Surgery Partners Inc. ((SGRY)) has held its Q4 earnings call. Read on for the main highlights of the call.
Surgery Partners Inc. recently held its earnings call, revealing a positive sentiment driven by robust financial performance in 2024. The company achieved record revenue and EBITDA growth, fueled by strong organic growth and strategic acquisitions. Despite some challenges, such as higher transaction costs and potential legislative changes, the overall outlook remains optimistic, with the highlights significantly outweighing the lowlights.
Record Revenue and EBITDA
Surgery Partners reported impressive financial results for 2024, with full-year adjusted EBITDA growth of 16% and net revenue growth of 13.5%. The company surpassed $3 billion in revenue and $0.5 billion in adjusted EBITDA for the first time, marking a significant milestone in its financial journey.
Strong Organic and Orthopedic Growth
The company experienced strong organic growth, with same facility revenue increasing by 8%. A notable contributor to this growth was the orthopedic sector, which saw a remarkable 50% increase in total joint procedures, highlighting the company’s focus on high-acuity specialties.
Successful Acquisitions and De Novo Growth
In 2024, Surgery Partners expanded its footprint by adding seven surgical facilities and opening eight de novo facilities. The pipeline for 2025 looks promising, with 12 facilities in development, supporting the company’s long-term growth strategy.
Managed Care and Contractual Rate Confidence
The company secured over 99% of expected contractual rates for 2025, with Medicare rate increases of approximately 3%. This provides a strong foundation for rate growth visibility in the coming year.
Strong Physician Recruitment
Surgery Partners successfully recruited over 750 new physicians in 2024, enhancing its focus on high-acuity specialties, particularly orthopedics. This recruitment effort strengthens the company’s position in the healthcare market.
Transaction and Integration Costs Impacting Cash Flow
Higher transaction and integration costs due to increased M&A activity impacted cash flow in 2024. However, these costs are expected to normalize in 2025, alleviating some financial pressure.
Potential Impact from Legislative Changes
While legislative changes pose a manageable risk, the company estimates a 1% revenue risk from site neutrality policies. However, Surgery Partners is well-positioned to adapt to any procedural shifts to lower-cost sites.
Forward-Looking Guidance
Looking ahead to 2025, Surgery Partners projects net revenue between $3.3 billion and $3.45 billion, with adjusted EBITDA ranging from $555 million to $565 million. This guidance reflects double-digit growth and margin expansion, aligning with the company’s long-term growth algorithm. The company plans to deploy $200 million in acquisitions, with $53 million already spent on three ASCs in California and Texas.
In summary, Surgery Partners Inc.’s earnings call highlighted a robust financial performance in 2024, driven by strong organic growth, strategic acquisitions, and successful physician recruitment. Despite some challenges, the company’s positive outlook for 2025, supported by strong guidance, underscores its potential for continued success in the healthcare market.