Cover
Cover - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 03, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2020 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-37576 | ||
Entity Registrant Name | Surgery Partners, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 47-3620923 | ||
Entity Address, Address Line One | 310 Seven Springs Way, Suite 500 | ||
Entity Address, City or Town | Brentwood | ||
Entity Address, State or Province | TN | ||
Entity Address, Postal Zip Code | 37027 | ||
City Area Code | 615 | ||
Local Phone Number | 234-5900 | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | ||
Trading Symbol | SGRY | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 255.9 | ||
Entity Common Stock, Shares Outstanding | 59,859,614 | ||
Documents Incorporated by Reference | Portions of the registrant's definitive proxy statement for the 2021 annual meeting of stockholders are incorporated by reference into Part III of this report. | ||
Entity Central Index Key | 0001638833 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 317.9 | $ 92.7 |
Accounts receivable | 382.2 | 326.9 |
Inventories | 56.4 | 46.3 |
Prepaid expenses | 17.6 | 17.8 |
Other current assets | 27.4 | 41.8 |
Total current assets | 801.5 | 525.5 |
Property and equipment, net | 544.6 | 523.3 |
Intangible assets, net | 46.9 | 47.3 |
Goodwill | 3,468 | 3,402.4 |
Investments in and advances to affiliates | 90.3 | 93.2 |
Right-of-use operating lease assets | 310.1 | 297.7 |
Long-term deferred tax assets | 124.8 | 98.7 |
Other long-term assets | 27 | 30.8 |
Total assets | 5,413.2 | 5,018.9 |
Current liabilities: | ||
Accounts payable | 100.2 | 96.7 |
Accrued payroll and benefits | 65.4 | 54.2 |
Medicare accelerated payments and deferred governmental grants | 109.8 | 0 |
Other current liabilities | 217 | 191.2 |
Current maturities of long-term debt | 64.4 | 56 |
Total current liabilities | 556.8 | 398.1 |
Long-term debt, less current maturities | 2,792.4 | 2,524.7 |
Right-of-use operating lease liabilities | 300.9 | 283.1 |
Other long-term liabilities | 139.7 | 113.6 |
Non-controlling interests—redeemable | 306.8 | 321 |
Redeemable preferred stock - Series A; shares authorized, issued and outstanding - 310,000; redemption value - $434.5 and $395.0, respectively | 434.5 | 395 |
Stockholders' equity: | ||
Preferred stock, $0.01 par value; shares authorized - 20,000,000; shares issued or outstanding - none | 0 | 0 |
Common stock, $0.01 par value; shares authorized - 300,000,000; shares issued and outstanding - 50,461,706 and 49,298,940, respectively | 0.5 | 0.5 |
Additional paid-in capital | 607.9 | 662.7 |
Accumulated other comprehensive loss | (61) | (50.7) |
Retained deficit | (431.8) | (315.7) |
Total Surgery Partners, Inc. stockholders' equity | 115.6 | 296.8 |
Non-controlling interests—non-redeemable | 766.5 | 686.6 |
Total stockholders' equity | 882.1 | 983.4 |
Total liabilities and stockholders' equity | $ 5,413.2 | $ 5,018.9 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Redeemable preferred stock, shares authorized (shares) | 310,000 | 310,000 |
Redeemable preferred stock, shares issued (shares) | 310,000 | 310,000 |
Redeemable preferred stock, shares outstanding (shares) | 310,000 | 310,000 |
Redeemable preferred stock, redemption value | $ 434.5 | $ 395 |
Preferred stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (shares) | 20,000,000 | 20,000,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (shares) | 50,461,706 | 49,298,940 |
Common stock, shares outstanding (shares) | 50,461,706 | 49,298,940 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Income Statement [Abstract] | ||||
Revenues | $ 1,860.1 | $ 1,831.4 | $ 1,771.5 | |
Operating expenses: | ||||
Salaries and benefits | 550.3 | 550 | 534.7 | |
Supplies | 538.4 | 507.9 | 490.3 | |
Professional and medical fees | 191.4 | 154.8 | 145.5 | |
Lease expense | 87.4 | 85.6 | 86.7 | |
Other operating expenses | 112.8 | 109.3 | 104.2 | |
Cost of revenues | 1,480.3 | 1,407.6 | 1,361.4 | |
General and administrative expenses | 97.1 | 88.6 | 93.6 | |
Depreciation and amortization | 94.8 | 76.5 | 67.4 | |
Income from equity investments | (10.8) | (10.2) | (8.9) | |
Loss (gain) on disposals and deconsolidations, net | 5.7 | (4.4) | 31.8 | |
Transaction and integration costs | 23.2 | 19 | 31.7 | |
Impairment charges | 33.5 | 7.9 | 74.4 | |
Grant funds | (46.2) | 0 | 0 | |
Loss on debt extinguishment | 0 | 11.7 | 0 | |
Litigation settlement | 1.2 | 0.2 | 46 | |
Other income | (1.7) | (1.4) | (3.7) | |
Total operating expenses | 1,677.1 | 1,595.5 | 1,693.7 | |
Operating income | 183 | 235.9 | 77.8 | |
Tax receivable agreement expense | 0 | (2.4) | 0 | |
Interest expense, net | (201.8) | (178.9) | (147) | |
(Loss) income before income taxes | (18.8) | 54.6 | (69.2) | |
Income tax (benefit) expense | (20.1) | 9.5 | 26.4 | |
Net income (loss) | 1.3 | 45.1 | (95.6) | |
Less: Net income attributable to non-controlling interests | (117.4) | (119.9) | (110.1) | |
Net loss attributable to Surgery Partners, Inc. | (116.1) | (74.8) | (205.7) | |
Less: Amounts attributable to participating securities | (39.5) | (35.7) | (32.4) | |
Net loss attributable to common stockholders | $ (155.6) | $ (110.5) | $ (238.1) | |
Net loss per share attributable to common stockholders - basic and diluted (in USD per share) | [1] | $ (3.19) | $ (2.29) | $ (4.96) |
Weighted average common shares outstanding - basic and diluted (shares) | [1] | 48,776 | 48,280 | 48,028 |
[1] | The impact of potentially dilutive securities for all periods were not considered because the effect would be anti-dilutive in those periods. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 1.3 | $ 45.1 | $ (95.6) |
Other comprehensive (loss) income, net of tax: | |||
Derivative activity | (10.3) | (28.3) | (22.4) |
Comprehensive (loss) income | (9) | 16.8 | (118) |
Less: Comprehensive income attributable to non-controlling interests | (117.4) | (119.9) | (110.1) |
Comprehensive loss attributable to Surgery Partners, Inc. | $ (126.4) | $ (103.1) | $ (228.1) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions | Total | Impact of adoption of ASC 842 | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Deficit | Retained DeficitImpact of adoption of ASC 842 | Non-Controlling Interests— Non-Redeemable |
Beginning Balance, stockholders' equity (shares) at Dec. 31, 2017 | 48,687,000 | |||||||
Beginning Balance, stockholders' equity at Dec. 31, 2017 | $ 1,336.6 | $ 0.5 | $ 695.5 | $ (41.3) | $ 681.9 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | (130.2) | (205.7) | 75.5 | |||||
Equity-based compensation (shares) | 339,000 | |||||||
Equity-based compensation | 8.1 | 8.1 | ||||||
Preferred dividends | (32.4) | (32.4) | ||||||
Other comprehensive loss | (22.4) | $ (22.4) | ||||||
Repurchase of shares (shares) | (157,000) | |||||||
Repurchase of shares | (2) | (2) | ||||||
Acquisition and disposal of shares of non-controlling interests, net | 20.1 | 4.3 | 15.8 | |||||
Distributions to non-controlling interests—non-redeemable holders | (78.3) | (78.3) | ||||||
Other | (0.6) | (0.6) | ||||||
Ending Balance, stockholders' equity (shares) at Dec. 31, 2018 | 48,869,000 | |||||||
Ending Balance, stockholders' equity at Dec. 31, 2018 | $ 1,098.9 | $ 6.1 | $ 0.5 | 673.5 | (22.4) | (247) | $ 6.1 | 694.3 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member | |||||||
Net (loss) income | $ 6 | (74.8) | 80.8 | |||||
Equity-based compensation (shares) | 430,000 | |||||||
Equity-based compensation | 9.2 | 9.2 | ||||||
Preferred dividends | (35.7) | (35.7) | ||||||
Other comprehensive loss | (28.3) | (28.3) | ||||||
Acquisition and disposal of shares of non-controlling interests, net | 8.3 | 15.7 | (7.4) | |||||
Distributions to non-controlling interests—non-redeemable holders | (81.2) | (81.2) | ||||||
Other | $ 0.1 | 0.1 | ||||||
Ending Balance, stockholders' equity (shares) at Dec. 31, 2019 | 49,298,940 | 49,299,000 | ||||||
Ending Balance, stockholders' equity at Dec. 31, 2019 | $ 983.4 | $ 0.5 | 662.7 | (50.7) | (315.7) | 686.6 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | (30.4) | (116.1) | 85.7 | |||||
Equity-based compensation (shares) | 1,163,000 | |||||||
Equity-based compensation | 12.4 | 12.4 | ||||||
Preferred dividends | (39.5) | (39.5) | ||||||
Other comprehensive loss | (10.3) | (10.3) | ||||||
Acquisition and disposal of shares of non-controlling interests, net | 39.8 | (27.7) | 67.5 | |||||
Distributions to non-controlling interests—non-redeemable holders | (73.1) | (73.1) | ||||||
Other | $ (0.2) | (0.2) | ||||||
Ending Balance, stockholders' equity (shares) at Dec. 31, 2020 | 50,461,706 | 50,462,000 | ||||||
Ending Balance, stockholders' equity at Dec. 31, 2020 | $ 882.1 | $ 0.5 | $ 607.9 | $ (61) | $ (431.8) | $ 766.5 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 1.3 | $ 45.1 | $ (95.6) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 94.8 | 76.5 | 67.4 |
Non-cash interest expense (income), net | 4.5 | 2.5 | (1.4) |
Equity-based compensation expense | 13.2 | 10.2 | 9.3 |
Loss (gain) on disposals and deconsolidations, net | 5.7 | (4.4) | 31.8 |
Impairment charges | 33.5 | 7.9 | 74.4 |
Loss on debt extinguishment | 0 | 11.7 | 0 |
Deferred income taxes | (21.9) | 8.5 | 25.3 |
Income from equity investments, net of distributions received | 0.5 | 0.3 | 0.2 |
Non-cash lease expense | 39.4 | 40 | 0 |
Changes in operating assets and liabilities, net of acquisitions and divestitures: | |||
Accounts receivable | (46.6) | (23.5) | (22.8) |
Medicare accelerated payments and deferred governmental grants | 135.2 | 0 | 0 |
Other operating assets and liabilities | (12.7) | (45.3) | 56 |
Net cash provided by operating activities | 246.9 | 129.5 | 144.6 |
Cash flows from investing activities: | |||
Purchases of property and equipment | (42.9) | (73.6) | (39.8) |
Payments for acquisitions, net of cash acquired | (104.6) | (13.8) | (106.8) |
Purchase of equity investments | 0 | (15.2) | 0 |
Proceeds from disposals of facilities and other assets | 58.5 | 17.6 | 19.2 |
Other investing activities | 0.6 | (0.2) | (1.5) |
Net cash used in investing activities | (88.4) | (85.2) | (128.9) |
Cash flows from financing activities: | |||
Principal payments on long-term debt | (216.3) | (490.8) | (157.6) |
Borrowings of long-term debt | 429.4 | 506.9 | 282.7 |
Payments of debt issuance costs | (8.5) | (8.9) | (3) |
Payment of premium on debt extinguishment | 0 | (17.8) | 0 |
Distributions to non-controlling interest holders | (109.6) | (121.2) | (109) |
Payments related to ownership transactions with non-controlling interest holders | (27.4) | (3.2) | (2.2) |
Payments of preferred dividends | 0 | 0 | (7.8) |
Repurchase of shares | 0 | 0 | (2) |
Other financing activities | (0.9) | (0.9) | (7.4) |
Net cash provided by (used in) financing activities | 66.7 | (135.9) | (6.3) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 225.2 | (91.6) | 9.4 |
Cash, cash equivalents and restricted cash at beginning of period | 93 | 184.6 | 175.2 |
Cash, cash equivalents and restricted cash at end of period | 318.2 | 93 | 184.6 |
Supplemental cash flow information: | |||
Interest paid, net of interest income received | 203.6 | 180.3 | 145.4 |
Cash paid for income taxes | 1.7 | 1.6 | 2.2 |
Non-cash purchases of property and equipment | $ 27.7 | $ 30.7 | $ 61 |
Organization and Summary of Acc
Organization and Summary of Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Accounting Policies | Organization and Summary of Accounting Policies Organization Surgery Partners, Inc., a Delaware corporation (together with its subsidiaries, the "Company"), was formed April 2, 2015. On August 31, 2017, a fund advised by an affiliate of Bain Capital Private Equity LP ("Bain Capital") became the controlling stockholder of the Company, holding Series A Preferred Stock (as defined in Note 7. "Redeemable Preferred Stock") and common stock that collectively represented approximately 65.7% of the voting power of all classes of capital stock of the Company as of August 31, 2017. As of December 31, 2020, Bain Capital held approximately 67.0% of the voting power of all classes of capital stock of the Company. As of December 31, 2020, the Company owned and operated a national network of surgical facilities and ancillary services in 30 states. The surgical facilities, which include ambulatory surgery centers ("ASCs") and surgical hospitals, primarily provide non-emergency surgical procedures across many specialties, including, among others, gastroenterology, general surgery, ophthalmology, orthopedics and pain management. The Company's surgical hospitals also provide services such as diagnostic imaging, laboratory, obstetrics, oncology, pharmacy, physical therapy and wound care. Ancillary services are comprised of multi-specialty physician practices, urgent care facilities and anesthesia services. As of December 31, 2020, the Company owned or operated a portfolio of 127 surgical facilities, comprised of 110 ASCs and 17 surgical hospitals. The Company owns these facilities in partnership with physicians and, in some cases, health care systems in the markets and communities it serves. The Company owned a majority interest in 84 of the surgical facilities and consolidated 107 of the facilities for financial reporting purposes. Basis of Presentation The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes. Examples include, but are not limited to, estimates of accounts receivable allowances, professional and general liabilities and the estimate of deferred tax assets or liabilities. Actual results could differ from those estimates. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, as well as interests in partnerships and limited liability companies controlled by the Company through its ownership of a majority voting interest or other rights granted to the Company by contract to manage and control the affiliate's business. All significant intercompany balances and transactions are eliminated in consolidation. COVID-19 Pandemic The COVID-19 global pandemic has significantly affected the Company's facilities, employees, patients, communities, business operations and financial performance, as well as the U.S. economy and financial markets. Beginning mid-March, the COVID-19 pandemic began to negatively affect the Company's net revenue and business operations. Due in part to local, state and federal guidelines, as well as recommendations from major medical societies, requiring social distancing and self-quarantines in response to the COVID-19 pandemic, surgical case volumes across most of the Company's surgical facilities were significantly impacted in the second quarter of 2020. The impact of COVID-19 on the Company's surgical facilities varies based on the market in which the facility operates, the type of surgical facility and the procedures that are typically performed. Although the Company cannot provide any certainty regarding the length and severity of the impact of the COVID-19 pandemic, surgical case volumes improved in the second half of 2020 as states began to re-open and allow for non-emergent procedures. The Company's operating structure naturally enables some flexibility in the cost structure according to the volume of surgical procedures performed, including much of its cost of revenues. In addition to the natural variability of these costs, the Company and its partners in the surgical facilities have undertaken additional steps to preserve financial flexibility. Beginning in mid-March, and for the remainder of 2020, the Company took actions that included significantly reducing cash operating expenses and deferring non-essential expenditures at the height of the crisis. CARES Act On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law to provide stimulus funding for the U.S. economy. As part of the CARES Act, the U.S. government initially announced that it would offer $100 billion of relief to eligible health care providers. On April 7, 2020, Centers for Medicare and Medicaid Services ("CMS") officials indicated they would distribute $30 billion of direct grants to hospitals, ASCs and other health care providers based on how much they bill Medicare. Payments received from these grants are not required to be repaid provided the recipients attest to and comply with certain terms and conditions, including limitations on balance billing and not using funds received from the grants to reimburse expenses or losses that other sources are obligated to reimburse. The Company received approximately $59 million of the grant funds distributed under the CARES Act and other governmental assistance programs during the year ended December 31, 2020. The recognition of amounts received is conditioned upon attestation with terms and conditions that funds will be used for COVID-19 related healthcare expenses or lost revenues. The Company’s assessment of whether the terms and conditions for amounts received are reasonably assured of having been met considers, among other things, the CARES Act, the COVID-19 Economic Relief Bill, enacted on December 27, 2020, and all frequently asked questions and other interpretive guidance issued by HHS, including the Post-Payment Notice of Reporting Requirements issued on January 15, 2021 (the “January 15, 2021 Notice”) and frequently asked questions issued by HHS on January 28, 2021 which clarified previously issued guidance, as well as expenses incurred attributable to COVID-19 and the Company’s results of operations during such period as compared to the Company’s budget. Such guidance, set forth the allowable methods for quantifying eligible healthcare related expenses and lost revenues. Only healthcare related expenses attributable to COVID-19 that another source has not reimbursed and is not obligated to reimburse are eligible to be claimed. As a result, the Company estimates approximately $46.2 million of grant funds received qualified for recognition as a reduction in operating expenses under the caption Grant funds in the consolidated statements of operations for the year ended December 31, 2020. While the January 15, 2021 Notice and frequently asked questions issued by HHS on January 28, 2021 indicate that targeted distribution payments may be allocated or transferred to subsidiaries, distinct conditions exist for such allocations or transfers. There are significant uncertainties as to the meaning and interpretation of conditions specific to the allocation or transfer of targeted distribution payments such that, as of December 31, 2020, the Company is not reasonably assured that it can or will choose to comply with such conditions in order to allocate or transfer targeted distribution payments. Amounts received, but not recognized as a reduction to operating expenses as of December 31, 2020, are reflected as a component of Medicare accelerated payments and deferred governmental grants in the consolidated balance sheets as of December 31, 2020, and such unrecognized amounts may be recognized as a reduction in operating expenses in future periods if the underlying conditions for recognition are met. HHS’ interpretation of the underlying terms and conditions of grant funds received through the CARES Act and other governmental assistance programs, including auditing and reporting requirements, may evolve. Additional guidance or new and amended interpretations of existing guidance on the terms and conditions of such payments may result in the Company’s inability to recognize certain payments, changes in the estimate of amounts recognized, or the derecognition of amounts previously recognized, which may be material. As a way to increase cash flow to Medicare providers impacted by the COVID-19 pandemic, the CARES Act expanded the Medicare Accelerated and Advance Payment Program, which allows for most providers and suppliers, including the Company’s surgical hospitals and ASCs to request an advance payment of anticipated Medicare revenues. ASCs could request up to 100% of the Medicare Fee-for-Service payment amount for a three-month period. Hospitals could request up to 100% of the payment amount for a six-month period, with certain critical access hospitals able to request up to 125% of the payment for a six-month period. Under the current terms of the program, all providers will have 29 months from the date of their first program payment to repay the full amount of the accelerated or advance payments they have received. The revised terms extend the period before repayment begins from 210 days to one year from the date that payment under the program was received. Once the repayment period begins, the offset will be limited to 25% of new claims during the first 11 months of repayment and 50% of new claims during the final 6 months. The revised program terms also lower the interest rate on outstanding amounts due at the end of the repayment period from 10% to 4%.The Company received approximately $120 million of accelerated payments during the year ended December 31, 2020. These accelerated payments received were deferred. The current portion was approximately $95 million and is included as a component of Medicare accelerated payments and deferred governmental grants in the consolidated balance sheets as of December 31, 2020. The long-term portion is included as a component of other long-term liabilities in the consolidate balance sheets. The Company does not expect to receive additional Medicare accelerated payments. The CARES Act also provides for the deferral of the Company's portion of social security payroll taxes for the remainder of 2020. Under the CARES Act, half of the deferred amount will have to be paid in each of December 2021 and December 2022. The Company began deferring the social security payroll tax match in April 2020. As of December 31, 2020, the Company has deferred approximately $16.9 million. The current portion is included as a component of accrued payroll and benefits and the long term portion is included as a component of other long-term liabilities in the consolidated balance sheets as of December 31, 2020. The Company is continuing to closely monitor legislative actions and regulatory guidance at the federal, state and local levels with respect to the CARES Act as other governmental assistance might become available to the Company. Variable Interest Entities The consolidated financial statements include the accounts of variable interest entities ("VIE") in which the Company is the primary beneficiary under the provisions of Accounting Standards Codification 810, Consolidation . The Company has the power to direct the activities that most significantly impact a variable interest entity's economic performance. Additionally, the Company would absorb the majority of the expected losses from any of these entities should such expected losses occur. At December 31, 2020, the variable interest entities include four surgical facilities and three physician practices. The total assets (excluding goodwill and intangible assets, net) of the consolidated VIEs included in the accompanying consolidated balance sheets as of December 31, 2020 and 2019, were $27.7 million and $36.2 million, respectively, and the total liabilities of the consolidated VIEs were $21.1 million and $25.2 million, respectively. Fair Value of Financial Instruments The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants to sell the asset or transfer the liability. The Company uses fair value measurements based on inputs classified into the following hierarchy: • Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These may include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. • Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, depending on the nature of the item being valued. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, restricted invested assets and accounts payable approximate their fair values under Level 3 calculations. A summary of the carrying amounts and fair values of the Company's long-term debt follows (in millions): Carrying Amount Fair Value December 31, December 31, 2020 2019 2020 2019 Senior secured term loan $ 1,539.4 $ 1,434.1 $ 1,533.4 $ 1,434.1 6.750% senior unsecured notes due 2025 $ 370.0 $ 370.0 $ 376.0 $ 368.2 10.000% senior unsecured notes due 2027 $ 545.0 $ 430.0 $ 596.8 $ 471.4 The fair values in the table above were based on a Level 2 inputs using quoted prices for identical liabilities in inactive markets. The carrying amounts related to the Company's other long-term debt obligations, including finance lease obligations, approximate their fair values under Level 3 calculations. The Company has entered into certain interest rate swap agreements (see Note 8. "Derivatives and Hedging Activity"). At December 31, 2020 and 2019, the fair value of these derivative instruments was $61.0 million and $50.7 million, respectively, and was included in other long-term liabilities in the consolidated balance sheets. The fair value of these derivative financial instruments was based on a quoted market price, or a Level 2 input. Revenues The Company's revenues generally relate to contracts with patients in which the performance obligations are to provide health care services. The Company recognizes revenues in the period in which our obligations to provide health care services are satisfied and reports the amount that reflects the consideration the Company expects to be entitled to receive. The contractual relationships with patients, in most cases, also involve a third-party payor (e.g., Medicare, Medicaid and private insurance organizations, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by or negotiated with the third-party payors. The payment arrangements with third-party payors for the services provided to the related patients typically specify payments at amounts less than the Company's standard charges. The Company continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals. A summary of revenues by service type as a percentage of total revenues follows: Year Ended December 31, 2020 2019 2018 Patient service revenues: Surgical facilities revenues 95.3 % 94.1 % 93.6 % Ancillary services revenues 3.4 % 4.3 % 4.5 % 98.7 % 98.4 % 98.1 % Other service revenues: Optical services revenues 0.2 % 0.2 % 0.5 % Other 1.1 % 1.4 % 1.4 % 1.3 % 1.6 % 1.9 % Total revenues 100.0 % 100.0 % 100.0 % Patient service revenues. This revenue is related to charging facility fees in exchange for providing patient care. The fee charged for health care procedures performed in surgical facilities varies depending on the type of service provided, but usually includes all charges for usage of an operating room, a recovery room, special equipment, medical supplies, nursing staff and medications. The fee does not normally include professional fees charged by the patient’s surgeon, anesthesiologist or other attending physician, which are billed directly by such physicians to the patient or third-party payor. However, in several surgical facilities, the Company charges for anesthesia services. Ancillary service revenues include fees for patient visits to the Company's physician practices, pharmacy services and diagnostic tests ordered by physicians. Patient service revenues are recognized as performance obligations are satisfied. Performance obligations are based on the nature of services provided. Typically, the Company recognizes revenue at a point in time in which services are rendered and the Company has no obligation to provide further patient services. As the Company primarily performs outpatient procedures, performance obligations are generally satisfied same day and revenue is recognized on the date of service. The Company determines the transaction price based on gross charges for services provided, net of estimated contractual adjustments, discounts from third-party payors. The Company estimates its contractual adjustments and discounts based on contractual agreements, its discount policies and historical experience. Changes in estimated contractual adjustments and discounts are recorded in the period of change. Other service revenues. Optical service revenues consist of handling charges billed to the members of the Company's optical products purchasing organization. The Company's optical products purchasing organization negotiates volume buying discounts with optical products manufacturers. The buying discounts and any handling charges billed to the members of the buying group represent the revenue recognized for financial reporting purposes. The Company satisfies the performance obligation and recognizes revenue when the orders are shipped to members. The Company bases its estimates for sales returns and discounts on historical experience and has not experienced significant fluctuations between estimated and actual return activity and discounts given. The Company sold its optical products purchasing organization on December 31, 2020. Other revenues include management and administrative service fees derived from the non-consolidated facilities that the Company accounts for under the equity method, management of surgical facilities in which it does not own an interest, and management services provided to physician practices for which the Company is not required to provide capital or additional assets. These agreements typically require the Company to provide recurring management services over a multi-year period which are billed and collected on a monthly basis. The fees derived from these management arrangements are based on a predetermined percentage of the revenues of each facility or practice and are recognized in the period in which management services are rendered and billed. The following table sets forth patient service revenues by type of payor and as a percentage of total patient service revenues for the Company's consolidated surgical facilities (dollars in millions): Year Ended December 31, 2020 2019 2018 Amount % Amount % Amount % Patient service revenues: Private insurance $ 989.9 53.9 % $ 970.5 53.8 % $ 948.9 54.6 % Government 708.5 38.6 % 701.9 38.9 % 653.3 37.6 % Self-pay 58.5 3.2 % 46.1 2.6 % 50.0 2.9 % Other (1) 79.2 4.3 % 84.6 4.7 % 84.8 4.9 % Total patient service revenues 1,836.1 100.0 % 1,803.1 100.0 % 1,737.0 100.0 % Other service revenues: Optical service revenues 3.0 3.8 9.5 Other revenues 21.0 24.5 25.0 Total revenues $ 1,860.1 $ 1,831.4 $ 1,771.5 (1) Other is comprised of anesthesia service agreements, auto liability, letters of protection and other payor types. