Surgery Partners (SGRY) 8 Aug 212021 Q2 Earnings call transcript

Greetings, and welcome to Surgery Partners, Inc.

Second Quarter 2021 Earnings Call. [Operator Instructions] I would now like to turn the conference over to your host, Tom Cowhey, CFO.

Good morning, and welcome to Surgery Partners' Second Quarter 2021 Earnings Call. This is Tom Cowhey, Chief Financial Officer.

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

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

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

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

the six With year to be of on another first strong the growth. of XXXX books, year the months promises

$XX and grew baseline, XXX% million, growth EBITDA prior-year especially XX% when quarter, progress, strong to Second-quarter the second the increasing our same-store mix. acuity over approximately achieved XXXX volumes representing of quarter coupled with

proposition to affected $X.X XX of offer record-breaking COVID-XX services the value of in in demand the operations, has excess the pressures billion our persistent the Although last physicians, we revenues and resulted months. our and over payers, patients for

growth key year our geographies, EBITDA. watch half the closely in variant adjusted increasing in $XXX projected we for full-year of and our to are the confident remain the outlook at back million continue in impact of prospects we to least While Delta

been second strategic make our has team and during quarter. driven excellent progress the execution which focus on drivers, relentless to by key an growth a our Our of continued

Some highlights.

cases approximately physicians compared to compared last over as outpace year-to-date continued prior-year to as which XX% grow efforts replacement, new from the more recruiting to XXXX. to year's Our with to physician Total in XX% new XXXX, physicians joint a to year-to-date strong up compared the in period, as XXXX recruiting basis increasing continued results, period. XXXX XXX% year-to-date doubled on compared prior-year

revenues a Our nearly our XX% of replacement prior-year same-facility with mix total associated with robotics strong reduced quarter. XX% nearly strong the growth four volume, highly up growth. net our year-to-date year-to-date this the cases cases portion Partially with baseline. as together joint was than lower revenue buoyed But COVID-impacted versus represented of investments to XXXX of XXXX and XX% up growth our more year. over prior growth acuity is points revenue per importantly, by they XX% case compared as did surging the finally, higher and same-facility volumes quarter offsetting XX% in volume approximately up with this second all nearly the comes of with are baseline And case volume

disciplined of maintaining much negotiating identifying spent the while On with we the capital year potential approach. deployment targets a front, and

in in X.X We we multiple are the transactions in vast times, an at deployed average $XXX of that pleased transactions week. far this of three so that adjusted to have last majority closed less announce over was which year million EBITDA than the closed

letter $XXX attractive robust acquisitions million intent of under of multiples. remains pipeline over with additional Our at

growth through a industry and an transition high facilities. our of confident will cardio surgical the year, continuing to target remain acuity with million a that total on significant We we well market proceeds in in cases we're executing goal. We exceed musculoskeletal with remain or to $XXX and tailwinds capital addressable continue deployment meet least $XXX we purpose-built In at plans. in our surgical deploying this leader billion summary,

this our plan be to on inorganic executing in a consolidator industry. and organic are strategies fragmented highly We and

With opportunities, mid-teens the the our EBITDA let Eric? deployment strong believe benefit capital is over through of inorganic greater we walk in some call organic and that, of adjusted Eric capable business growth. our With both a accomplishments me you to pipeline continued of turn recent to of and detail.

year-over-year model approximately strong when as XX% new the on focus was update. of strategic additional moment at of in EBITDA remain We Thank the of the results, our on solid I'll adjusted preliminary the a you, COVID-impacted areas: which our revenues highlights compared morning. then company that initiatives. results quarter; adjusted I around our I with $XX Medicare to to basis. spend growth execution. rest I for and expectations growth my a compared of normalized prior-year First, some few good Today, and very more were Falls, encouraged XXXX by OPPS, over our finally, our spend will approximately XX%. quarter compared a some Idaho XXXX. second it in and revenue XX%, Margin the few and of the pleased our of ASC performance over of our margins million the our highlighted growth of We Wayne, on strength key following quarter in provide approximately will second-quarter second total by: a as and demonstrates XX% expectations hospital nearly quarter; the comments XXXX XX% to led exceeded specifics and achieved will revenue grew believe also with growth by EBITDA second-quarter minutes systems same-facility And revenue payment our and XXXX business same-facility baseline

performance CARES closely investment projected historical with second-quarter back long-term XX.X%, seasonal in XXXX, the underlying you as near XXXX at growth margins EBITDA mix more were generally grants our intensifies. reflect Margins, initiatives, commercial performance, adjusted and to our quarter recognition, increase of organic continued Looking exclude with second consistent our our are which half when consistent in margins.

