Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2021 | Jul. 29, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
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 $0.01 per share | |
Trading Symbol | SGRY | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 82,478,580 | |
Entity Central Index Key | 0001638833 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 464.8 | $ 317.9 |
Accounts receivable | 374.9 | 382.2 |
Inventories | 57.3 | 56.4 |
Prepaid expenses | 28.3 | 17.6 |
Other current assets | 27.6 | 27.4 |
Total current assets | 952.9 | 801.5 |
Property and equipment, net of accumulated depreciation of $231.0 and $189.3, respectively | 543.9 | 544.6 |
Goodwill and other intangible assets, net | 3,533.9 | 3,514.9 |
Investments in and advances to affiliates | 90.2 | 90.3 |
Right-of-use operating lease assets | 318.8 | 310.1 |
Long-term deferred tax assets | 129.8 | 124.8 |
Other long-term assets | 51.1 | 27 |
Total assets | 5,620.6 | 5,413.2 |
Current liabilities: | ||
Accounts payable | 109.1 | 100.2 |
Accrued payroll and benefits | 75.6 | 65.4 |
Medicare accelerated payments and deferred governmental grants | 78.6 | 109.8 |
Other current liabilities | 199 | 217 |
Current maturities of long-term debt | 69.6 | 64.4 |
Total current liabilities | 531.9 | 556.8 |
Long-term debt, less current maturities | 2,786.1 | 2,792.4 |
Right-of-use operating lease liabilities | 310.8 | 300.9 |
Other long-term liabilities | 151.7 | 139.7 |
Non-controlling interests—redeemable | 312.8 | 306.8 |
Redeemable preferred stock - Series A; shares authorized - 310,000; shares issued or outstanding - none and 310,000, respectively; redemption value - $— and $434.5, respectively | 0 | 434.5 |
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 - 82,478,580 and 50,461,706, respectively | 0.8 | 0.5 |
Additional paid-in capital | 1,298.4 | 607.9 |
Accumulated other comprehensive loss | (54.4) | (61) |
Retained deficit | (479.7) | (431.8) |
Total Surgery Partners, Inc. stockholders' equity | 765.1 | 115.6 |
Non-controlling interests—non-redeemable | 762.2 | 766.5 |
Total stockholders' equity | 1,527.3 | 882.1 |
Total liabilities and stockholders' equity | $ 5,620.6 | $ 5,413.2 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation on property and equipment | $ 231 | $ 189.3 |
Redeemable preferred stock, shares authorized (shares) | 310,000 | 310,000 |
Redeemable preferred stock, shares issued (shares) | 0 | 310,000 |
Redeemable preferred stock, shares outstanding (shares) | 0 | 310,000 |
Redeemable preferred stock, redemption value | $ 0 | $ 434.5 |
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) | 82,478,580 | 50,461,706 |
Common stock, shares outstanding (shares) | 82,478,580 | 50,461,706 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | ||
Income Statement [Abstract] | |||||
Revenues | $ 543.3 | $ 374.7 | $ 1,055.7 | $ 815.7 | |
Operating expenses: | |||||
Salaries and benefits | 155.3 | 116.1 | 307 | 256.5 | |
Supplies | 157.5 | 110.1 | 304.8 | 239.4 | |
Professional and medical fees | 57.4 | 45.3 | 112.9 | 92.1 | |
Lease expense | 22.6 | 21.5 | 45.4 | 42.8 | |
Other operating expenses | 32.2 | 26.3 | 63.8 | 54.7 | |
Cost of revenues | 425 | 319.3 | 833.9 | 685.5 | |
General and administrative expenses | 24.5 | 25.3 | 51.3 | 48.1 | |
Depreciation and amortization | 25.2 | 23.4 | 50.9 | 45.2 | |
Income from equity investments | (3) | (2.5) | (5.6) | (4.5) | |
Loss on disposals and deconsolidations, net | 1 | 2.9 | 0.1 | 6.4 | |
Transaction and integration costs | 9.2 | 4.9 | 14.5 | 10.4 | |
Grant funds | (4.9) | (43.1) | (20) | (43.1) | |
Loss on debt extinguishment | 9.6 | 0 | 9.6 | 0 | |
Litigation settlement | 0 | 0 | 0 | 1.2 | |
Other income | (2.8) | (0.2) | (2.8) | (1.7) | |
Total operating expenses | 483.8 | 330 | 931.9 | 747.5 | |
Operating income | 59.5 | 44.7 | 123.8 | 68.2 | |
Interest expense, net | (53.4) | (49.2) | (106.7) | (96.3) | |
Income (loss) before income taxes | 6.1 | (4.5) | 17.1 | (28.1) | |
Income tax benefit | (2.7) | (0.6) | (2.5) | (15.8) | |
Net income (loss) | 8.8 | (3.9) | 19.6 | (12.3) | |
Less: Net income attributable to non-controlling interests | (35.7) | (28.6) | (67.5) | (47.7) | |
Net loss attributable to Surgery Partners, Inc. | (26.9) | (32.5) | (47.9) | (60) | |
Less: Amounts attributable to participating securities | 0 | (9.7) | (10.3) | (19.2) | |
Net loss attributable to common stockholders | $ (26.9) | $ (42.2) | $ (58.2) | $ (79.2) | |
Net loss per share attributable to common stockholders | |||||
Basic (in USD per share) | $ (0.39) | $ (0.86) | $ (0.94) | $ (1.63) | |
Diluted (in USD per share) | [1] | $ (0.39) | $ (0.86) | $ (0.94) | $ (1.63) |
Weighted average common shares outstanding | |||||
Basic (shares) | 69,267 | 48,840 | 62,060 | 48,661 | |
Diluted (shares) | [1] | 69,267 | 48,840 | 62,060 | 48,661 |
[1] | The impact of potentially dilutive securities for all periods presented was not considered because the effect would be anti-dilutive in those periods. |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 8.8 | $ (3.9) | $ 19.6 | $ (12.3) |
Other comprehensive income (loss), net of tax: | ||||
Derivative activity | 0.2 | 7.3 | 6.6 | (17.9) |
Comprehensive income (loss) | 9 | 3.4 | 26.2 | (30.2) |
Less: Comprehensive income attributable to non-controlling interests | (35.7) | (28.6) | (67.5) | (47.7) |
Comprehensive loss attributable to Surgery Partners, Inc. | $ (26.7) | $ (25.2) | $ (41.3) | $ (77.9) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Deficit | Non-Controlling Interests— Non-Redeemable | |
Beginning Balance, stockholders' equity (shares) at Dec. 31, 2019 | 49,299,000 | ||||||
Beginning 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 | (13.9) | (27.5) | 13.6 | ||||
Equity-based compensation (shares) | 1,219,000 | ||||||
Equity-based compensation | 2.8 | 2.8 | |||||
Preferred dividends | (9.5) | (9.5) | |||||
Other comprehensive income (loss) | (25.2) | (25.2) | |||||
Acquisition and disposal of shares of non-controlling interests, net | [1] | 0.7 | (0.7) | 1.4 | |||
Distributions to non-controlling interests—non-redeemable holders | (14.9) | (14.9) | |||||
Ending Balance, stockholders' equity (shares) at Mar. 31, 2020 | 50,518,000 | ||||||
Ending Balance, stockholders' equity at Mar. 31, 2020 | 923.4 | $ 0.5 | 655.3 | (75.9) | (343.2) | 686.7 | |
Beginning Balance, stockholders' equity (shares) at Dec. 31, 2019 | 49,299,000 | ||||||
Beginning 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] | |||||||
Other comprehensive income (loss) | (17.9) | ||||||
Ending Balance, stockholders' equity (shares) at Jun. 30, 2020 | 50,551,000 | ||||||
Ending Balance, stockholders' equity at Jun. 30, 2020 | 895.9 | $ 0.5 | 648.2 | (68.6) | (375.7) | 691.5 | |
Beginning Balance, stockholders' equity (shares) at Mar. 31, 2020 | 50,518,000 | ||||||
Beginning Balance, stockholders' equity at Mar. 31, 2020 | 923.4 | $ 0.5 | 655.3 | (75.9) | (343.2) | 686.7 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (9.7) | (32.5) | 22.8 | ||||
Equity-based compensation (shares) | 33,000 | ||||||
Equity-based compensation | 3.8 | 3.8 | |||||
Preferred dividends | (9.7) | (9.7) | |||||
Other comprehensive income (loss) | 7.3 | 7.3 | |||||
Acquisition and disposal of shares of non-controlling interests, net | [1] | 1.7 | (1.2) | 2.9 | |||
Distributions to non-controlling interests—non-redeemable holders | (20.9) | (20.9) | |||||
Ending Balance, stockholders' equity (shares) at Jun. 30, 2020 | 50,551,000 | ||||||
Ending Balance, stockholders' equity at Jun. 30, 2020 | $ 895.9 | $ 0.5 | 648.2 | (68.6) | (375.7) | 691.5 | |
Beginning Balance, stockholders' equity (shares) at Dec. 31, 2020 | 50,461,706 | 50,462,000 | |||||
Beginning Balance, stockholders' equity at Dec. 31, 2020 | $ 882.1 | $ 0.5 | 607.9 | (61) | (431.8) | 766.5 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | 0.1 | (21) | 21.1 | ||||
Equity-based compensation (shares) | 812,000 | ||||||
Equity-based compensation | (2.8) | (2.8) | |||||
Preferred dividends | (10.3) | (10.3) | |||||
Equity offering (shares) | 8,625,000 | ||||||
Equity offering | 248.3 | $ 0.1 | 248.2 | ||||
Other comprehensive income (loss) | 6.4 | 6.4 | |||||
Acquisition and disposal of shares of non-controlling interests, net | [1] | 2.3 | 0.3 | 2 | |||
Distributions to non-controlling interests—non-redeemable holders | (20.8) | (20.8) | |||||
Ending Balance, stockholders' equity (shares) at Mar. 31, 2021 | 59,899,000 | ||||||
Ending Balance, stockholders' equity at Mar. 31, 2021 | $ 1,105.3 | $ 0.6 | 843.3 | (54.6) | (452.8) | 768.8 | |
Beginning Balance, stockholders' equity (shares) at Dec. 31, 2020 | 50,461,706 | 50,462,000 | |||||
Beginning Balance, stockholders' equity at Dec. 31, 2020 | $ 882.1 | $ 0.5 | 607.9 | (61) | (431.8) | 766.5 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Other comprehensive income (loss) | $ 6.6 | ||||||
Ending Balance, stockholders' equity (shares) at Jun. 30, 2021 | 82,478,580 | 82,479,000 | |||||
Ending Balance, stockholders' equity at Jun. 30, 2021 | $ 1,527.3 | $ 0.8 | 1,298.4 | (54.4) | (479.7) | 762.2 | |
Beginning Balance, stockholders' equity (shares) at Mar. 31, 2021 | 59,899,000 | ||||||
Beginning Balance, stockholders' equity at Mar. 31, 2021 | 1,105.3 | $ 0.6 | 843.3 | (54.6) | (452.8) | 768.8 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (4.9) | (26.9) | 22 | ||||
Equity-based compensation (shares) | (29,000) | ||||||
Equity-based compensation | 3.7 | 3.7 | |||||
Preferred share conversion (shares) | 22,609,000 | ||||||
Preferred share conversion | 439.7 | $ 0.2 | 439.5 | ||||
Other comprehensive income (loss) | 0.2 | 0.2 | |||||
Acquisition and disposal of shares of non-controlling interests, net | [1] | 5.6 | 11.9 | (6.3) | |||
Distributions to non-controlling interests—non-redeemable holders | $ (22.3) | (22.3) | |||||
Ending Balance, stockholders' equity (shares) at Jun. 30, 2021 | 82,478,580 | 82,479,000 | |||||
Ending Balance, stockholders' equity at Jun. 30, 2021 | $ 1,527.3 | $ 0.8 | $ 1,298.4 | $ (54.4) | $ (479.7) | $ 762.2 | |
[1] | Includes post acquisition date adjustments. |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 19.6 | $ (12.3) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 50.9 | 45.2 |
Non-cash interest expense, net | 5.7 | 2.2 |
Equity-based compensation expense | 9.3 | 6.9 |
Loss on disposals and deconsolidations, net | 0.1 | 6.4 |
Loss on debt extinguishment | 9.6 | 0 |
Deferred income taxes | (3.2) | (16.4) |
Income from equity investments, net of distributions received | (0.4) | (0.2) |
Non-cash lease expense | 20 | 20.1 |
Changes in operating assets and liabilities, net of acquisitions and divestitures: | ||
Accounts receivable | (3.1) | 16.3 |
Medicare accelerated payments and deferred governmental grants | (28.8) | 124.7 |
DOJ settlement payments | (32.2) | (4) |
Other operating assets and liabilities | 5 | 22.2 |
Net cash provided by operating activities | 52.5 | 211.1 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (28) | (19.9) |
Payments for acquisitions, net of cash acquired | (15.2) | (12.4) |
Proceeds from disposals of facilities and other assets | 2.5 | 9.4 |
Other investing activities | 0 | 0.4 |
Net cash used in investing activities | (40.7) | (22.5) |
Cash flows from financing activities: | ||
Principal payments on long-term debt | (309.4) | (182.8) |
Borrowings of long-term debt | 283.1 | 288.2 |
Payments of debt issuance costs | (8.7) | (6.5) |
Payment of premium on debt extinguishment | (2.4) | 0 |
Proceeds from equity offering | 260.9 | 0 |
Payments of equity offering costs | (12.7) | 0 |
