Surgery Partners, Inc. · NASDAQ:SGRY

Surgery Partners — 42nd Annual J.P. Morgan Healthcare Conference (January 2024)

35 slides from Surgery Partners's conference presentation, January 2024

  1. Slide 1: 42nd Annual J.P. Morgan Healthcare Conference

    42nd Annual J.P. Morgan Healthcare Conference

  2. Slide 2: Legal Disclaimer

    Legal Disclaimer Forward-Looking Statements Statements contained in this presentation, including the question and answer portion of the presentation, other than statements of historical fact, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as

  3. Slide 3: Table of Contents

    Table of Contents 1 Introduction 2 Investment Highlights 3 Finance & Liquidity Highlights © 2023 Surgery Partners – Confidential & Proprietary Information 3

  4. Slide 4: Surgery Partners Introduction

    Surgery Partners Introduction © 2023 Surgery Partners – Confidential & Proprietary Information

  5. Slide 5: We Are a Leading Pure-Play Surgery Center Operator

    We Are a Leading Pure-Play Surgery Center Operator… Key Metrics ~$2.7 billion ~$417 million Q3 2023 TTM Q3 2023 TTM 32 Revenue Adjusted EBITDA(1) States 139 Ambulatory Surgery Centers 18 Short-Stay Surgical Hospitals ~5,000 Affiliated Physicians 650,000+ Annual Patients © 2023 Surgery Partners – Con

  6. Slide 6: Anchored by Strong, Consistent Execution

    …Anchored by Strong, Consistent Execution… Adjusted EBITDA(1) ($M) Historical Execution Provides High Confidence in Robust $436 - $440(3) Growth Outlook $380 $340(2) $259 $257 $235 $164 2017A 2018A 2019A 2020A 2021A 2022A 2023P % YoY Growth (2) (2) (3) (8.3%) +42.9% +10.1% (0.8%) +22.2% +20.9% +15.3

  7. Slide 7: Highly Visible Near and Long-Term Growth Drivers

    …with Highly Visible Near and Long-Term Growth Drivers Top-line Growth Margin Expansion Capital Investment Volume / Procurement Acquisitions Rate Health System/ Recruiting / Service Revenue Cycle Health Plan Line Expansion Partnerships Org / Workflow Managed Care De Novos Efficiencies Mid-Teens Adju

  8. Slide 8: Built to Capture Macro Tailwinds Through Patient and Physician Engagement

    Our Company was Built to Capture Macro Tailwinds Through Industry Leading Patient and Physician Engagement… Preferred Patient Experience Enhanced Physician Engagement 95% 100% 91 100% 3.5% 10.6% Overall Patient Surgical hospitals Net Promoter Growth in Cohort Same facility Same facility Satisfaction

  9. Slide 9: Anchored in our Culture, the Foundation of How we Operate

    …And is Anchored in our Culture, which is the Foundation of How we Operate PATIENTS PHYSICIANS Our core values are foundational to who we are  Act with integrity and transparency  Be accountable  Drive clinical and service excellence EMPLOYEES PAYORS  Promote a culture of diversity and inclusion

  10. Slide 10: Surgery Partners Investment Highlights

    Surgery Partners Investment Highlights © 2023 Surgery Partners – Confidential & Proprietary Information

  11. Slide 11: Surgery Partners Investment Highlights

    Surgery Partners Investment Highlights Large Market Opportunity Supported by Multiple Macro Growth Drivers and Aligned 1 with the Mega Trends: High Quality, Low-Cost Care in Specialized Settings 2 An Industry Leader Focused on Higher Growth, Higher Acuity Specialties 3 Exceptional Clinical Quality C

  12. Slide 12: Significant Market Opportunity: >$90B Outpatient Surgical Market

    Significant Market Opportunity: >$90B Outpatient Surgical 1 Market and ~$60B of Cases Migrating to Outpatient… Annual Revenue (US)(1) Annual Volume Growth(1) $500B+ ~$60B incremental shift of $230B surgery -2% inpatient surgical cases to Inpatient the outpatient setting $470B+ $55B+ surgery 2% ~60%

  13. Slide 13: Well-Positioned to Capitalize On Key Industry Trends

    …With Surgery Partners Well-Positioned to Capitalize On 1 Key Industry Trends Key Trends Our Positioning • MSK remains highest growth, most financially • 95% CAGR(1) in total joints in ASCs attractive specialty Right • ~80% facilities perform MSK procedures and ~70% Specialties • Cardiology in very

