Surgery Partners (SGRY) 8 Nov 222022 Q3 Earnings call transcript

Greetings, and welcome to the Surgery Partners, Inc.

Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Dave Doherty. begin. may you Doherty,

welcome Dave Partners Doherty, and earnings quarter call. I’m the to morning, third Surgery XXXX Good company’s CFO.

is Evans. today our me our Wayne Chairman, Joining DeVeydt; CEO, Eric Executive and

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

for measures, Additionally, we evaluating we during of not as today's will call, The substitute in performance. can discuss this in certain useful considered non-GAAP information should or be which with reconciliation surgerypartners.com at be additional on quarterly presentation believe can in morning’s Form isolation our A filed. this in XX-Q, prepared recent these found in release of posted our results press when report our most be accordance on measures and website GAAP. a

that, call With over Wayne? I'll to Wayne. the turn

continued growth our million execution a you, thank XXX as procedures on prior acuity to per capital XX% This morning, compared adjusted grew XX% case the for as of higher as report Net to quarter. increase XX.X combination all and quarter EBITDA third deploying and high of increase from you in case an Good from we're pleased revenue today. million, morning, improvements, to acquisitions. us value a net and well for rate joining year revenue Thank Dave. XXXX

points EBITDA XX.X%, our The allowed labor we've second with margin. levels cost top on cost in of basis an report XXX points margin and quarter As our XXX combination year controllable basis premium focus supply line our consistent quarters, to us prior growth rate at the the of prior above experienced we've historical and above of trend. managed and pressures inflation a cost adjusted

that detail a we and guided expectations Dave is into greater second Each quarter call. minutes. we go to within will in results set our few the in of in those internally these results these

we you effectively healthcare and the challenges tailwinds. operate the the experiencing. of has us are that to These macro are that know, many sector and both As environment others in has in long-term tailwinds allowed and manage team's immediate a execution landscape healthcare –

we have discussed As engaged and past, opportunities. points has business in controls, to and of reacted aligned continued team pressure the this that team core durable in incentives, are with the structural the responses. management rapid on monitoring been model this and reported is and right we these areas results evidence resilient growth Today's many capitalize

our Although is still experience of across felt to direct COVID-XX in virus the impact country, the third material being related quarter. impact any the

the we in We this third as proactively years pandemic, effects when tertiary elevated address experienced and and continue many to of as some levels of of took did atypical after two time families the friends with staff physician, summer, vacations well-earned their individuals clinical, restrictions. quarter we the support

QX known revenue expected range earnings noted to EBITDA. You vacations may guidance impact we in recall our reported fact of for and we when these adjusted the QX our that extended and

and the last the quarterly of we let more into outcome was expectations call. slightly we the Dave me quarter detail, pleased in-line of Ian, guidance go third few revenue with with on our very Despite but shared will headwind are a the that at our of share Hurricane earnings highlights. midpoint Eric our

growth over revenues X% prior year over X% case quarter revenue X% Difficulty]. [Technical to with Same facility compared per higher nearly and net the increased

all at in in nearly this consistent our core third year last the spanning nine over with high overall to of to New XXX new physician recruiting recruits bringing new recruits the months growth efforts our recruits yielded first year facilities XXX the of time specialties. quarter, with our

recruiting revenue from benefiting cohorts. and prior physicians our bring that efforts recruiting become more more and cases are As than we refined, more onboarding

example, revenue per than cohort. we've revenue higher as multiple our in as XXXX case compounding more For from initial deferred this from net did. discussed there recruiting the recruited prior higher organic the than overall relates the class XX% contribution past, bringing effect And year to year's for The last our contributions a cohort revenue is the mature, physicians growth. cases cohorts year is years nearly with XXX as is it

the accelerate. third XX% procedures the quarter year. continues approximately out patient to of from of settings transition up the acute prior care were our replacements finally, for And Joined ASCs in in

total Over of the rate our growth a of years, XX%. is approximately rate growth aggregate three compounded while our cardiac over program had past joint has program XXX%,

to of financial results and reflect market outpatient addressable the XXX our the We physician care the with of With associated is shift will setting. of capture significant acquisition, patient focus performing the of continue investments. the shift well tailwinds strong cost in to We lower recruiting on efforts, novo to a quality care high company a centric in and our over positioned in very benefit significant setting. believe site billion, de procedures macro our numerous total

Our third stay M&A Team on short approach from Late our added portfolio managing ValueHealth. targets. and robust to quarter, hospital in with potential acquired currently Hospital the to and two Specialty of the surgical pipeline we team in another interest and continues ASCs strategically multiples. acquisitions Kansas positions sourcing Spine is important minority at of acquisition disciplined this executing a attractive