Payment of preferred dividends | (5.1) | 0 |
Distributions to non-controlling interest holders | (63.4) | (51.7) |
Receipts (payments) related to ownership transactions with non-controlling interest holders | 3.4 | |
Receipts (payments) related to ownership transactions with non-controlling interest holders | (1.9) | |
Other financing activities | (10.9) | (0.3) |
Net cash provided by financing activities | 134.8 | 45 |
Net increase in cash, cash equivalents and restricted cash | 146.6 | 233.6 |
Cash, cash equivalents and restricted cash at beginning of period | 318.2 | 93 |
Cash, cash equivalents and restricted cash at end of period | $ 464.8 | $ 326.6 |
Organization and Summary of Acc
Organization and Summary of Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
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, acting through its subsidiaries, owns and operates a national network of surgical facilities and ancillary services. 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. Unless the context otherwise indicates, Surgery Partners, Inc. and its subsidiaries are referred to herein as "Surgery Partners," "we," "us," "our" or the "Company." As of June 30, 2021, the Company owned or operated a portfolio of 123 surgical facilities, comprised of 106 ASCs and 17 surgical hospitals in 30 states. 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 87 of the surgical facilities and consolidated 106 of the facilities for financial reporting purposes. Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation of the Company's financial position and results of operations have been included. The Company’s fiscal year ends on December 31 and interim results are not necessarily indicative of results for a full year or any other interim period. The information contained in these condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 (the "2020 Annual Report on Form 10-K"). The condensed 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. Reclassifications Certain reclassifications have been made to the comparative periods' financial statements to conform to the current year presentation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed 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. 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 United States economy and financial markets. 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 continue to improve as states re-open and allow for non-emergent procedures. 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 United States economy. As part of the CARES Act, the United States government announced that it would offer relief to eligible health care providers, including distribution 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 has received approximately $67 million of the grant funds distributed under the CARES Act and other governmental assistance programs, including approximately $1 million and $8 million during the three and six months ended June 30, 2021, respectively. 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 the United States Department of Health and Human Services ("HHS"), including in the Provider Relief Fund Reporting Portal and associated user guides. This guidance sets 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. Based on guidance, the Company estimates approximately $4.9 million and $20.0 million of grant funds received qualified for recognition as a reduction in operating expenses for the three and six months ended June 30, 2021, respectively. Amounts received, but not recognized as a reduction to operating expenses as of June 30, 2021, are reflected as a component of Medicare accelerated payments and deferred governmental grants in the condensed consolidated balance sheets as of June 30, 2021, 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 allowed for most providers and suppliers, including the Company’s surgical hospitals and ASCs to request an advance payment of anticipated Medicare revenues. Under the current terms of the program, repayment begins one year from the date that payment under the program was received, and 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. 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. Any outstanding amounts due at the end of the repayment period are subject to interest at a rate of 4%. The Company received approximately $120 million of accelerated payments during the year ended December 31, 2020. The payments received were deferred and included in the condensed consolidated balance sheets. During the six months ended June 30, 2021, approximately $20 million has been repaid in accordance with the terms above. As of June 30, 2021 and December 31, 2020, the current portion of deferred accelerated payments was approximately $76 million and $95 million, respectively, and is included as a component of Medicare accelerated payments and deferred governmental grants in the condensed consolidated balance sheets. 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 provided for the deferral of the Company's portion of social security payroll taxes during 2020. Under the CARES Act, half of the deferred amount will have to be paid in each of December 2021 and December 2022. As of both June 30, 2021 and December 31, 2020, the Company had 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 condensed consolidated balance sheets. 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 condensed consolidated financial statements include the accounts of variable interest entities ("VIE") in which the Company is the primary beneficiary under the provisions of the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification 810, " Consolidation ". The Company has the power to direct the activities that most significantly impact a VIE's economic performance. Additionally, the Company would absorb the majority of the expected losses from any of these entities should such expected losses occur. During the three months ended June 30, 2021, the Company divested its interest in one surgical facility and one physician practice. As of June 30, 2021, the Company's consolidated VIEs include three surgical facilities and two physician practices. The total assets (excluding goodwill and intangible assets, net) of the consolidated VIEs included in the accompanying condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020 were $26.2 million and $27.7 million, respectively, and the total liabilities of the consolidated VIEs were $19.9 million and $21.1 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 condensed 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 estimated fair values of the Company's long-term debt follows (in millions): Carrying Amount Fair Value June 30, December 31, June 30, December 31, Senior secured term loan $ 1,538.2 $ 1,539.4 $ 1,530.5 $ 1,533.4 6.750% senior unsecured notes due 2025 $ 370.0 $ 370.0 $ 374.2 $ 376.0 10.000% senior unsecured notes due 2027 $ 545.0 $ 545.0 $ 596.1 $ 596.8 The fair values in the table above were based on 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 based on Level 3 inputs. 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 its 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: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Patient service revenues: Surgical facilities revenues 95.5 % 95.0 % 95.5 % 94.8 % Ancillary services revenues 3.2 % 3.5 % 3.2 % 3.7 % Total patient service revenues 98.7 % 98.5 % 98.7 % 98.5 % Other service revenues 1.3 % 1.5 % 1.3 % 1.5 % Total revenues 100.0 % 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 and 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. Other service 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. For the six months ended June 30, 2020, other service revenues also includes optical service revenues, which consisted of handling charges billed to the members of the Company's optical products purchasing organization. The Company sold its optical products purchasing organization on December 31, 2020. 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): Three Months Ended June 30, 2021 2020 Amount % Amount % Patient service revenues: Private insurance $ 273.0 50.9 % $ 199.2 54.0 % Government 226.2 42.2 % 140.8 38.1 % Self-pay 17.8 3.3 % 11.2 3.0 % Other (1) 18.9 3.6 % 17.9 4.9 % Total patient service revenues 535.9 100.0 % 369.1 100.0 % Other service revenues 7.4 5.6 Total revenues $ 543.3 $ 374.7 Six Months Ended June 30, 2021 2020 Amount % Amount % Patient service revenues: Private insurance $ 519.1 49.8 % $ 425.2 52.9 % Government 452.6 43.5 % 316.6 39.4 % Self-pay 31.0 3.0 % 24.0 3.0 % Other (1) 38.9 3.7 % 37.9 4.7 % Total patient service revenues 1,041.6 100.0 % 803.7 100.0 % Other service revenues 14.1 12.0 Total revenues $ 1,055.7 $ 815.7 (1) Other is comprised of anesthesia service agreements, automobile 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. At December 31, 2020, cash, cash equivalents and restricted cash reported within the condensed consolidated statement of cash flows includes $0.3 million of restricted investments, which are reflected in other long-term assets in the condensed consolidated balance sheets. These restricted investments represented 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. The restrictions were released during the six months ended June 30, 2021. 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. Goodwill Goodwill represents the fair value of the consideration provided in an acquisition over the fair value of net assets acquired and is not amortized. Additions to goodwill include amounts resulting from new business combinations and incremental ownership purchases in the Company's subsidiaries. A summary of the Company's acquisitions and dispositions for the six months ended June 30, 2021 is included in Note 2. "Acquisitions." A summary of activity related to goodwill for the six months ended June 30, 2021 is as follows (in millions): Balance at December 31, 2020 $ 3,468.0 Acquisitions, including post acquisition adjustments 20.2 Divestitures and deconsolidations (0.1) Balance at June 30, 2021 $ 3,488.1 A detailed evaluation of potential impairment indicators was performed as of June 30, 2021, which specifically considered the ongoing impact of the COVID-19 pandemic. On the basis of available evidence as of June 30, 2021, no indicators of impairment were identified. Future estimates of fair value could be adversely affected if the actual outcome of one or more of the Company's assumptions changes materially in the future, including a decline in the Company’s stock price and the fair value of its long-term debt, lower than expected surgical case volumes, higher market interest rates or increased operating costs. Such changes impacting the calculation of fair value, the risks of which are amplified by the COVID-19 pandemic, could result in a material impairment charge in the future. Derivative Instruments and Hedging Activities The Company records all derivatives on the balance sheet at fair value and any financing elements treated as debt instruments are recorded at amortized cost. 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. 