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

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

noted, two execute the As to new physicians of area in XXXX as well quarters first more have we to this year XX% in continue and added Wayne ago. compared a

base key are industry-leading we Robotic continues return appropriate expand the an of in has growth made XX same-facility to year-to-date believe our ASC of on up Another an XX achieve component our we've footprint. investment. ASCs on of has investments robotics facilities our can installed been reached and cases where across that and total our XX% we

we we these the closed earnings four geography capital of a final since were front, represents Northern depth consolidation California, are pleased with for in well, facility and $XXX which to the which also Three and the of call, facilities gastrointestinal, new over across market specialties, this have grow New musculoskeletal, to we of Partners know in our new a Surgery partnership. are was one year-to-date. facilities in added major ophthalmology. On deploying and million acquisition excited York, last acquisitions our These and

bring to to to as capabilities partners we look with the new excited and Partners enhance welcome to them physician to bear. we are forward working our and family, employees facilities We our these Surgery performance

under current value-based core at appealing remain additional for specialties new the in of is letter As area Wayne increasing partnership and our These of with focus over attractive geographies arena. in our our mentioned, A intent. we as robust $XXX very in remains explore pipeline acquisitions million and opportunities company multiples. of emerging opportunities

facilities providers, and benefit payers, Our an was the business while physician provide from exceptional benefit to patients, and environment to our purpose-built lower-cost patient model experience. all enjoying parties also enabling high-quality,

site-of-service to across the that our a spectrum we our provide high-quality discounts compared As when of company, healthcare peers are we at services confident meaningful facilities.

believe provider risk-based ideal across to are we to partner we such, better help types. As and populations payer an manage

approaches pursuing that growth various We balancing revenue care value-based to different are aware strategies with are profitability. and many organizations

focus Our both predictable profitable. on that very in is both a and importantly, is, way achieving

exploring same-day a believe has system. on key While of like-minded be aligned acuity risk-taking we resided leader to experienced in healthcare procedures and with risk-bearing partner We and impacting the expand bundles, highest geographies. care approach trusted arrangements value-based providers, patients we across can are payers, opportunities our traditional for entities our some with

is you on updating fully arrangements with accelerant and aligned opportunities goals in further the forward value-based progress be look model payment should of coming business to a We our partnership quarters. current to Our the our growth.

Moving on to outlook for the remainder of XXXX.

optimistic our physician the continue XXXX, hear trends to of about half as in-office We to backlogs and from visits. second anecdotes be materialize starting starting enter we're of partners the to we

a results, the support office projected evaluate that to physician indicator for to hope forward-looking from in at physician outlook our our a considering leading EBITDA our visits year-to-date this procedures help As half back recent trends that reminder, when and of us will visits performance office improving floor momentum and for acquisitions, continued facilities. With $XXX strong are we surgical our raised new this adjusted have in year. least and we million exceed

procedures. to this of the cardiac procedures is that total continuing from future to business to to added do moment six partner we procedures after to of these at guidance affirmation we extensive X% expand in is rates XXX under do the has both knees, expect years I the Based revenues has moved book than evolve. recently ASC-CPL and model, Medicare elimination which In supporter to in remain that that performed rate initial for over increase our cardiac under XXXX excited administration, will financial the so for these various outlook. essence, hips hospital To CMS XX the to aggregate procedures to remain plan not preliminary in We XXXX list being ASCs, the outpatient far year. impact CMS takeaway we update the the on we to less business. spend and a departments our new was continue the CMS' look to Of momentum. the CMS effect across list will the in as and of or payment we medical cardiac the this released joint by inks about in I year progress Before we XXXX represent not that the calendar one-half Tom, increase of an Tom, a trend payment cost CMS does been criteria our that that, changes to that our remind changing we like year, right and and facilities planned Tom? such revised investors build practice proposed codes for XXXX. proponent CMS beneficiaries. ASC-CPL, will CMS. forward year-to-date With them medicine talking call and in upon inpatient-only in as I'd this on baseline turn setting key important continue continue OPPS/ASC results to across greater approximately of and these procedures believe outpatient Further, XXXX setting the we changed, Fundamentally, and turn total joint study confident in quality our with rescind proposal, who the guidelines. system review remove and color XXXX. call ASCs on over XXXX, will X.X% summarize, the originally expect of the in are is a change enhance and procedures investors an of the moved believe additional encouraged or provide our to words, the our Medicare technology reverted our own from we Further, ASC-CPL and the to not by the can by that decision to ASC-covered that and procedures we by of

Eric. Thanks,

First, XX% XXXX. $XXX on of I'll were second than line, have for our higher nearly prior-year spend before the nearly Starting the increased the a some few performance the second-quarter considerations as the quarter move financial top we with second minutes XXX,XXX quarter liquidity, surgical to cases into million, on we to moving period. in XX% Revenues half cases.