The these effective acquired was under multiple facilities on Xx.

from quarter. ValueHealth partnership execution continued ValueHealth addition, we the speak related will position purchased in to further opportunities to In minority our the on novo in interest a moment. a Eric de three in ASCs

further with XXXX support transition development novo with an our our exposure on that free remains enhances and cash interest changes to growth flow no until debt our trajectory. to positive XXXX. long-term strong on until to Our material maturities focus balance generating existing no rate pipeline sheet pipeline, execution believe acquisition accelerated de We along

the of QX $XXX outlook, our a [ph] Based on anticipate billion. reaffirming Dave [year we we the in revenue quarters $X.XX our our and] to in XXXX the first detail are adjusted XXXX $X.XX for range year solid guidance million three million more performance during full our year. range full-year of the of remainder EBITDA to to and the of will discuss billion for outlook $XXX

that, let With over me turn call Eric. Eric? the to

and Thank morning, you, Wayne, good everyone.

third before mentioned, are the trajectory started very we pandemic. Wayne As positive pleased our results of with continue that [Technical our Difficulty] the quarter

of and macro earn We market environment. our current needed and much broader resiliency tools regarding the throughout have the learned the in model pandemic requisite to toolbox business the share

culture with From our physician seen that These have truly our created strength with data specialties Specifically, leveraging patient we partnerships, to of perspective, been partnerships the to data have strong operational growing. with year specialty quality approach our life. legalized an core partners. date, making, coupled case with enhance of decision our driven all driven

our past at over CAGR the a years. cases overall fact, grown X% have three In

for region. some significantly our of and As canceled the rescheduled ASCs Out and the safety expectations. was operating an we limited we last for September. of that abundance we had caution of quarter, or quarter, last What Hurricane hours our were patients in we anticipate cases noted Ian, teams were in on the of did extended which week however in-line experienced vacations not a with Florida our impact but those significant

impacted XX warning counties and week, that that canceled in were with practices Hurricane ASCs were rescheduled located During or cases. XX

did impacted, any colleagues our or of were many loss Although injuries. catastrophic experience we life not of

We reschedule continue repair. to procedures and have still to facilities cancel some

We expect to the fully the region operations in in resume fourth quarter.

still but [Technical to the residents or Difficulty] expected the full the over in rebuilding rescheduling of cancellation is area of hurricane unknowable are as or many the process in result impact is The resettling. in

determined that the approximately have adversely impacted quarter the by We earnings million. hurricane $X.X third

adjusted XXXX Hurricane Much we third like have Ida made quarter As of in EBITDA. the year, excluded of hurricane experienced the you last when Louisiana. landfall losses may our recall, from impact we the similar in reported

occasions Hurricane a we grew we Ian [eight] [ph] facility cases in net nearly same basis, this quarter, and quarter, year. X% Despite last than XXX,XXX surgical On by saw the almost more third revenue performed X.X%. the

tailwinds strong contribution markets, growth. broader drove position X.X% facility in same our a execution, superior operational Our healthy of macro competitive and case

margin initiatives at EBITDA tramped XX%. top Our Income the a margin. XX.X% acquisitions and is have quarter organic were of strong in and CARES growth year third material grants in with Adjusted growth basis the the discipline completed to million with robust control past not XXX from of points for This cost expansion over quarter. Act attributable came our $XX.X recognized this coupled expectations line exceeded growth. revenue slightly

labor, our we we monitor and which overtime. in trends costs closely experience identify either mentioned impacts reporting to to not our increases premium system-wide as and or Enhanced quarter, last inflationary and third supply As of contract supply on labor early In any new labor did to allows costs. labor us we accordingly. call, define react we our

the our of labor rates the In most premium fact, as labor overall market of is is markets, contract utilization is in demanding. the abating

Premium a continues labor wages, the our same of total be percentage as and XXXX benefits pre-pandemic to periods. of quarter [ph] in ratio] third in salaries, [consistent

communities environment exceptional to quality we are faster recruit the and high a us allows known workplace maintaining favorable serve. in the to is Our enabler and for key patient clinical we experience

last GPO third of also revenues, and factors year. than improved and third are impact businesses. last supplies XX.X% the our quarter to that points] lower quarter understand were could net with our key of approximately working We the slightly suppliers from inflationary quarter, [X [ph] In

global and disruptions we moving continued environment the potential costs forward. acknowledge the Given increased chain, supply for the to

this seeing increases address. in but we managing in costs At active to or are risk remain underway large proactively unusually not this initiatives vigilant and have we deliveries, price implant point, commodities,

overall to physician targeted have our on that revenue higher focus our levels expansions. the highest margin to contribution Moving line facility been contribute continue we well per generate for efforts as on from and case relentless These levers, organic growth as portfolio. our recruitment rates, to

