Surgery Partners, Inc. · NASDAQ:SGRY
Surgery Partners — Debt Investor Presentation (March 2016)
32 slides from Surgery Partners's debt investor presentation, Mar 18, 2016
Slide 1: Investor Presentation March 2016
Investor Presentation March 2016 Exhibit 99.2
Slide 2: Presenters
Presenters Chief Executive Officer and Director since 2009 Previously served as President and Chief Operating Officer since 2004 when Surgery Partners was formed More than 20 years of healthcare experience with both an extensive management background and clinical experience Formerly served as Senior
Slide 3: Agenda
Agenda Acquisition Strategy 3 Financial Overview 4 Executive Summary 1 Company Overview 2 Appendix 5
Slide 4: Executive Summary
Executive Summary 4 oe SURGERY PARTNERS
Slide 5: Executive Summary
Executive Summary Surgery Partners, Inc. (“Surgery Partners” or the “Company”) is a leading surgical services company with a differentiated outpatient care delivery model National platform of 101 surgical facilities comprised of 96 ambulatory surgery centers (“ASCs”) and 5 surgical hospitals across
Slide 6: Sources and Uses; Pro Forma Capitalization
Incremental First Lien Term Loan Incremental First Lien Term Loan Sources of Funds Notes Uses of Funds Notes 198.9 $ First Lien Net Leverage Senior Secured Net Leverage Total Net Leverage 4.4x 5.6x 5.8x 4.5x 5.5x 5.8x 3.8x 3.8x 5.8x 1,286.0 $ 1,366.0 $ 1,394.2 $ Free Cash Flow / Credit Agreement EBI
Slide 7: Summary of Terms
Summary of Terms Issuer Surgery Center Holdings, Inc. Issue $400.0 million Senior Unsecured Notes (the "Notes"). Term 5 years. Placement Type 144A Private Placement without registration rights. Guarantees Guaranteed on a senior unsecured basis by each of the Issuer’s existing and future wholly-owned
Slide 8: Company Overview
Company Overview sik SURGERY PARTNERS
Slide 9: Surgery Partners at a Glance
Surgery Partners at a Glance 8Urgent Care Facilities Healthcare Facilities 96ASCs 5Surgical Hospitals 46Physician Practices Surgical Facilities Physician practices National Network
Slide 10: Surgery Partners at a Glance
Surgery Partners at a Glance Optical Services Anesthesia Services Diagnostics Specialty Pharmacy Ancillary Services ü Company Highlights A network of outpatient care focused services over 500,000 annual patients 4,000 affiliated physicians 5,100 talented employees 94% patient satisfaction 96% partne
Slide 11: Company Timeline
Company Timeline $6 $11 $30 $49 $80 $85 $106 $240 $260 $285 $871 $959 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014PF 2015 10% % Ancillary Surgical Foundation Building (2004–2009) Business Diversification (2011–2013) Differentiated Delivery Model (2014 – Today) represents Surgery Partners o
Slide 12: Traditional Delivery Method
Traditional Delivery Method Patient Surgical Specialist Surgical Facility
Slide 13: Value Proposition: Surgical Facilities Complemented by Differentiated Ancillary Services
Value Proposition: Surgical Facilities Complemented by Differentiated Ancillary Services Deliver Superior Care and Growth Multi-specialty, multi-faceted and high quality outpatient delivery model Strong Operating Margins Majority of the practices are wholly- owned Majority of ancillary earnings are
Slide 14: Operating Philosophy
Operating Philosophy Ancillary(2) 11% 27% Ancillary Pre- Symbion Acquisition Own and operate 96 ASCs and 5 surgical hospitals Enhanced ability to meet the needs of the local market and its patients Majority of the practices are wholly-owned Expertise across all surgical specialties Provides the abil
Slide 15: Attractive Industry Dynamics
Out- Patient 77% In-Patient 23% Out- Patient 15% In-Patient 85% Attractive Industry Dynamics ASCs Provide Lower Costs and Superior Outcome Government and commercial payors are focused on patients being served in lower cost sites of care with high quality outcomes Growth in the ASC market has been dr
Slide 16: Diversified Specialty and Payor Mix
Diversified Specialty and Payor Mix Ophthalmology 30% GI 22% Pain management 18% Orthopedic 12% Otolaryngology 4% General surgery 3% Other 11% Commercial 55% Government 38% Self-Pay 2% Other 5% Specialty Mix Drives stable revenue Payor Mix Diversified payor base resulting from local contracting Deli
Slide 17: Physician Engagement Strategy
Physician Engagement Strategy Drives success in recruiting and retaining high quality physicians Over 100 Employed Physicians Operate in 46 practices, majority of which are wholly-owned ~1,000 Partnered Physicians Hold ownership positions in surgical facilities and receive pro-rata share of cash flo
