Slide 1: 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
Slide 2: Transaction Overview
Transaction Section 1 Overview
Slide 3: Transaction Overview
Transaction Overview Surgery Partners, Inc. (“Surgery Partners” or the “Company”) is a leading independent operator of short-stay surgical facilities, focused on providing high quality, cost effective solutions for surgical and related ancillary care National network of 123 surgical facilities compr
Slide 4: Sources and Uses and As Adjusted Capitalization
Sources and Uses and As Adjusted Capitalization ($ in Millions) New Senior Unsecured Notes due 2027 Cash on Balance Sheet $ 430.0 15.0 Redemption of Senior Unsecured Notes due 2021 Redemption Premium (104.438%) and Accrued Interest Estimated Fees and Expenses $ 400.0 36.5 8.5 Total Sources $ 445.0 T
Slide 5: Summary of Terms
Summary of Terms 6 Issuer Surgery Center Holdings, Inc. Guarantors Each of the existing and subsequently acquired or organized direct and indirect wholly-owned domestic restricted subsidiaries that guarantees the Company’s senior secured credit facilities, with certain exceptions Issue $430.0 millio
Slide 6: Transaction Timeline
Transaction Timeline Key Event 7 Date Title March 26 - 27 Roadshow meetings March 28 Price and allocate Week of April 8 Close and fund (T + 10) March 2019 SMTWTFS 12 3456789 10111213141516 17182021212223 24252930 31 26 28 27 April 2019 SMTWTFS 123456 789101213 14151617181920 21222324252627 282930 11
Slide 7: Transaction Timeline
ak Transaction Timeline ‘March 2019 April 2019 SoM tw otf s||s M TW TF 1 2 1 2 3 4 5 6 3 4 5 6 7 8 9 7 8 9 10 fi 2 13 10 11 12:13:14 «15 16] | 14 15 16 17 18 19 20 17 18 2 21 21 22 23| | 21 22 23 24 25 2% 27 2 25 By Bd BB key Event a Week of April8 Close and fund (T + 10)
Slide 8: Leading Independent Surgical Facility Operator
Leading Independent Surgical Facility Operator $1.77 billion $273.5 million Credit Agreement EBITDA(2) GAAP Revenue(1) 31 States 108 ASCs 15 Surgical Hospitals 4,000 Affiliated Physicians 600,000+ Annual Patients (1) GAAP Revenue for the year ended December 31, 2018. (2) Credit Agreement EBITDA for
Slide 9: Diversified Mix of Specialties and Case Mix
We Have a Specialties, Diversified Mix, Focused on High Value-Add Population Supported by an Aging Strength with high acuity patients Other(2) 16% Musculoskeletal(1) Leading musculoskeletal platform 38% GI Expansive network of surgical capabilities 25% Leading trend to lower cost setting Ophthalmolo
Slide 10: Leading Musculoskeletal Platform is Key to Future Growth
Leading Musculoskeletal Platform is Key to Future Growth 2x Increase in hip revision procedures projected by 2026 $7 billion Annual Medicare spend on total joint procedures 100 million Adults in the U.S. with chronic pain Leading national musculoskeletal surgical facilities operator Reduced costs fo
Slide 11: Well Positioned to Capture Share in a Fragmented Market
We Are Well Positioned to Capture Incremental Share in a Fragmented Market ’0 6 -’1 6A CAGR 5,591 4,608 Total: +2% Independents +1% Other Hospitals +1% National Operators +5% 2006 2016 Source: Definitive Healthcare, IBIS. 12 64% 58% 14% 16% 28% 20% Number of ASCs in the U.S.
