Surgery Partners, Inc. (NASDAQ:SGRY) Q1 2019 Earnings Conference Call Transcript

May 08, 2019 • 08:30 am ET

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Surgery Partners, Inc. (NASDAQ:SGRY) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Greetings and welcome to Surgery Partners Incorporated First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer will follow the formal presentation. Please note this conference is being recorded.

I will now turn the conference to your host today, Mr. Tom Cowhey, CFO of Surgery Partners. Please proceed.

Executive
Tom Cowhey

Good morning and welcome to Surgery Partners' first quarter earnings call. This is Tom Cowhey, Chief Financial Officer. Joining me today is Wayne DeVeydt, our Chief Executive Officer, and we are also excited to have Eric Evans, our new Chief Operating Officer, join us for our Q&A session.

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

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

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

Executive
Wayne DeVeydt

Good morning. Thank you, Tom, and thank you all for joining us today. For our call this morning, I'd like to review some highlights from our first quarter results. And I will then provide an update on several of our strategic initiatives supporting organic growth and the margin expansion as we drive towards sustainable, double-digit adjusted EBITDA growth. And finally, I'll turn the call over to Tom to provide further details on the quarter.

Starting with the quarter, I'm pleased to report first quarter 2019 adjusted revenues of $416.8 million and adjusted EBITDA of $50.7 million, reflecting continued traction from our strategic initiatives. As we look deeper into the quarter, adjusted EBITDA grew by 7.6% over the first quarter of 2018, moderately better than our previously guided mid-single-digit growth.

Same-facility revenue increased by 5% from the prior year quarter, driven by strong net revenue per case and volume growth. As a reminder, we had one fewer workday in 2019 in the first quarter as compared to 2018. Adjusting for this workday, same-facility revenue increased by 6.7%.

Finally, adjusted EBITDA margins were 12.2%, a 70 basis point improvement versus the prior year quarter, which is especially encouraging when considering our government payer mix increased by approximately 140 basis points as compared to the prior year quarter.

The first quarter of 2019 represents our third consecutive quarter of same-facility revenue and case volume growth. Encouraging indicators that our strategic initiatives, supporting organic growth and margin expansion are taking hold and providing us with solid momentum as we