the in, XX% no tell recruitment very of or at I

Falls is to growth drive several that organic progresses note going ramp And to Idaho will to progress. and mean year that just a continue up. Hospital Community those the as as as I years

of less growth. You though, should to X% than that same-store relative it growth, represented our know,

we see the only So of being the more that get year. across entire other into course, book is further will an and of we business grow XX%-plus that asset our only as

question then guys – and earlier as Eric, recruitment Makes sense. about one and MSK, you last And me, the early seeing capability. right, of the there talked you that know building physician momentum in I very in from you're were you're

those So those start the seeing an in cardio like? you us if of momentum about can you're How color different give with are are we conversations what conversations terms what as thinking cardiologists? opportunity, And there? as any in

CMS about done great cardiac we surgical a right. to It's facilities, open Yes. excited question. what Clearly, up are short-stay has to

we that I an do opportunity. we're as So the innings. really think in see early

years does conversations about think want in labs system out orthopedics, to to That create year to quite those to have cath we've you means early rhythm centers of how cardiac us it's you, is XX partner centers our years, mean the to added a us about cardiologists, you get several initially. if a working some So We move momentum like And tell with I the stuff of last who just capacity. joints innings, in five with hope but cath health not we're management. a taken we're to year would to the total well. labs talking conversation cardiac is five then for are a over standpoint, cardiac their many started. to XX from get that going that even move

them thing we really very experience early patient-centric a physicians win they record We innings. one And steps run be established and it's when to And track of clearly so approach built that have is our the way see of we some we early are happening, those time. relationships. efficient. those the over facilities, But

surgical in also hospitals. developing of would too, we earlier a further are say, our couple mentioned cardiac I I As things

another that the that quarter would we opened cardiac in we procedures. management hospital and rhythm doing for And hospital a had last had open heart started so first an I the just program time mention,

seeing we're a as not hospitals So It from standpoint. well. consolidated physician is first orthopedics, unlike because started, when it cardiology was surgical in story comes employment it a when we market-by-market as it to our

there are employed. are markets the are also where There cardiologists all where So many they're many country the in not. markets

the So be by time not, going through. be those save when I going it's to you going less can making the faster, think markets take where markets healthcare they're kind growth. opportunity structurally. right multi-year, of of the obviously, transition to of have sure and location, the same complex and but things in they manage value system because same But a creation much be the think, less to it's bit Other will – procedures will look are it's we done at we the to kind how

really a have right. strong We growth in small cardio. right It's now, end

will growth for there that's an able outsized think be where ortho going continue. while to showing it's to be a tipping a It's start and but growth, a like we to So out. ways come we'll really more going point

congrats and Awesome. Thanks again.

Thank you.

Brian. Thanks,

question Bank Kevin proceed. with next America. Fischbeck from is Please Our of

Okay. Great. Thanks.

the or to same guess to want I money, there. your doesn't new Just doesn't guidance I we're include sounds CARES to want the I received money guidance, CARES date page it also the confirm, any on make assume sure like guess, but you

of incorporates worth the year we is guidance print that so in printed Hey, Brian. It's we the we'll excuse what first EBITDA of end fact the at and nearly believe sorry, Kevin, for had Tom The $XX – the me. million Tom, quarter. I'm it's

at this we capacity I can't I physicians do run point, you this just like where we that have driving guess understand doing. recruiting I of Okay. imagine rate? because start how of in physician are Great. then growth and seems a of to lot facility today that is of would And guys you're type keep it are to I some guess, I the type trajectory because the guess, the want much clip. at adding that that longer you reach

So great in on This it's dive I'll that Eric. a is question. just one.

out a will lot of There facilities standpoint, I have From where it relatively are of to lot see but by of say new this every there a we varies what We where to still kind us we're us ahead a add that have runway capacity. left. that with. work for face opportunity is We year them, capital-light that capacity adding a market, you building don't for and where constraints at we're to face sure a lot of of we're capacity don't capacity, it's make we point markets physicians trend.

for And watch And I physicians. any new see there's gets as we group do a docs our are in to in now add so same-store that in closely. opportunity of opportunity recruit change a near-term would whole to We fact try from that, don't us cardiology recruitment a added, who perspective.