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company maintains its cash and cash equivalent balances at high credit quality financial institutions. Cash, cash equivalents and restricted cash reported within the consolidated statement of cash flows includes $0.3 million of restricted investments, which are reflected in other long-term assets in the consolidated balance sheet at both December 31, 2020 and 2019. These restricted investments represent restricted cash held in accordance with the provisions of a long-term operating lease agreement held as security for performance under the Company's covenants and obligations within the agreement through January 2024. Accounts Receivable Accounts receivable from third-party payors are recorded net of estimated implicit price concessions, which are estimated based on the historical trend of the Company's surgical hospitals’ cash collections and contractual write-offs, and for the Company's surgical facilities in general, established fee schedules, relationships with payors and procedure statistics. While changes in estimated reimbursement from third-party payors remain a possibility, the Company expects that any such changes would be minimal and, therefore, would not have a material effect on its financial condition or results of operations. Accounts receivable consists of receivables from federal and state agencies (under the Medicare and Medicaid programs), private insurance organizations, employers and patients. Management recognizes that revenues and receivables from government agencies are significant to the Company's operations, but it does not believe that there is significant credit risk associated with these government agencies. Concentration of credit risk with respect to other payors is limited because of the large number of such payors. The Company recognizes that final reimbursement of accounts receivable is subject to final approval by each third-party payor. However, because the Company has contracts with its third-party payors and also verifies insurance coverage of the patient before medical services are rendered, the amounts that are pending approval from third-party payors are not considered significant. Amounts are classified outside of self-pay if the Company has an agreement with the third-party payor or has verified a patient’s coverage prior to services rendered. The Company's policy is to collect co-payments and deductibles prior to providing medical services. Patient services of the Company are primarily non-emergency, which allows the surgical facilities to control the procedures for which third-party reimbursement is sought and obtained. The Company does not require collateral from self-pay patients. The Company's collection policies and procedures are based on the type of payor, size of claim and estimated collection percentage for each patient account. The Company analyzes accounts receivable at each of its surgical facilities to ensure the proper collection and aged category. Collection efforts include direct contact with third-party payors or patients, written correspondence and the use of legal or collection agency assistance, as required. Prior to its sale on December 31, 2020, the receivables related to the Company's optical products purchasing organization were recognized separately from patient accounts receivable and included in other current assets in the consolidated balance sheets. Such receivables were $8.6 million at December 31, 2019. Impairment of Long-Lived Assets, Goodwill and Intangible Assets The Company evaluates the carrying value of long-lived assets when impairment indicators are present or when circumstances indicate that impairment may exist. The Company performs an impairment test by preparing an expected undiscounted cash flow projection. If the projection indicates that the recorded amount of the long-lived asset is not expected to be recovered, the carrying value is reduced to estimated fair value. The cash flow projection and fair value represents management’s best estimate, using appropriate and customary assumptions, projections and methodologies, at the date of evaluation. For discussion on impairment for goodwill and indefinite-lived intangible assets, refer to Note 4. "Goodwill and Intangible Assets." Professional and General and Workers' Compensation Insurance The Company maintains general liability and professional liability insurance in excess of self-insured retentions through third party commercial insurance carriers in amounts that management believes is sufficient for the Company's operations, although, potentially, some claims may exceed the scope of coverage in effect. The professional liability insurance coverage is on a claims-made basis and the general liability insurance is on an occurrence basis. The Company also maintains workers' compensation insurance, subject to a self-insured retention. The Company expenses the costs under the self-insured retention exposure for general and professional liability and workers' compensation claims which relate to (i) claims made during the policy period, which are offset by insurance recoveries and (ii) an estimate of claims incurred but not yet reported that are expected to be reported after the policy period expires. Reserves and provisions are based upon actuarially determined estimates using individual case-basis valuations and actuarial analysis. Reserves for professional, general and workers' compensation claim liabilities are determined with no regard for expected insurance recoveries and are presented gross on the consolidated balance sheets. Derivative Instruments and Hedging Activities The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. Investments in Unconsolidated Affiliates Investments in unconsolidated affiliates in which the Company exerts significant influence but does not control or otherwise consolidate are accounted for using the equity method. Equity method investments are initially recorded at cost, unless the investments are a result of the Company losing control of a previously controlled entity, but still retaining a non-controlling interest. Transactions that result in the deconsolidation of a previously consolidated entity, are measured at fair value. The fair value measurement utilizes Level 3 inputs, which include unobservable data, to measure the fair value of the retained non-controlling interest. The fair value determination is generally based on a combination of multiple valuation methods, which can include discounted cash flow, income approach, or market value approach which incorporates estimates of future earnings and market valuation multiples for certain guideline companies. These investments are included as investments in and advances to affiliates in the accompanying consolidated balance sheets. The Company’s share of the profits and losses from these investments is reported in income from equity investments in the accompanying consolidated statements of operations. The Company monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the investees and records reductions in carrying values when necessary. Non-Controlling Interests The physician limited partners and physician minority members of the entities that the Company controls are responsible for the supervision and delivery of medical services. The governance rights of limited partners and minority members are restricted to those that protect their financial interests. Under certain partnership and operating agreements governing these partnerships and limited liability companies, the Company could be removed as the sole general partner or managing member for certain events such as material breach of the partnership or operating agreement, gross negligence or bankruptcy. These protective rights do not preclude consolidation of the respective partnerships and limited liability companies. Ownership interests in consolidated subsidiaries held by parties other than the Company are identified and generally presented in the consolidated financial statements within the equity section but separate from the Company's equity. However, in instances in which certain redemption features that are not solely within the control of the Company are present, classification of non-controlling interests outside of permanent equity is required. Consolidated net income attributable to the Company and to the non-controlling interests are identified and presented on the consolidated statements of operations; changes in ownership interests in which the Company retains a controlling interest are accounted for as equity transactions assuming the Company continues to consolidate related entities. Certain transactions with non-controlling interests are classified within financing activities in the consolidated statements of cash flows. The consolidated financial statements of the Company include all assets, liabilities, revenues and expenses of surgical facilities in which the Company has sufficient ownership and rights to allow the Company to consolidate the surgical facilities. Similar to its investments in non-consolidated affiliates, the Company regularly engages in the purchase and sale of ownership interests with respect to its consolidated subsidiaries that do not result in a change of control. Non-Controlling Interests — Redeemable. Each partnership and limited liability company through which the Company owns and operates its surgical facilities is governed by a partnership or operating agreement, respectively. In certain circumstances, the applicable partnership or operating agreements for the Company's surgical facilities provide that the facilities will purchase all of the physician limited partners’ or physician minority members’, as applicable, ownership if certain adverse regulatory events occur, such as it becoming illegal for the physician(s) to own an interest in a surgical facility, refer patients to a surgical facility or receive cash distributions from a surgical facility. The non-controlling interests — redeemable are reported outside of stockholders' equity in the consolidated balance sheets. A summary of activity related to the non-controlling interests—redeemable for the years ended December 31, 2020 and 2019 is as follows (in millions): December 31, 2020 2019 Balance at beginning of period $ 321.0 $ 326.6 Net income attributable to non-controlling interests—redeemable 31.7 39.1 Acquisition and disposal of shares of non-controlling interests, net—redeemable (9.4) (4.7) Distributions to non-controlling interest —redeemable holders (36.5) (40.0) Balance at end of period $ 306.8 $ 321.0 Inventories Inventories, which consist primarily of medical and drug supplies, are stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. Recent Accounting Pronouncements In March 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-04 Reference Rate Reform (Topic 848) . ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the year ended December 31, 2020, the Company elect |
Acquisitions and Disposals
Acquisitions and Disposals | 12 Months Ended |
Dec. 31, 2020 | |
Business Combinations And Disposals [Abstract] | |
Acquisitions and Disposals | Acquisitions and Disposals The Company accounts for business combinations in accordance with the fundamental requirements of the acquisition method of accounting and under the premise that an acquirer can be identified for each business combination. The acquirer is the entity that obtains control of one or more businesses in the business combination and the acquisition date is the date the acquirer achieves control. The assets acquired, liabilities assumed and any non-controlling interests in the acquired business at the acquisition date are recognized at their fair values as of that date, and the direct costs incurred in connection with the business combination are recorded and expensed separately from the business combination. Any goodwill recognized is determined as the excess of the fair value of the consideration conveyed plus the fair value of any non-controlling interests in the acquisition over the fair value of the net assets acquired. Acquisitions in which the Company is able to exert significant influence but does not have control are accounted for using the equity method. Acquired assets and assumed liabilities typically include, but are not limited to, fixed assets, intangible assets and right-of-use leases. The valuations are based on appraisal reports, discounted cash flow analyses, actuarial analyses or other appropriate valuation techniques to determine the fair value of the assets acquired or liabilities assumed. Fair value attributable to non-controlling interests is based on a Level 3 computation using significant inputs that are not observable in the market. Key inputs used to determine the fair value include financial multiples used in the purchase of non-controlling interests, primarily from acquisitions of surgical facilities. Such multiples, based on earnings, are used as a benchmark for the discount to be applied for the lack of control or marketability. Fair value attributable to the property and equipment acquired is based on Level 3 computations using key inputs such as cost trend data and comparable asset sales. Fair value attributable to the intangible assets acquired is based on Level 3 computations using key inputs such as the Company's internally-prepared financial projections. Fair values assigned to acquired working capital are based on carrying amounts reported by the acquiree at the date of acquisition, which approximate their fair values. Acquisitions During the year ended December 31, 2020, the Company acquired a controlling interest in three surgical facilities, including a surgical hospital, a controlling interest in five surgical facilities in existing markets, that were merged into existing facilities and a physician practice for total aggregate consideration of $120.1 million, including cash consideration of $104.6 million, net of cash acquired, non-cash consideration of $8.7 million and contingent consideration of $0.7 million. The non-cash consideration consisted of non-controlling interests in the Company's existing surgical facilities. The cash consideration was funded through cash from operations, proceeds from its recent divestitures and other available resources. The total consideration was allocated to the assets acquired and liabilities assumed based upon the respective acquisition date fair values. During the year ended December 31, 2019, the Company acquired a controlling interest in one surgical facility, a clinic that was merged into an existing facility and a physician practice for total aggregate consideration of $26.7 million, including cash consideration of $20.1 million, net of cash acquired. The remainder of the consideration related to the forgiveness of certain amounts due to the Company from the acquired clinic. During 2020, the Company made a working capital settlement payment resulting in additional cash consideration of $0.8 million related to the clinic acquisition. The additional consideration is reflected in the table below. During the year ended December 31, 2020, no other significant changes were made to the purchase price allocation of assets and liabilities, existing at the date of acquisition, related to individual acquisitions completed in 2019. Preliminary or final amounts recognized for each major class of assets acquired and liabilities assumed for acquisitions completed during the years ended December 31, 2020 and 2019, including post acquisition date adjustments, are as follows (in millions): 2020 2019 Consideration transferred (1) $ 120.1 $ 27.4 Fair value of non-controlling interests 57.3 8.3 Aggregate acquisition date fair value $ 177.4 $ 35.7 Net assets acquired: Current Assets $ 24.3 $ 5.4 Property and equipment 50.6 1.8 Intangible assets 3.6 — Goodwill 153.7 23.4 Right-of-use operating lease assets 15.4 28.8 Other long-term assets (2) 0.2 8.9 Current liabilities (16.4) (4.2) Long-term debt (40.0) (0.2) Right-of-use operating lease liabilities (14.0) (28.2) Aggregate acquisition date fair value $ 177.4 $ 35.7 (1) In connection with the clinic acquisition in 2019, the Company acquired the remaining non-controlling interests in one of its existing consolidated surgical facilities. As such, $6.3 million of the cash consideration for the clinic acquisition was classified as a financing activity and presented in payments related to ownership transactions with non-controlling interest holders in the Consolidated Statements of Cash Flows. (2) The assets acquired in 2019 includes the fair value of a non-controlling investment held by the acquired clinic in one of the Company's consolidated surgical facilities of $8.8 million. This investment asset was subsequently eliminated in consolidation. The fair values assigned to certain assets acquired and liabilities assumed by the Company in 2020 have been estimated on a preliminary basis and are subject to change as new facts and circumstances emerge that were present at the date of acquisition. The goodwill acquired in connection with the 2020 acquisitions was allocated to the Company's Surgical Facility Services reportable segment. The results of operations of the 2020 acquisitions are included in the Company’s results of operations beginning on the dates of acquisition, and were not considered significant for the year ended December 31, 2020. During the year ended December 31, 2019, the Company acquired non-controlling interests, primarily in four surgical facilities, for a cash investment of $15.2 million. The non-controlling interests were accounted for as equity method investments. Disposals During the year ended December 31, 2020, the Company sold its interests in three surgery centers, one of which was previously accounted for as an equity method investment, sold certain assets related to its anesthesia business, certain imaging assets and its optical products purchasing organization for combined net cash proceeds of $58.5 million, and recognized a net pre-tax gain of $5.2 million included in loss on disposals and deconsolidations, net in the consolidated statement of operations for the year ended December 31, 2020. Additionally, the Company closed its diagnostic laboratory and recognized a net pre-tax loss of $3.5 million included in loss on disposals and deconsolidations, net in the consolidated statement of operations for the year ended December 31, 2020. During the year ended December 31, 2019, the Company disposed of previously owned real property associated with one of its existing non-consolidated surgical facilities. In connection with the sale, the Company recognized a $10.9 million pretax gain included in loss (gain) on disposals and deconsolidations, net in the accompanying consolidated statements of operations. The sale did not impact the Company's investment in the surgical facility, which continues to be accounted for as an equity method investment. During the year ended December 31, 2018, the Company disposed of four surgery centers, two surgical hospitals and its optical laboratory for net cash proceeds of $18.7 million, and recognized a net pretax loss of $21.2 million included in loss on disposals and deconsolidations, net in the consolidated statement of operations for the year ended December 31, 2018. The non-cash loss was primarily a result of the write-off of the net assets of the facility (net of proceeds received) and was primarily driven by the write-off of the associated goodwill. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and EquipmentProperty and equipment are stated at cost or, if obtained through acquisition, at fair value determined on the date of acquisition. Depreciation is recognized using the straight-line method over the estimated useful lives of the assets, generally 20 to 40 years for buildings and building improvements, three five The Company also leases certain facilities and equipment under finance leases. Assets held under finance leases are stated at the present value of lease payments at the inception of the related lease. Such assets are amortized on a straight-line basis over the lesser of the lease term or the remaining useful life of the leased asset. A summary of property and equipment follows (in millions): December 31, 2020 2019 Land $ 11.1 $ 11.0 Buildings and improvements 109.7 106.6 Furniture and equipment 20.7 23.1 Computer and software 80.8 59.8 Medical equipment 196.8 148.3 Right-of-use finance lease asset 298.4 259.3 Construction in progress 16.4 25.9 Property and equipment, at cost 733.9 634.0 Less: Accumulated depreciation (189.3) (110.7) Property and equipment, net $ 544.6 $ 523.3 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the fair value of the consideration provided in an acquisition over the fair value of net assets acquired and is not amortized. The Company has indefinite-lived intangible assets related to the certificates of need held in jurisdictions where certain of its surgical facilities are located, Medicare licenses and certain management rights agreements. The Company also has finite-lived intangible assets related to physician guarantee agreements, non-compete agreements, management rights agreements and customer relationships. Physician income guarantees are amortized into salaries and benefits costs in the consolidated statements of operations over the commitment period of the contract, generally three two three The Company tests its goodwill and indefinite-lived intangible assets for impairment at least annually, as of October 1, or more frequently if certain indicators arise. The Company tests for goodwill impairment at the reporting unit level, which is defined as one level below an operating segment. During 2020, the Company identified three reporting units, which include the following: 1) Surgical Facilities, 2) Ancillary Services, and 3) Alliance, which is a component of the Optical Services operating segment. A detailed evaluation of potential impairment indicators was performed, which specifically considered the volatility observed in the prices of the Company’s outstanding debt securities and common stock, as well as the decline in surgical case volumes following the emergence of the COVID-19 pandemic, all of which improved in the second half of 2020 as states began to re-open and allow for non-emergent procedures. The Company compares the carrying value of the net assets of the reporting unit to the estimated fair value of the reporting unit. To determine the fair value of the reporting units, the Company obtained valuations at the reporting unit level prepared by third-party valuation specialists which typically utilizes a combination of the income and market approaches. The discounted cash flow model is projected based on a year-by-year assessment that considers historical results, estimated market conditions, internal projections, and relevant publicly available statistics. Determining fair value requires the exercise of significant judgment, including assumptions about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The significant judgments are typically based upon Level 3 inputs, generally defined as unobservable inputs representing the Company's own assumptions. The cash flows employed in the discounted cash flow analysis are based on the Company's most recent budgets and business plans aligned with provided guidance and, when applicable, various growth rates are assumed for years beyond the current business plan period. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting units. The variables within the discount rate, many of which are outside of the Company's control, provide the best estimate of all assumptions applied within the discounted cash flow model. There can be no assurance that operations will achieve the future cash flows reflected in the projections. In determining the fair value under the market approaches, the analysis includes a control premium, which was based on observable market data and a review of selected transactions of companies that operate in the Company's sector. While the Company believes that all assumptions utilized in the testing were appropriate, they may not reflect actual outcomes that could occur. Specific factors that could negatively impact the assumptions used include changes to the discount and growth rates and a change in the equity and enterprise premiums being realized in the market. On the basis of available evidence as of August 31, 2020, the Company identified indicators of impairment related to its Ancillary Services and Alliance reporting units, including the impacts of the COVID-19 pandemic, the closure of its diagnostic laboratory (as discussed in Note 2. "Acquisitions and Disposals") and its strategic decision to sell its optical products purchasing organization. No indicators of impairment were identified for the Company's Surgical Facilities reporting unit. Based on the impairment indicators noted, the Company performed an impairment analysis for the Ancillary Services and Alliance reporting units as of August 31, 2020. As of the September 30, 2020 valuation, carrying value for both the Ancillary Services and Alliance reporting units exceeded the fair value, resulting in non-cash impairment charges of $28.6 million and $4.9 million, respectively. The fair values as of August 31, 2020 were determined using the adjusted book value for the Ancillary Services reporting unit and the discounted cash flow model for the Alliance reporting unit. As of October 1, 2020, prior to its annual impairment testing, the Company's three reporting units with allocated goodwill were as follows: 1) Surgical Facilities - $3.3 billion, 2) Ancillary Services - no remaining goodwill after the August 31 impairment discussed above, and 3) Alliance - $4.2 million. As of the October 1, 2020 valuation, the fair value for the Surgical Facilities reporting unit was substantially in excess of its carrying value, and there were no additional indicators of impairment related to the other reporting units. The fair value of the Surgical Facilities reporting unit as of October 1, 2020 was determined using the income and market approach as discussed above. Subsequent to the date of our annual impairment test, the Company considered its operating results for the fourth quarter of 2020, macroeconomic, industry and market conditions, and other market indicators including its market capitalization. Based on its evaluation of all such factors, the Company concluded that an event had not occurred or circumstances had not changed that would more likely than not reduce the fair value of its reporting units below their carrying values. On December 31, 2020, the Company disposed of the Alliance reporting unit with the sale of its optical products purchasing organization. During the year ended December 31, 2019, as a result of its impairment testing, the Company recorded non-cash impairment charges of $2.5 million related to the Alliance reporting unit. During the year ended December 31, 2018, as a result of its impairment testing, the Company recorded non-cash impairment charges of $60.7 million and $13.7 million related to the Ancillary Services and Alliance reporting units, respectively. A summary of the changes in the carrying amount of goodwill follows (in millions): December 31, 2020 2019 Balance at beginning of period $ 3,402.4 $ 3,382.8 Acquisitions, including post acquisition adjustments 154.7 22.3 Disposals and deconsolidations (55.6) (0.2) Impairments (33.5) (2.5) Balance at end of period $ 3,468.0 $ 3,402.4 A summary of the Company's acquisitions and disposals for the years ended December 31, 2020 and 2019 is included in Note 2. "Acquisitions and Disposals." A summary of the components of intangible assets follows (in millions): December 31, 2020 December 31, 2019 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Finite-lived intangible assets: Management rights agreements $ 31.1 $ (10.1) $ 21.0 $ 31.1 $ (7.3) $ 23.8 Other 13.6 (6.5) 7.1 8.8 (4.5) 4.3 Total finite-lived intangible assets 44.7 (16.6) 28.1 39.9 (11.8) 28.1 Indefinite-lived intangible assets 18.8 — 18.8 19.2 — 19.2 Total intangible assets $ 63.5 $ (16.6) $ 46.9 $ 59.1 $ (11.8) $ 47.3 During the year ended December 31, 2019, the Company acquired a clinic that was previously managed by the Company. As a result of the transaction, the Company determined the management rights agreement related to the acquired clinic no longer provided a future benefit. As such, the Company recorded non-cash impairment charges of $5.4 million, which was included as a component of impairment charges on the accompanying consolidated statement of operations. Amortization expense for intangible assets was $4.3 million, $4.6 million and $4.