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

revenue Looking higher and prior-year a of increase, of components return case cases the XX%, to net lower volume rates. partially by by decreased acuity at mix approximately levels, case offset XX% pre-pandemic than our this the period, driven higher per was underlying

operating earnings. to Turning

an using $XX.X Our additional we quarter $X.X million, we guidance second new was of of accounting deferred June comparable EBITDA $X.X XXXX. adjusted non-controlling In HHS, CARES interests. recognized increasing balance we approximately from XXXX $X funds. period And XX% $X million quarter liability Act grants in than higher adjusted grant less the as in for grant million million the after of than received the our XX, have by At income, sheet. second million on EBITDA quarter, grants

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

We from will results throughout occur expect profitable, the we continue to report year. facility to facility XXXX this separately becomes later project until this which

to future financial we Recoupment revenue approximately revenue which the and million, expected $XXX is in payments, deferred from million quarter. includes of XXXX. approximately the of in $XXX quarter ended a commenced of held quarter into second the down We've $XX on flow strong liquidity, early funds as cash cash advanced to advanced Medicare and Moving from these our these Medicare million first with payments statements. continue position

Justice the Surgery to cash to had was Department $XX to payment to an delayed as part a back of of second operating of agreement. settlement Labs, the Logan relating our million net agreed quarter, Partners final of that payment included $X which Moving million, XXXX the approximately inflows

As CapEx a of deployed Medicare acquisitions, third And of the million approximately XXXX. to recruitment $XX ceased we In and operations Advanced the million in activity, reminder, Labs Program. the quarter, the $XX Payment CMS Logan on syndication investments. related quarter

repayments the Medicare XXXX, uses tax cash until Payment payment Idaho fourth becomes under The Advance our the leverage. calendar times. of advanced as would the was other quarter, continued million with debt-to-EBITDA net and Medicare material of of over remainder Program of projected the $XX second million this $XX agreement, credit X.X of include Falls payment additional year. it the the the funds, the to for receivable consistent funding the end for ratio first debt-to-EBITDA in Community X.X of calculated forward Looking total Hospital the net company's company's profitable, of some the of Normalizing at for been times, quarter, ratio impact quarter have total of

our approximately stock to preferred call, XX.X rate XX, musculoskeletal all and engaging growth and us expanding go EBITDA to Finally, capital cardiology, enabled deployed opportunity fuel performance. have our key common approximately into Bain guidance emphasis we targeting increase shares we provided the as service on our total Throughout XX.X trajectory. disclosed with shares to has position remain May converted This we negotiations deploy, recognition second-quarter this outstanding million. stock and million $XXX XXXX, available opportunity to in least on Capital's offensive million. core on growth, We confident today the capital CARES adjusted growth common last to coupled the the to lines have bringing continued continued such as Act us our model high-value at has our second quarter, XXXX grant on recruits, and in strategic of year.

adjusted growth the a later to EBITDA of commercial to our revenue Our unchanged XX.X%, results, XXXX of calendar for our seasonal middle midpoint date. in increase the be end on at in remains based our bias anticipates guidance Implied approximately toward deployed intensifies year. at will margins typical which mix the as margins range revenue XXXX actual with the XX% over outlook to XX% revenue capital upper

remind trend, expected the quarter of evaluate commercial investors highest this is of consider we and contribution the we As our as over that progression earnings we acuity the typically combined of fourth When quarter our will benefit balance over with intensifies. fourth year, represent we earnings quarter that, and seasonal is operator fourth-quarter mix year Further, would consistent excited remains relative growth capital recently short, period. further and Community annual Hospital questions. from to well the executing XXXX revised volumes our continuing performance that with to are through this XX% encouraged momentum through we the the a projection, over think the transactions, this trajectory and adjusted our outlook With to we this year. We EBITDA completed In XXXX additional call for Falls beyond. the prospects believe full the our turn enhance year. throughout profits of focused remainder of quarterly XXXX prospect accelerate of from over the deployment and back our by the stage Idaho are growth that at the we like our I'd backlog could on by prudent are team Operator?