them standpoint, out of I market. safe driving to are procedures out in and acuity that it's really near-term those the coming outcomes any in physician a getting do. what of ortho recruit certainly on again, because On that because of to higher the opportunity. a lot use the docs in would Clearly, see change tried peer we're we of attention the sentiment up us side, lot help made ground a But kind success don't our us from had success who point of they now hadn't see a past COVID, us an drive they And allowing just to we see that we place opportunity, maybe efficiency come. is actually physicians' positions the great

on the the and getting spreading terms that to were that that them data-driven add mouth impact bigger compounding ways docs We of last we took came the recruit our and uncertain all been not maybe we time up over year is are doctors thought, that of would on growing we right back we're really that's the Eric analysis think procedures grows a hit at we've time, having want us through recruited what's board. as of volumes. change moving happen, that thing in overall we of doctors accelerate over that COVID of fear facilities of we how than how surprise XX%, really very matures thought acuity and number then faster actually the looking XXXX volume XX% is as that nice in factor in last of capacity. doing about of I those coming in our first that and right in And I is amount more. the in the new finished think we've because and doctors the make that we remarks are I obviously and been quarter, much would spotlight one Kevin, sure we for of talked a too, but physicians in first it by And in prepared that quarter. put said, the recruited focused a started and actually is in why are in XXXX, that I we has recruited word Like then year right and some about that those retaining lot And to and how that. point procedures how docs unknown

look at is of take out started, when there, start a So two-year we then. capacity we there kind and if we building a see we we need that lens

most productive next state-of-the-art decade for that runway later when we you think has a there. Tampa, up in half now about year our was given at the and facility so a And the X-OR, down opened a us and scenes facility

that's we so take. And approach the

too, always this years that because we always have two this a that lens is growth out, our view continue. know company always is to going So as

procedures adds I just from would every year Yes. that not organic the physicians, allowed are new perspective, existing new CMS And right. physicians one of the thing our Kevin the it's add,

And at what coming our now, new docs and facilities we our They already do are to suddenly like our look they doing procedures look that in we at that now so are at volume they do us. facility. can

of behind procedures in we then is driver or we that of can we why use elsewhere, us driven market figuring physicians too so and big if focused and year has done on who story just like available partners we tools like every us. robotics to has do and procedures to So their right a they earn that us. those business doing physicians on happening? our we've lot with approach is book liked that's focused the out been such us data of it bump have we're get really was really And can they very been that been sure and – now that more an of took what physician to us already making extremely a ASC already part had do is can the they share and simply new from allowed there that be that, key environment is of them that a additional doing And why procedures

win us. huge a been for that's so And

early or maybe numbers, XXXX, great. guidance this right, have newer just All guys I is early us kind it's are $XXX question, can for but raise, guidance we impacting double-digit jumping-off about us. I that's guess with some point obviously you kind of growth given to something compounding still to guess this talk last Is year. of mean apply a this is algorithm next about that I since million of of still the is think kind it we COVID and for that CARES,

in for mid-teens or that immature consolidate Kevin, the made early XXXX us to approach the in very about it growth to plus raise to unique did very it's a we and be that obviously ability be forward. going thought But QX, industry organic fragmented double-digit growth we we our beyond. we our rate to low with talking clear So would capital

outlook don't opportunity if go the get to we're year later sooner, I mean more it year. necessarily we capturing that I next it So for means the just simply will in would know change and have that

in, year good I this we real we about feel double-digit off So, that. where all that finished will of

about Yes, what portfolio added and bit, I But and at really have we Kevin, it's what right. there. to a There XXXX. mostly we're organic is that think some I basically organic about we late realize little a we as think think that delivered at double-digit in basis, growth we replaced, we've on think important talked par reshuffling happened

It's as as And as really wanted we that's kind offering, north and to of to you at quite when but kind might multiples the is of that the honestly, drive three the when do deploy into of I ability the maker on real capital received double-digit of capitalize of last have years. should capital difference course third attractive our stool, really nearly the that's here. so to much about from to of – bridge $XXX we able the the ability we just we just about deployable how haven't something to over the think deploy two the And been we worth I that think you think that think that leg million teens. equity get really to

helpful. that's right, Thank you. All

Thanks, Kevin.