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 condensed consolidated balance sheets. A summary of activity related to non-controlling interests—redeemable for the six months ended June 30, 2021 and 2020 is as follows (in millions): 2021 2020 Balance at beginning of period $ 306.8 $ 321.0 Net income attributable to non-controlling interests—redeemable 24.4 11.3 Acquisition (disposal) of shares of non-controlling interests, net—redeemable 1.9 (1.7) Distributions to non-controlling interest—redeemable holders (20.3) (15.9) Balance at end of period $ 312.8 $ 314.7 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If a carryforward exists, the Company makes a determination as to whether the carryforward will be utilized in the future. A valuation allowance is established for certain 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 our 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, we may need to adjust the valuation allowance, for all or a portion of our deferred tax assets. Our income tax expense in future periods will be reduced or increased to the extent of offsetting decreases or increases, respectively, in our valuation allowance in the period when the change in circumstances occurs. These changes could have a significant impact on our future earnings. 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's effective tax rate was (14.6)% for the six months ended June 30, 2021 compared to 56.2% for the six months ended June 30, 2020. For the six months ended June 30, 2021, the effective tax rate differed from 21% due to tax benefits of $4.1 million related to the vesting of restricted stock awards, as well as a $3.0 million tax benefit related to entity divestitures. For the six months ended June 30, 2020, the effective tax rate differed from 21% due to tax benefits of $11.9 million attributable to (a) the release of federal and state valuation allowances on the Company’s Internal Revenue Code Section 163(j) interest carryforwards as a result of the increase in deductible interest expense allowed under the CARES Act, and (b) the Settlement Agreement, as defined in Note 9. "Commitments and Contingencies." Based upon the application of interim accounting guidance, the tax rate as a percentage of net income after income attributable to non-controlling interests will vary based upon the relative net income from period to period. Recent Accounting Pronouncements In March 2020, the FASB issued Accounting Standard Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The ASU provides optional guidance for a limited period of time to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting and applies only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASU is effective as of March 12, 2020 through December 31, 2022. Entities may adopt ASU 2020-04 as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The Company is evaluating the impact of this ASU on its consolidated financial statements. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions During the six months ended June 30, 2021, the Company acquired a controlling interest in a surgical facility in a new market and two surgical facilities in existing markets that were merged into existing facilities for aggregate cash consideration of $15.2 million, net of cash acquired. The cash consideration was funded through cash from operations. The total consideration was allocated to the assets acquired and liabilities assumed based upon the respective acquisition date fair values. The aggregate amounts preliminarily recognized for each major class of assets acquired and liabilities assumed for the acquisitions are as follows (in millions): Total consideration $ 15.4 Fair value of non-controlling interests 7.5 Aggregate acquisition date fair value $ 22.9 Net assets acquired: Current assets $ 1.7 Property and equipment 1.7 Goodwill 20.0 Right-of-use operating lease assets 2.1 Current liabilities (0.6) Long-term debt (0.1) Right-of-use operating lease liabilities (1.9) Aggregate acquisition date fair value $ 22.9 The fair values assigned to certain assets acquired and liabilities assumed by the Company 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. During the six months ended June 30, 2021, no 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 2020. The goodwill acquired was allocated to the Company's Surgical Facility services reportable segment. The results of operations of the acquisitions were included in the Company’s results of operations beginning on the dates of acquisition and were not considered significant for the six months ended June 30, 2021. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt A summary of long-term debt follows (in millions): June 30, December 31, Senior secured term loan (1) $ 1,538.2 $ 1,539.4 6.750% senior unsecured notes due 2025 370.0 370.0 10.000% senior unsecured notes due 2027 545.0 545.0 Notes payable and other secured loans 137.6 137.5 Finance lease obligations 281.7 281.2 Less: unamortized debt issuance costs and discounts (16.8) (16.3) Total debt 2,855.7 2,856.8 Less: Current maturities 69.6 64.4 Total long-term debt $ 2,786.1 $ 2,792.4 (1) Includes unamortized fair value discount of $3.2 million and $3.7 million as of June 30, 2021 and December 31, 2020, respectively. Revolving Credit Facility On January 27, 2021, the Company entered into an amendment to the credit agreement governing its revolving credit facility (the "Revolver"), 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 a $50.0 million increase in the outstanding commitments under the Revolver. The maturity extension and the additional commitments became operative on February 1, 2021. As of June 30, 2021, the Company's availability on the Revolver was $163.7 million (including outstanding letters of credit of $6.3 million). There were no outstanding borrowings under the Revolver as of both June 30, 2021 and December 31, 2020. Sixth Amendment to Credit Agreement On May 3, 2021, the Company entered into a sixth amendment to the credit agreement, which amended the credit agreement originally dated as of August 31, 2017 (the “Credit Agreement”). The sixth amendment provides for, among other things, a new tranche of term loans under the Credit Agreement in an aggregate original principal amount of approximately $1.545 billion (the “New Term Loans”), which New Term Loans replace or refinance in full all of the existing term loans outstanding under the Credit Agreement. The New Term Loans mature on August 31, 2026 (or, if at least $185 million of the Borrower’s 6.750% senior unsecured notes due 2025 shall have not either been repaid, repurchased or redeemed or refinanced with indebtedness having a maturity date not earlier than 91 days after August 31, 2026 by no later than April 1, 2025, then April 1, 2025). The New Term Loans bear interest at a rate per annum equal to (x) LIBOR plus a margin of 3.75% per annum (LIBOR with respect to the New Term Loans shall be subject to a floor of 0.75%) 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 (the alternate base rate with respect to the New Term Loans shall be subject to a floor of 1.75%)) plus a margin of 2.75% per annum. The New Term Loans are subject to quarterly amortization in an aggregate original principal amount of approximately 1.00% per annum. Voluntary prepayments of the New Term Loans are permitted, in whole or in part, with prior notice, without premium or penalty (except LIBOR breakage costs and a call premium in the case of certain repricing events within a specified period of time after May 3, 2021, as further set forth in the sixth amendment). In connection with the sixth amendment, the Company recorded debt issuance costs and discount of $8.9 million, and a debt extinguishment loss of $9.6 million, included in loss on debt extinguishment in the accompanying condensed consolidated statement of operations for the three and six months ended June 30, 2021. The loss includes the partial write-off of unamortized debt issuance costs and discounts and a prepayment premium related to the prior existing term loans, and a portion of debt issuance costs incurred with the New Term Loans. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Leases | Leases 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 following table presents the components of the Company's lease expense and their classification in the condensed consolidated statement of operations (in millions): Six Months Ended June 30, 2021 2020 Operating lease costs $ 37.5 $ 36.3 Finance lease costs: Amortization of leased assets 13.8 12.0 Interest on lease liabilities 12.6 10.4 Total finance lease costs 26.4 22.4 Variable and short-term lease costs 9.8 8.3 Total lease costs $ 73.7 $ 67.0 The following table presents supplemental cash flow information (dollars in millions): Six Months Ended June 30, 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 36.7 $ 33.7 Operating cash outflows from finance leases $ 11.9 $ 10.4 Financing cash outflows from finance leases $ 10.6 $ 8.3 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 31.4 $ 37.5 Finance leases $ 6.6 $ 8.5 |
Leases | Leases 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 following table presents the components of the Company's lease expense and their classification in the condensed consolidated statement of operations (in millions): Six Months Ended June 30, 2021 2020 Operating lease costs $ 37.5 $ 36.3 Finance lease costs: Amortization of leased assets 13.8 12.0 Interest on lease liabilities 12.6 10.4 Total finance lease costs 26.4 22.4 Variable and short-term lease costs 9.8 8.3 Total lease costs $ 73.7 $ 67.0 The following table presents supplemental cash flow information (dollars in millions): Six Months Ended June 30, 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 36.7 $ 33.7 Operating cash outflows from finance leases $ 11.9 $ 10.4 Financing cash outflows from finance leases $ 10.6 $ 8.3 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 31.4 $ 37.5 Finance leases $ 6.6 $ 8.5 |
Redeemable Preferred Stock
Redeemable Preferred Stock | 6 Months Ended |
Jun. 30, 2021 | |
Temporary Equity Disclosure [Abstract] | |
Redeemable Preferred Stock | Redeemable Preferred Stock On August 31, 2017, the Company issued 310,000 shares of Series A Preferred Stock to Bain Capital Private Equity, L.P. ("Bain Capital") at a purchase price of $1,000 per share for an aggregate purchase price of $310.0 million. Pursuant to the Certificate of Designations, Preferences, Rights and Limitations of 10.00% Series A Convertible Perpetual Participating Preferred Stock of Surgery Partners, Inc. (the “Certificate of Designation”), 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 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 twenty out of thirty consecutive trading days prior to such date, equals or exceeds $42.00 per share. In accordance with such provision, on May 17, 2021, the Company converted all outstanding shares of Series A Preferred Stock into approximately 22.609 million shares of common stock, $0.01 par value per share. Following the conversion, no shares of Series A Preferred Stock remained outstanding. The conversion of the Series A Preferred Stock into common stock was a non-cash transaction, and therefore had no impact on the condensed consolidated statements of cash flows. A summary of activity related to the Series A Preferred Stock follows (in millions): Balance at December 31, 2020 $ 434.5 Dividends accrued 10.3 Dividends declared (5.1) Redeemable preferred stock conversion to common stock (439.7) Balance at June 30, 2021 $ — |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 6 Months Ended |
Jun. 30, 2021 | |
