Surgery Partners, Inc 10-Q for FY2023 Q1

Surgery Partners, Inc. (SGRY)

10-Q 2023-05-02 For: 2023-03-31

Added on April 07, 2026

About this 10-Q

Surgery Partners, Inc filed this 10-Q on May 2, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $666.2M; up 11.7% from $596.2M a year earlier
Net loss: $24.9M; compared with net income of $12.2M a year earlier
Diluted EPS: -$0.20; compared with $0.14 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


Delaware						47-3620923
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Large accelerated filer ☒						Accelerated filer ☐
Non-accelerated filer ☐						Smaller reporting company ☐
						Emerging growth company ☐


		Page

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Operations (Unaudited)	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	3
	Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28

Signatures		29


	(Unaudited)
	March 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	245.5	$	282.9
Accounts receivable	452.9		456.3
Inventories	71.8		71.4
Prepaid expenses	29.3		31.4
Other current assets	69.4		79.0
Total current assets	868.9		921.0
Property and equipment, net of accumulated depreciation of $382.7 and $374.3, respectively	844.3		876.6
Goodwill and other intangible assets, net	4,252.6		4,179.4
Investments in and advances to affiliates	191.6		190.3
Right-of-use operating lease assets	274.0		279.1
Long-term deferred tax assets	93.3		91.5
Other long-term assets	118.6		144.2
Total assets	$	6,643.3	$	6,682.1

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	144.4	$	151.6
Accrued payroll and benefits	67.8		68.9
Other current liabilities	200.0		210.1
Current maturities of long-term debt	62.9		62.8
Total current liabilities	475.1		493.4
Long-term debt, less current maturities	2,530.9		2,559.0
Right-of-use operating lease liabilities	268.8		271.4
Other long-term liabilities	80.2		75.4

Non-controlling interests—redeemable	345.8		342.0

Stockholders' equity:
Preferred stock, $0.01 par value; shares authorized - 20,310,000; shares issued or outstanding - none	—		—
Common stock, $0.01 par value; shares authorized - 300,000,000; shares issued and outstanding - 126,480,483 and 125,960,834, respectively	1.3		1.3
Additional paid-in capital	2,478.1		2,478.0
Accumulated other comprehensive income	64.9		76.2
Retained deficit	(582.3)		(557.3)
Total Surgery Partners, Inc. stockholders' equity	1,962.0		1,998.2
Non-controlling interests—non-redeemable	980.5		942.7
Total stockholders' equity	2,942.5		2,940.9
Total liabilities and stockholders' equity	$	6,643.3	$	6,682.1


	Three Months Ended March 31,
	2023		2022

Revenues	$	666.2	$	596.2
Operating expenses:
Salaries and benefits	202.2		178.9
Supplies	188.4		171.6
Professional and medical fees	74.6		63.6
Lease expense	21.4		20.0
Other operating expenses	45.6		37.3
Cost of revenues	532.2		471.4
General and administrative expenses	32.0		29.5
Depreciation and amortization	33.7		27.4
Transaction and integration costs	12.5		7.1
Grant funds	(1.1)		(1.2)
Net loss (gain) on disposals, consolidations and deconsolidations	10.5		(0.1)
Equity in earnings of unconsolidated affiliates	(3.3)		(3.1)
Litigation settlements	3.0		(32.8)
Other expense (income), net	0.3		(2.4)
	619.8		495.8
Operating income	46.4		100.4
Interest expense, net	(46.8)		(56.3)
(Loss) income before income taxes	(0.4)		44.1
Income tax benefit (expense)	1.6		(1.3)
Net income	1.2		42.8
Less: Net income attributable to non-controlling interests	(26.1)		(30.6)
Net (loss) income attributable to Surgery Partners, Inc.	$	(24.9)	$	12.2

Net (loss) income per share attributable to common stockholders
Basic	$	(0.20)	$	0.14
Diluted (1)	$	(0.20)	$	0.14
Weighted average common shares outstanding
Basic	125,206		87,995
Diluted (1)	125,206		90,272


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive (Loss) Income		Retained Deficit		Non-Controlling Interests— Non-Redeemable		Total
	Shares	Amount

Balance at December 31, 2021	89,333	$	0.9	$	1,622.3	$	(31.5)	$	(502.7)	$	880.6	$	1,969.6
Net income	—	—		—		—		12.2		20.0		32.2
Equity-based compensation	572	—		7.7		—		—		—		7.7
Other comprehensive income	—	—		—		56.8		—		—		56.8
Acquisition and disposal of shares of non-controlling interests, net	—	—		(4.8)		—		—		(24.3)		(29.1)
Distributions to non-controlling interests—non-redeemable holders	—	—		—		—		—		(24.6)		(24.6)
Balance at March 31, 2022	89,905	$	0.9	$	1,625.2	$	25.3	$	(490.5)	$	851.7	$	2,012.6


Balance at December 31, 2022	125,961	$	1.3	$	2,478.0	$	76.2	$	(557.3)	$	942.7	$	2,940.9
Net (loss) income	—	—		—		—		(25.0)		18.3		(6.7)
Equity-based compensation	519	—		3.7		—		—		—		3.7
Other comprehensive loss	—	—		—		(11.3)		—		—		(11.3)
Acquisition and disposal of shares of non-controlling interests, net	—	—		(3.6)		—		—		49.7		46.1
Distributions to non-controlling interests—non-redeemable holders	—	—		—		—		—		(30.2)		(30.2)
Balance at March 31, 2023	126,480	$	1.3	$	2,478.1	$	64.9	$	(582.3)	$	980.5	$	2,942.5