Citi. next Giacobbe from Our proceed. with question Ralph Please is

– in guess weather demand how back, physician Thanks, I are or given updated to was physicians maybe patterns I to of sort morning. guess or of quarter there's of spillover first, a something it's just your weather do back of the the you're think the XQ? got the then, argument you the all still recruiting I you maybe at sort And that's thoughts new on into what just in Thanks. relative there seeing coming see the us pent-up hard for your on And pent-up growth sort that's the come? that impact whether was in good quarter of sort demand this scheduling of and adds point? to kind of think

Ralph. Thanks,

and back, days we yes, I I the we try several as the back because impacted of of about can impact though you you get always quarter, was in get four another how everybody optimistic the saying, back, week hospitals, and never reason strength we when those in back that might week as in had else just nonetheless, down for comes lose a came those that year, it March. Texas. a It's we're Let you back, that cases hard week of but time, lose very time. to if were But services. by the start much people, impacted to being that's locations had ASCs market mean doing in do remind a period cases of me think of some we you during window has surgical shut in same gauge a of many come almost

get we again days about our let of so those fact, In about a I'll we're this growth April there. kind year. in far how and optimistic they bit kind rebound where Eric procedures more still of But trajectory know we'll and other has back and going. did, the never but looked Tom comment little maybe

question, the for Thanks Yes. Ralph.

about, say we – have those are the seeing COVID, we strength quarter you we've us hearing, would talk started that pretty that's on and our turned volumes impacted expectations. by talked as even really busier, offices physicians to and what corner and both in continued of right. rebound seeing ahead is, the really I really, is What's are interesting process, So when March in for doctors' April, where a months again our they they're are what scheduling operators, clinics in a we

coming to out the months. and that So start they getting in in, they starts play in office the come busier

trend. before coming that so And That's that refill a of is we're seeing we're in I office the ahead the pretty through. kind good expectations actually positive fact feel of

people and amount some to In to of injections, relative delay that care. have also there's put that of or a cases We their have have is timing have of that off people just a procedures when able and little so vaccines. deferred have certain care they're bit they pain time, getting affects real

scheduling get when reasons to lots have so weighted scheduling, I we clinics. continue than tell and of of or care. too they're It's consensus I'll see we physicians half to amongst back more to deferred to we that. now normal. that's before say some a the in probably say to think kind be and that And things And lot early would there's running optimism what But seeing this these that And think we're at rebound. ahead want the some about above-expectation with going do do other is agree myself. And of I there's what you of are going to more far

I my might level. of you So add. Tom, that's know, don't kind high what

easier the that's As about think right, about some of think there maybe one you the to or not specific ways of deferred is care. whether categories,

first some musculoskeletal single-digit I we XXXX groups still saw we beginnings COVID of orthopedic in much right. March, – mid quarter, saw the in the half those outbreak. it XXXX, so were particularly by of our growth And the of back in impacted less mean the in is over and inside

see saw what and really robotics was CMS some GI we've particularly things based pandemic, for talking strong did and the – of about. we the been the right. really dropped growth a in So really function all recruiting actually the there, the the What procedures off, we guidance the on of that

the Some little We've be on the over ones those ophthalmology first should to XXXX specifically dropped windows. as those GI a back now inside of of procedures and level, bit targeted just growth CMS the gotten surgeries quarter right. really the early that off were deferred that in

a So or two. point

back management, think some larger which more still the procedures really process for to sooner, a that the management am there opportunity and other part some that that know I care there condition, And as of injections, think the that out a we're deferred we lot the there just leads there like know replacement. which for look and pain ultimately the as simple is are at business, opportunity part encouraged there. and things of but lines that other about I of that overall it's I that, of little so more I of the came by a is but is in orthopedic fact growth growth of whole chronic back, the that I Ophthalmology seeing of

rise. as those there see vaccination based office really We think there are opportunity still to back, is those that continue XXXX of come is levels. Some for particularly to continue well we below visits and on rates to that

come via as Very should or show the question going my a M&A, of do lower looks see Can just consider it. margin I deals line? to Guidance is profile margin what's about little the XXXX. company puts or little the range, really give last then is at – as you we should And helpful. at bit accelerate you you got a little better higher that slightly margin top sort question. sense, us then Okay, that? And on accelerate this typically a of we in Thanks. ramp for higher XX% the like above acuity, the you than point? just guess talk the

Yes.