Slide 12: Strong, Vertically Integrated Management Team
Strong, Vertically Integrated Management Team… Eric Evans EVP & Chief Operating Officer 15 Years Healthcare Experience 1 Year with Surgery Partners Wayne DeVeydt Chief Executive Officer 26 Years Healthcare Experience 1 Year with Surgery Partners Tom Cowhey EVP & Chief Financial Officer 18 Years Heal
Slide 13: Built a Solid Foundation to Capture Growth
… That has Built a Solid Foundation to Capture Growth Solid, but un-pruned assets Streamlined, surgical facility assets Holistic infrastructure Great platform, but fragmented Lack of strategic clarity Focused management and vision 14 TO: … A scalable Platform with clear strategic direction and purpo
Slide 14: 2018 was a Year of Substantial Accomplishments
2018 was a Year of Substantial Accomplishments Pruned Asset Base $100M+ Pruned Annualized Net Revenue 2 Surgical Hospitals 5 ASCs 16 Physician Practices 2 Optical Businesses Recharged Organic Growth 500+ new physicians recruited 4% improvement in same-facility case growth 2H ‘18 vs. 1H ‘18 8.4% same
Slide 15: 2018 Financial Results
2018 Financial Results As Reported Basis ($ Million) ($ Million) +32% $273 Credit Agreement EBITDA +11% +19% (1) See pages 23 and 24 for full reconciliations of Adjusted EBITDA to income (loss) before income taxes and Credit Agreement EBITDA to cash from operating activities. Case volume and net rev
Slide 16: Considerable Momentum Entering 2019
Considerable Momentum Entering 2019 (1) Same facility information as reported in the Company’s public filings includes ancillary business (same facility case volume growth of (0.3%), (0.5%), (4.1%), (1.4%), 0.9% and 1.1% for Q3 2017, Q4 2017, Q1 2018, Q2 2018, Q3 2018 and Q4 2018, respectively, same
Slide 17: Three Pillars of Adjusted EBITDA Growth
Three Pillars of Adjusted EBITDA Growth Organic Consistent volume and rate growth Procurement savings Fit For Growth Corporate and organizational synergies to drive margin improvement M&A Seeking to execute in high-growth specialties at attractive values Long-Term Double-Digit Adjusted EBITDA Growth
Slide 18: Growth Outlook
Growth Outlook Tailwinds Headwinds Organic ,, , Divestitures Medicare growth Physician recruitment Creative in-market partnerships Total Joint Program Bundled payment arrangements Fit For Growth Supply chain optimization Benefit plan savings Corporate synergies M&A Attractive M&A opportunities Trans
Slide 19: Transformational De Novo Opportunity in Idaho Falls
Transformational De Novo Opportunity in Idaho Falls Expected to Receive Licensure in Q1 2020 • • 100% owned by Surgery Partners Scheduled to open in November 2019, licensure likely in Q1 2020 with • New services will include Emergency Room, Intensive Care Unit and 88 new private rooms 20 Idaho Falls
Slide 20: Key Credit Highlights
Key Credit Highlights Large and Growing Industry with Favorable Outpatient Dynamics Physician Centric Value Proposition Designed to Drive High Care in a Low Cost Setting Quality Patient Diversified Mix of Payors and Procedures Multiple Growth Opportunities with Successful Track Record Attractive Fin
Slide 21: Key Credit Highlights
§ Key Credit Highlights Large and Growing Industry with Favorable Outpatient Dynamics Physician Centric Value Proposition Designed to Drive High Quality Patient Care in a Low Cost Setting Diversified Mix of Payors and Procedures Multiple Growth Opportunities with Successful Track Record Attractive F
Slide 22: Reconciliation to Adjusted EBITDA
Reconciliation to Adjusted EBITDA The following table reconciles Adjusted EBITDA to (loss) income before income taxes, the most directly comparable GAAP financial measure (in thousands and unaudited): (Loss) income before income taxes $ (69,165) $ 82,286 $ 92,178 Plus (minus): Net income attributabl
Slide 23: Reconciliation to Credit Agreement EBITDA
Reconciliation to Credit Agreement EBITDA The following table reconciles Credit Agreement EBITDA to cash flows from operating activities, the most directly comparable GAAP financial measure (in thousands and unaudited): Cash flows from operating activities $ 144,600 Plus (minus): Net income attribut
Slide 24: Reconciliation to Credit Agreement EBITDA
i Reconciliation to Credit Agreement EBITDA The following table reconciles Credit Agreement EBITDA fo cosh flows rom operating activites, the most drectly comparable GAAP frxoncial ‘measure (in thousands and uncudtied): [Credit Agreement EBITDA Adjustments Cash flows from operating activiies $144,40