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 2021 and 2020, 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 an additional $25.8 million will be reclassified as an increase to interest expense. In May 2021, the Company entered into additional interest rate swap agreements to match the terms of the New Term Loan and effectively extend the termination date to March 31, 2025. As of June 30, 2021, the Company had nine interest rate swaps with a total net hedged notional amount of $1.2 billion. Of the nine interest rate swaps, three are pay-fixed, receive 1 mo. LIBOR (subject to a minimum of 0.75%) interest rate swaps designated in cash flow hedging relationships with a total notional amount of $1.2 billion and a termination date of March 31, 2025. The remaining six interest rate swaps are undesignated and consist of three pay-fixed, receive 1 mo. LIBOR (subject to a minimum of 1.00%) interest rate swaps and three pay 1 mo. LIBOR (subject to a minimum of 1.00%), receive-fixed interest rate swaps with a termination date of November 30, 2023. The pay-floating, receive-fixed swaps are designed to economically offset the undesignated pay-fixed, receive-floating swaps. Concurrently with the May 2021 transactions, the four previously existing interest rate swap positions were amended, de-designated or terminated and replaced with the new interest rate swaps discussed above. The Company voluntarily de-designated an aggregate notional amount of $435 million (the effects of which are offset by the pay-floating, receive-fixed interest rate swaps) and terminated an aggregate notional amount of $435 million. No cash was exchanged between the Company and the counterparties due to the transactions described above, therefore the non-cash transactions had no impact on the condensed consolidated statements of cash flows. The amount of unrealized losses recorded in OCI related to the de-designated and terminated notional amounts at the time of the de-designation and termination was $55.0 million. This amount will be amortized to interest expense over the remaining term of the original interest rate swaps. The liability of the de-designated and terminated notional amounts was blended into the fixed rate of the new pay-fixed interest rate swaps. The pay-fixed, receive floating interest rate swaps entered into in May 2021 did not meet the requirements to be considered derivatives in their entirety as a result of the financing component. Accordingly, the swaps are considered hybrid instruments, consisting of a financing element treated as a debt instrument and an embedded at-market derivative that was designated as a cash flow hedge. Within the Company’s condensed consolidated balance sheets, the financing elements treated as debt instruments described above are carried at amortized cost and the embedded at-market derivatives and the undesignated swaps are recorded at fair value. The cash flows related to the portion treated as debt are classified as financing activities in the condensed consolidated statements of cash flows while the portion treated as an at-market derivative are classified as operating activities. Cash settlements related to the undesignated swaps will offset and are classified as operating activities in the condensed consolidated cash flows. The key terms of interest rate swaps outstanding are presented below: June 30, 2021 December 31, 2020 Description Effective Date Notional Amount (in millions) Status Notional Amount (in millions) Status Maturity Date Pay-fixed swap May 7, 2021 $ 435.0 Active $ — NA March 31, 2025 Pay-fixed swap May 7, 2021 330.0 Active — NA March 31, 2025 Pay-fixed swap May 7, 2021 435.0 Active — NA March 31, 2025 Pay-fixed swap November 30, 2018 165.0 Active — NA November 30, 2023 Pay-fixed swap November 30, 2018 120.0 Active — NA November 30, 2023 Pay-fixed swap June 28, 2019 150.0 Active — NA November 30, 2023 Receive-fixed swap April 30, 2021 (165.0) Active — NA November 30, 2023 Receive-fixed swap April 30, 2021 (120.0) Active — NA November 30, 2023 Receive-fixed swap April 30, 2021 (150.0) Active — NA November 30, 2023 Pay-fixed swap November 30, 2018 — Terminated 330.0 Active November 30, 2023 Pay-fixed swap November 30, 2018 — Terminated 330.0 Active November 30, 2023 Pay-fixed swap November 30, 2018 — Terminated 240.0 Active November 30, 2023 Pay-fixed swap June 28, 2019 — Terminated 300.0 Active November 30, 2023 $ 1,200.0 $ 1,200.0 Our interest rate swap agreements, excluding the portion treated as debt, are recognized at fair value in the condensed consolidated balance sheets and are valued using pricing models that rely on market observable inputs such as yield curve data, which are classified as Level 2 inputs within the fair value hierarchy. The following table presents the the fair values of our derivatives and their location on the condensed consolidated balance sheets (in millions): June 30, 2021 December 31, 2020 Location Assets Liabilities Assets Liabilities Derivatives not designated as hedging instruments Interest rate swaps Other long-term assets $ 17.6 $ — $ — $ — Interest rate swaps Other long-term liabilities — 17.3 — — Derivatives in cash flow hedging relationships Interest rate swaps Other long-term liabilities (1) — 55.5 — 61.0 Total $ 17.6 $ 72.8 $ — $ 61.0 (1) The balance as of June 30, 2021 includes $52.9 million related to the financing component of the pay-fixed, receive floating interest rate swaps. The following table presents the pre-tax effect of the interest rate swaps on the Company's accumulated OCI and condensed consolidated statement of operations (in millions): Three Months Ended June 30, Six Months Ended June 30, Location 2021 2020 2021 2020 Derivatives not designated as hedging instruments Gain recognized in income Other income $ 0.2 $ — $ 0.2 $ — Derivatives in cash flow hedging relationships Loss (gain) recognized in OCI (effective portion) $ 5.8 $ (1.7) $ 4.9 $ 26.9 Loss reclassified from accumulated OCI into income (effective portion) (1) Interest expense, net $ 6.0 $ 5.6 $ 11.5 $ 9.0 (1) Includes amortization of accumulated OCI related to de-designated and terminated interest rate swaps of $3.2 million for the three and six months ended June 30, 2021. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2021 | |
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): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Numerator: Net loss attributable to Surgery Partners, Inc. $ (26.9) $ (32.5) $ (47.9) $ (60.0) Less: amounts allocated to participating securities (1) — (9.7) (10.3) (19.2) Net loss attributable to common stockholders $ (26.9) $ (42.2) $ (58.2) $ (79.2) Denominator: Weighted average shares outstanding- basic and diluted (2) 69,267 48,840 62,060 48,661 Loss per share: Basic and diluted (2) $ (0.39) $ (0.86) $ (0.94) $ (1.63) Dilutive securities outstanding not included in the computation of loss per share as their effect is antidilutive: Stock options 2,016 — 1,901 42 Restricted shares 1,484 530 1,451 545 (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 presented was not considered because the effect would be anti-dilutive in each period. |
Other Current Liabilities
Other Current Liabilities | 6 Months Ended |
Jun. 30, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | Other Current Liabilities A summary of other current liabilities is as follows (in millions): June 30, December 31, Right-of-use operating lease liabilities $ 39.1 $ 39.2 Accrued legal settlement (1) — 32.2 Interest payable 29.6 24.5 Tax receivable agreement liability 21.2 21.2 Amounts due to patients and payors 22.2 20.9 Cost report liabilities 30.5 16.9 Accrued expenses and other 56.4 62.1 Total $ 199.0 $ 217.0 (1) See Note 9. "Commitments and Contingencies" for further discussion. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
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 June 30, 2021 and December 31, 2020 were $23.2 million and $21.4 million, respectively. Expected insurance recoveries of $10.5 million as of both June 30, 2021 and December 31, 2020, are included as a component of other current assets and other long-term assets in the condensed 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 paid $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. During the three months ended March 31, 2020, the Company recorded an additional litigation-related charge of $1.2 million relating to the resolution of the DOJ investigation included in litigation settlement on the condensed 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 the 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 as of both June 30, 2021 and December 31, 2020. As a result of the amendment to the TRA, the Company was required to value the liability under the TRA by discounting the fixed payment schedule using the Company’s incremental borrowing rate. The carrying value of the liability under the TRA, reflecting the discount, was $38.9 million and $37.0 million as of June 30, 2021 and December 31, 2020, respectively. The current portion of the liability was $21.2 million as of both June 30, 2021 and December 31, 2020, and is included as a component of other current liabilities in the condensed consolidated balance sheets. The long-term portion is included as a component of other long-term liabilities in the condensed consolidated balance sheets. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2021 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company currently operates in two major lines of business that are also the Company's reportable operating segments - the operation of surgical facilities and the operation of ancillary 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 for the three and six months ended June 30, 2020 reflected in the table below consisted of an optical products group purchasing organization, which was sold on December 31, 2020. "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): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Revenues: Surgical Facility Services $ 525.8 $ 361.0 $ 1,021.6 $ 784.2 Ancillary Services 17.5 13.2 34.1 30.2 Optical Services — 0.5 — 1.3 Total $ 543.3 $ 374.7 $ 1,055.7 $ 815.7 Adjusted EBITDA: Surgical Facility Services $ 95.6 $ 80.0 $ 190.6 $ 147.2 Ancillary Services (0.1) (1.3) (1.0) (3.3) Optical Services — 0.2 — 0.6 All other (19.6) (20.7) (40.8) (39.8) Total $ 75.9 $ 58.2 $ 148.8 $ 104.7 Reconciliation of Adjusted EBITDA: Income (loss) before income taxes $ 6.1 $ (4.5) $ 17.1 $ (28.1) Net income attributable to non-controlling interests (35.7) (28.6) (67.5) (47.7) Depreciation and amortization 25.2 23.4 50.9 45.2 Interest expense, net 53.4 49.2 106.7 96.3 Equity-based compensation expense 4.1 3.4 9.3 6.9 Transaction, integration and acquisition costs (1) 11.4 10.1 20.8 22.7 Loss on disposals and deconsolidations, net 1.0 2.9 0.1 6.4 Litigation settlement and other litigation costs (2) 0.8 2.3 1.8 3.8 Loss on debt extinguishment 9.6 — 9.6 — Gain on escrow release (3) — — — (0.8) Adjusted EBITDA $ 75.9 $ 58.2 $ 148.8 $ 104.7 (1) This amount includes transaction and integration costs of $9.2 million and $4.9 million for the three months ended June 30, 2021 and 2020, respectively. This amount further includes start-up costs related to a de novo surgical hospital of $2.2 million and $5.2 million for the three months ended June 30, 2021 and 2020, respectively. This amount includes transaction and integration costs of $14.5 million and $10.4 million for the six months ended June 30, 2021 and 2020, respectively. This amount further includes start-up costs related to a de novo surgical hospital of $6.3 million and $12.3 million for the six months ended June 30, 2021 and 2020, respectively. (2) This amount includes other litigation costs of $0.8 million and $2.3 million for the three months ended June 30, 2021 and 2020, respectively. This amount includes other litigation costs of $1.8 million and $2.6 million for the six months ended June 30, 2021 and 2020, respectively. This amount includes litigation settlement costs of $1.2 million for the six months ended June 30, 2020, with no comparable costs in the 2021 period. (3) Included in other income in the condensed consolidated statement of operations for the six months ended June 30, 2020. June 30, December 31, Assets: Surgical Facility Services $ 5,021.6 $ 4,962.4 Ancillary Services 32.7 35.0 All other 566.3 415.8 Total assets $ 5,620.6 $ 5,413.2 Six Months Ended June 30, 2021 2020 Cash purchases of property and equipment: Surgical Facility Services $ 27.2 $ 16.8 Ancillary Services 0.2 0.1 All other 0.6 3.0 Total cash purchases of property and equipment $ 28.0 $ 19.9 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsDuring August 2021, the Company purchased a controlling interest in three ASCs in new markets for a combined purchase price of $85.0 million. The Company funded the purchase price with available resources. As of the date of this filing, the Company has not completed its preliminary estimation of the fair values assigned to the assets acquired and liabilities assumed. |