me is there in of and So there unpack to things help couple let it. some a of you try

profitability dollars high implant of acuity thing room time of cases is we've know, generate our because math those the that per the we highest first across right. that minute The done portfolio, operating

for revenue. our the lower this our that better margin acuity cost we of the That dollars which So acuity room are we than don't, we on but had markup. even minute better now we to if margin can an case, may operating we case margin be we choose that we the and said, while have and a implant percentage per those and in not want had with rather on much case, with we'd an for contribution to, But fill if we the place usually every implant pick know implant oftentimes, account to do a lower get because the of cases. in of paid to a

probably you And margins thing up that took and total by just company more, the you first them so, you if pass through or about for XX our the go implant, of realize right. normalize is points should the margins

there cost is the those and implant you on impact the of think cases impact as of implant And the so the large a pass-through there really about itself.

particularly is that a is The margins. on done we XXX said up we XXXX supply mix. of the and to you constant. achieved costs function we've is we And how well conscious mix that of let's second part which in efficiencies, is be it is would, points, we've shift your of, basis first but up quarter which made think XXX to I the basis we've that We've exactly how say the margins quarter points G&A that helping which with Right, of look government, with keep additional over that done parity relative towards with XXXX. thing over that to first at need as shift the

day, a some we the grow pressure going and on of over do that's to and continue target And more and kind that is processes this to counterweight appropriate we we're a on margin scale think something so to upwards profile, we going that to the continue those to as we in kind do as we the the to believe about benefits corporate what should and at be those those there higher acuity inside that each we're is drift capture, can think but to push leverage we standardizing every margin we the the lot provide are by that – that think after as driving of But continue business margins, I for mid-teens cases. time long-term we area of there towards.

coming about we those Got it. anything Makes how sense. on that and M&A, on? think should deals And then

around let visits our he's – this million LOI, commented Eric deployment doing Eric bit since of a is our about in but been of the to maybe, year. talk a expectations what's we pipeline of hopefully of and these exceeding remarks lot around under I'm $XXX going Pipeline robust. goals prepared comment

Yes, just acquisitions asking the that? Is I were margins. you to impact of clarify, about think on

yes. Yes,

Yes.

asking question. I'm sure the make to want I So right

I centers that to bring see, say in right. you buy, opportunities we would So general we

table, the supply business. we So bring managed little overall going what than to to profile all But we cycle, revenue chain, expect bring a to that probably initially those we we have, our were they're it's lower maybe things. margin care, pretty quickly bring whether

buy that's expectation part our we for our right. we the business effective something is lower when how cost of so And

their margins, our additional take we earnings. we to drive in, platform and go find opportunities raise we As

and right it at in but that. our something that the dilutive, expectation bring forward initially, I least over get So slightly portfolio to time you're from could of rest the on, where everything drive margin will as we them as they think saying is when probably be benefit we we

Thank Okay, you. it. got

Our question Please The with Benchmark proceed. Company. is Bill from next Sutherland

taking for start the the and Thanks good everybody. year. Hey, to question

more kind now? are little and M&A on what focus question right valuations on Ralph's a on doing up just, of you Eric, color maybe Following and

Sure.

with earlier mentioned we as So pipeline. Bill, we're really our pleased

our we what on facilities. of of orthopedics. in We bread lot opportunities see lot opportunities strong in some and a have like attractive matching ophthalmology and of GI orthopedics. focus certainly, Focus current opportunities butter There highly We a our are is is and geographies. kind cardio also have attractive portfolio see we

nice to are of We're opportunities have single also surgical a We ASCs of multicenter really to hospitals. that company. the multi-specialty few kind a add pipeline at looking and

We've we quite good. so pipeline, our look what's at feel in of And balance talked. the we

to have M&A. We'll We million $XXX confidence. that high of plus get

of fickle got my groups very very don't right? we range, talking the And are historical I valuations comments, this mentioned in still our a country. You always we're attractive find valuations little just great across accretive physician we've get ahead and in some with want to valuations. but As it's

to execute on able expect We be those. to

a have $XXX focused of plus as a coming other We got bunch new team and mentioned and experienced very that's under LOI, stuff it million we at in we're we've looking day. opportunities every

really deployed So plus of capital this multiples we'll It year. it's have a industry. highly and get full fragmented attractive still that million confidence, to is we $XXX

do in And also into Is directly of the I And thinking mix work which start trend think you self-insured? payer help – guess about about the mentioned Great. employer, Tom, that is a you it? maybe pick-up us piece to the with payor the mix? it in to big mix. degree government you Can