  14. Slide 14: Diversified Case Mix, Focused on Core Specialties

    2 Diversified Case Mix, Focused on Core Specialties… Case Mix(1) 2019 – YTD Sept. 2023 CAGR by Specialty Case(4) All Other Specialties(2) 13.6% Cardio Musculoskeletal(3) 16% 7.4% Gastrointestinal 35% 25% 5.1% Orthopedic Ophthal- mology 3.7% Ophthalmology 24% 1.7% General Surgery Gastrointestinal Mus

  15. Slide 15: With the Highest Contribution Margin

    2 …With the Highest Contribution Margin MSK and Cardiology specialties offer the largest growth opportunity among the most profitable cases per minute ASC Direct Contribution $ Margin Per Minute of Operating Room Time(1) >$50 per minute PMT IMP CAR OPTH GI PMT ORTHO UROL NEU ENT OBGYN POD HAND DERM

  16. Slide 16: Targeted Investments To Win in Highest-Growth, Most Attractive Areas

    Targeted Investments To Win in Highest-Growth, Most 2 Attractive Areas… $3 billion Total Shoulder and Ankle Replacements on ASC List Orthopedic Annual savings by shifting 50% of joint cases to ASCs(1) Effective January 1, 2024 57 ~80% Robots in use Facilities perform MSK across Facilities procedures

  17. Slide 17: Leveraging Our Capital Efficient Flywheel

    2 …While Leveraging Our Capital Efficient Flywheel 1. Demographic and site of service 7. Supply chain initiatives trends leading to future growth 6. Payer strategies 2. Physician recruitment 5. Acquisitions and 3. Add orthopedics and Partnerships cardiology as a new service line 4. Expansion of orth

  18. Slide 18: Our Flywheel in Action: Orthopedic Playbook

    Our Flywheel in Action: Orthopedic Playbook Provides 2 Line of Sight to Success in Future Specialties Orthopedic Case Volume 100k+ Orthopedic Procedures Annually 104,989 92,269 1,000+ Orthopedic Physicians 61,132 95% ASC Total Joint CAGR(1) 100+ New ASC Orthopedic physician recruits YTD September 20

  19. Slide 19: Cardiovascular Ambulatory Shift is Early; Deliberate & Balanced Strategy

    Cardiovascular Ambulatory Shift is Early; Deliberate & 2 Balanced Strategy in Flight Industry Trends Our Strategy Regulatory(1) Providers(1) Proactively monitor Strategic partnership Changes to Medicare >70% of cardiology market opportunities with health systems / Medicaid ASC-CPL groups employed by

  20. Slide 20: We Hold Ourselves to the Highest Standards

    3 We Hold Ourselves to the Highest Standards… Outperforming Clinical Quality National Benchmarks ASCs Outperform in 10 of 10 quality Surgical Hospitals Outperform in surgical- measures reported through the ASC Quality focused quality measures reported through Collaborative(1) CMS, AHRQ & Patient Saf

  21. Slide 21: Best-in-Class Patient Satisfaction Scores

    3 …Resulting in Best-in-Class Patient Satisfaction Scores Net Promoter Score 95 Patient 91 Experience 82 77 95 95 Overall 96 Process People Patient 71 Experience 71 61 94 Personal © 2023 Surgery Partners – Confidential & Proprietary Information Note: Surgery Partners’ scores based on patient satisfa

  22. Slide 22: We Align Ourselves with our Physician Partners

    3 We Align Ourselves with our Physician Partners… Multi-Facility Management Three-Way JVs Facility Facility Facilities Two-Way JVs Services Health Payors Systems OR ~95% Physician Partner Retention1 © 2023 Surgery Partners – Confidential & Proprietary Information (1) Based on FY 2022 22

  23. Slide 23: Integrated Pure-Play Platform

    …That Can Uniquely Benefit From an Integrated Pure-Play 3 Platform… 100% of surgical facilities/ clinical practices migrated to end-state Patient platforms, representing 100% of Accounting revenue. Platform 91% of surgical facilities/clinical Revenue practices migrated to common Robotic Cycle claims

  24. Slide 24: Turnkey Technology Stack Delivering Organic Synergies

    …And a Turnkey Technology Stack With Proven Track 3 Record of Delivering Organic Synergies Managed Care Supply Chain • Managed Care • Enhanced centralized • Enhanced centralized team with seasoned team with seasoned executives executives • Migrated to one • Continuing to enhance company-wide GPO our