Our highest short demand by meeting new team facilities positions. been the in for physicians the quality surgical increased targeting stay physician recruiting has our

first separates our using nearly XXX alternatives from eyes of XXX market. have added bringing high new to and that contrasts As over [ability] staff us total demonstrated new quality front surgeons our in to In spanning value proposition partners the quarter, with our part a effectively new we teams with office quarters cost and facilities three industry physician facilities. ability to recruits, and third our in we in consistently, key our our our the unique predictably, of [ph] often specialties, physicians clinical the

As Wayne current continues class. the strength our cohorts encouraged growth year of strong year-over-year to highlighted, early and we each are by recruiting of drive recruiting our

of point Difficulty], position XXXX net year. in a strong revenue very As cohort last [Technical is the cohort recruited than per that XXXX we XX% more already average the

particularly this ASCs. in our of helped growth total has MSK All joint procedures, fuel in our cases

discussed, stay have prior the we are quarter, see procedures this XX,XXX of than this expect existing do With slowing. share cost, facilities, migrate orthopedic lower pipeline, robotic high are moving to proceed facilities. We of options and as more fair equipment, performed X% not share, an investments orthopedic cardiac increasing procedures developing approximately novo We in all short the cardiac M&A including to we we as considering robust renovation surgical for growth facilities, wave capture de preparing to settings. our year well quality, next and And quarter. in outpatient our as into

minimal the our require often level, the near-term. the facility ROIs determine investments we are These authorized and at only finance in when spend,

Spine As as Wayne agreements management minority mentioned, ValueHealth and the Kansas and acquired third we ASCs. well stakes as Specialty in two Hospital, in equity late quarter,

the expand it Kansas excited provides into and of MSK complements as high XXX and market, widely XXXX’s for portfolio very value, This known and our our neuro-orthopedic Spine existing are higher the spine hospital surgery line. best in [Technical to to market. surgery is Cypress was We hospitals one Specialty integrate additional acuity, premier capacity Hospital service our named ASC Difficulty] recently as

own cases system. three of these and migration combined novos represent partnership to over also differentiated quality, the time transactions stay operate. strengths disproportionately interests high and facilities ValueHealth with the and We expect continuation maximize operating the on to in we leveraging acuity high ValueHealth we rapid that These facilities acquired as grow our we of short our our de capitalize specialized

the [syndicated other are our [ph] multiple initial In novos in de there across addition portfolio. acquire to ValueHealth, from] development

the for With and Specialty of ASCs, Hospital, acquisitions we and commitment have these Kansas capital deployment achieved XXXX. Spine our

manage with continue of robust targets, We evaluating including a opportunities are remaining acquisition pipeline to ValueHealth. we the

meaningful future deployment capital will earnings XXXX contributions to provide and in to beyond. approach Our

that guidance This still along with million. reaffirming we're of to environment the for adjusted year, guidance the considers results are pandemic EBITDA we and reporting, the $XXX inflation remainder prudently our million margins. in are a Given of of could pressure a outlook in that our range period we $XXX

results our far from this we so As risks. can manage through confident year, can you see we are these

this procurement, are are development, revenue teams initiatives and recruiting, on to care, goals. operations our across our Our cycle, and achieve managed executing we aligned highly

the In of accomplishments summary, very I'm proud quarter. team's this

cost patient a and that meaningful stay high short purpose quality, value Our in provide of company facilities all surgical to stakeholders. provides efficient, centered environment our built key

call said, the Dave? that color on additional results, as I turn our over to as to will With our Dave outlook. well financial provide

the by we more especially strength of than period X.X% about Thanks, remainder our prospects before quarter of with on financial third across quarter performed we and prior X.X% line, all our Eric. for orthopedics almost the first providing the third I our and additional the top will talk XXXX. the broad perspectives on last specialties, Starting versus year. liquidity in year XXXX, XXX,XXX outlook year results surgical cases where grew in same with

effectively near patient enhanced physician our proactive illness. expectations Difficulty] was of with the procedures canceled, the and the efforts last quarter, reschedule believe our are Ian to volumes we on levels many impact centers. continuing to despite in-line due as impact had visibility that This you [Technical We Hurricane with have managed shared normalized Florida we through growth or

case prior over XX% saw from the Largely year a year consolidated Difficulty] to last our contributions rise in attributed is revenues growth to acquisitions growth XXX.X [Technical million. growth, and this facilities. organic we combination factors This of