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

Congrats mean guys. talked backlog or are already building solid that about some a a are saying them out backlog. I quarter. question, I how just right? morning, guess Good guys there's of COVID, Hey. your on my you on there physicians first

So as Just uptick some impact backlog any some any it], changes are the any of [call the scheduling an you in there? to that's of with that's curious. or we've variant, potential evidence already seeing the seen, out already anecdotal Delta or place of

fair facilities, continue we on we've got acute different. is would facilities. you, impact what Even like a be I well care to prepared for to Again, that's having there's to growing big this feel we're does remind full Brian, and Hey, date, change purpose-built Delta of certain point markets. been bit on Eric. this just where Florida one humility and and all Louisiana are our we're we obviously, variant impact. there that Great minds, unpredictable. really amount is out this little extremely we closely, cases. need watching in the processes of have Clearly, this if really good a question I'll we a a a something have appears that's on backlog To lot seen serve haven't PPE, and has time, an because our

market. And different so by we're monitoring closely. It's

trends, watch see impact. seen we but far, it have not have So some We to good we continuing that closely.

where But far. think humble go. could have no here looks far, be will with I it idea deal to going well-positioned to so it relatively thus because like it pretty we're I'm So be we what

I you gears, then appreciate said Tom, the XX.X% on shifting margins, that. And of guidance. midpoint

You quarter, do the would we I up from levels? XX% as think seasonality. going this you past drive what current like opportunity can forward, about where the up needed basis, to here be And an But from you of apples-to-apples did guess, margin to? guys take kind on the think margin

great a That's Yes. Brian. question,

XXX XXX As there are you of think two I our within over to the to drive we years, equation. couple And goal annual of course to that is we the think where forces about aware the think points is next margins. points countervailing of about basis of improvement be need basis as you that

first cost is the The we're that or growing through higher we're of acuity passing in where the implant. for paying cases

those And of right points, total margins about that from things, to the actually of what's And the is go now, financials that minute percentage costs profit up an actually as per we one our of were per right? of the which we our of think if margin time, highest is implant fastest, so a implant to would operating company over highest take growing contribution of it have by important so one it's out contributions the XX cases, lower But dollars point that's you room businesses. realize our portfolio. minute in

business. But a it percentage we a little So know that's great of dampening from effect. margin, has a bit that a

at we operations, procurement to rates, the to looking to across just economies we're what get how volumes quite of improve what is on try bringing be the to doing our in so that those what cycle we our our whether realization our by helping services. enhance deliver new of field, on do margins and scale leverage more to scale physicians, doing our by managed on in on to doing or care And and that's portfolio, continue just what's lift whether corporate our efficient in we simply G&A, really improve we're at to that's revenues, them we're what revenue

points basis years. those points combination improvement net several hope the so to we the over next XXX And of basis of will the of XXX course two,

And sense. last question makes That me. for then

thinking level, model $XX.XX think about that baseline same-store revenue or that this sort we going of case I to forward? per the in is try As right about as to revenue be

bad where that's Yes, are. for not we

the recognize government at who a a the has who where mix - got Just starting slightly done would XXXX, that look or a I have up even little as we number that bit higher a even as are you just has intensifies. and than seen slightly now, of we even acuity as would is was years Medicare vaccinated We will so right of that higher couple kind procedures function a back the first. anticipate little ago. going of of of wonkiness that the We into might of some as intensifies normalize bit that half. think back of that we think as as some But year a we half through a tick that's think about first good - get But and mix back get to we commercial of point. go

pushing just we're point. in we're which that is growing focusing, I'd over will Clearly, starting - portfolio good up, that Yes, an and point. on buying, have where and acuity our where also impact But that time. both reemphasize current what acuity

Thanks, Awesome. guys.