  25. Slide 25: We Operate in a Highly Fragmented Market

    4 We Operate in a Highly Fragmented Market… Number of Physician-Owned Number of ASCs in the U.S.(2) Hospitals in U.S.(1) Medicare-Certified ASCs (2023) Total = 6,223 ASCs(3) ~ 240 100% Corporation Owned (3%) Physician-Hospital- Hospital Owned (3%) Corporation Owned (7%) 80% Physician-Hospital 60% Ow

  26. Slide 26: Focused on Short-Stay Surgical Facilities with Accelerating M&A Momentum

    4 … And are Focused on Short-Stay Surgical Facilities with Accelerating M&A Momentum Closed / Sold Acquisitions Partnerships Pipeline Executed strategic 2018: Divested over ~$105m in 11 Partnerships with: ~$100m in Transactions in 2018 annualized revenues 17 De Novos Currently in ~$35m in 7 Developm

  27. Slide 27: We Have a Purpose-Built, Veteran Management Team

    5 We Have a Purpose-Built, Veteran Management Team… Wayne DeVeydt Eric Evans Dave Doherty Jennifer Baldock Chairman of the Board Chief Executive Officer EVP & Chief Financial Officer EVP & Chief Administrative Officer 29 Years Healthcare Experience 19 Years Healthcare Experience 22 Years Healthcare

  28. Slide 28: A Track Record of Delivering on its Promises

    6 …That Has a Track Record of Delivering on its Promises Historical Adjusted EBITDA vs. Consensus Estimates …and since outperformed consensus for 15 consecutive quarters Outperformance Raised Guidance +18% +15% In 2018 and 2019 we put +11% People, Processes and Systems in +6% +5% +5% place… +3% +3%

  29. Slide 29: Finance & Liquidity Highlights

    Finance & Liquidity Highlights © 2023 Surgery Partners – Confidential & Proprietary Information

  30. Slide 30: Strong, Consistent History of Robust Growth

    Strong, Consistent History of Robust Growth Net Revenue ($M) Adjusted EBITDA(1) ($M) ~$2.75b(2) $450 $436$438 -$440(2) $2,225 $400 $340(3) $350 $340 $1,831 $300 $259 $1,341 $250 $200 $164 $150 $100 $50 $0 2017 2019 2021 2023P 2017 2019 2021 2023P % YoY Growth % YoY Growth +17.2% +3.4% +19.6% +8.3% (

  31. Slide 31: Sustainable Long-term Double-Digit AEBITDA Growth

    Reaping the Benefits: Sustainable Long-term Double-Digit AEBITDA Growth ~$750 $436 - $440(1) $259 $164 2017A 2019A 2023P 2025P 2027P Management is committed to driving double digit growth in 2024 and beyond through execution of organic strategic initiatives and continued capital deployment © 2023 Su

  32. Slide 32: Capital Structure Strengthened to Support Growth

    Capital Structure Strengthened to Support Growth Credit Agreement Leverage Ratio Capital Structure Highlights 7.2x • Credit rating upgrades by S&P and Moody’s 7.0x • Extended term loan to December 2030 5.6x • Oversubscribed by 3.1x • Lowered base interest rate 4.3x ~ 4.0x • Increased revolving credi

  33. Slide 33: Surgery Partners Investment Highlights

    Surgery Partners Investment Highlights $150B+ Total 10.6% Industry-leading Superior Clinical Quality 1 Addressable Market 2 Same Facility Growth(1) 3 and Customer Experience $60B of Inpatient Cases ~80% Facilities Performing 100% of Surgical Hospitals Migrating to Outpatient of MSK Rated 4 / 5 Stars

  34. Slide 34: Appendix

    Appendix © 2023 Surgery Partners – Confidential & Proprietary Information

  35. Slide 35: Reconciliation to Adjusted EBITDA

    Reconciliation to Adjusted EBITDA The following table reconciles Adjusted EBITDA to Income before income taxes, the most directly comparable GAAP financial measure (unaudited): TTM Year Ended December 31, Sept. 23 2022 2021 2020 2019 2018 2017 (1) (in millions) Income (loss) before income taxes 115.

Surgery Partners — 42nd Annual J.P. Morgan Healthcare Conference (January 2024) on 6ix