Because recent buy do structure, that revenue. non-consolidating to our time. enhance through As a this acquisitions not the revenue provide net operational and ownership excellence are of reminder, to us include in of our over we performance many their a opportunity up consolidated more facility

acquire we last noted in higher favorable case adjusted acquire, most aligned quality possible] report quarter the growth, [ph]. we which to that X.X% case evaluate total high a revenue approximately opportunities, targeted assets the when agnostic X.X% I at we the days at basis, per quarter prior was to the facility third high basis, the [multiple our with period. year On of X.X%. focus treatment M&A assets accounting is revenue our a same increased with growth on Net than specialties

Same year. negatively was Difficulty] a Adjusted by quarter, points, million facility recognition third in growth from XX.X%, from grant a included of was income from the grants. the approximately the due EBITDA was Hurricane XX.X CARES $XXX,XXX EBITDA XX of revenue effect to expansion impacted the benefit Ian. basis [Technical margin Act which Adjusted approximately prior

pressures] we before, mentioned I've As [generic our affecting labor are costs. and diligently supply managing [ph]

immune, these to were not material we factors this are morning. the results we reporting Although not are

and were Our salaries, wages, with and pre-pandemic benefit costs, as well as our prior medical supply levels in-line costs expectations. our year,

a of the we Given deploying offset guidance. to cost ended to approximately the that to to market continue carefully it represent are pressure, monitor does dynamics, help we but results future into these cost incorporating $XXX We mitigation will potential risk our quarter future continue with million tactics factors, proactively cash.

CapEx free We occurred Recoupment with remaining has reported our the largely with spend sheet. payments $XX on negative the and distributions balance from third quarter, $XX million in initiatives the generated advanced Medicare $XX was cash flows advance on an payments. million CapEx to revenue of operations and seasonal flows order. deferred Medicare cash large due had timing of as million amount repaid of XXXX We immaterial our to of of in partners

on de years. our to generated deployed and On of strengthen transactions are [sub-X.X] on trends of in [ph] and a are October XX support MSK focused $XXX [ph]. cash year-to-date sensors facility we flow approximately and positive a novo our $XX excluding Through future million. this have we procedures primarily have [multiple] year growth free well-positioned These basis, at same investments, million

calculated the net of the X.Xx of consistent under debt-to-EBITDA end company's was quarter the third expectations as agreement quarter. company's The our with ratio second credit and at the total

deploy expand to expect credit our total bringing our Xx syndicates assets. the upper liquidity the float the quarter, We facility, for this million. times worked our leverage we under banking in capacity near-term under in capacity in to position, revolving with as the to instrument Xx to $XXX accretive borrowing To continue to that we enhance the third capital

borrowings outstanding On revolver. September we any the under have not did XX,

of Hospital is consolidated and $XXX capacity, total XXX result a was cash of our Difficulty] revolver working expanded capacity. October. the As noting settled position that Specialty partially worth and facility acquisition solid million liquidity quarter our almost capital, M&A. Kansas investments supports in of representing well It liquidity million, capitalization, was Spine local [Technical as This both in this as undrawn our future

corporate approximately at we have On debt the the in gross front, debt billion level. $X.X

exposure debt no prior with us rate in we All effectively incremental swaps this of is leaving interest the rate the caps into with fluctuations. to of year, fixed benefit entered and interest

material In of by addition, approximately our debt XXXX, debt no have XX% maturities until XXXX. and we due

today's risks. asset portfolio continually rate to [ph] to] [owed environment, Also refresh with long-term rate as trends. interest align With market we significant we not growth reminder, our a are

Our portfolio certain that at low assets refresh a relatively multiple and a stronger prospects. we growth relatively is with premise multiple future capital the high anchored at redeploy on then the can sell

these well from we ability in confident ongoing free proceeds to fund combining as flow, the and our clear, M&A when well-positioned cash activities, future are current opportunistically. portfolio to approach capital opportunities. are markets of management position, Therefore, our To our we be current generation as