Balance at December 31, 2022	$	4,137.1
Acquisitions, including post acquisition adjustments	91.3
Disposals	(11.1)
Balance at March 31, 2023	$	4,217.3


	Carrying Amount				Fair Value
	March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022

Senior secured term loan	$	1,370.1	$	1,370.0	$	1,353.0	$	1,359.7
6.750% senior unsecured notes due 2025	$	185.0	$	185.0	$	181.5	$	183.4
10.000% senior unsecured notes due 2027	$	320.0	$	320.0	$	326.4	$	326.8


	March 31, 2023		December 31, 2022

Senior secured term loan (1)	$	1,370.1	$	1,370.0
6.750% senior unsecured notes due 2025	185.0		185.0
10.000% senior unsecured notes due 2027	320.0		320.0
Notes payable and other secured loans	174.9		171.3
Finance lease obligations	553.5		585.7
Less: unamortized debt issuance costs and discounts	(9.7)		(10.2)
Total debt	2,593.8		2,621.8
Less: Current maturities	62.9		62.8
Total long-term debt	$	2,530.9	$	2,559.0


	Classification in Consolidated Balance Sheets	March 31, 2023		December 31, 2022

Assets:
Operating lease assets	Right-of-use operating lease assets	$	274.0	$	279.1
Finance lease assets	Property and equipment, net of accumulated depreciation	490.6		529.6
Total leased assets		$	764.6	$	808.7

Liabilities:
Operating lease liabilities:
Current	Other current liabilities	$	38.0	$	36.5
Long-term	Right-of-use operating lease liabilities	268.8		271.4
Total operating lease liabilities		306.8		307.9
Finance lease liabilities:
Current	Current maturities of long-term debt	21.4		20.9
Long-term	Long-term debt, less current maturities	532.1		564.8
Total finance lease liabilities		553.5		585.7
Total lease liabilities		$	860.3	$	893.6


		March 31, 2023				December 31, 2022
	Location	Assets		Liabilities		Assets		Liabilities
Derivatives not designated as hedging instruments
Interest rate caps	Other long-term assets	$	—	$	—	$	9.0	$	—
Interest rate swaps	Other long-term assets	6.2		—		8.5		—
Interest rate swaps	Other long-term liabilities	—		6.2		—		8.5

Derivatives in cash flow hedging relationships
Interest rate caps	Other long-term assets	8.4		—		10.4		—
Interest rate swaps	Other long-term assets	70.6		—		85.5		—
Interest rate swaps	Other long-term liabilities (1)	—		28.3		—		31.9
Total		$	85.2	$	34.5	$	113.4	$	40.4


	Twelve Months Ended March 31, 2023

Cash flows from operating activities	$	153.5
Plus (minus):
Non-cash interest expense, net	(26.3)
Non-cash lease expense	(35.2)
Deferred income taxes	(19.1)
Equity in earnings of unconsolidated affiliates, net of distributions received	1.1
Other non-cash income	7.5
Changes in operating assets and liabilities, net of acquisitions and divestitures	140.5
Income tax expense	20.4
Net income attributable to non-controlling interests	(137.1)
Interest expense, net	225.4
Transaction, integration and acquisition costs	54.3
Litigation settlements and regulatory change impact	14.1
Hurricane-related impacts	1.5
Undesignated derivative activity	(7.4)
Acquisitions and synergies (1)	92.3
Credit Agreement EBITDA	$	485.5


No.						Description

10.1						Ninth Amendment to the Credit Agreement, dated as of January 13, 2023, by and among SP Holdco I, Inc., Surgery Center Holdings, Inc., the other Guarantors party thereto, Jefferies Finance LLC and the other lenders party thereto (incorporated herein by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K filed March 1, 2023).
31.1						Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						Inline XBRL Taxonomy Extension Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in Inline XBRL (included in Exhibit 101).


SURGERY PARTNERS, INC.

By:			/s/ David T. Doherty David T. Doherty Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)


	Three Months Ended March 31,
	2023		2022
Patient service revenues:
Surgical facilities revenues	96.0	%	95.7	%
Ancillary services revenues	2.5	%	2.9	%
Total patient service revenues	98.5	%	98.6	%
Other service revenues	1.5	%	1.4	%
Total revenues	100.0	%	100.0	%


	Three Months Ended March 31,
	2023				2022
	Amount		%		Amount		%
Patient service revenues:
Private insurance	$	335.6	51.1	%	$	300.2	51.1	%
Government	287.8		43.8	%	249.0		42.4	%
Self-pay	15.6		2.4	%	16.8		2.9	%
Other (1)	17.4		2.7	%	21.7		3.6	%
Total patient service revenues	656.4		100.0	%	587.7		100.0	%
Other service revenues	9.8				8.5
Total revenues	$	666.2			$	596.2


	March 31, 2023		December 31, 2022
Assets:
Surgical Facility Services	$	6,049.2	$	6,001.1
Ancillary Services	41.4		41.7
All other	552.7		639.3
Total assets	$	6,643.3	$	6,682.1


	Three Months Ended March 31,
	2023		2022
Cash purchases of property and equipment:
Surgical Facility Services	$	23.8	$	17.7
Ancillary Services	0.5		0.2
All other	—		0.3
Total cash purchases of property and equipment	$	24.3	$	18.2