Organization and Summary of A_2
Organization and Summary of Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation of the Company's financial position and results of operations have been included. The Company’s fiscal year ends on December 31 and interim results are not necessarily indicative of results for a full year or any other interim period. The information contained in these condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 (the "2020 Annual Report on Form 10-K"). |
Principles of Consolidation | The condensed 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. |
Reclassifications | Reclassifications Certain reclassifications have been made to the comparative periods' financial statements to conform to the current year presentation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed 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. |
Variable Interest Entities | Variable Interest Entities The condensed consolidated financial statements include the accounts of variable interest entities ("VIE") in which the Company is the primary beneficiary under the provisions of the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification 810, " Consolidation |
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 condensed 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 its 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 and 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. Other service 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. For the six |
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. At December 31, 2020, cash, cash equivalents and restricted cash reported within the condensed consolidated statement of cash flows includes $0.3 million of restricted investments, which are reflected in other long-term assets in the condensed consolidated balance sheets. These restricted investments represented 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. The restrictions were released during the six months ended June 30, 2021. |
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 |
Goodwill | GoodwillGoodwill represents the fair value of the consideration provided in an acquisition over the fair value of net assets acquired and is not amortized. Additions to goodwill include amounts resulting from new business combinations and incremental ownership purchases in the Company's subsidiaries |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities The Company records all derivatives on the balance sheet at fair value and any financing elements treated as debt instruments are recorded at amortized cost. 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. |
Non-Controlling Interests—Redeemable | 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 condensed consolidated balance sheets. |
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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If a carryforward exists, the Company makes a determination as to whether the carryforward will be utilized in the future. A valuation allowance is established for certain 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 our 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, we may need to adjust the valuation allowance, for all or a portion of our deferred tax assets. Our income tax expense in future periods will be reduced or increased to the extent of offsetting decreases or increases, respectively, in our valuation allowance in the period when the change in circumstances occurs. These changes could have a significant impact on our future earnings. 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's effective tax rate was (14.6)% for the six months ended June 30, 2021 compared to 56.2% for the six months ended June 30, 2020. For the six months ended June 30, 2021, the effective tax rate differed from 21% due to tax benefits of $4.1 million related to the vesting of restricted stock awards, as well as a $3.0 million tax benefit related to entity divestitures. For the six months ended June 30, 2020, the effective tax rate differed from 21% due to tax benefits of $11.9 million attributable to (a) the release of federal and state valuation allowances on the Company’s Internal Revenue Code Section 163(j) interest carryforwards as a result of the increase in deductible interest expense allowed under the CARES Act, and (b) the Settlement Agreement, as defined in Note 9. "Commitments and Contingencies." Based upon the application of interim accounting guidance, the tax rate as a percentage of net income after income attributable to non-controlling interests will vary based upon the relative net income from period to period. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2020, the FASB issued Accounting Standard Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The ASU provides optional guidance for a limited period of time to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting and applies only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASU is effective as of March 12, 2020 through December 31, 2022. Entities may adopt ASU 2020-04 as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The Company is evaluating the impact of this ASU on its consolidated financial statements. |
Organization and Summary of A_3
Organization and Summary of Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Carrying Amounts and Fair Values of Long-Term Debt | A summary of the carrying amounts and estimated fair values of the Company's long-term debt follows (in millions): Carrying Amount Fair Value June 30, December 31, June 30, December 31, Senior secured term loan $ 1,538.2 $ 1,539.4 $ 1,530.5 $ 1,533.4 6.750% senior unsecured notes due 2025 $ 370.0 $ 370.0 $ 374.2 $ 376.0 10.000% senior unsecured notes due 2027 $ 545.0 $ 545.0 $ 596.1 $ 596.8 |
Schedule of Revenues | A summary of revenues by service type as a percentage of total revenues follows: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Patient service revenues: Surgical facilities revenues 95.5 % 95.0 % 95.5 % 94.8 % Ancillary services revenues 3.2 % 3.5 % 3.2 % 3.7 % Total patient service revenues 98.7 % 98.5 % 98.7 % 98.5 % Other service revenues 1.3 % 1.5 % 1.3 % 1.5 % Total revenues 100.0 % 100.0 % 100.0 % 100.0 % 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): Three Months Ended June 30, 2021 2020 Amount % Amount % Patient service revenues: Private insurance $ 273.0 50.9 % $ 199.2 54.0 % Government 226.2 42.2 % 140.8 38.1 % Self-pay 17.8 3.3 % 11.2 3.0 % Other (1) 18.9 3.6 % 17.9 4.9 % Total patient service revenues 535.9 100.0 % 369.1 100.0 % Other service revenues 7.4 5.6 Total revenues $ 543.3 $ 374.7 Six Months Ended June 30, 2021 2020 Amount % Amount % Patient service revenues: Private insurance $ 519.1 49.8 % $ 425.2 52.9 % Government 452.6 43.5 % 316.6 39.4 % Self-pay 31.0 3.0 % 24.0 3.0 % Other (1) 38.9 3.7 % 37.9 4.7 % Total patient service revenues 1,041.6 100.0 % 803.7 100.0 % Other service revenues 14.1 12.0 Total revenues $ 1,055.7 $ 815.7 |
Schedule of Rollforward of Goodwill | A summary of activity related to goodwill for the six months ended June 30, 2021 is as follows (in millions): Balance at December 31, 2020 $ 3,468.0 Acquisitions, including post acquisition adjustments 20.2 Divestitures and deconsolidations (0.1) Balance at June 30, 2021 $ 3,488.1 |
Schedule of Rollforward of Noncontrolling Interest - Redeemable | A summary of activity related to non-controlling interests—redeemable for the six months ended June 30, 2021 and 2020 is as follows (in millions): 2021 2020 Balance at beginning of period $ 306.8 $ 321.0 Net income attributable to non-controlling interests—redeemable 24.4 11.3 Acquisition (disposal) of shares of non-controlling interests, net—redeemable 1.9 (1.7) Distributions to non-controlling interest—redeemable holders (20.3) (15.9) Balance at end of period $ 312.8 $ 314.7 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Assets Acquired and Liabilities Assumed | The aggregate amounts preliminarily recognized for each major class of assets acquired and liabilities assumed for the acquisitions are as follows (in millions): Total consideration $ 15.4 Fair value of non-controlling interests 7.5 Aggregate acquisition date fair value $ 22.9 Net assets acquired: Current assets $ 1.7 Property and equipment 1.7 Goodwill 20.0 Right-of-use operating lease assets 2.1 Current liabilities (0.6) Long-term debt (0.1) Right-of-use operating lease liabilities (1.9) Aggregate acquisition date fair value $ 22.9 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Summary of Long-term Debt | A summary of long-term debt follows (in millions): June 30, December 31, Senior secured term loan (1) $ 1,538.2 $ 1,539.4 6.750% senior unsecured notes due 2025 370.0 370.0 10.000% senior unsecured notes due 2027 545.0 545.0 Notes payable and other secured loans 137.6 137.5 Finance lease obligations 281.7 281.2 Less: unamortized debt issuance costs and discounts (16.8) (16.3) Total debt 2,855.7 2,856.8 Less: Current maturities 69.6 64.4 Total long-term debt $ 2,786.1 $ 2,792.4 (1) Includes unamortized fair value discount of $3.2 million and $3.7 million as of June 30, 2021 and |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
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 condensed consolidated statement of operations (in millions): Six Months Ended June 30, 2021 2020 Operating lease costs $ 37.5 $ 36.3 Finance lease costs: Amortization of leased assets 13.8 12.0 Interest on lease liabilities 12.6 10.4 Total finance lease costs 26.4 22.4 Variable and short-term lease costs 9.8 8.3 Total lease costs $ 73.7 $ 67.0 The following table presents supplemental cash flow information (dollars in millions): Six Months Ended June 30, 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 36.7 $ 33.7 Operating cash outflows from finance leases $ 11.9 $ 10.4 Financing cash outflows from finance leases $ 10.6 $ 8.3 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 31.4 $ 37.5 Finance leases $ 6.6 $ 8.5 |
Redeemable Preferred Stock (Tab
Redeemable Preferred Stock (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Temporary Equity Disclosure [Abstract] | |
Activity Related to Redeemable Preferred Stock | A summary of activity related to the Series A Preferred Stock follows (in millions): Balance at December 31, 2020 $ 434.5 Dividends accrued 10.3 Dividends declared (5.1) Redeemable preferred stock conversion to common stock (439.7) Balance at June 30, 2021 $ — |
