Surgery Partners, Inc. (NASDAQ:SGRY) Q3 2019 Earnings Conference Call Transcript

Nov 05, 2019 • 08:30 am ET

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Surgery Partners, Inc. (NASDAQ:SGRY) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Greetings, and welcome to the Surgery Partners Third Quarter 2019 Earnings Conference Call. [Operator Instructions] A brief question-and-answer session will follow the formal presentation. [Operator Instructions]

It is now my pleasure to introduce your host, Tom Cowhey, Chief Financial Officer. Thank you. Sir, you may begin.

Executive
Tom Cowhey

Good morning, and welcome to Surgery Partners third quarter 2019 earnings call. This is Tom Cowhey, Chief Financial Officer. Joining me today is Wayne DeVeydt, our Chief Executive Officer; and Eric Evans, our Chief Operating Officer.

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 interim report on Form 10-Q 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 will review some highlights from our third quarter results and then provide an update on several of our strategic initiatives that support our organic growth and margin expansion, and briefly discuss how those initiatives impact our sustainable double-digit adjusted EBITDA growth goals. 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 third quarter 2019 adjusted revenues of $458.3 million and adjusted EBITDA of $62.2 million. As we look deeper into the quarter, adjusted EBITDA grew by 5.4% over the third quarter of 2018, consistent with our previous guidance and our targeted double-digit full year growth.

Days adjusted same-facility revenue increased by 7.9% from the prior year quarter, driven by strong net revenue per case and volume growth. We are pleased with the significant growth over the prior year, representing our fifth consecutive quarter of same-facility revenue and case volume growth, which we believe is a testament to our efforts.

Finally, adjusted EBITDA margins were 13.6%, an improvement of 30 basis points over the prior year quarter. As Tom will discuss later, adjusting for the impact of closed or divested facilities revenue growth would have been over 9% and EBITDA growth would have been approximately 13% over the prior quarter.

Our strong third quarter performance does not incorporate any add-back or adjustment for the impact of Hurricane Dorian in early September, which we estimate reduced our reported results by over $3 million in revenue, and approximately $1.2 million to $1.5 million in adjusted