Brian. Thanks,

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

questions this over as payroll year, have the and $XXX repayments a and the here. use of backlog I advanced of taxes. some payments of remaining Obviously, you course scheduled Good continuation capital. you do Two referenced million Medicare of I much to talk of as wanted about know morning.

schedule about than the perhaps repayments? question. particular markets that's first my I more odds of of or anything there a getting would that associated So talk with and any just the bit service can or be like more first backlog that what is million? guess little that's part today That And about would and $XXX then the be, out you unique lines

Tom answer I to it's morning. then because it. to a flow see few little kind I of to to maybe cash to question and this try I'm going to used bit backlog big going picture, Wayne. we phrase you the I'm know Good as Frank, just flip minutes, that the adequately. sure talk we Hey, unbundle it a And want make

we by week. start in that me Let which, was closed of over majority the transactions, $XXX saying million have of of the last

been that's So already funded.

think coming you about our June XX. out flow that as have to of cash of So

have the currently, if are to done. that LOI LOI over currently, $XXX get $XXX least did and that to very also in would we the I and I of did submitted We million tell now under surprised end we not not you, a exceed $XXX we have then of of have transactions year. speak And on be optimistic that number other that under we we would LOIs our at prepared million million between remarks.

and on continue of of kind to think as to these the you we're position back transactions. what viewing CMS all So consolidator is Tom half very how repayments fund I'm that said, picture well strong are though, an future we occurring the to bullish that cash With in as in to year the we're the the opportunity pipeline incredibly big and give of let going of the be overview, a a being industry.

the you look cash million June if $XXX about balance Frank, at a consolidated Hey, at on XX, basis. it's

in So I that's tell we've you million about last what $XX week, deployed. you right to about got would probably, there. think that's the

Of million. is just Advanced "repaid" you on to needs that get $XXX remaining be Payment $XXX would million that $XXX Program numbers, So to that million. round the

being as that and million think You equivalents. cash can about worth consolidated of $XXX

liquid. very that for keep we would of we're working purposes. some - obviously But Now, capital that's

pipeline. on a about as lot sheet we balance cash of think We the have our

stage. undrawn which the also We at revolver, this have is

have of beyond so letters and capital $XXX XX So million-ish the available markets credit, access $XXX to excellent million, that. we million there,

ability So on M&A execute past to also we and both continue to good feel that future about our pipeline. quite our existing on pipeline

great. Thanks. That's

hop. question Second I'll and

keeps to like question that wanted update an in calls. labor, getting the repeated all seems get Just it on that's the

So staffing difference from what I'm a delivery hearing we're nursing just people your across perspective business with and other the of curious, model from spectrum? Thanks. between surgical any just age, and kind

say we that this I topic be think Particularly weekends. is them, Eric. labor Labor of I preferred in that but a less that, country. think is right the five, more healthcare, to nine there call, obviously for are well. our Frank, I out now place manage not When clinical of world a immune able through would good that's the every we've and its lots facilities less staff industry to for across kind Yes, including been about in hot to to quite work. reasons, tend job We're to our

coming high have there, like coming there, it's satisfaction patients scores, We doctors like predictable.

well-positioned are the So of have some where like there of With not we're feel in we within clearly healthcare. we COVID etc. have exposure, pressure. world etc., said, a markets We're going pockets to ton that

candidates nothing fantastic done able happens Our we're environment, a that has positions manage there's job something this like filling team in HR sourcing through, feel going be assuming of and it's more we drastic even to tough in and to that later the year.

Thank you, much. very

Sure.

Qiu Tao with proceed. Our is Please from next question Stifel.

the mean on the outlook EBITDA year, morning. your you unchanged. good question but I capital first is raised My guidance guidance. revenue really Hey, for

on to expecting look a and the like as why outlook at level. that Or acquired the pretty So it facilities. sounds are But you much there anything else it that we case, XQXX newly mix keep I'll is decided you mix the Is need lower is continuing revenue of close acuity to maybe unchanged? normalization to here? the consider per revenue guys

No.

- Tom. I this think Tao, is

a think the revenue we what you we have toward say range. bias did is the guidance, the end upper about that one, As of

yes, think continue it's upper possible. the about particularly range, our M&A, that the pierce think year I we progress, I we of we As do end could as see think, to

wouldn't early. see to all than want much We too to So into I how that want other just shakes you that little out. bit read it's a still

OPPS/ASC look you the the those comment how pace the that maybe and in changes does Got you, this on make investment, very that around wanted But the little at mentioned affect you impact, pipeline appreciate to that's helpful. earnings. current when Really your the particularly And rule. your you X.X% has investments?