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. Total estimated amortization expense for the next five years and thereafter related to intangible assets follows (in millions): 2021 $ 5.7 2022 3.8 2023 2.9 2024 2.5 2025 1.9 Thereafter 11.3 Total $ 28.1 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt A summary of long-term debt follows (in millions): December 31, 2020 2019 Senior secured term loan (1) $ 1,539.4 $ 1,434.1 Senior secured revolving credit facility — — 6.750% senior unsecured notes due 2025 370.0 370.0 10.000% senior unsecured notes due 2027 545.0 430.0 Notes payable and other secured loans 137.5 104.0 Finance lease obligations 281.2 253.4 Less: unamortized debt issuance costs (16.3) (10.8) Total debt 2,856.8 2,580.7 Less: Current maturities 64.4 56.0 Total long-term debt $ 2,792.4 $ 2,524.7 (1) Includes unamortized fair value discount of $3.7 million and $4.6 million as of December 31, 2020 and 2019, respectively. Senior Secured Credit Facilities The Company has a credit agreement (the "Credit Agreement") providing for a $1.29 billion senior secured term loan (the "Term Loan"), a $180.0 million senior secured incremental term loan (the "2018 Incremental Term Loan"), a $120.0 million senior secured incremental term loan (the "2020 Incremental Term Loan") and a $120.0 million senior secured revolving credit facility (the "Revolver" and, together with the Term Loan, the 2018 Incremental Term Loan and the 2020 Incremental Term Loan, the “Senior Secured Credit Facilities"). The Revolver may be utilized for working capital, capital expenditures and general corporate purposes. Subject to certain conditions and requirements set forth in the Credit Agreement, the Company may request one or more additional incremental term loan facilities or one or more increases in the commitments under the Revolver. On March 18, 2020, the Company drew down its available capacity under its Revolver, as a precautionary measure in order to increase liquidity and preserve financial flexibility in light of current uncertainty resulting from the COVID-19 pandemic. During the second quarter, the Company fully repaid the outstanding balance. As of both December 31, 2020 and 2019, the Company had no outstanding borrowing on the Revolver. As of December 31, 2020, the Company's availability on the Revolver was $112.5 million (including outstanding letters of credit of $7.5 million). The Term Loan will mature on August 31, 2024 and the Revolver will mature on August 31, 2022. The Senior Secured Credit Facilities bear interest at a rate per annum equal to (x) LIBOR plus a margin ranging from 3.00% to 3.25% per annum, depending on the Company's first lien net leverage ratio or (y) an alternate base rate (which will be the highest of (i) the prime rate, (ii) 0.5% per annum above the federal funds effective rate and (iii) one-month LIBOR plus 1.00% per annum (solely with respect to the Term Loan, the alternate base rate shall not be less than 2.00% per annum)) plus a margin ranging from 2.00% to 2.25% per annum. In addition, the Company is required to pay a commitment fee of 0.50% per annum in respect of unused commitments under the Revolver. The Term Loan amortizes in equal quarterly installments of 0.25% of the aggregate original principal amount of the Term Loan. The Term Loan is subject to mandatory prepayments based on excess cash flow for the applicable fiscal year that will depend on the first lien net leverage ratio as of the last day of the applicable fiscal year, as well as upon the occurrence of certain other events, as described in the Credit Agreement. There were no excess cash flow payments required as of December 31, 2020. On April 22, 2020, the Company entered into a second incremental term loan amendment, which further amended and supplemented the Credit Agreement to provide for a $120.0 million senior secured incremental term loan. The 2020 Incremental Term Loans were fully drawn on April 22, 2020 and bear interest at a rate per annum equal to (x) LIBOR plus a margin of 8.00% per annum or (y) an alternate base rate (which will be the highest of (i) the prime rate, (ii) 0.5% per annum above the federal funds effective rate, (iii) one-month LIBOR plus 1.00% per annum and (iv) 2.00% per annum) plus a margin of 7.00% per annum. The 2020 Incremental Term Loans were incurred as a separate tranche of term loans under the Credit Agreement, and are subject to maturity, amortization and mandatory prepayment provisions consistent with the existing terms loans outstanding under the Credit Agreement. Voluntary prepayments of the 2020 Incremental Term Loans are permitted, in whole or in part, with prior notice, without premium or penalty (except LIBOR breakage costs and a make-whole and call premium, as applicable, in the case of certain prepayments or events within a specified period of time after April 22, 2020, as set forth in the second incremental term loan amendment). With respect to the Revolver, the Company is required to comply with a maximum consolidated total net leverage ratio of 9.50:1.00, which covenant will be tested quarterly on a trailing four quarter basis only if, as of the last day of the applicable fiscal quarter the Revolver is drawn in an aggregate amount greater than 35% of the total commitments under the Revolver. Such financial maintenance covenant is subject to an equity cure. The Credit Agreement includes customary negative covenants restricting or limiting the ability of the Company and its restricted subsidiaries, to, among other things, sell assets, alter its business, engage in mergers, acquisitions and other business combinations, declare dividends or redeem or repurchase equity interests, incur additional indebtedness or guarantees, make loans and investments, incur liens, enter into transactions with affiliates, prepay certain junior debt, and modify or waive certain material agreements and organizational documents, in each case, subject to customary and other agreed upon exceptions. The Credit Agreement also contains customary affirmative covenants and events of default. On April 16, 2020, the Company entered into a third amendment to Credit Agreement governing the Revolver, which amended and supplemented financial covenants applicable to the Revolver. Pursuant to the third amendment, the Company's requirement to comply with a maximum consolidated total net leverage ratio was waived for the remainder of 2020. Additionally, for the first three quarters of 2021, the third amendment provides for an alternative calculation for the maximum consolidated total net leverage ratio where the trailing four quarter basis may be negatively impacted by the impacts of the COVID-19 pandemic. The third amendment became effective concurrently with the funding of the 2020 Incremental Term Loans on April 22, 2020, and are discussed in more detail above. As of December 31, 2020, the Company was in compliance with the covenants contained in the Credit Agreement. The Senior Secured Credit Facilities are guaranteed, on a joint and several basis, by SP Holdco I, Inc. and each of Surgery Center Holdings, Inc.'s current and future wholly-owned domestic restricted subsidiaries (subject to certain exceptions) (the "Subsidiary Guarantors") and are secured by a first priority security interest in substantially all of Surgery Center Holdings, Inc.'s, SP Holdco I, Inc.'s and the Subsidiary Guarantors’ assets (subject to certain exceptions). In connection with the 2020 Incremental Term Loans borrowings, the Company recorded debt issuance costs and discount of $6.5 million. 6.750% Senior Unsecured Notes due 2025 Effective June 30, 2017, the Company issued $370.0 million in gross proceeds of senior unsecured notes due July 1, 2025 (the "2025 Unsecured Notes"). The 2025 Unsecured Notes bear interest at the rate of 6.750% per year, payable semi-annually on January 1 and July 1 of each year. The 2025 Unsecured Notes are a senior unsecured obligation of Surgery Center Holdings, Inc. and are guaranteed on a senior unsecured basis by each of Surgery Center Holdings, Inc.'s existing and future domestic wholly-owned restricted subsidiaries that guarantees the Senior Secured Credit Facilities (subject to certain exceptions). The Company may redeem the 2025 Unsecured Notes, in whole or in part, at any time on or after July 1, 2020, at the redemption prices set forth below (expressed as a percentage of the principal amount to be redeemed), plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption: July 1, 2020 to June 30, 2021 103.375 % July 1, 2021 to June 30, 2022 101.688 % July 1, 2022 and thereafter 100.000 % If Surgery Center Holdings, Inc. experiences a change in control under certain circumstances, it must offer to purchase the 2025 Unsecured Notes at a purchase price equal to 101.000% of the principal amount, plus accrued and unpaid interest, if any, up to, but excluding, the date of repurchase. The 2025 Unsecured Notes contain customary affirmative and negative covenants, which, among other things, limit the Company’s ability to incur additional debt, pay dividends, create or assume liens, effect transactions with its affiliates, guarantee payment of certain debt securities, sell assets, merge, consolidate, enter into acquisitions and effect sale and leaseback transactions. 10.000% Senior Unsecured Notes due 2027 Effective April 11, 2019, the Company issued $430.0 million in an aggregate principal amount of senior unsecured notes due April 15, 2027 (the "2027 Unsecured Notes"). The 2027 Unsecured Notes bear interest at the rate of 10.000% per annum, payable semi-annually on April 15 and October 15 of each year, beginning on October 15, 2019. The 2027 Unsecured Notes are a senior unsecured obligation of Surgery Center Holdings, Inc. and are guaranteed on a senior unsecured basis by each of Surgery Center Holdings, Inc.'s existing and future domestic wholly-owned restricted subsidiaries that guarantees the Senior Secured Credit Facilities (subject to certain exceptions). The Company may redeem up to 40% of the aggregate principal amount of the 2027 Unsecured Notes at any time prior to April 15, 2022, with the net cash proceeds of certain equity issuances at a redemption price equal to 110.000% of the principal amount of notes to be redeemed, plus accrued and unpaid interest to, but excluding, the date of redemption. The Company may redeem the 2027 Unsecured Notes, in whole or in part, at any time prior to April 15, 2022, at a redemption price equal to 100% of the principal amount of notes to be redeemed plus the applicable premium, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Company may redeem the 2027 Unsecured Notes, in whole or in part, at any time on or after April 15, 2022, at the redemption prices set forth below (expressed as a percentage of the principal amount of notes to be redeemed), plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption: April 15, 2022 to April 14, 2023 105.000 % April 15, 2023 to April 14, 2024 102.500 % April 15, 2024 and thereafter 100.000 % If Surgery Center Holdings, Inc. experiences a change of control under certain circumstances, it must offer to purchase the 2027 Unsecured Notes at a purchase price equal to 101.000% of the aggregate principal amount of notes, plus accrued and unpaid interest, if any, up to, but excluding, the date of repurchase. The indenture governing the 2027 Unsecured Notes contains customary affirmative and negative covenants, which, among other things, limit the Company’s ability to incur additional debt, pay dividends, create or assume liens, effect transactions with its affiliates, guarantee payment of certain debt securities, sell assets, merge, consolidate, enter into acquisitions and effect sale and leaseback transactions. On July 30, 2020, the Company completed the issuance and sale of $115.0 million in aggregate principal amount of senior unsecured notes due 2027 at 100.75% of the principal amount. The notes were issued as part of the same series as the existing 2027 Unsecured Notes originally issued in April 2019, and have the same terms. In connection with the notes issuance, the Company recorded debt issuance costs, net of issuance premium of $1.0 million. Other Debt Certain of the Company’s subsidiaries have outstanding indebtedness under notes payable and other secured loans, which is collateralized by the real estate and equipment owned by the surgical facilities to which the loans were made, and right-of-use finance lease obligations for which the Company is liable to various vendors for several property and equipment leases classified as finance leases. The various bank indebtedness agreements contain covenants to maintain certain financial ratios and also restrict encumbrance of assets, creation of indebtedness, investing activities and payment of distributions. At December 31, 2020, the Company was in compliance with its covenants contained in the credit agreements. Maturities A summary of maturities for the Company's long-term debt, excluding unamortized debt issuance costs and the unamortized fair value discount discussed above, for the next five years and thereafter as of December 31, 2020 follows (in millions): 2021 $ 64.4 2022 57.1 2023 53.4 2024 1,519.7 2025 396.7 Thereafter 785.5 Total $ 2,876.8 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Leases | LeasesThe Company determines if an arrangement is a lease at inception. Right-of-use assets represent the right to use the underlying assets for the lease term and the lease liabilities represent the obligation to make lease payments arising from the leases. Right-of-use assets and liabilities are recognized at commencement date based on the present value of future lease payments over the lease term, which includes only payments that are fixed and determinable at the time of commencement. When readily determinable, the Company uses the interest rate implicit in a lease to determine the present value of future lease payments. For leases where the implicit rate is not readily determinable, the Company's incremental borrowing rate is used. The Company calculates its incremental borrowing rate on a periodic basis using a third-party financial model that estimates the rate of interest the Company would have to pay to borrow an amount equal to the total lease payments on a collateralized basis over a term similar to the lease. The Company applies its incremental borrowing rate using a portfolio approach. The right-of-use asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's operating leases are primarily for real estate, including medical office buildings, and corporate and other administrative offices. The Company's finance leases are primarily for medical equipment and information technology and telecommunications assets. The Company's finance leases also include certain land, buildings and improvements as discussed in Note 3. "Property and Equipment." Real estate lease agreements typically have initial terms of ten years and may include one or more options to renew. Certain leases also include options to purchase the leased property. The useful life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The majority of the Company's medical equipment leases have a bargain purchase option that is reasonably certain of exercise, so these assets are depreciated over their useful life. The Company's lease agreements do not contain any material residual value guarantees, restrictions or covenants. Certain of the Company's lease agreements require the Company to pay common area maintenance, repairs, property taxes and insurance costs, which are variable amounts based on actual costs incurred during each applicable period. Certain lease agreements also include escalating rent payments that are not fixed at commencement but are based on an index that is determined in future periods over the lease term based on changes in the Consumer Price Index or other measure of cost inflation. These variable components of lease payments are expensed as incurred and are not included in the determination of the right-of-use asset or lease liability. Due to the COVID-19 pandemic, the Company received concessions for certain of its leases primarily consisting of deferral of rental payments. The Company has elected to account for these COVID-19 related concessions as though the enforceable rights and obligations for those concessions are explicit within the underlying contract. The Company accounts for the deferred rentals as a component of other current liabilities within the consolidated balance sheets. In a few instances the Company modified the terms of the lease in exchange for lease concessions. These modifications resulted in an increase to the Company's right-of-use operating lease assets and liabilities of $27.4 million during the year ended December 31, 2020. The following table presents the components of the Company's right-of-use assets and liabilities related to leases and their classification in the consolidated balance sheets at December 31, 2020 and 2019 (in millions): Classification in Consolidated Balance Sheets December 31, 2020 December 31, 2019 Assets: Operating lease assets Right-of-use operating lease assets $ 310.1 $ 297.7 Finance lease assets Property and equipment, net of accumulated depreciation 258.1 237.1 Total leased assets $ 568.2 $ 534.8 Liabilities: Operating lease liabilities: Current Other current liabilities $ 39.2 $ 37.3 Long-term Right-of-use operating lease liabilities 300.9 283.1 Total operating lease liabilities 340.1 320.4 Finance lease liabilities: Current Current maturities of long-term debt 18.9 15.8 Long-term Long-term debt, less current maturities 262.3 237.6 Total finance lease liabilities 281.2 253.4 Total lease liabilities $ 621.3 $ 573.8 The following table presents the weighted-average lease terms and discount rates at December 31, 2020 and 2019 (in millions): December 31, 2020 December 31, 2019 Operating Leases Finance Leases Operating Leases Finance Leases Weighted-average remaining lease term 8.9 years 15.9 years 8.9 years 16.6 years Weight average discount rate 10.3 % 9.2 % 10.4 % 8.7 % The following table presents the components of the Company's lease expense and their classification in the consolidated statement of operations for the years ended December 31, 2020 and 2019 (in millions): December 31, 2020 December 31, 2019 Operating lease costs $ 74.1 $ 70.4 Finance lease costs: Amortization of leased assets 26.2 22.2 Interest on lease liabilities 22.2 13.0 Total finance lease costs 48.4 35.2 Variable and short-term lease costs 16.9 13.2 Total lease costs $ 139.4 $ 118.8 During the years ended December 31, 2020 and 2019, the Company incurred lease costs of $22.8 million and $20.6 million, respectively, under operating lease agreements with physician investors who are related parties. During the years ended December 31, 2020 and 2019, the Company paid rent of $6.9 million and $6.7 million, respectively, under a finance lease agreement with a lessor who is a related party. One of the Company's surgical facilities has a non-controlling ownership interest in the lessor. Payments are allocated to principal adjustments of the finance lease liability and interest expense. The following table presents supplemental cash flow information for the years ended December 31, 2020 and 2019 (dollars in millions): December 31, 2020 December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 68.1 $ 67.3 Operating cash outflows from finance leases $ 20.7 $ 13.0 Financing cash outflows from finance leases $ 18.3 $ 13.4 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 62.1 $ 56.2 Finance leases $ 47.0 $ 133.3 Future maturities of lease liabilities at December 31, 2020 are presented in the following table (in millions): Operating Leases Finance Leases 2021 $ 70.7 $ 43.2 2022 66.1 40.7 2023 62.1 37.0 2024 58.4 32.1 2025 50.0 30.7 Thereafter 219.1 381.9 Total lease payments 526.4 565.6 Less: imputed interest (186.3) (284.4) Total lease obligations $ 340.1 $ 281.2 |
Leases | LeasesThe Company determines if an arrangement is a lease at inception. Right-of-use assets represent the right to use the underlying assets for the lease term and the lease liabilities represent the obligation to make lease payments arising from the leases. Right-of-use assets and liabilities are recognized at commencement date based on the present value of future lease payments over the lease term, which includes only payments that are fixed and determinable at the time of commencement. When readily determinable, the Company uses the interest rate implicit in a lease to determine the present value of future lease payments. For leases where the implicit rate is not readily determinable, the Company's incremental borrowing rate is used. The Company calculates its incremental borrowing rate on a periodic basis using a third-party financial model that estimates the rate of interest the Company would have to pay to borrow an amount equal to the total lease payments on a collateralized basis over a term similar to the lease. The Company applies its incremental borrowing rate using a portfolio approach. The right-of-use asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's operating leases are primarily for real estate, including medical office buildings, and corporate and other administrative offices. The Company's finance leases are primarily for medical equipment and information technology and telecommunications assets. The Company's finance leases also include certain land, buildings and improvements as discussed in Note 3. "Property and Equipment." Real estate lease agreements typically have initial terms of ten years and may include one or more options to renew. Certain leases also include options to purchase the leased property. The useful life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The majority of the Company's medical equipment leases have a bargain purchase option that is reasonably certain of exercise, so these assets are depreciated over their useful life. The Company's lease agreements do not contain any material residual value guarantees, restrictions or covenants. Certain of the Company's lease agreements require the Company to pay common area maintenance, repairs, property taxes and insurance costs, which are variable amounts based on actual costs incurred during each applicable period. Certain lease agreements also include escalating rent payments that are not fixed at commencement but are based on an index that is determined in future periods over the lease term based on changes in the Consumer Price Index or other measure of cost inflation. These variable components of lease payments are expensed as incurred and are not included in the determination of the right-of-use asset or lease liability. Due to the COVID-19 pandemic, the Company received concessions for certain of its leases primarily consisting of deferral of rental payments. The Company has elected to account for these COVID-19 related concessions as though the enforceable rights and obligations for those concessions are explicit within the underlying contract. The Company accounts for the deferred rentals as a component of other current liabilities within the consolidated balance sheets. In a few instances the Company modified the terms of the lease in exchange for lease concessions. These modifications resulted in an increase to the Company's right-of-use operating lease assets and liabilities of $27.4 million during the year ended December 31, 2020. The following table presents the components of the Company's right-of-use assets and liabilities related to leases and their classification in the consolidated balance sheets at December 31, 2020 and 2019 (in millions): Classification in Consolidated Balance Sheets December 31, 2020 December 31, 2019 Assets: Operating lease assets Right-of-use operating lease assets $ 310.1 $ 297.7 Finance lease assets Property and equipment, net of accumulated depreciation 258.1 237.1 Total leased assets $ 568.2 $ 534.8 Liabilities: Operating lease liabilities: Current Other current liabilities $ 39.2 $ 37.3 Long-term Right-of-use operating lease liabilities 300.9 283.1 Total operating lease liabilities 340.1 320.4 Finance lease liabilities: Current Current maturities of long-term debt 18.9 15.8 Long-term Long-term debt, less current maturities 262.3 237.6 Total finance lease liabilities 281.2 253.4 Total lease liabilities $ 621.3 $ 573.8 The following table presents the weighted-average lease terms and discount rates at December 31, 2020 and 2019 (in millions): December 31, 2020 December 31, 2019 Operating Leases Finance Leases Operating Leases Finance Leases Weighted-average remaining lease term 8.9 years 15.9 years 8.9 years 16.6 years Weight average discount rate 10.3 % 9.2 % 10.4 % 8.7 % The following table presents the components of the Company's lease expense and their classification in the consolidated statement of operations for the years ended December 31, 2020 and 2019 (in millions): December 31, 2020 December 31, 2019 Operating lease costs $ 74.1 $ 70.4 Finance lease costs: Amortization of leased assets 26.2 22.2 Interest on lease liabilities 22.2 13.0 Total finance lease costs 48.4 35.2 Variable and short-term lease costs 16.9 13.2 Total lease costs $ 139.4 $ 118.8 During the years ended December 31, 2020 and 2019, the Company incurred lease costs of $22.8 million and $20.6 million, respectively, under operating lease agreements with physician investors who are related parties. During the years ended December 31, 2020 and 2019, the Company paid rent of $6.9 million and $6.7 million, respectively, under a finance lease agreement with a lessor who is a related party. One of the Company's surgical facilities has a non-controlling ownership interest in the lessor. Payments are allocated to principal adjustments of the finance lease liability and interest expense. The following table presents supplemental cash flow information for the years ended December 31, 2020 and 2019 (dollars in millions): December 31, 2020 December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 68.1 $ 67.3 Operating cash outflows from finance leases $ 20.7 $ 13.0 Financing cash outflows from finance leases $ 18.3 $ 13.4 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 62.1 $ 56.2 Finance leases $ 47.0 $ 133.3 Future maturities of lease liabilities at December 31, 2020 are presented in the following table (in millions): Operating Leases Finance Leases 2021 $ 70.7 $ 43.2 2022 66.1 40.7 2023 62.1 37.0 2024 58.4 32.1 2025 50.0 30.7 Thereafter 219.1 381.9 Total lease payments 526.4 565.6 Less: imputed interest (186.3) (284.4) Total lease obligations $ 340.1 $ 281.2 |