Derivatives and Hedging Activ_2
Derivatives and Hedging Activities (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Interest Rate Swaps Outstanding | The key terms of interest rate swaps outstanding are presented below: June 30, 2021 December 31, 2020 Description Effective Date Notional Amount (in millions) Status Notional Amount (in millions) Status Maturity Date Pay-fixed swap May 7, 2021 $ 435.0 Active $ — NA March 31, 2025 Pay-fixed swap May 7, 2021 330.0 Active — NA March 31, 2025 Pay-fixed swap May 7, 2021 435.0 Active — NA March 31, 2025 Pay-fixed swap November 30, 2018 165.0 Active — NA November 30, 2023 Pay-fixed swap November 30, 2018 120.0 Active — NA November 30, 2023 Pay-fixed swap June 28, 2019 150.0 Active — NA November 30, 2023 Receive-fixed swap April 30, 2021 (165.0) Active — NA November 30, 2023 Receive-fixed swap April 30, 2021 (120.0) Active — NA November 30, 2023 Receive-fixed swap April 30, 2021 (150.0) Active — NA November 30, 2023 Pay-fixed swap November 30, 2018 — Terminated 330.0 Active November 30, 2023 Pay-fixed swap November 30, 2018 — Terminated 330.0 Active November 30, 2023 Pay-fixed swap November 30, 2018 — Terminated 240.0 Active November 30, 2023 Pay-fixed swap June 28, 2019 — Terminated 300.0 Active November 30, 2023 $ 1,200.0 $ 1,200.0 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table presents the the fair values of our derivatives and their location on the condensed consolidated balance sheets (in millions): June 30, 2021 December 31, 2020 Location Assets Liabilities Assets Liabilities Derivatives not designated as hedging instruments Interest rate swaps Other long-term assets $ 17.6 $ — $ — $ — Interest rate swaps Other long-term liabilities — 17.3 — — Derivatives in cash flow hedging relationships Interest rate swaps Other long-term liabilities (1) — 55.5 — 61.0 Total $ 17.6 $ 72.8 $ — $ 61.0 (1) The balance as of June 30, 2021 includes $52.9 million related to the financing component of the pay-fixed, receive floating interest rate swaps. |
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 condensed consolidated statement of operations (in millions): Three Months Ended June 30, Six Months Ended June 30, Location 2021 2020 2021 2020 Derivatives not designated as hedging instruments Gain recognized in income Other income $ 0.2 $ — $ 0.2 $ — Derivatives in cash flow hedging relationships Loss (gain) recognized in OCI (effective portion) $ 5.8 $ (1.7) $ 4.9 $ 26.9 Loss reclassified from accumulated OCI into income (effective portion) (1) Interest expense, net $ 6.0 $ 5.6 $ 11.5 $ 9.0 (1) Includes amortization of accumulated OCI related to de-designated and terminated interest rate swaps of $3.2 million for the three and six months ended June 30, 2021. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | 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): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Numerator: Net loss attributable to Surgery Partners, Inc. $ (26.9) $ (32.5) $ (47.9) $ (60.0) Less: amounts allocated to participating securities (1) — (9.7) (10.3) (19.2) Net loss attributable to common stockholders $ (26.9) $ (42.2) $ (58.2) $ (79.2) Denominator: Weighted average shares outstanding- basic and diluted (2) 69,267 48,840 62,060 48,661 Loss per share: Basic and diluted (2) $ (0.39) $ (0.86) $ (0.94) $ (1.63) Dilutive securities outstanding not included in the computation of loss per share as their effect is antidilutive: Stock options 2,016 — 1,901 42 Restricted shares 1,484 530 1,451 545 (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 presented was not considered because the effect would be anti-dilutive in each period. |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Other Current Liabilities | A summary of other current liabilities is as follows (in millions): June 30, December 31, Right-of-use operating lease liabilities $ 39.1 $ 39.2 Accrued legal settlement (1) — 32.2 Interest payable 29.6 24.5 Tax receivable agreement liability 21.2 21.2 Amounts due to patients and payors 22.2 20.9 Cost report liabilities 30.5 16.9 Accrued expenses and other 56.4 62.1 Total $ 199.0 $ 217.0 (1) See Note 9. "Commitments and Contingencies" for further discussion. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Revenue and Operating Income | The following tables present financial information for each reportable segment (in millions): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Revenues: Surgical Facility Services $ 525.8 $ 361.0 $ 1,021.6 $ 784.2 Ancillary Services 17.5 13.2 34.1 30.2 Optical Services — 0.5 — 1.3 Total $ 543.3 $ 374.7 $ 1,055.7 $ 815.7 Adjusted EBITDA: Surgical Facility Services $ 95.6 $ 80.0 $ 190.6 $ 147.2 Ancillary Services (0.1) (1.3) (1.0) (3.3) Optical Services — 0.2 — 0.6 All other (19.6) (20.7) (40.8) (39.8) Total $ 75.9 $ 58.2 $ 148.8 $ 104.7 Reconciliation of Adjusted EBITDA: Income (loss) before income taxes $ 6.1 $ (4.5) $ 17.1 $ (28.1) Net income attributable to non-controlling interests (35.7) (28.6) (67.5) (47.7) Depreciation and amortization 25.2 23.4 50.9 45.2 Interest expense, net 53.4 49.2 106.7 96.3 Equity-based compensation expense 4.1 3.4 9.3 6.9 Transaction, integration and acquisition costs (1) 11.4 10.1 20.8 22.7 Loss on disposals and deconsolidations, net 1.0 2.9 0.1 6.4 Litigation settlement and other litigation costs (2) 0.8 2.3 1.8 3.8 Loss on debt extinguishment 9.6 — 9.6 — Gain on escrow release (3) — — — (0.8) Adjusted EBITDA $ 75.9 $ 58.2 $ 148.8 $ 104.7 (1) This amount includes transaction and integration costs of $9.2 million and $4.9 million for the three months ended June 30, 2021 and 2020, respectively. This amount further includes start-up costs related to a de novo surgical hospital of $2.2 million and $5.2 million for the three months ended June 30, 2021 and 2020, respectively. This amount includes transaction and integration costs of $14.5 million and $10.4 million for the six months ended June 30, 2021 and 2020, respectively. This amount further includes start-up costs related to a de novo surgical hospital of $6.3 million and $12.3 million for the six months ended June 30, 2021 and 2020, respectively. (2) This amount includes other litigation costs of $0.8 million and $2.3 million for the three months ended June 30, 2021 and 2020, respectively. This amount includes other litigation costs of $1.8 million and $2.6 million for the six months ended June 30, 2021 and 2020, respectively. This amount includes litigation settlement costs of $1.2 million for the six months ended June 30, 2020, with no comparable costs in the 2021 period. (3) Included in other income in the condensed consolidated statement of operations for the six months ended June 30, 2020. |
Reconciliation of Assets from Segment to Consolidated | June 30, December 31, Assets: Surgical Facility Services $ 5,021.6 $ 4,962.4 Ancillary Services 32.7 35.0 All other 566.3 415.8 Total assets $ 5,620.6 $ 5,413.2 |
Schedule of Financial Information by Reportable Segment | Six Months Ended June 30, 2021 2020 Cash purchases of property and equipment: Surgical Facility Services $ 27.2 $ 16.8 Ancillary Services 0.2 0.1 All other 0.6 3.0 Total cash purchases of property and equipment $ 28.0 $ 19.9 |
Organization and Summary of A_4
Organization and Summary of Accounting Policies - Organization (Details) | Jun. 30, 2021statesurgical_facility |
Products And Services [Line Items] | |
Number of surgical facilities owned | 123 |
Number of states in which entity operates | state | 30 |
Number of surgical facilities owned, majority interest | 87 |
Number of surgical facilities owned, consolidated | 106 |
Facilities, Ambulatory Surgery Centers | |
Products And Services [Line Items] | |
Number of surgical facilities owned | 106 |
Facilities, Surgical Hospitals | |
Products And Services [Line Items] | |
Number of surgical facilities owned | 17 |
Organization and Summary of A_5
Organization and Summary of Accounting Policies - CARES ACT (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | 15 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||
Proceeds from grants received | $ 1 | $ 8 | $ 67 | |||
Repayments of grants received | 20 | |||||
Grant funds | 4.9 | $ 43.1 | 20 | $ 43.1 | ||
Accelerated payments | $ 120 | |||||
Deferred accelerated payments | 76 | 76 | 95 | 76 | ||
Deferred accrued payroll and benefits | $ 16.9 | $ 16.9 | $ 16.9 | $ 16.9 |
Organization and Summary of A_6
Organization and Summary of Accounting Policies - Variable Interest Entities (Details) $ in Millions | Jun. 30, 2021USD ($) | Jun. 30, 2021surgical_facility | Jun. 30, 2021physician_practice | Dec. 31, 2020USD ($) |
Variable Interest Entity [Line Items] | ||||
Number of facilities included in VIE | 3 | 2 | ||
Assets | $ 5,620.6 | $ 5,413.2 | ||
Variable Interest Entity, Primary Beneficiary | ||||
Variable Interest Entity [Line Items] | ||||
Assets | 26.2 | 27.7 | ||
Liabilities | $ 19.9 | $ 21.1 |
Organization and Summary of A_7
Organization and Summary of Accounting Policies - Carrying Amount and Fair Value of Long-Term Debt (Details) - USD ($) $ in Millions | Jun. 30, 2021 | May 03, 2021 | Dec. 31, 2020 |
Secured Debt | Senior secured term loan | Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Long-term debt | $ 1,538.2 | $ 1,539.4 | |
Secured Debt | Senior secured term loan | Fair Value | Fair Value, Inputs, Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Long-term debt | $ 1,530.5 | 1,533.4 | |
Senior Notes | 6.750% senior unsecured notes due 2025 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Stated interest rate (percent) | 6.75% | 6.75% | |
Senior Notes | 6.750% senior unsecured notes due 2025 | Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Long-term debt | $ 370 | 370 | |
Senior Notes | 6.750% senior unsecured notes due 2025 | Fair Value | Fair Value, Inputs, Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Long-term debt | $ 374.2 | 376 | |
Senior Notes | 10.000% senior unsecured notes due 2027 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Stated interest rate (percent) | 10.00% | ||
Senior Notes | 10.000% senior unsecured notes due 2027 | Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Long-term debt | $ 545 | 545 | |
Senior Notes | 10.000% senior unsecured notes due 2027 | Fair Value | Fair Value, Inputs, Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Long-term debt | $ 596.1 | $ 596.8 |
Organization and Summary of A_8
Organization and Summary of Accounting Policies - Schedule of Revenues by Service Type (Details) - Revenue Source - Revenue | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenue from External Customer [Line Items] | ||||
Service revenues as a percentage of total revenues | 100.00% | 100.00% | 100.00% | 100.00% |
Patent service revenues | ||||
Revenue from External Customer [Line Items] | ||||
Service revenues as a percentage of total revenues | 98.70% | 98.50% | 98.70% | 98.50% |
Surgical Facility Services | ||||
Revenue from External Customer [Line Items] | ||||
Service revenues as a percentage of total revenues | 95.50% | 95.00% | 95.50% | 94.80% |
Ancillary Services | ||||
Revenue from External Customer [Line Items] | ||||
Service revenues as a percentage of total revenues | 3.20% | 3.50% | 3.20% | 3.70% |
Other service revenues | ||||
Revenue from External Customer [Line Items] | ||||
Service revenues as a percentage of total revenues | 1.30% | 1.50% | 1.30% | 1.50% |
Organization and Summary of A_9
Organization and Summary of Accounting Policies - Schedule of Revenues by Sources (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 543.3 | $ 374.7 | $ 1,055.7 | $ 815.7 |