Yes.

our the the Eric. higher at the I early honestly, just has another appropriate similar we had of list So past. that actually only has the and see no impact fact grow. pleased change acuity are to minimis clearly, as inpatient between if and impact is ASCs. And safe very joints, And and procedures, we this what coming we I'll opportunities back, the have that about guidance look - with new in has answer the cardiac, you de of on pipeline. I talked for what's the and with think administration the We're that in again our quite being industry that. it that the pipeline, innings confirmed the on tremendous to joints. they've mean, mean that happening

We of And that that little it joints to in of might just on as and front maybe, bit set expect more a technology continues a are us. them be off come will list give of with the we where opportunity to good Tom, improve. data

Yes, absolutely.

that grew look joints you in reiterate just second it's on at the just As important ASCs. quarter, the to we XXX% total

just double if the seen they United total see done have, focused and we have anything, outpatient And math to States most of that transition areas that could procedures joint best rapid a XXXX. on. and continue that been that procedures there today. I that are reaffirmed see that So CMS, really I've will both to estimates than one in to there. suggest the ASC we And growth investors And continue that that's very is those more we, million the departments. By over think by

is over think about and what numbers second inside our I'd our probably year. was that it that those two-third XXXX. last that roughly of one-third number the half of And of volume say think about the procedures ASCs that's we joints, Medicare them think in I we As in Xx about just approach quarter, could today, total where by up we Inside are Medicare. know

improve. continue and to trend that will facilities continue we that and think that, ensure So building that we've capturing trend. potentially out been capable of capital even And our to we're investing

and during facilities Got of quarter, Last guys think think quarter? by me, facility in there. you consolidated you, sell color four fell from surgical appreciate facilities I the any fell by the the number Did I the question one. the

overall the closed really reshuffling There's some it's which that or sold, operations. always either portfolio happens to that immaterial we've

Thanks. for That it is Okay. me.

you. Thank

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

bit utilization. than other just start to reaccelerate. wanted of guess speaking, fact faster it dig like to back Great, healthcare seeing is, coming you're seems surgery about the broadly I in backlogs thanks. have physician comment that types been your little a I to

it you're that So where where X% you where versus should recruiting one comparing it are still? were in thing. be? how XXXX guess normally to would of I year. grows you've doctors, in I guess mean above line But you kind think demand do of expect far I been versus be XXXX. already every to we trend is that theory, where is utilization you I guess short

areas Yes, the is so healthcare. pandemic. throughout faster surgery other responded have great question, certainly of We've than that volumes Kevin. I'll of Eric. saying that with This start seen kind

is which of of baseline time a the believe about there's we we're that you're front funnel, there out period really you talk the Although below backlog And where giving backlog, visits. when that there's - there, physician we end still right? we're

year is line typically the kind So what for a which is numbers, where that a in growth that, We by-service offices us. are that XXXX. versus in of getting seeing that's lines. is ortho right stronger case we're hear important looking look CAGR. We're mean busier, range. kind the XXXX service across we're lot whether starting ophthalmology is I X% that at our to and We're little our to X% for of seeing than flow starts of actually a obviously

is up, seen they're service up have and cases we there's delayed several going some point. that caught And there, out where period there hold get at to lines so time that we've to although believe where of that do are

is which, we the were on their first in build that for backlog for about, the seeing for hearing from time what we're physicians they're comes the office, again, pipe backlog, down talking So us. the specifically well bodes what

time that month the first we really last that's two So started to a bit. that or the hear in

the Delta plan so second something through us in the of with nice hopefully, And should flow be year. the - a the half unless changes for there, that

we guess, as that about deferrable. I Yes. surgeries mean, is I being guess I think something

or that when to is kind slows volume you normal? it it uncertain you're trajecting that how the the still really that is Or are back some that getting core these as do it's that a So you that the there it's deferred deferred of to of bolus back whether and and sense toward procedures fact still deferred volume have things, big be? will

Yes.

and hard mix up always who it's So shows to match and who doesn't.

in are going year core what the to given come of vaccinated the back volume government is think - some market. I there's you've with on back the half faster, our what's in seen think based getting up, business delay - largely We right? it, we So deferred timing a show the to beginning if of first of is about some sooner. saw you vaccination,

about back services. across more some we period vaccinated, your some And we are core of a seeing. people are to is feel think clearly, comfortable if so to like think question. what you're as run cases book begin lot that plays of that answers we're But commercial out, but in see And our hopeful, in this core and backlog that how we'll rate that when deferred you the XX-month we show our feel will get there there up and likely

They that's No, still commercial more bit what seem services? its government companies payer back growing It's comment, coming care speaking You're little for pushing the that about why mean when coming an obviously Medicare-focused, broadly are for guess a I little is and and adjusted is like that are saying. case less. faster, I government government back more basis, volume make helpful. comment indicating are things that's the the the it's bit on is back coming that and who's so that to managed than Or that that adjusted Yes. first. joints and things that lagging? a be is faster commercial you? different you mix programs

of it. back are part people start think where - soonest delayed certainly it's fastest. Yes, got But vaccinated our people the things, have that ones the in coming I particular world do in surgeries,

business. we kind I of would focused Medicare a - say, it is So

would would normalize. is government to and I do higher than Our mix expect, expect say on I we a that normalized trend

Thanks. Okay, great.