With our quarter XXXX billion XXXX about in we and and are third full-year this the of optimistic related consolidated, closures and recent results $X.X acquisitions, total view not impact the hurricane released including impact continued $X.XX are of anticipate the quarter [reflects] to pandemic. we morning, billion that revenue range [ph] those of third of the the

for are EBITDA guidance XXX million. to XXX XXXX range our In reaffirming to addition, million we adjusted

large reset In cases facing. we We than of XXXX, our environment with we insurance on our the that is believe quarter, fourth Other range there this that typically are affected have case pandemic perform. business, to patients experienced in deductible given study higher surgical a count by the is the payers commercial continue annually. macroeconomic focus we the prudent limits

the Our fourth late quarter. similar quarter demand level a anticipates of guidance for fourth the in

currently evaluate in senior of with midst our investors some the tailwinds our growth are Board provide and with as [thought-winds] planning team Directors. we the but for XXXX, to We of leadership and goals our wanted process [ph] XXXX

of include program, active income, supply we elimination Difficulty] of inflationary the walls without impact headwind variants. the items COVID-XX the contemplating CMS' return From potential a of unknown new sequestration, any are management grant of and of hospitals of recognition or the and pressures, front, impact minimal labor [Technical full-year continued

These our the that which continue earlier, growth offset by line our continued million addition in Idaho headwinds from margin is in community and initiatives are efficiency will provide I annualization de of $XXX reported acquisitions, and of XXXX hospital expect the during including to we the of activity. maturation growth XXXX and in Organic the as acquisition top pandemic. commitment excess process opened novos, contributions expansion we in our continued to

As process, look headwinds long-term actions help and mid-teens in our adjusted stage team we forward targeted and growth. that focused for early our to future achieve we a EBITDA We grow our in deployment on EBITDA greater presentation. us ability evaluate into at targets these with double-digit confident will in visibility relative our projections tailwinds, capital remain to this our providing

business that have now opportunity benefits a believe years marketplace from consolidation. for that provides that for stated and ample have we fragmented trends, a We demographics, model and favorable organic powerful we unique

should believe our speak that of XXXX date to to strength Our our to momentum. continue capitalize and results model, on that and XXXX business year operations we the

call to like With over I'd to that, Operator? operator for questions. back turn the the

Jefferies. go Brian Our is Thank first Please [Operator Instructions] from ahead. you. of Tanquilut question

Hey, wasn't know congrats quarter. on guys the morning and I it good easy.

think wondering still about markets spend, your point. the acquisition need tap of if of the longer-term on question color some my access I and or I appreciate needs I the on you'll your a I at but to to now, company equity Wayne, as mean, you, the first So, capital lot for markets views investors right on capital are the debt views all guess,

thinking cash and want about Just about we that hear as generation deployment on how XXXX to and beyond? capital your you're thoughts flow think and

things the and morning me shareholders. for good let of a Hey, Brian, and anchor Look, question. few listeners all our appreciate on

a physician X,XXX of not but an and of foremost, and pace, First growth do these the clearly the is deployment. this out over just especially long-term to our big the initiatives of at there, continuing and owned independently de recruitment, combination highly And with novos capital aggressive opportunity we part the ASCs model is around a multiples. attractive like if organic

we million the target Our model to that to that's anchor XXX on at number you the the on I'd anchor long-term. because on give like think one I been that has us deploying year. important to get baked about And mid-teens a least to on as think growth

kind consolidated say As in million we you revolver about prepared of as right the as our flow, as $XXX you remarks, at undrawn have XX. September now liquidity Dave well heard of cash when of look both

What flow our for is positive, you year cash to We rate can't in results payments run had is current CMS this see Medicare. our that remaining cash the flow. free

that into We that all approximately we tax M&A. that opportunity cash. about to there as X.X have between will free but roughly forecasting as that we says can I million have say towards do also number, billion go the as as [ph] consolidated that you [XXX] and well payments. to that, about are get of used our our be of your we say I have And believe we year, lease of a think cash next $XXX to revolver, gap

we have place storm right refinance quite path I'd think what start in see asset, more to love go We view say would this but where to hopefully to debt we long-term the that year. sure is on as the further contrary. then a we of we debt [Technical some put our and Difficulty] to evaluate I'm So, upcoming markets. we'll debt, the will whether this then this subside that And that a not

can do right ability that delevering doing in we'll we to tell that that, opportunity taking We've our raise but capital I we while leverage we be down confident that. we've we you And would that opportunistic. committed been our to to feel very will cash several will those and the do to shareholders, tax we to think for our number exists, and If on will years either refunded way Act of our all that to items had agreement continue the subside flow next deliver the one-time or because payments related grow after the of the it be converts that CARES had year. for substantial commitment. this that and related to continue

so, M&A I ability really you'll And this the from its fund think see of and to to cash flow. start free power engine

appreciate too, the I should guys that. And as interpretation for recently. of to be And a the obviously ASC and put CMS benefit think I you rate XXXX, thinking out guess, or Eric, CMS rule? we you from impact trend just about for investors your final rule their how commercial of

and that about start kind impact the obviously good the obviously we'll morning, is Certainly, feel for take pleased to the better so with ASCs. words that the We're and quarter. Good that. the Brian, CMS initially question ruling on has quarter. we came very thanks out, the than

given some bit still arguments were hoping better we more, than inflation, there's we think I expected. little that but a for

those to with nice sure a always grow making to where about being value happy that and [Technical Medicare high to a the we with value that would in commercial little and dance steerage player revenues good find and allows position, of bit with say on feel Difficulty] X% we continue our clearly and near have of this, some we're able we're medium I the a commercial because we our [paid really side, appropriately payers revenue us negotiations are between room are on negotiations fairly] [ph]. coming those the believe