Total patient service revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 535.9 | $ 369.1 | $ 1,041.6 | $ 803.7 |
Total patient service revenues | Customer | Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Service revenues as a percentage of total revenues | 100.00% | 100.00% | 100.00% | 100.00% |
Private insurance | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 273 | $ 199.2 | $ 519.1 | $ 425.2 |
Private insurance | Customer | Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Service revenues as a percentage of total revenues | 50.90% | 54.00% | 49.80% | 52.90% |
Government | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 226.2 | $ 140.8 | $ 452.6 | $ 316.6 |
Government | Customer | Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Service revenues as a percentage of total revenues | 42.20% | 38.10% | 43.50% | 39.40% |
Self-pay | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 17.8 | $ 11.2 | $ 31 | $ 24 |
Self-pay | Customer | Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Service revenues as a percentage of total revenues | 3.30% | 3.00% | 3.00% | 3.00% |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 18.9 | $ 17.9 | $ 38.9 | $ 37.9 |
Other | Customer | Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Service revenues as a percentage of total revenues | 3.60% | 4.90% | 3.70% | 4.70% |
Other service revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 7.4 | $ 5.6 | $ 14.1 | $ 12 |
Organization and Summary of _10
Organization and Summary of Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) $ in Millions | Dec. 31, 2020USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Restricted invested assets included in other long-term assets | $ 0.3 |
Organization and Summary of _11
Organization and Summary of Accounting Policies - Rollforward of Goodwill (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning of period | $ 3,468 |
Acquisitions, including post acquisition adjustments | 20.2 |
Divestitures and deconsolidations | (0.1) |
Goodwill, end of period | $ 3,488.1 |
Organization and Summary of _12
Organization and Summary of Accounting Policies - Schedule of Non-Controlling Interests - Redeemable (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Non-Controlling Interests - Redeemable [Roll Forward] | ||
Balance at beginning of period | $ 306.8 | $ 321 |
Net income attributable to non-controlling interests—redeemable | 24.4 | 11.3 |
Acquisition (disposal) of shares of non-controlling interests, net—redeemable | 1.9 | (1.7) |
Distributions to non-controlling interest—redeemable holders | (20.3) | (15.9) |
Balance at end of period | $ 312.8 | $ 314.7 |
Organization and Summary of _13
Organization and Summary of Accounting Policies - Income Taxes (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Effective tax rate (percent) | (14.60%) | 56.20% |
Tax benefits related to vesting of restricted stock awards | $ 4.1 | |
Tax benefits related to the sale of partnership interests | $ 3 | |
Tax benefits related to CARES Act and Settlement Agreement | $ 11.9 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) $ in Millions | 6 Months Ended | |
Jun. 30, 2021USD ($)surgical_facility | Jun. 30, 2020USD ($) | |
Business Acquisition [Line Items] | ||
Payments for acquisitions, net of cash acquired | $ 15.2 | $ 12.4 |
Surgical Facilities, Existing Markets | ||
Business Acquisition [Line Items] | ||
Number of facilities acquired | surgical_facility | 2 | |
Payments for acquisitions, net of cash acquired | $ 15.2 |
Acquisitions and Disposals - Ac
Acquisitions and Disposals - Acquisitions (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Net assets acquired: | ||
Goodwill | $ 3,488.1 | $ 3,468 |
Surgical Facilities, Existing Markets | ||
Business Acquisition [Line Items] | ||
Total consideration | 15.4 | |
Fair value of non-controlling interests | 7.5 | |
Aggregate acquisition date fair value | 22.9 | |
Net assets acquired: | ||
Current assets | 1.7 | |
Property and equipment | 1.7 | |
Goodwill | 20 | |
Right-of-use operating lease assets | 2.1 | |
Current liabilities | (0.6) | |
Long-term debt | (0.1) | |
Right-of-use operating lease liabilities | (1.9) | |
Aggregate acquisition date fair value | $ 22.9 |
Long-Term Debt - Summary of Lon
Long-Term Debt - Summary of Long-Term Debt (Details) - USD ($) $ in Millions | Jun. 30, 2021 | May 03, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | |||
Finance lease obligations | $ 281.7 | $ 281.2 | |
Less: unamortized debt issuance costs and discounts | (16.8) | (16.3) | |
Total debt | 2,855.7 | 2,856.8 | |
Less: Current maturities | 69.6 | 64.4 | |
Total long-term debt | 2,786.1 | 2,792.4 | |
Secured Debt | Senior secured term loan | |||
Debt Instrument [Line Items] | |||
Long-term debt | 1,538.2 | 1,539.4 | |
Unamortized fair value discount (premium) | (3.2) | 3.7 | |
Senior Notes | 6.750% senior unsecured notes due 2025 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 370 | 370 | |
Stated interest rate (percent) | 6.75% | 6.75% | |
Senior Notes | 10.000% senior unsecured notes due 2027 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 545 | 545 | |
Stated interest rate (percent) | 10.00% | ||
Notes payable and other secured loans | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 137.6 | $ 137.5 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - USD ($) | May 03, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jan. 27, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | |||||||
Debt issuance costs and discount, net of issuance premium | $ 16,800,000 | $ 16,800,000 | $ 16,300,000 | ||||
Loss on debt extinguishment | 9,600,000 | $ 0 | $ 9,600,000 | $ 0 | |||
Federal Funds Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate (percent) | 3.00% | ||||||
New Term Loans | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 1,545,000,000 | ||||||
Maturity covenant, minimum amount of Borrower's 6.750% senior unsecured notes due 2025 not repaid, repurchased or redeemed or refinanced | $ 185,000,000 | ||||||
Maturity covenant, minimum maturity date for borrowings after August 31, 2026 by no later than April 1, 2025 | 91 days | ||||||
Quarterly amortization in aggregate principal amount, percent per annum (percent) | 1.00% | ||||||
Debt issuance costs and discount, net of issuance premium | $ 8,900,000 | $ 8,900,000 | |||||
New Term Loans | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate (percent) | 3.75% | ||||||
Debt instrument, basis spread on variable rate, floor (percent) | 0.75% | ||||||
New Term Loans | Federal Funds Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate (percent) | 0.50% | ||||||
New Term Loans | One-month LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate (percent) | 1.00% | ||||||
New Term Loans | Base Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate (percent) | 2.75% | ||||||
Debt instrument, basis spread on variable rate, floor (percent) | 1.75% | ||||||
6.750% senior unsecured notes due 2025 | Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Stated interest rate (percent) | 6.75% | 6.75% | 6.75% | ||||
Revolving Credit Facility | Secured Debt | |||||||
Debt Instrument [Line Items] | |||||||
Availability on line of credit instrument | $ 163,700,000 | $ 163,700,000 | |||||
Revolving Credit Facility | The Revolver | Secured Debt | |||||||
Debt Instrument [Line Items] | |||||||
Increase in outstanding commitments | $ 50,000,000 | ||||||
Amount of line of credit outstanding | 0 | 0 | $ 0 | ||||
Letter of Credit | Secured Debt | |||||||
Debt Instrument [Line Items] | |||||||
Availability on line of credit instrument | $ 6,300,000 | $ 6,300,000 |
Leases - Lease Expense and Cash
Leases - Lease Expense and Cash Flow Information (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Leases [Abstract] | ||
Operating lease costs | $ 37.5 | $ 36.3 |
Finance lease costs: | ||
Amortization of leased assets | 13.8 | 12 |
Interest on lease liabilities | 12.6 | 10.4 |
Total finance lease costs | 26.4 | 22.4 |
Variable and short-term lease costs | 9.8 | 8.3 |
Total lease costs | 73.7 | 67 |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash outflows from operating leases | 36.7 | 33.7 |
Operating cash outflows from finance leases | 11.9 | 10.4 |
Financing cash outflows from finance leases | 10.6 | 8.3 |
Right-of-use assets obtained in exchange for operating lease obligations | 31.4 | 37.5 |
Right-of-use assets obtained in exchange for finance lease obligations | $ 6.6 | $ 8.5 |
Redeemable Preferred Stock - Ad
Redeemable Preferred Stock - Additional Information (Details) $ / shares in Units, $ in Millions | May 17, 2021shares | Aug. 31, 2017USD ($)$ / sharesshares | Mar. 31, 2021USD ($) | Jun. 30, 2021lease_renewal_option$ / sharesshares | Feb. 01, 2021$ / shares | Dec. 31, 2020$ / sharesshares |
Temporary Equity [Line Items] | ||||||
Proceeds from issuance of preferred shares | $ | $ 248.3 | |||||
Common stock, par value (in USD per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |||
Preferred stock, shares outstanding (shares) | 0 | 0 | ||||
Conversion of Series A Preferred Stock into Common Stock | ||||||
Temporary Equity [Line Items] | ||||||
Shares of common stock issued in conversion (shares) | 22,609,000 | |||||
Series A Preferred Stock | ||||||
Temporary Equity [Line Items] | ||||||
Preferred stock dividend rate (percent) | 10.00% | |||||
Trading days | lease_renewal_option | 20 | |||||
Consecutive trading days | lease_renewal_option | 30 | |||||
Threshold share price (in USD per share) | $ / shares | $ 42 | |||||
Preferred stock, shares outstanding (shares) | 0 | |||||
Bain Capital Private Equity, L.P. | Series A Preferred Stock | ||||||
Temporary Equity [Line Items] | ||||||
Stock issued during period (shares) | 310,000 | |||||
Purchase price per share (in USD per share) | $ / shares | $ 1,000 | |||||
Proceeds from issuance of preferred shares | $ | $ 310 |
Redeemable Preferred Stock - Re
Redeemable Preferred Stock - Redeemable Preferred Stock Activity (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Increase (Decrease) in Temporary Equity [Roll Forward] | |
Beginning balance | $ 434.5 |
Dividends declared | (5.1) |
Redeemable preferred stock conversion to common stock | (439.7) |
Ending balance | 0 |
Series A Preferred Stock | |
Increase (Decrease) in Temporary Equity [Roll Forward] | |
Beginning balance | 434.5 |
Dividends accrued | 10.3 |
Ending balance | $ 0 |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activities - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2021USD ($)lease_renewal_option | Mar. 31, 2021USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Jun. 30, 2021USD ($)lease_renewal_option | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | |||||||
Amount estimated to be reclassified as a reduction to interest expense over next 12 months | $ 25.8 | ||||||
Derivative notional amount | $ 1,200 | 1,200 | $ 1,200 | ||||
Amount of unrealized losses recorded in OCI | (0.2) | $ (6.4) | $ (7.3) | $ 25.2 | (6.6) | $ 17.9 | |
Derivatives not designated as hedging instruments | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | |||||||
Derivative notional amount | 435 | $ 435 | |||||
Amount of unrealized losses recorded in OCI | $ 55 | ||||||
Interest Rate Swap | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | |||||||
Number of interest rate swaps | lease_renewal_option | 9 | 9 | |||||
Derivative notional amount | $ 435 | $ 435 | |||||
Interest Rate Swap | Derivatives in cash flow hedging relationships | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | |||||||
Derivative notional amount | $ 1,200 | $ 1,200 | |||||