Redeemable Preferred Stock
Redeemable Preferred Stock | 12 Months Ended |
Dec. 31, 2020 | |
Temporary Equity Disclosure [Abstract] | |
Redeemable Preferred Stock | Redeemable Preferred Stock On August 31, 2017, the Company completed the sale issuance of 310,000 shares of the Company's preferred stock, par value $0.01 per share, designated as 10.00% Series A Convertible Perpetual Participating Preferred Stock (the "Series A Preferred Stock") to Bain Capital at a purchase price of $1,000 per share for an aggregate purchase price of $310.0 million (the "Preferred Private Placement"). The accrued value of the Series A Preferred Stock is convertible into shares of common stock at a price per share of common stock equal to $19.00, subject to certain adjustments as provided in the Certificate of Designations, Preferences, Rights and Limitations of the 10.00% Series A Convertible Perpetual Participating Preferred Stock of Surgery Partners, Inc. (the "Series A Certificate of Designation"), at any time at the option of the holder. In addition, the Company may require the conversion of all, but not less than all, of the Series A Preferred Stock pursuant to the terms and conditions of the Series A Certificate of Designation, after the second anniversary of the date of issuance, if the volume weighted average closing price of the Common Stock for any 20 out of 30 consecutive trading days prior to such date, equals or exceeds $42.00 per share. The Company cannot redeem the Series A Preferred Stock prior to the fifth anniversary of its issuance and thereafter, may redeem all, but not less than all, of the Series A Preferred Stock for cash pursuant to and subject to the terms and conditions of the Series A Certificate of Designation. The holders of Series A Preferred Stock may cause the Company to redeem the Series A Preferred Stock upon the occurrence of certain change of control transactions of the Company or the common stock ceasing to be listed or quoted on a trading market. The Company adjusts the carrying amount of the Series A Preferred Stock to equal the redemption value at the end of each reporting period as if it were also the redemption date. Changes in the redemption value are recognized immediately as they occur. The Series A Preferred Stock ranks senior to the common stock and any other capital stock of the Company with respect to dividends, redemption and any other rights upon the liquidation, dissolution or winding up of the Company, and the holders thereof are entitled to vote with the holders of common stock, together as a single class, on all matters submitted to a vote of the Company’s stockholders. In addition to participating in any dividends that may be declared with respect to the common stock on an as-converted basis, each share of Series A Preferred Stock accrues dividends daily at a dividend rate of 10.00%, compounding quarterly, and in any given quarter, subject to certain conditions, the Board of Directors of the Company may declare a cash dividend in an amount up to 50% of the amount of the dividend that has accrued and accumulated during such quarter through the end of such quarter, and the amount of any quarterly dividend paid in cash shall not compound on the applicable date and shall not be included in the accrued value of the Series A Preferred Stock. In the event of the Company’s liquidation, dissolution or winding-up (whether voluntary of involuntary), holders of Series A Preferred Stock will be entitled to receive out of the assets of the Company available for distribution to shareholders, after satisfaction of any liabilities and obligations to creditors of the Company, with respect to each Series A Preferred Share, an amount equal to the greater of (i) $1,000.00 per share, plus dividends compounded to date, plus dividends accrued but not yet compounded and (ii) the amount that a holder of one share of common stock would receive, assuming the Series A Preferred Stock had converted into shares of common stock. The following table presents a summary of activity related to the redeemable preferred stock for the years ended December 31, 2020 and 2019 (in millions): December 31, 2020 2019 Balance at beginning of period $ 395.0 $ 359.3 Dividends accrued (there were no cash dividends declared) 39.5 35.7 Balance at end of period $ 434.5 $ 395.0 There were no unpaid cash dividends declared at December 31, 2020 and 2019. The aggregate and per share amounts of unpaid cumulative preferred dividends as of December 31, 2020 and 2019 were $109.0 million and $351.54, and $69.5 million and $224.09, respectively. |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Activities | Derivatives and Hedging Activities The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. During 2020 and 2019, such derivatives have been used to hedge the variable cash flows associated with existing variable-rate debt. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income ("OCI") and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings, as documented at hedge inception in accordance with the Company’s accounting policy election. Amounts reported in accumulated OCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Over the next 12 months, the Company estimates that $21.8 million will be reclassified as an increase to interest expense. As of December 31, 2020 and 2019, the Company had four interest rate swaps with a current notional amount of $1.2 billion and a termination date of November 30, 2023. The derivatives are recorded at fair value (see Note 1. "Organization and Summary of Accounting Policies") and classified as a long-term liability included in other long-term liabilities in the consolidated balance sheets as of December 31, 2020 and 2019. The following table presents the pre-tax effect of the interest rate swaps on the Company's accumulated OCI and statement of operations (in millions): Year Ended December 31, 2020 2019 2018 Derivatives in cash flow hedging relationships: Loss recognized in OCI (effective portion) $ 30.5 $ 35.8 $ 23.1 Loss reclassified from accumulated OCI to interest expense (effective portion) 20.2 7.5 0.6 |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share are calculated based on the weighted-average number of shares outstanding in each period and dilutive stock options, unvested shares and warrants, to the extent such securities exist and have a dilutive effect on earnings per share. The Company computes basic and diluted earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation method that determines earnings per share for common shares and participating securities according to their participation rights in dividends and undistributed earnings. A reconciliation of the numerator and denominator of basic and diluted earnings per share follows (dollars in millions, except per share amounts; shares in thousands): Year Ended December 31, 2020 2019 2018 Numerator: Net loss attributable to Surgery Partners, Inc. $ (116.1) $ (74.8) $ (205.7) Less: Amounts allocated to participating securities (1) (39.5) (35.7) (32.4) Net loss attributable to common stockholders $ (155.6) $ (110.5) $ (238.1) Denominator: Weighted average shares outstanding- basic and diluted (2) 48,776 48,280 48,028 Basic and diluted loss per share (2) $ (3.19) $ (2.29) $ (4.96) Dilutive securities outstanding not included in the computation of diluted loss per share as their effect is antidilutive: Stock options 712 — 83 Restricted shares 981 67 198 (1) Includes dividends accrued during all periods for the Series A Preferred Stock. The Series A Preferred Stock does not participate in undistributed losses. (2) The impact of potentially dilutive securities for all periods were not considered because the effect would be anti-dilutive in each of those periods. Share Repurchase Transactions On December 15, 2017, the Company's Board of Directors authorized a share repurchase program of up to $50.0 million of the Company's issued and outstanding common stock from time to time. The timing and size of repurchases will be determined based on market conditions and other factors. The authorization does not obligate the repurchase of any shares and the Company may repurchase shares of common stock at any time without prior notice. The share repurchases will be made in accordance with applicable securities laws in open market or privately negotiated transactions. The authorization does not have a specified expiration date, and the share repurchase program may be suspended, recommenced or discontinued at any time or from time to time without prior notice. In 2018, the Company repurchased 156,818 shares of its common stock at an average price of $12.64 per share through market purchases. At December 31, 2020, the Company had $46.0 million of repurchase authorization available under the December 2017 authorization. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income Taxes The Company uses the asset and liability method to account for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any change in tax rates that could impact deferred tax assets or liabilities are recognized in the same period the change occurs. If a net operating loss ("NOL") and/or interest limitation ("163(j)") carryforward exists, the Company makes a determination as to whether that NOL and/or 163(j) carryforward will be utilized in the future. A valuation allowance is established for certain net operating loss and interest limitation carryforwards when their recoverability is deemed to be uncertain. The carrying value of the net deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and related assumptions change in the future, the Company may be required to adjust its deferred tax valuation allowances. The Company, or one or more of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal income tax examinations for years prior to 2017 or state income tax examinations for years prior to 2016. The Company and certain of its subsidiaries file a consolidated federal income tax return. The partnerships, limited liability companies, and certain non-consolidated physician practice corporations also file separate income tax returns. The Company's allocable portion of each partnership's and limited liability company's income or loss is included in taxable income of the Company. The remaining income or loss of each partnership and limited liability company is allocated to the other owners. The Company made income tax payments of $1.7 million, $1.6 million and $2.2 million for the years ended December 31, 2020, 2019 and 2018, respectively. Income tax (benefit) expense is comprised of the following (in millions): Year Ended December 31, 2020 2019 2018 Current: Federal $ (0.2) $ (0.2) $ (0.3) State 1.9 1.7 1.5 Deferred: Federal (22.2) 3.2 16.5 State 0.4 4.8 8.7 Total income tax (benefit) expense $ (20.1) $ 9.5 $ 26.4 A reconciliation of the provision for income taxes as reported in the consolidated statements of operations and the amount of income tax (benefit) expense computed by multiplying consolidated income (loss) in each year by the U.S. federal statutory rate of 21% (2020, 2019 and 2018) follows (in millions): Year Ended December 31, 2020 2019 2018 Tax (benefit) expense at U.S.federal statutory rate $ (4.0) $ 11.5 $ (14.5) State income tax, net of U.S. federal tax benefit 2.4 5.7 10.0 Change in valuation allowance 4.1 13.6 26.9 Net income attributable to non-controlling interests (24.8) (25.2) (23.1) Changes in measurement of uncertain tax positions — (0.1) (0.1) Stock option compensation 1.2 1.3 0.5 Differences related to divested facilities (0.7) 0.1 6.0 Tax return reconciling differences — 1.1 1.7 Change in effective tax rate (0.8) 0.3 0.5 Tax Receivable Agreement liability 0.9 1.6 0.9 Goodwill impairment 4.3 0.5 8.9 Litigation settlement (3.7) — 8.6 Other 1.0 (0.9) 0.1 Total income tax (benefit) expense $ (20.1) $ 9.5 $ 26.4 The components of temporary differences and the approximate tax effects that give rise to the Company’s net deferred tax asset are as follows (in millions): December 31, 2020 2019 Deferred tax assets: Medical malpractice liability $ 4.0 $ 3.5 Accrued vacation and incentive compensation 3.2 2.3 Net operating loss carryforwards 164.7 143.0 Allowance for bad debts 2.5 2.2 Capital loss carryforwards 1.7 2.0 Amortization of intangible assets 2.2 0.3 Deferred financing costs 7.9 9.5 Section 163(j) interest 69.8 54.7 Interest rate swap liability 15.8 12.9 TRA liability 1.0 1.2 Right of use 50.6 52.1 Affiliate indebtedness receivable — 6.8 Other deferred assets 16.4 9.0 Total gross deferred tax assets 339.8 299.5 Less: Valuation allowance (91.1) (77.9) Total deferred tax assets 248.7 221.6 Deferred tax liabilities: Depreciation on property and equipment (1.8) (2.8) Basis differences of partnerships and joint ventures (73.6) (67.5) Right of use (47.5) (51.5) Other deferred liabilities (1.0) (1.1) Total deferred tax liabilities (123.9) (122.9) Net deferred tax assets $ 124.8 $ 98.7 The Company had federal NOL carryforwards of $615.7 million as of December 31, 2020, of which $516.2 million expire between 2026 and 2037. The remaining federal NOL carryforwards, which were generated subsequent to 2017, do not expire. The Company had state NOL carryforwards of $678.9 million as of December 31, 2020, which expire between 2021 and 2040. The Company had capital loss carryforwards of $6.2 million as of December 31, 2020, which expire between 2021 and 2023. The Company had federal and state credit carryforwards of $0.7 million as of December 31, 2020. The federal credits do not expire, and the state credits expire between 2021 and 2031. The Company had IRC Section 163(j) interest limitation carryforwards of $278.4 million as of December 31, 2020, which do not expire. The Company has recorded a valuation allowance against deferred tax assets at December 31, 2020 and 2019 totaling $91.1 million and $77.9 million, respectively, which represents an increase of $13.2 million. The valuation allowance continues to be provided for certain deferred tax assets for which the Company believes it is more likely than not that the tax benefits will not be realized, which are primarily Section 163(j) interest carryforwards, certain state NOLs and capital loss carryforwards. The Company has evaluated the realizability of its deferred tax assets based on sources of positive and negative evidence, and determined that it is more likely than not that the NOL carryforwards will be realized. The determination was made based upon projections of future book and taxable income. If the Company's expectations for future operating results on a consolidated basis or at the state jurisdiction level vary from actual results due to changes in health care regulations, general economic conditions, or other factors, the Company may need to adjust the valuation allowance, for all or a portion of its deferred tax assets. The Company's income tax expense in future periods will be reduced or increased to the extent of offsetting decreases or increases, respectively, in its valuation allowance in the period when the change in circumstances occurs. These changes could have a significant impact on the Company's future earnings. Included in the increase in the valuation allowance for the year ended December 31, 2020 was an increase of approximately $2.8 million that was recorded to additional-paid-in-capital as the result of the tax effect of the interest rate swap liability. Approximately $16.8 million of the valuation allowance as of December 31, 2020 is recorded against deferred tax assets that, if subsequently recognized, will be credited directly to contributed capital. A reconciliation of the beginning and ending liability for gross unrecognized tax benefits for the years ended December 31, 2020 and 2019 is as follows (in millions): December 31, 2020 2019 Unrecognized tax benefits at beginning of year $ 0.1 $ 0.1 Reductions for tax positions of prior year — — Unrecognized tax benefits at end of year $ 0.1 $ 0.1 The Company recognizes interest and penalties related to uncertain tax positions in its provision for income taxes in the consolidated statements of operations. For both years ended December 31, 2020 and 2019, the Company had approximately $0.1 million each of accrued interest and penalties related to uncertain tax positions. The total amount of accrued liabilities related to uncertain tax positions that would affect the Company's effective tax rate, if recognized, is $0.1 million as of both December 31, 2020 and 2019. The reserves are included in long-term taxes payable in the consolidated balance sheet as of December 31, 2020. |
Equity-Based Compensation
Equity-Based Compensation | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Equity-Based Compensation | Equity-Based Compensation Transactions in which the Company receives employee and non-employee services in exchange for the Company’s equity instruments or liabilities that are based on the fair value of the Company’s equity securities or may be settled by the issuance of these securities are accounted for using a fair value method. The Company’s policy is to recognize compensation expense using the straight line method over the relevant vesting period for units that vest based on time. The Surgery Partners, Inc. 2015 Omnibus Incentive Plan, as amended and restated effective January 1, 2020 ("2015 Omnibus Incentive Plan") from which all equity-based awards will be granted. Under this plan, the Company can grant stock options, stock appreciation rights, restricted stock, unrestricted stock, stock units, performance awards, cash awards and other awards convertible into or otherwise based on shares of its common stock. As of December 31, 2020, 8,315,700 shares were authorized to be granted under the 2015 Omnibus Incentive Plan and 5,285,421 were available for future equity grants. Restricted and Performance Share-Based Awards During the years ended December 31, 2020 and 2019, the Company granted 1,077,367 and 556,450 restricted stock awards ("RSAs") to certain officers, employees and non-employee directors in accordance with the 2015 Omnibus Incentive Plan, respectively. Vesting and payment of these RSAs are generally subject to continuing service of the employee or non-employee director over the ratable vesting periods beginning one year from the date of grant to three During the years ended December 31, 2020 and 2019, the Company granted 854,367 and 389,972 performance-based restricted stock units ("PSUs") subject to the achievement of a combination of performance conditions, respectively. In addition to the achievement of the performance conditions, these PSUs are generally subject to the continuing service of the employee over the ratable vesting period from the earned date continuing for two years. For these PSUs, the number of shares payable at the end of the performance periods ranges from 0% to 150% of the targeted units based on the Company’s actual performance and/or market conditions results as compared to the targets. These PSUs are not considered outstanding until earned. During the years ended December 31, 2020 and 2019, 309,692 and 245,301 of the PSUs previously granted were deemed to have been earned, respectively. Restricted and Performance Share-Based Activity A summary of non-vested restricted share-based activity for the years ended December 31, 2020, 2019, and 2018 follows: Unvested Shares Weighted Average Grant Date Fair Value Outstanding at December 31, 2017 574,456 $ 15.95 Granted/Earned 519,605 16.10 Forfeited/Cancelled (180,719) 15.09 Vested (210,318) 16.31 Outstanding at December 31, 2018 703,024 $ 16.18 Granted/Earned 801,751 12.70 Forfeited/Cancelled (272,706) 12.97 Vested (456,183) 16.20 Outstanding at December 31, 2019 775,886 $ 13.78 Granted/Earned 1,387,059 6.87 Forfeited/Cancelled (162,635) 13.77 Vested (552,943) 12.78 Outstanding at December 31, 2020 1,447,367 $ 9.75 Stock Options and Stock Appreciation Rights The Company granted 2,256,500 and 700,000 stock options during the years ended December 31, 2019 and 2018, respectively. No stock options were granted during the year ended December 31, 2020. Options to purchase shares are granted with an exercise price equal to the fair market value of the Company’s common stock on the day of grant, based on the closing price of the Company’s common stock on the trading date immediately prior to the grant date. The stock options granted during the year ended December 31, 2019 are subject to the following performance and vesting criteria: (i) one-third (33.3%) of the award will vest in three equal annual installments on each of the first three anniversaries of December 31, 2019, (ii) one-third (33.3%) of the award will vest based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $25.00 over a period of thirty (30) consecutive trading days, and (iii) one-third (33.3%) of the award will vest based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $35.00 over a period of thirty (30) consecutive trading days, in each case, generally subject to continued employment on each vesting date. Forfeitures are recognized as incurred. The stock options granted during the year ended December 31, 2018 are subject to the following performance and vesting criteria: (i) fifty percent (50%) of the stock option awards will vest in five equal annual installments on each of the first five anniversaries of the date of grant, (ii) twenty-five percent (25%) of the award will vest based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $25.00 over a period of sixty (60) consecutive trading days, and (iii) twenty-five percent (25%) of the award will vest based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $35.00 over a period of sixty (60) consecutive trading days, in each case, generally subject to continued employment on each vesting date. Forfeitures are recognized as incurred. On December 16, 2018, the Company cancelled 200,000 stock options and replaced them with 200,000 stock-settled stock appreciation right awards (the "SAR Awards"). These were the only SAR Awards granted as of December 31, 2020. The SAR Awards had a base price equal to the exercise price of the cancelled stock options. Fifty percent (50%) of the SAR Awards will vest in five equal annual installments on each of the first five anniversaries of the date of grant, generally subject to continued employment on each vesting date. Twenty-five percent (25%) of the award will vest based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $25.00 over a period of sixty (60) consecutive trading days, and twenty-five percent (25%) of the award will vest based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $35.00 over a period of sixty (60) consecutive trading days, in each case, generally subject to continued employment on each vesting date. Forfeitures are recognized as incurred. Option/SAR Valuation In applying the Monte Carlo simulation model to value both the stock options and SAR Awards, the Company used the following assumptions: ▪ Risk-free interest rate . The risk-free interest rate is used as a component of the fair value of stock options to take into account the time value of money. For the risk-free interest rate, the Company uses the implied yield on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life, in years, of the options granted. ▪ Expected volatility . Volatility, for the purpose of share-based compensation, is a measurement of the amount that a share price has fluctuated. Expected volatility involves reviewing historical volatility and determining what, if any, change the share price will have in the future. The Company used historical stock price information of certain peer group companies for a period of time equal to the expected option life period to determine estimated volatility. ▪ Expected life, in years . A clear distinction is made between the expected life of an option and the contractual term of the option. The expected life of an option is considered the amount of time, in years, that an option is expected to be outstanding before it is exercised. Whereas, the contractual term of the stock option is the term an option is valid before it expires. ▪ Expected dividend yield . Since issuing dividends will affect the fair value of a stock option, GAAP requires companies to estimate future dividend yields or payments. The Company has not historically issued dividends and does not intend to issue dividends in the future. As a result, the Company does not apply a dividend yield component to its valuation. The following table sets forth the assumptions used by the Company to estimate the fair value of stock options and SAR Awards granted during the years ended December 31, 2019 and 2018. No stock options or SAR Awards were granted during the year ended December 31, 2020. 2019 2018 Expected volatility 60 % 60% - 65% Risk-free interest rate 2.30% - 2.40% 2.50% - 2.90% Expected dividends — — Average expected term (years) 4 10 Fair value of stock options granted $4.83 - $6.41 $8.48 - $9.44 The estimated fair value of options is amortized to expense on a straight-line basis over the options’ vesting period. Stock Option and Stock Appreciation Rights Activity A summary of stock option and SAR Award activity for the years ended December 31, 2020, 2019, and 2018 follows: Options/SARs Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Outstanding at December 31, 2017 12,687 $ 20.10 1.2 Granted 700,000 12.90 10.0 Exercised — Forfeited/Cancelled (200,000) 12.90 10.0 Outstanding at December 31, 2018 512,687 $ 13.03 9.8 Granted 2,256,500 13.00 9.2 Exercised — Forfeited/Cancelled — Outstanding at December 31, 2019 2,769,187 $ 13.02 9.0 Granted — Exercised (4,199) 20.24 5.8 Forfeited/Cancelled (4,473) 19.00 4.8 Outstanding at December 31, 2020 (1) 2,760,515 $ 12.88 8.0 (1) Of the outstanding stock options, 585,119 were exercisable as of December 31, 2020. Other information pertaining to equity-based compensation At December 31, 2020, unrecognized compensation cost related to unvested shares was approximately $20.2 million. Unrecognized compensation cost will be expensed annually based on the number of shares that vest during the year. The Company records equity-based compensation expense to recognize the fair value of the restricted shares that vest and stock options granted. The Company recorded equity-based compensation expense of $13.2 million, $10.2 million and $9.3 million for the years ended December 31, 2020, 2019, and 2018, respectively. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Surgery Partners 401(k) Plan The Surgery Partners 401(k) Plan is a defined contribution plan whereby certain employees who have completed at least one month of service, including at least one hour of service during that period of time, are eligible to participate. Employees may enroll in the plan immediately upon completion of the minimum service requirement. The Surgery Partners 401(k) Plan allows eligible employees to make contributions of varying percentages or flat dollar amounts of their annual compensation, up to the maximum allowable amounts by the Internal Revenue Service ("IRS"). Eligible employees may or may not receive a match by the Company of their contributions. Employer contributions vest incrementally over a period of five years. The Company's contributions were $7.2 million for the year ended December 31, 2020 and $7.6 million for each of the years ended December 31, 2019 and 2018. |
Other Current Liabilities
Other Current Liabilities | 12 Months Ended |