A offset inflationary Medicare [indiscernible]? feel their of Dave, impact that sure do started. specifics I the we to about we third than managed really trying and you of on and ability a focus And pressures year, team. net of don't are more know, we positive certainly Clearly, feel that. offset about the more more than the and that if those we to come make up the was well-positioned to where I or that's to care talk want increase helps that each good

Yes.

we rule. It agree bit Medicare obviously proposed what to was good from the see the rate I I think with Eric. you, a in little very saw

aspects that on favorable. ASC also came relatively three rate have news the of headline hospital We I rates The rate, us. positive. up was that affect think, The pretty

encourage However, a a dampening that through. I that at XXXB headline effect number program to folks working which obviously, that the look drug we're take on did have change, still of would impact

those year. [Technical things middle course versus flow of through much of we that commercial of the expectations will generally but will next of how All where at Difficulty] in were positive look program, our how rate and year our the

from Our next question is Bank Kevin Please of Fischbeck of America. go ahead.

there previously, you Great. guess things were it thinking exactly number, with but are I than margin comments left little couple side just had a the speaking generally came that what want sounded to what a dig the margins. lower margin me thinking. I of into like Thanks. bit because there a wondering If the how guidance you you're revenue higher a assumes in-line about

margin bridge just in that the you're change the trying to side? So, Thanks. on guidance

on Kevin, things couple of anchor margins. I good morning. would A regarding

fair of variable amount with business associated a has and it [ph]. we [flattened our foremost, and down] model costs First

the aware would of much no our we we surprise think what I way. kind I it from July its And in on highlight hurricane we were that the flexing one, very fact of that G&A started saw was was that and vacation the quickly. being perspective atypical

type in being of do our what cancel point data few hurricane. shutdown a when it flex away to That of is as I G&A the In then fact, because see our took and decision facilities, outside is ability an took headwind we initiative but would it that would to did accordingly. did and use the typically the procedures, our quickly, itself, margin, think but the of many those I that, to drive factors influence things. of of from such you But impacted those

that our it we One for better G&A margins think is, investing be up. our environment in initiatives the underlying we've been are to would continuing I wasn't years just current ramp really even actually if in. are

on As all single we are have now We system standard data of HRS facilities of entire over functions a mentioned, our now system. on on warehouse. our almost one have facilities all HRS we HR a XX%

we've you're force the with year of last This coming first investments been several making is these they've kind staged together, long-term [Technical Difficulty] and These the the along and power of seeing, benefits of all over full way. that all come years, that but that. the the kind been

much whereby The is that highlight fee we over partnership up. so would arrangement doing mind a take have we we and you management, for in get we second of have, keep we ability are acquire more interest to thing management a minority time I we acquisitions buy the XXX% to this ValueHealth over through

that the That have is but rules zero of so revenue you way revenue, the associated get impact one, because relevant, the when do you were, it is those get with zero accounting occur, consolidate, you the of the acquisitions inability EBITDA. because to

to majority strong. but that strong continues And start recording miscorrelation to up versus to but see we and times And so, cash quite flow revenue. the then a at we the happening will quality nonetheless start the owner, buy obviously flip, what's of be XXX% of extent revenue, that a to will is become you'll quite between earnings with EBITDA the

affecting to So, us, that's we've this partnerships been building. year other down that's been continue that factor we in the especially these as move

add front? on the Dave, anything margin you to want

Yes.

which a market last really from quarter. the little yes, is from was the guide a year end was this third Just guide because for outcome our the right, And the EBITDA number revenue our quarter right or of at last reported middle, I adjusted this bit again going in was range. question into our top in and remarkable than quarter, think to you're relates better your point what

team when I'm adjusted what adjusted is that, managed the inside really in recognized hurricane was $X.X how look benefit the $XXX,XXX grant income gets you we that received pleased the earnings with impact at and [indiscernible] took of get the that and of million. of mechanically, but about reported about you do earnings, out

that point our bit in you'll than line find So, that when gave math second guide be things, the we those quarter. behind you our a little do may probably the better margin conservative

for can Okay. two That's second in question. helpful. If then my questions squeeze I

potential of opportunity? some And then you hospital elimination the what just about for Any that [ph] Thanks. [outwalls] your redeploy and them elimination mentioned that assets to at program. Difficulty] talk as a that sell the secondly, mentioned How multiples. is you bit [Technical little to of is? the potential some headwinds way You you? – better Can meaningful