Yeah.

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

Good intent, in see about the mind, your just on put curious out it for rescinding your is Hey. you're I year's I'm everybody. that these just impact the the last business. What CMS changes? that. I book thinking their of doesn't with you, Eric, changes really basically morning, what thinking update. guess

Yes.

So Bill, I'd say a couple of things.

what that they detail. looking be the when coming First in full would world, that expectation kind base, I acute mean physicians, was procedures from the with going technology be to by them. see every not our will in in the it, totally most list care going a to list say, comfortable I was be they over procedures I out. more back what inpatient-only came waited it my clearly, on been a to I facilities. year in to to going made going in my to It of time and are going leap all, and increasingly traditional little it's bit that that I at talking you moving we over. they're tell out to physician back year little surprising was to and has surprised an I'm having same every to verify the approach take back. had would is we're that these Bill, approach get back of

of think might going fact small slower scheme I see whatever going cautionary the there's be not same in value so decided expect on be of to is or to that less natural our which This, natural proposition mean on that I take to Over end patient procedures. a be And strong. opportunity, the is grand really push. it the very impact. place. as those procedures, administration it what time, The doctor fraction, up a There's we approach I to The me, to than represent a is little a an X.X% So a in these. push. again, what

Makes sense, thanks.

two Just one or more.

on success in an developments curious accelerating then cases. such robotics be if I'm had guys. great for You've you And with update deployment you the there? cardio maybe adoption might the

Sure.

been be been, has story robotics I going great for again, say accelerating. So wouldn't a to us. it's it's

a moving over patients where, are XX we - technology again, was we've think actually right was that care. the of from the of accelerated areas us months I of obviously lot a side to piece in all last keeping

where of what So at cheaper a looking getting value better by procedure, is or having can technology. enable piece better a satisfaction, having getting price outcomes, - patients we higher we're a

the at it's looking more joint we don't add we're pace as the But been so all last will at XX it those I the Vinci, And time. as these. the quite little at programs, think have that harder be even math our ASC make da - that's we have surgical an one has we bit a in to hospitals a Certainly, work, center months. setting.

less than a For us, is us, to it as the it comes in world. when And news individual for it's market is good care about pace different robotics, opportunity. too, acute little the bit which pure

is For want can't procedures. to without us, is of who They technology. docs of piece right? offense, use they groups us, bring this a this don't So all

any And especially having as cardiac, care. us And further then And just not it's the patients joints, of really so business. even piece cannibalization follow accelerate that. total to it's of all equipment, we're on right if into up to it's new of allowed a going to getting higher-cost on setting

believe this want the to of procedures. continue that approach. Again, starting cardiologists to our basic opportunity we is to is highly high-value which most cardiac country, the across management. really going with look, a their rhythm facilities efficient be cardiac, So We're the procedures use there's for multiyear

think those can I So extractions, defibrillators, XX% wire roughly of do procedures AICDs, our today. facilities

dynamics markets, look our we're capacity adding right a those saying, setting. time hard the we're with somewhere, with cardiologists cath comfortable expanding, any ASC at add Clearly, get in time cardiologists is over and lab. taking the market time, we're So trying this to to a

in two- structurally And again, It different you're by so over be be doesn't cardiologists might mean country, be to meaningful. someday markets that we are of In this XXX% very And it's in means faster. other a a markets, to time, really won't kind do of period. ASCs. it to In some employed. That three-year transition market. move going see it expect it

going progress some from procedure recently. opportunity, of is one Continue particularly care, we're a health launched. that. procedures. making cardiac we money is added payer. when that lot of them there's increasing this procedures, there. got be five still to centers just on those side to to go to - us, believe care So of on any back I really to not that's year of to it's value-based a the We're We've getting cardiac a about just platform, actually push, save four value-based a already but new going We've system It to or think surgical right the an side. any bullish it the you tremendous hoping from adding we have hospitals start our couple a a are

together And make it think an just so combined those I things exciting opportunity.

monitoring. me that It care lead with for of some your virtual color. Thanks, whole level to could that kinds it an everybody. part the all is Thanks approach of strikes you - increased of

All right. Thanks, Bill.