Dec. 31, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | Other Current Liabilities A summary of other current liabilities is as follows (in millions): December 31, 2020 2019 Right-of-use operating lease liabilities $ 39.2 $ 37.3 Accrued legal settlement (1) 32.2 35.1 Interest payable 24.5 21.8 Tax receivable agreement liability 21.2 16.9 Amounts due to patients and payors 20.9 16.5 Cost report liabilities 16.9 5.6 Accrued expenses and other 62.1 58.0 Total $ 217.0 $ 191.2 (1) See Note 14. "Commitments and Contingencies" for further discussion. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Professional, General and Workers' Compensation Liability Risks The Company is subject to claims and legal actions in the ordinary course of business, including claims relating to patient treatment, employment practices and personal injuries. The Company maintains professional, general and workers' compensation liability insurance in excess of self-insured retentions, through third party commercial insurance carriers. Although management believes the coverage is sufficient for the Company's operations, some claims may potentially exceed the scope of coverage in effect. Plaintiffs in these matters may request punitive or other damages that may not be covered by insurance. The Company is not aware of any such proceedings that are reasonably possible to have a material adverse effect on the Company's business, financial position, results of operations or liquidity. Total professional, general and workers' compensation claim liabilities as of December 31, 2020 and 2019 were $21.4 million and $19.4 million, respectively. Expected insurance recoveries of $10.5 million and $12.1 million as of December 31, 2020 and 2019, respectively, are included as a component of other current assets and other long-term assets in the consolidated balance sheets. Laws and Regulations Laws and regulations governing the Company's business, including those relating to the Medicare and Medicaid programs, are complex and subject to interpretation. These laws and regulations govern every aspect of how the Company's surgical facilities conduct their operations, from licensing requirements to how and whether the Company's facilities may receive payments pursuant to the Medicare and Medicaid programs. Compliance with such laws and regulations can be subject to future government agency review and interpretation as well as legislative changes to such laws. Noncompliance with such laws and regulations may subject the Company to significant regulatory sanctions including fines, penalties, and exclusion from the Medicare, Medicaid and other federal health care programs. From time to time, governmental regulatory agencies will conduct inquiries of the Company's practices, including, but not limited to, the Company's compliance with federal and state fraud and abuse laws, billing practices and relationships with physicians. Government Settlement On April 14, 2020, Logan Laboratories, LLC ("Logan Labs"), a toxicology laboratory based in Tampa, Florida, that provides urine testing services and Tampa Pain Relief Centers, Inc. ("Tampa Pain" and, together with Logan Labs, the "Companies"), a pain management medical practice based in Tampa, Florida, both indirect wholly-owned subsidiaries of the Company, entered into a settlement agreement (the "Settlement Agreement") with the United States of America, acting through the United States Department of Justice (“DOJ”) and on behalf of the Office of Inspector General of the Department of Health and Human Services ("OIG"), the Defense Health Agency, acting on behalf of the TRICARE Program, the Office of Personnel Management, as the administrator of the Federal Employees Health Benefits Program, the Office of Workers Compensation Programs of the United States Department of Labor, which administers federal workers compensation claims for federal employees, including the United States Postal Service, and the United States Department of Veterans Affairs (collectively, the "U.S. Parties") and certain other parties to resolve the pending DOJ investigation. Under the terms of the Settlement Agreement, the Companies still owe payment of $30.7 million plus accrued interest on April 1, 2021. The Company previously recorded a litigation-related charge of $46.0 million relating to an anticipated resolution of the DOJ investigation on the consolidated statements of operations for the year ended December 31, 2018. For the year ended December 31, 2020, the Company recorded an additional litigation-related charge of $1.2 million relating to the resolution of the Covered Conduct on the consolidated statement of operations. Acquired Facilities The Company, through its wholly-owned subsidiaries or controlled partnerships and limited liability companies, has acquired and will continue to acquire surgical facilities with prior operating histories. Such facilities may have unknown or contingent liabilities, including liabilities for failure to comply with health care laws and regulations, such as billing and reimbursement laws and regulations, the Stark Law, the Anti-Kickback Statute, the FCA, and similar fraud and abuse laws. Although the Company attempts to assure that no such liabilities exist, obtain indemnification from prospective sellers covering such matters and institute policies designed to conform centers to its standards following completion of acquisitions, there can be no assurance that the Company will not become liable for past activities that may later be asserted to be improper by private plaintiffs or government agencies. There can be no assurance that any such matter will be covered by indemnification or, if covered, that the liability sustained will not exceed contractual limits or the financial capacity of the indemnifying party. The Company cannot predict whether federal or state statutory or regulatory provisions will be enacted that would prohibit or otherwise regulate relationships which the Company has established or may establish with other health care providers or have materially adverse effects on its business or revenues arising from such future actions. Management believes, however, that it will be able to adjust the Company's operations so as to be in compliance with any statutory or regulatory provision as may be applicable. Potential Physician Investor Liability A majority of the physician investors in the partnerships and limited liability companies which operate the Company's surgical facilities carry general and professional liability insurance on a claims-made basis. Each partnership or limited liability company may, however, be liable for damages to persons or property arising from occurrences at the surgical facilities. Although the various physician investors and other surgeons generally are required to obtain general and professional liability insurance with tail coverage that extends beyond the period of any claims-made policies, such individuals may not be able to obtain coverage in amounts sufficient to cover all potential liability. Since most insurance policies contain exclusions, the physician investors will not be insured against all possible occurrences. In the event of an uninsured or underinsured loss, the value of an investment in the partnership interests or limited liability company membership units and the amount of distributions could be adversely affected. Tax Receivable Agreement On May 9, 2017, the Company entered into an agreement to amend that certain Income Tax Receivable Agreement, dated September 30, 2015 (as amended, the "TRA"), by and between the Company, and the other parties referred to therein, which amendment became effective on August 31, 2017. Pursuant to the amendment to the TRA, the Company agreed to make payments to H.I.G., the Company's former controlling shareholder, in its capacity as the stockholders representative pursuant to a fixed payment schedule. The amounts payable under the TRA are calculated as the product of (i) an annual base amount and (ii) the maximum corporate federal income tax rate for the applicable year plus three percent. The amounts payable under the TRA are related to the Company’s projected realized tax savings over the next five years and are not dependent on the Company’s actual tax savings over such period. The calculation of amounts payable pursuant to the TRA is thus dependent on the maximum corporate federal income tax rate. To the extent that the Company is unable to make payments under the TRA, such payments will be deferred and will accrue interest at a rate of LIBOR plus 500 basis points until paid. If the terms of credit agreements and other debt documents cause the Company to be unable to make payments under the TRA and such terms are not materially more restrictive than those existing as of September 30, 2015, such payments will be deferred and will accrue interest at a rate of LIBOR plus 300 basis points until paid. Assuming the Company's tax rate is 24%, calculated as the maximum corporate federal tax rate plus three percent, throughout the remaining term of the TRA, the Company estimates the total remaining amounts payable under the TRA was approximately $43.2 million and $60.1 million as of December 31, 2020 and 2019, respectively. The carrying value of the liability under the TRA, reflecting a discount, was $37.0 million and $48.7 million as of December 31, 2020 and 2019, respectively. The current portion of the liability was $21.2 million and $16.9 million as of December 31, 2020 and 2019, respectively, and is included as a component of other current liabilities in the |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company operates in three major lines of business that are also the Company's reportable operating segments - the operation of surgical facilities, the operation of ancillary services and the operation of optical services. The Surgical Facility Services segment consists of the operation of ASCs and surgical hospitals and includes anesthesia services. The Ancillary Services segment consists of multi-specialty physician practices and a diagnostic laboratory, which was closed during the third quarter of 2020. The Optical Services segment consists of an optical products group purchasing organization, which was sold on December 31, 2020, as discussed in Note 2. "Acquisitions and Disposals." "All other" primarily consists of the Company's corporate general and administrative functions. The following tables present financial information for each reportable segment (in millions): Year Ended December 31, 2020 2019 2018 Revenues: Surgical Facility Services $ 1,793.4 $ 1,748.2 $ 1,682.4 Ancillary Services 63.6 79.4 79.6 Optical Services 3.1 3.8 9.5 Total $ 1,860.1 $ 1,831.4 $ 1,771.5 Adjusted EBITDA: Surgical Facility Services $ 339.3 $ 328.9 $ 309.5 Ancillary Services (3.4) 2.6 3.0 Optical Services 1.4 1.4 2.5 All other (80.7) (74.3) (80.2) Total $ 256.6 $ 258.6 $ 234.8 Reconciliation of Adjusted EBITDA: (Loss) income before income taxes $ (18.8) $ 54.6 $ (69.2) Net income attributable to non-controlling interests (117.4) (119.9) (110.1) Depreciation and amortization 94.8 76.5 67.4 Interest expense, net 201.8 178.9 147.0 Equity-based compensation expense 13.2 10.2 9.3 Transaction, integration and acquisition costs (1) 38.2 36.1 34.0 Impairment charges 33.5 7.9 74.4 Loss (gain) on disposals and deconsolidations, net 5.7 (4.4) 31.8 Litigation settlement and other litigation costs (2) 6.4 4.6 46.0 Reserve adjustments (3) — — 2.7 Contingent acquisition compensation expense — — 1.5 Gain on escrow release (4) (0.8) — — Loss on debt extinguishment — 11.7 — Tax receivable agreement expense — 2.4 — Adjusted EBITDA $ 256.6 $ 258.6 $ 234.8 (1) For the year ended December 31, 2020, this amount includes transaction and integration costs of $23.2 million, of which $6.6 million were acquisition related costs, and includes start-up costs related to a de novo surgical hospital of $15.0 million. For the year ended December 31, 2019, this amount includes transaction and integration costs of $19.0 million, and includes other acquisition costs and start-up costs related to a de novo surgical hospital of $17.1 million. For the year ended December 31, 2018, this amount includes transaction and integration costs of $31.7 million, and includes other acquisition costs of $2.3 million. (2) This amount includes litigation settlement costs of $1.2 million, $0.2 million and $46.0 million for the years ended December 31, 2020, 2019 and 2018, respectively. This amount further includes other litigation costs of $5.2 million and $4.4 million for the years ended December 31, 2020 and 2019, respectively, with no comparable costs in 2018. (3) This amount represents adjustments to revenue in order to apply consistent policies to businesses acquired by Surgery Partners in prior periods. (4) Included in other income in the consolidated statement of operations for the year ended December 31, 2020, with no comparable gain in 2019 and 2018. December 31, 2020 2019 Assets: Surgical Facility Services $ 4,962.4 $ 4,580.4 Ancillary Services 35.0 69.6 Optical Services — 17.7 All other 415.8 351.2 Total assets $ 5,413.2 $ 5,018.9 Year Ended December 31, 2020 2019 2018 Cash purchases of property and equipment: Surgical Facility Services $ 38.7 $ 65.9 $ 34.2 Ancillary Services 0.4 1.1 0.4 All other 3.8 6.6 5.2 Total cash purchases of property and equipment $ 42.9 $ 73.6 $ 39.8 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On January 27, 2021, the Company entered into an underwriting agreement relating to a public offering of 7,500,000 shares (the “Firm Shares”) of the Company’s common stock, $0.01 par value per share, at a price to the public of $30.25 per share. In addition, the Company granted the underwriters an option to purchase up to an additional 1,125,000 shares of common stock at the same price per share as the Firm Shares. On February 1, 2021, the Company completed the public offering pursuant to which the Company sold 8,625,000 shares of common stock, resulting in net proceeds of $249.2 million, net of underwriting discounts and commissions. On January 27, 2021, the Company entered into an amendment to the credit agreement governing the Revolver, dated as of January 27, 2021 (the “Amendment”), which amended and supplemented the credit agreement, dated as of August 31, 2017, to provide for an extension of the maturity date of the Revolver to February 1, 2026 and an increase in the outstanding commitments under the Revolver in an amount equal to $50.0 million. The maturity extension and the additional commitments became operative on February 1, 2021, upon satisfaction by the Borrower of certain conditions precedent set forth in the Amendment, including the closing of the offering of the Firm Shares. |
Organization and Summary of A_2
Organization and Summary of Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes. Examples include, but are not limited to, estimates of accounts receivable allowances, professional and general liabilities and the estimate of deferred tax assets or liabilities. Actual results could differ from those estimates. |
Principles of Consolidation | The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, as well as interests in partnerships and limited liability companies controlled by the Company through its ownership of a majority voting interest or other rights granted to the Company by contract to manage and control the affiliate's business. All significant intercompany balances and transactions are eliminated in consolidation. |
Variable Interest Entities | Variable Interest Entities The consolidated financial statements include the accounts of variable interest entities ("VIE") in which the Company is the primary beneficiary under the provisions of Accounting Standards Codification 810, Consolidation . The Company has the power to direct the activities that most significantly impact a variable interest entity's economic performance. Additionally, the Company would absorb the majority of the expected losses from any of these entities should such expected losses occur. At December 31, 2020, the variable interest entities include four surgical facilities and three physician practices. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants to sell the asset or transfer the liability. The Company uses fair value measurements based on inputs classified into the following hierarchy: • Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These may include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. • Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, depending on the nature of the item being valued. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, restricted invested assets and accounts payable approximate their fair values under Level 3 calculations. |
Revenues | Revenues The Company's revenues generally relate to contracts with patients in which the performance obligations are to provide health care services. The Company recognizes revenues in the period in which our obligations to provide health care services are satisfied and reports the amount that reflects the consideration the Company expects to be entitled to receive. The contractual relationships with patients, in most cases, also involve a third-party payor (e.g., Medicare, Medicaid and private insurance organizations, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by or negotiated with the third-party payors. The payment arrangements with third-party payors for the services provided to the related patients typically specify payments at amounts less than the Company's standard charges. The Company continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals. Patient service revenues. This revenue is related to charging facility fees in exchange for providing patient care. The fee charged for health care procedures performed in surgical facilities varies depending on the type of service provided, but usually includes all charges for usage of an operating room, a recovery room, special equipment, medical supplies, nursing staff and medications. The fee does not normally include professional fees charged by the patient’s surgeon, anesthesiologist or other attending physician, which are billed directly by such physicians to the patient or third-party payor. However, in several surgical facilities, the Company charges for anesthesia services. Ancillary service revenues include fees for patient visits to the Company's physician practices, pharmacy services and diagnostic tests ordered by physicians. Patient service revenues are recognized as performance obligations are satisfied. Performance obligations are based on the nature of services provided. Typically, the Company recognizes revenue at a point in time in which services are rendered and the Company has no obligation to provide further patient services. As the Company primarily performs outpatient procedures, performance obligations are generally satisfied same day and revenue is recognized on the date of service. The Company determines the transaction price based on gross charges for services provided, net of estimated contractual adjustments, discounts from third-party payors. The Company estimates its contractual adjustments and discounts based on contractual agreements, its discount policies and historical experience. Changes in estimated contractual adjustments and discounts are recorded in the period of change. Other service revenues. Optical service revenues consist of handling charges billed to the members of the Company's optical products purchasing organization. The Company's optical products purchasing organization negotiates volume buying discounts with optical products manufacturers. The buying discounts and any handling charges billed to the members of the buying group represent the revenue recognized for financial reporting purposes. The Company satisfies the performance obligation and recognizes revenue when the orders are shipped to members. The Company bases its estimates for sales returns and discounts on historical experience and has not experienced significant fluctuations between estimated and actual return activity and discounts given. The Company sold its optical products purchasing organization on December 31, 2020. Other revenues include management and administrative service fees derived from the non-consolidated facilities that the Company accounts for under the equity method, management of surgical facilities in which it does not own an interest, and management services provided to physician practices for which the Company is not required to provide capital or additional assets. These agreements typically require the Company to provide recurring management services over a multi-year period which are billed and collected on a monthly basis. The fees derived from these management arrangements are based on a predetermined percentage of the revenues of each facility or practice and are recognized in the period in which management services are rendered and billed. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company maintains its cash and cash equivalent balances at high credit quality financial institutions. Cash, cash equivalents and restricted cash reported within the consolidated statement of cash flows includes $0.3 million of restricted investments, which are reflected in other long-term assets in the consolidated balance sheet at both December 31, 2020 and 2019. These restricted investments represent restricted cash held in accordance with the provisions of a long-term operating lease agreement held as security for performance under the Company's covenants and obligations within the agreement through January 2024. |
Accounts Receivable | Accounts Receivable Accounts receivable from third-party payors are recorded net of estimated implicit price concessions, which are estimated based on the historical trend of the Company's surgical hospitals’ cash collections and contractual write-offs, and for the Company's surgical facilities in general, established fee schedules, relationships with payors and procedure statistics. While changes in estimated reimbursement from third-party payors remain a possibility, the Company expects that any such changes would be minimal and, therefore, would not have a material effect on its financial condition or results of operations. Accounts receivable consists of receivables from federal and state agencies (under the Medicare and Medicaid programs), private insurance organizations, employers and patients. Management recognizes that revenues and receivables from government agencies are significant to the Company's operations, but it does not believe that there is significant credit risk associated with these government agencies. Concentration of credit risk with respect to other payors is limited because of the large number of such payors. The Company recognizes that final reimbursement of accounts receivable is subject to final approval by each third-party payor. However, because the Company has contracts with its third-party payors and also verifies insurance coverage of the patient before medical services are rendered, the amounts that are pending approval from third-party payors are not considered significant. Amounts are classified outside of self-pay if the Company has an agreement with the third-party payor or has verified a patient’s coverage prior to services rendered. The Company's policy is to collect co-payments and deductibles prior to providing medical services. Patient services of the Company are primarily non-emergency, which allows the surgical facilities to control the procedures for which third-party reimbursement is sought and obtained. The Company does not require collateral from self-pay patients. The Company's collection policies and procedures are based on the type of payor, size of claim and estimated collection percentage for each patient account. The Company analyzes accounts receivable at each of its surgical facilities to ensure the proper collection and aged category. Collection efforts include direct contact with third-party payors or patients, written correspondence and the use of legal or collection agency assistance, as required. |
Impairment of Long-Lived Assets, Goodwill and Intangible Assets | Impairment of Long-Lived Assets, Goodwill and Intangible Assets The Company evaluates the carrying value of long-lived assets when impairment indicators are present or when circumstances indicate that impairment may exist. The Company performs an impairment test by preparing an expected undiscounted cash flow projection. If the projection indicates that the recorded amount of the long-lived asset is not expected to be recovered, the carrying value is reduced to estimated fair value. The cash flow projection and fair value represents management’s best estimate, using appropriate and customary assumptions, projections and methodologies, at the date of evaluation. For discussion on impairment for goodwill and indefinite-lived intangible assets, refer to Note 4. "Goodwill and Intangible Assets." |
Professional and General and Workers' Compensation Insurance | Professional and General and Workers' Compensation Insurance The Company maintains general liability and professional liability insurance in excess of self-insured retentions through third party commercial insurance carriers in amounts that management believes is sufficient for the Company's operations, although, potentially, some claims may exceed the scope of coverage in effect. The professional liability insurance coverage is on a claims-made basis and the general liability insurance is on an occurrence basis. The Company also maintains workers' compensation insurance, subject to a self-insured retention. |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. |
Investments in Unconsolidated Affiliates | Investments in Unconsolidated Affiliates Investments in unconsolidated affiliates in which the Company exerts significant influence but does not control or otherwise consolidate are accounted for using the equity method. Equity method investments are initially recorded at cost, unless the investments are a result of the Company losing control of a previously controlled entity, but still retaining a non-controlling interest. Transactions that result in the deconsolidation of a previously consolidated entity, are measured at fair value. The fair value measurement utilizes Level 3 inputs, |
Non-Controlling Interests | Non-Controlling Interests The physician limited partners and physician minority members of the entities that the Company controls are responsible for the supervision and delivery of medical services. The governance rights of limited partners and minority members are restricted to those that protect their financial interests. Under certain partnership and operating agreements governing these partnerships and limited liability companies, the Company could be removed as the sole general partner or managing member for certain events such as material breach of the partnership or operating agreement, gross negligence or bankruptcy. These protective rights do not preclude consolidation of the respective partnerships and limited liability companies. Ownership interests in consolidated subsidiaries held by parties other than the Company are identified and generally presented in the consolidated financial statements within the equity section but separate from the Company's equity. However, in instances in which certain redemption features that are not solely within the control of the Company are present, classification of non-controlling interests outside of permanent equity is required. Consolidated net income attributable to the Company and to the non-controlling interests are identified and presented on the consolidated statements of operations; changes in ownership interests in which the Company retains a controlling interest are accounted for as equity transactions assuming the Company continues to consolidate related entities. Certain transactions with non-controlling interests are classified within financing activities in the consolidated statements of cash flows. The consolidated financial statements of the Company include all assets, liabilities, revenues and expenses of surgical facilities in which the Company has sufficient ownership and rights to allow the Company to consolidate the surgical facilities. Similar to its investments in non-consolidated affiliates, the Company regularly engages in the purchase and sale of ownership interests with respect to its consolidated subsidiaries that do not result in a change of control. Non-Controlling Interests — Redeemable. Each partnership and limited liability company through which the Company owns and operates its surgical facilities is governed by a partnership or operating agreement, respectively. In certain circumstances, the applicable partnership or operating agreements for the Company's surgical facilities provide that the facilities will purchase all of the physician limited partners’ or physician minority members’, as applicable, ownership if certain adverse regulatory events occur, such as it becoming illegal for the physician(s) to own an interest in a surgical facility, refer patients to a surgical facility or receive cash distributions from a surgical facility. The non-controlling interests — redeemable are reported outside of stockholders' equity in the consolidated balance sheets. |