Slide 18: Ancillary Services Deployment
25% 75% 100% Outpatient Surgery Ancillary Services Total Practice Operations More efficient operations Enhanced marketing / patient volumes Stronger managed care contracts Drive share of in-office ancillaries Capture confirmation (diagnostic) samples for existing patients Building capabilities to ad
Slide 19: Integrated Ancillary Deployment
$0 20.0% $50 10.0% $100 $150 2011 20122013 Standalone 2014 2015 Integrated Ancillary Deployment +34% Revenue Enhancement +7% Increase in Operating Income Margin Incorporation of multiple ancillary services at 15 select facilities demonstrates the successful execution of its strategy 0.0% 30.0% 40.0%
Slide 20: Multiple Levers of Growth in Existing and New Markets
Multiple Levers of Growth in Existing and New Markets Total Growth Base Business Same-Facility In-Market Practice Development Symbion Synergies Surgical Facility Acquisitions Same-Facility Growth Optimize operating efficiencies at existing facilities Physician engagement and recruitment Payor contra
Slide 21: Strong and Consistent Cash Flow Generation
Strong and Consistent Cash Flow Generation Low maintenance capex requirements Growth capex is deployed in small, low-risk leverage accretive transactions Stable cash flows diversified across specialties, business lines, and geographies Ancillary services improve consolidated margins History of disci
Slide 22: Attractive Valuation and Market Validation
Surgery Partners trades at 12.3x 2015 Adjusted EBITDA with… …Strong Institutional Support… “We think the company's ancillary strategy is a differentiator in the space as it creates multiple levers to increase profitability, with full economics captured by Surgery Partners. From 2011 to 2014, the fac
Slide 23: Winning Value Proposition
Winning Value Proposition Convenient, comfortable and cost-efficient settings Patients Superior clinical outcomes and 94% patient satisfaction rate based on an internal survey Flexible approach to physician engagement: employment, partnership, affiliation Convenient and efficient surgical facilities
Slide 24: Acquisition Strategy
Acquisition Strategy 24 oe SURGERY PARTNERS
Slide 25: Consistent Value Creation through Acquisitions
Consistent Value Creation through Acquisitions New Anesthesia Contracts (including 2 Platform Businesses in Q4’15) Urgent Care Acquisition (in-market) 4 1 Multiple Leverage Accretive Acquisitions that Complement Existing Footprint Disciplined acquisition strategy to diversify geographic footprint an
Slide 26: Acquisitions Under Signed LOI
Acquisitions Under Signed LOI As part of the Transaction, Surgery Partners intends to fund the acquisition of 1 ASC (with a physician practice, lab and pharmacy) and 1 physician practice Acquisitions are under signed LOI for an aggregate purchase price of $91.1million Incremental EBITDA contribution
Slide 27: Financial Overview
Financial Overview ak SURGERY PARTNERS
Slide 28: 2015 Performance Review
2015 Performance Review 2015 Revenue of $959.9 million ―400,230 cases $2,484 revenue per case 2015 Adjusted EBITDA of $158.1 million and Credit Agreement EBITDA of $210.9 million Achieved 10.7% same-facility revenue growth driven by: 5.2% same-facility case growth 5.3% same-facility revenue per case
Slide 29: Historical Financial Summary
Historical Financial Summary $871.3 $959.9 2014 2015 $185.5 $210.9 2014 2015 $162.8 $183.1 2014 2015 Revenues Credit Agreement EBITDA(1) Free Cash Flow(2) (2)Free Cash Flow defined as Credit Agreement EBITDA less Maintenance CapEx. (1)Credit Agreement EBITDA Reconciliation in Appendix. Continued str
Slide 30: Appendix
| Appendix sik SURGERY PARTNERS
Slide 31: Credit Agreement EBITDA Reconciliation
Credit Agreement EBITDA Reconciliation Includes cost savings from reductions in corporate overhead, supply chain rationalization, enhanced physician engagement, improved payor contracting, and revenue synergies associated with rolling out ancillary services throughout the Symbion portfolio Represent
Slide 32: Board of Directors Comprised of Industry Leading Professionals
Board of Directors Comprised of Industry Leading Professionals 32 Board Members Biography Michael T. Doyle CEO and Director Served as the Chief Executive Officer and Director of Surgery Center Holdings, Inc. since 2009, Chief Executive Officer of Surgery Partners, Inc. since April 2015 and Director
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