Yes.

thanks for So, question. the

It the On allows success that number to Medicare but loss the of about into procedures. higher become a We're to outwalls] material, have advantage acuity do space. it's to that hopeful of of permanently requires that not you procedures access HOPD to extra we at with centers program actually quite specific ability But the actually us those continue [hospital moving It the [indiscernible]. program, staffing. rates took them do and Medicare ASC for think to that going allows look is those program facilities. clearly [ph]

can that drive in to and is, It's as to overcome One not actually ASCs, high we to the at quite those we'll done done. using were high we've is centers, a examples work what safely. volume of we've be done had procedures overcome quality second it which considered ways. the of certainly on a couple huge something be do And increased in but hopefully two continuing previously got but number, is, these acuity

excited level and step-up to about that our care. of higher were we’re really we able provide ASCs So,

something did Again, of to outgrow it's within have [indiscernible] period not make of and in but that a huge ways. for number other our that difference a those company, we'll it time

as work, sure us proactively with question, ongoing be to quite that diligence increased allows that to in our second management we're something our far excited that facilities because area owner. As the that about just on that's was natural are we think make your portfolio which going best

There Difficulty] else. are don't times that do And meaningful. where asset can facility see that the have maybe perspectives we other to someone same growth is highly on where as [Technical on be valuable we opportunities. think we relatively We our

the is in particular a it than can market to or we're higher a here a work idea for. we at sell cash particular We So, the put back facility. multiple

some year. this done We've that of

going We expect more to do into next year. of that

that in a it because those time, us Difficulty] deploy but certainly number opportunity. it gives real gives more ability of [Technical our take to All arbitrage us things confidence

but that So, haven't publicly, as far sizing done that, it’s we as [ph]. [meaningful]

of influence as Chair all look the its we've mean, we Kevin a and it bottom to our we'd we of in would the the always potential. that member to it as a time grow is disproportionately I can it maybe ability Board, and look though, or I Yes, like is management to at at about we to Board, because bottom just gauge kind growth part bottom grow the give the say talk and of portfolio the of you the the has maximized portfolio at but because that,

individuals and opportunity may a that arbitrage. get in unique the asset we Other an then like have to market that

we're XXX generally in assets look at something million that you that so, range if combined total. the million at have has, to all looking the EBITDA And X

XX acquire about able can a Sub-X, for not if the it double-digit, what get would but it's be also million you're quickly arbitrage you why the if say how can you it X that's math and a number to Sub-X, it's and rate. growth million us So, works you're potentially thinking doing, you long-term and easy an affects see think massive to about multiple we and if

constantly And so, we year. single every are this doing

not reason nice is further of the have better capital right it's to understand are has that the that team of we We I looking that we to and assets this group very that at of finish get over next of assets attractive XXX of substantial that say we'll idea what we the lot lot confidence cash a but a generate we million line. I we the free see if have in multiples in flow as out have the showing of a just at real time year, them that And what to think always is can to, job done time lot think we liquidate the another of as a it we the or there redeploy bottom is, invest? want the that interest power would right

is Gill ahead. Lisa Our from next Morgan. Please of JP go question

I just guidance think that EBITDA at XXXX, So, for XX% it thanks it way current much about morning. business? would question. tailwinds fewer for the on way like look look in Thanks Dave Obviously, right consensus the right at to the headwinds very to call growth details looks about mid-teens If the your consensus, my always headwinds you go the the to a – just it? be I and about about. totality on that that this talked first impact we numbers? that versus is I is mid-teens how want impact talked about how growth will back tailwinds, think this that Is align obviously that but and doesn't think about