great a question. that's Yes,

you look about less progression, in impact. is But mix the an the about it is as as second particular, is think at as the – The you it terms government has the think one, quarterly intense in clearly of migration. year you

seem times regular rate way As their influence happening pockets but doesn't of helps in deductibles, deductibles some that the quite and with PPO that of on as the out it uncertainty to is even like as high, course, headline what's decisions. and of you paying more of you look at change are economic about think their consumers HMO

something about clearly trend you... is their of combat we has if it's part expect them But think as over it that which years by why impacted last pull that to can about the I so, that think to how the new be know of we couple the spend. to of on deductible quarterly that try and is payment actually help to Eric, course in models what with patient utilization we we're we doing that progression helping And is left earnings, we're some trying where to the to financing. us finance calendar of continue, don't to creative of

employer, couple about care Yes. on like say think this. value things to we how of just And I'd the a based direct to and

service of start help just fact granting our in me guys money, that let save by kind rates. So you fee flat a on the for we us bunch just to of

amount if in value I'm care right care with experience patients So great saves to about and tremendous of the to our money. a outcomes site and just with based working better they simply insurers of have employers the working world, where thinking get a place

lot so a such and is – first we're ourselves, dollars of so interesting in millions hundreds the step thinking system when by based proposition and value based we versus naturally we against can be So and of about do value alternative. save we where care go challenging like care, value negotiating our the ourselves, health is we're a of and just are

the not employer, But with can. we the savings you get our exists on to amount think of about to employers health risk, opportunity I we share in we'd going to taking right love opposed maybe its when patients partners huge. it the direct as working to that much right And there we're and so with still we're as and that think do model just location to try if is the creating to working and plan certainly

approach, want that where value then looking an go markets an we a of and based local first is we we're until value to for way that. there And that employer to services to that. absolutely are so it ways different sometimes a is captured interest take But open or doing clearly our there a such naturally it's that care provide we're has hard that beyond

a just and And demographics Medicare the creep just into mix? the et looks of that a piece larger it cetera, will population, you total like do,

time, a would say seeing that, the to, is first over quarter of anomaly. Yes, I think I but little bit we're

to that of share have do that part after of a have bit time, want of move is that during over But seen to to it, COVID getting likely folks to vaccinated right. least market year more opening actually us we're a see after the probably now CMS year that have little more think were well, year you that come up. than I probably more you're who this go Medicare – We things year it to normal. going is gotten out yes, group continue Part

over is time, I every we're commercial gain think news market to had share. also the opportunity good

So just it's to not us it's a end, Medicare.

Right.

thanks Okay, guys. Appreciate it.

you, Bill. Thank

Our Capital RBC next is Markets. from Morgan Please proceed. question with Frank

Good million be? amount a morning. us deals on this could little The I you kind acquisition contribution under share think know revenue of you what acquisitions you you $XXX touched Could of LOI. bit with have of $XXX million pipeline.

about but I with let's, of are it know my very I historically to talked competitive those margin multiples profile we've is head, able on execute and been say multiples. that is, we've have what I of would staying Yes, the pretty if the don't this similar. last years couple top The

quickly. number you Tom's going get pretty can we it, to take but... to So through that

to with a a the right. of business generally free kind start margins acquiring million $XX could what be that businesses probably are of margin two, corporate little It's profile are the Yes. depends we're on more $XXX It on million. the

buying million $XX And we're get at so million, of of and a margin worth multiple $XX XX% you historic take like think Xx our if you that revenue. just

to individual it type focused that it just clearly of and specific rule about business of rolls rough how to transactions Obviously accretive. deals could they're be the and it. will a and very thumb, think That's So probably the on. be

contribution have of than of kind otherwise larger see higher you. So that thumb could as implant tell mix, you rule the a business might revenue again you

revenue reiterate like Yes. I typically a cases, In buy when we new we would opportunities too, have business. some

buy pent-up to might what total we try acquisitions, orthopedics a but opportunities centers the bring they've expertise. haven't they in in We into joint all past, been these up we done find of revenue program. maybe our the Some set with

So…

Hello?