Inventories | Inventories Inventories, which consist primarily of medical and drug supplies, are stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-04 Reference Rate Reform (Topic 848) . ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future London Interbank Offered Rate ("LIBOR") indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses , which introduced a new model for recognizing credit losses on financial instruments based on an estimate of the current expected credit losses. The new current expected credit losses (“CECL”) model generally calls for the immediate recognition of all expected credit losses and applies to financial instruments and other assets, which is primarily applicable to accounts receivable for the Company. This ASU was effective for the Company on January 1, 2020. The adoption of this ASU did not have a material impact on its consolidated financial position and results of operations. In February 2016, the FASB issued ASU 2016-02, "Leases" (the "Lease Accounting Standard"). The Company adopted the Lease Accounting Standard effective January 1, 2019, using a modified retrospective transition approach. The most prominent of the changes resulting from this ASU is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases. The Company’s accounting for finance leases remained substantially unchanged from its prior accounting for capital leases. Upon adoption of the Lease Accounting Standard, the Company recorded $294.0 million of operating lease liabilities and right-of-use assets on January 1, 2019. The cumulative effect of the accounting change recognized upon adoption was $6.1 million reflected as an adjustment to retained deficit in our consolidated balance sheets. |
Acquisitions and Disposals | Acquisitions and Disposals The Company accounts for business combinations in accordance with the fundamental requirements of the acquisition method of accounting and under the premise that an acquirer can be identified for each business combination. The acquirer is the entity that obtains control of one or more businesses in the business combination and the acquisition date is the date the acquirer achieves control. The assets acquired, liabilities assumed and any non-controlling interests in the acquired business at the acquisition date are recognized at their fair values as of that date, and the direct costs incurred in connection with the business combination are recorded and expensed separately from the business combination. Any goodwill recognized is determined as the excess of the fair value of the consideration conveyed plus the fair value of any non-controlling interests in the acquisition over the fair value of the net assets acquired. Acquisitions in which the Company is able to exert significant influence but does not have control are accounted for using the equity method. Acquired assets and assumed liabilities typically include, but are not limited to, fixed assets, intangible assets and right-of-use leases. The valuations are based on appraisal reports, discounted cash flow analyses, actuarial analyses or other appropriate valuation techniques to determine the fair value of the assets acquired or liabilities assumed. Fair value attributable to non-controlling interests is based on a Level 3 computation using significant inputs that are not observable in the market. Key inputs used to determine the fair value include financial multiples used in the purchase of non-controlling interests, primarily from acquisitions of surgical facilities. Such multiples, based on earnings, are used as a benchmark for the discount to be applied for the lack of control or marketability. Fair value attributable to the property and equipment acquired is based on Level 3 computations using key inputs such as cost trend data and comparable asset sales. Fair value attributable to the intangible assets acquired is based on Level 3 computations using key inputs such as the Company's internally-prepared financial projections. Fair values assigned to acquired working capital are based on carrying amounts reported by the acquiree at the date of acquisition, which approximate their fair values. |
Property and Equipment | Property and EquipmentProperty and equipment are stated at cost or, if obtained through acquisition, at fair value determined on the date of acquisition. Depreciation is recognized using the straight-line method over the estimated useful lives of the assets, generally 20 to 40 years for buildings and building improvements, three five The Company also leases certain facilities and equipment under finance leases. Assets held under finance leases are stated at the present value of lease payments at the inception of the related lease. Such assets are amortized on a straight-line basis over the lesser of the lease term or the remaining useful life of the leased asset. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the fair value of the consideration provided in an acquisition over the fair value of net assets acquired and is not amortized. The Company has indefinite-lived intangible assets related to the certificates of need held in jurisdictions where certain of its surgical facilities are located, Medicare licenses and certain management rights agreements. The Company also has finite-lived intangible assets related to physician guarantee agreements, non-compete agreements, management rights agreements and customer relationships. Physician income guarantees are amortized into salaries and benefits costs in the consolidated statements of operations over the commitment period of the contract, generally three two three The Company tests its goodwill and indefinite-lived intangible assets for impairment at least annually, as of October 1, or more frequently if certain indicators arise. The Company tests for goodwill impairment at the reporting unit level, which is defined as one level below an operating segment. During 2020, the Company identified three reporting units, which include the following: 1) Surgical Facilities, 2) Ancillary Services, and 3) Alliance, which is a component of the Optical Services operating segment. A detailed evaluation of potential impairment indicators was performed, which specifically considered the volatility observed in the prices of the Company’s outstanding debt securities and common stock, as well as the decline in surgical case volumes following the emergence of the COVID-19 pandemic, all of which improved in the second half of 2020 as states began to re-open and allow for non-emergent procedures. The Company compares the carrying value of the net assets of the reporting unit to the estimated fair value of the reporting unit. To determine the fair value of the reporting units, the Company obtained valuations at the reporting unit level prepared by third-party valuation specialists which typically utilizes a combination of the income and market approaches. The discounted cash flow model is projected based on a year-by-year assessment that considers historical results, estimated market conditions, internal projections, and relevant publicly available statistics. Determining fair value requires the exercise of significant judgment, including assumptions about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The significant judgments are typically based upon Level 3 inputs, generally defined as unobservable inputs representing the Company's own assumptions. The cash flows employed in the discounted cash flow analysis are based on the Company's most recent budgets and business plans aligned with provided guidance and, when applicable, various growth rates are assumed for years beyond the current business plan period. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting units. The variables within the discount rate, many of which are outside of the Company's control, provide the best estimate of all assumptions applied within the discounted cash flow model. There can be no assurance that operations will achieve the future cash flows reflected in the projections. In determining the fair value under the market approaches, the analysis includes a control premium, which was based on observable market data and a review of selected |
Leases | LeasesThe Company determines if an arrangement is a lease at inception. Right-of-use assets represent the right to use the underlying assets for the lease term and the lease liabilities represent the obligation to make lease payments arising from the leases. Right-of-use assets and liabilities are recognized at commencement date based on the present value of future lease payments over the lease term, which includes only payments that are fixed and determinable at the time of commencement. When readily determinable, the Company uses the interest rate implicit in a lease to determine the present value of future lease payments. For leases where the implicit rate is not readily determinable, the Company's incremental borrowing rate is used. The Company calculates its incremental borrowing rate on a periodic basis using a third-party financial model that estimates the rate of interest the Company would have to pay to borrow an amount equal to the total lease payments on a collateralized basis over a term similar to the lease. The Company applies its incremental borrowing rate using a portfolio approach. The right-of-use asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's operating leases are primarily for real estate, including medical office buildings, and corporate and other administrative offices. The Company's finance leases are primarily for medical equipment and information technology and telecommunications assets. The Company's finance leases also include certain land, buildings and improvements as discussed in Note 3. "Property and Equipment." Real estate lease agreements typically have initial terms of ten years and may include one or more options to renew. Certain leases also include options to purchase the leased property. The useful life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The majority of the Company's medical equipment leases have a bargain purchase option that is reasonably certain of exercise, so these assets are depreciated over their useful life. The Company's lease agreements do not contain any material residual value guarantees, restrictions or covenants. Certain of the Company's lease agreements require the Company to pay common area maintenance, repairs, property taxes and insurance costs, which are variable amounts based on actual costs incurred during each applicable period. Certain lease agreements also include escalating rent payments that are not fixed at commencement but are based on an index that is determined in future periods over the lease term based on changes in the Consumer Price Index or other measure of cost inflation. These variable components of lease payments are expensed as incurred and are not included in the determination of the right-of-use asset or lease liability. Due to the COVID-19 pandemic, the Company received concessions for certain of its leases primarily consisting of deferral of rental payments. The Company has elected to account for these COVID-19 related concessions as though the enforceable rights and obligations for those concessions are explicit within the underlying contract. The Company accounts for the deferred rentals as a component of other current liabilities within the consolidated balance sheets. In a few instances the Company modified the terms of the lease in exchange for lease concessions. These modifications resulted in an increase to the Company's right-of-use operating lease assets and liabilities of $27.4 million during the year ended December 31, 2020. |
Earnings Per Share | Earnings Per ShareBasic and diluted earnings per share are calculated based on the weighted-average number of shares outstanding in each period and dilutive stock options, unvested shares and warrants, to the extent such securities exist and have a dilutive effect on earnings per share. The Company computes basic and diluted earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation method that determines earnings per share for common shares and participating securities according to their participation rights in dividends and undistributed earnings. |
Income Taxes | Income Taxes The Company uses the asset and liability method to account for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any change in tax rates that could impact deferred tax assets or liabilities are recognized in the same period the change occurs. If a net operating loss ("NOL") and/or interest limitation ("163(j)") carryforward exists, the Company makes a determination as to whether that NOL and/or 163(j) carryforward will be utilized in the future. A valuation allowance is established for certain net operating loss and interest limitation carryforwards when their recoverability is deemed to be uncertain. The carrying value of the net deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and related assumptions change in the future, the Company may be required to adjust its deferred tax valuation allowances. The Company, or one or more of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal income tax examinations for years prior to 2017 or state income tax examinations for years prior to 2016. The Company and certain of its subsidiaries file a consolidated federal income tax return. The partnerships, limited liability companies, and certain non-consolidated physician practice corporations also file separate income tax returns. The Company's allocable portion of each partnership's and limited liability company's income or loss is included in taxable income of the Company. The remaining income or loss of each partnership and limited liability company is allocated to the other owners. |
Equity-Based Compensation | Equity-Based CompensationTransactions in which the Company receives employee and non-employee services in exchange for the Company’s equity instruments or liabilities that are based on the fair value of the Company’s equity securities or may be settled by the issuance of these securities are accounted for using a fair value method. The Company’s policy is to recognize compensation expense using the straight line method over the relevant vesting period for units that vest based on time. |
Organization and Summary of A_3
Organization and Summary of Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | A summary of the carrying amounts and fair values of the Company's long-term debt follows (in millions): Carrying Amount Fair Value December 31, December 31, 2020 2019 2020 2019 Senior secured term loan $ 1,539.4 $ 1,434.1 $ 1,533.4 $ 1,434.1 6.750% senior unsecured notes due 2025 $ 370.0 $ 370.0 $ 376.0 $ 368.2 10.000% senior unsecured notes due 2027 $ 545.0 $ 430.0 $ 596.8 $ 471.4 |
Schedule of Revenues by Service Type | A summary of revenues by service type as a percentage of total revenues follows: Year Ended December 31, 2020 2019 2018 Patient service revenues: Surgical facilities revenues 95.3 % 94.1 % 93.6 % Ancillary services revenues 3.4 % 4.3 % 4.5 % 98.7 % 98.4 % 98.1 % Other service revenues: Optical services revenues 0.2 % 0.2 % 0.5 % Other 1.1 % 1.4 % 1.4 % 1.3 % 1.6 % 1.9 % Total revenues 100.0 % 100.0 % 100.0 % |
Schedule of Revenue Sources for Patient Service Revenues | The following table sets forth patient service revenues by type of payor and as a percentage of total patient service revenues for the Company's consolidated surgical facilities (dollars in millions): Year Ended December 31, 2020 2019 2018 Amount % Amount % Amount % Patient service revenues: Private insurance $ 989.9 53.9 % $ 970.5 53.8 % $ 948.9 54.6 % Government 708.5 38.6 % 701.9 38.9 % 653.3 37.6 % Self-pay 58.5 3.2 % 46.1 2.6 % 50.0 2.9 % Other (1) 79.2 4.3 % 84.6 4.7 % 84.8 4.9 % Total patient service revenues 1,836.1 100.0 % 1,803.1 100.0 % 1,737.0 100.0 % Other service revenues: Optical service revenues 3.0 3.8 9.5 Other revenues 21.0 24.5 25.0 Total revenues $ 1,860.1 $ 1,831.4 $ 1,771.5 (1) Other is comprised of anesthesia service agreements, auto liability, letters of protection and other payor types. |
Schedule of Rollforward of Non-Controlling Interests - Redeemable | A summary of activity related to the non-controlling interests—redeemable for the years ended December 31, 2020 and 2019 is as follows (in millions): December 31, 2020 2019 Balance at beginning of period $ 321.0 $ 326.6 Net income attributable to non-controlling interests—redeemable 31.7 39.1 Acquisition and disposal of shares of non-controlling interests, net—redeemable (9.4) (4.7) Distributions to non-controlling interest —redeemable holders (36.5) (40.0) Balance at end of period $ 306.8 $ 321.0 |
Acquisitions and Disposals (Tab
Acquisitions and Disposals (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Business Combinations And Disposals [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | Preliminary or final amounts recognized for each major class of assets acquired and liabilities assumed for acquisitions completed during the years ended December 31, 2020 and 2019, including post acquisition date adjustments, are as follows (in millions): 2020 2019 Consideration transferred (1) $ 120.1 $ 27.4 Fair value of non-controlling interests 57.3 8.3 Aggregate acquisition date fair value $ 177.4 $ 35.7 Net assets acquired: Current Assets $ 24.3 $ 5.4 Property and equipment 50.6 1.8 Intangible assets 3.6 — Goodwill 153.7 23.4 Right-of-use operating lease assets 15.4 28.8 Other long-term assets (2) 0.2 8.9 Current liabilities (16.4) (4.2) Long-term debt (40.0) (0.2) Right-of-use operating lease liabilities (14.0) (28.2) Aggregate acquisition date fair value $ 177.4 $ 35.7 (1) In connection with the clinic acquisition in 2019, the Company acquired the remaining non-controlling interests in one of its existing consolidated surgical facilities. As such, $6.3 million of the cash consideration for the clinic acquisition was classified as a financing activity and presented in payments related to ownership transactions with non-controlling interest holders in the Consolidated Statements of Cash Flows. (2) The assets acquired in 2019 includes the fair value of a non-controlling investment held by the acquired clinic in one of the Company's consolidated surgical facilities of $8.8 million. This investment asset was subsequently eliminated in consolidation. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | A summary of property and equipment follows (in millions): December 31, 2020 2019 Land $ 11.1 $ 11.0 Buildings and improvements 109.7 106.6 Furniture and equipment 20.7 23.1 Computer and software 80.8 59.8 Medical equipment 196.8 148.3 Right-of-use finance lease asset 298.4 259.3 Construction in progress 16.4 25.9 Property and equipment, at cost 733.9 634.0 Less: Accumulated depreciation (189.3) (110.7) Property and equipment, net $ 544.6 $ 523.3 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Activity Related to Goodwill | A summary of the changes in the carrying amount of goodwill follows (in millions): December 31, 2020 2019 Balance at beginning of period $ 3,402.4 $ 3,382.8 Acquisitions, including post acquisition adjustments 154.7 22.3 Disposals and deconsolidations (55.6) (0.2) Impairments (33.5) (2.5) Balance at end of period $ 3,468.0 $ 3,402.4 |
Summary of Components of Indefinite-Lived Intangible Assets | A summary of the components of intangible assets follows (in millions): December 31, 2020 December 31, 2019 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Finite-lived intangible assets: Management rights agreements $ 31.1 $ (10.1) $ 21.0 $ 31.1 $ (7.3) $ 23.8 Other 13.6 (6.5) 7.1 8.8 (4.5) 4.3 Total finite-lived intangible assets 44.7 (16.6) 28.1 39.9 (11.8) 28.1 Indefinite-lived intangible assets 18.8 — 18.8 19.2 — 19.2 Total intangible assets $ 63.5 $ (16.6) $ 46.9 $ 59.1 $ (11.8) $ 47.3 |
Summary of Components of Finite-Lived Intangible Assets | A summary of the components of intangible assets follows (in millions): December 31, 2020 December 31, 2019 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Finite-lived intangible assets: Management rights agreements $ 31.1 $ (10.1) $ 21.0 $ 31.1 $ (7.3) $ 23.8 Other 13.6 (6.5) 7.1 8.8 (4.5) 4.3 Total finite-lived intangible assets 44.7 (16.6) 28.1 39.9 (11.8) 28.1 Indefinite-lived intangible assets 18.8 — 18.8 19.2 — 19.2 Total intangible assets $ 63.5 $ (16.6) $ 46.9 $ 59.1 $ (11.8) $ 47.3 |
Summary of Scheduled Amortization | Total estimated amortization expense for the next five years and thereafter related to intangible assets follows (in millions): 2021 $ 5.7 2022 3.8 2023 2.9 2024 2.5 2025 1.9 Thereafter 11.3 Total $ 28.1 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | A summary of long-term debt follows (in millions): December 31, 2020 2019 Senior secured term loan (1) $ 1,539.4 $ 1,434.1 Senior secured revolving credit facility — — 6.750% senior unsecured notes due 2025 370.0 370.0 10.000% senior unsecured notes due 2027 545.0 430.0 Notes payable and other secured loans 137.5 104.0 Finance lease obligations 281.2 253.4 Less: unamortized debt issuance costs (16.3) (10.8) Total debt 2,856.8 2,580.7 Less: Current maturities 64.4 56.0 Total long-term debt $ 2,792.4 $ 2,524.7 (1) Includes unamortized fair value discount of $3.7 million and $4.6 million as of December 31, 2020 and 2019, respectively. |
Debt Redemption Percentages | The Company may redeem the 2025 Unsecured Notes, in whole or in part, at any time on or after July 1, 2020, at the redemption prices set forth below (expressed as a percentage of the principal amount to be redeemed), plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption: July 1, 2020 to June 30, 2021 103.375 % July 1, 2021 to June 30, 2022 101.688 % July 1, 2022 and thereafter 100.000 % April 15, 2022 to April 14, 2023 105.000 % April 15, 2023 to April 14, 2024 102.500 % April 15, 2024 and thereafter 100.000 % |
Summary of Scheduled Maturities of Debt | A summary of maturities for the Company's long-term debt, excluding unamortized debt issuance costs and the unamortized fair value discount discussed above, for the next five years and thereafter as of December 31, 2020 follows (in millions): 2021 $ 64.4 2022 57.1 2023 53.4 2024 1,519.7 2025 396.7 Thereafter 785.5 Total $ 2,876.8 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Schedule of Components of Right-of-use Assets and Liabilities Related to Leases | The following table presents the components of the Company's right-of-use assets and liabilities related to leases and their classification in the consolidated balance sheets at December 31, 2020 and 2019 (in millions): Classification in Consolidated Balance Sheets December 31, 2020 December 31, 2019 Assets: Operating lease assets Right-of-use operating lease assets $ 310.1 $ 297.7 Finance lease assets Property and equipment, net of accumulated depreciation 258.1 237.1 Total leased assets $ 568.2 $ 534.8 Liabilities: Operating lease liabilities: Current Other current liabilities $ 39.2 $ 37.3 Long-term Right-of-use operating lease liabilities 300.9 283.1 Total operating lease liabilities 340.1 320.4 Finance lease liabilities: Current Current maturities of long-term debt 18.9 15.8 Long-term Long-term debt, less current maturities 262.3 237.6 Total finance lease liabilities 281.2 253.4 Total lease liabilities $ 621.3 $ 573.8 The following table presents the weighted-average lease terms and discount rates at December 31, 2020 and 2019 (in millions): December 31, 2020 December 31, 2019 Operating Leases Finance Leases Operating Leases Finance Leases Weighted-average remaining lease term 8.9 years 15.9 years 8.9 years 16.6 years Weight average discount rate 10.3 % 9.2 % 10.4 % 8.7 % |
Schedule of Lease Expense and Cash Flow Information | The following table presents the components of the Company's lease expense and their classification in the consolidated statement of operations for the years ended December 31, 2020 and 2019 (in millions): December 31, 2020 December 31, 2019 Operating lease costs $ 74.1 $ 70.4 Finance lease costs: Amortization of leased assets 26.2 22.2 Interest on lease liabilities 22.2 13.0 Total finance lease costs 48.4 35.2 Variable and short-term lease costs 16.9 13.2 Total lease costs $ 139.4 $ 118.8 The following table presents supplemental cash flow information for the years ended December 31, 2020 and 2019 (dollars in millions): December 31, 2020 December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 68.1 $ 67.3 Operating cash outflows from finance leases $ 20.7 $ 13.0 Financing cash outflows from finance leases $ 18.3 $ 13.4 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 62.1 $ 56.2 Finance leases $ 47.0 $ 133.3 |
Maturity of Operating Leases | Future maturities of lease liabilities at December 31, 2020 are presented in the following table (in millions): Operating Leases Finance Leases 2021 $ 70.7 $ 43.2 2022 66.1 40.7 2023 62.1 37.0 2024 58.4 32.1 2025 50.0 30.7 Thereafter 219.1 381.9 Total lease payments 526.4 565.6 Less: imputed interest (186.3) (284.4) Total lease obligations $ 340.1 $ 281.2 |
Maturity of Finance Leases | Future maturities of lease liabilities at December 31, 2020 are presented in the following table (in millions): Operating Leases Finance Leases 2021 $ 70.7 $ 43.2 2022 66.1 40.7 2023 62.1 37.0 2024 58.4 32.1 2025 50.0 30.7 Thereafter 219.1 381.9 Total lease payments 526.4 565.6 Less: imputed interest (186.3) (284.4) Total lease obligations $ 340.1 $ 281.2 |
Redeemable Preferred Stock (Tab
Redeemable Preferred Stock (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Temporary Equity Disclosure [Abstract] | |
Activity Related to Redeemable Preferred Stock | The following table presents a summary of activity related to the redeemable preferred stock for the years ended December 31, 2020 and 2019 (in millions): December 31, 2020 2019 Balance at beginning of period $ 395.0 $ 359.3 Dividends accrued (there were no cash dividends declared) 39.5 35.7 Balance at end of period $ 434.5 $ 395.0 |
Derivatives and Hedging Activ_2