Thanks Bill.

Thank you.

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

side I influence shift morning. momentum wondering the at Good of first, on CMS much on the some the of - release? outpatient? the guess to commercial payers do rely changes Thanks. just all CMS rely I commercial the they on guess, how

morning. good Hey, Ralph,

or I push is this. on I to It's to has We've the a - were actually, side long of are fact, we increasingly, think things. I setting, - through has they're push for that. say of to CMS before whether bullish on this on nothing record. commercial is them. doing what I pre-authorizations don't that long business. commercial the got the quite value faster. track proposition actually And commercial time, this into mean great safety a momentum ahead any commercial trying for We our that's other going commercial I no. a And honestly, way doing right? impact would in We been joints. change such going think think And that So, payers were procedures

sense. Yes, makes

bump year, next guys expectations then you And for rate CMS actual are your the there? what Okay.

So facilities procedures we CMS than preliminary is of in focus So decreasing, very as that. but the we'll immaterial is portion the And think, are look final outpatient optical we do I on the to know that mix ASC the there's mix it's of on both bump of of on actually relative what business, a the and the X.X%. We that in the rates rate do aggregate overall business. the right? based where aggregate see lot notice, a been our from our at better we'll side side our says,

And so about we overall feel good pretty the rate package.

it. Got

like And we it access Okay. hospitals care. pushing more push hear and seems then, That's obviously, and more helpful. to value-based strategies

at JVs your Just with sort systems? hospital three-way up coming sort of point, are of this around commentary two-way incremental interested in any sort conversations versus more of that

morning. is This Hey, Wayne. Ralph. Good

the to will Let healthcare me evolve. That the the two-way ecosystem and that being term, that hospitals long said, by for for partnerships we're systems always created the in understand looking at the just value physician. for partnerships, and be be with partnerships start viable we of saying where most local still the some believe needs to the like-minded that needs three-way consumer

I anymore. and so those. that the game you I rate continue will I about it's never a Eric to would those. say pursue And would But that tell team exclude not

play We that. will not

patients We will healthcare to specifically. value the for we trying and are participate for the when create truly system

we're tell opportunities the about are would that you in us. excited I of value-based very so And that care front

we built And have and model component Some very right are perspective, the value-added from team VBC. breed what we of because participate a the exactly with for. was a partners that Eric our think that's are our we and we best meeting business in to can be of think

So anything to add to like that? you'd Eric,

than partnerships. My in with Yes, very partnership. a think, that much of in all, of we with three-way right? most of positioned goes mind, health we're a that. here to going does almost rely most cases, even Ralph, you In back way to And like-minded don't a on three when the two answer. to health three-way those partnered system, we're cases, be I rates I a their systems are those There faster part are actually on value-based so entity Wayne's partnership interesting, do say necessarily and it point, think it's not

value-based a next-gen or are clinic so of new opportunities about out the And of allowing super independent. us, or what physicians stay enablers of to in some models there physician that's I the whether that we're would excited some say front is care the payer

Our of value proposition kind players plays well out there. of for all those,

we're of so answer. part excited be to And the

be partnerships systems, help be will some those health companies, VBC we that And or a role as we add value. interesting uniquely them but two-way not plans positioned have of partner believe and health an primarily very to to and independent three-way a

it. Got

go the or makes just Is the get deals. want year then about. be thinking the any understand would and there? last So forma that EBITDA to X.X for contribution or trailing? around pro the back or something thinking we back recent half for imply just Is $XX X.X to need one the Okay, way of trying to times to be And me. of should contribution. commentary I million we the sense. framing

than geography. be, Yes. Ralph, used better looking it still at upon a period but trailing is to depending XX-month certainly is the COVID-impacted

we're about of course so right we XX what run And the is thinking next the months. rate the as think that for

inside what calendar those you're about of assets be overall we contribution of so from in in thinking And XXXX. it right will the the full year way believe terms the

Got it.

that Thank alright, helpful. Okay, is you.

you. Thank

you. Thank

All right.

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This conference. concludes today's

very lines your time. your a disconnect Thank great Have may at much for You you day. participation. this