We're still here Frank, sorry.

about yes. Sorry that,

Idaho $XX rate we of on EBITDA revenue. sort from on expect also and stabilizes the Falls, this matures revenue a there? then run color million should of what or and point I finally the to now And be that thing whenever out year When is, Okay. appreciate

about adjustments, rate, as credit EBITDA right. agreement The we've the run talked of part

now We revenue where rate where think in quarter. million look and where and get is you little probably contribution run can fourth to the based expected it's couple is a starting So a the we're rate at reasonable of a And about take $XX kind there. of get the to it's run the can expecting. quarters, was estimation, it EBITDA bit point the you on growth of that last

be So north of should million. it $XXX

Got the have of there. a as good better just you. specifics volume the just months get more magnitude you going. recovery went on and sort trying get also then lot obviously My to kind I of a of color the of you to just – little on the last But first quarter? I of it a could the mix mean through momentum And picture one, sounds like, get the of kind the

the on you. color any So, of trends And hop. as business? well month-to-month as mix accelerated of overall kind I'll volume how Thank

about answer one I tough couple could of be reasons. ways business a we're January you focused days, misleading, less day for have that's business think little because the a Frank, but to you data, have think data company. right. a – don't as Not in Because a because, bit the I two some

particularly southeast. you a a loss As had at we about of in think week February, about the cases,

was March. musculoskeletal rebound kind single-digits. those our But as quarter, the well. do up think helpful quarter, are as saw that and looking year-over-year as at definitely looks the we some at We think growth in you're think in some you're some calendar at mid year-over-year sure we about – not year-over-year, looking you do the good first We on what double-digit cases looking we of of there like. those I'm of that so the Same rescheduling growth other of first look right, that still March. at of month comps in kind saw right GI we're categories And particularly to and thing with of quarter mid-teens ophthalmology, year-over-year, overall February that's

the of It and in funny was it, scheduling that of a almost encouraged by rebound. we month really seeing focused of was a volume we're hopeful what for today will back it kind Overall, as So strong well. half was the momentum makes as comp as in March, continue. net-net that that is which encouraged think March obviously XXXX by X% about same-store really April, we growth, it which we're about that we're we're think

Thank you.

of ours only you has comment platform we rating right, company enough and consumers. paramount of that we of and view And a the we for and every that the financial and while hospitals are behalf believe about on runway this Board produced of mitt these matters an that just – tremendous to as safety high the built list with hospitals high there this as for more that about Eric have Directors great comments, are over X% exceptional those can have And hospitals offer they've highest actually the really emphasize recommending as this United come the list. XX executed real and of is national we're And excited in fact have day makes optimism around building catchers these facilities. received in much on entire surgical I we are that see has company coveted around we country built I superior X,XXX forward X,XXX emphasize much over excited in just in we front continue wanted one definitely I score to every recently, five-star that States XX. example, that our more quality, this this and how cannot And results closing country make even to on really but have these of very that that of has out recently if go safety through aware, over only received a opportunities Directors you're the team company. management company. quality Board got the XX recognition built to XX% have team is the very a several on, in Before we're we available why And us. came that so out of those rating, HCATs only and and us

make fact what the So you and to company in reflection that financial this built continues sight I really safety these want is of two paramount to the nobody simply are factors. around loses and a that quality sure of those be see results what

it turn to with Eric, I'll So over you. that

company, the those the product for thanks of Clearly our foundation comments Yes, right. Wayne. is

do, shout in patients often quality Before against company is that execute their our short-stay nurses proven the operating solution a again are and for facilities to of that's as collectively X,XXX you most once physicians work certainly positive colleagues want there. our it of to our And have nursing the call, always Thousands professional number. in opportunity this as work faith We patients lives. are past and and in our across physicians creating our is physician our to stakeholders who partners the value vulnerable part facing and by day continue to efforts in difference contributions. so we to in mission, patients next for foundation extremely privileged surgical for Week. we the are colleagues moment proud week say the people's conclude caregivers as of we to partner daily to and am our clinical to us to the trust moments. take our they of are company nation's this place I efforts, through as their just in get preferred a our which I life are of over the and year, year. physician challenges serve partners patient colleagues thank excited each our of special this XX,XXX take our lead deliver obviously facilities health clearly make over company the Nurses the We system of us what seriously give humbled the be our over and U.S., XXX,XXX growing the In of fully why become we to and the out many more is a at our on I and and incredibly trusted country. enhance my want most goal They I to and are to about we a a will partnership. many

Thanks again us So we'll today. joining and time talk for for thank soon. your you

Have a good day.

Thank today’s conference. you. This conclude does

disconnect may You lines your your for time. participation. this at you thank And