Three Pay-fixed Interest Rate Swaps | LIBOR | Minimum | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | |||||||
Variable interest rate of derivative instrument (as a percent) | 0.75% | 0.75% | |||||
Three Pay-fixed Interest Rate Swaps | Derivatives not designated as hedging instruments | LIBOR | Minimum | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | |||||||
Variable interest rate of derivative instrument (as a percent) | 1.00% | 1.00% | |||||
Three Receive-fixed Interest Rate Swaps | Derivatives not designated as hedging instruments | LIBOR | Minimum | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | |||||||
Variable interest rate of derivative instrument (as a percent) | 1.00% | 1.00% |
Derivatives and Hedging Activ_4
Derivatives and Hedging Activities - Interest Rate Swaps Outstanding (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | $ 17.6 | $ 0 |
Derivative liability, notional amount | (72.8) | (61) |
Derivative notional amount | 1,200 | 1,200 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 435 | 0 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 330 | 0 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 435 | 0 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 165 | 0 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 120 | 0 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 150 | 0 |
Receive-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative liability, notional amount | (165) | 0 |
Receive-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative liability, notional amount | (120) | 0 |
Receive-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative liability, notional amount | (150) | 0 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 0 | 330 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 0 | 330 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 0 | 240 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | $ 0 | $ 300 |
Derivatives and Hedging Activ_5
Derivatives and Hedging Activities - Derivatives and their location on the condensed consolidated balance sheets (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Derivative asset, notional amount | $ 17.6 | $ 0 |
Derivative liability, notional amount | 72.8 | 61 |
Interest Rate Swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Derivative liability, notional amount, financing component | 52.9 | |
Interest Rate Swap | Derivatives not designated as hedging instruments | Other Noncurrent Assets | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Derivative asset, notional amount | 17.6 | 0 |
Derivative liability, notional amount | 0 | 0 |
Interest Rate Swap | Derivatives not designated as hedging instruments | Other Noncurrent Liabilities | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Derivative asset, notional amount | 0 | 0 |
Derivative liability, notional amount | 17.3 | 0 |
Interest Rate Swap | Derivatives in cash flow hedging relationships | Other Noncurrent Liabilities | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Derivative asset, notional amount | 0 | 0 |
Derivative liability, notional amount | $ 55.5 | $ 61 |
Derivatives and Hedging Activ_6
Derivatives and Hedging Activities - Pre-tax Effect of Derivatives on AOCI and Statement of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Amortization of accumulated OCI related | $ 3.2 | $ 3.2 | ||
Derivatives not designated as hedging instruments | Other income | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Gain recognized in income | 0.2 | $ 0 | 0.2 | $ 0 |
Derivatives in cash flow hedging relationships | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Loss (gain) recognized in OCI (effective portion) | 5.8 | (1.7) | 4.9 | 26.9 |
Derivatives in cash flow hedging relationships | Interest expense, net | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Gain recognized in income | $ 6 | $ 5.6 | $ 11.5 | $ 9 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | ||
Numerator: | |||||
Net loss attributable to Surgery Partners, Inc. | $ (26.9) | $ (32.5) | $ (47.9) | $ (60) | |
Less: Amounts attributable to participating securities | 0 | (9.7) | (10.3) | (19.2) | |
Net loss attributable to common stockholders | $ (26.9) | $ (42.2) | $ (58.2) | $ (79.2) | |
Denominator: | |||||
Weighted average shares outstanding- basic (shares) | 69,267 | 48,840 | 62,060 | 48,661 | |
Weighted average shares outstanding- diluted (shares) | [1] | 69,267 | 48,840 | 62,060 | 48,661 |
Loss per share: | |||||
Basic (in USD per share) | $ (0.39) | $ (0.86) | $ (0.94) | $ (1.63) | |
Diluted (in USD per share) | [1] | $ (0.39) | $ (0.86) | $ (0.94) | $ (1.63) |
Stock options | |||||
Loss per share: | |||||
Dilutive securities outstanding not included in the computation of loss per share as their effect is antidilutive (shares) | 2,016 | 0 | 1,901 | 42 | |
Restricted shares | |||||
Loss per share: | |||||
Dilutive securities outstanding not included in the computation of loss per share as their effect is antidilutive (shares) | 1,484 | 530 | 1,451 | 545 | |
[1] | The impact of potentially dilutive securities for all periods presented was not considered because the effect would be anti-dilutive in those periods. |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 01, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 |
Sale Of Stock [Line Items] | ||||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 | $ 0.01 | |
Sale price to public (in USD per share) | $ 30.25 | |||
Underwriting discounts, commissions and other related costs related to offering | $ 12.7 | $ 0 | ||
Public Offering | ||||
Sale Of Stock [Line Items] | ||||
Stock sold in offering (shares) | 8,625,000 | |||
Net proceeds from stock offering | $ 260.9 | |||
Underwriting discounts, commissions and other related costs related to offering | $ 12.7 | |||
Firm Shares | ||||
Sale Of Stock [Line Items] | ||||
Stock sold in offering (shares) | 7,500,000 | |||
Additional Shares Granted to Underwriters | ||||
Sale Of Stock [Line Items] | ||||
Stock sold in offering (shares) | 1,125,000 |
Other Current Liabilities - Oth
Other Current Liabilities - Other Current Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Other Liabilities Disclosure [Abstract] | ||
Right-of-use operating lease liabilities | $ 39.1 | $ 39.2 |
Accrued legal settlement | 0 | 32.2 |
Interest payable | 29.6 | 24.5 |
Tax receivable agreement liability | 21.2 | 21.2 |
Amounts due to patients and payors | 22.2 | 20.9 |
Cost report liabilities | 30.5 | 16.9 |
Accrued expenses and other | 56.4 | 62.1 |
Total | $ 199 | $ 217 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Apr. 01, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2018 | Dec. 31, 2020 |
Guarantor Obligations [Line Items] | ||||||||
Professional, general and workers' compensation insurance reserve | $ 23.2 | $ 23.2 | $ 21.4 | |||||
Expected insurance recoveries | 10.5 | 10.5 | 10.5 | |||||
Payment under settlement agreement | $ 30.7 | |||||||
Litigation-related charge | 0 | $ 0 | $ 1.2 | $ 0 | $ 1.2 | $ 46 | ||
Projected tax savings period | 5 years | |||||||
Federal effective tax rate (percent) | 24.00% | |||||||
Long-term tax receivable agreement liability | 43.2 | $ 43.2 | 43.2 | |||||
Net long-term tax receivable agreement liability | 38.9 | 38.9 | 37 | |||||
Current portion of tax liability | $ 21.2 | $ 21.2 | $ 21.2 | |||||
Federal Funds Rate | ||||||||
Guarantor Obligations [Line Items] | ||||||||
Debt instrument, basis spread on variable rate (percent) | 3.00% | |||||||
Collaborative tax agreement, basis spread on variable rate (percent) | 3.00% | |||||||
LIBOR | Materially More Restrictive | ||||||||
Guarantor Obligations [Line Items] | ||||||||
Debt instrument, basis spread on variable rate (percent) | 5.00% | |||||||
LIBOR | Not Materially More Restrictive | ||||||||
Guarantor Obligations [Line Items] | ||||||||
Debt instrument, basis spread on variable rate (percent) | 3.00% |
Segment Reporting - Revenues an
Segment Reporting - Revenues and Operating Income by Reportable Segment (Details) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Jun. 30, 2021USD ($)segment | Jun. 30, 2020USD ($) | Dec. 31, 2018USD ($) | |
Segment Reporting [Abstract] | ||||||
Number of operating segments | segment | 2 | |||||
Segment Reporting Information [Line Items] | ||||||
Revenues | $ 543.3 | $ 374.7 | $ 1,055.7 | $ 815.7 | ||
Adjusted EBITDA | 75.9 | 58.2 | 148.8 | 104.7 | ||
Reconciliation of Adjusted EBITDA: | ||||||
Income (loss) before income taxes | 6.1 | (4.5) | 17.1 | (28.1) | ||
Net income attributable to non-controlling interests | (35.7) | (28.6) | (67.5) | (47.7) | ||
Depreciation and amortization | 25.2 | 23.4 | 50.9 | 45.2 | ||
Interest expense, net | 53.4 | 49.2 | 106.7 | 96.3 | ||
Equity-based compensation expense | 4.1 | 3.4 | 9.3 | 6.9 | ||
Transaction, integration and acquisition costs | 11.4 | 10.1 | 20.8 | 22.7 | ||
Loss on disposals and deconsolidations, net | 1 | 2.9 | 0.1 | 6.4 | ||
Litigation settlement and other litigation costs | 0.8 | 2.3 | 1.8 | 3.8 | ||
Loss on debt extinguishment | 9.6 | 0 | 9.6 | 0 | ||
Gain on escrow release | 0 | 0 | 0 | (0.8) | ||
Adjusted EBITDA | 75.9 | 58.2 | 148.8 | 104.7 | ||
Transaction and integration costs | 9.2 | 4.9 | 14.5 | 10.4 | ||
Start-up costs | 2.2 | 5.2 | 6.3 | 12.3 | ||
Other litigation costs | 0.8 | 2.3 | 1.8 | 2.6 | ||
Litigation settlement | 0 | 0 | $ 1.2 | 0 | 1.2 | $ 46 |
Operating Segments | Surgical Facility Services | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 525.8 | 361 | 1,021.6 | 784.2 | ||
Adjusted EBITDA | 95.6 | 80 | 190.6 | 147.2 | ||
Reconciliation of Adjusted EBITDA: | ||||||
Adjusted EBITDA | 95.6 | 80 | 190.6 | 147.2 | ||
Operating Segments | Ancillary Services | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 17.5 | 13.2 | 34.1 | 30.2 | ||
Adjusted EBITDA | (0.1) | (1.3) | (1) | (3.3) | ||
Reconciliation of Adjusted EBITDA: | ||||||
Adjusted EBITDA | (0.1) | (1.3) | (1) | (3.3) | ||
Operating Segments | Optical Services | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 0 | 0.5 | 0 | 1.3 | ||
Adjusted EBITDA | 0 | 0.2 | 0 | 0.6 | ||
Reconciliation of Adjusted EBITDA: | ||||||
Adjusted EBITDA | 0 | 0.2 | 0 | 0.6 | ||
All other | ||||||
Segment Reporting Information [Line Items] | ||||||
Adjusted EBITDA | (19.6) | (20.7) | (40.8) | (39.8) | ||
Reconciliation of Adjusted EBITDA: | ||||||
Adjusted EBITDA | $ (19.6) | $ (20.7) | $ (40.8) | $ (39.8) |
Segment Reporting - Assets and
Segment Reporting - Assets and Cash Purchases of Property and Equipment by Operating Segment (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | |||
Total assets | $ 5,620.6 | $ 5,413.2 | |
Total cash purchases of property and equipment | 28 | $ 19.9 | |
Operating Segments | Surgical Facility Services | |||
Segment Reporting Information [Line Items] | |||
Total assets | 5,021.6 | 4,962.4 | |
Total cash purchases of property and equipment | 27.2 | 16.8 | |
Operating Segments | Ancillary Services | |||
Segment Reporting Information [Line Items] | |||
Total assets | 32.7 | 35 | |
Total cash purchases of property and equipment | 0.2 | 0.1 | |
All other | |||
Segment Reporting Information [Line Items] | |||
Total assets | 566.3 | $ 415.8 | |
Total cash purchases of property and equipment | $ 0.6 | $ 3 |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - Subsequent Event - Ambulatory Surgery Centers, New Markets $ in Millions | 1 Months Ended |
Aug. 31, 2021USD ($)ambulatory_surgery_center | |
Subsequent Event [Line Items] | |
Number of facilities acquired | ambulatory_surgery_center | 3 |
Combined purchase price | $ | $ 85 |