Surgery Partners, Inc. · NASDAQ:SGRY
Surgery Partners — Debt Investor Presentation (July 2020)
28 slides from Surgery Partners's debt investor presentation, Jul 22, 2020
Slide 1: Surgery Partners Lender Presentation July 2020
SURGERY PARTNERS Lender Presentation July 2020 Exhibit 99.1
Slide 2: Legal Disclaimer
Legal Disclaimer Forward-Looking Statements This presentation contains forward-looking statements, which are based on our current expectations, estimates and assumptions about future events. All statements other than statements of current or historical fact contained in this report are forward-looki
Slide 3: Legal Disclaimer (continued)
Legal Disclaimer (continued) Non-GAAP Financial Measures This presentation contains certain non-GAAP financial measures, including Adjusted Revenue, Adjusted EBITDA, and Credit Agreement EBITDA. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance tha
Slide 4: Transaction Overview
Transaction Section 1 Overview Confidential
Slide 5: 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 127 surgical facilities com
Slide 6: Sources, Uses and Pro Forma Capitalization
Sources, Uses and Pro Forma Capitalization ($ in Millions, as of 03/31/20) A dd-On Senior Unsecured Not es due 2027 $ 115.0 Cash t o Balance Sheet Est . Financing Fees & Expenses $ 111.0 4.0 Total Sources $ 115.0 Total Uses $ 115.0 Current Actual Current Adjusted (2) Current Actual Current Adjusted
Slide 7: Summary of Terms
Summary of Terms Confidential 7 Issuer Surgery Center Holdings, Inc. (same as existing) Issue $115.0 million add-on to 10.000% Senior Notes due April 15, 2027 Distribution Rule 144A for life (same as existing) Guarantors Same as existing Security None (same as existing) Maturity April 15, 2027 (same
Slide 8: Anticipated Transaction Timeline
Anticipated Transaction Timeline Holiday Key Event Confidential 8 Date Title July 23rd – 10:30am ET Investor Call July 23rd Price and allocate July 30th Close and fund (T+5)
Slide 9: Company Update
Company Section 2 Update Confidential
Slide 10: 2Q20 Preliminary Financials - Flash
2Q20 Preliminary Financials - Flash Surgical Case Volume Revenues Same Store Revenues Adjusted EBITDA Net Loss Cash & Equivalents Surgery Partners business continues to rebound, with trailing 4-week case volume at 90%+ of prior year 10 Note: Adjusted Revenue is estimated to be at least $375 million.
Slide 11: Business has Experienced Strong Recovery
Business has Experienced Strong Recovery Same Store Case Volume versus Prior Year (Days Adjusted) June case volume vs. prior year 90%+ of prior year 80-90% of prior year 70-80% of prior year Continued to experience strong volume trends in first half of July Confidential 11 Most states have returned
Slide 12: Acceleration of Favorable Trends
Acceleration of Favorable Trends Migration from Hospitals to Ambulatory Surgical Settings June ASC joint replacements increased 260% compared to prior year Growing demand & interest from physicians and patients Year-to-date, revenue from new physicians improved 37% compared to prior year Growth in h
Slide 13: Company Overview
Company Section 3 Overview Confidential
Slide 14: We Are a Business Built Over the Course of 20+ Years
We Are a Business Built Over the Course of 20+ Years… 2011 2014 2015 2017 2018 Confidential 14 1996 Formation of Symbion Healthcare 2004 Formation of Surgery Partners Initial Public Offering
Slide 15: Leading Independent Surgical Facility Operator
…Resulting in the Operator Leading Independent Surgical Facility $1,856 million Revenue(1) $327.0 million Credit Agreement EBITDA(2) 30 States 111 Ambulatory Surgery Centers 16 Short-Stay Surgical Hospitals 4,000 Affiliated Physicians & ~1,500 Physician Owners 600,000+ Annual Patients (1) GAAP reven
Slide 16: Diversified Mix, Focused on High Value-Add Specialties
Diversified Mix, Focused Supported by an Aging on High Value-Add Population Specialties, Surgery Partners Case Mix ✓ Strength with high acuity patients Other(2) 16% oskeletal(1) Musc ✓ Leading musculoskeletal platform 38% GI 21% ✓ Expansive network of surgical capabilities 25% ✓ Leading trend to low
Slide 17: Strong, Vertically Integrated Management Team
Strong, Vertically Integrated Management Team Tom Cowhey EVP & Chief Financial Officer 18 Years Healthcare Experience 2 Years with Surgery Partners Wayne DeVeydt Executive Chairman of the Board of Directors 26 Years Healthcare Experience 2 Years with Surgery Partners Eric Evans Chief Executive Offic
Slide 18: What Makes Us Unique
What Section 4 Makes Us Unique Confidential
Slide 19: What Makes Us Unique
What Makes Us Unique Uniquely positioned as a result of our focus on high growth specialties Supported by our superior clinical quality, customer satisfaction and physician engagement outcomes Only independent surgical facility operator of national size and scale Focused on consolidating an under-va
Slide 20: 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 100 million Adults in the U.S. with (1) (2) on total joint procedures chronic pain ✓ Leading national musculoskeletal surgical facilities operator ✓ Redu
Slide 21: Increasing Opportunity With the Highest Acuities
Increasing Opportunity With the Highest Acuities ~4x gr 7 Case Volume by Specialty +32% since 2012 2019 (1) Includes cardiology, ENT, general surgery, plastic surgery and other. Confidential 21 2019 Revenue: $1,831M 2012 Revenue: $257M ✓ Revenue CAGR of 2012 ✓ Case mix aligned with higher acuity 130
Slide 22: Sizing the Medicare Opportunity with Joint Replacement
Sizing the Medicare Opportunity with Joint Replacement 2.6% aggregate rate increase (50 bps higher than 2019 increase) 1.9 million hip and knee procedures projected by 2026(1) Total Knee Arthroplasty (TKA) and covered procedures 48% total knee cases without major complications(2), which could be can
Slide 23: Recognizing the Benefits of Our Transformational Journey
Recognizing the Benefits of Our Transformational Journey Although the COVID-19 pandemic will impact short-term growth, the foundation built supports the potential for a long-term double-digit Adjusted EBITDA growth model 2018 2019 Future Foundation of Our Transformational Journey Executing on Our St
Slide 24: Long-Term Growth Model
Long-Term Growth Model Volume Procurement Acquisitions Revenue Cycle Expansions Rate Org / Workflow Efficiencies Managed Care De Novos Long-term double-digit Adjusted EBITDA growth model Confidential 24 Capital Investment Margin Expansion Top-line Growth
Slide 25: Appendix
Appendix Section 5 Confidential
Slide 26: Historical Financial Results
Historical Financial Results As Reported Basis ($ Million) ($ Million) +10.5% CAGR +14.4% CAGR Credit Agreement EBITDA $1,856 $327 $1,831 $1,772 $235 2017 2018 2019 LTM 3/31/20 2017 2018 2019 LTM 3/31/20 +3.1% CAGR +7.2% CAGR 525,136 520,741 516,788 $3,591 $3,536 $3,468 (3) (3) 2019 (3) 2017 2018 20
Slide 27: 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 millions and unaudited): Cash flows from operating activities $ 138.2 Plus (minus): Non-cash interest inco
Slide 28: Reconciliation to Adjusted EBITDA
Reconciliation to Adjusted EBITDA The following table reconciles Adjusted EBITDA to income (loss) before income taxes, the most directly comparable GAAP financial measure (in millions and unaudited): Income (loss) before income taxes $ 25.8 $ 54.6 $ (69.2) $ 82.3 Plus (minus): Net income attributabl
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