Derivatives and Hedging Activities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Effect of Interest Rate Swaps | The following table presents the pre-tax effect of the interest rate swaps on the Company's accumulated OCI and statement of operations (in millions): Year Ended December 31, 2020 2019 2018 Derivatives in cash flow hedging relationships: Loss recognized in OCI (effective portion) $ 30.5 $ 35.8 $ 23.1 Loss reclassified from accumulated OCI to interest expense (effective portion) 20.2 7.5 0.6 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Reconciliation of Numerator and Denominator of Basic and Diluted EPS | A reconciliation of the numerator and denominator of basic and diluted earnings per share follows (dollars in millions, except per share amounts; shares in thousands): Year Ended December 31, 2020 2019 2018 Numerator: Net loss attributable to Surgery Partners, Inc. $ (116.1) $ (74.8) $ (205.7) Less: Amounts allocated to participating securities (1) (39.5) (35.7) (32.4) Net loss attributable to common stockholders $ (155.6) $ (110.5) $ (238.1) Denominator: Weighted average shares outstanding- basic and diluted (2) 48,776 48,280 48,028 Basic and diluted loss per share (2) $ (3.19) $ (2.29) $ (4.96) Dilutive securities outstanding not included in the computation of diluted loss per share as their effect is antidilutive: Stock options 712 — 83 Restricted shares 981 67 198 (1) Includes dividends accrued during all periods for the Series A Preferred Stock. The Series A Preferred Stock does not participate in undistributed losses. (2) The impact of potentially dilutive securities for all periods were not considered because the effect would be anti-dilutive in each of those periods. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax (Benefit) Expense | Income tax (benefit) expense is comprised of the following (in millions): Year Ended December 31, 2020 2019 2018 Current: Federal $ (0.2) $ (0.2) $ (0.3) State 1.9 1.7 1.5 Deferred: Federal (22.2) 3.2 16.5 State 0.4 4.8 8.7 Total income tax (benefit) expense $ (20.1) $ 9.5 $ 26.4 |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the provision for income taxes as reported in the consolidated statements of operations and the amount of income tax (benefit) expense computed by multiplying consolidated income (loss) in each year by the U.S. federal statutory rate of 21% (2020, 2019 and 2018) follows (in millions): Year Ended December 31, 2020 2019 2018 Tax (benefit) expense at U.S.federal statutory rate $ (4.0) $ 11.5 $ (14.5) State income tax, net of U.S. federal tax benefit 2.4 5.7 10.0 Change in valuation allowance 4.1 13.6 26.9 Net income attributable to non-controlling interests (24.8) (25.2) (23.1) Changes in measurement of uncertain tax positions — (0.1) (0.1) Stock option compensation 1.2 1.3 0.5 Differences related to divested facilities (0.7) 0.1 6.0 Tax return reconciling differences — 1.1 1.7 Change in effective tax rate (0.8) 0.3 0.5 Tax Receivable Agreement liability 0.9 1.6 0.9 Goodwill impairment 4.3 0.5 8.9 Litigation settlement (3.7) — 8.6 Other 1.0 (0.9) 0.1 Total income tax (benefit) expense $ (20.1) $ 9.5 $ 26.4 |
Schedule of Deferred Tax Assets and Liabilities | The components of temporary differences and the approximate tax effects that give rise to the Company’s net deferred tax asset are as follows (in millions): December 31, 2020 2019 Deferred tax assets: Medical malpractice liability $ 4.0 $ 3.5 Accrued vacation and incentive compensation 3.2 2.3 Net operating loss carryforwards 164.7 143.0 Allowance for bad debts 2.5 2.2 Capital loss carryforwards 1.7 2.0 Amortization of intangible assets 2.2 0.3 Deferred financing costs 7.9 9.5 Section 163(j) interest 69.8 54.7 Interest rate swap liability 15.8 12.9 TRA liability 1.0 1.2 Right of use 50.6 52.1 Affiliate indebtedness receivable — 6.8 Other deferred assets 16.4 9.0 Total gross deferred tax assets 339.8 299.5 Less: Valuation allowance (91.1) (77.9) Total deferred tax assets 248.7 221.6 Deferred tax liabilities: Depreciation on property and equipment (1.8) (2.8) Basis differences of partnerships and joint ventures (73.6) (67.5) Right of use (47.5) (51.5) Other deferred liabilities (1.0) (1.1) Total deferred tax liabilities (123.9) (122.9) Net deferred tax assets $ 124.8 $ 98.7 |
Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the beginning and ending liability for gross unrecognized tax benefits for the years ended December 31, 2020 and 2019 is as follows (in millions): December 31, 2020 2019 Unrecognized tax benefits at beginning of year $ 0.1 $ 0.1 Reductions for tax positions of prior year — — Unrecognized tax benefits at end of year $ 0.1 $ 0.1 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Restricted and Performance Share-Based Activity | A summary of non-vested restricted share-based activity for the years ended December 31, 2020, 2019, and 2018 follows: Unvested Shares Weighted Average Grant Date Fair Value Outstanding at December 31, 2017 574,456 $ 15.95 Granted/Earned 519,605 16.10 Forfeited/Cancelled (180,719) 15.09 Vested (210,318) 16.31 Outstanding at December 31, 2018 703,024 $ 16.18 Granted/Earned 801,751 12.70 Forfeited/Cancelled (272,706) 12.97 Vested (456,183) 16.20 Outstanding at December 31, 2019 775,886 $ 13.78 Granted/Earned 1,387,059 6.87 Forfeited/Cancelled (162,635) 13.77 Vested (552,943) 12.78 Outstanding at December 31, 2020 1,447,367 $ 9.75 |
Schedule of Stock Options, Valuation Assumptions | The following table sets forth the assumptions used by the Company to estimate the fair value of stock options and SAR Awards granted during the years ended December 31, 2019 and 2018. No stock options or SAR Awards were granted during the year ended December 31, 2020. 2019 2018 Expected volatility 60 % 60% - 65% Risk-free interest rate 2.30% - 2.40% 2.50% - 2.90% Expected dividends — — Average expected term (years) 4 10 Fair value of stock options granted $4.83 - $6.41 $8.48 - $9.44 |
Schedule of Stock Options Activity | A summary of stock option and SAR Award activity for the years ended December 31, 2020, 2019, and 2018 follows: Options/SARs Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Outstanding at December 31, 2017 12,687 $ 20.10 1.2 Granted 700,000 12.90 10.0 Exercised — Forfeited/Cancelled (200,000) 12.90 10.0 Outstanding at December 31, 2018 512,687 $ 13.03 9.8 Granted 2,256,500 13.00 9.2 Exercised — Forfeited/Cancelled — Outstanding at December 31, 2019 2,769,187 $ 13.02 9.0 Granted — Exercised (4,199) 20.24 5.8 Forfeited/Cancelled (4,473) 19.00 4.8 Outstanding at December 31, 2020 (1) 2,760,515 $ 12.88 8.0 |
Other Current Liabilities - (Ta
Other Current Liabilities - (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Other Current Liabilities | A summary of other current liabilities is as follows (in millions): December 31, 2020 2019 Right-of-use operating lease liabilities $ 39.2 $ 37.3 Accrued legal settlement (1) 32.2 35.1 Interest payable 24.5 21.8 Tax receivable agreement liability 21.2 16.9 Amounts due to patients and payors 20.9 16.5 Cost report liabilities 16.9 5.6 Accrued expenses and other 62.1 58.0 Total $ 217.0 $ 191.2 (1) See Note 14. "Commitments and Contingencies" for further discussion. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Revenue and Operating Income | The following tables present financial information for each reportable segment (in millions): Year Ended December 31, 2020 2019 2018 Revenues: Surgical Facility Services $ 1,793.4 $ 1,748.2 $ 1,682.4 Ancillary Services 63.6 79.4 79.6 Optical Services 3.1 3.8 9.5 Total $ 1,860.1 $ 1,831.4 $ 1,771.5 Adjusted EBITDA: Surgical Facility Services $ 339.3 $ 328.9 $ 309.5 Ancillary Services (3.4) 2.6 3.0 Optical Services 1.4 1.4 2.5 All other (80.7) (74.3) (80.2) Total $ 256.6 $ 258.6 $ 234.8 Reconciliation of Adjusted EBITDA: (Loss) income before income taxes $ (18.8) $ 54.6 $ (69.2) Net income attributable to non-controlling interests (117.4) (119.9) (110.1) Depreciation and amortization 94.8 76.5 67.4 Interest expense, net 201.8 178.9 147.0 Equity-based compensation expense 13.2 10.2 9.3 Transaction, integration and acquisition costs (1) 38.2 36.1 34.0 Impairment charges 33.5 7.9 74.4 Loss (gain) on disposals and deconsolidations, net 5.7 (4.4) 31.8 Litigation settlement and other litigation costs (2) 6.4 4.6 46.0 Reserve adjustments (3) — — 2.7 Contingent acquisition compensation expense — — 1.5 Gain on escrow release (4) (0.8) — — Loss on debt extinguishment — 11.7 — Tax receivable agreement expense — 2.4 — Adjusted EBITDA $ 256.6 $ 258.6 $ 234.8 (1) For the year ended December 31, 2020, this amount includes transaction and integration costs of $23.2 million, of which $6.6 million were acquisition related costs, and includes start-up costs related to a de novo surgical hospital of $15.0 million. For the year ended December 31, 2019, this amount includes transaction and integration costs of $19.0 million, and includes other acquisition costs and start-up costs related to a de novo surgical hospital of $17.1 million. For the year ended December 31, 2018, this amount includes transaction and integration costs of $31.7 million, and includes other acquisition costs of $2.3 million. (2) This amount includes litigation settlement costs of $1.2 million, $0.2 million and $46.0 million for the years ended December 31, 2020, 2019 and 2018, respectively. This amount further includes other litigation costs of $5.2 million and $4.4 million for the years ended December 31, 2020 and 2019, respectively, with no comparable costs in 2018. (3) This amount represents adjustments to revenue in order to apply consistent policies to businesses acquired by Surgery Partners in prior periods. (4) Included in other income in the consolidated statement of operations for the year ended December 31, 2020, with no comparable gain in 2019 and 2018. |
Reconciliation of Assets from Segment to Consolidated | December 31, 2020 2019 Assets: Surgical Facility Services $ 4,962.4 $ 4,580.4 Ancillary Services 35.0 69.6 Optical Services — 17.7 All other 415.8 351.2 Total assets $ 5,413.2 $ 5,018.9 |
Schedule of Financial Information by Reportable Segment | Year Ended December 31, 2020 2019 2018 Cash purchases of property and equipment: Surgical Facility Services $ 38.7 $ 65.9 $ 34.2 Ancillary Services 0.4 1.1 0.4 All other 3.8 6.6 5.2 Total cash purchases of property and equipment $ 42.9 $ 73.6 $ 39.8 |
Organization and Summary of A_4
Organization and Summary of Accounting Policies - Organization (Details) | Dec. 31, 2020surgical_facilitystate | Aug. 31, 2017 |
Product Information [Line Items] | ||
Number of States in which entity operates | state | 30 | |
Number of surgical facilities owned | 127 | |
Number of surgical facilities owned, majority interest | 84 | |
Number of surgical facilities owned, consolidated | 107 | |
Facilities, Ambulatory Surgery Centers | ||
Product Information [Line Items] | ||
Number of surgical facilities owned | 110 | |
Facilities, Surgical Hospitals | ||
Product Information [Line Items] | ||
Number of surgical facilities owned | 17 | |
Bain Capital | Surgery Partners, Inc | ||
Product Information [Line Items] | ||
Percentage of voting interest held | 67.00% | 65.70% |
Organization and Summary of A_5
Organization and Summary of Accounting Policies - CARES ACT (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Proceeds from grants received | $ 59 | ||
Grant funds | 46.2 | $ 0 | $ 0 |
Accelerated payments | 120 | ||
Accelerated payments, current portion | 95 | ||
Deferred accrued payroll and benefits | $ 16.9 |
Organization and Summary of A_6
Organization and Summary of Accounting Policies - Variable Interest Entities (Details) $ in Millions | Dec. 31, 2020USD ($) | Dec. 31, 2020surgical_facility | Dec. 31, 2020physician_practice | Dec. 31, 2019USD ($) |
Variable Interest Entity [Line Items] | ||||
Number of facilities included in VIE | 4 | 3 | ||
Assets | $ 5,413.2 | $ 5,018.9 | ||
Variable Interest Entity, Primary Beneficiary | ||||
Variable Interest Entity [Line Items] | ||||
Assets | 27.7 | 36.2 | ||
Liabilities | $ 21.1 | $ 25.2 |
Organization and Summary of A_7
Organization and Summary of Accounting Policies - Schedule of Carrying Amount and Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Apr. 11, 2019 | Jun. 30, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term debt | $ 2,876.8 | |||
Senior secured term loan | Secured Debt | Carrying Amount | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term debt | 1,539.4 | $ 1,434.1 | ||
Senior secured term loan | Secured Debt | Fair Value | Fair Value, Inputs, Level 2 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term debt | $ 1,533.4 | 1,434.1 | ||
6.750% senior unsecured notes due 2025 | Senior Notes | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Debt instrument, stated rate | 6.75% | 6.75% | ||
6.750% senior unsecured notes due 2025 | Senior Notes | Carrying Amount | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term debt | $ 370 | 370 | ||
6.750% senior unsecured notes due 2025 | Senior Notes | Fair Value | Fair Value, Inputs, Level 2 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term debt | $ 376 | 368.2 | ||
10.000% senior unsecured notes due 2027 | Senior Notes | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Debt instrument, stated rate | 10.00% | 10.00% | ||
10.000% senior unsecured notes due 2027 | Senior Notes | Carrying Amount | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term debt | $ 545 | 430 | ||
10.000% senior unsecured notes due 2027 | Senior Notes | Fair Value | Fair Value, Inputs, Level 2 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term debt | $ 596.8 | $ 471.4 |
Organization and Summary of A_8
Organization and Summary of Accounting Policies - Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Interest rate swap agreement | $ 61 | $ 50.7 |
Organization and Summary of A_9
Organization and Summary of Accounting Policies - Schedule of Revenues by Service Type (Details) - Revenue Source - Revenue | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue from External Customer [Line Items] | |||
Revenue by service type as a percentage of total revenues | 100.00% | 100.00% | 100.00% |
Patient service revenues | |||
Revenue from External Customer [Line Items] | |||
Revenue by service type as a percentage of total revenues | 98.70% | 98.40% | 98.10% |
Surgical Facility Services | |||
Revenue from External Customer [Line Items] | |||
Revenue by service type as a percentage of total revenues | 95.30% | 94.10% | 93.60% |
Ancillary Services | |||
Revenue from External Customer [Line Items] | |||
Revenue by service type as a percentage of total revenues | 3.40% | 4.30% | 4.50% |
Other service revenues | |||
Revenue from External Customer [Line Items] | |||
Revenue by service type as a percentage of total revenues | 1.30% | 1.60% | 1.90% |
Optical Services | |||
Revenue from External Customer [Line Items] | |||
Revenue by service type as a percentage of total revenues | 0.20% | 0.20% | 0.50% |
Other | |||
Revenue from External Customer [Line Items] | |||
Revenue by service type as a percentage of total revenues | 1.10% | 1.40% | 1.40% |
Organization and Summary of _10
Organization and Summary of Accounting Policies - Schedule of Revenues by Sources (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 1,860.1 | $ 1,831.4 | $ 1,771.5 |
Patient service revenues | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 1,836.1 | $ 1,803.1 | $ 1,737 |
Patient service revenues | Customer | Revenue | |||
Disaggregation of Revenue [Line Items] | |||
Revenue by service type as a percentage of total revenues | 100.00% | 100.00% | 100.00% |
Private insurance | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 989.9 | $ 970.5 | $ 948.9 |
Private insurance | Customer | Revenue | |||
Disaggregation of Revenue [Line Items] | |||
Revenue by service type as a percentage of total revenues | 53.90% | 53.80% | 54.60% |
Government | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 708.5 | $ 701.9 | $ 653.3 |
Government | Customer | Revenue | |||
Disaggregation of Revenue [Line Items] | |||
Revenue by service type as a percentage of total revenues | 38.60% | 38.90% | 37.60% |
Self-pay | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 58.5 | $ 46.1 | $ 50 |
Self-pay | Customer | Revenue | |||
Disaggregation of Revenue [Line Items] | |||
Revenue by service type as a percentage of total revenues | 3.20% | 2.60% | 2.90% |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 79.2 | $ 84.6 | $ 84.8 |
Other | Customer | Revenue | |||
Disaggregation of Revenue [Line Items] | |||
Revenue by service type as a percentage of total revenues | 4.30% | 4.70% | 4.90% |
Optical Services | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 3 | $ 3.8 | $ 9.5 |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 21 | $ 24.5 | $ 25 |
Organization and Summary of _11
Organization and Summary of Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Restricted invested assets included in other long-term assets | $ 0.3 | $ 0.3 |
Organization and Summary of _12
Organization and Summary of Accounting Policies - Accounts Receivable (Details) $ in Millions | Dec. 31, 2019USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Optical products receivable | $ 8.6 |
Organization and Summary of _13
Organization and Summary of Accounting Policies - Schedule of Non-Controlling Interests - Redeemable (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Non-Controlling Interests - Redeemable [Roll Forward] | ||
Non-controlling interest, beginning balance | $ 321 | $ 326.6 |
Net income attributable to non-controlling interests—redeemable | 31.7 | 39.1 |
Acquisition and disposal of shares of non-controlling interests, net—redeemable | (9.4) | (4.7) |
Distributions to non-controlling interest —redeemable holders | (36.5) | (40) |
Non-controlling interest, ending balance | $ 306.8 | $ 321 |
Organization and Summary of _14
Organization and Summary of Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Operating lease, liability | $ 340.1 | $ 320.4 | |||
Operating lease assets | 310.1 | 297.7 | |||
Adjustment to retained deficit | 882.1 | 983.4 | $ 1,098.9 | $ 1,336.6 | |
Impact of adoption of ASC 842 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Operating lease, liability | $ 294 | ||||
Operating lease assets | $ 294 | ||||
Adjustment to retained deficit | 6.1 | ||||
Retained Deficit | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Adjustment to retained deficit | $ (431.8) | $ (315.7) | (247) | $ (41.3) | |
Retained Deficit | Impact of adoption of ASC 842 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Adjustment to retained deficit | $ 6.1 |
Acquisitions and Disposals - Ac
Acquisitions and Disposals - Acquisitions (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020USD ($)surgical_facilityphysician_practice | Dec. 31, 2019USD ($)surgical_facilityphysician_practice | Dec. 31, 2018USD ($) | |
Business Acquisition [Line Items] | |||
Total cash consideration, net of cash acquired | $ 104.6 | $ 13.8 | $ 106.8 |
Number of surgical facilities acquired | surgical_facility | 4 | ||
Cash investment for purchase of equity investment | 0 | $ 15.2 | $ 0 |
Surgical Facility and Physician Practice | |||
Business Acquisition [Line Items] | |||
Total aggregate consideration | 120.1 | 27.4 | |
Total cash consideration, net of cash acquired | 104.6 | 20.1 | |
Noncash consideration | 8.7 | ||
Contingent consideration | 0.7 | ||
Additional cash consideration from working capital settlement payment | $ 0.8 | ||
Surgical Facility and Physician Practice | Previously Reported | |||
Business Acquisition [Line Items] | |||
Total aggregate consideration | $ 26.7 | ||
Surgical Facilities, Including Surgical Hospital | |||
Business Acquisition [Line Items] | |||
Number of business entities acquired | surgical_facility | 3 | ||
Surgical Facilities, Existing Markets | |||
Business Acquisition [Line Items] | |||
Number of business entities acquired | surgical_facility | 5 | 1 | |
Physician Practice | |||
Business Acquisition [Line Items] | |||
Number of business entities acquired | physician_practice | 1 | 1 |
Acquisitions and Disposals - As
Acquisitions and Disposals - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net assets acquired: | |||
Goodwill | $ 3,468 | $ 3,402.4 | $ 3,382.8 |
Surgical Facility and Physician Practice | |||
Business Acquisition [Line Items] | |||
Consideration transferred | 120.1 | 27.4 | |
Fair value of non-controlling interests | 57.3 | 8.3 | |
Aggregate acquisition date fair value | 177.4 | 35.7 | |
Net assets acquired: | |||
Current Assets | 24.3 | 5.4 | |
Property and equipment | 50.6 | 1.8 | |
Intangible assets | 3.6 | 0 | |
Goodwill | 153.7 | 23.4 | |
Right-of-use operating lease assets | 15.4 | 28.8 | |
Other long-term assets | 0.2 | 8.9 | |
Current liabilities | (16.4) | (4.2) | |
Long-term debt | (40) | (0.2) | |
Right-of-use operating lease liabilities | (14) | (28.2) | |
Aggregate acquisition date fair value | $ 177.4 | 35.7 | |
Surgical Facility | |||
Business Acquisition [Line Items] | |||
Fair value of non-controlling interests | 8.8 | ||
Net assets acquired: | |||
Proceeds from noncontrolling interests | $ 6.3 |
Acquisitions and Disposals - Di
Acquisitions and Disposals - Disposals (Details) $ in Millions | 12 Months Ended | |||||
Dec. 31, 2020USD ($)surgery_center | Dec. 31, 2019USD ($) | Dec. 31, 2018optical_laboratory | Dec. 31, 2018USD ($) | Dec. 31, 2018surgery_center | Dec. 31, 2018surgical_hospital | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from disposals of facilities and other assets | $ 58.5 | $ 17.6 | $ 19.2 | |||
Surgery Centers, Certain Assets Related to Anesthesia Business, Certain Imaging ASsets and Optical Products Purchasing Organization | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Number of interests sold | surgery_center | 3 | |||||
Proceeds from disposals of facilities and other assets | $ 58.5 | |||||
Pre-tax gain (loss) | 5.2 | |||||
Diagnostic Laboratory | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Pre-tax gain (loss) | $ (3.5) | |||||
Previously Owned Real Property Associated with Existing Non-Consolidated Surgical Facility | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Pre-tax gain (loss) | $ 10.9 | |||||
Surgery Centers, Surgical Hospitals, and Optical Laboratory | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Number of interests sold | 1 | 4 | 2 | |||
Proceeds from disposals of facilities and other assets | 18.7 | |||||
Pre-tax gain (loss) | $ (21.2) |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation | $ 90.5 | $ 71.9 | $ 62.5 |
Buildings and improvements | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Property, and equipment useful life | 20 years | ||
Buildings and improvements | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Property, and equipment useful life | 40 years | ||
Computer and software | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Property, and equipment useful life | 3 years | ||
Computer and software | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Property, and equipment useful life | 5 years | ||
Furniture and equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Property, and equipment useful life | 5 years | ||
Furniture and equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Property, and equipment useful life | 7 years |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Right-of-use finance lease asset | $ 298.4 | $ 259.3 |
Property and equipment, at cost | 733.9 | 634 |
Less: Accumulated depreciation | (189.3) | (110.7) |
Property and equipment, net | 544.6 | 523.3 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, excluding right-of-use finance lease asset, at cost | 11.1 | 11 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, excluding right-of-use finance lease asset, at cost | 109.7 | 106.6 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, excluding right-of-use finance lease asset, at cost | 20.7 | 23.1 |
Computer and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, excluding right-of-use finance lease asset, at cost | 80.8 | 59.8 |
Medical equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, excluding right-of-use finance lease asset, at cost | 196.8 | 148.3 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, excluding right-of-use finance lease asset, at cost | $ 16.4 | $ 25.9 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Additional Information (Details) | Oct. 01, 2020USD ($)reporting_unit | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($)reporting_unit | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Finite-Lived Intangible Assets [Line Items] | |||||
Number of reporting units | reporting_unit | 3 | 3 | |||
Goodwill impairment loss | $ 5,400,000 | ||||
Goodwill | 3,468,000,000 | $ 3,402,400,000 | $ 3,382,800,000 | ||
Amortization expense | $ 4,300,000 | 4,600,000 | 4,900,000 | ||
Physician income guarantees | Minimum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful lives of intangible assets | 3 years | ||||
Physician income guarantees | Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful lives of intangible assets | 4 years | ||||
Non-compete agreements | Minimum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful lives of intangible assets | 2 years | ||||
Non-compete agreements | Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful lives of intangible assets | 5 years | ||||
Management rights agreements | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful lives of intangible assets | 15 years | ||||
Customer relationships | Minimum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful lives of intangible assets | 3 years | ||||
Customer relationships | Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful lives of intangible assets | 10 years | ||||
Surgical Facility Services | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill | $ 3,300,000,000 | ||||
Ancillary Services | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill impairment loss | $ 28,600,000 | 60,700,000 | |||
Goodwill | 0 | ||||
Alliance | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill impairment loss | $ 4,900,000 | $ 2,500,000 | $ 13,700,000 | ||
Goodwill | $ 4,200,000 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning of period | $ 3,402.4 | $ 3,382.8 |
Acquisitions, including post acquisition adjustments | 154.7 | 22.3 |
Disposals and deconsolidations | (55.6) | (0.2) |
Impairments | (33.5) | (2.5) |
Goodwill, end of period | $ 3,468 | $ 3,402.4 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Summary of Components of Intangible Assets (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying amount | $ 44.7 | $ 39.9 |
Finite-lived intangible assets, accumulated amortization | (16.6) | (11.8) |
Total | 28.1 | 28.1 |
Indefinite-lived intangible assets | 18.8 | 19.2 |
Total intangible assets, gross carrying amount | 63.5 | 59.1 |
Total intangible assets, net | 46.9 | 47.3 |
Management rights agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying amount | 31.1 | 31.1 |
Finite-lived intangible assets, accumulated amortization | (10.1) | (7.3) |
Total | 21 | 23.8 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying amount | 13.6 | 8.8 |
Finite-lived intangible assets, accumulated amortization | (6.5) | (4.5) |
Total | $ 7.1 | $ 4.3 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Future Amortization of Intangible Assets (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2021 | $ 5.7 | |
2022 | 3.8 | |
2023 | 2.9 | |
2024 | 2.5 | |
2025 | 1.9 | |
Thereafter | 11.3 | |
Total | $ 28.1 | $ 28.1 |
Long-Term Debt - Summary of Lon
Long-Term Debt - Summary of Long-Term Debt (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jul. 30, 2020 | Dec. 31, 2019 | Apr. 11, 2019 | Jun. 30, 2017 |
Debt Instrument [Line Items] | |||||
Finance lease obligations | $ 281.2 | $ 253.4 | |||
Less: unamortized debt issuance costs | (16.3) | (10.8) | |||
Total debt | 2,856.8 | 2,580.7 | |||
Less: Current maturities | 64.4 | 56 | |||
Total long-term debt | 2,792.4 | 2,524.7 | |||
Notes payable and other secured loans | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | 137.5 | 104 | |||
Senior secured term loan | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | 1,539.4 | 1,434.1 | |||
Unamortized fair value discount | 3.7 | 4.6 | |||
Senior secured revolving credit facility | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | 0 | 0 | |||
6.750% senior unsecured notes due 2025 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | $ 370 | 370 | |||
Debt instrument, stated rate | 6.75% | 6.75% | |||
10.000% senior unsecured notes due 2027 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | $ 545 | $ 430 | |||
Less: unamortized debt issuance costs | $ (1) | ||||
Debt instrument, stated rate | 10.00% | 10.00% |
Long-Term Debt - Senior Secured
Long-Term Debt - Senior Secured Credit Facilities (Details) - USD ($) | Apr. 22, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||
Debt issuance costs and discount | $ 16,300,000 | $ 10,800,000 | |
Senior secured term loan | Secured Debt | |||
Debt Instrument [Line Items] | |||
Original balance of debt | $ 1,290,000,000 | ||
Quarterly installment of original principal | 0.25% | ||
Senior secured revolving credit facility | Secured Debt | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Original balance of debt | $ 120,000,000 | ||
Long-term line of credit | 0 | $ 0 | |
Outstanding balance on debt | $ 112,500,000 | ||
Commitment fee | 0.50% | ||
Net leverage ratio | 9.50 | ||
Commitment threshold | 35.00% | ||
Senior secured revolving credit facility | Secured Debt | Letter of Credit | |||
Debt Instrument [Line Items] | |||
Outstanding balance on debt | $ 7,500,000 | ||
2018 Incremental Term Loan | Secured Debt | |||
Debt Instrument [Line Items] | |||
Original balance of debt | 180,000,000 | ||
2020 incremental term loans | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 120,000,000 | ||
Alternate base rate, floor | 2.00% | ||