Hi, Lisa. for question. Yes. the Thanks

is I have basis. we as and I long-term will a through our we as us going that about kind there gone little math because a early that kind Eric build a budget bit through earner a for we in talking have now. off, double-digit do we a we're consensus we're be is responding of – I well it our to out our say process. First feel short-term, quantify that how how obviously to bit different – right comfortable of through Eric little how difficult gone don't on looks and too the on up process

our there. looking kind I'm of his this head And what right at he's is yes, Board of shaking to, the definitely that expects and Wayne get ability now, us and

about guidance, stay a specifics our will for we us there. kind future of little is at how we calls, point But this So, our double-digit the of but quiet that into get somewhat bit to definitely providing goal. we be prudent how think

that. Okay, great. I appreciate

on hit Board, we mid-teens I growth long-term you to identify goal. opportunities of the speaking this assure all to team to just our Yes, can that continue behalf challenge management and levers

an can we we're this this then a and year-over-year proud grants, over you know, I agree environment, is you and with team. guys of growth how year been from incredibly we these strip do push our CARES has out entire macro As all this really company what but and unique think rate XX%, if we

saying as will So, confidence be said, say, I are the prepared have would intentional quite we high we double-digit. in remarks Dave that

in mid-teen those relative we're been regardless we're at now do to we've more fall for. just be that Now, we next we continue [indiscernible]. to the achieved trying between to that out the build us will help year give that of confidence then high targets that where going into And figure shooting and that catalyst how environment

over one, and past see impact do And I've then about How we around in about market time; direction? question just actual that care. a care. the your two, with in the had but based Wayne, bigger that conversations value the picture move Privia; relationship XXXX? more the margins one we value you mean as in of think towards that think based two, you in and Will on shift I

technology to in will moment that's and the like a more really finally heard talk behind you does right real I do others XXXX. it number care think it's previous it's and think getting real now get built including decades and momentum people seem about I track its question, So, monitor great momentum about it based for the that that have be this. and and companies, about joked able two and to we've I value

don't from we we've with and I as I said say discussions we believe this mean this. our folks, can really flippantly, think and assure before, you this

We are in value, the care. based value

math We that are actually with the quality. have math both The work. analogy the folks key and component that built structure the to the cost make aligns

will I share with for show model we so, can And that and existing I time within you points their real first think share to real can would that proof the see that VBC, what points that. proof payers continue like call in individuals

that proving I time] key will The for it your question, and margins, to excited [indiscernible] because world truly to of the to this does that start the it proceeding. we confidence margins just relative to But Privia over taking think have answer allow ultimately, we're and actually it is this see in the and will and people works to us a want bigger work. how with XXX% [pie about early which relationship then that's lot they is of improve [ph]. And for us piece us is, a

RBC of Hendrix Capital. go Ben ahead. from is question last Please Our

guys. thanks Hey,

costs the coming arrangements could You material remind you supply guys inflationary noted pressure? have GPO heard that contracts us Thanks. up We've falls Do months. commentary step-up your you the vigilance renewals from long-term much from peers Can coming and the supplies. of a inflationary environment. how present due given around large supply supply of amid in coming any about under

Ben. Hey,

against is is question one Your for or structural for a a good good us related is to believe of the because GPO chain we supply technical inflation. our hedge that hedge areas one us

a that. ways. have of It benefits And underneath to a with relationship great of inside supply provides is our We huge GPO. amount us in for number a more that. majority we have room of grow A spend

portfolio. One, visibility. GPO make And much gives us more a spread data of lot with across decisions that our that can informed data you and

have cost clinicians So, and are. is side, more strong do a And there job data us we from pretty where the And our trends tremendous. good our their visibility gives visibility that management effectively. operators that cost can much into

with for contracts and up be others GPO, to manage vendors. you kind not what is renewal, may about they Our what GPO the long-term referring key is but underneath of talked have,

a come on contracts for when typical those up basis renewal. so, And they see can

to opportunity good a us staggered the is, but visibility portfolio, you decisions to us can so get again visibility operators, the vendors. informed them. maybe limited a make allows again It's they the give on Now, better their than to GPO not good inside see impact, our to is [Technical vendor news key which bit price to is little gives that inside Difficulty] more It that there.

the been us for this think as XXXX expectations to [Technical it great and we about that we was our of definitely tool provide we that a one for GPO will Difficulty]. the So, navigate us has year. inform It help just and ways

Thank you.

Please sir. the comments. have to we end Evans would like ahead, question-and-answer the back of to I and call for reached the closing go gentlemen, session. Ladies hand Eric

everyone today. appreciate us and joining you Thank

Before like a Collectively, significant the the providing we quality clinical our provide and excellence and X,XXX go, for we recognize patient to physicians. to responsibility our let commitment would best differentiated physicians the colleagues take you the for efforts and environment nearly XX,XXX I to absolute of exceptional experience.

alongside most I'm We fully work vulnerable on deliver to each year call in our through trust day. know life to to quality have more us colleagues often of Thank and a what patient partnership. their place moments. patients are morning this you XXX,XXX the these for we and professionals privileged that enhance more as than all work and their joining great mission

joining for conference. This concludes Thank us. today's you

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