Debt issuance costs and discount | $ 6,500,000 | ||
2020 incremental term loans | Secured Debt | |||
Debt Instrument [Line Items] | |||
Original balance of debt | $ 120,000,000 | ||
LIBOR | 2020 incremental term loans | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 8.00% | ||
Federal Funds Effective Swap Rate | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 3.00% | ||
Federal Funds Effective Swap Rate | Secured Debt | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 0.50% | ||
Federal Funds Effective Swap Rate | 2020 incremental term loans | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 0.50% | ||
One Month LIBOR | Secured Debt | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 1.00% | ||
One Month LIBOR | 2020 incremental term loans | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 1.00% | ||
Base Rate | Senior secured term loan | Secured Debt | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 2.00% | ||
Base Rate | 2020 incremental term loans | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 7.00% | ||
Minimum | LIBOR | Secured Debt | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 3.00% | ||
Minimum | Base Rate | Secured Debt | |||
Debt Instrument [Line Items] | |||
Debt instrument, margin in addition to base rate | 2.00% | ||
Maximum | LIBOR | Secured Debt | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 3.25% | ||
Maximum | Base Rate | Secured Debt | |||
Debt Instrument [Line Items] | |||
Debt instrument, margin in addition to base rate | 2.25% |
Long-Term Debt - 6.750% Senior
Long-Term Debt - 6.750% Senior Unsecured Notes due 2025 (Details) - Senior Notes - 6.750% senior unsecured notes due 2025 - USD ($) | Jun. 30, 2017 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Debt instrument, stated rate | 6.75% | 6.75% |
Original balance of debt | $ 370,000,000 | |
Redemption Period One | ||
Debt Instrument [Line Items] | ||
Redemption price, percentage | 103.375% | |
Redemption Period Two | ||
Debt Instrument [Line Items] | ||
Redemption price, percentage | 101.688% | |
Redemption Period Three | ||
Debt Instrument [Line Items] | ||
Redemption price, percentage | 100.00% | |
Redemption Period Four | ||
Debt Instrument [Line Items] | ||
Redemption price, percentage | 101.00% |
Long-Term Debt - 10.000% Senior
Long-Term Debt - 10.000% Senior Unsecured Notes due 2027 (Details) - USD ($) | Apr. 11, 2019 | Dec. 31, 2020 | Jul. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||||
Debt issuance costs and discount, net of issuance premium | $ 16,300,000 | $ 10,800,000 | ||
Senior Notes | 10.000% senior unsecured notes due 2027 | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, stated rate | 10.00% | 10.00% | ||
Face value of debt issued | $ 430,000,000 | $ 115,000,000 | ||
Percentage of debt principal redeemable | 40.00% | |||
Percentage of principal | 100.75% | |||
Debt issuance costs and discount, net of issuance premium | $ 1,000,000 | |||
Senior Notes | 10.000% senior unsecured notes due 2027 | Redemption Period One | ||||
Debt Instrument [Line Items] | ||||
Redemption price of debt | 110.00% | |||
Senior Notes | 10.000% senior unsecured notes due 2027 | Redemption Period Two | ||||
Debt Instrument [Line Items] | ||||
Redemption price of debt | 100.00% | |||
Senior Notes | 10.000% senior unsecured notes due 2027 | Redemption Period Three | ||||
Debt Instrument [Line Items] | ||||
Redemption price of debt | 105.00% | |||
Senior Notes | 10.000% senior unsecured notes due 2027 | Redemption Period Four | ||||
Debt Instrument [Line Items] | ||||
Redemption price of debt | 102.50% | |||
Senior Notes | 10.000% senior unsecured notes due 2027 | Redemption Period Five | ||||
Debt Instrument [Line Items] | ||||
Redemption price of debt | 100.00% | |||
Senior Notes | 10.000% senior unsecured notes due 2027 | Redemption Period Six | ||||
Debt Instrument [Line Items] | ||||
Redemption price of debt | 101.00% |
Long-Term Debt - Summary of Sch
Long-Term Debt - Summary of Scheduled Maturities of Debt Obligations (Details) $ in Millions | Dec. 31, 2020USD ($) |
Debt Disclosure [Abstract] | |
2021 | $ 64.4 |
2022 | 57.1 |
2023 | 53.4 |
2024 | 1,519.7 |
2025 | 396.7 |
Thereafter | 785.5 |
Total | $ 2,876.8 |
Leases - Components of Right-of
Leases - Components of Right-of-us Assets and Liabilities Related to Leases (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2020USD ($)option_to_renew | Dec. 31, 2019USD ($) | |
Leases [Abstract] | ||
Initial term of operating leases | 10 years | |
Number of options to renew operating leases | option_to_renew | 1 | |
Unusual or Infrequent Item, or Both [Line Items] | ||
Increase in right-of-use operating lease assets and liabilities | $ 62.1 | $ 56.2 |
Assets: | ||
Operating lease assets | $ 310.1 | $ 297.7 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization | us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization |
Finance lease assets | $ 258.1 | $ 237.1 |
Total leased assets | $ 568.2 | $ 534.8 |
Operating lease liabilities: | ||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesCurrent | us-gaap:OtherLiabilitiesCurrent |
Current | $ 39.2 | $ 37.3 |
Long-term | 300.9 | 283.1 |
Total operating lease liabilities | $ 340.1 | $ 320.4 |
Finance lease liabilities: | ||
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:LongTermDebtAndCapitalLeaseObligationsCurrent | us-gaap:LongTermDebtAndCapitalLeaseObligationsCurrent |
Current | $ 18.9 | $ 15.8 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:LongTermDebtAndCapitalLeaseObligations | us-gaap:LongTermDebtAndCapitalLeaseObligations |
Long-term | $ 262.3 | $ 237.6 |
Total finance lease liabilities | 281.2 | 253.4 |
Total lease liabilities | $ 621.3 | $ 573.8 |
Weighted-average remaining lease term, operating leases | 8 years 10 months 24 days | 8 years 10 months 24 days |
Weighted-average remaining lease term, finance leases | 15 years 10 months 24 days | 16 years 7 months 6 days |
Weighted-average discount rate, operating leases | 10.30% | 10.40% |
Weighted-average discount rate, finance leases | 9.20% | 8.70% |
COVID-19 Pandemic | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Increase in right-of-use operating lease assets and liabilities | $ 27.4 |
Leases - Lease Expense and Cash
Leases - Lease Expense and Cash Flow Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Lessee, Lease, Description [Line Items] | ||
Operating lease costs | $ 74.1 | $ 70.4 |
Finance lease costs: | ||
Amortization of leased assets | 26.2 | 22.2 |
Interest on lease liabilities | 22.2 | 13 |
Total finance lease costs | 48.4 | 35.2 |
Variable and short-term lease costs | 16.9 | 13.2 |
Total lease costs | 139.4 | 118.8 |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash outflows from operating leases | 68.1 | 67.3 |
Operating cash outflows from finance leases | 20.7 | 13 |
Financing cash outflows from finance leases | 18.3 | 13.4 |
Right-of-use assets obtained in exchange for lease obligations: | ||
Operating leases | 62.1 | 56.2 |
Finance leases | 47 | 133.3 |
Noncontrolling Interest | ||
Finance lease costs: | ||
Rent paid under finance lease agreement, allocated to principal and interest | 6.9 | 6.7 |
Investor | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease costs | $ 22.8 | $ 20.6 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Operating Leases | ||
2021 | $ 70.7 | |
2022 | 66.1 | |
2023 | 62.1 | |
2024 | 58.4 | |
2025 | 50 | |
Thereafter | 219.1 | |
Total lease payments | 526.4 | |
Less: imputed interest | (186.3) | |
Total lease obligations | 340.1 | $ 320.4 |
Finance Leases | ||
2021 | 43.2 | |
2022 | 40.7 | |
2023 | 37 | |
2024 | 32.1 | |
2025 | 30.7 | |
Thereafter | 381.9 | |
Total lease payments | 565.6 | |
Less: imputed interest | (284.4) | |
Total lease obligations | $ 281.2 | $ 253.4 |
Redeemable Preferred Stock - Ad
Redeemable Preferred Stock - Additional Information (Details) | Aug. 31, 2017USD ($)trading_day$ / sharesshares | Dec. 31, 2020USD ($)$ / shares | Dec. 31, 2019USD ($)$ / shares |
Temporary Equity [Line Items] | |||
Preferred stock, par value (in USD per share) | $ / shares | $ 0.01 | $ 0.01 | |
Dividends declared but unpaid | $ | $ 0 | $ 0 | |
Cumulative preferred dividends | $ | $ 109,000,000 | $ 69,500,000 | |
Cumulative preferred dividends (in USD per share) | $ / shares | $ 351.54 | $ 224.09 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | |||
Balance at beginning of period | $ | $ 395,000,000 | $ 359,300,000 | |
Dividends accrued (there were no cash dividends declared) | $ | 39,500,000 | 35,700,000 | |
Cash dividends declared | $ | 0 | 0 | |
Balance at end of period | $ | $ 434,500,000 | $ 395,000,000 | |
Series A Preferred Stock | |||
Temporary Equity [Line Items] | |||
Preferred stock dividend rate | 10.00% | ||
Trading days | trading_day | 20 | ||
Consecutive trading days | trading_day | 30 | ||
Threshold share price (in USD per share) | $ / shares | $ 42 | ||
Maximum cash dividend declarable | 50.00% | ||
Redemption price (in USD per share) | $ / shares | $ 1,000 | ||
Series A Preferred Stock | Common Stock | |||
Temporary Equity [Line Items] | |||
Share price (in USD per share) | $ / shares | $ 19 | ||
Majority Shareholder | Series A Preferred Stock | |||
Temporary Equity [Line Items] | |||
Stock issued during period (shares) | shares | 310,000 | ||
Preferred stock, par value (in USD per share) | $ / shares | $ 0.01 | ||
Purchase price per share (in USD per share) | $ / shares | $ 1,000 | ||
Initial public offering | $ | $ 310,000,000 |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activities (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020USD ($)swap | Dec. 31, 2019USD ($)swap | Dec. 31, 2018USD ($) | |
Derivative [Line Items] | |||
Amount estimated to be reclassified as a reduction to interest expense over next 12 months | $ 21.8 | ||
Number of interest rate swaps held | swap | 4 | 4 | |
Loss recognized in OCI (effective portion) | $ 30.5 | $ 35.8 | |
Loss recognized in OCI (effective portion) | $ 23.1 | ||
Loss reclassified from accumulated OCI to interest expense (effective portion) | 20.2 | 7.5 | |
Loss reclassified from accumulated OCI to interest expense (effective portion) | $ 0.6 | ||
Interest Rate Swap | |||
Derivative [Line Items] | |||
Current notional amount | $ 1,200 | $ 1,200 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 15, 2017 | ||
Numerator: | |||||
Net loss attributable to Surgery Partners, Inc. | $ (116,100,000) | $ (74,800,000) | $ (205,700,000) | ||
Less: amounts allocated to participating securities | (39,500,000) | (35,700,000) | (32,400,000) | ||
Net loss attributable to common stockholders | $ (155,600,000) | $ (110,500,000) | $ (238,100,000) | ||
Denominator: | |||||
Weighted average common shares outstanding - basic and diluted (shares) | [1] | 48,776,000 | 48,280,000 | 48,028,000 | |
Basic and diluted loss per share (in USD per share) | [1] | $ (3.19) | $ (2.29) | $ (4.96) | |
Stock repurchase program, authorized amount | $ 50,000,000 | ||||
Shares repurchased (shares) | 156,818 | ||||
Shares repurchased, average price per share (in USD per share) | $ 12.64 | ||||
Stock repurchase program, remaining authorized repurchase amount | $ 46,000,000 | ||||
Stock options | |||||
Denominator: | |||||
Dilutive securities outstanding not included in the computation of diluted loss per share as their effect is antidilutive (shares) | 712,000 | 0 | 83,000 | ||
Restricted shares | |||||
Denominator: | |||||
Dilutive securities outstanding not included in the computation of diluted loss per share as their effect is antidilutive (shares) | 981,000 | 67,000 | 198,000 | ||
[1] | The impact of potentially dilutive securities for all periods were not considered because the effect would be anti-dilutive in those periods. |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Contingency [Line Items] | |||
Cash paid for income taxes | $ 1.7 | $ 1.6 | $ 2.2 |
Valuation allowance | 91.1 | 77.9 | |
Increase in valuation allowance | 13.2 | ||
Valuation allowance that if recognized, would credit directly to contributed capital | 16.8 | ||
Accrued interest and penalties related to uncertain tax positions | 0.1 | 0.1 | |
Uncertain tax positions that would impact effective tax rate | 0.1 | $ 0.1 | |
Additional Paid-in Capital | |||
Income Tax Contingency [Line Items] | |||
Additional-paid-in-capital increase, due to tax effect of disposals of shares of noncontrolling interests | 2.8 | ||
Capital Loss Carryforward | |||
Income Tax Contingency [Line Items] | |||
Capital loss carryforwards | 6.2 | ||
General Business Tax Credit Carryforward | |||
Income Tax Contingency [Line Items] | |||
Capital loss carryforwards | 0.7 | ||
Interest Limitation | |||
Income Tax Contingency [Line Items] | |||
Capital loss carryforwards | 278.4 | ||
Domestic Tax Authority | |||
Income Tax Contingency [Line Items] | |||
Net operating loss carryforwards | 615.7 | ||
Subject to expiration | 516.2 | ||
State and Local Jurisdiction | |||
Income Tax Contingency [Line Items] | |||
Net operating loss carryforwards | $ 678.9 |
Income Taxes - Income Tax (Bene
Income Taxes - Income Tax (Benefit) Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Current: | |||
Federal | $ (0.2) | $ (0.2) | $ (0.3) |
State | 1.9 | 1.7 | 1.5 |
Deferred: | |||
Federal | (22.2) | 3.2 | 16.5 |
State | 0.4 | 4.8 | 8.7 |
Total income tax (benefit) expense | $ (20.1) | $ 9.5 | $ 26.4 |
Income Taxes - Income Tax Rate
Income Taxes - Income Tax Rate Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Tax (benefit) expense at U.S.federal statutory rate | $ (4) | $ 11.5 | $ (14.5) |
State income tax, net of U.S. federal tax benefit | 2.4 | 5.7 | 10 |
Change in valuation allowance | 4.1 | 13.6 | 26.9 |
Net income attributable to non-controlling interests | (24.8) | (25.2) | (23.1) |
Changes in measurement of uncertain tax positions | 0 | (0.1) | (0.1) |
Stock option compensation | 1.2 | 1.3 | 0.5 |
Differences related to divested facilities | (0.7) | 0.1 | 6 |
Tax return reconciling differences | 0 | 1.1 | 1.7 |
Change in effective tax rate | (0.8) | 0.3 | 0.5 |
Tax Receivable Agreement liability | 0.9 | 1.6 | 0.9 |
Goodwill impairment | 4.3 | 0.5 | 8.9 |
Litigation settlement | (3.7) | 0 | 8.6 |
Other | 1 | (0.9) | 0.1 |
Total income tax (benefit) expense | $ (20.1) | $ 9.5 | $ 26.4 |
Income Taxes - Approx. Tax Effe
Income Taxes - Approx. Tax Effects of Temporary Differences, Deferred Tax Asset and Liability (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Medical malpractice liability | $ 4 | $ 3.5 |
Accrued vacation and incentive compensation | 3.2 | 2.3 |
Net operating loss carryforwards | 164.7 | 143 |
Allowance for bad debts | 2.5 | 2.2 |
Capital loss carryforwards | 1.7 | 2 |
Amortization of intangible assets | 2.2 | 0.3 |
Deferred financing costs | 7.9 | 9.5 |
Section 163(j) interest | 69.8 | 54.7 |
Interest rate swap liability | 15.8 | 12.9 |
TRA liability | 1 | 1.2 |
Right of use | 50.6 | 52.1 |
Affiliate indebtedness receivable | 0 | 6.8 |
Other deferred assets | 16.4 | 9 |
Total gross deferred tax assets | 339.8 | 299.5 |
Less: Valuation allowance | (91.1) | (77.9) |
Total deferred tax assets | 248.7 | 221.6 |
Deferred tax liabilities: | ||
Depreciation on property and equipment | (1.8) | (2.8) |
Basis differences of partnerships and joint ventures | (73.6) | (67.5) |
Right of use | (47.5) | (51.5) |
Other deferred liabilities | (1) | (1.1) |
Total deferred tax liabilities | (123.9) | (122.9) |
Net deferred tax assets | $ 124.8 | $ 98.7 |
Income Taxes - Schedule of Gros
Income Taxes - Schedule of Gross Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Unrecognized tax benefits at beginning of year | $ 0.1 | $ 0.1 |
Reductions for tax positions of prior year | 0 | 0 |
Unrecognized tax benefits at end of year | $ 0.1 | $ 0.1 |
Equity-Based Compensation - Add
Equity-Based Compensation - Additional Information (Details) $ / shares in Units, $ in Millions | Dec. 16, 2018installmenttrading_day$ / sharesshares | Dec. 31, 2020USD ($)shares | Dec. 31, 2019USD ($)trading_dayinstallment$ / sharesshares | Dec. 31, 2018USD ($)trading_dayinstallment$ / sharesshares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options and rights granted (shares) | 0 | 2,256,500 | 700,000 | |
Unrecognized compensation cost | $ | $ 20.2 | |||
Equity-based compensation | $ | $ 13.2 | $ 10.2 | $ 9.3 | |
Restricted Stock Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Awards granted during period (shares) | 1,077,367 | 556,450 | ||
PSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Awards granted during period (shares) | 854,367 | 389,972 | ||
Vesting period | 2 years | |||
Restricted units granted, earned during period (shares) | 309,692 | 245,301 | ||
Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options and rights granted (shares) | 0 | 2,256,500 | 700,000 | |
Vesting percentage | 25.00% | |||
Stock Option | Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.30% | 50.00% | ||
Number of annual installments | installment | 3 | 5 | ||
Stock Option | Tranche Two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.30% | 25.00% | ||
Share price (in USD per share) | $ / shares | $ 25 | $ 25 | ||
Number of consecutive trading days, threshold | trading_day | 30 | 60 | ||
Stock Option | Tranche Three | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.30% | |||
Share price (in USD per share) | $ / shares | $ 35 | $ 35 | ||
Number of consecutive trading days, threshold | trading_day | 30 | 60 | ||
SAR Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options and rights granted (shares) | 200,000 | 0 | ||
Options cancelled (shares) | 200,000 | |||
SAR Awards | Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 50.00% | |||
Number of annual installments | installment | 5 | |||
SAR Awards | Tranche Two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 25.00% | |||
Share price (in USD per share) | $ / shares | $ 25 | |||
Number of consecutive trading days, threshold | trading_day | 60 | |||
SAR Awards | Tranche Three | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 25.00% | |||
Share price (in USD per share) | $ / shares | $ 35 | |||
Number of consecutive trading days, threshold | trading_day | 60 | |||
Minimum | Restricted Stock Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Minimum | PSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Payable at end of period | 0.00% | |||
Maximum | Restricted Stock Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 5 years | |||
Maximum | PSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Payable at end of period | 150.00% | |||
2015 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized under plan (shares) | 8,315,700 | |||
Shares available for future grant (shares) | 5,285,421 |
Equity-Based Compensation - Sum
Equity-Based Compensation - Summary of Restricted and Performance Share-Based Activity (Details) - Restricted and Performance Shares - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Unvested Shares | |||
Outstanding, beginning of the period (shares) | 775,886 | 703,024 | 574,456 |
Granted/Earned (shares) | 1,387,059 | 801,751 | 519,605 |
Forfeited/Cancelled (shares) | (162,635) | (272,706) | (180,719) |
Vested (shares) | (552,943) | (456,183) | (210,318) |
Outstanding, end of the period (shares) | 1,447,367 | 775,886 | 703,024 |
Weighted Average Grant Date Fair Value | |||
Outstanding, beginning of the period (in USD per share) | $ 13.78 | $ 16.18 | $ 15.95 |
Granted/Earned (in USD per share) | 6.87 | 12.70 | 16.10 |
Forfeited/Cancelled (in USD per share) | 13.77 | 12.97 | 15.09 |
Vested (in USD per share) | 12.78 | 16.20 | 16.31 |
Outstanding, end of the period (in USD per share) | $ 9.75 | $ 13.78 | $ 16.18 |
Equity-Based Compensation - Fai
Equity-Based Compensation - Fair Value Assumptions (Details) - $ / shares | Dec. 16, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (shares) | 0 | 2,256,500 | 700,000 | |
Employee Stock Options and Stock Appreciation Rights | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||||
Expected volatility | 60.00% | |||
Expected volatility, minimum | 60.00% | |||
Expected volatility, maximum | 65.00% | |||
Risk-free interest rate, minimum | 2.30% | 2.50% | ||
Risk-free interest rate, maximum | 2.40% | 2.90% | ||
Expected dividends | 0.00% | 0.00% | ||
Average expected term (years) | 4 years | 10 years | ||
Employee Stock Options and Stock Appreciation Rights | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||||
Fair value of stock options granted (in USD per share) | $ 4.83 | $ 8.48 | ||
Employee Stock Options and Stock Appreciation Rights | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||||
Fair value of stock options granted (in USD per share) | $ 6.41 | $ 9.44 | ||
Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (shares) | 0 | 2,256,500 | 700,000 | |
SAR Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (shares) | 200,000 | 0 |
Equity-Based Compensation - S_2
Equity-Based Compensation - Summary of Options Activity (Details) - $ / shares | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Options/SARs | ||||
Outstanding, beginning of period (shares) | 2,769,187 | 512,687 | 12,687 | |
Granted (shares) | 0 | 2,256,500 | 700,000 | |
Exercised (in shares) | (4,199) | 0 | 0 | |
Forfeited/Cancelled (shares) | (4,473) | 0 | (200,000) | |
Outstanding, end of period (shares) | 2,760,515 | 2,769,187 | 512,687 | 12,687 |
Weighted Average Exercise Price | ||||
Outstanding, beginning of period (in USD per share) | $ 13.02 | $ 13.03 | $ 20.10 | |
Granted (in USD per share) | 13 | 12.90 | ||
Exercised (in USD per share) | 20.24 | |||
Forfeited/Cancelled (in USD per share) | 19 | 12.90 | ||
Outstanding, end of period (in USD per share) | $ 12.88 | $ 13.02 | $ 13.03 | $ 20.10 |
Weighted Average Remaining Contractual Term (years) | ||||
Outstanding | 8 years | 9 years | 9 years 9 months 18 days | 1 year 2 months 12 days |
Granted | 9 years 2 months 12 days | 10 years | ||
Exercised | 5 years 9 months 18 days | |||
Forfeited/Cancelled | 4 years 9 months 18 days | 10 years | ||
Outstanding options, exercisable (shares) | 585,119 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |||
Vesting period | 5 years | ||
Matching contribution expense | $ 7.2 | $ 7.6 | $ 7.6 |
Other Current Liabilities - Sch
Other Current Liabilities - Schedule of Other Current Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Other Liabilities Disclosure [Abstract] | ||
Right-of-use operating lease liabilities | $ 39.2 | $ 37.3 |
Accrued legal settlement | 32.2 | 35.1 |
Interest payable | 24.5 | 21.8 |
Tax receivable agreement liability | 21.2 | 16.9 |
Amounts due to patients and payors | 20.9 | 16.5 |
Cost report liabilities | 16.9 | 5.6 |
Accrued expenses and other | 62.1 | 58 |
Total | $ 217 | $ 191.2 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Apr. 01, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Guarantor Obligations [Line Items] | ||||
Professional, general and workers' compensation insurance reserve | $ 21.4 | $ 19.4 | ||
Estimated insurance recoveries | 10.5 | 12.1 | ||
Litigation-related charge | $ 1.2 | 0.2 | $ 46 | |
Projected tax savings period | 5 years | |||
Tax rate | 24.00% | |||
Remaining amounts payable under TRA | $ 43.2 | 60.1 | ||
Carrying value of liability, net of discount | 37 | 48.7 | ||
Deferred tax liabilities, current | $ 21.2 | $ 16.9 | ||
Forecast | ||||
Guarantor Obligations [Line Items] | ||||
Payment under settlement agreement | $ 30.7 | |||
LIBOR | ||||
Guarantor Obligations [Line Items] | ||||
Interest accrued on payment under Tax Receivable Agreement, basis spread on variable rate | 3.00% | |||
Federal Funds Effective Swap Rate | ||||
Guarantor Obligations [Line Items] | ||||
Debt instrument, basis spread on variable rate | 3.00% | |||
Materially More Restrictive | LIBOR | ||||
Guarantor Obligations [Line Items] | ||||
Debt instrument, basis spread on variable rate | 5.00% | |||
Not Materially More Restrictive | LIBOR | ||||
Guarantor Obligations [Line Items] | ||||
Debt instrument, basis spread on variable rate | 3.00% |
Segment Reporting - Revenues an
Segment Reporting - Revenues and Operating Income by Reportable Segment (Details) | 12 Months Ended | ||
Dec. 31, 2020USD ($)segment | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Segment Reporting [Abstract] | |||
Number of operating segments | segment | 3 | ||
Segment Reporting Information [Line Items] | |||
Revenues | $ 1,860,100,000 | $ 1,831,400,000 | $ 1,771,500,000 |
Adjusted EBITDA | 256,600,000 | 258,600,000 | 234,800,000 |
Reconciliation of Adjusted EBITDA: | |||
(Loss) income before income taxes | (18,800,000) | 54,600,000 | (69,200,000) |
Less: Net income attributable to non-controlling interests | (117,400,000) | (119,900,000) | (110,100,000) |
Depreciation and amortization | 94,800,000 | 76,500,000 | 67,400,000 |
Interest expense, net | 201,800,000 | 178,900,000 | 147,000,000 |
Equity-based compensation expense | 13,200,000 | 10,200,000 | 9,300,000 |
Transaction, integration and acquisition costs | 38,200,000 | 36,100,000 | 34,000,000 |
Impairment charges | 33,500,000 | 7,900,000 | 74,400,000 |
Loss (gain) on disposals and deconsolidations, net | 5,700,000 | (4,400,000) | 31,800,000 |
Litigation settlements and other litigation costs | 6,400,000 | 4,600,000 | 46,000,000 |
Reserve adjustments | 0 | 0 | 2,700,000 |
Contingent acquisition compensation expense | 0 | 0 | 1,500,000 |
Gain on escrow release | (800,000) | 0 | 0 |
Loss on debt extinguishment | 0 | 11,700,000 | 0 |
Tax receivable agreement expense | 0 | 2,400,000 | 0 |
Transaction and integration costs | 23,200,000 | 19,000,000 | 31,700,000 |
Acquisition costs | 6,600,000 | 2,300,000 | |
Start-up costs related to de novo surgical hospital | 15,000,000 | 17,100,000 | |
Litigation settlement | 1,200,000 | 200,000 | 46,000,000 |
Other litigation costs | 5,200,000 | 4,400,000 | 0 |
All other | |||
Segment Reporting Information [Line Items] | |||
Adjusted EBITDA | (80,700,000) | (74,300,000) | (80,200,000) |
Surgical Facility Services | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Revenues | 1,793,400,000 | 1,748,200,000 | 1,682,400,000 |
Adjusted EBITDA | 339,300,000 | 328,900,000 | 309,500,000 |
Ancillary Services | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Revenues | 63,600,000 | 79,400,000 | 79,600,000 |
Adjusted EBITDA | (3,400,000) | 2,600,000 | 3,000,000 |
Optical Services | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Revenues | 3,100,000 | 3,800,000 | 9,500,000 |
Adjusted EBITDA | $ 1,400,000 | $ 1,400,000 | $ 2,500,000 |
Segment Reporting - Assets and
Segment Reporting - Assets and Cash Purchases of Property and Equipment by Operating Segment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Segment Reporting Information [Line Items] | |||
Total assets | $ 5,413.2 | $ 5,018.9 | |
Cash purchases of property and equipment | 42.9 | 73.6 | $ 39.8 |
Operating Segments | Surgical Facility Services | |||
Segment Reporting Information [Line Items] | |||
Total assets | 4,962.4 | 4,580.4 | |
Cash purchases of property and equipment | 38.7 | 65.9 | 34.2 |
Operating Segments | Ancillary Services | |||
Segment Reporting Information [Line Items] | |||
Total assets | 35 | 69.6 | |
Cash purchases of property and equipment | 0.4 | 1.1 | 0.4 |
Operating Segments | Optical Services | |||
Segment Reporting Information [Line Items] | |||
Total assets | 0 | 17.7 | |
All other | |||
Segment Reporting Information [Line Items] | |||
Total assets | 415.8 | 351.2 | |
Cash purchases of property and equipment | $ 3.8 | $ 6.6 | $ 5.2 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Feb. 01, 2021 | Jan. 27, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | ||||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Common stock, par value (in USD per share) | $ 0.01 | |||
Sale price to public (in USD per share) | $ 30.25 | |||
Subsequent Event | Revolving Credit Facility | Senior secured revolving credit facility | ||||
Subsequent Event [Line Items] | ||||
Increase in outstanding commitments | $ 50,000,000 | |||
Subsequent Event | Public Offering | ||||
Subsequent Event [Line Items] | ||||
Shares sold in offering | 8,625,000 | |||
Net proceeds from stock offering | $ 249,200,000 | |||
Subsequent Event | Firm Shares | ||||
Subsequent Event [Line Items] | ||||
Shares sold in offering | 7,500,000 | |||
Subsequent Event | Additional Shares Granted to Underwriters | ||||
Subsequent Event [Line Items] | ||||
Shares sold in offering | 1,125,000 |